CentralNic Group PLC (AIM:CNIC) expects full-year revenues and profits will be at least at the upper end of market expectations.
The internet platform company issued the guidance in its interim results for the first half of 2021, in which it revealed a 36% increase in adjusted underlying earnings (EBITDA) to US$20.5mln from US$15.1mln in the first half of last year.
The reported loss before tax halved to US$1.5mln from US$3.1mln the prior year.
Revenue rose 57% to US$174.7mln from US$111.3mln the year before, with organic revenue growth of 20%. The accelerated organic growth seen during the first half of this year is expected to be sustained following the investment in new management, staff and systems, CentralNic said.
Net debt at the end of June stood at US$83.8mln, compared to debt of US$85.0mln at the end of 2020. The company said it will press on with its market consolidation strategy, with opportunities being continually assessed in what is a large, globally fragmented and growing market.
"CentralNic has enjoyed a very strong first half across both our online presence subscriptions products and our privacy enabled online marketing technologies – achieving record organic growth of 25% in the second quarter, following 16% organic growth for the first quarter 2021 and 9% for the full year 2020,” said Ben Crawford, the chief executive officer of CentralNic.
“By virtue of our significant investment in resources, restructuring and market-leading products and promotions, we expect full-year revenue and profits to be at least at the upper end of market expectations. As our investment levels plateau, we expect future periods to benefit from increasing operational leverage.
“These robust results reflect CentralNic's continued success in sourcing, completing and integrating transformative acquisitions and driving the organic growth of all our businesses. Moreover, as the business scales rapidly, the underlying qualities of our recurring revenues and excellent cash generation become increasingly meaningful. The pipeline of future acquisition targets remains strong, while the net debt level remains comfortable and easily serviced given the profitability and cash generation of the existing CentralNic Group and the additional contribution from recent acquisitions. We are confident in continuing our trajectory towards joining the ranks of the global leaders in our industry,” he added.
Zeus Capital Market was quick off the mark with upgrades to its full-year forecasts. It has raised its 2021 revenue forecast to US$355mln from US$348mln (having already raised its revenue forecast by 15% following CentralNic’s July trading update) and sees potential for an upgrade to earnings.
“CentralNic’s elevated growth appears sustainable,” the broker said.
“The company's investments in Online marketing products and promotions are driving sustained market share gains and have increased exposure to higher growth markets. In the Direct and Indirect divisions, the company is leveraging its strong customer relationships to cross-sell associated services that are now outpacing core domain names sales,” it added.
For now, CentralNic’s nominated adviser (Nomad) is being conservative in leaving its underlying earnings (EBITDA) forecasts unchanged, noting that its estimate currently stands at the top of the range of forecasts, but it will revisit the estimates after the third-quarter trading update in November.
The company trades at nine times projected 2021 EBITDA and offers an 8% free cash flow yield, a rating that Zeus believes undervalues the company’s 20% organic revenue growth and earnings momentum.
Shares in CentralNic were up 4.7% at 100.5p in mid-morning trade.
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