28 February 2022

CENTRALNIC GROUP PLC

("CentralNic" or "the Company" or "the Group")

UNAUDITED PRELIMINARY ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2021

CentralNic Group Plc (AIM: CNIC), the global internet platform that derives recurring revenue from operating a marketplace model for online presence and online marketing services, announces its unaudited preliminary accounts for the financial year ended 31 December 2021. The audited annual report and accounts for 2021 will be published in early April 2022. Both revenue and Adjusted EBITDA have increased year-on-year, driven by a combination of acquisitions and underlying organic growth.

Financial summary:

·       Revenue increased by 71% to USD 410.5m (FY2020: USD 240.0m)

·       Organic revenue increased by 39% (FY2020: 9%)

·       Net revenue (gross profit) increased by 58% to USD 118.5m (FY2020: USD 75.1m)

·       Adjusted EBITDA* increased by 57% to USD 46.3m (FY2020: USD 29.4m) resulting in a margin of 11.3% on gross revenue and 39.0% on net revenue, i.e. excluding passthrough expenses such as registry fees and revenue shares

·       Operating profit of USD 12.4m (FY2020: operating loss of USD 2.1m)

·       Profit before tax of USD 1.6m (FY2020: loss before tax of USD 11.8m)

·       Net debt** down to USD 75.0m (gross interest bearing debt of USD 131.1m, cash of USD 56.1m) as compared to USD 85.0m in FY2020  - despite four acquisitions for a combined USD 18.3m in the year, and the settlement of combined deferred consideration of USD 1.7m

·       Adjusted cash conversion ratio of 116% (FY2020: 120%)

·       Adjusted EPS for the year increased by 18% to USD 11.80 cents (FY2020: USD 9.96 cents)

Financial highlights:

·      Non-recurring revenue products contributed less than 1% of our total revenue

·      Successful bond tap issue of EUR 15m at 104.5% of nominal value, implying a yield to maturity of sub 5%

·      Acquisition of SafeBrands (Online Presence segment) in January 2021, Wando Internet Solutions (Online Marketing segment) in February 2021, White & Case Ltd (Online Marketing segment) in November 2021 and NameAction (Online Presence segment) in December 2021

·      Final and interim deferred consideration payments made for Team Internet (Online Marketing segment) and SafeBrands (Online Presence segment) respectively

·      Currency exposure on the EUR 105m bond has been hedged at a locked-in average EUR/USD rate of 1.1891, 3.3% below the prior year balance sheet date

Operational highlights:          

·      Very strong traction for the Group's privacy-safe online marketing technologies in the context of privacy-conscious policies of Big Tech

·      Significant investment in new management, staff and systems accelerated organic growth to record levels and positions the Group well for continued growth

·      New Data and AI group established to improve growth and profitability, enhance customer service, optimise business operations and decision making, enhance marketing, reduce customer churn, and automate detection of non-compliant customer activity

·      Appointment of Carsten Sjoerup in the new role of Chief Technology & Product Officer to lead the integration of technology and product teams across all brands, with a focus on technical expertise and new product launches

·      Experienced non-executive directors added to the board

·      New customer wins for the Registry business include JISC and Dot London

Post year-end highlights:

·      Exceptionally strong start into the year augurs well for financial year 2022

·      Acquisition of Fireball GmbH and the .ruhr TLD in February 2022 for a total of c.USD 0.7m

Outlook:

·      The record organic growth in 2021 as the world started to come out of lockdown demonstrates the success of the Company's strategy of investing during the pandemic

·      The Company's market consolidation strategy continues, with acquisition opportunities being continually evaluated in a large, global and fragmented market

·      The Group is consolidating the carefully curated assets into its marketplace model for online presence and online marketing services which facilitates to develop network effects among the highly complementary businesses it has acquired

·      The Company is pleased to announce that the strong growth experienced during 2021 has continued into 2022 to date

·      The year-on-year revenue growth experienced during Q1 to date, which has been driven largely by the performance of the Online Marketing segment, is materially ahead of the revenue growth rates implied by analyst consensus expectations for the full year to 31 December 2022

·      Given the early stage of the current financial year and given the uncertainty implied by the geopolitical situation, the Directors have yet to fully ascertain the expected impact on full year performance; they however reconfirm their opinion that it should be at least at or above the high end of the latest range of analyst expectations***

Ben Crawford, CEO of CentralNic, commented: "CentralNic has enjoyed a very strong 2021 across both our online presence subscription products and our privacy-safe online marketing solutions - achieving record organic growth of 39% for the year. Significant investment in human resources, restructuring and market-leading products has contributed to the Group having revised its performance expectations for 2021 upwards repeatedly over the course of the year.

"A virtually pure play recurring revenue business with cash conversion of over 100%, CentralNic continues to improve its cash position, interest coverage and net debt to EBITDA ratio as it grows. As our investment levels plateau moving forward, we expect future periods to benefit from increasing operational leverage. 

"These robust results reflect CentralNic's continued success in sourcing, completing and integrating transformative acquisitions, integrating them into marketplaces enjoying network effects, and driving organic growth.  The pipeline of future acquisition targets remains strong and we are confident in continuing our trajectory towards joining the ranks of the global leaders in our industry."

* Subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses

** Includes gross cash, debt and prepaid finance costs

*** Analyst expectations of revenue and adjusted EBITDA for the financial year ending 31 Dec 2022 currently range from USD 420.2m to USD 469.2m and USD 48.0m to USD 51.3m respectively.

These unaudited financial results have been prepared for the purpose of fulfilling the information undertaking requirements included in the bond terms for the Senior Secured Callable Bond Issue. To the best of our knowledge, these unaudited financial results have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Issuer and the Group taken as a whole. In addition, to the best of our knowledge, these unaudited financial results include a fair review of the development and performance of the business and the position of the Issuer and the Group taken as a whole. The principal risks and uncertainties that the business faces remain materially consistent with the risks and uncertainties described in the Risks section of the Group's 2020 annual report.

Ben Crawford - CEO

Don Baladasan - Group Managing Director

Michael Riedl - CFO

For further information:

Forward-Looking Statements

This document includes forward-looking statements. Whilst these forward-looking statements are made in good faith, they are based upon the information available to CentralNic at the date of this document and upon current expectations, projections, market conditions and assumptions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Group and should be treated with an appropriate degree of caution. 

About CentralNic Group Plc

CentralNic (AIM: CNIC) is a London-based AIM-listed company which drives the growth of the global digital economy by developing and managing software platforms allowing businesses globally to buy subscriptions to domain names, used for their own websites and email, as well as for protecting their brands online. These platforms can also be used for distributing domain name related software and services, an opportunity that contributes significantly to CentralNic's organic growth. The Company's inorganic growth strategy is identifying and acquiring cash-generative businesses in its industry with annuity revenue streams and exposure to growth markets, and migrating them onto the CentralNic software and operating platforms. CentralNic operates globally with customers in almost every country in the world. It earns recurring revenues from the worldwide sales of internet domain names and other services on an annual subscription basis. For more information please visit: www.centralnicgroup.com

MANAGEMENT COMMENTARY ON PERFORMANCE

Introduction

CentralNic's organic growth, combined with its 2019, 2020 and 2021 acquisitions, substantially increased the scale and capabilities of the Company. The effect of this is demonstrated in our unaudited preliminary FY2021 results which show a transformational increase in revenues and adjusted EBITDA, both of which have grown by 71% and 57% respectively compared to FY2020.

Performance overview

                The Company has performed strongly during the year with the key financial metrics listed below:

¹ Please refer to note 7

² n.m. - not meaningful

On a pro forma basis (as defined in the footnote on page 2), the Company grew by 39% organically during FY2021.

Segmental analysis

The Company has combined the previous Direct and Indirect segments into a single Online Presence segment for all reporting periods ending 30 September 2021 and later. In this segment, which provides the essential tools for businesses to go online, growth in domain name sales has accelerated notably. More importantly, our efforts to deliver value-added services are paying off, with the growth in sales of associated services outpacing growth in domain names sales. The Online Marketing (formerly "Monetisation") segment, was renamed as its service offering has been substantially expanded through the acquisitions of Zeropark, Voluum and Wando, to a full suite of online customer acquisition solutions, including data analytics.

 Organic growth rates quoted below are calculated on a pro forma basis including all the Group's constituents as of the last balance sheet dates and adjusted for non-recurring or non-cash revenues and on a constant currency basis.

Online Presence segment

Significant scale was achieved in the Online Presence segment, with revenues increasing by USD 21.4m for the year ended 31 December 2021, or 17%, from USD 127.9m to USD 149.3m. Organic growth for this segment was 9% over the year. The growth has been predominantly carried by the Group's Wholesale and Enterprise brands. Enterprise has seen growth further accelerated by the successful SafeBrands acquisition.

The number of processed domain registration years increased by 9% from 11.3m in 2020 to 12.3m in 2021. At the same time, the average revenue per domain year increased by 2% from USD 9.02 to USD 9.24. The share of Value-Added Service revenue in 2021 was 8.3%[1].

Online Marketing segment

The Online Marketing segment grew more rapidly, with revenues increasing by USD 149.2m, or 133%, from USD 112.1m to USD 261.3m. Organic revenue grew at a rate of 65%, predominantly driven by CentralNic's PubTONIC media buying business, with the inorganic growth being contributed by the full year impact of the Zeropark and Voluum acquisitions and this year's acquisitions of Wando and the White & Case website portfolio.

The number of visitor sessions also increased by 49% from 2.1 billion in 2020 to 3.1 billion in 2021 and the revenue per thousand sessions ("RPM") increase by 36% from USD 47.9 to USD 64.9[2]. 

CentralNic is a leader in online privacy, as none of our marketing platforms make use of third-party cookies or collect personal data on our customers. We therefore expect that restrictions placed on those practices (e.g. the ban of third-party cookies in Google Chrome or App Tracking Transparency in Apple's iOS 14.5) will benefit CentralNic, as we provide an alternative for online marketers that is proven to be highly effective, whilst respecting the privacy of internet users. This puts us at the forefront of companies offering solutions for a more privacy conscious world.

Outlook

CentralNic has enjoyed a very strong 2021, across both our online presence subscription products and our privacy-safe online marketing technologies - achieving record organic growth of 39% by virtue of our significant investment in human resources, restructuring and market-leading products. This contributed to the Group revising its performance expectations for 2021 upwards repeatedly over the course of the year.   

These outstanding results demonstrate that CentralNic can source and complete transformative acquisitions, but more importantly that it can also integrate them successfully into marketplaces while continuing to deliver organic growth. Moreover, as the company rapidly scales up, the underlying qualities of high recurring revenues and excellent cash conversion become increasingly meaningful.

A virtually pure play recurring revenue business with cash conversion of over 100%, CentralNic continues to improve its cash position, interest coverage and net debt to EBITDA ratio as it grows. As our investment levels plateau moving forward, we expect future periods to benefit from increasing operational leverage.

The pipeline of future deals remains strong, while the net debt level remains comfortable particularly given the profitability of the existing CentralNic Group and the expected contribution from recent acquisitions. We are confident in continuing our trajectory towards joining the ranks of the global leaders in our industry.

Ben Crawford
Chief Executive Officer