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Research: TMT
MotorK’s Q123 trading update indicates that the group is on track to meet its FY23 guidance and our forecasts after management secured 59% of the annual recurring revenue (ARR) growth required. Performance in Q1 was strong, with the group reporting high double-digit revenue growth, driven by low customer churn and continuing multi-product adoption. With investment in its platform largely complete, the company is starting to see operating leverage. The stock is up 89% year to date, and we believe there is still significant upside potential, as highlighted by its discount to peers.
Written by
MotorK |
Positive indicators provide strong visibility |
Q123 trading update |
Software and comp services |
21 April 2023 |
Share price performance
Business description
Next events
Analysts
MotorK is a research client of Edison Investment Research Limited |
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MotorK’s Q123 trading update indicates that the group is on track to meet its FY23 guidance and our forecasts after management secured 59% of the annual recurring revenue (ARR) growth required. Performance in Q1 was strong, with the group reporting high double-digit revenue growth, driven by low customer churn and continuing multi-product adoption. With investment in its platform largely complete, the company is starting to see operating leverage. The stock is up 89% year to date, and we believe there is still significant upside potential, as highlighted by its discount to peers.
Year |
Revenue |
ARR |
PBT* |
Diluted EPS* |
DPS |
EV/Sales |
EV/EBITDA |
12/21 |
27.6 |
15.1 |
(8.2) |
(0.37) |
0.00 |
2.8 |
92.9 |
12/22 |
38.5 |
26.9 |
(8.8) |
(0.22) |
0.00 |
2.0 |
331.6 |
12/23e |
55.8 |
39.0 |
3.4 |
0.07 |
0.00 |
1.4 |
5.3 |
12/24e |
67.8 |
51.9 |
9.4 |
0.17 |
0.00 |
1.1 |
3.3 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q123 growth driven by SparK and product launches
MotorK reported Q123 revenue growth of 37% y-o-y to €11.4m (+23% organic), driven by low customer churn at 5.6% and a high net revenue retention ratio of 117.1%. We believe that these key performance indicators benefited from the launch of the SparK platform in Q422, alongside recent product launches, supporting multi-product adoption, cross-selling and upselling. As highlighted in our last update, the completion of major investment in the platform should lead to margin expansion in the period and support management’s objective of turning cash EBITDA positive by FY24. A higher proportion of SaaS recurring revenue, which increased by 59% y-o-y to €8.6m and accounted for 76% of total revenue (+6pt y-o-y), could further support margin progression.
Secured ARR provides strong visibility
MotorK reported Q123 ARR of €27.9m, up 71% y-o-y (+52% organic). ARR also grew by €1m q-o-q, which we believe was attributable to the recognition of delayed contracts from Q422. Total secured ARR at period end was €33.8m, which includes an additional €5.9m of committed ARR from contracts that have been signed, but not yet billed and implemented. Secured ARR represents 58.7% of the growth we forecast for FY23, providing good visibility at this point in the year. We have left our top-line forecasts unchanged, with the change in our profit and cash figures reflecting the inclusion of the group’s complete FY22 accounts in our model.
Valuation: Shares up 89%, upside potential remains
MotorK’s shares are up 89% year to date, which we believe reflects increased confidence in the continued growth of its platform and increasingly secured outlook, as well as the completion of its €3m share buyback programme on 6 April. On EV/Sales and EV/EBITDA across FY23e and FY24e, the group trades at an average discount to peers of 75%, indicating that there is still significant potential upside.
Q123 results summary and forecast changes
MotorK reported strong y-o-y revenue growth in its Q123 trading update across all service lines, particularly from its higher-margin SaaS recurring revenues. Excluding the impact of FY22 acquisitions (FranceProNet, Carflow and WebMobil24), revenue was 23% higher y-o-y, with SaaS revenue 30% higher.
Revenues increased across geographies, particularly outside of its core Italian market, highlighting diversification and the positive impact from its recent acquisitions.
Q1 is seasonally MotorK’s weakest quarter, reflected in the q-o-q decline in revenue and its average annual contract value (ACV) of €17.6k remaining broadly flat q-o-q. We believe ACV could expand further as management continues to implement its land and expand strategy, which will be supported by its SparK platform and continued new product launches.
Exhibit 1: Summary of Q123 results
€m |
Q123 |
Q422 |
q-o-q |
Q122 |
y-o-y |
Revenue |
|||||
SaaS |
8.7 |
11.2 |
(22%) |
5.8 |
50% |
Recurring revenue |
8.6 |
10.9 |
(21%) |
5.4 |
59% |
Non-recurring revenue |
0.1 |
0.3 |
(69%) |
0.4 |
(71%) |
Digital Marketing |
1.8 |
1.8 |
0% |
1.8 |
1% |
Other |
0.9 |
0.6 |
57% |
0.8 |
20% |
Total revenue |
11.4 |
13.6 |
(16%) |
8.3 |
37% |
Period end ARR |
27.9 |
26.9 |
4% |
16.3 |
71% |
Period end organic ARR |
24.8 |
17.2 |
44% |
13.4 |
85% |
Average contract value |
17.6 |
17.8 |
(1%) |
16.1 |
10% |
Source: MotorK
We have left our headline forecasts unchanged, with some of our profit and cash expectations reflecting the inclusion of the group’s complete FY22 accounts in our model, which we did not have at the time of our last note.
Exhibit 2: Summary of forecast changes
€m |
FY23e |
FY24e |
|||||||
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
||
Revenues |
55.8 |
55.8 |
0.0% |
44.7% |
67.8 |
67.8 |
0.0% |
21.6% |
|
Adjusted EBITDA |
14.8 |
14.8 |
0.0% |
N/A |
23.6 |
23.6 |
0.0% |
N/A |
|
Adjusted EBITDA margin |
26.5% |
26.5% |
0.0% |
25.8% |
34.8% |
34.8% |
0.0% |
8.4% |
|
Cash EBITDA |
(6.8) |
(6.8) |
0.0% |
-56.5% |
1.6 |
1.6 |
0.0% |
N/A |
|
Cash EBITDA margin |
-12.2% |
-12.2% |
0.0% |
28.3% |
2.4% |
2.4% |
0.0% |
14.6% |
|
Normalised operating profit |
3.4 |
4.2 |
25.0% |
N/A |
9.4 |
10.2 |
9.0% |
N/A |
|
Normalised operating profit margin |
6.0% |
7.5% |
1.5% |
27.7% |
13.8% |
15.1% |
1.2% |
7.5% |
|
Reported operating profit |
1.8 |
2.6 |
47.0% |
N/A |
7.8 |
8.6 |
10.8% |
N/A |
|
Reported operating margin |
3.2% |
4.7% |
1.5% |
N/A |
11.4% |
12.7% |
1.2% |
8.0% |
|
Normalised PBT |
2.8 |
3.4 |
23.4% |
N//A |
8.8 |
9.4 |
7.4% |
175.2% |
|
Reported PBT |
1.2 |
1.9 |
54.1% |
N/A |
7.2 |
7.8 |
9.1% |
322.2% |
|
Normalised net income |
2.2 |
2.7 |
23.4% |
N/A |
6.7 |
7.2 |
7.4% |
161.4% |
|
Reported net income |
1.0 |
1.5 |
54.1% |
N/A |
5.5 |
5.9 |
9.1% |
301.1% |
|
Normalised basic EPS (€) |
0.06 |
0.07 |
25.0% |
N/A |
0.17 |
0.18 |
10.5% |
165.4% |
|
Normalised diluted EPS (€) |
0.05 |
0.07 |
28.0% |
N/A |
0.16 |
0.18 |
13.1% |
165.3% |
|
Reported basic EPS (€) |
0.02 |
0.04 |
56.1% |
N/A |
0.14 |
0.15 |
12.2% |
307.3% |
|
Dividend per share (€) |
0.00 |
0.00 |
N/A |
N/A |
0.00 |
0.00 |
N/A |
N/A |
|
Net debt/(cash) |
(1.9) |
(1.9) |
-1.8% |
N/A |
4.4 |
4.2 |
-5.4% |
N/A |
|
ARR |
39.0 |
39.0 |
0.0% |
45.0% |
51.9 |
51.9 |
0.0% |
33.0% |
|
Source: Edison Investment Research
Exhibit 3: Financial summary
€m |
2019 |
2020 |
2021 |
2022 |
2023e |
2024e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||||
Revenue |
|
|
27.9 |
19.3 |
27.6 |
38.5 |
55.8 |
67.8 |
Annualised recurring revenue |
|
|
7.5 |
10.0 |
15.1 |
26.9 |
39.0 |
51.9 |
Operating costs excl. D&A |
(26.5) |
(20.5) |
(26.7) |
(38.3) |
(41.0) |
(44.2) |
||
EBITDA |
|
|
1.5 |
(1.1) |
0.8 |
0.2 |
14.8 |
23.6 |
Normalised operating profit |
|
|
(0.8) |
(4.3) |
(3.4) |
(7.8) |
4.2 |
10.2 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(0.0) |
(0.1) |
(3.2) |
(3.5) |
0.0 |
0.0 |
||
Share-based payments |
(0.2) |
(0.1) |
(9.7) |
(1.5) |
(1.6) |
(1.6) |
||
Reported operating profit |
(1.1) |
(4.5) |
(16.4) |
(12.9) |
2.6 |
8.6 |
||
Net Interest |
(1.4) |
(1.8) |
(4.8) |
(1.0) |
(0.8) |
(0.8) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(2.3) |
(6.1) |
(8.2) |
(8.8) |
3.4 |
9.4 |
Profit Before Tax (reported) |
|
|
(2.5) |
(6.3) |
(21.2) |
(13.9) |
1.9 |
7.8 |
Reported tax |
1.1 |
0.9 |
(2.8) |
(0.1) |
(0.4) |
(1.9) |
||
Profit After Tax (norm) |
(1.1) |
(5.2) |
(11.0) |
(8.9) |
2.7 |
7.2 |
||
Profit After Tax (reported) |
(1.4) |
(5.4) |
(23.9) |
(14.0) |
1.5 |
5.9 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
1.6 |
0.0 |
0.4 |
6.7 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
(1.1) |
(5.2) |
(11.0) |
(8.9) |
2.7 |
7.2 |
||
Net income (reported) |
0.2 |
(5.4) |
(23.5) |
(7.3) |
1.5 |
5.9 |
||
Basic average number of shares outstanding (m) |
26 |
27 |
30 |
41 |
40 |
39 |
||
EPS - basic normalised (€) |
|
|
(0.04) |
(0.19) |
(0.37) |
(0.22) |
0.07 |
0.18 |
EPS - diluted normalised (€) |
|
|
(0.04) |
(0.19) |
(0.37) |
(0.22) |
0.07 |
0.18 |
EPS - basic reported (€) |
|
|
0.01 |
(0.20) |
(0.79) |
(0.18) |
0.04 |
0.15 |
Dividend (€) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
128.8 |
(-30.8) |
42.6 |
39.9 |
44.7 |
21.6 |
||
EBITDA Margin (%) |
5.3 |
-5.9 |
3.0 |
0.6 |
26.5 |
34.8 |
||
Normalised Operating Margin |
-3.0 |
-22.3 |
-12.3 |
-20.2 |
7.5 |
15.1 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
22.8 |
16.8 |
26.2 |
52.8 |
59.2 |
63.3 |
Intangible Assets |
11.2 |
9.9 |
18.0 |
36.8 |
37.0 |
35.3 |
||
Tangible Assets |
1.6 |
1.7 |
3.1 |
5.0 |
5.1 |
5.3 |
||
Investments & other |
10.1 |
5.2 |
5.2 |
11.0 |
17.0 |
22.7 |
||
Current Assets |
|
|
25.4 |
28.3 |
63.4 |
45.7 |
52.1 |
55.3 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
16.0 |
11.5 |
16.0 |
26.5 |
37.5 |
46.8 |
||
Cash & cash equivalents |
9.4 |
11.8 |
43.3 |
19.2 |
14.6 |
8.5 |
||
Other |
0.0 |
4.9 |
4.2 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(13.6) |
(14.5) |
(15.2) |
(18.1) |
(25.1) |
(31.1) |
Creditors |
(11.1) |
(6.1) |
(8.3) |
(12.0) |
(19.1) |
(25.1) |
||
Tax and social security |
0.0 |
0.0 |
(2.9) |
(3.8) |
(3.8) |
(3.8) |
||
Short term borrowings |
(2.5) |
(7.1) |
(2.7) |
(1.6) |
(1.6) |
(1.6) |
||
Other |
0.0 |
(1.3) |
(1.3) |
(0.6) |
(0.6) |
(0.6) |
||
Long Term Liabilities |
|
|
(27.1) |
(28.5) |
(10.0) |
(18.6) |
(21.2) |
(15.1) |
Long term borrowings |
(23.5) |
(25.6) |
(6.2) |
(11.3) |
(11.2) |
(11.2) |
||
Other long term liabilities |
(3.7) |
(2.9) |
(3.8) |
(7.4) |
(10.0) |
(3.9) |
||
Net Assets |
|
|
7.5 |
2.1 |
64.4 |
61.8 |
64.9 |
72.4 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
7.5 |
2.1 |
64.4 |
61.8 |
64.9 |
72.4 |
CASH FLOW |
||||||||
Net income |
0.2 |
(5.4) |
(23.5) |
(7.3) |
1.5 |
5.9 |
||
Depreciation & amortisation |
2.7 |
3.8 |
4.2 |
8.0 |
10.5 |
13.4 |
||
Working capital |
(7.4) |
2.5 |
(2.0) |
(6.7) |
(7.3) |
(15.2) |
||
Exceptional & other |
1.6 |
1.9 |
15.0 |
(3.2) |
2.2 |
2.3 |
||
Tax |
(0.1) |
(1.2) |
2.6 |
(0.0) |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
(3.0) |
1.7 |
(3.6) |
(9.2) |
7.0 |
6.5 |
Capex |
(3.6) |
(3.2) |
(3.9) |
(9.1) |
(9.9) |
(10.8) |
||
Acquisitions/disposals |
(0.6) |
0.0 |
(5.4) |
(4.5) |
0.0 |
0.0 |
||
Net interest |
(0.5) |
(0.5) |
(6.9) |
(1.3) |
(0.7) |
(0.7) |
||
Equity financing |
0.0 |
0.0 |
70.1 |
(0.7) |
(0.0) |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(0.1) |
0.1 |
0.2 |
(0.1) |
0.0 |
0.0 |
||
Net Cash Flow |
(7.8) |
(1.9) |
50.5 |
(24.7) |
(3.6) |
(5.1) |
||
Opening net debt/(cash) |
|
|
8.2 |
16.2 |
20.6 |
(34.4) |
(6.5) |
(1.9) |
FX |
(0.2) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.1 |
(2.5) |
4.5 |
(3.2) |
(1.0) |
(1.0) |
||
Closing net debt/(cash) |
|
|
16.2 |
20.6 |
(34.4) |
(6.5) |
(1.9) |
4.2 |
Source: Edison Investment Research, company accounts
|
|
Research: Metals & Mining
Alkane continues to increase its production guidance, indicating confidence in a strong close to FY23, from 62,000–70,000oz to 65,000-73,000oz. It also lowered its expected unit costs to an AISC of A$1,550–1,700/oz, from previous guidance of A$1,550–1,800/oz. These updates follow confirmation of Q323 gold production of 16,641oz and a total for the year to date of 54,431oz, at an AISC of A$1,446/oz.