Netfonds reported solid Q3 figures with higher topline but softer than anticipated bottom line. Further, the company appointed Christian Hammer to the Management Board and prolonged the contracts of Martin Steimeyer and Peer Reichelt. In detail:
Gross sales came in at record € 70.4m (+25% yoy), above our estimate of € 67m, mainly driven by the ongoing positive AuA development, reaching € 30.75bn at the end of September (vs. € 27.2bn in 9M'24), driven by further inflows and solid market performance. On the back of the strong AuA development and the typical delayed revenue recognition, we expect even higher Q4 sales. As material expenses of € 58m remained rather stable (82% relatively to gross sales vs. 81.4% in H1), net sales came in at € 12.7m (+23% yoy), slightly above our estimates of € 12.4m (eNuW).
EBITDA stood at € 2.1m (+11% yoy), below our estimate of € 3.1m. We assume that personnel expenses should have increased to € 6.5m (eNuW: +12% yoy) and other OPEX to € 4.0m (eNuW: +54% yoy). EBT came in at € 0.8m (vs. € 1.2m in Q3'24 vs eNuW: € 1.8m) 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: € 0.1m).
Importantly, especially the ongoing strong AuA development serves as an indicator for future growth that should already start to materialize in Q4. 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. Mind you, Q4 is usually the strongest and most profitable quarter.
Thanks to its proprietary 360° finfire platform, Netfonds should 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. Going forward, we see growth in this segment stemming from three sources, 1) direct customer wins, 2) acquisitions and 3) cooperation with large insurance portfolio holders that could potentially use a whitelabel version of the platform.
Despite the fact that the last growth layer is rather speculative, we continue to consider finfire being the group's key mid- to long-term growth and scalability driver. For FY25, we now expect € 273m gross sales, € 53.8m net sales and an EBITDA of € 12.7m, which is in line with or even above the guidance of € 260-270m gross sales, € 52.5-54m net sales and an EBITDA of € 12-13.5m.
In order to further support growth going forward, Netfonds appointed Christian Hammer to the Management Board. Christian Hammer served more than 13 years as management director of NFS Netfonds. Under his leadership, NFS Netfonds has developed into Germany's largest bank-independent liability umbrella in the industry. Further Netfonds prolonged the contracts of Martin Steimeyer and Peer Reichelt. For us the appointment as well as the prolongations symbol the continuation of the growth of the last years.
BUY with a unchanged PT of € 74.00, based on DCF.
ISIN: DE000A1MME74