Penneo - Q3 a tad on the soft side, requiring a strong Q4 - ABG
Q3 ARR ~2% lower vs. ABGSCe, adj. EBITDA better Reiterated guidance requires strong ARR growth in Q4 Long-term case intact: a quality offering in large markets Q3 ARR slightly lower than ABGSCe, but better profitability Penneo reported Q3 ARR of DKK 65m (-2.1% vs. ABGSCe at DKK 67m), corresponding to 29% y-o-y growth, with the miss vs. ABGSCe explained by lower uplift at 15.3% and lower new ARR at 17.5%, while the churn rate was kept low at an impressive 3.2%. Q3 revenue was DKK 15m (+1.2% vs. ABGSCe at DKK 15m), while adj. EBITDA landed at DKK -5m (+35.2% vs. ABGSCe at DKK -7m) from lower investments in growth. The recently adjusted FY’22 guidance was reiterated at ARR of DKK 70m-75m and adj. EBITDA of negative DKK 15m-20m. The high cash burn continued, leaving Penneo with a cash position of DKK 58m. Reiterated ARR guidance requires a strong Q4 The main takeaways from Penneo’s Q3 are the following: 1) With Q3 adding merely DKK 1.5m in additional ARR (although we note that Q3 is a seasonally weak quarter), Penneo needs to add DKK ~5m-10m in Q4 to reach its reiterated FY’22 ARR guidance of DKK 70m-75m. While Q4 has historically been a strong quarter, we note that large, binary KYC deals may cause Penneo to fall short of guidance. We thus leave our ’22 ARR estimate at the lower end of guidance at DKK 70m. 2) We believe the mix of more cautious buying behaviour among both existing and new clients and the company’s high cash burn and cash position of DKK 58m at the end of Q3 may cause Penneo to cut back further on growth investments ahead. This will further slow ARR growth and leads us to stick to our cautious short-term view on growth. 3) The short-term delays, however, do not affect our positive long-term view. Strong SaaS metrics in recent years, a quality product offering, and significant market potential driven by strong demand drivers (efficiency, cost improvements and regulation), support our positive long-term view. One-year fwd. FVR lowered slightly to DKK 5-15/sh ... Läs mer på ABG Sundal Collier
