Cliq Digital AG (CLIQ) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Cliq's Full Year 2023 Results Presentation. My name is Sebastian McCoskrie, and I head Cliq's Investor Relations and will host today's earnings call. Unfortunately, our CEO, Luc Voncken, has the flu and so won't be able to present today. Ben Bos, member of Cliq's Management Board, will take over and give the whole presentation, and I will be reading out the questions you have kindly sent in via e-mail beforehand. Please note the disclaimer shown and that this call is being recorded. The visual, audio and/or transcription of this call may be published, including any of the data arising there from. If you have any objection, please disconnect at this time. I will now hand over to Ben, who will kick off today's presentation. Over to you, Ben.

Thank you, Sebastian. Good afternoon, everyone, and thank you for joining Cliq's Full Year 2023 earnings call today. First of all, I will present our operational achievements and highlights as well our strategy going forward. Afterwards, we will move on to the financials. And after that, I'll be answering your questions. Ladies and gentlemen, 2023 was our best year in company history. Never before have we generated more sales, more earnings and above all, being more innovative. However, as I'm sure most of you are aware, the market environment in 2023 remain challenging also for Cliq economics and geopolitics negatively impacted consumers nearly everywhere and inflation continue to put pressure on discretionary spending. At Cliq, we are also affected by this and felt the effect both in our member sign-ups as well as the marketing prices. We need to pay to keep our performance marketing up and running. But nevertheless, we continued on our multiyear growth story and Cliq's business model remains successful, strong and resilient, and we'll also do so in the years to come. Here is clear prove our concept and how our business has developed over the last 5 years. Since 2019, our sales have grown by over 50% CAGR from EUR 63 million and EBITDA by over 70% CAGR. Now that's what I can call an attractive growth story. So meaning on 2023 last year, we achieved amazing and record-breaking sales and earnings against a very strong comparable year 2022. Never before have we achieved higher sales, which amounted to a record EUR 326 million. And these sales were driven by our bundled content streaming services, which now make up a vast majority of our total turnover. In 2023, the lion's share of our customer acquisition cost of over EUR 135 million were successfully channeled to marketing these bundled content services. And as a result, the lifetime value of our members rose significantly, which translates to a much more valuable customer base acquired. But despite higher customer acquisition cost, our EBITDA came in at EUR 50 million, the highest amount in group's history, and perhaps even more importantly, for all your financial experts out there, the EBITDA was thus up 60% versus an already strong comparable year 2022. Bottom line, EPS grew at a CAGR of over 92% since 2019 and came in at EUR 4.90, which just goes to show our financial discipline as well as our operational excellence. But more about that later. Let's now dive into our key operational highlights of 2023 and shine some light on the drivers of our growth story now as well as going forward. So ladies and gentlemen, our business model is a very special one and a highly profitable one. And I am happy to say that we continue to optimize and improve it further in 2023. Content is key for Cliq. In 2 important ways, not only to entertain our members once they have signed up, but also to attract them to our services in the first place. These so-called hookups [indiscernible] we place are incredibly important to waken and spark the interest of potential members. A bit like the Mars bar that catches your eye whilst the supermarket checkout queue from masons to box office hits and best sellers. In 2023, we continue to grow and curate our content library towards higher quality and more appealing titles, especially with regard to market-specific and niche tastes. We extend that important licenses. We introduced new category extensions like fast channels, Karaoke and live concert recordings as well as new top-rated and awarded content across our 5 categories. Cliq.de, our flagship service in Germany remains our dream come through. Despite a rocky start and many lessons learned, we believe this service has great potential going forward. Currently, we have a solid 5-digit number of members. We appreciate the benefits of the bundled content. Importantly, we gained valuable insight into how best to market such a product, which have flowed into our strategic growth drivers. I will come back to you in a minute. And an important topic for all of us is how what we do impact our surroundings and our planet. Our sustainability project kicked off in 2023. The team involved, hit the ground running, and we have set ourselves an ambitious value-creative road map going forward. Following our successful launch in Latin America, the global expansion of our numerous streaming services has reached a new milestone with the Asian market entry. Lots of sales growth potential had, not just in new countries, but also in the established ones. And last but not least, I come to our most important operational highlight of the year. Cliq's very owned, magnificent 7. We have identified the 7 traffic sources that will help us in considerably improving our consortiums, diversifying our concentration risk and future proofing our business further. Let me dive deeper into the future strategy. So here, you can see our magnificent 7. Our focus on attracting eyeballs and converting these eyeballs into paid memberships is the core of our business model. Previously, we relied predominantly on just one eyeballs or better traffic sources, namely Google display. Going forward, we will extend our outreach and tap into new exciting traffic sources, which promise to deliver more eyeballs, high conversion rates and favorable returns on investments. Our go-to marketing channel for many years now has been Google Display, a very successful partnership and one which has driven our multiyear growth strategy. The display market remains one of the most important channels to source traffic to our services and makes up around 40% of the Google ad impressions in the U.S. However, in recent times, we have seen that the prices we have to pay in auctions for our display and space have risen and remains elevated, especially in Europe. So we need to spread out our wings to tap into new sources to increase our outreach and improve our marketing efficiency. One of those new traffic sources is search. Let me explain to you how this works. Potential new members are googling for content, which will also offer like movie streaming. We bid on such keywords and many orders, of course, which gives the searches a hit to an article about the sort of our after content. This has already been successfully tested in the U.S., and we will roll out this exciting opportunity also in further regions going forward. And if we can hook up or trigger new sign up with these articles, we can also do with videos. In general, the market for a moving image advertisement formats is developing away from linear television and towards digital video formats. This is the second largest impression source in the U.S. and a strongly growing ad market also for us. So for our flagship service, we intend to target and source further traffic by appealing ads on social media, both directly with our content as well as indirectly via influencers. As a brand, our ads needs to resonate with the right people at the right time. Social media advertising allows for real-time engagement, enabling brands like ours to interact directly with consumers. And furthermore, the viral nature of social media facilitates brand exposure and amplification, expanding reach far beyond initial ad placements, ultimately driving brand awareness and sales growth. The potential is really meaningful. One of our many Cliq.de learnings was the benefit to be gained from engaging more strongly with both affiliate and B2B partners. We are frequently approached by other businesses who want to offer their customers access for streaming services and/or keen on giving their customers special offers, discounts and privileges. So in return, we get ad space from strong, well-known brands and can increase our outreach to their customer base. Most recently, we have partnered with Legal once again as well as with the subscriber base of the [indiscernible] and so the Frankfurt [indiscernible] and computer built to give us more reach into the approvals of typically long-term happy readers. Our past cooperation with Lidl, New York and Cola pizza have delivered some really great conversion rates. It makes so much sense to partner up with other brands who share a similar target audience. So and going forward, we have a long list of further interested and interesting partners. Also, assessing portals like MyDeals, Vitra Affiliate partners has proven to convert really well and forge win-win partnerships. Our plan is to integrate this new traffic source into our English-speaking corporations. And finally, a word on an area of great importance for Cliq artificial intelligence. We already embraced the use and deployment of artificial intelligence very early on. We use it to optimize our marketing campaigns and there's our conversions. And we reach and translate with AI, and AI is a great help for many of our day-to-day tasks. And the better the AI gets, the greater the areas of use with applications that Cliq become. We can't wait. So ladies and gentlemen, as you can see from the growth drivers I've just presented, we have a lot to do, but the growth opportunities are huge. We want to continue to be more relevant, reach more potential customers than ever before. Our business model is and has always been a very dynamic one. One that can adapt to different patients, taste products and market conditions. It's not challenged or it's at all that. On the contrary, we operate a marketing machine that runs on fresh eyeballs, traffic in order to perform and meaning to generate profitable conversion. Well, it's not called performance marketing for nothing and just watch what we are doing, increasing our outreach by stepping into new traffic sources to fuel our machine. And exactly, that's what our 7 strategic growth drivers are geared to do. But allow me please to digress for a moment and speak a bit more in detail about our business model. I believe it's always very valuable and often quite necessary to repeat and emphasize what and how exactly Cliq operates. So ladies and gentlemen, Cliq is not a streaming provider in the classical sense. We are not another Netflix or Spotify or Viaplay, very flattering, but not true. We do not navigate and focus our business on member and churn numbers. At Cliq, we navigate and focus on customer acquisition and conversions and doing so very profitably and very early in our customers, our members life cycle. We are first and foremost, marketers, global performance marketers to be precise. We sparked the interest of consumers around the world with our marketing, our ads. And the consumer's response is immediately. It is positive. We signed up a new member. If it's not positive, we've got to work harder. In other words, our focus is always on converting eyeballs into paid and profitable memberships. And our objective is to extend our outreach. We want to always reach more potential members in the mass market with our affordable streaming products. The products we market are digitally namely numerous entertainment streaming service in over 40 countries worldwide. Our USP is twofold: convenience and choice. We offer predominantly one membership with 1 log in, 1 monthly payment for 5 different content categories, a true one-stop shop. And we do this very successfully and above all, very profitably. We want to provide our streaming service to everyone, and we want to do so by bundling the content offered into appealing, convenient and simple services. Cliq's value chain had 3 key elements. We licensed finished content for all 5 content categories. We don't own our products or product it or produce it, sorry. This keeps costs down and operational flexibility high. We then bundle the content from across all our content categories into subscription-based streaming services according to market specific and trends. And finally, we sell these services online to the mass market. Our online advertising experience and expertise enables us to achieve above-market standard conversion rates. That's in a nutshell how we create value. Here are 5 different content categories, movies and series, music, sports, audio books and games appealing verticals to the mass market everywhere. Our content also caters very much into new states and is nonexclusive with the exception of the Italian Serie B football. The convenience aspect and simplicity of a content bundle is what makes a big difference and as a real sales catalyst. And we always ensure that our content is attractive, fresh and meet local tastes. The content is offered via 2 types of streaming services. On the one hand, in the form of single content services, which target specific niche audiences, for example, audio books and music content, specifically for kids or scarry movie content for horror fans. And on the other, fire bundled content services such as [indiscernible] and Cliq.de which offer a wide-ranging bundled entertainment package for the whole family. The majority of our products are so-called numerous streaming services, which are dynamically priced and available in all operating countries. These services provide both single and bundled content streaming entertainment services, whereby the latter constitute by far the majority of the group sales. In addition, our flagship streaming service was stasis in 2023 in Germany on Cliq.de. This most advanced bundles content streaming service offers new features and localized content as well as a fixed price of $6.99 at native fabs, both mobile and for TV or a rollout of an English language version of the refi flagship service is currently under review. Ladies and gentlemen, our business model follows an ambitious growth strategy that focuses first and foremost on conversions and improving those conversions. So let's move on to our 2023 financial highlights and outlook. As already mentioned, the group's main sales focus is on bundled content streaming services. And in 2023, our bundled content sales totaled EUR 307 million and constituted 94% of our total EUR 326 million of revenue. That corresponds to a growth rate of 27% year-on-year, thanks to our increased online advertising campaign and also a higher lifetime value of our customers. Geographically, sales in North and Latin America in 2023 grew the strongest and easily outpaced the overall market growth rate with 25% and 269%, respectively. Our sales growth in North America was mainly due to an increase in more effective marketing campaigns, promoting our bundled content streaming services. 60% of our group sales were generated in North America and 30% in Europe. Our newest region, Latin America, already made up 4% of the total sales and contributed nearly EUR 30 million to revenue after just 5 quarters of operations, well done. European sales growth came in at a still very decent 7% year-on-year, notwithstanding the pressure from the elevated customer acquisition cost in light of heated competition. The group revenue outlook for 2023 faced some challenges and the anticipated ramp-up in sales took longer than expected. Consequently, annual sales fell slightly short by 5% of the 2023 guidance. However, the group business strategy is designed to prioritize profitability over top line growth as clearly demonstrated by the year-on-year EBITDA growth of 16%, which you can see on the next slide. So one very important development in 2023 is reflected in the quality of our generated sales. Our sales in 2023 reflect also the increase in the expected average lifetime value of a customer, the so-called LTV. This was up by 70% last year and amounted to EUR 85 against EUR 73 in 2022, thanks to our focus on selling bundled content streaming services. Looking further at our P&L, our cost of sales was dominated, as always, by our customer acquisition cost. Despite higher content cost, the other content cost of sales in percent of sales were down compared to last year due to cost optimization and a further increase of payments by credit card. Total operating expenses in 2023 grew by 10% due to higher personnel expenses. On average, we had an 80% higher headcount last year. EBITDA increased by 16% in 2023 to EUR 50 million, which was in line with our guidance. Thus the EBITDA margin remained strong at 15.54%, notwithstanding higher marketing costs and higher content-related fees included in the cost of sales. Our financial results improved year-on-year and effective income tax rate in 2023 remained stable compared to prior year at 29%. Bottom line, basic EPS was up 10% against 2022 at EUR 4.90 on the back of EUR 32 million profit for the year. In the fourth quarter, sales contracted in Europe and the rest of the world, but overall, the decline was overcompensated by further sales growth in North America, North and Latin America. And in Q4 2023, we generated the highest sales in group history of EUR 84 million. EBITDA was down by EUR 1 million to EUR 12 million, mostly due to higher operating expenses, which included one-off project costs. All in all, a challenging quarter despite the record breaking sales level. One of the main challenges we faced in 2023 was the stickiness of the elevated market price for our customer acquisition, especially in Europe. In 2023, we spent EUR 135 million on marketing, which means we grew our customer acquisition cost by 21% year-on-year. This spend also went to new countries and new platforms, where obviously, the resulting conversion rates reflected more start-up engines than smooth running, highly efficient marketing machines. But as you all are probably aware, we do like to trial and test new ideas, but that sometimes comes at a cost. One, we limit and contain but still a cost. Our updated strategy to tap into new traffic sources will pay off sooner rather than later, and we are very confident in improving our marketing efficiency going forward. Moving on to one of my favorite financials, cash, despite and I start filing. Despite higher customer acquisition costs, our cash flow from operating activities amounted to EUR 30 million against EUR 24 million in 2022. This cash inflow was driven by the higher EBITDA generated. The cash outflow from investing activities totaled EUR 12 million compared to EUR 8 million in 2022 and was largely related to payments for license content as well as through investment for platform and technical developments. In 2023, we just generated a record EUR 19 million in operating free cash flow. The cash flow -- the cash outflow from financing activities were EUR 13 million and included the EUR 12 million dividend paid out in April. All in all, our cash inflow in 2023 was EUR 6 million. And as always, I'd like to say cash, as always, [indiscernible] at Cliq. So now let's take a quick look at our balance sheet. The total assets grew to EUR 154 million at the end of the year. And our equity ratio increased to 66% from 60% at the end of 2022. At the end of the year, our net cash position was EUR 16 million and included the EUR 12 million dividend paid. So our big access assets are our capitalized customer acquisition cost or contract cost. At the 31 of December, they were valued at EUR 49 million and just EUR 9 million higher than at the year-end 2022. However, the lifetime value of our customer base, our LTV CB, which represents the future revenue expected to be generated by existing members over the estimated individual remaining lifetime at the reporting date grew in the same period by EUR 23 million. This increase was the result of the higher proportion of bundled content streaming services within total group revenue as per the 31 December 2023. The LTV CB totaled EUR 164 million. And please bear in mind that this is an off-balance sheet item, our aid in Jan. Ladies and gentlemen, as announced on Tuesday, the group has decided to initiate a share buyback program as part of 2024 capital return strategy and not to distribute a dividend from -- for the full year 2023 profit. Consistently, returning capital to shareholders is a priority at Cliq and reflects our financial discipline. The share buyback program is a testament to our conviction in Cliq's operational strengths and objectives of our growth strategy. The buyback will return capital Cliq Digital shareholders of up to EUR 13 million, which would correspond to a payout of 43% of the group's operating cash flow in 2023. Cliq shares have been strongly affected by market volatility and are viewed by many financial experts as significantly undervalued. This program is aimed to boost shareholders' value and can be more tax efficient for some of our shareholders. From our perspective, we see this buyback as a vote of confidence in the group's future prospects. The share buyback program is based on the authorization of the Annual General Meeting of 14 of April 2022, which allows the acquisition up to let's say, up to 650,000 -- nearly 650,000 shares of Cliq. The shares bought back shall be used to subsequently reduce Cliq Digital share capital through cancellation and/or for the share-based payment arrangements, including stub option plants. The buyback will be affected via the stock exchange and et cetera training of Deutsche Boerse AG and exercised independently and without the influence of Cliq Digital by investment bank commissioned by Cliq which shall make a decision on timing and amount of individual order placements. As part of our capital return strategy, we shall decide on a yearly basis to what extent and how capital will we return to our shareholders in the coming years. Thanks to our strong balance sheet, we are able to finance the share buyback program through current liquidity as well as future operating cash flow. As I already mentioned, our business model is far from that, and we are well positioned to stay firmly on our multiyear growth track. We are and always will be a growth company. Our growth comes from more outreach, more conversions and more countries, extending our advertising channels and tapping into new traffic sources as well as offering our members the payment method of their choice, are key to reaching our growth targets and paying the way to further sustainable growth. The economic environment remains challenging and is deteriorating across many countries, especially in Europe. However, you can see our 2 most relevant markets. On the left-hand side, our how shall I say, input market, the global digital ad market and on the right, our output market, the market for global digital media. Even if competition is increasing, we are confident that we can win further market share with our pretty unique bundled contact service proposition. And as you can see, we are selling content, which is the stand to grow further in increasingly fragmented market. Our aim is to contribute meaningfully to the shaping of the future streaming landscape and be well positioned at the crossroads of technology, entertainment and consumer behavior. For 2024, we are following a clear path to achieve our goals. We will continue to increase our content offering and focus adversely on conversions, which are key to attracting and acquiring new members. We will also further expand our business into new and exciting geographies. Hence, we expect in 2024 group sales to come in between EUR 360 million and EUR 380 million. 43% CAGR since 2019 is quite a remarkable achievement. Furthermore, EBITDA in 2024 is to range between EUR 52 million and EUR 58 million after customer acquisition cost of between EUR 150 million and EUR 170 million. Our midterm sales target is to achieve a run rate during the last quarter of 2025 to realize more than EUR 500 million in revenue going forward. We are well on track to continue our multiyear growth story. Now a look on sustainability. Last but not least, sustainability is an important topic also at Cliq. And last year, we have taken kind steps in our ESG initiatives. We kicked off our group-wide sustainability project to build a consistent and transparent reporting system, which will meet the legal requirements of our stakeholders. We have since outlined and determined our group-wide commitment and engagement as well as top management ownership. In 2023, the group started off with our gap analysis report, which will provide a strategic analysis of Cliq's current sustainability efforts, ambitions and local areas as well as strategic road maps towards CSRD compliance in 2026 and a more advanced sustainability strategy in 2030 and beyond [indiscernible] sentence. As part of the GAAP analysis project and analysis of Cliq's assisting sustainability practice and management system has been conducted to identify areas of improvement to be implemented in the following periods. A double materiality assessment is currently ongoing and encompasses a strategic evaluation answers of sustainability matters from 2 key angles, the financial perspective and the impact perspective. By undertaking this assessment, Cliq Digital strives to gain a comprehensive understanding of the sustainability issues that hold the utmost importance of our organization. The group conducted a carbon footprint assessment and Scott screening to help identify interact emissions, upstream and downstream in the company's value chain. The outcomes of this work will be relevant to develop an action plan towards the group's goal of net zero greenhouse gas emission. In 2024, Cliq will finalize the initiative launch in 2023, elevating its sustainability journey by defining specific and sustainability targets and preparing the first internal sustainability report in accordance with GRI standards. This proactive approach will provide valuable insights into reporting requirements and allow the group to address any significant short comment promptly. Into 2025, Cliq will take initial steps towards implementing software solutions tailored to its long-term sustainability reporting needs. These steps are essential to ensure the integrity and accuracy of the sustainability reporting over the long term, reinforcing the group's commitment to transparency and accountability in line with regulatory requirements. So ladies and gentlemen, Cliq has an appealing investment case. As you can see here, ours is through growth story with some very compelling fundamentals and multiples. Today, we have shown our strategic growth drivers, giving you further insight into how our business model works and giving guidance for the years to come. Thank you for your kind attention, and we shall now begin our Q&A session. Sebastian?

Our first question -- sorry. Thanks, Ben. Our first question today is from Joris Tasman and regards artificial intelligence. What threats and opportunities have you identified from AI technology for the Cliq Digital business model?

Well, for us, at Cliq it's important to keep up to date with emerging technologies. So we have spent a lot of time exploring under artificial intelligence challenges in the past year. Of course, there are challenges that come with artificial intelligence. The technology is evolving rapidly, and we have to make sure that there is awareness and understanding how AI can support everyone's expertise in a safe and efficient way -- efficiency way of effective way. On the other hand, AI opens up a wide range of opportunities, especially for data-driven companies like Cliq. It allows us to analyze and leverage the vast amount of data we collect from more efficiently to further improve our ROI return on investment. Speaking of content offerings, we can't ignore that AI can be used to create entertainment content. In fact, we are currently busy building various AI-powered entertainment application to enrich our content offerings. So overall, AI has the potential to be a real growth driver for Cliq in many areas. But it's important to keep in mind that it's not matching. You still need the expertise in place to make use -- they make use it in a way that makes sense.

Our next question is from [indiscernible] an Italian journalist. He says, buybacks are welcomed, but why haven't insiders been buying Cliq's stocks?

Thanks for your question, Vincent [indiscernible]. As we have mentioned previously, also Supervisory and Management Board members practice their own portfolio, their [indiscernible] measures and endeavored to not put all their eggs into one basket.

Our next 2 questions come from Andrea Zayavck on the share buyback. First, could you elaborate on the specific goals and expected benefits of this program for shareholders? How do you measure and track these benefits?

Well, thanks, Andrea. First off, to be clear, Cliq is and always has been committed to consistently returning capital to its shareholders. Our capital return strategy foresees returning capital to shareholders, either via different distribution or share buyback. Incidentally, we have been authorized to do the latter since 2017. The authorization was renewed at the 2022 AGM, and we made use of it on Tuesday. To be clear, we are not ruling out distributing difference again in the future. We only favor this type of capital repayment, buyback for 2024 for due to the high market volatility. Our objective is to increase the company's shareholders' value. For some time now, we have been receiving a large number of inquiries from investors who are in favor of a share buyback also for tax reasons. So the buyback decision was also taken in particular with a few of the best possible capital return strategy for our shareholders.

Andreas, second question. Considering the significant portion of shares being bought back, does this program signal any potential future plans to take the company private?

Well, as I just mentioned, the Management Board is committed to maximizing the value of the company for its shareholders. These -- there are no concrete plans for delisting.

Next up, some questions from Gindi Yanko. Could you please explain the proportion from the bundled services content? What percentage of it comes from Cliq DE platform designed only for Germany? And what percentage comes from the rest of the world, U.S., Europe and other countries. How can a user subscribe to your services from a country outside Germany?

Thank you for the question. Our approach to marketing and service provisions tailored to individual countries, ensuring a localized experience for users. While we don't disclose granular sales data on brand level, our earlier presentation highlighted that the majority of our sales relates to our bundled services and is largely driven by the U.S. market.

Our next question comes from Felix [indiscernible] from Warburg. How do you plan to implement the share buyback, an offer to the shareholders could be needed.

Well, thank you, Felix. In 2023, Cliq shares traded with a turnover of EUR 138 million, of which EUR 102 million alone were traded on XTRA in Frankfurt. So this was nearly 5x higher than the scale and scale all share average, making Cliq's trading turnover in 2023 to be the third highest overall. So I do believe we -- the market for Cliq's shares is liquid enough to support our share buyback program without the need of an offer.

How is Cliq DE proceeding? Are there any numbers paying, nonpaying users, EBIT?

Well, as you know, we don't break out financials by individual services. But as I mentioned before, we are progressing nicely. With Cliq.de, we tested 10 different traffic sources and learned which ones work and which didn't convert [indiscernible] into paid membership as previously expected. So TV ads and digital out-of-home campaigns proved too expensive for the conversions achieved. However, partnerships with the other brands like [indiscernible] and FYZ as well as with trusted affiliate parts have proven to increase our outreach. During the 6-month test phase, we were able to acquire a 5-digit number of new members. We believe there's a good market for our flagship product out there and not just in Germany.

Our next questions are from Roland Konen of Value Holdings Capital Partners. According to the Annual Report '23, the shareholdings of the Executive Board and Supervisory Board are at 9% according to the annual report at 11%. Why is there a decline when the executive bodies were unchanged as of the 31 of December, were directors dealings, reports admitted?

The numbers shown in the annual report are an aggregate number of positions. Not all of them are being held directly by the individual board members, a position which has changed is that of a legal entity in which Board members, among other investors, all indirect participations. For this change in shareholding, Cliq.de has not received a directive dealing notification.

Speaking of executive board salaries, these will amount to 22.5% of net income in '23, after 25% in '22, 37% in '21, which I consider to be too high in percentage terms. The Executive Board should be paid based on performance but in a reasonable proportion to the group result. The entrepreneurial risk is compensated by the shareholding and the resulting dividend income and share price increases. What is your view on this, Ben?

Well, Roland, a bit of a difficult question for me personally to answer as I also received Management Board pay. Please be aware that around 28% of the compensation is an accrual for the share-based option program and has not been paid out yet. Additionally, another part, a big part of our remuneration is performance related. And as you know, the company performed very well in 2023.

I am in favor of the announced share buyback, but would also have liked a dividend with a lower volume of ship buyback. Was a combination of buyback and dividend also under discussion? If so, why did you decide against the dividend?

Well, the buyback already corresponded to 43% of our operating cash flow. So in combination with the dividend distribution would be quite a stretch. As previously mentioned, our capital return strategy foresees returning capital to shareholders, either via different distribution or share buyback. We are not ruling out distributing dividends again in the future. We only favor the buyback for 2024 due to the high market volatility. Our objective is to increase the company's shareholders' value. For some time now, we've been receiving a large number of inquiries from investors or in favor of a share buyback also for tax reasons. The buyback decision was also taken in particular, with a few on the best possible capital return strategy for our shareholders.

Are you aiming for prime standard listing?

As a listed entity with ambitious commercial goals, we are always looking to growth perspectives, including our current listing. We're already today fulfilled several criteria for uplifting to the prime standard and monitor the requirements and changes regularly. There are a few issues of our size with the same quarterly reporting scope and speed. Nevertheless, there is currently no ongoing active project to enter into the regulated market.

Can you please specify the higher one-off other operating expenses in the fourth quarter, how high were they? And what were they for?

Yes. Well, the higher one-off project costs, operating project costs, operating expenses that are related to costs from corporate and organizational restructuring to prepare the company for the future growth plans.

Could you also briefly explain why IT expenses have risen significantly, while sales and travel expenses have fallen considerably?

Yes. The higher IT costs are the results of increased traffic volumes and higher demands on computer processing power from transcoding, the increased content portfolio. The sales and travel costs in 2022 were incidentally higher and are back to normal efforts in 2023. The 2022 sales and travel cost events stimulating our corporate culture and cooperation between Cliq's offices and many newly hired employees doing COVID time. So that's one of the reasons why we had back then higher costs on trafficking.

Our next questions are from [indiscernible] at Montega. Regarding the outlook for '24. Within the Executive Board statement, you communicated the goal of making the business model in '22 -- '24 more future-proof in particular. What exactly can we derive from that?

Thanks, Neils. Well, future-proofing is, for example, extending and diversifying our traffic sources, which I went into in detail earlier on. Also expanding our geographic footprint into new countries and regions contribute meaningfully to our future business development, as does offering our members more attractive services, payment bended and content.

Your outlook for 2024 is noticeably below consensus in terms of both sales and earnings. In your opinion, what has changed so much that the previous expectations cannot be met?

Well, we need to have ambitious plans to be conservative in our guidance. Our expectation for our sales ramp-up in Q4 2023 were unfortunately not met, and the customer acquisition costs have remained elevated, especially in Europe. So sometimes it's better to be safe than sorry.

What needs to happen to reach the upper end of the earnings guidance, could you please roughly outline the scenario?

To reach the upper bracket of our earnings guidance, several key factors need to align favorably. Our sales and earnings guidance is linked to our ability to effectively promote our streaming services to a global audience while upholding a profitable margin. The guidance range we've provided for both sales and EBITDA reflects the earned volatility in advertising prices, influenced by external factors beyond Cliq's direct control. So to realize the upper end of our earnings guidance, it's imperative that advertising price remained stable or either it decline.

Regarding mix in the marketing spend. Any updates regarding the shift of marketing spend towards further channels. Recently, you stated to finalize the marketing strategy for video ads.

Well, I kindly refer to our presentation in which we elaborated on what we called our Magnificent 7. In 2023, we successfully launched the new traffic or search and we have seen the marketing opportunity for video, which we are planning to launch a project in 2024. Initially starting with small-scale testing to learn and master the new channel before rolling it out on a larger scale.

The other last question in regards to the decision towards a share buyback approach instead of dividends. Could you please elaborate on which and how many employees are entitled to the benefits of the share option plans and share appreciation rates?

Sure. Board members and key employees are entitled to the benefits of the share option plans and share appreciation rights. Currently, a total of 17 employees participate in the share appreciation rights and stock option plans.

Our next 2 questions were sent in by Gavin Hobe about our outlook. 2024 EBITDA is expected to range between EUR 52 million and EUR 58 million. What is the expected range for EPS, the same result as '23, EUR 4.90?

Well, thank you, Gavin. We guide for the short term, always on the strategic KPIs that are measured continually and are part of the monthly reports to the management board. The strategic key performance indicators used to manage the business performance of Cliq, our EBITDA, revenue and customer acquisition costs and not EPS.

Is there also an expectation for outlook 2025 for EBITDA and EPS?

Well, our medium-term guidance is only on sales.