Following the appointment of Ralf Thomas as CEO in 2022, mVISE performed a remarkable transformation, in which the company restructured into a manufactory with a focus on software development while significantly reducing workforce to improve utilization and thus efficiency. Here, management has implemented a one-stop-shop experience for customers, catering the entire value chain from the initial development until the operation of the software. On top of this, mVISE acquired Workforce Management (WFM) expert opcyc GmbH in late 2023, a company with a staggering 60% EBITDA margin and 90+% recurring revenue ratio.

The general beauty of the transformation lies in the positive impact on visibility and profitability (EBITDA margin +20.7pp from 2023-’27) as both the development business as well as the WFM software are yielding scalable and recurring revenues (70% by FY ‘27e) thanks to long-term contracts with customers.

In our view, the secret of success going forward lies in the company’s holistic development approach, offering numerous advantages for customers as it focusses on the entire software lifecycle, allowing for a more efficient, user-oriented and flexible process, ultimately improving quality and thus driving customers value. In addition, mVISE has a proven sector expertise, especially in the telecommunication and industrial segment, which marks a competitive edge compared to larger, more sector-agnostic peers, in our view. 

Going forward, mVISE is further seen to benefit from several structural growth trends regarding both software development and WFM. Here, especially the ongoing digitalization of German SMEs as well as the increasing cloudification should enhance the prospects of custom software developers like mVISE. Moreover, the intensifying labour shortage as well as flexible work models are seen to drive demand for WFM solutions. Thanks to probably the most configurable tool in the market, opcyc should be able to even compete with larger peers, in our view.

Along with several growth opportunities and operating a highly scalable business model, the stock looks undervalued trading at 5.8x EV/EBITDA 2024e (4.1x ‘26e). We hence initiate with BUY and a € 1.40 PT based on DCF.