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Claranova has reported another strong quarter of organic growth. In Q120 group revenues were 25% higher on an organic constant currency basis and 45% higher on a reported basis. The recently acquired Personal Creations was consolidated for the first time, contributing €8.5m to the Mobile division’s revenues. Based on the growth rates achieved in Q1, we maintain our forecasts.
Avanquest Software Claranova SE
Claranova is planning to buy out the minority interests in its Internet business for a total of €87.9m in a mixture of cash and equity. On completion, Claranova will own 100% of its Internet business (up from the current c 40% level), and the sellers will own 15.87% of Claranova. In our view, this is a positive move as it gives the company full control over the business while incentivising the new shareholders to continue to contribute to the success of the group.
Claranova’s FY19 results confirmed strong organic revenue growth and margin expansion boosted by the inclusion of the high-growth, high-margin internet acquisitions. The recent acquisition of Personal Creations in the US opens up a new addressable market for the Mobile business and has prompted the company to raise its four-year revenue target. The company is well funded to continue to invest in the business, whether internally or via acquisition.
Revenue growth accelerated in Q419, resulting in Claranova reporting revenue growth of 62% and organic revenue growth of 37% for FY19. Increased investment in customer acquisition was behind much of this growth. The company completed the acquisition of Personal Creations (PC) post year-end, adding a new range of personalised products to the PlanetArt business in the US. We have revised our forecasts to reflect recent trading, the PC acquisition and the recent reverse stock split.
Claranova has reported another strong quarter, with organic constant currency revenue growth of 33% y-o-y in Q319, maintaining the same rate of growth as in H119. Geographic and product expansion are driving PlanetArt growth, while the recent acquisitions by Avanquest have reinvigorated the division. We have revised our revenue forecasts up to reflect stronger than expected growth, although this has a minimal impact at the EBITDA level.
In H119, strong organic growth from PlanetArt and Avanquest combined with recent acquisitions resulted in 55% group revenue growth year-on-year. Over the same period EBITDA increased 283% to generate a 7.8% margin, and the group reported positive net income for the first time in several years. Management unveiled ambitious five-year growth targets and is focused on achieving these through a combination of geographic expansion, innovative new products and services and targeted M&A.
Claranova reported 53% year-on-year revenue growth for Q219, with organic growth of 36%. All divisions contributed to organic growth, and the Canadian businesses acquired by Avanquest also performed well. While H119 revenue growth rates are ahead of our FY19 growth forecasts, we are maintaining estimates until further detail on profitability is disclosed on 27 March. We believe that the risk to earnings is on the upside.
Claranova’s Q1 revenue growth of 61% y-o-y was made up of 33% organic growth and 27% growth from the recent acquisitions in the Avanquest business. All divisions showed organic growth in the quarter, prompting an upgrade to our forecasts. We lift our normalised EPS forecast by 1.9% in FY19 and 1.4% in FY20.
After a year of strong growth for PlanetArt and myDevices combined with further restructuring for Avanquest, Claranova reported EBITDA profitability on a group basis. With further growth expected in PlanetArt, acquisitions doubling the size of Avanquest, and operator contracts increasing their contribution to myDevices, we maintain our revenue and EBITDA margin growth forecasts for FY19 and FY20. PlanetArt’s launch in India and recent distribution agreements signed by myDevices both have scope to contribute materially to revenues in the longer term.
myDevices, Claranova’s internet of things (IoT) business, has announced two distribution agreements for IoT in a Box. These deals provide access to the reseller and distributor networks of Alibaba Cloud and Ingram Micro, substantially widening the business’s access to the Chinese and US markets. We maintain our forecasts for the myDevices division but note that these deals offer the potential for material revenue contributions once the reseller networks are fully trained up on the product.
Claranova is a group consisting of three businesses focused on mobile and internet technologies with high growth potential. After a long period of restructuring and refocusing the business, the group is demonstrating strong revenue growth and improving profitability. Claranova also has ample funds to make targeted acquisitions to supplement organic growth.
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