CentralNic Group Plc (LON:CNIC) is one of the world’s leading domain registry service providers. It offers registry services, distribution, and strategic consultancy for new TLDs (top-level domains), ccTLDs (country code top-level domains) and SLDs (second-level domains). It reports across three divisions: the Wholesale division (19% FY16 EBITDA) enables new TLD and ccTLD rights holders to supply their domains to an integrated network of around 1,500 retailers and through them over 100,000 resellers, including billing and cash collection services. The Retail division (38% FY16 EBITDA) allows different categories of end users across 10 different languages to register domain names and purchase the additional services required to deploy their websites and email. The Enterprise division (43% FY16 EBITDA) enables corporations and domain investors to manage their domain name portfolios. The group listed on AIM in 2013. It is headquartered in London but operates globally with customers in over 200 countries. In FY16, approximately 90% of its revenues were generated outside the UK.
In this interview, CEO Ben Crawford describes the attractive cash conversion and strong operational gearing characteristics of the group’s business model. He explains the acquisition strategy, which prioritises companies in emerging markets where internet adoption is currently less widespread. The August acquisition of Slovakia’s SK-Nic is the most recent example of this strategy at play. With an exclusive licence to distribute the domain name for the national country code for Slovakia (.sk), it has a leading market share in the Slovakian market and is growing at twice the European average; by investing in the platform and marketing, he believes it will make a strong contribution to future growth while also contributing to the subscription revenue base that the group is building. Ben goes on to presents the highlights of the FY17 interim results, which saw growth across all three divisions, and EBITDA +50% y-o-y, and also discusses the importance of the recent announcement that the group has renegotiated its exclusive contract to distribute the number one TLD xyz.com. Confident that the group will hit full-year consensus estimates, he wraps up summarising that the emerging market exposure and superior growth currently being delivered relative to larger peers, combined with a 25% plus PE discount makes CentralNic an attractive investment opportunity.”