Claranova — Growth targets maintained

Claranova (PAR: CLA)

Last close As at 20/05/2024

EUR2.26

−0.03 (−1.09%)

Market capitalisation

EUR132m

More on this equity

Research: TMT

Claranova — Growth targets maintained

Claranova reported Q323 revenue of €91m, which was 2% higher y-o-y on a constant currency organic basis. PlanetArt revenue was lower than expected due to a focus on profitability versus growth, while Avanquest and myDevices both grew at double-digit rates in the quarter. Management has maintained its FY23 guidance for revenue and EBITDA growth. We have revised down our revenue forecasts to reflect lower growth for PlanetArt but we maintain our EBITDA forecasts for FY23 and FY24.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Claranova

Growth targets maintained

Q323 revenue update

Software and comp services

12 May 2023

Price

€2.13

Market cap

€97m

$1.094:€1

Net debt (€m) at end H123

64.8

Shares in issue

45.5m

Free float

84%

Code

CLA

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.6

(7.6)

(27.6)

Rel (local)

7.7

(10.2)

(37.4)

52-week high/low

€3.93

€1.87

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, France, and it has operations in Europe, the United States and Canada.

Next events

Q423 revenue update

2 August

Analyst

Katherine Thompson

+44 (0)20 3077 5700

Claranova is a research client of Edison Investment Research Limited

Claranova reported Q323 revenue of €91m, which was 2% higher y-o-y on a constant currency organic basis. PlanetArt revenue was lower than expected due to a focus on profitability versus growth, while Avanquest and myDevices both grew at double-digit rates in the quarter. Management has maintained its FY23 guidance for revenue and EBITDA growth. We have revised down our revenue forecasts to reflect lower growth for PlanetArt but we maintain our EBITDA forecasts for FY23 and FY24.

Year

end

Revenue
(€m)

EBITDA*
(€m)

PBT**
(€m)

Diluted EPS**
(€)

DPS
(€)

P/E
(x)

06/21

470.6

32.9

24.2

0.37

0

5.7

06/22

473.7

25.5

7.2

0.11

0

19.9

06/23e

516.8

31.8

9.8

0.16

0

13.0

06/24e

541.8

43.8

22.3

0.34

0

6.3

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

Q323 underlying revenue growth 2% y-o-y

Claranova reported Q323 revenue of €91m, flat y-o-y and up 2% on a constant currency (cc) organic basis. For the nine months to 31 March (9M23), Claranova reported revenue of €405m, up 9% on a reported basis and 2% on a cc organic basis. For Q323, PlanetArt revenue of €60m was down 6% y-o-y or 2% on a cc basis. The company noted that the focus in the quarter was on profitability rather than growth, including stabilising customer acquisition costs and focusing on higher margin products. Avanquest Q3 revenue of €29m was 13% higher y-o-y or 8% on a cc organic basis, with acquisitions contributing 6% of growth. The company noted that lower margin non-core revenues had declined to 17% of divisional revenue by the end of Q323. myDevices revenue of €2m was 53% higher y-o-y or 44% cc with annual recurring revenue of €3m at quarter-end (+37% y-o-y cc).

Reducing revenue but maintaining EBITDA forecasts

The company reiterated its guidance for revenue growth of 10% and EBITDA growth of 25–30% for FY23. We have revised down our revenue forecasts for PlanetArt to reflect the focus on profitable growth but overall we maintain our EBITDA forecasts for FY23 and FY24.

Valuation: Sustained profitable growth is key

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, we maintain our €7.4 per share valuation. In our view, consistent growth in revenues and margins towards Claranova’s FY24 targets will be fundamental to reducing the discount to peers. In the near term, sustained growth in PlanetArt (while balancing profitability) will be the key trigger.

Changes to forecasts

Exhibit 1: Changes to estimates

€'m

FY23e

FY23e

FY24e

FY24e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

526.5

516.8

(1.9%)

9.1%

552.6

541.8

(2.0%)

4.8%

EBITDA

36.0

36.0

0.0%

27.4%

48.0

48.1

0.0%

33.5%

EBITDA margin

6.8%

7.0%

0.1%

1.0%

8.7%

8.9%

0.2%

1.9%

EBITDA – pre IFRS 16

31.8

31.8

0.2%

24.8%

43.8

43.8

(0.1%)

37.6%

EBITDA margin pre IFRS 16

6.0%

6.2%

0.1%

0.8%

7.9%

8.1%

0.1%

1.9%

Normalised operating profit

31.0

31.0

0.0%

31.1%

43.0

43.1

0.0%

38.9%

Normalised operating margin

5.9%

6.0%

0.1%

1.0%

7.8%

7.9%

0.2%

1.9%

Reported operating profit

23.8

23.8

0.0%

32.6%

38.3

38.4

0.0%

61.1%

Reported operating margin

4.5%

4.6%

0.1%

0.8%

6.9%

7.1%

0.1%

2.5%

Normalised PBT

9.8

9.8

0.1%

36.7%

22.3

22.3

0.0%

127.9%

Reported PBT

2.6

2.6

0.4%

(160.6%)

17.6

17.6

0.0%

582.4%

Normalised net income

8.2

8.2

(0.5%)

63.5%

16.8

16.8

0.1%

105.2%

Reported net income

(1.2)

(1.2)

3.5%

(88.6%)

13.2

13.2

0.2%

(1206.8%)

Normalised basic EPS (€)

0.18

0.18

(0.5%)

52.7%

0.37

0.37

0.1%

105.5%

Normalised diluted EPS (€)

0.17

0.16

(0.5%)

53.7%

0.34

0.34

0.1%

105.4%

Reported basic EPS (€)

(0.03)

(0.03)

3.5%

(89.4%)

0.29

0.29

0.2%

(1208.1%)

Net debt/(cash)

90.7

91.8

1.2%

28.9%

84.0

85.2

1.4%

(7.2%)

Net debt/EBITDA (x)

2.9

2.9

1.9

1.9

Divisional revenues

PlanetArt

400.6

390.7

(2.5%)

6.7%

412.3

402.1

(2.5%)

2.9%

Avanquest

119.8

119.5

(0.3%)

16.8%

133.4

132.7

(0.5%)

11.1%

myDevices

6.2

6.6

7.6%

27.6%

6.9

7.0

0.7%

5.2%

Total

526.5

516.8

(1.9%)

9.1%

552.6

541.8

(2.0%)

4.8%

Divisional EBITDA

PlanetArt

17.0

16.9

(0.6%)

3.8%

21.8

21.8

0.0%

29.0%

Avanquest

16.8

16.8

0.0%

44.3%

22.5

22.5

0.0%

33.9%

myDevices

(2.1)

(1.9)

(8.3%)

(22.3%)

(.5)

(0.5)

10.6%

(72.3%)

Total EBITDA – pre IFRS 16

31.8

31.8

0.2%

24.8%

43.83

43.8

(0.1%)

37.6%

Source: Edison Investment Research

Exhibit 2: Financial summary

€'m

2017

2018

2019

2020

2021

2022

2023e

2024e

30-June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

130.2

161.5

262.3

409.1

470.6

473.7

516.8

541.8

EBITDA

 

 

(5.0)

3.9

16.0

20.6

36.5

28.3

36.0

48.1

Company adjusted EBITDA

 

 

(5.0)

3.9

16.0

17.4

32.9

25.5

31.8

43.8

Normalised operating profit

 

 

(5.8)

3.4

15.5

15.8

31.0

23.7

31.0

43.1

Amortisation of acquired intangibles

0.0

0.0

(1.5)

(2.4)

(3.1)

(3.8)

(4.5)

(4.7)

Exceptionals

0.4

(2.4)

(2.9)

(5.6)

(4.4)

(0.7)

(2.2)

0.0

Share-based payments

(4.8)

(7.1)

0.3

0.0

0.0

(1.2)

(0.5)

0.0

Reported operating profit

(10.1)

(6.1)

11.4

7.8

23.5

18.0

23.8

38.4

Net Interest

(0.9)

(0.3)

(3.5)

(4.5)

(6.8)

(16.5)

(21.2)

(20.8)

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

(45.6)

0.0

0.0

(5.7)

0.0

0.0

Profit Before Tax (norm)

 

 

(6.6)

3.1

12.0

11.3

24.2

7.2

9.8

22.3

Profit Before Tax (reported)

 

 

(11.0)

(6.4)

(37.7)

3.3

16.7

(4.2)

2.6

17.6

Reported tax

(0.4)

(1.8)

(3.7)

(2.1)

(3.5)

(5.7)

(4.4)

(4.0)

Profit After Tax (norm)

(7.0)

2.4

9.2

8.7

18.6

5.5

7.5

17.2

Profit After Tax (reported)

(11.4)

(8.2)

(41.4)

1.2

13.2

(10.0)

(1.9)

13.5

Minority interests

0.3

0.2

0.6

(0.7)

(3.7)

(0.5)

0.7

(0.3)

Discontinued operations

0.0

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

14.9

5.0

8.2

16.8

Net income (reported)

(11.0)

(7.9)

(40.8)

0.5

9.5

(10.5)

(1.2)

13.2

Basic ave. number of shares outstanding (m)

38

39

39

39

39

43

46

46

EPS - basic normalised (€)

 

 

(0.18)

0.07

0.25

0.20

0.38

0.12

0.18

0.37

EPS - diluted normalised (€)

 

 

(0.18)

0.06

0.25

0.20

0.37

0.11

0.16

0.34

EPS - basic reported (€)

 

 

(0.29)

(0.20)

(1.04)

0.01

0.24

(0.25)

(0.03)

0.29

Dividend (€)

0.00

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

0.7

9.1

4.8

EBITDA Margin (%)

-3.8

2.4

6.1

5.0

7.7

6.0

7.0

8.9

Company adjusted EBITDA margin (%)

-3.8

2.4

6.1

4.3

7.0

5.4

6.2

8.1

Normalised Operating Margin

-4.4

2.1

5.9

3.9

6.6

5.0

6.0

7.9

BALANCE SHEET

Fixed Assets

 

 

2.0

1.3

75.1

93.7

96.6

123.3

147.9

143.8

Intangible Assets

0.9

0.5

69.9

70.5

77.5

96.6

120.6

115.9

Tangible Assets

0.3

0.2

1.4

15.7

12.2

18.2

18.8

19.4

Investments & other

0.7

0.6

3.8

7.5

6.9

8.5

8.5

8.5

Current Assets

 

 

28.1

79.1

100.9

116.3

128.4

146.7

152.8

145.7

Stocks

3.7

3.7

4.8

14.4

16.1

22.0

24.0

25.2

Debtors

4.3

4.9

11.6

9.9

9.2

8.3

9.1

9.5

Cash & cash equivalents

17.1

65.7

75.4

82.8

90.4

100.3

103.7

94.9

Other

2.9

4.8

9.1

9.2

12.7

16.1

16.1

16.1

Current Liabilities

 

 

(28.1)

(37.2)

(60.5)

(74.6)

(76.7)

(106.0)

(112.4)

(114.7)

Creditors

(26.6)

(35.4)

(54.8)

(64.3)

(63.8)

(78.1)

(84.5)

(86.8)

Tax and social security

(0.3)

(1.7)

(3.0)

(1.2)

(2.0)

(1.9)

(1.9)

(1.9)

Short term borrowings

(1.1)

(0.1)

(2.7)

(6.1)

(7.7)

(22.6)

(22.6)

(22.6)

Other

0.0

0.0

0.0

(3.0)

(3.2)

(3.4)

(3.4)

(3.4)

Long Term Liabilities

 

 

(0.7)

(29.0)

(52.0)

(73.1)

(66.1)

(162.3)

(186.3)

(170.9)

Long term borrowings

0.0

(28.1)

(49.1)

(62.8)

(57.4)

(148.9)

(172.9)

(157.5)

Other long term liabilities

(0.7)

(0.9)

(2.9)

(10.3)

(8.7)

(13.4)

(13.4)

(13.4)

Net Assets

 

 

1.3

14.2

63.6

62.3

82.2

1.7

2.0

3.9

Minority interests

(0.1)

(1.8)

(11.0)

(11.7)

(16.2)

(3.3)

1.2

7.0

Shareholders' equity

 

 

1.2

12.5

52.6

50.6

66.0

(1.6)

3.2

10.9

CASH FLOW

Op Cash Flow before WC and tax

(5.0)

3.9

16.0

20.6

36.5

28.3

36.0

48.1

Working capital

6.8

7.9

(4.1)

22.5

(3.1)

3.2

3.7

0.7

Exceptional & other

(2.2)

(5.7)

(5.2)

(6.3)

(8.9)

(4.2)

(2.2)

0.0

Tax

(0.0)

(1.2)

(3.8)

(6.8)

(5.1)

(9.4)

(4.4)

(4.0)

Net operating cash flow

 

 

(0.4)

5.0

3.0

30.0

19.4

17.9

33.0

44.7

Capex

(0.2)

(0.1)

(2.5)

(1.2)

(3.8)

(2.2)

(2.0)

(2.0)

Acquisitions/disposals

3.6

14.2

(13.3)

(31.9)

(3.8)

(73.3)

(26.8)

(11.7)

Net interest

(0.0)

(0.3)

0.0

(0.5)

(0.7)

(1.7)

(7.2)

(6.8)

Equity financing

1.9

2.0

(1.4)

0.0

2.4

13.3

0.0

0.0

Dividends

0.0

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)

1.9

(3.6)

(3.6)

Net Cash Flow

5.0

20.1

(14.2)

(3.2)

11.0

(44.1)

(6.6)

20.7

Opening net debt/(cash)

 

 

(9.8)

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

71.2

91.8

FX

(0.6)

0.4

0.3

(0.8)

1.8

2.1

0.0

0.0

Other non-cash movements

1.8

1.1

0.0

(5.7)

(1.3)

(54.5)

(14.0)

(14.0)

Closing net debt/(cash)

 

 

(16.0)

(37.5)

(23.6)

(13.9)

(25.3)

71.2

91.8

85.2

Source: Claranova, Edison Investment Research


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General disclaimer and copyright

This report has been commissioned by Claranova and prepared and issued by Edison, in consideration of a fee payable by Claranova. 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.

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United Kingdom

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Tinexta’s Q123 results reflect trends that are consistent with prior years for the Digital Trust (DT) and Business Innovation (BI) divisions, coupled with a reassuring boost from a rebound in growth by Cyber Security (CS). The conservative balance sheet with an almost net cash position at the end of Q123 should enable Tinexta to undertake further M&A, which could provide scope for upgrades to profit estimates. We increase our DCF-based valuation to €30.4/share (€29.5 previously).

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