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CentralNic more than doubles revenue as parking business thrives

Kevin Murphy, November 30, 2020, Domain Registrars

CentralNic today reported revenue growth of 118% for the nine months to September 30, largely on the back of its recently acquired domain monetization business.

The company said it made a net loss after tax of $6.2 million, compared to $6 million, on revenue of $168.5 million.

Still casting itself as the domain industry’s consolidator, most of the growth came due to acquisitions made over the last couple of years, so CentralNic has also published pro forma results to give a better sense of organic growth.

On that basis, revenue was up a still-decent 17%.

The acquisition of Team Internet, which offers the ParkingCrew and Tonic monetization services, for $48 million just over a year ago was the biggest booster of growth.

Pro forma, CentralNic’s monetization segment was up 39% to $72.9 million in revenue, mostly due to a whopping 36% increase in RPMs.

Ninety-two percent of its monetization revenue comes from a single customer.

CentralNic’s indirect segment, which unhelpfully bundles together its registrar reseller channel with its registry service provider operation and .sk registry operator business, was up 51% to $63.5 million and up 8% to $65.2 million pro forma.

The company said the growth was mostly due to the acquisitions of TPP Wholesale and Hexonet Group last year.

The direct segment, which comprises its retail registrars as well as software and consultancy, dipped by 9% to $32.1 million, or 2% to $31.8 million pro forma.

GoDaddy sees 12% growth in domains revenue

Kevin Murphy, November 5, 2020, Domain Registrars

GoDaddy delivered another quarter of impressive growth in the third quarter, showing again the resilience of the domain name market to the coronavirus pandemic.

The company reported total revenue up 11% on the same period last year at $844.4 million, with net income sliding from $76.8 million to $65.1 million.

GoDaddy spent more on marketing during the quarter, saying that as demand for its services increases it needs to make sure it captures as many customers as possible.

Revenue from domains slightly outperformed overall growth, coming in at $387.4 million, up 12.2% year over year.

The domains segment was also a bit more profitable because GoDaddy no longer has to pay Neustar for domains in TLDs managed by what is now GoDaddy Registry.

The business applications segment, which includes email and third-party apps such as shopping carts, was the standout growth segment, coming in at $154.6 million, up 18.7%.

GoDaddy expects to see a similar pattern in Q4, with domains growth coming in at low double figures and business apps growth coming in at high double figures.

Both Q3 growth and Q4 outlook were better than analysts expected, and GoDaddy stock was rewarded accordingly.

The company also announced the departure of COO Andrew Low Ah Kee after 10 years with the company. His position will not be immediately refilled, and he is said to be taking a presidential role at a company outside of the domain industry.

Another domain firm going private as Endurance announces $3 billion deal

Kevin Murphy, November 3, 2020, Domain Registrars

Endurance International, owner of registrar brands including Domain.com, BigRock and BuyDomains, plans to go private in a $3 billion private equity deal.

The buyer is Clearlake Capital group, in what appears to be its first foray into the domain name market.

It has offered to pay $9.50 for each Endurance share, saying it’s a 79% premium on the closing price the day before the media first got a whiff of a deal being in the works back in September and a 64% premium on Friday’s close.

The deal is still subject to shareholder approval, but Endurance says institutional investors accounting for 36% of its shares have already promised to vote in favor.

Endurance yesterday also announced its third-quarter financial results. It reported net income down from $7.8 million to $6.7 million, on revenue that was up 3% at $278.4 million.

The company does not break out what portion of its revenue or profit comes from domains. Hosting and web marketing services are also a big part of its business.

Blood on the boardroom floor after MMX admits revenue screwup

Kevin Murphy, October 30, 2020, Domain Registries

MMX’s top two execs are out, after the new gTLD registry admitted that the company misstated its revenue in 2019 and the first half of 2020.

CEO Toby Hall and CFO Michael Salazar both quit from the board and their executive roles with immediate effect, after a board probe concluded that its 2019 revenue was overstated to the tune of $1.7 million. Its 2019 net income was also overstated by $1.9 million.

In the first half of 2020, it understated revenue by about $80,000 and net income by about $200,000.

The screwups relate to not only the mystery $1.1 million contract MMX warned about earlier this month, but also two more contracts last year worth a total of $790,000.

The company received the cash from these unnamed partners and reported it as revenue immediately, when it should have recognized it only when the partners made sales to end users, MMX said.

Its revenue for 2019 should have been correctly reported as $17.2 million, and its net income should have been $2.8 million.

For the first half of 2020, revenue should have been $8.4 million and net income should have been $1.4 million.

The company said that Tony Farrow, an ICM Registry import who until recently worked as MMX’s COO, will return to the company as interim CEO.

Bryan Disher, an independent MMX director, will be interim CFO. Guy Elliott, currently non-executive chair, will become executive chair.

Lockdown bump was worth $600,000 to ICANN, but end of Club Med saves 10x as much

Kevin Murphy, October 19, 2020, Domain Policy

The coronavirus pandemic lockdowns and the resulting bump in domain name sales caused ICANN’s revenue to come out $600,000 ahead of expectations, up 4%, the org disclosed last week.

But ICANN saved almost 10 times as much by shifting two of its fiscal year 2020 public meetings to an online-only format, due to travel and gathering restrictions.

The organization’s FY20 revenue was $141 million, up by $5 million on FY19, against a rounded projection of $140 million. ICANN’s financial years end June 30.

ICANN said it is “uncertain if these market trends will continue”.

Back in April, the organization lowered its revenue forecast for FY21 by 8%, or $11 million.

Expenses were down $11.1 million at $126 million, 8% lower that expectations and $4 million lower than the 2019 number.

That was mostly due to a $6.2 million saving from having two public meetings online-only.

ICANN typically spends $2 million per meeting funding over 500 travelers, both ICANN staff and community members, but that was down to almost nothing for the first two meetings of this year.

Pre-pandemic, ICANN expected these meetings, slated for Cancun and Kuala Lumpur, to cost $4.2 million and $3.4 million respectively, but the switch to Zoom brought them in at $1.4 million and $0.4 million.

ICANN would have occurred some pre-meeting travel expenses for the Cancun gathering, which was cancelled at the last minute, as well as cancellation fees on flights and hotels.

The org has previously stated that the switch away from face-to-face meetings could save as much as $8 million this calendar year.

The rest of the savings ICANN chalked down to lower-than-expected personnel costs, with hiring slowing during the pandemic.

Incidentally, if you’re wondering about the headline above, it’s a reference to a notorious 2009 WSJ article, and outrage about ICANN’s then $12 million travel budget.

Eleven years later, the FY20 travel budget was $15.7 million.

CentralNic parking boosts revenue even as its registrars suffer

Kevin Murphy, September 2, 2020, Domain Registrars

CentralNic reported what it called “outstanding” first-half financial results yesterday, with growth from its new parking business more than offsetting a decline in its registrar business.

The company reported H1 revenue of $111.1 million, up 124% year over year. Adjusted EBITDA was up 64% to $15.1 million.

But these remarkable numbers were driven primarily by acquisitions — CentralNic made four in the second half of last year. Its estimated organic growth was more modest.

On an apples-to-apples basis, revenue was up 18% and adjusted EBITDA was up 16%.

The company has reorganized how it reports its various segments into “direct”, “indirect” and “monetization”. Two of those segments grew while one shrank.

The direct segment, which basically means CentralNic’s collection of retail registrars, saw revenue down 11% at $21.6 million, but a lot of that was due to rejiggering the reporting segments. Apples-to-apples, revenue was down 1% at $20.9 million.

Indirect, which bundles together its wholesale registrars, registry and registry back-end services, saw revenue up 62% at $41.2 million. Apples-to-apples, the growth was 9%.

But the standout performer was the new monetization segment — domain parking, which became a big deal after CentralNic acquired German outfit Team Internet last year — which saw revenue up 38% at $48.5 million.

The one worryingly dark spot in this segment is the fact that one customer is responsible for over 92% of revenue.

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.