As seen in the two most recent quarters, a softer ACV in the Private segment was compensated for by a solid contribution from Public DK following strong sales to both municipalities and Landburgsstyrelsen. While Public Sweden’s net ACV was roughly flat, the underlying development was solid. This is because Formpipe terminated an unprofitable S&M contract with an ACV of SEK3m related to a customer-specific solution. The total ARR (S&M and SaaS) was SEK406m (333m), up from SEK383m in the last quarter, corresponding to an annualised q/q growth of 26%, which of half was driven by FX. The total FX-adjusted ACV was SEK10.9, largely matching our forecast of SEK10.0m and last year’s SEK10.0m.

Private performed slightly weaker than our expectations, mainly due to increased churn in Support & Maintenance contracts related to old on-premises deals. Also, while MSFT Finance and Operations has historically been the most important source of customers, the interest in Lasernet in conjunction with MSFT Business Central (BC) has increased. As Formpipe and its partners now focus on further strengthening the offering to MSFT BC, short-term new sales might take a small hit while the TAM increases. On the other hand, during the quarter, Formpipe received a large banking deal as a traditional license which would have added SEKc1-2m in ACV if received as SaaS instead.

We leave our Base Case at SEK35 (35) following a Q2 report roughly in line with our expectations. Although the EBIT and margin were somewhat below our expectations, Formpipe successfully executes its strategy, where improving margins is the focus. We believe upcoming quarterly reports showing solid ARR growth (ACV) and gradual margin improvements will catalyse the share price to reach our Base Case.