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Real Consulting | Sharpening the Services edge, growth with margin accretion

Smart UX adds utilities expertise; we push through modest uplift to our numbers – Real Consulting acquired a 95% stake in Smart UX Development (Romania-based SAP Utilities VAR) in July 2025 for a total consideration of €2.74mn, comprising an upfront payment of c€1.7mn and deferred instalments through 2028, alongside a put/call option on the remaining 5% stake. We have updated our mid-term forecasts to reflect the Smart UX deal as well as improved performance in the core business, incorporating limited near-term uplift given Smart UX’s relatively small base, but with a gradual ramp-up assumed over the mid-term as the new business adds SAP S/4HANA Utilities and SAP BTP capabilities that complement RC’s offering. Overall, we have raised our revenue forecasts by +4% in 2025e and +6-7% in 2026-27e, while pushing through EBITDA uplifts of +3% in 2025e and +8-10% in 2026-27e, supported by higher services penetration and improving mix across both existing and new contracts.

c15% adj. EBITDA CAGR paired with >3pps margin accretion over 2025-29e – Our forecasts including the newly-added Smart UX now point to c11% group revenue CAGR over 2025-29e, supported by improving share-of-wallet growth across the existing contract base, steady new contract uptake in 2025-26e and continued SaaS migration. We continue to include c€30mn of revenues from the 2 large Greek state digitization contracts (govt ERP and BI) in our 2025-28e numbers, now assuming execution extending through 2027-28e. We note that our forecasts carry some upside risk given underlying trends (maturing SaaS adoption in Greece, increasing complexity of contracts under tender). Growth is driven primarily by IT Services, alongside a gradual increase in recurring revenues, with ARR set to reach c38-40% of group sales by 2029e. We forecast c15% group adj. EBITDA CAGR over 2025-29e as cloud-native platforms become a larger part of the offering and scale effects materialize more visibly, with adj. EBITDA margins trending toward the 21.5-22% range from 2027e onward.

Cash generation supports balance sheet strength, allocation flexibility – With strong milestone payment inflows expected by end 2025e, we anticipate RC will close FY’25e on net cash of >€7mn. Going forward, we see rising profitability, disciplined working capital management and low capex needs (typical of VARs) supporting OCF conversion, making RC well positioned to consistently generate FCF of €7-8m p.a. through 2028e. Assuming no effects from M&A ahead, we believe Real Consulting should increase its net cash position to c€26m by 2028e allowing enough headroom for potential accretive transactions and/or rising returns to shareholders.

Valuation – RC has moved sideways since the summer, with the stock trading at c8.7x 2026e EV/EBITDA, broadly at par with EU VAR peers, but quite attractive on a growth-adjusted basis. We thus see plenty of scope for re-rating, as RC offers superior growth vs. peers, supported by an accelerating ARR base and clear potential for margin accretion ahead. After incorporating the upgrades to our estimates and rolling our model into 2026e, we raise our PT (based on a DCF at 9.2% WACC) to €6.2 per share (from €5.6 before). This implies c11x 2026e EV/EBITDA for RC, at premium vs. the EU peer median, justified by the superior 2-digit growth profile, in our view.