Introduction
In a world where government IT projects are often bloated, over-budget, and endlessly customized, cBrain is flipping the script.
Headquartered in Denmark, cBrain offers a clean, elegant solution: F2, a standardized digital platform designed specifically for the public sector. Rather than reinventing the wheel with every project, F2 provides government agencies with a commercial off-the-shelf (COTS) system that’s ready to deploy, easy to scale, and built with efficiency in mind.
Already dominant in Denmark’s digital administration space, cBrain is now riding the global wave of government modernization. With growing traction in Germany, the UAE, and beyond, it’s transforming itself from a regional SaaS firm into a global GovTech contender.
Meanwhile, the company is strengthening its recurring revenue base, building a sticky ecosystem around F2, and proving that profitability and innovation can coexist—even in public sector IT.
But here’s the real question for investors:
Is this under-the-radar GovTech company a long-term compounder or already priced for perfection?
The Business – Digitizing Governments, the Danish Way
Founded in 2002, cBrain is a Danish software company redefining how governments manage digital workflows. At the heart of its offering is F2, a ready-to-use, standardized software platform tailored specifically for the public sector.
Where traditional government IT projects rely on custom-built systems—often plagued by delays, budget overruns, and technical debt—cBrain’s approach is refreshingly modern. F2 eliminates the need for consultants, bespoke code, or lengthy development timelines. Instead, it provides a fully integrated, off-the-shelf platform that handles everything from paperwork and approvals to case management and policy implementation.
Originally developed for Danish ministries, F2 now powers digital operations across more than 75 government institutions in Denmark, including 21 out of 22 ministries. Its success at home has laid the foundation for a growing international footprint, with deployments or pilots in countries such as France, Germany, the UK, the US, the UAE, and multiple African nations.
What sets cBrain apart isn’t just technology—it’s a strategic philosophy. By streamlining implementation and reducing both cost and risk, cBrain empowers governments to modernize without falling into the usual traps of legacy IT overhauls.
This lean, scalable model is also good business. cBrain operates on a subscription-based SaaS model, anchored by long-term contracts with government clients. Unlike traditional project-based vendors, cBrain prioritizes recurring revenue, creating a predictable and profitable financial engine as it scales internationally.
The Founder – Why Per Tejs Knudsen Is the Right Captain for cBrain
Few companies in the GovTech space are led by a founder with as deep a résumé—and as much skin in the game—as Per Tejs Knudsen, the CEO and visionary behind cBrain.
With a civil engineering degree from the Technical University of Denmark (DTU) and a business diploma from Copenhagen Business School, Knudsen blends technical insight with strategic discipline—a rare duality in tech leadership. His entrepreneurial journey began in 1983 with the founding of PPU Software, later renamed Maconomy A/S, which he took public in 2000. Just two years later, he launched cBrain—and led it to a public listing in 2006.
His track record speaks volumes: he doesn’t just build products—he builds publicly listed, scalable software companies.
As founder-CEO, Knudsen retains significant insider ownership through his investment vehicle, Putega Holding ApS—a detail not to be overlooked. In a market flooded with short-term thinking, Knudsen’s equity stake ensures he is directly aligned with shareholders, financially and strategically.
Beyond the boardroom, he’s deeply engaged in Denmark’s academic and tech communities, serving on advisory boards at DTU and contributing to national tech discourse through organizations like the Danish Academy of Technical Sciences and Dansk IT.
Knudsen is also a vocal advocate for proactive public sector digitalization, crediting Denmark’s early national strategy as a catalyst for cBrain’s success. As he noted in a recent interview:
“Our government identified the need to formulate a digitalization strategy several years before anyone else.”
Under his leadership, cBrain has delivered profitable growth, secured long-term government clients, and expanded globally—all while maintaining a lean, product-first culture. For investors who value founder-led businesses with high insider alignment, cBrain checks all the boxes.
The Numbers – How Profitable Is cBrain Under the Hood?
1- Return on Invested Capital (ROIC): Efficiency That’s Gaining Strength
One of the most telling metrics in long-term business performance is Return on Invested Capital (ROIC). For high-quality compounders, we like to see ROIC above 10% consistently over a decade—a sign that the company can reinvest profitably.
cBrain hits that bar in 7 of the last 10 years, and more impressively, it has posted:
- >15% ROIC in each of the past 5 years
- >20% ROIC in 3 of the last 4 years
That trajectory points to a highly capital-efficient business—one benefiting from an asset-light SaaS model, recurring public sector revenue, and minimal capital expenditure. With a fully standardized product like F2 and sticky, long-term government contracts, there’s every reason to believe this high ROIC trend will continue.
2- Book Value + Dividends: Quiet Compounding Through Equity Growth
This metric—essentially a proxy for equity growth rate—offers insight into how much value cBrain is adding for shareholders over time. While we lack 2014–2015 data, the rest of the 10-year history paints a clear picture:
- Equity has grown every year except one (flat, not down)
- Since 2020, annual equity growth has consistently exceeded 10%
This signals a disciplined financial engine. Growth is not just top-line or margin expansion—it’s flowing through to the balance sheet. In a business with minimal debt and modest capex needs, growing equity becomes a key long-term wealth creation lever.
3- Free Cash Flow: A Strong, Stable Foundation for Dividends and Reinvestment
Free cash flow (FCF) is king—especially in software. Here, we focus on levered free cash flow margin to assess profitability after debt service, and use free cash flow yield to gauge valuation realism.
The good news:
- Positive free cash flow every year for the last decade
- Doubling of FCF in 2024, following stable performance from 2021–2023
- Strong FCF margins over the last 5 years (except 2023, due to one-off loan repayment)
That 2023 dip was related to a strategic payoff on property debt (Utzon House)—not a signal of operational weakness. In fact, cBrain has made it clear: future FCF will fuel both dividend hikes and continued reinvestment. There’s no buyback program yet—logical, given the company’s premium valuation and low FCF yield.
For investors, the message is clear:
This is a cash-generative business with prudent capital allocation.
Debt – Clean Balance Sheet, Clean Execution
In a world where tech companies often overextend with leverage to fuel growth, cBrain stands out by keeping it simple—and debt-free.
A quick check of the financials reveals that cBrain currently carries no long-term debt. This alone removes a major source of risk for investors.
Even more encouraging is the company’s proactive capital management. In recent years, management used free cash flow to fully repay loans tied to company-owned real estate—most notably the repayment tied to Utzon House, its flagship headquarters.
With a strong cash position, a recurring revenue model, and low capital intensity, cBrain has no operational need for debt—and no signs of taking any on. That gives it both financial flexibility and downside protection, especially in volatile macro environments.
For long-term investors, this clean balance sheet adds resilience without compromising growth.
Risks – What Could Derail cBrain’s Growth Engine?
Every promising business carries its own set of vulnerabilities—and cBrain is no exception. While its fundamentals are strong, long-term investors should be aware of the strategic, operational, and technical risks that could impact performance.
1- Rising Competition: The Moat May Narrow
cBrain’s early success came from being a first mover in standardized, off-the-shelf government software—an innovative pivot away from the costly, bespoke IT systems that dominated public sector procurement.
But this edge may erode.
As digital transformation accelerates globally, more competitors are entering the COTS (Commercial Off-The-Shelf) arena. Larger software vendors and enterprise IT firms—with deep pockets, global reach, and long-standing government ties—could replicate cBrain’s offering, and do so at scale.
🔺 Risks:
- Pricing pressure from new entrants could compress margins.
- Brand giants (like Oracle, Microsoft, or SAP) could undercut smaller players.
- Low-code/no-code platforms make it easier for governments to build or customize their own tools.
While cBrain still benefits from its strong reputation and existing contracts, its product uniqueness is no longer guaranteed.
2- Ecosystem Execution: A Bottleneck for Global Scale
One of cBrain’s most ambitious goals is to build a partner-driven ecosystem—a network of IT firms, NGOs, consultants, and local governments who implement and evangelize the F2 platform independently.
But this strategy comes with execution risk.
If cBrain fails to scale this ecosystem, it will remain overly reliant on direct sales and long procurement cycles, especially in foreign markets. Without a self-sustaining partner network, F2 adoption will likely stagnate outside Denmark.
🔺 Risks:
- Slower international growth due to lack of boots-on-the-ground partners.
- Reduced scalability as more contracts require cBrain’s direct involvement.
- Partner hesitancy if incentives aren’t attractive or the ecosystem lacks technical support.
Building a true ecosystem requires more than a good product—it demands infrastructure, marketing, training, and compelling economics for third parties. If this fails, so does cBrain’s global expansion thesis.
3- Cybersecurity: High Stakes in High-Sensitivity Environment
As a provider of mission-critical software to government institutions, cBrain is a prime target for cyber threats.
Its F2 platform underpins workflows, compliance, and operations in ministries and public agencies. A successful attack could compromise not just data—but trust, contracts, and the very credibility of the company.
🔺 Risks:
- Breach of sensitive government data
- Disruption of public services
- Loss of contracts due to compliance failures
A single cybersecurity incident could lead to contract termination, litigation, or reputational collapse—particularly devastating in the risk-averse public sector.
To cBrain’s credit, the company emphasizes secure architecture and has not reported any major incidents to date. But with cyberattacks growing more frequent and sophisticated, security must remain a top priority—not just for operational continuity, but for survival in regulated environments.
Summary: While cBrain’s fundamentals remain sound, its long-term success depends on fending off new competition, building a scalable ecosystem, and safeguarding trust through ironclad cybersecurity. Investors should monitor these areas closely as the business scales globally.
Reasons to Invest in cBrain – A Quiet Leader in Government Digitization
1- A Software Revolution in Public IT
The global shift from costly, custom-built government IT systems to standardized digital solutions is accelerating—faster than most expected. For decades, public sector IT relied on large consultants and bespoke projects that were slow, expensive, and frequently plagued by failure.
But today, governments are facing pressure to digitize faster and smarter:
- Shortage of skilled IT workers
- Need for more cost-effective solutions
- Public demand for faster services
Enter cBrain’s F2 platform—a Commercial Off-The-Shelf (COTS) solution that helps governments bypass years of painful IT development. With cBrain, projects that once took 18–24 months can now be launched in 3–6 weeks, as shown by its rapid deployment for two new Danish ministries in just 21 days.
What this means for investors:
– Faster adoption → Faster revenue
– Sticky contracts → Recurring income
– Simplified IT → Lower costs for clients, higher margins for cBrain
As more governments prioritize speed and standardization, F2 becomes a natural go-to.
2- Going Global: From Denmark to the World
While cBrain dominates the Danish public sector (used by 21 ministries and 75+ institutions), its biggest growth engine lies abroad.
Already in 12+ countries, including:
- 🇺🇸 USA
- 🇩🇪 Germany
- 🇫🇷 France
- 🇰🇪 Kenya
- 🇷🇴 Romania
- 🇦🇪 UAE
The international footprint now accounts for more than one-third of total revenue, with ambitions to surpass domestic sales in the coming years.
Strategic pillar: The “Steppingstones” initiative
→ Targeting larger average contracts, more cross-border partnerships, and export-led growth.
With global public sector IT spending in the hundreds of billions, even modest penetration into markets like the U.S. or Germany could turbocharge cBrain’s revenue base.
3- F2 Climate & F2-for-Partners – Two Growth Levers in One Platform
F2 Climate Software
Governments want to implement green policies—but they often struggle with outdated bureaucracy. F2 Climate fixes this by helping agencies streamline grants, track progress, and roll out programs in weeks, not years.
Real-world examples:
- 🇩🇰 Denmark: €300M farmland restoration launched in 3 months
- 🇬🇾 Guyana: F2 used to protect endangered wildlife through fast policy implementation
With trillions in climate-related funding on the table globally, F2 Climate is perfectly positioned to become the digital backbone for green governance.
F2-for-Partners Concept
Traditionally, cBrain led all implementation. But now, partners and governments themselves can roll out F2—creating a self-scaling model.
This opens the door to:
- Faster adoption in new countries
- Reduced labor intensity
- Sticky, recurring subscription revenue
As this ecosystem grows, F2 becomes the “default OS” for public sector digitization, hard to displace and widely adopted.
Bottom Line:
“Governments are tired of reinventing the wheel—cBrain sells them a ready-to-roll Tesla.”
The demand is clear. The trend is accelerating. And cBrain holds the keys to a proven platform, a global vision, and a growing ecosystem.
Conclusion — A Digitization Pure Play at the Right Price?
cBrain is one of those rare companies quietly executing in a highly specialized space—government digital transformation—and doing so with remarkable consistency.
With a founder-CEO who owns a significant stake, a standardized platform (F2) that radically simplifies public sector IT, and a highly efficient, cash-generative model, cBrain checks many boxes for long-term investors:
What Makes It Stand Out:
- ROIC consistently above 15%, with 3 of the last 4 years exceeding 20%
- Asset-light, high-margin, recurring revenue business
- Record free cash flow in 2024
- Zero debt and a strong balance sheet
- Growing international momentum in high-budget markets like the U.S., UAE, and Germany
But this isn’t a risk-free bet.
As the government software market matures, standardization will attract heavyweight competitors. The first-mover moat cBrain enjoys today could shrink if enterprise players develop similar off-the-shelf platforms and undercut pricing. Likewise, the success or failure of its F2 ecosystem strategy will determine whether cBrain scales efficiently—or remains limited to direct sales.
Add to that the existential threat of cyber attacks—a major concern when serving governments—and it becomes clear that execution, reliability, and security will define the company’s future.
The Opportunity
Where others see bureaucratic slow-lane IT, cBrain sees a structural shift—a global move from slow, costly custom builds to plug-and-play digital infrastructure.
And it’s already proving that model works:
- 3-week rollouts vs. 2-year deployments
- Fast-track climate program launches
- Strategic partner expansion to multiply reach
If cBrain delivers on its ecosystem strategy, locks in a few major international deals, and continues growing EPS (forecast at +15% CAGR over the next 5 years), it could become a category leader in COTS-for-government software.
Investment Outlook
At DKK 200, the stock trades near its calculated Margin of Safety-based intrinsic value, making it attractive for long-term, value-oriented investors.
For those who believe in the mission, the model, and the founder’s track record, even initiating a small starter position above intrinsic value could make sense—particularly with growth tailwinds blowing in cBrain’s favor.
Final Verdict:
Buy or Watch Closely – A mission-driven, founder-led, capital-efficient software firm operating in a niche undergoing global transformation. The risks are real—but the reward profile, especially at these levels, is compelling.