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CentralNic “well positioned” for next stage of development

Snapshot

  • CentralNic provides registry services for internet domains
  • Distributes portfolio to network of 1,500 registrars such as GoDaddy
  • Swung to US$2.4mln operating profit in last six months
  • Primed for further acquisitions
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Quick facts: Centralnic Group PLC

Price: 66.3 GBX

LSE:CNIC
Market: LSE
Market Cap: £120.53 m
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What CentralNic does

CentralNic Group PLC (LON:CNIC) is a provider of registry services for internet domains, a string of characters (e.g. ‘.com’, ‘.net’, or ‘.gov’) used to identify administrative authority or control of different websites online.

CentralNic is headquartered in London but also has offices in New York, Dubai and Los Angeles with account executives in Hong Kong, Abu Dhabi and Melbourne.

 

What it owns

CentralNic operates its own proprietary registry engine that uses in-house IT systems to distribute its portfolio of domains across a network of 1,500 registrars such as domain retailer GoDaddy.

The firm also owns domain name technology firm KeyDrive, which it acquired last year in a reverse takeover for an initial sum of US£35.8mln.

KeyDrive develops and operates software platforms used for selling subscription-based tools for businesses to operate online, including domain names, hosting, email, domain portfolio management and online advertising services.

 

Inflexion points

• In September's half-year results, the AIM-listed company broke into the black at the operating level with a US$2.4mln profit, compared to a US$1.4mln operating loss a year ago.

• A mixture of acquisitive and organic growth led to revenues soaring 225% to US$49.7mln in the six months to the end of June, which almost all from the subscription sales of domain names and web services.

• Acquistions have been flowing, with July 2019 seeing the addition of Hexonet, a seller of domain name subscriptions across in 110 countries, for up to €10mln; following May's purchase of Australia and New Zealand focused domain name resale platform TPP Worldwide for AU$24mln and September's purchase of Romania and Brazil-focused registrar GlobeHosting for €2.56mln.

• In November the group said it was engaged in advanced discussions regarding the potential acquisition of Team Internet AG, which may or may not lead to a transaction being completed.

• On an organic basis, revenues grew 6%, with most of the heavy lifting coming from previous acquisitions, including r, with almost US$28mln spent on three more acquisitions in the second half.

• New client wins in the half included Automattic, the parent company of WordPress and of the '.blog' top-level domain, registry wins with the Kingdom of Bahrain and a South East Asian government and a portfolio of around 680,000 domain names after previous registrar Alpnames had its licence revoked by Icann.

• Chief executive Ben Crawford said the acquisition of KeyDrive had led to a “significant improvement” in the quality of company earnings.

Blue Sky

Going forward, Crawford said that the company was “well positioned for the next stage of developing a global company that drives the growth of the digital economy, giving shareholders exposure to the fastest-growing customers, products and markets in our sector, worldwide”.

Crawford said CentralNic was looking to again double in size in 2019.

"Results to date in the new financial year, together with the group's high percentage of recurring revenues, provide the board with every confidence of meeting market expectations for 2019,” saidchairman Mike Turner at the time of results.

“Furthermore, the continued availability of attractive acquisition targets, coupled with the group's proven ability to source, complete, and integrate complex acquisitions around the world, provides an excellent opportunity to build a sizeable global business to rival the largest industry players.”

 

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Watch

CentralNic Group PLC set to double in size with KeyDrive acquisition

Ben Crawford, chief executive of CentralNic Group PLC (LON:CNIC), tells Proactive's Andrew Scott they've entered into a conditional agreement to acquire the entire share capital of KeyDrive. The initial consideration is US$35.8 million, representing an enterprise value of US$44.5 million,...

on 16/7/18

3 min read