Penneo: ARR in line, cash flow better - ABG

Q2: 21% ARR growth in line, FCF of DKK -4m vs. ABGSCe DKK -6m
Reiterates FY'24 guidance, as expected
Expect limited consensus estimate revisions


Q2 numbers vs. ABGSCe

Q2 ARR of DKK 95.6m was in line with our DKK 95.8m estimate and corresponded to ~21% y-o-y growth. Churn of 5% was a tad higher than expected, and uplift of 10% was 2pp lower than our estimate. The latter continued to be weighed down by temporary downgrades from customers. However, better-than-expected new sales of 16% compensated, fuelled by strong customer intake (particularly in Denmark and Belgium). Revenues of DKK 24.0m were ~3% below our estimate, but adj. EBITDA came in somewhat higher at DKK 1.5m (vs. ABGSCe of DKK 1.1m). Looking more closely at the cost composition, a portion of the deviation vs. our estimates between staff costs and other external expenses is, to our understanding, driven by a relative increase in freelancers vs. permanent employees (salaries for the former is recognised in other external expenses). Lastly, FCF (excl. leases) of DKK -4m was stronger than our expectation of DKK -6m, taking the cash position to DKK 29m (vs. ABGSCe of DKK 27m). The deviation appears to be driven mainly by better NWC.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/penneo/Equity-research/2024/8/penneo---arr-in-line-cash-flow-better/