Original-Research: Verve Group SE (von GBC AG): BUY
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Original-Research: Verve Group SE - from GBC AG
06.03.2025 / 10:31 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
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Classification of GBC AG to Verve Group SE
Company Name: Verve Group SE
ISIN: SE0018538068
Reason for the research: Research study (Note)
Recommendation: BUY
Target price: 8.30 EUR
Last rating change:
Analyst: Marcel Goldmann, Cosmin Filker
BUSINESS DEVELOPMENT FY 2024
Verve published its preliminary business figures for 2024 on 27 February
2025. According to these figures, the operator of a fully-integrated
advertising software platform (ad-tech platform) recorded a record year
thanks to strong organic growth with a significant increase in revenue of
35.7% to EUR 437.01 million (PY: EUR 321.98 million) and was thus able to
benefit significantly from the ongoing recovery of the advertising market.
In particular, the dynamic growth of 46.0% in the fourth quarter (of which
24.0% was organic growth, excluding Jun M&A and currency effects) to EUR
144.20 million (Q4 2023: EUR 98.7 million) made a significant contribution to
this, with the final quarter also closing with new record figures at revenue
and earnings level.
In addition to the significant organic growth impetus (organic growth
achieved: approximately 24.0%), the Jun Group acquisition carried out in
summer 2024 also further increased the pace of growth.
According to the company, the Group integration of this acquired technology
company is proceeding according to plan. Their technological and personnel
integration is progressing well, with the first successes already visible in
the form of a significantly higher organic growth rate of 10.0% for the Jun
business in the past financial year 2024 (PY: 1.0%). Verve expects to
realise further sales synergies in the current financial year and believes
it is well on track to achieve at least the originally communicated EUR 9.0
million in synergies in the 2025 financial year. In the medium term, the
company even sees further potential for annual sales synergies in the range
of EUR 30.0 million to EUR 40.0 million.
In terms of revenue distribution, the traditionally largest advertising
segment 'Supply Side Platform' (revenue share of SSP: 89.3%) accounted for
the lion's share of revenue, with revenue totalling EUR 390.27 million (PY: EUR
301.39 million). Due to the strengthening of the "Demand Side Platform" as a
result of the Jun acquisition, sales in this segment jumped to EUR 100.55
million (PY: EUR 47.12 million), resulting in a somewhat more balanced segment
mix than before.
The rapid revenue growth recorded resulted primarily from an increase in the
software customer base and the expansion of advertising budgets with
existing software customers. The number of major customers (sales volume > EUR
100,000) on Verve's ad-tech platform increased significantly by 56.8%
year-on-year to 1,140 at the end of the fourth quarter (number of major
customers at the end of Q4 2023: 727). Even excluding their acquisition in
June, the company also reported strong (organic) customer growth of 39.5% to
1,014 software customers on an adjusted basis. At the same time, existing
software customers increased their advertising budgets significantly by
15.0% to a rate of 110.0% at the end of the fourth quarter (net USD
expansion rate Q4 2023: 95.0%). At the same time, the volume of digital
advertising delivered or placed increased significantly by 33.0% to 274
billion at the end of the fourth quarter (advertising ads at the end of Q4
2023: 206 billion).
On the product side, growth was driven in part by increased customer demand
for Verve's innovative ID-less advertising solutions (e.g. in the form of
ATOM 3.0 or Moments.AI). With revenue growth well above the average for the
advertising industry, Verve succeeded in gaining significant market share
and thus further expanding its leading market position, particularly in the
mobile market segment.
Their extremely positive business development was also reflected at all
earnings levels. With EBITDA totalling EUR 128.52 million, the strong level of
the previous year (PY: EUR 128.46 million) was even slightly exceeded.
However, it should be noted at this point that the previous year's figure
was significantly positively influenced by a revaluation of the AxesInMotion
earn-out payment liability (positive special effect of EUR 62.76 million).
Adjusted for special effects (e.g. M&A and restructuring costs or
revaluation of balance sheet items), adjusted EBITDA (Adj. EBITDA) increased
significantly by 40.0% to EUR 133.25 million (PY: EUR 95.17 million). This
resulted in a moderate increase in the adjusted EBITDA margin (Adj. EBITDA
margin) to 30.5% (PY: 29.6%).
In terms of net performance, a clearly positive consolidated result (after
minority interests) of EUR 28.80 million was generated, which was below the
previous year's level (PY: EUR 46.73 million). However, this significant
decline is mainly due to the positive one-off effect from the revaluation of
an M&A-related payment obligation described above.
The company guidance (sales of EUR 400 to EUR 420 million and Adj. EBITDA of EUR
125 to EUR 135 million) raised again by Verve's management at the end of
August 2024 was thus significantly exceeded in terms of sales and was at the
upper end of the communicated earnings guidance range in terms of earnings.
Our sales and earnings forecast was also exceeded (sales of EUR 410.02 million
and Adj. EBITDA of EUR 128.11 million).
With the publication of its preliminary business figures, the ad-tech group
has also provided a rough outlook for the current financial year 2025 and
intends to further concretise this guidance in the further course of the
year (probably in the first quarter). Against the backdrop of an already
good start to the year, Verve's management expects double-digit organic
growth for the current financial year, with this targeted significant
business expansion to be achieved primarily through the increased marketing
of ID-less advertising solutions and an expected strong US advertising
market (Verve's core market).
At the same time as issuing a general outlook for the current financial
year, Verve's management has once again confirmed its medium-term guidance
(sales CAGR: 25.0% to 30.0%; Adj. EBITDA margin: 30.0% to 35.0%).
Accordingly, the technology company expects continued high growth momentum
in the form of double-digit profitable growth rates beyond the current
financial period.
In light of their strong performance, the continuation of their high growth
momentum and their extremely positive company outlook, including
confirmation of the medium-term guidance, we have left our previous sales
and earnings forecasts for the financial years 2025 and 2026 unchanged. We
have also included the 2027 financial year in our detailed estimate period
for the first time with specific estimates.
Based on our confirmed forecasts and the first-time inclusion of the 2027
financial year in our detailed estimate period, which have also led to a
higher starting point for the estimates for the subsequent financial years,
we have significantly raised our previous price target to EUR 8.30 per share
(previously: EUR 6.70 per share). In view of the current share price level, we
therefore continue to assign a 'BUY' rating and continue to see significant
upside potential in Verve shares.
You can download the research here: http://www.more-ir.de/d/31910.pdf
Contact for questions:
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Date (time) of completion: 06/03/2025 (8:21)
Date (time) of first distribution: 06/03/2025 (10:30)
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2096382 06.03.2025 CET/CEST
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