27 February 2023

CENTRALNIC GROUP PLC

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

UNAUDITED PRELIMINARY ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2022

A record year for revenue and Adjusted EBITDA; with a confident outlook for 2023

CentralNic Group Plc (AIM: CNIC), the global internet company that derives recurring revenue from privacy-safe, AI based customer journeys that help online consumers make informed choices as well as from the distribution of domain names, is pleased to announce its unaudited preliminary accounts for the financial year ended 31 December 2022. The audited annual report and accounts for 2022 is expected to be published on 27 March 2023.

Both revenue and profitability have increased significantly year-on-year, driven by a combination of strong organic growth and accretive acquisitions.

Financial summary:

·       Revenue increased by 77% to USD 728.2m (FY2021: USD 410.5m)

·       Organic revenue growth* of 60% (FY2021: 39%)

·       Net revenue (gross profit) increased by 50% to USD 177.7m (FY2021: USD 118.5m)

·       Adjusted EBITDA** increased by 86% to USD 86.0m (FY2021: USD 46.3m)

·       Operating profit increased by 172% to USD 33.6m (FY2021: USD 12.4m)

·       Profit before tax increased dramatically to USD 14.8m (FY2021: USD 1.6m)

·       Net debt*** reduced by 30% to USD 56.6m as compared to USD 81.4m at 31 December 2021 notwithstanding c. USD 41m M&A net of related equity raises

·       Leverage**** reduced to 0.9x from 2.2x pro forma EBITDA as of 31 December 2021 due to improved profitability and cash generation

·       Adjusted operating cash conversion of 110% (FY2021: 122%)

·       Adjusted EPS for the year increased by 70% to 20.01 US cents (FY2021: 11.80 US cents)

·       Proposed final dividend of 1.0p. This reflects a greater emphasis on returns to shareholders in future

Operational highlights:

·      The Group's organic growth further accelerated during the period, driven by ongoing market share gains of its proprietary privacy-safe, AI based customer journeys which address a multi-billion-dollar opportunity

·      The number of visitor sessions increased by 77% from 2.6 billion for the year ended 31 December 2021 to 4.6 billion for the year ended 31 December 2022 and the revenue per thousand sessions ("RPM") increased by 37% from USD 76.40 to USD 105.00

·      Adjusted EBITDA as a percentage of Net Revenue has increased from 39% for the year ended 31 December 2021 to 48% for the year ended 31 December 2022, demonstrating improved operating leverage

Corporate highlights:             

·      Acquisition of VGL Verlagsgesellschaft mbH ("VGL"), a leading product review website publisher, on 8 March 2022 for an enterprise value of EUR 60m (c. USD 65m)

·      On 18 July 2022, the final deferred consideration payment for the acquisition of KeyDrive SA was settled in cash totalling USD 1.1m

·      Acquisition of M.A Aporia ("Aporia") on 13 September 2022 for an initial consideration of USD 11.2m

·      Acquisition of Intellectual Property Management Company for an enterprise value of USD 7.3m on 26 October 2022

·      On 31 October 2022 the Company re-financed its debt facilities consisting of a USD 150m term loan and a USD 100m revolving credit facility with an initial maturity date of 14 October 2026 and an option to extend by a further year.  The borrowing cost of the facilities is determined by CentralNic's net leverage, which is initially 2.75% above SOFR, a notable reduction compared to the 7% above 3-month EURIBOR for the senior secured bond it replaced.

·      In November 2022, the Company entered into three separate interest rate swap transactions to fix the variable interest component on USD 75m of the new USD 150m term loan at a blended rate of 3.92%

·      Appointment of Michael Riedl as Chief Executive Officer and William "Billy" Green as Group Chief Financial Officer on 12 December 2022

·      Acquisition of a portfolio of revenue generating niche websites for USD 5.2m on 19 December 2022

·      Launch of the Company's inaugural share buyback programme on 30 December 2022

Michael Riedl, CEO of CentralNic, commented: "I am absolutely delighted with CentralNic's performance in 2022, achieving record revenue and profit, despite the challenging macro-economic environment. This remarkable achievement stands as a testament to the exceptional business portfolio our team has successfully built.

Moving forward, we shall continue to exhibit the same level of discipline and efficiency as we accelerate our product rollouts, launch strategic partnerships, and enhance our scalability. Our unwavering focus on innovation and operational excellence will be the cornerstone of our success.

Whilst early into the new financial year, we anticipate 2023 will see yet another year of robust growth and shareholder returns. We remain committed to delivering outstanding value to our shareholders, and we are confident of another successful year. 

Given this confidence, I am pleased to announce that the Directors intend to propose paying a maiden dividend of 1.0p for the year 2022 to the AGM to be held in late April.  This is the next step of our plan of returning cash to shareholders, following the completion of our maiden share buyback programme in early 2023. I look forward to keeping you updated on our progress throughout 2023." 

* Pro forma revenue, adjusted for; acquired revenue, constant currency foreign exchange impact and non-recurring revenues is estimated at USD 743.1m for the year ended 31 December 2022 and at USD 465.5m for the year ended 31 December 2021

** Parent and subsidiary earnings before interest, tax, depreciation, amortisation, impairment, non-cash charges and non-core operating expenses

*** Includes gross cash, bank debt and prepaid finance costs as of 31 December 2022 (cash of USD 94.8m and bank debt and prepaid finance costs of USD 151.4m); includes gross cash, bond debt, bank debt, prepaid finance costs and hedging liabilities as of 31 December 2021 (cash of 56.1m, bond debt, bank debt and prepaid finance costs of USD 131.1m and hedging liabilities of USD 6.4m) 

**** Includes Net Debt as defined under *** (i) excluding prepaid finance costs, (ii) plus guarantee obligations, and (iii) plus the best estimate of any crystallised deferred consideration payable in cash, all divided by pro forma EBITDA, i.e., last twelve months' EBITDA including acquired entities' EBITDA on a pro forma basis, and adjusted for rental expense capitalised under IFRS 16 and non-core operating expenses

All full year 2022 numbers remain subject to audit.

Michael Riedl - CEO

William Green - 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 fast-growing London-headquartered software company which helps online consumers make informed choices through privacy-safe and AI-based customer journeys that convert general interest internet users into high conviction buyers. It also operates a leading network for the automated distribution of domain names and associated services. It has delivered 78% CAGR since its IPO in 2013 through a combination of organic growth and acquiring and integrating cash generative businesses in its industry with annuity revenue streams and exposure to revenue markets. 

For more information please visit: www.centralnicgroup.com

MANAGEMENT COMMENTARY ON PERFORMANCE

Introduction

CentralNic's organic growth, combined with its accelerated acquisition strategy, substantially increased the scale and capabilities of the Company. The effect of this is demonstrated in our unaudited preliminary FY2022 results which show a transformational increase in revenues and adjusted EBITDA, which grew by 77% and 86% respectively compared to FY2021.

Performance overview

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

¹ Please refer to note 9

² Please refer to note 8

Segmental analysis

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 Marketing segment

The Online Marketing segment has proven to be largely decorrelated from the softer performance reported by some of the major online marketing players. The Company's Online Marketing segment further accelerated its growth, with revenues increasing by USD 313.5m, or 120%, from USD 261.3m to USD 574.7m. Organic revenue grew at a rate of 86%, predominantly driven by CentralNic's TONIC platform.  Inorganic growth was obtained from the full year impact of the Wando and White & Case acquisitions, as well as the acquisitions of VGL and Aporia and, to a lesser degree, Fireball. 

The number of visitor sessions also increased by 77% from 2.6 billion in 2021 to 4.6 billion in 2022 and the revenue per thousand sessions ("RPM") increased by 37% from USD 76.40 to USD 105.00³.

CentralNic is a leader in online privacy, as none of our marketing platforms make use of third-party cookies, instead relying on contextual data. 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 iOS 14.5 or Android 12 and later versions) will continue to 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, a key success factor in winning market share.

3 Based on analysis of c.84% of the segment which can be adequately and reliably be described by this KPI

Online Presence segment

Reported revenue in the segment increased by 3% from USD 149.3m for the year ended 31 December 2021 to USD 153.5m for the year ended 31 December 2022. Organic growth for the Online Presence segment was slightly higher at 4% over the year when adjusted for non-USD revenues translating into fewer USD following the deterioration of most global currencies against USD during the early part of the 2022 financial year. 

The average revenue per domain year increased by 5% from USD 9.40 in 2021 to USD 9.90 in 2022, while the number of processed domain registrations decreased by 2% from 12.6m in 2021 to 12.3m in 2022⁴.  The share of Value-Added Service revenue for the year ended 31 December 2022 remained stable at 8%. 

Outlook

CentralNic has enjoyed a very strong 2022, particularly in our Online Marketing segment. For the year ended 31 December 2022, we reported 60% organic revenue growth on a pro forma basis. Moreover, as the Company rapidly scales up, the underlying qualities of high recurring revenues and excellent cash conversion become increasingly meaningful. Furthermore, the Group has strong operating leverage, as demonstrated by CentralNic's Adjusted EBITDA as a percentage of Net Revenue increasing from 39% for the year ended 31 December 2021 to 48% for the year ended 31 December 2022.

As a virtually pure-play recurring revenue business with high inherent cash conversion consistently above 100%, the Company continues to improve its key financial metrics as it grows, including its cash position, interest coverage and net debt to EBITDA ratio. Our net leverage has substantially reduced and is now only 0.9x trailing 12-month EBITDA compared to 2.2x as of 31 December 2021. CentralNic is therefore comfortably positioned, particularly given the Group's high cash generation and the expected contribution from recently completed acquisitions. With USD 100m of committed and available to be drawn finance facilities, CentralNic now has additional capacity to find highly earnings accretive M&A opportunities while maintaining its disciplined capital allocation approach and returning cash to shareholders when appropriate.

Whilst the Directors continue to monitor the global macro-economic environment closely, they are confident in the Group's outlook.  Targeted investment in people and our market-leading products, in particular our suite of privacy-safe online marketing technologies, position us to succeed.

Michael Riedl
Chief Executive Officer

4 Based on analysis of c.79% of the segment which can be adequately and reliably be described by this KPI