Last close As at 05/08/2026
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Research: TMT
With ever-increasing requirements and growing complexity in corporate reporting, EQS has a positive backdrop for its products and services in digital investor relations and compliance. Its main COCKPIT cloud-based platform is fully in place and the group’s peak investment phase is past, meaning that capex can now be focused on adding functionality. The main drive from this point is to add new clients and increase revenue per client, lifting annual recurring revenues and improving quality of earnings. Profitability and free cash-flow are on an improving trend.
EQS |
A platform for sustainable growth
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Software |
Deutsches Eigenkapitalforum 2020
12 October 2020 |
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EQS is a research client of Edison Investment Research Limited |
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With ever-increasing requirements and growing complexity in corporate reporting, EQS has a positive backdrop for its products and services in digital investor relations and compliance. Its main COCKPIT cloud-based platform is fully in place and the group’s peak investment phase is past, meaning that capex can now be focused on adding functionality. The main drive from this point is to add new clients and increase revenue per client, lifting annual recurring revenues and improving quality of earnings. Profitability and free cash-flow are on an improving trend.
Pandemic boosts corporate communications in H120
Having delivered a positive first quarter EBITDA for the first time since Q117, Q220 progress was stronger still, building from €0.8m to €2.2m. The need for companies to communicate, particularly in the early phases of lockdown, helped drive Investor Relations revenues ahead by 28% over H119 (adjusted for the ARIVA disposal in July 2019). News revenues were up by 26% and there was a 98% uplift in video and audio webcasts revenue versus H119. EQS also ran over 50 virtual AGMs in the period, permitted under new COVID-19-specific regulation. On the downside, there were only six IPOs and the sales cycle for new clients was elongated. Despite this, Compliance revenues were up 16% on the prior year (adjusted for ARIVA).
Building recurring revenues and controlling costs
The group added 151 new SaaS customers in H1 (Q1: +64, Q2: +87), in line with the expectations for the year of adding 300–350 (albeit at the lower end), and logging €2.9m of newly acquired annualised recurring revenue. There is a structural lag in these new revenues being reflected in the reported revenue numbers, which gives a degree of confidence to our FY21e forecasts. With the new phase of the group’s development, software development costs are reduced and there has been close control of spending due to COVID-19, with H120 operating expenses 2% lower than H119. Management could accelerate the margin expansion, but its ambitions are more centred on sustainable growth. This requires increased sales and marketing spend, as well as client account management.
Valuation: Starting to reflect growth
Having been marked down sharply with the market in March, EQS’s share price has since more than doubled as it has become clearer that the group is a potential beneficiary of the circumstances. The recent share split (four new shares for each one held) should improve liquidity in the stock. The strong forecast FY21 EBITDA progress puts the shares on a 17% discount to larger global peers on EV/EBITDA.
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Edison estimates
Source: Company accounts, Edison Investment Research |
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Research: Healthcare
RedHill’s COVID-19 programme is progressing well with two clinical trials ongoing, a Phase II study (n=40) in the US and an international Phase II/III study (n=270). If results are promising, RedHill plans to apply for emergency use authorisation as soon as possible. The commercial highlight this year was the acquisition of Movantik (for opioid-induced constipation) from AstraZeneca on 1 April 2020. Q220 was the first full quarter of RedHill promoting Movantik with booked sales of $20.9m (AstraZeneca’s reported sales of $96m in FY19). RedHill is also ramping up the promotion of its other GI drugs, Talicia for H. pylori eradication and Aemcolo for travellers’ diarrhoea. Our valuation of RedHill is $601m or $16.2 per ADS.