Earnings call transcript: Axactor Q2 2025 sees revenue growth, stock dips

Axactor SE reported mixed Q2 2025 results, with total group revenue increasing to €64 million from €59 million, yet gross revenue declined 9% year-over-year to €81 million, resulting in a minor pre-market stock dip. Despite this, the company highlighted robust 14% growth in its Third-Party Collection (3PC) segment, which management expects to double by 2027, and successfully completed refinancing, including a new €125 million bond, providing financial stability with no major debt maturities until Q3 2027. Axactor is shifting its strategic focus to Non-Performing Loan (NPL) investments, with analysts forecasting 13% revenue growth for FY2025 and anticipating positive impacts from potential interest rate reductions on collections.

Analysis

Axactor SE's second-quarter 2025 results indicate a company in a strategic transition, underpinned by a strengthened financial position. While gross revenue declined 9% year-over-year to €81 million, this was primarily attributed to the divestment of a Spanish portfolio in 2024, masking underlying stability. More importantly, total group revenue increased to €64 million from €59 million, and the crucial Third-Party Collection (3PC) segment demonstrated robust health with 14% year-over-year revenue growth. Management's guidance projects a doubling of 3PC revenues by 2027, fueled by new landmark contracts. The company's successful refinancing, including a new €125 million bond, has eliminated major debt maturities until Q3 2027, providing significant operational flexibility. This allows for a strategic pivot from deleveraging to pursuing accretive Non-Performing Loan (NPL) investments, a move supported by solid collection performance which has exceeded 100% of forecasts for two consecutive quarters. The adjusted annualized return on equity of 12% and a reported EBITDA margin of 51% further signal operational efficiency, with analyst consensus forecasting 13% revenue growth for the full year 2025.

Key Decisions for Investors

• Given the successful completion of major refinancing activities, which has de-risked the balance sheet until late 2027, investors should evaluate the company's strategic pivot towards NPL investments as a primary catalyst for future value creation.
• The performance of the Third-Party Collection (3PC) segment is critical; investors should monitor revenue growth from new landmark contracts, particularly the expected front-loaded contribution in 2026, as this underpins the optimistic long-term guidance.
• With collection performance holding steady at 102% of forecasts and InvestingPro's analysis suggesting the stock is undervalued, the current share price may not fully reflect the stabilized financial position and the renewed focus on accretive growth initiatives.
• Consider the potential upside from lower NOK interest rates, which management indicated could positively impact both financing costs and customer collection rates, providing a potential macro tailwind for earnings.