Max 21 AG's (DE:MA1G) repositioning, with the sale of loss-making NECDIS at end 2017 and its refocus on creating recurring revenues from hybrid business communications specialist, Binect, and IT security system provider, KeyIdentity, helped sharply reduce EBITDA losses in Q118. Binect achieved a 21% y-o-y increase in revenues and positive EBITDA after break-even in Q417. At KeyIdentity, underlying revenues grew 61% y-o-y and losses at the EBITDA level were reduced by 22% to €451k, helped by cost-cutting and growth in recurring revenues. We see current management guidance for 27% underlying revenue growth and an EBITDA loss of no more than €2.5m, followed by EBITDA break-even in 2019 (one year later than forecast previously), as reasonable and achievable.
Binect emerges into positive EBITDA
During 2017, Max 21 laid the groundwork for bringing Binect to EBITDA profitability in Q118. It intensified its co-operation with Deutsche Post (DE:DPWGn), expanded its partner network and product portfolio, and put in place direct sales operations. With a leaner organisation (staff cuts of 30% since year-end 2017) and focus on its scalable family of products, the group has the potential to profitably exploit the very large addressable German market, which Max 21 estimates at 6-8bn letters pa compared with the 97m processed by the company in 2017.
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