Monday, November 13, 2017

Gofore about to IPO on First North

Gofore’s IPO closed just minutes ago and I got on board just in time!

Gofore about to IPO on First North


Gofore is a rather small IT consultancy of approximately 400 employees from Tampere. Gofore seems to be almost a carbon-copy of another Tampere based IT consultancy, where I actually own a couple of stocks, Vincit.

Just like Vincit, also Gofore has been a success in the “Great place to work” competition. This becomes less of a merit once one realizes that taking part costs money and only a limited number of companies partake. That still doesn’t take anything away from Gofore, or Vincit.

IPO details

New shares 1.6 million
Sold shares 1.8 million
Of which offered to general public 750 000 shares
Minimum 150 shares => 5000 people at minimum would max out the IPO
Sold shares account for about 26% of all shares in the company
Lock-up period 6 months for Gofore itself and 12 months for sellers


Market cap after IPO will be 82 million euro
P/E, trailing twelve months, is 18.5
EV/EBITA is 12-14 for the current year (Vincit is at 17, Siili at 12)
Revenue growth from 2015 to 2016 was about 50%, to 18.6 million euro
Revenue for 2017 is expected to hit 32.5 to 34.5 million euro, which would be +80%
Q1-Q3 2017 revenue was 22.7 million euro, which is up 76% compared to Q1-Q3 2016
Q1-Q3 2017 EBITA was 3.8 million euro, compared to 1.9 million euro Q1-Q3 2016
Q1-Q3 2017 EPS was 0.30 euro, compared to 0.14 euro Q1-Q3 2016
EBITA for 2017 is expected to hit 5.2 to 6.2 million euro, which would be +130%
Sales CAGR from 2012 to 2016 was 49.7%


EBIT% 2017 estimate 17%
EBIT% from 2012 to 2016 has been 13.5%
ROI% has been around 50-60%

Major risks (from Evli research)

1) failing to maintain key personnel and attract new skilled professionals, 2) increased competition dampening price level, 3) unsuccessful internationalization to Germany and the UK, 4) Higher personnel costs due to wage inflation and 5) Customer risk; five largest customers account 42% of the sales.


I’m taking part in the IPO because of the current “climate” where the IPO scene is somewhat heated up and in my opinion there are quick profits to be made. I believe the IPO to be overbooked and that price on the open will be a bit over the IPO price. 

As for Gofore, the price seems quite fair, not too bad but not cheap either. The business is not capital intensive and is quite profitable. And having public sector as its biggest customers may be considered as a feat of entrepreneurship. Gofore tells that they will seek to grow faster than the overall market’s, which itself is growing quite fast at 15% to 25%.

Gofore’s current owners are selling their stock but they are not making an exit and will still retain a dominating 56% of all stock in the company. Mutual pension companies Varma and Ilmarinen are the anchor investors, with at least 1.35 million shares combined. 

The company lacks a moat or some other characteristic that would make it special. I mean, sure they have had success as a good employer and all but that doesn’t tend to last. As the company grows, recruiting top talent and providing a close environment becomes increasingly difficult. Therefore, I don’t intend to hold the stock for a long time.

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