Topic: Swissnet recently provided investors with a detailed overview on the targeted FY25e revenue split as well as the development of recurring revenues. Moreover, management outlined the post-merger integration plan of Swissnet Group. In detail:

FY25e segment breakdown. In accordance with the company’s guidance of CHF 26-28m sales (eNuW: CHF 26.5m; eCons: CHF 27.6m), management recently released a segment breakdown, targeting CHF 9.0m sales in the Infrastructure, CHF 14.9m in the SaaS and CHF 3.6m in the MENA segment. On a pro-forma basis, this would imply 44% organic growth, which should be predominantly driven by the ramp up of Swissnet’s unique AI SaaS hospitality solution Lokalee in the MENA region as well as ongoing key customer gains in the SaaS and Infrastructure segment. FY25e EBITDA is seen to come in at CHF 2.0m in Infrastructure, CHF 4.2m in SaaS and CHF 0.6m in MENA, implying an overall EBITDA of CHF 6.8m (eNuW: CHF 6.1m; eCons: CHF 6.2m) and a margin of 24.7%. This should be driven by the high scalability of the SaaS driven business model as well as continuous efficiency gains and synergy effects following the merger.

Recurring revenues. Swissnet’s business model is characterized by a high share of recurring revenues of 77%. While 100% of the SaaS revenues are recurring, also 50% of MENA and Infrastructure sales are recurring, thanks to a strong maintenance business in Infrastructure and the AI SaaS hospitality suite of Lokale. In our view, the high share of recurring revenues paired with a churn rate of <5% p.a., allows for strong visibility on sales and cash flows going forward as well as high scalability given very low incremental costs in the SaaS business.

Post-merger integration. Management aims for full integration until Dec’25e following the acquisitions of Lokalee and Swissnet, which should unlock further efficiency gains in FY26e. Overall management expects cost-synergies to the tune of CHF 1.2m. In addition to this, we expect significant cross-selling opportunities to arise from the merger.

Overall, this is currently not adequately reflected in the share price, in our view, given a valuation of 10.5x EV/EBTIDA FY25e (5.4x FY26e).

We hence reiterate BUY with an unchanged € 20.00 PT based on DCF.

Organic sales growth FY23-25e

Source: NuWays Research, company data