Verve's Q1 report was broadly in line with our cautious expectations, confirming a seasonally softer but stable start to the year. Revenue grew 4% year-on-year (like-for-like), while margins contracted, reflecting substantial FX headwinds and planned front-loaded sales force investments. However, cash flow was the clear highlight of the report, with operating cash flow exceeding our estimate, supported by the release of receivables tied up at the end of Q4’25, alongside maximizing utilization of its securitization program, which has now reached the 100 MEUR ceiling. Management also confirmed that approval has been received in Q2 to add two new legal entities to the program, expected to contribute more meaningfully from H2'26. While we view this as a step in the right direction, we are cautious about reading too much into Q1 cash flows. Beyond an upward revision to our cash flow estimates, our P&L forecast remains broadly unchanged, with the decisive proof points on cash conversion and sales productivity acceleration remaining squarely on H2'26. We reiterate our Accumulate recommendation while increasing our target price to SEK 20 (was SEK 18).

Mixed customer metrics and a capitalized-driven EBITDA beat

Reported revenue came in at 137 MEUR, representing a like-for-like growth of 4% (reported growth ~26%) and was broadly in line with our estimates of 140 MEUR. The topline growth was, as we expected, pressured by tough Q1'25 comparisons, FX headwinds, and the lingering impact of the large customer loss in Q4'25. Operationally, KPIs showed mixed signals: the net dollar expansion rate (NDER) dropped to 90% (Q4'25: 92%), while customer retention remained highly resilient at 98%, and the customer base expanded. Adjusted EBITDA of 28 MEUR beat our 26 MEUR estimate, but the beat was largely driven by higher-than-expected capitalized development costs. The year-on-year margin compression of about 2 pp was temporarily dragged by the immediate costs of the front-loaded 10 MEUR sales force expansion, which will only begin to generate operating leverage in H2'26. Free cash flow increased substantially year-on-year and came in at 35 MEUR (-10 MEUR), but was at the same time supported by working capital timings and increased use of the securitization program. Adjusted leverage ticked up marginally to 3.1x (Q4'25: 3.0x) as a result of the 50 MEUR bond tap in February, as well as settled earn-out payments.

Minor revisions with an unchanged H2-weighted outlook

Following Q1, we have made modest recalibrations to our forecasts. We have adjusted our 2026 revenue estimate marginally to 681 MEUR (was 684 MEUR) and modestly raised our 2026 adjusted EBITDA estimate to 162 MEUR (was 156 MEUR), reflecting higher capitalized development. Our adjusted EBIT estimates remain unchanged, reflecting a corresponding increase in our D&A expense estimates. Due to the strong Q1 working capital release, we have raised our 2026 free cash flow estimate to 86 MEUR* (was ~70 MEUR). We await more tangible proof of cash generation in H2 before adopting a more optimistic outlook for outer years. We expect Verve's leverage to decline to ~2.7x by year-end 2026 (was 2.8x), on track to reach the 1.5-2.5x target range during 2027.

Valuation remains attractive, but execution is key to re-rating

Verve's valuation remains attractive on absolute figures, trading at a 2026e EV/EBITDA of ~5x, an adjusted EV/EBIT of 6x, and an EV/FCFF of 9x. These multiples are depressed both historically and relative to comparable ad tech peers, which we believe continues to reflect the market's skepticism about the company's ability to turn earnings into free cash flow and reduce its elevated leverage. Before any meaningful re-rating can occur, we believe the market's patience demands that management demonstrate sustained cash conversion improvements and prove that platform efficiencies are durable post-unification. The platform is now unified and stable, and the reiterated 2026 guidance suggests management remains confident in its trajectory. If Verve can continue to prove through consistent execution over the coming quarters that cash conversion is on track and leverage is declining toward its long-term targets, the stock has a strong re-rating potential, in our view. However, we believe the company has much to prove before a stronger scenario can be priced in with confidence.