* Weak ACV, but good margins * We lower our sales assumptions, but raise '26e-'27e EBIT margins * 1.7x EV/sales in '26e (excl. the DPS of SEK 14), 15x EV/EBIT
ANNONS
Good cost control, but weak ACV
Formpipe's Q4 results were mixed, with a weak ACV figure (the lowest level since Q2'20) overshadowing good cost control and better-than-expected dividends. Most of the company's ACV stems from Microsoft Dynamics and Temenos. Although Microsoft Dynamics saw continued momentum (18 new deals, down from 23 in Q4'24), progress with Temenos remains slow. Given the sequential improvement in Q3 and Temenos' solid Q4 figures, this outcome is somewhat puzzling, but ACV tends to be lumpy. We expect the current level to persist over the coming quarters and then improve. The soft ACV was also exacerbated by churn (likely ~SEK 2m), but given that this was mainly related to legacy products, which currently account for only a small share of the current ARR, we believe the risk of significant future churn is low. On costs, Formpipe introduced cost savings measures in Q1'25, and has now implemented further actions. Given Formpipe's partner-led sales model, we do not expect these measures to significantly impact sales processes; instead, we welcome the news and are optimistic about continued margin expansion.
We lower our sales assumptions
We lower '26e-'27e sales by 7-9% due to the weak, forward-looking ACV figure. Alongside lower cost assumptions, we raise '26e adj. EBIT by 5%, but cut '27e by 9%. We now expect 5% organic growth in '26e.
Extraordinary dividends on the cards
Following the recent divestment, the BoD is proposing an extraordinary dividend of SEK 14/share (SEK 760m), which was above our forecast of SEK 11/share. Given the recent contraction in peer multiples and Formpipe's high share of recurring revenue, we think it makes sense to distribute the majority of the funds from the divestment. Adjusting for the dividends, the valuation sits at 1.7x EV/sales in 2026e (or ~15x EV/EBIT).
