Penneo: Q2e will likely deviate from usual seasonality - ABG
- Q2e: 21% ARR growth and adj. EBITDA of DKK 1.1m
- '24e likely to be even more back-end loaded vs. previous years
- Adj. EBITDA up 6-4% in '24e-'26e, FVR of DKK 6-14
Q2e: 21% ARR growth and DKK 1.1m adj. EBITDA
We forecast ARR of DKK 95.8m for 21% y-o-y growth, equivalent to a q-o-q DARR of DKK 4.5m. This assumes a low churn of 4.5% y-o-y (after the higher 5.5% in Q1), as well as an uplift rate of 12.0%. We expect the latter to remain weighed down by temporary downgrades from existing customers. Our new sales estimate of 13.5% is based on our expectation of a continued strong customer intake in Q2, although deal sizes likely remain muted. We model Q2 revenues of DKK 24.9m and adj. EBITDA of DKK 1.1m. We expect FCF (incl. leases) of DKK -6.9m to bring the cash position down to DKK 26.9m.
'24e likely to be more back-end loaded than in previous years
We do not expect Penneo to report a material change in the demand outlook, meaning we make no revisions to our full-year top-line estimates. However, we change the quarterly dynamics for '24e, as we now expect the year to end up even more back-end loaded than in previous years. We thus expect lower ARR growth in Q2 than in H2 despite ~2pp easier comps. Two key reasons are the anticipated roll-out of KYC to the Belgium market (we think already in Q3) and the recent win of a major customer in Germany. As Penneo reports live ARR, we first expect these effects to be clearly visible in ARR from Q4. Turning to costs, we lift '24e-'26e adj. EBITDA by 6-4% (and FCF by 7-16%), as we anticipate that the Q2e numbers will show continued strict cost control. A key driver is negative q-o-q net recruitment in Q2e (supported by our LinkedIn tracker). For '24, we expect ARR growth of 22.5% (vs. 18-25% guidance) and adj. EBITDA of DKK 8.3m (vs. DKK 5m-10m guidance), meaning we do not expect Penneo to modify its guidance.
FVR of DKK 6-14
Penneo is trading at 2.6-1.7x EV/ARR in '24e-'26e. Our DCF yields DKK 14, while a valuation vs. DocuSign points to DKK 6.
Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/penneo/Equity-research/2024/7/penneo---q2e-will-likely-deviate-from-usual-seasonality/