Smartbroker cut its guidance for FY23, as a result of the currently challenging market environment that is especially burdening the Media segment, already visible in the weak H1 figures:

• Sales of € 23.4m (-16% yoy) are lower than anticipated (eNuW: € 26.3m), mainly driven by the soft development of the Media segment with only c. € 14.2m (-16% yoy vs eNuW: € 17.3m). Sales in the transaction segment was soft, but in line with expectations (€ 9.2m vs eNuW: € 9.0m), as marketing budgets were reduced during H1 (to € 1.7m) to keep the powder dry for the launch of Smartbroker+ that finally happened a week ago.
• EBITDA came in weak at € 1.7m (vs € 4.6m in H1´22 vs eNuW: € 4.4m) as a result of the weaker top-line that could not be fully compensated by reduced marketing spendings.

Looking into H2, we expect the Media segment to remain rather flattish, while the transaction business should develop slightly better compared to H1, on the back of the recent launch of Smartbroker+ that should start fuelling customer inflow and transactions already this year. Still, the full growth potential of Smartbroker+ should become visible in FY24e. Consequently, management cut its sales guidance for FY23 by 9% at mid-point to € 46-51m in sales and € -1m to € 1m in EBITDA.

Given that we considered FY23 a transition year, that is additionally burdened by high development costs of Smartbroker+, the guidance cut is not having notable impact on the case. As Smartbroker+ is offering the unique combination of the service range of an established full-service broker at a neobroker pricing, we expect customer inflows and transactions to ramp-up within the next months and years.

Especially synergy effects between the Media segment and the Smartbroker should fuel both: While CAC of Smartbroker are seen to decline, thanks to the reach of the media portals, new customer of Smartbroker are expected to mainly use the embedded media portals within the app, increasing page views and interactions and making the portals more attractive for advertisers.

While the timing of the guidance cut is not ideal, it is not changing the investment case. We hence reiterate BUY with reduced PT of € 15, based on DCF.