Alongside the announcement of two small acquisitions in Germany, CentralNic’s management has confirmed continuing high organic revenue growth in Q122 (FY21: 37%), driven largely by the performance of the online marketing segment. Management is still acquiring strategic assets as part of its vertical integration strategy, with the Fireball Search and .ruhr top-level domain (TLD) deals bought for total cash consideration of €0.6m, at implied multiples of 0.3x sales and 0.6x EBITDA. The acquisitions are expected to be immediately earnings accretive. The continued segmental growth underlines that CentralNic’s privacy-safe approach to online marketing, is proving both resilient and attractive. We have yet to revise our forecasts, which we will review with the FY21 preliminary results, expected on 28 February. However, CentralNic trades on an undemanding rating given its robust growth, with management confident of the full-year outlook.
Price - 130p
Market cap - £297m
Note: *Excludes impact of share-based payments, share option expense, foreign exchange charges and non-core operating costs. **FY21e and FY22e EPS figures reflect 228.8m voting shares in issue.
Fireball was the leading search engine in Germany before it was bought by Lycos Europe in 2000. Given Fireball’s high consumer awareness, in 2016 it was relaunched as an independent company, with search results powered by Bing and a strong focus on privacy. Fireball offers new traffic sources for CentralNic to monetise and adds alternative monetisation channels to generate revenues from internet traffic.
There are c 10k domain names registered using the .ruhr TLD, the domain address for the area around the river Ruhr in Germany, consisting of c 50 cities, including Dortmund and Essen, with roughly five million inhabitants. Once it has been migrated across to CentralNic, .ruhr will be fully managed by CentralNic. It will join German regional TLDs, .saarland and .London, managed on behalf of London & Partners, as part of CentralNic’s expanding portfolio of geographic TLDs. The acquisition is expected to close by the end of May 2022.
Share price performance
Business description
CentralNic Group provides the essential tools for businesses to go online, operating through two divisions: online presence (reseller, corporate and SME); and online marketing. Services include domain name reselling, hosting, website building, security certification and website monetisation.