Rapid Customer Growth And Deposits Will Support Long-Term Earnings Power

Catalysts

About Nordnet

Nordnet operates a digital savings and investments platform focused on retail customers across the Nordic region and Germany.

What are the underlying business or industry changes driving this perspective?

• Rapid customer growth, with 77,500 new funded accounts in the quarter and an annualized customer growth rate of 13.2%, increases the base over which Nordnet can generate transaction income, fund fees and net interest income, with potential benefits for revenue and earnings.
• Growing adoption of Nordnet branded funds, which now account for 29% of SEK 307b in fund capital and capture both production and distribution economics as more customers invest in passive products, can support fund related income and overall net margins.
• Strong deposit growth to SEK 97.2b, including SEK 26b of net cash savings in the quarter and a SEK 13b sequential deposit increase, provides a larger funding base that can support net interest income and contribute to profit before tax.
• High product development velocity, reflected in 25 new app versions, AI powered news and portfolio recaps, technical analysis tools in the mobile app and algorithmic execution for ETF savings, can deepen engagement and trading activity per customer, which influences transaction income and operating leverage.
• Long term expansion opportunities in underpenetrated markets, including Germany where pension reform is broadening the investable pool and Denmark where equity participation is described as being 5 to 10 years behind Sweden, offer scope to add savings capital and customers that can scale revenue and support returns on equity.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Nordnet compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Nordnet's revenue will grow by 11.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 50.2% today to 60.7% in 3 years time.
• The bullish analysts expect earnings to reach SEK 5.2 billion (and earnings per share of SEK 20.99) by about July 2029, up from SEK 3.1 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as SEK4.2 billion.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 26.0x on those 2029 earnings, down from 29.3x today. This future PE is greater than the current PE for the SE Capital Markets industry at 23.2x.
• The bullish analysts expect the number of shares outstanding to decline by 0.72% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.83%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Nordnet is putting meaningful emphasis on net interest income, including a snapshot-based NII indication of SEK 2.8b for 2026 and a strong focus on deposit funded earnings. A long term trend toward lower or more volatile reference rates, or sustained shifts from cash into securities, could reduce NII resilience and weigh on revenue and profit before tax over time.
• The business model is tightly linked to retail trading and fund activity, with Q1 trades per day at 302,000 and transaction income of SEK 730m. If retail engagement structurally cools, ticket sizes normalize, or trading mix tilts toward lower margin segments, Nordnet could see pressure on brokerage margins and transaction income, which would affect revenue growth and earnings.
• Competition in key growth markets is intensifying, with Avanza entering Denmark, aggressive pricing from Saxo, and a crowded German broker market with higher expected customer acquisition costs. Over time this could translate into lower pricing power, higher marketing spend, and thinner fund and brokerage margins, which would impact net margins and returns on equity.
• The strategy leans heavily on continued customer and savings capital growth in underpenetrated markets, including Denmark and Germany, as well as structurally rising equity participation and pension flows. If these long term adoption trends stall or regulation around pensions and retail investing becomes less supportive, Nordnet may fall short of medium term customer growth and savings capital ambitions, which would filter through to slower revenue growth and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Nordnet is SEK440.0, which represents up to two standard deviations above the consensus price target of SEK360.43. This valuation is based on what can be assumed as the expectations of Nordnet's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK440.0, and the most bearish reporting a price target of just SEK260.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be SEK8.5 billion, earnings will come to SEK5.2 billion, and it would be trading on a PE ratio of 26.0x, assuming you use a discount rate of 7.8%.
• Given the current share price of SEK366.8, the analyst price target of SEK440.0 is 16.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.