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PlanetArt growth accelerates

Claranova 13 May 2021 Update
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Claranova

PlanetArt growth accelerates

Q321 results

Software & comp services

13 May 2021

Price

€7.13

Market cap

€282m

$1.21/€

Net cash (€m) at end H121

46.7

Shares in issue

39.5m

Free float

91%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.4)

5.4

22.9

Rel (local)

(14.8)

(3.4)

(11.7)

52-week high/low

€8.81

€5.03

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/IoT). Its headquarters are in Paris, and it has operations in Europe, the United States and Canada.

Next events

FY21 revenue update

4 August

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Claranova is a research client of Edison Investment Research Limited

Claranova reported 31% y-o-y revenue growth for Q321, or 30% on an organic, constant currency (cc) basis. PlanetArt saw growth accelerate to 45% (42% organic, cc), helped by the successful integration of Personal Creations and subsequent launch of FreePrints Gifts in the US. Avanquest returned to growth having completed the transition to subscription licensing. We have revised our forecasts to reflect Q3 results, with a small upgrade to revenue and EBITDA in both years.

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

28.9

06/20

409.1

17.4

11.3

0.20

0.0

35.6

06/21e

483.4

36.5

29.6

0.47

0.0

15.3

06/22e

569.9

41.9

35.9

0.54

0.0

13.3

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

Q321 reported revenue growth of 31% y-o-y

Claranova reported revenue growth of 31% y-o-y for Q321 and 22% for the nine months ending 31 March 2021 (9M21). On an organic basis, group revenue grew 24%, and on an organic cc basis, 30%. PlanetArt was the driver with 42% organic cc growth in Q321. Avanquest has returned to growth (+4%, or +7% organic, cc) now that the transition to subscription licensing is complete. As legacy products have been contributing a declining proportion of divisional revenue, we should see increasing growth from this division in the coming quarters. myDevices continued to see supressed demand because of COVID-19 restrictions in the hospitality sector, but as restrictions are lifted, commercial deployments should start to resume.

Upgrading forecasts

We have revised our forecasts to reflect Q321 revenue. We have increased our PlanetArt revenue and EBITDA forecasts for FY21 and FY22. We have slightly reduced our Avanquest revenue forecasts for FY21/22 but we maintain our EBITDA forecasts. We assume a slightly larger EBITDA loss for myDevices in FY21. We raise group revenue by 0.9% in FY21e and 1.0% in FY22e, with a 0.3% increase in EBITDA (pre-IFRS 16) in FY21e and 1.2% in FY22e.

Valuation: Sum-of-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. Using EV/sales multiples that reflect our views on the growth and profitability of each division and are conservative compared to the peer group averages, we calculate a valuation of €13.9 per share (up from €13.8 when we last wrote due to our revenue upgrades). In our view, consistent growth in revenues and margins towards the company’s FY23 targets will be key to reducing the discount to peers. Factors that could provide upside to our estimates include sustained high demand for photo printing, successful adoption of the FreePrints Gifts app in the US and Personal Creations in the UK and returning recent PlanetArt acquisitions to profitability.

Q321 revenue update

Exhibit 1: Revenues, nine months and Q3

Revenues (€m)

y-o-y

y-o-y

y-o-y

9M21

9M20

y-o-y

Constant currency

Organic

Constant currency organic

PlanetArt

306

236

30%

37%

20%

27%

Avanquest

65

68

-5%

-1%

-5%

-1%

myDevices

3

4

-14%

-8%

-14%

-8%

Total

373

307

22%

28%

14%

20%

Q321

Q320

PlanetArt

72

50

45%

55%

35%

42%

Avanquest

23

22

4%

7%

4%

7%

myDevices

1

1

-34%

-28%

-34%

-28%

Total

96

73

31%

39%

24%

30%

Source: Claranova

Claranova reported 31% revenue growth for Q321 and 22% growth for 9M21. On a cc basis, growth was 39% for Q321 and 28% for 9M21. PlanetArt acquired Personal Creations in August 2019 and CafePress in September 2020 – organic growth rates exclude July 2020 revenue for Personal Creations and revenue from September 2020 to March 2021 for CafePress. Although Avanquest acquired three businesses during the period (PDFescape, Gamulator and Kubadownload) the revenue contribution was not material.

PlanetArt generated 35% organic growth in Q321 and 20% growth for 9M21. Also adjusting for currency, organic growth was 42% in Q321 and 27% for 9M21, compared to 23% for H121 and 32% for Q121. This implies an acceleration in growth compared to the first two quarters of the year. The company noted the successful integration of Personal Creations and the subsequent launch of FreePrints Gifts in the US had helped revenue growth.

Avanquest saw a 4% increase in revenue in Q321, or 7% on a cc basis. For 9M21, revenue declined 5% or 1% on a cc basis. The company noted that the transition to subscription licensing was complete and made up more than three-quarters of new business for its three main proprietary products (PDF, security, photo). Recurring revenue increased to 60% in Q3, up from 56% in H121 and 54% in Q121. Non-strategic business (in particular physical software sales) continued to decline, whereas the remainder of the business grew at double-digits.

Changes to forecasts

We have made minor changes to our forecasts, increasing PlanetArt revenue assumptions for FY21 and FY22, and reducing slightly the contribution from Avanquest in both years and myDevices in FY21. EBITDA upside for PlanetArt is partially offset by myDevices in FY21, resulting in a minimal increase of €0.1m. In FY22, we raise our EBITDA forecast by €0.5m.

Exhibit 2: Changes to forecasts

€'m

FY21e

FY21e

FY22e

FY22e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

479.2

483.4

0.9%

18.2%

564.1

569.9

1.0%

17.9%

EBITDA

40.0

40.1

0.3%

94.8%

45.0

45.5

1.1%

13.4%

EBITDA margin

8.3%

8.3%

(0.0%)

3.3%

8.0%

8.0%

0.0%

(0.3%)

EBITDA - pre IFRS 16

36.4

36.5

0.3%

109.4%

41.4

41.9

1.2%

14.7%

EBITDA margin - pre IFRS 16

7.6%

7.6%

(0.0%)

3.3%

7.3%

7.4%

0.0%

(0.2%)

Normalised operating profit

35.1

35.2

0.4%

122.9%

40.1

40.6

1.3%

15.3%

Normalised operating profit margin

7.3%

7.3%

(0.0%)

3.4%

7.1%

7.1%

0.0%

(0.2%)

Reported operating profit

26.5

26.6

0.5%

241.4%

36.8

37.3

1.4%

40.1%

Reported operating margin

5.5%

5.5%

(0.0%)

3.6%

6.5%

6.5%

0.0%

1.0%

Normalised PBT

29.2

29.6

1.5%

161.8%

35.4

35.9

1.4%

21.2%

Reported PBT

20.6

21.0

2.1%

535.9%

32.1

32.6

1.6%

55.2%

Normalised net income

18.3

18.6

2.0%

133.0%

21.1

21.4

1.6%

15.1%

Reported net income

11.4

11.7

3.2%

2248.2%

18.6

18.9

1.8%

61.0%

Normalised basic EPS (€)

0.46

0.47

2.0%

132.2%

0.53

0.54

1.6%

14.6%

Normalised diluted EPS (€)

0.46

0.47

2.0%

133.0%

0.53

0.54

1.6%

15.1%

Reported basic EPS (€)

0.29

0.30

3.2%

2239.6%

0.47

0.48

1.8%

60.4%

Net debt/(cash)

(24.3)

(25.0)

2.8%

79.9%

(56.7)

(57.9)

2.0%

131.5%

Divisional revenues

PlanetArt

383.9

390.4

1.7%

24.3%

456.3

464.0

1.7%

18.8%

Avanquest

90.2

88.5

(2.0%)

(2.1%)

101.4

99.6

(1.8%)

12.6%

myDevices

5.1

4.5

(11.4%)

(6.8%)

6.3

6.3

0.0%

40.8%

Total

479.2

483.4

0.9%

18.1%

564.1

569.9

1.0%

17.9%

Divisional EBITDA

PlanetArt

28.3

28.7

1.4%

103.3%

31.3

31.8

1.6%

10.8%

Avanquest

10.5

10.5

0.0%

46.6%

13.3

13.3

0.0%

26.7%

myDevices

(2.4)

(2.7)

11.5%

(30.3%)

(3.2)

(3.2)

0.0%

19.6%

Total EBITDA - pre IFRS 16

36.4

36.5

0.3%

109.4%

41.4

41.9

1.2%

14.7%

Source: Edison Investment Research

Exhibit 3: Financial summary

€'m

2015

2016

2017

2018

2019

2020

2021e

2022e

Year end 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

483.4

569.9

EBITDA

 

 

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

40.1

45.5

Normalised operating profit

 

 

(11.4)

(16.0)

(5.8)

3.4

15.5

15.8

35.2

40.6

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)

(5.3)

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

26.6

37.3

Net Interest

1.1

(1.7)

(0.9)

(0.3)

(3.5)

(4.5)

(5.6)

(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

29.6

35.9

Profit Before Tax (reported)

 

 

5.3

(27.8)

(11.0)

(6.4)

(37.7)

3.3

21.0

32.6

Reported tax

(0.6)

(0.8)

(0.4)

(1.8)

(3.7)

(2.1)

(5.1)

(7.5)

Profit After Tax (norm)

(10.9)

(18.5)

(7.0)

2.4

9.2

8.7

22.8

27.6

Profit After Tax (reported)

4.7

(28.6)

(11.4)

(8.2)

(41.4)

1.2

15.9

25.1

Minority interests

(8.1)

0.0

0.3

0.2

0.6

(0.7)

(4.1)

(6.2)

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

18.6

21.4

Net income (reported)

(6.5)

(28.6)

(11.0)

(7.9)

(40.8)

0.5

11.7

18.9

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

0.47

0.54

EPS - diluted normalised (€)

 

 

(3.27)

(0.49)

(0.18)

0.06

0.25

0.20

0.47

0.54

EPS - basic reported (€)

 

 

(1.13)

(0.76)

(0.29)

(0.20)

(1.04)

0.01

0.30

0.48

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

#DIV/0!

26.1

10.9

24.0

62.4

56.0

18.2

17.9

EBITDA Margin (%)

-7.3

-7.9

-3.8

2.4

6.1

5.0

8.3

8.0

Normalised Operating Margin

-12.3

-13.7

-4.4

2.1

5.9

3.9

7.3

7.1

BALANCE SHEET

Fixed Assets

 

 

15.7

3.0

2.0

1.3

75.1

93.7

97.1

93.5

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

15.5

15.3

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

131.8

169.8

Stocks

5.9

5.0

3.7

3.7

4.8

14.4

17.0

20.1

Debtors

4.8

4.7

4.3

4.9

11.6

9.9

11.7

13.8

Cash & cash equivalents

30.5

11.1

17.1

65.7

75.4

82.8

93.9

126.8

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)

(77.6)

(87.0)

Creditors

(26.9)

(24.5)

(26.6)

(35.4)

(54.8)

(64.3)

(67.3)

(76.7)

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

78.2

103.3

Minority interests

0.0

0.0

(0.1)

(1.8)

(11.0)

(11.7)

(15.8)

(22.0)

Shareholders' equity

 

 

29.3

2.1

1.2

12.5

52.6

50.6

62.3

81.2

CASH FLOW

Op Cash Flow before WC and tax

(6.8)

(9.2)

(5.0)

3.9

16.0

20.6

40.1

45.5

Working capital

0.4

2.5

6.8

7.9

(4.1)

22.5

(1.4)

4.2

Exceptional & other

(3.8)

(4.3)

(2.2)

(5.7)

(5.2)

(6.3)

(5.3)

0.0

Tax

0.3

(0.3)

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(7.5)

Net operating cash flow

 

 

(9.8)

(11.3)

(0.4)

5.0

3.0

30.0

28.3

42.2

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)

(5.6)

(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

(3.6)

(3.6)

Net Cash Flow

29.0

(15.7)

5.0

20.1

(14.2)

(3.2)

11.1

32.9

Opening net debt/(cash)

 

 

18.0

(23.9)

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(25.0)

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)

(25.0)

(57.9)

Source: Claranova, Edison Investment Research


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Germany

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United Kingdom

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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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Australia

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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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