CentralNic Group PLC (LON:CNIC) Chief Executive Officer Ben Crawford caught up with DirectorsTalk for an exclusive interview to discuss their half-year results, UK & US comparisons, the KeyDrive & Globehosting acquisitions and the outlook for the rest of 2018.
Q1: You’ve just announced your half-year results for the six months ended 30th June 2018, what’s your view of these results?
A1: Well, certainly they demonstrate that our business plan is working, we’re trading in line with expectations and obviously these great results have been in advance of the biggest change in the company’s history which was the acquisition of KeyDrive which happened in August.
The summary is revenues up, EBITDA is up by almost 100% but we adjust it for the forex headwind, still up by 65% and gross profits up by 30%, couldn’t really ask for better. We made an acquisition in December of a company called SK-NIC in Slovakia, that’s definitely contributed to some of the growth, but we’ve seen nice underlying organic growth as well.
Q2: How do the domain names and web services industries compare in the UK and against the US?
A2: Actually, they’re quite similar, both the UK and the US are fairly mature markets, and both actually are dominated by one company, GoDaddy.
The thing about us is whilst we are based in UK, we actually have customers in almost every country in the world and so, our approach is to find the growth wherever it is and the quality margins, so we actually have staff all over the world and businesses all over the world. Whereas the UK and the US tend to be more highly competitive in the fairly mature markets, if you look at countries like Brazil for instance, United Arab Emirates, Singapore and so on, they have quite different characteristics and we’re actually fairly significant players in all three of those markets.
Q3: You mentioned KeyDrive earlier, how are you progressing in terms of consolidating the acquisition?
A3: It’s going great actually, because the story leaked about our acquisition and our shares ended up being suspended for a couple of months at the beginning of the year, it gave us the opportunity to bring all of the staff inside, explain to them all about the merger and basically do all the initial working out of who was going to report to who and so on.
So, we had a great run up where we could do a lot of the preliminary work and I’d say the teams are working very harmoniously already. We’ve identified some revenue synergies where we can cross-sell, we’ve started training the staff up in both companies to sell each other’s products and we’re also focussed on making some savings as well. We have a plan for that with them team with deadlines so far, so good.
Q4: You mentioned earlier that recently acquired Romania and Brazil focussed Globehosting, how does this acquisition tie into CentralNic Group’s overall strategy?
A4: In our industry, domain names and the add-on products like web hosting and SSL certificates are all subscription type recurring revenue products so they all have the same kind of virtuous attraction, no matter what country they’re in.
If we focus very much on Western Europe or the US or the UK, we’d find it very expensive because the cost of customer acquisitions is very high and very competitive whereas if we look at countries like Brazil and Romania, there’s a lot of growth. There’s a lot of growth in the future as they catch up with the western countries in terms of the amount of internet usage they have but the recurring revenue model is exactly the same.
Hence, it’s a great fit for us, it improves our growth at the same time of not really extending us into any uncomfortable territories where we’re doing the exact same thing we do in the UK except we’re doing in Brazil and Romania.
Q5: What other high growth markets does the company have in mind for expansion?
A5: As I mentioned, we actually bought a company in Slovakia in December of last year and that’s proven to be a great acquisition as well, so Eastern Europe is very attractive. The Middle East is an attractive area, obviously South-East Asia and Latin America are high growth areas as well.
If we look further afield, further in like years to come, obviously Africa represents fantastic opportunities for us as well, with a billion people adopting the internet faster than anyone’s adopted in history.
Q6: Just looking further ahead then, what does the outlook like for CentralNic Group for the second half of 2018?
A6: The Board has reviewed our performance and indicates we’ll be trading in line with market expectations. Obviously, those expectations are all about the business as it is now, but we’ve made it clear we’re definitely in the market for additional acquisitions to get us into more markets and we’ve proven that we can do it and do it well. So, we’re obviously hoping to go beyond.
