Original-Research: Reply – from Quirin Privatbank Kapitalmarktgeschäft
18.08.2025 / 13:47 CET/CEST
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Classification of Quirin Privatbank Kapitalmarktgeschäft to Reply
Company Name:ReplyISIN:IT0005282865 Reason for the research:UpdateRecommendation:Buyfrom:18.08.2025Target price:178Last rating change:Analyst:Sebastian Droste
Structural advantages result in strong resilience
On July 31, Reply released its Q2 2025 financial results. Revenue growth was strong at +8.3% yoy to EUR 606.7m, in line with our expectation (+7.9% yoy). Growth was driven by sustained demand in AI, data management and cloud, strong momentum in region 3 (+22.9% yoy; UK-led and boosted by the Solirius acquisition), and healthy expansion in region 1 (+6.4% yoy), while region 2 was softer (+1.4% yoy). Challenges included continued weakness in France, price pressure, and higher automation that could reduce revenue per project, though this is being offset by clients starting more projects and expanding use cases, resulting in overall growth being supported by core markets. The EBIT margin of Q2 2025 improved from 13.3% to 16.4% exceeding our estimate of 15.3%, supported by an EUR 18.5m extraordinary income, a favorable regional mix, and improved cost ratios. We have conducted a fundamental revaluation of the business, reflecting the structural advantages of Reply’s agile, decentralized, and innovation-driven model, which supports above-average growth and margins compared to peers. With resilient demand in growth markets, a robust balance sheet, and a clear focus on strategic AI initiatives, the investment case remains compelling. We raise our target price from EUR 125 to EUR 178 and change our recommendation to Buy.
You can download the research here: REPLY_SPA_20250818
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