Stock-opedia interview with CEO : part 118 Jan 2022 12:05
Jack Brumby, who co-writes the daily Small Cap Value Report on Stockopedia, holds CNIC and wrote a good piece on the company yesterday. In particular, he had a phone call with the CEO and concludes and reports usefully as follows:
"It’s a short update, with more to come on the 28th Feb, so I’ll leave it there for now. But this is a tech company on a relatively modest valuation that appears to have reached an inflection point recently, and continues to report strong trading momentum with large addressable markets to aim for. Worth keeping an eye on – management does a good job of presenting to the market via video, so you can find material on investormeetcompany."
"Edit – meeting with management
I’ve just had a chat with CEO Ben Crawford, here’s a write up of the key points:
The team appreciates the need to communicate with the market as it made quite a few acquisitions in its first few years, hence the videos explaining CentraNic’s journey so far. It’s the only company of its type listed in the UK, with the rest in the US.
Online presence offers businesses the key services to get on the internet (web address, website, software). Online marketing connects advertisers to websites with advertising inventory.
Both segments operate a ‘marketplace’ model (big believer in this model).
Online Presence – CentralNic is higher up the supply chain than other web service providers like GoDaddy and Google. It is connected to country codes across the world and these are all integrated on its platform, which is quite a feat. It sells to c20,000 resellers including the biggest companies selling domain names. Reliable subscription revenue, one a year.
Online Marketing – only three acquisitions made here so far, but ecommerce companies generated some $4 trillion in revenue last year with most of their customer acquisition coming via online marketing. More than $400bn spent here annually, growing at around 20% per annum. Reliable revenue but paid far more frequently than in Online Presence.
Why the move into online marketing? Had been trying to buy the right online marketing company for a few years when they finally got the deal. It was the exact company they wanted. This business had some issues with the company that owned them, and was a fantastic purchase for CNIC. The group has spent $90m on acquiring companies in online marketing and has banked over $250m in revenues from them already.
This is Ben Crawford’s third rollup (the other two were private). Strategy is to maintain discipline, buy at low multiples, and invest for growth, rather than buying high and seeking to strip out costs, which is what a lot of competitors do.
CNIC has a couple of really great advantages re. Mamp;A. It has a working business relationship with almost all of its acquired companies due to its position high up the supply chain. This provides an ‘incredibly handy’ perspective on the sector. CNIC sees who’s growing, and most people will take their calls."
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