The Platform Group — Significant acceleration in growth in Q324

The Platform Group (FRA: TPG)

Last close As at 03/12/2024

EUR7.70

−0.06 (−0.77%)

Market capitalisation

EUR134m

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Research: Consumer

The Platform Group — Significant acceleration in growth in Q324

The Platform Group (TPG) reported a strong acceleration in revenue growth and profitability in Q324 as its growing industry presence and subsequent underlying growth provided an increase in most KPIs during the period. Its valuation continues to look attractive versus its online peers if management delivers on its expected growth rates.

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Consumer

The Platform Group

Significant acceleration in growth in Q324

Online services

Spotlight - Update

25 November 2024

Price

€7.48

Market cap

€151m

Share price graph

Share details

Code

TPG

Listing

Xetra

Shares in issue

20.2m

Net debt (excluding leases)
as at 30 September 2024

€82.9m

Business description

The Platform Group is a leading European online ecommerce platform company. Its software solutions connect partners in many sectors to new ecommerce customers across numerous online channels. Its services include marketing, customer support, payment and delivery.

Bull

Connects commercial partners that lack scale to access a high number of online stores.

Large (c 13,000) and growing (+11% in H124) number of commercial partners across many industries.

Investment requirements beyond M&A are low, in particular software for platform solutions.

Bear

E-commerce markets are competitive.

M&A aspirations (three to eight acquisitions per year) present execution risk.

Expansion into new business verticals and geographies may bring different operational challenges and financial rewards.

Analyst

Russell Pointon

+44 (0)20 3077 5700

The Platform Group is a research client of Edison Investment Research Limited

The Platform Group (TPG) reported a strong acceleration in revenue growth and profitability in Q324 as its growing industry presence and subsequent underlying growth provided an increase in most KPIs during the period. Its valuation continues to look attractive versus its online peers if management delivers on its expected growth rates.

Company financials

Year
end

Revenue
(€m)

Adjusted EBITDA (€m)

PBT
(€m)

EPS
(€)

DPS
(€)

EV/EBITDA (x)

P/E
(x)

12/22*

387.4

16.8

24.5

N/A

0.0

13.9

N/A

12/23*

440.8

22.6

33.0

1.5

0.0

10.4

5.0

12/24e**

510.0

30.5

N/A

N/A

N/A

7.7

N/A

12/25e**

570.0

48.5

N/A

N/A

N/A

4.8

N/A

Source: Company accounts and guidance. Note: *Pro forma. **Forecasts are the midpoint of management’s guidance.

Strong revenue growth drives profitability

TPG published summary financial statements (headlines for income statement and net debt) and key performance indicators (KPIs) for the nine months to September 2024 (9M24). Growth in all KPIs (number of partners, +11%; number of orders, +22%; average order value, +5%; and active customers in the last 12 months (LTM), +5%) drove gross merchandise volume (GMV) (+c 30% to €608.4m) and revenue (+31% to €371.2m) in 9M24. M&A contributed c 18% revenue growth while organic growth was c 13%. The revenue growth and ongoing cost efficiencies provided leverage of all costs except distribution, to give adjusted EBITDA growth of 70% to €24.6m (6.6% margin). Q324 provided the strongest year-on-year growth rates in GMV (+63%), revenue (+44%) and adjusted EBITDA (+466%) of FY24 so far. All KPIs, except active customers LTM and adjusted EBITDA margin (5.0%), improved sequentially (ie quarter-on-quarter). Cash increased to €17.2m (H124: €15.1m) and net debt to €82.9m (H124: €53.1m). Management targets a similar year-end absolute net debt (2.6x EBITDA), dependent on M&A.

Financial guidance reiterated, more M&A expected

Management has reiterated its September 2024 financial guidance for FY24 and FY25. The midpoint of the FY24 guidance implies GMV up 19%, revenue down 11% and adjusted EBITDA down 27% (4.3% margin) in Q424. The comparative Q423 was boosted by one-off car sales. The guidance does not include any contribution from three acquisitions, including TPG entering the US, that are expected to complete in either December 2024 or January 2025.

Valuation: Discount to online non-food peers

TPG’s EV/EBITDA multiples for FY24 and FY25 of 7.7x and 4.8x, respectively, compare with the medians for online non-food retailer peers (see our initiation note) of 10.1x and 8.6x. While TPG’s free float and liquidity might justify a discount to the peers, the size of the discount appears excessive given management’s guidance for growth in revenue and profitability.

General disclaimer and copyright

This report has been commissioned by The Platform Group and prepared and issued by Edison, in consideration of a fee payable by The Platform Group. 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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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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United Kingdom

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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London │ New York │ Frankfurt

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United Kingdom

General disclaimer and copyright

This report has been commissioned by The Platform Group and prepared and issued by Edison, in consideration of a fee payable by The Platform Group. 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 2024 Edison Investment Research Limited (Edison).

Australia

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.

New Zealand

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

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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