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CentralNic to meet full-year expectations

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Internet platform business CentralNic (LON:CNIC) is set to meet full-year expectations and is progressing well with the diversification of its business.

The company, which listed on AIM just over a year ago, has been busy ploughing the money it raised in the flotation into diversifying its business.

The company came to the market as a player primarily focused on the sale of Internet domain names (i.e. a registry service provider), but it now has many legs to the business, including trading premium domain names, offering services related to domain-name ownership, and participating in the relaxation of restrictions on top level domains (TLDs) – the bits of a web site address that come after the final dot.

The company announced on Monday it has nailed sales of non-core premium domain names – web site addresses that sell for more than the standard rate – worth US$2.5mln.

The cash from the sales will be used to accelerate growth within the group.

That growth, however, may not be as rapid as hoped back when the Internet Corporation for Assigned Names and Numbers (ICANN) decided to loosen up restrictions on TLDs.

There has been a growing feeling in the industry that the release of new TLDs has not been as swift as originally envisaged, and CentralNic acknowledged that, while demand for new TLDs such as .website and .wiki is strong and is growing, the market is not as mature at this stage as the company had anticipated.

ICANN has recognised this by more than halving its demand projection for domain registrations under new TLDs in 2015 from 33mln to 15mln.

The TLD business as a whole may not have matured as fast as expected, but CentralNic is more than doing its bit to generate growth, with the company ranked number two in the world among TLD distributors by industry statistics website ntldstats.com.

According to nTLDStats, the .xyz TLD, which CentralNic has the rights to, has been part of more than 730,000 domain name registrations, which is more than any other new TLD.

The board expects CentralNic to be the exclusive registry service provider to at least 35 new TLD's over the next 2-3 years.

The group has also been confirmed as the exclusive global distributor and billing agent for the following new TLDs to be launched from 2015: .site, .design, .tickets.

Other CentralNic new TLDs still to be launched include .college, .fans, .feedback, .contact, and .pid.

CentralNic remains upbeat over the future of TLDs.

Ben Crawford, chief executive, said: "CentralNic and its clients have a number of high quality new TLDs and with our partners we intend to build on our results to date in leading the re-organisation of the domain name system.

“This year we have been successful in diversifying our business by entering the retail, enterprise and premium domain markets, where we have a commercial interest in a significant portfolio of premium domain names of varying values.”

House broker Zeus Capital said: “Today’s announcement further demonstrates the success CentralNic is achieving at diversifying the business by gaining exposure to multiple growth opportunities, following on from the acquisition of Internet.BS for a maximum consideration of US$7.5mln in June and the US$1.6mln investment in Accent Media, the successful applicant for the dot tickets domain, that was completed in September.”

The broker added that the industrywide delays in the release of TLDs was flagged back in September, and suggested that the new TLD programme had not yet achieved the level of exposure anticipated, partly because “most mass-market and super-brand domains are yet to launch”.

“However, it is anticipated that awareness will start to build as major DotBrands such as .google, .apple, .sony and .hsbc begin launching next year,” the broker said.

Shares in CentralNic dipped 2p to 35p in the morning trading session.

Quick facts: Centralnic Group PLC

Price: 71.5 GBX

LSE:CNIC
Market: LSE
Market Cap: £135.02 m
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Ben Crawford, chief executive of CentralNic (LON:CNIC), says the fast-growing emerging markets are where the growth is going to come from for the top-level domain group. ‘China is the biggest market for domain names in the world now in terms of growth,’ he explains. ‘But there’s a billion...

on 04/28/2015

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