FY25p disappoints; balance sheet clean-up resets the base

FY25p EBITDA arrived at € -1.3m, thus falling short of our estimate (€ 0.5m) and the outlook from September (€ 0.4-1.0m). The main drivers were non-recurring personnel and operating expenses of c. € 0.65m (eNuW: mostly related to the former CEO's pay package). In addition, management conducted a systematic review of receivables and is currently assuming a negative impact of € 1.5m, primarily related to training loans granted to students in earlier cohorts. Those value adjustments became necessary after changes in the legal framework after loan issuance have impaired enforceability. Excluding those one-off and non-recurring effects, the adj. EBITDA would have amounted to € 0.85, thus showing underlying yoy improvement.

Looking ahead, management also quantified its EBITDA outlook for FY26, guiding for a range of € 1.5-2.5m. We view this target as achievable, which is visible in our € 1.9m estimate (6.7% margin) that is based on efficiency gains and the recent expansion of the branch network. We also factor in the current weak demand situation amid uncertainty around the timing of the new driving license reform, which leads prospective learners to postpone training in hopes of lower fees. Yet, management emphasizes that January has been one of the strongest enrollment months in the company’s history, likely supported by the higher branch count but also improved market reach. In fact, 123f should be hit much less by the current dynamics given its strong brand perception and superior digital onboarding funnel. In the long run, this could even lead further market share gains for 123f, given that a number of smaller, analogue peers is likely being forced out of the market.

Overall, the long-term prospects of the company remain intact. The investment case continues to be underpinned by the scalability of its AI-driven training platform, the increasing relevance of simulator-based education and the opportunity to gain market share as smaller, analogue driving schools struggle with rising costs and regulatory complexity. While near-term volatility remains elevated, these structural advantages support the long-term growth potential of the business model.

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