CentralNic Half Yearly Results See Organic Growth of 6%

CentralNic released their half yearly results for January to
June Monday reporting both revenues and Adjusted EBITDA have
tripled year-on-year, driven by a combination of growth through acquisition and
underlying organic growth of around 6%.

“In the first half of 2019 CentralNic’s adjusted EBITDA exceeded our full year performance in 2018,” Ben Crawford, CEO of CentralNic, commented on the strong results. “These outstanding results not only demonstrate that CentralNic can source and complete transformative acquisitions, but that it can also integrate them successfully while continuing to deliver organic growth. Moreover, as we scale up rapidly, the underlying qualities of high recurring revenues and excellent cash conversion become increasingly meaningful.”

“Our pipeline of future deals remains strong, while our
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.”

Highlights reported by CentralNic were:

Financial Summary:

·       Revenue increased by 225% to $49.7m (H1 2018: $15.3m), which was virtually all subscription based

·       Gross profit increased by 127% to $19.7m (H1 2018: $8.7m)

·       Adjusted EBITDA* increased by 203% to $9.2m (H1 2018: $3.1m)

·       Operating profit increased by 266% to $2.4m (H1 2018: operating loss of $1.4m)

·       Cash balance increased 73% to $17.9m (H1 2018: $10.4m)

·       Net debt** was reduced by 47% to $6.0m (H1 2018: $11.3m)

*Excludes
impact of share-based payments expense for options, premium domain
sales, foreign exchange, and non-core operating costs

** Includes gross cash, debt and prepaid costs; please see section “Post half year end highlights”

Operational Highlights:     

·      Numerous notable client wins, including:

o  Automattic, the parent company of WordPress and of the .blog TLD

o  The Alpnames portfolio of c. 680,000 domain names assigned by ICANN

o  The Kingdom of Bahrain, for registry services

o  A major contract from a global luxury car manufacturer

o  A significant registry project from a South East Asian government

·      On
track to make more than $1.0m of cost savings in the full year ending
December 2019, from the integration of the KeyDrive acquisition, as
demonstrated by strong H1 2019 performance

·      Completion of first stage of earn-out for the KeyDrive acquisition, which exceeded financial targets

·      Successful
placing of the debut offering of a €50.0m oversubscribed senior secured
bond, used to repay debt and to fund acquisitions

Post half year end highlights:

·      TPP Wholesale acquisition completed 1 August 2019 for a gross consideration of c. $16.6m

·      Hexonet
acquisition completed 7 August 2019 after CentralNic paid an initial
cash consideration of c.$7.8m for all Hexonet shares

·      Ideegeo acquisition completed 7 August 2019 for a total consideration of c.$3.4m

·      Settlement of the €50.0m
senior secured bond issue on 3 July 2019 and repayment of the prior
acquisition facility provided by Silicon Valley Bank on 30 July 2019

·      The
debt markets have demonstrated confidence in our recurring business
model and acquisition strategy by over subscribing to our debut bond
offering

·      The
cumulative annual adjusted EBITDA (including ongoing cost reductions of
Hexonet) from the three newly acquired businesses, as per their latest
completed financial years is $4.6m

·      Net
Debt restated for the bond issuance and the three new acquisitions
would be approximately $35m, assuming the simultaneous completion of all
the transactions on 30 June 2019

               Outlook

·      Strong
growth in the first half and three successful acquisitions, taking the
Company to c. $130m revenues on a proforma annualised basis, demonstrate
the successful execution of our buy and build strategy

·      Performance
of last year’s key acquisition, KeyDrive, demonstrates CentralNic’s
ability to generate network effect and economies of scale beyond initial
hard cost synergies, thereby improving gross margin and adjusted EBITDA
margin

·      This
gives us confidence to continue with this consolidation strategy and we
continue to assess a number of opportunities in what is a huge,
fragmented and growing market

·      Having achieved strong results in the first half of 2019, management is confident that the full year result should be around the top end of the current range of analyst forecasts

Disclosure: CentralNic is the parent of company of instra. Domain Pulse is an instra domain name news site.

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