BUY
Original-Research: USU Software AG - from NuWays AG
Classification of NuWays AG to USU Software AG
Company Name: USU Software AG
ISIN: DE000A0BVU28
Reason for the research: Update
Recommendation: BUY
from: 07.03.2024
Target price: 30.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Philipp Sennewald
Q4 preview: Sequential improvements following license recovery
Topic: USU Software is going to release its 2023 annual report on March 28th, which is seen to show further sequential improvements during Q4, partly driven by a recovery of the license sales as well as continuously growing SaaS sales.
Q4 sales are seen coming in at € 34.9m, implying a muted 4.0% yoy but showing further sequential improvements with 6.3% qoq. This should be driven among others by a recovery of the license revenues, which we expect to come in at € 3.1m thus accounting for almost half of the FY license sales (eNuW: € 6.5m) but still 30% down yoy. Mind you, that license revenues deteriorated in the first 9M of ’23 following prolonged sales cycles. Besides this, SaaS sales look set to show further strong growth of 20% yoy to € 4.6m. Overall, FY ’23 sales are seen at € 133m, hence meeting the lower end of the company’s guidance (€ 132-139m).
While growth remains muted, Q4 adj. EBITDA is expected at € 4.3m, indicating an improved margin of 12.4% vs Q3 (+3.9pp qoq). Again, the main driver behind this is seen to be the sequential increase in license sales, which usually show higher initial margins compared to subscription-based SaaS revenues. Yet, FY adj. EBITDA is anticipated to amount to € 13.1m, thus reaching the lower end of the guidance (€ 13-15m) but also implying a margin decline by 3.4pp to 9.9%.
2024 another transition year. While sequential improvements should continue throughout 2024e, we still expect profitability to be slightly below the levels of ’21 & ’22 with an adj. EBITDA margin of 12.5%. This is mainly due to the ongoing SaaS transformation, where management aims for a >75% share of new customer business by FY ’26 and hence a consequent decline in license sales. While this will have an adverse short-term effect on profitability, margins are seen to strongly expand in mid-term (eNuW: 17.1% by FY ‘26e), as the annual subscription payments of the SaaS contracts should equal perpetual license sales including maintenance after c. 3 years.
Although another transition year is likely laying ahead, current valuation appears undemanding at 13x EV/EBIT ‘24e (vs historic avg. of 20x). Reiterate BUY with an unchanged PT of € 30 based on DCF.
You can download the research here:
http://www.more-ir.de/d/29087.pdf
For additional information visit our website
www.nuways-ag.com/research.
Contact for questions
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden
www.nuways-ag.com/research.
Kontakt für Rückfragen
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
++++++++++
Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
++++++++++
-------------------transmitted by EQS Group AG.-------------------
The issuer is solely responsible for the content of this research. The result of this research does not constitute investment advice or an invitation to conclude certain stock exchange transactions.
P R O D U C T S U G G E S T I O N S
The information presented here has been provided by our content partner EQS-Group. The originator of the news is the respective issuer, the company relating to the news, a publication service provider (press or information agency) which uses the distribution service of EQS to transmit company news to shareholders, investors, investors or interested parties. The original publications and other company-relevant information can be found at eqs-news.com.
The information you can access does not constitute investment advice. The presentation of our cooperation partners, where the implementation of investment decisions would be possible depending on the individual risk profile, is solely at the discretion of the person using the service. We only present companies of which we are convinced that the range of services and customer service will satisfy discerning investors.
If you are considering leverage products, familiarise yourself with the typical characteristics of the financial instruments beforehand. Take the time to determine the risk content of the planned investment before making an investment decision. Bear in mind that a total loss cannot be ruled out with leverage products.
For newcomers to the subject, we offer various options in both the training and the tools section, through which you can train theoretical knowledge and practical experience and thus improve your skills. The offer ranges from participation in webinars to personal mentoring. The range is continuously being expanded.
1 Lab features are usually functionalities that emerge from the think tank of the investor community. In the early stages, these are experimental functionalities whose development process is largely determined by use and the resulting feedback from the community. When integrating external services or functionalities, the functionality can only be guaranteed to the extent that the individual process elements, such as interfaces, interact with each other.