R22 Grows Dynamically and Achieves Record Results

R22 delivered record results, with revenue and profit growing strongly. In 2018/2019, the Group posted PLN 145.6 million in revenue and significantly improved its profitability. Adjusted EBITDA reached PLN 37.9 million, up 39%, while net profit grew 59% to PLN 16.7 million. Growth was even faster in Q4 alone, where EBITDA growth exceeded 50% and net profit growth exceeded 70%. The Group is continuing its international expansion and developing its portfolio of business process automation services and tools.

The 2018/2019 year was a period of very dynamic growth for R22 both operationally and financially. The Group achieved its first successes in building a regional leader in Central and Eastern Europe. Through a series of acquisitions, R22 established and consolidated a leadership position in the Romanian hosting and domain market and acquired the runner-up in the Croatian market. R22 also invested in high-potential technology companies with proprietary solutions offering global commercial potential – User.com and Blugento. Alongside the growth in scale and crossing the 250,000-customer milestone, the Group worked on offer optimisation and synergy creation, resulting in ARPU growth and a significant improvement in profitability.

– We are proud of the results achieved in Q4 and across the full year. We delivered record figures, which are the result of intensive work on revenue growth and offer optimisation, as well as our international expansion. The growth in not only revenue but also profitability – and hence the dynamic growth in Group earnings – confirms the soundness and effectiveness of our strategy. This is visible in both hosting and omnichannel communication, where EBITDA almost doubled in Q4 alone. – says Jakub Dwernicki, CEO of R22.

In Q4, the R22 Group achieved PLN 40.1 million in revenue, representing a 31% year-on-year increase. EBITDA amounted to PLN 10.8 million, up 51% year-on-year, while net profit was PLN 4.9 million, a 74% increase. Q4 results do not include all Romanian companies or the Croatian Avalon, whose consolidation commenced in July. In Q4, EBITDA in the omnichannel communication segment grew by over 75% year-on-year to PLN 4.5 million, with revenue rising 29% year-on-year to PLN 19.2 million; in the hosting segment, EBITDA rose 64% to PLN 5.6 million on a 55% increase in revenue. At the same time, despite capex associated with acquisitions, the Group reduced its net debt-to-EBITDA ratio to 1.5x (1.3x excluding the subordinated loan from the Foreign Expansion Fund FIZAN). Over the full year, R22 generated a PLN 10.3 million cash surplus.

– Our objective is to maintain growth momentum and expand into further markets while simultaneously developing our product offering and providing comprehensive tools for the digitalisation and automation of business processes. Over the next two years, we aim to double the size of the business through organic growth and acquisitions in additional Central and Eastern European markets. – adds Jakub Dwernicki.

In Q4 2018/2019, the Group signed agreements to acquire three Romanian companies, further strengthening its leadership position with nearly 25% of the hosting and domain market, as well as completing the acquisition of the runner-up in the Croatian market with nearly a 17% share. R22 is currently in discussions regarding acquisitions in additional markets, while not excluding the possibility of entering selected markets through organic growth.

– The most strategically significant transaction in the hosting space, however, was the buyout of the minority stake in H88 – a key step from both a corporate and an investment perspective. At an attractive valuation, we are acquiring a stake in the most dynamically growing entity in the Polish hosting and domain market, with growing international exposure. – comments Jakub Dwernicki.

In March 2019, R22 signed an agreement to acquire the minority stake in the hosting segment. The total transaction value of EUR 13.6 million was structured in two tranches – the first was completed on 1 July 2019, and the second is to be completed by 11 February 2020.