CLIQ Digital — Entering its next growth phase

CLIQ Digital (SCALE: CLIQ)

Last close As at 21/12/2024

EUR5.40

−0.15 (−2.70%)

Market capitalisation

EUR36m

More on this equity

Research: TMT

CLIQ Digital — Entering its next growth phase

CLIQ Digital’s Q3 results were strong, with gross revenue of €40m (+35% y-o-y, +21% q-o-q) and EBITDA of €7.4m (+63% y-o-y), growing in line with management’s raised FY21 guidance announcement. On a nine-month basis, gross revenue was €103m (+34% y-o-y) and EBITDA was €19m (+75% y-o-y), reflecting management’s increased marketing spend, focus on direct media buying and its enriched content offering. We have raised our profit and margin forecasts for FY21 and FY22, reflecting the company’s higher-margin strategy of direct media buying over affiliate marketing. During the quarter, CLIQ has signed licensing deals adding over 360 movies and 500 cloud games to its all-in-one platform.

Analyst avatar placeholder

Written by

TMT

CLIQ Digital

Entering its next growth phase

Q321 results

Media

10 November 2021

Price

€26.3

Market cap

€163m

Net cash (€m) as at 30 September 2021

0.7

Shares in issue

6.5m

Free float

89%

Code

CLIQ

Primary exchange

XETRA

Secondary exchange

FRA

Share price performance

%

1m

3m

12m

Abs

12.7

25.1

42.8

Rel (local)

6.8

22.8

11.0

52-week high/low

€41.00

€15.50

Business description

CLIQ Digital is a leading lifestyle company providing members worldwide with streaming entertainment services. In 2020, 45% of sales were generated in Europe, 48% in North America and 7% in other regions.

Next events

FY21 results

February 2022

Analysts

Fiona Orford-Williams

+44 (0)20 3077 5739

Max Hayes

+44 (0)20 3077 5700

CLIQ Digital is a research client of Edison Investment Research Limited

CLIQ Digital’s Q3 results were strong, with gross revenue of €40m (+35% y-o-y, +21% q-o-q) and EBITDA of €7.4m (+63% y-o-y), growing in line with management’s raised FY21 guidance announcement. On a nine-month basis, gross revenue was €103m (+34% y-o-y) and EBITDA was €19m (+75% y-o-y), reflecting management’s increased marketing spend, focus on direct media buying and its enriched content offering. We have raised our profit and margin forecasts for FY21 and FY22, reflecting the company’s higher-margin strategy of direct media buying over affiliate marketing. During the quarter, CLIQ has signed licensing deals adding over 360 movies and 500 cloud games to its all-in-one platform.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/19

63.1

3.9

0.4

0.3

73.6

N/A

12/20

107.0

14.4

1.2

0.5

22.7

1.7

12/21e

149.9

26.5

2.7

1.1

9.9

4.1

12/22e

190.2

33.0

3.5

1.4

7.5

5.3

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

Indicators highlight positive momentum

Marketing spend, a key performance driver, was up 41% y-o-y to €13.8m in Q321 and up 33% to €34.8m for 9M21. Direct media buying, rather than affiliate marketing, now contributes most to marketing spend at 76% (9M20: 55%), reducing CLIQ’s fees to affiliate partners. For 9M21, EBITDA margin expanded by 4pp to 18%. CLIQ’s customer base value, calculated by multiplying the number of members on its platform by remaining lifetime value, grew by 25% q-o-q to €50m in Q321, indicating continuing positive momentum. We have raised our FY21 and FY22 revenue forecasts by 3.3% and our EBITDA forecasts for both years by 27.3% and 22.6% respectively.

Continuing to enrich all-in-one platform

So far in 2021, management has signed several licensing deals, focusing on new categories and demographics, which it sees as key for both customer retention and growth. During Q321, CLIQ agreed a two-year deal with Lighthouse Home Entertainment, for 360 high-quality German, European and International films, as well as a five-year deal with Blacknut’s Cloud Gaming Service, integrating 500 games titles to its platform from 2022 onwards. Cloud-gaming is management’s current primary focus, underpinned by Grand View Research’s forecasts for global sales growth of 48% y-o-y until 2027, equating to a total market size of $7.2bn.

Valuation: Share price at record highs in 2021

CLIQ's share price has performed very strongly over the last two years. Nevertheless, based on the peer group average EV/sales multiple over FY21 and FY22, CLIQ currently trades at a 65% discount, which we believe should narrow as management continues to deliver superior growth. Parity would equate to a share price of €75.0.

Strong growth in 2021 underpins our raised forecasts

CLIQ Digital has continued to grow revenue and profits q-o-q in 2021 as it increases marketing spend and rolls out its direct media buying strategy in Europe, following its successful implementation in its US operations in 2020. Growth has also been fostered by the enriched content offering on its all-in-one platform, particularly in family, gaming and sport, while maintaining its attractive pricing structure. Highlights include:

From 1 September 2021, members will be able to stream over 360 high-quality films following its newly agreed licensing deal with Lighthouse Home Entertainment, which also includes two new releases every month.

From early 2022, members be able to access over 500 high-quality cloud games following its licensing deal for Blacknut's multiscreen Cloud Gaming Service.

In July 2021, CLIQ announced that it had secured the exclusive live broadcasting rights in Germany, Austria and Switzerland for the Italian Serie B football championship.

Exhibit 1: Summary of performance growth

€m

9M20

9M21

y-o-y change

Q320

Q321

y-o-y change

Gross revenue

76.8

103.2

34%

29.7

40.0

35%

Marketing spend

28.2

34.8

33%

9.8

13.8

41%

EBITDA

10.9

19.0

75%

4.5

7.4

63%

EBITDA margin

14%

18%

4pp

15%

19%

4pp

EBIT

10.3

18.1

75%

4.4

7.0

60%

Net income

7.3

12.3

69%

2.9

4.7

62%

Diluted EPS (€)

0.80

1.82

128%

0.32

0.70

119%

Source: CLIQ Digital

Credit card remained the predominant and fastest-growing payment means during the period, amounting to 69% of gross revenue (H121: 67%). Customers’ adoption of credit cards for mobile purchases benefits gross margin as it reduces the costs of sales attributable to third parties, such as fees charged by a mobile carrier.

Exhibit 2: Summary of changes to forecasts

€'m

FY21e

FY22e

New

Old

y-o-y change

New

Old

y-o-y change

Gross revenue

149.9

142.0

5.6%

190.2

172.7

10.1%

Net revenue

127.0

119.1

6.6%

169.4

152.1

11.4%

EBITDA

27.7

22.4

23.8%

34.3

30.3

13.2%

EBITDA margin

18%

16%

2.7pp

18%

18%

0.5pp

Normalised EBIT

27.1

21.8

24.5%

33.6

29.6

13.5%

Normalised EBIT margin

18%

15%

2.7pp

18%

17%

0.5pp

Net income for equity

17.8

14.5

22.5%

22.2

20.0

11.2%

Normalised basic EPS (€)

2.8

2.2

25.2%

3.7

3.2

13.7%

Normalised diluted EPS (€)

2.8

2.2

25.2%

3.6

3.2

13.7%

Dividend per share (€)

1.1

0.9

25.2%

1.4

1.23

13.7%

Net debt/(cash)

(3.1)

2.7

N/A

(13.1)

(4.7)

176.8%

Source: Edison Investment Research

We have raised our FY21 revenue forecast by 5.6% to €149.9m, in line with current consensus and management’s guidance for the year. We have increased our FY22 revenue forecast 10.1% as we expect momentum to continue next year, supported by further content additions and planned entry into new markets, which management intends to start in Q122.

Our updated EBITDA forecasts imply higher margin expansion in FY21 than previously expected, reflecting the continued roll-out of its direct media buying strategy in Europe. Direct media buying teams are a largely fixed cost, reducing cost pressures as the company scales. However, we anticipate that costs relating to improving its content offering will affect profitability. Additionally, we believe the greatest impact to margins from its direct media buying strategy will be in FY21 due its roll-out in Europe for the first time. We have therefore kept our FY22 EBITDA margin broadly flat at 18%.

Our EPS and dividend forecasts have risen in line with EBITDA, where our prior expectations for EPS reflected the immediate uplift from CLIQ’s acquisition of its minority interest in Hype Ventures.

Finally, we now believe CLIQ will be in a net cash position at the end of the year, reflecting its net cash position of €0.7m at the end of Q321 and our expectations for profit growth for the rest of FY21. We believe its FY22 net cash position can reach €13.1m, up from our prior expectation of €4.7m, due to its current cash generation, our expectation of improving margins and our €5.8m uplift to our FY21 net cash position.

Valuation

CLIQ’s share price has grown over 750% since the start of 2020 and reached a record high of €38.5 in April, supported by heightened demand for mobile entertainment during the pandemic, CLIQ’s enriched all-in-one platform and management delivering on its direct media buying strategy. Despite this, and its relatively high sales growth forecast compared to peers, CLIQ remains at a significant discount to other global entertainment and customer acquisition peers on consensus EV/sales, EV/EBIT and P/E, across FY21 and FY22.

As consensus forecasts indicate that the majority of CLIQ’s peer group will still be loss making at the EBIT level, we believe the most suitable valuation metric is EV/sales. Were CLIQ’s shares to be priced at parity to peers at an average across FY21 and FY22, the implied share price would be €75.0. This represents a 65% discount to the current price of €26.3, which we believe will narrow as the company grows and as management continues to add content to its platform, as well as continuing to roll-out its direct media buying strategy.

Exhibit 3: Peer valuation

 

Market cap

Share price perf ytd

Sales growth (%)

EV/Sales (x)

EV/EBIT (x)

P/E (x)

Company

(m)

(%)

FY1e

FY2e

FY1e

FY2e

FY1e

FY2e

FY1e

FY2e

Cinedigm

$386

257

57

15

7.7

6.7

N/A

N/A

N/A

N/A

Stingray

C$356

2

11

7

2.5

2.3

10.6

8.3

8.0

7.0

Spotify

$54,957

-9

18

20

4.8

4.0

3034.9

N/A

N/A

596.4

Netflix

$288,561

20

19

15

10.0

8.7

48.3

38.4

60.7

49.6

Alchimie

€30

-48

16

25

0.8

0.7

N/A

N/A

N/A

N/A

Pantaflix

€24

23

296

16

0.8

0.7

N/A

10.7

N/A

10.1

Nordic Entertainment

SEK40,119

12

3

24

3.4

2.7

55.3

108.6

67.4

135.7

Glu Mobile

$2,204

39

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Storytel

SEK10,592

-43

24

25

3.4

2.7

N/A

N/A

N/A

N/A

Peer average

56

18

3.4

2.7

51.8

24.5

60.7

49.6

Cliq Digital

€163

58

40

27

1.1

0.9

6.0

4.8

9.9

7.5

Premium/(discount)

-68%

-69%

-88%

-80%

-84%

-85%

Source: Refinitiv, Edison Investment Research. Note: Priced at 9 November 2021.

Exhibit 4: Financial summary table

€m

2018

2019

2020

2021e

2022e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Gross revenue

 

 

58.2

63.1

107.0

149.9

190.2

Net revenue

 

 

39.1

44.3

81.5

127.0

169.4

Cost of Sales

(42.1)

(44.3)

(72.0)

(87.9)

(100.8)

Gross Profit

16.2

18.8

34.9

62.0

89.4

EBITDA

 

 

3.9

5.8

15.9

27.7

34.3

Normalised operating profit

 

 

3.0

4.8

15.2

27.1

33.6

Reported operating profit

3.0

4.8

15.2

27.1

33.6

Net Interest

0.4

(0.9)

(0.8)

(0.6)

(0.6)

Profit Before Tax (norm)

 

 

3.4

3.9

14.4

26.5

33.0

Profit Before Tax (reported)

 

 

3.4

3.9

14.4

26.5

33.0

Reported tax

(0.4)

0.0

(4.0)

(8.3)

(10.3)

Profit After Tax (norm)

3.0

3.9

10.4

18.2

22.7

Profit After Tax (reported)

3.0

3.9

10.4

18.2

22.7

Minority interests

0.8

1.7

3.3

0.4

0.5

Net income (normalised)

2.2

2.2

7.2

17.8

22.2

Net income (reported)

2.2

2.2

7.2

17.8

22.2

Basic average number of shares outstanding (m)

6.2

6.2

6.2

6.7

6.3

EPS - basic (€)

 

 

0.35

0.36

1.16

2.67

3.50

EPS - diluted (€)

 

 

0.34

0.35

1.14

2.63

3.45

Dividend (€)

0.00

0.28

0.46

1.07

1.40

Revenue growth (%)

(-17.5)

8.5

69.4

40.2

26.9

Gross Margin (%)

27.8

29.8

32.7

41.3

47.0

EBITDA Margin (%)

6.6

9.1

14.9

18.5

18.0

Normalised Operating Margin

5.1

7.6

14.2

18.1

17.7

BALANCE SHEET

Fixed Assets

 

 

52.8

52.9

55.2

57.0

57.7

Intangible Assets

0.9

0.7

0.8

0.8

0.6

Tangible Assets

1.3

0.7

2.2

3.2

3.9

Goodwill & other

50.6

51.5

52.3

53.0

53.2

Current Assets

 

 

12.9

15.2

21.7

31.8

46.7

Recievables

6.5

8.2

9.1

12.7

13.4

Cash & cash equivalents

1.3

0.7

4.9

9.0

17.5

Other

5.1

6.3

7.7

10.1

15.8

Current Liabilities

 

 

(8.0)

(8.7)

(12.9)

(14.0)

(14.6)

Creditors

(2.3)

(2.0)

(2.0)

(2.8)

(3.5)

Tax

(1.2)

(1.1)

(3.2)

(3.5)

(3.5)

Borrowings

(8.1)

0.0

0.0

0.0

0.0

Provisions

(0.0)

0.0

(0.4)

(0.4)

(0.4)

Other

(4.6)

(5.6)

(7.3)

(7.3)

(7.3)

Long Term Liabilities

 

 

(1.8)

(12.7)

(8.5)

(10.3)

(10.1)

Long term borrowings

0.0

(9.9)

(3.8)

(5.9)

(5.6)

Other long term liabilities

(1.8)

(2.8)

(4.7)

(4.5)

(4.5)

Net Assets

 

 

55.9

46.7

55.6

64.5

79.6

Minority interests

0.8

2.0

4.8

1.2

1.7

Shareholders' equity

 

 

56.7

48.7

60.5

65.7

81.3

CASH FLOW

Op Cash Flow before WC and tax

4.2

4.8

15.1

27.1

33.7

Working capital

3.2

(1.9)

1.6

(2.8)

0.0

Exceptional & other

(0.7)

0.9

0.9

(0.2)

(3.8)

Tax

(2.9)

(1.3)

(2.8)

(8.9)

(10.9)

Net operating cash flow

 

 

3.8

2.5

14.8

15.2

19.0

Capex

(0.6)

(0.4)

(0.7)

(0.8)

(0.8)

Acquisitions/disposals

(0.5)

(3.4)

0.0

(6.0)

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

0.0

(2.1)

(7.1)

(8.9)

Other

(4.0)

(1.6)

(1.5)

(0.1)

(0.5)

Net Cash Flow

(1.2)

(2.9)

10.5

1.2

8.8

Opening net debt/(cash)

 

 

5.5

6.8

9.2

(1.1)

(2.4)

FX

(0.0)

0.0

(0.0)

0.0

0.0

Other non-cash movements

0.0

0.4

(0.1)

0.1

0.0

Closing net debt/(cash)

 

 

6.8

9.2

(1.1)

(2.4)

(11.9)

Source: Company accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by CLIQ Digital and prepared and issued by Edison, in consideration of a fee payable by CLIQ Digital. Edison Investment Research standard fees are £49,500 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.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on CLIQ Digital

View All

Latest from the TMT sector

View All TMT content

Research: Consumer

Veganz — Planting growth

Veganz believes it is the largest brand of purely plant-based food in Europe, with a multicategory range of products spanning ambient, chilled and frozen food. It is mainly focused on the DACH region and is looking to expand by growing organically with its existing retail customers as demand for its products increases, but also by bringing more of its production in-house. Veganz’s November 2021 IPO (net proceeds to company c €31m) seeks to capitalise on current growth in plant-based products, with plans to build a second manufacturing site, which should help improve company gross margins and catalyse further top-line growth.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free