MotorK — Positive indicators provide strong visibility

MotorK (AMS: MTRK)

Last close As at 24/02/2024

EUR4.09

0.04 (0.99%)

Market capitalisation

EUR184m

More on this equity

Research: TMT

MotorK — Positive indicators provide strong visibility

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.

Max Hayes

Written by

Max Hayes

Associate Analyst

TMT

MotorK

Positive indicators provide strong visibility

Q123 trading update

Software and comp services

21 April 2023

Price

€2.15

Market cap

€84m

Net cash (€m) at end FY22
(includes security deposits)

6.5

Shares in issue

39.1m

Free float

21.8%

Code

MTRK

Primary exchange

Euronext Amsterdam

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.3)

85.3

(58.0)

Rel (local)

(17.0)

79.9

(60.0)

52-week high/low

€5.16

€1.10

Business description

MotorK is a European SaaS provider operating in the automotive retail industry, selling mainly in the EU5 but with a global presence. Its cloud-based platform, SparK, offers OEMs and dealers a suite of digital tools to support the vehicle lifecycle end-to-end.

Next events

H123 results

28 July 2023

Q323 trading update

19 October 2023

Analysts

Max Hayes

+44 (0)20 3077 5721

Katherine Thompson

+44 (0)20 3077 5730

MotorK is a research client of Edison Investment Research Limited

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
end

Revenue
(€m)

ARR
(€m)

PBT*
(€m)

Diluted EPS*
(€)

DPS
(€)

EV/Sales
(x)

EV/EBITDA
(x)

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


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This report has been commissioned by MotorK and prepared and issued by Edison, in consideration of a fee payable by MotorK. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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General disclaimer and copyright

This report has been commissioned by MotorK and prepared and issued by Edison, in consideration of a fee payable by MotorK. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Metals & Mining

Alkane Resources — Guidance increased again

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.

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