We expect Q1 sales of SEK 119m, up 17% y-o-y (vs. 18% in Q4’21), and SaaS ACV sales of SEK 7.2m (vs. SEK 4.5m in Q1’21). Similar to Q4, we believe the majority of Formpipe’s divisions (Public SE, Public DK, and Private) will continue to see strong demand, with Private performing particularly well due to the company’s investments in that area. However, given that Formpipe has ~100 outsourced personnel in Ukraine, we fear that recent events could entail some additional costs, although the impact on deliveries should be low as most of this personnel is working with R&D. In terms of Q1 EBIT, we expect SEK 9m (+56% y-o-y) for a margin of 7.5% (5.6%).
Estimate changes
While we keep our sales forecasts unchanged, we lower EBIT by 13-5% for ’22e-’24e, mainly due to recent events in Ukraine. Here, we believe that Formpipe might seek to complement its current organisation by signing up subconsultants in other countries, and we estimate these to be more costly to employ. In addition, we think that the company remains forward-leaning in terms of recruitment, while we also expect personnel salaries to come up. Ultimately, this means that we currently see an unusually large risk to near-term estimates. For 2022e, we now forecast 17% sales growth (of which 12% organic) and an adj. EBIT margin of 11% (vs. 10% in 2021). For 2021-2025e, we forecast an 11% sales CAGR and a 32% adj. EBIT CAGR.
Large share of recurring revenue and ample room for growth
Given current uncertain costs in terms of supply chain disruptions and rising cost inflation, Formpipe should find comfort in being an IT company with a large share of recurring revenue (64% in 2021) and low churn. Furthermore, we argue that Formpipe remains poised to increase the hit ratio for its Lasernet product both with Microsoft and with Temenos, which in turn entails strong growth opportunities.
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