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Last close As at 02/02/2023
EUR29.75
▲ 1.35 (4.75%)
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Research: TMT
CLIQ Digital (CLIQ) has had a positive start to the year, with Q122 results providing an early indication that it is on track to meet its guidance for strong growth and increased profitability in FY22. Its shift to direct media buying continues to drive rapid growth in the membership base in North America and Europe, with more members now choosing to pay for its multi-content offering. This reflects the success to date of investments in marketing and new content. As expected and guided, the additional spend will depress EBITDA margin in the current year, but we would expect it to start to rebuild in FY23.
CLIQ Digital |
Momentum continuing unabated |
Q122 trading update |
Media |
6 May 2022 |
Share price performance
Business description
Next events
Analysts
CLIQ Digital is a research client of Edison Investment Research Limited |
CLIQ Digital (CLIQ) has had a positive start to the year, with Q122 results providing an early indication that it is on track to meet its guidance for strong growth and increased profitability in FY22. Its shift to direct media buying continues to drive rapid growth in the membership base in North America and Europe, with more members now choosing to pay for its multi-content offering. This reflects the success to date of investments in marketing and new content. As expected and guided, the additional spend will depress EBITDA margin in the current year, but we would expect it to start to rebuild in FY23.
Year end |
Revenue (€m) |
PBT* |
Adjusted EPS* |
DPS |
P/E |
Yield |
12/20 |
107.0 |
14.4 |
1.2 |
0.5 |
20.6 |
2.0 |
12/21 |
150.0 |
25.3 |
2.6 |
1.1 |
9.5 |
4.4 |
12/22e |
210.4 |
32.0 |
3.3 |
1.3 |
7.5 |
5.3 |
12/23e |
290.2 |
47.1 |
4.8 |
2.0 |
5.2 |
8.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Investments driving growth
Revenue in Q122 increased by 75% to €52.6m (Q122: €30.1m), with the group reporting growth in all regions (North America: +89%, Europe: +71%, RoW: +16%). Marketing spend, its main revenue driver, was up 147% y-o-y to €22.5m, benefiting also from management’s fundamental shift from media buying from affiliate partners to an in-house media buying team. Management reiterated its short- and mid-term guidance, indicating revenue growth of at least 40% to c €210m in FY22 and a 35% CAGR to €500m by end-FY25. On an annual run-rate, CLIQ’s FY22 revenue would be €210m, so management guidance, and our forecasts, look readily achievable given that the company expects to deliver another three quarters of growth.
Robust cash position despite investments
The membership base rose 13% q-o-q to 1.5m users, reflecting the successful marketing campaigns and content investment. The company recently licensed new content from Palatin Media and LEONINE Studios, adding over 600 hours of entertainment across genres. 82% of members now opt for its higher-value multi-content offering, rather than single-content (Q121: 66%). As expected (FY21 trading update), marketing and content investment depressed margins - EBITDA margin was 15.8% (Q121: 17.6%) - and resulted in lower operating free cash flow, down €4.9m y-o-y to €0.2m. However, CLIQ’s balance sheet remains robust with net cash of €2.5m. The financing facility’s maturity date has been extended to end-July 2022 and Commerzbank has signed a mandate to arrange a new 3-to-5-year facility, giving further firepower for investment in marketing, content and platforms.
Valuation: Still significant upside potential
CLIQ’s share price is roughly the same as at the start of the year, while its peers are down 32%. Across FY22e and FY23e, it still trades at a discount to peers across average EV/sales, EV/EBITDA and P/E multiples. Parity across these ratios would equate to an implied share price of €65.4.
Investments leading to improvements in customer base
As highlighted previously, investments in marketing and content across all genres were key to expanding its customer base at the quarter end to 1.5 million, up 13% q-o-q and 50% y-o-y. These investments also drove an increase in the average length of a subscription, as well as the expected lifetime value for multi- and single-content offerings, which rose from €69.81 to €71.27 q-o-q. As a result, growth in its customer base value (number of members multiplied by expected individual lifetime value) accelerated to €104m, as illustrated in Exhibit 1. Customer base value represents the total revenue that is expected to be generated by existing members, and so provides good visibility for the rest of the year.
Exhibit 1: Customer base value and number of paid memberships |
Source: CLIQ Digital |
Starting to leverage the CLIQ brand
To date, the marketing effort for customer recruitment has been focused on performance marketing via clips and teasers to draw people in from their particular interest categories, then sell across the wider package. With the growth of the multi-content portals, the use of an umbrella brand (a single brand name for multiple white-label products) is an additional marketing tool that CLIQ has not used extensively previously. The upcoming strategy day on 15 June 2022 will give management the opportunity to showcase its multi-content portal and provide insight into its proposed brand marketing campaign, which should increase CLIQ’s profile both with its target subscriber base and with the financial community.
Exhibit 2: Financial summary
€m |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
63.1 |
107.0 |
150.0 |
210.4 |
290.2 |
Cost of Sales |
(44.3) |
(72.0) |
(98.8) |
(145.1) |
(197.6) |
||
Gross Profit |
18.8 |
34.9 |
51.2 |
65.2 |
92.6 |
||
EBITDA |
|
|
5.8 |
15.9 |
27.2 |
33.4 |
48.7 |
Normalised operating profit |
|
|
4.8 |
15.2 |
26.3 |
32.7 |
47.9 |
Reported operating profit |
4.8 |
15.2 |
26.3 |
32.7 |
47.9 |
||
Net Interest |
(0.9) |
(0.8) |
(0.9) |
(0.7) |
(0.8) |
||
Profit Before Tax (norm) |
|
|
3.9 |
14.4 |
25.3 |
32.0 |
47.1 |
Profit Before Tax (reported) |
|
|
3.9 |
14.4 |
25.3 |
32.0 |
47.1 |
Reported tax |
0.0 |
(4.0) |
(7.1) |
(10.0) |
(14.7) |
||
Profit After Tax (norm) |
3.9 |
10.4 |
17.4 |
22.0 |
32.4 |
||
Profit After Tax (reported) |
3.9 |
10.4 |
18.2 |
22.0 |
32.4 |
||
Minority interests |
1.7 |
3.3 |
0.4 |
0.5 |
0.7 |
||
Net income (normalised) |
2.2 |
7.2 |
17.0 |
21.5 |
31.7 |
||
Net income (reported) |
2.2 |
7.2 |
17.8 |
21.5 |
31.7 |
||
Average number of shares outstanding (m) |
6.2 |
6.2 |
6.5 |
6.5 |
7 |
||
EPS - basic (€) |
|
|
0.36 |
1.16 |
2.62 |
3.30 |
4.88 |
EPS - normalised fully diluted (c) |
|
|
0.35 |
1.16 |
2.59 |
3.26 |
4.81 |
Dividend (€) |
0.28 |
0.46 |
1.10 |
1.32 |
1.95 |
||
Revenue growth (%) |
8.5 |
69.4 |
40.2 |
40.3 |
38.0 |
||
Gross Margin (%) |
29.8 |
32.7 |
34.1 |
31.0 |
31.9 |
||
EBITDA Margin (%) |
9.1 |
14.9 |
18.1 |
15.9 |
16.8 |
||
Normalised Operating Margin |
7.6 |
14.2 |
17.5 |
15.6 |
16.5 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
52.9 |
55.2 |
59.4 |
62.0 |
65.4 |
Intangible Assets |
0.7 |
0.8 |
2.6 |
5.0 |
7.5 |
||
Tangible Assets |
0.7 |
2.2 |
3.8 |
5.2 |
6.0 |
||
Goodwill & other |
51.5 |
52.3 |
53.0 |
51.7 |
51.9 |
||
Current Assets |
|
|
15.2 |
21.7 |
36.9 |
57.3 |
59.1 |
Receivables |
8.2 |
9.1 |
12.5 |
17.3 |
17.6 |
||
Cash & cash equivalents |
0.7 |
4.9 |
7.3 |
19.7 |
19.5 |
||
Other |
6.3 |
7.7 |
17.1 |
20.3 |
22.0 |
||
Current Liabilities |
|
|
(8.7) |
(12.9) |
(27.3) |
(24.3) |
(18.1) |
Creditors |
(2.0) |
(2.0) |
(7.9) |
(10.4) |
(4.2) |
||
Tax |
(1.1) |
(3.2) |
(1.2) |
(1.2) |
(1.2) |
||
Borrowings |
0.0 |
0.0 |
(5.0) |
0.0 |
0.0 |
||
Provisions |
0.0 |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
||
Other |
(5.6) |
(7.3) |
(12.8) |
(12.4) |
(12.4) |
||
Long Term Liabilities |
|
|
(12.7) |
(8.5) |
(9.4) |
(20.7) |
(11.1) |
Long term borrowings |
(9.9) |
(3.8) |
0.0 |
(11.4) |
(1.9) |
||
Other long term liabilities |
(2.8) |
(4.7) |
(9.4) |
(9.3) |
(9.2) |
||
Net Assets |
|
|
46.7 |
55.6 |
59.6 |
74.3 |
95.3 |
Minority interests |
2.0 |
4.8 |
0.0 |
0.5 |
1.2 |
||
Shareholders equity |
|
|
44.7 |
50.8 |
59.5 |
73.7 |
94.1 |
CASH FLOW |
|||||||
Op Cash Flow before WC and tax |
4.8 |
15.1 |
26.8 |
32.7 |
47.9 |
||
Working capital |
(1.9) |
1.6 |
(1.2) |
(2.3) |
(6.5) |
||
Exceptional & other |
0.9 |
0.9 |
1.3 |
(1.4) |
0.5 |
||
Tax |
(1.3) |
(2.8) |
(6.1) |
(11.0) |
(15.5) |
||
Operating cash flow |
|
|
2.5 |
14.8 |
20.8 |
18.0 |
26.3 |
Capex |
(0.4) |
(0.7) |
(3.3) |
(3.4) |
(3.6) |
||
Acquisitions/disposals |
(3.4) |
0.0 |
(10.3) |
0.0 |
0.0 |
||
Net interest |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
(2.1) |
(3.3) |
(8.6) |
(12.7) |
||
Other |
(1.6) |
(1.5) |
(2.5) |
(0.1) |
(0.8) |
||
Net Cash Flow |
(2.9) |
10.5 |
1.4 |
5.9 |
9.3 |
||
Opening net debt/(cash) |
|
|
6.8 |
9.6 |
(0.9) |
(2.3) |
(8.2) |
FX |
0.0 |
(0.0) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
9.6 |
(0.9) |
(2.3) |
(8.2) |
(17.5) |
Source: Edison Investment Research, CLIQ Digital
|
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Research: Investment Companies
Henderson Far East Income (HFEL) focuses on providing investors with a high and growing level of income, with capital appreciation an important consideration within the investment objective. The trust has met these goals on a total return basis, with a dividend yield premium of around 50% over its Association of Investment Companies (AIC) peers. This is funded predominantly via underlying dividend income, which increased by 14.7% in H122 (31 August 2021 to 28 February 2022) versus H121.
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