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Fortnox

Web-based administration software

Fortnox develops and sells software in the administration segment for small and medium sized enterprises. The company offers software for bookkeeping, CRM, archiving, invoicing, orders, time reports, webshops and client management. Through its cloud-based solution, customers can access the software and their data from any place at any time. Revenues are generated through a subscription-based model, where customers pay per system and per active user. Due to small variable costs whenever a new customer is acquired, the business model is highly scalable, giving Fortnox the potential to reach higher margins.

Many small companies in Sweden have not yet utilized the digital transformation. While Fortnox has historically had rapid growth, there is still a domestic market to grow in. Also, we see that the company has a strong competitive offering that eventually could be expanded to other markets. Two other segments that Fortnox has recently made investments in are finance and insurance. We find these segments to be interesting areas in which to expand the current customer base. This could pay off in the future, both in terms of profitability and having a fully covered offering - i.e. stickiness.

We see two major risks for Fortnox. 1) Increased competition due to a highly profitable, growing market. This could affect prices, customer growth, as well as the current customer base. 2) Expansion into the new verticals might not pay off. There is a risk that Fortnox’s investments into finance and insurance may not pay off as anticipated, mainly due to expansion outside the company’s key area.

SEKm 2018 2019e 2020e
Sales 374 490 604
Sales growth (%) 37,5 30,9 23,2
EBITDA 124 178 235
EBITDA margin (%) 33,2 36,4 38,9
EBIT adj 102 154 210
EBIT adj margin (%) 27,3 31,4 34,8
Pretax profit 100 154 210
EPS rep 1,28 2,01 2,74
EPS growth (%) 55 56,9 36,5
EPS adj 1,32 2,01 2,74
DPS 0,35 0,5 0,65
EV/EBITDA (x) 30,4 28,8 21,3
EV/EBIT adj (x) 37,1 33,4 23,8
P/E (x) 52,1 45,5 33,3
P/E adj (x) 50,5 45,5 33,3
EV/sales (x) 10,1 10,5 8,3
FCF yield (%) 1,8 2 2,8
Dividend yield (%) 0,5 0,5 0,7
Net IB debt/EBITDA -1,6 -1,8 -1,9
SEKm 2018 2019e 2020e
Sales 374 490 604
COGS 0 0 0
Gross profit 374 490 604
Other operating items -250 -312 -369
EBITDA 124 178 235
Depreciation on tangibles 0 0 0
Depreciation on intangibles -25 -24 -25
EBITA 100 154 210
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 100 154 210
Other financial items 0 0 0
Net financial items 0 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 100 154 210
Tax -23 -34 -46
Net profit 76 120 164
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 76 120 164
EPS 1,28 2,01 2,74
EPS Adj 1,32 2,01 2,74
Total extraordinary items after tax -2,4 0 0
Tax rate (%) -23,2 -22 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 33,2 36,4 38,9
EBITA margin (%) 26,6 31,4 34,8
EBIT margin (%) 26,6 31,4 34,8
Pretax margin (%) 26,6 31,4 34,8
Net margin (%) 20,4 24,5 27,1
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 37,5 30,9 23,2
EBITDA growth (%) 53,3 43,2 31,8
EBIT growth (%) 59 54,2 36,5
Net profit growth (%) 56,6 56,7 36,5
EPS growth (%) 55 56,9 36,5
Profitability 2018 2019 2020
ROE (%) 57,9 53,2 46,5
ROE Adj (%) 59,7 53,2 46,5
ROCE (%) -419 -476,8 -621,2
ROCE Adj(%) -429,1 -476,8 -621,2
ROIC (%) -94,9 -225,7 -299,4
ROIC Adj (%) -97,2 -225,7 -299,4
Adj earnings numbers 2018 2019 2020
EBITDA Adj 127 178 235
EBITDA Adj margin (%) 33,9 36,4 38,9
EBITA Adj 102 154 210
EBITA Adj margin (%) 27,3 31,4 34,8
EBIT Adj 102 154 210
EBIT Adj margin (%) 27,3 31,4 34,8
Pretax profit Adj 102 154 210
Net profit Adj 79 120 164
Net profit to shareholders Adj 79 120 164
Net Adj margin (%) 21,1 24,5 27,1
SEKm 2018 2019e 2020e
EBITDA 124 178 235
Net financial items 0 0 0
Paid tax -23 -34 -46
Non-cash items 0 0 0
Cash flow before change in WC 101 144 189
Change in WC -46 12 14
Operating cash flow 104 144 189
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -34 -36 -36
Acquisitions and disposals 0 0 0
Free cash flow 70 108 153
Dividend paid -15 -21 -30
Share issues and buybacks 0 0 0
Other non cash items 24 33 14
Decrease in net IB debt 79 120 137
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 84 97 108
Tangible fixed assets 6 5 5
Other fixed assets 21 21 21
Fixed assets 111 123 134
Inventories 0 0 0
Receivables 94 121 151
Other current assets 0 0 0
Cash and liquid assets 198 318 454
Total assets 402 561 739
Shareholders equity 165 285 419
Minority 0 0 0
Total equity 165 285 419
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 237 276 320
Other current liabilities 0 0 0
Total liabilities and equity 157 348 402
Net IB debt -198 -318 -454
Net IB debt excl. pension debt -198 -318 -454
Capital invested -53 -53 -56
Working capital -143 -155 -169
EV breakdown 2018 2019 2020
Market cap. diluted (m) 3983 5449 5449
Net IB debt Adj -198 -318 -454
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 3785 5132 4995
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 99,8 101,7 92,8
Capital invested turnover (%) -463,9 -922,2 -1104,3
Capital employed turnover (%) -1575,3 -1519,8 -1787,5
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 64,8 52,3 49,4
Working capital / sales (%) -44,4 -30,4 -26,8
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -119,5 -111,3 -108,4
Net debt / market cap (%) -5,1 -5,8 -8,3
Equity ratio (%) 41,1 50,8 56,7
Net IB debt adj. / equity (%) -119,5 -111,3 -108,4
Current ratio (%) 123,1 158,9 189,2
EBITDA / net interest (%) 108201,7 0 0
Net IB debt / EBITDA (%) -158,7 -178,2 -193,5
Interest cover (%) N/A N/A N/A
SEKm 2018 2019e 2020e
Shares outstanding adj. 60 60 60
Fully diluted shares Adj 60 60 60
EPS 1,28 2,01 2,74
Dividend per share Adj 0,3 0,5 0,7
EPS Adj 1,32 2,01 2,74
BVPS 2,77 4,78 7,03
BVPS Adj 1,36 3,16 5,21
Net IB debt / share -3 -5 -7,3
Share price 64,41 91,4 91,4
Market cap. (m) 3840 5449 5449
Valuation 2018 2019 2020
P/E 52,1 45,5 33,3
EV/sales 10,11 10,48 8,28
EV/EBITDA 30,4 28,8 21,3
EV/EBITA 38 33,4 23,8
EV/EBIT 38 33,4 23,8
Dividend yield (%) 0,5 0,5 0,7
FCF yield (%) 1,8 2 2,8
P/BVPS 24,09 19,1 13
P/BVPS Adj 49,12 28,92 17,54
P/E Adj 50,5 45,5 33,3
EV/EBITDA Adj 29,8 28,8 21,3
EV/EBITA Adj 37,1 33,4 23,8
EV/EBIT Adj 37,1 33,4 23,8
EV/cap. employed -117,6 -158,9 -141,7
Investment ratios 2018 2019 2020
Capex / sales 9 7,4 6
Capex / depreciation 136,7 148,9 144
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 40,1 37,6 33,2
Depreciation on intangibles / definite intangibles 29,3 25,3 23,1
Depreciation on tangibles / tangibles 0 0 0

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Main shareholders

Fortnox

Main shareholders Share capital % Voting shares % Verified
Olof Hallrup 21.0 % 21.0 % 31 Dec 2018
Swedbank Robur Fonder 7.0 % 7.0 % 31 Jan 2019
Spiltan Fonder 3.8 % 3.8 % 28 Feb 2019
Peder Klas-Åke Bengtsson 2.8 % 2.8 % 31 Dec 2018
Norges Bank 2.8 % 2.8 % 31 Dec 2018
Avanza Pension 2.6 % 2.6 % 31 Dec 2018
Keel Capital 2.5 % 2.5 % 31 Dec 2018
Wasatch Advisors Inc. 2.3 % 2.3 % 31 Dec 2018
SEB Fonder 2.2 % 2.2 % 31 Jan 2019
Nordnet Pensionsförsäkring 1.9 % 1.9 % 31 Dec 2018
Source: Holdings by Modular Finance AB

Insider list

Fortnox

Name Quantity Code Date
Sofia Frick - 330 SELL 9 Nov 2018
Kerstin Elisabeth Sundberg + 2 000 BUY 20 Jun 2018
Roger Hartelius Nilsson + 50 000 BUY 1 Jun 2018
Andreas Kemi + 2 000 BUY 4 May 2018
Andreas Kemi + 1 000 BUY 3 May 2018
Andreas Kemi + 2 000 BUY 26 Apr 2018
Sara Nylén - 13 820 SELL 20 Mar 2018
Sara Nylén - 11 180 SELL 19 Mar 2018
Sara Nylén - 25 000 Redemp 2 Mar 2018
Sara Nylén + 25 000 Redemp 2 Mar 2018

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