Verve Group — Strong Q4 with good momentum into FY25

Verve Group (OMX: VER)

Last close As at 05/03/2025

EUR3.36

−0.23 (−6.28%)

Market capitalisation

EUR671m

More on this equity

Research: TMT

Verve Group — Strong Q4 with good momentum into FY25

Verve delivered a strong Q424, with organic net revenue growth of 24%, and resultant progress for the full year of 36% to €437m, clearly outstripping our modelled €420m. The group’s focus on ID-less targeting solutions for advertising markets is delivering greater market share, although the industry shift away from cookie-based solutions has been slower than originally anticipated. The growth is broadly based, with an increasing number of scaled customers, high retention rates and increased activity levels. Verve is continuing to invest to support its growth, with more emphasis on its US sales effort in an expanding market and continuing platform integrations. We have lifted net revenue forecasts for FY25 and FY26, staying with conservative margin assumptions.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

Media and Games Invest_resized

Media

Q424 and FY24 figures

5 March 2025

Price €3.36
Market cap €7,827m

Net cash

€351.2m

Shares in issue

186.8m
Code M8G
Primary exchange FRA
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs 8.2 (1.0) 189.2
52-week high/low €4.1 €1.2

Business description

Verve operates a software platform for the automated buying and selling of digital advertising spaces in real time. It is the market leader in in-app advertising in the US and among the largest providers in Europe. Verve also serves substantial CTV volumes, plus channels such as mobile web and digital out-of-home.

Next events

Q125 report

28 May 2025

Analyst

Fiona Orford-Williams
+44 (0)20 3077 5700

Verve is a research client of Edison Investment Research Limited

Note: EBITDA is adjusted. PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Year end Revenue (€m) EBITDA (€m) PBT (€m) EPS (€) P/E (x) EV/EBITDA (x)
12/23 322.0 95.2 26.8 0.36 9.4 78.6
12/24 437.0 133.2 48.6 0.22 15.3 56.1
12/25e 520.0 175.0 98.6 0.35 9.5 42.7
12/26e 560.0 185.0 116.6 0.42 8.0 40.4

Gaining market share

Verve can only continue to grow by demonstrating that it delivers value to its customers. Full-screen and video ads fulfil that brief well and these are building as a proportion, accounting for around 9% of Q424 net revenues. Overall revenues are well spread, with the largest customer accounting for around 6% of either advertiser or publisher revenues. Customer retention for the larger customers (those bringing gross revenues of over $100k) is very strong at 97% in Q424, with the number of customers in this category up by 39% organically. A net dollar expansion rate of 110% indicates that they are spending more money with Verve, with overall ad impressions delivered up 33% y-o-y in Q424.

Jun boosting the demand side

The acquisition of Jun Group has lifted the group’s demand side revenues to 27% of the Q424 total, with the goal remaining a 50:50 split. The integration programme is progressing well, with Verve on track to deliver €9m of revenue synergies targeted for 2025, with the mid-term targets reiterated at €30–40m on an annualised basis.

Valuation: Still scope for rating expansion

There has been a marked difference in underlying and stock market performance across the ad tech sector, with clear winners and losers. Verve falls comfortably into the former group, with a 246% share price increase over one year, +17% year-to-date. We have now rebased the comparison across FY24–26e. This and revisions to prospects elsewhere in the sector have weighed on the comparative valuation, which on average EV/sales and average EV/EBITDA over FY24–26 now sits at €3.94, a little ahead of the current price. Restricting to an EV/EBITDA basis would lift this to €5.44, which is closer to our discounted cash flow (DCF)-based approach, which returns an implied value of €6.17.

Scaling up, reaping rewards

It is worth looking at how Verve has been building over the last three years on a quarter-by-quarter basis, which shows how the development and investment in prior years has powered the growth seen in 2024. The strong Q424 performance is despite the much stronger comparatives from Q423. The final quarter is always going to be the most heavily weighted due to the inherent seasonality of the market, which will also show through in a higher adjusted EBITDA margin.

Revisions to forecasts

In light of the Q424 performance propelling group revenues to €437m, ahead of our prior FY24 forecast of €420m, we have lifted our FY25 revenue estimate from €510m to €520m and for FY26 from €545m to €560m. Bearing in mind the investment needed to deliver these top-line objectives, we have left our adjusted EBITDA estimate at €175m and shaved our FY26 figure from €188m to €185m.

The mid-term guidance remains for a revenue CAGR of 25–30%, returning an EBITDA margin in a range of 30–35% and an EBIT margin of 20–25%, all of which were delivered in 2024. Verve has additional guidance on net leverage of 1.5–2.5x (again met in FY24 at 2.4x). We anticipate good levels of free cash flow in FY25, resulting in a reduction in net debt by year-end to a figure of around €300m. Management is planning to refinance the group’s bonds during the current year, which should result in a meaningful reduction in interest costs. Our current modelling results in an FY25 leverage figure of 1.7x, and 1.3x for FY26.

Valuation

There has been a seeming divide within the adtech sector of perceived winners and losers, and Verve is clearly in the former category. Nine out of the 19 stocks that we include in the peer table are down, on average by 27% over a one-year horizon, while the 10 that have increased in value have risen an average of 94%. Verve is in the positive category, with a one-year gain of 246%. In view of the shift in the business model, we no longer feel it relevant or appropriate to continue to compare Verve with the online games stocks.

Since our December report, we have rolled on a year in the comparison table, with FY0 now representing 2024. Looking at an average rating on EV/sales and EV/EBITDA across a three-year time horizon, pricing Verve’s shares at parity would suggest a share price of €3.94, a little ahead of the current level. Were we simply to look at a smoothed EV/EBITDA across the same period, this would rise to €5.44. Carrying out a DCF, with the same inputs as previously in terms of weighted average cost of capital (10%) and terminal growth (2%), indicates a level of €6.17, up from €5.89 in December.


General disclaimer and copyright

This report has been commissioned by Verve and prepared and issued by Edison, in consideration of a fee payable by Verve. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright 2025 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or sol icitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Verve Group

View All

Latest from the TMT sector

View All TMT content

Research: TMT

Freelancer — Q424 results point to stronger FY25

Freelancer reported FY24 results that confirmed that the core Freelancer marketplace saw improved customer acquisition and retention in Q424, providing positive momentum going into FY25. With a streamlined cost base and a focus on using AI to deliver a wider range of quality services at a lower cost, management is targeting double-digit revenue growth and sustainable profitability in FY25. We have revised up our FY25 forecasts to reflect the better performance in Q424.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free