Portfolio Updates

CentralNIC reports record growth with strong organic contribution from Online Marketing

We were delighted to see CentralNIC, a global internet platform company and AIM-listed Kestrel portfolio company, report H1 headline revenue growth of 57%. Whilst some of this was driven by M&A, organic growth for the period was a record 20%, driven mainly by an acceleration in Online Marketing. Gross margins remained stable at 31% while cash conversion improved to 125%.

CentralNIC provides businesses with the tools to get online, including domain names and associated web services. Around 99% of its revenues are from subscription products with highly predictable renewal rates. However, new revenue streams offer significant upside potential; hosting, cybersecurity and brand protection complement existing services including domain names, websites and domain monetisation services.

Kestrel Insight

When the Covid pandemic first hit, discretionary corporate spending was curtailed in many areas, including marketing. However, as people spent more time online at work and play, going digital became an increasingly important way for companies to reach customers and sell products. This has manifested itself in a sharp acceleration in digital marketing spend, which is forecast to grow 17% in 2021 to $389bn (Source: Statista) and another 13% in 2022.

This digital explosion has not only benefited goliaths such as Google and Facebook, but also the plethora of smaller digital operators that make up a complex ecosystem of web-service providers.

CentralNIC’s decision two years ago to build out its Online Marketing division by acquiring Team Internet in 2019, CodeWise in 2020 and Wando in 2021, now seems very well-timed, with 28% organic growth in Online Marketing over the first half. While this growth may moderate as CentralNIC matures, we expect continued margin expansion will drive outperformance in profits and cash.


Kestrel’s Portfolio Updates should neither be construed as investment research, nor the provision of investment advice, nor a recommendation. This article should be viewed as short term commentary only based on the latest economic statistics, company results or information on upcoming releases or events. It is only a brief unsubstantiated summary of Kestrel’s opinion on such information as at the date of publication and no reliance may be placed upon any contents of this article by the recipient.

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