Last close As at 12/08/2026
GBP0.43
▲ 1.50 (3.61%)
Market capitalisation
GBP106m
Research: TMT
Team Internet’s H1 earnings showed resilience despite continued headwinds in online marketing. Going into the typically seasonally stronger H2, we expect the company’s initiatives in product innovation, vertical integration and international to increasingly influence growth and margin expansion. At 8.2x FY24 earnings, Team Internet continues to trade at a significant discount to peers on our unchanged earnings estimates. We believe this rating remains attractive given the company’s track record, prospects and cash generation.
Team Internet |
Earnings remain resilient |
Interim results |
Software and comp services |
12 August 2024 |
Share price performance
Business description
Next events
Analyst
Team Internet is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||
Team Internet’s H1 earnings showed resilience despite continued headwinds in online marketing. Going into the typically seasonally stronger H2, we expect the company’s initiatives in product innovation, vertical integration and international to increasingly influence growth and margin expansion. At 8.2x FY24 earnings, Team Internet continues to trade at a significant discount to peers on our unchanged earnings estimates. We believe this rating remains attractive given the company’s track record, prospects and cash generation.
Year end |
Revenue (US$m) |
EBITDA (US$m) |
PBT* |
EPS* |
DPS |
EV/EBITDA (x) |
P/E |
Yield |
12/22 |
728.2 |
86.0 |
64.3 |
14.7 |
0.0 |
5.6 |
14.6 |
N/A |
12/23 |
836.9 |
96.4 |
77.6 |
22.5 |
2.0 |
5.6 |
9.5 |
1.2 |
12/24e |
939.2 |
110.2 |
91.0 |
26.3 |
2.3 |
5.6 |
8.2 |
1.3 |
12/25e |
1037.7 |
119.5 |
101.8 |
28.3 |
2.5 |
5.6 |
7.6 |
1.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Earnings resilience despite headwinds
H1 gross revenues of $409.7m (+3% y-o-y) were essentially flat excluding $10.7m from Shinez, acquired 29 April. A weak adverting market continues to suppress Online Marketing, particularly Search, but as this is the lowest gross profit business, net revenues (gross profit) grew 7% y-o-y at $97.7m, with gross margin expanding by 80bp y-o-y. EBITDA expanded by 4% to $46.6m. Net debt was $109.9m, reflecting the Shinez acquisition and operating cash conversion at 87%. However, with cash conversion expected to normalise close to 100% in H2 and no share buybacks scheduled, we expect net debt to reduce to $66m by year end. This includes the payment of an inaugural interim dividend of 1p.
On track, strategic initiatives coming into play
Our P&L estimates are essentially unchanged from the net revenue/gross profit level and below, with gross revenue pared back by c 4.5%, more in line with consensus. While we do not expect a near-term recovery in click rates, events such as the Olympics and particularly the US elections should support the online advertising market into the seasonally stronger H2. Key strategic initiatives should start to have an impact in FY25. These include vertical integration initiatives, such as including Tonic or Vergleich ads on Shinez content, the expansion of Vergleich beyond Germany and new product launches as well as competitive and efficiency initiatives in Online Presence.
Valuation: Discount looks unjustified
Team Internet trades at an EV/EBITDA multiple of 6.0x and a P/E of 8.2x with a 14% free cash flow yield. On a fundamental basis, we believe that this remains too low for a business with Team Internet’s track record, prospects and cash generation. The group’s rating is a c 45% P/E ratio discount to ad-tech peers of the online marketing business and a 47% discount to the online presence peers (albeit a small subset). A recovery in online advertising, accretive M&A and/or a resumption of buybacks could drive EPS upside.
Divisional review
Online Marketing
Advertising weakness suppresses net revenue, gross profit continues to advance
The weak advertising market and strong comparisons suppressed Online Marketing growth in H1, particularly in Search (primarily Tonic and Shinez) but, as these are lower gross profit business lines, the effect was most felt on gross revenues, while net revenue (gross profit) continued to advance. Gross revenues for H1 were up 3% y-o-y to $312.5m but down 1% (excluding the $10.7m from Shinez), whereas net revenue advanced 5% y-o-y. Performance in Q2 also showed some sign of improvement, with gross revenues (excluding Shinez) up 1% y-o-y versus a 3% decline in Q1, while gross profit grew by 10%.
The number of visitor sessions grew 16% y-o-y to 6.1bn on a trailing 12-month basis, but revenue per 1,000 sessions dropped to $88 versus $91 in Q1 and 100 a year ago. Given the good rise in volumes, Team Internet should be well placed as and when an improved demand environment drives prices up again.
Strategic initiatives to drive growth and margins
Management’s strategy for Online Marketing is develop the business into a diverse digital audience matching platform, connecting audiences and advertisers between platforms that are not innately integrated. The company’s Omni-media, Omni-monetisation(OM2) strategy is to deploy both M&A to and organic development initiatives to grow its coverage of both media channels and monetisation opportunities.
Increased supply and demand-side versatility
Following the acquisition of Shinez, the company’s coverage of the online marketing ecosystem is represented in Exhibit 2, while the diversity of the company’s revenue exposure is shown in Exhibit 3. The acquisition of Shinez has added a new social media partner channel, in X, strengthens the lines of business with Meta and Instagram (shared by both) and through its relationships with direct advertisers, doubles the Online Marketing segment’s revenue generated independently of Google.
|
Exhibit 1: OM2 – Increasing ecosystem coverage |
|
|
Source: Team Internet, Edison |
|
Exhibit 2: Value flows – FY22 Annual Report |
Exhibit 3: Value flows – Interim Report 2024 |
|
|
|
Source: Team Internet |
Source: Team Internet |
|
Exhibit 2: Value flows – FY22 Annual Report |
|
|
Source: Team Internet |
|
Exhibit 3: Value flows – Interim Report 2024 |
|
|
Source: Team Internet |
Coverage of the conversion funnel: Scope for vertical integration
With the acquisition of Shinez, Team Internet now has a presence at each stage of the e-commerce conversion funnel, from the initial raising of awareness and brand building, then building and qualifying interest, right through to setting up the transaction:
■
Awareness: Shinez provides solutions for helping advertisers raise awareness and build their brand, and is paid on a pay per (1,000) view (PPM) basis.
■
Interest: Tonic determines a consumer’s interests through its double qualification process, then directs well-qualified leads to advertisers, being monetised on a pay per click basis (PPC).
■
Sale: at the sharp end of the funnel, Vergleich provides comparison sites to enable consumers already considering a purchase to compare and evaluate products or services, being paid on a per transaction (PPA) basis, often a percentage of the purchase price or in Vergleich’s case a percentage of the total basket size.
|
Exhibit 4: Coverage of the e-commerce conversion funnel |
|
|
Source: Edison Investment Research, Team Internet |
This coverage of the funnel opens up a number of opportunities for vertical integration, essentially capturing a greater proportion of the value chain in connecting buyers to advertisers.
These include delivering ad inventory to the Shinez sites using Tonic, or even selective placement of VGL transaction sites where it is seen not to conflict with the platforms’ advertiser customers. Given Shinez’s high volume, but low transaction value, the successful addition of higher-value PPC or PPA revenues on only a small proportion of volume should generate meaningful revenue synergies.
The group also aims to leverage the Shinez platform to generate revenue from previously unmonetised Tonic and VGL visitor sessions through programmatic display and video advertising on a pay-per-view basis. Management also hopes that the behavioural insights gathered from Tonic and VGL will enable Shinez to more effectively connect advertisers with relevant audiences, supporting higher revenues per thousand session values.
Online Presence: Solid growth, improved margins
Online Presence continued to perform robustly. This is driven in part by the structural shift towards top level domains, where Team Internet is competitively strong. The company’s move to strengthen the team, improve customer service and rationalise operations also appears to be having an impact. Gross revenues grew by 6% to $97.2m and net revenues up by 11% to $32.7m. Operating margins were ‘much improved’, although the company does not disclose down to this level.
Estimates
Our estimates are shown in Exhibit 4. Management has confirmed that it expects to meet consensus estimates. We have reduced our gross revenue forecasts, which were at the top end of consensus, by 4.5%, reflecting the weak advertising market, but our estimates for net revenue and gross profit down are little changed, reflecting the mix shift to higher-margin business. The Olympics and, in particular, the US election should drive an improving market for Online Marketing in H2. We believe that good progress with strategic initiatives, such vertical integration of Shinez and Tonic or VGL services, internationalisation of VGL and accretive M&A, could all generate upside to our estimates.
Net debt was $109.9m, reflecting the Shinez acquisition, with operating cash conversion at 87%, somewhat below management’s target. However, with cash conversion expected to normalise close to 100% in H2 and no share buybacks scheduled, we expect net debt to reduce to $66m by year end, giving the company plenty of scope for acquisitions or capital distribution via increased dividends or buybacks.
Exhibit 5: Revenue model
US$m |
FY23 |
H124 |
H224e |
FY24e |
FY25e |
Online Marketing |
|||||
Gross revenue (excl Shinez) |
657.1 |
301.8 |
375.0 |
676.8 |
721.8 |
Growth (Organic) |
14% |
-1% |
6% |
3% |
7% |
Shinez |
10.7 |
50.3 |
61.0 |
106.5 |
|
Gross Revenue |
657.1 |
312.5 |
425.3 |
737.8 |
828.3 |
Net Revenue |
131.7 |
65.0 |
91.6 |
156.6 |
178.1 |
Gross Margin |
20.0% |
21.5% |
21.5% |
21.2% |
21.5% |
Online Presence |
|||||
Revenue |
179.8 |
97.2 |
104.2 |
201.4 |
209.4 |
Growth (Organic) |
17% |
6% |
19% |
12% |
4% |
Gross Profit |
59.4 |
32.7 |
35.0 |
67.7 |
71.2 |
Gross Margin |
33.0% |
33.6% |
33.6% |
33.6% |
34.0% |
Group |
|||||
Gross Revenue |
836.9 |
409.7 |
529.5 |
939.2 |
1037.7 |
Net Revenue / Gross Profit |
191.1 |
97.7 |
126.6 |
224.3 |
249.3 |
Gross Margin |
22.8% |
23.8% |
23.9% |
23.9% |
24.0% |
Opex (ex D,A, SBP) |
94.7 |
51.1 |
63.0 |
114.1 |
129.8 |
EBITDA adjusted |
96.4 |
46.6 |
63.6 |
110.2 |
119.5 |
EBIT adjusted |
93.1 |
45.3 |
61.9 |
107.2 |
116.0 |
PBT adjusted |
77.5 |
36.8 |
54.2 |
91.0 |
101.8 |
PAT adjusted |
63.2 |
28.8 |
40.2 |
69.0 |
74.2 |
EPS – adjusted diluted (c) |
22.5 |
10.9 |
15.4 |
26.3 |
28.3 |
Net debt/(cash) |
74.1 |
110.8 |
66.2 |
66.2 |
-4.4 |
Source: Team Internet, Edison Investment Research estimates. Note: FY23 numbers are restated.
Exhibit 6: Estimate changes
Year end 31 December |
Reported |
Y-o-y |
Old |
New |
|
Y-o-y |
Old |
New |
|
Y-o-y |
US$m |
2023 |
growth |
2024e |
2024e |
Change |
growth |
2025e |
2025e |
Change |
growth |
Gross revenue |
837 |
15% |
984 |
939 |
(4.5)% |
12% |
1,082 |
1,038 |
(4.1)% |
10% |
Net revenue |
191 |
8% |
219 |
224 |
2.5% |
17% |
225 |
249 |
10.6% |
11% |
Adjusted EBITDA |
96 |
12% |
110 |
110 |
0.5% |
14% |
117 |
119 |
2.3% |
8% |
EBITDA Margin |
12% |
11% |
12% |
11% |
12% |
|||||
Profit Before Tax (norm) |
78 |
21% |
90 |
90 |
0.0% |
16% |
97 |
98 |
1.0% |
9% |
Profit Before Tax (reported) |
2 |
(90)% |
46 |
46 |
(0.2)% |
2851% |
54 |
57 |
5.9% |
25% |
Net income (normalised) |
22 |
(47)% |
72 |
69 |
(3.8)% |
216% |
77 |
74 |
(4.0)% |
8% |
Basic average number of shares outstanding (m) |
272 |
257 |
253 |
258 |
253 |
|||||
EPS – basic normalised (c) |
23.27 |
49% |
27.94 |
27.25 |
(2.5)% |
17% |
29.97 |
29.30 |
(2.2)% |
8% |
EPS – diluted normalised (c) |
22.46 |
45% |
27.06 |
26.33 |
(2.7)% |
17% |
29.02 |
28.32 |
(2.4)% |
8% |
|
||||||||||
Closing net debt/(cash) |
74.1 |
72.0 |
66.2 |
5.9 |
(4.4) |
Source: Team Internet, Edison Investment Research estimates
Valuation
Team Internet trades at an EV/EBITDA multiple of c6.0x and a P/E of c8x with a 14% free cash flow yield. On a fundamental basis, we believe that this remains too low for a business with Team Internet’s track record, prospects and cash generation. The group’s forward year P/E ratio is a c 45% discount to ad-tech peers of the online marketing business and a 47% discount to the online presence peers (albeit a small subset). A recovery in online advertising, good progress with the company’s vertical integration and internationalisation initiatives, accretive M&A and/or a resumption of buybacks could drive EPS upside.
Exhibit 7: Peer group multiples
|
Year end |
Share price |
Quoted |
EV/sales |
EV/sales |
EV/EBITDA |
EV/EBITDA |
P/E |
P/E |
|
Company |
|
|
|
FY1e (x) |
FY2e (x) |
FY1e (x) |
FY2e (x) |
FY1e (x) |
FY2e (x) |
|
Team Internet Group |
Dec-24 |
171.8 |
GBp |
0.7 |
0.6 |
6.1 |
5.6 |
8.2 |
7.6 |
|
|
|
|
|
|
|
|
|
|
|
|
Online Marketing peers |
|
|
|
|
|
|
|
|
|
|
Applovin Corp |
Dec-24 |
67.2 |
USD |
5.7 |
5.0 |
10.6 |
9.1 |
21.5 |
17.1 |
|
Stroeer SE & Co KgaA |
Dec-24 |
58.0 |
EUR |
2.3 |
2.1 |
7.7 |
6.9 |
18.5 |
14.5 |
|
Magnite Inc |
Dec-24 |
12.9 |
USD |
3.3 |
3.0 |
10.2 |
8.9 |
15.9 |
13.3 |
|
Criteo |
Dec-24 |
45.5 |
USD |
2.0 |
1.8 |
6.1 |
5.8 |
11.0 |
10.6 |
|
Perion Network Ltd |
Dec-24 |
8.1 |
USD |
NM |
NM |
NM |
NM |
34.8 |
42.3 |
|
Taboola.com Ltd |
Dec-24 |
3.1 |
USD |
0.5 |
0.4 |
4.5 |
3.7 |
10.3 |
8.0 |
|
PubMatic Inc |
Dec-24 |
19.0 |
USD |
2.6 |
2.3 |
8.4 |
6.9 |
80.9 |
42.4 |
|
Mgi Media and Games Invest Se |
Dec-24 |
2.5 |
EUR |
1.7 |
1.4 |
5.9 |
4.6 |
14.3 |
8.6 |
|
Tremor International Ltd |
Dec-24 |
273.0 |
GBp |
1.1 |
1.0 |
3.8 |
3.3 |
9.0 |
7.5 |
|
Viant Technology Inc |
Dec-24 |
9.5 |
USD |
1.5 |
1.3 |
10.0 |
8.4 |
110.1 |
88.1 |
|
System1 |
Dec-24 |
1.1 |
USD |
0.8 |
0.7 |
10.8 |
7.9 |
NM |
NM |
|
YOC AG |
Dec-24 |
15.9 |
EUR |
1.5 |
1.2 |
9.5 |
7.7 |
15.5 |
11.9 |
|
Mean |
|
|
|
2.1 |
1.9 |
8.0 |
6.7 |
31.1 |
24.0 |
|
Median |
|
|
|
1.7 |
1.4 |
8.4 |
6.9 |
15.9 |
13.3 |
|
Discount to median |
|
|
|
-28% |
-19% |
-49% |
-43% |
|||
Online Presence (web services) peers |
|
|
|
|
|
|
|
|
|
|
GoDaddy |
Dec-24 |
152.8 |
USD |
5.5 |
5.1 |
18.7 |
16.3 |
24.3 |
23.7 |
|
Verisign |
Dec-24 |
175.2 |
USD |
11.5 |
11.1 |
15.7 |
15.1 |
21.9 |
20.2 |
|
Squarespace |
Dec-24 |
44.1 |
USD |
5.3 |
4.6 |
24.9 |
19.2 |
107.4 |
61.0 |
|
ionos |
Dec-24 |
23.8 |
EUR |
2.7 |
2.5 |
9.5 |
8.3 |
18.4 |
14.4 |
|
Tucows |
Dec-24 |
23.4 |
USD |
NM |
NM |
NM |
NM |
NM |
NM |
|
Mean |
|
|
|
6.3 |
5.8 |
17.2 |
14.7 |
43.0 |
29.8 |
|
Median |
|
|
|
5.4 |
4.9 |
17.2 |
15.7 |
23.1 |
22.0 |
|
Total mean |
|
|
|
3.2 |
2.9 |
10.4 |
8.8 |
34.2 |
25.6 |
|
Total median |
|
|
|
2.3 |
2.1 |
9.5 |
7.9 |
18.5 |
14.5 |
|
Discount to median |
63% |
71% |
44% |
52% |
||||||
Source: Edison Investment Research, LSEG Data & Analytics. Note: Prices as at 12 August 2024.
Exhibit 8: Financial summary
$m |
2022 |
2023 |
2024e |
2025e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Gross Revenue |
|
|
728.2 |
836.9 |
939.2 |
1,037.7 |
Cost of Sales |
(550.5) |
(645.8) |
(714.9) |
(788.4) |
||
Gross Profit (net revenue) |
177.7 |
191.1 |
224.3 |
249.3 |
||
EBITDA |
|
|
86.0 |
96.4 |
110.2 |
119.5 |
Normalised operating profit |
|
|
83.0 |
93.1 |
107.2 |
116.0 |
Amortisation of acquired intangibles |
(36.4) |
(38.8) |
(41.1) |
(41.1) |
||
Exceptionals |
(7.3) |
(4.1) |
(1.4) |
0.0 |
||
Share-based payments |
(5.7) |
(4.5) |
(2.6) |
(3.5) |
||
Reported operating profit |
33.6 |
45.7 |
62.1 |
71.4 |
||
Net Interest |
(18.8) |
(15.6) |
(16.2) |
(14.2) |
||
Joint ventures & associates (post tax) |
0.1 |
0.1 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
64.3 |
77.6 |
91.0 |
101.8 |
Profit Before Tax (reported) |
|
|
14.9 |
30.2 |
45.9 |
57.2 |
Reported tax |
(16.9) |
(5.0) |
(15.1) |
(18.1) |
||
Profit After Tax (norm) |
41.4 |
63.2 |
69.0 |
74.2 |
||
Profit After Tax (reported) |
(2.0) |
25.2 |
30.8 |
39.1 |
||
Net income (normalised) |
41.4 |
63.2 |
69.0 |
74.2 |
||
Net income (reported) |
(2.0) |
25.2 |
30.8 |
39.1 |
||
Basic average number of shares outstanding (m) |
268 |
272 |
253 |
253 |
||
EPS - basic normalised (c) |
|
|
15.4 |
23.3 |
27.2 |
29.3 |
EPS - diluted normalised (c) |
|
|
14.7 |
22.5 |
26.3 |
28.3 |
EPS - basic reported (c) |
|
|
(0.8) |
9.2 |
12.6 |
15.2 |
Dividend (p) |
0.00 |
2.00 |
2.30 |
2.50 |
||
Revenue growth (%) |
77.4 |
14.9 |
17.5 |
10.0 |
||
Gross Margin (%) |
24.4 |
22.8 |
23.9 |
24.0 |
||
EBITDA Margin (%) |
11.8 |
11.5 |
11.7 |
11.5 |
||
EBITDA/Net Revenue (%) |
48.4 |
50.4 |
49.1 |
47.9 |
||
Normalised Operating Margin |
11.4 |
11.1 |
11.4 |
11.2 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
365 |
347 |
355 |
321 |
Intangible Assets |
348 |
327 |
335 |
302 |
||
Tangible Assets |
7 |
7 |
7 |
6 |
||
Investments & other |
10 |
13 |
13 |
13 |
||
Current Assets |
|
|
194 |
200 |
247 |
330 |
Stocks |
1 |
0 |
0 |
0 |
||
Debtors |
98 |
107 |
116 |
128 |
||
Cash & cash equivalents |
95 |
93 |
131 |
202 |
||
Current Liabilities |
|
|
198 |
188 |
198 |
213 |
Creditors |
190 |
186 |
197 |
211 |
||
Short term borrowings |
5 |
0 |
0 |
0 |
||
Lease liabilities |
2 |
2 |
2 |
2 |
||
Long-Term Liabilities |
|
|
194 |
202 |
232 |
232 |
Long-term borrowings |
146 |
167 |
197 |
197 |
||
Other long-term liabilities |
48 |
36 |
36 |
35 |
||
Net Assets |
|
|
167 |
157 |
171 |
205 |
Shareholders' equity |
|
|
167 |
157 |
171 |
205 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
54 |
72 |
90 |
102 |
||
Working capital |
7 |
(8) |
2 |
2 |
||
Exceptional & other |
25 |
18 |
20 |
21 |
||
Tax |
(8) |
(6) |
(15) |
(18) |
||
Net operating cash flow |
|
|
78 |
76 |
97 |
107 |
Capex |
(7) |
(10) |
(9) |
(9) |
||
Acquisitions/disposals |
0 |
(5) |
(39) |
0 |
||
Interest paid |
(8) |
(12) |
(18) |
(18) |
||
Equity financing |
59 |
0 |
0 |
0 |
||
Change in borrowing |
167 |
15 |
30 |
0 |
||
Dividends |
0 |
(4) |
(10) |
(7) |
||
Other |
(31) |
(43) |
(15) |
(2) |
||
Net Cash Flow |
258 |
17 |
36 |
70 |
||
Opening net debt/(cash) |
|
|
81 |
57 |
74 |
66 |
FX |
(5) |
3 |
3 |
0 |
||
Other non-cash movements |
(14) |
(15) |
(30) |
0 |
||
Closing net debt/(cash) |
|
|
(157) |
74 |
66 |
(4) |
Source: Edison Investment Research, company accounts
|
|
Research: Healthcare
AFT Pharmaceuticals has expanded its licensing partnership with Hikma in the US to include distribution of the recently launched Combogesic tablets (Maxigesic Rapid). We view this as a logical step, given Hikma’s established footprint in the US, with synergistic benefits likely on costs and sales uptake. Hikma already holds exclusive distribution rights to Maxigesic/Combogesic IV in the US and will now also market the tablet formulation in the same hospital and ambulatory setting. Management expects to book the first sales within CY24 and, while the deal economics have not been fully disclosed, the agreement includes a profit share for Hikma according to our understanding. Note that unlike the IV formulation, AFT’s sales strategy for the tablets entails having different distribution partners across sales channels. The first distribution agreement for the Combogesic tablets was signed with Alexso in June 2024.