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Windfalls still biggest money-spinner for M+M

Kevin Murphy, February 3, 2016, Domain Registries

Minds + Machines is still pulling in most of its cash from one-time new gTLD auction defeats, according to its latest trading update.

The company yesterday reported billings for 2015 of $7.92 million, up from $5.03 million in 2013.

But the company brought in $9.15 million by pulling out of private new gTLD auctions, where the winning bid is shared among the losers. That’s down from $37.5 million in 2014.

“Billings” is the money make at the point of sale, rather than audited revenue which is recognized over the life of the registration. Revenue numbers will come in April.

For the fourth quarter, sales of both premium and standard-fee names were up.

Premium names were up 215% at $1.52 million, which standard name billings were up 184% at $2.66 million.

The company said its registry business ended the year with 278,523 names under management, a 158% increase on year-ago numbers.

M+M met or beat its “key performance indicator” targets in terms of average revenue per name (both standard and premium) and sales growth.

However, the Chinese market boom caused it to miss its market share KPI.

It blamed missing the low end of its 3% to 5% new gTLD market share target by half a percentage point on the rapid growth of China.

The money being pumped into domain names from China in the second half of last year tends to favor the budget end of the new gTLD market, where names can be picked up for cents, whereas M+M’s TLD mix is skewed a little higher.

M+M said last week that it plans to open an office in China soon.

Endurance splashes out $1.1 billion on Constant Contact

Kevin Murphy, November 2, 2015, Domain Registrars

Endurance International is to acquire email marketing company Constant Contact for $1.1 billion.

The $32-a-share cash offer, a 23% premium on Constant Contact’s Friday closing price, has been approved by both boards.

Endurance counts registrars BigRock, Domain.com and ResellerClub among its portfolio of brands, which also includes hosting companies HostGator and BlueHost.

The company said the deal will push its annual revenue to over $1 billion for the first time.

Endurance has acquired over 40 companies in its history, according to CEO Havi Ravichandran, who described M&A activity as a “core competency”.

The deal, which is subject to regulatory and shareholder approval, will be funded with debt.

The company today reported a third-quarter loss of $15.4 million, about double its year-ago loss, on revenue that was up 18% to $188.5 million.

Credit card hack cost Web.com millions

Kevin Murphy, October 30, 2015, Domain Registrars

Web.com is taking a $1 million per-quarter hit to its revenue as a result of August’s hacking attack.

It also incurred $400,000 in consulting, legal and credit monitoring fees in the third quarter as a result of the breach, CEO David Brown told analysts last night.

Some 93,000 credit card numbers were stolen during the attack, a small portion of its 3.3 million customers.

A number of customers jumped ship as a result of the attack, moving their domains elsewhere, which increased Web.com’s churn rate.

“Due to the subscription nature of our business, in the fourth and subsequent quarters we expect the breach will have about a $1 million negative impact on revenue per quarter due to the shortfall from Q3,” Brown said.

It added 15,000 customers in the quarter, lower than the 21,000 it added in Q2.

Net income for the quarter was $6.1 million, reversing a $3.4 million loss in the year-ago period, on revenue that was basically flat at $136.8 million, compared to $137.4 million a year ago.

In response to an analyst question, Brown also commented on the success, or lack thereof, of the company’s new gTLD business. He said:

That continues to be positive, but we’re not doing back-flips here. It’s not that positive. We think it’s good for the market, good for consumers and businesses to have more choices. But they’re not flying off the table. .com and .net and the original extensions still are the force in the marketplace. But as we see more gTLDs and as the market understands them and see the opportunity, we continue to believe that this will be a positive trend. But at this point, it’s not moving the needle in our business or likely in anyone’s business.

Web.com owns registrars including Network Solutions and Register.com.

M+M lays off dozens in focus on S&M, promises profit next year

Kevin Murphy, September 22, 2015, Domain Registries

Minds + Machines has outlined its plan to refocus its business on sales and marketing, which has already resulted in a couple dozen job losses, as the latest stage of its profit runway.

The new gTLD company also outlined plans to return about half of its cash reserves — mostly obtained by losing new gTLD auctions — to its shareholders.

For the first half of the year, the London-listed company reported an EBITDA loss of $1.2 million, compared to income of $5.7 million a year earlier, on revenue that was up to $3.6 million from $113,000 in the comparable 2014 period.

The company said it is “committed to achieving its stated goal of crossing over into profitability in 2016” and blamed high operating costs for the loss, but said it has been restructuring to help it return to profit.

M+M said its headcount has been reduced from 58 to 44, but that it has added ten jobs in sales and marketing, which seems to indicate at least 24 people recently lost their jobs.

The bottom line was also affected by the fact that most of the company’s cashflow to date has been generated by auction losses, and there were more of those last year than this.

The company hit three of its six “key performance indicator” targets — domains under management market share, premium sales growth and standard sales growth — but fell short of the other three.

Average revenue per name for premiums was $184 versus a $200-$225 target, and average revenue per standard name was down from $28 to $10, largely due to a deep discount promotion for .work domains. Higher prices for soon-to-launch .law could increase the average, M+M said.

The company also announced that it will spent £15 million ($23.1 million) of its cash reserves on a share buyback.

That’s almost half of the $48.3 million is has in the bank. This time last year, M+M’s share price peaked at 12p; it’s currently at 8.55p.

The price saw a spike in May, shortly before then-chairman Fred Krueger was asked to resign by the board. Krueger has since sold off the majority of his substantial shareholding, despite explicitly saying that he would not.

Retail sales see CentralNic over double revenue

Kevin Murphy, September 16, 2015, Domain Registries

CentralNic saw a huge 171% increase in revenue and a tripling of billings in the first half of the year, based on its newly acquired retail business and the sale of premium names.

For the six months to the end of June, the London-based firm saw revenue of £4.4 million ($6.8 million) compared to £1.6 million ($2.5 million) a year earlier.

It moved into profit during the period, netting £287,000 ($442,000) after tax compared to a loss of £599,000 in the 2014 period.

CentralNic broke down its numbers into segments, showing that its new business areas were responsible for most of the growth, while the core registry business was relatively slow.

Registry was up 13% to £1.6 million ($2.5 million).

The new registrar business, which is lead by its $7.5 million Internet.bs acquisition, leaped from £180,000 to £1.8 million (£2.8 million), while its premium name sales business was £1.1 million compared to a negligible £50,000 a year earlier.

The company noted in a statement that Google was the first “megabrand” to use a .xyz domain name and expressed optimism that this may increase awareness of new gTLDs in future.

CentralNic is the second-largest new gTLD back-end, as measured by registration volume, largely due to its .xyz contract.

It also acts as back-end for .online, which left the blocks very quickly earlier this month, racking up over 57,000 names so far.