Last close As at 05/08/2026
EUR277.40
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Market capitalisation
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Research: TMT
Esker’s Q3 update confirms continued strong revenue growth (23% y-o-y constant currency growth in Q321, 22% for 9M21), with organic revenue growth guidance for FY21 nudged up to 18%. Order intake also continues to grow at double-digit rates, providing the foundations for growth in the medium term. We maintain our forecasts.
Esker |
Q3 update confirms FY21 outlook |
Q3 revenue update |
Software & comp services |
14 October 2021 |
Share price performance
Business description
Next events
Analyst
Esker is a research client of Edison Investment Research Limited |
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Esker’s Q3 update confirms continued strong revenue growth (23% y-o-y constant currency growth in Q321, 22% for 9M21), with organic revenue growth guidance for FY21 nudged up to 18%. Order intake also continues to grow at double-digit rates, providing the foundations for growth in the medium term. We maintain our forecasts.
Year end |
Revenue (€m) |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield (%) |
12/19 |
104.2 |
13.6 |
1.79 |
0.33 |
160.2 |
0.1 |
12/20 |
112.3 |
14.5 |
1.99 |
0.50 |
144.2 |
0.2 |
12/21e |
131.6 |
19.1 |
2.51 |
0.55 |
114.3 |
0.2 |
12/22e |
153.6 |
24.5 |
3.17 |
0.60 |
90.4 |
0.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Solid growth in new contracts signed
Esker reported Q321 revenue of €33.4m, 20% higher y-o-y or 23% higher in constant currency (cc); 9M21 revenue is up 22% (reported and cc). SaaS revenue grew 22% cc in Q321 and 25% cc for 9M21, reflecting higher volumes from existing customers and the contribution from new customers. Implementation revenue showed the fastest growth (40% Q321, 21% 9M21 cc) as the company worked to fulfil bookings received since the end of 2020. The annual recurring value (ARR) of new contracts in Q321 was 11% higher y-o-y at €3m (worth €11.6m in subscription revenue over the life of the contracts) and the ARR of new contracts for 9M21 of €9.5m was 42% higher y-o-y (total subscription value €34.5m). Esker closed Q321 with net cash of €36.9m.
Raising FY21 guidance
The company has nudged its full year constant currency growth rate from 17% to 18%, with the expectation of FY21 revenue in the region of €132m and an operating margin of 12–15%. Our FY21 revenue forecast is €131.6m with a reported operating margin of 13.5% – we leave our estimates unchanged.
Valuation: Reflects growth in recurring revenue
The stock trades at a premium to document processing automation software and French software peers but at a discount to US SaaS peers. Esker has re-rated over the past two years (the stock is up 100% over the last year and 272% over two years), with its P/E multiple moving much closer to the US SaaS software peer group. We believe this is due to the value placed on businesses with high levels of recurring revenue, providing visibility through a period of economic uncertainty, and the potential for multi-year profitable double-digit growth. Esker has the added advantage of a strong balance sheet to fund growth.
Exhibit 1: Financial summary
€'000s |
2016 |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
||
Year end 31 December |
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 |
131,614 |
153,583 |
EBITDA |
|
|
14,871 |
16,399 |
18,279 |
20,054 |
21,927 |
27,363 |
32,712 |
Operating Profit (before amort and except) |
|
|
9,934 |
10,547 |
11,955 |
12,843 |
14,037 |
18,188 |
23,137 |
Amortisation of acquired intangibles |
(200) |
(300) |
(344) |
(425) |
(425) |
(425) |
(425) |
||
Exceptionals and other income |
(474) |
(456) |
(88) |
(62) |
0 |
57 |
0 |
||
Other income |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
9,260 |
9,791 |
11,523 |
12,356 |
13,612 |
17,820 |
22,712 |
||
Net Interest |
(108) |
(110) |
(57) |
268 |
(67) |
100 |
200 |
||
Profit Before Tax (norm) |
|
|
9,949 |
10,669 |
12,215 |
13,634 |
14,462 |
19,088 |
24,537 |
Profit Before Tax (FRS 3) |
|
|
9,275 |
9,913 |
11,783 |
13,147 |
14,528 |
18,720 |
24,112 |
Tax |
(2,950) |
(3,148) |
(2,940) |
(3,402) |
(2,966) |
(4,118) |
(5,305) |
||
Profit After Tax (norm) |
6,785 |
7,281 |
9,168 |
10,106 |
11,509 |
14,888 |
19,139 |
||
Profit After Tax (FRS 3) |
6,325 |
6,765 |
8,843 |
9,745 |
11,562 |
14,601 |
18,808 |
||
Ave. Number of Shares Outstanding (m) |
5.3 |
5.3 |
5.4 |
5.4 |
5.7 |
5.7 |
5.8 |
||
EPS - normalised (c) |
|
|
128 |
138 |
170 |
186 |
203 |
259 |
328 |
EPS - normalised fully diluted (c) |
|
|
122 |
132 |
165 |
179 |
199 |
251 |
317 |
EPS - (GAAP) (c) |
|
|
120 |
128 |
164 |
180 |
204 |
254 |
322 |
Dividend per share (c) |
30 |
32 |
41 |
33 |
50 |
55 |
60 |
||
Gross margin (%) |
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 |
20.8 |
21.3 |
||
Operating Margin (before GW and except) (%) |
15.1 |
13.9 |
13.8 |
12.3 |
12.5 |
13.8 |
15.1 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
28,324 |
37,912 |
39,635 |
47,201 |
48,987 |
51,687 |
55,087 |
Intangible Assets |
22,381 |
26,673 |
28,096 |
29,323 |
30,787 |
33,187 |
35,587 |
||
Tangible Assets |
5,158 |
7,115 |
7,050 |
10,434 |
10,036 |
9,536 |
9,336 |
||
Other |
785 |
4,124 |
4,489 |
7,444 |
8,164 |
8,964 |
10,164 |
||
Current Assets |
|
|
42,024 |
42,823 |
49,016 |
52,022 |
72,918 |
71,029 |
85,736 |
Stocks |
101 |
176 |
147 |
185 |
257 |
257 |
257 |
||
Debtors |
19,523 |
21,253 |
25,551 |
30,015 |
31,440 |
36,780 |
42,919 |
||
Cash |
21,338 |
20,632 |
22,794 |
21,357 |
40,421 |
33,193 |
41,760 |
||
Other |
1,062 |
762 |
524 |
465 |
800 |
800 |
800 |
||
Current Liabilities |
|
|
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(50,150) |
(41,983) |
(45,770) |
Creditors |
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(38,650) |
(41,983) |
(45,770) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
(11,500) |
0 |
0 |
||
Long Term Liabilities |
|
|
(7,657) |
(14,909) |
(10,810) |
(8,276) |
(6,342) |
(3,842) |
(2,698) |
Long term borrowings |
(7,657) |
(13,716) |
(9,318) |
(6,516) |
(3,644) |
(1,144) |
0 |
||
Other long-term liabilities |
0 |
(1,193) |
(1,492) |
(1,760) |
(2,698) |
(2,698) |
(2,698) |
||
Net Assets |
|
|
34,392 |
39,620 |
47,769 |
56,647 |
65,413 |
76,891 |
92,355 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
15,944 |
17,311 |
18,366 |
20,290 |
24,389 |
25,356 |
30,359 |
Net Interest |
(127) |
(75) |
63 |
352 |
(30) |
100 |
200 |
||
Tax |
(1,456) |
(2,053) |
(2,795) |
(3,329) |
(884) |
(4,118) |
(5,305) |
||
Capex |
(7,021) |
(9,304) |
(7,789) |
(10,995) |
(10,167) |
(11,500) |
(12,200) |
||
Acquisitions/disposals |
(935) |
(7,551) |
(225) |
(486) |
(492) |
0 |
0 |
||
Financing |
467 |
(345) |
785 |
1,449 |
48 |
1,000 |
0 |
||
Dividends |
(1,550) |
(1,633) |
(1,756) |
(2,237) |
(1,896) |
(2,897) |
(3,343) |
||
Net Cash Flow |
5,322 |
(3,650) |
6,649 |
5,044 |
10,968 |
7,941 |
9,712 |
||
Opening net debt/(cash) |
|
|
(8,978) |
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(30,285) |
(38,226) |
HP finance leases initiated |
(645) |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
26 |
(15) |
(90) |
(602) |
(1,701) |
0 |
(0) |
||
Closing net debt/(cash) |
|
|
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(30,285) |
(38,226) |
(47,937) |
Source: Esker, Edison Investment Research
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