Claranova: Strong Growth Sustained Over the First 9 Months of Activity - Moderate Impact of COVID-19 on Q3 Revenue 

Regulatory News:

This press release presents unaudited consolidated revenue, prepared in accordance with IFRS

The Claranova group (Paris:CLA) reports revenue of €307.3 million for the first nine months of 2019-2020 (July 2019 - March 2020), up +57%, with organic growth of +15%¹. This revenue increase of over €100 million in nine months demonstrates the resilience of the Group’s activities in a complex economic and health environment, marked in the third quarter (January 2020 - March 2020) by the launch of lockdown measures in the countries where the Group operates. In this context, Claranova successfully capitalized on the surge in online consumption and maintained its strong growth trajectory. Q3 revenue grew +30% to €72.6 million, with organic growth of +7%, at a time when many companies are facing a major economic crisis.

Revenue trends by division for the first nine months of 2019-2020 were as follows:

All Group activities reported growth in Q3 2019-2020:

Mobile Printing: Revenue up +78% over 9 months, with organic growth of +18%

The Mobile Printing division posted revenue of €235.8 million for the first nine months of 2019-2020, an increase of +78%. At constant scope, traditional photo printing activities confirmed their momentum, reporting revenue growth of +20% to €159.7 million, including €37.5 million in the third quarter (+7%). This trend reflects the refocusing of the customer acquisition strategy. Investment was stepped-up in Europe where acquisition costs remain low, with the aim of accelerating market gains in this high growth potential region. FreePrints activities in Europe therefore continued their growth trajectory in Q3, with double-digit expansion rates. In the final weeks of March, the division benefited from the increase in online shopping tied to COVID-19. The Group noted a significant increase in the number of downloads of its FreePrints apps in certain European countries.

The Personalized Gifts business acquired in August 2019² generated revenue of €76.1 million over the eight months of consolidation, with additional Q3 revenue of €12.2 million. This Q3 performance reflects the highly seasonal nature³ of the personalized gifts business and also includes the deferral of revenue and results following the closure of the Personal Creations plant in the United States in March. This measure, which is expected to impact short-term profitability, was taken to protect Group employees against the COVID-19 pandemic. Orders continued to be taken throughout the period and the plant was able to start resuming production in May. PlanetArt continues to integrate Personal Creations and will focus in the coming months on developing synergies with these activities, particularly in the mobile sector.

Mobile Printing division revenue trends for the first nine months of 2019-2020 were as follows:

Mobile Printing division revenue trends in Q3 2019-2020 were as follows:

Printing activity surged with the lockdown from April: new FreePrints customers up +69% and printing up +77% across FreePrints products as a whole

Since the beginning of lockdown, the Group has noted a sharp upsurge in Printing activity, reflected by a year-on-year increase of +69% in new customer acquisitions and +77% in photo product printing across all FreePrints products. The increase in the customer base is a major growth driver for the Group in the mid-term.

Software: ongoing transition towards subscription-based software publishing

The Software division, which brings together the Claranova group’s software publishing activities (Security, PDF, Photo), posted revenue of €67.9 million for the first nine months of 2019-2020, up +12%. This increase includes Q3 revenue of €22.1 million, up +8% on Q3 2018-2019, already a particularly strong period (+ 22%).

As in the first six months, Q3 revenue trends reflect the ongoing transition of software publishing activities towards a subscription-based sales model. This transformation, which will boost and secure the division’s future growth, has a short-term negative price impact, as the unitary price of software sold by subscription is lower than that of software sold under a perpetual license. This temporary impact will be largely offset in the coming years by recurring license payments, enabling a significant increase in the division’s margin. In the third quarter, recurring revenue therefore continued to grow, representing 46% of the division’s activities, compared to 42% in the first-half of the year. Subscription-based software sales now account for the majority of sales of Claranova’s proprietary brands: InPixio (47%), OneSafe (59%), SodaPDF (84%).

IoT: deployment significantly accelerates (+ 60% excluding non-recurring items in Q3)

The IoT division reports revenue of €3.5 million for the first nine months of 2019-2020, up 32% like-for-like. Excluding non-recurring revenue received under commercial agreements signed with certain resell partners (including the US telecommunications operator Sprint), division revenue surged +60% on Q3. This growth reflects the takeoff of commercial deployment of the division’s IoT solutions, supported by the further strengthening of its resell partner network. At the end of March 2020, the IoT division had 463 customers and a network of 123 resellers, up +65% and +28%, respectively, on the end of December.

The acceleration of commercial deployment is mainly based on the ramp-up of temperature management solutions and the successfully launch of the No Dead Zone^TM panic button multi-network technology, which protects hotel employees. The IoT division also announced the integration of its IoT platform technology in the BOB Assistant^TM predictive maintenance solution in partnership with Eolane, the European leader in electronic industrial services and connected solutions. This industrial equipment predictive maintenance IoT solution with embedded artificial intelligence opens up new avenues for the division in high-potential sectors (energy, water treatment, etc.).

While on-site deployment is temporary suspended during the lockdown, the growing interest of customers and prospects for myDevices’ solutions are now established and the COVID-19 epidemic may even accelerate the integration of IoT solutions within companies.

COVID-19 epidemic: Group employees and activities are highly resilient

From the outset of the pandemic and throughout the world, Claranova has taken all the necessary measures to guarantee the health and safety of its teams. Wherever possible, we immediately introduced home working. We have made numerous collaborative tools available to enable our employees to work efficiently and to guarantee business continuity and actively support our customers. In addition to implementing these tools, we placed considerable importance on maintaining the social link provided by workplace communities. By regularly organizing online meeting places, we have sought to ensure that none of our employees suffer isolation or distress due to the lockdown measures and to fight against the separation of businesses or regions.

We have decided to continue home working after the lifting of lockdown. In all the countries where the Group operates, we have chosen to gradually leave lockdown to ensure a smooth recovery under the best possible conditions for the health and safety of employees and others. We have systematically limited travel to the workplace, whenever possible. All managers have been available and continue to be available to answer the numerous personal and professional questions that may arise in this complex period.

At this stage, the company is particularly resilient and has successfully capitalized on the growth in online activity linked to COVID-19 and changes in consumer behavior.

In the Mobile Printing division, activities generally benefited from these changes, with excellent sales trends. The impact on sales of gifts and personalized items has still to be determined. These activities are highly dependent on seasonal social events (in the current quarter, mothers’ and fathers’ day, graduation, etc.). We are not yet able to precisely a the impact on results.

FreePrints activities have helped reduce the impact of social distancing, with initiatives such as sending free personalized greeting cards to friends and family.

The impact of COVID-19 on software activities has been limited, with certain products even appearing to benefit from the development of online sales.

Pierre Cesarini, CEO of the Claranova group, said: “Claranova continues its growth trajectory, with revenue exceeding €300 million in the first nine months of 2019-2020. In this third quarter, the Group’s activities continued to grow, despite lockdown measures in many countries. Claranova remains protected by its business model, which focuses on online acquisition of B2C customers using freemium business models.

Despite the potential impact on our results of the highly seasonal nature of our personalized gifts business (mothers’ and fathers’ day, graduation, etc.), we have observed a significant upsurge in downloads of our FreePrints apps and our Avanquest software in recent weeks. This trend confirms Claranova’s considerable resilience and its ability to continue its strong growth by acquiring new customers around the world, thereby guaranteeing our future outlook.

I would like to warmly thank our teams, whose extraordinary commitment and capacity to adapt have enabled us to achieve these exceptional results in such unusual times.”

Financial calendar:
August 11, 2020: 2019-2020 annual revenue

Telephone number for individual shareholders: 0805 29 10 00 (standard rate).
Line open on Tuesdays to Thursdays between 2 p.m. and 4 p.m.

About Claranova:

A high-growth technological group, Claranova is an international player that is firmly positioned in the long term, drawing on resilient business models for high-growth potential markets. As the leader in personalized digital printing (Mobile Printing), Claranova also sets itself apart through its technological expertise in software publishing (Software) and the Internet of Things (IoT). These three business divisions share a common vision: simplify access to new technologies using reliable solutions, combining innovation and ease of use. Drawing on this vision, for the past four years Claranova has enjoyed an average annual growth trajectory of + 30% while improving its profitability, both through organic and external growth. The Group generated revenue of €234.3 million in H1 2019-2020, for an operating margin of 5%.

For more information on the Claranova group:
https://www.claranova.com or https://twitter.com/claranova_group

CODES
Ticker:  CLA
ISIN: FR0013426004
www.claranova.com

Disclaimer:

This document contains forward-looking information that may only be interpreted at the date of its communication and Claranova refuses any intention or obligation to provide, update or revise any forward-looking statements, as a result of new information, future events or other factors.

¹ Organic growth is equal to the increase in revenue at constant consolidation scope and exchange rates.
² Personal Creations’s personalized gifts business was acquired on August 2, 2019.
³ The personalized gifts business generates the majority of its revenue and profitability at the year-end holiday period.

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