Inderes Group - Q3: All key items above expectations, market headwind easing - SEB

Outcome: Sales and EBITA above, thanks to event business in September

Inderes Q3 sales landed at EUR 4.2m, topping our estimate of EUR 4.0m by 4%. As Jul-Aug sales were already reported the deviation owes to September sales, which increased by 20% to EUR 1.7m, beating our estimate of EUR 1.5m clearly. Q3 sales increased 11.5% y/y driven by strong growth in IR software. The company also referred to good growth in the event business and Swedish projects. Additionally, we flag that the research business continues its growth and the number of commissioned research clients keeps increasing. At end Q3 the number of research contracts was up 4% y/y to 149(up by 2 new contracts q/q), topping our estimate of 148 contracts. The Swedish revenue was 22.4%of sales (21.4% year ago), i.e. EUR 0.9m. We had also expected Swedish sales to be EUR 0.9m, but looking behind the rounded numbers the Swedish growth topped our estimate.

Splitting sales into recurring and project revenue, we note that both revenue streams came in equally above our estimate. The recurring revenue was EUR 2.8m (SEB est. EUR 2.7), increasing by 9% y/y.
Q3 EBITA landed at EUR 1.0m, topping our estimate by EUR 0.1m. On cost lines there were no major surprises vs. our estimates and the beat in EBITA owes to stronger than expected September sales. The number of employees was 118, in line with our estimate. During the past 12 months Inderes delivered services for 430 listed companies, marginally down from the previous quarter (Q2/24: 432 companies), but still up 1% y/y. Consequently the read-x is that Inderes has managed to earn more from its existing clients and we think the key driver for this is the successful cross-sales of IR software.

Outlook: Guidance repeated

Inderes reiterated its FY guidance and sees sales growing from 2023 (EUR 17.2m) and EBITA margin improving from the 2023 level (10.6%). We expect FY24 sales growth of 8% (sales of EUR 18.9m) and EBITA margin of 14.3%.

Impact: Positive reaction warranted

In addition to the beat on key headlines, the Swedish sales, number of research agreements and recurring revenue were better than expected. This coupled with the more optimistic comments on market outlook (reassuring signs of improving IPO activity) leads us to conclude that the Q3 report surprised on the positive side.

Conference call details: Finnish call at 9:30 and English call at 13:00 (EEST)

You can follow the Finnish webcast starting at 9:30 EEST on October 22, 2024,at
https://inderes.videosync.fi/inderes-q3-report-2024

You can follow the English webcast starting at 13:00 EEST on October 22, 2024,at
https://hca.videosync.fi/2024-10-22-inderes/register