CentralNic now owns .sk after $30m deal closes

CentralNic has just closed its acquisition of SK-NIC, the ccTLD operator for Slovakia, the company announced today.
The London-based firm announced the deal back in August, when it was to be worth €21.27 million up front, with a deferred performance-related cash payout of €4.85 million cash over three years.
But the deal, originally intended to close in September, was delayed by legal “complexities” and restructured from an asset purchase to a purchase of SK-NIC, including its liabilities, in its entirety.
The purchase price is now €20.27 million in advance, with €5.85 million deferred. That’s still a total of €26.12 million ($30.67 million).
The acquisition is unusual in that it sees a ccTLD transferring to control of a foreign entity, and was opposed by many in the Slovakian internet community.
A petition was organized calling for the transfer of .sk to a new independent body with more community and government oversight.
There had been fears that CentralNic would do to .sk what it has to Laos’ .la — repurpose it to mean something other than “Slovakia” — but CentralNic told DI that it will no do so.
The deal means .sk will move from its outdated old registry infrastructure to CentralNic’s standards-based EPP platform, which should make it easier for registrars to integrate.
It’s also likely to mean it’s going to be much easier for non-Slovaks to be able to register .sk domains.
SK-NIC currently has about 360,000 domains under management.

CentralNic and .CLUB reveal premium sales

CentralNic and .CLUB Domains have both revealed sales of premium domain names over the last several days.
CentralNic said yesterday that it has sold “a number” of premiums for $3.4 million.
The names are believed to be from its own portfolio, rather than registry-reserved names in any of the TLDs it manages. The company did not disclose which names, in which TLDs, it had sold.
The sale smooths out potential lumpiness in CentralNic’s revenue, and the company noted that the sales means that recurring revenue from its registrar and registry business will become an increasing proportion of its revenue as its premium portfolio diminishes.
Last week, .CLUB announced that it sold $380,793 of premium .club domains in the third quarter. That was spread over 452 domains.
The big-ticket domains were porn.club and basketball.club, sold by the registry for $85,000 together.
The Q3 headline number was a sharp decline from the Q2 spike of $2.7 million, which was boosted by auctions in China.
The company published a lot more data on its sales on its blog, here.

CentralNic extends XYZ deal until 2032

CentralNic and XYZ.com have extended their registry services pact for the next fifteen years, according to CentralNic.
Announcing its first-half 2017 financial results today, CentralNic said the back-end contract has been extended until 2032.
It’s an unusually long duration for a registry services contract, which are usually much more likely to run about five years.
It even lasts 10 years beyond the expiration of XYZ.com’s own ICANN contracts (though renewal of these is a near-certainty).
The deal covers all .xyz domains, as well as all of the other TLDs in XYZ.com’s portfolio. That currently includes the likes of .rent, .storage and .college.
CentralNic said it “will receive a fixed fee based on the volume of .xyz registrations and subscriptions managed” under the new deal.
In a statement to the markets, CEO Ben Crawford said the relationship “has been updated to normalise the Company’s revenues and profits going forward.”
I believe the previous contract contained a per-domain component, which exposed CentralNic’s revenue to .xyz’s erratic pricing-influenced growth trajectory.
.xyz’s zone file has shrunk by a whopping four million domains since this time last year, causing it to lose the crown of highest-volume new gTLD, due to it offering free or almost free domains that expired without renewing after a year.
However, CentralNic disclosed that the proportion of its own wholesale transaction volumes that were renewals (rather than adds and transfers, I assume) was 18% in the first half, up from 2% in the same 2016 period.
For the six months ended June 30, the company had overall revenue of £10.6 million ($13.9 million), up 18.5% year over year.
Its net loss after tax was £619,000 ($810,000), down from £1.3 million. At the EBITDA level, profit was £1.4 million ($1.8 million) compared to $900,000 in H1 2016.
While I still stubbornly think of CentralNic as primarily a registry play, in fact the company now gets about three quarters of its revenue today from its retail registrar division, which contributed just shy of £8 million to the total in H1.
Instra, the Australian registrar it acquired at the end of 2015, contributed £5.83 million.
The wholesale division, registry back-end services — contributed £1.82 million to revenue and £450,000 to EBITDA in the half.
That’s despite CentralNic being the back-end for six of the top 20 new gTLDs by volume — .website, .space, .tech, .site, .online, and .xyz
If we tally up the number of domains in only those six TLDs, we get to about 4.2 million, per their zone files.
The company’s third reporting unit, Enterprise, contributed £800,000 ($1 million) in the half, of which £360,000 ($471,000) came from premium domain sales.

CentralNic promises $30 million .sk will only ever mean “Slovakia”

CentralNic has committed that it will not repurpose Slovakian ccTLD .sk to mean anything other than “Slovakia”, following its purchase of SK-NIC this week.
The acquisition of the Bratislava-based registry, which will cost between €21 million and €26 million ($25 million to $31 million) depending on performance, has been controversial in Slovakia, with many leading registrars campaigning against the sale.
One of the charges leveled against CentralNic was that its modus operandi has been to market ccTLDs as if they have other meanings. It markets Laos’ .la as a TLD for Los Angeles, and acts as the back-end for Palau’s .pw, which is marketed as an acronym for “Professional Web”.
“From a technical point of view, it’s definitely a good acquisition. CentralNic has a good system that is stable and working well, but we don’t agree with their sales and marketing policies,” Ondrej Jombik of Slovak registrar Platon told DI today.
Jombik is the person who organized a petition against the sale that attracted almost 10,000 signatures.
“We don’t agree with how they manage national TLD registries,” he said. “What they do in Palau is not acceptable. What they do in Laos is not acceptable. We’re kind of scared what they plan to do with our domain, how they plan to market it.”
But CentralNic CEO Ben Crawford said in an email interview that these concerns are misplaced. He said:

CentralNic has never had plans to repurpose .sk, and CentralNic commits not to market it with any other meaning than as the Slovak country code. Moreover, while some of the ccTLDs we work with welcome the export revenues from repurposing their TLDs, such practices are specifically restricted under recent contractual requirements put in place by the Slovak Government in response to this concern being raised by SK-NIC’s policy committee.

Jombik’s petition, which claimed to be supported by 13 of the top 15 .sk registrars covering 73% of .sk’s 360,000 domains, called for the ccTLD to be handed over to a “new independent non-profit organization” that more fairly represented the Slovak internet community.
But Crawford said that .sk already has strong community representation, which is guaranteed by the registry’s contract with the Slovak government.
“I am honestly unaware of any ccTLD where the Government, the internet community in general and the registrars all have such a defined and important role,” he said, adding:

There will be changes under our management: The Government contract has recently been beefed up placing further stability and disclosure responsibilities on SK-NIC, including escrowing the registry data to the Government cloud, a formalised Service Level Agreement, giving the Government the right to audit SK-NIC’s performance, etc., all of which we will abide by. We have other ideas too on contributing to the Slovak internet, and we are planning to hold discussions with not for profits, industry associations, Universities and other such entities in Slovakia, to seek their guidance on the best ways to do this.

Whether these promises and actions will be enough to assuage critics of the deal, who are also motivated by a sense of national pride and aggrieved that what is arguably a national resource is falling into foreign hands, remains to be seen.
Having a ccTLD manager acquired outright by a foreign entity without a redelegation by ICANN/IANA is an unusual occurrence. Only the $109 million acquisition of .CO Internet by US-based Neustar back in 2014 springs to mind.

CentralNic brings back old CFO

CentralNic has swapped its currently chief financial officer for his immediate predecessor.
Glenn Hayward has left the company after three and a half years “to pursue other opportunities”, the company said in a statement to the markets today.
He has been replaced by Don Baladasan, who was CFO of the company between 2010 and 2014.
During his previous stint in the role, he oversaw CentralNic’s flotation on London’s Alternative Investment Market.

Junk drop cuts .xyz in half, .top claims volume crown

The .xyz gTLD has seen its zone file halve in size, as millions of free and cheap domains were not renewed.
The former volume leader among new gTLDs started this month with a tad over 5.2 million domains in its zone.
But its July 17 zone contained 2.5 million, much less than half as many, DI analysis shows.
The precipitous decline means that Chinese-run gTLD .top, increasingly notorious as a go-to TLD for spammers, is now literally at the top of the league table, when you measure new gTLDs by zone file volume, with 2.6 million names.
The primary reason for .xyz losing so many names is of course the expiration of most of the domains that were sold for just $0.01 — or given away for free — in the first few days of June 2016, and the aggressive promotional pricing on offer for the remainder of that month.
On May 30, 2016, there were just under 2.8 million names in the .xyz zone. By July 1, 2016, that number had topped 6.2 million, an increase of 3.4 million over a single month.
That was .xyz’s peak. The zone has been in gradual decline ever since.
Domains generally take 45 days to drop, so it’s entirely possible XYZ.com will see further losses over the next month or so.
There’s nothing unusual about seeing a so-called “junk drop” a year after a TLD launches or runs a free-domains promotion. It’s been well-understood for over a decade and has been anticipated for .xyz for over a year.
But compounding its problems, the .xyz registry appears to still be banned in China, where a substantial portion of its former customer base is located.
The company disclosed over two months ago that it had a “temporary” problem that had seen its license to sell domains via Chinese registrars suspended.
The ban was related to XYZ falling out with its original “real name verification” provider, ZDNS, which was tasked with verifying the identities of Chinese registrants per local government regulations.
I’ve never been able to confirm with either party the cause of this split, but everyone else involved in the Chinese market I’ve asked has told me it related to a dispute over money.
Regardless, two months later the major Chinese registrars I checked today still appear to not be carrying .xyz names.
XYZ has meanwhile signed up with alternative Chinese RNV provider Tele-info, and just three days ago submitted the necessary paperwork (pdf) with ICANN to have the move approved as a registry service under its contract.
In that request, XYZ said the new RNV service “will allow XYZ to reenter certain domain name markets”, suggesting that it has not yet regained Chinese government approval to operate there.

CentralNic says revenue more than doubled in 2016

CentralNic’s revenue was up 110% in 2016, according to the company.
The registry today released its unaudited results for last year, showing EBITDA up 65% at £5.5 million ($6.7 million) on revenue of £22.1 million ($26.9 million)
The company, which has expanded into registrar services via acquisition in the last few years, said its recurring revenue — mainly domain registrations — now account for about 80% of revenue.
CentralNic has about a third of the new gTLD back-end market, primarily because it’s the provider for .xyz’s millions of cheapo registrations.
In its statement, it said it hopes to focus on growing more in China, where clients including .xyz were recently licensed.
It also intends to make more acquisitions, where the deals “meet clear strategic criteria including being earnings accretive in the short term with a strong recurring revenues base”.

Hires and promotions at Donuts, MMX and CentralNic

A few gTLD registries have announced changes to senior management positions and new hires over the last several days, so I thought I’d lump them all together into one post.
Donuts has appointed a new CEO. Venture capitalist Bruce Jaffe, who’s been on the board as an independent director for about a year, has taken over from founding CEO Paul Stahura.
Stahura is sticking around as executive chair.
The company also appointed outsider John Pollard, a veteran of Micrsoft, Expedia and various other companies, to the new role of chief revenue officer.
The company has cast the moves as a case of Donuts growing out of its startup phase.
Across the pond, Minds + Machines — which now insists on being called MMX — today announced that it has poached former Sedo chief sales officer Solomon Amoako to head up channel management as a VP.
Amoako has also held positions with Rightside and Tucows.
He’s tasked with broadening MMX’s distribution channel in the Americas and Europe.
Finally, CentralNic announced last week that it’s shipping London-based director of marketing Lexi Lavranos to Los Angeles to head up its registry business there.
As well as its stable of new gTLDs, CentralNic of course also sells the Laos ccTLD, .la, “repurposed” for the LA market.

Famous Four exec moves to CentralNic

Famous Four Media has lost its chief marketing officer to CentralNic.
Andy Churley joined the London-based registry services provider as group marketing manager this month, according to press release.
He’s been with FFM for the first few years of its entry into the gTLD game, overseeing the launches of cheap TLDs such as .science, .download and .bid.
Previously, he was with the registrar Group NBT.
CentralNic now of course is also in the registrar business, having acquired Internet.bs and Instra over the last few years.

Verisign loses .art contract to CentralNic

CentralNic has been awarded the back-end contract for the forthcoming .art gTLD, usurping Verisign from the role.
UK Creative Ideas, which bought .art at a private auction for an undisclosed sum a year ago, appointed the company its “exclusive registry service provider”, CentralNic said.
UKCI’s original .art application named Verisign as its back-end, and this is not the first time CentralNic has sneaked away a Verisign client.
When XYZ.com acquired .theatre, and .security and .protection from Symantec, it moved them from Verisign to its .xyz provider CentralNic.
That earned XYZ and CentralNic a contract interference lawsuit, which XYZ settled in May.
Clearly litigation has not managed to chill competition in this instance.
.art is set to launch in stages over the next 12 months, CentralNic said.
UKCI estimated in its ICANN application that it would get between 25,000 and 80,000 registrations in its first year.
That may prove to be optimistic, at least at the high end.
UKCI’s vision for .art is for a restricted gTLD, which don’t tend to do huge volumes. I believe the largest restricted new gTLD is .nyc, with about 75,000 names in its zone.
All .art registrants will have to show some kind of connection to the art world, according to UKCI’s application.

This includes artists, owners and keepers of works of art, commercial art organisations (such as galleries and auction and trading houses), not-for-profit organisations (such as museums, foundations, and professional associations), supporting businesses (such as insurance, appraisal, transport) and customers and members of the general public interested in art.

Goodness knows how this will be implemented in practice, given that basically everyone is an artist to some extent.
UKCI is based in the Isle of Man, the UK dependency presumably selected for tax reasons rather than any connection to the art world, and is backed by Russian venture capitalists.