EQS is making good progress on building a substantial presence in both corporate compliance and investor relations, growing its SaaS and annual recurring revenue streams. With a platform approach that allows for cross- and up-selling, this is a scalable business model in growing markets, driven by digitisation and regulation. The implementation of whistleblowing regulation in the EU during 2021 gives a clear opportunity for the group to extend its client base. The cost of grasping that opening is weighing on short-term profitability but enhances medium-term prospects.

5% share placings in Q420 at €26 and Q121 at €38 mopped up excess demand for the stock and the share price is 22% off its February pre-placing high. On EV/Sales, averaged over FY20-22e, the valuation is still at a discount of around 53% to larger financial software peers, while earnings multiples are distorted in this investment phase. Application software peers trade on similar FY21e and FY22e EV/Sales.