Team Internet lays off 200

When Google tweaks its algorithms, people lose their jobs.

That seems to be the takeaway from Team Internet’s latest trading update, which includes the revelation that more than 200 employees, more than a quarter of its 2024 end-of-year headcount, have been laid off recently.

The blame was laid squarely with changes to Google’s advertising services, which already scuppered a deal that would have taken Team Internet private back in March.

Google said back then that its advertisers would be opted out of AdSense For Domains, the service that Team Internet used to monetise most of its parked domains, by default.

Team Internet has been migrating its domains to Google’s Related Search for Content, which shows context-relevant suggested searches on content pages, but it’s taking time to make the move.

The result of this is that the company made a lot less money in its first half. Revenue for the six months to June 30 was $263.9 million, compared to $409.7 million for the first half of 2024.

The company also slipped from profit to loss at the operating level, while adjusted EBITDA was $24.6 million, compared to $46.6 million a year ago.

Its Domains, Identity & Software division, which includes the CentralNic registry and registrars such as Key-Systems, saw revenue up a smidge at $103.9 million and adjusted EBITDA up 28.9% at $10.7 million.

The growth was driven by price, not volume. The number of handled domain reg-years was down by 4% to 12.9 million, while the average price was up 7% to $12.79.

Reseller loss hits Tucows’ DUM but not revenue

Tucows reported revenue growth in its domains business in the second quarter, despite its domains under management going down due to a major reseller.

The company said last night that domains revenue was up 8% annually to $67.6 million at the end of June, with adjusted EBITDA for the segment going up 12% to $12.5 million.

But Tucows had 24.02 million domains under management at the end of the quarter, down from 24.3 million three months earlier. David Woroch, CEO of the domains business said in prepared remarks:

As anticipated, total domains under management and transaction volumes declined modestly—down 2% and 3%, respectively—reflecting the continued impact of one reseller that has moved a portion of its portfolio in-house.

Despite this, revenue for the wholesale/reseller domains channel rose 8% on last year to $57.3 million. Retail domains revenue was up 10% year over year to $10.3 million.

Including all of the company’s non-domains businesses, Tucows Q2 revenue was up 10.1% to $98.5 million and adjusted EBITDA was up 37% to $12.6 million, both compared to the year-ago quarter.

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%.

.com is back as Verisign discounts bear fruit

Verisign’s .com returned to growth in the first quarter after the company offered its registrars marketing programs that substantially discounted the retail price of domains.

The company ended the quarter with 169.8 million .com and .net domains under management, a 777,000-name increase on the end of 2024. It’s the first time it’s reported quarterly DUM growth in almost two years.

While the company did not break out the split between the two TLDs, my records show that .com’s zone file grew by about 800,000 names during the quarter, while .net’s shrank by about 100,000.

Verisign has now upgraded its guidance for DUM growth this year to between a 0.7% decrease and a 0.9% increase, the first time its guidance has had a top-end in positive territory in some time. In February, it guided at between negative 2.3% and negative 0.3%.

The major reason for the reversal of fortunes is the program of discounts that have seen some registrars sell .com domains to customers recently for less than half of the usual $10.26 wholesale price.

“It’s still early, but we do see signs of registrars shifting towards customer acquisition, and we also see more registrar engagement with our marketing programs,” CEO Jim Bidzos said on an earnings call with analysts tonight.

In previous quarters last year, the fact that registrars were focused on squeezing more revenue out of their customers, rather than driving new registrations, was blamed for .com losing DUM.

Bidzos said that sales were up across all three of its core geographic markets — the US, EMEA and Asia-Pacific. On previous calls, North America and China were noted for weaknesses.

If there’s any reason to believe that the guidance is cautious, it’s because of what Bidzos and analysts euphemistically referred to as “the macro”, or “macro-economic situation”.

At this particular point in history, that’s code for US President Donald Trump’s erratic behavior with regard to world trade and tariffs, that has spooked economies globally. It’s not at all clear yet how this crisis might affect the domains market.

Verisign reported net income of $199 million for the quarter, up from $194 million a year ago, on revenue up 4.7% at $402 million. Operating income was up from $259 million to $271 million

The company, which has to date mainly been rewarding investors with share buybacks, has now also started issuing quarterly cash dividends. This quarter, they’re all getting $0.77 per share.

Sales and profits dip at Team Internet

Having been one of the industry’s notable growth stories over the last decade, Team Internet saw its revenue and profit go down in 2024, according to its latest earnings report.

The company is also predicting a miserable 2025 as it tries to work around Google’s decision to turn off advertising on parked domains by default for its customers, a key source of Team Internet’s revenue.

Revenue was down 4.1% to $802.8 million, the company said, and adjusted EBITDA was down 4.7% to $91.9 million.

The domains part of its business seemed to fare better than its search unit, recording revenue up 7.4% at $202.7 million. But this division also includes some non-domains software businesses, so we can’t really break its performance out any more granularly.

Team Internet said the current analyst consensus for adjusted EBITDA this year is between $60 million and $62 million, a huge drop on 2024, with double-digit growth returning next year.

CEO Michael Riedl said in a statement: “The Search segment’s difficult reset in 2025 in response to recent market developments is the acceleration of a long-anticipated pivot, not, the board believes, a permanent setback.”

He also seemed to confirm that the company will rely on AI-generated content to populate its domains, enabling it to use Google’s contextual advertising.

More gloom predicted for .com

Verisign is predicting more shrinkage at .com and .net in 2025, despite a few notes of optimism from its CEO.

The company said last night that its two flagship gTLDs shrunk by a combined 3.7 million domains in 2024, a 2.1% decrease, as I flagged up a couple weeks ago, and that its growth this year will be between negative 2.3% and negative 0.3%.

The quarterly loss was around 500,000 domains. Verisign ended the quarter with 169 million domains under management.

CEO Jim Bidzos again told analysts that the shrinkage was partly due to weakness in China and partly due to American registrars concentrating on profit margins over customer acquisition.

Growth was positive in the EMEA region, he said, without quantifying it.

Bidzos said that marketing programs the company recently launched show early signs of adoption by registrars, and that he expects registrars to refocus on customer acquisition as part of a cyclical trend.

He pointed to the fact that two registrars — presumably GoDaddy and Squarespace — have taken out pricey Super Bowl TV ads this weekend as an encouraging sign.

He said that Verisign is “considering looking at” applying for new gTLDs next year and is “looking at the potential for applications”.

The company reported Q4 net income of $191 million, down from $265 million a year earlier, on revenue that was up 3.9% at $395 million.

For the full year, Verisign had net income of $786 million versus $818 million in 2023, on revenue that was up 4.3% at $1.56 billion.

Americans are deserting .com

Forget China, Verisign is now seeing most of its domain sales weakness coming from the US.

The company revealed in its quarterly earnings call last week that .com and .net were down by a combined 1.1 million names in the third quarter, and 850,000 of those losses were from American registrars.

CEO Jim Bidzos told analysts that the weakness was a result of US registrars concentrating more on making existing customers more profitable and less on acquiring new customers.

Registrars are raising prices and pushing more secondary market sales, he said. That’s great for the registrars’ bottom lines, but it doesn’t help Verisign shift product.

There were 169.6 million .com and .net domains at the end of Q3, Bidzos said. The Q3 renewal rate is expected to be about 72.3%, compared to 73.5% a year ago.

There was also weakness in China, he said, due to economic factors and regulation. China has frequently been blamed for sales fluctuations in previous weak quarters. Europe was actually up by 200,000 names, Bidzos said.

Verisign now expects domain growth of between -2.9% and -2.3% for the full year, narrowing its forecast from the -3% to -2% it predicted in July and the +1% to -1% predicted at the start of the year.

Higher wholesale prices means the company is still growing, however. Revenue was up 3.8% to $391 million and net income was up from $188 million to $201 million compared to year-ago numbers.

No .uk price hikes despite tumbling sales

Nominet said today that it has no plans to raise the price of .uk domains, even as registration volumes continue to sink and profits tumbled.

The registry said in its annual report that its net loss for the year ended March 31 was £6 million ($7.7 million), compared to £3.9 million ($5 million) in fiscal 2023, on revenue up £2.3 million ($3 million) to £56.4 million ($72.4 million).

The increase in revenue was due to its non-domains Cyber business, which was up by £2.7 million, offsetting a £400,000 decrease in domains revenue that was due to a 300,000 decline in domains under management.

Domains brought in £41.1 million at the top line during the period, but profit dropped from £14.8 million in 2023 to £9.8 million.

Nominet also lost a Protective DNS contract with the UK government during the year, which led to 40 layoffs and 19 employees being reassigned, but said the setbacks will not lead to price hikes.

“Even with the loss of the UK PDNS contract, and lower domain name renewals indicative of a maturing market, we see no immediate need to increase pricing, but we will continue to regularly review,” chair Andy Green and CEO Paul Fletcher said in the report.

.uk names currently cost £3.90 per year, with the last price increase happening in 2020.

Fletcher and CFO Carolyn Bedford both received hefty bonuses during the year, amounting to an extra £180,000 for Fletcher on top of his £304,500 base salary and an extra £94,557 for Bedford to add to her £190,000 base.

The company confirmed in its report that it plans to participate in the next new gTLD application round in 2026 as a back-end registry services provider, saying it expects the market to be very competitive.

Verisign predicts more gloom as registrars shun .com growth

Verisign has yet again massively downgraded its expectations for .com growth, after it lost almost two million domains in the second quarter.

The company said it had 170.6 million .com and .net domains at the end of June, down 1.8 million compared to Q1 and a 2.2% decrease compared to a year earlier.

CEO Jim Bidzos said Verisign now expects the domain name base for the full year to be between -2% and -3%. That compares to a range of between +0.25% and -1.75% predicted in April and +1% to -1% predicted in February.

The Q2 renewal rate is expected to be 72.6% compared to 73.4% a year ago and 74.1% in Q1.

Bidzos said he does not expect the base to return to positive growth until the second half of 2025.

Bidzos, talking to analysts, acknowledged that Verisign’s wholesale .com price increases “may have had an impact” but put the blame for the growth shortfall squarely on what he called the “unregulated retail channel” in the US.

American registrars have been cranking up their prices in order to prioritize average revenue per user over volume, he said, meaning retail prices for .com have gone up “more than twice” Verisign’s own price hikes, leading to fewer sales as a result.

“Our research shows that the benefit from our capped wholesale prices is not always passed on to consumers,” he said.

He faced a barrage of questions from analysts about recent calls for the US government to sever its ties with Verisign over .com and put the TLD out for competitive rebidding, but reiterated the company’s position that if the government cuts it off, it still gets to run .com under its contract with ICANN.

Despite the volume woes, Verisign continues to be a high-margin cash-generating machine.

The company reported Q2 net income of $199 million, up from $186 million a year ago, on revenue up 4.1% at $387 million. Operating income was up to $266 million from $249 million and operating cash flow up to $160 million from $145 million.

GoDaddy price increases lead to revenue growth

GoDaddy last night reported domains revenue ahead of forecasts after it raised its prices and sold more higher-priced domains on the aftermarket.

The company’s Core Platform segment, which includes domains and hosting, reported first-quarter revenue up 4% compared to a year ago at $725 million, with domains revenue driving growth, up 7% percent to $532 million.

Domains under management was 84.6 million at the end of March 31.

“Our growth was driven by strong demand for domains in the primary and secondary market, increased pricing in the primary market and a higher average transaction value in the secondary market,” CFO Mark McCaffrey said in prepared remarks.

Aftermarket revenue was up 12% to an unspecified amount.

Including the company’s other revenue streams, GoDaddy reported net income of $401.5 million on revenue up 7% at $1.1 billion.

Verisign, the .com registry, last week reported stagnating .com growth that it blamed in part on US registrars raising their retail prices, leading to lower first-year sales and renewals.