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MMX to pay $5.1 million to get out of terrible .london deal

Minds + Machines will pay its partner on .london roughly $5.1 million in order to put the catastrophic deal to bed for good.

That’s a reduction from the $7.9 million liability it had previously estimated.

The company said last week that it will pay an unspecified partner the $5.1 million “as full and final settlement for any further liability or contractual spend” after renegotiating the contract.

In April, MMX said that the deal had cost it $13.7 million since the outset.

While MMX has never publicly fingered the contract in question, which has been a pair of concrete boots for years, its deal with .london’s London & Partners is the only one that fits the bill.

The registry secured L&P, the marketing arm of the London Mayor’s office, as a client during the mayoral reign of Boris Johnson, the man set to be anointed the UK’s next prime minister this week.

It agreed to make millions of dollars in guaranteed payments over the duration of the contract, because it expected to sell a shedload of .london domains.

That never happened. The gTLD peaked at 86,000 names in March 2018 and was down to 54,000 a year later, evidently a fraction of what MMX had planned for.

The renegotiated deal — I believe at least the second time the deal has been amended — is “in principle” for now, with formal approval expected soon.

In its trading statement last week, MMX also said that the first half of the year ended with a 19% increase in regs, ending June at about 1.82 million.

It said it has “stabilised” declining billings in its acquired ICM Registry portfolio of porn-themed TLDs at $2.8 million, and that it has a “clear pathway” to growth from the four zones.

It’s hoping “further new initiatives” — likely a reference to a new trademark-blocking service — will help out in the current half.

MMX also said that it’s spending $1 million of its cash reserves on a stock buyback.

Time for some more ICANN salary porn

Kevin Murphy, June 3, 2019, Domain Policy

ICANN has filed its tax return for its fiscal 2018, so it’s once again that time of the year in which the community gets to salivate over how much its top staffers get paid.

The latest form 990, covering the 12 months to June 30, 2018, shows that the top 21 ICANN employees were compensated to the tune of $10.3 million, an average of $492,718 each.

That’s up about 4% from $9.9 million in the previous year, an average across the top 21 staffers of $474,396 apiece.

These numbers include base salary, bonuses, and benefits such as pension contributions.

Employee compensation overall increased from $60 million to $73.1 million.

The biggest earner was of course CEO Göran Marby, who is now earning more than his immediate predecessor Fadi Chehadé but a bit less than last-but-one boss Rod Beckstrom.

Marby’s total compensation was $936,585, having received a bonus of almost $200,000 during the year. His base salary was $673,133.

The number of staffers receiving six-figure salaries increased from 159 in fiscal 2017 to 183 — about 44% of its estimated end-of-year headcount.

Towards the end of the reported year, as ICANN faced a budget crunch, many members of the ICANN community had called on the organization to rein in its spending on staff.

ICANN says it targets compensation in the 50th to 75th percentile range for the relevant industry.

The top five outside contractors in the year were:

  • Jones Day, ICANN’s go-to law firm. It received $5.4 million, down from $8.7 million in 2017.
  • Zensar Technologies, the IT consultancy that develops and supports ICANN software. It received $3.7 million.
  • IIS, the Swedish ccTLD registry, which does pre-delegation testing for new gTLDs. It received $1.3 million.
  • Iron Mountain, the data escrow provider. It received $1.1 million.
  • Infovity, which provides Oracle software support. It received $1 million.

The return shows that ICANN made a loss of $23.9 million in the year, on revenue that was down from $302.6 million to $136.7 million.

The primary reason for this massive decrease in revenue was the $135 million Verisign paid for the rights to run .web, at an ICANN last-resort auction, in ICANN’s fiscal 2017.

The tax form for 2018 can be found here (pdf) and 2017’s can be found here (pdf).

Revenue dips as Brexit whacks .eu in 2018

Kevin Murphy, April 16, 2019, Domain Registries

.eu saw its registrations sink substantially in 2018, largely due to Brexit, which affected its revenue and profit.

Registry EURid said yesterday that it was managing 3,684,750 .eu domains at the end of the year, down by 130,305 over the year.

It’s .eu’s lowest end-of-year domain count since 2012.

The UK, which voted to leave the EU in 2016 but has yet to follow through, sank from the fourth-largest .eu country to the sixth, now behind less populous countries Poland and Italy.

EURid and the UK government have warned UK-based registrants that they stand to lose their domains after Brexit is actually executed (if it ever is)

As Brits abandoned their .eu names by the tens of thousands, EURid also suspended over 36,000 domains for abuse, which affected its annual total.

The decline hit EURid’s revenue, which was down to €12.7 million, from €13.3 million in 2017. Profit was down from €1.7 million, from €2 million.

The data was published in the registry’s annual report (pdf), published yesterday.

.london disaster leads to mixed 2018 for MMX

New gTLD registry MMX, aka Minds + Machines, suffered a huge net loss in 2018, largely due to its disastrous .london contract, even while its operating fundamentals improved.

For the year, MMX reported a net loss of $12.6 million, compared to a 2017 profits of $3.8 million, on revenue up 5% to $15.1 million.

The loss was almost entirely attributable to charges related to an “onerous contract” with one of its partners.

MMX has never disclosed the identity of this partner, but the only outfit that fits the profile is London & Partners, the agency with which MMX partnered to launch .london several years ago.

The registry, expecting big things from the geo-TLD, promised to pay L&P millions over the term of the contract, which expires in 2021.

But it’s been a bit of a damp squib compared to former management’s expectations, peaking at about 86,000 regs last year and shrinking ever since.

MMX says the estimated gap between the minimum revenue guarantee payable to L&P and the expected revenue is expected to bring in before 2021, is $7.2 million.

It’s recorded this as a charge on its income statement accordingly, along with another $4.2 million impairment charge related to the same contract.

The company recorded a $7.7 million accounting charge related to this contract in 2016, too.

The company says that to date it has lost about $13.7 million on the deal.

These charges, along with a few other smaller one-off expenses, were enough to push the company into the black for 2018.

But other key performance indicators showed more promise, helped along by the acquisition last year of porn-themed registry operator ICM Register, best-known for .xxx.

Notably, renewal revenue almost doubled, up 97% to $9.4 million.

Domains under management was up 37% to 1.81 million.

Operating EBITDA was $3.6 million, up 12.5%.

Looking ahead, MMX said billings for the first quarter are expected to be up 246%, due to the first impact of the ICM acquisition.

It also said it closed $500,000 of sales in .law in China in March. That would work out to over 5,000 domains, based on the retail price of about $100 a year, but those domains have yet to show up in the .law zone file, which only grew by about 200 domains last month.

MMX said it is planning to launch “a high-value defensive registration product” for corporate registrars by the third quarter.

If I had to guess, I’d say that is probably a clone of Donuts’ Domain Protected Marks List service, which offers trademark owners deep discounts when they defensively block strings across the whole Donuts gTLD portfolio.

It’s a model copied by other registries, including recently Uniregistry.

NameSilo nets $1.5 million profit

Kevin Murphy, March 28, 2019, Domain Registrars

Fast-growing registrar NameSilo yesterday reported its financial results for 2018.

The Canadian company reported revenue of CDN 17.2 million ($13.3 million) for the year, up from CDN 10.4 million ($8.1 million) in 2017.

Net income was CDN 1.92 million ($1.48 million), compared to CDN 565,000 ($435,000).

Bookings were CDN 28.78 million ($21.45 million), up from CDN 14.04 million ($10.81 million) in 2017.

These are the results of NameSilo LLC, the operating registrar subsidiary of the listed entity, NameSilo Technologies Corp, which is listed on the Canadian pink sheets. The former reversed into the latter in August.

NameSilo says it has added 850,000 new domains under management since then, and now has about 2.7 million names.

According to the most-recent registry transaction reports, NameSilo was the second-fastest growing gTLD registrar in November and the 16th-largest by DUM. It ranks higher if you group registrar accreditations into families.

Radix sees revenue up 30%

Kevin Murphy, March 12, 2019, Domain Registries

New gTLD registry Radix said today that its revenue increased by 30% in 2018, largely due to an end-of-year boost.

The company, which runs nine gTLDs including .online and .site, said that gross revenue was $16.95 million last year.

It added that net profit was up 45.6%, but the privately held company does not actually disclose the dollar value of its bottom line.

Radix said that the fourth quarter of the year, which presumably saw the benefits of Operation September Thrust, was its strongest quarter.

The company said that 27% of its revenue came from standard-price new registrations and 60% from renewals.

Its premiums brought in $1.9 million, 56% of which were premium renewals.

Endurance domain revenue dips

Kevin Murphy, February 7, 2019, Domain Registrars

Endurance International put in a poor show when it came to domains name sales in 2018.

Revenue and average revenue per registrant were both down in the fourth quarter and full-year results, which were announced this morning.

Endurance’s registrar business includes BigRock, Domain.com, FastDomain, PublicDomainRegistry.com and others.

Combined, those four brands account for almost 10 million gTLD domains under management, but that number has also been heading south recently.

The company said today that its fourth-quarter domain revenue was $31.3 million, down from $33 million a year earlier. It had 666,000 domain subscribers at the end of the quarter, down from 683,000.

Average revenue per subscriber for the quarter was also down, from $16.63 to $15.63.

For the full year, revenue was down from $133.6 million to $129.9 million and average revenue per subscriber was down from $16.98 to $16.05.

The shrinkage is reflected in the latest transaction reports filed with ICANN, too.

In October, the most recently reported month, all four of Endurance’s biggest registrar brands shrunk in terms of DUM.

PDR was the biggest loser — actually topping the list of shrinking registrars — shedding over 76,000 gTLD domains, over 10,000 of which was from net transfers.

CentralNic expects flat profit as revenue almost doubles

Kevin Murphy, February 4, 2019, Domain Registries

London-listed domain firm CentralNic today gave investors a sneak preview of its 2018 financial performance.

The company expects its profits at the adjusted EBITDA level to be up only slightly — from £6.6 million ($8.62 million) to £6.7 million ($8.75) — compared to 2017.

But revenue is expected to soar from £24.3 million ($31.7 million) to £42.5 million ($55.5 million), largely due to the impact of its merger with KeyDrive, which completed in August.

KeyDrive was the holding company for brands including the registrars Key-Systems, Moniker and BrandShelter, and the registry providers OpenRegistry and KSRegistry.

The Luxembourgish firm reversed into AIM-listed CentralNic in a deal, described as “transformative” for CentralNic, valued at up to $55 million.

Most of the company’s revenue now comes from the registrar part of the business, though the registry division is the more profitable.

CentralNic said today that “subscription products” are now roughly 90% of total revenue.

The company expects to save £1 million ($1.3 million) this year by migrating its old registrars over to the KeyDrive platform and migrating its new registries onto the CentralNic platform.

It has also appointed KeyDrive’s former CFO as CentralNic CFO, replacing Don Baladasan. Michael Riedl has also joined the board of directors, while Baladasan remains on the board as group managing director.

Full, audited financial results will be announced in May.

MMX sees better profits than expected

Kevin Murphy, January 29, 2019, Domain Registries

Portfolio registry MMX saw 2018 financial results slightly ahead of expectations, the company told investors yesterday.

It now expects revenue to be over $15.5 million for the year, compared to $14.3 million in 2017. Operating EBITDA, its preferred profitability indicator, will be “marginally ahead of market expectations”.

It expects revenue from renewals — which MMX has been trumpeting as a key indicator of stability — to be $9.4 million, compared to $4.8 million in the prior year.

That’s mainly due to the $3.4 million contribution of recently acquired porn TLD specialist ICM Registry. Without ICM, renewal revenue was still up 20% though.

The company’s exposure to the Chinese market has also been reduced. It now contributes 36% of sales, compared to 50% in 2017.

Volatile one-off premium domain sales are also on the decrease in terms of revenue share — 15% in 2018 compared to 38% in 2017.

Its full audited results will be published later in the quarter.

Dark horse NameSilo doubles size in 2018

Kevin Murphy, January 7, 2019, Domain Registrars

Domain name registrar NameSilo says it managed to double its size in terms of cash bookings and domains under management in 2018.

The Vancouver-based company said that in 2018 it added 1.27 net new domains, an increase of 106%.

Bookings were $20.1 million, up from the $11.1 million it reported in 2017, according to the company.

NameSilo now says it has 2.49 million domains under management.

That would be a whopping 500,000 increase on the end of September, judging by the latest gTLD registry transaction reports.

The registrar is now the 17th-largest gTLD registrar by DUM, bigger than old hands such as Register.com and Name.com.

And yet I think it’s fair to say the company is a bit of a dark horse. It’s certainly managed to stay under my radar until now.

You’d be hard pressed from its web site to figure out who runs the company or where to find them, despite what ICANN registrar contracts require.

But press releases show it went public, kinda, when it backed into Canadian investment vehicle Brisio Innovations Inc last year, in a deal worth $9.5 million.

It’s now listed on the Canadian Securities Exchange, an alternative investment market, with the rather catchy ticker “URL”.

Given the rapid DUM growth, one might suspect an over-reliance on bargain-bucket new gTLDs, but that does not appear to be the case. About three quarters of its names in September were in .com.

The company credits word of mouth for its recent growth successes, and there may be some truth in that.

NameSilo performed well each month last year in terms of net transfers, often in the five-figure range. It ranked fifth in those terms in September across all gTLDs, beating the likes of Google, NameCheap and AliBaba, with almost 15% of its 90,000 net new DUM coming from transfers.

Given the much larger number of attempted adds and grace period deletes NameSilo experiences every month compared to its similarly sized peers, I rather suspect a lot of its new business is coming in via drop-catching.

The company offers customers API-only access to its platform for drop-catching deleting domains, among other purposes.