CentralNic Group — Fireball, .ruhr and strong organic growth

Team Internet Group (AIM: TIG)

Last close As at 25/04/2024

GBP1.36

−4.00 (−2.85%)

Market capitalisation

GBP354m

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Research: TMT

CentralNic Group — Fireball, .ruhr and strong organic growth

Alongside the announcement of two small acquisitions in Germany, CentralNic’s management has confirmed continuing high organic revenue growth in Q122 (FY21: 37%), driven largely by the performance of the online marketing segment. Management is still acquiring strategic assets as part of its vertical integration strategy, with the Fireball Search and .ruhr top-level domain (TLD) deals bought for total cash consideration of €0.6m, at implied multiples of 0.3x sales and 0.6x EBITDA. The acquisitions are expected to be immediately earnings accretive. The continued segmental growth underlines that CentralNic’s privacy-safe approach to online marketing, is proving both resilient and attractive. We have yet to revise our forecasts, which we will review with the FY21 preliminary results, expected on 28 February. However, CentralNic trades on an undemanding rating given its robust growth, with management confident of the full-year outlook.

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Written by

TMT

CentralNic Group

Fireball, .ruhr and strong organic growth

M&A announcements

Software & comp services

15 February 2022

Price

130p

Market cap

£297m

US$1.35/£

Net debt (US$m) at 31 December 2021

76

Shares in issue

228.8m

Free float

55%

Code

CNIC

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

Business description

CentralNic Group provides the essential tools for businesses to go online, operating through two divisions: online presence (reseller, corporate and SME); and online marketing. Services include domain name reselling, hosting, website building, security certification and website monetisation.

Analysts

Richard Williamson

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

CentralNic Group is a research client of Edison Investment Research Limited

Alongside the announcement of two small acquisitions in Germany, CentralNic’s management has confirmed continuing high organic revenue growth in Q122 (FY21: 37%), driven largely by the performance of the online marketing segment. Management is still acquiring strategic assets as part of its vertical integration strategy, with the Fireball Search and .ruhr top-level domain (TLD) deals bought for total cash consideration of €0.6m, at implied multiples of 0.3x sales and 0.6x EBITDA. The acquisitions are expected to be immediately earnings accretive. The continued segmental growth underlines that CentralNic’s privacy-safe approach to online marketing, is proving both resilient and attractive. We have yet to revise our forecasts, which we will review with the FY21 preliminary results, expected on 28 February. However, CentralNic trades on an undemanding rating given its robust growth, with management confident of the full-year outlook.

Year end

Revenue (US$m)

Adj. EBITDA*
(US$m)

PBT*
(US$m)

EPS**
(c)

DPS
(c)

P/E
(x)

12/19

109.2

17.9

16.1

9.24

0.0

19.0

12/20

241.2

30.6

19.8

10.57

0.0

16.6

12/21e

384.1

43.0

29.7

11.57

0.0

15.2

12/22e

420.2

48.0

33.6

12.24

0.0

14.3

Note: *Excludes impact of share-based payments, share option expense, foreign exchange charges and non-core operating costs. **FY21e and FY22e EPS figures reflect 228.8m voting shares in issue.

Fireball was the leading search engine in Germany before it was bought by Lycos Europe in 2000. Given Fireball’s high consumer awareness, in 2016 it was relaunched as an independent company, with search results powered by Bing and a strong focus on privacy. Fireball offers new traffic sources for CentralNic to monetise and adds alternative monetisation channels to generate revenues from internet traffic.

There are c 10k domain names registered using the .ruhr TLD, the domain address for the area around the river Ruhr in Germany, consisting of c 50 cities, including Dortmund and Essen, with roughly five million inhabitants. Once it has been migrated across to CentralNic, .ruhr will be fully managed by CentralNic. It will join German regional TLDs, .saarland and .London, managed on behalf of London & Partners, as part of CentralNic’s expanding portfolio of geographic TLDs. The acquisition is expected to close by the end of May 2022.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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