The Q1 report beat our sales and EBITDA estimates by 10% and 13%, respectively. The new ARR definition shows that the sequential growth streak has remained unbroken (whereas the old definition did not). The current cost base is unlikely to increase materially, as made clearer by the Q1 figures. That said, once the variable sales from increasing client volumes start increasing, we believe the company will return to growth mode.
Estimate changes
We raise our '24e sales by 2% and '24e-'26e EBITDA by 8-5% on the back of the report. Technically we cut our ARR estimates by ~5% for '24e-'26e, but that is due to a mechanical effect of the new ARR definition, which considers both fixed and variable sales on an LTM basis. The result of this is lower intra-quarterly ARR volatility, and thereby a seemingly clearer linear sequential growth. While the operations remain unchanged, the new ARR definition better highlights how the underlying business works. We remain optimistic regarding the company's operating performance and prospects, as the company beat estimates once again.
Valuation
Our revised estimates imply that the company is trading at an EV/ARR multiple of ~2.5x and at a '24e-'25e EV/EBITDA of ~11x-9x. This is 25-30% below Nordic SaaS peers, which trade around 14x NTM EV/EBITDA.
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