Lemonsoft extensive report: Toward earnings growth era after transformation phase

Translation: Original published in Finnish on 1/21/2026 at 7:00 am EET.

We reiterate our Accumulate recommendation and EUR 7.1 target price for Lemonsoft. Last year was a time of major changes for Lemonsoft, both in terms of its organization and its technology platform. The transformation phase is nearing its end, allowing the company now to focus on accelerating sales and product development. While the growth outlook for 2026 remains cautious in our view, expectations are also moderate at the current share valuation (2026e EV/EBIT 12x). Thus, we consider the risk/reward ratio attractive.

SaaS-based provider of enterprise resource planning (ERP) systems for SME companies

Lemonsoft's ERP system scales according to customer needs and is designed to provide all of a company's key functions and industry-specific features in a single, comprehensive solution. The company's core target group consists of SMEs with 10–250 employees, and the most important sectors in terms of strategy are industrial manufacturing, as well as wholesale and retail (over 50% of revenue). Lemonsoft invests heavily in product development and is also expanding its product portfolio through acquisitions. Since December 2019, the company has completed a total of 12 acquisitions.

Strong market position in industrial manufacturing and wholesale

Lemonsoft's market growth and potential are driven by the low level of digitalization in its customer industries, the growing need for productivity-enhancing solutions, and the ongoing transition to SaaS software solutions. Lemonsoft's comprehensive, industry-specific, SaaS-based solution and its strong market position in industrial manufacturing (15% market share) and wholesale (5%) give it a solid foundation for continued competitiveness. We continue to see clear growth potential for Lemonsoft in its current target markets, even though the weak economic environment in recent years and, to some extent, the company's own internal challenges have slowed organic growth. 

Profitable growth and good cash flow

Lemonsoft’s investment profile combines growth, high profitability and cash flow with good business model continuity, scalability and predictability. The company's revenue has increased by an average of 20% in 2017-2024, and our 2025 estimate for the adjusted EBIT % is 24%. While most of the growth has historically been organic, the role of acquisitions has become more prominent in recent years. The expanded product portfolio and customer base resulting from acquisitions also offer the company clear opportunities for upselling and cross-selling, the full potential of which has yet to be realized. In addition, changes in the organization and technological development in recent years have weakened profitability. However, the foundation for profitable growth is stronger now than before, and the growth upturn should also begin to be reflected in the company's earnings growth. Lemonsoft's financial target is to achieve an average adjusted EBIT growth of 25% in 2026-2028. The company plans to achieve profit growth through (1) increasing market share in its core segments, (2) disciplined cost control, and (3) selective acquisitions. We currently forecast an average adjusted EBIT growth of approximately 13% (organically) during the company's strategy period.

Valuation is moderate in relation to accelerating earnings growth

Based on our forecasts, Lemonsoft's EV/EBIT ratio, adjusted for PPA amortization from acquisitions, is 15x in 2025. While the ratio appears neutral when viewed solely in relation to the lackluster short-term development, we believe that Lemonsoft's medium-term earnings potential is clearly higher than the 2025 level. If the market starts to pick up and the earnings growth that we forecast materializes, the valuation already looks very moderate for the coming years (2026e-2027e EV/EBIT 12x-11x). There is also potential to accelerate earnings growth going forward through successful acquisitions.