Claranova — Demand held up in Q121

Claranova (PAR: CLA)

Last close As at 28/03/2024

EUR2.60

0.07 (2.77%)

Market capitalisation

EUR145m

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Research: TMT

Claranova — Demand held up in Q121

Claranova has reported another strong quarter of revenue growth in Q121, with reported revenue up 29% y-o-y and organic, constant currency revenue up 23% y-o-y. PlanetArt was the driver of growth, with good performance from the original photo-printing business and the acquired personalised gifts business. We have increased our revenue forecasts to reflect Q1 performance but due to the high level of uncertainty caused by COVID-19, we maintain our EBITDA forecasts for FY21 and FY22.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

Demand held up in Q121

Q121 revenue update

Software & comp services

5 November 2020

Price

€5.97

Market cap

€234m

$1.17/€1

Net cash (€m) at end FY20

13.9

Shares in issue

39.2m

Free float

91%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.5)

4.1

(34.3)

Rel (local)

(7.2)

3.2

(22.5)

52-week high/low

€9.27

€2.96

Business description

Claranova consists of three businesses focused on mobile and internet technologies: PlanetArt (digital photo printing; personalised gifts), Avanquest (consumer-focused software) and myDevices (internet of things). Its headquarters are in Paris, and it has operations in Europe, the US and Canada.

Next events

AGM

1 December

Q221 revenue update

February 2021

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Claranova is a research client of Edison Investment Research Limited

Claranova has reported another strong quarter of revenue growth in Q121, with reported revenue up 29% y-o-y and organic, constant currency revenue up 23% y-o-y. PlanetArt was the driver of growth, with good performance from the original photo-printing business and the acquired personalised gifts business. We have increased our revenue forecasts to reflect Q1 performance but due to the high level of uncertainty caused by COVID-19, we maintain our EBITDA forecasts for FY21 and FY22.

Year end

Revenue (€m)

EBITDA**
(€m)

PBT*
(€m)

Diluted EPS*
(€)

DPS
(€)

P/E
(x)

06/19

262.3

16.0

12.0

0.25

0.0

24.2

06/20

409.1

17.4

11.3

0.20

0.0

29.8

06/21e

488.0

27.4

21.0

0.30

0.0

20.2

06/22e

557.0

36.8

30.4

0.44

0.0

13.5

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Pre-IFRS 16.

PlanetArt drives organic growth

Group organic constant currency growth of 23% came mainly from PlanetArt (+32%, 77% of group revenue) with a small contribution from myDevices (+111%, 1% of group revenue), partially offset by a 2% decline for Avanquest (22% of group revenue). PlanetArt saw continued strong demand for photo printing and 50% like-for-like growth in the personalised gifts business. Avanquest has substantially completed the shift from upfront to subscription licensing for its proprietary software products, which has depressed revenue growth and profitability in recent quarters. From this point, growth should start to accelerate and margins improve.

Raising revenue forecasts; maintaining EBITDA

Reflecting the better-than-expected performance of PlanetArt and slightly lower-than-expected growth of Avanquest, we have increased our group revenue forecasts by 1.2% for FY21 and FY22. Taking into account COVID-19-related uncertainty in Claranova’s seasonally strongest quarter (CYQ4), we cautiously maintain our EBITDA forecasts.

Valuation: Sum of the parts suggests upside

Reflecting the different business models and minority interests for each division, we continue to use a sum-of-the-parts approach to valuation. Based purely on peer-group averages per division, we calculate a fair value of €15.9 per share. However, once multiples are adjusted to reflect our views on the growth and profitability of each division, we calculate what we believe to be a more realistic valuation of €12.12 per share (unchanged since our last note). Factors that could provide upside to our estimates would be sustained high demand for photo printing, successful adoption of the FreePrints Gift app in the US and returning recent acquisitions to profitability.

Quarterly revenue update

Claranova reported 29% y-o-y revenue growth in Q121. On an organic basis, group revenue grew 19% y-o-y; at constant currency this increased to 23%.

Exhibit 1: Quarterly revenue by division

Revenues (€m)

Q121

Q120

y-o-y

y-o-y

y-o-y

Reported (%)

Organic (%)

Constant ccy, organic (%)

PlanetArt

69

48

43

29

32

Avanquest

20

21

(6)

(6)

(2)

myDevices

1

1

100

100

111

Total

90

70

29

19

23

Source: Claranova

On a divisional basis:

PlanetArt: the division saw 32% growth on an organic, constant currency basis (Q120: 30%, Q420: 53%). The high levels of demand experienced in Q420 (which covered much of the lockdown periods in Europe and the US) continued into Q121. With further lockdowns being implemented across Europe, this could support elevated demand in Q221. Personal Creations contributed two months of revenue in Q120 and CafePress only contributed one month of revenue in Q121. The company noted the personalised gifts business grew 50% on a like-for-like basis, which implies that under Claranova’s ownership the Personal Creations business is performing well.

Avanquest: in Q121, revenue declined 6% y-o-y or 2% on a constant currency basis. The business has been shifting key software lines from upfront to subscription licensing, which has supressed revenue growth over the last year. In the case of SodaPDF and InPixio this transition is complete, with 82% and 72% of revenue, respectively, from subscription licences, and double-digit revenue growth in Q121. Recurring revenue made up 54% of revenue in Q121 compared to 46% in Q420. The company noted that lower margin, non-strategic activities continued to decline, in particular, sales of third-party, physical software and sales through partner channels.

myDevices: divisional revenues doubled year-on-year, representing mainly non-recurring revenue from commercial partners in the US. COVID-19 restrictions have made it difficult for customers in the hospitality sector to install internet-of-things devices but we believe that once restrictions are removed, demand should return.

Outlook and changes to forecasts

Management commented it remains fully focused on maintaining the current positive momentum, despite the recent renewed lockdowns in most countries of operation. CYQ4 is typically the strongest quarter for Claranova, particularly in the PlanetArt division, and it remains to be seen what impact the pandemic will have on demand and logistics (cost and speed of delivery). Despite these uncertainties, management expects to be able to maintain its track record of strong and profitable growth.

We have revised our FY21 and FY22 revenue forecasts to reflect the stronger Q1 performance by Planet Art and slightly lower revenues for Avanquest. Bearing in mind the uncertainties around Q221 trading, we maintain our EBITDA forecasts.

Exhibit 2: Changes to forecasts

€'m

FY21e

FY21e

FY22e

FY22e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

482.4

488.0

1.2%

19.3%

550.6

557.0

1.2%

14.1%

EBITDA

30.6

30.6

0.0%

48.5%

40.0

40.0

0.0%

30.7%

EBITDA margin

6.3%

6.3%

(0.1%)

1.2%

7.3%

7.2%

(0.1%)

0.9%

EBITDA - pre IFRS 16

27.4

27.4

0.0%

57.1%

36.8

36.8

0.0%

34.3%

EBITDA margin - pre IFRS 16

5.7%

5.6%

(0.1%)

1.4%

6.7%

6.6%

(0.1%)

1.0%

Normalised operating profit

25.7

25.7

0.0%

62.7%

35.1

35.1

0.0%

36.6%

Normalised operating profit margin

5.3%

5.3%

(0.1%)

1.4%

6.4%

6.3%

(0.1%)

1.0%

Reported operating profit

19.4

19.4

0.0%

148.7%

31.8

31.8

0.0%

63.9%

Reported operating margin

4.0%

4.0%

0.0%

2.1%

5.8%

5.7%

(0.1%)

1.7%

Normalised PBT

21.0

21.0

0.0%

85.5%

30.4

30.4

0.0%

44.8%

Reported PBT

14.7

14.7

0.0%

344.3%

27.1

27.1

0.0%

84.6%

Normalised net income

11.8

11.8

0.0%

47.4%

17.7

17.7

0.0%

50.2%

Reported net income

6.9

6.9

0.0%

1287.8%

15.2

15.2

0.0%

118.6%

Normalised basic EPS (€)

0.30

0.30

0.0%

47.4%

0.45

0.45

0.0%

50.2%

Normalised diluted EPS (€)

0.30

0.30

0.0%

47.4%

0.44

0.44

0.0%

50.2%

Reported basic EPS (€)

0.18

0.18

0.0%

1287.8%

0.39

0.39

0.0%

118.6%

Net debt/(cash)

(22.1)

(22.6)

2.3%

62.7%

(48.9)

(49.5)

1.1%

118.8%

Divisional revenues

PlanetArt

377.2

386.4

2.5%

23.1%

432.6

442.9

2.4%

14.6%

Avanquest

99.7

96.0

(3.7%)

6.3%

111.7

107.8

(3.5%)

12.3%

myDevices

5.6

5.6

0.0%

16.7%

6.3

6.3

0.0%

12.5%

Total

482.4

488.0

1.2%

19.3%

550.6

557.0

1.2%

14.1%

Divisional EBITDA

PlanetArt

19.5

19.5

0.0%

38.1%

27.0

27.0

0.0%

38.5%

Avanquest

11.3

11.3

(0.0%)

57.8%

13.0

13.0

0.0%

15.0%

myDevices

(3.4)

(3.4)

0.0%

(11.5%)

(3.2)

(3.2)

0.0%

(5.9%)

Total EBITDA - pre IFRS 16

27.4

27.4

0.0%

57.1%

36.8

36.8

0.0%

34.3%

Source: Edison Investment Research

Exhibit 3: Financial summary

€'m

2015

2016

2017

2018

2019

2020

2021e

2022e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

93.1

117.4

130.2

161.5

262.3

409.1

488.0

557.0

EBITDA

 

 

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

30.6

40.0

Normalised operating profit

 

 

(11.4)

(16.0)

(5.8)

3.4

15.5

15.8

25.7

35.1

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

(1.5)

(2.4)

(3.3)

(3.3)

Exceptionals

15.6

(10.0)

0.4

(2.4)

(2.9)

(5.6)

(3.0)

0.0

Share-based payments

(0.0)

(0.1)

(4.8)

(7.1)

0.3

0.0

0.0

0.0

Reported operating profit

4.2

(26.1)

(10.1)

(6.1)

11.4

7.8

19.4

31.8

Net Interest

1.1

(1.7)

(0.9)

(0.3)

(3.5)

(4.5)

(4.7)

(4.7)

Joint ventures & associates (post tax)

0.0

(0.0)

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

(45.6)

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(10.3)

(17.7)

(6.6)

3.1

12.0

11.3

21.0

30.4

Profit Before Tax (reported)

 

 

5.3

(27.8)

(11.0)

(6.4)

(37.7)

3.3

14.7

27.1

Reported tax

(0.6)

(0.8)

(0.4)

(1.8)

(3.7)

(2.1)

(3.4)

(6.2)

Profit After Tax (norm)

(10.9)

(18.5)

(7.0)

2.4

9.2

8.7

16.1

23.4

Profit After Tax (reported)

4.7

(28.6)

(11.4)

(8.2)

(41.4)

1.2

11.3

20.8

Minority interests

(8.1)

0.0

0.3

0.2

0.6

(0.7)

(4.4)

(5.7)

Discontinued operations

(3.2)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(18.9)

(18.5)

(6.7)

2.6

9.8

8.0

11.8

17.7

Net income (reported)

(6.5)

(28.6)

(11.0)

(7.9)

(40.8)

0.5

6.9

15.2

Basic ave. number of shares outstanding (m)

6

38

38

39

39

39

39

39

EPS - basic normalised (€)

 

 

(3.27)

(0.49)

(0.18)

0.07

0.25

0.20

0.30

0.45

EPS - diluted normalised (€)

 

 

(3.27)

(0.49)

(0.18)

0.06

0.25

0.20

0.30

0.44

EPS - basic reported (€)

 

 

(1.13)

(0.76)

(0.29)

(0.20)

(1.04)

0.01

0.18

0.39

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

-

26.1

10.9

24.0

62.4

56.0

19.3

14.1

EBITDA Margin (%)

-7.3

-7.9

-3.8

2.4

6.1

5.0

6.3

7.2

Normalised Operating Margin

-12.3

-13.7

-4.4

2.1

5.9

3.9

5.3

6.3

BALANCE SHEET

Fixed Assets

 

 

15.7

3.0

2.0

1.3

75.1

93.7

96.7

92.7

Intangible Assets

12.0

1.5

0.9

0.5

69.9

70.5

74.1

70.7

Tangible Assets

0.6

0.5

0.3

0.2

1.4

15.7

15.1

14.5

Investments & other

3.1

1.1

0.7

0.6

3.8

7.5

7.5

7.5

Current Assets

 

 

48.0

25.5

28.1

79.1

100.9

116.3

129.7

160.7

Stocks

5.9

5.0

3.7

3.7

4.8

14.4

17.2

19.6

Debtors

4.8

4.7

4.3

4.9

11.6

9.9

11.8

13.5

Cash & cash equivalents

30.5

11.1

17.1

65.7

75.4

82.8

91.5

118.4

Other

6.9

4.7

2.9

4.8

9.1

9.2

9.2

9.2

Current Liabilities

 

 

(32.0)

(25.3)

(28.1)

(37.2)

(60.5)

(74.6)

(79.7)

(85.8)

Creditors

(26.9)

(24.5)

(26.6)

(35.4)

(54.8)

(64.3)

(69.4)

(75.5)

Tax and social security

(0.3)

(0.0)

(0.3)

(1.7)

(3.0)

(1.2)

(1.2)

(1.2)

Short term borrowings

(4.8)

(0.7)

(1.1)

(0.1)

(2.7)

(6.1)

(6.1)

(6.1)

Other

0.0

0.0

0.0

0.0

0.0

(3.0)

(3.0)

(3.0)

Long Term Liabilities

 

 

(2.4)

(1.1)

(0.7)

(29.0)

(52.0)

(73.1)

(73.1)

(73.1)

Long term borrowings

(1.8)

(0.6)

0.0

(28.1)

(49.1)

(62.8)

(62.8)

(62.8)

Other long term liabilities

(0.7)

(0.5)

(0.7)

(0.9)

(2.9)

(10.3)

(10.3)

(10.3)

Net Assets

 

 

29.3

2.1

1.3

14.2

63.6

62.3

73.6

94.4

Minority interests

0.0

0.0

(0.1)

(1.8)

(11.0)

(11.7)

(16.1)

(21.7)

Shareholders' equity

 

 

29.3

2.1

1.2

12.5

52.6

50.6

57.5

72.7

CASH FLOW

Op Cash Flow before WC and tax

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

30.6

40.0

Working capital

0.4

2.5

6.8

7.9

(4.1)

22.5

0.4

2.0

Exceptional & other

(3.8)

(4.3)

(2.2)

(5.7)

(5.2)

(6.3)

(3.0)

0.0

Tax

0.3

(0.3)

(0.0)

(1.2)

(3.8)

(6.8)

(3.4)

(6.2)

Net operating cash flow

 

 

(9.8)

(11.3)

(0.4)

5.0

3.0

30.0

24.6

35.8

Capex

(4.4)

(0.9)

(0.2)

(0.1)

(2.5)

(1.2)

(1.0)

(1.0)

Acquisitions/disposals

10.8

(0.4)

3.6

14.2

(13.3)

(31.9)

(7.0)

0.0

Net interest

(0.9)

(0.1)

(0.0)

(0.3)

0.0

(0.5)

(4.7)

(4.7)

Equity financing

33.2

(5.1)

1.9

2.0

(1.4)

0.0

0.0

0.0

Dividends

0.0

2.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.1

0.1

0.1

(0.6)

0.0

0.4

(3.2)

(3.2)

Net Cash Flow

29.0

(15.7)

5.0

20.1

(14.2)

(3.2)

8.7

26.9

Opening net debt/(cash)

 

 

18.0

(23.9)

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(22.6)

FX

0.1

(0.1)

(0.6)

0.4

0.3

(0.8)

0.0

0.0

Other non-cash movements

12.6

1.7

1.8

1.1

0.0

(5.7)

0.0

0.0

Closing net debt/(cash)

 

 

(23.9)

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(22.6)

(49.5)

Source: Claranova, Edison Investment Research


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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Lepidico — Enter the US government

On 28 October, Lepidico (LPD) announced that it had signed a formal mandate with the US International Development Finance Corporation (DFC) to undertake an in-depth analysis and evaluation of the Karibib Phase 1 (L Max/LOH-Max) project for the purpose of determining whether it qualifies for DFC debt-based financing. This entry of a US federal government institution into the development of Lepidico’s Phase 1 project is consistent with the former’s attempt to secure the future supply of up to 35 metals and minerals deemed ‘critical’ for the ongoing health of the US economy – four of which can be produced by Lepidico. In addition to the credibility that the DFC lends Karibib, for the company, its involvement holds out the possibility of a higher (and more efficient) proportion of debt funding and a lower average interest rate.

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