EQS Group

DB: EQS

Market Cap€310.1m

Last Close €36.6

EQS is a leading international provider of regulatory technology in the fields of corporate compliance and investor relations. Its products enable corporate clients to fulfil complex national and international disclosure obligations, minimise risks and communicate transparently with stakeholders.

Investment summary

Q3 figures showed the boost given to EQS’s whistleblowing offering by the June acquisition of Business Keeper, lifting the number of whistleblowing customers to c 1,500. Implementation of the EU Directive is delayed in a number of territories, but the direction of travel is set and the timetable slippage should only be one or two quarters. Additional sales and marketing costs were already factored into our estimates (in line with guidance for FY21), which are unchanged. Management is targeting group revenue of c €130m by FY25, with an EBITDA margin of 30%, with Compliance revenues comprising c 75% of group. Achieving these ambitious targets requires EQS to exploit the full potential of recent acquisitions and to take maximum advantage of the current window of opportunity.

Y/E Dec	Revenue (€m)	EBITDA (€m)	PBT (€m)	EPS (fd) (c)	P/E (x)	P/CF (x)
2019A	35.4	2.6	(0.3)	(7.41)	N/A	110.1
2020A	37.6	4.8	0.4	4.12	888.3	45.5
2021E	49.4	2.8	(2.7)	(21.47)	N/A	164.1
2022E	70.0	7.5	0.9	7.23	506.2	71.3

Industry outlook

While this EU whistleblowing regulation is now active, the deadline for implementation in national laws of December 2021 will not be met by most member states. However, the delays are not expected to be significant, with the necessary legislation in the key German market likely to be brought forward once the new administration is established. We expect the benefit to start to accrue more strongly through FY22 and the additional sales cost to continue for a few months more.

Last updated on 21/01/2022