Translation: Original comment published in Finnish on 2/7/2023 at 5:30 am EET.
Innofactor will publish its Q4 report on Thursday at 9:00 am EET. We expect Innofactor's net sales to have grown strongly and profitability to have improved from a weak comparison period driven by billable utilization. We also expect that the company's dividend proposal will be in line with the dividend policy, i.e. about half of the profit. Due to general market uncertainty, interest in the report is more focused on market comments than usual. We do, however, expect that the guidance will reflect an increase in net sales and EBITDA in 2023.
We expect that strong growth has continued supported by the acquisition
We estimate that Innofactor's net sales increased by 20% to EUR 21.0 million in Q4 driven by organic growth (11 percentage points) and supported by the Invencoacquisition. In addition, we monitor the development of materials and services and net sales per employee, which indicate whether organic growth was driven by subcontracting or own billable utilization. This, in turn, has a significant impact on the profitability trend. In Q2, the company had project challenges, which it got under control in Q3 and we believe they should not have a negative effect in Q4.
We expect profitability to improve from a weak comparison period
We estimate that EBITDA was EUR 2.6 million or 12.2% of net sales in Q4 (Q4’21: 9.4%). Thus, we expect EBITDA to have grown by 55% from a weak comparison period driven by billable utilization. Our estimates assume that project management has remained in order and that part of organic growth is supported by lower margin subcontracting. We estimate that EBIT has increased to EUR 1.8 million in Q4 (Q4’21: 0.5 MEUR) supported by lower depreciation. There was a EUR 0.5 million non-recurring depreciation related to the Arc business in the comparison period. We expect EPS to be EUR 0.04 in Q4 and EUR 0.09 in the full year 2022. In addition, we expect the company to propose a dividend of EUR 0.05 per share, which is in line with its dividend policy. In 2021, the company distributed a capital return of EUR 0.08 per share as a result of the acquisition.
In connection with the Q2 update we raised a profit warning risk but the good performance and comments in Q3 lowered this risk. Now the year has progressed so far that we believe the profit warning should already have been issued. The company’s guidance is that adjusted EBITDA will grow in 2022 (estimate 7.8 MEUR vs. 7.5 MEUR in 2021).
Our estimate indicates that net sales and EBITDA will grow also in 2023
We estimate that Innofactor's net sales will grow by 7% driven by the Invenco acquisition and EBITDA will be EUR 8.2 million. Thus, we expect the company’s guidance will again be that net sales and EBITDA will grow from the previous year (2022e: 71.6 MEUR and 7.8 MEUR).
With the economic situation, uncertainty about customer demand is elevated in 2023, even though the sector as a whole survived the 2022 uncertainty nicely. Thus, we are more curious than usual about market comments.
Innofactor
Innofactor är verksamt inom IT-sektorn. Bolaget är inriktade mot att erbjuda tjänster inom digitalisering och molnbaserade lösningar. Exempel på affärsområden inkluderar försäljning, marknad och kommunikation, business intelligence, samt CRM (Customer Relationship Management). Störst närvaro återfinns inom den nordiska marknaden och kunderna består av små- och medelstora företagskunder. Huvudkontoret ligger i Esbo.
Read more on company pageKey Estimate Figures2022-10-25
2021 | 22e | 23e | |
---|---|---|---|
Omsättning | 66,4 | 71,6 | 76,8 |
tillväxt-% | 0,30 % | 7,87 % | 7,26 % |
EBIT (adj.) | 4,4 | 4,8 | 5,1 |
EBIT-% | 6,64 % | 6,64 % | 6,67 % |
EPS (adj.) | 0,07 | 0,09 | 0,10 |
Utdelning | 0,08 | 0,05 | 0,06 |
P/E (just.) | 23,23 | 14,23 | 12,64 |
EV/EBITDA | 6,26 | 7,42 | 6,65 |