Verve Group

* Lack of a diversified and wide revenue base, potentially exposing the company to risks associated with market fluctuations or customer loss.
* Possible cyclical nature of the advertising business, which could impact financial performance during economic downturns.

* Strong recurring revenue model based on advertising volumes, enhancing business stability and predictability.
* Asset-light business model allowing for efficient scaling with high incremental returns and minimal reinvestment needs.
* Clear competitive moat through extensive database and market leadership in the in-app advertising market.

* Lack of consistent earnings growth, with EPS growth not exceeding historical averages or maintaining stability over longer periods.
* Net debt exceeds two times operating cash flow, potentially indicating challenges in debt management.
* Absence of dividend payments or growth, limiting appeal for income-focused investors.
* Return on Equity (ROE) has not consistently reached 20% over the last five years, indicating potential room for improvement in capital utilization.

* Strong profitability with gross profit margin exceeding 40% and operating margin above 20%, indicating pricing power and competitive advantage.
* Consistent revenue growth above industry average over the last five years, suggesting market share gains and strong demand.
* High operating cash flow conversion (above 80%) over the past five years, demonstrating ability to generate real cash profits.

* EPS growth has been dampened by high debt and interest costs, potentially impacting overall financial performance.
* Lack of clear information about sustainability-related performance incentives in executive compensation plans.
* Insufficient information available to assess the CEO evaluation process and succession planning.

* Visionary CEO with long-term perspective and deep industry knowledge, consistently delivering on promises and creating shareholder value.
* Strong commitment to innovation and strategic planning, focusing on ID-less solutions and niche market segments.
* Clear and consistent investor communication, emphasizing long-term business value and transparency about mistakes.
* Founder-CEO owns a significant stake (c25%) in the company, aligning management interests with shareholders.

Net Sales amounted to EUR 65.9m (51.9), growing 27% y/y. The growth primarily stems from organic growth. Adj EBITDA grew 30% y/y and reached EUR 17.6m (13.5). Equivalent to a margin of 27%, which we deem solid as Q1 is generally a seasonally weaker quarter.
As we discussed in our previous note, 2022 will be characterized by high investments into R&amp;D and further hiring of key employees. Thus, we believe this will hold back the margin expansion in 2022. We currently forecast an Adj EBITDA margin of 28.7% in 2022. Additionally, we forecast Sales and Adj EBITDA in 2022 of EUR 312 &#8211; 89m respectively. Slightly above managements midrange guidance of Sales and Adj EBITDA of EUR310 &#8211; 85m. Why we will make minor revisions and reiterate our base case of SEK 68.
On our estimates for 2022, MGI trades at 7.5x EV/EBITA.
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