Team Internet Group PLC (AIM:TIG, OTCQX:TIGXF) said it was confident in its "fundamental prospects and business" as would-be buyer Verdane confirmed it would not be formally bidding for the group.
The AIM-listed company also noted that the Oslo-based private equity firm is "bound by the restrictions set out in Rule 2.8 of the City Code on Takeovers and Mergers", the key stipulation of which is it can't make a further offer for the UK domains and search group for six months.
It leaves Team Internet with the opportunity to explore ways to increase shareholder value, including optimising capital allocation and reviewing its asset ownership.
In a comprehensive update, the company said it has also received 'repeated offers' for its Domains, Identity & Software (DIS) segment, which continues to perform strongly.
A key challenge ahead is Google’s decision to phase out AdSense for Domains (AFD) from March 2025. This move will push advertisers towards Google’s new monetisation platform, Related Search on Content (RSOC).
Team Internet has been preparing for this transition, but the timeline and financial impact remain uncertain. The board believes RSOC will ultimately create a more sustainable and valuable business, though it expects a dip in revenue during the transition period.
As part of its strategy, Team Internet is positioning its Search business as a content and video publishing leader. It has also strengthened its zero-click advertising solutions through its Zeropark platform, which offers an alternative to AFD.
The company says demand for its services is at an all-time high, and it is prioritising new customer onboarding to maintain quality and performance.
Despite the challenges, Team Internet remains highly profitable and cash-generative. The company plans to use its strong cash flows to reduce debt, return money to shareholders through dividends and buybacks, or a combination of both.
In 2024, Team Internet’s Search segment generated $91 million in net revenue, with $72 million coming from Google AFD. The remainder came from RSOC, zero-click, display, and video advertising. The DIS segment, which operates on a subscription model, continues to provide stable and recurring revenue, while the Comparison segment is seeing strong growth and increasing profitability.
The shift towards RSOC means Team Internet expects a drop in earnings from its Search segment in 2025, with adjusted EBITDA projected at $20 million to $25 million, down from $57 million in 2024. However, earnings from the DIS and Comparison segments are expected to rise to between $40 million and $43 million, keeping overall Group Adjusted EBITDA within a range of $60 million to $68 million for 2025. The company expects a return to strong earnings growth from 2026 onwards.