Stocks you'd probably want to own. Company updates.

Shoper, Apator and more.

Apr 28, 2024

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In today's edition, we will take a closer look at the latest updates for 3 companies: Shoper, Apator, and one more, rapidly growing but already profitable.

By the way, expect a write-up on a new investment opportunity in your inbox in the coming week.

Let's get started.

Shoper (WSE:SHO)

current price: 36 pln

Mcap: 1.012 mpln

I wrote a deep dive on Shoper in February 2024. Please, check it out here:

Refining e-commerce with a Polish touch.

S.O.S.

Feb 10

Read full story

You may also enjoy my Twitter thread (click on the picture):

Q1-2024 UPDATE

Income Statement

Shoper S.A. has demonstrated robust financial performance in the first quarter of 2024. The company's total revenues surged to 44.2 million PLN, marking a significant increase of 26% compared to the first quarter of 2023, which recorded 35.1 million PLN. This growth is a clear indicator of Shoper's expanding market presence and operational efficiency.

Net income also showed a substantial improvement, rising by 53% to 7.8 million PLN in Q1 2024 from 5.1 million PLN in Q1 2023.

Drivers of Revenue Growth

The primary drivers of revenue growth for Shoper include an increase in GMV and the expansion of their service offerings. The GMV from Shoper's omnichannel and online store platforms saw a remarkable increase, which directly contributed to the top-line growth.

Earnings Expectations and Segment Performance

Shoper's earnings per share (EPS) and revenue for Q1 2024 exceeded analyst expectations. The performance across different business segments was notably strong, with the SaaS (Software as a Service) model continuing to be a significant contributor to revenue. The integration of new services and platforms has also played a crucial role in this success.

Expenses

During Q1 2024, Shoper effectively managed its operating expenses, which only increased by 20% compared to the revenue growth of 26%. This discrepancy indicates improved operational efficiency and effective cost control measures.

Margins

Shoper's gross margin and operating margin have shown improvement in Q1 2024. The gross margin increased due to higher sales volumes, which diluted the fixed cost component. Meanwhile, the operating margin benefited from stringent control over operating expenses and enhanced operational efficiencies. The adjusted EBITDA margin also improved to 33.8%, up from 32% in Q1 2023, reflecting better profitability.

Balance Sheet

Assets

Shoper S.A.'s total assets have experienced a notable increase, rising by 8% from PLN 126,533 thousand as of December 31, 2023, to PLN 136,792 thousand as of March 31, 2024.

Current assets have seen a more significant rise of 32%, from PLN 29,510 thousand to PLN 39,081 thousand. This substantial growth in current assets is primarily driven by an increase in cash and cash equivalents, which surged by 45% from PLN 17,240 thousand to PLN 26,233 thousand. This increase in liquidity positions the company well for short-term operational needs and potential investment opportunities.

Liabilities

Shoper's total liabilities have also increased by 10%, from PLN 70,182 thousand to PLN 77,053 thousand. This increase is spread across both long-term and short-term liabilities, indicating a balanced approach to financing.

Long-term liabilities, which include long-term lease obligations and deferred tax liabilities, have risen by 10% from PLN 34,481 thousand to PLN 37,825 thousand.

Short-term liabilities, comprising short-term lease obligations, trade payables, and other short-term obligations, have also increased by 10% from PLN 35,701 thousand to PLN 39,228 thousand.

Debt and Capital Structure Changes

During the first quarter of 2024, Shoper S.A. has made significant changes to its capital structure. The company has increased its equity by acquiring the remaining 20% of shares in Apilo Sp. z o.o., which resulted in full ownership.

Furthermore, the company has issued new shares as part of its employee incentive program, resulting in a slight increase in the share capital. This issuance of shares indicates the company's commitment to aligning the interests of its employees with those of the shareholders.

Cash Flow

Shoper S.A.'s cash flow performance for the first quarter of 2024 demonstrates a robust financial position, with significant improvements in operational efficiency and strategic capital management.

OCF

For Q1 2024, Shoper reported a net cash inflow from operating activities of PLN 15.7 million, a substantial increase of 32% compared to PLN 11.9 million in Q1 2023. This improvement is primarily attributed to the company's higher earnings before interest, taxes, depreciation, and amortization (EBITDA), which rose by 36% yoy.

Investing Cash Flow

Shoper's cash flow from investing activities shows a net outflow of PLN 5.5 million in Q1 2024, which is significantly higher than the PLN 2.5 million outflow in Q1 2023. This 119% increase in cash used for investing activities is primarily due to higher expenditures on the acquisition of intangible assets and property

Despite the increased outflow, the strategic nature of these investments is expected to contribute positively to Shoper's long-term growth and operational capabilities.

Financing Cash Flow

The financing activities of Shoper resulted in a net cash outflow of PLN 1.2 million in Q1 2024, a significant improvement from the PLN 3.2 million outflow in the same period last year. This 61% decrease in financing cash outflow is mainly due to lower repayments of borrowings and lease liabilities, which suggests a more stable financial structure with less reliance on external financing.

The company's ability to reduce its financing costs and manage its debt levels effectively is a positive indicator of financial health and prudent financial management.

Net Change in Cash

The net change in cash and cash equivalents for Q1 2024 was an increase of PLN 9.0 million, compared to an increase of PLN 6.2 million in Q1 2023.

The company's results were also a positive surprise for analysts, as seen in the table below:

Management's Evaluation of Future Prospects and Challenges

SHOPER's management has expressed a highly optimistic outlook for the company's future. The company's performance in the first quarter of 2024 was one of the best in its history, with revenue and GMV growth rates reminiscent of those seen during the pandemic period. The CEO stated:

The first quarter was very good for us, one of the best in history. We recorded an increase in revenues, GMV, and adjusted EBITDA – almost at dynamics known from the pandemic period.

We entered the current year with great optimism. We expect an improvement in consumer sentiment and a bolder approach to shopping.

It’s worth noting:

partnership with home.pl and the acquisition of their internet stores
collaboration with Gomag in Romania
integration of new services like Shoper Payments in partnership with Przelewy24 are pivotal elements of Shoper's strategy.
ongoing negotiations for multiple acquisitions both in Poland and abroad

Shoper is a national leader in providing its services for micro and small enterprises. Many investors wonder whether their solutions will be suitable for large clients. It is worth noting that the CEO mentioned that they are increasingly acquiring large companies, which is a very good indicator in the face of a competitive market. The CEO also mentioned potential international expansion which will further strengthen the positive outlook for the company in the coming years.