High-potential SMEs

Egm x-rayed: CiccioGamer89 explodes Idntt revenues (+94%)

The famous creator is the spearhead of the talent agency In-Sane! acquired by the digital content company in 2022

by Valeria Novellini

18 July 2024

Mirko Alessandrini in arte Ciccio Gamer 89, un youtuber romano che ha creato la sua fortuna con i videogiochi. (Cristiano Minichiello / AGF)

6' min read

Key points

Agcom Guidelines
Idntt numbers
Growing by external lines

6' min read

Hamburgers and Easter eggs. What do they have to do with content creation? No, we are not talking about the now much-talked-about Ferragni affair, but rather about Mirko Alessandrini, better known on YouTube as CiccioGamer89, a gamer and content creator who recently launched his own line of hamburgers and Easter eggs, the former of which can only be purchased through delivery platforms and the latter, in a limited edition, on e-commerce sites. CiccioGamer89 is probably the 'spearhead' of the talent agency In-Sane! Srl, acquired by Idntt in 2022 and now a 75% subsidiary. And it is the first example of 'branding', i.e. the transformation of a creator into a brand and of its contents into a product that can be purchased by its community.

The Agcom Guidelines

CiccioGamer89, with more than three million community members, undoubtedly falls within the influencer guidelines launched by Agcom in early 2024, which apply to those who have at least 1 million followers on different platforms, have published at least 24 pieces of content in the year prior to Agcom's survey and have an average engagement rate of 2% in the last six months (the engagement rate, or interaction rate, measures the number of interactions made by an influencer's fanbase in a given period; however, there is currently no single formula for its calculation and each social network uses a different one).

But the legislation is already having an effect, so much so that Agcom has recently initiated six preliminary proceedings against six influencers who are allegedly promoting 'easy and safe' methods of earning money, as well as four moral suasion initiatives aimed at four influencers who allegedly publish photos and videos on Instagram highlighting brands and tourist facilities with which they are believed to have business relations. And all these influencers do not indicate the promotional nature of their communications.

The situation is serious. But as far as CiccioGamer89 and other minor creators of In-Sane! Srl (thus not subject to the Agcom guidelines but nevertheless required to comply with the rules on commercial communications, teleshopping, sponsoring and product placement, which primarily prohibit surreptitious advertising), the 'branding' of products and content is certainly possible if carried out transparently.

Idntt numbers

For Idntt, the integration with In-Sane! Srl resulted ina 94.4% jump in revenue to EUR 19.3 million, but even if the EUR 8.6 million contribution of In-Sane! was separated out, turnover would have risen by EUR 795,000 (+8%). The increase in turnover, however, was not proportionally reflected in the profit margins: ebitda rose by 31% to EUR 3.5 million, ebit by 26.1% to EUR 2.9 million, and net profit by 19.9% to about EUR 1.7 million. In fact, In-Sane! Srl's margins were markedly lower than the rest of the group, even though they improved significantly compared to 2022 (the company's ebitda margin rose from 5.9% to 9.3%, albeit in the presence of decreasing revenues compared to the €9.7m of 2022).

Strong increase in large customers and foreign revenues

However, the acquisition allowed the Idntt group to increase the share of turnover generated by large customers from 60.4% to 82.4% and the share generated in countries other than Italy and Switzerland (the latter being Idntt's registered office) from 22.7% to 52.7%. It is worth mentioning that in 2023, revenues generated by the Public Administration, which had driven the 2022 results, dropped by 29.4% to EUR 2.1 million as a result of delays in the realisation of the projects envisaged by the NRP, which caused part of the revenues to be shifted to 2024 and subsequent years. And since uncertainties about the timing currently remain on many Pnrr projects, Idntt's focus on large companies appears forward-looking.

In June 2024, Idntt signed an agreement to acquire a 10% stake in the creative content factory C41 Srl, whose clients include some of the most important luxury brands (prior to the transaction, the two companies had already created a 'Foresteria' in Milan, furnished with designer furniture and presented as part of the Fuorisalone initiatives).000 and on the occasion of the approval of the 2025 budget, i.e. in 2026, Idntt will be able to exercise a purchase option on a further 41% at a price equal to 5 times the ebitda plus the algebraic balance of the financial position, with a minimum value of 1 million.

Also in June 2024, Idntt then acquired the majority stake in RealLife Television, a content factory that has been active in Italy for 25 years with a clientele of large public and private groups, in which Idntt CEO Christian Traviglia himself had been a partner between 2006 and 2010. Here the disbursement was EUR 2.5 million and there is the possibility of a further earn-out, not exceeding EUR 0.5 million, based on the net financial debt as at 30 June 2024. RealLife in 2023 achieved revenues of EUR 4.5m, an ebitda of EUR 0.6m (ebitda margin of around 14%; higher than that of In-Sane! Srl, but still lower than that of the entire Idntt group in 2023 at 18.2%) and a net profit of EUR 323,000, with a net cash of EUR 309,000 at the end of the year.

At the end of 2023, Idntt had net liquidity of EUR 2.1 million (an increase from EUR 1.9 million at the end of 2022 despite disbursements for acquisitions and buy-backs totalling EUR 544,000 and the payment of a dividend of EUR 111,000). Also for the financial year 2023, the dividend payout amounted to EUR 110,000; adding to this figure the sums related to the acquisitions C41 Srl and RealLife, we arrive at a total of EUR 2.73m (of EUR 3.23m assuming also the maximum value of the RealLife earn-out). As a result, the group should arrive at a very low Debt/Equity ratio (at the end of 2023, equity amounted to just under EUR 6.8 million), even assuming no contribution from operating cash flow or the possible contribution of the third and final exercise period of the 'Idntt 2021 - 2024 warrants' (one share for every three warrants at EUR 2.67 per share; current share prices are slightly higher). However, it should also be mentioned that Idntt is continuing its buy-back activities and currently holds 2.52% of the share capital in its own right.

Growth for external lines

Idntt aims to reach EUR 50 million in revenue within three years and to this end intends to continue to grow by external lines; the possible contribution of the consolidation of C41 Srl from 2026 will be relatively small (in 2023 the company generated EUR 4.4 million in revenue and the ebitda margin is low at 4%).

The goal is achievable in terms of financial sustainability, but Idntt will certainly have to set itself the goal of increasing the profitability of the acquired companies in the first place. For this purpose, the new business unit 'Consumer', which will have the mission to turn some of the most important influencers and creators into brands, will be crucial. The strategy company specialising in the content economy DeRev recently published its new list of influencer fees in Italy, which indicates an average increase of 3.56%, but entirely from influencers and creators with a relatively low following (from a minimum of 10,000 to a maximum of 1 million followers). For 2024, DeRev estimates a total value of influencer marketing in our country of around 375 million (+8% compared to 2023), equal to 5% - 8% of total digital advertising expenditure. And given that Nielsen data as of May 2024 indicated a growth in digital advertising of 3.9%, it seems clear that the weight of influencer marketing is in any case destined to increase, despite the disaffection towards certain well-known personalities. Una Media Hub's estimates even indicate an increase in influencer marketing of 11%.

Idntt, therefore, will be able to leverage both the best-known creators (who will be able to create new brands) and the numerous panel of minor influencers it has and who are less exposed to reputational crises. The acquisition of RealLife Television, on the other hand, strengthens the group's presence in more 'traditional' digital marketing, which is, however, dominated by the large international players, especially with regard to video content.

Idntt currently has a free float of almost 36%, which is high for a company in the Euronext Growth Milan, but 7.53% of this share is held by the institutional investor AcomeA Sgr. The treasury shares in the portfolio may possibly be used for share exchanges during possible acquisitions, but it cannot be ruled out that the company may decide to further open up the capital to institutional investors through accelerated bookbuilding, a path recently followed by several Euronext Growth Milan companies, including Execus, which is also active in the digital marketing and social selling sector, especially through LinkedIn, and which raised around EUR 1.8 million in a transaction of this type.