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Key-Systems buys reseller EDC

Key-Systems has acquired one of its resellers, European Domain Centre.

The acquiring registrar did not disclose the terms of the deal, but said EDC will help boost its own BrandShelter corporate registrar business.

EDC says it has clients including AirBnB, Campari, Lycamobile, iStockPhoto and BusinessWire.

The company was founded in 2003 by Nikolaj Borge and Christopher Hofman Laursen and is based in Copenhagen, Denmark.

Its selling point has been its willingness to offer offer its customers the broadest range of gTLD and ccTLD options.

It’s been a customer of RRPproxy, Key-Systems’ reseller network, since 2008.

As it’s been using the Key-Systems IANA number all this time, it’s not possible to get an accurate figure for its domains under management from ICANN reports.

XYZ acquires .storage, its 10th gTLD

XYZ.com said today that it has acquired the half-launched new gTLD .storage from its original owner.

The terms of the deal were not disclosed, but CEO Daniel Negari said in a blog post that it has been funded using some of the “excess of cash flow” from sales of .xyz domains.

The original .storage registry was Extra Space Storage, which rents out physical storage units in the US.

It started its protracted launch period a little over a year ago but had not planned to go to general availability until July this year.

Having apparently passed through its sunrise period and a special landrush for the storage industry, which ended in January, it has fewer than 800 domains in its zone file.

It looks like XYZ will be essentially relaunching the gTLD from scratch, with a new sunrise period penciled in for November and an early access period and GA slated for December.

Pre-launch pricing is around the $80 mark at the few registrars I checked today, and it looks like that will remain under the new management.

That’s despite XYZ talking today about .storage as a “premium” vertically-focused TLD along the lines of its $3,000 .cars or $750 .theatre.

The company said that it will not hold back reserved names at higher, premium pricing. Even nice-looking domains such as cloud.storage will be available at the base fee, it said.

The new acquisition becomes the 10th that XYZ has a hand in running, if you count the three car-related gTLDs it manages in a joint venture with Uniregistry. The others are .security, .rent, .protection, .theatre, and .college.

Activist investor says eNom was sold too cheap

Kevin Murphy, February 20, 2017, Domain Registries

J Carlo Cannell, the activist investor who has been circling Rightside for the last year or so, was unimpressed with the company’s recent sale of eNom to Tucows.

In a letter published as a Securities and Exchange Commission filing last week, Cannell announced that he has started up a support group for fellow “concerned” investors.

In the distinctly loveless Valentine’s Day missive, Cannell called for Rightside to be acquired, go private or issue a big dividend to investors, and said he intends to campaign to have the board of directors replaced.

On the eNom sale, Cannell wrote that the $76.7 million deal “marks a step in the right direction” for the company, but that he was “not satisfied” with the price or the $4 million legal fees accrued. He wrote:

Conversations with management suggest that the Company took only two months to evaluate and close the transaction. Perhaps if they had been more patient and diligent, shareholders would have enjoyed more than the 0.5x 2016 revenues which they received in this “shotgun sale”.

This price was a fraction of Tucows’ own valuation of 2.6x 2016 estimated revenue. For the two trading sessions following the eNom transaction, NAME traded up 10% while TCX was up 32%, suggesting that investors believe it was a better deal for TCX shareholders than NAME shareholders.

The deal was described at the time by Tucows’ CEO Elliot Noss as an “individual opportunistic transaction”.

Noss later told analysts that the eNom business was floundering, “a flat, potentially even slightly negative-growth business”.

Cannell said last week he has formed Save NAME Group, named after Rightside’s ticker symbol, as a means to exert pressure on the board.

He said it is currently “difficult to justify” the company remaining publicly listed, and that the “sale of the entire company” or a “special and substantial dividend” could help appease shareholders.

He said Rightside agreed last August to let him name a new director, but has dragged its feet approving his suggestion, adding:

SNG intends to become more active and vocal in its efforts to force change at NAME. SNG has compiled a slate of qualified candidates. The names and identity of these candidates shall be disclosed periodically together with other neutral and reliable facts to support the contention of SNG that some or all of the board of NAME needs to be replaced.

Cannell, who owns about 9% of Rightside, first emerged as a critic of the company a year ago.

At that time, he called for the company to ditch its “garbage” new gTLD registries in favor of a focus on its higher-margin eNom business.

He was supported by Uniregistry CEO Frank Schilling, then also a Rightside investor in addition to a competitor.

Tucows says eNom may be shrinking as Melbourne IT drives 2016 growth

Kevin Murphy, February 8, 2017, Domain Registrars

Tucows yesterday reported an 11% increase in revenue for 2016, driven partly by an acquisition, but warned that its more recent acquisition, eNom, may be shrinking.

The company reported revenue for 2016 of $189.8 million, up from $171 million in 2015. Net income was up 41% at $16 million.

For the fourth quarter, revenue was up 9% year-on-year at $48.8 million. Net income was down 9% at $2.8 million.

In a conference call, executives linked some of the growth to the April 2016 acquisition of Melbourne IT’s reseller business, which added 1.6 million domains to Tucows’ DUM.

While Tucows also operates its Ting mobile phone service, the majority of its revenue still comes from domains and related services.

In the fourth quarter, revenue was $30 million for this segment. Of that, $23.1 million came from domains sold via its wholesale network and $3.8 million came from Hover, its retail channel.

CEO Elliot Noss noted that the acquisition of the eNom wholesale registrar business from Rightside last month made Tucows easily the second-largest registrar after GoDaddy, but made eNom sound like a neglected business.

“The eNom business is a flat, potentially even slightly negative-growth business in terms of gross margin dollars,” he told analysts.

eNom’s channel skews more towards European and North American web hosting companies, which are a growth challenge, he said. He added:

We acquired a mature retail business and associated customers which for the past few years has been more about maintaining and servicing eNom’s existing customers as opposed to growth. It has not been actively promoted and as a result has a flat to declining trajectory. It’s something we don’t intend to change in the short-term, but as we look under the hood and get a better sense of the platform as we will with all of the operations, the long-term plan might be different.

The acquisition was “overwhelmingly about generating scale and realizing cost efficiencies”, Noss said.

Tucows paid $83.5 million for eNom, which has about $155 million in annual revenue and is expected to generate about $20 million in EBITDA per year after efficiencies are realized.

Rightside sells eNom to Tucows for $83.5m

Kevin Murphy, January 23, 2017, Domain Registrars

Tucows is to become “the second largest registrar in the world” by acquiring eNom from Rightside, paying $83.5 million.

The deal will give Tucows another 14.5 million domains under management and 28,000 resellers, giving it a total of 29 million DUM and 40,000 resellers.

That DUM number, which appears to include ccTLDs, makes Tucows the undisputed volume leader in the reseller world and the second-largest registrar overall.

GoDaddy, the DUM leader, had about 55 million domains just in gTLDs at the last count.

Tucows CEO Elliot Noss told analysts that the deal, along with the April 2016 acquisition of Melbourne IT’s reseller business, were “individual opportunistic transactions”.

He said that Tucows will take its time integrating the two companies, but expects to realize cost savings (presumably read: job losses as duplicate administrative positions are eliminated) over 24 months.

The reseller APIs will not change, and Tucows will not migrate names over to its own existing ICANN accreditations. This could help with reseller retention.

For Rightside, the company said the spin-off will allow it to focus on vertical integration between its gTLD registry business and its consumer-facing registrar, Name.com.

Rightside had come in for a certain amount of high-profile investor criticism for its dogged focus on new gTLDs at the expense of its eNom and Name.com businesses.

Activist investor J Carlo Cannell, supported by fellow investor and Uniregistry CEO Frank Schilling, a year ago accused Rightside of putting too much emphasis on “garbage” new gTLDs instead of its more profitable registrar businesses.

Since then, Rightside has rebuffed separate offers for some or all of its gTLDs by rivals Donuts and XYZ.com.

Last June, it also announced plans to modernize eNom, which Cannell and others had accused of looking stale compared to its competitors.

NCC sells Open Registry at huge discount

Kevin Murphy, January 6, 2017, Domain Registries

NCC Group has followed through on its promise to divest parts of its domain business, selling the Open Registry collection of companies at a huge discount to the original purchase price.

KeyDrive and a mysterious entity called Terrain.com SA have together acquired the companies for €3.75 million ($3.97 million).

That’s compared to the minimum of £7.9 million ($12 million) NCC originally paid just two years ago.

NCC said in a statement that the sold companies are:

  • Open Registry SA, a registry back-end provider with a handful of new gTLD clients.
  • ClearingHouse for Intellectual Property SA, aka CHIP, which provides software and billing support for the Trademark Clearinghouse.
  • Nexperteam CVBA, a tiny registrar.
  • Sensirius CVBA, the original Open Registry company, a new gTLD consultancy.

Missing from that list is Artemis, the new gTLD registry for .trust, which NCC separately acquired from Deutsche Post for an undisclosed sum in February 2014.

NCC is also keeping hold of its data escrow business, which is widely used by gTLD registries to comply with ICANN rules.

It’s not clear how the sold companies are being divided up between the two buyers.

KeyDrive is the Luxembourg-based holding company for the registrars Key-Systems and Moniker and other domain firms.

Terrain.com appears to belong to EuroDNS chair Xavier Buck, who was chair of Open Registry until NCC bought it, but the domain itself doesn’t seem to resolve right now.

NCC said that €2 million will be paid up front and €1.75 million will be deferred for 18 months.

Neustar agrees to go private in $2.9 billion deal

Kevin Murphy, December 16, 2016, Domain Registries

Struggling infrastructure services firm and domain registry Neustar is set to go private in a $2.9 billion deal.

The company, best known for .biz, .co and .us, has agreed to be bought out by a group led by Golden Gate Capital.

The $33.50-per-share offer, announced on Wednesday and which Neustar’s board has approved, is a 45% premium over the closing price the day before Golden Gate first disclosed it had a stake.

That’s still hell and gone from the roughly $45 the shares were trading for a few years ago, before the company first raised concerns that its lucrative number portability deal with the US government was on the ropes.

Since it became apparent that the numbering contract, which accounts for about half of Neustar’s revenue, was at risk, the company has attempted to focus its efforts on marketing services, security and domains.

That effort included the $87 million acquisition of registry rival Bombora (owner of ARI and AusRegistry) last year.

Earlier this year, the company announced its intention to split into two, basically spinning off all of its businesses not exposed to the US government contract.

It’s not entirely clear whether that plan will be followed through, but Neustar can no doubt be expected to go through some significant restructuring under new ownership. Golden Gate et al are not altruists, after all.

Neustar has 30 days to consider better offers from other white knights, under the terms of the deal.

If ultimately given the final rubber stamp, the deal may still not close until the third quarter of 2017, Neustar said.

Donuts acquires stagnant .irish TLD

Kevin Murphy, December 16, 2016, Domain Registries

Donuts has acquired the new gTLD .irish, which is struggling to gain volume after about 18 months on the market.

The gTLD was applied for and operated by Dot-Irish LLC, a US company founded by Irish and Northern Irish entrepreneurs.

Since going to general availability in June last year, it managed to grow its zone file to a peak of about 2,300 names in the first year.

That’s since dropped off to about 2,000 names.

Even self-consciously Irish registrar Blacknight has only managed to shift fewer than 500 names.

These numbers are disappointing any way you look at them, with the original gTLD application talking about an addressable market of 6 million Irish citizens and 80 million more in the Irish diaspora.

Registrar support does not seem to have been the issue. Registrars with reach, including Tucows, Name.com, Host Europe Group and Go Daddy all sell the names.

Pricing may be a factor. While Blacknight promotes .irish prominently for about $10 a year, elsewhere prices can range from $40 to $50.

The terms of the acquisition, which Donuts said closed last month, have not been disclosed.

Donuts said it will migrate .irish to its own infrastructure March 1, 2017. All policies and protection mechanisms that apply to the rest of the 198-strong Donuts stables will be applied to .irish, the company said.

GoDaddy will pay $1.79 billion for HEG in major Euro expansion

Kevin Murphy, December 7, 2016, Domain Registrars

GoDaddy is to substantially increase the size of its European operation with the $1.79 billion acquisition of Host Europe Group.

The market-leading registrar confirmed yesterday earlier reports that it was on track to buy HEG, which counts several big-name British and German registrars among its brands.

The deal is worth €1.69 billion ($1.79 billion), which breaks down to €605 million to HEG shareholders and €1.08 billion in debt. It’s expected to close in the second quarter next year.

HEG’s domain brands include 123Reg and DomainMonster in the UK and DomainFactory in Germany.

The company says it has 1.7 million customers and manages over seven million domains.

But the acquisition is more concerned with HEG’s higher-margin small business hosting business, where the company has nine data centers in Europe and the US.

GoDaddy said in a press release:

Combining GoDaddy’s global technology platform with HEG’s footprint in Europe will enable the rapid deployment of a broader range of products to customers and allow for better scale of product development and go-to-market investments across both companies.

One part of the HEG business, the $92 million-a-year PlusServer, is likely to be sold off, however.

GoDaddy said that unit “serves larger, more mature companies that require a dedicated field sales force and account management”, which is not GoDaddy’s core strength.

The deal means that GoDaddy will become the owner of the annual NamesCon conference, which HEG picked up in August for an undisclosed amount.

The acquisition is unlikely to have closed before this coming January’s NamesCon, so there’s unlikely to be many obvious changes to the 2017 event.

GoDaddy said the acquisition is being financed by debt.

HEG’s current owner is private equity firm Cinven, which paid $545 million in 2013.

Oracle buys Dyn just weeks after huge attack

Kevin Murphy, November 21, 2016, Domain Services

Oracle has signed a deal to buy DNS services provider Dyn for an undisclosed amount probably in the nine-figure range.

The software giant said it plans to integrate Dyn’s services into its existing cloud computing platform. For the moment, existing Dyn customers are unaffected.

Dyn provides distributed DNS resolution services mainly to the enterprise market, where it has about 3,500 customers.

But it also provides redundant DNS to some TLD registries, notably Uniregistry.

Knowing how ruthlessly opportunistic Oracle can be when it comes to M&A, I have to wonder how much impact the recent denial of service attack against Dyn had on the timing of the deal being signed.

Dyn customers including Twitter and Netflix found themselves inaccessible for millions of North American internet users a couple of weeks ago.

Customers that may have been reconsidering their DNS options following the downtime may feel more reassured now that Dyn is about to become part of a much larger company.

While the acquisition price was not disclosed, it’s certainly going to be in the hundreds of millions.

Just six months ago, Dyn received $50 million in venture capital, following on from a $38 million round in 2012.