Verve: Strategic acquisitions support valuation

We reiterate our Buy recommendation and raise our target price to SEK 36 (was SEK 32) following Verve’s acquisitions of Acardo Group in Germany and Captify in the UK. We consider the acquired valuation levels moderate and view the acquisitions as a good strategic fit, enhancing Verve’s European footprint, expanding its demand-side, and strengthening its data capabilities. Together, they improve Verve’s ability to deliver measurable outcomes across the advertising value chain and, in our view, underpin the company’s long-term growth story.

Strengthening the demand side through acquisitions

Management expects synergies to be primarily cost-driven, especially at Captify, where overlapping functions (e.g., admin roles) will result in layoffs alongside office rationalization. Acardo will also undergo cost reductions, albeit to a smaller extent. On the revenue side, synergies are expected from rolling out Acardo’s coupon and cashback solutions across Verve’s demand-side products and combining Captify’s intent data and agency relationships with Verve’s in-app inventory. Importantly, no major technical integration is required; with Captify’s data assets remaining standalone but serving as an additional stream feeding into Verve’s platform, while Acardo’s existing setup allows for easy integration. On a combined basis, Acardo and Captify diversify Verve’s revenue mix both geographically and by vertical. Acardo strengthens Verve in European retail and CPG activation, while Captify enhances its data capabilities in search intent and demand-side scale with agencies and advertisers in the UK and US. Another key rationale behind the acquisitions is to fast-track Verve’s sales force expansion, especially with DSP specialists who already bring strong agency and advertiser relationships. Building such a team organically would take much longer, but through Captify’s ~30 salespeople in the US, UK, and Australia, and Acardo’s experienced German sales team, Verve gains immediate access to established talent and networks, accelerating its 2025-2026 plan to materially grow its sales force.

We are adding Acardo and Captify to our estimates

Despite these acquisitions, Verve kept its 2025 guidance unchanged, as it does not include the impact from M&A. While these acquisitions have limited impact on reported 2025 results due to consolidation timing, they will add more meaningfully to Verve’s financials on a full-year basis. While we maintain our pre-acquisition estimates for Verve largely intact, the consolidation of Acardo and Captify into our forecasts lifts our 2025e revenue and adjusted EBIT by 3% and 1%, respectively, and our 2026e revenue and adjusted EBIT by 11% and 10%. The acquisitions will initially weigh slightly on group margins due to Captify’s lower profitability, but we expect these effects to mitigate over time as synergies unfold from 2026, supported by, e.g., cross-selling, organizational streamlining, and shared overhead.

Acquisitions supportive for the valuation, but near-term risks persist

We see the acquisitions as supportive for Verve’s valuation by strengthening its data capabilities and product suite, accelerating its geographical expansion, and expanding its reach on the DSP side, without a large impact on the balance sheet. Based on our updated estimates, Verve trades at an adjusted EV/EBIT of 5x and an EV/FCFF (excl. earn-outs) of 7x for 2026e, which are very low multiples in absolute terms, in relation to peers, and relative to our acceptable valuation range. As such, we see upside potential in the valuation multiples, and our DCF model, which captures Verve’s long-term value creation, points to a potential upside with a fair value estimate of SEK 45 per share (was SEK 41). However, given the short-term risks highlighted by the August profit warning (due to platform integration issues), which also have impacted investor trust, we set our target price below the fair value. That said, if management succeeds in restoring confidence and near-term uncertainties ease, we see further upside towards our estimated fair value range.