Verve reported its Q1 figures broadly in line with our expectations, with strong operating cash flow as the standout. While top-line growth slightly trailed our estimates due to lower M&A contribution than we expected, adjusted EBITDA came in above our forecast. We view the robust cash conversion as an encouraging signal after last year's challenges, although it was meaningfully supported by favorable working capital timing effects shifting from Q4. The company reiterated its FY26 guidance. The company will host its earnings call at 15:00 CET.

Revenue slightly below estimates with mixed customer metrics

Reported revenue increased by 25.8% to 137.2 MEUR, falling slightly short of our 139.7 MEUR estimate. On a like-for-like basis, revenue grew by 3.7%. While the reported revenue was slightly below our estimate, organic growth (+6.4% y/y) came in at the higher end of our expectations against a tough comparison period (Q1'25 organic growth of 16%) and the lingering impact of the large customer loss in Q4'25, while also an FX headwind of -9.6 pp (as expected) weighed on the top-line development. Inorganic contribution from the Captify and Acardo acquisitions amounted to 6.9% y/y, which was slightly below our forecast.

Furthermore, we believe key customer metrics showed mixed signals; while the total number of customers grew by 34% to 4,086 and the retention rate remained high at 98%, the Net Dollar Expansion Rate (NDER) dropped to 90% (Q4'25: 92%, Q1'25: 100%). We view the NDER trajectory as a weak signal in the report and would have expected a stronger sequential recovery post-platform unification. That said, as NDER is calculated on a trailing four-quarter basis, the platform outage earlier in 2025 continues to weigh on this ratio due to the rolling calculation mechanics. Furthermore, the number of large software clients stabilized at 1,135 (Q1'25: 1,152), broadly back to the pre-unification level.

EBITDA beat driven by capitalized development and gross margin improvements

Verve generated 28.3 MEUR in adjusted EBITDA (Q1'25: 30.2 MEUR), which came in above our 26.3 MEUR forecast. Meanwhile, adjusted EBIT of 17.5 MEUR was essentially in line with our 17.3 MEUR estimate, as the EBITDA beat was offset by somewhat higher D&A expenses than expected. The gross margin was only slightly better than expected, and the primary drivers of the adjusted EBITDA beat were higher capitalized development costs than we estimated. However, as the company previously flagged, increased growth investments in sales team expansion led to higher personnel costs, causing a temporary margin drag in the first half of the year. Additionally, reported EBITDA came in at 24.0 MEUR, which was better in line with our 23.3 MEUR estimate, as a result of slightly higher one-off items than we modeled, which we attribute to the accelerated ramp-up costs related to Retail Media initiatives.

Strong cash flow supported by working capital timing

Heading into the report, our key focus was the cash flow statement and securitization program progress. Operating cash flow reached 45.2 MEUR in Q1 (Q1'25: 0.3 MEUR), representing a meaningful step up from the comparison period. However, this significant improvement stems largely from the delayed conversion of customer receivables from Q4'25. Management also noted that the company 'made optimal use of the opportunities offered by our securitization program' and is 'working consistently on an expansion'. After CAPEX of 10 MEUR, FCFF landed at 35 MEUR, which was above our estimate. While we maintain a cautious stance on cash generation given the weak 2025 outcome, we view Q1 cash flows as an encouraging first signal in the right direction, supporting the deleveraging path. Net debt was virtually unchanged quarter-on-quarter at 448 MEUR following the final Jun Group purchase price installment (23.8 MEUR) and the 50 MEUR bond tap proceeds. Cash position improved to 147 MEUR (Q4'25: 89 MEUR), which we believe provides solid liquidity for the upcoming quarters and its current investment phase. Adjusted leverage ticked up marginally to 3.1x (Q4'25: 3.0x).

Guidance reiterated as operational turnaround continues

Verve reaffirmed its 2026 outlook, projecting revenue in the range of 680-730 MEUR and adjusted EBITDA in the range of 145-175 MEUR. The guidance remains comfortably aligned with our pre-Q1 full-year estimates of 684 MEUR in reported revenue and 156 MEUR in adjusted EBITDA. While one quarter does not constitute a trend, the NDER trajectory shows that the underlying recovery remains in progress. We view the Q1 report as a step in the right direction for the company's operational turnaround post-unification, and we do not foresee any material near-term P&L estimate revisions.