What happened?
Carasent reported a strong Q3 2025, with revenue up ~27% year-over-year to SEK 82.2m (vs SEK 64.5m in the same quarter last year). With an organic growth of 13%
The company swung from an operating loss to an operating profit of SEK 7.2m (versus –8.5m in Q3 2024), for an operating margin of ~9%.
EBITDA jumped to SEK 23.6m (vs SEK 6.3m last year), for a margin of ~29% (vs ~10%).
EBITDAC of SEK 12.2m, for a margin of ~15% (vs SEK -2.2m last year)
Cash flow from operations turned positive with SEK 2.5m vs –5.5m last year.
The company reaffirmed its 2025 financial targets but emphasized that delivering on planned projects in Q4 (notably Metodika and Data-AL in Germany) is critical.
Given this strong turnaround, the stock is reacting positively as investors digest the confirmation of improving profitability and execution.
What is The Market Telling Us?
This quarter marks a notable inflection: Carasent has moved from unprofitable to profitable operations, and the margin expansion is significant.
The market likely sees this as evidence that underlying growth (especially in recurring revenues) is scaling. Indeed, annual recurring revenue (ARR) was SEK 323m (vs 255m) and organic ARR growth was ~16%.
However, the reliance on a strong Q4 execution adds risk — delays or execution hiccups could dampen sentiment. Thus, today’s rally might reflect both relief (beat) and a re-rate on confidence in its ability to deliver.
Hitting the guidance
Carasent has experienced a decline in share price since early July when the company revised its 2025 targets. To recap from July’s announcement:
Revised financial targets 2025 (previous targets):
Revenues around SEK 345-350 million (350 million), 2024: SEK 275 million
EBITDA around SEK 75 million (82-87 million), 2024: SEK 12 million
EBITDAC around SEK 35 million (44-49 million), 2024: SEK -30 million
The revision was mainly related to profitability, but it also indicates what management believes Q4 will deliver. YTD CARA has had revenues of SEK 250.3m, EBITDA of SEK 49.6m, and EBITDAC of SEK 19.2m.
So Q4 is expected to see revenues of SEK 95m, EBITDA of SEK 25.4 (27% margin), and an EBITDAC of SEK 15.8m (16% margin).
Our view
More research needed: We like CARA as a company and have long followed it. We especially appreciate the management's focus on value creation, cash flow, and organic development. However, the valuation has long held significant implied expectations.
Consensus expects CARA to deliver SEK 415m in revenue in 2026 with an EBIT of SEK 56m. Assuming that EBITDAC will be about 7% percentage points above EBIT that would lead to an EBITDAC of SEK 83m. Those figures seem likely given the current development.
Thus, the valuation on 2026e is:
EV/S: 4.8x
EV/EBITDAC: 24x
EV/EBIT: 36x
We like Earnings Power (EP) and Earnings Power Value (EPV) as gauges of market expectations. If one assumes a WACC of 12%, what Earning Power today is needed to justify the current EV of SEK 2bn? As EP is considered a steady state and adjusted for growth investments, one divides EP/WACC to get EPV. The current EP needed to justify SEK 2bn is SEK 240m. We think there are many years before CARA reaches that type of EP.
We do not have a public opinion on what a fair value of CARA is; we are only saying that the current valuation implies the market expects a significant rebound in finances, along with strong top-line growth and margin expansion in the coming years. We are unsure if the current valuation yields a large enough margin of safety.
Without deeper research and understanding of the business, we cannot say for sure whether the CARA is attractively priced. However, what we can say is that the company is delivering promising results, and more will likely follow. We will look into CARA more deeply.