CentralNics Team Internet acquisition to be 44% accretive to earnings in 2020

CentralNic Group PLCs (LON:CNIC) acquisition of German group Team Internet is expected to be nearly 44% accretive to the groups earnings for its 2020 financial year, according to new analysis from the companys house broker.

Zeus Capital added in a note published on Monday that the purchase will also be 40.6% accretive in 2021.

WATCH: CentralNic's acquisition of Team Internet to be 'significantly earnings enhancing'

The broker currently has the firm pegged with a price/earnings (PE) ratio of 9.2 for its 2020 financial year, however, this is expected to increase once the acquisition completes next year.

Speaking to Proactive on Monday, CentralNic chief executive Ben Crawford said what makes Team Internet distinct from the rest of its businesses is rather than selling domain names for websites it allows companies to place adverts for themselves of the web pages of defunct competitors, redirecting consumer traffic towards their own sites.

This model means companies can get “the best customer [they] could possibly want”, Crawford says, adding that Team Internet currently runs its operation through over 20mln different domain names serving 35,000 customers.

For CentralNic, the purchase adds another recurring revenue business with organic growth of around 4% per year.

“Its a business weve been chasing for some time”, Crawford says.

Sector aggregator

The US$48mln acquisition of Team Internet, CentralNics largest to date, continues a strategy by the firm to establish itself as a key aggregator in the domain name sector.

Since the start of 2018 the company has made over five acquisitions to boost its domain name portfolio.

One key purchase last year was KeyDrive, a tech firm which develops and operates software platforms used for selling subscription-based tools for businesses to operate online, including domain names, hosting, email, domain portfolio management and advertising services.

READ: CentralNic surges as it acquires domain name group Team Internet for US$45mln

The acquisition effectively caused CentralNic to double in size, a fact that was borne out in its latest set of half-year results, which reported a 225% surge in revenues to US$49.7mln in the six months ended 30 June, alongside a swing to a US$2.4mln profit from a US$1.4mln loss a year ago.

CentralNics growth also showcases the profitability of a relatively new industry, the registration of top-level domains (TLDs).

Big business in domain names

TLDs are suffixes attached to the end of websites such as .com, .org or .edu, with each domain having to be registered to a company or entity that wishes to use it, making controlling them big business.

According to data from US domain name registry Verisign Inc (Read More – Source