CentralNic Group - A solid Q121, with double-digit organic growth
CentralNic delivered 16% Q121 LTM pro forma revenue growth, with all its businesses contributing. Management indicated that growth in domain name sales had accelerated notably, benefiting the Direct and Indirect segments, with both Retail and Corporate returning to growth. Monetisation has been rebranded Online Marketing, with revenues increasing 76% to US$45.3m (54% of Q121 group sales), making it the fastest-growing segment. As expected, with the growth of Online Marketing, adjusted EBITDA margins softened from 14.4% in Q120 to 12.0% in Q121. CentralNic made two acquisitions in the period: SafeBrands (online brand protection) for a total consideration of US$4.4m and Wando Internet Solutions (online marketing) for US$6.5m upfront plus a further up to US$6.5m, funded by a €15m bond placing. CentralNic is trading in line with management’s expectations and the pipeline of future deals remains strong. The shares trade on an FY21e EV/adjusted EBITDA of 9.1x and P/E of 12.3x, which does not reflect the growth prospects for the group.CentralNic Group is a holding company which provides global domain name services. Co. provides Wholesale, Retail and Enterprise services and consultancy for new Top Level Domains (TLDs), Country Code TLD's and Second-Level Domains and it is the owner and registrant of a portfolio of domain names, which it uses as SLD domain extensions and for resale on the domain name aftermarket. The Wholesale Division powers domain names and sells them via an integrated network of third party retailers; the Retail Division sells domain names and related services to end users; and the Enterprise Division sells domain names and related services, consultancy services and licenses software to corporations.
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