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.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.