11 November 2024

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("UK MAR"). Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

TEAM INTERNET GROUP PLC

("Team Internet" or the "Company" or the "Group")

UNAUDITED FINANCIAL RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2024

Increasing gross margins and cost control provide the basis for sustaining bottom-line profitability and increased adjusted EPS

Team Internet Group Plc (AIM: TIG, OTCQX: TIGXF), the global internet company that generates recurring revenue from creating meaningful and successful connections: businesses to domains, brands to consumers, publishers to advertisers, announces its unaudited financial results for the nine months ended 30 September 2024 ("September 2024 YTD").

Financial summary:

●       Gross revenue increased by 1% to USD 615.1m (versus nine months ended 30 September 2023 ("September 2023 YTD"): USD 611.7m)

●       Net revenue (gross profit) increased by 4% to USD 143.6m (September 2023 YTD: USD 138.5m), with gross margin increasing from 22.6% to 23.3%

●       Adjusted EBITDA⁽ⁱ⁾ increased by 2% to USD 70.1m (September 2023 YTD: USD 68.8m), with adjusted EBITDA as a percentage of net revenue stable at approximately 49%

●       Operating profit decreased by less than 1% to USD 31.2m (September 2023 YTD restated⁽ⁱⁱ⁾: USD 31.4m), following a USD 2.7m higher amortisation charge, combined with a similar reduction in share-based payment expenses year-on-year

●       Profit before tax decreased by 9% to USD 18.3m (September 2023 YTD: USD 20.0m)

●       Profit after tax decreased by 7% to USD 11.9m (September 2023 YTD: USD 12.8m)

●       Adjusted EPS (diluted) increased by 7% to USD 16.83 cents (September 2023 YTD restated⁽ⁱⁱ⁾: USD 15.68 cents)

●       Net debt⁽ⁱⁱⁱ⁾ of USD 99.7m (31 December 2023: USD 74.1m, 30 June 2024: USD 109.9m) and leverage^(iv) of 1.20x. The Group has continued to be cash generative during Q3 2024, reducing net debt by USD 10.2m. As of September 2024 YTD, the Group has incurred non-operating cash outflows, including a cash outflow (net of acquired cash) of USD 31.8m for the acquisition of Shinez, USD 13.8m for share repurchases, and a USD 6.4m dividend payment

●       Adjusted operating cash conversion of 91% (September 2023 YTD: 95%). We expect cash conversion to continue to normalise nearer to 100% over the remainder of the year

Q3 highlights:        

●      In the Online Marketing segment, for the core products of TONIC and ParkingCrew, the number of visitor sessions increased by 15% to 6.5 billion for TTM 2024 from 5.6 billion for the trailing twelve-month period ended 30 September 2023 ("TTM 2023"). Revenue per thousand sessions ("RPM") decreased by 18% from USD 97 to USD 79

●      The Online Presence segment recorded organic revenue growth of 5% for TTM 2024

●      Adjusted EBITDA as a percentage of net revenue reached 49% for September 2024 YTD, a slight decrease from 50% in September 2023 YTD. However, consistent quarter-on-quarter improvements have been observed throughout the year, supported by improved operating leverage, delivering Q3 2024 adjusted EBITDA of USD 23.5m (Q3 2023: USD 24.2m) with EBITDA conversion of 51% (Q3 2023: 51%)

Post period-end events:

●      On 2 October 2024, a payment of USD 3.0m was made for the acquisition of M.A Aporia, related to contingent consideration tied to the ongoing employment of specific employees. We anticipate that this will be the last material acquisition related contingent payment across the Group

●      Interim dividend of 1.0 pence per ordinary share paid on 4 October 2024

Outlook:

The Directors are pleased to report that Team Internet Group's core businesses remain strong and resilient. While our recent acquisition of Shinez has yet to contribute to EBITDA, we are actively adjusting its operating model and cost base to improve performance. The Group's established operations continue to provide a solid foundation for growth and cash generation. The Group remains on track to produce record profits in 2024 and 2025, albeit at more moderate growth rates than originally anticipated. The Group now expects to deliver approximately USD 97m adjusted EBITDA for 2024.

Looking ahead, the Directors are committed to maximising value across the Group's asset base. We continue to enhance the revenue and profitability of our Online Presence business, which now contributes a substantial share of our overall profitability and operates under a subscription-based revenue model. The Board will continue to assess group structure to maximise Shareholder returns.

Our portfolio comprises a mix of market-leading assets in digital marketing and domain management. While the Group's Online Marketing assets are more transactional and operate in structural growth markets, the Online Presence assets, though lower growth over an economic cycle, offer high predictability and profitability. The Board believes the market does not fully recognise the value of this diverse asset mix and is committed to providing greater information by reporting on the profitability of each of these divisions in the 2024 annual results, as well as separating out our Comparison business, which has grown to the extent that it is expected to qualify as a separate reporting segment. In addition, the Board intends to explore a range of options to increase Shareholder value including balance sheet optimisation through share buybacks and dividends, as well as a comprehensive review of asset ownership. Additionally, the ongoing deployment of AI tools across all business areas presents opportunities for automation and profitability enhancement.

The Group's commitment to operational efficiency, paired with continuous innovation, reinforces our confidence in delivering sustainable Shareholder value and returns.

Michael Riedl, CEO of Team Internet, commented: "Team Internet has delivered a resilient performance in our core businesses within a dynamic market environment and the Group is poised to maintain record levels of profitability. Although our recent acquisition has not yet contributed to EBITDA, I am confident in its strategic value to our long-term objectives. In contrast, our Comparison business, created from the acquisition of VGL Publishing AG, has grown significantly, demonstrating the success of our acquisition strategy. Our focus is now more than ever on realising synergies through strategic integration, enhancing value across the sum of the parts of our established assets and accelerating Shareholder returns. With our ongoing commitment to innovation and operational excellence, we are well-positioned to return to higher growth in profit and cash flow."

Results presentation:

There will be a webinar/conference call for equity analysts at 10am UK time today. This event will be hosted by CEO Michael Riedl and CFO William Green.

Anybody wishing to register should contact teaminternet@secnewgate.co.uk, where further details will be provided.

Further, an Investor Meet Company session will be held at 12pm UK time today: https://www.investormeetcompany.com/team-internet-group-plc/register-investor

Investors who already follow Team Internet Group Plc on the Investor Meet Company platform will automatically be invited. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.

⁽ⁱ⁾Earnings before interest, tax, depreciation, amortisation, impairment, non-core operating expenses, foreign exchange gains and losses, and share-based payment expenses

⁽ⁱⁱ⁾Please see note 12 for further information on prior period restatements, which are of the same nature as reported in the June 2024 unaudited interim financial statements

⁽ⁱⁱⁱ⁾Includes cash (USD 93.3m), bank debt and prepaid finance costs (USD 192.3m) and hedging liabilities (USD 0.7m) as of 30 September 2024 (31 December 2023 cash (USD 92.7m), bank debt and prepaid finance costs (USD 166.6m) and hedging liabilities (USD 0.2m))

^(iv)Includes Net Debt as defined under⁽ⁱⁱⁱ⁾(a) excluding prepaid finance costs, (b) plus guarantee obligations, and (c) 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 expenses capitalised under IFRS 16 and non-core expenses

For further information:

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, OTCQX: TIGXF) 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.

MANAGEMENT COMMENTARY ON PERFORMANCE

Introduction

Team Internet's core businesses continue to be robust and resilient, with the Group's established operations serving as a solid base for future growth and cash generation.

Performance overview

                The Group's key financial metrics are listed below:

^* Certain prior period figures are restated, please refer to note 12 for further information.

Online Marketing segment

Net revenue increased by 1% from USD 94.3m to USD 95.4m. The segment saw 15% growth in the number of consumer journeys, from 5.6 billion for TTM 2023 to 6.5 billion for TTM 2024. Click prices continue to be under pressure on both the demand (revenue) and supply (cost of sales) side, with RPM⁽¹⁾ decreasing by 18% from USD 97 to USD 79. These metrics relate to the TONIC and ParkingCrew platforms and do not cover the Group's product comparison business, VGL, where RPM has increased 19% to USD 246, with visitor sessions 33% higher.

During the period, in line with market best practice, the Group pursued higher traffic quality metrics and less reliance on short-form video. As a result, whilst volume growth remained healthy, it did not fully compensate for lower RPM. A key and significant investment in the last eighteen months is the launch of the search on content business model, and this is expected to assist the Group in improving both metrics over time.  

Our Online Marketing segment aims to become the leading Digital Audience Matching platform. We match audiences and advertisers between platforms that are not innately integrated, such as linking social media users with search ad campaigns on leading search engines, programmatic display, and video ad inventory. We also connect users starting their product search on search engines with leading e-commerce platforms and their marketplace partners. In line with our OM² - omni-media, omni-monetisation - vision, we continually expand our network of digital audiences and demand sources. By harnessing the power of artificial intelligence, we enhance the relevance and value of our first-party data as we expand our international footprint.

The Group aims to leverage the recently acquired Shinez platform to generate revenue from previously unmonetised TONIC and VGL visitor sessions through programmatic display and video advertising on a pay-per-view basis. In return, the behavioural insights gathered from TONIC and VGL will enable Shinez to more effectively connect advertisers with relevant audiences when viewing its content. By doing so, we will drive future profitability through improved targeting, increased RPM, and the accumulation of valuable first-party data. In response to unanticipated changes in Shinez's specific target markets and the resulting underperformance relative to expectations, the Group has swiftly taken corrective actions, including integrating additional advertising inventory, refining revenue optimisation strategies and a more general review of its operating model. Please refer to note 10.a for more information.

Online Presence segment

Net revenue increased by 9% from USD 44.2m to USD 48.2m, with much improved operating margins, continuing the year-on-year growth which the segment demonstrated throughout 2023, 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 decreased by 6% from 14.0m for TTM 2023 to 13.2m for TTM 2024, and the average revenue per domain year increased by 13% from USD 10.8 to USD 12.2⁽²⁾.

The Online Presence segment empowers businesses and individuals worldwide to create, maintain, and protect their digital identities, starting with a domain name. This segment serves its global subscriber base through both direct and indirect channels.

Michael Riedl
Chief Executive Officer

⁽¹⁾ Based on analysis of c.78% of the Online Marketing segment which can be adequately and reliably described by this KPI

⁽²⁾ Based on analysis of c.86% of the Online Presence segment which can be adequately and reliably described by this KPI

The financial statements on pages 1 to 21 were approved by the Board of Directors and authorised for issue on 11 November 2024.

^* Certain prior period figures are restated, please refer to note 12 for further information.

·      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.

·      Share-based payment reserve represents the cumulative value of share-based payments recognised through equity and deferred tax assets arising thereon.

·      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.

·      Retained earnings represents the cumulative value of the profits not distributed to Shareholders but retained to finance the future capital requirements of the Group.