Abby Hardoon, the MD of Daily Internet, the Nottingham based web hosting provider targeting SMEs is making faster progress as he tries to repeat the success in building Host Europe Plc (sold to Pipex in 2004 for over £30m).
AIM-listed Daily Internet generated £0.9m pre-tax losses on £1.6m revenue in the year to March 2013. Pre-tax losses more than doubled at the half-year to September, to £401k on revenue up 5% (to £0.8m).
Since then, however, a lot has happened. In October they bought Netplan, the IaaS provider with revenue of £1m and EBITDA of £425k (for year to September 2013) for an initial consideration of £2.5m plus additional earn-outs. Netplan complements Daily’s web hosting and recently launched dedicated server business, significantly increasing potential revenue per customer. At the same time, the balance sheet was strengthened by a £3m placing and capitalisation of £700k of debt.
Today they announced another acquisition, for £150k, of small UK internet hosting provider NameHog. This brings with it 5,000 SME customers, revenue of £179k and positive EBITDA of £25k. Daily is raising a further £650k through a subscription offering. The top team has been strengthened with the arrival of new non-Exec, Chris Evans, ex-iomart head of UK domain name and web hosting.
Daily Internet is in a Race for Scale. Having broadened its portfolio and with the Netplan purchase, the Group needs to build both customer base and ARPU, to achieve a critical mass and improve returns. NameHog is a small step in the right direction, but Daily Internet will need more and bigger targets for its “Buy and Build” strategy. A higher share price would help fund further steps, but this will depend on how well the company delivers on its recent progress.