PROFILE | A Financial Solutions Outfitter

Financial software developer and vendor - Profile is a Greek origin software developer and vendor that covers various domains of Banking, Fintech and Investment Management. Operating in 38 countries worldwide, it generates most of its revenue (c. 65%) outside Greece. Profile’s product portfolio is well established in FinTech, with the company maintaining solid track record in terms of rapid delivery times and ease of deployment, while als6o being strategically positioned on new trends, ensuring that it will continue to bring value to its clients. Competitive advantages in relation to its peers lie with its global presence, cross-functional product offerings and tailored solutions through an Agile operating framework.

Enjoys high client retention rates – Its business model is characterised by contractually recurring revenue. Profile generates c. 70% of its revenue through long-term maintenance, SaaS and PayG contracts. Maintaining solid track record, Profile has managed to build strong and rather long-term customer relationships and enjoys high client retention rates (c.97%-99%) and industry recognition through references.

Solid organic growth prospects - Through organic growth and strategic acquisitions, the company enjoyed sales & EBITDA growth of 13-14% CAGR in 2016-2018. Looking ahead, we see further organic growth as Profile leverages on new FinTech trends led by technological advances and systems modernisation. The company showcases impressive growth in new contract undertaking, which at current run rates, implies average sales growth of 14.1% in 2019-2020, driven by increased 3rd party spend for software products. Profit-wise, we expect Profile will maintain overall healthy margins, owing to solid geographic/product mix and high client retention rates, which should result in a free cash flow conversion rate of c. 75% of EBITDA on average over the next 5-10 years, broadly in-line with the 2018 historical figure.

Trades at deep discount to global peers - To better gauge the fair value of Profile, we contrast EV/EBITDA valuations against its peers’ outlook. Global peers have traded on avg at c. 14x over the last 2 years. Despite its re-rating year-to-date, Profile trades at a deep discount to peers. Given the positive outlook ahead, we believe the market should eventually pay attention on the sustainability of EBITDA and cash flow generation, which warrant even higher multiples than the company’s historical avg, thus further convergence towards industry avg is likely. These dynamics are further supported by a fair value assessment on the back of a peer multiple and DCF valuation, resulting in a €67-68mn fair value (€5.9 - €6.0 per share, excluding treasury shares). Meanwhile, potential strategic M&A would imply further value enhancement, adding as much as €1.80 per share.