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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 374 504 624
Sales growth (%) 37,5 34,6 23,8
EBITDA 127 188 243
EBITDA margin (%) 33,9 37,4 39
EBIT adj 105 162 217
EBIT adj margin (%) 27,9 32,2 34,9
Pretax profit 102 160 217
EPS rep 1,32 2,1 2,85
EPS growth (%) 48,1 58,6 35,8
EPS adj 1,36 2,13 2,85
DPS 0,35 0,5 0,65
EV/EBITDA (x) 29,8 37,8 28,7
EV/EBIT adj (x) 36,2 43,9 32,1
P/E (x) 50,5 59,2 43,6
P/E adj (x) 49,1 58,1 43,6
EV/sales (x) 10,1 14,1 11,2
FCF yield (%) 1,8 1,4 2,1
Dividend yield (%) 0,5 0,4 0,5
Net IB debt/EBITDA -1,6 -1,5 -1,7
SEKm 2018 2019e 2020e
Sales 374 504 624
COGS 0 0 0
Gross profit 374 504 624
Other operating items -248 -316 -380
EBITDA 127 188 243
Depreciation on tangibles 0 0 0
Depreciation on intangibles -25 -28 -26
EBITA 102 160 217
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 102 160 217
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 102 160 217
Tax -23 -35 -48
Net profit 79 125 170
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 79 125 170
EPS 1,32 2,1 2,85
EPS Adj 1,36 2,13 2,85
Total extraordinary items after tax -2,4 -2,3 0
Tax rate (%) -22,7 -21,9 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 33,9 37,4 39
EBITA margin (%) 27,3 31,7 34,9
EBIT margin (%) 27,3 31,7 34,9
Pretax margin (%) 27,2 31,7 34,9
Net margin (%) 21,1 24,8 27,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 37,5 34,6 23,8
EBITDA growth (%) 49,1 48,5 29,3
EBIT growth (%) 53,3 56,7 35,9
Net profit growth (%) 49,6 58,4 35,8
EPS growth (%) 48,1 58,6 35,8
Profitability 2018 2019 2020
ROE (%) 59,7 60,3 53,2
ROE Adj (%) 61,5 61,5 53,2
ROCE (%) 77,1 77,3 68,2
ROCE Adj(%) 79 78,4 68,2
ROIC (%) -332,3 -420,6 -672,5
ROIC Adj (%) -340,1 -426,6 -672,5
Adj earnings numbers 2018 2019 2020
EBITDA Adj 129 191 243
EBITDA Adj margin (%) 34,5 37,8 39
EBITA Adj 105 162 217
EBITA Adj margin (%) 27,9 32,2 34,9
EBIT Adj 105 162 217
EBIT Adj margin (%) 27,9 32,2 34,9
Pretax profit Adj 104 162 217
Net profit Adj 81 127 170
Net profit to shareholders Adj 81 127 170
Net Adj margin (%) 21,7 25,3 27,2
SEKm 2018 2019e 2020e
EBITDA 127 188 243
Net financial items 0 0 0
Paid tax -23 -35 -48
Non-cash items 0 0 0
Cash flow before change in WC 104 153 196
Change in WC -46 10 9
Operating cash flow 104 148 196
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -34 -42 -40
Acquisitions and disposals 0 0 0
Free cash flow 70 107 156
Dividend paid -15 -21 -30
Share issues and buybacks 0 0 0
Other non cash items 24 -7 9
Decrease in net IB debt 79 79 136
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 84 98 112
Tangible fixed assets 6 5 5
Other fixed assets 21 22 22
Fixed assets 111 125 139
Inventories 0 0 0
Receivables 94 139 175
Other current assets 0 0 0
Cash and liquid assets 198 276 412
Total assets 402 540 725
Shareholders equity 165 249 389
Minority 0 0 0
Total equity 165 249 389
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 237 292 337
Other current liabilities 0 0 0
Total liabilities and equity 157 348 402
Net IB debt -198 -276 -412
Net IB debt excl. pension debt -198 -276 -412
Capital invested -32 -27 -23
Working capital -143 -153 -162
EV breakdown 2018 2019 2020
Market cap. diluted (m) 3983 7393 7393
Net IB debt Adj -198 -276 -412
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 7117 6981
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 99,8 107 98,6
Capital invested turnover (%) -1575,3 -1696,1 -2472,8
Capital employed turnover (%) 283,2 243,4 195,7
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 64,8 52,4 50,4
Working capital / sales (%) -44,4 -29,3 -25,2
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -119,5 -111 -106
Net debt / market cap (%) -5,1 -3,7 -5,6
Equity ratio (%) 41,1 46 53,6
Net IB debt adj. / equity (%) -119,5 -111 -106
Current ratio (%) 123,1 142,3 174,1
EBITDA / net interest (%) 110288,7 0 0
Net IB debt / EBITDA (%) -155,7 -146,6 -169,1
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 1,32 2,1 2,85
Dividend per share Adj 0,3 0,5 0,7
EPS Adj 1,36 2,13 2,85
BVPS 2,77 4,17 6,52
BVPS Adj 1,36 2,53 4,65
Net IB debt / share -3 -4,3 -6,6
Share price 64,41 124 124
Market cap. (m) 3840 7393 7393
Valuation 2018 2019 2020
P/E 50,5 59,2 43,6
EV/sales 10,11 14,12 11,19
EV/EBITDA 29,8 37,8 28,7
EV/EBITA 37,1 44,5 32,1
EV/EBIT 37,1 44,5 32,1
Dividend yield (%) 0,5 0,4 0,5
FCF yield (%) 1,8 1,4 2,1
P/BVPS 24,09 29,71 19,03
P/BVPS Adj 49,12 49,04 26,69
P/E Adj 49,1 58,1 43,6
EV/EBITDA Adj 29,3 37,3 28,7
EV/EBITA Adj 36,2 43,9 32,1
EV/EBIT Adj 36,2 43,9 32,1
EV/cap. employed 22,9 28,6 18
Investment ratios 2018 2019 2020
Capex / sales 9 8,3 6,3
Capex / depreciation 136,7 147 151,9
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 40,1 42,5 35,4
Depreciation on intangibles / definite intangibles 29,3 28,9 23,3
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 Mar 2019
Swedbank Robur Fonder 7.0 % 7.0 % 30 Apr 2019
Spiltan Fonder 3.4 % 3.4 % 31 May 2019
Peder Klas-Åke Bengtsson 2.8 % 2.8 % 31 Mar 2019
Norges Bank 2.8 % 2.8 % 31 Mar 2019
Avanza Pension 2.6 % 2.6 % 31 Mar 2019
Wasatch Advisors Inc. 2.1 % 2.1 % 31 Mar 2019
SEB Fonder 2.1 % 2.1 % 30 Apr 2019
Keel Capital 1.9 % 1.9 % 30 Sep 2018
We Enable Business In Sweden AB 1.8 % 1.8 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

Fortnox

Name Quantity Code Date
Anna Maria Frick - 1 850 SELL 26 Apr 2019
Anna Maria Frick - 2 000 SELL 25 Apr 2019
Anna Maria Frick - 156 SELL 25 Apr 2019
Andreas Kemi + 500 BUY 22 Mar 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
Andreas Kemi + 2 000 BUY 4 May 2018

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