Penneo: Q2 in line with our estimates - ABG

ARR -1% below ABGSCe, revenues and adj. EBITDA bang in line
Guidance reiterated; no improvement in buying behaviour
Expect limited estimate changes and a neutral share price reaction
Q2 numbers vs. ABGSC

Penneo reported a decent, but neutral, set of numbers in Q2. Q2 ARR of DKK 79.2m came in 1% below our DKK 79.9m estimate, corresponding to ~25% y-o-y growth (CER ARR growth was ~26% due to a weak NOK and SEK). The low churn of ~4% was in line with our estimate, uplift of 17.0% was 0.5pp higher vs. ABGSCe, while new ARR of 12.0% came in 1.7pp short of our estimate. Q2 revenues of DKK 21.9m and adj. EBITDA of DKK -3.6m were bang in line with our estimates (~0% deviation).

Still no signs of improving demand, and cash burn continued
In our Q2 preview, we highlighted two factors in to watch for in Q2, namely signs of improving demand and the worrying cash burn. Starting with the former, Penneo reiterated its FY'23 guidance of ARR of DKK 87m-95m (and adj. EBITDA of negative DKK 10m-15m), as we had anticipated. The ARR guidance assumes continued cautious buying behaviour for the remainder of '23, as the company notes no improvement in demand (which particularly harms new sales from longer sales cycles, lower deal sizes, and smaller initial commitments). Moving to cash burn, FCF (excl. leases) in Q2 of DKK -9.9m was weaker than we had expected (ABGSCe DKK -7.3m), driven by weaker net working capital and higher R&D capitalisation than we had expected. Overall, we consider Q2 to largely be a non-event, with no impact on our positive view on the long-term prospects in Penneo given strong SaaS metrics, a quality product offering, and vast markets

Consensus estimate revisions and share price reaction
Following Q2 numbers in line with estimates, we expect limited changes to consensus estimates. A neutral share price reaction seems warranted. The company will host a conference call at 10:00 CET.Deviation tableSource: ABG Sundal Collier, company data

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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/penneo/Equity-research/2023/8/penneo---q2-in-line-with-our-estimates/