London, UK, 22 September 2020

Edison issues outlook on CREALOGIX Group (CLXN)

CREALOGIX is a leading, global, digital banking engagement platform provider. In FY20, revenues grew 1.7% to CHF103.7m, with adjusted EBITDA rising to CHF2.4m, slightly below our expectations. Revenues grew 13.2% in H220 vs H120, with minimal impact from the COVID-19 pandemic. Recurring revenues continued to rise to 44%, with SaaS 17% of the mix, while international sales fell to 62%. Management announced a reorganisation (with a CHF7m provision) to accelerate the SaaS transition, funded by the CHF25m convertible H120 bond refinancing. The SaaS transition will be a drag in FY21 (although we expect stronger margins in H221), before a full year of benefit in FY22. We have lowered our forecasts slightly to reflect a more uncertain global economic outlook.

Looking at CREALOGIX's trading peers suggests a valuation of c 3-5x revenues and c 15x EBITDA could be achievable as CREALOGIX emerges from its SaaS transition. If we apply the peer group EBITDA multiple to our estimates for CREALOGIX, it suggests an EV of CHF155m in FY22 and CHF187m in FY23, a premium of c 32% to today's EV and a 27% uplift in share price. A multiple of 3x revenues would imply an EV target of CHF350m+ in the medium term. 

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