Claranova embarks on “One Claranova” strategy to boost growth

October 31, 2024November 3, 2024 GaryPageau Claranova, PlanetArt

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PlanetArt parent Claranova announced its new strategic roadmap to enter a new era of profitable growth called “One Claranova.” The strategy “marks a decisive step towards an integrated group focused on operational excellence and profitability. By optimizing its assets, leveraging its international scale, fostering innovation and data, Claranova will strengthen its leadership by focusing on its core activities to create longterm value for its shareholders,” the company said.

This strategic plan is based on three pillars:

Becoming a world-class operating company rather than a portfolio of activities. By creating stronger synergies between its brands, technologies and teams, Claranova is moving from the sum of its parts (Avanquest, PlanetArt, myDevices) to a unified, agile company. To this end, Claranova will initiate a process with the aim of selling the myDevices division in the coming months. This will improve efficiency, reduce costs, and unlock value.
Leveraging AI and data to win and retain customers. With over 100 million active users in more than 160 countries, Claranova is ideally positioned to take advantage of AI and data mining. In particular, the Group will capitalize on unified databases, machine learning and predictive models to optimize pricing, improve product recommendations as well as customer engagement and experience.
Unlocking synergies to optimize performance. Claranova will seize new growth opportunities and focus on maximizing and pooling marketing efforts (return on investment in customer acquisition, cross-selling, and CRM development). By creating synergies between its platforms and brands, Claranova will improve its conversion rate and average revenue per user (ARPU).

With this new strategy, Claranova is aiming to achieve the following medium-term objectives:

Total revenues of 575 to 625 million euros, representing average annual sales growth of 5% to 8%
13% – 15% EBITDA margin
Net financial debt to EBITDA below 1x

“Our new strategic roadmap marks a decisive turning point for Claranova,” said Eric Gareau, CEO, Claranova. “From a portfolio of activities, Claranova is becoming a more integrated group of international scope with an operational focus, concentrating on its key assets to consolidate its leadership. The initiation of the selling process of myDevices illustrates this shift. This transformation will unlock synergies, stimulate innovation and strengthen our financial performance. Committed to sustainable value creation, we are making operational excellence our top priority. By 2027, ‘One Claranova’, our new strategy, will result in a new cycle of profitable growth with a significant improvement in our margins and balance sheet, to the benefit of our shareholders.”

In other Claranova news, the company reported stable annual revenue for FY 2023-2024 of €496 million, reflecting the Group’s decision to give priority to profitability, EBITDA rose 41% to €46m, up from €33m the previous year, despite myDevices’ underperformance. This strong growth increased the EBITDA margin of nearly 3 points, from 6.4% to 9.3% at June 30, 2024. Restated for the myDevices division (whose sale is being considered),

Over the period, profitability of Claranova’s strategic divisions (excluding myDevices) improved significantly with EBITDA for PlanetArt up 28% to €20m, and Avanquest up 60% to €28m. Efforts to spread out PlanetArt’s marketing investments and reduce the seasonality effect on its business, optimize structure costs, improve returns on customer acquisition investments, and above all ramp up the SaaS business model for software publishing activities, contributed to EBITDA of €18m for H2 2023-2024 (9.4% of revenue), compared with €15m for the same period last year (7.8% of revenue). These figures perfectly illustrate the effectiveness of the Group’s strategy focused on profitability, which should accelerate over the next few years with the implementation of its new “One Claranova” roadmap.

During the year, Claranova was successful in refinancing and extending the maturity of its debt by 4 years, giving a new impetus to its financial development. These measures, which were essential to putting the Group back on a sound financial footing for the long term, had a negative impact on net financial expense for the year, which ended the period at €34m, including a charge of €23.3m^[2] for the early redemption of the OCEANE bonds. This in turn mechanically resulted in a net loss for the period of €12m. At the same time, these bond redemptions (ORNANE, EuroPP, OCEANE) and debt refinancing will reduce the Group’s financial expenses and improve financial income next year.

Reflecting the Group’s increased capacity for cash flow generation, most of these repayments were made from its own funds. Net cash flow from operating activities increased more than fourfold to €40m, compared with €9m the previous year. Similarly, operating cash flow (before working capital changes, tax and financial charges) rose to €42m, compared with €28m at the end of FY 2022-2023. Following the repayments made during the year, by June 30, 2024, Group financial debt was reduced by €40m to €139m, compared with

€179m one year earlier. The closing cash position remains strong at €37m, bringing net debt (preIFRS 16) to €102m, compared with €112m last year.

In €m	FY23-24	FY22-23 Reported basis
Revenue	496	507
EBITDA	46	33
EBITDA margin (% of Revenue)	9.3%	6.4%
Recurring operating income	39	25
Net financial income (expense)	(34)	(28)
Net Income	(12)	(11)
Net income attributable to owners of the Company	(11)	(11)
Net cash flow from (used in) operating activities	40	9
Of which Cash flow from operations before working capital changes, tax and financial charges	42	28
Closing cash position	37	67
Financial liabilities	139	179
Of which current financial liabilities	25	94
Of which non-current financial liabilities	114	85
Net debt	102	112
Net debt / EBITDA	2.2x	3.4x

“The past year has demonstrated our resilience and ability to improve our fundamentals,” said Gareau. “We recorded annual revenue of nearly €500 million, and above all, in line with our strategy focused on profitability, our EBITDA rose 41%, to €46m for the year. This result reflects the combined effects of rigorous cost controls, improved margins and excellent results from our core businesses,”

PlanetArt contribution

PlanetArt, the e-commerce division for personalized objects, reflecting a focus on profitability, demonstrated more measured growth in FY 2023-2024. On that basis, the division reported annual revenue of €365 million, representing a marginal decline of 3% like-for-like (-5% at actual exchange rates). Optimizing customer acquisition costs, rationalizing expenses and marketing higher-margin products, contributed to a significant improvement in EBITDA which rose to €20m for the year, representing a margin of 5% (versus 4% last year).