Alternative Payment Providers Will Unlock Digital Market Resilience

Key Takeaways

• Regulatory hurdles in payment processing are disrupting customer acquisition, but strategic payment diversification and a debt-free balance sheet support resilience and future growth.
  
• Operational efficiency and a focus on higher-value customers are enhancing profitability and positioning the company for margin expansion as payment disruptions ease.
  
• New payment regulations and high reliance on credit cards severely threaten customer growth, revenue stability, and investor confidence, intensifying long-term operational and financial risks.

Catalysts

Sells subscription-based streaming services that bundle movies and series, music, audiobooks, sports, and games to consumers in Germany, North America, Europe, Latin America, and internationally.

• The rollout of stricter global payment regulations and card scheme monitoring programs is currently restricting Cliq's ability to acquire new customers and process recurring subscriptions, but management is actively pursuing alternative payment providers and payment diversification (e.g., Apple Pay, Google Pay, PayPal); successful adaptation could restore customer acquisition channels and support revenue recovery and growth.
  
• Despite current disruptions in payment processing, long-term tailwinds remain intact: the global shift toward digital consumption, rising smartphone/internet penetration, and growing willingness to pay for subscription bundles continue to expand Cliq's addressable market, presenting future upside for both revenue growth and ARPU as these frictions are resolved.
  
• Cliq is exhibiting sustained efficiency gains and cost discipline, with sharply lower customer acquisition costs, reduced headcount, and rising EBITDA margins-even in a challenging environment; as payment issues are resolved, this leaner cost base should allow for improved profitability and margin expansion relative to previous periods.
  
• The company's focus on acquiring higher-value, more profitable customers (even at the cost of a temporarily smaller subscriber base) is lifting average lifetime value and ARPU in key geographies; when acquisition channels normalize, this quality-first approach should translate into healthier revenue and earnings per user.
  
• Although current regulatory/friction issues are weighing on sentiment, Cliq's robust net cash position and absence of debt provide resilience, enabling continued investment in proprietary content, partner relationships, and digital product innovation-supporting long-term competitive positioning and future revenue and earnings growth.

Cliq Digital Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Cliq Digital's revenue will decrease by 29.3% annually over the next 3 years.
• Analysts are not forecasting that Cliq Digital will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Cliq Digital's profit margin will increase from -12.3% to the average DE Software industry of 12.2% in 3 years.
• If Cliq Digital's profit margin were to converge on the industry average, you could expect earnings to reach €9.5 million (and earnings per share of €1.9) by about September 2028, up from €-27.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 2.2x on those 2028 earnings, up from -0.6x today. This future PE is lower than the current PE for the DE Software industry at 33.2x.
• Analysts expect the number of shares outstanding to decline by 2.33% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.7%, as per the Simply Wall St company report.

Cliq Digital Future Earnings Per Share Growth

Risks

• Significant disruptions from new global digital payment regulations (Visa's VAMP and similar acquiring bank standards) are materially restricting Cliq Digital's ability to acquire new customers and process payments from existing subscribers, putting immediate and sustained pressure on sales and revenue growth.
  
• Heavy reliance on credit card processing (98% of group sales) exposes Cliq Digital to outsized operational risk from further tightening of payment regulations or industry-wide shifts in digital transaction security, which could continue to cause customer churn, undermine future subscriptions, and erode core revenues.
  
• Persistent adverse trends in key markets-such as high customer churn rates (exacerbated by regulations like the FTC's click-to-cancel rule and stricter refund/cancellation rules), declining customer base, and a reduced lifetime value per user-threaten long-term customer retention, subscription revenue, and the lifetime value of the customer base.
  
• The shift to a "profitability first" strategy and resulting cuts in customer acquisition spend have shrunk the customer base and top-line sales, indicating that any inability to swiftly adapt the product or acquisition model could limit Cliq Digital's ability to return to growth, further weakening revenue scale and earnings potential.
  
• The company's inability to quantify the total impact of these payment ecosystem disruptions, coupled with withdrawal of future guidance and halted share buyback programs, increases long-term financial uncertainty and undermines investor confidence, heightening risk to both future earnings and Cliq Digital's valuation.

Valuation

• The analysts have a consensus price target of €3.41 for Cliq Digital based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €77.7 million, earnings will come to €9.5 million, and it would be trading on a PE ratio of 2.2x, assuming you use a discount rate of 6.7%.
• Given the current share price of €2.95, the analyst price target of €3.41 is 13.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.