Currency in EUR
Last close As at 02/06/2023
EUR24.05
▲ −0.30 (−1.23%)
Market capitalisation
EUR157m
Research: TMT
CLIQ Digital is a leading European content provider, which has seen strong revenue growth and margin improvement in 2021, underpinned by its new media buying strategy. Customer growth throughout the year has been robust, supported by its attractive pricing model and extensive all-in-one platform. Enriching its platform’s content should be key to capturing the market opportunity and management has been successful in doing this so far in 2021, particularly in family, gaming and sport. Its Hype ventures minority acquisition in H121 had an immediate impact on EPS and should lead to a considerable rise in full year dividend given the group’s targeted 40% payout policy.
CLIQ Digital |
Capturing the market opportunity
Media |
Deutsches Eigenkapitalforum 2021
4 November 2021 |
Share price graph Share details
Business description
Bull
Bear
Analysts
CLIQ Digital is a research client of Edison Investment Research Limited |
CLIQ Digital is a leading European content provider, which has seen strong revenue growth and margin improvement in 2021, underpinned by its new media buying strategy. Customer growth throughout the year has been robust, supported by its attractive pricing model and extensive all-in-one platform. Enriching its platform’s content should be key to capturing the market opportunity and management has been successful in doing this so far in 2021, particularly in family, gaming and sport. Its Hype ventures minority acquisition in H121 had an immediate impact on EPS and should lead to a considerable rise in full year dividend given the group’s targeted 40% payout policy.
Raised guidance shows success of new strategy
On 17 September, management raised FY21 guidance and now expects to generate gross revenue of c €145m (previously at least €140m) and EBITDA of c €26m (previously c €22m), representing y-o-y growth of 36% and 63% respectively. CLIQ’s Q321 results indicate ytd growth has been driven by higher marketing spend and supported by its strategy of direct media buying rather than affiliate marketing. Through direct media buying, management can focus its marketing spend on audiences, which should deliver greater profitability by cutting out fees paid to affiliate partners. This was a driver of its 9M21 performance, where gross revenue and EBITDA rose by 34% y-o-y and 75% y-o-y respectively. Our current forecasts pre-date management’s raised guidance.
Robust interim results
Marketing spend, which directly influences its core key performance indicators, was up 41% y-o-y to €13.8m in Q3 and up +33% for 9M21. With direct media buying now contributing to most of its marketing spend at 76% (9M20: 55%), CLIQ was able to grow its EBITDA margin by 4pp at 9M21 to 18%. CLIQ factor, calculated by dividing average revenue per user for the next six months by the costs of acquiring them, was 1.63x in Q321, reflecting consistent q-o-q improvement in 2021. Enriched content on its all-in-one platform should further improve customer retention, helping grow its share of the niche all-in-one entertainment market.
Valuation: Strong share price performance
CLIQ’s share price is up 858% since the start of 2020 and up 64% ytd. On sales and EBIT, CLIQ trades on FY22e EV multiples of 1.0x and 5.6x, representing a discount of 66% and 78% respectively to our peer group.
Edison estimates
Source: CLIQ, Edison Investment Research. Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. |
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Research: Consumer
The strategic transformation of the iconic Fridays brand operations in the UK provides Hostmore with not only the prospect of strong earnings generation but the model for future investments on the Hostmore platform. Fridays’ own resources (a coherent strategy, robust finances and experienced management with a record of delivery) should marry well with growth opportunities on COVID-19 fallout, notably an unusually favourable property market and material reduction in competition. An EV/EBITDA of 6x FY22e and at a sharp discount to that of its peers (we estimate c 11x average) ignores Fridays’ strong rejuvenation prospects, backed by our forecast of 2022 financials already well ahead of pre-pandemic levels.
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