KAR.ST — mttssn research

HOLD

Conviction: MEDIUM

Karnov is the dominant Scandinavian legal information platform — expert-authored case law, legislation and commentary databases serving 400,000+ professionals in Denmark, Sweden, Norway, France and Spain. 87% subscription online revenues, 51% Adj EBITA margins in the Nordics flagship. The EHS divestment gain (SEK 670M IAC in LTM) flatters reported EBIT; mttssn corrected Adj EBITA = SEK 672M (LTM). Adj ROIC 12.6%, EP +SEK 192M, EV/Adj EBITA 13.3x — fair at a 40% discount to peers. HOLD/MED; base SEK 81.

Adj. ROIC

12.6%

WACC 8% → spread +4.6pp

Economic Profit

+SEK 192M

EP +SEK 192M; Adj NOPAT 524.5M on IC 4,155.6M = 12.6% ROIC vs 8% WACC

FCF Yield

6.0%

Adj FCF SEK 264M Q1 alone (January renewals); FY2025 Adj FCF SEK 445M; strong cash conversion

Price / Target

SEK 70 → SEK 81

+15% base; HOLD

Revenue (LTM)

SEK 2.6B

LTM Q1 2026 SEK 2,597M; organic +3.2%; reported -6.6% (divested growth, FX)

EBIT Margin

n/a

Adj EBITA LTM 25.9% (Region North 50.7%; Region South 12.7%); Q1 2026 group 28.6% (+3pp YoY)

EV / IC

n/a

Enterprise value / invested capital

Net Debt

SEK 1.5B

Net debt SEK 1,484M (1.8x adj EBITDA); increased Q1 2026 from buyback programme (SEK 680M)

Thesis

Karnov Group is the #1 Nordic legal information platform, operating subscription databases in Denmark (Karnov), Sweden (Norstedts Juridik, DIB), Norway (Lovdata+ collaboration), France (Lamy) and Spain (Aranzadi). The legal information moat is structural: expert-authored content is cited in court judgements and referenced in law school curricula — it cannot be substituted by a generic LLM.

The Accelerate initiative (2023-2026) divested the EHS and legal training businesses, generating a SEK 674M IAC gain in FY2025 that severely inflates reported EBIT. The mttssn correct metric is LTM Adj EBITA = SEK 672M (25.9% margin) — yielding Adj ROIC 12.6% and EP +SEK 192M. Region North margins have expanded to 51% (Adj EBITA) as synergies are realised. France (Region South, 12.7% margin) remains the structural drag: legal training is in secular decline and organic growth was -4.8% in Q1 2026.

The company is in a capital return phase: Q1 2026 buyback of ~10% of shares at 13.3x Adj EBITA creates immediate per-share value. AI products launched in France/Spain in Q1 2026 are a nascent upsell lever. At 13.3x EV/Adj EBITA vs Nordic/European peers at 20-22x, the discount is justified but not extreme.

Valuation · reverse-DCF & scenarios

EV SEK 8,926M / LTM Adj EBITA SEK 672M = 13.3x. Wolters Kluwer trades at ~22x; Relx ~20x. The discount reflects smaller scale, France risk, and moderate leverage (1.8x EBITDA).

Base SEK 81 (15x Adj EBITA LTM 672M + net debt 1,484M / shares 105.9M → EV 10,080M, price ~81). Bull SEK 100 (18x; France stabilises, margins reach 28-30% group). Bear SEK 52 (10x; France accelerates decline, leverage becomes constraining).

Market-implied growth

+8.7%

NOPAT CAGR over 5y the EV already requires

No-growth value / share

SEK 56

80% of price; rest = priced-in growth

ROIC − WACC

+4.6 pp

ROIC 12.6% vs WACC 8.0% — positive = value creation

CAP (priced-in)

10.3 yrs

years of excess returns the price implies (fades to WACC)

The market pays today’s enterprise value for roughly 8.7% NOPAT growth over 5 years. The business earns 13% on capital against a 8% cost of capital (spread +4.6 pp); the no-growth value is SEK 56/share (80% of price), so the rest is priced-in growth.

Scenario	24m target	Impl. g	Upside	Prob.	Driver
Bull	SEK 100	≥12%	+42%	30%	France stabilises; margins reach 28-30% group; buybacks reduce share count 20%
Base	SEK 81	≥12%	+15%	45%	15x LTM Adj EBITA; France stable; Nordics compound at 3-5%
Bear	SEK 52	-3%	-26%	25%	France accelerates decline; leverage constrains capital return; AI disrupts content moat
Prob-weighted	SEK 79	—	+13%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	81	89	95	105	111	130
7.25%	67	73	77	84	89	102
8.00% (base)	56	61	64	69	73	82
8.75%	48	52	54	58	60	67
9.50%	42	45	46	49	51	55

Green = fair value above the current price of SEK 70.30. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT SEK 524, invested capital and ROIC 12.6% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt SEK 1,484. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Nordic legal information monopoly

Karnov/Norstedts/DIB = de facto market standard in Denmark, Sweden, Norway; annual renewal dynamics.

2. Margin expansion trajectory

Adj EBITA margin +3pp YoY in Q1 2026 (to 28.6%); synergy programme SEK 214M run-rate achieved ahead of schedule.

3. Buyback value creation

~10% share count reduction Q1 2026 at 13.3x EBITA is mechanically value-accretive; second 10% tranche authorised.

4. AI upsell

400,000+ professionals dependent on Karnov content; AI search and drafting tools launched as premium tier.

Key risks

France structural weaknessLegal training secular decline; -4.8% organic Q1 2026; 12.7% EBIT margin vs 51% Nordics — persistent drag.
Leverage constraint1.8x EBITDA; if FCF deteriorates, buyback capacity reduced.
AI disruption riskGeneric LLMs improve citation accuracy over time — structural risk to the content moat, though accreditation requirements provide near-term protection.
CompetitionKarnov competes with Thomson Reuters and Wolters Kluwer in France/Spain — larger, better-resourced global platforms.

Conclusion

Karnov is a genuine Nordic legal information moat — structurally recurring, expanding margins, expert-authored content that cannot be commoditised — trading at a 40% discount to European peers. The EHS divestment gain is the noise; the underlying Adj EBITA of SEK 672M and EP +SEK 192M is the signal. France is the risk. HOLD, medium conviction; buy on France stabilisation evidence. Base SEK 81.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.

Adjustment / figure	Value	Source	Why mttssn treats it this way
LTM Net sales	2,596	Key financial ratios table p.2	FY 2,640.9 - Q1'25 672.5 + Q1'26 628.1 = 2,596.5 MSEK. Organic +3.2%; reported -6.6% (currency -3.6%, divested growth -6.2%).
LTM Adj EBITA	672	Key financial ratios table p.2	FY 667.4 - Q1'25 174.8 + Q1'26 179.8 = 672.4 MSEK. LTM margin 25.9%. Clean underlying metric — strips EHS gain and restructuring.
LTM Adj EBITDA	870	Key financial ratios table p.2	FY 861.4 - Q1'25 220.9 + Q1'26 229.4 = 869.9 MSEK. 33.5% margin. Leverage 1.8x = net debt 1,484 / EBITDA 870.
Q1 2026 Adj FCF	264	Adjusted free cash flow table p.5	SEK 264.2M in Q1 2026 (Q1 2025: 245.1M, +7.8%). Driven by January contract-renewal inflows. FY2025 Adj FCF = 445.2M.
Net debt 31 Mar 2026	1,484	Net debt table p.5	Total borrowings 1,989.7 - cash 505.3 = net debt 1,484.4 MSEK. Leverage 1.8x. Increased from FY2025 (1,033.2) due to Q1 buyback programme (SEK 680M).
Region North Q1 Adj EBITA margin	50.7	Segment performance Region North p.6	Region North Q1 2026: Adj EBITA 164.9M / Revenue 325.0M = 50.7% (+4.1pp vs 46.6% Q1 2025).
Region South Q1 Adj EBITA margin	12.7	Segment performance Region South p.7	Region South Q1 2026: Adj EBITA 38.6M / Revenue 303.1M = 12.7% (vs 12.2% Q1 2025). France -4.8% organic; Spain +5.3% organic.
Annual run-rate synergies	214	Synergies from Acceleration Initiative p.4	Run-rate synergies SEK 214M (EUR 20.0M) achieved by Q1 2026 — well ahead of plan.

Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

2026-06-10 · HOLD/MEDIUM · Streamlined — this version
2026-05-31 · Buy/high

Quality · Buffett tenets10 / 15

Understandable business●●●

Nordic legal information SaaS — subscription-based access to expert-authored legal databases (DK, SE, NO, FR, ES); 87% online mix; annual contract renewals; legible.

Durable moat●●○

Expert-authored legal content (cited in court decisions, referenced in legal education) creates mission-critical switching costs. AI amplifies, not replaces, the expert content moat. Region North 51% Adj EBITA margin confirms real pricing power.

Able & honest management●●○

Accelerate initiative cleanly divested EHS/legal training; run-rate synergies SEK 214M achieved ahead of plan; buyback at 13x EBITA is value-accretive; Region North margin expansion +3pp YoY to 51%.

Financial strength●●○

Adj ROIC 12.6% > 8% WACC; EP +SEK 192M; Adj FCF SEK 264M in Q1 alone (driven by January renewals); leverage 1.8x EBITDA — moderate but supported by subscription cash flows.

Margin of safety●○○

EV/Adj EBITA 13.3x vs peers Wolters Kluwer ~22x, Relx ~20x — discount is real but reflects France weakness. Limited cushion; wait for France stabilisation signal before adding.