Innofactor Q4 on Thursday: We forecast guidance to reflect expectations of continued growth
Translation: Original comment published in Finnish on 2/6/2024 at 6:21 am EET.
Innofactor will publish its Q3 report on Thursday at 9.00 am EET. We expect revenue growth to have slowed slightly in Q4, but to have been good given the more challenging market environment. We expect profitability to have been satisfactory and slightly below the level of the comparison period. The focus in Q4 is of course also on guidance for the year ahead, which we expect to again indicate growth in revenue and EBITDA. In addition, we expect the company's board to propose a small increase in the dividend.
We estimate that revenue growth continued to be good given the market environment
Innofactor performed well in Q2-Q3, even though there are otherwise clear weaknesses in the IT services market, which also provides some support for Q4. We expect that the uncertainty will start to show up in Innofactor's numbers and it is now important to succeed in sales. We expect Innofactor's revenue growth to slow down to 5% in Q4, to 21.6 MEUR (Q2 organic 11% and Q3 8%). We also look forward to hearing your comments on the market, order book developments and outlook.
Innofactor announced that it has decided to expand its financial reporting starting from the 2023 financial statements release, so that the company reports the key indicators of the four solution areas separately. We feel this improves the transparency of the company’s business and its drivers.
We expect profitability to remain at a satisfactory level
We expect EBITDA to remain flat at 2.5 MEUR. Thus, we forecast the EBITDA margin to decline slightly to just above 11% (Q3'22 11.6%), driven by billing rates in countries other than Finland. Profitability is weak for Innofactor's structure, with other countries clearly depressing development and Finland holding the line with a strong performance. However, given the challenging market, we consider the level satisfactory. In the other lower lines, we forecast depreciation and financial expenses to be slightly higher than in the comparison period. As a result, we forecast EPS of EUR 0.03 in Q4, one cent lower than in the same period last year. EPS for the full year would thus be EUR 0.10 (2022: 0.09). We estimate that the board will propose a dividend of EUR 0.07 per share for 2023 (2022: 0.06). In addition, we believe that share buybacks are also very possible in the current year.
As usual, we expect the company to guide revenue and EBITDA growth in 2024
Ahead of the Q4 report, we forecast Innofactor's revenue to grow by 3% to 82 MEUR and EBITDA to increase to 9.0 MEUR or 10.9% of revenue in 2024 (2023e: 10.9% of revenue or 8.7 MEUR). As usual, we expect the company's revenue and EBITDA guidance to anticipate growth year-on-year. However, we note that the current year's growth is subject to more uncertainty than in previous years, due to uncertain customer demand in the IT services market.
Innofactor
Innofactor operates in the IT sector. The company is focused on offering services in digitization and cloud-based solutions. Examples of business areas include sales, marketing and communication, business intelligence, and CRM (Customer Relationship Management). The largest presence is found in the Nordic market and customers consist of small and medium-sized corporate customers. The head office is located in Espoo.
Read more on company pageKey Estimate Figures24.10.2023
2022 | 23e | 24e | |
---|---|---|---|
Revenue | 71.1 | 80.0 | 82.1 |
growth-% | 7.18 % | 12.41 % | 2.69 % |
EBIT (adj.) | 5.0 | 5.8 | 6.2 |
EBIT-% (adj.) | 7.06 % | 7.29 % | 7.53 % |
EPS (adj.) | 0.10 | 0.11 | 0.12 |
Dividend | 0.06 | 0.07 | 0.08 |
Dividend % | 5.70 % | 5.45 % | 6.23 % |
P/E (adj.) | 10.76 | 11.76 | 10.53 |
EV/EBITDA | 6.47 | 6.57 | 6.02 |