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M+M turns profit on the back of gTLD auctions

Kevin Murphy, September 24, 2014, 08:26:43 (UTC), Domain Services

Minds + Machines posted an operating profit of almost £3 million ($4.9 million) for the first half of the year, almost entirely driven by the proceeds of losing new gTLD auctions.
The registry record a profit to June 30 of £2.9 million on revenue of $68,000.
The “profit on gTLD auctions” line item that permitted that seemingly impossible profit number was £7.1 million ($11.6 million), based on M+M losing eight out of 12 private auctions.
The company had £22 million ($36 million) in cash and other current assets on its balance sheet at the end of the period.
None of M+M’s big TLDs had launched in the first half, hence the low revenue. Since the half ended, .london has proven successful and several more new gTLDs wholly or partially owned by M+M have also launched.
In his statement to the market, chair Fred Krueger said:

A key variable in our financial position is the dynamic of private auctions, which we have embraced, and which has worked tremendously to our advantage. We believe that our current still contested strings represent significant assets which we have the potential to monetize either to further our existing new TLDs or to purchase additional new TLDs at auction.

He also reiterated CEO Antony Van Couvering’s call for a new metric to track gTLD registry health that is based on revenue-per-domain rather than simple volumes.
His outlook for new gTLDs was arguably less cautious than his counterpart at CentralNic, which reported its half-year numbers yesterday and talked of demand “falling short of industry expectations”.
Krueger said:

Name registration data available to-date indicates a strong opening for a variety of new products/domains, and also shows that we are still very early in the adoption curve for new TLDs. We expect that the growth of almost all new TLDs will likely follow an “S curve”, as it historically has for newly launched TLDs, rather than a straight line.

He also reconfirmed that M+M plans to aggressively pursue its new integrated registrar business as a means to drive growth in its gTLDs, rather than simply relying on the channel.

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Comments (4)

  1. Jean Guillon says:
    September 24, 2014 at 9:49 am

    We have here an interesting business model to profit from new gTLDs in Round 2.

    Reply
  2. Raj Domains says:
    September 24, 2014 at 11:22 am

    M+M were good at these things…. all this made a lots of profit for them this time.

    Reply
  3. Jothan Frakes says:
    September 24, 2014 at 10:03 pm

    Fred mentions this but I completely agree with Antony about the .COM equivalent years (CEY) or some other methodology to normalize the launches.

    Reply
  4. Jean Guillon says:
    September 25, 2014 at 7:58 am

    Actually, I think it is bright, this cash comes at the right moment to reinvest into communication or other things.
    Regarding Round two, and learning from what the ICANN new gTLD guidebook allowed in Round one, I now see no problem with such business model.
    …a little risky maybe…

    Reply

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