Company overview

Fortnox CMD: Utilizing and strengthening its leading position in Sweden

Redeye Research Note timeStamp 2021/01/18

Redeye takes a positive view on Fortnox following a CMD highlighting an extensive product pipeline and its Swedish-focused strategy. We favor the continued focus on the Swedish market, which we believe has the most efficient growth opportunities. We raise our forecasts and Base case.

Key takeaways:

·         New Financial targets for 2025: +700 000 customers and SEK +300 in APRC/month

·         Focusing on broadening its offering, both in terms of product range and customer segments, to Swedish businesses rather than expanding abroad


We find the +700 000 customers target rather ambitious for two reasons. First, our previous forecast for year-end 2025 was 587 000. Second, to reach 700 000, the yearly average net intake must increase from 50 – 55 000 to 65 – 70 000. Our new forecast is 675 000.

On the other hand, we find the SEK +300 in ARPC/month quite defensive considering the extensive product pipeline shown at the CMD and Fortnox Finance opportunities. We decrease our ARPC forecast for 2025 slightly to SEK 350 from SEK 370.

All in all, the lower bound of Fortnox’s target (700 000 customers and SEK 300 in ARPC) would result in sales of SEK ~2.4bn in 2025, while our forecast results in SEK ~2.8bn.

We like Fortnox’s move to continue its focus on Sweden, as we believe it both utilizes and strengthens Fortnox’s competitive advantages. While Fortnox remains open to enter new markets, probably by M&A, the CMD’s focus was, without a doubt, further expansion in Sweden.

We believe that Fortnox’s brand and well-established relations with small and large accounting firms, its many integrations, and its significant customer base (and their data), makes growing sales in Sweden, in terms of both customers and ARPC, much more cost-efficient than going aboard. One could argue that the growth potential within Sweden is limited. However, considering the target of 700 000 customers in 2025 and the extensive product pipeline shown at the CMD, we believe Sweden is more than enough, at least until 2025.

By expanding its offering both in terms of product and customer segments as well as growing its ecosystem with integrations further, we believe that Fortnox will strengthen its competitive advantages, such as high switching costs and network effects, in Sweden.


We raise 2025E sales and EBIT by 12% and 22% – New Base case SEK 480

The new Base case of SEK 480 (330) is mainly a result of raised sales and margin forecasts for 2025 and beyond. While the different parts of the 2025 target deviated from our previous forecasts differently, we are positive about what we interpreted as a clear focus on the Swedish market. As mentioned, we believe that expanding in Sweden will be more cost-efficient and result in stronger competitive advantages.

While our Base case of SEK 480 equals the arguably discouraging multiples of 30x sales and 78x EBIT on our 2021 forecasts, assuming a valuation of 30x EBIT in 2025, would result in an annual return of 7%.

Income Statements Fortnox '19-'23E

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