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CentralNic Group Shares Up Amid Earnings Announcement


CentralNic Group [LON:CNIC], the AIM-listed IT company operating in digital advertising and domain name management, published its unaudited financial results for the six months ended 30th June 2022 yesterday (30th August).

The results seemed to go down well with investors as its shares rallied almost 5% intraday. The UK-based company saw revenue growth of 93% to USD334.6m (GBP287.9m) and a 51% rise in gross profit to USD82.1m, suggesting the company is in an extremely strong financial position heading into the second half of 2022.

The share price at the end of Tuesday stood at 124p and has ranged between 97.40p and 153.78p over the last 52-weeks, offering a year-to-date return of -13.57% and a one-year return of 26.04%. The current market capitalisation of the company is approximately GBP360m.

Enabling the digital economy

CentralNic focuses on digital advertising and domain name management, in addition to associated products and services, including web hosting and domain parking. The firm, founded at the beginning of the century by Stephen Dyer, aims to enable the global online economy to realise its full potential by providing the world’s most popular platforms and connecting customers with the tools to achieve their online aspirations.

CentralNic has grown significantly over the past few years and has recently been made a constituent of both the AIM-50 and AIM-100 indices. The group has annually doubled in size in six out of the past seven years through a combination of organic growth, winning new clients, and by acquisitions.

CentralNic immunity to market adversity

With a 51% rise in gross profit and adjusted underlying earnings (EBITDA) almost doubling to USD38.6m, CentralNic’s model has shown no vulnerabilities to the wider downturn in the online advertising market which has taken place over the past few months. The company generates three-quarters of its revenue from online marketing but said the segment “proved entirely immune to any adverse signals from the market”. This rate of growth is surprising given the weaker numbers coming out of the larger players in the sector such as Facebook and Google.

The rise in share price yesterday highlighted the fact that the company’s results slightly exceeded market expectations. The group’s stock had its “Buy” rating reaffirmed by analysts at Berenberg Bank in a research note issued on Tuesday. They currently have a 250p price target on the stock, indicating a potential upside of 101.13% from the company’s previous close.

Scalable privacy

Looking ahead, CentralNic Group has said the company will continue to “deliver sustainable growth thanks to [its] hugely scalable and privacy safe proprietary solutions and the enormous size of the market opportunities [they] are addressing”.

The company’s success over the next few months will be principally dictated by how many new customers it can attract. The number of visitor sessions increased by 82% to two billion compared with the prior half year, with revenue per visitor session also jumping 87%. If CentralNic Group can continue this growth, it is set for huge financial success in the near future.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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