2.8 Response, Search Market Update, Results Notice

Notice of results

The Board (the "Board") of Team Internet Group plc (AIM: TIG, OTCQX: TIGXF) notes the announcement from Verdane Fund Manager AB ("Verdane") confirming that it does not intend to make a firm offer for Team Internet. As a result, Verdane is bound by the restrictions set out in Rule 2.8 of the City Code on Takeovers and Mergers (the "Takeover Code").

The Board remains confident in Team Internet's fundamental prospects and business. Team Internet is a highly profitable and cash-generative business and, as announced on 11 November 2024, continues to explore options to increase shareholder value including optimising its capital allocation strategy, as well as a comprehensive review of its asset ownership. The interaction of the Board with the two recent inbound approaches (as noted in the announcement on 7 January 2025) was consistent with the Board's efforts to maximise shareholder value. We have also received repeated approaches for our Domains, Identity & Software ("DIS") segment, which continues to trade strongly.

Search market development

Google recently announced that from 19 March 2025, it will begin the process of opting all Google Ads accounts out of AdSense for Domains ("AFD"), while allowing advertisers to opt back in. The timeline for completing this process, the rate of advertisers opting back in, and the potential impact on average click prices-and consequently, our Revenue Per Thousand impressions ("RPM") KPI-cannot be accurately estimated at this time. This is expected to lead to an accelerated move from AFD to Google's latest monetisation product, Related Search On Content ("RSOC").

The Board believes that Team Internet is well-positioned to navigate this transition and that this will be a positive development in due course, producing a much more sustainable market and create a more valuable business.

Strategic response

As a leading provider of domain monetisation and digital advertising solutions, Team Internet has been preparing for the arrival of Google's latest monetisation product, RSOC and Team Internet's transition to RSOC. RSOC is core to the transformation of our Search segment into a content and video publishing powerhouse and offers an enhanced user and advertiser experience, as indicated in our November 2024 investor presentation[1]. The market development has been long-anticipated, though the announced acceleration is a challenge. It is anticipated that, during this transition period, contributions from AFD will decline faster than contributions from RSOC appreciate, meaning that the financial performance of Team Internet's Search segment will see a trough in 2025 before it recovers from 2026 onwards and returns to the long-term pattern.

In addition, we are a market leader in zero-click solutions via our Zeropark platform, which offers an alternative to AFD. We continue to work closely with our partners to navigate this transition effectively. We are seeing unprecedented demand for our solutions and are strategically prioritising new customer onboarding to ensure service quality and performance[2].

Balanced earnings composition

Even following the challenges associated with the Search division transition, we have a business which is highly profitable and cash generative. This means we are well placed to continue our review of asset ownership, use our cashflows to reduce debt, continue to return cash to shareholders via a mix of dividends and buybacks, or a blend of some or all of these actions.

In 2024, our Search segment generated $91 million in net revenue, of which approximately $72 million was derived from our Google AFD relationship, the remainder being generated by RSOC, zero-click, display and video advertising.

Our DIS segment, which operates on a subscription-based model, provides a stable and resilient revenue stream, serving as a strong foundation for long-term profitability.

Additionally, our Comparison segment continues to experience strong organic growth with significant operating leverage, providing significant runway for future profit growth.

The DIS and Comparison segments together contributed 52% of the Group's net revenue in 2024, up from 44% in 2023, and are expected to grow further in 2025 and beyond.

Outlook

At this stage our best estimate of 2025 Search segment Adjusted EBITDA is between $20 million and $25 million (2024: $57 million). We expect 2025 Adjusted EBITDA of between $40 million and $43 million (2024: $36 million) from our DIS and Comparison segments, which is consistent with our previous estimates. That adds up to a range of between $60 million and $68 million for Group Adjusted EBITDA in 2025 before a return to double-digit earnings growth from 2026 onwards.

[1] https://teaminternet.com/wp-content/uploads/2024/11/11th-Nov-2024-Interim-Results-September-2024.pdf#page=5

[2] https://www.linkedin.com/feed/update/urn:li:activity:7300435501197492224/

Notice of results

The Group will provide a further update when it publishes its audited Annual report for the financial year ended 31 December 2024 on Monday, 24 March 2025.

On the day of results there will be a webinar for equity analysts at 10:00, UK time. The presentation will be hosted by CEO Michael Riedl and CFO Billy Green. To register please contact SEC Newgate at teaminternet@secnewgate.co.uk where further details will be provided.

Furthermore, Team Internet will hold an Investor Meet Company session at 12:00, UK time, on 24 March 2025. Investors can sign up to Investor Meet Company for free to meet Team Internet Group Plc via: https://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 09:00 the day before the meeting or at any time during the live presentation.

CEO Comment

Michael Riedl, CEO of Team Internet, commented:

"Changes in the digital advertising landscape are inevitable and Team Internet has a proven track record of adapting to industry shifts and emerging stronger. The early reception of our RSOC solution has been extremely positive, and we remain confident that our diversified model, financial strength, and proactive strategy will continue to deliver long-term shareholder value."