Topic: Swissnet delivered a strong set of H1 2025 results, with revenues almost doubling yoy and adj. EBITDA rising significantly. In detail:

H1’25 sales increased by 91% yoy to CHF 11.3m (eNuW: CHF 11.6m). The increase was mainly driven by the first-time consolidation of Swissnet ICT and Lokalee, but also by organic growth across the SaaS and Infrastructure segments. Particularly, SaaS revenues benefited from continued customer wins in retail and hospitality, while Infrastructure revenues reflected a solid pipeline conversion, supported by the strong recurring maintenance business. With recurring revenues accounting for 77% of total revenues, Swissnet continues to enjoy high visibility and stability in its top line.

On the profitability side, adj. EBITDA doubled to CHF 2.3m (eNuW: CHF 2.5m; reported EBITDA: CHF 1.2m), corresponding to a margin of 20%. This improvement reflects both, operating leverage and synergies materializing from the merger, as well as a disciplined cost base despite the ongoing integration process, thus demonstrating the company’s ability to translate growth into bottom-line profitability. Importantly, the SaaS segment continues to drive margins thanks to its high scalability and low incremental costs, while Infrastructure is gradually contributing more stable cash flows.

Looking ahead, management reaffirmed its positive outlook for FY25, highlighting strong momentum, ongoing integration progress and improving profitability as key drivers. In the most recent management presentation, guidance was specified at CHF 28-30m in revenues (eNuW: CHF 26.9m reported) and CHF 5.5-6m in adj. EBITDA (eNuW: CHF 5.9m) on a pro-forma basis (Swissnet consolidated since January). In our view, this should be well in reach given the strong H1 baseline as well as continuous efficiency gains. Moreover, the ongoing integration of Swissnet ICT and Lokalee is expected to be completed by year-end and is seen to unlock additional cost synergies of around CHF 1.2m from FY26 onwards. Furthermore, cross-selling opportunities between Swissnet’s infrastructure business and Lokalee’s AI concierge solution in hospitality are already emerging, particularly in the MENA region.

Overall, the release confirmed our view on the case, as Swissnet continues to deliver on both growth and profitability while steadily executing its integration agenda. In fact, we see the combination of high growth, improving margins and rising cash conversion as strong validation of the equity story, which is seen to fully unfold from FY26e onwards.

In light of the current valuation of 4.7x EV/EBITDA and 12% adj. FCFY for FY26e, shares remain highly attractive in our view. We therefore confirm BUY with an unchanged PT of € 20 based on DCF.