Team Internet Group (LSE:TIG) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the Central NIC Group PLC investor presentation. 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 of the questions submitted today and publish responses where it is appropriate to do so.

0:31 Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Ben Crawford. Good afternoon, sir. Hi there, and welcome, everybody. Happy to be presenting today year to date September 2022 results. And so let's just start with our highlights. So, first and foremost, our online marketing business has delivered 100% organic growth in the, nine months to date. And and this is on top of the growth that got us recognized in the Financial Times fastest growing companies. I guess key for investors here is it isn't just a matter of driving top line growth.

1:22 Our operating leverage has in fact improved dramatically. So if we look at the, first nine months of last year, our EBITDA represented 37% of our net revenue. Fast forward to this year, it's 48% of net revenue, like, moving in inexorably towards that very attractive 50, margin. Meanwhile, we've been busy doing other things as well as driving the business. Michael and his team have successfully refinanced. So we have paid off our loan, which was a 7% coupon loan, a bond issued in Norway, and replaced it with a syndicated banks, who are now loaning, the same amount of money to us at, 3.45% interest.

2:15 So a vast improvement and, extended maturity. And I guess one of the key things here is it's also a US dollar loan. So last year, our bond was actually denominated in euros, which meant there's a lot of complexity with hedging and so on. Obviously, nothing that that actually worked against us. We paid exactly the amount that, we always knew we were gonna pay using hedging instruments, but, obviously, having a US Dollar note, loan means that we don't even have to worry about any of that stuff. But that's not all we've been doing. We have also been continuing with our inorganic growth or acquisitions. We acquired an company called APOYA, part of our online marketing group.

3:05 Yeah. Fantastic business, that will integrate very nicely and improve our margins in that area as well, and that, we acquired for 11 odd million dollars. And then then post period in October, we acquired a company called IPMC that manages domain names for brands on the West Coast Of The United States, and that was a $7,000,000 acquisition. Now let's move on to our business profile. Summary of what we do. So the company, between when we listed back in 2013 and 2019, this was our sole activity, and it remains a key activity and and one that obviously provides a foundation for the rest of our businesses. And that is our online presence marketplace.

3:52 So by online presence, we mean the basic tools to get a company on the Internet, their name, their domain name, their website, getting their email to work, and then some other services like Office three six five and so on. And we have built a very successful marketplace by buying a number of companies which all sell domain names, but they had different suppliers and different customers. By merging them together, we now have a comprehensive array of domain names. We have as many as any company in the world in terms of our supply side, and we sell upstream as well. So we have, we have access to virtually every domain name in the world, all the country codes in all the countries, all the traditional ones like .com.net.org, and all the new ones like .xyzed, .online, .website, and so on.

4:46 And, and we sell them, software to run their domain names. We sell them managed services to actually manage their domain names. And and in at least one case of SKNET, the country code for the Slovakia, we actually are the supplier. We own that domain name and run that for the for the country of Slovakia. Now that's on the supply side. On the demand side, our customers, we have again merged together, the various businesses we bought into channels. And we have three key channels, the reseller channel, where we make domain names and the value added services available to the biggest retailers in the world, Google Domains, GoDaddy, WordPress, the European leader, TEAM BLUE, as well as a long tail of 20,000 other retailers in all corners of the world.

5:36 Then we are also retailers selling domain names and value added services direct to entrepreneurs in almost every country in the world. We have 250,000 direct customers like that. And then lastly, enterprise customers. So these enterprise companies, they're brands, and brands think about domain names very differently from everyone else. They're not looking at them for email or websites. They look at them as the trademarks of the Internet. So in the same way that they would go to their IP attorneys and say, this is our brand. We want you to, secure it by registering trademarks in every country in the world. They will come to us and say, this is our brand. We want you to secure it by registering the matching domain names in every country in the world.

6:23 So this is a, so this is our marketplace. We, design and build this, and it's, delivering us some nice growth. But I guess the real key here is the underlying investment thesis, and that is this. These are recurring revenue businesses. They're actually subscription businesses. So for every one of our customers, for every one of our products, they have to pay us a fee each year to retain the usage of the services that we sell them. And if they don't pay us, then Cyber Squad has grabbed their domain name, their websites don't work, email doesn't work, and so on. So there's a extremely predictable recurring revenue stream that comes from these businesses. They're also incredibly sticky.

7:09 So in this industry, only 2% of customers switch from one supplier to another in the course of any one year, and that's because of switching risk, costs, complexities. So so, look, it's a fabulous business to be in, and there are additional opportunities for more acquisitions to build this into an even greater, even more global business. But and and we are doing that. But in 2019, we decided to diversify into a close adjacency, and that is online marketing. So the idea here is our online presence businesses, so your business every tool you need to get online, and then the online marketing businesses, provide you the services to get your customers to come to your website because that is the main reason that people go on the Internet is to acquire customers.

8:04 So whether they're a dentist, set up a website for people to book appointments, or they're a, you know, a shop wanting to sell people shoes, or a restaurant just wanting to take bookings. The purpose of them being on the Internet is to acquire more customers, and hence, this is the second part of the story. So, knowing that we were expert because we're a software company, and so we're able to essentially take these different businesses, merge them together, make them greater than part of greater whole than the sum of the parts. So we did it again. And this time, we bought a a series of companies that all sell traffic, and traffic is essentially just the people surfing the Internet.

8:54 And the idea is that companies who are online need to have a service provider that can identify of all these people surfing the Internet, which ones would wanna buy my products. So which ones have the intent to buy, which ones are local to me, which ones have enough money, and so on. And we and so what that's what we do, and we send them over to the company's website where they can then book an appointment or buy a pair of shoes or book a table. So the first company we acquired was a Google Partner. And so Google Ads is actually the platform, the most popular advertising platform on the Internet. So for median companies, when they wanna put ads on the Internet to get people to come to their websites and acquire customers, they use the Google Ads platform. And Google Ads teaches you how to make an ad, how to bid for an ad space, how to calculate your return on investment.

9:51 Because what Google wants to do is train all of these small businesses to work out the return on investment and say, okay. If I make a $50 margin on, on selling my service, and, then I I wanna acquire customers, and one in every four customers that comes to my website actually buys from me, then I'd be happy to say spend $10 a click because then four clicks will get me one customer. It'll cost me $40, but I'll make $50 in in profit. And the idea is once they have understood that, then they can kind of sit and forget, And that creates a recurring revenue stream for them of just predictable stream of customers that come to their website, creates a predictable recurring revenue model for Google Ads because they're collecting this money constantly, and it does the same for us as their partner because we're the ones that are bringing them the traffic.

10:53 Secondly, we then did a deal with a company with its own ad agency platform. So, obviously, ad agencies represent many large companies who don't necessarily go on Google Ads and do their book their ads. That way, they go through ad agencies, and the agencies buy the traffic directly from companies like us. And then lastly, we bought a company that was an Amazon partner. So in this case, obviously, Amazon wants people to go there and buy products and services from them, and they pay us for the traffic or for the people that will go there when they actually buy from them. And so now we have three massive customers, Google Ads, Amazon, and ad agencies all wanting to buy traffic from us, make us a very robust company with plenty of options for people to buy traffic.

11:44 And then where do we get the traffic from? Two sources. One, what we call organic traffic. So we have websites that people just know the name of, or they find it in Google search and so on. Represents about 20%. Most of our traffic, we actually buy, and I will go on to explain that to you shortly. But I guess the key thing is this. In the last model, in the online presence businesses, we get a subscription payment. So every customer pays us once a year for every product. Here in this business, every client of ours pays us every time they win a new customer. So rather than once a year, it can be multiple times a day. So, clearly, it's a much bigger market and one that we can grow much faster.

12:33 Now when we go on to market size, you can see it's a much greater market. The domain market, $7,000,000,000 a year. This online presence value added services like website building, email, Office three six five, etcetera, another $53,000,000,000, a great market that we're diversifying into and growing. But the giant here, the main business of the Internet is online marketing, and that's a $616,000,000,000 market growing at 15% a year. So clearly, hardly surprising that this is the area which we're growing most rapidly in. And so you can see that whilst up until 2019, online presence was the only business that we had, and we're growing that at a very respectable 4% organic in in the last twelve months.

13:28 It has been completely outstripped by the massive success of our online marketing business, which has grown 100% over the last twelve months to over $530,000,000 in revenues. The orange there you can see is adjustments we've made for companies that we have acquired. So the way we calculate organic growth so we're absolutely clear is we take all the companies that we owned at the end of q three of this year, and we look at exactly how much revenue they were making at the end of q three last year, whether we owned them at that time or not. And then and so, hence, that's where that orange represents. There is adjustments. So we're showing an absolute pure like for like comparison, totally unaffected by acquisitions.

14:18 This is organic growth.

14:22 Now just to delve a little bit more into what is really making our business grow so fast, And there's three components to it. The first is we bought companies with long term rolling contracts with Google, Google Ads, with Amazon, and with ad agency platform. And and these are extremely valuable because Google Ads, obviously, Google Ads is a platform where companies can buy ads and put it on Google search. They can buy ads and put them on YouTube. But, also, since 2007 when Google bought DoubleClick, they can put them on an array of third party publishing sites because Google's philosophy here is monetize the Internet. Don't just monetize Google Search and YouTube. Monetize every website you possibly can because they would rather get a share of revenue from other websites than not, and build Google Ads as being the gateway to advertising on the Internet. So as a result of that, they're spending over $50,000,000,000 in revenue share payments to other third party publishers. So the publisher basically brings them the traffic, and, and then they build the the Google Ads advertisers, and then they pay us the publisher's revenue

15:52 share. So that's where we fit in. So we have a partner that's paying over $50,000,000,000 to companies like us. Then we have a second partner, Amazon, who is, doing co op advertising. So they're taking marketing funds from all the companies that sell products over Amazon, and they're spending another $40,000,000,000 acquiring traffic. So, again, that's a partner we have under contract. And then lastly, there's ad agencies paying $70,000,000,000. Now we obviously don't have every ad agency under contract in the world, but we have a platform through which we can reach them.

16:27 So the upshot is two of our partners alone spend a $100,000,000,000 a year on traffic, and we have 0.4% share of that spend. And what that means is and bear in mind the rate at which this market is growing at 15%. We can continue to grow this business at at a 100% a year for a couple more years, and we still wanna have 1% market share. So the the amount of demand for what we have to sell is just gigantic. And so the issue for us is not finding a customer with money. It's actually finding the traffic to sell them, and this is how we do it. We actually are a publishing company, but, we're a software company. So in other words, unlike, you know, the the, you know, Daily Mail, which has a few TIG people and then a whole host of journalists, editors, illustrators, photographers, etcetera. We don't have any of that. We just have a lot of technologists and software builders because we use automation to build millions and millions of websites.

17:34 And each of those websites is full of ads, and each of those websites represents different micro categories of advertising because we are totally category neutral. So we will advertise seniors living, four wheel drive vehicles, hair transplant, dentists, what name it. We will be in that in that area, and and we do that. And how do we do that? By producing millions of websites, which either, say, for a service, we'll just have a bunch of ads for different dentists in, say, Chelsea or else of different oils, there'll be product comparisons of, say, different cordless vacuum cleaners because those are the websites that work. They're easiest. So when people land on them, they're looking for a dentist in Chelsea. They'll pick one. They'll go they'll make an appointment. They're looking for a cordless vacuum cleaner. They'll go to our site and then head off to Amazon and buy that cordless vacuum cleaner once they've made their selection on our site.

18:37 So our and our publishing, technology is enormously scalable. As I said, we we only cover a 10% of all the categories, but we can cover anything. So that really gives us the whole breadth of the entire advertising market, at our fingertips. And so but the question is why do people go to these websites if they have no articles and so on? And that is because we pay to send them there. So the way we do that is this. We engage media buying companies, 150 media buying companies to place ads where the people are on TikTok, on Facebook, on the Daily Mail, on other websites like that.

19:23 And that ad might say, you know, family friendly dentist in your area. And when someone clicks on that ad, it will TikTok will tell us what where that person is, and we will send them to any one of the thousands of different websites for dentists that we have

19:40 that relates to dentists in their area. Then when they click on that ad, they go to the dentist website. Google charges the dentist, pays us our revenue share, and this is where where where the cleverness comes in here. That's how we pay our media buyers. We pay them a revenue share. So their traditional customers will say, look. Here's my budget. They'll take 14% from the budget. We actually go to them and say our budget's unlimited. You get us anybody who's a highly qualified, high intent customer that wants dental surgery, wants to book a restaurant, wants to buy shoes. We don't care. So long as they do that thing, then we will pay you. And, and so the end result of that is we're not only the best customer that our media buying agencies have. We're the best customer they have ever had.

20:29 So they are hiring staff. They're running software, and they're continuously growing our business. And we can continuously sign up more media buyers because there are media buyers that only, you know, specialize in Hebrew language, specialize in, you know, some some, subsector of medical services, specialize only in TikTok advertising in, you know, Spanish and so on. So all of these media buyers, these universe media buyers, we can continue to grow. So, again, hugely, hugely scalable as we're talking about 4,000,000,000 people using the Internet almost every day.

21:09 Now with that, I think we've you hopefully have quite a clear understanding of what we do, how we do it, how sustainable it is, but I guess the exciting part is the financial results that that's delivering. So over to Michael to talk you through that.

21:28 Thank you, Ben. And, to put it in the words of Nelson Mandela who said, remember to celebrate milestones as you prepare for the road ahead. And while we still prepare to deliver the year end, Centric has already, in the course of the year, achieved quite a few remarkable mind that we're going to go through with you over the next few slides.

21:55 Starting starting with the top level financials. So for the first time, we recorded more than $500,000,000 in revenue. And, again, that's only after the first nine months, revenue up 88%. Also, net revenue is now for the first time north of $100,000,000, 53% up to $128,000,000. And our adjusted EBITDA has even increased at a faster pace, basically doubling to $62,000,000 in the first nine months of this year. And also the other the other key performance indicators that we share with you every quarter are also all up materially. Adjusted EPS up 92%, operating profit on a totally different scale at, almost 3,000,000 a month, and adjusted cash flow north of $65,000,000, so that's more than $5,000,000,000.

22:46 That is more than $77,000,000 every every month year to date. The other the other milestone that we've met is is refinancing our bond. The interest spread, which is basically what the what the lenders earn on us, has been cut by 60% at the current leverage level from 7% to 2.75%, and it could never go up to more than 3.55%, which means there is a very significant saving here. On the borrowing currency, we've made the choice to go from euros to dollars given that, in particular, as a result of the pivot into online marketing over the last couple of years, US dollars is now by by far our main income currency.

23:42 And, therefore, we've also decided to borrow in that in that currency, which will which will remove all the complexities around foreign exchange impact on the financing cost that you've observed over the last couple of quarters. So that's now a thing of the past. And also very important, in particular, in difficult financial markets like today, the bond would have matured on the 07/04/2023. However, net now, the maturity has been extended back to October 2026. And, even though we can't imagine a more difficult financial market than 2022, if then 2026 was difficult, we've also agreed a one year extension so that we could push it into 2027.

24:29 But as Cedric has demonstrated, it could that it could refinance in 2022, we are very confident that it can also refinance in 2026. To other to other important features of the of the new loan arrangements, which will be of interest to the shareholders, bonds typically have so called non core provisions that is you need to pay a penalty if you repay them early. This we've now removed in the new loan packages. So if, for example, the the company would not would would have fewer acquisition opportunities than its cash flow, It could actually, repay part of the loan without paying any penalties.

25:15 And on the and on the other hand, if we were running into into the surplus of great opportunities, We now have a $100,000,000 committed revolving credit facility, which which which means we could actually exploit current opportunities in the market without needing to go back to you, shareholders, to ask for more money and simply go back to the bank and finance these transactions with the existing credit line.

25:47 Going back to the going back to the q three or September year to date financials, the the last milestone that we've now achieved is that we've literally exceeded our our full year 2021 numbers already by the end of the third quarter.

26:10 Revenue, $526,000,000 compared to 410,000,000 for the full year last year. EBITDA, $62,000,000 for the first nine months as compared to $46,000,000 in the full year 2021. And on the operating profit, we are now already at almost three times the level of 2021. And that is, as we've also brought all the items, below that actually translate adjusted EBITDA into operating profit under control, depreciation, down to $2,100,000, noncooperating expenses, down to $6,000,000, and also the share based expenses are now are now lower, which in in aggregate explain the shift of the profits upwards.

27:05 Moving to the moving on to the balance sheet. Here, we actually see that equity is higher than at year end by by more than $40,000,000. Cash on hand is is up by more than $25,000,000, and net debt is actually down. And that despite the fact that we have still that we've still borrowed additional money in in March to find a position of a.org, the the leading the leading product review portal in the German speaking countries,

27:35 and recently, Aporia, which we just acquired before quarter end, which which means that despite us investing in further m and a, we can still delever at the same time. And the question is, why is that? And the and the answer we see on the cash flow statement. So here on this slide 19, you see the operating cash flow on under IFRS, totally no adjustments here. The operating cash flow has more than doubled from around the $25,000,000 in the first nine months last year to now $58,000,000 in the first nine months this year, which again is is notably more than the entire operating cash flow of 02/2021.

28:24 And given that given that these numbers are also influenced by the m and a activity, like charges pertaining to it or or certain working capital items, which come with the acquired companies. We have, like we've done in all quarters back to 2019, presents you with this adjusted cash flow bridge where we basically neutralize the impact of the M and A activity on our our cash conversion. And I'm happy to to show that despite the the materially accelerated growth, we are we are still delivering north of 100% cash conversion and, again, more cash flow than for the entire year 2021.

29:11 And this was an ask by by by investors. We've also now expanded this this table down to free cash flow. So, basically, what is left after interest paid, taxes paid, investments, etcetera. And I'm also happy to show that here, we are still at an at a at a conversion rate of almost 80% where many other businesses are rather close to zero on this metric. And, this this basically explains why we can constantly acquire, great assets to expand our the strategic capabilities of our business and still deleverage at the same time.

29:56 Then on this slide, we are we addressing a few items which are, a bit particular to CenturyLink or generally maybe to companies that are highly acquisitive. So our operation expenditure, growth rate is something that we've always highlighted. However, the reasons to highlight it are diminishing given that now the growth of this item has come down compared to prior reporting periods. And also here, just like in prior in prior reporting periods, most of the increase in operation expenditure is coming from the six acquisitions that we've completed between the end of the prior year comparison period and the end of this reporting period. The second item is the amortization of intangible assets.

30:44 So this this item is increasing because after each acquisition, we need to allocate part of the purchase price to certain tangible assets like customer relationships, assembled workforce, trademarks, internally developed software, etcetera. However, while we while we need to amortize it under under IFRS, we don't have to go back and buy the customer relationships again. We don't have to buy, or rehire the workforce. We don't have to buy our trademarks again, and this is why this is this item is not indicative of any cash outflow in this period or any future periods, and this is also why all analysts who cover our share unanimously strip this out of their of their profit figures.

31:33 The the third item, noncooperating expenses, these these are basically expenses to run our m and a program, including all stages, identifying the targets, doing the due diligence, drafting the contracts, and and and and restructuring the business to to make part of the Centric ecosystem. And here, at the end of last year, Ben and I have made a covenant to bring this figure down to sub to 10% or less of of EBITDA. And as you can tell here, we've we've not only met this covenant, but we've also reduced the absolute amount of these expenses, despite, as you would have seen, a quite active deal road map. We just we've actually mentioned six acquisitions since the end of, September last year.

32:27 And then we come to the finance cost items. So the finance the finance costs that you're seeing in in the first nine months this year are are not what you should expect going forward, not only because of the refinancing that we've explained to you a few slides earlier, but also in this period, we were still being hit by by FX impact, so foreign exchange impact from the from the wild currency swings that we've seen this year so far. And also given that we've refinanced early under IFRS, you actually capitalize the arrangement fees of a bond and and write it off. And given that we've chosen to refinance early, we had to accelerate the amortization of the of the deep of of this of this arrangement fees, which is also now sitting in this period.

33:19 Going forward, you can basically use the data that we provide on the refinancing slides to make a very good estimate of what our future interest charges will be, given that now all these, all these complexities, like, for example, foreign exchange changes will not occur anymore in the financing cost. With this, we end the financial section of this report, and I hand back over to Ben who will run you through strategy and the outlook. Thanks very much, Michael. Here we go. So so, clearly, our number one focus is on organic growth in all its forms of winning new customers, launching new products, cross selling, but also really crucially here using artificial intelligence to optimize our services, which means to extract more money for the traffic that we can that we can deliver to advertisers.

34:19 Operating leverage, as we've already demonstrated, has vastly improved, and this is really because of us having relatively fixed costs compared to revenues that can increase by pumping many more transactions through our platform, and we expect that to continue in future. Our acquisition program has got us to where we are today, and we're very good at it. We've completed 21 transactions. We're a valued buyer, and we've been proven that time and time again that we extract fantastic value from the companies that we buy. And we are an excellent buyer because and one of the reasons being that we do business with almost every company in our industry, and so we have a warm introduction, and we can ideally circumvent any formal competitive, sale process and just get the best companies into our group.

35:12 And then lastly, to keep our debt sustainable, we're approaching one time net debt to EBITDA ratio after being at two and a half times only a couple of years ago. So clearly, as the company throws off enough cash to both make acquisitions and improve our net debt position, we we intend absolutely to continue to do so. And, again, our interest coverage is north of five times. It's a it's a area that we and we believe investors are very comfortable with, and we would wanna stay around them moving forward. Now in addition to all of those objectives, we have ESG objectives, which are very important to us, because, we believe that the responsible company of the future will achieve growth that is both sustainable and inclusive.

36:01 And and so we we we're there right now. Our our actual, mission statement is making the Internet everybody's domain, and we are succeeding in having customers in almost every country in the world. And it isn't just that we're extracting money from our customers. We're actually providing them with a great service, them to build their own corner of the Internet and to monetize that and to spread the spread the benefits of the Internet all over the world. Our workforce is extremely diverse, and we are very focused in maintaining and increasing that. We have a grant project where we, have donated already €600,000, and we expect that to increase over the next couple of years to over €1,000,000 to worthy projects, software projects, helping cybersecurity, helping accessibility for the disabled to the Internet, helping with education and the Internet, and other such worthy causes.

37:03 And then lastly, we were a real early adopter of carbon neutrality. We first declared ourselves carbon neutral back in 2012. We did a whole lot of acquisitions of companies that weren't carbon neutral, so we've had to bring them all in line, which we did by the year 2020. So through a combination of carbon reduction and carbon offset payments, we're again carbon neutral and will intend to continue in that vein. So what does the future hold? We're we've made it clear. We expect to to to trade in line through to the end of the year at or at the actual very, very top of the numbers in the market, noting that those numbers have been upgraded four times already this year, six times in the last eighteen months.

37:56 The direction we're showing is very clear that profits will improve, scale will improve as we move forward. And we'll have more of that for you on the January 30 when we have the full year update. But in the meantime, I guess, the key points to take away is we have proven strong performance, sustainable growth, and the potential of our marketplace model to deliver excellent results, and we obviously continue could plan to continue to do so. There are online privacy measures that affect us only in a good way because we knew they were coming. We knew Judy Judy Powell was already here before we started getting into online marketing and and and third party cookie bands and so on. We're already on the horizon before we started here.

38:49 Our pipeline of future acquisitions is healthy, and, essentially, our cash position only gets stronger and stronger as we continue to throw off more and more cash. So with that, thank you very much for listening. We have a couple of minutes now for questions. So, over to our moderator. Ben, that's great. Michael, well, 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. Ben, Michael, as you can see in the q and a tab there, we have received a number of questions during your presentation this afternoon. So thank you to everyone on the call for taking the time to submit their questions. And, guys, if I could just hand back to you to make your way through that channel there to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end.

39:47 Thank you. Very good. So let's just jump through this. So the first question is about the slow growth of online presence, and do we do price rises? So, yes, the answer is yes. We definitely do price rises. It's always been an inflationary area. But because the largest part of our of that business has a lot of contractual pricing, so we supply big companies like Google and GoDaddy and Johnson and Johnson selling with domain names. It isn't something where we can just slip in a slight price rise. They're actually contracted multi year price protected programs. So we don't have quite the amount of flexibility that, say, someone that's only selling to small business has.

40:36 But yes. And and, honestly, that business has suffered quite a lot through the through through forex, changes in forex as well. Next question. On SGSDG, Could you give us some background on what we've done? I think I kind of gave you a fair fair amount of background about things we've done in that. We also publish a fairly comprehensive description in our annual report. If you're interested in that, you can just download it from the website. If you still have any questions, feel free to just contact us directly. With the continuing large rises in revenue, can you explain why net profit is down 6% from the half year results?

41:25 Michael, do you wanna Right. That is that is that is basically owed to two factors. First, additional additional amortization now that we have for the first that we've placed for more months, had to amortize the latest acquisitions, both of Aporia and and VGL, which is which we explained before, which is an item which is totally noncash. However, it's in accounting, it eats up a lot of the profits even though it's totally not relevant to the cash flow or the leverage or or future ability to pay money to shareholders. And and we also had we also had we also had these one off items that we explained before in the refinancing, writing off the writing off the capitalized arrangement fees of the bond given that we've refinanced it early and and and also the the FX impact that we explained why why the finance cost in the third quarter is not is not is not representative of the of the ongoing fines of the ongoing financing cost, which which made that on accounting basis, yes, the the the profit after tax is down from 6.9 at the end of the h one to 6.5.

42:51 But when you look at when you look at cash flow, which is, in our opinion, a much much better metric of of looking at of of how good the business performing, We've actually delivered much more much more cash flow, after q three, than we did after after the first half of the year. Very good. Thanks, Michael. So the next question is about, can we explain how the revenue arises and and how working capital movements work? I know it's quite a complex question, but I guess the summary is our online presence products are subscription products. Online marketing is more like a utility where we have a contract with someone, and under that contract, they continuously use our services and continuously accrue liability a a to us, which they then have to pay us on a regular basis, typically monthly, or else some of it is prepaid depending on the customer. So, yeah, large customers like Google, like, pay us on a monthly basis. Others actually do prefund their accounts before they can work with us.

44:01 So that probably explains working capital movements because we got a blend of those two types of payments, some some prepaid and others from from large enterprise customers paid on a kind of monthly basis. The have I covered that, do you think, Michael? Is there Yes. I I think I think that I think that's fair. Very good. So since that the market doesn't believe in central, Nick, what we we do exist. Why do you think that is? Is there a feeling out there that you're flashing the pan and not long term sustainable? Who knows? Yeah. Yeah. I'm sure there are some people that might think that, although we have been listed for nine years and grown at a CAGR of 78% year in, year out for the last nine So that's a pretty durable flash, and anyone who jumped on in early days has made a lot of money.

45:02 You know, we we we were, yeah, trading at 40 p when we did an equity raise at one point. So so, you know, I'd I'd say, you know, what what is the issue? The issue is this. We're we're a tech company, and compared to our peers, we're going fantastically well. We're we're we're we're maybe 20% down from our all time high, whereas many of our peers are up to 90% down from where they were last year. So and and and why? I I guess, unfortunately, we're somewhat the victims of our own success in that large institutions that invest in software companies and British small caps constantly in need of liquidity, and so they are selling down our shares at the moment just because they get a much more money for our shares than they do for anything else in their portfolio.

46:00 So it's a it's a downward pressure comes from that, but, we have been enormously resilient compared to our peers, here and in The United States and all over the world. But, look, are we really cheap? Yes. And, obviously, that's a great news for investors just learning about our story. Let me keep going down. Oh, you're just not understood. I think the other thing is you've seen how fast our online marketing business has grown. This is from 2020. Yeah. Say 01/01/2020, essentially zero. Now over $500,000,000, Three quarters of the way through 2023.

46:46 So I guess we took a lot of people by surprise. And and, yeah, people that said, oh, no. I know about that company. Would be have been very surprised when they find out what we do now. Alright. Is anyone else consolidating in the space? Yes. They are. There's a number of, paid back, consolidation players in the space as well as a couple, listed ones, but mostly paid back. I'd say there might be at least six. When are you expecting to review 2023 and '20, I'm sure it means, '24 forecast? Well, we review them all the time. They were recently upgraded in the last month.

47:34 And so what tends to happen is whenever we put out new results and we beat the expectations, people upgrade, and so you can expect to continue to see that. Next question. Will we see gross revenue of over $1,000,000,000 in 2023? Well, that sounds like the kind of thing I'm not supposed to be projecting, but I hope so. And there's certainly positive indicators that at the very least, could achieve maybe a billion dollar run rate during next year if you project forward, but, yeah, that's not that's not an official projection. So what are the barriers to entry for your business model? Can they be easily replicated?

48:19 If not, why not? No. It's very hard. There's maybe in terms of contracts with companies like Google, like Amazon, and so on. There are not many such contracts with such great terms because they are long contracts where based on a lot of trust and building a huge amount of volume with those companies. The technical platform, I wouldn't say it's unique, but it would be incredibly hard to copy. Again, there's ten years of work in our in our in our domain name business often relies on people wanting to get into the industry because we actually provide them with all the tools to get into the industry.

49:04 So so in that way, people who wanna compete actually are the ones that we wanna bring in because they help us. Us. Question here, Michael, is it ninety days so far and the same as It's it was it's it's it's daily so far, and and we've we've we've swapped 50% of it at an average of 3.92%, so very close to the to the current market for the next four years. So the risk of interest rates running away is is quite limited. K. That's a question about integration. We we do integrate different brands together, but we tend to do it very slowly and carefully because we just hate losing customers. So it's it tends to be a slow process.

49:53 Central Nick is more of an investor facing brand. You know, we have all kinds of brands like, yeah, Only Domains, INTERNET, PARKING Crew, Zero Park, theirglyc.org, etcetera, etcetera. But we, you know, we have a very sophisticated and complex integration scheme with, I think, over 25 different work workflows for integrating companies into head office and companies into each other. And but but the reality is it's it's slow. We're very focused on growth comes number one. Integration is more of a yeah. It plays a supporting role, but we definitely are focused on getting efficient more and more efficient all the time.

50:43 Michael, there's a question about does integration influence treatment of goodwill? I don't think it does, does it? Because it's more about a fine schedules. Exactly. Not not not not necessarily, or would say more more likely not. And as we explained before, amortization of intangible assets, so tangible things like trademarks are capitalized separately. If you wouldn't give up one one trademark, we would need to write it off, whereas the goodwill is basically what's what's left over. And and here, we only need to test whether whether the whether the profits delivered by by by the business still justify it, or if you combine two businesses, whether the combined cash flow of the two businesses justifies a combined goodwill. This is the test that we constantly run on every at every every quarter end, but, as you've seen, no no particular issues here.

51:37 Yep. Alright. So the next question is, is pointing out that the analyst growth rates are far, far lower than our recent historical growth rates in terms of the projections and trying to ask how come. And and I guess the answer is we do provide guidance to the analysts, but we are always very conservative. We wanna build in all of the possible things that could go wrong, not the not because we're seeing them, but because we we know they're there. We know there's a war. We know there's massive inflation. We know it's, you know, it's it's it's it's difficult to hire great engineers at the moment. And and and, you know, there are supply chain issues not really affecting us so far because we're completely online, but we just don't have the, like, hubris to say, yeah. That's all gonna never affect us.

52:32 So our philosophy as, I guess, you know, having been a CEO of a listed company now for almost ten years is, you know, put a number in the market that you can beat and raise. Do not do not disappoint ever. And so that's been our approach. And, yeah, there's just too much volatility out there to really project that we'd we yeah. There's no doubt that we're gonna continue to grow at this rate, but yeah. So I know it looks odd to have low much lower projections than we have existing rates, but the existing growth rates, but that's the reason why. So the annual accounts referred to central are becoming a billion dollar business. Have the business set any revenue targets for, say, the next one, three, five years? Yes. We have. And our internal targets are obviously higher than the analyst targets because they you know, that's that's the nature of targets. We wanna beat expectations, but we can't share them.

53:34 Alright. Can you please indicate whether you're trying to increase the share of value added service revenue in the online presence segment? And if so, what do you think you can get as a percentage of revenue in that division? Yes. We are. It's been a slow, road because the companies we've bought have just been pure play domain companies as a rule. But if you look at much more mature companies that do this, they have up up to 50% revenues coming from from this. And in fact, we own one of those companies, a small business in Australia that does sell Office three six five and all kinds of hosting and so on, and that's delivering a a a a more than 60% of the revenues.

54:20 K. Another question about the value of the shares. I think we've gone into that already. Rising interest rates, what's happening to vendor pricing expectations when you're looking at acquisitions? It isn't really a matter of interest rates. It's a matter of more the collapse of the valuation of 10 companies, which is helping us. Do we have to stop or we finish? You have have as long as you need, sir. Alright. We might as well finish these questions. I don't like to disappoint. So would it be fair to say that online marketing is about improving the quality of the traffic you buy and reselling it at a higher price? You you, maybe. I mean, it's also selecting the traffic that we buy, finding the best offer for it.

55:11 So there's actually a lot of yeah. There's, like, ten years of development of machine learning tools in order to to do that. So that might might be a incredibly high level simplified way of doing it, of describing it, but but you could also say that we're sorting through all the traffic to find the most high intent buyers and matching them with the with the with the, best offers for the products and services that they want, would be another way of describing it. Next question. Can you explain more explicitly what are the key determinants in maintaining the levels of organic growth in the online marketing segments? I think I pretty much explained it. So on the one hand, having partners that have a massive appetite or buy any any great traffic that we have to offer them.

56:05 Secondly, making sure that we have a a a software platform that can manage all the traffic and all the ads and and connect them up, which we do. And then lastly, the endless opportunities with media buying where we currently cover about 505,000 different ad categories and only in a few languages and only in a limited number of countries. So there's so, essentially, all of that remains as great potential to to increase. Next question. Could you provide some details on your board and how diverse it is? Sure. So we have how many people do we have on the board? Eight.

56:53 And and I'm I'm not sure how to so we have I think it would be safe to say, one woman and one person of color on the board, at this stage, but it's evolving. Have you considered relisting in The US? Yes. We have several times. Most of our big business partners are listed in The US, and so we're it's something we look at, but we are still a very small company for US. It's 700,000,000 for Nasdaq and so on. It's it's it's it's very small. And we'd have to say, whilst we're not valued at where we ought to be today, AIM has been good to us and allowed us to grow from 3,000,000 to 700,000,000 in revenues.

57:48 So, you know, we'd be cherished to complain, about that. Why alright. Next question. Why is GoDaddy growing at 7%, 9% constant currency, and your domain business is growing at 4.3%. I mean, GoDaddy has 5050% market share in The United States. They're operating at a much greater scale than us, so they're 20 times bigger than us. And I guess, you know, in a difficult market, you know, being the dominant brand in the world's largest market means that you it's easier for you to win customers and grow than being a kind of, you know, challenger brand in a global market. They're a great company, and we're absolutely delighted that they're business partners of ours.

58:36 And and, obviously, we do look at them, for examples, of how to do things very well and and and learn. We're good. Last thing. Thanks for your good work. All the best for the coming days, weeks, years. Well, that's that's appreciated. Thank you, Gregor, for that one. Look. So thank you all for those great questions. Apologies for really rushing through them, but I thought better to better to try and address them all than leave some people feeling like they their questions were not answered. Plenty of information on our in our annual report in particular, although, obviously, it's a year out of date because it's a year old. And and we do try and do, you know, fairly regular investor meets company presentations.

59:26 So I think you can expect another one in the early part of next year if you'd like to continue to follow our story. So thank you very much everybody for your participation for what turned out to be quite a long session, and, thank you to to to the team for organizing this. Ben, Michael, that's great. And thank you very much indeed for being so generous of your time then addressing every single question that came in from investors this afternoon. And, And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation's ended for you to review and then add any additional responses, of course, where it's appropriate to do so. Ben, I was just going to ask you for those closing comments, but I think you well delivered those just now. So unless there's anything further to add, sir, what I'll do is I'll redirect those on the call for their feedback, which I know is particularly important to yourself and the company.

1:00:15 So if there is anything to add, sir? Yeah. I would just say it we we absolutely read every piece of feedback, and we and we really take it on board. So if there's anything that we could do to make things clearer, to to to to help help explain the investment case and so on, please, you know, it won't it won't be wasted if you take the trouble to share criticisms or suggestions. We we we pay a lot of attention. So thank you very much, all of you. Ben, that's great. Thank you very much. And Michael as well, 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 in order that the management team can better understand your views and expectations.

1:01:00 This may only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Central NIC 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. Thank