Ventum Capital Markets analyst Rob Goff raised his price target on NowVertical Group (NowVertical Group Stock Quote, Chart, News, Analysts, Financials TSXV:NOW) to $0.85 from $0.70 on May 22 after the company posted stronger-than-expected Q1 2025 results driven by 23% organic growth and improved efficiency.
He maintains his “Buy” rating for the stock.
He said Q1 2025 revenue came in at $10.4-million, beating Ventum’s $10.0-million estimate, with 23% organic growth compared to $8.3-million a year earlier, excluding proceed from the sale of Allegient. Cost efficiencies helped push Adjusted EBITDA to $2.5-million, ahead of Ventum’s $1.7-million forecast and up from $1.2-million last year.
“The quarter represents the 9th consecutive quarter of solid, positive EBITDA reflecting double-digit organic growth together with efficiencies,” Goff said. “Notably, the return to YoY growth in the UK revenues after four quarters of decline was consistent with management’s earlier expectations.
NowVertical Group is a data analytics company that operates through three segments: NOW Origins, which provides the core software; NOW Solutions, which delivers industry-specific analytics; and Affinio, which specializes in marketing analytics using Snowflake. The company is expanding by acquiring other data-focused firms in industries with large amounts of information.
Goff said Ventum slightly raised its 2025 forecasts but lowered its EBITDA outlook to account for upfront spending on experienced sales staff to help build on recent momentum.
“The growing track record of consistent performance with strong organic growth and impressive efficiencies supports raising our PT once again,” he said. “We are moving our PT from $0.70 to $0.85 which implies a 7.3x 2026 EV/EBITDA, compared to 5.9x under our previous target of $0.70. The target valuation premium against Canadian small-cap peers considers its relative growth weighted against lower liquidity.”
He said NowVertical’s progress through 2024 and into 2025 has exceeded expectations.
“NOW has moved from being valued as a SOTP with its break-up value providing its key support benchmark towards being valued as a profitable, growth entity,” Goff said. “Management has demonstrated the commercial traction associated with efforts to expand its strategic value proposition for clients, where partnership alignments have leveraged growth. Revenue gains, together with efficiencies, have supported an impressive EBITDA turnaround that, together with restructured financial obligations, has brought a measure of financial stability. We look for NOW to successfully increase its share of wallet with core clients through cross-selling of service capabilities while it adds new clients.”
He said NowVertical reported a 56% year-over-year increase in run-rate revenue from its top 30 accounts, which make up about 60% of total sales, up from 25% growth in 2024 and under 3% in 2023. He added that stronger ties with Google, Snowflake, and Azure have helped boost NowVertical’s profile and led to more client referrals from those partners.
“We look for solid revenue gains while NOW moves to invest in growth by adding sales capabilities,” Goff said. “We are encouraged by management’s move to reposition NowVertical as an integrated, one-brand, professional services provider with a focus on cross-selling to gain value and share of wallet across strategic accounts.”
Goff thinks NowVertical Group will generate $8.9-million in Adjusted EBITDA on $44.4-million in revenue in fiscal 2025. He expects those figures to improve to $10.0-million in EBITDA on $51.5-million in revenue for fiscal 2026. Looking ahead to 2027, Goff forecasts $12.3-million in EBITDA on $57.5-million in revenue.
NowVertical CEO Sandeep Mendiratta said, in an earnings release on May 22, that the company delivered a strong quarter and continues to show its transformation into a business built on consistency, stability, and sustainable performance.
“Q1 2025 marks our fifth consecutive quarter of continuous growth and operational improvement, underscoring our momentum across the business,” he said. “We delivered Adjusted EBITDA of $2.5-million, representing an EBITDA margin of 24%, in line with our $10-million annual run-rate target. Our 23% year-over-year revenue growth is a direct result of disciplined execution and a sharpened operational focus. We have successfully renegotiated acquisition-related liabilities, unlocking an estimated $5.4-million in cash savings and improving our payment schedules. These efforts have strengthened our balance sheet and position us for sustained organic revenue growth with strong margins across our core markets.”
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About The Author /
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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