CentralNic Group “increasing investment to enhance long-term growth opportunities” says Zeus Capital


CentralNic Group plc (LON:CNIC) announced the closing of the Codewise acquisition and that the company continues to trade in line with market expectations. We make no changes to our forecasts, which remain at the top end of consensus range. We formally publish our previously estimated consolidated forecasts, where we show over 20% earnings accretion in 2021E and 2022E. We expect ongoing investments to enhance growth opportunities for the group.

  • Completion of Codewise acquisition: CentralNic closed the transaction on 31 October as planned. We continue to believe Codewise adds scale to CentralNic’s high-growth Monetisation division, eliminates a key competitor, provides about $1m of synergy opportunities and diversifies its customer base and product portfolio. We forecast over 20% earnings accretion in 2021E and 2022E. Codewise grew revenue 21%, gross profit 13% and Adjusted EBITDA 37% CAGR 2018-LTM to June 2020.
  • Acquisitions continue to perform strongly: CentralNic is making an earnout payment due to the strong performance of Keydrive in 2019. (Keydrive was acquired in August 2018.) The $2.2m earnout is payable in cash ($0.3m) and shares (1.7m). We have already factored the impact of this earnout in our forecasts. A final potential earnout payment of up to $1.4m remains outstanding.
  • Q3 results date: CentralNic plans to release full Q3 results on 30 November 2020.
  • Overall view: CentralNic Group is consolidating the market at attractive valuations, delivering synergies and improving target company operations. We expect increasing investment to enhance long-term growth opportunities for the group overall. As highlighted in H1 2020 results, the company has been investing in growth. The company made new hires including Chief People Officer and Head of Reseller Division roles and made new internal appointments to Head of Shared Services, Head of Corporate Communications, Head of Registry Solutions and Head of Product.
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CentralNic Group Plc
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Zeus Capital Ltd.

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