Vitec: Estimates down 2-5% on higher costs - ABG

Organic growth remains in healthy high-single digits Salaries and travel costs reduce adj. EBITA by 2-5% Share at 28.3x 2023e EV/adj. EBITA Costs surprised negatively in Q2
Vitec continued its solid organic growth trend in Q2, with recurring revenue growing 8%, although services revenue fell short of expectations, putting net sales in total -1% vs us and FactSet consensus. On costs, other external costs surprised us negatively, putting total opex 4% above our expectation. We expected to see higher salaries, but in combination with pent-up demand for travelling and conferences in the quarter, the higher costs caused a 16% miss on adj. EBITA vs us and a 23% miss vs FactSet consensus (a thin consensus). Adj. EBITA fell 2% y-o-y. As Vitec does not report on a segment basis, it is difficult to know if the cost miss relates to a specific subsidiary, group costs or a general trend overall. With recent acquisitions having a higher margin than Vitec itself, we do not feel too concerned about the margin trend ahead.