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[Idea note] - Karnov Group: AI-Powered Legal Tech Turnaround Story

D&G Small cap believes Karnov Group presents a compelling investment opportunity as it executes a comprehensive transformation strategy.

Author

Kristoffer Lindström
June 26, 2025

Idea note

This is an Idea note; It’s a collection of early signals – companies mentioned in fund letters, blogs, or by sharp investors online. Not a full pitch, just a starting point for ideas that might be worth a more in-depth look.

AI-Powered Legal Information Leader Accelerating Margin Expansion

Idea source: D&G Small cap

Price: 101 SEK (2025-06-26)

Karnov Group AB - Leading European provider of mission-critical legal, tax and accounting information services to over 500,000 professional users. Listed on Nasdaq Stockholm Mid Cap.

Ticker: KAR | Timeframe: 18-24 months | 🚅 Momentum

D&G Small cap believes Karnov Group presents a compelling investment opportunity as it executes a comprehensive transformation strategy. The fund points out that Karnov’s Q1 2025 results show strong operational momentum, with revenue increasing by 6.5% and adjusted EBITA margins rising to 26% from 22.7% in the same quarter last year. D&G Small cap considers the company’s newly launched AI assistant a significant growth driver, commanding at least a 30% pricing premium while gaining widespread adoption among law firms and government agencies. The fund believes that the combination of the ongoing EUR 20 million synergy program through 2026 and AI-driven revenue growth positions Karnov for sustained profitable expansion.

  • Setup: European legal information leader with 85%+ subscription-based revenue model and 90%+ renewal rates executing comprehensive AI and operational transformation.

  • Latest Development: Q1 2025 results show 6.5% revenue growth and 330bp EBITA margin expansion, with AI assistant gaining strong customer traction.

  • Mispricing Reason: The Market underappreciates AI monetization potential and synergy program execution speed.

  • Timing: Company entering final phase of EUR 20m synergy program while AI products scale commercially.

  • Value Catalysts: AI assistant rollout, margin expansion toward 30% target, potential acquisitions, synergy delivery.

  • Valuation: EV/EBIT NTM 18x slightly above three-year median.

  • Risks: AI adoption slower than expected, competitive pressure, integration execution challenge

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