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Fortnox

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 2019 2020e 2021e
Sales 532 676 823
Sales growth (%) 42,1 27 21,8
EBITDA 205 257 317
EBITDA margin (%) 38,5 38 38,5
EBIT adj 177 221 279
EBIT adj margin (%) 33,3 32,6 33,9
Pretax profit 172 221 279
EPS rep 2,26 2,89 3,66
EPS growth (%) 71,3 27,6 26,6
EPS adj 2,38 2,89 3,66
DPS 0,5 0,75 1
EV/EBITDA (x) 47,6 36,5 29,1
EV/EBIT adj (x) 55 42,5 33
P/E (x) 74,2 56,8 44,9
P/E adj (x) 70,5 56,8 44,9
EV/sales (x) 18,3 13,9 11,2
FCF yield (%) 1,4 1,7 2,2
Dividend yield (%) 0,3 0,5 0,6
Net IB debt/EBITDA -1,3 -1,6 -1,8
SEKm 2019 2020e 2021e
Sales 532 676 823
COGS 0 0 0
Gross profit 532 676 823
Other operating items -327 -419 -506
EBITDA 205 257 317
Depreciation on tangibles -1 -1 -1
Depreciation on intangibles -29 -35 -36
EBITA 174 221 279
Goodwill impairment charges 0 0 0
Other impairment and amortisation -2 0 0
EBIT 172 221 279
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 172 221 279
Tax -37 -49 -61
Net profit 135 172 218
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 135 172 218
EPS 2,26 2,89 3,66
EPS Adj 2,38 2,89 3,66
Total extraordinary items after tax -4,9 0 0
Tax rate (%) -21,6 -22 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 38,5 38 38,5
EBITA margin (%) 32,8 32,6 33,9
EBIT margin (%) 32,4 32,6 33,9
Pretax margin (%) 32,3 32,6 33,9
Net margin (%) 25,4 25,5 26,5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 42,1 27 21,8
EBITDA growth (%) 61,5 25,4 23,3
EBIT growth (%) 68,7 28,2 26,6
Net profit growth (%) 71,1 27,6 26,6
EPS growth (%) 71,3 27,6 26,6
Profitability 2019 2020 2021
ROE (%) 60,5 49 42,8
ROE Adj (%) 63,8 49 42,8
ROCE (%) 77,2 62,8 54,9
ROCE Adj(%) 80,4 62,8 54,9
ROIC (%) -1409,6 970 866,4
ROIC Adj (%) -1449,7 970 866,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj 210 257 317
EBITDA Adj margin (%) 39,4 38 38,5
EBITA Adj 179 221 279
EBITA Adj margin (%) 33,7 32,6 33,9
EBIT Adj 177 221 279
EBIT Adj margin (%) 33,3 32,6 33,9
Pretax profit Adj 179 221 279
Net profit Adj 142 172 218
Net profit to shareholders Adj 142 172 218
Net Adj margin (%) 26,7 25,5 26,5
SEKm 2019 2020e 2021e
EBITDA 205 257 317
Net financial items 0 0 0
Paid tax -37 -49 -61
Non-cash items 11 0 0
Cash flow before change in WC 179 208 255
Change in WC -19 6 9
Operating cash flow 185 214 265
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -46 -52 -52
Acquisitions and disposals 0 0 0
Free cash flow 138 163 213
Dividend paid -21 -30 -45
Share issues and buybacks 0 0 0
Other non cash items -48 0 0
Decrease in net IB debt 70 133 168
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 97 111 124
Tangible fixed assets 7 8 10
Other fixed assets 33 33 33
Fixed assets 137 152 167
Inventories 0 0 0
Receivables 148 187 230
Other current assets 0 0 0
Cash and liquid assets 267 400 568
Total assets 552 739 965
Shareholders equity 280 423 596
Minority 0 0 0
Total equity 280 423 596
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 272 317 369
Other current liabilities 0 0 0
Total liabilities and equity 552 739 965
Net IB debt -267 -400 -568
Net IB debt excl. pension debt -267 -400 -568
Capital invested 13 22 28
Working capital -124 -130 -139
EV breakdown 2019 2020 2021
Market cap. diluted (m) 10016 9778 9778
Net IB debt Adj -267 -400 -568
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 9749 9378 9210
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 111,6 104,7 96,6
Capital invested turnover (%) -5554,7 3809,6 3272
Capital employed turnover (%) 238,7 192,3 161,6
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 47,8 43,5 41,7
Working capital / sales (%) -25,1 -18,8 -16,3
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -95,2 -94,7 -95,3
Net debt / market cap (%) -3,5 -4,1 -5,8
Equity ratio (%) 50,8 57,2 61,7
Net IB debt adj. / equity (%) -95,2 -94,7 -95,3
Current ratio (%) 152,6 185,4 216,1
EBITDA / net interest (%) 193213,2 0 0
Net IB debt / EBITDA (%) -130,4 -155,9 -179,3
Interest cover (%) N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 60 60 60
Fully diluted shares Adj 60 60 60
EPS 2,26 2,89 3,66
Dividend per share Adj 0,5 0,8 1
EPS Adj 2,38 2,89 3,66
BVPS 4,7 7,09 9,99
BVPS Adj 3,08 5,23 7,91
Net IB debt / share -4,2 -6,4 -9,2
Share price 128,22 164 164
Market cap. (m) 7644 9778 9778
Valuation 2019 2020 2021
P/E 74,2 56,8 44,9
EV/sales 18,32 13,87 11,19
EV/EBITDA 47,6 36,5 29,1
EV/EBITA 55,9 42,5 33
EV/EBIT 56,6 42,5 33
Dividend yield (%) 0,3 0,5 0,6
FCF yield (%) 1,4 1,7 2,2
P/BVPS 35,71 23,13 16,41
P/BVPS Adj 54,5 31,38 20,72
P/E Adj 70,5 56,8 44,9
EV/EBITDA Adj 46,5 36,5 29,1
EV/EBITA Adj 54,3 42,5 33
EV/EBIT Adj 55 42,5 33
EV/cap. employed 34,8 22,2 15,5
Investment ratios 2019 2020 2021
Capex / sales 8,7 7,6 6,3
Capex / depreciation 152,9 142,7 139,4
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 47,9 46,4 41,9
Depreciation on intangibles / definite intangibles 30,3 31,6 29,1
Depreciation on tangibles / tangibles 14,3 12,5 12,3

Equity research

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Media

Fortnox - Interview with CEO Nils Carlsson (in Swedish)
Fortnox - Company presentation with CEO Nils Carlsson

Main shareholders - Fortnox

Main shareholders Share capital % Voting shares % Verified
Olof Hallrup 21.0 % 21.0 % 17 Mar 2020
Capital Group 7.3 % 7.3 % 31 Dec 2019
Swedbank Robur Fonder 5.5 % 5.5 % 31 Dec 2019
Avanza Pension 2.5 % 2.5 % 31 Dec 2019
Peder Klas-Åke Bengtsson 2.5 % 2.5 % 31 Dec 2019
Spiltan Fonder 2.5 % 2.5 % 31 Jan 2020
Miton Asset Management 2.3 % 2.3 % 31 Oct 2019
Keel Capital 1.9 % 1.9 % 30 Sep 2018
Wasatch Advisors Inc. 1.7 % 1.7 % 31 Dec 2019
We Enable Business In Sweden AB 1.5 % 1.5 % 31 Dec 2019
Source: Holdings by Modular Finance AB

Insider list - Fortnox

Name Quantity Code Date
Karl Olof Hallrup + 36 332 BUY 17 Mar 2020
Magnus Gudéhn BUY 10 Dec 2019
Anna Maria Frick - 1 850 SELL 26 Apr 2019
Anna Maria Frick - 156 SELL 25 Apr 2019
Anna Maria Frick - 2 000 SELL 25 Apr 2019
Andreas Kemi + 500 BUY 22 Mar 2019
Andreas Kemi + 500 BUY 21 Mar 2019
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

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