Original-Research: Verve Group SE (von GBC AG): BUY

Classification of GBC AG to Verve Group SE

Company Name:	Verve Group SE
ISIN:	SE0018538068
Reason for the research:	Research study (Note)
Recommendation:	BUY
Target price:	7.95 EUR
Last rating change:
Analyst:	Marcel Goldmann, Cosmin Filker

BUSINESS DEVELOPMENT 9M 2025

On 18 November 2025, the Verve Group announced its Q3 and nine-month financial figures for 2025. According to these figures, the ad tech group achieved a robust revenue and earnings performance in the first nine months of the financial year despite a weak advertising market and challenging environment as well as effects from the platform migration. The company benefited in particular from the strong opening quarter of the financial year (Q1 revenue growth: 32.2%). At € 325.20 million, comparable sales were up 11.0% on the same period of the previous year (consolidated sales 9M 2024: € 292.78 million). Reported sales even increased by 22.0% to € 357.09 million. It should be noted that this significant increase in sales was primarily caused by their increased price control as a result of their platform migration and the resulting change in revenue recognition (now reporting gross sales instead of net sales). Under IFRS 15, revenue must now be recognised on a principal basis (= gross billing basis).

Both organic and inorganic growth effects (Jun Group acquisition in September 2024) contributed significantly to the significant growth on a comparable basis. Specifically, the growth achieved was primarily driven by the significant increase in segment sales of 53.2% to € 87.74 million (9M 2024: € 57.26 million) in the Demand Side Platform business area (DSP segment). This significant increase in revenue is mainly due to the strengthening of the Demand Side segment as a result of the Jun Group acquisition completed in summer 2024 (Jun segment revenue contribution 9M 2025 GBCe: approximately € 47.0 million). Segment sales in the higher-turnover SSP business area also increased significantly by 13.7% to € 308.94 million (9M 2024: € 271.74 million).

In parallel to the increase in Group sales, however, a moderate decline in EBITDA to € 76.31 million (9M 2024: € 84.45 million) was achieved due to increased cost-optimisation measures and growth initiatives (e.g. expansion of the sales team) and unfavourable exchange rate effects (weak US dollar against the euro). Adjusted for one-off costs and special effects (e.g. M&A and consulting costs or restructuring costs), however, adjusted EBITDA (Adj. EBITDA) increased slightly to € 85.70 million (9M 2024: € 84.80 million). This resulted in an adjusted EBITDA margin of 24.0% (9M 2024: 29.0%).

At net level, a significant decline in earnings after taxes (after minority interests) to € -2.99 million (9M 2024: € 14.49 million) was recorded due to stronger depreciation and amortisation and financing effects. Earnings were dampened in particular by significantly higher depreciation and amortisation (9M 2025: € 36.49 million vs. 9M 2025: € 28.10 million) compared to the same period of the previous year.

Business development in Q3 2025

As in the second quarter, the third quarter was also characterised by the platform unification which was successfully completed in August and already delivered the first positive effects. In addition, Q3 2025 was also significantly characterised by strategic measures and course-setting.

In terms of top-line performance, Verve generated comparable sales of € 110.0 million in the third quarter, down 3.0% on the same quarter of the previous year (Q3 2024: € 113.7 million). This decline in revenue development was primarily the result of a 4.0% decrease in organic growth due to temporary problems with platform migration (leading to limited customer scaling, for example) and weaker market demand. The latter included significantly lower political advertising expenditure than in the same period of the previous year (keyword: US election year 2024). In terms of reported revenue, however, the ad tech group achieved a significant increase in consolidated revenue of 24.8% to € 141.92 million (Q3 2024: € 113.74 million), which is attributable to a change in revenue recognition following the unification of the platform in accordance with IFRS 15. From the third quarter onwards, sales on the migrated platform will be recognised on a gross basis (instead of the previous net basis). The significant increase in sales revenue was reflected accordingly in a substantial 29.1% rise in SSP segment revenue to € 126.22 million (Q3 2024: € 97.81 million). At € 28.51 million, the segment revenue generated in the DSP business field was almost on a par with the previous year (Q3 2024: € 28.42 million).

The operating business improved noticeably in the third quarter compared to the second quarter. Verve was able to return to its growth trajectory at quarterly level (Q3 sales growth compared to Q2: 3.7%). This was primarily the result of the successfully completed platform unification and the resumption of full customer activities. The former has already led to efficiency gains and a significantly improved gross margin of 37.0% at the end of Q3 (Q2 2025: 35.0%).

With the successful completion of its platform unification, Verve says it has accelerated its new customer acquisition, stabilised and further improved the performance of the AI algorithm and expanded the marketplace's delivery capacities towards the end of the third quarter, thus providing itself with a considerable 'tailwind' for the traditionally strong fourth quarter. It should be emphasised at this point that Verve has already made a strong start to the final quarter, according to its own statements.

Parallel to the technical consolidation, Verve implemented targeted efficiency measures in the third quarter in order to optimise processes, structures and the cost base. This included a targeted harmonisation of personnel requirements across all business divisions as well as a number of personnel changes. At the same time, the technology company expanded its sales organisation, particularly in the brand and agency area. Among other things, the measures introduced led to one-off redundancy costs totalling € 1.60 million, while the company also expects annual salary cost savings of around € 8.00 million from 2026 onwards. With the two acquisitions announced in mid-September (Captify & Acardo), the ad tech group has also strengthened its sales base and the development of its core business in key markets.

In terms of operating earnings development, Verve suffered a significant decline in EBITDA to € 21.83 million (Q3 2024: € 36.17 million), mainly due to one-off effects (severance payments, M&A-related costs, etc.), negative effects from the platform unification and increased growth investments (expansion of the sales team, etc.). Adjusted for one-off and special effects, EBITDA (Adj. EBITDA) totalled € 26.10 million and was therefore within reach of the previous year's level (Q3 2024: € 33.60 million). The EBITDA margin on a like-for-like basis thus amounted to 23.7% (Q3 2024: 29.6%).

The robust operating earnings performance and strong cash generation of the company's platform-based business model were also reflected in high operating cash flow. This initially amounted to € 4.66 million in the third quarter (Q3 2024: € 54.07 million) and € 10.23 million in the first nine months of the financial year (9M 2024: € 81.46 million). However, Verve recently announced in a company announcement that operating cash flow increased significantly to € 24.32 million in the third quarter and to € 29.89 million in the nine-month period due to a reclassification of a deferred purchase price payment (in connection with the Jun Group acquisition). According to the company, the subsequent adjustment of the previous cash flow statement is also cash-neutral and therefore has no impact on the amount of cash and cash equivalents at the end of the aforementioned reporting periods.

FORECASTS AND VALUATION

With the publication of its Q3/nine-month figures, the Verve Group has also reaffirmed and adjusted its previous guidance for FY 2025. With regard to the top-line targets for the year, Verve's management now expects higher consolidated revenue in a range of € 560.0 million to € 580.0 million (previously: € 485.0 million to € 515.0 million) due to the recent acquisitions (Captify and Acardo) and the change in revenue recognition (in accordance with IFRS 15). In terms of earnings, the technology company continues to expect Adj. EBITDA in the range of € 125.0 million to € 140.0 million.

In line with the confirmed and adjusted annual forecast, we have revised our previous sales estimate upwards. For the 2025 financial year, we now expect consolidated sales of € 571.05 million (previously: € 502.93 million). It should be emphasised here that Verve has already reported positive business development to date (including transaction volume) in the first half of the fourth quarter, which is traditionally the strongest quarter in terms of revenue, indicating strong year-end business.

Due to the change in revenue recognition since the third quarter (gross revenue recognition instead of the previous net revenue recognition), we have also increased our previous revenue estimates for the 2026 and 2027 financial years to € 750.37 million (previously: € 619.26 million) and € 875.95 million (previously: € 738.33 million) respectively. In view of the unchanged earnings guidance and the generally earnings-neutral effects of the change in revenue recognition (in accordance with IFRS 15), we have maintained our previous earnings forecasts for the current financial year and subsequent years.

Thanks to their successful platform consolidation (leading, among other things, to improved new customer retention and stronger customer scaling), their recent acquisitions (strengthening their sales base), their innovative ID-less product range and their strong positioning in the emerging advertising channels (in-app, CTV and DOOH), the Verve Group should be able to significantly increase its growth rate again from the coming financial year. As a result of the increased efficiency and economies of scale we are forecasting from the platform migration and the expected savings from the cost optimisation measures, the earnings situation and profitability should also improve significantly again from the coming financial year. The two most recently acquired companies (Captify & Arcado) should also make a noticeable contribution to Group performance in the coming financial year in terms of sales and earnings.

In light of our confirmed earnings estimates, we have left our previous price target of € 7.95 unchanged. In view of the current share price level, we therefore assign a 'BUY' rating and see significant upside potential in the Verve share.

 

 

You can download the research here: 20251215_Verve_Group_Note_final_ENG

Contact for questions:
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de

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Date (time) of completion: 15/12/2025 (9:02)
Date (time) of first distribution: 15/12/2025 (10:30)