Fortnox Q3 2022: Sales and EBIT Somewhat Below Forecasts

Research Note

2022-10-26

09:03

Redeye retains its positive view on Fortnox despite a Q3 report coming in somewhat short of our expectations. However, the organic growth of 35% and EBIT margin of 44% are nevertheless impressive. We will likely reduce our short-term forecasts somewhat.

FN

Fredrik Nilsson

  • Net customer intake was 10 000 (10 000) and matched our forecast. Note that Q3 is always the weakest quarter in terms of net customer intake.
  • Sales was SEK332m (237), corresponding to a y/y growth of 40.3%, which of 5.7% %-points from M&A. The number was 2.6% below our forecast, mainly due to lower sales from Core Subscriptions (Företagande, Byrån, Entreprenören) relative to our estimates. We believed the strong ARR seen in Q2 fueled by price increases should have had an even greater impact.
  • Pengar Transactions/Lending, basically Fortnox Finance, came in slightly lower than we expected. However, the growth rate increased both relative to last year’s Q3 and sequentially.
  • Marknadsplatsen beat our expectations significantly, indicating a solid development in Offerta and/or rapid growth in the newly launched Fortnox App market.
  • Both Other external costs and Personnel expenses came in above our forecasts. While the net recruitment was somewhat higher than we anticipated, the main reason behind the deviation was higher costs per employee.
  • In total, EBIT was about 9% below our estimate.
  • We will likely lower our near-term forecasts, and as we will raise our risk-free rate from 2% to 2.5%, we expect a slight reduction in our Base Case.

Note that we have made a new Fortnox model based on the company's current segment reporting, and there could be some minor differences in our current estimates relative to those in our last Update.

Disclosures and disclaimers

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