CLIQ Digital AG

XETRA:CLIQ

Earnings Call Transcript 2023-Q2

[Operator]

This meeting is being recorded.

[Sebastian McCoskrie, executive]

First half year 2023 video webcast. 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 therefrom. If you have any objection, please disconnect at this time. After the presentation, we will answer questions sent in by e-mail prior to this call.

I will now hand over to Luc Voncken, our CEO, who will lead you through this webcast. Over to you, Luc.

[Luc Voncken, executive]

Good afternoon, everyone, and welcome to our first half year 2023 results presentation. My name is Luc Voncken, and I'm the CEO of CLIQ Digital. With me today is Sebastian, our Head of Investor Relations, who will later on read out the questions currently sent in via e-mail. On today's agenda, I will first present our operational highlights and then our financial results. Afterwards, I will be answering your questions.

Ladies and gentlemen, the economic backdrop in 2023 remains worrying: war, political, economic, as well as climate change has all ranked high to worry consumers everywhere. But the direct effects of recession, disinflation and higher mortgage rates adversely also affect consumption demand. Despite weak consumer sentiment, CLIQ's strong performance in the first half year of 2023 was a record break. Our unique business model remains attractive, scalable, and above all, resilient.

Never before in the group's history have we generated more cash in the first 6 months than this year. EUR 11 million operating free cash flow makes me so proud and just goes to show how cash-generative our business really is, especially as we all know cash is king.

Our Annual General Meeting Was successfully held again in person in Düsseldorf, with the highest number of shareholders ever registered. All resolutions were passed in accordance with the proposals of the administration, including the conversion from bearer to registered shares as well as the distribution of a record EUR 1.79 ordinary dividend per share. And even after paying out our record dividend of close to EUR 12 million in April, we still have EUR 8 million net cash in the bank at the end of the half year. Ka-ching! Not only was our cash flow spectacular, all our relevant key financials were up and record-breaking.

Group sales have never been higher than in the first 6 months of 2023. We generated an incredible EUR 160 million of sales. That's 37% more year-on-year and the highest half-year levels in euros ever. Once again, CLIQ has delivered double-digit growth rates, both top and bottom line.

Another record-breaking in the first half year was EBITDA, which grew by 37% to EUR 25 million. Consequently, our EBITDA margin remained strong and stable at 16%. Bottom line EPS was EUR 2.49 on the back of EUR 60 million profit for the period, a growth of 26% against prior year's first half. We are all set to continue our multi-growth story according to our internal forecast, expect the second half year to deliver and continue our double-digit growth rates.

Ladies and gentlemen, in the first half year, we basically met market earnings expectations once again. As you can see here, our actual sales fell slightly short on the consensus estimates, but our earnings were in line with the analysts' forecast. Kudos to them, and thanks.

Moving on to our operational highlights in the first half of 2023, we made further inroads in improving our services, both at our numerous streaming services as well as at our flagship bundled content streaming service, cliq.de. Content is an important part of our business. Amongst various procurement agreements and contract extensions for our movies and series vertical, 3 major upgrades to our international libraries were particularly outstanding, namely for our markets in Latin America as well as in Italy and Spain.

For our new streaming service in Spain and across Latin America, we added over 150 Spanish-language feature films, including Hollywood blockbusters starring popular actors like George Clooney, Arnold Schwarzenegger, Bruce Willis and Richard Gere. And in Italy, we complemented the catalog with over 50 feature films with an internationally acclaimed cast, including Hollywood stars Daniel Radcliffe, Nicolas Cage, Liam Neeson and Johnny Depp. But also the content offering at our flagship service was significantly beefed up.

For cliq.de, we extended our movies, music and sports content deals with LEONINE, [ High View ] and Motorvision. We added 2 new linear DAZN channels, RISE and FAST, to further improve our sports vertical as well as 3 additional music channels for our rap, rock and oldie fans. We can really say, also on sports, cliq.de. is the home of sports. With the implementation of Zebralution, we have further improved our audio book and audio plays portfolio with content from popular German publishers. All these licensing upgrades contribute to making our numerous streaming and flagship services more attractive to a wider audience of all different age groups.

Allow me to give you a more detailed update on our flagship service: cliq.de's supporting brand marketing campaign was fully launched in April this year and generated over more than 200 million contact movers, so-called impressions. Our brand marketing activities for the German flagship streaming service successfully created awareness and conversions. Based on the data generated on our campaigns in April and May, the group has revised its approach and paused the TV campaigns and reduced the online campaign budget until after the German summer holidays and took the time necessary to improve our overall conversion rate in the full customer journey.

We don't want to burn our marketing spend. We learn from it, we test, we optimize and scale up in a controlled way. That's really the CLIQ way. In the meantime, we have kept some awareness TV campaigns for our music channels' online campaigns, hence, we advertise, for example, in the BILD am SONNTAG, which you can see here.

The recent addition of PayPal preselect as a new payment means for members has led to 50% more conversions on the payment page only, and further measures to improve the customer journey are also expected to result in higher conversion rates. In addition, further measures to improve the registration flow have been implemented, which also lower the customer acquisition costs.

Please remember, we are a small but careful company. We want to make our dream, cliq.de, come true in the best possible way. And as with all our streaming services, cliq.de needs to run profitably sooner rather than later. One recent and very gratifying cliq.de milestone was winning this year's German Brand Award, one of the most prestigious brand awards both nationally and internationally.

Out of over 1,300 entries from 17 countries, cliq.de product and brand launch was awarded Best of Best in the category, Excellent Brands, Newcomer Brand of the Year. We were honored to be winner in the category, Excellence in Brand Strategy and Creation, Brand Innovation and New Business Models. And last but not least, we won golds in the category Excellent Brands, Media Entertainment. The jury of the German Design Council is composed of independent interdisciplinary experts from corporates, academia, consulting services and agencies. Their recognition make me and the whole team so endlessly proud and was an absolute highlight for us.

Ladies and gentlemen, at present, one of the hottest topics around is artificial intelligence. At CLIQ, we have an expert group set up and have been utilizing artificial intelligence and reaping its benefits for quite a while already. We currently deploy AI for coding and research as well as generating content, images and text. In the future, we want to harness even more potential from AI.

Our marketing campaigns will benefit from targeting more reliable keywords and generating localized banners more efficiently. We will be able to conduct better trends research for more relevant ad content across different markets. And we expect to be able to identify major events across multiple markets to capture new campaign and product opportunities. We still have some way to go, but we expect great support for CLIQ from AI.

Ladies and gentlemen, allow me now to present to you our financial highlights. Here, we show the breakdown of sales by service and region. The group's main focus is selling, as you know all, bundled content streaming services. This retail purchased at a higher large membership price than single content services and grew year-on-year by 50% and constituted 93% of our total revenue.

Compared with the prior year's share, you can really see what a growth driver of bundled content services are for CLIQ. Geographically, North America and the European sales grew year-on-year at 36% and 33%, respectively. Latin America sales grew fastest to EUR 6 million, a true testament to the scalability of our business model.

Our EBITDA in the first 6 months increased in line with the sales development by 37% to EUR 25 million as the EBITDA margin remained strong at 16% despite higher marketing costs and higher content-related fees reported in the cost of sales. Thanks also to an improved management of our cost of sales, we were able to expand our EBITDA margin the second quarter.

Operating expenses grew mainly due to our higher staff number. At the end of June, we counted 177 Cliqers on our payroll, which is more than 30 staffers year-on-year, but also due to the higher IT costs resulting from the more content offered, including live streams. Bottom line, basic EPS in the first 6 months was up 26% against prior year first half at EUR 2.49 on the back of a net profit of EUR 60 million.

Let's go to our growth story. Here, you can see our multiyear growth story, including the strong record-breaking group performance in the first 6 months in 2023. For me, this is always a great slide to show, which proves that CLIQ is a true growth story and delivers what is promised in a very, very good way. Looking ahead, our internal forecasts for the next half year feels very well on track to fulfill our 2023 guidance.

Ladies and gentlemen, as you know, our sales growth is driven by marketing activities. In the first 6 months of 2023, we spent EUR 65 million on marketing, which means we grew our marketing spend, or better, our customer acquisition costs by only 24% year-on-year; and the corresponding sales growth was 37%, as you know.

Due to stronger bidding competition in the second quarter on the platforms where we acquire our new members, especially in Europe, we encountered higher market prices. Consequently, we decided strategically to scale back the number of our marketing campaigns and are continuously launching and testing more alternative traffic sources and new media exchanges.

In response to the elevated customer acquisition costs, the company has strategically focused on acquiring new bundled content members with a projected higher average lifetime value, which is instrumental in maintaining healthy profit margins. While this approach has resulted in a lower number of reported members compared to the previous period to empathize on attracting those with greater potential for long-term value has proven to be very effective.

Despite the lower member count, we continue to achieve a very decent conversion rates in the first half year. But we strive for more. We have now created new types of ad campaigns which will outperform our old ones and deliver higher conversion rates going forward. We are continuously launching and testing more alternative traffic sources and new media exchanges.

At the end of June, the number of unique paying members was roughly stable year-on-year at EUR 1.1 million versus EUR 1.2 million last year. However, the group was able to acquire new members for its bundled content services with a higher expected average lifetime value, and so higher group sales. The expected average lifetime value of a customer for bundled and single content services was up year-on-year by more than EUR 10 to EUR 82.69 in the first half of 2023. This increase was due to the group's focus on selling bundled content services and the subsequent growing share of bundled content service memberships.

Ladies and gentlemen, as I've mentioned earlier, we generated a record EUR 11 million in operating free cash flow in the first half of 2023. Despite the higher customer acquisition costs, the cash inflow from operating activities during the first 6 months amounted to EUR 17 million against EUR 4 million in the first half of last year. This was driven by the higher sales from our numerous bundled content streaming services.

The cash outflow from investing activities was [ EUR 7 million ] compared to EUR 4 million in 2022 and was largely related to payments for licensed content as well as to investment for platform development. The cash flow from financing activities during the first half year of 2023 was an outflow of EUR 12 million and included the EUR 12 million dividend base. Cash is king.

A brief glance at the balance sheet shows that our total assets grew to EUR 148 million at the end of June, and our equity ratio amounted to 58%. The contract costs on the 30th of June were higher year-on-year due to the increased marketing spend to acquire new paying members. At the end of June, our net cash position was EUR 8 million and included EUR 11.6 million dividend base.

Ladies and gentlemen, consumer sentiment is likely to remain muted over 2023 as consumers are hit by inflation and higher mortgage rates. Nevertheless, with our first half year results, CLIQ has further demonstrated its ability to achieve double-digit growth and reports improvements in sales, earnings and cash flow versus 2022. I gladly confirm our 2023 outlook shown here on the back of this record-breaking set of the first half year results.

And together with our strong second half year internal forecast, in the next 6 months, we remain focused on diversifying our marketing spend and building an area of strategic media relationships that will grow over time. We want to broaden the member targeting options for our bundled services to best reach the group's target audiences and increase conversion rates.

We will continue to expand our business across Latin America and into new very promising other regions, and at the same time, increase our sales densities in the existing regions with improved CapEx. And for our value-for-money bundled content flagship service cliq.de, we will continue to test, analyze and further optimize our marketing campaigns to increase conversion rates and make this flagship streaming service another profitable CLIQ success story. Furthermore, we will continue to upgrade our technologies to ensure a seamless customer journey and gather more details and more accurate data to steer our business and protect our margins going forward.

Ladies and gentlemen, for the full year 2023, we expect our sales to exceed the EUR 345 million mark, driven by strong marketing activities with an expected marketing spend of over EUR 120 million and investments into additional attractive content. Our EBITDA is thereby expected to come in at more than EUR 50 million, continuing the group's track record of strong profitability. Also looking further ahead, our multiyear growth story will progress, and we are well on track to achieve our sales goal of EUR 0.5 billion by the end of 2025.

Ladies and gentlemen, allow me please now some self-marketing. CLIQ will be hosting its first-ever Capital Markets Day here in beautiful Amsterdam. We will be showcasing our operations; explaining our business model and its workings; giving in-depth explanations to our marketing activities, so let's not hope competitors are going in; and further insight into our growth strategy going forward.

Furthermore, you will get to meet some of our finest CLIQ firsthand and learn more about what makes us different and profitable. The Capital Markets Day will take place early Q4, and we will be sending out to save the date later this month. I look forward to seeing you all in Amsterdam.

Thank you for your attention, and I shall now begin our Q&A session. Sebastian, our first question, please.

[Sebastian McCoskrie, executive]

The first question comes from [ Matthew Brian Smith ], and he asks, "In the Q1 conference call, you were notably upbeat about how advertising prices would develop, i.e., decline. What made you so optimistic then? And do you remain so now?"

[Luc Voncken, executive]

[ Matthew ], as you know, due to the auction algorithm for online advertising platforms such as Google, any other online advertisers can bid against us, a potential competitor for the online advertising space. This means auction competitors range from e-commerce companies to many other industries. In addition, we have our more direct competitors that are active in the sale of digital goods and streaming services. At CLIQ, we are willing to pay more for acquiring member with a higher lifetime value, which is instrumental in maintaining healthy profit margins.

[Sebastian McCoskrie, executive]

Our next question was raised by [ Johannes Wersinger ]. He asked, "What was the number of individual paying customers on cliq.de without free trial subscriptions as at the reporting date of 30th of June 2023?"

[Luc Voncken, executive]

[ Johannes ], we don't typically disclose the number of members for our individual streaming services. What I can tell you is that the cliq.de member numbers was lower than we had originally expected. Based on the data generated from our campaigns in April and May, the group has revised its approach and paused the TV campaigns and reduce the online campaign budget until after the summer holidays and took the time necessary to improve our overall conversion rate in the full customer journey. And as you know, we don't want to burn our marketing spend. We test, we optimize and scale up in a very controlled way.

[Sebastian McCoskrie, executive]

Felix Ellmann from Warburg asks, "Please give more details on the fact why members declined."

[Luc Voncken, executive]

Hi, Felix. Thanks for your question. In response to the challenges posed by elevated customer acquisition costs, the group has strategically focused on acquiring new members with a projected higher average lifetime value, which is instrumental in maintaining healthy profit margins. While this approach has resulted in a slightly lower number of new and reported members compared to the previous year's period, the emphasize on attracting those with greater potential for long-term value has proven to be very effective.

The result being on the LTV for bundled and single content services of EUR 87.53 in the second quarter, which is an increase of over EUR 15 year-on-year. Moreover, the ongoing ability to secure higher average membership fees from these newly acquired members throughout the current and previous periods has contributed to the growth of the customer base value and subsequently the company's revenues for the period.

[Sebastian McCoskrie, executive]

Felix further asked, "Please explain why rest of the world declined. How is the strategy here? Will these markets, i.e., Asia, be attacked in the future? Or is there no market, and why?"

[Luc Voncken, executive]

Well, the majority of our sales generated in rest of the world are single content streaming services. And as you know, our focus is clearly on selling bundled content services. And therefore, the sales decline in this region is intentionally and plausible.

Felix, allow me to put rest of the world sales into group's perspective. In the first 6 months of 2023, rest of the world sales declined by roughly EUR 1.5 million. That's less than 1% of the total EUR 160 million group sales generated. Our growth focus lies in North and Latin America as well as in Europe. And going forward, we have already taken a closer look at several new markets, including the APAC.

[Sebastian McCoskrie, executive]

[ Bart Demiliano ] raised the following question. "Congratulations on the outstanding 6 months' performance. The quarter-over-quarter growth is negative for the first time since 2019, making it more challenging for CLIQ Digital to achieve its full year '23 outlook. A significant rise in quarterly revenue to over EUR 90 million for the last 2 quarters is required in order to reach EUR 345 million in revenue this fiscal year. How will this be achieved in the current challenging market environment?"

[Luc Voncken, executive]

Thank you, [ Bart ]. In the next 6 months, we remain focused on diversifying our marketing expense and building an area of strategic media relationships that we will grow over time. We want to broaden the members targeting options for our bundled content services to best reach the group's target audiences and decrease conversion rates. We will continue to expand our business across Europe, North and Latin America into new very promising other regions. And at the same time, increase our sales densities in the existing regions with improved campaigns. Over the last months, we have optimized our marketing base, which resulted already in an increase in the lifetime value. This optimization process will continue and is expected to have a positive impact on the revenue going forward.

[Sebastian McCoskrie, executive]

Our next question comes from Italy from [ Vincenzo ]. On paper, CLIQ looks like a growth stock, exchanging hands at roughly 5x earnings, so quite undervalued. So why don't we see a massive buyback program? And how come insiders have not been massively buying stocks? If CLIQ is a growth stock, now it should be quite undervalued, so buying back and deleting stocks would be rational and would signal to investors, especially foreign investors, that the company is indeed undervalued and underappreciated. Not buying back, and a lack of insiders buying, may signal on the contrary and that those who better know the company think that earnings growth are about over and problems are ahead."

[Luc Voncken, executive]

Welcome, [ Vincenzo ]. We believe that the market is cautiously underestimating our growth prospects, and it will be -- we evaluate with every rich growth target and operational milestone achieved. We are constantly stepping up our buy- and sell-side education and transparently communicating our equity story to a wider market audience to increase awareness and understanding.

The company has a dividend policy, which has paid out 40% of the net result in the last 4 years in dividends, resulting in highly attractive yields. This policy is reviewed annually. Nevertheless, last year's AGM resolved that the company is authorized until April 13, 2027, to acquire treasury shares up to a total of 10% of the share capital existing at the time the authorization becomes effective, or if lower, at the time the authorization has exercised. Management will continuously review all possible and value-creative capital allocation options, but currently prioritized funding sales growth with excess capital over share buyback.

[Sebastian McCoskrie, executive]

Our next questions are from [ Milo ] from [ Edison ]. His first question is, "How are you ensuring that new customers acquired have a higher lifetime value?"

[Luc Voncken, executive]

Well, we are strategically focused on acquiring new members with a projected higher average lifetime value, which is instrumental in maintaining healthy profit margins. Our data can give us those results. We do this by using our data-driven market approach to target new members for our bundled content service offerings for our numerous streaming services, which have demonstrated a very elevated lifetime value.

[Sebastian McCoskrie, executive]

"Working capital seemed to be more favorable in Q2 versus Q1. How do you expect working capital movements to play out in the second half?"

[Luc Voncken, executive]

Well, indeed, we observed a favorable trend in our working capital, which positively contributed to our financial performance. While I cannot provide specific details at this time, I can assure you that our ongoing operational efficiencies and strategic initiatives are well positioned to support our business. We remain confident in our ability to navigate working capital movements in a manner that aligns with our growth objectives and enhances overall business stability.

[Sebastian McCoskrie, executive]

"What is the scale of cost efficiencies AI use is creating for CLIQ?"

[Luc Voncken, executive]

Well, [ Milo ], in the future, we want to harness even more potential from AI. Our marketing campaigns will benefit from targeting more reliable keywords and generating localized banners more efficiently. We will be able to conduct better trend research for more relevant ad content across different markets. And we expect to be able to identify major events across multiple markets to capture new campaign opportunities.

Coming back to your initial questions, it's still early days, and the cost efficiencies are not yet material, but the time, benefit and workload reduction gained by our Cliqers can be helpful to reduce cost. More importantly, is to look for sales opportunities, which AI can bring us in the future at a product level.

[Sebastian McCoskrie, executive]

"Are you seeing any softening in marketing customer acquisition costs towards the end of H1?"

[Luc Voncken, executive]

In recent months, there have been some fluctuations in the trends related to customer acquisition. The trend is always different per region. Increasing advertising costs will not automatically result in lower margins as we strategically focus always on the acquisition of profitable customers with relative high lifetime value.

As long as we see high levels of lifetime value for newly acquired customers, we can accept higher customer acquisition costs. By diversifying media sources and optimizing our marketing campaigns, we were able to increase our conversions and to maximize our profitability.

[Sebastian McCoskrie, executive]

[ Milo's ] last question is on Latin America. "Could you provide an indication of the competitive landscape in the region and maybe some learnings you've taken from the entry into a new geography?"

[Luc Voncken, executive]

Well, this is really a question also for the Capital Markets Day. So certainly, [ Milo ], Latin America has indeed presented us with promising growth opportunities. As for the competitive landscape in the region, it's characterized by a mix of established players and emergent -- emerging contenders. Our approach to entering this new geography was rooted in a well-defined strategy of testing, optimizing and scaling up in a controlled manner as we do always.

The learnings from our entry into this new geography have underscored the importance of agility, adaptability and a data-driven mindset. By adhering to a proven approach of testing, optimizing and scaling up in a controlled manner, we were able to grow our footprint in Latin America. These learnings not only bolster our current [ anti-Force ] in the region, but also helps our strategy as we continue to explore growth opportunities in other markets.

[Sebastian McCoskrie, executive]

Andreas Blom from MediumInvest raised the following question. "We have seen a decrease in your subscriber base, yet quite a significant increase in lifetime value. Can you elaborate on what components in this calculation are driving the higher average expected lifetime value?"

[Luc Voncken, executive]

Welcome, Andreas. Strategically, we have decided to focus our marketing efforts and resources on attracting new members for our numerous streaming bundled content services. Our bundled content services have been instrumental in elevating the average expected lifetime value. By offering comprehensive packages that encompass multiple content categories, members can experience a more diversified entertainment service.

These bundles come with higher price points compared to single content offerings, resulting in increased revenue per subscriber. Additionally, the inherent value of bundled packages encourages subscribers to remain engaged for longer periods, contributing to extended average lifetimes.

[Sebastian McCoskrie, executive]

Andreas's next question, "In connection to the prior question of decreasing subscriber base, is this primarily due to subscribers leaving the platforms sooner or due to limited customer acquisitions that should replace the natural customer churn?"

[Luc Voncken, executive]

The focus has been on attracting customers with a higher lifetime value. By prioritizing quality over quantity and customer acquisition, the intention is to cultivate a subscriber base that not only demonstrates greater engagements and loyalty, but also yields a higher lifetime value.

[Sebastian McCoskrie, executive]

Andreas' the last question: "Should we expect to see a continuing decrease in the number of subscribers going forward? And can you elaborate on why you think or don't think this is the case?"

[Luc Voncken, executive]

Well, Andreas, as you know, we don't guide or focus on members; we guide on sales, marketing spend and EBITDA. Our portfolio focuses on a range offerings, some with higher price points and enhanced features, while others are more competitively priced, our dynamic price model. The mix of services we actively promote plays a significant role in the members we acquire in a period.

[Sebastian McCoskrie, executive]

How can -- [indiscernible] asked, "How much brand marketing was in the expense marketing spend in Q2 of EUR 28.9 million? How is this expected to evolve in the second half?"

[Luc Voncken, executive]

Hi, [ Marie Therese ]. The brand marketing spend share was $1.2 million in the second quarter of 2023. As just explained in the presentation, we will continue doing brand marketing after the summer break.

[Sebastian McCoskrie, executive]

Her next question, "How have advertising prices evolve year-on-year and quarter-on-quarter?"

[Luc Voncken, executive]

Well, both year-on-year and quarter-on-quarter, the market prices for performance marketing have been elevated.

[Sebastian McCoskrie, executive]

Nils Scharwächter from Montega asked 3 blocks of questions, the first one on revenues and markets. "In Q2, the revenue share from the European business decreased significantly. Do you see structural challenges here, specific markets within Europe underperforming? Or how can you explain this development? How would you evaluate the further development in Latin America? Do you expect a more dynamic sales growth throughout the year?"

[Luc Voncken, executive]

Well, in Europe, it was for us, more challenging to acquire new customers with a higher lifetime value to compensate the relative high customer acquisition costs. This has resulted in less new members in Europe. In Latin America, many countries are performing well. Based on the trends we see, we expect dynamic sales to continue.

[Sebastian McCoskrie, executive]

Nils' next questions are on the customer KPIs. "The report states that in custom acquisition, the primary goal is to achieve a healthy profit margin rather than solely volume. What exactly can I understand or derive from this? Is it more like a strategic shift? Or should we see a temporary effect? Moreover, how do you identify and reach this specific customer group? As of now, you no longer report the 6-month profitability index, which we believe has reflected one of the key KPIs and has gradually declined in recent quarters. Was the decrease exclusively due to increased purchasing costs or were these also effects on the consumer side?"

[Luc Voncken, executive]

Well, we don't focus on member numbers, but focus on acquiring profitable members. The higher lifetime value of a member will result in higher top line, combined with higher absolute margins. It's not a strategic shift as we always are focused on profitability above just growth.

Regarding the profitability index, CLIQ no longer discloses the 6 months profitability index. This metric remains deployed only internally for measuring the profitability of newly acquired members and navigating the marketing measures. The decrease was due to the previously mentioned elevated market prices, but our focus is clearly on generating healthy profit margins.

[Sebastian McCoskrie, executive]

Nils further had some questions on cliq.de. "The main proportion of cash flow from investing activities of EUR 3.7 million in Q2 was for cliq.de. Can you quantify that more precisely? Just out of interest, how is the performance management done? Are the same KPIs used for cliq.de? Can you say a little more what the next steps are? What are the expected sales, customer numbers or profit contributions compared to the previous investment amounts? How much were the marketing expenses for the successful and excellent brand campaign?"

[Luc Voncken, executive]

With regards to the EUR 3.7 million investments, I would like to refer to Note 12 in the half year report. That's a very formal answer. The total investment in platform development was EUR 2 million, of which the majority was for cliq.de. The performance management has been set up in the same way as for our numerous streaming services. This is one of the core competencies of CLIQ. And there, I'm really proud. We don't share any specific details about the performance of cliq.de or other individual streaming services.

Based on the data generated from our campaigns in April and May, the group has revised its approach and paused the TV campaigns and reduced the online campaign budget until after the German summer holidays, and took the time necessary to improve our overall conversion rate in the full consumer share as a journey. As you know, we don't want to burn our market expense. We test, we optimize and scale up in a controlled way.

[Sebastian McCoskrie, executive]

Luc, we now come to our last question, and that's on cost ratio from Nils. He asked, "The improvement in the expense ratios more than compensated the increase in marketing expenses. How is it that other operating expenses decreased relatively sharply in comparison?"

[Luc Voncken, executive]

As already said, one mantra: we test, we optimize and scale up in a controlled way. It's also the second mantra at CLIQ: we always are working on achieving a healthy EBITDA margin. We are not only focused on top line growth, but always optimizing our operational and cost structure.

Ladies and gentlemen, thank you for your attention. That was our last question. If you have any further questions, please feel free to get in touch with Sebastian or Julian. Thank you for joining our half year 2023 video call today, and have a great day. I hope you all to see at the Capital Markets Day early Q4. Thank you very much.