Classification of GBC AG to Verve Group SE

Company Name:	Verve Group SE
ISIN:	SE0018538068
Reason for the research:	Research study (Anno)
Recommendation:	BUY
Target price:	9.20 EUR
Last rating change:
Analyst:	Marcel Goldmann, Cosmin Filker

Q1 closed with significant sales and operating earnings growth, share price target raised after guidance concretisation

Thanks to strong organic growth, Verve Group closed the past 2024 financial year with a significant increase in revenue of 35.7% to € 437.01 million (PY: € 321.98 million), making it a record year. The dynamic growth of 46.0% to € 144.2 million in the fourth quarter (Q4 2023: € 98.7 million) made a particularly significant contribution to this. In addition to the organic growth impetus, the Jun Group acquisition carried out in summer 2024 also increased the pace of growth. At the same time, adjusted EBITDA increased disproportionately by 40.0% to € 133.25 million (PY: € 95.17 million).

Verve also achieved a significant increase in revenue of 32.2% to € 109.04 million in the first quarter of the current financial year 2025 (Q1 2024: € 82.47 million). This was primarily fuelled by a significant increase in large software customers (revenue > USD 100,000) by 51.0% to 1,152 (Q1 2024: 764). At the same time, adjusted EBITDA (Adj. EBITDA) increased significantly by 37.3% to € 30.2 million (Q1 2024: € 22.0 million). The adjusted EBITDA margin improved slightly to 27.7% at the end of the first quarter (Q1 2024: 26.7%).

With the recent publication of its Q1 business figures, Verve's management has concretised the previous rough company outlook (double-digit organic growth) for the current financial year 2025. Accordingly, Verve now expects sales revenues in a range of € 530.0 million to € 565.0 million and an adjusted EBITDA of € 155.0 million to € 175.0 million for the current financial year. Based on this, Verve Group is aiming for future sales of over € 1.00 billion and an operating result
(EBITDA) of over € 330.0 million in 2028/2029. In line with its growth ambitions, Verve recently announced its uplisting to the Geregelten Markt (regulated market) of the Frankfurt Stock Exchange and is aiming to be included in the prominent SDAX in the future.

In view of the more specific guidance, the confirmed medium-term outlook and the positive Q1 performance, we have adjusted our previous estimates upwards. For the current financial year 2025, we now expect sales of € 547.34 million (previously: € 502.11 million) and EBITDA of € 157.37 million (previously: € 156.84 million). For the following years 2026 and 2027, we are forecasting sales of € 652.42 million (previously: € 596.79 million) and € 784.77 million (previously: € 716.74 million) respectively. At the same time, EBITDA should increase to € 192.42 million (previously: € 191.58 million) or € 237.34 million (previously: € 236.16 million).

Thanks in particular to its strong positioning in the US core market (especially in the mobile in-app and CTV sector) and with its innovative ID-less advertising solutions as well as the increased expansion of its marketing and sales staff, this ad tech company should be able to continue its dynamic growth trajectory despite the current difficult environment. In the course of this, Verve should also be able to capitalise on its highly diversified customer portfolio with a predominant share of advertising customers from defensive sectors (e.g. gaming/entertainment, retail/e-commerce or social media/internet or consumer goods industries), as customers from these sectors (share of Verve's total customer base GBCe: >70.0%) traditionally keep their advertising budgets relatively stable even across different economic cycles.

In addition, the mobile in-app and CTV advertising channels, in which Verve is primarily active, have also proven to be significantly more robust in an advertising market phase with a tendency towards 'tighter' customer budgets than alternative advertising formats, such as display advertising or web advertising.

With regard to future Group profitability, Verve should be able to increasingly benefit from the expected positive effects of the efficiency and optimisation measures introduced (bundling and standardisation of cloud-based platforms as part of platform integration, etc.) from the end of the current financial year onwards.

Based on our increased sales and earnings estimates, we have also significantly raised our previous price target to € 9.20 (previously: € 8.30) per share. The rollover effect (price target based on the 2026 fiscal year instead of 2025 as previously) also contributed to the increase in the price target. This was offset by the recent dilution effect resulting from the capital increase and the shares issued as part of the employee stock option program. In relation to the current share price level, we therefore continue to assign a 'BUY' rating and see significant upside potential for the Verve share. The share could receive an additional 'boost' from a possible inclusion in the SDAX. We consider the probability of this ad tech group being included in this prestigious index in the near future to be relatively high.

You can download the research here: http://www.more-ir.de/d/32946.pdf

Contact for questions:
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de

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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,5b,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung

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Date (time) of completion: 02/07/2025 (9:55)
Date (time) of first distribution: 02/07/2025 (11:30)