CentralNic Group plc (LON:CNIC) has outperformed revenue and EBITDA expectations again. Strong growth in Q4 accelerated full year organic revenue growth to 37% from 29% in 9M 2021. Both revenue and EBITDA are expected to be c. 6% ahead of our estimates. The Online Marketing division appears to be going from strength-to-strength, as the division’s PubTONIC product effectively delivers high conversion traffic to advertisers. We plan to review our forecasts after the release of full year results at the end of February.
- 2021 outperformance: Revenue is expected to be c. $410m, c. 6% ahead of our estimate of $385m. We suspect CentralNic’s strong revenue growth (c. 70%) was driven by the Online Marketing division, which has grown significantly ahead of expectation in each quarter in 2021. The group’s full year organic revenue growth accelerated to c. 37% from 29% yoy in 9M 2021.
- The Online Marketing division’s PubTONIC product is seeing huge demand, driven by its ability to source, qualify and deliver high conversion traffic to advertisers. The Online Marketing division, which targets advertising without the use of any cookies, was likely boosted by Google and Apple’s removal of support for third-party cookies in their browsers. We suspect advertising has been diverted away from companies that depend on third-party cookies towards well positioned companies like CentralNic.
- Strong EBITDA and cash: CentralNic also outperformed our Adjusted EBITDA expectation. Adjusted EBITDA grew 47% yoy to c. $45m in 2021, c. 6% ahead of our forecast of $42.5m. Net debt is expected to be c. $76m, in line with our estimates, and adjusted operating cash conversion continues to be well in excess of 100%.
- Valuation: The strong trading update should support price momentum. CentralNic’s share price has fallen c. 7% since the beginning of the year and the company now trades at only 10x EBITDA and 15x PE 2022 despite delivering very strong growth. We plan to revise our forecasts after full year results are released on 28 February 2022.
