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New gTLDs steal $5 million from Web.com’s top line

Kevin Murphy, November 6, 2014, 14:46:31 (UTC), Domain Registrars

Top registrar Web.com is seeing disappointing revenue from its domain business due to new gTLDs.

The “increased availability” of names has taken a chunk out of the company’s premium domain sales, CEO David Brown told analysts on the company’s third-quarter earnings call yesterday.

While we continue to expect the recently expanded top-level domain environment to increase our ability to sell domains over the medium to long term, the increased availability of names has had a near-term negative impact on domain-related revenue. This is primarily associated with non-core domain-related revenue such as sales of premium domain names and bulk domain sales.

As a result, the company has reduced its full-year 2014 revenue guidance from between $576 million and $579 million to between $566.7 million and $568.7 million

The company blamed about half of the reduction — about $5 million — on softness in its domain name business.

Brown explained that the new gTLD environment has seen domain investors exercise much more caution when it comes to buying premium names and buying names in bulk:

We’ve seen that market get soft…. The reason the softness is occurring is that this marketplace is looking at all of these new gTLDs coming into place, there are more options available for people and they’re kind of stepping back away, at least temporarily, to see how things settle out.

He said the company expects the market to come back after the uncertainty has passed.

Web.com yesterday reported third-quarter net income of $33.9 million, up from $29.3 million a year ago, on revenue that was up to $137.4 million from $125.2 million in 2013.

The company, which owns brands including Register.com and Network Solutions, announced a $100 million share repurchase at the same time, to prop up the inevitable hit its stock was to take.

Its shares are trading down 25% at time of publication.

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