Team Internet Group (LSE:TIG) — Interim Results

0:00 Good afternoon, ladies and gentlemen, and welcome to the TEAM INTERNET GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where appropriate to do so, these will be available via your investor meet company dashboard.

0:32 Before we begin, I would like to submit the following poll, which will appear on your screens now. And I would now like to hand you over to the executive management team from TEAM INTERNET GROUP PLC. Michael, Billy, good afternoon. Good afternoon, and good afternoon, everybody. Thank you very much for joining us today on this Monday afternoon. My name is Michael Riedel, group CEO of TEAM INTERNET GROUP, and with me today is Billy Green, GROUP CFO. And as we'll see on the next slide,

1:05 we've changed our typical presentation structure slightly. So we, today, have the q three highlights section directly followed by the financial results section, and Billy will run you both through both of these sections. And I will then take over to conduct you through the business profile and the strategy and outlook for the group. Billy, over to you. Thank you, Michael. So just starting off with an overview of some of the company's financial highlights for the nine months ended 09/30/2023. Those of you who have followed TEAM INTERNET GROUP PLC, formerly Central NIC Group PLC, of you who followed us for a number of years will know that the TEAM INTERNET story has been one of consistent and impressive revenue growth. We've continued to deliver growth both at a gross revenue and at a net revenue, I. E. Gross profit level over the last nine months.

2:11 You'll see that both gross revenue and net revenue grew year on year. What's particularly a focus of the company and what's particularly pleasing is that not only are we delivering increased revenue, but also our delivery of profitability, adjusted EBITDA continues apace. The adjusted EBITDA of the Group grew by 11% year on year. And in what's quite a tough trading environment at the moment, to be able to grow our adjusted EBITDA by a double digit percentage is very pleasing to the group and it is certainly something that we hope will be replicated continue to be replicated in the near future. As we'll come onto later in the presentation, the delivery of profitability obviously doesn't just stop at the adjusted EBITDA level.

3:03 We're very focused as a management team and as a board on delivering profitability right the way through the P and L right down to profit after tax. So the fact that we're posting an impressive profit after tax level is something that is part of our commitment to add real bottom line profitability and objectively to create additional shareholder value. In terms of other metrics that we track as a management team and as a board, the earnings per share of the business continues to grow year on year. That's obviously impacted not only the earnings growth that's coming through, but also by the reduction in the volume of shares out in the market. We several months ago entered into and then expanded a share buyback program, which we continue to execute on.

3:59 We're happy to use the company's cash reserves in a moderate manner in pursuing buying back shares of the company, and that's something that we're continuing to do. And as part of that, we're comfortable with an increase in the level of net debt that the company services. The net debt of the group was just over £80,000,000 at the end of twenty twenty one. It then decreased to £56,600,000 at the end of twenty twenty two, which we regarded to be quite a low level of debt for a group of our increasing scale. So we've been quite comfortable with a moderate increase back up to 81,700,000 as of the 09/30/2023. And the reasons for those increases in net debt I'll go into in more detail slightly later in the presentation, but they are closely related to returning cash to shareholders and associated mature uses of cash.

4:59 In terms of cash, we continue to generate very strong operating cash flow. Our adjusted cash flow for the year ended sorry, the nine months ended 09/30/2023 was £65,600,000 And it's quite pleasing to see that that was even in excess of the amount of cash flow generated in comparative period in the prior year, because I considered twenty twenty two's very robust, very strong record cash generation for us as a group. I consider that to be a very tough comparative. So the fact that we've delivered slightly more operating cash, adjusted cash this year is something that I consider to be an achievement of the business as a whole. And as you'll see in the bottom right hand corner of the page, the free cash flow yield of the company continues to be at the very least highly competitive.

5:52 Taking a slightly deeper look at the company's financials, the previous slide presented the GAAP revenue and profit growth of the company. We've also been tracking for many years what the real underlying organic revenue growth of the group shows. Those of you who have seen previous TEAM INTERNET GROUP presentations, will have seen that we typically put up on screen how our organic growth looks by adding back into a comparative period the additional revenue that would have accrued if all of the constituent parts of the group would have been the same throughout the entire period. So by adding into LTM Q3 twenty twenty two numbers, the additional little green sliver on top you'll see there of what the additional revenue would have been if we had owned all of the constituent parts of the group throughout the entire period, you'll see that even after adding back that amount into the prior year comparative, we drove a still significant volume of organic growth from the LTM Q3 twenty twenty two into LTM Q3 twenty twenty three of 20% in the online marketing segment.

7:03 But not only did we experience impressive levels of growth in online marketing, but we experienced a higher than usual, higher than average, certainly higher than any year I've experienced level of organic growth in the online presence. So the legacy domain procurement business to have driven 17% growth within that relatively steady state, typically single digit to mid single digit, high single digit segment to be able to deliver 17% growth is something that is out of step with what our delivery has been in the past. So quite objectively online presence is having a good year and it re illustrates for us the importance of that part of our business and our operation of these two interrelated businesses in different corners of the internet.

7:55 In terms of KPI growth, you'll note that the KPIs of the company continue to support the impressive delivery of the group. The huge, the continued huge growth in volumes in visitor sessions on the online marketing side of the group means that even in a period when RPM, so click through prices, click rates, price points are somewhat challenged in the market and it's something that we've never shied away from directly confronting when there are good times for RPMs and click prices and there are not so good times and we are currently in a downside of the digital marketing cycle. Even in a period when click prices are compromised and challenged, the continued growth in the volumes of the business means that we continue to grow our absolute dollar value revenue, absolute dollar value net revenue, I. E. Gross profit. And in a period when RPMs, and this is the same across the board with our business partners and our competitors, we're very comfortable with the levels of growth that we're seeing in what's not the best time in the market.

9:07 On the online presence side of things, within the online presence segment, the picture is more consistent and clear. We've seen both growth, both in terms of domain years and growth in terms of price metrics. So a very good year for online presence, a good year in the industry generally, but a specifically good year for TEAM INTERNET within the online presence segment.

9:31 As we've alluded to in previous presentations, we strive to be the leader, the market leader in each of the segments in which we operate. Whilst there is no one business that is completely analogous to our own business models, there are naturally a couple of peers that we look to and we operate in the same ecosystem as these peers and we look to these peers, particularly as if you go back a couple of years, System One Inc. Within the online marketing segment and the domains segment of 2Cows within the online presence ecosystem, these were very objectively the market leaders up to a couple of years ago. And over the last several years, we have caught up our market share to within a few percentage points of parity.

10:20 So we're very pleased with the way in which we've grown into those markets. We already had very strong positions in those markets two, three years ago, we've continued to grow into those markets over the last several years. And that's an ongoing process and we look forward to giving you future updates about our position in those markets as part of future presentations. Reining back into what's actually going on within TEAM INTERNET and how we're able to generate such impressive growth and growth in market share. We've made public in recent quarters several strategic partnerships which are starting to generate more material amounts of revenue for the group. Those partnerships with companies such as Klarna, Sovereign, booking.com and Shopify, those are all deals that we closed earlier this year and they're now starting to have a real revenue impact for us. So really starting to contribute to the profitability of the group.

11:16 They are each individually quite different distinct deals and they are a sign that whilst we've always been very pleased about our ability and the openness of very large digital marketing companies to do business with us and to have long standing strategic relationships with us. We're hopeful that we can also open up more business with the leaders of tomorrow, the companies that are going to be the digital marketing leaders in one, two, five, ten years time, it's important that we've got quite a diversified outlook and that we are in business with all of the major players of the future. On the online presence side of things, the launch and growth of AI powered domain search. We were the first company to launch an AI powered domain search tool within our internet BS retail platform.

12:07 And that's been very well received by retail consumers and we expect to be talking about that for many years to come. We're not just investing in new products on the online presence side of things, on the online marketing side of our business, so the digital marketing side of the business. We recently launched a new product called Absolutely, and I won't steal too much of the future of the presentation. Michael will be giving a little bit more of an overview of absolutely later in the presentation.

12:40 In terms of the company's equity structure, I alluded earlier to the company's share buyback programme, which continues apace. We have completed nearly two thirds of that share buyback programme, which was committed to a level of up to £34,000,000 of buybacks or 28,900,000 shares. Given that we're not quite two thirds of the way through that programme, there is still a long runway, good capacity for further share buybacks over the next several months and into next year. So we're certainly not finished or nowhere near finished with that programme and we look forward to an of earmarked cash to continue to deliver on the remainder of that programme. Taking a slightly deeper dive in terms of the financials of the company, these figures are still nine months ended September 30, so they still give a good tail on the numbers.

13:39 You saw earlier in the financial highlights the growth in revenue and adjusted EBITDA and I promised that you would see growth in terms of the company's profit after tax. So profitable delivery right the way down the P and L to a profit after tax of £800,000 which is a record level for TEAM INTERNET and it's our anticipation and our strategic aim that we will continue delivering profits after taxation, so real bottom line profitability, so that we're objectively delivering as much shareholder value as is possible. I can't pretend that it's always one way traffic. Whilst most operating metrics and most financial metrics are going in the right direction, Anybody that looks a bit closer at our operating profit, so our GAAP operating profit year on year, will see that we did experience a £5,300,000 decrease in the level of operating profit comparing the nine months ended 09/30/2023 compared to the nine months ending 09/30/2022.

14:40 And whilst we would like to deliver increased operating profit every single period, the demands of GAAP indicate that's not always possible. There are two factors why operating profit is not quite as of the same level in 2023 as it was in 2022. One is we experienced and benefited from a non recurring foreign exchange gain of 6,100,000 in the nine months ending 09/30/2022. And given that we are reasonably risk averse in terms of our approach to foreign exchange, we've hedged more of our foreign, our non US dollar activity in the year, the nine months ending 09/30/2023, and we've therefore arrived in 2023 at pretty much a nil gain nil loss situation with a small 100,000 net foreign exchange loss.

15:28 That does mean that our results are negatively impacted by the absence of what was a fairly significant gain this time last year, but a non operating gain and a non recurring gain, so not part of the recurring operating cost base of the business. Likewise, you'll see that the line amortization of intangible assets has increased by £7,000,000 year on year. This is primarily a non cash charge because it primarily relates to delivery of relates to intangible amortization of intangible assets in respect of acquisitions. We've been a fairly acquisitive group over the last several years and every time we make an acquisition, we account for that acquisition and we capitalise onto our balance sheet goodwill and intangible assets in respect of the purchase price allocations for those acquisitions.

16:18 We then amortise the intangible assets to the P and L over the estimated useful economic life of that asset. And as added more intangible assets to our balance sheet, so the intangible asset amortization charge increases, which impacts operating profit, but is a non cash charge. And therefore, there are no underlying concerns for us in the decrease in operating profit year on year. And whilst we're hoping to get to a point very soon where we'll be delivering increased operating profit as well as all other financial metrics, that one shows a slight decrease year on year and yet we are showing an increase in revenue, adjusted EBITDA and absolute dollar value, bottom line profit after tax. In terms of the balance sheet of the group, I alluded earlier to the net debt of the company increasing since the thirtieth of September last year and since the end of last year.

17:15 But that increase in net debt is part of a quite manageable, quite anticipated

17:22 cash evolution over the course of the year. We've returned cash to our shareholders in two ways, one of which is by the payment in Q2 of this year of our inaugural dividend And the other material method of returning cash to shareholders has been the share buyback program that I've described earlier. Those were not the only material cash outflows outside the operating cash of the business. We've also settled deferred contingent consideration liabilities to the tune of $17,900,000 year. That is a non recurring cash outflow that reflects earn outs that we've paid to the management of companies we've acquired over the years. And that is something that we have paid out the largest chunk of the deferred contingent consideration liabilities that were on our balance sheet.

18:18 And we now anticipate no further deferred contingent consideration payments, earn out payments in the same materiality of those we have experienced over the last year or so. The final slide in terms of detailed financials. The cash generation of the company continues to be strong, but not quite at the level at which I had targeted at the start of this year. We always target greater than 100% cash conversion. And whilst we were successful in achieving that target, delivering 110% cash conversion in 2022, the first half of this year was a bit more challenging for us in terms of cash conversion. We have only caught up now to 95% in the year to date September 30.

19:06 We hope to deliver closer to 100% over the remainder of this year, But we strive for perfection and we strive to achieve more in terms of cash conversion and we will continue to target delivering in excess of 100% cash conversion for the remainder of this year and into next year. And with that, I will hand back over to Michael for a closer look at the business profile. Thank you, Billy. And, I hope you all agree that the results are quite satisfactory. And, so this is why in the next two sections, we will focus on, a, what makes us so successful today and how do we plan to keep it that way going forward.

19:54 And the the principal force behind our success is that we that we don't own only own one, successful brand, but actually have a full portfolio of of brands which all conquered marking market leading positions in their relative in their relevant niche markets. And the list begins with Viptonic, where we are the leading Google AFD based media buying platform. AFD stands for AdSense for domains where basic Google Ads are shown on otherwise empty domain names. We are also one of the market leader leaders on a global scale in classical domain name parking.

20:41 And given that the first two products are responsible for more than half of our entire revenue, We will also share a few slides on how exactly the user workflow looks like for these products. And without without going through the entire list, it then ends with our oldest brand in the stable Centronic Registry, which is today twenty seven years old, an almost biblical age in terms of the Internet, and it is still the number one, platform for the provisioning of so called new top level domains, which are all new top level domains that were, that were released after the deregulation of the market in 2012. And you might have already seen some on the Internet like .xyz, .icu, .online, .sites, and many others.

21:33 So here we hold roughly 45 global market share. Next slide, please. So here is here is basically an overview of of the entire flow of of demand and supply through the different brands that we that we operate.

21:59 As you as you may know from from our Capital Market Day when we announced our our rebranding as TIG INTERNET GROUP, the the overarching theme is creating meaningful and successful connections. So our our success lies in connecting otherwise disconnected or disjoint ecosystems like social media with search engines. And and here, you'll see the entire map where we have a whole series of different supply side pools and demand side pools, and we are constantly adding new categories of supply and demands to it. And within each category, we also constantly and incessantly, we're adding new partners both of on supply side and on the demand side.

22:52 What you can, however, see here is that as of today, on the on the demand side, there is there is a certain concentration on search where we operate with our two products, Tonic and Parking Crew, which, as I mentioned before, are are responsible for the 67% of our group revenue. And on the next few slides, we are going to present to you how exactly, the user experience looks like and, just how successful we are in in making connections here.

23:36 Thank you. Have you moved on? May I just ask the the studio? Good. So Tonic. Tonic qualifies and monetizes referral traffic globally. What does referral traffic mean? It basically means traffic that is referred from another source. So here, we put ads on social media, on any kinds of of websites, on the open web networks like Taboola and Outbrain, so called native networks, and also to some degree on on other search engines. And then and then and then understands these consumers and match them with with with search ads that others have booked on Google or other platforms.

24:26 So here you see some statistics on the right hand side on this. So more than more than 10,000,000 visitors every day, more than 250,000 different campaigns for different products and services in in more than 160 countries. So very broadly diversified, absolutely no concentration or any specific, sector or vertical. And then you see this supply sides with TikTok and Facebook being two of our most prominent partners together with Tabool and Outbrain. However, there is more than 30 other networks that are also connected to us, just there was not more space on the slide. And on the right hand side is of course, on the demand side is our core partner Google, but also here we've we've struck partnerships with Yahoo and more recently Bing and, and revenues from these two sources will then also increase over time.

25:26 And on the next slide, you basically see how this looks on on an iPhone, and I'm not sure whether the video will play. Normally normally, all the three iPhones should be should be animated, but I'm not sure whether this video platform supports this. So on the on the left hand side, if the videos will start to play, you see a website about about soccer, which you would which you will find on any kind of of of news or sports websites. So news and sports websites are are typical typical websites where we would be very successful. Where embedded in the article, you would then find you would then find product suggestions, and when you click on them, you would then be referred to one of our websites where we will then present you with the selection of the most relevant advertisers for the specific user. So basically, every customer journey is bespoke.

26:27 In the middle, you would have seen someone searching for a mobile contract without credit scoring, again, very similar process, you enter it, you type it in, one of our websites would then appear in the search results and from there, you then basically engage on or embark on the consumer journey. And on the right hand side, there is a TikTok example. TikTok is today our most prominent, source of traffic where would when you would then click on on the so called short form video, you would then again be referred to a customer journey where we would then first suggest a few, a few related search terms which, which is industry lingo for simply subcategories of of the of the keyword of the ad on which you have clicked. And from there, you would then from there, you would then be shown the the ads of the actual advertisers that fit the consumer's intent the closest.

27:37 Is it only me? But it's it seems the presentations are are not playing. But, anyway, we we will we will we will try to make them available in the playable mode, on the on the Internet if, on our website if possible. Next slide, please. And then, and then we have parking crew. Parking crew is is is is, in the end, the basis on which we've built TONIC. Parking crew already dates back at twelve years to 2011. And, so the technology platform is very similar. Also, the workflow the workflow is relatively similar, so you could almost understand TONIC as a parking crew on steroids.

28:23 On parking crew on parking crew, we we also have significant numbers of traffic sources, 32,000,000 domain names, which is which is almost 10% of the 354,000,000 domain names in existence point at any point in time to our services. And and despite the fact that these are all empty websites, which which don't which don't have any active content on them, they still attract more than, 300,000,000 visitors every month. And, the monetization here is very similar, with with Google and Yahoo as our main partners. And but here also, Zero Park, our 2020 acquisition in Poland comes into play. Zero Park monetizes our traffic for which Google and Yahoo don't have any competitive ads on their in the network and ZEROPark also does the same thing for most of our competitors globally, which gives us very interesting, competitive intelligence.

29:30 Next slide, please. So in here, I guess the video will also not play but again apologies for this, but we are going to try to fix that when we release our presentation on our website. So on the on the left on the left hand side, you have seen the mobile flow. Why do we see why do we see a mobile phone and a desktop here?

29:55 Intronic, we really focus on mobile traffic. This is this is where we are the most competitive and and today also mobile traffic is much more significant than desktop traffic. However, in in domain parking, still a lot of the traffic comes from desktop when people just sit in front of the keyboard and enter domain names, into a browser bar, which happens less frequently on on a mobile phone. But from here, the the process is basically the same. You enter a domain name, you go to and it would then basically, the domain name would then not have any content other than relevant ads that match the user's intent.

30:45 Next slide, please. So what are we what are we going to do what are we going to do in the future? So we've recently launched a new product called Absolutely, and I hope you find the name absolutely great. And what Absolutely does is basically pushing the pushing our contact point with with the user one step closer to the to the to the to the user in the in the work experience. So rather than first having the user to click on an ad that we booked with someone like Taboola and Outbrain and then going through the entire chain, we would basically, we would basically deliver this new ad format absolutely directly to the publisher At the the absolute the ads the absolutely ad container will then will then read the content of the website and automatically detect what are the most relevant keywords for advertising for this for this website.

31:55 And from there, the workflow looks exactly the same as with Tonic, so no no further distraction from any competing from any competing content. Just showing the most relevant, the most relevant commercial offerings to the consumer. And as we've shown before, each year, more and more people are excited about this and engage on on consumer journeys with us, 5,600,000,000 in the in twelve months ending the 09/30/2023. And on the right hand side, you can see that we're also currently in in an early in early test with our partner, Google, for a new product called related search on content.

32:41 So here, we would also try to go one step further and and basically disintermediate native networks and place and and place ads directly into the content on the website. Here, the difference is that we don't go through our classical at only user workflow, but we would we would then show search results which which may also include non paid search results. So in in here, we will need to see will the will the loss of people who click on nonpaying links be outweighed by by the by the additional advertisers that have that are opting in for this format.

33:28 But as as you as you as you can tell, we're constantly trying to keep more of the of the cake for us and which is more like the right hand side and on the, sorry, on the left hand side and on the right hand side, we're also at the same time trying to grow the cake. Next slide, please. So strategy and outlook. So this is this is not a new one, but, I expect this this slide still to be around, for for many quarters to come. So our strategy is about creating a virtuous circle, which starts with a laser focus on organic growth by winning new customers, growing our existing customer base, launching new products, contracting new suppliers, and all the things that that we just explained to you.

34:20 And this organic growth together with our with our efforts on on managing our cost base leads to operating leverage, And, Billy has mentioned before that that our so called EBITDA conversion, so EBITDA divided by our gross profit, is systematically increasing over time and has now finally reached 50%. So, we we we now spend 50% or less of all the gross profit that we generate on internal on internal cost and, and and we endeavor to further grow this ratio. This operating leverage then again translates into more competitive cost of capital and here at the end of twenty twenty two, in October to be more precise, we had a major crystallization event, on on debt And when we refinanced our bond, we were able to reduce the interest margin.

35:16 So that's basically interest that we pay on top of the market rate from 7% to 3% testament to the materially reduced credit risk and improved business case of TIG INTERNET GROUP and this is why this year we've turned our attention to managing the other side of the equation of the cost of capital, which is the cost of equity and our our new dividend policy and share buyback program both feed into this objective. And the, more competitive cost of capital will then again allow us to do focus bolt on m and a acquisitions. We are going to address one of them a bit later in this deck. And the additional bolt on acquisitions then create new adjacencies that help us identify new potential for organic growth because we can then again attach new suppliers or new demand side partners to our value chain.

36:18 Next slide, please. So where will this lead us in 10 in in ten years from today? And it would be a very it would be a very daring guess predicting how exactly online advertising works on the Internet in ten years from from today. And or today, it is very different than it was in in 2000 in 2013. There are, however, a few things which which we can which we can guarantee, which is, first, it will be more diversified, meaning that we will put particular focus on on growing the revenue streams outside the, outside the Google universe, which doesn't mean that we will see growing our Google relationship, but we must we must also build, other similarly successful businesses on the site.

37:16 The business will also be even more global than it is today. And when I when I say this, I don't mean that this will sell in more countries. There is, we are we are generating revenue from almost every country on this planet. However, today, today, we have a mix of 51% of revenue coming from The Americas, most importantly, The United States, and then, 49% from the rest of the world, Europe or EMEA and Asia Pacific. And, why this is great? Because it demonstrates that we that we have that we have, notable scale also in the very important US market, but, we also have a very, very healthy business, or scale of business outside The United States.

38:06 And this is something that we want to celebrate and reinforce and do more of. And then, the business will also be more vertically integrated and let me explain to you what we mean with this, over the next few slides. Thank you. So we've we've spoken about Tonic, and Tonic is great at attracting consumers on so called low intent media websites, social media, news websites, sports websites, other things where you can't really tell, which products the customer might be interested in. And match these consumers with the exact right search ads that other people have booked on Google or other search engines and make money out of this despite the fact that we need to share the click price with Google or our other partners.

39:06 And then we have a second business model, operated by our company, BGL, who operates under two brands, for glaicht.org in Germany and in France, who can pay the full Google Click price or you could also substitute Bing. The names here are more for illustrative purposes and still make money because they are so great at converting the search and the search ads traffic into actual transactions at Amazon or other ecommerce partners. And now just imagine when you combine these two skills into one superpower and you could actually take users off social media, say TikTok, and drive them through a a modified workflow, directly to to e to ecommerce partners and translates them there into into ecommerce transactions.

40:00 The the the potential for for for margin enhancement are, of course, dramatic. And we don't necessarily see this model as substituting the other model because all the things that are now highly profitable should still work. And there are also some there are also some services which escape this, for example, our largest service, which is our largest customer group, which are actually US dentists. There will not be there will not be any shippable dentistry sets, anytime soon. So some, some some verticals will simply escape this this this mechanism. However, the, the universal rounds there, for, for shippable e commerce goods, being sold through social through social media websites is estimated by McKinsey to be worth $80,000,000,000 by 2025.

40:50 And, this is why why Meta and TikTok have the strategies, and Amazon has the strategy to tap into this. However, we all we are also confident that our strategy will also have its place in this game. Because while the while the others bet on the fact that they could be the best social media and ecommerce company at the same time, Our model is based on connecting the best social media platforms and the best ecommerce, companies at any point in time. And this this flexible approach is what has already made us successful in Tonic before, where we were very quick, to to repivot from from, being very Facebook heavy to now being more TikTok based than before.

41:40 One one quality of the business model that we can that we are basic, very agnostic on both the the products or services that we advertise and the networks from which we source our partners. And this flexibility gives us the resilience to also grow the business in times like 2023. Next slide, please. So Adrenaline, while it is a small acquisition in in in terms of our history, It is still very relevant. And, again, ADRENALET addresses the same a similar theme just translated just as as the one that we just discussed on the prior slide, just translated to domain parking, so our parking crew product. And Adrenal Ads is basically taking traffic from platforms like parking crew and its competitors And rather than, using it to display, ads that other people have booked on Google, it would match the users directly with advertising campaigns that ecommerce providers have booked. Again, very similar theme.

42:46 And this is also very important and and and one one very important aspect that I would like to add here is is the following. So we are already we are already today thinking of the world ten years and twenty years ahead. Thirty years ago when when online advertising slowly started and let's let's not forget that Amazon is has only been started thirty years ago. Most on advertising was on a so called PPM model. PPM stands for pay per thousand. The the m stands for Latin mille, meaning thousand. I don't know why no one has called it PPT.

43:31 Anyway, this is how advertising work at that time. The advertiser had to pay for every view of, for every viewer of his ad whether they whether they clicked on it or not. And this has, this, of course, this was, of course, very inconvenient for advertisers. And over time, this has migrated to now the so called PPC model, pay per click being the, most being the dominant form of on advertising. So the advertisers over time have won the upper hand and would now only pay the website operator when a user actually clicks on the ad. However, our conviction is that another thirty years in the future, called PPA, pay per action, will be the dominant form of of advertising when advertiser only pays any money when there's an actual outcome, ideally, an actual sale.

44:33 And our and our products vadleischvia.org and and may your point of air and also now AdrenalAx are near 100% based on these PPA principles. So here, we've basically bought ourselves a foothold in the in the future while we, through the other through the mechanism that we just showed to you on on the prior slide, will gradually shift larger parts of our of our today's PPC based revenue streams into the future that we expect to unfold over the next few decades. And with that, I think we come to the last slide. Correct?

45:20 And so in summary, TEAM INTERNET is operating into highly attractive markets, high growth digital advertising, which we refer to as online as online marketing segment, and domain name management solutions, which we report as the online presence segment. In the first, we are creating we are creating privacy safe consumer journeys with AI in order to convert users of general interest media into highly confident consumers. And in online presence, we are a critical constituent of the entire global online presence and productivity tool ecosystem with a focus on the domain names of domain names, but also other digital products that are associated with domain names like SSL certificates, for example.

46:19 On the right hand side, you can see that that while you might not have necessarily seen us in in in the wild, because we largely work through through partners like Google or GoDaddy, WordPress, and many others, 5,600,000,000 online consumers who engage in our customer journeys is is a clear sign that this is not a niche phenomenon but but but the mega trend. Fourteen fourteen million domain years process that is more than 4% of the entire domain, number of domain names registered each year and we are also global, as referred to before, 51% of revenue currently comes from The Americas and 49% from the rest of the world.

47:10 And because of the strong underlying demand for our services, the directors expressed their confidence in us trading at least in line with the current market expectations. And also importantly to state, we are also confident that with the high cash reserves that we have, committed credit lines and, the strong cash generation that Billy refers to, we are fully funded for simultaneously investing our future and at the same time, return money to all shareholders. With this, we end the presentations. Thank you very much for your attention and we are now open for Q and A. Perfect.

47:56 Michael, Billy, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Billy, Michael, unfortunately, at this time, there are a few investors that are struggling to get in attendee side. But as you can see, we have received a number of questions throughout your presentation this afternoon. So if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Yes. Very, very happy too, and I would I would I would probably combine the first and most recent, question received, which is about which is about net stats and and and share buybacks.

48:58 So, there was never what what should be very clear is that we have not borrowed, in order to buy back shares. We made our decision to to buy back to buy back shares because in the board's opinion, the share price is unnaturally low. And, I can also see from the question that that some of you would, agree with this. And so we've we've made we've made a commitment, to only reserve a small part of our, of our this of our 2023 cash flow for m and a activity and return the rest to, our shareholders, partially through a dividend, which we paid, I think, early June and the remainder through a share buyback program that should give or take, use the entire authority that the AGM has given to the board earlier this year. So that is the intent.

50:01 The reason why the debt figure has gone up is that also deferred consideration payments for past acquisitions have become due which were very successful and this is why we see this small increase in the total debt number which still stays below one times net debt to EBITDA or around one times net debt to EBITDA and we have a firm bank pool, our debt is still good for many years. We have locked, we have very favorable debt rates, We have, we have locked in a very good portion of the debt, through hedging contracts.

50:57 So we have been currently paying, way below market interest rates and, we felt felt it was the right thing at this stage to rather buy back shares which hold a 15% free cash flow yield, if I remember Billy's slide correctly. Whereas on the debt piece, we would not even pay half that and that is before tax. So after tax, the interest charge would maybe only be 35 to 40% of the cost of equity that we currently have. However, for those who for those who are, worried about about the debt level, what is very important to us, and we understand that the trust is the most important currency in in anything you do.

51:53 And this is why already at the education of the annual report 2022, we included a cash flow allocation waterfall model, which clearly which clearly lines out how we would allocate our free cash flow. And and what we've done this year is exactly in line with with this policy. So shareholders can always account on the company doing exactly as it promises unless maybe post merger events, which you can never exclude in life. But in this policy, you will also see that there is also that there's that we've also drawn in the debt ceiling because we understand your concerns while while management is very comfortable in the quality of our returns.

52:40 We have committed to put in to put in the ceiling, which is which is in writing in our annual report so you can rely on us respecting the ceiling. Maybe may maybe that a side note, which is a bit of a twist of of the of the first part of the of the question that is whether whether the board have any intentions to increase the personal holdings given the the the present bargain levels. So many of the many many of the of our investors, like, for example, Kestrel have been systematically buying shares in the markets, and I would not be surprised if they if if if they start engaging in more share in more share purchases soon.

53:34 I I personally have taken I personally have taken my my my holding in the company up from 1,100,000 shares, which I had in two thousand eighteen when I was appointed as group CFO to today 2,700,000 shares. And while while some of that was coming from stock options, even on the stock options, I I then settled all the tax from my from my private funds, not selling any shares to settle, any tax liabilities. So there's there's a very strong there's a very strong commitment by by the management board to be strong holders in the company and we are confident in that at one time the market will hopefully discover that the share should be re rated and until that time we will be loyal to the company and put our money where our mouth is.

54:31 And I should maybe I should also not add as a last comment on this, implicitly, you will also see that that none of the that none of the board members ever sold, that that that that that we did that's Billy and I and Kestrel never sold any never sold any shares into the share buyback, which implicitly also means by foregoing by foregoing, selling our pro rata of the, of of the of the share buyback, our our personal share constantly constantly goes up. So I hope there I hope there are enough tokens of evidence that that the management board and the and the anchor investor are firmly committed to the story.

55:22 The there was a question on online marketing. The relationship the ratio between the number of visitors and the revenue per thousand sessions. So the number of visitors is basically the number that you see on the screen. 5,600,000,000 people came on one of our websites, and and and we then we then showed relevant products and services to them. And and the revenue per thousand basically number how much revenue we generated out of each 1,000 of these of of these session, which is a number that actually that actually dropped.

56:09 It will not be a a secret to anyone here that the online advertising market is currently not in its strongest cycle or in in a down cycle. But the important thing here is, yeah, there are two important mentions. First, it is a cycle as it has always been. There there will also be better times when when the prices when when TIG prices go up again. Secondly secondly, it shows that, it shows that we can actually outperform the market. So if you would dissect the quarterly click price reports that Google issues, you would have seen that the average Google click price diminished by 14% in the same comparative period.

56:54 So we've been doing, 7% better in in in relative in relative terms. And and see and and and the and the last point is, in the in the end, it's our job to to to create as much value for everyone on this call and everyone who's also not on this call. And we we still have strong levers to to increase to increase the number the number of visitors by constantly by constantly adding new social networks, native networks or or exploring new, new new new products, new product verticals, which would then again attract new new, new groups of of, online of online users.

57:48 And, just in the twelve months of the report on now, we were able to increase the number of people who actually engaged on our journeys by 36%. And despite the fact that the average, revenue per thousand dropped by 7%, we were then still delivering notable top line top line growth for the, for the business. I'm not sure how we are on time. So, yeah, here here is basically a question that's that asks to to give to give a forecast, which is which, of course, difficult as a public company. However, a reasonable expectation would be that the that the that the user growth will will will slowly will slowly come down simply driven by the fact that once we become really big, keeping certain percentage rates stable becomes more and more difficult.

58:49 So next next next next year, 20 25% addition in the in the number of visitor sessions would would mean actually the same or similar level of absolute gains in in in in terms of users. But but one one can also take a little bit of hope that that maybe the online advertising cycle is approaching an inflection point. So in for q three two thousand twenty three, Google has for the first time in, I think, like, two years or so reported a notable positive evolution of the of the click prices. I mean, I was saying only in q three, not not for the q not for the nine months year to date, which could be which could be an early sign of of the burst being over. On the other hand, there's also no there's also no guarantee that we're really already out of the woods.

59:46 Probably the, this year, Thanksgiving and Christmas season will be very indicative of of whether this was our delight at the end of the tunnel or a short term recovery. But as you have seen, even even during a period of two years of consecutive trouble in the online marketing industry, we've still been able to deliver very notable growth rates and also growth that translates into increasing earnings and cash flow and this is why we are confident that we will still be around when the market finally picks up and will then become one of the key beneficiaries of the market inflection.

1:00:41 Michael, Billy, if I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform, and we'll notify all the investors when they're ready for their review. But, Michael, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great. Sure. Using you using use you using the the answer to the last to last question as a as a segue, TEAM INTERNET GROUP has demonstrated that we can deliver financial results in in any kind of market condition, both the hype cycle when when everyone was making money, but also in the down cycle when only the best can make money.

1:01:41 And I hope I I hope today was helpful to you. We we try to be one of the more accessible management teams on the market. So, should you come up with any questions, after this call, feel happy or feel free to reach out through your usual, channels, and, we will try to get back to you as soon as we can. Thank you. Perfect. That's great. Michael, Billy, thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company.

1:02:27 On behalf of the management team of TEAM INTERNET GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.