Last close As at 05/08/2026
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Research: TMT
EQS’s interims showed good progress in its evolution into a leading technology provider to corporate entities. With its revamped cloud-based COCKPIT platform scheduled for launch in Q418 and an ever-tightening regulatory environment, the elements are in place to underpin mediumterm growth. Additional costs weigh on current-year profitability and FY18 EBITDA guidance was reduced, but our view is that this is an investment in making the group a credible and scalable partner in investor relations and compliance, with an attractive monthly recurring revenue base.
EQS Group |
Software |
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EQS is a client of Edison Investment Research Limited |
Transition year
EQS’s interims showed good progress in its evolution into a leading technology provider to corporate entities. With its revamped cloud-based COCKPIT platform scheduled for launch in Q418 and an ever-tightening regulatory environment, the elements are in place to underpin medium- term growth. Additional costs weigh on current-year profitability and FY18 EBITDA guidance was reduced, but our view is that this is an investment in making the group a credible and scalable partner in investor relations and compliance, with an attractive monthly recurring revenue base.
Providing for a market need
EQS operates in three inter-related segments: corporate communications and PR; IR; and governance, risk and compliance. It is transitioning to a technology partner to the corporate sector, providing tools that enable relevant individuals to meet regulatory and compliance obligations and to handle IR efficiently. Having started out rooted in meeting the needs of the IR and company secretariat functions, EQS is now bringing together its various offerings onto a single cloud-based platform, which will allow it to expand and scale. The digital governance, risk and compliance market is developing rapidly, with the group anticipating double-digit market growth in this segment. There are no major incumbents in Germany or Europe.
New COCKPIT launches next phase
FY18 is a transition year with management energy primarily focused on the new platform, giving the group a robust and scalable resource. The German domestic market has been helpful, with a healthy IPO pipeline providing new IR clients. In compliance, EQS has launched Insider Manager, benefited from being an authorised issuer of Legal Entity Identifiers and added Integrity Line’s whistle-blowing facility. In FY19, the new COCKPIT will enable EQS to offer clients integrated workflow platforms across both compliance and IR segments. It should be able to secure a larger share of client spend, generate ‘sticky’ monthly recurring revenues and improve the quality of earnings.
Valuation: Well underpinned
With the current investment draining earnings, peer-based comparisons are of limited value. On an FY1 EV/sales basis, EQS is trading at a +50% discount. On a reverse DCF, taking the company’s 2018–25e revenue CAGR guidance of around 17% and assuming a WACC of 8%, the current share price assumes a mid-term EBITDA margin of c 15%. Given the element of execution risk, the shares appear to be well underpinned at current levels.
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Edison estimates
Source: Company accounts, Edison Investment Research |
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Deutsche Börse is a broad financial market infrastructure business with a clear plan to realise structural growth opportunities across its pre-trade, trading and clearing, and post-trade activities. Selective acquisitions will be sought to augment this potential. The shares trade on a marked discount to global peers.