Team Internet Group — Rebasing for Google Adsense transition

Team Internet Group (AIM: TIG)

Last close As at 05/03/2025

GBP0.54

−45.00 (−45.64%)

Market capitalisation

GBP246m

More on this equity

Research: TMT

Team Internet Group — Rebasing for Google Adsense transition

We are re-initiating forecasts on Team Internet to reflect Verdane’s decision not to make an offer for the business (removing Take Over Panel research restrictions) and the company’s trading update flagging disruption to the Search business as a result of Google opting out Google Ads accounts of Adsense for Domains (AFD). The Domains, Identity and Software (DIS) business continues to perform solidly, while Comparison is generating strong, operationally leveraged growth, which looks well set to continue. Nevertheless, factoring in the disruption and advertising weakness, we have cut EBITDA by 17% and 39% in FY24e and FY25e, respectively, with EPS reduced by 7% and 42%, respectively.

Written by

Dan Ridsdale

Head of Technology

Software and comp services

Trading update/end of offer period

5 March 2025

Price 53.60p
Market cap £133m

£/US$ 1.27

Net cash/(debt) at end-December 2024

£(97.0)m

Shares in issue

248.8m
Free float 100.0%
Code TIG
Primary exchange AIM
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs (49.4) (38.3) (59.1)
52-week high/low 206.0p 76.4p

Business description

Team Internet Group is a global internet company that generates revenue through domain name distribution, online product comparison and AI-driven customer digital marketing solutions. The company’s mission is to ‘create meaningful connections’ by enhancing user experiences and by fostering deeper engagement through innovative technology.

Next events

FY24 results

24 March 2025

Analyst

Dan Ridsdale
+44 (0)20 3077 5700

Team Internet Group is a research client of Edison Investment Research Limited

Note: PBT and diluted EPS are normalised, excluding amortisation of acquired intangibles, share-based payments and exceptional items.

Year end Revenue ($m) EBITDA ($m) PBT ($m) EPS (¢) DPS (¢) P/E (x) Yield (%) EV/EBITDA (x)
12/22 728.2 86.0 64.3 14.70 0.00 4.7 N/A 3.4
12/23 836.9 96.4 77.5 22.48 2.00 3.0 2.9 3.0
12/24e 803.0 92.0 74.0 21.17 2.30 3.2 3.4 3.2
12/25e 739.0 60.3 45.4 13.50 2.50 5.1 3.7 4.9

Google disruption

Management had already flagged in its February trading update that ongoing weakness in online advertising had affected the Search division. This was further compounded by Google’s decision to automatically opt out Google Ads accounts from AFD, to which the Search segment has significant exposure (79% of Search net revenue). The business has been investing into transitioning to Related Search On Content (RSOC), Google’s replacement product, and management believes that ultimately it will benefit from this change. However, Google’s accelerated timescale will disrupt trading in FY25 with a recovery expected to gain traction in FY26.

Comparison and DIS performing well

The DIS business continued its solid growth trajectory in FY24 (revenue +7%, EBITDA +46%), reflecting the gains from the efficiency programme and operational leverage. Further growth is expected in FY25. Comparison delivered very strong, operationally geared growth, with revenues up 43% and EBITDA up 89%, with the company’s AI platform and increased use of paid search to direct potential consumers facilitating rapid international expansion. Recent launches in Italy and Spain, and a relaunch in France, have been successful. Additional country launches are planned for this year, supporting our forecast of further strong growth into FY25.

Discount neglects qualities of DIS and Comparison

The deeply discounted rating of 5.1x FY25e EPS is understandable given the recent Search downgrade cycle. However, in our new FY25 forecasts DIS and Comparison account for c 75% of group EBITDA. DIS is robust and cash generative, and the group has received repeated approaches for this business. Comparison has good prospects to continue its strong, operationally leveraged growth trajectory. We believe the current share price overly discounts the qualities of these businesses. Management remains committed to delivering shareholder value through selling divisions as well as continued share buy backs and dividend payments.

Revised estimates: Search exposure substantially reduced

In line with its goal of providing more transparency on the components of the group, management has introduced more detailed and useful segmental reporting. Comparison is now broken out as a separate division and EBITDA is reported for each division.

We forecast a continuation of robust revenue growth and margins for DIS, while we believe that Comparison is well-placed to continue growing strongly as the business continues its international expansion. The Search forecasts reflect both a significant reduction in revenues and gross margin as the company navigates the switch from AFD to RSOC.

At this stage visibility is still limited. We will introduce forecasts for FY26 following the release of the FY24 results on 24 March.

Estimate revisions

The reduction in our FY24 estimates reflects the ongoing weakness in the advertising market, reported in the February trading update.

The changes to our FY25 estimates reflect the transition of the Search business where the move from AFD to RSOC will lead to a short-term decline in Search profits, though a recovery to previous levels is expected in the medium term.

We have not changed our dividend estimates, and on our current estimates the business has the capacity to return more capital to shareholders through dividends or further share buybacks.

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This report has been commissioned by Team Internet Group and prepared and issued by Edison, in consideration of a fee payable by Team Internet Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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