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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 532 706 868
Sales growth (%) 42,1 32,6 23
EBITDA 205 311 376
EBITDA margin (%) 38,5 44 43,4
EBIT adj 177 252 317
EBIT adj margin (%) 33,3 35,7 36,5
Pretax profit 172 249 313
EPS rep 2,26 3,25 4,09
EPS growth (%) 70,8 43,9 25,8
EPS adj 2,39 3,25 4,09
DPS 0,5 0,75 1
EV/EBITDA (x) 47,7 51,5 42
EV/EBIT adj (x) 55,2 63,5 50
P/E (x) 74,4 83,8 66,6
P/E adj (x) 70,2 83,8 66,6
EV/sales (x) 18,4 22,7 18,2
FCF yield (%) 1,4 1,2 1,5
Dividend yield (%) 0,3 0,3 0,4
Net IB debt/EBITDA -1,3 -0,8 -1,2
SEKm 2019 2020e 2021e
Sales 532 706 868
COGS 0 0 0
Gross profit 532 706 868
Other operating items -327 -395 -491
EBITDA 205 311 376
Depreciation on tangibles -2 -1 -1
Depreciation on intangibles -28 -46 -47
EBITA 175 252 317
Goodwill impairment charges 0 0 0
Other impairment and amortisation -3 0 0
EBIT 172 252 317
Other financial items 0 0 0
Net financial items 0 -4 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 172 249 313
Tax -37 -55 -69
Net profit 135 194 244
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 135 194 244
EPS 2,26 3,25 4,09
EPS Adj 2,39 3,25 4,09
Total extraordinary items after tax -4,9 0 0
Tax rate (%) -21,6 -21,9 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 38,5 44 43,4
EBITA margin (%) 33 35,7 36,5
EBIT margin (%) 32,4 35,7 36,5
Pretax margin (%) 32,3 35,2 36,1
Net margin (%) 25,4 27,5 28,2
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 42,1 32,6 23
EBITDA growth (%) 61,5 51,7 21,1
EBIT growth (%) 68,7 46,5 25,6
Net profit growth (%) 71,1 43,9 25,8
EPS growth (%) 70,8 43,9 25,8
Profitability 2019 2020 2021
ROE (%) 60,5 53,5 44,9
ROE Adj (%) 64,2 53,5 44,9
ROCE (%) 69,6 56,1 44
ROCE Adj(%) 72,8 56,1 44
ROIC (%) 291,3 137,2 102,4
ROIC Adj (%) 299,6 137,2 102,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj 210 311 376
EBITDA Adj margin (%) 39,4 44 43,4
EBITA Adj 180 252 317
EBITA Adj margin (%) 33,9 35,7 36,5
EBIT Adj 177 252 317
EBIT Adj margin (%) 33,3 35,7 36,5
Pretax profit Adj 180 249 313
Net profit Adj 143 194 244
Net profit to shareholders Adj 143 194 244
Net Adj margin (%) 26,9 27,5 28,2
SEKm 2019 2020e 2021e
EBITDA 205 311 376
Net financial items 0 -4 -4
Paid tax -37 -55 -69
Non-cash items 11 0 0
Cash flow before change in WC 179 253 304
Change in WC 6 2 -7
Operating cash flow 185 254 296
CAPEX tangible fixed assets -3 -2 -3
CAPEX intangible fixed assets -43 -58 -49
Acquisitions and disposals 0 0 0
Free cash flow 138 195 244
Dividend paid -21 -30 -45
Share issues and buybacks 0 0 0
Other non cash items -14 -174 0
Decrease in net IB debt 119 -20 189
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 97 108 110
Definite intangible assets 0 0 0
Tangible fixed assets 7 8 9
Other fixed assets 34 34 34
Fixed assets 137 324 327
Inventories 0 0 0
Receivables 116 156 197
Other current assets 32 46 61
Cash and liquid assets 267 422 610
Total assets 552 947 1196
Shareholders equity 280 445 644
Minority 0 0 0
Total equity 280 445 644
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 38 38 38
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 19 28 37
Other current liabilities 215 262 302
Total liabilities and equity 552 947 1196
Net IB debt -267 -247 -435
Net IB debt excl. pension debt -267 -247 -435
Capital invested 51 236 247
Working capital -86 -88 -80
EV breakdown 2019 2020 2021
Market cap. diluted (m) 10044 16262 16262
Net IB debt Adj -267 -247 -435
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 9777 16015 15826
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 111,5 94,1 81
Capital invested turnover (%) 1148,1 491,8 359,7
Capital employed turnover (%) 215 156,8 120,6
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 26,4 26,9 26,9
Payables / sales (%) 3,2 3,3 3,7
Working capital / sales (%) -14,6 -12,3 -9,7
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -95,2 -55,5 -67,6
Net debt / market cap (%) -3,5 -1,5 -2,7
Equity ratio (%) 50,8 47 53,9
Net IB debt adj. / equity (%) -95,2 -55,5 -67,6
Current ratio (%) 177,2 202,1 242,9
EBITDA / net interest (%) 193214,2 8837,3 10705,5
Net IB debt / EBITDA (%) -130,4 -79,4 -115,6
Interest cover (%) 165424,5 7173,8 9007,9
SEKm 2019 2020e 2021e
Shares outstanding adj. 60 60 60
Fully diluted shares Adj 60 60 60
EPS 2,26 3,25 4,09
Dividend per share Adj 0,5 0,8 1
EPS Adj 2,39 3,25 4,09
BVPS 4,69 7,44 10,77
BVPS Adj 4,69 7,44 10,77
Net IB debt / share -4,5 -4,1 -7,3
Share price 128,22 272 272
Market cap. (m) 7665 16262 16262
Valuation 2019 2020 2021
P/E 74,4 83,8 66,6
EV/sales 18,37 22,7 18,24
EV/EBITDA 47,7 51,5 42
EV/EBITA 55,8 63,5 50
EV/EBIT 56,8 63,5 50
Dividend yield (%) 0,3 0,3 0,4
FCF yield (%) 1,4 1,2 1,5
P/BVPS 35,81 36,57 25,24
P/BVPS Adj 35,81 36,57 25,24
P/E Adj 70,2 83,8 66,6
EV/EBITDA Adj 46,6 51,5 42
EV/EBITA Adj 54,2 63,5 50
EV/EBIT Adj 55,2 63,5 50
EV/cap. employed 34,9 25,8 19,3
Investment ratios 2019 2020 2021
Capex / sales 8,7 8,4 6
Capex / depreciation 157,2 125,6 107
Capex tangibles / tangible fixed assets 45,9 21,3 31,9
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 26,8 13,2 12,8

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 20.9 % 20.9 % 30 Jun 2020
Capital Group 8.0 % 8.0 % 30 Jun 2020
Swedbank Robur Fonder 5.6 % 5.6 % 30 Jun 2020
Groupama Asset Management 2.7 % 2.7 % 31 Mar 2020
Miton Asset Management 2.5 % 2.5 % 30 Apr 2020
Peder Klas-Åke Bengtsson 2.3 % 2.3 % 30 Jun 2020
Spiltan Fonder 2.1 % 2.1 % 31 Jul 2020
Avanza Pension 2.0 % 2.0 % 30 Jun 2020
Kayne Anderson Rudnick 1.7 % 1.7 % 31 Jul 2020
Norges Bank 1.7 % 1.7 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Fortnox

Name Quantity Code Date
Joachim Lindow - 14 500 SELL 29 May 2020
Joachim Lindow - 1 500 SELL 28 May 2020
Jesper Svensson - 16 500 BODEL 20 May 2020
Joachim Lindow - 10 000 SELL 15 May 2020
Jesper Svensson - 190 SELL 14 May 2020
Joachim Lindow - 2 000 SELL 14 May 2020
Jesper Svensson - 3 810 SELL 14 May 2020
Jesper Svensson - 9 000 SELL 13 May 2020
Joachim Lindow - 17 000 SELL 13 May 2020
Jesper Svensson - 4 000 SELL 13 May 2020

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