Translation: Original published in Finnish on 8/17/2026 at 7:00 am EEST.

We reiterate our Buy recommendation and EUR 6.0 target price for Lemonsoft. The company's Q2 revenue grew in line with our expectations, but the earnings improvement compared to the previous year was slightly below our estimates due to a higher cost structure. In light of Lemonsoft's outlook commentary, the market situation in the company's core industries is clearly improving. This should start to support sales development more strongly in H2, and in our assessment, be properly reflected in revenue and earnings lines during 2027. Against this backdrop, we believe the stock's valuation (2027e EV/EBIT 8x) is very attractive.

Revenue grew as expected

Lemonsoft's Q2 revenue grew by 5% to 7.8 MEUR, slightly exceeding our forecast of 7.7 MEUR. The Jakamo acquisition in February supported growth by 7.5 percentage points. Organic growth (-2.1%) was slightly negative, in line with our expectations. SaaS income (Q2'26: 6.22 MEUR), which is the most important for the strategy and value creation, grew by 12%, reflecting the impact of Jakamo. SaaS organic growth was 2.7%, so the trend is cautiously improving. According to the company, customer churn in the early part of the year was at the previous year's level (2025: 6.3%) and did not decrease as initially expected. Churn has occurred particularly outside the core business areas due to customers' financial difficulties and M&A transactions.

Earnings fell slightly short of our expectations

Adjusted EBIT in Q2 was 1.6 MEUR (Q2'25: 1.2 MEUR), falling short of our forecast (1.9 MEUR). The adjusted EBIT margin (21%) improved significantly from the soft comparison period (16%), but we had expected an even stronger turnaround. The deviation from our forecast came from personnel costs. In Q2, Lemonsoft invested significantly in customer experience, for example, by strengthening customer interface resourcing. Gross margin (Q2'26: 84.9% vs. Q2'25: 85.8%) was fully in line with our expectations. Overall, Lemonsoft's current cost structure provides a good basis for earnings growth in the coming years, provided that an upturn in sales begins to be reflected in revenue.

Market outlook is picking up

Lemonsoft's guidance, updated twice in July, expects 2026 revenue to grow by -1–5% and the adjusted operating profit margin to be between 23–29% (our forecast: 2% and 26%). Following the divestment of Finvoicer, Lemonsoft is a more focused software provider for industrial manufacturing and wholesale & retail, and the company's prerequisites for organic growth are strengthening. Recently, there have also been signs of market recovery, which will support Lemonsoft's sales development going forward. The renewed sales organization and other measures taken have also started to move things in a better direction. According to the company, new sales activity has increased significantly (2-3x lead volume) and the sales pipeline has grown substantially. This is expected to be reflected in positively realized deals in H2. The market outlook is partly brightened by the fact that certain legacy software (e.g., Visma L7) is being replaced at a faster pace than before.

Valuation is attractive given the earnings growth in the coming years

Based on our forecasts, Lemonsoft's EV/EBIT ratio, adjusted for PPA amortization from acquisitions, is 10x in 2026. We believe the valuation has fallen to a low level, and Lemonsoft's share no longer prices in significant growth expectations. If sales pick up and our the earnings growth we forecast materializes, the valuation for the coming years looks very low (2027e-2028e EV/EBIT 8x-7x). A key challenge for Lemonsoft's valuation increase in the short term is the generally weak sentiment for SaaS stocks. If the company can deliver its targeted earnings growth in the coming years, we estimate that investors' concerns will eventually dissipate, and the valuation will return to a higher level than at present.