Last close As at 05/08/2026
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Research: TMT
Esker reported Q222 revenue growth of 19% y-o-y (12% in constant currency), driven by 23% growth in SaaS revenues. Bookings intake was strong, with the annual recurring value (ARR) of bookings up 25% y-o-y. Despite the worsening economic environment, management maintained its outlook for FY22. A diverse customer base, the high level of recurring revenue, inflation-linked contracts and a strong balance sheet should mitigate the impact of rising inflation and interest rates.
Esker |
Maintaining outlook for FY22 |
Q2 revenue update |
Software and comp services |
18 July 2022 |
Share price performance
Business description
Next events
Analyst
Esker is a research client of Edison Investment Research Limited |
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Esker reported Q222 revenue growth of 19% y-o-y (12% in constant currency), driven by 23% growth in SaaS revenues. Bookings intake was strong, with the annual recurring value (ARR) of bookings up 25% y-o-y. Despite the worsening economic environment, management maintained its outlook for FY22. A diverse customer base, the high level of recurring revenue, inflation-linked contracts and a strong balance sheet should mitigate the impact of rising inflation and interest rates.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
112.3 |
14.5 |
1.99 |
0.50 |
68.7 |
0.4 |
12/21 |
133.6 |
18.2 |
2.39 |
0.60 |
57.2 |
0.4 |
12/22e |
158.0 |
21.4 |
2.76 |
0.65 |
49.4 |
0.5 |
12/23e |
183.0 |
26.7 |
3.39 |
0.70 |
40.3 |
0.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
H122 constant currency revenue growth 13%
Esker reported revenue of €39.8m for Q222, up 19% y-o-y or 12% at constant currency (cc) rates. This resulted in H122 revenue of €76.3m, up 19% y-o-y or 13% cc. As ever, SaaS revenue (79% of total revenue) was the driver of growth, up 16% cc for Q222 and 17% cc for H122. The Market Dojo acquisition completed at the start of June but was not a material contributor to SaaS revenue in the period. After a brief slowdown in Q122 as COVID-19 rates surged, implementation services returned to a more normal pace, generating revenue growth of 17% y-o-y (12% cc) in Q222. Esker closed H122 with net cash of €26.5m.
Strong bookings momentum maintained
Q222 growth in the ARR of bookings of 25% y-o-y follows growth of 11% in Q122 and the lifetime value of new bookings was 41% higher y-o-y at €14.6m. Management has maintained its expectation of organic constant currency growth of 15–16% in FY22 and an operating margin of 12–15%. We have increased our FY22 revenue forecast by 0.8% and normalised diluted EPS by 0.4%, mainly due to currency effects as the euro has weakened versus the dollar. Our FY23 forecasts are substantially unchanged.
Valuation: Better value
The share price has declined 62% year to date and is down 30% since the company reported FY21 results in March. Based on P/E ratios for FY22 and FY23, the stock continues to trade at a premium to French software peers and at a discount to US SaaS peers, we believe due to its high level of recurring revenue, history of and potential for double-digit profitable growth and strong balance sheet. We see potential for upside if the company achieves profitability at the upper end of its target range.
Q2 revenue update
Esker reported revenue growth of 19% y-o-y for Q222, or 12% at constant exchange rates (cc). This resulted in H122 reported revenue growth of 19% y-o-y or 13% cc. We note that the $/€ exchange rate was 1.123 in Q122 (1.138 in Q121) and 1.066 in Q222 (1.205 in Q221), and c 40% of revenue is generated in the US.
By revenue type:
■
SaaS: Q222 grew 23% y-o-y (16% cc) to €31.5m, compared to 23% y-o-y (19% cc) in Q122.
■
Implementation services: Q222 grew 17% y-o-y (12% cc) to €6.4m, compared to 8% y-o-y (4% cc) in Q122, and was 9% higher q-o-q.
■
Legacy products: Q222 declined 17% y-o-y (-28% cc) to €1.9m versus -14% y-o-y (-23% cc) in Q122.
In Q222, the company reported bookings with a lifetime contract value of €14.6m (+41% y-o-y cc). The ARR of these contracts was €4.0m (+25% y-o-y cc), equating to an average contract length of 3.7 years. As a reminder, the ARR only includes the subscription fee element of the contract and does not include the volume-related element. The company noted that bookings were particularly strong in France, the United States and Australia.
Esker closed H122 with gross cash of €43.1m and net cash of €26.5m. In Q2, it completed the acquisition of Market Dojo (we have assumed cash paid of €9m) and paid the FY21 dividend. The company took out a new €12m loan at a low fixed interest rate to have funds in case any acquisition targets present themselves.
Market Dojo acquisition closed
At the start of June, Esker completed the Market Dojo acquisition. The business made a minor revenue contribution of c €50k in Q222 and management expects a contribution of c €1m for H222. Since acquisition, the company has started joint marketing and will be aiming to introduce Market Dojo to the US market.
Continued progress with partner channel
Management noted that c 20% of bookings came via partners during Q222, up from c 10% a year ago.
Esker recently strengthened its strategic partnership with Grant Thornton France (GTF). GTF is now an integrator of Esker software on a global basis and, in particular, will work with Esker to help companies prepare for the changes to France’s e-invoicing regulations due in 2024. From July 2024, e-invoicing will be mandatory for all business-to-business exchanges.
Outlook and changes to forecasts
Esker reiterated its expectations for 15–16% organic constant currency revenue growth for FY22, with a 12–15% operating margin. Despite the current economic environment, the company has not yet seen any signs of slowing demand, either in terms of bookings or volumes processed. It has historically seen sales cycles lengthen when there have been unexpected events, such as COVID lockdowns and the war in Ukraine, but currently sales cycles are at normal levels. The customer base is fairly diversified by vertical and no customer makes up more than 1.4% of revenue. Contracts tend to factor in inflation-linked price increases after the initial term, although management noted that the index used in France was currently showing artificially low rates and it intends to change this in new contracts. The company noted that it was taking a more cautious approach to hiring but does not see any reason to assume slowing growth in FY23.
We have slightly increased our revenue forecast for FY22, reflecting the weakening euro versus the dollar, and this results in a small increase in our EPS forecast. Our forecasts for FY23 are substantially unchanged – for the cost base, a slightly slower rate of hiring offsets the weaker euro versus the dollar.
At its AGM in June, the company announced a €0.60 per share dividend for FY21, ahead of our €0.55 forecast, plus a 10% loyalty bonus for shareholders who have held their shares for two or more years. We have raised our dividend forecasts for FY22 and FY23.
Exhibit 1: Changes to estimates
€m |
FY22e old |
FY22e new |
change |
y-o-y |
FY23e old |
FY23e new |
change |
y-o-y |
Revenues |
156.8 |
158.0 |
0.8% |
18.3% |
182.9 |
183.0 |
0.0% |
15.8% |
EBITDA |
29.6 |
29.7 |
0.3% |
15.6% |
35.7 |
35.7 |
(0.0%) |
20.2% |
EBITDA margin |
18.9% |
18.8% |
(0.1%) |
(0.4%) |
19.5% |
19.5% |
(0.0%) |
0.7% |
Normalised EBIT |
20.0 |
20.1 |
0.4% |
18.1% |
25.3 |
25.3 |
(0.0%) |
25.9% |
Normalised EBIT margin |
12.8% |
12.7% |
(0.0%) |
(0.0%) |
13.8% |
13.8% |
(0.0%) |
1.1% |
Reported EBIT |
19.6 |
19.7 |
0.4% |
18.5% |
24.9 |
24.9 |
(0.0%) |
26.5% |
Reported EBIT margin |
12.5% |
12.4% |
(0.0%) |
0.0% |
13.6% |
13.6% |
(0.0%) |
1.1% |
Normalised PBT |
21.3 |
21.4 |
0.4% |
17.4% |
26.7 |
26.7 |
(0.0%) |
24.8% |
Normalised net income |
16.6 |
16.7 |
0.4% |
16.6% |
20.8 |
20.8 |
(0.0%) |
24.8% |
Reported net income |
16.3 |
16.3 |
0.4% |
14.4% |
20.5 |
20.5 |
(0.0%) |
25.3% |
Normalised dil. EPS (€) |
2.75 |
2.76 |
0.4% |
15.7% |
3.39 |
3.39 |
(0.0%) |
22.8% |
Reported basic EPS (€) |
2.79 |
2.80 |
0.4% |
14.7% |
3.45 |
3.45 |
(0.0%) |
23.2% |
Reported diluted EPS (€) |
2.70 |
2.71 |
0.4% |
13.5% |
3.34 |
3.34 |
(0.0%) |
23.3% |
Net cash |
34.5 |
34.1 |
(1.1%) |
(11.6%) |
44.6 |
44.0 |
(1.3%) |
29.0% |
DPS (€) |
0.60 |
0.65 |
8.3% |
8.3% |
0.65 |
0.70 |
7.7% |
7.7% |
Source: Edison Investment Research
Exhibit 2: Financial summary
€'000s |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
||||
Year end 31 December |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
||||
PROFIT & LOSS |
||||||||||||
Revenue |
|
|
65,990 |
76,064 |
86,871 |
104,188 |
112,274 |
133,580 |
158,008 |
183,002 |
||
EBITDA |
|
|
14,871 |
16,399 |
18,279 |
20,054 |
21,927 |
25,653 |
29,652 |
35,655 |
||
Operating Profit (before amort and except) |
|
|
9,934 |
10,547 |
11,955 |
12,843 |
14,037 |
17,006 |
20,077 |
25,280 |
||
Amortisation of acquired intangibles |
(200) |
(300) |
(344) |
(425) |
(425) |
(425) |
(425) |
(425) |
||||
Exceptionals and other income |
(474) |
(456) |
(88) |
(62) |
0 |
0 |
0 |
0 |
||||
Other income |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||||
Operating Profit |
9,260 |
9,791 |
11,523 |
12,356 |
13,612 |
16,581 |
19,652 |
24,855 |
||||
Net Interest |
(108) |
(110) |
(57) |
268 |
(67) |
202 |
200 |
200 |
||||
Profit Before Tax (norm) |
|
|
9,949 |
10,669 |
12,215 |
13,634 |
14,462 |
18,210 |
21,377 |
26,680 |
||
Profit Before Tax (FRS 3) |
|
|
9,275 |
9,913 |
11,783 |
13,147 |
14,528 |
18,188 |
20,952 |
26,255 |
||
Tax |
(2,950) |
(3,148) |
(2,940) |
(3,402) |
(2,966) |
(3,907) |
(4,609) |
(5,776) |
||||
Profit After Tax (norm) |
6,785 |
7,281 |
9,168 |
10,106 |
11,509 |
14,298 |
16,674 |
20,810 |
||||
Profit After Tax (FRS 3) |
6,325 |
6,765 |
8,843 |
9,745 |
11,562 |
14,281 |
16,342 |
20,479 |
||||
Ave. Number of Shares Outstanding (m) |
5.3 |
5.3 |
5.4 |
5.4 |
5.7 |
5.8 |
5.8 |
5.9 |
||||
EPS - normalised (c) |
|
|
128 |
138 |
170 |
186 |
203 |
245 |
286 |
351 |
||
EPS - normalised fully diluted (c) |
|
|
122 |
132 |
165 |
179 |
199 |
239 |
276 |
339 |
||
EPS - (GAAP) (c) |
|
|
120 |
128 |
164 |
180 |
204 |
244 |
280 |
345 |
||
Dividend per share (c) |
30 |
32 |
41 |
33 |
50 |
60 |
65 |
70 |
||||
Gross margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||||
EBITDA Margin (%) |
22.5 |
21.6 |
21.0 |
19.2 |
19.5 |
19.2 |
18.8 |
19.5 |
||||
Operating margin (before GW and except) (%) |
15.1 |
13.9 |
13.8 |
12.3 |
12.5 |
12.7 |
12.7 |
13.8 |
||||
BALANCE SHEET |
||||||||||||
Fixed Assets |
|
|
28,324 |
37,912 |
39,635 |
47,201 |
48,987 |
57,229 |
70,689 |
74,089 |
||
Intangible Assets |
22,381 |
26,673 |
28,096 |
29,323 |
30,787 |
33,644 |
45,804 |
47,604 |
||||
Tangible Assets |
5,158 |
7,115 |
7,050 |
10,434 |
10,036 |
9,896 |
10,096 |
10,496 |
||||
Other |
785 |
4,124 |
4,489 |
7,444 |
8,164 |
13,689 |
14,789 |
15,989 |
||||
Current Assets |
|
|
42,024 |
42,823 |
49,016 |
52,022 |
72,918 |
71,534 |
74,495 |
91,379 |
||
Stocks |
101 |
176 |
147 |
185 |
257 |
341 |
341 |
341 |
||||
Debtors |
19,523 |
21,253 |
25,551 |
30,015 |
31,440 |
35,548 |
44,156 |
51,140 |
||||
Cash |
21,338 |
20,632 |
22,794 |
21,357 |
40,421 |
34,978 |
29,332 |
39,230 |
||||
Other |
1,062 |
762 |
524 |
465 |
800 |
667 |
667 |
667 |
||||
Current Liabilities |
|
|
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(50,150) |
(45,872) |
(48,435) |
(52,254) |
||
Creditors |
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(38,650) |
(44,703) |
(48,435) |
(52,254) |
||||
Short term borrowings |
0 |
0 |
0 |
0 |
(11,500) |
(1,169) |
0 |
0 |
||||
Long Term Liabilities |
|
|
(7,657) |
(14,909) |
(10,810) |
(8,276) |
(6,342) |
(2,497) |
(2,497) |
(2,497) |
||
Long term borrowings |
(7,657) |
(13,716) |
(9,318) |
(6,516) |
(3,644) |
0 |
0 |
0 |
||||
Other long-term liabilities |
0 |
(1,193) |
(1,492) |
(1,760) |
(2,698) |
(2,497) |
(2,497) |
(2,497) |
||||
Net Assets |
|
|
34,392 |
39,620 |
47,769 |
56,647 |
65,413 |
80,394 |
94,252 |
110,718 |
||
CASH FLOW |
||||||||||||
Operating Cash Flow |
|
|
15,944 |
17,311 |
18,366 |
20,290 |
24,389 |
28,844 |
24,776 |
32,489 |
||
Net Interest |
(127) |
(75) |
63 |
352 |
(30) |
253 |
200 |
200 |
||||
Tax |
(1,456) |
(2,053) |
(2,795) |
(3,329) |
(884) |
(3,420) |
(4,609) |
(5,776) |
||||
Capex |
(7,021) |
(9,304) |
(7,789) |
(10,995) |
(10,167) |
(11,140) |
(12,200) |
(13,000) |
||||
Acquisitions/disposals |
(935) |
(7,551) |
(225) |
(486) |
(492) |
(4,502) |
(9,000) |
0 |
||||
Financing |
467 |
(345) |
785 |
1,449 |
48 |
2,769 |
0 |
0 |
||||
Dividends |
(1,550) |
(1,633) |
(1,756) |
(2,237) |
(1,896) |
(2,897) |
(3,644) |
(4,014) |
||||
Net Cash Flow |
5,322 |
(3,650) |
6,649 |
5,044 |
10,968 |
9,907 |
(4,477) |
9,899 |
||||
Opening net debt/(cash) |
|
|
(8,978) |
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(30,285) |
(38,609) |
(34,132) |
||
HP finance leases initiated |
(645) |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||||
Other |
26 |
(15) |
(90) |
(602) |
(1,701) |
(1,583) |
(0) |
(0) |
||||
Closing net debt/(cash) |
|
|
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(30,285) |
(38,609) |
(34,132) |
(44,030) |
||
Source: Esker, Edison Investment Research
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Research: Investment Companies
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