Penneo: ARR slightly lower, continuing to invest - ABG

Q3 ARR of DKK 65m vs. ABGSCe at DKK 67m Recently adjusted FY’22 guidance reiterated Only minor downward rev.; neutral share reaction likely ARR roughly in line with ABGSCe, adj. EBITDA better Q3’22 ARR came in at DKK 65m (-2.1% vs. ABGSCe at DKK 67m), corresponding to 29% y-o-y growth. The slight deviation is explained by a lower uplift of 15.3% (vs. ABGSCe at 17.5%) and lower new ARR of 17.5% (vs. ABGSCe at 19.0%). This, in turn, can be explained by more cautious buying behavior among both existing and new customers, in addition to a higher-than-expected turnover of commercial staff in the quarter. However, the churn rate of 3.2% was better than our estimate of 4.0%, resulting in a net retention rate of 112%. Q3 revenue came in at DKK 15m (1.2% vs. ABGSCe at DKK 15m), while adj. EBITDA landed at negative DKK 5m for the quarter (+35.2% vs. ABGSCe at negative DKK 7m). At the end of Q3, Penneo’s cash position was DKK 58m. Recently downgraded FY’22 ARR guidance reiterated Penneo reiterated the recently downgraded FY’22 guidance of FY’22 ARR of DKK 70m-75m and adj. EBITDA of negative DKK 15m-20m. Despite seeing more cautious buying behavior and longer sales cycles, the company says it will continue to invest in product development, sales, and business operations for the rest of ’22 and into ’23. However, it will carry out the investments with caution to the cash burn and indicates it will not raise additional external capital. We expect to make only minor downward estimate changes With a report broadly in line on ARR, we expect to make only minor downward changes to our ‘22e-‘24e estimates. Expect a slight neutral share price reaction today. Läs mer på ABG Sundal Collier