Tinexta reported strong Q119 results, with c 10% organic revenue growth, c 32% organic EBITDA growth, 50% EPS growth and improving free cash flow (FCF) generation. All divisions contributed to profit growth and the acquisitions made in FY18 are performing well. Management has reiterated guidance for FY19, which appears conservative even though Q1 is a seasonally less important quarter. We maintain our forecasts for now but will review them later in the year.
Tinexta has reported strong Q119 results, with c 10% organic revenue growth, 32% organic EBITDA growth and 50% EPS growth. M&A added a further c 6% to revenue and EBITDA. Revenue growth and margins were driven by the two most important divisions: Digital Trust and Innovation & Marketing Services, 35% and 34% of group EBITDA before central costs, respectively. Digital Trust’s organic revenue and EBITDA growth was 9.5% and 10.1% respectively, and Innovation & Marketing Services was 32.9% and 98.3% respectively. Despite reporting a three percent decline in organic revenue, successful cost management by Credit Information and Management resulted in organic EBITDA growth of 15.6%.
Management has reiterated FY19 guidance for revenue of greater than €250m (+4%) and EBITDA of €68–70m (at least c 3% growth). Our forecasts, with revenue ahead of guidance and EBITDA roughly in line, remain essentially unchanged for now. However given that Q1 revenue growth rates in Digital Trust and Innovation & Marketing Services were ahead of our FY19 estimates we see scope to revisit these later in the year. The adoption of IFRS 16 could, we estimate, add €3–4m to EBITDA, although management has yet to issue firm guidance on this.
Pre the adoption of IFRS 16, Tinexta’s EV/EBITDA multiples of 9.9x for FY19e and 9.2x for FY20e look low versus peers given our possibly conservative forecast of c 6% average organic growth for EBITDA in FY19–21. The FCF yield is 6% in FY19. Our discounted cash flow (DCF) valuation remains at €14.2 per share.