We are initiating coverage of EasyVista with a Buy recommendation. The group offers a successful ITSM (IT service management) software solution.

Reinforced staff and management should allow EasyVista to capture a significant part of the market’s growth, as shown in recent figures (H1 sales +50%).

The breakeven point was reached in 2017. Cash generation should be strong by 2020, when the EBITDA margin should be close to 20%.

A success story in IT service management

EasyVista is a software editor, providing a global solution to corporations to make delivery and support easy to implement. The product is user-friendly and has codeless workflow settings. Marketing skill is a key edge for the group’s success.

A major part of growth will stem from the US market (50% of world market), where EasyVista has considerably reinforced its staff and management team.

Cash and profit generation ahead, after a strong investment phase; H1 18 sales up 50%

The turnaround point was reached in H2 17. The group’s FY 17 €-0.7m EBIT was actually split €-2m in H1 and €+1.3m in H2, i.e. a +7.7% operating margin, which should more or less double in 2018, thanks to significant sales growth.

The group’s H1 sales (€18.5m) were up 50%, of which +63% in H2. 85 new clients adopted EasyVista solution in H1, in both Europe and the USA.

The renewable licence’s new contracting mode recorded €5m in sales (vs. zero in H1 17), whereas traditional perpetual licence sales were also – and paradoxically – up 48%, because French public entities prefer this contracting system (the consequence of budget credits-driven decision-making).

Current valuation doesn’t fully integrate earnings momentum ahead

Assuming a 2020 EBITDA close to €10m (c.20% of sales), our DCF model results in a €57.7 valuation per share for EasyVista.

According to our average of the different valuation methods, our six-month target price stands at €50.75.