Formpipe: Profitability trending upwards

Research Update

2017-11-01

07:30

Q3 revenue of SEK 88.0m was in line with our expected SEK 88.5m. EBIT was on the other hand significantly better than our estimate and came in at SEK 11.1 compared to our expectations of SEK 7.3m. Even though SaaS orders increases rapidly, the trend in profitability is upward. Due to a large traditional license deal in Q4 2016, it may be challenging to continue this trend in the coming quarter. However, we argue that Formpipe’s future looks bright. We are pleased to read that recurring revenue continues to grow and now amounts to 57% of net sales. We believe Formpipe can continue to increase their recurring revenues without increasing their costs to the same extent. This will allow further margin improvements on a mid-term basis. We reiterate our earlier DCF-valuation that indicates a fair value range of SEK 9-20 with a Base case of SEK 15 per share.

JS

Johan Svantesson

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