Translation: Original published in Finnish on 11/5/2026 at 9:00 pm EET.

We reiterate our Buy recommendation and EUR 6.0 target price for Lemonsoft. The Q3 figures were largely in line with our expectations, and we make only minor downward adjustments to our earnings estimates for the coming years. The market environment has continued to improve, and activity in the early stages of the sales pipeline has picked up clearly. We expect this to start showing in the company’s growth next year. In light of this, the share’s valuation (2027e EV/EBIT 10x) remains very attractive.

Q3 figures largely in line with our expectations

Lemonsoft’s Q3 revenue grew by 1.5% to 7.2 MEUR, slightly below our 7.3 MEUR estimate. Organic growth was 0.2%, with acquisitions and divestments adding a net ~1.3pp. Supported by the Jakamo acquisition, strategically key SaaS revenue grew by 8% to 5.9 MEUR. Adjusted EBIT was 2.5 MEUR, slightly above our 2.4 MEUR forecast. The beat came from the gross margin (86.4%), which was lifted by the removal of Finvoicer and Lixan from the figures and lower platform costs. The adjusted EBIT margin (35.0%) was in line with the comparison period. A one-off financial expense related to the Finvoicer divestment, however, pushed EPS (EUR 0.03) below our estimate (EUR 0.09).

Sales pipeline has picked up, but churn is still weighing on performance

According to the company, the number of new deals still fell slightly short of targets in Q3, but customer decision-making became notably more active toward the end of the quarter. Activity in the early stages of the sales pipeline has picked up as the industrial manufacturing and wholesale & retail markets recover, and the number of ERP leads has doubled or tripled from earlier levels. During the quarter, Lemonsoft won several new customers switching from competitors’ systems that are reaching the end of their life cycle. The company estimates that this transition will offer a significant growth opportunity in the coming years. In early Q4, the number and size of deals have reportedly increased gradually. On the other hand, customer churn remained at the Q2 level. According to the company, new cancellations have fallen significantly since the summer, but cancellations made earlier in the year will keep actual churn elevated in the coming quarters.

Only minor changes to estimates

Lemonsoft reiterated its guidance, under which 2026 revenue will grow by -1% to +5% and the adjusted EBIT margin will be 23–29%. Our estimates (1.6% growth and an adjusted EBIT margin of 26.6%) are close to the midpoints of the ranges. We slightly lower our SaaS growth forecasts for the coming years, as elevated churn continues to weigh on performance a bit more than we expected, and new sales are reflected in revenue with a lag. A higher gross margin partly offsets this, and our earnings forecasts for the next few years fall by some 2%. For next year, we forecast growth of 2.3%, weighted toward H2'27 due to the divestments. We forecast the adjusted EBIT margin to rise to 28.4%. For 2028, we forecast 5% growth and an adjusted EBIT margin of 29.1%. Lemonsoft will likely accelerate its growth through acquisitions again in the coming years.

Valuation remains very moderate

On our forecasts, 2026e EV/EBIT adjusted for PPA amortization is 11x. If the earnings growth we forecast materializes, the valuation for the coming years (EV/EBIT 2027e–2028e: 10x and 8x) is very attractive. Earnings growth in the coming years also looks increasingly likely as market conditions move in the right direction. At our target price, the share would be valued at around 14x and 13x EV/EBIT for 2026–2027. In the short term, weak sentiment toward SaaS companies is weighing on the acceptable valuation, even though the worst AI fears have eased. The principal owners’ combined holding of over 90% also keeps alive the possibility that Lemonsoft will be taken private through a compulsory redemption of minority shares.