Swissnet kicked off FY26 with two commercial updates, supporting our view that the group's international expansion and IoT strategy continues to gain tangible traction.
In detail, the company announced the implementation of a guest room management system (GRMS) across multiple hotels in Abu Dhabi, a project valued at c. AED 5m (~ CHF 1.1m). It is scheduled to be completed withing the next five months. In our view, this project further strengthens Swissnet's footprint in MENA and highlights its ability to deliver high-scale hospitality technology projects that, typically offer follow-on potential via service, maintenance and additional digital infrastructure updates. Moreover, the company extended an existing IoT cooperation with a European construction customer, hereby deploying another c. 1,700 IoT SIM cards to securely connect and monitor digital retail touchpoints. This upsell after only a short usage period should be seen a positive sign of customer satisfaction and a strong indicator for the scalability of Swissnet's recurring revenue potential.
Operationally, Swissnet already showed the targeted pattern with strong top-line momentum and improving margins. H1'25 sales almost doubled to CHF 11.3m, supported by consolidation effects (Swissnet & Lokalee) as well as organic traction across SaaS and Infrastructure. Importantly, the share of recurring sales remained high at 77% paired with <5% churn, provides sound revenue visibility and reduced volatility compared to typical project-heavy ICT peers. On the bottom-line, the adj. EBITDA of CHF 2.3m (20% margin) reflects operating leverage as well as early synergy effects. With the full integration targeted in FY26, further synergies are expected to materialize, providing additional margin tailwinds.
Looking ahead, FY26 should mark the first year in which the Swissnet platform model becomes fully visible in the numbers via: (i) scaling of Lokalee and international SaaS cross-selling, (ii) continued expansion of recurring revenues, and (iii) a leaner cost base following the integration process. To be precise, we expect strong top-line momentum to prevail in FY26e, resulting in 59% higher sales of 42.7m and a significantly improved reported EBITDA margin of 20% (CHF 8.5m).
Despite the operational progress, valuation remains undemanding as shares trade at 5.7x EV/EBITDA FY26e (3.0x FY27e). We thus confirm our BUY recommendation and leave our PT unchanged at € 20, based on DCF.
