<a id="bm-comp-9165c2cb-29a5-4f07-83a2-d41bd9ae207d" name="bm-comp-9165c2cb-29a5-4f07-83a2-d41bd9ae207d" class="BMCustomAnchor"></a><table><tr><td bm-component-id="9165c2cb-29a5-4f07-83a2-d41bd9ae207d" style="vertical-align: top; width:100.000000%;"><ul><li>Strong implied Q4 to meet raised FY'24 guidance is achievable</li><li>Clear profitability focus: cutting '24e-'26e ARR, raising EBITDA</li><li>We expect FCF break-even in '25e: FVR to DKK 7-13 (6-14)</li></ul></td></tr></table><a id="bm-comp-27ba9370-fd51-42f9-98f3-ca6c206acec0" name="bm-comp-27ba9370-fd51-42f9-98f3-ca6c206acec0" class="BMCustomAnchor"></a><table><tr><td bm-component-id="27ba9370-fd51-42f9-98f3-ca6c206acec0" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">The strong Q4 to meet raised FY'24 guidance is achievable</h3><p>Penneo grew ARR by 18% y-o-y in Q3 (below ABGSCe at 19.5%), with a solid 15% contribution from new sales weighed down by a softer-than-expected uplift of 8%. Churn was 5%, roughly in line with recent quarters. Revenue growth of just 7% disappointed, burdened by compensation for a few large KYC clients, thereby pushing Q3 adj. EBITDA of DKK -2.0m below our DKK 0.6m estimate despite lower opex. The raised guidance implies Q4 adj. EBITDA of DKK 14m-19m vs. the historical maximum of DKK 9m, but we still view it as realistic (ABGSCe DKK 16m). With only ~1.5 months left of '24e, Penneo will also be helped by a favourable seasonality effect in Q4 and the highly probable ARR recognition of a large German client.</p><h3 class="bm-h3">Focus on profitability: ARR estimates cut, EBITDA raised</h3><p>Penneo's scale is becoming increasingly visible, with LTV/CAC improving to an impressive 26x on a LTM basis (vs. 19x in Q3'23). LTM opex is down 8% y-o-y (and down 4% including R&D capitalisation), helped by a 26% lower sales cost base. Profitability will likely remain Penneo's key focus next year as well, prompting us to raise '25e-'26e adj. EBITDA by 6-1%. We now expect it to break-even on FCF in '25e. However, it is partly also the surprisingly strong profitability and cost focus that make us somewhat less optimistic on Penneo's growth prospects than previously after a Q3 that, in our view, did not uncover any incremental positive news on growth vs. expectations. Building on the ARR guidance downgrade and a market we deem unlikely to improve much in '25e, we cut '25e/'26e ARR by 4/5%, now forecasting ARR growth of 19/21%.</p><h3 class="bm-h3">FVR narrowed to DKK 7-13 (6-14)</h3><p>Penneo is currently trading at 2.9-1.9x EV/ARR on '24e-'26e. A valuation based on peer multiples points to DKK 7-9. Our DCF yields DKK 13.</p></td></tr></table>