CentralNic Group PLC - Final Results
CentralNic Group plc
("CentralNic" or "the Company" or "the Group")
Final results for the year ended 31 December 2013
CentralNic (AIM: CNIC), the owner and manager of an internet distribution platform which derives a revenue share from sales of internet domain names into markets across the world, today announces its audited results for the year ended 31 December 2013.
The Company expects to publish the Annual Report on 19 May 2014, and the Company's Annual General Meeting will be held on 11 June 2014.
- Successful listing on AIM on 2 September 2013, raising £5 million in cash for the Company (£4.2 million after costs)
- Signed contracts to supply domain names to an additional 114 domain retailers from 32 countries, including leading Chinese registrars and the world's largest domain name retailer, GoDaddy, which collaborated with CentralNic on a significant promotion for the .LA domain in Los Angeles in July 2013
- The CentralNic-distributed domain name .PW has been the world's most successful Top-Level Domain ("TLD") launch since .co was re-launched in 2011, attaining sales of 250,000 domains within the first six months of retail. CentralNic also launched domains ending .in.net, .mex.com and .Africa.com
- 25 new generic Top-Level Domains ("gTLDs") have passed ICANN's initial evaluation and, being uncontested, will be exclusively powered by CentralNic when they launch from mid-2014. An additional 26 gTLD applications have passed initial evaluation and remain candidates for CentralNic to distribute
|31 Dec 2013||31 Dec 2012|
|Net cashflow from operating activities||1,134||982|
* - Earnings before interest, tax, depreciation, amortisation and non-cash charges; excludes share based payments expense of £66,447
- Billings (including partner share) increased by 15% to £3.89 million (2012: £3.38 million)
- Net revenue increased by 4% to £3.05 million (2012: £2.93 million), despite being in the pre-revenue phase for new Top-Level Domains. Domain net revenue grew by 7% to £2.65 million (2012 £2.48 million) with growth from .PW revenues, while revenues in other domains distributed by CentralNic were sustained
- Gross profit margin increased to 76.6% (2012: 73.4%) reflecting the Company's ability to grow registry revenue with minimal incremental cost
- Adjusted EBITDA of £1.02 million (2012 £1.13 million), reflecting a year-on-year increase offset by £0.20 million of investment in resourcing the registrar business, further developing the registry business and costs related to the new status as an AIM-listed business
- Net cash-flow from operating activities increased to £1.13 million (2012 £0.98 million) reflecting timing of customer payments on account and an increased accrual for partner revenue share.
Post year end
- Five new gTLDs entered launch phase in March and April 2014: .wiki; .xyz; .ink; .bar; .rest
- Four additional gTLD distribution contracts won - .website, .press, .host and .space, plus the distribution contract for .co.com
- Preferred supplier agreement signed with Domain Venture Partners (Fund II)
- Fully owned retail subsidiary TLD Registrar Solutions ("TLD RS") launched with retail websites for .menu, .build, .luxury and .london
- DomiNIC Domain Management software development progressing and marketing commenced
Commenting on the results, John Swingewood, Chairman of CentralNic, said:
"The Directors are extremely pleased with CentralNic's strategic progress in 2013. The Company is achieving sustained growth resulting from the continued demand for our domain names, establishing new retail channels and securing new inventory. The Board is particularly pleased that these results are yet to include revenues from sales of our pipeline of new Top-Level Domains or of our new retail websites, all of which are starting their launch activities in mid-2014.
"Our objectives when we listed on AIM last year were to accelerate our growth through securing new retail channels, including our own proprietary channels, and obtaining new inventory through commercial and government contracts, including making strategic investments in new TLD applicants. I am delighted that we made progress in each of those areas in 2013. The Board is excited by the considerable opportunities for CentralNic and is confident that the Company will achieve its commercial targets for 2014."
For further information, please contact:
CentralNic Group plc
Ben Crawford (CEO)
+44 (0) 203 388 0600
Ross Andrews / Nick Cowles ( Corporate Finance)
+44 (0) 161 831 1512
John Goold (Institutional Sales)
+44 (0) 207 533 7716
Jamie Hooper / Julian Bosdet
+44 (0) 20 7398 7719
About CentralNic Group plc
- CentralNic (LSE: CNIC) is one of the world's leading providers of both registry and registrar services to the internet domain name industry, meaning that it is both a wholesaler and a retailer of the names used for website and email addresses. The business operates globally, with customers in over 75 countries. It is headquartered in London, and in September 2013 successfully completed its admission to the AIM market of the London Stock Exchange. At the time of listing, CentralNic's goals were to grow the volume of transactions over CentralNic's platform, giving companies and individuals all over the world the tools to have their own online presence.
- CentralNic distributes domains on behalf of their clients - owners or rights-holders - on a revenue share basis. CentralNic-distributed domains use an annual registration fee model, paid in advance by the end users, providing an annuity revenue stream for both CentralNic and its clients.
- CentralNic was selected as the Registry Service Provider and distributor for 60 applications for new generic Top-Level Domains (gTLDs) - a programme devised by the domain industry regulator ICANN to supplement the existing TLDs such as .com and .co.uk with new domain extensions. Out of the 60 applications, there are 25 new gTLDs that will make exclusive use of CentralNic's platform, these include: .wiki, .bar, .college, .press, .rest, .ink, .feedback, .contact and .xyz.
- CentralNic will also distribute additional TLDs from a list of 26 applications that have passed initial evaluation and are currently in the process of contention resolution. These TLDs include .app, .art, .blog, .law, .llc, .mail, .news, and .school.
- CentralNic's clients that are acquiring and funding these new TLDs include a number of successful entrepreneurs as well as Global 1000 companies such as Saudi Telecommunications, Qatar Telecom, Etisalat and Kuwait Finance House, and media and entertainment industry leaders The Guardian and William Morris Endeavor. CentralNic will receive service fees or shares in transactional revenues as fees for the distribution of domains using the new TLDs.
- CentralNic's distribution network has approximately 1,500 registrars, including industry-leading domain retailers such as GoDaddy and Network Solutions. The network includes registrars in over 75 countries that retail domain names directly to the public and wholesale them through an additional network of over 100,000 resellers. End users register these domain names as an address for their websites and emails, as a defensive measure to protect their brands online, as a method of capturing internet traffic and achieving desired rankings on search engines, and as an investment.
- CentralNic is itself the rights holder for 25 domain extensions, including .us.com, .eu.com, .uk.com, .ru.com and .cn.com. It therefore retains 100% of the wholesale revenues for domains using those domain extensions.
- CentralNic is the owner of a portfolio of premium domain names including 17 two-letter .com domains including http://us.com and http://uk.com. Reports of sales of two-letter .com domains for US$4.6 million and US$3.7 million in 2013 and 2014 (respectively) serve as evidence of the continued high values the market places on these premium domains.
- In addition to its growth as a global distributor of domain names, the Directors believe that there is potential for CentralNic to also become a significant retailer of domain names direct to end users. To this end, CentralNic has already obtained the necessary accreditations, built the technology, signed initial contracts and commenced trading as a domain name retailer.
All Group information and news can be found at http://www.centralnic.com
Chief Executive Officer's Report
CentralNic is a profitable, high-margin business with strong cash-flows, already set on a high growth strategy via a portfolio of new Top-Level Domains that I consider second to none.
CentralNic has made significant progress in 2013. The Company listed on the AIM market of the London Stock Exchange, guided its clients' applications for new Top-Level Domains through the evaluation and approvals process, and commenced an aggressive business development strategy aimed at securing recurring revenues for years to come. In addition, the Company achieved its financial performance targets.
Billings were £3.89 million, representing a 15% increase on 2012, and producing net revenues of £3.05 million, an increase of 4% over 2012. Net cash-flow from operating activities was £1.13 million, a 15% improvement over the previous year. This growth in revenues is the result of strong deferred revenues from prior periods, continued growth in annuity billings for existing inventory, the successful launch of new domain extensions and consulting revenues relating to new TLDs.
In September 2013, CentralNic successfully raised £5 million (£4.2 million after costs of placing) through its listing on AIM, and immediately commenced investing the funds raised in its future growth strategies, with £0.20 million of operating expenditure invested in the fourth quarter of 2013. Despite this additional spend and new expenses due to our AIM listing, the Group achieved an adjusted EBITDA of £1.02 million in 2013, representing a strong 33.3% margin on net revenues.
At the year end the Group had cash balances of £4.93 million (2012 £0.16 million).
New Top-Level Domains
The internet is going through what our industry regulator ICANN called "the biggest change since its inception," with the introduction of the new gTLD programme, allowing new entrants to join the ranks of .com, .org, .net, etc - and another 20 or so TLDs which have achieved sales of over 1 million domains.
CentralNic was selected as the exclusive registry provider for 60 gTLD applications, under revenue-share and fee-for-service contracts. At the close of 2013, industry regulator ICANN had completed the Initial Evaluations of these new TLD Applications:
- 25 passed initial evaluation and are uncontested; they are therefore guaranteed to be powered by CentralNic when they launch
- 26 applications passed initial evaluation, and are in contention resolution between CentralNic's clients and other applicants. We anticipate that CentralNic will obtain exclusive distribution rights to some of these TLDs.
CentralNic continues to support its clients in navigating the ICANN contracting and contention resolution processes, and assisting them in developing their launch marketing and operational strategies. TLD-related consulting fees that CentralNic received in 2013 will be supplanted with revenues from the sale of domains from the second half of 2014.
CentralNic listed on the AIM market with four clearly stated objectives to accelerate our growth. During 2013 CentralNic made considerable progress in realising those objectives:
1. Increasing our global retail market coverage
CentralNic continued to expand its global retailer network in 2013 by signing contracts with 114 new registrars and resellers from 32 countries, including the world's largest domain name retailer, GoDaddy, which has 12 million customers and 57 million domains under management.
2. Engaging with developing markets
CentralNic has expanded its team, and we now have multilingual executives around the world focussed on developing markets. We have already made significant progress accessing what is now the world's largest market of internet users, China, by signing contracts with three leading Chinese registrars.
3. Adding new domains to our inventory
When CentralNic listed in September 2013, its expectations were to obtain distribution contracts for an additional five domain extensions over the ensuing two years. This objective was actually met by April 2014. CentralNic has already won the distribution contracts for .website, .press, .host, .space and .co.com.
4. Entering the retail marketplace ourselves
Extensive planning and development work on CentralNic's retail strategy was undertaken in 2013 and Q1 2014. By May 2014 TLD RS had launched "flagship store" retail websites for .menu, .build, .luxury and .london.
Domain Management Software Acquisition
In December 2013, CentralNic acquired DomiNIC, a domain portfolio management and sales software product, currently used by some of the largest corporations in the German-speaking markets.
CentralNic is using this software to integrate its domain distribution platform with the in-house systems used by major corporations.
At the end of 2013 the estimated number of people with access to the internet was growing rapidly towards three billion, with smart phone sales now surpassing one billion per year and initiatives like internet.org focused on getting the remaining five billion people online, using the resources of Facebook, Samsung, Nokia, and Ericsson, amongst others.
CentralNic intends to supply this growing demand with domain names and other tools to empower these new internet users to get their own websites. We are already active in 75 geographic markets, making us well-equipped to continue growing globally and supporting consumers and businesses in developing markets seeking to enjoy the benefits of internet adoption.
Taking into account the continuing investment in 2014 and the revenues from new TLD operations commencing in the second half, the Company is well positioned to meet market expectations for 2014.
Chief Executive Officer
7 May 2014
More detailed information about Final Results can be found here: https://www.centralnic.com/investors/regulatory