We think Lime sounded unsurprisingly forward-leaning on the prospects of M&A (either on the tech or the expansion side). This bodes well for future value creation. However, while tech acquisitions typically come with small revenues and high up-selling potential and expansion acquisitions come with larger revenues but a need to integrate and convert customer bases, both involve some lag from acquisition to actual value creation. Encouragingly, Lime has been active on the R&D side with new products including renewals of Lime BI, Lime GO and the launch of e-signing tools. This should improve client acquisition and retention while providing Lime with up-selling opportunities.
Valuation still on the high side
Post these revisions and today’s share price decline, Lime trades at EV/EBITDA of 32x for 2021 and 27x for 2022. Our fair valuation range is SEK 245-264. (SEK 237-255)
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