Formpipe: Opex growth to decelerate ahead - ABG

Poor Q3 margins on lower delivery sales in Public DK
We cut ‘22e-‘24e EBIT by 13-8%
Opex growth to slow down & margins to improve in ‘23e


Tough comps and elevated opex levels

Formpipe posted Q3 sales of SEK 117m, up 10% y-o-y, mainly due to FX and the acquisition of Alkemit. Organic sales rose 3% y-o-y (vs. 10% in Q2) due to tough comps in delivery sales Public DK (-18% y-o-y), as Landbrugsstyrelsen was an unusually large spender in Q3’21. While we had anticipated lower delivery sales due to this, the impact was larger than expected, resulting in sales coming in 2% below our forecast and EBIT 31% below (SEK 6m vs. ABGSCe SEK 9m). Although opex grew 23% y-o-y due to FX, growth investments (e.g. travel and marketing), and higher personnel turnover, we expect opex growth to decelerate ahead after a period of elevated levels. Furthermore, SaaS ACV of SEK 7.0m declined from SEK 8.5m in Q3’21, reflecting a weaker development for Temenos more recently (Temenos blames prolonged sales cycles on recent macro), while the Microsoft Dynamics-related business seems to have performed well. Here, ACV in Private grew 16% y-o-y to SEK 6.5m, which we think was solid.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/formpipe/Equity-research/2022/10/formpipe---opex-growth-to-decelerate-ahead/