CentralNic plc LON:CNIC CEO Ben Crawford said: “Following the rapid scaling up of our operations in 2016, we have made a pleasing start to 2017. We have additional sales resources, new licences to help grow our business in China, new TLDs launching and opportunities to sell software licenses and enterprise services.With support from our investors, we look forward to continuing the evolution of our business in 2017, scaling up to meet the demand for domain name services as it grows globally.”
CentralNic Group plc (LON:CNIC), the internet platform business which derives revenues from the global sale of domain names and associated services, provides the following Trading and Strategic Update. The 2016 trading performance in this statement is based on unaudited initial management estimates.
2016 Trading Update
In 2016 the Company continued to grow while increasing recurring revenues:
-- Group Revenue increased by more than 110% to GBP22.1 million (2015: GBP10.4 million) -- Recurring/subscription revenues(1) increased to circa 80% of overall revenues (2015: 67%) -- Adjusted EBITDA(2) increased by over 65% to GBP5.5 million (2015: GBP3.3 million) -- Net Cash at the end of the year was GBP7.3 million
(1) Recurring / subscription revenues include revenues from domain registration, domain renewals and other recurring revenues.
(2) Earnings before interest, tax, depreciation, amortisation, acquisition and non-recurring fees and non-cash charges.
2017 Current Trading
The Board is confident in meeting market expectations for the 2017 year:
— Trading at this early stage of the year is in line with plan, and business development initiatives are advancing
— The Group has good exposure to the new TLDs – the fastest-growing category of domain names. The total number of domains using new TLDs rose from 11 million at the beginning of 2016 to over 27 million by the beginning of 2017. CentralNic is the number one new TLD service provider with market share by volume currently around 32% (2015: 20%)
— Increased renewal revenues from new TLDs are expected in 2017, as the base of domains due to renew or expire has increased to almost 10 million domains in the wholesale business (2016: 3.3 million) and circa 1.3 million in the retail business (2016: 0.7 million)
— The Chinese market accounts for circa 60% of all new Top-Level Domain sales globally. CentralNic is the leading non-domestic wholesale provider of new TLDs into China, and China’s Ministry for Industry and Information Technology recently accredited .xyz, .site, .ink and .design, all wholesaled exclusively by CentralNic. The accreditation permits use of domains with these endings for websites and email addresses in China.
— New TLD launches in 2017 include .fun, .realty, .observer, and .art. In addition to the .fun and .art contract wins last year, there is a further pipeline of new TLDs in the process of contracting to migrate to the CentralNic platform
— Initial renewal rates for .xyz and other new TLDs launched over the last 2 years are encouraging
— The Company has appointed the former Commercial Operations Director and former Marketing Director of Group NBT (Netnames) to lead revenue growth initiatives.
Strategy
CentralNic has proven its ability to grow both revenues and Adjusted EBITDA from GBP3.1m and GBP1.0m respectively in 2013 to GBP22.1m and GBP5.5m in 2016, achieving circa 80% recurring / subscription revenues in 2016. CentralNic’s strategy has focussed on increasing its scale and scope of operations and on acquisitions, which along with premium domain sales have underpinned its growth in total revenues, Adjusted EBITDA and recurring revenues. The strategy includes:
– Developing and operating scalable software platforms to serve global markets with domain names and related services
– Identifying and exploiting relatively high growth areas of the domain industry, including taking a leading role in new Top-Level Domains, servicing country code domains and focussing on growth markets such as China
- Winning and retaining well-resourced partners with complementary objectives
– Executing acquisition transactions that meet clear strategic criteria including being earnings accretive in the short term with a strong recurring revenues base.
Vision
— CentralNic’s objective is join the ranks of world leaders in its industry (which include a number of multi-billion-dollar companies) as the new TLDs it distributes expand to challenge the incumbent domain name endings, and China and other emerging markets grow to rival the size of the North American and European markets.
— CentralNic strives to achieve this goal through continuing to disrupt existing markets and by identifying and exploiting growth markets around the world.
Moreover there is consolidation in the domain services industry which present step-change acquisition opportunities for CentralNic to enter new markets and broaden its service offerings.
