Open main menu
Home
Random
Donate
Recent changes
Special pages
Community portal
Preferences
About Stockhub
Disclaimers
Search
User menu
Talk
Contributions
Create account
Log in
Editing
EQS Group
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
== Financials == EQS’s Q122 figures showed revenues ahead by 34% to €14.11m, with the growth boosted by the inclusion of the revenues generated by Business Keeper (a previous acquisition, Got Ethics, was consolidated from January 2021 and is therefore included in the comparative figure). Stripping Business Keeper revenues out, the organic growth rate was nearer 7%. In normal trading, this would be a disappointing degree of progress, but it should be remembered that the group is very focused on driving sales in whistleblowing solutions and these, as explained above, have been slow with the timing slippage on the implementation of the legislation. These factors have led management to narrow the range of expectations for revenue growth for the FY22 year from 30–50% to 30–40% growth, equivalent to €65–75m moving to €65–70m. Edison Investment Research's previous estimate was for €70m, which now lies at the top end of the range. Provided that the German whistleblowing legislation does proceed as currently anticipated, Edison Investment Research is comfortable with maintaining its forecast at this level. With the Q122 results, the group provided some valuable insight into the client recruitment process, timescales and costings, summarised in Exhibit 8 below. As this is styled ’fast track’, Edison Investment Research imagines that it is not always so straightforward. What is clear though is the length of the expected retention, which reflects how complex it can be to switch suppliers once the systems are embedded. The €67k lifetime value is calculated using Q122 data, taking an average ARR of €4.3k for those 25 years, building in an annual inflationary increase of 3% and discounting at 8%, with a 4% churn rate built-in. {| class="wikitable" |+Exhibit 8: Fast-track customer acquisition journey<ref name=":1" /> !Stages !Awareness !Consideration !Acquisition !Lifetime value |- |Touchpoints |Paid search |Landing page |Demo | |- | |Website |Product page |Negotiation | |- | | |Demo request |Signing | |- |Timeframe |2 weeks |1 week |2 weeks |25 years |- |Cost attribution |€760 |€560 |€1,120 |€67,000 |} Using the less-optimised cost of customer acquisition achieved in Q122 of around €11k, the ratio of lifetime value to acquisition cost is 6.1x, as shown in the Q122 results presentation. With scale, it is not unreasonable to suggest that customer acquisition costs should fall (at least until the market is highly penetrated), lifting this ratio further. {| class="wikitable" |+Exhibit 9: Q122 summary results and full year guidance<ref name=":1" /> !€m !Q122 !Q121 !% change ! !Full year guidance |- |Investor Relations revenues | | | | | |- |Cloud-products |2.56 |2.20 |16% | | |- |Service-products |2.25 |2.68 |<nowiki>-16%</nowiki> | | |- |Total Investor Relations |4.81 |4.88 |<nowiki>-1%</nowiki> | | |- | | | | | | |- |Compliance revenues | | | | | |- |Cloud-products |7.19 |3.53 |104% | | |- |Service-products |2.12 |2.14 |<nowiki>-1%</nowiki> | | |- |Total Compliance |9.31 |5.67 |64% | | |- | | | | | | |- |Group revenues |14.12 |10.55 |34% | |<nowiki>+30–40%</nowiki> |- |EBITDA |0.25 |0.31 |<nowiki>-19%</nowiki> | |€6–10m |- |EBIT |(1.77) |(0.97) |83% | | |- | | | | | | |- |Personnel expenses |9.41 |7.05 |34% | | |- |New SaaS customers |216 |158 |37% | |2,500–3,500 |- |Total customers |4,405 |3,260 |35% | | |- |New ARR |1.81 |1.44 |26% | |€11.0–16.0m |- |ARR |12.1 |10.5 |15% | | |} EBITDA performance in Q122 was in fact better than anticipated, reflecting lower costs as pressure was taken off the sales and marketing pedals as the urgency of tackling the German opportunity dissipated with the legislative delays. As can be seen in Exhibit 9 above, personnel expenses are the group’s largest expense item at 67% of Q122 revenue, with the year-on-year comparison reflecting the additional employees from last year’s acquisition of Business Keeper. ‘Other’ expenses in Q122 of €2.79m including €0.6m of consulting costs relating to the fundraise in March. Excluding this additional consulting cost, the increase in other expenses was 31%, more in line with the underlying growth in group revenue. Guidance for new ARR and for EBITDA were maintained at €11–16m and €6–10m respectively and Edison Investment Research is also holding its EBITDA revenue forecast at €7.5m, which falls in the lower half of the range, implying a slightly more cautious assumption on margin. '''Exhibit 10: Historical revenue progression and forecast by segment'''<ref name=":2">Source: EQS Group accounts, Edison Investment Research.</ref> [[File:Image8-ebafa5124d8196802324f40aa657b1d6.png|600x600px]] {| class="wikitable" |+Exhibit 11: Segmental revenue progress and group revenue and EBITDA forecasts<ref name=":2" /> !Year end December (€k) !FY19 !FY20 !FY21 !FY22e !FY23e |- | colspan="6" |'''Investor Relations''' |- |Cloud-products |5,286 |7,849 |9,504 |11,642 |13,680 |- |Growth (%) |0% |48% |21% |23% |18% |- |Service-products |8,717 |9,818 |10,012 |10,513 |11,038 |- |Growth (%) |0% |13% |2% |5% |5% |- |Discontinued operation (ARIVA.DE AG) |2,072 |0 |0 |0 |0 |- |Total Investor Relations |16,075 |17,667 |19,516 |22,155 |24,718 |- |Growth (%) | |10% |10% |14% |12% |- |Like-for-like growth (%) | |26% | | | |- | | | | | | |- | colspan="6" |'''Compliance''' |- |Cloud-products |9,332 |10,696 |19,826 |34,244 |48,280 |- |growth (%) |0% |15% |85% |73% |41% |- |Service-products |8,535 |9,273 |10,881 |13,601 |17,002 |- |Growth (%) |0% |9% |17% |25% |25% |- |Discontinued operation (ARIVA.DE AG) |1,425 |0 |0 |0 |0 |- |Total Compliance |19,292 |19,969 |30,707 |47,845 |65,282 |- |Growth (%) | |4% |54% |56% |36% |- |Like-for-like growth (%) | |12% | | | |- | | | | | | |- |Group revenue |35,367 |37,636 |50,223 |70,000 |90,000 |- |growth | |6% |33% |39% |29% |- |Like-for-like growth (%) | |18% |14% | | |- |EBITDA |2,554 |4,760 |1,742 |7,500 |18,000 |- |Growth (%) | |86% |<nowiki>-63%</nowiki> |<nowiki>+331%</nowiki> |<nowiki>+140%</nowiki> |- |EBITDA margin (%) |7.2% |12.6% |3.5% |10.7% |20.0% |} Management’s medium-term guidance is for IR revenues to build at a CAGR of 13% over FY21–25e. This seems reasonable in ‘normal’ capital markets, with the ongoing migration to digital methodologies within business and continuing progress in cross-selling products within the IR COCKPIT. '''Exhibit 12: IR segment growth target'''<ref name=":1" /> [[File:Image9-15a11fb2d529d45c87d468276dc3d513.png|600x600px]]'''<br />Exhibit 13: Compliance segment growth target'''<ref name=":1" /> [[File:Image10-0196e00384d21c4af781ad09d16a5d55.png|600x600px]] The growth forecast in the Compliance segment combines organic growth at a CAGR of 22% FY21–25e, with the addition of (growing) Business Keeper revenues coupled with synergies quantified by management at €5–10m to FY25e. '''Exhibit 14: Long-term revenue and EBITDA record and forecasts<ref name=":2" />''' [[File:Image11-890fc63683ee1974ef2a8cf0e6620ea4.png|600x600px]] === Cash flow dominated by M&A === With the emphasis on recurring revenues, the underlying cash requirements of the business are relatively modest and the broad spread of clients with relatively small contract values minimises the credit risk. The comparatively low level of operating cash flow is really just a reflection of the concentration of resource into investing to build out the medium and longer-term prospects. This is clearly shown in the aggregation exercise below where Edison Investment Research has looked at the sources and uses of cash for the five years FY17–21, where the scale of the M&A is apparent. As indicated above, Business Keeper was the largest acquisition to date by some margin, at a cost of €95m, of which €80m was paid in FY21 with the balance due in FY22.'''<br />Exhibit 15: Sources and uses of cash FY17–21<ref name=":2" />''' [[File:Image12-56506b266e95c68bcdcd599486ef4408.png|600x600px]] During FY21, the group raised €43.9m in three capital raises, in February, July and December. These were for €13.6m at €38.00 per share, €22.4m at €38.00 and €7.7m at €41.00. During Q122, the group carried out a further fund-raise of €45m gross, in part to facilitate the requirements of a new prospective cornerstone investor, Gerlin NV’s Teslin fund. To satisfy this, the deal was structured to be underwritten by other key investors, which only subscribed to the extent that, with a rump placing, they would end up where they wanted to be, thereby avoiding dilution. So, although visually a take up of 9.7% looks poor, this does not represent the underlying degree of support from existing shareholders. Gerlin took 42% of the issue and now has a 6.1% holding in the enlarged equity. The other advantage of the transaction was that it did not require the major input of investment bankers, saving €2–3m on the deal. An additional element of the rationale for this latest placing was to contribute to the funding of the potential proposed acquisition of a German firm (DFGE) in the ESG reporting space. This deal did not come to fruition due to differing expectations of the two parties (the then target has more of a consulting ethos), but future collaboration remains on the cards. The funds originally earmarked for this have been reallocated to the ongoing investment in whistleblowing plus the internal development of the ESG offering. === Reinforced balance sheet === The proceeds of the recent placing are being applied to the repayment of bridging finance (ie a €50m loan from Commerzbank with a 12-month term from June 2021), with a refinancing underway that will provide a more suitable financial structure for an acquisitive, growth company. This is particularly important to get right if management is to capitalise on the further opportunity in ESG cloud-based products for the corporate market. At end Q122, net debt was €27.83m, down from €74.37m at the end of FY21. This figure includes lease liabilities. Stripping these out, net debt would be €22.33m (end FY21: €68.34m). Edison Investment Research's current modelling indicates a figure for end FY22e of €47.2m including leases, post the payment of the €15m of deferred consideration for Business Keeper. This represents net debt/EBITDA of 6.3x and gearing of 15%. {| class="wikitable" |+Exhibit 16: Financial summary<ref>Source: Company accounts, Edison Investment Research.</ref> ! |€'000s | |2020 |2021 |2022e |2023e |- |Year end 31 December | | |IFRS |IFRS |IFRS |IFRS |- |INCOME STATEMENT | | | | | | |- |Revenue | | |37,636 |50,223 |70,000 |90,000 |- |Cost of Sales | | |0 |0 |0 |0 |- |Gross Profit | | |37,636 |50,223 |70,000 |90,000 |- |EBITDA | | |4,760 |1,742 |7,500 |18,000 |- |Operating Profit (before amort. and excepts.) | | |819 |(4,417) |1,517 |12,018 |- |Amortisation of acquired intangibles | | |(656) |(1,090) |(1,150) |(1,149) |- |Exceptionals | | |0 |110 |0 |0 |- |Share-based payments | | |0 |0 |0 |0 |- |Reported operating profit | | |163 |(5,397) |367 |10,869 |- |Net Interest | | |(396) |(1,461) |(1,530) |(1,459) |- |Joint ventures & associates (post tax) | | |0 |0 |0 |0 |- |Exceptionals | | |0 |0 |0 |0 |- |Profit Before Tax (norm) | | |423 |(5,878) |(13) |10,559 |- |Profit Before Tax (reported) | | |(233) |(6,858) |(1,163) |9,410 |- |Reported tax | | |(599) |229 |407 |(3,293) |- |Profit After Tax (norm) | | |296 |(5,682) |(9) |6,863 |- |Profit After Tax (reported) | | |(832) |(6,629) |(756) |6,116 |- |Minority interests | | |(34) |0 |0 |0 |- |Discontinued operations | | |0 |0 |0 |0 |- |Net income (normalised) | | |296 |(5,682) |(9) |6,863 |- |Net income (reported) | | |(866) |(6,629) |(756) |6,116 |- | | | | | | | |- |Average Number of Shares Outstanding (m) | | |7.2 |8.1 |10.0 |10.0 |- |EPS - normalised (€) | | |0.04 |(0.70) |(0.00) |0.68 |- |EPS - normalised fully diluted (c) | | |4.12 |(69.77) |(0.08) |68.47 |- |EPS - basic reported (€) | | |(0.12) |(0.81) |(0.08) |0.61 |- |Dividend per share (c) | | |0.00 |0.00 |0.00 |0.00 |- | | | | | | | |- |Revenue growth (%) | | |6.4 |33.4 |39.4 |28.6 |- |EBITDA Margin (%) | | |12.6 |3.5 |10.7 |20.0 |- |Normalised Operating Margin (%) | | |2.2 |(8.8) |2.2 |13.4 |- | | | | | | | |- |BALANCE SHEET | | | | | | |- |Fixed Assets | | |39,007 |168,468 |167,934 |178,614 |- |Intangible Assets | | |31,016 |160,386 |160,342 |172,685 |- |Tangible Assets | | |7,216 |7,351 |6,813 |4,975 |- |Investments & other | | |775 |731 |779 |954 |- |Current Assets | | |17,086 |18,369 |36,092 |42,681 |- |Stocks | | |0 |0 |0 |0 |- |Debtors | | |3,923 |7,018 |9,589 |12,082 |- |Cash & cash equivalents | | |12,074 |8,653 |23,806 |27,902 |- |Other | | |1,089 |2,697 |2,697 |2,697 |- |Current Liabilities | | |(12,381) |(89,171) |(80,698) |(71,365) |- |Creditors | | |(2,747) |(3,197) |(3,515) |(4,270) |- |Tax and social security | | |(56) |(214) |(552) |(552) |- |Short term borrowings (includes lease debt) | | |(3,278) |(73,095) |(61,095) |(61,095) |- |Other | | |(6,300) |(12,665) |(15,536) |(5,448) |- |Long Term Liabilities | | |(10,768) |(27,426) |(22,438) |(29,438) |- |Long term borrowings (includes lease debt) | | |(7,641) |(9,927) |(7,423) |(14,423) |- |Other long term liabilities | | |(3,127) |(17,499) |(15,015) |(15,015) |- |Net Assets | | |32,943 |70,240 |100,890 |120,492 |- |Minority interests | | |0 |0 |0 |0 |- |Shareholders' equity | | |32,943 |70,240 |100,890 |120,492 |- | | | | | | | |- |CASH FLOW | | | | | | |- |Operating Cash Flow | | |3,765 |(1,306) |4,627 |11,498 |- |Working capital | | |1,294 |(1,149) |(2,253) |(1,738) |- |Exceptional & other | | |1,037 |4,721 |1,175 |4,806 |- |Tax | | |(154) |(229) |407 |(3,293) |- |Operating Cash Flow | | |5,942 |2,037 |3,956 |11,273 |- |Capex | | |(2,008) |(3,149) |(3,250) |(3,250) |- |Acquisitions/disposals | | |0 |(96,428) |(15,000) |(7,000) |- |Net interest | | |(157) |(1,636) |0 |0 |- |Equity financing | | |9,124 |43,929 |45,374 |0 |- |Dividends | | |0 |0 |0 |0 |- |Other | | |414 |(2,772) |(3,927) |(3,927) |- |Net Cash Flow | | |13,315 |(58,019) |27,153 |(2,904) |- |Opening net debt/(cash) including lease liabilities | | |13,472 |(1,155) |74,370 |47,217 |- |FX | | |(199) |126 |0 |0 |- |Other non-cash movements | | |1,511 |(17,631) |0 |0 |- |Closing net debt/(cash) including lease liabilities | | |(1,155) |74,370 |47,217 |50,122 |}
Summary:
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see
Stockhub:Copyrights
for details).
Do not submit copyrighted work without permission!
Cancel
Editing help
(opens in new window)