Topic: Yesterday, Smartbroker Holding reported FY23 prelims that came in as a mixed bag as well as a conservative outlook into FY24 that is underlined by soft monthly trading stats. In detail:

• FY23 sales of € 46.3m (-12% yoy) are 8% below our estimates of € 50.4m, driven by both, weaker Media sales of only € 28.1m (-18% yoy vs eNuW: € 29.4m) and weaker Transaction sales of only € 18.2m (-3% yoy vs eNuW: € 21.0m). While Media suffered from the difficult market environment with lower volatility, weakness in Transactions resulted mainly from the negative side effects of the migration to S+ visible in declined no of customers and trades.
• EBITDA came in at € 0.5m (-94% yoy), in line with estimates (eNuW: € 0.3m). Lower than expected marketing spending (-65% yoy to € 1.6m vs eNuW: € 3.5m) and other operating expenses (-2% yoy to € 7.8m vs eNuW: € 8.2m), compensated for the softer topline. As D&A stand at € 6.4m (vs eNuW: € 3.4m), EBIT came in at € -5.8m (vs FY22: € -8.4m), significantly below our estimates (eNuW: € -3.1m).

In a nutshell, the preliminary figures are the reflection of a difficult year, burdened by the weak stock market performance and the migration to S+. Still, prelims were in line with the reduced guidance from September 2023 (€ 46-51m sales; € -1 to 1m EBITDA).

Looking into 2024, we rather see a transition year that should be characterized by the launch of several missing features at S+ (such as RFQ orders at all trading venues or bond trading) and the UI/UX overhaul of several portals in the Media segment. Positively, the product improvements paired with increasing marketing spending from H2 onwards, should fuel topline again resulting in € 50.0m sales and € 1.6m EBITDA (eNuW), in line with management guidance of € 50-55m sales and € -1m to € 3m EBITDA.

Overall, the S+ remains the growth driver of the Group, as the unique combination of the service range of an established full-service broker at a neobroker pricing should drive customer inflows and transactions, fueled by reach of the proprietary media portals.

As the investment case remains intact, we reiterate BUY with a reduced PT of € 9.50, based on DCF.