Topic: 123fahrschule provided strong Q1 preliminary figures, both on the top- and bottom-line. In detail:

Q1 preliminary sales came in at € 6.6m, marking an 18% yoy improvement. This was mainly driven by the Private Customer segment, where some of the newly opened branches had a first positive impact. Notably, registrations increased substantially by 41% yoy in the first quarter, indicating strong market share gains across key regions. In our view, this should bode well for further strong growth in the coming quarters. This comes mainly on the back of an improved marketing strategy, which was implemented during H2’24 including new hires.

Despite higher marketing spending, 123fahrschule was able to improve EBITDA significantly to € 0.65m (Q1’24: € - 0.05m), implying a 9.8% margin. In our view, this clearly underpins the operational improvements and scalability of the business.

Important to note, the major simulator order (€ 1m volume) that was communicated in January, is not yet reflected in the numbers, as delivery is scheduled for Q2.

Against the backdrop of the strong Q1 prelims, management reiterated the FY25 guidance of € 28-30m (eNuW: € 28.7m) in sales and € 1.5-2.5m (eNuW: € 2.5m) in EBITDA. In our view, the company looks well on track to achieve those targets, especially after the strong first quarter of the year.

Taking a look beyond FY25e, 123fahrschule is poised for continuous strong growth, which should be driven by the ongoing expansion of the branch network as well as the new driving school legislation (re-introduction of online-theory & inclusion of simulators into education plan), which is seen to come into effect in Q1’26. Thanks to its scale, 123fahrschule should be able to significantly capitalize on those changes in the form of an increased catchment area as well as pricing advantages, which should allow for market share gains. Moreover, 123fahrschule will be able to offer an education with a much higher quality and convenience for students compared to peers, making it the driving school of choice for upcoming learner drivers.

Against this backdrop and the continuously undemanding valuation, we confirm BUY with an unchanged PT of € 7.90 based on DCF.