Currency in EUR
Last close As at 09/06/2023
EUR22.95
▲ −0.45 (−1.92%)
Market capitalisation
EUR149m
Research: TMT
CLIQ Digital has updated its business plan and lifted guidance, raising the FY22 revenue target from €210m to €250m, with EBITDA up from over €33m to over €38m. We have increased our forecasts, with FY23e revenue also raised (from €290m to €300m). This follows February’s upgrade, implying that its marketing approach continues to pay off. Management is targeting €500m of revenues by FY25, which, in our view, is demanding but achievable. The new packaged content offering will be marketed under the CLIQ.de brand and is designed to be simple but affordable, so well suited to a backdrop of pressure on household disposable income. The shares continue to trade at a sizeable discount to peers.
CLIQ Digital |
Strategic update and financials upgrade |
CMD/upgrade |
Media |
17 June 2022 |
Share price performance
Business description
Next events
Analysts
CLIQ Digital is a research client of Edison Investment Research Limited |
CLIQ Digital has updated its business plan and lifted guidance, raising the FY22 revenue target from €210m to €250m, with EBITDA up from over €33m to over €38m. We have increased our forecasts, with FY23e revenue also raised (from €290m to €300m). This follows February’s upgrade, implying that its marketing approach continues to pay off. Management is targeting €500m of revenues by FY25, which, in our view, is demanding but achievable. The new packaged content offering will be marketed under the CLIQ.de brand and is designed to be simple but affordable, so well suited to a backdrop of pressure on household disposable income. The shares continue to trade at a sizeable discount to peers.
Year end |
Revenue |
PBT* |
Adjusted EPS* (€) |
DPS |
P/E |
Yield |
12/20 |
107.0 |
14.4 |
1.2 |
0.5 |
20.0 |
2.0 |
12/21 |
150.0 |
25.3 |
2.6 |
1.1 |
9.0 |
4.7 |
12/22e |
250.0 |
36.5 |
3.8 |
1.5 |
6.2 |
6.5 |
12/23e |
300.0 |
45.9 |
4.8 |
1.9 |
5.0 |
8.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Repackaging supported by brand advertising
The strategic update focused on the repackaging of content into a coherent brand offering. This will be available on the web and through native apps, utilising the ‘CLIQ’ branding for the first time, so avoiding too much overlap with the existing customer base. It will offer the ‘best of everything’ across the five content categories – movies, games, sport, music and audiobooks – at an introductory price of €6.99, so below the monthly outlay needed to subscribe to many larger single-category content services. This will be supported by a major brand marketing campaign, including TV, out of home and consumer brand partnerships. Marketing spend guidance for the year increases from €70m to €90m. Guidance for paid memberships also increases from 1.7–1.8m to over 2.0m (from the 1.5m disclosed at end March). Management envisages that this upscaled version of its offering will reduce membership churn as well as drive organic growth.
Raised forecasts
We have increased our FY22 revenue and EBITDA projections in line with revised guidance. This has had a knock-on benefit on FY23 revenue, particularly as the relaunch is scheduled for 1 September 2022. While the cost of customer acquisition will be increased by the additional marketing (FY22e EBITDA margin: 15.9% to 15.2%; FY23e: 16.8% to 15.9%), the ratio to lifetime value should improve.
Valuation: Discount persists despite outperformance
CLIQ’s share price is roughly unchanged year-to-date, while peers are down 44%, a further deterioration since our last report in May when they were down 32% on average. However, across FY22e and FY23e, CLIQ’s shares continue to trade at a discount across average EV/sales, EV/EBITDA and P/E multiples. Parity across these ratios would equate to an implied share price of €60.2 (May 2022: €65.4).
Exhibit 1: Financial summary
€'m |
2020 |
2021 |
2022e |
2023e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
107.0 |
150.0 |
250.0 |
300.0 |
Cost of Sales |
(72.0) |
(98.8) |
(172.7) |
(203.2) |
||
Gross Profit |
34.9 |
51.2 |
77.3 |
96.8 |
||
EBITDA |
|
|
15.9 |
27.2 |
38.0 |
47.6 |
Operating profit (before amort. and excepts.) |
|
|
15.2 |
26.3 |
37.2 |
46.7 |
Reported operating profit |
15.2 |
26.3 |
37.2 |
46.7 |
||
Net Interest |
(0.8) |
(0.9) |
(0.7) |
(0.8) |
||
Profit Before Tax (norm) |
|
|
14.4 |
25.3 |
36.5 |
45.9 |
Profit Before Tax (reported) |
|
|
14.4 |
25.3 |
36.5 |
45.9 |
Reported tax |
(4.0) |
(7.1) |
(11.4) |
(14.3) |
||
Profit After Tax (norm) |
10.4 |
17.4 |
25.1 |
31.6 |
||
Profit After Tax (reported) |
10.4 |
18.2 |
25.1 |
31.6 |
||
Minority interests |
3.3 |
0.4 |
0.6 |
0.7 |
||
Net income (normalised) |
7.2 |
17.0 |
24.5 |
30.9 |
||
Net income (reported) |
7.2 |
17.8 |
24.5 |
30.9 |
||
Average Number of Shares Outstanding (m) |
6.2 |
6.5 |
6.5 |
6.5 |
||
EPS - basic (€) |
|
|
1.16 |
2.62 |
3.77 |
4.75 |
EPS - normalised fully diluted (€) |
|
|
1.16 |
2.59 |
3.72 |
4.69 |
Dividend (€) |
0.46 |
1.10 |
1.51 |
1.90 |
||
Revenue growth (%) |
69.4 |
40.2 |
66.7 |
20.0 |
||
Gross Margin (%) |
32.7 |
34.1 |
30.9 |
32.3 |
||
EBITDA Margin (%) |
14.9 |
18.1 |
15.2 |
15.9 |
||
Normalised Operating Margin |
14.2 |
17.5 |
14.9 |
15.6 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
55.2 |
59.4 |
61.9 |
65.3 |
Intangible Assets |
0.8 |
2.6 |
5.0 |
7.5 |
||
Tangible Assets |
2.2 |
3.8 |
5.1 |
5.9 |
||
Goodwill & other |
52.3 |
53.0 |
51.7 |
51.9 |
||
Current Assets |
|
|
21.7 |
36.9 |
59.3 |
69.7 |
Receivables |
9.1 |
12.5 |
15.0 |
20.8 |
||
Cash & cash equivalents |
4.9 |
7.3 |
23.5 |
23.6 |
||
Other |
7.7 |
17.1 |
20.8 |
25.4 |
||
Current Liabilities |
|
|
(12.9) |
(27.3) |
(24.3) |
(27.2) |
Creditors |
(2.0) |
(7.9) |
(10.4) |
(13.3) |
||
Tax |
(3.2) |
(1.2) |
(1.2) |
(1.2) |
||
Borrowings |
0.0 |
(5.0) |
0.0 |
0.0 |
||
Provisions |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
||
Other |
(7.3) |
(12.8) |
(12.4) |
(12.4) |
||
Long Term Liabilities |
|
|
(8.5) |
(9.4) |
(20.7) |
(11.1) |
Long term borrowings |
(3.8) |
0.0 |
(11.4) |
(1.9) |
||
Other long term liabilities |
(4.7) |
(9.4) |
(9.3) |
(9.2) |
||
Net Assets |
|
|
55.6 |
59.6 |
76.2 |
96.8 |
Minority interests |
4.8 |
0.0 |
0.6 |
1.3 |
||
Shareholders equity |
|
|
50.8 |
59.5 |
75.5 |
95.5 |
CASH FLOW |
||||||
Operating Cash Flow |
15.1 |
26.8 |
37.3 |
46.8 |
||
Working capital |
1.6 |
(1.2) |
(0.1) |
(2.9) |
||
Exceptional & other |
0.9 |
1.3 |
(1.9) |
(2.4) |
||
Tax |
(2.8) |
(6.1) |
(12.4) |
(15.1) |
||
Operating cash flow |
|
|
14.8 |
20.8 |
22.9 |
26.4 |
Capex |
(0.7) |
(3.3) |
(3.4) |
(3.6) |
||
Acquisitions/disposals |
0.0 |
(10.3) |
0.0 |
0.0 |
||
Net interest |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
0.0 |
0.0 |
0.0 |
0.0 |
||
Dividends |
(2.1) |
(3.3) |
(9.8) |
(12.4) |
||
Other |
(1.5) |
(2.5) |
(0.1) |
(0.8) |
||
Net Cash Flow |
10.5 |
1.4 |
9.7 |
9.6 |
||
Opening net debt/(cash) |
|
|
9.6 |
(0.9) |
(2.3) |
(12.0) |
FX |
(0.0) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(0.9) |
(2.3) |
(12.0) |
(21.6) |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
discoverIE has seen a strong bounce-back in trading after the worst of the COVID pandemic, with organic revenue growth of 18% y-o-y in FY22 and 14% versus FY20 (pre-COVID). The combination of organic growth and recent high-margin acquisitions generated underlying operating profit growth of 34% y-o-y with a margin approaching 11%. Organic order growth of 36% y-o-y has provided a strong order book entering FY23. With FY22 underlying EPS beating our forecasts, we upgrade FY23 and introduce FY24 estimates. We expect further M&A as discoverIE continues with its strategy to consolidate the fragmented electronics market.
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