Carnegie Investment Bank
Raketech Group Holding
Date Title Alternative
2024-05-17 Numbers in line with profit warning Download | Show Close
2024-05-06 Cutting full-year guidance Download | Show Close
2024-04-17 Updating of Google's algorithms brings increased uncertainty Download | Show Close
2024-02-26 Guidance for cashflow to remain strong Show Close
Research | 26 Feb 2024 | Raketech Group Holding

Guidance for cashflow to remain strong

 

In line with guidance

Revenues for Q4 were reported at EUR22.8m, representing growth of 45.3%. This was driven by the Sub-affiliation segment, which has grown by 228% Y/Y. EBITDA for the quarter came in at EUR0.6m, which means a margin at 26.3%. Full-year EBITDA reached EUR23.6m, in the middle of the guidance range, versus our EUR25m forecast towards the upper end. Free cash flow was EUR4.8m for Q4. Full-year free cash flow came in at EUR14m, in line with guidance for EUR13–15m. Overall, a stable quarter for the company.

Adjusting estimates to reflect guidance

This year has started with EUR7.3m in revenues for January, which would correspond to growth of about 38% for the whole of Q1’. The company has issued full-year guidance for EBITDA of EUR24–26m and free cash flow before earn-outs at EUR22–24m. Based on this guidance, we reduce our EBITDA estimates by 13% for 2024 and 15% for 2025. These adjustments also reflect the change in the company’s revenue mix, with Sub-affiliation having a gross margin of 15% compared with Affiliation marketing’s almost 90% gross margin. Growth over the forecast period will be dominated by Sub-affiliation. The large changes in our 2024–25 EPS estimates stem from EPS in euros being close to zero, and so we cut 2024e EPS from EUR0.34 to EUR0.26 and 2025e from EUR0.41 to EUR0.31. We believe, however, the company’s focus should be on free cash flow.

 

Potential for high capital returns to shareholders

We adjust our fair value to SEK28–32 (34–36). As we now have an understanding of the earn-outs associated with Casumba, we believe Raketech could potentially be able to return EUR25–30m to shareholders during 2024–26, representing more than 40% of its market cap. We see potential for increasing dividends or buybacks in the future. Moreover, we believe the sizeable discount at which Raketech trades versus other affiliates will be somewhat reduced now the uncertainty regarding the earn-outs has been eliminated. We expect that some of the discount will remain as Raketech has a lower proportion of revenues through revenue share than GIG or Better Collective, for example.

 

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2023-11-17 Full-year guidance raised Show Close

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