Pluxee (PLXFP NR/BBB+/NR) 3Q Results Recap
Earnings were Wednesday after the close (not morning, apologies). We thought results were going to be firm given the equity px action late on Tuesday (+5.8%) and results were in our eyes but apparently not for equities (-9% yesterday). Summary, which DG covered, was +17.9% organic growth (to €297m) and upgrade to FY24 guidance from +16-17% to +18%. Given YTD revenue has been +21.8% (at €889) it implies a slow down to HSD growth in Q4 - more on that below. All other guidance was unch including recurring EBITDA margin >35%. Medium-term targets were unch.
We attribute the equity px action (€4b market cap) to 1) implied slow-down in 4Q and unch EBITDA margin guidance despite headline lift and 2) potential nerves heading into French election and associated regulation uncertainty. On the former we'd note Pluxee is a growth stock trading at a 20x P/E vs. SXXP's 14x and is sensitive to changes in short-term expectations (even from HDD to MDD growth). On the 2nd point Pluxee does not disclose French exposure but Europe is 43% of revenue and Cobee acquisition is a step into the Spanish market. Larger Edenred's was at 15% of EBIT last year - it brings Q2 results (3m to June) on 23rd of July - watch for comments there too.
We keep the cheap view on the Pluxee 28s at Z+77. It's come in 10bps over the last 2 weeks.
Points we were interested in;
- Cobee, the Spanish start-up it acquired last month, will have "limited impact on leverage". To reiterate BS headroom was there (ended 1H/Feb with a net cash position of €1.1b on a €1.8b cash pile) and acquisitions have already been guided to. We were more interested if this was bolt-on or large scale; given it had 100k employee consumers vs. Pluxee's 330k and it's guided to +100% organic growth we assumed px tag may have been hefty. But mgmt clarified in call that was not the case adding "in terms of leverage, yes, it's going to be small because it's not a very significant price. It's a fair price." We will have to wait for FY results at the end of October to put a number to "fair".
- French election impact on regulation was asked but mgmt didn't give much; "we have been in discussion with some civil servants which are part of the ministries so far, and then we see, we have no specific view on what might come from one party or another,"
- Mgmt said the implied HSD growth in 4Q (a slowdown vs. rest of the year) was due to rolling tougher yoy comparables that received a boost from regulation changes in Brazil last year.
- €297 revenue (+18% organic, 14% on 4% FX headwind) made up of €257m (+11%) in operating and €40m in float (+76%) - float is the investment/interest income it generates on pre-loaded cards before they are used (i.e. idle cash). Europe at €123m (+8%), Latin America at €116m (+16%) and RoW at €58m (+42%).
- YTD revenue at €889m (+22%) from €774m in operating (+15%) and €115m in float (+89%). YTD Net client wins (measured in annualised business volume) was >€1.2b (targets >€1.3 for FY) and net client retention was 103% (targets >100%).
- Outside of above FY24 guidance, MT targets are LDD organic growth in FY25 and FY26, 37% recurring EBITDA margin in FY26 (vs. >35% target in FY24) and >70% recurring FCF conversion on avg. between FY24-26.