Last week, Netfonds reported mixed Q2 figures with softer than expected top- and bottom line. Positively, OPEX remained rather stable yoy. In detail:
Gross sales came in at € 57.8m (2% yoy), below our estimate of € 64.2m, despite a very positive AUA development reaching € 30bn end of July (vs € 28.3bn in FY24), driven by further inflows and solid market performance. The topline decline can partially be explained by delayed revenue recognition in Q2 that should be visible in higher Q3 sales. Positively, material expenses should have declined in absolute numbers and remained stable relatively to sales at 81.5% (vs 81.4% in Q1'25) resulting in net sales of € 10.7m (-2% yoy vs eNuW: € 11.9m).
EBITDA stood at € 2.0m (-3% yoy), below our estimate of € 2.7m, and Q1 figures of € 2.8m, mainly driven by the softer topline development. That said, personnel expenses should have remained rather stable at € 6.0m (eNuW, 2% yoy) and other OPEX should have even declined to € 2.7m (eNuW, -10% yoy, -16% qoq vs eNuW old: € 3.2m). EBT should have come in at € 0.9m (vs € 1.4m in Q2'24 vs eNuW: € 1.6m) with D&A that should have remained stable (eNuW: € 1.2m) and a financial result that was burdened by the interest payment for the bond (eNuW: € -0.2m).
In a nutshell, Q2 was not as strong as anticipated, but nothing to be worried about. Especially the ongoing strong AuA development serves as an indicator for future topline growth that should already start to materialize in Q3 . Knowing that the more profitable AuM's are growing more dynamically, EBITDA margins should expand further. Hence, we still see the company well on track to reach its FY25 guidance.
As the anticipated growth should be strongly supported by Netfonds proprietary 360° finfire platform, Netfonds should additionally enjoy the typical scale effects of a growing platform business. Moreover, finfire is seen to fuel the consolidation of the insurance broker market that is, in contrary to the investment adviser market, still highly fragmented. Prospectively, we not only see growth in this segment stemming from direct customer wins and acquisitions, but also from cooperation with large insurance portfolio holders that could potentially use a whitelable version of the platform. Despite the fact that the last growth layer is rather speculative, we nevertheless continue to consider finfire to remain the Groups key mid- to long-term growth and scalability driver.
For FY25 we now expect € 268m gross sales, € 53.8m net sales and an EBITDA of € 12.6m, which is in line with the guidance of € 260-270m gross sales, € 52.5-54m net sales and an EBITDA of € 12-13.5m. Both, guidance and our estimates can be considered as conservative and with room for an update until eoy.
BUY with a reduced PT of € 74.00 (old: € 78.00), based on DCF.
ISIN: DE000A1MME74
