- Magic Software continues to benefit from the digitalisation boom and the boom in M&A, where IT integration services, especially for the cloud, become necessary.
- While Magic's organic performance continues to impress us, we use this note to focus on the fact that 80% of Magic's revenues are essentially tech consulting.
- While a good platform for selling software, which admittedly has declined in the mix, consulting services are exposed to human capital risks, more acute in a 'great resignation' environment.
- While Magic continues to be attractive, at least as a holding of our Asseco Poland investment, we note that human capital risks, specifically attrition and payroll increases, could impact the company.
For further details see:
Magic Software Continues To Deliver Growth, But Consulting Model Exposed To Human Capital Risks