Everyone can code now – but not everyone has brand reputation, customer relations or the competencies to navigate the bureaucracy – all these key elements might be overlooked and misunderstood at the current valuation.
cBrain claims to have a total addressable market of 325 billion DKK in the global government software market.
But; How much of this market is cBrain likely to capture?
#1 Competitors
cBrain is not entering empty territory. In the US, UK, or Germany, local equivalents of EG and Systematic already possess the exact same bureaucratic and relational moats that cBrain enjoys in Denmark. In a low churn sector, does this severely impact TAM.
#2 New Entrants
If AI allows any localized startup to build bespoke workflow tools rapidly, the frequency of new entrants is mathematically high. However, the consequence of this threat to cBrain is remarkably low. Central governments do not buy critical infrastructure from startups. They demand ISO certifications, heavily audited sovereign cloud compliance, and a decade of referenced reliability. This bureaucracy acts as a moat against disruptive new entrants.
#3 Need for product development
cBrain’s products are essentially:
– F2 paperless – A highly disciplined, standardized digital filing cabinet and routing system
– F2 climate – The exact same F2 Core engine, but pre configured to process carbon permits, ESG reporting, and green subsidies
– F2 customization – ServiceBuilder is the low-code toolkit that allows local consulting firms to configure F2 for local governments.
These products are by no means representative of the whole 325 billion DKK TAM. For cBrain to ever approach this figure, it would require excessive product development into areas outside their core competencies. Because F2 does not replace ERP systems or heavy infrastructure, a more realistic TAM is closer to 10% of their reported figure. To extend beyond this 10%, cBrain cannot rely on a simple copy-paste of their current product into new markets; they would need extensive R&D and a fundamentally different sales reach.
So; How are cBrain planning to capture this market?
#1 With aggressive sales in new markets through external companies.
cBrain is pivoting hard to an “F2-for-Partners” model, where external consultancies can install and implement cBrains F2 products. They are building tools (F2 ServiceBuilder) that allow external stakeholders to configure and implement the software.
While this should propel potential customers – it might also be a double-edged sword – Giving sales channels to external partners unavoidably gives away control of own sales channels and execution, potentially damaging cBrain’s reputation and customer relations.
Can cBrain copy paste its Danish government competencies to other governments?
Most likely no. Expecting a 1:1 frictionless interaction using “the Danish way” in different cultures with different “ways of doing it” – will undoubtedly provide friction across stakeholders. With that said – cBrain already has customers globally; proving their model can be exported.
The Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) are currently being implemented. This is an opportunity for cBrain as their F2 climate can give them “a foot in the door”.
Also, what about incentives and management?
Per Tejs Knudsen founded cBrain in 2002, took it public in 2006, and remains CEO of cBrain — that’s over 20 years of continuous founder leadership. He holds shares through his personal holding company, Putega Holding ApS. CTO Thomas Qvist is also a co-owner through Felida Holding ApS and has been with the company since 2003. The two co-founders did sell a combined 4.2% stake in 2021 to bring in institutional investors. Per received total annual compensation of roughly 3.2 million DKK as of 2024, with base salary of about 2.2 million making up the majority. For a company with a market cap around 3 billion DKK, that’s remarkably modest.
This highlights a long-tenured management – with high insider ownership – resulting in high alignment with shareholders. Finally, the board is diverse and consists of expertise within government, IT and law.
Also, Per Tejs Knudsen has a Master of Science in Engineering from the Technical University of Denmark (DTU) and HD in Accounting from the Copenhagen Business School.
So is cBrain a good investment?
Assuming cBrain can capture 20% of my revised TAM. At a 20% income ratio. Are we looking at a 30 times increase in earnings.
Math stuff
Revised TAM (product-relevant market):
10% of 325B = 32.5B DKK
Addressable share (realistic market capture):
20% of 32.5B = 6.5B DKK
Potential income at 20% margin:
20% of 6.5B = 1.3B DKK
Earnings multiple: 1.3B / 43M ≈ 30x current earnings
cBrain currently (date: 05.04.2026) trades at a TTM PE of 30.
The hurdle of international expansion is massive. Competing with existing national players is not an easy task – But CSRD and CSDDD regulation might boost adoption of the F2 platform. Another potential boost to sales and market share is the adoption of third party consultants. With external partners the scalability significantly increases – at the cost of customer relationship management. Though the incorporation of external partners partly resolves the issue of difference between cultures and workflows – by allowing for customization.
A PE in the 30s demands strong execution! And headroom for growth. cBrain has both. But can they capitalise and scale in new markets? A patient investor might wait and see – I assume the current skepticism surrounding software companies is overdone – and am willing to take on that risk. This is not a margin of safety play – but an expected value play (asymmetric risk reward).
Scenario analysis
Scenario weight 10% = 30 times increase in earnings; exit multiple PE 25. Potential market cap = 32,250M DKK
Scenario weight 65% = 2 times increase in earnings; exit multiple PE 20. Potential market cap = 1,720M DKK
Scenario weight 25% = no increase in earnings; exit multiple PE 15. Potential market cap = 645M DKK
Current market cap = 1,290M DKK
Weighted annual return = 4,504 / 1,290 = 3.5x or 13% a year – over a 10 year horizon; assuming no discount rate. This is under my normal margin of safety at 20% – with a large upside pulling up the average return, meaning great risk of failure. So why am I still considering investing? It’s plus EV and I trust the management. But, In this case; for a 30PE company, there are simply too many IF’s. The uncertainty regarding the product and competition – makes this bull thesis too fragile. I am looking for high conviction, high growth and conservative pricing. cBrain as an investment thesis, is simply not there yet.
Notes & Key Issues
Two conflicting statements from cBrain annual report:
Note : “cBrain estimates the global addressable market for the F2 digital platform to exceed 50 billion USD” (page 14, cBrain annual report 2025).
“Market analysts estimate the global government software market to exceed USD 50 billion, driven by continued digitalization at national, regional, and local government levels” (page 6, cBrain annual report 2025).
Based on my analysis – these two statements are contradicting. I have left it for now. TAM are notoriously difficult to assess. For this analysis to truly shine it really needs two things:
1. Using cBrains TAM assessment is questionable – as I truly don’t know what they estimate as “global government software market. A homemade TAM would significantly improve this analysis.
2. I would need to know more about the product and how satisfied customers are with it.
Another thing –
Financial Overview (DKK millions)
| Financial | 2022 | 2023 | 2024 | 2025 | 2026E |
|---|---|---|---|---|---|
| Revenue | 188 | 239 | 268 | 251 | 275–290 |
| Revenue growth | — | +27% | +12% | -6% | 10-15% |
| EBT | 49 | 81 | 86 | 56 | 41-58 |
| EBT margin | 26% | 34% | 32% | 22% | 15-20% |
| Net income (approx) | 38 | 63 | 65 | 43 |
Revenue fell 6% and margins compressed from 32% to 22%. cBrain attributes this to delays in large government projects, and they’re guiding for a recovery in 2026. Short term profitability is being sacrificed for increased revenue growth.
https://www.cbrain.com/post/cbrain-announces-next-phase-growth-plan-and-short-term-financial-targets-for-2026
Debt:
Liabilities/Assets=18%
Income/Liabilities=61%
Profitability:
Income/Revenue=17%
Income/Assets=11%
This is a very profitable company – with very low debt. Meaning shareholder dilution is unlikely to fuel growth.
What do analyst expect?
| 2025 | 2026 | 2027 | 2028 | |
| PE | 52.1x | 24.2x | 15.9x | 11.8x |
Note 2026 PE is a tad lower than what cBrain themselves guide!. As cBrain is guiding for a real possibility of declining income. These analyst estimates are likely overly optimistic. Market expansion is expensive.
Gemini 3.0 and Claude 4.6 has been used to improve readability.