2019-2020 annual results

1 Oct 2020

Group’s strength confirmed: high growth, increased profitability and strengthened operating cash flow generation

  • Annual revenue of €409 million, up 56%, including 20% organic growth
  • EBITDA of €17 million (+9%)
  • Fourfold increase in operating cash flow to €29 million
  • Available cash up 10% to €83 million after investment of €33 million

 

Claranova closes another year of high growth, increasing its profitability in an unprecedented context.

The Group clears the €400 million revenue bar (€409 million), progressing 56%, of which organic growth of 20%. Claranova’s three-year average annual growth rate is 46% and the Group has enjoyed as of June 30, 2020, 14 consecutive quarters of growth. This strong growth was achieved while preserving operating profitability in a complex economic environment: EBITDA, the main operating performance indicator, is €17 million (+9%). The Group chose not to include the reduction in employee costs financed by the US government under the Paycheck Protection Program (PPP), pending final clarification by the US authorities of the conditions governing the definitive vesting of this assistance to two of our subsidiaries. The inclusion of these reductions would have increased the Group’s operating profitability by nearly US$5 million, producing an EBITDA of €22 million.

 

Cash flow generation was significantly strengthened, with operating cash flow increased fourfold from €7 million to €29 million.

 

This fiscal year confirms the improvement in Claranova’s financial profile, reporting Net income of €1 million. On this basis and after investment of €33 million during the fiscal year, available cash stood at €83 million at the end of June 2020.

 

PlanetArt: move toward personalized e-commerce

 

PlanetArt reports annual revenue of €314 million, up 78% (29% at constant scope). This growth was driven by continued geographic roll-out in Europe, the ramp-up of new mobile offerings (FreePrints Photo Tiles and FreePrints Cards) and a surge in the use of its apps during lockdown. The Personal Creations assets purchased in August 2019 generated revenue of €88 million.

 

The strong revenue growth was accompanied by a 30% increase in EBITDA to €14 million, translating into a ratio of EBITDA over sales of 4.5% as compared to 6.2% last year. The performance of historical activities supported PlanetArt’s profitability during the period. This positive effect was nonetheless offset by the integration of Personal Creations which did not contribute to PlanetArt’s overall profitability in this first year. The operating profitability of personalized e-commerce activities was also impacted by the ongoing aggressive marketing investment strategy.

 

With the integration of Personal Creations in August 2019, completed in September 2020 by the acquisition of CafePress, another leader in the US personalized products market, PlanetArt increased its critical size, expanded its product range, and extended its geographic presence, while accessing a unique platform bringing together hundreds of thousands of designers. Numerous synergies have been identified between PlanetArt’s historical businesses and these new activities, at product, customer, regional and technological levels. The US launch in July 2020 of FreePrints Gifts, a new mobile app in the FreePrints family dedicated to the personalized gifts segment, is a first step.

 

These acquisitions enable PlanetArt to enter the “personalized” e-commerce space. As e-commerce becomes predominant, “personalized” e-commerce allows companies to address growing consumer demand for distinctive products by offering the ability to transform everyday consumer goods into unique objects. In a world where production capacities are increasingly sophisticated and able to produce easily and at low cost personalized objects in small batches and with short cycles, the Group believes that personalized e-commerce will soon win market share from “standard” e-commerce.

Avanquest: a transition year to prepare an upcoming acceleration in profitable growth

 

Avanquest reports revenue of €90 million, up 9% . This increase reflects the refocus of activities towards proprietary software sold as subscriptions.

 

This shift in revenue model to subscription sales has limited growth during this year, but it will strengthen the recurring nature and future profitability of Avanquest. Within a year, the percentage of recurring revenue jumped from 35% to 46%.

 

EBITDA is €7 million, representing an operating margin of 7.9% compared to 12.4% last year. This decrease reflects again the refocus of activities towards proprietary software sold as subscription.

 

It also reflects the impact of the pandemic on Avanquest’s non-strategic activities and significant marketing investment to support the launch of new products that will fuel Avanquest’s growth in the future: launch of InPixio Studio Photo 10 on March 25, 2020, Adaware Antivirus on August 4, 2020, Soda PDF 12 on August 5, 2020 and Adaware Protect.

 

Efforts made during the fiscal year, reflected by growth in recurring SaaS revenue , will secure revenue generation in the long term and boost profitability, as each subscription renewal is achieved with low additional marketing investment.

 

myDevices: ongoing commercial roll-out and strengthening of the partnership with Sprint in the United States

myDevices reports revenue of €5 million, up 51% in the fiscal year. While roll-out slowed in certain sectors (particularly hospitality and catering) due to the pandemic, the division nonetheless reported a strong surge in commercial activity with close to 500 customers and 5,000 sites equipped.

 

Alongside revenue growth, operating losses reported during the year fell 26%. Despite the uncertainties inherent to the current health situation, the commercial ramp-up during the period is expected to continue, enabling the IoT division to progressively improve its profitability. The merger of our historical partner Sprint, with the telecommunications operator T-Mobile, boosts our US market expansion prospects, as T-Mobile sales teams now propose myDevices IoT solutions to their customers.

 

While the IoT market is still emerging, the myDevices platform places Claranova in an excellent position to seize major developments in this new market.

 

Strong acceleration in Group operating cash flow, multiplied by four during the period

 

Operating cash flows increased fourfold during the year from €7 million to €29 million. This increase reflects strong Group growth (organic and external), the surge in FreePrints activities during lockdown and the specific nature of the business model (B2C8 distribution) which naturally operates with negative WCR, including for the Personal Creations business acquired at the beginning of the year.
Strong and healthy financial position: available cash of €83 million, up 10% after €33 million in investment

Claranova closes fiscal year 2019-2020 with cash of €83 million, up 10% on June 30, 2019. This increase in the Group’s cash position includes investments totaling €33 million during the year, with the acquisition of Personal Creations for €17 million and settlement of the remaining €15 million deferred payment for the acquisition of the Adaware, SodaPDF and Upclick businesses.

 

Claranova closes fiscal year 2019-2020 with cash of €83 million, up 10% on June 30, 2019. This increase in the Group’s cash position includes investments totaling €33 million during the year, with the acquisition of Personal Creations for €17 million and settlement of the remaining €15 million deferred payment for the acquisition of the Adaware, SodaPDF and Upclick businesses.

 

This new year of profitable growth in an unprecedented context confirms Claranova’s ability to adapt, develop and be resilient. Our mobile, software and IoT solutions all progressed during the year, enabling us to report growth of 56% and exceed the €400 million revenue bar.

While continuing to invest heavily in marketing and R&D and completing a defining acquisition with the integration of Personal Creations, we successfully maintained our profitability.

This pandemic has turned our economy upside down and accelerated the digitalization of how we live, work and consume. In this changing environment our digital positioning remains a strength. More than ever, Claranova is well placed to respond to these structural changes and maintains its objectives of revenue of €700 million and operating profitability in excess of 10% by 2023.

Pierre Cesarini, CEO of the Claranova group