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Nominet sold security unit for a dollar after blowing $23.5 million

Kevin Murphy, July 21, 2022, Domain Registries

Nominet has found itself out of pocket to the tune of $23.5 million after selling its CyGlass network security business for a dollar.

Chair Andrew Green told members last week that the .uk registry sold CyGlass to a group of its employees for the nominal sum after deciding to divest itself of non-core businesses. He said in an email:

As our involvement in CyGlass is now at an end, I am in a position to share the approximate cost of the unsuccessful investment in CyGlass with members. In addition to the $6.3m cost of purchase, Nominet invested around $16.0m in supporting the ongoing running cost of the business. Costs associated with closure will be c$1.2m – approximately equivalent to continuing to support the business for a further two months. That totals c$23.5m. Converting back to GBP over a relatively long period is complex, but the total cost over 2+ years is approximately £18m.

At the time it was sold, it was costing Nominet $600,000 a month to keep CyGlass running, he said.

The strategy of diversification from the core registry business was made under previous management and ultimately was partly the cause of last year’s boardroom bloodbath that eventually led to Green’s appointment on a back-to-basics platform.

Green told members that CyGlass “struggled as a result of changing work patterns following the Covid pandemic”, adding:

While there has been continuing interest in the offering from customers, the pipeline of opportunities has been slow in converting to new long-term customers. As a result Annual Recurring Revenue – a key driver of investor interest – has been growing imperceptibly

Now independent, CyGlass recently told the security trade press it is seeking partnerships to drive growth.

Nominet to purge £50 million from war chest for good causes as new chair outlines strategy

Kevin Murphy, October 8, 2021, Domain Registries

.uk registry Nominet is to take £50 million ($68 million) it had set aside for acquisitions and instead donate it to public benefit causes, as part of a suite of reforms outlined by new chair Andy Green yesterday.

“We’ve made a clear commitment that we’re about purpose, not profit,” Green said in a short video address to members.

The money is about half of Nominet’s reserve fund, which will be reduced to about £50 million over the next three years. The company also committed to donating at least £5 million a year from profits in future.

While the company has talked a good game about addressing critics’ concerns over the few months since its CEO walked and half its board were fired by angry members, it’s the first big example of Nominet putting some concrete pounds-sterling numbers on its new strategy.

And it doesn’t stop at good causes. The company is scrapping its ambitions to broaden out into domain-adjacent sectors such as security, and will sell off its Cyglass network security business.

“We’ve decided to abandon the idea of building a global cyber[-security] business,” Green told members, in an address that promised to put the registry at the center of everything.

Cyglass lost about £2.2 million in the last six-month reporting period, the company revealed.

Nominet will keep one foot in DNS infrastructure security, where it services the UK government, Green said. That business also currently makes a loss, about £1 million, but is targeted for profitability by 2024.

On the issue of executive and director pay, he reiterated that the company has scrapped an incentive plan that he said was “clearly a misstep”, and noted that his own compensation is lower than his predecessors.

Staff wages will be compared against not only companies in the tech sector, but also other public-benefit concerns, he said.

Domainers and registrars who were hoping Nominet would slash its .uk wholesale fees have less to be cheerful about — Green said that Nominet will instead commit to freeze its prices until 2024.

After that time, the company will take another look and decide whether to raise, freeze, or even lower its fees, Green said.

Reaction from some of the members whose uprising caused the current change of strategy appeared to welcome the changes warmly on social media, while expressing concern that Nominet has not yet picked a new permanent CEO to guide the firm on this new path.