Last week, 123fahrschule published a sound set of FY ‘23 results. Total sales increased by 24% yoy, coming in at € 20.6m (eNuW: € 20.2m; eCons: € 21.0m). In spite of a slight decrease in the number of private customer registrations, sales growth was still driven by the Private Customers segment, where sales grew by 16% yoy to € 15.6m (eNuW: € 15.9m). The Professional Driver Education segment continued its strong growth momentum, as sales were up 138% yoy to € 2.3m. Importantly, sales from the Driving Instructor Training segment regained traction in Q4 (+106% yoy), as FY sales came in at € 2.7m (+22% yoy; eNuW: € 2.2m), which was largely due to efficiency gains.

FY EBITDA came in at € -0.8m (eNuW: € -0.7m; eCons: € -0.4m), which is largely in line with expectations. After a neutral 9M EBITDA, the full-year figure, once again, underpins the company's strong seasonality, which is reflecting (1) a general reluctance of customers to take driving lessons during Christmas season as well as (2) higher OpEx based on built-up provisions for vacation accruals which are cumulated at YE. However, this represents a substantial improvement compared to an EBITDA of € -2,7m in FY ‘22.  In our view, this shows the effectiveness of the cost-cutting measures introduced in December 2022, whose implementation was fulfilled in 2023.

Going forward, the company looks set to remain on its growth path, as sales are seen to grow by 13% yoy to € 23.2m in FY’ 24e (eNuW; eCons: € 24.2m), which should be driven by the Private Customer segment (+12% yoy) based on increased capacity of driving instructor FTEs (+20% yoy at YE ‘24e). Yet, we also expect a contribution from the Professional Driver Education segment (+20% yoy), as an increased focus on corporate clients (i.e. logistics, retail, agriculture) is seen to offset a possible negative effect of the current government budget crisis on the awarding of education vouchers.

Against this backdrop, EBITDA is seen to further improve to a neutral level (eNuW; eCons: € 2.6m) before turning positive in FY ‘25e (eNuW: € 2.2m; eCons: € 3.2m), which should be fuelled by the likely return of online theory in 2025. In a CC scheduled for next Monday (

register here

), management is going to provide more colour on this matter as well as on possible legal changes regarding the use of simulators in driving schools.

The stock remains a BUY with a new PT of € 7.20 based on DCF.