Yesterday, Netfonds reported strong Q2 figures that are broadly in line with our estimates, underpinningthat Netfonds continues on its growth path with further sequential improvements:

• Sales came in at € 46.5m (0% qoq, 2% yoy), slightly below our estimates of € 47.3m, mainly driven by the highly scalable finfire platform that drove new inflows resulting in AuM growth to € 22.8bn (eNuW: € 22.3bn, 10% yoy vs € 21.5bn in FY22). The high-margin wealth management (Hamburger Vermögen) with now € 2.8bn (vs € 2.1bn in FY22) is in particular contributing to the development, additionally stabilizing the margins on total AuM (eNuW: 0,82% vs 0,82% in FY22).
• Nets sales of € 9.6m (20% qoq, 20% yoy) were stronger than expected (eNuW: € 9.4m), due to reduced material expenses of c. € 37.3m (vs eNuW 38.8m, -4% qoq, -2% yoy), following the ramp-up of the high margin wealth management AuM. Margins stood at 20.6% (vs 17.1% in Q1, 17.6% Q2´22).
• EBITDA quadrupled qoq to € 1.5m (65% yoy, vs eNuW: € 1.7m), thanks to improving net sales and stabilizing personnel expenses and other operating costs. EBIT stood at € 0.8m (vs eNuW: € 0.7m), significantly above Q1´23 (€ -0.3m) that was burdened by the sale of v-d-v and Q2´22 (€ 0m).

Going forward, the company looks set to continuously benefit from global stock markets’ that remain rather stable on high levels, which should fuel performance related AuM growth and AuM inflows. With that, the confirmed FY23 guidance of € 185-190m of sales (eNuW: € 194m) and € 36m of net sales at mid-point (vs eNuW: € 37.3m) is in reach, implying further sequential improvements.

Beyond FY23, Netfonds should continue on its growth path, thanks to 1) the leading market position in an oligopolistic market with high entry barriers and 2) long-term structural growth drivers including growing AuM´s, a rising number of advisors, ongoing digitization of the financial sector and stricter regulation, which should all fuel the company's top-line. On the back of the scalability of the platform business, EBIT margins are seen >5% by FY25e, in our view.

Positive newsflow should come from unveiling the mid-term guidance during the capital markets day, scheduled for 19^th of September 10am.

BUY with an unchanged PT of € 59.00, based on DCF.