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Research: TMT
CLIQ Digital has lowered its financial outlook for FY24 due to the transition to new sales channels in H124. This was coupled with elevated churn following a change in refund programmes from credit card providers, flagged in Q124, which allows subscribers to cancel more easily. The transition to the ‘Magnificent Seven’ sales channels, which aims to diversify CLIQ’s marketing channels from traditional display advertising to search engine advertising, affiliation and business-to-business (B2B) partnerships, has meant new customer acquisitions have been slower than previously anticipated. We have cut our FY24 forecasts, which are now towards the lower end of management’s guidance. Our reduced FY25 revenue estimate is below company guidance; we will review our forecasts with subsequent trading updates.
Written by
CLIQ Digital |
FY24 outlook weakened |
Updated forecasts |
Media |
31 July 2024 |
Share price performance
Business description
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Analysts
CLIQ Digital is a research client of Edison Investment Research Limited |
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CLIQ Digital has lowered its financial outlook for FY24 due to the transition to new sales channels in H124. This was coupled with elevated churn following a change in refund programmes from credit card providers, flagged in Q124, which allows subscribers to cancel more easily. The transition to the ‘Magnificent Seven’ sales channels, which aims to diversify CLIQ’s marketing channels from traditional display advertising to search engine advertising, affiliation and business-to-business (B2B) partnerships, has meant new customer acquisitions have been slower than previously anticipated. We have cut our FY24 forecasts, which are now towards the lower end of management’s guidance. Our reduced FY25 revenue estimate is below company guidance; we will review our forecasts with subsequent trading updates.
Year end |
Revenue (€m) |
EBITDA* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
276.1 |
43.5 |
4.47 |
1.79 |
1.4 |
29.5 |
12/23 |
326.4 |
50.3 |
4.91 |
0.00 |
1.2 |
N/A |
12/24e |
261.5 |
10.0 |
0.44 |
0.04 |
13.7 |
0.7 |
12/25e |
282.5 |
18.4 |
1.38 |
0.00 |
4.4 |
N/A |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Slow Q224 results in lower full year guidance
CLIQ has downgraded its FY24 guidance, following a weaker-than-expected performance in Q224. Management expects revenue for Q224 to be c €68m (Q223: €77m), indicating a c 12% drop in H124 revenues to c €141m (H123: €160m). For the full year, revenue is now expected within a range of €260–280m, reflecting a downgrade of 13–15%, while EBITDA is now anticipated at between €10m and €20m, 33–62% lower than previously expected. For FY25, management’s new guidance is for revenues of c €325m, while its mid-term expectations have been lowered to more than €400m in FY27, down from €500m in FY26 previously.
Lowering of forecasts
Having downgraded our figures post Q124, we have again downgraded our estimates to reflect management’s updated guidance. We lower our FY24 and FY25 revenue estimates by 14% in each year to €261.5m and €282.5m, respectively. We lower our EBITDA estimates by 62% to €10.0m in FY24 and by 38% to €18.4m in FY25, reflecting margins of 3.8% in FY24 and 6.5% in FY25. We expect the benefits of the transformation programme to begin to bear fruit towards Q424, hence the expected year-on-year uplift in margin. As a result of our changes, our FY24 expected net cash position has reduced to €10.4m (previously €16.5m), driven by the lower profit. In FY25 we expect a slight increase in net cash to €11.0m as the improvement in profit is coupled with lower spend on content.
Valuation: Significant year-to-date decline
Following the news, CLIQ’s share price has fallen 70% in the year-to-date. The considerable discount to peers reflects the recent trading and newsflow, but we would expect this to begin to narrow as CLIQ delivers against guidance.
Exhibit 1: Financial summary
€'m |
2021 |
2022 |
2023 |
2024e |
2025e |
|
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
|
INCOME STATEMENT |
||||||
Revenue |
|
150.0 |
276.1 |
326.4 |
261.5 |
282.5 |
Cost of Sales |
(98.8) |
(201.3) |
(241.7) |
(212.5) |
(222.9) |
|
Gross Profit |
51.2 |
74.8 |
84.6 |
49.0 |
59.6 |
|
EBITDA |
|
27.2 |
43.5 |
50.3 |
10.0 |
18.4 |
Operating profit (before amort. and excepts.) |
|
26.3 |
42.1 |
45.9 |
5.0 |
13.3 |
Reported operating profit |
26.3 |
42.1 |
45.9 |
5.0 |
13.3 |
|
Net Interest |
(0.9) |
(1.2) |
(0.9) |
(0.9) |
(0.9) |
|
Profit Before Tax (norm) |
|
25.3 |
40.9 |
45.0 |
4.1 |
12.4 |
Profit Before Tax (reported) |
|
25.3 |
40.9 |
45.0 |
4.1 |
12.4 |
Reported tax |
(7.1) |
(11.9) |
(13.2) |
(1.3) |
(3.9) |
|
Profit After Tax (norm) |
18.2 |
29.0 |
32.0 |
2.8 |
8.6 |
|
Profit After Tax (reported) |
18.2 |
29.0 |
31.8 |
2.8 |
8.6 |
|
Minority interests |
0.4 |
(0.1) |
(0.0) |
0.1 |
0.2 |
|
Net income (normalised) |
17.8 |
29.1 |
32.0 |
2.8 |
8.4 |
|
Net income (reported) |
17.8 |
29.0 |
31.8 |
2.8 |
8.4 |
|
Average Number of Shares Outstanding (m) |
6.5 |
6.5 |
6.5 |
6.5 |
6.4 |
|
EPS - normalised (€) |
|
2.74 |
4.47 |
4.91 |
0.44 |
1.38 |
EPS - normalised fully diluted (€) |
|
2.71 |
4.45 |
4.84 |
0.44 |
1.36 |
Dividend (€) |
1.10 |
1.79 |
0.00 |
0.04 |
0.00 |
|
Revenue growth (%) |
40.2 |
84.1 |
18.2 |
(19.9) |
8.0 |
|
Gross Margin (%) |
34.1 |
27.1 |
25.9 |
18.7 |
21.1 |
|
EBITDA Margin (%) |
18.1 |
15.8 |
15.4 |
3.8 |
6.5 |
|
Normalised Operating Margin (%) |
17.5 |
15.2 |
14.1 |
1.9 |
4.7 |
|
BALANCE SHEET |
||||||
Fixed Assets |
|
59.4 |
65.1 |
69.9 |
75.5 |
80.5 |
Intangible Assets |
2.6 |
8.4 |
12.1 |
18.1 |
23.4 |
|
Tangible Assets |
3.8 |
5.0 |
4.0 |
3.5 |
3.0 |
|
Goodwill & other |
53.0 |
51.7 |
53.8 |
54.0 |
54.2 |
|
Current Assets |
|
36.9 |
70.0 |
84.8 |
73.9 |
77.3 |
Receivables |
12.5 |
13.6 |
20.5 |
25.1 |
34.0 |
|
Cash & cash equivalents |
7.3 |
16.8 |
15.7 |
10.4 |
11.0 |
|
Other |
17.1 |
39.6 |
48.5 |
38.4 |
32.2 |
|
Current Liabilities |
|
(27.3) |
(31.2) |
(33.9) |
(35.5) |
(39.3) |
Creditors |
(7.9) |
(9.5) |
(13.1) |
(15.2) |
(19.3) |
|
Tax |
(1.2) |
(2.6) |
(6.9) |
(6.9) |
(6.9) |
|
Borrowings |
(5.0) |
0.0 |
0.0 |
0.0 |
0.0 |
|
Provisions |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
|
Other |
(12.8) |
(18.7) |
(13.5) |
(13.1) |
(12.8) |
|
Long Term Liabilities |
|
(9.4) |
(22.6) |
(17.7) |
(21.6) |
(21.5) |
Long term borrowings |
0.0 |
(6.6) |
0.0 |
0.0 |
0.0 |
|
Other long term liabilities |
(9.4) |
(16.0) |
(17.7) |
(21.6) |
(21.5) |
|
Net Assets |
|
59.6 |
81.3 |
103.1 |
92.3 |
97.0 |
Minority interests |
0.0 |
(0.1) |
(0.1) |
(0.0) |
0.2 |
|
Shareholders equity |
|
59.5 |
81.4 |
103.2 |
92.3 |
96.8 |
CASH FLOW |
||||||
Operating Cash Flow |
26.8 |
44.9 |
53.2 |
9.2 |
17.5 |
|
Working capital |
(1.2) |
(18.1) |
(19.9) |
(2.5) |
(4.9) |
|
Exceptional & other |
1.3 |
0.4 |
2.4 |
0.9 |
0.9 |
|
Tax & interest |
(6.1) |
(3.4) |
(5.3) |
(2.2) |
(4.8) |
|
Operating cash flow |
|
20.8 |
23.8 |
30.4 |
5.4 |
8.7 |
Capex |
(3.3) |
(9.6) |
(10.7) |
(8.6) |
(7.7) |
|
Acquisitions/disposals |
(10.3) |
1.5 |
(0.2) |
0.0 |
0.0 |
|
Equity financing |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Dividends |
(3.3) |
(7.2) |
(11.6) |
(0.3) |
0.0 |
|
Other |
(2.5) |
(0.9) |
(2.0) |
(0.8) |
(0.4) |
|
Net Cash Flow |
1.4 |
7.7 |
5.8 |
(4.2) |
0.6 |
|
Opening net debt/(cash) |
|
(0.9) |
(2.3) |
(9.9) |
(15.7) |
(10.4) |
FX |
0.0 |
(0.1) |
(0.0) |
0.0 |
0.0 |
|
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Closing net debt/(cash) |
|
(2.3) |
(9.9) |
(15.7) |
(10.4) |
(11.0) |
Source: CLIQ Digital, Edison Investment Research
|
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Research: Investment Companies
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