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Currency in EUR
Last close As at 02/06/2023
EUR24.05
▲ −0.30 (−1.23%)
Market capitalisation
EUR157m
Research: TMT
Due to product launch delays at the end of FY17, Cliq Digital (CLIQ) saw H1 revenues and operating profits fall by 12% and 38% y-o-y. However, net income benefited from a non-recurring credit of €0.8m due to reductions in estimated contingent consideration. Nevertheless, we are encouraged by the growing marketing expenditure, which should drive improved performance in H2. The shares trade at a substantial discount to peers.
Cliq Digital |
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Muted H1, marketing spend to drive H2 uptick
Due to product launch delays at the end of FY17, Cliq Digital (CLIQ) saw H1 revenues and operating profits fall by 12% and 38% y-o-y. However, net income benefited from a non-recurring credit of €0.8m due to reductions in estimated contingent consideration. Nevertheless, we are encouraged by the growing marketing expenditure, which should drive improved performance in H2. The shares trade at a substantial discount to peers.
H118 results: Flat income supported by one-off items
CLIQ reported muted interim numbers. Revenues declined 12.5% on the back of delayed product launches due to contract slippage and longer than anticipated integration times in Q417, which hampered investment into customer acquisition over this period. Despite lower amortisation of capitalised marketing spend, EBIT fell 38% y-o-y to €1.5m. However, net income of €1.4m was broadly unchanged due to €0.8m in one-off gains due to changes in estimates of the fair value of contingent liabilities. We estimate that net income declined 12% on an organic basis.
Marketing expenditure returns to growth
On a positive note, the company returned to growth in marketing spend (+10% year-on-year). This is a crucial indicator of the health of the business, suggesting that management sees attractive investment opportunities. After a period of consolidating expenditure in 2017, we are encouraged to see this KPI trend back in the right direction. As a result of this spend, the ‘CLIQ factor’ (a measure of return of marketing spend per €) came down from the historic highs seen last year (1.48) closer to CLIQ’s long-term average of 1.39. On an operational level, we note that completion of the acquisitions of CMind (67% to 80% share) and AffiMobiz in the first half should help drive increasing efficiency of marketing expenditure, potentially underpinning future improvements in the CLIQ factor.
Valuation: Discount to peers
At 0.5x FY18e consensus sales and 7.3x FY18e earnings, CLIQ trades at a substantial discount to the wider peer group of user acquisition groups. Investors are likely cautious about the slowdown in H1 performance and required ramp in H2 to meet both consensus estimates and management guidance for the full year. Delivery on these measures could see the discount to peers narrowing.
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Consensus estimates
Source: Bloomberg, Edison Investment Research |
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Research: Consumer
Bundesliga leaders and unbeaten in their last 14 matches in all competitions, Borussia Dortmund could not have wished for a stronger start under new head coach, Lucien Favre. Indeed an impressive home win over Atlético Madrid already all but assures qualification for the knockout stages of the Champions League, which is in marked contrast to last season’s disappointment. This reinforces our current-year forecast of robust pre-transfer revenue growth (c 12%), driven by international TV marketing, even if the bumper transfers of Dembélé and Aubameyang make FY18 a hard act to follow. Progress may be more measured in FY20 but subject as ever to surprise from Dortmund’s ability to generate substantial hidden reserves from player transfers.
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