The Burn The Index portfolio launched in May 2026 and exists out of five positions. So far, we have generated a return of 17%.

If you would have invested the same amount of money on the same days in the S&P500, your return would have been 3.1%.

Our goal remains clear: outperform the S&P500 by owning undervalued quality businesses with an attractive growth outlook.

In this month’s portfolio update I will walk you through the transactions, the performance, and major updates from the companies in our portfolio.

Transactions

I added Ashtead Technologies to the portfolio on August 20th, after the company revised its outlook downwards due to tensions in the Middle East. The market reaction was ugly (-20% at some point).

This seems to be a temporary issue. With a record-high industry backlog, I expect results to be stable this year, and grow again in 2027.

Ashtead Technologies has been on my watchlist for quite some time, but I was always held back by the valuation. To me this seemed like the perfect opportunity.

An in-depth write-up and investment thesis on Ashtead Technologies is available to subscribers.

A second transaction took place on August 25th, when we added to our existing Innoscripta position.

The company published great results, but a seasonal effect and difficult IT system integration gave investors a big scare. That led to a -15% move, and me buying up more shares.

Performance

- Andreas

Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. All investments carry risk, and past performance does not guarantee future results. Please consult a qualified financial advisor before making any investment decisions.

The company was founded in 2000 and went public on Nasdaq First North in May 2018. The Q2 results were good to say the least: SEK 58.7 million in net sales, up 86% YoY (91% currency-adjusted), and a 36% EBIT margin.

Yet, concerns around legislation and sales cyclicality remain. I sat down with the CEO and discussed the burning platforms. Below you will find the interview transcript (excl. the small talk 😉) , as well as my take on the valuation.

The Interview

Hi Markus, great Q2 results. For investors that are not up to speed with I-Tech: can you walk us through the value chain?

Of course. Let’s start from the very beginning. We secured the IP around the industrial-scale production of medetomidine. When I-Tech went public in 2018, we raised SEK 40 million, a part of which was specifically allocated to secure this production IP.

From there, we work with a set of contract manufacturers. We believe that to do manufacturing really well, it must be a core capability. Today, we work mainly with Indian API (Active Pharmaceutical Ingredient) producers. They are among the world’s best when it comes to producing tricky substances cost-efficiently.

I-Tech directly controls the customer relationship, including order-taking and approval. Our distributors typically act as local logistics partners. They handle essential regional services that they excel at, such as customs clearance, intermediate transit, and temporary warehousing.

We plan production based on customers’ forecasted volume offtake. This means there is always product in stock available to be dispatched when we receive a firm customer order. The logistics company then picks up the shipment.

For Selektope, we typically use air freight. This is quite rare within specialty chemicals, where sea freight over long distances is the norm. However, we exclusively use air freight because Selektope is highly active, meaning customers require very small volumes of it, making air transport efficient.

How does the process look like for new build projects?

For new build projects, planning is very straightforward for our customers (the coating companies). The shipyard will specify exactly when they are ready with assembling the ship and when they need to apply the coatings. These timelines are documented and rarely delayed unless there is, e.g., a strike.

Because coating companies operate as logistics and inventory companies at their core, they want to keep their inventory as low as possible. They are masters at maintaining low working capital. Therefore, for new build projects, our product arrives “just-in-time,” making the planning and delivery process very smooth.

What about the maintenance market?

For the maintenance market, it is a different game. This market is about 10 times larger than the new build market simply due to the sheer number of active ships in the world. However, servicing requires local inventory.

A ship owner might call a coating company and say, ”I have some downtime, so I plan to dry-dock and service my ship in China. Can you supply the coating there?” To meet these ad-hoc demands, coating companies must maintain local inventories of finished paint products.

It is important to note that they do not need to keep inventories of Selektope. They just need inventories of the finished coatings.

This dynamic explains the variation in our quarterly results. We experience high and low quarters because the timing of when coating companies plan their production runs can vary significantly.

Sales are impacted by underlying cyclicality. Is that the right way to look at it?

I have not seen much cyclicality in our business. Surprisingly, antifouling is one of the least cyclical businesses because the service market (the far larger market) remains constant. Whether the economy is in a downturn or a boom, ships are required to undergo dry-dock servicing at least once every five years.

The variation in our sales occurs between quarters because customers place large orders to run block production campaigns, rather than spreading their purchasing evenly throughout the year. This leads to strong quarters followed by slower ones. Last year, the slowness was mainly due to one customer’s financial difficulties, alongside some likely inventory destocking as they reduced working capital.

So, “cyclicality” is the wrong way to describe it. Instead, we experience seasonal variation. In the Northern Hemisphere, very little servicing is done during the winter. This is because marine paints dry poorly in cold, damp conditions. In fact, certain coating systems, like silicone-based paints, cannot even be applied below specific temperatures.

But how does pricing impact the sales volatility?

We do not change prices on an order-by-order basis. We have a straightforward, stable pricing structure based on a volume ladder. During the last quarter, we did make some price adjustments, but those were solely to offset raw material cost hikes resulting from disruptions in the Hormuz Strait.

You suggested antifouling’s future may be regionalised as countries adopt distinct regulations. What does that mean for I-Tech?

Our product itself will not change. Selektope is what it is: a single active substance. However, our customers’ products are formulations; they are “soups” of various chemicals, and these formulations will vary by region.

For example, if we are unable to secure regulatory approval under the EU Biocidal Products Regulation (BPR), European-based paint companies won’t be able to produce and sell formulations containing our active substance within Europe for European applications.

To be fair, this is not a massive issue for us currently because the EU BPR has been highly discouraging to innovate. Since the framework was established over ten years ago, very few new coating products have actually been approved. Because of this sluggishness, there are very few products in Europe that contain Selektope, and our European sales are consequently very low.

The real point is that global chemical regulatory frameworks are diverging. This makes it difficult for a customer to offer a single, standardised global paint product that complies with both European and South Korean standards.

What is the situation in South Korea like?

I highlighted South Korea because it is a massive and vital market for the shipping industry, and they have taken a very different path than Europe. South Korea’s local legislation dictates that if a biocide meets certain toxicity criteria, its concentration in the final formulation is capped. For instance, at no more than 1%.

This means future paint formulations complying with South Korean standards will look very different from those sold in China or Europe today.

So it forces formulators to adapt because chemical restrictions directly affect paint performance?

Yes, but the positive side of South Korea’s approach is that it triggers innovation. They are clearly signaling a direction: to lower the total volume of biocides. To achieve this, the industry needs new, highly efficient biocides that can perform exceptionally well even at very low concentrations.

In contrast, European regulations discourage innovation. While the South Korean framework presents challenges for formulators, it also opens up an exciting space for high-performing, innovative technologies.

If the EU still says no, could that cost you the ~2% European sales and create an overhang with other regulators, or is that too far-fetched?

You have to apply a realistic time scale to that scenario. The immediate impact of an EU rejection is that the 2% of our sales currently tied to European applications could be at risk. However, customers can still manufacture coatings containing Selektope inside Europe, as long as those coatings are exported and applied elsewhere (such as in Turkey or North Africa).

The legislation is framed around protecting local European workers and public health, but it allows production for export. So, while that 2% is under threat, it may not disappear entirely or immediately.

Regarding the risk of this regulatory stance spreading to other regions: yes, that threat exists, but regulatory changes occur over a timeframe measured in decades, not years. If a major shipping hub like South Korea were to eventually be inspired by a negative European decision, that could pose a future challenge. This is why Korea remains a very important market for us to watch.

You are planning to enter the aquaculture space. Does this require a different commercial approach, or will it follow the same “ingredient brand” model you established with Selektope?

It is a very equivalent model. There is a slight overlap in customers, but aquaculture also introduces a new group of customers who focus exclusively on that sector.

Our plan is to build this business model very similarly to Selektope. Of course, this is pending customer validation. At this stage of medium maturity, we cannot guarantee it will be a massive commercial success. However, the opportunity is highly interesting. It expands our product portfolio and extends our target market.

Importantly, the pace of innovation in aquaculture is much faster than in commercial shipping. Net impregnation coatings used in aquaculture typically have a lifespan of one season or year, compared to the five-year cycle in shipping.

Playing devil’s advocate: Is this diversification a first step toward safeguarding and broadening the business?

Yes, that is fair. The strategic decision to diversify the company was largely catalyzed by the events of 2023, when the EU proposed restrictions that threatened our core business.

It made us realise that despite doing everything right, a regulatory body can still suddenly cut away at your business foundation. For the long-term health of the company, diversification is essential.

On the positive side, we have built immense expertise in formulating antifouling products, established strong customer relationships, and initiated valuable co-development projects. It makes perfect sense to leverage these assets to bring other interesting technologies to our customers and deliver more value.

Aquaculture is simply the first concrete project from our development pipeline that we are ready to discuss publicly. We have several other projects in our business development pipeline, and we hope to announce more concrete steps toward broadening our business in the near-term future.

In fact, broadening both our product portfolio and our strategic focus was one of the reasons the board selected my profile when appointing a new CEO in 2024. However, to be clear on our current strategy: we remain experts in marine antifouling. This is a highly attractive niche market, and we want to double down on it by delivering more value to our customers.

Final one. What are your takeaways from the last six months?

First, we’ve learned that you must measure progress on a different time scale. In this industry, quarters are too short to draw definitive conclusions.

A major learning relates to how our business interacts with the macro environment. The shipping industry is currently highly disruption-driven. Recent geopolitical events have essentially added fuel to the fire, boosting shipping activity and earnings. When shipowners’ earnings increase, they order more ships.

Furthermore, these disruptions push up fuel prices, which significantly strengthens the value proposition for premium antifouling coatings like ours, as shipowners become highly focused on fuel savings.

Speculatively, a more peaceful world with fewer trade disruptions could actually be negative for our short-term demand. It would mean ships travel fewer total ton-miles because they don’t have to bypass disrupted regions, potentially leading to a shipping downturn and lower earnings for I-Tech. This correlation is a key strategic learning.

On an operational level, we were also pleasantly surprised by how quickly our second-largest customer returned to normal purchasing levels.

Valuation

Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. All investments carry risk, and past performance does not guarantee future results. Please consult a qualified financial advisor before making any investment decisions.

Innoscripta dropped Q2 results. The market’s initial reaction is ugly with a 10% drop in the share price as I write this article. Let’s dive in.

The Results and Outlook

First, the good news. H1 2026 YoY revenue growth was an impressive 43.2%, reaching €63.2 million. The company maintains a highly scalable model, posting an adj. EBIT margin of 57.7%. Net income increased 54.2% to €24.7 million or a strong 39% margin.

Management also reconfirmed FY26 guidance of at least €140 million in revenue and at least €80 million in EBIT. The company launched in France, USA and UK. The first customers have been signed. I do not expect any tangible results straight away, but I will keep a close eye on the customer count during the next few quarters.

So what drove the market to dump the stock today? Although revenue growth was impressive YoY, it dropped 43% QoQ. And that scared the market.

I think there are two reasons. On one hand you have the typical seasonality impact. When a customer files for a return, the revenue only gets counted the following quarter. Q4 tends to be a cut-off date for recovering R&D expenses from 5 years ago. That means lots of filings pile up in Q4, and get counted in Q1. That’s why Q1 is always a big quarter. Q2 is the opposite: filings in Q1 slow down over the holidays and don’t get back to normal pace until early-to-mid February.

In addition to that, management flagged that a necessary IT migration took place. This acted as an additional headwind for the quarter.

My Next Steps

Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. All investments carry risk, and past performance does not guarantee future results. Please consult a qualified financial advisor before making any investment decisions.

Getting caught out of position is what keeps CEOs up at night. Yet that is the new reality for 5 industry-leading companies on my watchlist. They either suffer from post-pandemic whiplash, or are labelled redundant on the back of the rise of AI.

And although these companies aren’t perfect, I believe they should be watched closely because they have “good bones”. Profitable, strong balance sheets, ample cash flow, low capital intensity. There’s enough to like and they didn’t get to the top by accident.

These businesses are on my watchlist today and might make it into the Burn The Index portfolio at some point. Free subscribers get the update first.

5️⃣ Interparfums

Ticker: IPAR // Market cap: $3.7 billion // FWD PE: 24x // FCF yield: 5%

Chances are at least one fragrance in your bathroom cabinet was designed in Rue de Solférino, Paris. This is the headquarters of Interparfums, one of the best-in-class designers and manufacturers of prestige fragrances under licence from fashion brands like Jimmy Choo, Coach and Montblanc.

The company was riding highs post-pandemic. But fortunes changed: tariffs, inflation, difficult YoY comparisons due to licenses ending, and a global consumer slowdown for higher-end goods. Sales growth stalled and the share price re-rated from $150 highs to today’s $110-115 range.

Interparfums is a quality business. From founder-led management, to strong capital returns and a solid balance sheet. But growth was missing. That is about to change though. Management announced a strong pipeline for 2027 and new brands are entering the line-up in 2028.

The company is fairly valued. I’d be interested to add this name to the portfolio if they can meet their FY26 targets, and the valuation slides into cheap territory.

4️⃣ Zoetis

Ticker: ZTS // Market cap: $34.5 billion // FWD PE: 13x // FCF yield: 6%

Zoetis is the largest animal health company globally, spun off from Pfizer in 2013. The company was a market darling, especially during and after the pandemic. The assumption was that animal companionship was here to stay and grow.

That changed during the last 6 months. Management admitted that the addressable market stalled, as smaller budgets made pet owners think twice where to spend money. Then came safety concerns around Librela, the company’s osteoarthritis injection for dogs, after the FDA flagged adverse effects.

If that were not enough, the company is now also dealing with competition from generics, forcing Zoetis’ hand to lower prices temporarily and selectively.

This year has been messy for Zoetis to say the least. But the company is fundamentally still good quality. Capital returns, highly profitable, low capital intensity. Those are pillars to lean on. The livestock segment is still growing as well, and the drug pipeline is filled, supporting the long-term growth outlook.

Today the stock trades at roughly 12-13x earnings, near its cheapest multiple ever. I’m awaiting more news around the impact from the generics competition and the Librela case before opening a position.

Used sources: IR of mentioned companies and Burn The Index deep-dives

Disclaimer: This is not financial advice. Do your own research.

You can track my investment activity through these portfolio updates. I will share my trade details and provide the necessary context around each decision. Check out the latest portfolio update to see my holdings and performance.

The following article provides the transaction details on my latest buy, a quick primer on the business and the investment thesis. Free subscribers received the notification earlier today.

1️⃣ Transaction

Disclaimer: This is not financial advice. Do your own research.

Beating the market is the ultimate goal, but there’s a price to pay for diving in without knowing how to swim. If there’s one thing my experience has taught me, it’s that patience, conviction, and a strong understanding of fundamentals are essential to becoming a better and more disciplined investor.

1️⃣ Be Patient and Allow Your Thesis to Convert

I used to be a terrible investor. I’d spend a few minutes researching a company, convincing myself that I knew enough about the business. If the price went up, I’d sell right away for a quick win. If the share price declined, I panicked and sold off my position.

The problem was simple: I had no patience because I did not understand what I owned. That made me uncomfortable and fearful about losing money.

Fortunately, my professional career as a management consultant gave me a different perspective. I learned that behind every company sits a complex operation including manufacturing, sales, supply chain, back office and many other moving parts.

These operations take time to build, improve and scale. Over time, they create shareholder value, which ultimately is reflected in the share price.

Once I understood this mechanism, I looked at the market differently and spent far more time trying to understand the business in detail. I also stopped expecting my investments to work immediately.

A good investment thesis can take months or even years to play out. The share price might move in the opposite direction along the way but that doesn’t mean the thesis is wrong. When in doubt, I always go back to my original thesis and ask a simple question: Has the business changed? If not, stay the course.

2️⃣ Invest with Conviction to Optimise Returns

Even if you research a company properly and invest for the long-term, it is no guarantee that you will generate above-average returns. I 2x’d a few positions over the past years, but some of them didn’t make a dent in my total return.

The problem was that I did not invest with conviction. My position sizes were just too small. Diversifying your portfolio makes sense, but that doesn’t mean holding a lot of positions. Instead, you should hold a handful of very well researched companies. I learned that when you research the details, your conviction in a company grows, and the mental hurdle to invest larger amounts of capital disappears. It’s kind of magical.

Of course, don’t confuse conviction with gambling. You do need to properly research a company first before diving in. Otherwise you’re just betting the house, and increasing your risk of capital losses. That’s the last thing you want to be dealing with.

3️⃣ Focus on Fundamentals, Not Macro Noise

Imagine doing extensive research and investing in a position with conviction. It does sound great on paper. But what if you get distracted by crazy headlines, geopolitical changes, national debt escalating, or interest rates surging.

I used to be a slave to this type of information, and it made investing unnecessarily complicated. For one, I had no control over any of it. Secondly, these events happen dozens of times every year. If you allow yourself to be influenced by every headline, you inevitably end up trading the news. That means you have to be right far more often just to make a profit.

Today, I still read the newspapers, but I do not give a lot of weight to these factors in my investment decisions. I’d argue that I’m a better investor by not letting these headlines get to me. They haven’t helped me one bit during my investment journey and I can’t come up with a valid reason to take them all that seriously.

Disclaimer: This is not financial advice. Do your own research.

A 7% FCF yield, coupled with over 20% revenue and even higher net income growth driven by strong operating leverage already makes this an interesting business. Add a net cash position, FCF conversion above 100%, double-digit ROIIC, 20% insider ownership, and no dilution, and suddenly this one becomes quite compelling.

The company valuation is interesting: a 17x FWD PE on the earnings side, a 7% FCF yield and a 2% reverse DCF growth assumption on the cash flow side. And those are conservative numbers.

This business, focused on stolen-car recovery and fleet management, is a quality business. Up next: Elevator Pitch and My Next Steps.

Elevator Pitch

Ituran Location and Control Ltd. is an Israel-based tech business that generates 70% of its revenues through stolen-vehicle recovery solutions and 30% from connected fleet solutions. Their customers are finance and insurance companies, as well as OEMs and after-market service providers.

So, how does it work? Ituran sells a - proprietary - tracking device (30% one-time hardware revenues), after which it deploys a subscription model to track vehicles or to offer fleet management solutions (70% recurring revenues). To date, the company has racked up over 2.7 million subscribers, and growth is not stopping.

It’s an ingenious model because their customers (e.g., insurance companies) actively push their clients to solutions like the one Ituran offers to reduce risk in their portfolio. The nice bit is that customers also pay upfront, meaning cash conversion is over 100% in most years.

The company is headquartered in Israel, which still generates the bulk of revenue at 56%, but Brazil has quietly become the second pillar, now contributing 22% of sales, with the remainder spread across the globe.

In my opinion, Ituran’s edge comes from its hard-to-replicate market share (70% in Israel and 45% in Brazil). This is only possible because of the infra they’ve built out. Think installer networks for example, entrenched relationships with OEMs and insurance companies as well as banks.

Once you’re in, you really need to screw up to lose that position. Of course, their moat is regional. If it is hard for others to build it out in Brazil or Israel, where Ituran is king, the same goes for Ituran trying to build it out in mature markets elsewhere.

Management is not sitting still and looks for new avenues to deploy their expertise. One of them is IturanMOB, a fleet management platform that functions as a remote car rental solution. They are also looking into leveraging and monetising their enormous data sets gathered over the years.

One more thing worth flagging, even if it’s not decision-critical today: Ituran also owns a 16% stake in Bringg, which operates the software layer sitting between a retailer’s warehouse and the customer’s doorstep for last-mile delivery, fulfilment, and returns. Ituran carries this stake at zero book value on its balance sheet. Bringg was valued at $1 billion back in 2021. I do think today’s valuation is lower. The company generated $40 million in revenues in 2024.

I addressed the financials in the beginning of the article. In short: there’s nothing to dislike here. P&L, balance sheet and cash flow statements come out healthy.

My Next Steps

Ituran will be added to the shortlist and I am continuing my homework on the business. I must admit I’m intrigued. Management is also quite stoic in their communication and the company is executing well.

As a free subscriber you will receive my next move straight into your inbox!

Check out the August 2026 portfolio update to see my holdings and performance.

Disclaimer: This is not financial advice. Do your own research.

Revenues grew 17% YoY to $3.4 billion. Organic growth was unimpressive with 3%, but this was mainly due to an accounting fluke with its subsidiary Altera, as well as some other anomalies that were expected by management. Excluding these, organic growth would have landed at 5%. As a reminder, Constellation Software’s business model relies on acquisitions to grow, and is supported by organic growth.

Free Cash Flow Available To Shareholders (“FCFA2S”, the cash flow before acquisitions or debt repayment), a key performance metric for Constellation Software, came in at $345 million, a 57% increase YoY. That is a healthy increase, but was aided by a couple of one-offs. Net cash flows from operating activities (CFO) grew 10% to $477 million, mainly supported by strong revenue growth.

Acquisitions worth $893 million were completed. That’s a good chunk, and one of the better prints in recent quarters. Adding to that, the company completed or has open commitments to acquire a number of businesses worth $818 million. Also, something you want to see as an investor in Constellation Software.

Management does not like to make any grand statements about the future, but the earnings call did show that they still see a healthy flow of deals, the same type of competition, and no real disruption from AI.

My Next Steps

Disclaimer: This is not financial advice. Do your own research.

Kaspi Q2 revenue increased 15% YoY to $2.3 billion and net income was stable at $539 million (23.3% margin), even with investments in Turkey and high funding costs in Kazakhstan.

E-commerce remains the primary growth driver, with constant-currency GMV increasing 28% and purchases up 33% YoY. Fintech revenue grew 23% YoY, supported by an 18% increase in the average net loan portfolio. The company also began shifting its mix toward longer-duration, higher-revenue products. Total Payment Volume (TPV) increased 13% YoY, with flat margins as Kaspi invested in Kaspi Alan (pay-by-palm) technology.

The Turkish banking license was acquired during the quarter, allowing Kaspi to launch fintech products. They also launched the Kaspar AI assistant, helping users throughout the shopping experience whilst improving underlying metrics. Lastly, management is proposing an 18% dividend increase (9.3% annual yield).

Kaspi reiterated its FY 2026 guidance. The company continues to expect GMV growth of approx. 20%, TPV growth of around 15%, average net loan portfolio growth of approx. 15%, and adjusted EBITDA growth of around 5%.

A key driver for the remainder of the year will be the 100 bps reduction in interest rates on the 3-month deposit product in August. Management expects the resulting benefit from lower funding costs to begin flowing through to earnings toward the end of 2026, with the positive impact continuing into 2027.

Is Kaspi Still a Buy?

Disclaimer: This is not financial advice. Do your own research.

Below is an overview of 5 small-caps that I believe deserve a closer look. Each has the potential to deliver attractive returns for shareholders over the years ahead. They are currently on my watchlist and, perhaps in the not-too-distant future, may find their way into my portfolio.

1️⃣ LeMaitre Vascular

Ticker: LMAT // Market cap: $1.86 billion // FWD PE: 28x // FCF yield: 4%

LeMaitre Vascular develops, manufactures and sells a wide range of products used in the treatment of cardiovascular diseases. These products include bovine grafts, catheters, carotid shunts, vascular grafts, patches, as well as the production and distribution of cardiac and peripheral tissues.

What makes this company special is their laser focus on one customer type: vascular surgeons. Together with their local presence, highly trained sales staff, proprietary product portfolio and reputation as a “no backorder company”, LeMaitre Vascular built itself a defensible competitive advantage.

In combination with a healthy balance sheet (no debt), high margins (25% net profit margins), and ample capital return levels (16% ROIC), this company tends to command a premium valuation. However, because of a minor guidance review (-1% due to temporary operational issues), the stock came crashing down 20% over the last 7 days. That brings us closer to a more attractive valuation level.

2️⃣ EVS

Ticker: EVS // Market cap: €409 million // FWD PE: 10x // FCF yield: 5.6%

EVS runs an end-to-end shop for the sports broadcasting business, focusing both on products that amplify the viewer value, but also simplify work for production teams. This includes e.g., tech to capture and play back high quality replays and highlights, software for managing video content from recording to delivery and media infrastructure that routes and processes video signals within a broadcast facility.

EVS is at the forefront of its industry. But management realises that AI is here to stay. That is the reason why they are moving to a software-driven product portfolio, and aim to leverage M&A to meet their ambitious growth plans. At the same time, that leads to an execution risk.

After a soft trading update (with no structural issues mentioned), the share price tanked, making it a 22% drawdown YTD. The company is one of Belgium’s gems if you ask me. Technologically at the forefront, and the company fundamentals, both in its business model and financials (balance sheet, margins), are spot on.

Used sourced: IR of mentioned companies and Burn The Index deep-dives

Disclaimer: This is not financial advice. Do your own research.

I sold put options on TransMedics for $2.40 per contract on May 9th. These options expire on January 15, 2027, and have a strike price of $40. This means I get the instant premium, and have to buy the shares if the price falls below $40.

The thesis was that TransMedics is a great company undergoing a heavy investment cycle that would pressure near-term margins but fuel years of growth. At the time, I viewed the valuation as too high and management’s Q1 communication around the investment plan as too vague.

Putting the pieces together, I opted for a safe put option strategy. Here’s a link to the article I wrote about this transaction and the underlying thesis:

Q2 results were good, the outlook might scare some investors

TransMedics posted $190 million in revenues (21% YoY), driven by strong growth in the Services segment. The operating margin declined from 23.2% in 2025 to 13.6% in 2026. This decline was deliberate and resulting from R&D and infrastructure investments. Net profit margin came in at a below-average 8%.

So, where is the money flowing? The increase in operating expenses was driven by investments in R&D and clinical programs, incl. OCS Kidney, the next-generation OCS (Gen 3.0) platform, and the ENHANCE and DENOVO trials. The company also invested in infra, incl. a new HQ and a manufacturing facility in Italy, as well as logistics and international expansion through PAD Aviation, the National OCS Program, and IT infra to support growth.

What may have spooked investors (the stock is down 9% as I write this) is management’s expected timeline for these investments. Investors should be prepared for elevated spending to continue over the next 18–24 months, with current gross margins likely becoming the new baseline for the next two to three years.

My thesis has not changed. The company is growing fast, they are investing in the right areas (expanding their moat), and fundamentally there is not much to dislike.

Valuation

Disclaimer: This is not financial advice. Do your own research.

Content

1. Business model

2. Balance sheet and cash flow

3. Profitability

4. Competitive advantage

5. Management

6. Outlook

7. Valuation

8. Landing the plane

1. Business model

Ready for a primer on supply chain and logistics? Just kidding, but it does get a bit dry and technical, so I’ll try to keep it an easy read.

Ferrari Group is a niche logistics player at its core

The company operates four segments whose service offerings partly overlap.

The largest segment is International Services, which accounts for 66% of revenues. It combines the Freight Forwarding and Customs Solutions business.

Freight Forwarding entails the air transport of luxury goods. The company does not own an airplane fleet but instead works with multiple partner carriers.

Customs Solutions offers the regulatory expertise required to manage complex international shipments. They do have an in-house team of customs management experts, combined with an outside network in order to serve customers in more than +65 countries.

Domestic Services generate 17% of revenues and include the Ground Transportation service offering. Here, the key task is to securely move the luxury goods by road within a country. As opposed to the International Services segment, Ferrari Group does operate a fleet of armoured and non-armoured vehicles.

This segment surfs to a certain degree on the spillover effect of international shipments since the “last mile” delivery is done on the road.

A third segment is Warehouse & Logistics, accounting for 6% of revenues. Here, Ferrari Group offers high-security storage in specialised vaults. The warehouse facilities are partly owned, leased and subcontracted. The company reorganised its portfolio in recent years by completing sale-and-leaseback deals.

Don’t be mistaken: the company is still investing in its warehousing network to support growth initiatives. They develop facilities (e.g., Bangkok hub) and refurbish locations (e.g., Paris–Charles de Gaulle Airport hub).

Special & Other Services represents 11% of revenue and includes bespoke, white-glove offerings beyond standard logistics. Think red-carpet security, quality control and repairs. This segment can be volatile as it depends on when events take place.

Q1 2026 results show weakness in China

The company provided a trading update mid-May highlighting weakness in Asia, primarily driven by a double-digit decline in China following the loss of a major contract. This impact is also reflected in the YoY performance of the Warehouse & Logistics segment (see below).

Management stated that the 7.3% decline in Asia was mainly due to lower sales volumes and the continued market demand normalisation after several years of above-average sales.

Overall, the company is in good shape. Management sounds confident when asked about the China situation and believes that growth will re-accelerate. Those aren’t just empty words because Ferrari Group is investing in the region. A good example is the new office and warehouse facility at Tai Seng Exchange in Singapore.

Smart mechanics underlying revenue generation

Ferrari Group’s top-line growth is primarily driven by shipment volume, shipment value and taxable weight. Shipment volume refers to the total number of international and domestic shipments managed across their network. Taxable weight reflects the physical weight of transported goods, which influences freight costs and service fees.

Shipment value represents the total value of the goods transported and is an important revenue driver, particularly given the company’s focus on the “hard luxury” segment, including watches, jewellery, and precious stones.

The high value of these items supports premium pricing, as customers place greater emphasis on security, reliability, and service quality. The pricing structure is generally based on transaction prices that are agreed upon with clients in advance.

Since transportation costs represent only a small portion of the overall retail value of luxury items, clients are generally less price sensitive and prioritise secure and reliable handling of their goods.

Enjoying a diversified and loyal customer base

Ferrari Group provides its services primarily to the hard luxury segment, particularly watches and high-end jewelry. The company serves a range of customer groups, including global luxury brands, watch manufacturers, distributors, dealers, jewellery manufacturers and distributors, diamond dealers, and producers and traders of gemstones and other precious materials.

In addition, it offers services to high-net-worth individuals, supports the transportation of fine art, and provides logistics and security solutions for events involving high-value luxury items (e.g., auctions). The company also identified luxury e-commerce businesses as a target customer segment as part of its expansion strategy.

According to the company, customer relationships are generally long-standing, with many lasting more than ten years. Its customer base is relatively diversified, with no individual customer accounting for more than 10% of total revenue.

M&A as a lever to drive organic growth where challenges exist

Don’t expect any transformative deals. Management clearly highlights that they are looking for small targeted acquisitions that strengthen operational capabilities in attractive markets.

Just this year, Ferrari Group acquired Deltacorp in Brazil to enhance local capabilities, and capitalise on strong demand. These are the types of acquisitions that the company likes to do as they support growth where organic growth is difficult.

Italian customs case criminal proceeding is ongoing

The Italian customs case concerns allegations that Ferrari Group failed to maintain adequate compliance monitoring procedures under Italian law. The case stems from alleged smuggling of luxury watches by former employees in 2020 and 2021 and consists of a settled tax-related matter and an ongoing criminal proceeding.

In 2025, the company resolved the tax-related component through a voluntary disclosure procedure with the Italian Customs Authority, without admitting liability. Ferrari Group paid €13.5 million.

The criminal proceeding remains ongoing. Ferrari Group has requested that the court dismiss the case, but no ruling has been issued. Management considers the matter a contingent liability. While financial penalties are not expected, a bad outcome could result in sanctions that restrict the company’s commercial activities.

Conclusion: Pass ✓

Ferrari Group provides a critical service to the massive luxury industry. Its one-stop-shop offering is likely to attract large customers who aim for a secure and all-round offering, instead of working with various partners. Their revenue model is interesting because it follows shipment value as well. The Italian smuggling case remains an overhang, of which the impact is difficult to assess today.

2. Balance sheet and cash flow

The company has optionality with a strong net cash position

Ferrari Group grew its net cash position to €97m by the end of 2025. That’s 13% of the company’s market cap. The company does hold $45m in leasing liabilities.

I think that’s a very good position to be in, especially given that the company is looking to expand into new regions. Optionality is an underrated luxury in my opinion.

FCF growth supported by stronger earnings and disciplined CapEx

I think this story is rather straightforward. Ferrari Group doubled its operating cash flow between 2021 and 2025, driven by strong top-line growth and cost management, as well as the operating leverage of its global logistics network.

With infrastructure already established across more than 60 countries, the company can handle higher shipment volumes with relatively little additional cost. That means there is a meaningful operating leverage effect at play.

The strong cash generation is enhanced by an asset-light business model. CapEx is limited to around 2% of revenue, allowing the business to expand without significant ongoing investment.

Conclusion: Pass ✓

The company is in a great spot. There’s excess cash, growth opportunities are being chased and FCF generation remains top notch. Nothing to be unhappy about.

3. Profitability

Declining margins, but with a caveat

At first glance, this chart does not paint an encouraging picture. Declining operating and net profit margins suggest the business is under pressure. However, it’s more nuanced after taking a closer look.

There are two things that we need to take into account when looking at 2025 numbers. The company enjoyed other income around €24 million, driven by the sale of real estate in Asia and listing cost rebates. Those are one-offs. On the other hand, they had to pay approx. €13.5 million in VAT and interest-related expenses to cover the Italian customs case.

This means the numbers are different if adjusted for these anomalies. Operating profit and net profit margin would be 15.5% and 11.8% respectively, even though revenues grew 3.2% YoY between 2024 and 2025. The reason is higher employee costs, reflecting Ferrari Group’s decision to prepare for growth opportunities. Margins were also impacted by the ramp-up of new operations in markets such as Saudi Arabia and Vietnam, as well as its continued investments its new Transport Management System.

The key question is whether these investments will ultimately translate into stronger revenue growth and improved margins. I do think that over the long-term a new Transport Management System will add value in that operations will run more efficiently. The targeted expansion into new markets can definitely add to revenue growth. Over time I expect net profit margins to find their footing around 14%.

Strong but deteriorating capital returns

ROIC is very high at 32%, but the long-term trend is negative. The culprits aren’t hard to find. For one, operating profit decreased as explained, and the asset base increased driven by ongoing investments. I’ve explained these dynamics earlier.

Ferrari Group does not dilute shareholders

There’s no stock-based compensation, nor does the company issue new shares. Shares outstanding did increase due to a corporate reorganisation related to the IPO preparation, not a new equity issuance.

Conclusion: Caution ⚠

Although margins are healthy, the long-term trend is not what we like to see. Yes, they are investing, and there are non-structural reasons for the margin decline, but it is yet to be seen whether these investments pay off.

4. Competitive advantage

Ferrari Group PLC operates in a specialised niche within the logistics industry. Management classifies competitors according to their geographic reach and degree of specialisation. Its closest competitors are luxury secure logistics specialists such as Malca-Amit (supposedly the go-to service provider for diamond and jewellery traders) and Temis Luxury (small boutique).

Other competitors include high-security logistics providers like Brink’s, Loomis, Prosegur, and GardaWorld, regional specialists such as Sequel, Transguard Group, and Maltacourt, and global logistics companies including DHL, FedEx, UPS, Kuehne + Nagel, DSV, and Etihad Secure Logistics, which lack Ferrari Group’s luxury-focused expertise.

The Group considers its competitive position to be supported by significant barriers to entry, including its global secure logistics infrastructure, long-standing relationships with insurers such as Lloyd’s of London, specialised customs expertise developed over more than 65 years, and strong, long-term client relationships built on trust and reliability.

Ferrari Group identifies aggressive pricing, technological innovation, and potential market share erosion as its main competitive risks. Management seeks to address these challenges by maintaining its premium positioning, investing in innovation, including its new Transport Management System, and deepening relationships with existing clients.

Conclusion: Pass ✓

Although the market is highly competitive, Ferrari has carved out a niche where it is the dominant player. Rather than competing with high-volume transport providers, the company operates alongside smaller, boutique-style competitors. By continuing to invest in technology and its global network, Ferrari has maintained its leadership position. And because its closest competitors are privately held, Ferrari also benefits from a financial advantage as the only publicly listed company in its peer group.

5. Management

Marco Deiana is the CEO of the company and member of the founding family. Together with Corrada Deiana (COO Europe), they hold 71% of the shares. Fair to say their interests are aligned with shareholders. And there is no sign of excessive pay (CEO earns €440k per year and a 0.01% share of consolidated profits).

Before becoming CEO in 2016, he had spent more than 20 years with the company, gaining experience across a range of departments. His career path appears to have been a deliberate preparation for the role, reflecting a typical succession plan.

So, what is Mr. Deiana busy with these days? A few things caught my attention when looking through the public comments and earnings call. For one, he’s adamant that the one-stop shop business model is the right one to pursue, even if the luxury market is returning to normalised growth.

The market launches in Saudi Arabia and Vietnam are high on his list as well. Lastly, he is looking into implementing a new Transport Management System. This is always a daunting task, but a logical step for a company like Ferrari Group as it will help them expand margins over time.

Conclusion: Pass ✓

Mr. Deiana seems to be a competent CEO. He knows the company inside out and made it his own after taking the business public. His priorities in the business model, expansion and operational efficiency are the right ones. Infighting is something to watch out for, but there haven’t been any signs that this is a real risk.

6. Outlook

The best we can do is try to understand demand in the underlying luxury industry. That’s the right proxy for Ferrari Group’s outlook. If anything, the sector is showing signs of stabilisation after years of slightly declining sales.

Regional trends are becoming increasingly important drivers of performance. The United States and Japan have emerged as areas of relative strength, benefiting from robust local demand and a recovery in tourism. Asia-Pacific, particularly China, remains a critical long-term growth opportunity, although near-term performance continues to be mixed. This remains a headwind for Ferrari Group these days.

The Asia region remains strategically important due to ongoing wealth creation and the continued expansion of luxury consumption. The Middle East has faced pressure from geopolitical disruptions and weaker tourism flows, but local demand is supporting a gradual recovery.

Short term growth rates are expected to be between 2-3%, with long-term expectations between 4-6%. This is based on outlooks from investment banks and market research outfits.I tend to not place too much weight on those forecasts and rather stick to what companies are projecting. And those are aiming for 2-4% on the short term.

This means that Ferrari Group, with a guidance fork of 4-6% is actually rather optimistic about its prospects.

Conclusion: Caution ⚠

It seems that growth is slowly coming back in the luxury industry after years of slowing down. It is still early days, and we need to be aware that growth won’t be exploding straight out of the gate. We’ve seen over the past two years that an announced improvement can be delayed, time and time again.

7. Valuation

Sources

• Fiscal.ai

• Ferrari Group Investor Relations resources

Disclaimer: This is not financial advice. Do your own research. Some of the data might deviate from company sources.

Disclaimer: This is not financial advice. Do your own research.

Just after Netflix released its Q2 earnings, my timeline started to get flooded by hot takes, bull and bear cases, and just a stream of valuation updates.

Apparently winter is coming for the streaming giant. Competition is heating up and AI is commoditising content development. On top of that, management is sharing less metrics, which doesn’t sit well with investors. All of this turbulence led to the stock declining 28% for the year.

I’ll be honest with you: besides watching a Netflix show once in a while, I wasn’t very informed about the business behind the streaming giant.

But, I tend to get interested when the narrative is dominated by panic and the company is in a seemingly existential crisis. So, I decided to dive into the dumpster fire myself and get you, and myself, some answers.

This article provides an in-depth analysis of the business, and whether it deserves a spot in the Burn The Index portfolio.

Content

1. Business model

2. Balance sheet and cash flow

3. Profitability

4. Competitive advantage

5. Management

6. Outlook

7. Valuation

8. Landing the plane

1. Business model

Before diving into the details I wanted to share an important piece of context. The Netflix we know today can be traced back to multiple “betting-the-farm” decisions. Each of those decisions came at a time where growth was slowing down.

What caught my attention during the research for this article is how fast management identified potential challenges, their brave approach to testing solutions, and executing relentlessly once a solution was chosen.

Netflix is far more than licensed movies and series

The company was originally known to license content from other studios like Disney or CBS. They soon realised that being dependent on expiring content deals was a risk they didn’t want to take.

As a result, Netflix started to push original content. We probably all remember House of Cards and Orange is the New Black. These were great series, and helped Netflix control costs, retain subscribers and license internationally.

Fast-forward a decade or so, and you will find that the Netflix library today looks vastly different. Sure, you can still choose from an insane amount of movies and series. But in addition to that the company added documentaries, stand-up specials, video gaming as well as live events such as the Monday night WWE, NFL Christmas Day games, high profile boxing games and more.

This on one hand increased the subscriber count, but more importantly drives consumers to spend more time on the Netflix platform. Lastly, it ensures that the platform becomes more sticky as consumers find reasons to stay on board.

Why does this all matter? Well, it’s part of Netflix’s revenue and growth engine.

Subscriptions and increasingly ads drive revenue

Netflix generates the vast majority of its revenue through monthly membership fees giving viewers access to its streaming platform, offered across a variety of tiered plans. This includes lower-priced, ad-supported options designed to reach a broader range of consumers, but also multi-account plans for larger households.

The reason for the multi-account plans is because Netflix discovered a few years ago that account sharing was a serious drag on growth. They were giving content away for free and started pushing back on this, successfully.

Membership growth sits at the centre of Netflix’s expansion strategy, as the company aims to penetrate as many households as possible. This growth is fueled by an ever-expanding content library that keeps current subscribers engaged while attracting new ones, with live events proving to be a particularly strong proposition.

Price increases happen continuously, but never randomly. I guess based on their subscriber data, Netflix can make informed decisions, thereby limiting churn.

The advertising business adds a further revenue layer. It makes selected subscriptions more affordable, attracting new members. Although this is still a relatively new and only a small part of revenues, it is expected to become an important growth driver.

Management think of themselves as builders, not buyers

Well, they tried to acquire Warner Bros Discovery’s streaming and studios business last year but stepped away from the deal after Paramount Skydance swooped in and closed the deal. As a result, Netflix did receive a termination fee of $2.8bn.

The reason why Netflix was interested is pretty straight forward. They could have gotten their hands on precious IP, reduce licensing cost, and added millions of subscriber overnight. What sticks with me is that if the opportunity presents itself, Netflix is not shy to pull the trigger.

Apart from that saga, management is quite vocal about the fact they see themselves primarily as builders, and not acquirers. But, the truth is somewhere in the middle I guess. It’s true that they bank on original content. But, the company did acquire smaller shops like Interpositive and Eyeline to scale its use of Gen AI and advanced visual effects.

Content creation is changing

Netflix’s content creation method is two-folded. They either license from other companies, or produce it themselves as “Originals”.

Original shows and movies go through a typical process, just like any other “Hollywood” production. Deciding what to produce used to be almost a random and lucky endeavour. I remember an interview with Kevin Spacey in which he explained that working with Netflix was a real eye-opener: no restrictions, a big budget, and a “go get it done” mentality.

In the meanwhile, they’ve become more sophisticated. A good example is their approach to finding local novels or stories and turning them into national, and later on, global phenomenons.

AI, of course, plays a major role in how content is created these days. It can support creators - for example - in developing scenes which would otherwise be expensive, hard to execute or time-consuming.

Netflix is clear on AI. It enhances what they can do and the tech is not perceived as an existential threat. I think that’s a relatively realistic view. I do expect small outfits with a laptop to be able to produce very good content. The creative process is put into the hands of everyone basically. But does that mean Netflix is playing a losing game? Not really in my opinion.

Will “Hollywood” have to adjust to the new way of making content? Most certainly, but assuming this spells the end for Netflix is a few bridges too far.

Leveraging affiliates to support growth

Netflix is constantly moving the dials to see what works and what doesn’t. A good example is the recently announced partnership with TF1, where TF1’s product experience is directly integrated into the Netflix platform to expand content.

Another example is the bundling of a Netflix subscription with your local telecom operator. I’ve seen it in my home country and know people who’ve chosen that option.

Will all these initiatives move the needle? Most likely not, but it helps a bit I guess. What I do like to see is a company showing a need to invent and reinvent.

Conclusion: Pass ✓

I think that the mindset around competing for attention is the right one. And by expanding the content offering, Netflix is playing into that game. The business model around subs, pricing and ads is clear and logical. The threat and benefit around AI is something Netflix needs to think through, but I doubt this will spell the end for Netflix, or Hollywood as a whole.

2. Balance sheet and cash flow

A sizeable but shrinking debt load

Netflix currently has $14.3 billion in total debt, but also holds about $9.1 billion in available liquidity. Net debt stands at $5.2 billion. Part of that improvement comes from the termination fee they received as part of the botched acquisition of WBD.

How did Netflix end up with that much debt in the first place? Well, there’s a few things to consider. The main reason for the debt was, and is still, to fund the acquisition, licensing, and production of content. Specifically, the company’s push into original content requires significantly more upfront cash than licensed content because production costs must be paid as the content is being created, long before it appears on your screen. Growth at all cost was the motto for years.

The total debt is reasonable in my opinion. We have a long term debt to assets ratio of 0.2x, and a debt to equity ratio of 0.47x. I feel comfortable with these numbers. Netflix is not in a distressed or cash-strapped position.

Earnings and FCF generation is strong enough to pay down debt

Netflix’s EBIT covers interest expenses 17x. That’s a very comfortable situation to be in. Even better, the company generated over $10 billion in operating cash flow and $9.7 billion FCF in 2025. Strip out the termination fee of $2.8 billion and FCF would still be $7.6 billion.

It’s fair to say that Netflix has enough fire power to simultaneously pay down its debt whilst keeping up the investment tempo, and buy back shares.

Netflix is capital intense, if we take a really close look

If we look at capital intensity in a conventional way, we’d land on a D&A to revenue ratio of 0.7%. That’s extremely low, and not particularly on point.

As you should know by now, Netflix acquires content, which is what keeps the engine running. It’s fair to say that this is sort of the investment that allows them to continue to be in business. To gauge Netflix's true capital intensity, we need to look at "additions to content assets" in the cash flow statement (the real cash spend on content). For 2025, that ended up being over $7 billion (first half of 2025).

If we then extrapolate and make the calculation, we end up with a D&A to revenues ratio of 35.5%. That’s a completely different picture, and likely closer to the truth. It’s clear that Netflix is relatively capital intense, especially driven by the need for new content, either licensed or developed in-house.

Conclusion: Caution ⚠

Netflix is a healthy company. They produce ample cash flow to pay down the debt and service the interest payments. What does raise a flag, or should at least be taken into account, is the capital intensity. Finding a balance between a quality content library and an investment growth rate that is slower than revenue growth, will be the eternal challenge, and hard to continuously achieve.

3. Profitability

Healthy margins driven by operating leverage

That’s a nice looking chart. Netflix has continuously managed to increase its gross and net profit margins. In part thanks management’s philosophy of ensuring that programming spend grows slower than revenue.

This is the operational leverage that many companies dream about. For every newly added user, the content acquired or built can be amortised over more users.

Net profit margins did get a boost thanks to the $2.8bn termination fee, but even if we look at FY24, the profit margins are also very healthy at 22.3%, coming from 17.2% during FY21.

Improving returns on investment

Return on Invested Capital is critical because it assesses the company’s profitability and capital efficiency.

Netflix’s returns have become increasingly better over time, going from around 10% in 2017 to 22% in 2024. Starting in 2019, Netflix flipped the switch and started looking after margins instead of growing at all cost. That leads to today’s maturing 20-30% ROIC. A very healthy number in my opinion.

Minimal dilution through SBC and share issuance

Between 2017 and today, Netflix reduced the share count with 3.7%. That’s not a lot, but the question is whether there was ever a good time to buy back shares. We don’t want to see management buying back shares at all costs, because that pressures shareholder value creation.

As we can see in the chart above, Netflix is not doing great when it comes to buying back at the right time. They bought back shares in 2021 at a 60x PE, and for $9 billion at a 60x PE in 2025. Hardly a good move in my opinion. Relative to historical valuations, today seems like a much better time.

Stock-based compensation is another potential threat to shareholder value. That amounted to $368m in 2025, or 3.3% of net profits. That’s actually quite ok. After all, this is a tech company, so I am relatively happy.

Conclusion: Pass ✓

Margins and returns are healthy if management choses to focus on them. A few years ago the mantra was to grow at all cost. As a shareholder you need to be comfortable with this approach. The limited dilution is a good sign for shareholders.

4. Competitive advantage

Netflix’s direct competitors are other major subscription platforms like Disney+, Amazon Prime Video, HBO Max and Apple TV. The competition is fairly intense, with deep-pocketed players going all-in to gain subscribers.

Another trend is the consolidation spree that is starting to get going. The WBD deal was just one example, and it is expected that there might be more to come. That will result in very large streaming giants, and therefore increased competition for Netflix.

What I would also be watching out for more closely is competition from YouTube, which dominates viewing time. It is also a great platform for solo creators to develop an audience. I see this as the end boss for Netflix, at the moment.

But, Netflix is not a sitting duck of course. Their differentiation builds on a few things. For one, the content library is extremely rich and the release rhythm is unmatched. They do not depend on a handful of franchises they need to milk empty.

They have also kept control over pricing, data, and the customer relationship in-house. That relationship feeds them incredible amounts of data on subscriber and content level. You can also see this in where they release what, which dates (just look at the Stranger Things 5 release schedule), and where they show it.

Underpinning all of this is a head start in infrastructure. To me (and I am no tech expert), Netflix does feel like the native platform for streaming. It was built for exactly that purpose.

Conclusion: Caution ⚠

Competition is intensifying. I think Netflix is well positioned to deal with this as a native streaming giant with an enormous content library. If that engine keeps on humming, they should be fine. If not, it will obviously backfire on the results, and then it becomes a question of whether the price you pay justifies that risk.

5. Management

Netflix is led by co-CEOs Ted Sarandos and Greg Peters, who took the role jointly in January 2023 when Reed Hastings (the founder) stepped down as CEO to become Executive Chairman. He left that role in the meanwhile.

Sarandos is actually co-CEO alongside Hastings since 2020. Both he and Peters have been working closely with Hastings for over 15 years, so they are familiar with the business, its evolution and culture.

Hastings co-founded Netflix in 1997 and served as CEO for over two decades. He was the architect of Netflix’s foundational strategy: the pivot to original content, and international expansion from 2016 onward.

The clearest sign of the leadership handover came with the password-sharing crackdown. That had Peters’ fingerprints all over it. Since taking over in 2023, Sarandos and Peters have split the growth agenda. Peters leads the build-out of advertising, and shaping pricing and membership mechanics, and Sarandos has continued driving content strategy, pushing into live entertainment.

It seems both have been involved in quite some pivotal moments, which provides comfort in knowing these guys know what they are doing.

On ownership, insider stakes at Netflix are quite low (1–2%). Sarandos holds roughly half a million shares, and Peters a couple hundred thousand. The equity stakes still keep management meaningfully aligned with shareholders.

Conclusion: Caution ⚠

My first fear was that the new CEOs did not make any of the grand decisions that accelerated growth of Netlifx in the past. Luckily, the new CEOs aren’t rookies and know the company inside out, and have managed pivotal points in Netflix’s history.

6. Outlook

The days of 15-20% subscriber growth are over. There’s many estimates out there, ranging from 6% to 9% underlying market growth. Especially in the US, subscriber growth is saturated and not expected to go anywhere in years to come. Growth will have to come from upgraded tiers and price increases especially.

The real growth is still available in regions like the Asia-Pacific, which is less penetrated. Although not split up, that region grew 18% for Netflix, and the company indicated that it was mainly driven by subscriber growth.

In short, companies like Netflix will have to find new ways to expand the share of wallet with existing subscribers while developing new formulas to convince new subscribers.

Conclusion: Caution ⚠

Growth is no longer low hanging fruit for Netflix. The company now has to revert to other regions and new subscription formulas to add new subscribers, while finding new ways to increase the share of wallet with existing ones. A though balancing act in my opinion.

7. Valuation

Sources

• Fiscal.ai

• Netflix Investor Relations resources

Disclaimer: This is not financial advice. Do your own research.

It’s one of those summers where major sport events align on the calendar. Wimbledon just ended, we’re almost through the 2026 World Cup, and the Tour de France just started.

That tends to be a good time for a company called EVS Broadcast Equipment (EVS), who specialise in broadcasting software and hardware for live sports.

But then came a trading update which looked like a profit warning, and the stock price took a serious hit, falling from €36 to €27.

This article provides an in-depth analysis of the business, and whether it deserves a spot in the Burn The Index portfolio.

Subscribe now

Content

1. Business model

2. Balance sheet and cash flow

3. Profitability

4. Competitive advantage

5. Management

6. Outlook

7. Valuation

8. Landing the plane

1. Business model

EVS is a well-known name in the field of live video technology for broadcast and media productions. The Belgium-based company was founded in 1994 and rose to fame with its pioneering Live Slow-Motion system, which became a global standard.

The instant slow-motion replay after a decisive moment? That’s EVS doing its magic!

While known for its replay expertise, EVS has reinvented itself to become a software-driven ecosystem that supports the complete production lifecycle.

EVS is the end-to-end tool box for media productions

The company exists out of six units with a distinct but complementary offering. I tried to keep it simple, and added some visuals to make it tangible:

LiveCeption delivers the technology needed to capture and instantly play back high quality replays and highlights. EVS developed AI-powered features like the “Zoom” function, allowing operators to crop high-res video for sharper analysis.

MediaCeption is the central hub for managing video content from recording to delivery. It unifies different production stages, including bringing in video (ingest), organising, editing and distributing it for news and sports.

The technology connects live production with archives and social media publishing. Production teams can work faster thanks to AI deployment for tasks like video archive search, speecht-to-text conversion and object recognition.

Media Infrastructure provides the underlying "brain" and technical foundation that routes and processes video signals within a broadcast facility. Its primary goal is to ensure that video and audio signals get where they need to go reliably, whether the facility uses traditional cables or modern computer networks.

I can’t really explain this without taking up too much space, so I thought this video might be helpful instead:

T-Motion is the newest division at EVS, created in 2025 to provide robotic systems for cameras. By combining the expertise of the recently acquired companies Telemetrics and XD Motion, this unit offers automated camera movements.

These robotic systems use AI to help operators with smart movements and automated presets, making production more efficient and creative.

PowerVision the Xeebra Solution lives here. Doesn’t sound familiar? Well, that’s basically the VAR (Video Assistent Referee) you see at work during football games.

Flexible Control Room is a specialised solution called Tactiq, a software-defined interface that unifies video, audio graphics, and lighting control into a single station.

It’s a lot to take in but EVS is basically running an end-to-end shop for the sports broadcasting business, focusing both on products that amplify the viewer value, but also simplify work for production teams. A win-win, I guess?

Revenues follow the cadence of events

There is one important dynamic to understand around revenue generation. Large sport events tend to line up in “even” years, and that brings in additional revenue for EVS, in the range of €14-15 million, and are market as “Big Event Rental”. For 2025, an “uneven” year, EVS generated €208 million, growing by 5.1% YoY.

EVS breaks down revenues into two categories. Equipment sales, covering both hardware and software solutions, remains the dominant revenue stream for the company. In 2025, it accounted for €175 million (84%).

Other services form a significant and growing category, generating €33 million in 2025, and includes professional support services like equipment installations, project management, and training for operators.

Coming back on the Big Event Rental component: this obviously leads to a volatile result profile. To counter this, EVS is trying to double down on Service Level Agreements. These are now accounting for 16.7% of total revenues, and grew 37% over the last two years.

Customer dependency risk is low and loyalty high

EVS categorises its client base into three segments: the Live Audience Business, Live Service Providers, and Big Event Rental.

The Live Audience Business, accounting for 59% of 2025 revenues, include organisations that create content for their own use, including major broadcasters like NBC, Fox Sports, and ESPN, as well as stadiums, corporate media centers, and governmental or educational institutions.

Live Service Providers, accounting for 41% of 2025 revenues, include rental and facilities companies, production firms, and freelance operators who leverage EVS tech to provide services to other broadcasters.

As mentioned, large sports events take place in “even” years, so last year the third segment, Big Event Rental, did not generate much. This segment includes host broadcasters responsible for producing events like the Olympics or World Cup.

There is a low customer concentration risk as no single customer represented more than 10% of revenues in both 2024 and 2025. Customer loyalty seems high (if there’s a measure?) as the top 100 clients typically invest in 8 out of 10 years.

M&A and the Big Hairy Audacious Goal

I’m not making this up. That’s actually the name of the revenue target they set themselves (€350 million in 2030). Management estimates that €300 million is feasible organically, which leaves a gap to bridge through M&A.

EVS has built an M&A track record in the meanwhile through the addition of Telemetrics (indoor robotics) and XD Motion (outdoor robotics) in 2025, and MOG Technologies (MediaCeption enhancement) in 2024.

The listed acquisitions were accretive to both revenues and net profit straight away, indicating that management is making the right choices.

Conclusion: Pass ✓

EVS built a comprehensive portfolio of value adding services to the broadcasting production industry. Their M&A strategy seems spot on, enhancing existing solutions, and expanding the portfolio in a meaningful way.

I do not like the dependency on mega-events like the Olympics and the World Cup. They make sales very lumpy, and the risk of missing out on such a reference event might have repercussions in other years when selling to more regular customers.

2. Balance sheet and cash flow

Cash at hand and no debt

EVS has optionality because it sports a net cash position of €58 million and no debt to pay back. It is a decline from the €75 million in 2024, but that’s due to the acquisitions mentioned earlier, a €10 million share buyback program and a 3.4% dividend yield.

FCF is all over the place due to macro factors and internal screw ups

It’s not a pretty sight, but let me explain. The swings in operating cash flow were driven almost entirely by working capital timing, and IT issues, rather than a deterioration in the underlying operating business.

I think no explanation is needed for the fluctuation in 2020 and 2021 (pandemic). However, in 2022, an ERP transition delayed Q4 invoicing. In 2023, that ERP effect reversed, bringing FCF back up. And in 2024, a structural improvement in receivables collection combined with record profit pushed FCF to a new high.

Cash from operations fell to €28 million in 2025, mainly due to a €23 million rise in trade receivables driven by strong but unpaid December revenue and newly acquired T-Motion receivables. A weaker US dollar added further pressure.

EVS is not a capital intense business

The visual from Fiscal.ai is a bit misleading, but you get the point. It shows D&A and CapEx between 2016 and 2025.

D&A is slowly rising due to the amortization of acquired technology and customer-related intangible assets. But, nothing to worry about in my opinion.

CapEx, which we see as fuelling growth, came in at approx. 4.1% of sales in 2025, a sensible level driven by capitalised R&D and growth-related investments.

Conclusion: Pass ✓

The balance sheet should give comfort as there is cash available and no debt. I’m not in love with their volatile FCF profile. The reasons are always operational, and it seems there have been some misfires in the past.

EVS is - to my surprise - not that capital intense. I do expect CapEx to intensify in coming years as the companies aims to meet its 2030 goals.

3. Profitability

Healthy gross and net profit margins pressured by acquisitions

In 2025, EVS’s gross margin decreased to 70.8% from 72.3% in the previous year, primarily as a result of the dilutive effect of integrating the new T-Motion robotics business and the impact of US tariffs.

What I found interesting is that the company also signed a single large strategic deal that carried higher-than-typical discount rates. The CFO however flagged that there is no sign of broad-based discounts being handed out.

The net profit margin also declined, falling from 21.5% in 2024 to 18.5% in 2025. This was driven by a deliberate 7.0% increase in operating expenses to support the “Double Down North America” strategy and accelerated R&D initiatives, alongside the absence of high-margin Big Event Rental revenue in an “uneven” year.

Healthy returns on investment

Return on Invested Capital is critical because it assesses the company’s profitability and capital efficiency.

EVS returns have been very healthy. The main reason for the slight decline was due to the acquisitions that took place. I’ve mentioned this earlier on. The acquisitions sported lower margins. The CEO emphasised they are working on improving these.

Minimal dilution through SBC and share issuance

Total diluted shares outstanding increased 3.2% between 2020 and 2025. Today, Stock-based compensation totals €1.3m. That’s completely reasonable for me. Nothing to see here. Let’s move on.

Conclusion: Pass ✓

EVS is very profitable, although margins slightly decreased over the past years. Integration of acquisitions, as well as dealing with tariffs were the main culprits in previous years. It is positive to read that there is barely any dilution in the shape of SBC or issuing new shares.

4. Competitive advantage

This might actually be the factor that keeps me on the side. Competition is fragmented and the industry as a whole is changing. That forces EVS’s hand to make changes to their portfolio and operations.

Let’s look at competition first. Grass Valley is EVS’s closest competitor and has gotten more aggressive since being bought by Black Dragon Capital in 2021. They compete on a few fronts: a cloud-based system for producing live video remotely, camera-related products, and they offer end-to-end broadcast setups (cameras, switchers, etc.). They also tend to win deals by bundling all of this together at a lower combined price, especially when bidding for big sports contracts.

Evertz Technologies is another strong challenger across broadcast, post-production, and new media, particularly in IP and software-defined video. Other rivals (Merging Technologies, Lawo, Cisco Systems, and Crestron Electronics) compete more on specific segments like audio, IP infrastructure, or control systems, rather than across EVS’s full portfolio.

I think that’s a typical setup: one big competitors, and many smaller and specialised players. But as I mentioned before, it’s not only competitors that are a worry.

There is a shift ongoing in the industry: production is moving toward software-based, cloud workflows, which chips away at EVS’s traditional edge in physical hardware, and lets leaner software-only rivals undercut on price.

On top of that, streaming giants like YouTube, Netflix, and Amazon Prime moving into live sports are pushing broadcasters to expect more flexible, cloud-based setups, even though these platforms aren’t direct EVS competitors.

In response, EVS is buying smaller specialised companies to fill gaps (like camera robotics and orchestration), pushing further into AI and cloud subscription products so it isn’t just selling hardware, and leaning on its reputation for rock-solid, low-latency reliability in big live sports events, where broadcasters still pay a premium.

Conclusion: Caution ⚠

Yes, there is competition, but that’s nothing to really worry about. The bigger issue is a broader industry shift where EVS was forced to adjust its portfolio and acquire smaller and more specialised companies. That all comes with an execution risk. If they miss, EVS risks being left behind.

5. Management

Serge Van Herck has led EVS as CEO since September 2019, bringing more than 30 years of experience in the broadcast and satellite industry.

Credit where it is due: under his leadership and the company’s PLAYForward strategy, revenue has grown from €103 million in 2019 to €208.1 million in 2025.

On ownership, insider holdings totalled 784,000 shares, or 5.5% of the company’s capital. The vast majority of this stake belongs to Michel Counson, Managing Director and co-founder, who alone holds 781,500 shares.

Most of the Executive Management team also hold shares, but their individual stakes generally fall below the 3% mandatory disclosure threshold and aren’t rolled up into the Board’s aggregate figure.

One notable setback for management is the departure of CFO Veerle De Wit, after nearly five years in her role. This is viewed as a significant loss and does not calm down the markets.

Conclusion: Caution ⚠

Mr. Van Herck has a proven track record at EVS. It’s hard to argue there. But, insider ownership is relatively low, and the loss of Veerle De Wit as CFO is not a good look.

6. Outlook

According to EVS’s own data, the broadcast equipment market only grows 2 to 3% annually. This is not something we can label as “very attractive”. It also falls short of the 8% organic growth required for EVS to meet its targets.

So now we have to see whether EVS can actually get to this 8% growth, as part of their business plan for 2030.

A fundamental pillar of this growth is the company’s structural evolution from a product-led hardware provider into a software-driven, ecosystem-based platform that reduces operational complexity for Tier 1 customers.

This transition is designed to improve the quality of earnings by increasing recurring revenue through the expansion of Service Level Agreements and new subscription-based licensing models like the e-Shop. Geographically, North America serves as the primary engine for this expansion, where EVS expects to achieve a high single-digit annual growth rate by deepening customer intimacy and scaling its local organization.

Furthermore, EVS plans to outpace the traditional broadcast market by aggressively targeting the Live Audience Business (LAB) segment, which includes corporate media, houses of worship, and sports venues.

EVS also highlights that some of its competitors are leaving the live broadcasting market, leaving a vacuum for EVS to fill.

Conclusion: Caution ⚠

I think EVS’s growth outlook is ambitious, and much depends on their ability to execute and win new and significant deals. The gap between the underlying industry growth, and what EVS management sets forward is quite a gap to fill.

7. Valuation

Sources

• Fiscal.ai

• EVS Investor Relations resources

Disclaimer: This is not financial advice. Do your own research.

You can track my investment activity through these portfolio updates. I will share my trade details and provide the necessary context around each decision.

Disclaimer: I am investing my own money. Do your own research. This article is not investment advice, but only shares my investment journey.

1️⃣ The transaction

There’s no better time to review Ashtead, a UK-listed small-cap that provides specialised underwater equipment and technical expertise required to build, maintain, and decommission oil, gas, and offshore wind infrastructure on the seabed.

The energy infrastructure market is moving fast, and Ashtead is positioned to be one of the primary beneficiaries.

This article provides an in-depth analysis of the business, and whether it deserves a spot in the Burn The Index portfolio.

Shout out to Ashtead’s IR team who helped me lay the final pieces of the puzzle.

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Content

1. Business model

2. Balance sheet

3. Profitability

4. Competitive advantage

5. Management

6. Outlook

7. Valuation

8. Landing the plane

9. Verdict

1. Business model

Ashtead’s offering can be split into three segments.

First of all, they offer survey and robotics equipment. Think advanced sensors, positioning tools and robotic equipment for visibility and navigation.

Their second segment includes mechanical solutions, which are heavy duty tools for subsea tasks such as cutting, dredging, and lifting large structures during the construction or decommissioning of offshore platforms and wind farms.

Asset integrity is the third segment, which includes the tech to inspect and monitor underwater infrastructure, ensuring it remains safe and efficient. It’s basically the segment that focuses on extending the asset’s life.

By now it should be clear: Ashtead is not your average engineering firm. This company doubles down on a value-adding niche within the energy asset life cycle.

Equipment rental and sales is how they make money

Ashtead’s total revenue in 2025 was £203.2 million, which is driven by two activities. Their main revenue stream is equipment rental (75% of revenues). This commercial model is driven by utilisation and pricing dynamics.

The second revenue stream is equipment sales and other service (25% of revenues). It includes specialised equipment, as well as other services such as project management, transportation and engineering consultancy to a lesser degree.

Broad customer base with essential Tier-1 clients on board

Ashtead serves 117 customers globally, with no single customer accounting for 10% or more of total revenue. All of Ashtead’s top ten customers have maintained a relationship with the company for over a decade. That’s a pretty loyal base.

They do however work with 3 critical customers which are Tier 1 subsea contractors: TechnipFMC, Saipem, and Subsea 7.

While they are part of the broader customer base, Ashtead highlights them specifically because of their record multi-year backlogs, which more than doubled to $55 billion over the last four years.

This backlog serves as a proxy for the industry’s health, as well as a soft measure of revenue visibility for Ashtead.

Equipment rental as a counter to capital constraints and complexity

Rentals make up the bulk of revenues and management has observed a growing “propensity to rent” and outsourcing among these customers, who are increasingly choosing to lease specialised subsea equipment rather than buying and maintaining it themselves.

This shift is driven by capital constraints and the high technical complexity of maintaining and mobilising such assets.

Ashtead capitalises on this dynamic by moving beyond equipment hire to become an integrated solutions partner, offering complete packages of technology and expertise that help customers reduce expensive offshore vessel time and minimise errors.

A shift toward an integrated solutions partner model raises one key concern: the need for specialised personnel. When I raised this with Ashtead's IR team, they were clear:

I expect headcount to increase, but the issue to remain under control. Given that employees have expertise in different fields, and are technically knowledgeable, this problem around cross training seems manageable in my opinion.

Becoming a serial acquirer

Ashtead views strategic M&A as a cornerstone of its growth strategy, specifically aiming to consolidate a highly fragmented market. So far, the company completed nine transactions in the past eight years.

Unlike many consolidators, management’s philosophy is full integration rather than building a house of brands. They merge every acquisition into a single operational platform, offering customers a one-supplier approach.

Ashtead’s most recent major targets include the 2023 acquisition of ACE Winches and the 2024 acquisitions of Seatronics and J2 Subsea. Seatronics and J2 Subsea significantly strengthened the company’s subsea survey and robotics capabilities, adding specialised services like cable moulding, and increasing the total fleet by 30%.

ACE Winches introduced a new lifting, pulling, and deployment service line that has accelerated project engagement, allowing Ashtead to talk to customers 18–24 months before project mobilisation. This extends their life cycle footprint quite a bit.

The impact of these activities has been significant, with M&A driving 19% of the company’s 21% revenue growth in 2025. These acquisitions have successfully internationalised the business, resulting in 33% of revenues now being generated outside of Europe.

According to management, the pipeline of deals is healthy and management are not seeing any significant movement on valuations. This can of course change over time, making their acquisition model potentially less attractive.

The macro volatility hedged by asset fungibility

The company maintains a high level of asset fungibility, meaning approximately 85% of its equipment can be used interchangeably across both the offshore oil and gas and renewables markets.

This flexibility acts as a natural hedge against regulatory shifts or local market downturns, allowing the company to pivot its resources to where demand is strongest.

No asset recycling as a business model

I read about it first during my research for the AerCap deep-dive. Companies with a big asset fleet trying to offload those assets with a net gain, thereby opening up an additional revenue stream.

Ashtead does not look to sell assets and instead typically runs these to the end of their useful life.

When the Company does have a profit on disposal (POD) this is typically due to customers losing equipment or damaging it beyond repair, where the contractual terms then mean they have to pay to Ashtead Technology a replacement cost.

The Group typically has around £1-2m or POD each year.

Conclusion: Pass ✓

Ashtead runs a robust business model, with a clear selling proposition. There’s limited customer concentration, they have access to Tier-1 customers and can leverage M&A to feed their niche positioning.

2. Balance sheet

Ashtead's balance sheet isn't the easiest read. The company is increasingly acting like a serial acquirer while operating an asset-heavy business. The key things to focus on are net debt, the ability to service it, and the overall health of the asset base.

Ashtead is paying down its debt

Ashtead achieved a notable reduction in total net debt, which fell to £108.9 million by end of last year, compared to £128.4 million a year earlier. Back then, the company just acquired Seatronics and J2 Subsea, leading to a significant rise in debt to finance the deals.

I am happy to see the reduction in debt. Often times companies just stay around the same level, but keep on paying interest in the process.

The reduction in debt resulted in the company’s net debt-to-Adjusted EBITDA leverage decreasing to 1.3x (2024 pro-forma: 1.6x). This performance places the company at the lower end of its 1.0x to 2.0x target leverage range, providing substantial "strategic optionality" for future organic and inorganic growth.

This year’s May trading update was also another sign in the right direction. The company flagged that it will further improve the leverage to below 1.0x by year end.

The company generates ample free cash flow

The primary driver behind this deleveraging was the company’s robust FCF generation of £40.4 million. That’s pretty impressive for a company generating just over £200 million in revenues.

Cash inflow from operations was a record £73.2 million, more than enough to cover the company’s significant £37.2 million CapEx program while still allowing for the repayment of bank loans, and dividends (0.4% yield).

This strong cash-generating model ensures Ashtead can easily service its existing debt, which includes a £170.0 million Revolving Credit Facility (RCF).

By year-end, the company had £14.1 million in cash and £50.6 million undrawn on its RCF.

The asset base is in good shape

The company’s balance sheet is anchored by its specialised subsea technology fleet and strategic intangible assets.

Property, plant, and equipment grew by 15% to £100.4 million. Management invested £33.8 million specifically into increasing the breadth and depth of the equipment fleet, which now consists of over 30,000 subsea assets.

Goodwill stands at £111.7 million, reflecting the nine acquisitions in the past eight years. The assets seem to be in high demand, so I do not expect any short term impairments. Of course, this can change, and remains a risk.

Ashtead is a capital intense business

Ashtead Technology maintains a disciplined Capex program, spending a total of £37.2 million in 2025, which was comfortably funded by record operating cash inflows of £73.2 million.

The focus is heavily weighted toward growth Capex, with £33.8 million invested directly into the subsea technology fleet in 2025.

These investments prioritize proprietary, in-house designed innovations like the eBOS imaging sonar and the equipment required to stock newly expanded operational hubs in Houston and Norway.

This targeted reinvestment is highly strategic because 85% of the fleet is fungible, ensuring that these growth assets can be flexibly redeployed across both oil and gas and offshore wind projects as global demand shifts.

Conclusion: Pass ✓

Ashtead’s balance sheet looks surprisingly healthy for such an asset-heavy business. They can service their debt, the asset fleet is in healthy shape and free cash flow is at very strong levels.

3. Profitability

Strong gross and net profit margins

Ashtead’s gross margins are high, and only decreased a few percentage points over the last years, mainly due to slightly higher direct costs. Even so, gross margins above 70% are perfectly fine in my opinion.

Net margins hovered between 15-20% over the last years, but a small downtrends is visible. The decrease in net profit margin was driven a couple of items. For one, the acquisitions in the past years led to a different product mix, with higher costs affiliated. In addition, one-off legal and professional fees as well as higher overhead.

Healthy returns

The Group delivered a ROIC of 22.7% for the 2025. While this represents a moderation from previous years, management emphasises that it remains "significantly ahead of the cost of capital".

The slight reduction in 2025 was primarily due to the large-scale acquisitions of Seatronics and J2 Subsea in late 2024, which increased the Group's capital base. Despite this, ROIC has remained consistently above 20% since 2022.

Minimal dilution

The company uses equity-settled compensation plans (LTIPs) to align executive and senior management interests with shareholders. The share-based payment expense for 2025 was £1.15 million (2024: £1.10 million).

This represents approximately 0.56% of total revenue, indicating that SBC is a well-managed and relatively small component of the overall cost base. It’s there, but nothing major.

Share dilution has remained low and is primarily driven by the issuance of shares to satisfy employee incentive schemes. The number of outstanding shares grew from 80.2 million in 2024 to 80.6 million in 2025. I can definitely live with that increase.

Conclusion: Pass ✓

Ashtead is a profitable business. It does not dilute shareholders much and capital returns are very attractive. The acquisitions might distort the margins over time (downward), but that is ok as long as the growth trajectory remains intact.

4. Competitive advantage

Ashtead Technology’s competitive advantage is built on a business model that shifts the company from being a simple equipment renter to an integrated solutions provider and OEM.

In-house innovation and OEM status

Unlike many competitors who buy third-party equipment, the majority of Ashtead’s Mechanical Solutions and Asset Integrity fleet is designed, engineered, and assembled in-house.

This proprietary technology can’t be bought, making it hard to replicate. That’s a significant barrier to entry. Examples include the world-leading mattress recovery tools and bespoke sonar packages.

The “One-Supplier” integrated model

Ashtead provides complete packages of technology and personnel, positioning itself as a single provider. This creates two tangible commercial benefits for customers.

By providing integrated packages, Ashtead can reduce the number of offshore personnel required for a project (e.g., needing only 8 to 10 people instead of 16 if multiple suppliers were used).

The “real saving” is improved communication. Having only one supplier significantly reduces the room for error and costly communication breakdowns in “hostile” underwater environments.

Deep service moat and scale

Ashtead maintains the largest and broadest independent subsea equipment fleet in the industry, with over 30,000 assets.

This physical scale is protected by a “deep service moat” of domain knowledge and technical expertise built over 40 years, which ensures they can solve complex underwater engineering challenges that “box-moving” rental companies cannot.

Competitive field is broad, but not specialised

Ashtead Technology competes in a fragmented subsea rental market. Its closest peer is Unique Group, a private global competitor with strong Middle East presence, especially since Ashtead’s Seatronics acquisition.

STR (Subsea Technology & Rentals) is another direct UK rival, offering survey equipment on a smaller scale.

James Fisher and Sons competes in mechanical solutions and decommissioning, leaning on brand strength across the UK and Africa, while Oceanscan challenges Ashtead more narrowly in North Sea survey work on price and local service.

Oceaneering International is the closest listed comparable. It’s larger and more diversified, but with lower margins and ROIC than Ashteas’s focused rental model.

Further out, Gardline competes in adjacent marine survey services, equipment makers like Teledyne Marine compete more on instrumentation than rental scale, and a wave of Chinese and Southeast Asian manufacturers pressures the low end on price. But these tend to lack Ashtead’s global service network.

Conclusion: Pass ✓

Ashtead has a serious, and likely, expanding competitive advantage. The moat exists through its scale, and is expanding through the shift to an integrated model and its ability to develop solutions in-house, thereby setting itself apart.

5. Management

Allan Pirie is the Chief Executive Officer of Ashtead Technology. He has been a central figure in the company’s leadership for over 15 years, having joined as Chief Financial Officer in 2009 and being promoted to CEO in 2012.

I’ll spare you the CV but one thing is clear: he’s been in this business since 30 years and knows what he’s doing.

As CEO, Pirie has overseen the company’s transition from a rental-focused business to an integrated solutions provider and OEM. He is a significant shareholder (1,477,063 shares as of December 31, 2025).

Conclusion: Pass ✓

The company is led by a competent CEO, whose interests are aligned with shareholders. The results also speak for themselves. The company has grown significantly under his leadership.

6. Outlook

Ashtead’s management remains positive on the company’s growth outlook, arguing that offshore infrastructure is supported by long-term structural demand and increasing offshore investment activity.

It also points to rising order backlogs among key Tier-1 customers, including TechnipFMC, which has described current conditions as “buoyant” and “entering a sustained period of high activity”.

I am slightly worried though. The key question is whether this reflects structural growth or a cyclical peak. Energy markets, particularly oil and gas, are inherently cyclical, which raises the risk that current earnings sit above normal levels.

Ashteads’s IR team counters this by pointing out that (1) they’ve grown geographically, (2) increasing the proportion of revenues that come from the IRM (inspection, repair and maintenance) phase vs construction, (3) added decommissioning and (4) growing the business in the renewables market.

All that might be true, I do think as a potential shareholder, you have to take into account that Ashtead might be over-earning, albeit slightly.

The broader industry picture is mixed. Offshore wind shows the strongest structural growth. Offshore oil, by contrast, is entering a slower investment phase, with capital expenditure expected to fall to around $85 billion in 2026 from $111.9 billion in 2025, as operators prioritise returns over expansion.

Offshore gas remains supported by energy security and LNG demand but is also competing for capital with lower-carbon offshore investments.

Overall, the outlook supports long-term offshore growth, but cyclicality remains a central risk to earnings sustainability.

Conclusion: Caution ⚠

Backlogs and Ashtead’s own comment on outlook confirms things look rosy. But, it would not be the first time that a capital intense industry sees its fortunes turn in a matter of months due to politics or the macro environment. My take is that yes, we’re good for now, but it might not last forever.

7. Valuation

Sources

• Fiscal.ai

• Ashtead Investor Relations resources

Disclaimer: This is not financial advice. Do your own research.

The company was founded in 2012, went public in May 2025, and released its Q1 2026 results in May: €40.3M in revenue, up 57% YoY, and a 67% EBIT margin.

The headline print was quite impressive, but concerns remain around the legislative risk, a potential growth slowdown in Germany (accounting for almost all revenues), and AI displacement fear.

I sat down with the CEO and discussed the burning platforms.

Below you will find the interview transcript, as well as my take on the valuation.

The interview

What is your outlook for the business and what’s the next growth leg?

The German market will continue to grow for a very long time, but we do not want to rely solely on this market due to the risk of legislative changes that could make the market less attractive. We’re not expecting any changes, but we want to be ahead of the curve.

I think that international expansion is a necessity to maintain Innoscripta’s growth trajectory over a long term period. Countries like the US, Canada, Japan, Singapore but also Japan offer great opportunities. We also see an opportunity in selected European countries. Some of these markets are significantly larger than Germany.

We do not blindly walk into these countries. We assess them in advance based on a set of demand and legislative criteria.

Listing country names is the easy. What is Innoscripta’s edge?

I wouldn’t call us advisors because we create the documentation for the customer. We are more than an advisor by helping to structure data as a data integrator.

Part of our edge is that our platform is integrated with SAP interfaces and time-tracking systems, which is very comfortable for the clients. Something a traditional advisor without software simply cannot offer.

It is a bit like the competition is selling cars without wheels or engines. You buy the body from them and have to bring the rest yourself. With us, you get the whole car because we take the data and create the actual documentation.

We haven’t even fully utilized our pricing yet because we offer such high added value compared to consultants who don’t have software and don’t even know how to structure the data.

What is the biggest challenge?

Getting admitted to the Office of the CFO is a high hurdle because the Big 4 tend to have a foot in the door. We have been increasingly successful in Germany by outplaying them. It’s also interesting to see that we our handed over projects where competitors failed.

AI will apparently take over the world, but also Innoscripta?

We offer a solution to a complex problem which also involves large sums of money which are critical to our customers’ ability to operate.

This complexity is also the number one killer for AI incumbents. Because we deal with taxes, it is a matter of trust and complex technical work, which keeps others from easily jumping over that hurdle and rebuilding what we have.

Investors think growth comes from catch-up fees. Is it?

We don’t publish specific data on that for several reasons, but every investor is invited to build their own model, or they can look at existing research reports. From our perspective, we are not a ‘catch-up business’ at all; we are an underutilised business.

For every customer we onboard, there is a specific lifecycle where they typically start with small tickets. Take a client like (REDACTED), for example: they might give us a small ticket first, then a larger one, and then we go international with them. If we were to fully roll that out, a single customer like (REDACTED) could yield a double-digit million turnover.

We actually have many firms under contract right now in Germany that we aren’t fully utilising yet because we simply haven’t identified all the costs there; it requires someone to go there and engage in a dialogue rather than just having revenue tumble out.

It is like being a tenant on an acre of land. You have the lease, and our task is to cultivate that field again and again. When I look at the potential if we were to fully ‘farm’ these accounts, the turnover potential is enormous.

How do you see the sales organisation scaling?

I see several possibilities for scaling. One major path is growing internationally with our large existing customers. Take (REDACTED) as an example: they started with us in Germany as a trusted partner, and now we can go to the USA and handle their research allowance there.

If we were to truly and fully roll out that model worldwide with a single customer like (REDACTED), it could yield €20 to €30 million in turnover. To support this, we need different sales and expert teams so we can eventually cover the whole world and serve these multinational corporations.

At the same time, we are building specialized teams around the Office of the CFO. We are currently testing a software solution for transfer pricing (Verrechnungspreise), which has incredibly high synergies with our current work.

Transfer pricing is a complex theme. Companies like e.g., (REDACTED) must justify the prices of goods, like diesel engines, sent between international branches to various tax authorities. This requires endless documentation, and if it doesn’t fit, companies face significant back payments.

We have several such ‘irons in the fire’ where we want to grow on the product side. By increasing the breadth of our offering, we create a much larger value proposition.

Why do you still use factoring with such a healthy cash balance?

You have to understand how our contracts are built: we have our ‘cash event’ the moment a customer receives their tax notice, but that doesn’t mean the customer actually has the cash in hand yet.

On average, there is a delay of about 200 days before the tax authorities actually pay out, mostly because customers have to wait for their annual financial statements.

Without factoring, we would be facing a complete 180-day delay in our entire cash flow for about two-thirds of our payments. By using it, we get about a third immediately and the rest much faster than waiting on the government.

It does cost us a bit of margin, but it’s absolutely worth it to keep the balance sheet healthy. We are actually very enthusiastic about this setup because it allows us to keep moving forward without that massive lag in our cash

Is there a scenario in which a take-private is on the table?

I currently own 66% of the company directly and indirectly … Whether we go private again really depends on what the stock price does over a long period of time.

At the moment, I believe we are too cheap. We’re currently trading at a multiple that I find far too low, but I expect the market will eventually honour our results with a double-digit price-earnings ratio.

We find the IPO was very meaningful for our reputation and transparency, which helps us displace competitors, and we want to maintain the listing to provide liquidity for our employees as part of our ownership culture.

Last one: why was nobody present from the company at the IPO?

We just want to build a great businesses. You won’t find many images of us online, and that is on purpose. We don’t necessarily want to draw attention. We believe that we can create shareholder value by delivering results.

The valuation

Is Innoscripta undervalued or not? I will use data from Fiscal.ai and Innoscripta’s 2026 outlook as a baseline for my calculations.

Management expects at least €140 million in revenues and €80m EBIT. I will use the 41.1% net profit margin of 2025 as a proxy for future calculations.

PE ratio vs. historical average

Since Innoscripta has only been publicly listed since May 2025, its historical PE ratio is based on one year of reported public-market earnings: 21.2x.

Based on management’s guidance, and assuming the current net profit margin and 10 million shares outstanding remain unchanged, Innoscripta is expected to generate approximately €5.8 in earnings per share. At a share price of €82.8, this implies a forward P/E ratio of 14.3x.

For a company delivering 57% YoY revenue growth, that valuation appears relatively attractive. The market is applying a discount due to Innoscripta’s customer concentration risk and its exposure to the AI sector.

However, these concerns could diminish over time. AI adoption continues to accelerate, and Innoscripta is actively expanding into additional markets. They just announced their first big account in France.

As the business diversifies geographically and across customer segments, its concentration risk should gradually decline, potentially supporting a higher valuation multiple.

Reverse DCF

This metric estimates the level of free cash flow (FCF) growth required to generate a 10% annual return for shareholders. The assumptions used are:

• Current stock price: 82.8

• Shares outstanding: 10 million

• Perpetuity growth rate: 3%

• Target return: 10%

• FCF year 1: 40.64 million

Based on these inputs, Innoscripta only needs to grow FCF at approximately 8.5% annually to deliver a 10% shareholder return. That does not appear particularly demanding given the company’s recent performance.

Innoscripta doubled its FCF between 2024 and 2025, and I expect FCF to increase by at least another 30% this year. While growth will likely moderate from these levels over time, the market’s current expectations remain relatively low compared to the company’s ability to generate cash.

Even under more conservative growth assumptions, the stock appears undervalued relative to the FCF the business is capable of producing.

Earnings growth

This metric shows you the return we can expect as an investor. Here is the calculation:

Earnings growth = EPS growth + dividend yield + PE multiple (expansion/contraction).

I think it is reasonable to assume an 12% EPS growth rate going forward. The company grew revenues much faster in the past and is guiding for another significant leap. But, let’s stay conservative.

Also, the company pays a 4.6% dividend. I think this is relatively safe for the coming years. FCF is strong, and Innoscripta runs a capital light business. Of course, if big clients fall away, they might change this policy.

I am not using a PE re-rating for now. A PE of 14.3x is not demanding but there are underlying risks to take into account. Again, let’s be conservative.

Earnings growth = 12% + 4.6% = 16.6%

That is a very high expected earnings growth for shareholders. You mostly see this in names that have very strong returns, generate high levels of cash flow, but whose stock price is being pressured by perceived risks. The “alpha” lies in understanding that risk in detail.

Conclusion: Innoscripta is undervalued based on a PE, earnings growth and FCF basis. The market tagged a heavy discount on this name. And I am not sure whether that’s justified.

Disclaimer: This is not financial advice. Do your own research.

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Our portfolio launched in May of this year, and currently holds 3 positions and 1 option play. The goal is simple: outperform the S&P 500 by owning high-quality, dominant businesses.

My approach to investing is straightforward. I analyse the numbers and the business without overcomplicating the thesis or relying on complex valuation models. Above all, I apply common sense and think long term.

Today, I’ll run you through this month’s portfolio moves, an update on our positions, and the portfolio performance.

ChatGPT launched on November 30th, 2022. Since then, Accenture’s stock price went from hero to zero, declining 58% in the process.

It doesn’t take a genius to figure out that AI is making a lot of investors nervous about the future of Accenture’s business model.

Managed services? Replace those FTEs with AI agents. Strategy consulting? Just prompt Claude. Operating model overhaul? Upload your previous blueprints and let NotebookLM generate a tailored approach.

The assumptions sound logical, but at times feel quite lazy.

One thing became blatantly clear to me as a former consultant: the market might understand what Accenture offers, but it doesn’t have a clue about the real challenges clients face, and why they hire consultants in the first place.

This article provides an in-depth analysis of the business, and whether it deserves a spot in the Burn The Index portfolio.

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Content

1. Business model

2. Balance sheet

3. Profitability

4. Competitive advantage

5. Management

6. Outlook

7. Valuation

8. Landing the plane

1. Business model

Accenture was spun out of Arthur Anderson, the bankrupt auditor behind one of the largest fraud cases in the history of capitalism: Enron.

Fast forward 25 years to this day, and you’ll find Accenture being a professional services juggernaut. The company offers broad range of services, making it hard to describe what they do in detail.

On a high level, their activities can be split into two groups. They offer consulting services, which entails helping clients identify and execute strategic changes, such as modernising finance systems, supporting a product launch, or implementing transformation programs.

Their second business line is Managed Services, in which Accenture operates parts of a client's business or technology on their behalf, such as IT infrastructure or business operations.

From hourly billing to fixed-price contracts

Historically, the consulting business relied on a time-based billing model. This setup allowed the customer and consulting firm to monitor the budget by comparing project progress with the budget spent.

In addition, the billed time could be adjusted depending on the dynamics of the project (e.g., mistakes were made by consultants, there was scope creep by the client, an extension is required due to unavailability of key personnel).

Today, and with the advent of AI, the billing model is slowly changing from time based to performance based for both Consulting and Managed Services work.

This implies two things. For one, the risk lies with Accenture to deliver the agreed scope, no matter the setbacks happenning during these complex, multi-year projects.

On the other hand, Accenture does benefit 100% from the efficiencies it can push through, for example by deploying AI to cover basic and repetitive tasks.

M&A as a driver for accelerated organic growth

You might not think of Accenture as a serial acquirer, but this company has a long M&A track record:

Each acquisition adds another piece of IP, tech and brainpower to an already broad service offering, ensuring Accenture can always deliver on client requests, no matter how niche or complex.

One thing is abundantly clear: Accenture never loses a client because it is not able to deliver on the client request. It’s nearly impossible to shape a project that would be too large, or too niche for Accenture to handle.

Today, Accenture is looking to expand inorganically by acquiring companies which are less FTE-heavy, and generate recurring revenues. This serves as a hedge against the Managed Services business, which is feeling pressure from improving AI models.

Although these acquisitions look targeted, I sometimes wonder whether the focus is not too broad, as they try to cover weak links in their complete offering through M&A.

Accenture is global and well diversified

Accenture’s business model is built on deep, long-standing relationships with the world’s largest organisations.

The company primarily serves Forbes Global 2000 companies and major government agencies. Currently, they work with approx. 75% of the Fortune Global 100 and 500.

To me, a key indicator of their stability is that 195 of their top 200 clients have been partners for 10 or more years. They also maintain 305 "Diamond" clients, representing their largest and most integrated relationships.

AI mixes things up, but it’s not the end of the world

I’ve been in the trenches, sat down with CEOs, and seen firsthand what transformation projects actually look like and how they impact a business.

I admit to be a bit confused when reading these world-ending headlines about Accenture. That’s definitely not how I see their future. Here’s my thinking.

Assume AI models become better and cheaper. A client calls Accenture for support on a cost-cutting program.

These projects are sensitive and politically charged. The CEO wants speed, and business unit leads need to keep teams motivated while ensuring operations continue.

Most companies cannot realistically do this alone. Yes, ChatGPT can generate a blueprint, timeline, and recommendations. But those outputs are not built on direct execution experience.

Let me rephrase: do you think that a company generating $10 billion in revenue would cut corners with AI to overhaul their operating model, just to save $5 million, and risking operational disruptions? I don’t think so.

Then there’s execution capacity. Who owns the project internally while still running the business? These initiatives easily require 10–15 dedicated people, before accounting for management involvement or data collection.

And perhaps most importantly: who is comfortable letting AI drive decisions through HR and legal approval processes? Few companies will accept that risk.

And this is just me getting started … .

In practice, and speaking for AI: clients will start expecting standard consulting work to become cheaper or bundled: parts of the conceptual phase, stakeholder interviews, write-ups, synthesis, and financial modelling.

Managed Services will evolve similarly. Fewer FTEs, and more AI agents doing the grunt work.

But who designs those agents? Trains them? Maintains them? Upgrades them? That is where Accenture still plays an important role. I have yet to see a company that can fully manage this internally.

And this discussion may still be early: most enterprises do not even have structured operational data to run meaningful AI programs. Many of them don’t even run on the cloud.

The real question is whether Accenture can squeeze out the same type of earnings from this changing service offering.

For now, my view is that earnings stay broadly stable. There will be turbulence, but I struggle to see Accenture earning materially less. Enterprises still have a large execution burden ahead of them.

The premium may no longer sit in strategic thinking alone, but it might increasingly flow into tech, maintenance and overall infra setups.

Conclusion: Pass ✓

Accenture’s business model is in full transition. The billing model is changing from time to performance based. This comes with additional risk, but also efficiency benefits.

The company is currently trying to come to terms with a new world in which AI plays a central role. They're dealing with this head on by acquiring new types of businesses which are more focused on recurring revenues, likely to offset a potential decline in traditional Managed Services.

I think the AI fear is extreme and unnecessary. Clients still need Accenture. The company will simply earn revenue through different types of services.

2. Balance sheet

Accenture carries debt, but even more cash

The company has a net cash position of approximately $1.8 billion. That’s a relatively comfortable position to be in.

Management however has explicitly stated their intention to access the long-term debt market in the near future.

This move is designed to increase liquidity to fund the company’s elevated $9 billion acquisition target for fiscal 2026. As mentioned, Accenture is looking to acquire businesses that generate recurring revenue, whilst being less FTE-heavy.

Operating cash flow generation is impressive but not enough

Accenture produced $11.5 billion in operating free cash flow in 2025.

But, the company is also returning a massive amount of cash to shareholders in the form of dividends ($3.7 billion in 2025) and share repurchases ($4.6 billion in 2025). That is all on top of the acquisitions.

To me two things are clear: they can handle their debt, but they are taking on too many obligations in the form of shareholder returns.

Just by pausing the dividend, the company can easily free up close to $4 billion annually.

Capital intensity is low

Accenture is not a capital-intensive business but is instead labor-intensive as it is a global professional services firm where compensation costs is the key cost driver.

The company’s CapEx are used to acquire or improve physical assets such as computers, IT hardware, office furniture, fixtures, and leasehold improvements. This adds up to approx. $700 million, which is reasonable when generating $69 billion in revenues.

A small, but important item to understand is deferred transition revenues, which are part of D&A. These entail advance payments received from clients to cover the costs of transition or set-up activities at the beginning of managed services contracts.

Rather than being recognized as revenue immediately, these payments are deferred and then recognized as revenue over the duration of the contract as the services are actually provided to the client.

This model helps Accenture meet the initial working capital demands of complex projects and protects the company financially if a client fails to fulfil their long-term obligations.

Accenture held approximately $642 million in non-current deferred transition revenues, based on FY25 results.

Conclusion: Caution ⚠

Currently, the balance sheet and cash flows are very healthy. I put emphasis on the word “currently”, because Accenture is about to embark on a serious acquisition spending spree.

I do not like their shareholder returns policy as there seems to be no guardrails. They literally bought back billions in shares during years where they traded over 30x PE. That’s hard to justify in my opinion.

3. Profitability

Stable gross and net profit margins

With gross and net margins hovering around 31-32% and 10-11% respectively since a decade, it’s fair to say that Accenture is a stable business with healthy levels of profitability.

That little bump downwards you see in gross margins between 2024 and 2025? That’s primarily driven by higher compensation costs, after multiple years of holding back pay raises and limiting bonus payouts.

Actual diluted EPS growth was strong over the last 10 years with a 10% CAGR.

Share-based compensation is a silent killer

Profitability is not only about margins. Stock-based compensation is another metric which is relevant to understanding profitability. Accenture pays a lot of it, which indirectly dilutes shareholders.

In 2025, Accenture spent close to 27.6% of net income on share-based compensation. That’s significant to say the least.

Share buy backs as a countermeasure

The count went down from 660.5 million to 623.4 million between 2017 and FY25. That offsets (and then some) the dilution through share-based compensation.

Conclusion: Pass ✓

Accenture is a profitable business, which also trickles through in the cash flow statement, as highlighted earlier.

The company does spend a fortune on stock-based compensation, but its base salaries and bonus structures are not above average, meaning the total employee comp package including SBC is not outlandish.

I would keep a close eye on the wage bill. The service sector wage hikes are behind us, but they remain the primary driver for lower margins.

4. Competitive advantage

Scale and scope

Accenture’s main competitive advantage lies in its unrivalled scale and the comprehensive breadth of its services.

This unique positioning allows the company to cover every aspect of a transformation, from establishing an AI and technology foundation to reinventing nearly every functional part of a company.

This is further bolstered by the depth of industry expertise, which enables the firm to deliver tailored solutions that significantly accelerate value creation.

Client relationships

A second pillar of differentiation is the stability of its client relationships. 195 of the top 200 clients have been partnering with the firm for over a decade.

Complementing these relationships is Accenture’s leading position within the technology ecosystem, where it has maintained a decade-long strategy to be the number-one partner for every major technology provider.

This ecosystem leadership is a critical advantage as clients increasingly look to scale the adoption of AI and data technologies.

Conclusion: Pass ✓

Accenture’s scale and scope of services is unseen in consulting. Yes, you have McKinsey and BCG for the pen and paper strategy consulting work, and InfoSys or others for pure-play managed services.

But at very large scale, there’s only one company you can call to deliver an end-to-end transformation.

5. Management

Julie Sweet is Accenture’s CEO since September 2019, and Chair of the Board since 2021.

Prior to becoming CEO, she was the CEO of North America from June 2015 to September 2019, and previously served as general counsel, secretary, and chief compliance officer starting in March 2010.

Insider ownership by management teams and members of the board is less than 1%.

Although the company grew significantly under Julie Sweet, some of the capital allocation decisions are worth questioning. For example, and addressed earlier, the buy backs in some years at sky-high valuations made little sense. I’m especially looking at the years 2021 and 2022.

Accenture’s M&A strategy is not always clear to me. It seems they are constantly plugging the gaps in their offering, but it’s very hard to figure out where the focus should lie.

Conclusion: Caution ⚠

The CEO does not convince me. Yes, she grew the company significantly since her tenure started, but that growth was boosted by macro economic factors.

Capital allocation has not been on point continuously, and the strategy around how to move away from managed services seems blurry for now.

In addition, there’s been criticism around how to deal with crises. Downsizing the FTE count has been an escape route many times before, but that does not help a business to drive growth.

6. Outlook

I think it is important that we separate two things.

On one hand you have the actual addressable market. Those are the companies that e.g., are in need of support to transform their organisation, digitise the IT stack, or require resources to prepare and execute their M&A strategy.

Whatever it might be: this market is doing well and is expected to do well going forward. In addition, demand for cloud transition, managed services and digital transformations will support that growth for years if not decades to come.

You can derive this pretty easily as top line growth is mostly coming from volume. Hourly rates for consultants have stagnated ever since the inflation spike in 2022-2023.

The second consideration is more delicate. The market is interesting and growing, but can Accenture still play a part in it?

In my opinion, AI will have the following impact: generic financial modelling work, slide building, basic analysis, data gathering and back-end repetitive task execution will be replaced by AI.

But this leaves a big gap for Accenture to still play along. You need implementers, maintenance teams, people conceptualising solutions based on real transformations.

The argument around “managed services will see less demand” is probably true to some degree, but that implies that Accenture can ask top dollar to get these AI agents implemented.

“But others can do this as well?” Yes, but there’s only one company who can do it all, at scale.

Conclusion: Pass ✓

I genuinely believe Accenture has a bright future ahead. There’s massive need for companies to digitise. AI will definitely mess around with their business model, but their size and depth of service offering make them omnipresent and a prerequisite almost if you want to overhaul your entire operation.

Management does not fully convince me, so if there’s a need for caution, it would be in that area. Of course, the outlook hinges on how well management executes.

7. Valuation

• Fiscal.ai

• Accenture Investor Relations resources

Disclaimer: This is not financial advice. Do your own research.