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CentralNic Group PLC Q&A: Acqusition of Globehosting (LON:CNIC)

CentralNic Group PLC (LON:CNIC) Chief Executive Officer Ben Crawford caught up with DirectorsTalk for an exclusive interview to discuss the acquisition of Globehosting, international markets and what we can expect from the company going forward.

 

Q1: Ben, could you just remind us what it is that CentralNic does?

A1: Absolutely. We’re in the domain name and web presence services business, we make available the tools for companies to set up their own websites and email and so on. It’s a recurring revenue business because the domain names and other associated products are sold on a subscription basis and whilst we’re headquartered in the UK, we actually have customers in almost every country in the world. So, we’re a truly global company.

 

Q2: You’ve announced some interesting news this morning, could you tell us about Globehosting, the company that you’ve just acquired?

A2: So, whilst the company is based in the United States, it’s actual main customer base is in Romania and Brazil. This is a company that sells domain names and website hosting and SSL certificates which are the certificates that websites need to be viewed as trusted on browsers like Chrome and Mozilla. It’s a phenomenally good business, it’s revenues in the last year were about €850,000 and its EBITDA was approximately 50% of that so very very strong business. We’re paying roughly 6 times EBITDA, about two thirds of it upfront and the balance over 2 years.

 

Q3: How does the Globehosting acquisition fit into CentralNic?

A3: Well, it fits very well because we’re actually a global retailer and we address markets all over the world and we actually have the technologies in place now that have enabled us to already on day one, migrate the customers over to our accounts for the domain names and then the hosting and SSL will follow. So, it’s a great fit and it gives us exposure to markets where we’re a little bit lightweight at the moment.

 

Q4: How does the Globehosting acquisition tie in with the recent acquisitions of SK-NIC in Slovakia and the German-based KeyDrive?

A4: Perfectly, it’s like a jigsaw puzzle.

We really like the Eastern European markets because they’re fast-growing as far an internet penetration is concerned so we actually acquired SK-NIC back in December last year which is focussed on the Slovakian market. Romania has about 4 times the population of Slovakia and is a little bit behind it in terms of internet take-up so that’s something that we can absolutely take advantage of. So, the Romanian market was the only one in the world where actually domain names were bought outright rather than on a subscription basis and they’ve changed their rules as of this year so it’s a perfect time for us to enter.

As far as KeyDrive is concerned, we’re actually using some of the KeyDrive platforms, the software that we bought last month to power Globehosting so that’s a good fit, KeyDrive also has a good exposure to the Brazilian market so this is helping us build our Brazilian presence. Brazil is just a phenomenal market in terms of it has 207 million people live there and the internet penetration is way way below what it is in Western Europe so there’s plenty of room for growth there.

 

Q5: You’ve just mentioned that you like the European side of it but what other international markets does the company have in mind?

A5: We really pride ourselves on being able to go anywhere in the world where there’s a growth opportunity or we can have some sustainable competitive advantage, that’s where we’re constantly identifying and working on entering those markets.

So, really, wherever the growth is, wherever we can compete successfully is a market for us.

 

Q6: Where does CentralNic Group see itself going from here?

A6: I’d say in this year, 2018, it’s our 5th anniversary of our listing on AIM and we’re 10 times bigger than we were when we listed and so, I guess we want to continue along that trajectory for the next 5 years, in fact speed it up.