Solid Q2 preliminary numbers beat estimates

Subject: Yesterday Netfonds reported strong preliminary Q2 numbers above our estimates on both the top and bottom lines. The upper end of the guidance seems within reach. In detail:

• Gross turnover grew by 20% year-on-year to €56.5 million, above our estimates of €56 million. The main driver was strong AuA and AuM development with new record levels of €26.2 billion (+10% YTD; 15% yoy) and €3.3 billion (20% YTD; 18% yoy), both well above our estimates of €25.7 billion and €3.2 billion (eNuW old). As a result, Netfonds should comfortably reach our FY24 estimates of €27 billion AuA and €4.0 billion AuM.
• EBITDA exceeded expectations at €2.0 million (122% qoq, 37% yoy vs eNuW: €1.6 million)), mainly driven by revenue growth combined with stable OPEX compared to Q1, demonstrating the strong operating leverage of the business model.

Looking ahead, we see further sequential growth on the back of 1) value-enhancing smaller transactions (i.e. MFK and Comfort Finance) at very reasonable prices (eNuW: 4-8x EBITDA) 2) the launch of a proprietary money market fund with already over €75m end-Q2 and 3) the acquisition of an umbrella in Luxembourg. All of this should start to materialise within Q3/Q4´24. Hence the confirmed FY24 guidance of €220-230 million in gross turnover And €41.5-43 million net sales must be easily accessible.

Consolidation of the insurance brokerage market in full swing. In addition to the strong operational performance, the Group’s proprietary 360° finfire platform is seen as a driver for market consolidation, particularly in the insurance brokerage market which, unlike the investment advisor market, is still highly fragmented. finfire makes selling and managing insurance products much easier, unlocking huge cross-selling opportunities as the already on-board investment advisor can additionally offer a wide range of insurance products to its clients. finfire therefore remains the company’s key growth and scalability driver in the medium to long term. The expected strong organic growth momentum is expected to be accompanied by further value-adding M&A deals which should come at a very reasonable price.

Overall, we believe that Netfonds is well on track to achieve its medium-term target of €59 million in net sales (vs. eNuW: €59 million) and €23 million in EBITDA (vs. eNuW: €20 million) in financial year 2026.

BUY with an unchanged PT from€74.00based on DCF.