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Claranova — Flat revenue in a challenging year

Claranova (PAR: CLA)

Currency in EUR

Last close As at 09/06/2023

EUR1.85

▲ −0.02 (−1.07%)

Market capitalisation

EUR85m

More on this equity

Research: TMT

Claranova — Flat revenue in a challenging year

Claranova has reported Q422/FY22 revenue substantially in line with our forecast. The group reported revenue growth of 4% for Q422 and 1% for FY22. As has been the case year to date, a slower performance in PlanetArt has offset growth in Avanquest and myDevices to result in a relatively flat revenue for the full year. We have reduced our FY22 EBITDA forecast to reflect the revenue restatement and higher costs in PlanetArt.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

Flat revenue in a challenging year

Q422 revenue update

Software and comp services

10 August 2022

Price

€3.69

Market cap

€168m

US$1.02:€1

Net cash (€m) at end H122

1.8

Shares in issue

45.6m

Free float

80%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

3.1

19.1

(47.6)

Rel (local)

(4.0)

12.3

(44.5)

52-week high/low

€7.38

€2.85

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

FY22 results

12 October

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Claranova is a research client of Edison Investment Research Limited

Claranova has reported Q422/FY22 revenue substantially in line with our forecast. The group reported revenue growth of 4% for Q422 and 1% for FY22. As has been the case year to date, a slower performance in PlanetArt has offset growth in Avanquest and myDevices to result in a relatively flat revenue for the full year. We have reduced our FY22 EBITDA forecast to reflect the revenue restatement and higher costs in PlanetArt.

Year end

Revenue (€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/20

409.1

17.4

11.3

0.20

0

18.4

06/21

470.6

34.2

24.2

0.37

0

10.0

06/22e

472.8

29.6

19.6

0.32

0

11.7

06/23e

528.1

44.5

34.6

0.58

0

6.4

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

FY22 revenue broadly in line

Claranova reported revenue growth of 4% y-o-y for Q422 and 1% for FY22. Excluding the impact of currency and acquisitions, the group reported a 7% decline for both Q422 and FY22. As has been the case for Q122–Q322, PlanetArt growth was constrained (-12% constant currency organic) as the business looked for alternative customer acquisition channels after the Apple app privacy changes. Avanquest and myDevices saw strong growth for the year (+12% and +29% constant currency organic, respectively).

Estimates revised to reflect restatement and inflation

Avanquest FY21 and FY22 revenue has been restated to reflect IFRS 15 treatment of Soda PDF subscriptions, reducing revenue in both years by c €1m. This drops through to EBITDA, which we have reduced by the same amount. We have also reduced our PlanetArt EBITDA forecast for FY22 to reflect cost inflation. The company remains confident it will be able to achieve a group EBITDA margin of at least 10% for FY23 (we conservatively forecast an 8.4% margin). Claranova will report full FY22 results on 12 October.

Valuation: PlanetArt growth the trigger for upside

Reflecting the different business models for each division, we continue to use a sum-of-the-parts approach to valuation. Using EV/sales multiples that reflect our views on divisional growth and profitability and are conservative compared to the peer group averages, and reflecting the reduced forecasts for FY22, we reduce our valuation marginally from €7.90 to €7.85 per share. In our view, consistent growth in revenues and margins towards the company’s FY23/24 targets will be key to reducing the discount to peers. In the near term, resumption of growth in PlanetArt will be the key trigger.

Review of Q4 revenue update

Claranova reported Q422 revenue of €102m and FY22 revenue of €474m, slightly below our €475m forecast. The table below shows a summary of quarterly and annual revenue by division. We note that the company has restated Avanquest revenue, to recognise Soda PDF subscription revenue according to IFRS 15. This reduces FY21 and FY22 revenue by c €1m.

Exhibit 1: Divisional revenues

€m

Q422

Q421*

y-o-y

y-o-y

y-o-y

y-o-y

Reported

Constant currency

Organic

Constant currency organic

PlanetArt

76

75

1%

(9%)

(2%)

(11%)

Avanquest

25

23

9%

2%

9%

2%

myDevices

2

1

107%

88%

107%

88%

Total

102

98

4%

(5%)

2%

(7%)

FY22*

FY21*

y-o-y

y-o-y

y-o-y

y-o-y

Reported

Constant currency

Organic

Constant currency organic

PlanetArt

366

380

(4%)

(9%)

(7%)

(12%)

Avanquest

102

86

18%

12%

18%

12%

myDevices

5

4

36%

29%

36%

29%

Total

474

471

1%

(5%)

(2%)

(7%)

Source: Claranova. Note: *Q121-Q322 Avanquest revenue restated. Figures may not add due to rounding.

■

PlanetArt: the division reported a 1% y-o-y increase in revenue for Q422. On an organic basis, revenue declined 2% y-o-y, and on an organic constant currency basis, revenue was 11% lower y-o-y (compared to a 21% decline in Q322). The business continues to seek alternative customer acquisition channels since the introduction of Apple’s App Tracking Transparency function in Q421. The company continues to work to balance revenue growth and EBITDA profitability, and having invested to strengthen its teams and infrastructure over the last year believes it will emerge from this transition period stronger and return to a path of strong growth.

■

Avanquest: the division reported revenue growth of 9% y-o-y in Q422, or 2% on a constant currency organic basis. FY22 revenue growth on a constant currency organic basis was 12%. The company noted that its SaaS security and pdf software solutions generated stronger growth: Adaware FY22 revenue was €43m (+24% y-o-y on a reported basis), Soda PDF revenue was €27m (+26% y-o-y) and inPixio revenue was €8.2% (+18% y-o-y). This implies that the rest of the business declined at a reported rate of 8.5% in FY22.

■

myDevices: the division reported revenue growth of 107% y-o-y in Q422 or 88% on a constant currency organic basis. FY22, the division reported revenue growth of 36% or 29% on a constant currency organic basis. The division had annual recurring revenue of €2.4m at the end of FY22, 75% higher y-o-y on a reported basis. The number of partners distributing myDevices technology increased from 82 at the end of FY21 to 178 at the end of FY22 (+85% y-o-y).

Changes to forecasts

We have revised our forecasts to reflect reported FY22 revenue. As Avanquest revenue has been revised down by c €1m, we have reduced our divisional FY22 EBITDA forecast by the same amount. We have also reduced our H222 EBITDA forecast for PlanetArt, reflecting cost inflation in multiple areas.

Exhibit 2: Changes to forecasts

€'m

FY22e

FY22e

FY23e

FY23e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

474.7

472.8

(0.4%)

0.5%

530.6

528.1

(0.5%)

11.7%

EBITDA

37.6

33.7

(10.5%)

(7.8%)

48.5

48.5

0.0%

44.1%

EBITDA margin

7.9%

7.1%

(0.8%)

(0.6%)

9.1%

9.2%

0.0%

2.1%

EBITDA - pre IFRS 16

33.6

29.6

(11.9%)

(13.5%)

44.5

44.5

0.0%

50.4%

EBITDA margin - pre IFRS 16

7.1%

6.3%

(0.8%)

(1.0%)

8.4%

8.4%

0.0%

2.2%

Normalised operating profit

32.1

28.2

(12.3%)

(9.2%)

43.1

43.1

0.0%

53.1%

Normalised operating margin

6.8%

6.0%

(0.8%)

(0.6%)

8.1%

8.2%

0.0%

2.2%

Reported operating profit

28.9

25.0

(13.7%)

6.2%

40.0

40.0

0.0%

60.3%

Reported operating margin

6.1%

5.3%

(0.8%)

0.3%

7.5%

7.6%

0.0%

2.3%

Normalised PBT

23.6

19.6

(16.8%)

(19.0%)

34.6

34.6

0.0%

76.4%

Reported PBT

16.3

12.3

(24.3%)

(26.4%)

31.5

31.5

0.0%

155.8%

Normalised net income

17.4

14.3

(17.5%)

(2.2%)

26.7

26.7

(0.1%)

86.4%

Reported net income

8.6

5.4

(37.2%)

(41.0%)

24.3

24.3

(0.1%)

351.6%

Normalised basic EPS (€)

0.39

0.32

(17.5%)

(14.5%)

0.58

0.58

(0.1%)

83.2%

Normalised diluted EPS (€)

0.38

0.32

(17.5%)

(14.3%)

0.58

0.58

(0.1%)

83.2%

Reported basic EPS (€)

0.19

0.12

(37.2%)

(48.4%)

0.53

0.53

(0.1%)

343.9%

Net debt/(cash)

57.2

61.3

7.2%

(342.4%)

38.9

42.7

9.6%

(30.4%)

Divisional revenues

PlanetArt

366.9

366.4

(0.1%)

(3.7%)

400.2

399.7

(0.1%)

9.1%

Avanquest

103.0

101.1

(1.9%)

17.0%

123.9

121.9

(1.6%)

20.6%

myDevices

4.8

5.3

11.3%

37.4%

6.5

6.5

0.0%

22.9%

Total

474.7

472.8

(0.4%)

0.5%

530.6

528.1

(0.5%)

11.7%

Divisional EBITDA

PlanetArt

21.7

18.2

(16.1%)

(30.1%)

28.2

28.2

0.0%

55.1%

Avanquest

15.4

14.4

(6.5%)

32.5%

19.5

19.5

0.0%

35.0%

myDevices

(3.5)

(3.0)

(14.3%)

12.3%

(3.2)

(3.2)

0.0%

5.6%

Total EBITDA - pre IFRS 16

33.6

29.6

(11.9%)

(13.5%)

44.5

44.5

0.0%

50.4%

Source: Edison Investment Research


Exhibit 3: Financial summary

€'m

2017

2018

2019

2020

2021

2022e

2023e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

130.2

161.5

262.3

409.1

470.6

472.8

528.1

EBITDA

 

 

(5.0)

3.9

16.0

20.6

36.5

33.7

48.5

Company adjusted EBITDA

 

 

(5.0)

3.9

16.0

17.4

34.2

29.6

44.5

Normalised operating profit

 

 

(5.8)

3.4

15.5

15.8

31.0

28.2

43.1

Amortisation of acquired intangibles

0.0

0.0

(1.5)

(2.4)

(3.1)

(3.1)

(3.1)

Exceptionals

0.4

(2.4)

(2.9)

(5.6)

(4.4)

0.3

0.0

Share-based payments

(4.8)

(7.1)

0.3

0.0

0.0

(0.4)

0.0

Reported operating profit

(10.1)

(6.1)

11.4

7.8

23.5

25.0

40.0

Net Interest

(0.9)

(0.3)

(3.5)

(4.5)

(6.8)

(8.6)

(8.5)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

(45.6)

0.0

0.0

(4.1)

0.0

Profit Before Tax (norm)

 

 

(6.6)

3.1

12.0

11.3

24.2

19.6

34.6

Profit Before Tax (reported)

 

 

(11.0)

(6.4)

(37.7)

3.3

16.7

12.3

31.5

Reported tax

(0.4)

(1.8)

(3.7)

(2.1)

(3.8)

(6.2)

(7.2)

Profit After Tax (norm)

(7.0)

2.4

9.2

8.7

18.5

15.1

26.6

Profit After Tax (reported)

(11.4)

(8.2)

(41.4)

1.2

12.9

6.2

24.3

Minority interests

0.3

0.2

0.6

(0.7)

(3.8)

(0.8)

0.1

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(6.7)

2.6

9.8

8.0

14.7

14.3

26.7

Net income (reported)

(11.0)

(7.9)

(40.8)

0.5

9.1

5.4

24.3

Basic ave. number of shares outstanding (m)

38

39

39

39

39

45

46

EPS - basic normalised (€)

 

 

(0.18)

0.07

0.25

0.20

0.37

0.32

0.58

EPS - diluted normalised (€)

 

 

(0.18)

0.06

0.25

0.20

0.37

0.32

0.58

EPS - basic reported (€)

 

 

(0.29)

(0.20)

(1.04)

0.01

0.23

0.12

0.53

Dividend (€)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

10.9

24.0

62.4

56.0

15.0

0.5

11.7

EBITDA Margin (%)

-3.8

2.4

6.1

5.0

7.8

7.1

9.2

Company adjusted EBITDA margin (%)

-3.8

2.4

6.1

4.3

7.3

6.3

8.4

Normalised Operating Margin

-4.4

2.1

5.9

3.9

6.6

6.0

8.2

BALANCE SHEET

Fixed Assets

 

 

2.0

1.3

75.1

93.7

96.4

126.5

129.1

Intangible Assets

0.9

0.5

69.9

70.5

77.5

107.4

109.8

Tangible Assets

0.3

0.2

1.4

15.7

12.2

12.4

12.6

Investments & other

0.7

0.6

3.8

7.5

6.7

6.7

6.7

Current Assets

 

 

28.1

79.1

100.9

116.3

128.4

137.4

159.0

Stocks

3.7

3.7

4.8

14.4

16.1

16.2

18.1

Debtors

4.3

4.9

11.6

9.9

9.2

9.2

10.3

Cash & cash equivalents

17.1

65.7

75.4

82.8

90.4

99.3

117.9

Other

2.9

4.8

9.1

9.2

12.7

12.7

12.7

Current Liabilities

 

 

(28.1)

(37.2)

(60.5)

(74.6)

(75.4)

(79.7)

(85.8)

Creditors

(26.6)

(35.4)

(54.8)

(64.3)

(62.5)

(66.8)

(72.9)

Tax and social security

(0.3)

(1.7)

(3.0)

(1.2)

(2.0)

(2.0)

(2.0)

Short term borrowings

(1.1)

(0.1)

(2.7)

(6.1)

(7.7)

(7.7)

(7.7)

Other

0.0

0.0

0.0

(3.0)

(3.2)

(3.2)

(3.2)

Long Term Liabilities

 

 

(0.7)

(29.0)

(52.0)

(73.1)

(66.3)

(161.8)

(161.8)

Long term borrowings

0.0

(28.1)

(49.1)

(62.8)

(57.4)

(152.9)

(152.9)

Other long term liabilities

(0.7)

(0.9)

(2.9)

(10.3)

(8.9)

(8.9)

(8.9)

Net Assets

 

 

1.3

14.2

63.6

62.3

83.1

22.4

40.5

Minority interests

(0.1)

(1.8)

(11.0)

(11.7)

(16.2)

6.9

13.1

Shareholders' equity

 

 

1.2

12.5

52.6

50.6

66.9

29.3

53.6

CASH FLOW

Op Cash Flow before WC and tax

(5.0)

3.9

16.0

20.6

36.5

33.7

48.5

Working capital

6.8

7.9

(4.1)

22.5

(4.4)

4.2

3.1

Exceptional & other

(2.2)

(5.7)

(5.2)

(6.3)

(8.9)

(2.5)

0.0

Tax

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(6.2)

(7.2)

Net operating cash flow

 

 

(0.4)

5.0

3.0

30.0

18.1

29.2

44.4

Capex

(0.2)

(0.1)

(2.5)

(1.2)

(3.8)

(2.0)

(2.0)

Acquisitions/disposals

3.6

14.2

(13.3)

(31.9)

(3.8)

(94.7)

(11.6)

Net interest

(0.0)

(0.3)

0.0

(0.5)

(0.7)

(5.8)

(8.5)

Equity financing

1.9

2.0

(1.4)

0.0

2.4

13.9

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.1

(0.6)

0.0

0.4

(2.6)

0.4

(3.6)

Net Cash Flow

5.0

20.1

(14.2)

(3.2)

9.8

(58.9)

18.6

Opening net debt/(cash)

 

 

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(24.0)

61.3

FX

(0.6)

0.4

0.3

(0.8)

1.8

(2.8)

0.0

Other non-cash movements

1.8

1.1

0.0

(5.7)

(1.4)

(23.6)

0.0

Closing net debt/(cash)

 

 

(16.0)

(37.5)

(23.6)

(13.9)

(24.0)

61.3

42.7

Source: Claranova, Edison Investment Research

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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.

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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

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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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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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