Nine months unaudited results to 30 September 2023
13/11/2023 07:00
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RNS Number : 1633T Team Internet Group PLC 13 November 2023
13 November 2023
TEAM INTERNET GROUP PLC
("Team Internet" or the "Company" or the "Group")
UNAUDITED FINANCIAL RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2023
Continued delivery with 16% year-on-year increase in Revenue, 11% rise in
Adjusted EBITDA,
and a confident outlook for FY23
Team Internet Group Plc (AIM: TIG), the global internet company that generates
recurring revenue from creating meaningful and successful connections:
businesses to domains, brands to consumers, publishers to advertisers, is
pleased to announce its unaudited financial results for the nine months ended
30 September 2023 ("September 2023 YTD").
September 2023 YTD Financial Summary:
● Gross revenue increased by 16% to USD 611.7m (nine months
ended September 2022 ("September 2022 YTD"): USD 526.7m)
● Organic revenue growth(*) for the trailing twelve months ended
30 September 2023 ("TTM 2023") of approximately 19%
● Net revenue (Gross profit) increased by 8% to USD 138.5m
(September 2022 YTD: USD 128.3m)
● Adjusted EBITDA(**) increased by 11% to USD 68.8m (September
2022 YTD: USD 62.0m)
● Adjusted EPS increased by 28% to USD 17.56 cents (September
2022 YTD: USD 13.68 cents)
● Net debt(***) of USD 81.7m (31 December 2022: USD 56.6m) and
Leverage(****) of 1.1x pro forma EBITDA TTM 2023, following non-operating cash
outflows in respect of the Group acquiring its own shares USD 30.2m (Share
buyback: USD 24.9m, Employee Benefit Trust: USD 5.3m), dividend of USD 3.6m,
reflecting the Group's choice to return cash to shareholders, and
non-recurring settlement of deferred consideration of USD 17.9m
● Adjusted operating cash conversion of 95% (FY2022: 110%). We
expect this to continue to normalise nearer to 100% over the remainder of the
year
Q3 highlights:
● On 4 September 2023, the Group announced its rebranding from
CentralNic Group to Team Internet Group and effective that same day, the
Group's shares commenced trading under the ticker "TIG". At a general meeting
held on 28 September 2023, a resolution was passed to change the Company's
name from CentralNic Group Plc to Team Internet Group Plc, a change which has
now been confirmed by Companies House
● The Group continued to trade at least in line with current
market expectations during the period, driven by ongoing market share gains of
its proprietary privacy-safe, AI-based customer journeys which address a
multi-billion-dollar opportunity
● In the Online Marketing segment, the number of visitor sessions
increased by 36% to 5.6 billion for TTM 2023 from 4.1 billion for the trailing
twelve-month period ended 30 September 2022 ("TTM 2022"). Revenue per thousand
sessions ("RPM") decreased by 7% from USD 104 to USD 97, continuing to
outperform the market
● The Online Presence segment again posted its highest ever
organic revenue growth, 17% TTM 2023 compared to 4% for TTM 2022
● Adjusted EBITDA as a percentage of Net revenue has increased to
50% for September 2023 YTD from 48% for September 2022 YTD, demonstrating that
Team Internet's growth continues to translate into operating leverage
● Zeropark, Team Internet's Commerce Media Tech business,
announced three strategic partnerships: First, becoming a Tier 1 Demand
Partner of Sovrn, a leading publisher technology platform. Second, a
significant deal with booking.com, the global online travel agency. Third,
Klarna, the Buy Now Pay Later platform has become a direct publisher on the
Zeropark network
● Voluum, Team Internet's flagship ad tracker, announced the
launch of a new integration with popular e-commerce platform Shopify, allowing
customers to directly feed conversion data from their Shopify stores into
Voluum, bolstering their ad, product, and page performance
● On 31 August 2023, Adrenalads LLC was acquired for an initial
consideration of USD 2.1m. The acquisition included deferred consideration of
USD 0.2m payable in February 2025. This business has a rich history of
collaboration with Zeropark
● One of the Group's largest Retail brands OnlyDomains entered
into a partnership with business email provider Titan to offer new and
existing customers premium business email with every domain name
Post period end highlights:
● Launch of Team Internet AG's Adsolutely product, seamlessly
integrating tailored ad feeds into the digital space, discarding the intrusive
nature of native ads. Adsolutely's state-of-the-art technology resonates with
the target audience's interests through advanced keyword pairing, offering
users total control over contextual ads and related terms, while handling the
intricacies of optimisation
● The Group's performance marketing business Codewise has been
rebranded to "Commerce Media Tech", reflecting our mission to help advertisers
connect with their ideal customers
● Simon McCalla joined Team Internet as the new CEO of our Online
Presence division. Simon's experience as a senior leader at blue chip
companies both within and beyond the domain name industry make him a great fit
to lead Online Presence into the future
● Team Internet initiated an ESG alliance between leading partners
along the domain name value chain at ICANN78 in Hamburg in October 2023
Outlook:
Team Internet delivered another strong performance during September 2023 YTD
across both its Online Marketing and Online Presence segments, delivering
organic revenue growth of 19% on a TTM 2023 pro forma basis. The Group has
maintained its strong operating leverage, as demonstrated by Adjusted EBITDA
as a percentage of Net revenue being 50% for September 2023 YTD (48% September
2022 YTD).
The material expansion of the Company's share buyback programme announced on 3
July 2023, alongside the cash flow waterfall model as described on page 14 in
the 2022 Annual Report, is primarily being funded by continued strong
operating cash generation. To date, the Company has bought back 16.7m shares
under its programme at a cumulative cost of GBP 20.7m. GBP 13.3m remains
available for the remainder of the programme.
The Group looks ahead with confidence to Q4, which is typically its strongest
quarter, and the Directors expect that the Group will continue to deliver
results at least in line with current market expectations for the full
year.(*****)
Results presentation:
There will be a webinar/conference call for equity analysts at 09.30am GMT
today, and for private client investment managers at 11am GMT. Both events
will be hosted by CEO Michael Riedl and CFO William Green.
Anybody wishing to register should contact teaminternet@secnewgate.co.uk
(mailto:teaminternet@secnewgate.co.uk) , where further details will be
provided.
Further, an Investor Meet Company session will be held at 1pm GMT today:
https://investormeetcompany.com/Team Internet-group-plc/register-investor
(https://investormeetcompany.com/centralnic-group-plc/register-investor)
Michael Riedl, CEO of Team Internet, commented: "I am pleased to report that
the Group has continued its strong organic revenue growth in Q3 2023, building
on the record results achieved in 2022. This growth was driven by both
operating segments, reflecting the strength of our product portfolio.
Leveraging this position, the Group is primed for a strong finish in Q4,
traditionally our highest revenue quarter of the year.
The Group's new brand launched in the quarter goes beyond aesthetics. It's a
manifestation of our purpose: to forge meaningful and successful connections.
We aim to connect domains with businesses, businesses with consumers, and
publishers with advertisers, propelling them towards their digital
aspirations.
Our aspirations for Team Internet are clear: diversification, global outreach,
deeper vertical integration, and an unyielding allegiance to our core values."
(*) Pro forma revenue, adjusted for; acquired revenue, constant currency
foreign exchange impact and non-recurring revenues is USD 817m for TTM 2023
and at USD 687m for TTM 2022
(**)Earnings before interest, tax, depreciation, amortisation, impairment,
non-cash charges and non-core operating expenses
(***) Includes gross cash, bank debt and prepaid finance costs as of 30
September 2023 (cash of USD 83.7m and bank debt and prepaid finance costs of
USD 166.7m); includes gross cash, bank debt, prepaid finance costs and hedging
assets of USD 1.4m (31 December 2022 cash of 94.8m, bond debt, bank debt and
prepaid finance costs of USD 151.2m and hedging liabilities of USD 0.2m)
(****) Includes Net Debt as defined under(***) (i) excluding prepaid finance
costs, (ii) plus guarantee obligations, and (iii) plus the best estimate of
any crystallised deferred consideration payable in cash, all divided by pro
forma EBITDA, i.e. last twelve months' EBITDA including acquired entities'
EBITDA on a pro forma basis, and adjusted for rental expense capitalized under
IFRS 16 and non-core expenses
(*****)Latest analyst forecasts are within a range of USD 783m and USD 834m
for FY23 revenue and USD 91m and USD 98m for FY23 Adjusted EBITDA
For further information:
Team Internet Group Plc +44 (0) 203 388 0600
Michael Riedl, Chief Executive Officer
William Green, Chief Financial Officer
Zeus Capital Limited (NOMAD and Joint Broker)
Nick Cowles / Jamie Peel / James Edis (Investment Banking) +44 (0) 161 831 1512
Dominic King (Corporate Broking) +44 (0) 203 829 5000
Berenberg (Joint Broker) +44 (0) 203 207 7800
Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff
SEC Newgate (for Media) teami (mailto:teaminternet@secnewgate.co.uk) nterne
(mailto:teaminternet@secnewgate.co.uk) t@secnewgate.co.uk
(mailto:teaminternet@secnewgate.co.uk)
Bob Huxford / Alice Cho / Harry Handyside / Tom Carnegie +44 (0) 203 757 6880
Forward-Looking Statements
This document includes forward-looking statements. Whilst these
forward-looking statements are made in good faith, they are based upon the
information available to Team Internet at the date of this document and upon
current expectations, projections, market conditions and assumptions about
future events. These forward-looking statements are subject to risks,
uncertainties and assumptions about the Group and should be treated with an
appropriate degree of caution.
About Team Internet Group Plc
Team Internet (AIM: TIG) creates meaningful and successful connections from
businesses to domains, brands to consumers, publishers to advertisers,
enabling everyone to realise their digital ambitions. The Company is a leading
global internet solutions company that operates in two highly attractive
markets: high-growth digital advertising (Online Marketing segment) and domain
name management solutions (Online Presence segment). The company's Online
Marketing segment creates privacy-safe and AI-generated online consumer
journeys that convert general interest online media users into confident high
conviction consumers through advertorial and review websites. The Online
Presence segment is a critical constituent of the global online presence and
productivity tool ecosystem, where Team Internet serves as the primary
distribution channel for a wide range of digital products. The company's
high-quality earnings come from subscription recurring revenues in the Online
Presence segment and revenue share on rolling utility-style contracts in the
Online Marketing segment.
For more information please visit: www.teaminternet.com
(http://www.teaminternet.com)
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
Team Internet's organic growth, combined with the acquisition strategy pursued
through the end of 2022, substantially increased the scale and capabilities of
the Group. The effect of this is demonstrated in our unaudited September 2023
YTD results which show increases in both Revenue and Adjusted EBITDA of 16%
and 11% respectively, compared to September 2022 YTD.
Performance Overview
The Group has performed strongly during the
period with the key financial metrics listed below:
Nine months ended Nine months
30 September 2023 ended
30 September 2022
Change
USD m USD m %
Revenue 611.7 526.7 16%
Net revenue/gross profit 138.5 128.3 8%
Adjusted EBITDA 68.8 62.0 11%
Operating profit 29.8 35.1 (15%)
Adjusted operating cash conversion (note 8) 95% 105% (9%)
Profit after tax 13.8 6.5 112%
EPS - Basic (cents) 5.10 2.48 106%
EPS - Adjusted earnings - Basic (cents) (note 7) 17.56 13.68 28%
Segmental analysis
Organic growth rates quoted below are calculated on a pro forma basis
including all the Group's constituents as of the last balance sheet dates and
adjusted for non-recurring or non-cash revenues and on a constant currency
basis.
Online Marketing segment
The Online Marketing segment continued to outperform the market, with revenues
increasing by USD 62.1m, or 15%, from USD 412.6m to USD 474.7m. Organic
revenue grew at a rate of 20% for TTM 2023, predominantly driven by Team
Internet's TONIC platform. Inorganic growth was a result of the full period
impact of the VGL acquisition, which was acquired in March 2022, and
Adrenalads in August 2023.
The number of visitor sessions increased by 36% from 4.1 billion for TTM 2022
to 5.6 billion for TTM 2023 and the RPM decreased by 7% from USD 104 to USD
97((1)).
The Online Marketing segment creates privacy-safe and AI-generated online
consumer journeys that convert general interest online media users into
confident high conviction consumers through advertorial and review websites,
generating utility-style referral and commission income through partnerships
with Google, Amazon and a multitude of other partners. Our long-term vision
aims to harness the Group's expertise in two critical areas: first, to
transform social media and other low-intent traffic into qualified leads for
search ad campaigns; and second, to effectively turn search ad campaigns into
successful e-commerce transactions. By integrating these capabilities, we
aspire to establish a robust social commerce channel. This sector is expected
to reach a value of USD 80 billion((2)) by 2025 in the US alone.
Online Presence segment
Reported revenue in this segment increased by 20% from USD 114.1m in September
2022 YTD to USD 137.0m in September 2023 YTD. Organic growth for the Online
Presence segment was 17% for TTM 2023, the highest growth rate since the
segment's establishment, driven by the structural shift in demand towards Top
Level Domains where Team Internet has a competitive edge.
The number of processed domain registration years increased by 11% from 12.7m
for TTM 2022 to 14.1m for TTM 2023 and the average revenue per domain year
increased by 8% from USD 10.03 to USD 10.81. The share of Value-Added Service
revenue TTM 2023 was 11.2%((3)).
The Online Presence segment is a critical constituent of the global online
presence and productivity tool ecosystem, where Team Internet serves as the
primary distribution channel for a wide range of digital products.
Michael Riedl
Chief Executive Officer
((1)) Based on analysis of c.85% of the search segment which can be adequately
and reliably described by this KPI
((2)) Source: "Social commerce: The future of how customers interact with
brands", McKinsey & Company, October 19, 2022
((3)) Based on analysis of c.86% of this segment which can be adequately and
reliably described by this KPI
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2023 2022 2022
Note USD m USD m USD m
Revenue 4 611.7 526.7 728.2
Cost of sales (473.2) (398.4) (550.5)
Net revenue/gross profit 138.5 128.3 177.7
Operating expenses (105.2) (89.4) (138.4)
Share-based payments expense (3.5) (3.8) (5.7)
Operating profit 29.8 35.1 33.6
Adjusted EBITDA((a)) 68.8 62.0 86.0
Depreciation of property, plant and equipment (2.3) (2.1) (3.0)
Amortisation and impairment of intangible assets (28.1) (21.1) (36.4)
Non-core operating expenses((b)) 5 (5.0) (6.0) (8.2)
Foreign exchange (loss)/gain (0.1) 6.1 0.9
Share-based payment expenses (3.5) (3.8) (5.7)
Operating profit 29.8 35.1 33.6
Finance income less finance costs 6 (8.8) (9.4) (13.2)
Foreign exchange loss on borrowings - (4.7) (5.6)
Net finance costs (8.8) (14.1) (18.8)
Profit before taxation 21.0 21.0 14.8
Income tax expense (7.2) (14.5) (16.9)
Profit/(loss) after taxation 13.8 6.5 (2.1)
Items that may be reclassified subsequently to profit and loss
Exchange difference on translation of foreign operations (4.2) (30.5) (13.7)
Movement arising on changes in fair value of hedging instruments 1.6 6.4 6.2
Total comprehensive income/(loss) for the period/year 11.2 (17.6) (9.6)
Profit/(loss) is attributable to:
Owners of Team Internet Group Plc 13.8 6.5 (2.1)
Total comprehensive income/(loss) is attributable to:
Owners of Team Internet Group Plc 11.2 (17.6) (9.6)
Earnings per share:
Basic (cents) 5.10 2.48 (0.78)
Diluted (cents) 5.07 2.41 (0.78)
Adjusted earnings - Basic (cents) 17.56 13.68 20.01
Adjusted earnings - Diluted (cents) 17.45 13.29 19.81
All amounts relate to continuing activities
((a)) Earnings before interest, tax, depreciation, amortisation and
impairment, non-cash charges and non-core operating expenses.
((b)) Non-core operating expenses include items related primarily to
acquisition, integration and other related costs, which are not incurred as
part of the underlying trading performance of the Group, and which are
therefore adjusted for, in line with Group policy.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2022
2023 2022
USD m USD m USD m
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2.7 1.8 1.8
Right-of-use assets 4.7 5.6 5.5
Intangible assets 327.0 314.1 347.9
Deferred receivables 0.2 0.4 0.3
Deferred tax assets 9.7 7.9 9.5
Derivative financial instruments 1.4 - -
345.7 329.8 365.0
CURRENT ASSETS
Inventory 0.5 0.8 0.6
Trade and other receivables 99.8 93.4 98.2
Cash and bank balances 83.7 83.8 94.8
184.0 178.0 193.6
TOTAL ASSETS 529.7 507.8 558.6
EQUITY AND LIABILITIES
EQUITY
Share capital 0.3 0.3 0.3
Share premium 98.3 98.3 98.3
Merger relief reserve 5.3 5.3 5.3
Share-based payments reserve 27.4 22.1 24.1
Cash flow hedging reserve 1.4 - (0.2)
Foreign exchange translation reserve (15.0) (27.6) (10.8)
Retained earnings 30.0 59.1 50.0
TOTAL EQUITY 147.7 157.5 167.0
NON-CURRENT LIABILITIES
Other payables 5.7 11.5 13.9
Lease liabilities 3.1 1.9 3.8
Deferred tax liabilities 26.5 26.8 30.2
Borrowings 147.7 0.5 145.9
Derivative financial instruments - - 0.2
183.0 40.7 194.0
CURRENT LIABILITIES
Trade and other payables and accruals 178.2 159.0 190.3
Lease liabilities 1.7 3.9 1.9
Borrowings 19.1 141.7 5.3
Derivative financial instruments - 5.0 0.1
199.0 309.6 197.6
TOTAL LIABILITIES 382.0 350.3 391.6
TOTAL EQUITY AND LIABILITIES 529.7 507.8 558.6
Equity attributable to owners
of the Parent Company
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share- based payments reserve USD m Foreign exchange translation reserve USD m
Merger relief reserve Cash flow hedging USD m
Share capitalUSD m Share premium USD m Reserve USD m Retained earnings
USD m USD m
Balance as at 1 January 2022 0.3 39.8 5.3 19.5 (6.4) 2.9 52.6 114.0
Profit for the period - - - - - - 6.5 6.5
Translation of foreign operations - - - - - (30.5) - (30.5)
Other comprehensive income - changes in fair value of hedging instruments - - - - 6.4 - - 6.4
Total comprehensive income for the period - - - - 6.4 (30.5) 6.5 (17.6)
Issue of share capital - 59.6 - - - - - 59.6
Share issue costs - (1.1) - - - - - (1.1)
Share-based payments - - - 3.8 - - - 3.8
Share-based payments - deferred tax asset - - - (0.4) - - - (0.4)
Share-based payments - exercised and lapsed - - - (0.8) - - - (0.8)
Balance as at 30 September 2022 0.3 98.3 5.3 22.1 - (27.6) 59.1 157.5
Loss for the period - - - - - - (8.6) (8.6)
Translation of foreign operations - - - - - 16.8 - 16.8
Other comprehensive income - changes in fair value of hedging instruments - - - - (0.2) - - (0.2)
Total comprehensive income for the period - - - - (0.2) 16.8 (8.6) 8.0
Repurchase of shares - - - - - - (0.5) (0.5)
Share-based payments - - - 4.3 - - - 4.3
Share-based payments - deferred tax asset - - - 0.5 - - - 0.5
Share-based payments - exercised and lapsed - - - (2.8) - - - (2.8)
Balance as at 31 December 2022 0.3 98.3 5.3 24.1 (0.2) (10.8) 50.0 167.0
Profit for the period - - - - - - 13.8 13.8
Translation of foreign operations - - - - - (4.2) - (4.2)
Other comprehensive income - changes in fair value of hedging instruments - - - - 1.6 - - 1.6
Total comprehensive income for the period - - - - 1.6 (4.2) 13.8 11.2
Dividends paid on equity shares - - - - - - (3.6) (3.6)
Repurchase of shares - - - - - - (30.2) (30.2)
Share-based payments - - - 7.3 - - - 7.3
Share-based payments - deferred tax asset - - - 1.2 - - - 1.2
Share-based payments - exercised and lapsed - - - (5.2) - - - (5.2)
Balance as at 30 September 2023 0.3 98.3 5.3 27.4 1.4 (15.0) 30.0 147.7
· Share capital represents the nominal value of the Company's
cumulative issued share capital.
· Share premium represents the cumulative excess of the fair value
of consideration received for the issue of shares in excess of their nominal
value less attributable share issue costs and other permitted reductions.
· Merger relief reserve represents the cumulative excess of the
fair value of consideration received for the issue of shares in excess of
their nominal value less attributable shares issue costs and other permitted
reductions.
· Retained earnings represents the cumulative value of the profits
not distributed to Shareholders but retained to finance the future capital
requirements of the Group.
· Share-based payments reserve represents the cumulative value of
share-based payments recognised through equity and deferred tax assets arising
thereon, net of exercised and lapsed options.
· Cash flow hedging reserve represents the effective portion of
changes in the fair value of derivatives.
· Foreign exchange translation reserve represents the cumulative
exchange differences arising on Group consolidation.
Unaudited Unaudited Audited
Nine months Nine months ended Year ended
ended 30 September 2022 31 December
31 September 2022
CONSOLIDATED STATEMENT OF CASH FLOWS 2023
USD m USD m USD m
Cash flow from operating activities
Profit before taxation 21.0 21.0 14.8
Adjustments for:
Depreciation of property, plant and equipment 2.3 2.1 3.0
Amortisation and impairment of intangible assets 28.1 21.1 36.4
Finance cost (net) 8.8 14.0 18.8
Share-based payments 3.5 3.8 5.7
Increase in trade and other receivables (1.1) (5.3) (9.8)
Increase/(decrease) in trade and other payables (8.3) 1.7 16.9
Decrease in inventories 0.2 - 0.2
Cash flow generated from operations 54.5 58.4 86.0
Income tax paid (4.3) (4.4) (8.4)
Net cash flow generated from operating activities 50.2 54.0 77.6
Cash flow used in investing activities
Purchase of property, plant and equipment (1.7) (0.6) (1.3)
Purchase of intangible assets (6.7) (3.6) (5.2)
Payment of deferred consideration (17.9) (2.5) (2.7)
Proceeds from disposals of investments - 0.1 0.1
Acquisition of subsidiaries and related assets, net of cash acquired (5.6) (66.9) (81.5)
Net cash flow used in investing activities (31.9) (73.5) (90.6)
Cash flow generated from/(used in) financing activities
Proceeds from borrowings 15.0 30.5 185.5
Settlement of forward foreign exchange contracts - (21.0) (25.5)
Repayment of bond financing - - (128.6)
Repayment of revolving credit facility - - (18.8)
Bank finance arrangement fees (0.2) - (3.4)
Accrued interest on bond tap - 0.4 0.4
Bond arrangement fees - (0.8) (0.8)
Proceeds from issuance of ordinary shares (net) - 58.5 58.6
Repurchase of ordinary shares (30.2) - (0.4)
Dividends paid on equity shares (3.6) - -
Payment of lease liability (1.1) (1.6) (2.2)
Bank loan capital repayments (0.2) - -
Interest paid (9.0) (7.0) (7.8)
Net cash flow generated from/(used in) financing activities (29.3) 59.0 57.0
Net increase/(decrease) in cash and cash equivalents (11.0) 39.5 44.0
Cash and cash equivalents at beginning of the period/year 94.8 56.1 56.1
Exchange losses on cash and cash equivalents (0.1) (11.8) (5.3)
Cash and cash equivalents at end of the period/year 83.7 83.8 94.8
NOTES TO THE UNAUDITED FINANCIAL RESULTS
1. General information
Team Internet Group Plc is the UK holding company of a group of companies
which operate a global internet platform that derives recurring revenue from
Online Marketing and Online Presence services. The Company is registered in
England and Wales. Its registered office and principal place of business is
4th Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR.
2. Basis of preparation
The financial results for the nine months ended 30 September 2023 are
unaudited and have been prepared on the basis of the accounting policies set
out in the Group's 2022 statutory accounts and, for all periods presented, in
line with the principal disclosure requirements of IAS 34: Interim Financial
Reporting.
The unaudited financial results are condensed and do not represent statutory
accounts within the meaning of section 435 of the Companies Act 2016. The
statutory accounts for the year ended 31 December 2022, upon which the
auditors issued an unqualified opinion, are available on the Group's website
and did not contain statements under section 498(2) or (3) of the Companies
Act 2006.
3. Segment analysis
Team Internet is an independent global service provider building and managing
platforms that sell Online Marketing and Online Presence services. Operating
segments are organised around the products and services of the business and
are prepared in a manner consistent with the internal reporting used by the
chief operating decision maker to determine allocation of resources to
segments and to assess segmental performance. The Directors do not rely on
analyses of segment assets and liabilities, nor on segmental cash flows
arising from the operating, investing and financing activities for each
reportable segment, for their decision making and therefore have not included
them.
The Online Marketing segment creates privacy-safe, AI-generated online
customer journeys that convert general interest online media users into
confident high conviction consumers through advertorial and review websites.
The Online Presence segment is a critical constituent of the global online
presence and productivity tool ecosystem, where Team Internet serves as the
primary distribution channel for the wide range of digital products.
Management reviews the activities of the Team Internet Group in the segments
disclosed below up to a Net revenue/gross profit level only:
Unaudited Unaudited
Nine months ended Nine months ended Audited
30 September 30 September Year ended
2023 2022 31 December
USD m USD m 2022
USD m
Online Marketing
Revenue 474.7 412.6 574.7
Cost of sales (380.4) (323.7) (449.6)
Net revenue/gross profit 94.3 88.9 125.1
Online Presence
Revenue 137.0 114.1 153.5
Cost of sales (92.8) (74.7) (100.9)
Net revenue/gross profit 44.2 39.4 52.6
Total revenue 611.7 526.7 728.2
Total cost of sales (473.2) (398.4) (550.5)
Net revenue/gross profit 138.5 128.3 177.7
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
4. Revenue
The Group's revenue is generated indirectly from consumers located in the
following geographical areas:
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December 2022
2023 2022 USD m
USD m % USD m % %
Americas 314.6 51% 279.2 53% 389.0 53%
APAC 53.8 9% 55.8 11% 73.5 10%
EMEA 210.9 35% 169.9 32% 234.5 33%
UK 32.4 5% 21.8 4% 31.2 4%
611.7 100% 526.7 100% 728.2 100%
The Group's revenue is invoiced directly to the following geographical areas:
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December 2022
2023 2022 USD m
USD m % USD m % %
Online Marketing
Americas 14.4 3% 14.0 3% 19.5 3%
APAC 7.9 1% 5.4 1% 7.8 1%
EMEA 449.3 73% 391.5 74% 544.5 75%
UK 3.1 1% 1.7 - 2.9 -
474.7 78% 412.6 78% 574.7 79%
Online Presence
Americas 51.4 8% 33.4 6% 51.7 7%
APAC 17.4 3% 16.2 3% 22.3 3%
EMEA 62.5 10% 61.6 12% 75.4 10%
UK 5.7 1% 2.9 1% 4.1 1%
137.0 22% 114.1 22% 153.5 21%
Total revenue 611.7 100% 526.7 100% 728.2 100%
5. Non-core operating expenses
Unaudited Unaudited Audited
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2022
2023 2022 USD m
USD m USD m
Acquisition related costs 0.7 3.1 3.5
Integration and streamlining costs 2.6 2.8 4.0
Other costs((1)) 1.7 0.1 0.7
5.0 6.0 8.2
( )
((1)) Other costs include items related primarily to business reviews and
restructuring expenses.
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
6. Net finance costs
Unaudited Unaudited Audited
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2022
2023 2022 USD m
USD m USD m
Finance income (0.3) - -
Impact of unwinding of discount on net present value of deferred consideration 1.1 0.4 1.0
Reappraisal of deferred consideration (2.8) (1.4) (1.3)
Arrangement fees on borrowings 1.0 2.9 3.0
Interest on bank borrowings and bond interest 9.9 7.4 10.2
Interest expense on leases 0.1 0.1 0.2
(Gain)/loss arising on derivatives classified (0.2) - 0.1
as fair value hedges
Foreign exchange loss on borrowings - 4.7 5.6
Net finance costs 8.8 14.1 18.8
( )
7. Earnings per share
Earnings per share has been calculated by dividing the consolidated
profit/(loss) after taxation attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the year. Diluted
earnings per share have been calculated on the same basis as above, except
that the weighted average number of ordinary shares that would be issued on
the conversion of all the dilutive potential ordinary shares (arising from the
Group's share option scheme and warrants) into ordinary shares has been added
to the denominator. In 2022, there is no change to the loss numerator of the
dilutive calculation. Due to the loss made in the year, the impact of the
potential shares to be issued on exercise of share options and warrants would
be anti-dilutive and therefore diluted earnings per share is reported on the
same basis on earnings per share.
Unaudited Unaudited Audited
Nine months Nine months ended Year ended
ended 30 September 2022 31 December
30 September USD m 2022
2023 USD m
USD m
Profit/(loss) after tax attributable to owners 13.8 6.5 (2.1)
Operating profit 29.8 35.1 33.6
Depreciation of property, plant and equipment 2.3 2.1 3.0
Amortisation and impairment of intangible assets 28.1 21.1 36.4
Non-core operating expenses 5.0 6.0 8.2
Foreign exchange loss/(gain) 0.1 (6.1) (0.9)
Share-based payment expenses 3.5 3.8 5.7
Adjusted EBITDA 68.8 62.0 86.0
Depreciation (2.3) (2.1) (3.0)
Net finance costs (excluding deferred consideration amounts, foreign exchange (11.8) (9.5) (13.1)
loss on borrowings and write off of arrangement fees on borrowing - note 7)
Taxation (7.2) (14.5) (16.9)
Adjusted earnings 47.5 35.9 53.0
Weighted average number of shares:
Basic 270,543,200 262,399,797 265,623,278
Effect of dilutive potential ordinary shares 1,600,095 7,708,732 2,584,385
Diluted average number of shares 272,143,295 270,108,529 268,207,663
Earnings per share:
Basic (cents) 5.10 2.48 (0.78)
Diluted (cents) 5.07 2.41 (0.78)
Adjusted earnings - Basic (cents) 17.56 13.68 20.01
Adjusted earnings - Diluted (cents) 17.45 13.29 19.81
Basic and diluted earnings per share of 5.10 and 5.07 cents (2022: 2.48 and
2.41 cents) have been impacted by depreciation, amortisation, impairment,
non-core operating expenses, foreign exchange gains and losses and share-based
payment expenses.
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
8. Financial instruments
The Team Internet Group is exposed to market risk, credit risk and liquidity
risk arising from financial instruments. The Group's overall financial risk
management policy focusses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group's financial
performance. The Group does not trade in financial instruments.
Cash conversion for the nine-month periods ended 30 September 2023, 30
September 2022 and for the year ended 31 December 2022 was as follows:
Unaudited Unaudited
Nine months Nine months ended Audited
ended 30 September 2022 Year ended
30 September 2023 USD m 31 December
USD m 2022
USD m
Cash conversion
Cash flow from operations 54.5 58.4 86.0
Exceptional costs incurred and paid during the year 5.1 5.4 7.8
Settlement of one-off working capital items from the prior year 6.0 1.2 1.2
Adjusted cash flow from operations 65.6 65.0 95.0
Adjusted EBITDA 68.8 62.0 86.0
Conversion % 95% 105% 110%
Net debt as at 30 September 2023 and 31 December 2022 is shown in the table
below.
Financial
Bank debt Cash instruments Net debt
USD m USD m USD m USD m
At 31 December 2022 (151.2) 94.8 (0.2) (56.6)
Drawdown (15.0) 15.0 - -
Capital repayments 0.2 (0.2) - -
Prepaid finance costs 0.2 (0.2) - -
Amortisation of prepaid finance costs (1.0) - - (1.0)
Mark-to-market revaluation - - 1.6 1.6
Other cash movements - (25.6) - (25.6)
Foreign exchange differences - (0.1) - (0.1)
At 30 September 2023 (166.8) 83.7 1.4 (81.7)
Financial instruments included in net debt represent the mark-to-market valuation of interest rate swaps, which fix the variable interest component of USD 75.0m of the bank debt.
8. Business combinations
Acquisition of Adrenalads LLC
On 31 August 2023, Team Internet acquired Adrenalads LLC, a Los Angeles based
online marketing company that has a rich history of collaboration with
Zeropark. Consideration included initial consideration USD 2.1m and deferred
consideration of USD 0.2m payable in February 2025. The acquisition will be
immediately earnings accretive. The acquisition aims to seamlessly integrate
Adrenalads into the Zeropark ecosystem. This move is anticipated to strengthen
Zeropark's ties with ecommerce stakeholders, improve efficiency of internal
media-buying processes, open new supply channels for Zeropark and establish a
presence in strategic Pacific time zone.
In FY2022, Adrenalads generated unaudited revenue of USD 2.7m, unaudited Net
revenue/gross profit of USD 1.1m and unaudited EBITDA of USD 0.7m.
The purchase price allocation exercise for the acquisition of Adrenalads has
not yet been completed as at the date of signing this report, and it is
therefore not possible to provide further details of the fair value estimates
of the assets and liabilities at the acquisition date.
Deferred consideration payments
During the nine month period ended 30 September 2023 the following deferred
consideration payments were made:
· Deferred contingent consideration payments for the acquisition of
VGL Publishing AG was settled in cash for EUR 13.7 (USD 14.9m), which includes
EUR 12.4m (USD 13.6m) in respect of performance in 2022
· The first deferred contingent consideration payment for the
acquisition of M.A Aporia was cash settled for USD 2.3m in two instalments USD
0.8m paid on 13 July 2023 and USD 1.5m paid on 24 August 2023
· On 27 July 2023, the final deferred contingent consideration
payment for the acquisition of InterNexum GmbH was settled in cash for EUR
0.6m (USD 0.6m)
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
9. Share buyback programme and Employee Benefit Trust
During the period the Company repurchased 15,878,125 shares under its share
buyback programme at an average share price of £1.28 (FY2022: 220,000 shares
at a share price of £1.54). These shares are held in treasury by the Company.
During the period the Group's Employee Benefit Trust purchased 3,648,587
shares at an average share price of £1.16. At 30 September 2023 the Employee
Benefit Trust held 9,199,521 shares (31 December 2022: 11,232,599 shares, 30
September 2022: 16,519,280 shares).
The total share repurchase in the period is USD 30.9m of which USD 30.2m was
settled in cash in the period, with USD 0.7m settled in cash after the period
end.
The number of shares held and outstanding share options is as follows:
Unaudited Unaudited Audited
30 September 2023 30 September 2022 31 December
Number Number 2022
Number
Issued share capital 288,660,084 288,660,084 288,660,084
Shares held by the Employee Benefit Trust (9,199,521) (16,519,280) (11,232,599)
Shares held in Treasury (16,098,125) - (220,000)
Share capital 263,362,438 272,140,804 277,207,485
Outstanding share options 11,525,831 18,372,001 12,985,926
Share capital plus outstanding share options 274,888,269 290,512,805 290,193,411
10. Events occurring after the period end
The following significant event occurred after the Group's period end date of
30 September 2023 and before the signing of these Unaudited Financial Results
on 13 November 2023:
· On 19 October 2023, a deferred consideration payment in relation
to the acquisition of M.A Aporia was made for USD 2.8m
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