Verve Group extensive report: Eyes on execution and cash flows

Verve's 2025 was largely marked by self-inflicted challenges. Platform unification issues led to a mid-year profit warning, and limitations in the receivables securitization program caused free cash flow to deteriorate sharply, pushing leverage above the company’s financial targets. Despite the turbulence, customer retention remained strong and the platform has been stable since mid-August 2025, with Q4’25 showing early efficiency gains. In our view, the investment case hinges on management proving it can convert a higher share of its profits into cash, sustain operational improvements, and deliver on 2026 guidance. At the current low valuation, we believe the risk/reward remains attractive for investors willing to accept near-term execution uncertainty. That said, we lower our recommendation to Accumulate and target price to SEK 18 (was SEK 20), reflecting a narrower acceptable valuation range.

A full-stack ad platform built for the privacy-first era

Verve operates a full-stack advertising platform, connecting advertisers seeking to buy digital ad space with publishers selling it. With ~75% of revenue from the US and ~96% from mobile (in-app), Verve is positioned among digital advertising’s fastest-growing segments. Unlike most competitors within the so-called open internet*, Verve benefits from vast direct SDK integrations and supplementary first-party gaming data, enabling effective targeting without traditional identifier-based signals (cookies and device IDs), which are decreasing in relevance amid growing privacy concerns and stricter regulation.

2026 will be a show-me story

We see Verve’s market positioning as offering strong growth potential driven by structural tailwinds in programmatic advertising (high single-digit market growth with mobile in-app and CTV growing faster) and its relatively rare combination of vertical integration and proprietary first-party data enabling privacy-compliant targeting solutions. In addition, its ability to retain customers despite platform migration issues (96-98% retention rate in Q2-Q3’25) further evidences the resilience of its commercial relationships. Its scalable cost structure should also support margin expansion as revenue recovers from the disruptions in 2025. However, we believe these opportunities are counterbalanced by several near-term risks. The company must demonstrate that weak cash conversion in 2025 (9 MEUR FCFF vs. 94 MEUR in 2024) was temporary, rebuild credibility following the mid-2025 guidance downgrade by delivering on 2026 guidance, and prove that elevated leverage will not constrain strategic flexibility. Additional risks include potential AI disruption to ad models and market cyclicality. Putting these pieces together, our estimates reflect cautious optimism where we see conditions for a cash flow recovery, improved margins, and a return to stronger organic growth, with our top- and bottom-line projections broadly aligned with the midpoint of management's guidance (2026e: 16% revenue growth like-for-like, 17% adjusted EBIT margin). Ultimately, 2026 is, in our view, about management proving through consistent execution that the platform unification pain was worth enduring.

Consistent execution will be key for a re-rate

Verve entered 2025 poised for, what we believed, a re-rating closer to its peer group, but stumbled badly. We assess that the market's patience has worn thin, with the stock trading at very low absolute multiples (2026e**: 6x EV/adj. EBIT, 10x EV/adj. FCFF) that, in our view, reflect the market’s genuine skepticism about the company’s ability to convert earnings into meaningful cash, compounded by its elevated leverage, and broader valuation pressure on open-internet ad tech. Before any re-rating can materialize, we believe management must demonstrate stronger cash conversion, prove that platform efficiencies are sustainable, make meaningful progress toward its deleveraging targets, and rebuild trust through consistent execution. That said, the platform is now unified and stable, with 2026 guidance suggesting management's confidence in returning to normalized growth. If those conditions are met, we believe the current valuation offers strong upside, but the burden of proof remains firmly on execution.