CentralNic announced financial results for Q3 2022

CentralNic Group Plc (AIM: CNIC) announced its unaudited financial results for the nine months ended 30 September 2022. The Company has achieved record revenue and Adjusted EBITDA for the period, driven by sustained organic growth which has been further supplemented with five acquisitions, including one acquisition post the period end.

Financial summary:

• Revenue increased by 88% to USD 526.7m (September 2021 YTD: USD 280.6m)
• Organic revenue growth* for the trailing twelve months ending 30 September 2022 of c.66%
• Net revenue/gross profit increased by 53% to USD 128.3m (September 2021 YTD: USD 84.1m)
• Adjusted EBITDA** doubled to USD 62.0m (September 2021 YTD: USD 30.9m)
• Operating profit of USD 35.1m (September 2021 YTD: USD 6.5m)
• Non-core operating expenses reduced by 8% to USD 6.0m (September 2021 YTD: 6.5m)
• Adjusted operating cash conversion of 105% (September 2021 YTD: 118%)
• Net debt*** reduced by 22% to USD 63.4m as compared to USD 81.4m on 31 December 2021

Operational highlights:          

• The Company’s organic growth further accelerated during the period, driven by the ongoing market share gains of its proprietary privacy-safe online marketing solutions which are facing a USD 100bn+ opportunity
• The number of visitor sessions increased by 83% from 1.8 billion in September 2021 YTD to 3.3 billion in September 2022 YTD and the revenue per thousand sessions (“RPM”) increased by 60% from USD 64.9 to USD 104.1
• EBITDA as a percentage of Net Revenue has increased from 37% in September 2021 YTD to 48% in September 2022 YTD, demonstrating that CentralNic’s operating leverage enables revenue growth to drive increasing profitability

Corporate highlights:

• Leverage**** reduced from 2.2x pro forma EBITDA as of 31 December 2021 to 1.2x due to improved profitability and continued deleverage
• Acquisition of VGL, a leading product review website publisher, in March 2022 for an enterprise value of EUR 60 million (c. USD 65 million)
• Oversubscribed GBP 42 million equity raise on 28 February 2022, EUR 21 million bond placing on 7 March 2022 and fully taken up Open Offer of GBP 3 million on 21 March 2022
• On 18 July 2022, the final deferred consideration payment for the acquisition of KeyDrive SA was settled totalling USD 1.1 million
• Acquisition of M.A Aporia on 13 September 2022 for an initial consideration of USD 11.2 million
• Appointment of Claire MacLellan as Non-Executive Director on 14 September 2022

Post quarter end highlights:

• Acquisition of Intellectual Property Management Company (“IPMC”) on 26 October 2022 for an enterprise value of USD 7.3 million
• In October 2022, the EUR 126 million of senior secured bonds were refinanced via a new Senior Facilities Agreement comprising a USD 150 million term loan and a USD 100 million revolving credit facility. These new debt facilities have an initial maturity date of 14 October 2026 with an option to extend by a further year. The borrowing cost will initially be 2.75% above SOFR, a notable reduction compared to the 7% above 3m EURIBOR for the senior secured bonds it replaces
• Between 9 and 21 November 2022, the Company entered into three separate interest rate swap transactions to fix the variable interest component on USD 75 million of the new USD 150 million term loan at a blended fixed rate of 3.92%

Outlook:

• CentralNic’s results for the nine months to September 2022 (“September 2022 YTD”) demonstrate the continued momentum within the business and significant potential of its strong marketplace model for Online Presence and Online Marketing services
• The Directors remain confident in the Company’s outlook, with the business trading comfortably inline with the recently upgraded market expectations^[1]. The Company will issue its full year trading update on 30 January 2023

Ben Crawford, CEO of CentralNic, commented: “CentralNic continued to build momentum in the third quarter, despite slower growth in the wider   economy, with year-on-year organic revenue growth now reaching a record 66%, EBITDA more than doubling, and operating profit on a completely new level due to CentralNic’s operating leverage.  This continued strong and consistent financial performance has allowed us to refinance at a notably improved interest rate, with a syndicate of quality banks which have the means to provide ongoing support for CentralNic’s growth strategy.  With the sustainability of our growth proven in a recessionary environment, and endorsed by leading financial institutions, we look forward to the future with even greater confidence.”