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GoDaddy counts cost of losing .co deal
GoDaddy has revealed how hard losing its .co registry back-end deal will hit revenue, but insisted that it has no plans to exit the registry business.
The company said in its second-quarter earning release that it anticipates “an approximate 50 basis point headwind to bookings and revenue” when the deal expires in the fourth quarter.
So that’s 0.5%, or about $6 million given GoDaddy’s quarterly revenue came in at $1.2 billion in the second quarter. CFO Mark McCaffrey said the loss will be “immaterial in and of itself” and will not prevent the company hitting its financial targets.
The loss of the .co deal (possibly coupled with the separate recent loss of the .in deal) inspired one analyst to ask executives whether the company has plans to exit the registry business, but McCaffrey said there was “no change in our philosophy”:
This was a one-off situation where we went out to rebid and the profitability metrics that were needed to continue in this relationship just weren’t there for us. So I would say it’s more on the strategy of our profitable growth and making sure we stay disciplined to our framework versus a change in philosophy
Dejargonizing this, it appears GoDaddy is saying “the other guys could do it cheaper”. In the case of .co, the other guys were Team Internet, which will receive 8% of .co’s gross revenue, versus the 19% GoDaddy was getting. (Update: Team Internet says in the comments that GoDaddy bid this time at 9%.)
For the second quarter, GoDaddy reported overall revenue up 8% at $1.2 billion and net income of $199.9 million, up 37% compared to the same quarter last year.
The “Core Platform” reporting segment, which includes domain name sales, saw revenue up 5% year over year to $753.7 million. Vanilla domain sales and aftermarket sales were both up 7%.
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8% of revenue??? who gets the other 92% and how the holy is TeamInternet going to make any money on 8% of revenue. Looks like GoDaddy had the smarts here.
The Colombian government gets the rest.
8% of a standard-priced TLD would be low indeed, but .co is priced higher making 8% bearable.
Actually, Team Internet won with 8%, but GoDaddy bid at 9%. So the difference between the two was of 1% and not of 10% and is suggested in this post.
> eam Internet won with 8%, but GoDaddy bid at 9%. So the difference between the two was of 1% and not of 10%
The difference between 8% and 9% is either 11.76% or 12.5% :p