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Research: TMT
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.
Claranova |
Growth targets maintained |
Q323 revenue update |
Software and comp services |
12 May 2023 |
Share price performance
Business description
Next events
Analyst
Claranova is a research client of Edison Investment Research Limited |
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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 |
EBITDA* |
PBT** |
Diluted EPS** |
DPS |
P/E |
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
|
|
Research: TMT
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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