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Research: TMT
mVISE has announced preliminary 2018 results showing revenue growth of 52% to €22.5m, and adjusted operating profit doubling to c €1.8m. Earnings were driven by growth in sales of the group’s high-margin software products and a solid performance by the consulting business. We expect the boost to the number of new channel partners at SaleSphere in Q419 and the creation of a new marketing promotion for mVise’s elastic.io in January to provide further impetus to earnings growth this year. With digitalisation of German industry giving the group strong growth impetus, while trading at a discount to its peer group.
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mVISE |
New channel partners to fuel 2019 growth
Software & comp services |
Scale research report - Flash
25 March 2019 |
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mVISE has announced preliminary 2018 results showing revenue growth of 52% to €22.5m, and adjusted operating profit doubling to c €1.8m. Earnings were driven by growth in sales of the group’s high-margin software products and a solid performance by the consulting business. We expect the boost to the number of new channel partners at SaleSphere in Q419 and the creation of a new marketing promotion for mVise’s elastic.io in January to provide further impetus to earnings growth this year. With digitalisation of German industry giving the group strong growth impetus, while trading at a discount to its peer group.
Surge in channel partners in the last two quarters
mVISE gained six new channel sales partners for its SaleSphere product in Q418: Infolox, OpusCapita, eggheads, Contenserv, AriBis and myview systems, giving a significant boost to SaleSphere’s market access. mVISE also deepened its cooperation with the Israel-based global software seller Magic Software in January. Magic Software will provide $2.5m in funding for tailoring elastic.io’s software integration platform for new customers. This will enable elastic.io to access larger clients for which a tailored product is a necessity.
Operating profit in line after 2018 revenue shortfall
Assuming a €0.5m revenue loss from the August 2018 sale of Just Intelligence, we estimate preliminary revenues were c 8% below management guidance of €25m, mainly reflecting delays to the ramp-up in channel partner numbers. Nevertheless, helped by high software product margins and a good consulting performance the group achieved an operating profit of €1.8m in line with the €1.8–2.0m guidance.
Multiples understate software platform potential
As a key provider of support to firms engaged in digitisation projects, mVISE is an attractive play on the mass business migration to Cloud computing and the take up of standardised software as a service, via its elastic.io integration platform and its SaleSphere sales digitisation platform. We see mVISE as attractively rated on a 2018 EV/EBITDA multiple of 11.7x. This prices it more or less in line with the IT consulting sector at 10.9x but at a significant discount to the average 21.3x multiple of the fast-growing software development sector, to which mVISE is becoming increasingly oriented.
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Consensus estimates
Source: mVISE, SMC Research. Note: *Provisional. |
Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
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Research: Investment Companies
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