CLIQ Digital — Bundled content driving sales and profit growth

CLIQ Digital (SCALE: CLIQ)

Last close As at 20/04/2024

EUR14.20

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EUR93m

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Research: TMT

CLIQ Digital — Bundled content driving sales and profit growth

CLIQ Digital had a very strong start to FY23, with a 58% y-o-y revenue uplift in Q123 (to €83m) and an EBITDA margin of 15.4% (Q122: 15.8%). Raised levels of marketing spend continue to drive momentum, generating growth in both the lifetime value of the customer base (LTVCB) and in the number of paid members. CLIQ is inherently highly cash generative and net cash was €10.9m at the quarter-end. Management has reiterated both FY23 and mid-term 2025 sales guidance, and our forecasts are unchanged, underpinned by the strong Q123 performance. CLIQ’s valuation remains at a significant discount to peers on EV/sales and EV/EBITDA multiples, with substantial potential upside to the current share price on current estimates, in our view.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

Hello - cliq

TMT

CLIQ Digital

Bundled content driving sales and profit growth

Q123 results

Media

5 May 2023

Price

€26.65

Market cap

€173m

Net cash (€m) at 31 March 2023

10.9

Shares in issue

6.5m

Free float

89%

Code

CLIQ

Primary exchange

XTRA

Secondary exchange

FRA

Share price performance

%

1m

3m

12m

Abs

(10.6)

(13.3)

(4.6)

Rel (local)

(11.3)

(14.7)

(15.3)

52-week high/low

€32.85

€16.62

Business description

CLIQ Digital sells subscription-based streaming services that bundle movies and series, music, audiobooks, sports and games to consumers globally. In Q123, 40% of sales were generated in Europe, 53% in North America and 7% in other regions.

Next events

H123 results

3 August 2023

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5700

Milo Bussell

+44 (0)20 3077 5700

CLIQ Digital is a research client of Edison Investment Research Limited

CLIQ Digital had a very strong start to FY23, with a 58% y-o-y revenue uplift in Q123 (to €83m) and an EBITDA margin of 15.4% (Q122: 15.8%). Raised levels of marketing spend continue to drive momentum, generating growth in both the lifetime value of the customer base (LTVCB) and in the number of paid members. CLIQ is inherently highly cash generative and net cash was €10.9m at the quarter-end. Management has reiterated both FY23 and mid-term 2025 sales guidance, and our forecasts are unchanged, underpinned by the strong Q123 performance. CLIQ’s valuation remains at a significant discount to peers on EV/sales and EV/EBITDA multiples, with substantial potential upside to the current share price on current estimates, in our view.

Year
end

Revenue
(€m)

EBITDA*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/21

150.0

27.2

2.71

1.10

9.8

4.1

12/22

276.1

43.5

4.45

1.79

6.0

6.7

12/23e

345.0

51.0

4.99

2.02

5.3

7.6

12/24e

400.2

59.4

5.84

2.37

4.6

8.9

Note: *EBITDA and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Robust growth with strong cash generation

We are encouraged by the continued progress made in both North America and Europe, which each delivered revenue +57%, as well as in Latin America, which delivered €3m of revenue, having launched in Q422. The shift to bundled content (93% of revenue from 82% in Q122) should create a stickier subscriber base with more sustainable long-term growth potential, provided content benefits from continued investment to keep it fresh and attractive. Management has reiterated guidance, continuing to expect revenue of €345m and EBITDA of at least €50m in FY23. We believe that a backdrop of constrained household budgets should be broadly positive for CLIQ.

Operational improvements in Q123

CLIQ has continued to develop and upgrade its bundled content offering, including the licensing of over 50 Hollywood films and ATP World Tour events in the DACH region. In Q123 CLIQ also launched the advertising campaign for its relatively new, low-cost bundled-content subscription service cliq.de, which included both TV and out of home adverts. In April 2023 CLIQ terminated its previous loan facility and has entered into a new smaller overdraft facility with HSBC, providing up to €15m with better conditions.

Valuation: Significant potential upside

CLIQ’s share price has gained c 3% in the year to date, against the peer median gain of 2%. Peer multiples have, however, dipped over this period, reflecting some amelioration in consensus estimates. CLIQ continues to trade at a significant discount to peers across median FY23 and FY24 EV/sales and EV/EBITDA multiples. Parity to the median EV/sales multiple would equate to an implied share price of €58, reflecting significant potential upside, in our view.

Exhibit 1: Financial summary

€m

2020

2021

2022

2023e

2024e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

107.0

150.0

276.1

345.0

400.2

Cost of Sales

(72.0)

(98.8)

(201.3)

(256.1)

(297.1)

Gross Profit

34.9

51.2

74.8

88.9

103.1

EBITDA

 

15.9

27.2

43.5

51.0

59.4

Operating profit (before amort. and excepts.)

 

15.2

26.3

42.1

49.7

58.1

Reported operating profit

15.2

26.3

42.1

49.7

58.1

Net Interest

(0.8)

(0.9)

(1.2)

(0.8)

(0.8)

Profit Before Tax (norm)

 

14.4

25.3

40.9

48.9

57.3

Profit Before Tax (reported)

 

14.4

25.3

40.9

48.9

57.3

Reported tax

(4.0)

(7.1)

(11.9)

(15.3)

(17.9)

Profit After Tax (norm)

10.4

18.2

29.0

33.6

39.4

Profit After Tax (reported)

10.4

18.2

29.0

33.6

39.4

Minority interests

3.3

0.4

(0.1)

0.7

0.9

Net income (normalised)

7.2

17.8

29.1

32.9

38.5

Net income (reported)

7.2

17.8

29.0

32.9

38.5

Average Number of Shares Outstanding (m)

6.2

6.5

6.5

6.5

6.5

EPS - normalised (€)

 

1.16

2.74

4.47

5.06

5.92

EPS - normalised fully diluted (€)

 

1.16

2.71

4.45

4.99

5.84

Dividend (€)

0.46

1.10

1.79

2.02

2.37

Revenue growth (%)

69.4

40.2

84.1

25.0

16.0

Gross Margin (%)

32.7

34.1

27.1

25.8

25.8

EBITDA Margin (%)

14.9

18.1

15.8

14.8

14.8

Normalised Operating Margin

14.2

17.5

15.2

14.4

14.5

BALANCE SHEET

Fixed Assets

 

55.2

59.4

65.1

74.2

83.2

Intangible Assets

0.8

2.6

8.4

15.7

23.8

Tangible Assets

2.2

3.8

5.0

6.5

7.3

Goodwill & other

52.3

53.0

51.7

51.9

52.1

Current Assets

 

21.7

36.9

70.0

94.2

122.3

Receivables

9.1

12.5

13.6

18.9

27.4

Cash & cash equivalents

4.9

7.3

16.8

26.9

36.4

Other

7.7

17.1

39.6

48.4

58.6

Current Liabilities

 

(12.9)

(27.3)

(31.2)

(36.1)

(40.9)

Creditors

(2.0)

(7.9)

(9.5)

(14.0)

(18.0)

Tax

(3.2)

(1.2)

(2.6)

(3.9)

(5.0)

Borrowings

0.0

(5.0)

0.0

0.0

0.0

Provisions

(0.4)

(0.4)

(0.4)

(0.4)

(0.4)

Other

(7.3)

(12.8)

(18.7)

(17.9)

(17.5)

Long Term Liabilities

 

(8.5)

(9.4)

(22.6)

(25.3)

(29.2)

Long term borrowings

(3.8)

0.0

(6.6)

(6.4)

(6.2)

Other long term liabilities

(4.7)

(9.4)

(16.0)

(19.0)

(23.0)

Net Assets

 

55.6

59.6

81.3

106.9

135.5

Minority interests

4.8

0.0

(0.1)

0.7

1.5

Shareholders equity

 

50.8

59.5

81.4

106.3

133.9

CASH FLOW

Operating Cash Flow

15.1

26.8

44.9

50.2

58.6

Working capital

1.6

(1.2)

(18.1)

(0.8)

(4.5)

Exceptional & other

0.9

1.3

1.6

2.8

2.8

Tax

(2.8)

(6.1)

(3.4)

(16.1)

(18.7)

Operating cash flow

 

14.8

20.8

25.0

36.2

38.2

Capex

(0.7)

(3.3)

(9.6)

(11.1)

(12.2)

Acquisitions/disposals

0.0

(10.3)

1.5

0.0

0.0

Net interest

0.0

0.0

0.0

0.0

0.0

Equity financing

0.0

0.0

0.0

0.0

0.0

Dividends

(2.1)

(3.3)

(7.2)

(13.2)

(15.4)

Other

(1.5)

(2.5)

(1.0)

(1.4)

(0.9)

Net Cash Flow

10.5

1.4

8.9

10.4

9.6

Opening net debt/(cash)

 

9.6

(0.9)

(2.3)

(9.9)

(20.3)

FX

(0.0)

0.0

(0.1)

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)*

 

(0.9)

(2.3)

(9.9)

(20.3)

(30.0)

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by CLIQ Digital and prepared and issued by Edison, in consideration of a fee payable by CLIQ Digital. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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.

London │ New York │ Frankfurt

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London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by CLIQ Digital and prepared and issued by Edison, in consideration of a fee payable by CLIQ Digital. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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