Merchant Onboarding Momentum And Market Expansion Will Drive Value Over The Next Three Years

Catalysts

About Qliro

Qliro is a Nordic-based provider of composable payment and Buy Now, Pay Later (BNPL) solutions for e-commerce merchants and SMEs.

What are the underlying business or industry changes driving this perspective?

• While Qliro continues to see robust growth in total payments volume and new merchant onboarding, the translation of this volume into consistent operating income growth remains constrained. This is due to increased variable costs associated with new customer acquisitions, likely impacting near-term net margins.
• Although recent expansion into Norway and Finland demonstrates strong commercial momentum and access to broader markets, initial volumes are still modest. Operating leverage from these regions may take time to materialize, which could delay profit acceleration.
• Despite rapid BNPL volume growth, the shift toward Pay Now transactions outside the core markets and the lower initial share of BNPL in new merchant volume could temper overall profitability until greater adoption of higher margin BNPL services is achieved at scale.
• The company’s operational focus on organizational restructuring and process automation is expected to enhance efficiency. However, these initiatives may lead to transitional disruptions or unexpected costs, putting temporary pressure on earnings.
• While Qliro is aligning its offerings with the continued digitization of payments and the rise of modular, integrated e-commerce ecosystems, competitive pressures from both specialized fintechs and global players could limit the pace at which Qliro converts merchant onboarding momentum into sustained revenue and operating income growth over the long term.

Assumptions

This narrative explores a more pessimistic perspective on Qliro compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Qliro's revenue will grow by 42.0% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -31.2% today to 12.3% in 3 years time.
• The bearish analysts expect earnings to reach SEK 100.7 million (and earnings per share of SEK 2.49) by about December 2028, up from SEK -89.5 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as SEK156.5 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.5x on those 2028 earnings, up from -5.5x today. This future PE is lower than the current PE for the SE Consumer Finance industry at 9.7x.
• The bearish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.59%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• If Qliro successfully continues to capture market share and achieves its ambition of becoming the Nordic market leader within the next 3 to 5 years, sustained high payments volume growth and stronger merchant onboarding could drive significant increases in revenue above current expectations.
• Faster than anticipated adoption of BNPL products, particularly as the share of BNPL in total volume recovers and grows, may accelerate gross profit and net margins, especially if new customer cohorts maintain strong retention and higher conversion rates.
• Operational improvements, such as cost efficiencies from process automation, tech modernization, and organizational restructuring, could result in higher profitability and operating leverage, helping Qliro exceed current margin and earnings forecasts.
• Expanding into new markets, especially as the Finland launch shows rapid early traction and international merchants use Qliro outside the Nordics, may lead to broader revenue streams and amplified earnings growth if momentum is sustained.
• Continued reduction in credit losses, supported by improved underwriting, lower consumer delinquency, and a decreasing trend in debt collection rates, could bolster net profit more robustly than assumed, impacting the bottom line positively.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Qliro is SEK18.0, which represents up to two standard deviations below the consensus price target of SEK22.0. This valuation is based on what can be assumed as the expectations of Qliro's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK26.0, and the most bearish reporting a price target of just SEK18.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be SEK820.4 million, earnings will come to SEK100.7 million, and it would be trading on a PE ratio of 7.5x, assuming you use a discount rate of 6.6%.
  
• Given the current share price of SEK17.4, the analyst price target of SEK18.0 is 3.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.