* Adj. EBITDA-capex SEK 2.3m vs. ABGSCe 3.2m
* The miss was entirely ad hoc-driven
* Trading at 5x '27e adj. EBITDA-capex
Material earnings improvement y-o-y, but below estimates
The Q3 report was a bit softer than expected, and came in SEK 0.9m below our expectations on adj. EBITDA-capex, at SEK 2.3m (vs. 0.4m Q3'25). The adj. EBITDA-capex margin was below estimates, but improved y-o-y from 0.9% to 4.8%. Sales were 3m below expectations at SEK 48m (-6% vs. ABGSCe 51m). Local currency growth was -1.7% y-o-y. Subscription revenue growth was strong at 15% y-o-y (in line with ABGSCe at SEK 35m), and we note that the top-line miss was entirely caused by ad hoc revenues. The gross margin increased to 76% (in line with ABGSCe). Gross profit was SEK 2.8m below our ests., so lower costs absorbed roughly two thirds of the shortfall; personnel costs fell 7% y-o-y and other external costs 13%.
Ad-hoc growth will be the focus for Q4
ARR ended at SEK 136m (-3% vs ABGSCe 140m), +10% y-o-y but down SEK 5.1m from Q2. ARR bookings were SEK 1.6m (vs ABGSCe 3.0m). NRR was 96% (vs ABGSCe 99%), while churn of 1.6% was below our 2.0%, so lower spend among existing clients explains most of the ARR shortfall. Management points to a small number of clients, partly in legacy CX. Total sales bookings fell 52.5% y-o-y, entirely on ad hoc, which matters as Q4 is seasonally the largest ad hoc quarter (SEK 27m in Q4'25, almost half of Q4 sales). Management says restructuring is largely complete, and the focus is now commercial: improving sales execution and conversion, deepening client relationships and building ARR through the Trinity offer. While earnings did not reach our estimates, we are encouraged by the improvement y-o-y despite negative organic growth.
Trading at 5x '27e EBITDA adj.
The share has been soft into numbers, trading down ~30% in the last 90 days. On our unrevised estimates, Nepa is currently trading at 5x '27e EV/EBITDA adj. Our initial understanding of the report as well as a mechanical calculation suggest that consensus estimates for '26e-'28e sales could be negative but minor, with revisions to '27e-'28e adj. EBITDA estimates likely negative within a mid-single-digit range. We expect more details on the Q3 report during the conference call scheduled at 10:00 CEST, link to the call here.