Last close As at 05/08/2026
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Research: TMT
Esker reported revenue growth of 7% y-o-y for Q320 and 8% for 9M20. The volume processed through its platform returned to close to pre-COVID levels by September. As companies look to Esker’s technology to support their digital transformation projects, orders for 9M20 grew 11% y-o-y. While management guidance for FY20 is maintained on a constant currency basis, we reduce our revenue forecasts for FY20/21 by 1% to reflect the recent strengthening of the euro, resulting in small EPS reductions.
Esker |
Rebound in SaaS-based business |
Q3 revenue update |
Software & comp services |
14 October 2020 |
Share price performance
Business description
Next events
Analyst
Esker is a research client of Edison Investment Research Limited |
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Esker reported revenue growth of 7% y-o-y for Q320 and 8% for 9M20. The volume processed through its platform returned to close to pre-COVID levels by September. As companies look to Esker’s technology to support their digital transformation projects, orders for 9M20 grew 11% y-o-y. While management guidance for FY20 is maintained on a constant currency basis, we reduce our revenue forecasts for FY20/21 by 1% to reflect the recent strengthening of the euro, resulting in small EPS reductions.
Year end |
Revenue (€m) |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield |
12/18 |
86.9 |
12.2 |
1.65 |
0.41 |
90.6 |
0.3 |
12/19 |
104.2 |
13.6 |
1.79 |
0.33 |
83.4 |
0.2 |
12/20e |
112.9 |
13.6 |
1.69 |
0.35 |
88.1 |
0.2 |
12/21e |
130.6 |
18.0 |
2.21 |
0.40 |
67.6 |
0.3 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q3 shows recovery in volumes processed
Esker reported revenue of €27.1m for Q320, +7% y-o-y or +10% in constant currency. SaaS-based revenue grew 14% in constant currency (21% in September), while licence-based revenues declined 17% and legacy revenues declined 39% y-o-y. The company noted that the variable element of subscription revenues (usually c 45% of total revenue) saw volumes recover to 95% of pre-COVID levels by September. Despite the economic situation, Esker saw the value of orders signed in 9M20 grow by 11% compared to the prior year to €21.3m, providing support for growth in FY21. Management commented that while some projects have been delayed, other customers have accelerated their transition to digital working to ensure operational continuity. Net cash at the end of Q320 was €25.2m, up from €22.9m at the end of H120.
FY20 constant currency growth target maintained
Management continues to expect constant currency revenue growth of close to 9% for FY20, with profitability close to that achieved in FY19. As the euro has strengthened significantly against the dollar through Q3 (from $1.125/€ on 30 June to $1.179/€ on 13 October), we have reduced our H2 revenue forecast slightly, with forecast reported revenue growth of 8.4% for FY20 and 15.7% for FY21. With a proportion of costs dollar-based, we reduce normalised EPS by 3.7% in FY20 and 0.1% in FY21.
Valuation: Reflects high recurring revenues
The stock trades at a premium to DPA software and French software peers but at a discount to US SaaS peers. Esker has re-rated over the last year, with its P/E multiple moving more towards the US SaaS peer group. We believe that this is due to the value placed on businesses with high levels of recurring revenue, providing visibility through a period of economic uncertainty. Esker has the added advantage of a strong balance sheet that does not require additional funding to support growth. Successful execution of Esker’s partner strategy could be a trigger for earnings and share price upside.
Changes to forecasts
Exhibit 1: Changes to forecasts
€m |
FY20e old |
FY20e new |
change |
y-o-y |
FY21e old |
FY21e new |
change |
y-o-y |
Revenues |
113.9 |
112.9 |
(0.9%) |
8.4% |
131.8 |
130.6 |
(0.9%) |
15.7% |
EBITDA |
22.2 |
21.7 |
(2.3%) |
8.4% |
26.2 |
26.2 |
(0.1%) |
20.5% |
EBITDA margin |
19.5% |
19.2% |
(0.3%) |
(0.0%) |
19.9% |
20.1% |
0.2% |
0.8% |
Normalised EBIT |
14.0 |
13.5 |
(3.7%) |
4.8% |
17.3 |
17.3 |
(0.1%) |
28.7% |
Normalised EBIT margin |
12.3% |
11.9% |
(0.3%) |
(0.4%) |
13.2% |
13.3% |
0.1% |
1.3% |
Reported EBIT |
13.5 |
13.0 |
(3.8%) |
5.5% |
16.9 |
16.9 |
(0.1%) |
29.6% |
Reported EBIT margin |
11.9% |
11.5% |
(0.4%) |
(0.3%) |
12.8% |
12.9% |
0.1% |
1.4% |
Normalised PBT |
14.1 |
13.6 |
(3.7%) |
(0.2%) |
18.0 |
18.0 |
(0.1%) |
32.5% |
Normalised net income |
10.3 |
9.9 |
(3.7%) |
(1.7%) |
13.2 |
13.2 |
(0.1%) |
32.5% |
Normalised dil. EPS (€) |
1.76 |
1.69 |
(3.7%) |
(5.3%) |
2.21 |
2.21 |
(0.1%) |
30.2% |
Reported basic EPS (€) |
1.88 |
1.81 |
(3.6%) |
0.7% |
2.23 |
2.23 |
(0.1%) |
23.2% |
Reported diluted EPS (€) |
1.81 |
1.75 |
(3.6%) |
1.6% |
2.16 |
2.15 |
(0.1%) |
23.3% |
Net cash |
26.0 |
25.7 |
(1.0%) |
22.4% |
33.0 |
32.8 |
(0.8%) |
27.4% |
DPS (€) |
0.35 |
0.35 |
0.0% |
6.1% |
0.40 |
0.40 |
0.0% |
14.3% |
Source: Edison Investment Research
Exhibit 2: Financial summary
€'000s |
2016 |
2017 |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 December |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
French GAAP |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
65,990 |
76,064 |
86,871 |
104,188 |
112,903 |
130,603 |
EBITDA |
|
|
14,871 |
16,399 |
18,279 |
20,054 |
21,730 |
26,192 |
Operating Profit (before amort and except) |
|
|
9,934 |
10,547 |
11,955 |
12,843 |
13,455 |
17,317 |
Amortisation of acquired intangibles |
(200) |
(300) |
(344) |
(425) |
(425) |
(425) |
||
Exceptionals and other income |
(474) |
(456) |
(88) |
(62) |
0 |
0 |
||
Other income |
0 |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
9,260 |
9,791 |
11,523 |
12,356 |
13,030 |
16,892 |
||
Net Interest |
(108) |
(110) |
(57) |
268 |
(200) |
100 |
||
Profit Before Tax (norm) |
|
|
9,949 |
10,669 |
12,215 |
13,634 |
13,603 |
18,017 |
Profit Before Tax (FRS 3) |
|
|
9,275 |
9,913 |
11,783 |
13,147 |
14,030 |
17,592 |
Tax |
(2,950) |
(3,148) |
(2,940) |
(3,402) |
(3,788) |
(4,750) |
||
Profit After Tax (norm) |
6,785 |
7,281 |
9,168 |
10,106 |
9,930 |
13,153 |
||
Profit After Tax (FRS 3) |
6,325 |
6,765 |
8,843 |
9,745 |
10,242 |
12,842 |
||
Ave. Number of Shares Outstanding (m) |
5.3 |
5.3 |
5.4 |
5.4 |
5.7 |
5.8 |
||
EPS - normalised (c) |
|
|
128 |
138 |
170 |
186 |
175 |
228 |
EPS - normalised fully diluted (c) |
|
|
122 |
132 |
165 |
179 |
169 |
221 |
EPS - (GAAP) (c) |
|
|
120 |
128 |
164 |
180 |
181 |
223 |
Dividend per share (c) |
30 |
32 |
41 |
33 |
35 |
40 |
||
Gross margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||
EBITDA Margin (%) |
22.5 |
21.6 |
21.0 |
19.2 |
19.2 |
20.1 |
||
Operating Margin (before GW and except) (%) |
15.1 |
13.9 |
13.8 |
12.3 |
11.9 |
13.3 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
28,324 |
37,912 |
39,635 |
47,201 |
49,849 |
52,649 |
Intangible Assets |
22,381 |
26,673 |
28,096 |
29,323 |
31,723 |
34,223 |
||
Tangible Assets |
5,158 |
7,115 |
7,050 |
10,434 |
10,334 |
10,034 |
||
Other |
785 |
4,124 |
4,489 |
7,444 |
7,792 |
8,392 |
||
Current Assets |
|
|
42,024 |
42,823 |
49,016 |
52,022 |
68,207 |
65,273 |
Stocks |
101 |
176 |
147 |
185 |
185 |
185 |
||
Debtors |
19,523 |
21,253 |
25,551 |
30,015 |
32,479 |
36,497 |
||
Cash |
21,338 |
20,632 |
22,794 |
21,357 |
35,078 |
28,126 |
||
Other |
1,062 |
762 |
524 |
465 |
465 |
465 |
||
Current Liabilities |
|
|
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(47,338) |
(38,960) |
Creditors |
(28,299) |
(26,206) |
(30,072) |
(34,300) |
(35,838) |
(38,960) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
(11,500) |
0 |
||
Long Term Liabilities |
|
|
(7,657) |
(14,909) |
(10,810) |
(8,276) |
(5,776) |
(3,276) |
Long term borrowings |
(7,657) |
(13,716) |
(9,318) |
(6,516) |
(4,016) |
(1,516) |
||
Other long term liabilities |
0 |
(1,193) |
(1,492) |
(1,760) |
(1,760) |
(1,760) |
||
Net Assets |
|
|
34,392 |
39,620 |
47,769 |
56,647 |
64,943 |
75,686 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
15,944 |
17,311 |
18,366 |
20,290 |
20,804 |
25,297 |
Net Interest |
(127) |
(75) |
63 |
352 |
(200) |
100 |
||
Tax |
(1,456) |
(2,053) |
(2,795) |
(3,329) |
(2,936) |
(4,750) |
||
Capex |
(7,021) |
(9,304) |
(7,789) |
(10,995) |
(11,000) |
(11,500) |
||
Acquisitions/disposals |
(935) |
(7,551) |
(225) |
(486) |
0 |
0 |
||
Financing |
467 |
(345) |
785 |
1,449 |
0 |
0 |
||
Dividends |
(1,550) |
(1,633) |
(1,756) |
(2,237) |
(1,946) |
(2,099) |
||
Net Cash Flow |
5,322 |
(3,650) |
6,649 |
5,044 |
4,722 |
7,047 |
||
Opening net debt/(cash) |
|
|
(8,978) |
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(25,739) |
HP finance leases initiated |
(645) |
0 |
0 |
0 |
0 |
0 |
||
Other |
26 |
(15) |
(90) |
(602) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(13,681) |
(10,016) |
(16,576) |
(21,018) |
(25,739) |
(32,787) |
Source: Esker, Edison Investment Research
|
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Research: Metals & Mining
Notwithstanding COVID-19, Pan African’s (PAF) normalised financial results for FY20 were materially ahead of our expectations, driven by a US$9.9m positive variance in the direct cost of production (see Exhibit 3). In consequence, the group announced a more than fivefold increase in its proposed dividend for the year in US dollar terms to a record ZAR312.9m, putting it among the top 14 dividend-paying precious metals companies globally in terms of yield (see Exhibit 15). While FY20 represented a step change in PAF’s profitability compared with FY19, we believe that another step change is possible in FY21 under the influence of higher gold prices, close control of costs as new projects come on stream, a benign foreign exchange environment, a rising production profile and the maturity of all remaining hedging contracts prior to December 2020.