Fortnox: On track to reaccelerate organic sales growth - ABG

Transaction based sales are starting to recover
Overall, Fortnox delivered Q2 results in line with our expectations. Sales were SEK 230m, 0% vs. ABGSCe. Although the company’s transaction-based sales remain hurt by the pandemic, they grew 20% q-o-q (16% organically) which boosts our expectation of further improvements in the coming quarters. Fortnox Finance sales, however, came in 2% below our forecast. Customer intake of +15,000 (ABGSCe 16,000) was robust, as the second quarters of the last three years all saw growth of just +13,000. Adj. EBIT grew 14% y-o-y (vs. total sales growth of 35%), hurt by increased investments in its platform. With these projects now having entered their final stages, we think the company’s internal efficiency will improve.

Strong customer intake in H1 to persist in H2e
We expect continued acceleration in customer intake, mainly due to an enhanced focus on micro accounting bureaus. In addition, we note that competitor Bokio, which has previously offered a free accounting solution, has recently started to charge a fee for its products. We think that this will result in churn, and that Fortnox will be able to capitalise on this due to its market-leading position. In terms of estimate changes, we reduce ’21-‘23 sales by 1.0-0.4% due to lowered assumptions on Fortnox Finance sales. While we leave our ‘21 EBIT estimate relatively intact, we hike ’22-‘23e EBIT by 2% due to raised gross margin assumptions. This stems from the fact that the company has recently implemented automatic interpretation of invoices.

We continue to expect improved financials in H2e
We continue to expect improved financials in H2e. For 2022, we forecast sales of SEK 1,265m, corresponding to 31% organic growth (vs. 25% in ‘21e). Furthermore, the company’s M&A opportunities remain solid, which is also supported by the lease adj. NIBD/EBITDA of -1.3x in ‘21e. The share is currently trading at 55x EV/EBIT on our new 2022 forecasts.

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