Tucows and GoDaddy see weakness in big-ticket aftermarket sales

Two of the industry’s largest registrars saw weakness in their first-quarter revenues which they attributed largely to a lack of high-priced secondary market sales.

This lumpier and less-predictable side of the market saw Tucows overall domains revenue down 4% in the period, while GoDaddy saw its “core platform” revenue down a million bucks or 0.2%.

GoDaddy said a 5% increase in domains revenue was “offset by tough compares for our aftermarket business as well as the continued uneven flow of large transactions.”

Tucows said it has “experienced a weaker aftermarket for domain sales, most notably at the higher end of the price range”.

GoDaddy’s core services revenue was down to $698 million from $699.6 million a year ago. Overall revenue was $1.036 billion, up 3.3%. Its net income was down 30% at $47.4 million.

Tucows’ overall revenue was down 0.8% at $80.4 million, with a net loss of $19.1 million compared to a loss of $3 million a year ago.

Verisign narrows domain growth guidance

Verisign cast a slightly more optimistic light on the potential for .com and .net growth last week, as it reported a modest improvement in first-quarter sales.

Management told analysts that it’s now expecting domain growth of between 0.5% and 2.25% for the year — a boost to the low-end but a lowering of the high-end.

In February, it had predicted growth of between 0% and 2.5%.

For Q1, the company reported domain growth of just 0.1% There were 174.8 million .com and .net domains at the end of the quarter, up by a million from the start of the year.

Verisign reported net income of $179 million, up from $158 million a year ago, on revenue that increased 5.1% at $364 million.

New gTLDs report came in under budget

ICANN spent less than expected carrying out the Operational Design Phase of the new gTLD program last year, according to financials published yesterday.

The Org’s second fiscal quarter (fourth calendar quarter) report shows it spent $6.8 million on the ODP, which ended in mid-December with the delivery of the Operational Design Assessment.

That’s under the low-end of the $7 million to $9 million ICANN’s board of directors had approved for its budget.

The report also reveals that roughly 15 full-time equivalents, mostly ICANN staff, spent a total of over 27,000 hours to produce the ODA report, which is currently awaiting board approval.

The financial report shows that ICANN spent about $400,000 more than expected on its AGM in Kuala Lumpur last October. This, it said, was due to higher airfare costs, partially offset by 45 fewer funded travelers than expected attending.

Overall, ICANN received about $1 million more in funding than it expected, at $76 million, due to not losing as many registrars as expected, and its FY23 spend to date was $67 million, about $5 million under budget due to “lower than planned professional services and personnel costs”.

It had an average 399 staff over the period and ended the year with total assets of $558 million, $438.3 million of which is invested.

GoDaddy to lay off hundreds

GoDaddy has become the latest big tech firm to announce huge layoffs, with hundreds of employees set to be let go.

The company said last week it is laying off 8% of its staff. This equates to more than 500 job losses, based on 6,800+ the company’s web site reports.

Employees at three brands are most-affected — Media Temple, Main Street Hub and 123 Reg — with the former two also set to disappear as independent brands.

Main Street Hub is social media marketing firm from Texas that GoDaddy acquired in 2018. Media Temple is a hosting provider from California that GoDaddy acquired in 2013.

123 Reg is a UK-based registrar brand that was part of Host Europe Group until GoDaddy bought it in 2017. GoDaddy says the brand will remain, but some roles will be terminated. Staff will find out who’s staying and who’s going before the end of the month.

GoDaddy CEO Aman Bhutani blamed growth hindered by the “uncertain macroeconomic environment” for the moves.

The company, which reported revenue up 7.2% at $1.03 billion and a $100 million profit in the third quarter, is due to report its fourth quarter and full-year earnings this evening.

.com shrinks again, but prices to go up again

Verisign plans to increase .com prices again this year, as its latest quarterly results show its top line and margins swelling despite renewals and overall domains under management shrinking.

The company ended 2022 with 173.8 million .com and .net regs in the domain name base, only up 0.2% from the start of the year. Only a quarter ago, it had predicted growth of between 0.25% and 1%.

A year ago, it had predicted that metric to grow between 2.5% and 4.5%, but it reduced its outlook every quarter and eventually missed even its barrel-bottom estimate. The two TLDs shrank by about 400,000 names in Q4.

For 2023, the company expects domain growth of between no growth at all and 2.5%.

The poor performance in volume terms came about as result of post-pandemic effects and China volatility, CEO Jim Bidzos told analysts. He did not blame the last few years of price increases for the dip.

The preliminary renewal rate for Q4 was 73.2% compared to 74.8% in the same quarter of 2021, but new regs were down across the two TLDs also — 9.7 million compared to 10.6 million over the same periods.

But of course domains under management alone is a poor way to measure Verisign’s cash-printing machine.

The company reported 2022 net income of $674 million which was down from $785 million a year earlier when it had benefited from a one off tax-related boost of $165.5 million.

Annual revenue was up 7.3% at $1.42 billion, a touch ahead of the 7% .com price increase it imposed during the year. Operating margin for 2022 was 66.2%, up from 65.3%.

For the quarter, net income was $179 million compared to $330 million (with the aforementioned tax benefit) on revenue that was up 8.5% at $369 million. Margin was 66.5% compared to 65.3% for Q4 2021.

The company said .com prices will go up again in September 1, from $8.97 to $9.59 per year.

CentralNic reports strong 2022

CentralNic grew faster than analysts’ expectations last year, the company said today.

The company expects to report EBITDA of “at least” $177 million, up 33%, on revenue up 77% at about $728 million, for 2022.

Factoring out acquisitions and currency fluctuations, organic growth is expected to be around 60%.

The growth has been driven by its domain monetization business, which CentralNic has been building through acquisitions over the last few years.

The company will report its results proper on February 27.

Verisign growth slows with post-Covid blues

Verisign sold fewer .com and .net domains than it did a year ago in the third quarter and has once again slashed its outlook for the year.

It had 174.2 million names across the two TLDs at the end of September, an increase of 1.2% over the year but down by around 100,000 names (rounded) on the quarter.

There were 9.9 million new domains sold. That compares to 10.1 million in the second quarter and 10.7 million in Q3 last year.

It now expects its total domains under management to increase by between 0.25% and 1% for the full year. That compares to the between 0.5% and 1.5% it predicted at the end of Q2, the 1.75% and 3.5% predicted in April, and the between 2.5% and 4.5% it predicted in February.

That equates to 2022 revenue of $1.418 billion to $1.426 billion, CFO George Kilguss told analysts. Verisign’s always jaw-dropping operating margin is expected to be between 65.75% and 66.25%.

CEO Jim Bidzos told analysts the slower growth can the attributed to the general macroeconomic malaise, Verisign coming off the lockdown bump experienced in 2020 and 2021, and the perennial issue of Chinese lumpiness.

Renewal rates for Q3 are expected to be 73.8%, the same as Q2 but down from 75% a year-ago.

But the company continues to make money hand over fist. Revenue was up 6.8% compared to Q3 last year at $357 million and net income was up to $169 million compared to $157 million a year ago.

CentralNic expects to blow past revenue estimates

CentralNic has updated its financial projections for the year, saying it expects to “materially exceed” the current analysts’ estimates.

The London-listed company expects to next month report revenue for the nine months to September 30 up 86% at $525 million and adjusted EBITDA of “at least” $61 million, up 89% compared to last year.

That’s just for three quarters. The latest analyst consensus estimate was for revenue of $626.6 million and EBITDA of $72.5 million for the entire year, the company said.

Twelve-month organic growth, excluding the effect of acquisitions, to September 30 is estimated at 66%.

CentralNic said growth is being “driven predominantly by the growth of the Online Marketing Segment, which continues to win market share as a result of the ever-increasing demand for online customer acquisition services that are privacy-safe.”

ICANN finished year $24 million ahead but loses $29 million on the markets

ICANN came out of fiscal 2022 $24 million ahead of its budget due to lower travel expenses and greater domain sales than expected, but blew $29 million on poor investments, according to financial results published today.

The Org ended June having received $150 million, mostly from registries and registrars, which was $5 million more than it had budgeted for.

Fixed, variable and transaction-based fees accounted for most of the difference. Registrars sold more domains than ICANN predicted, and fewer registries and registrars cancelled their contracts.

Verisign of course was the biggest contributor, accounting for over a third of revenue — $49 million for .com/.net fees alone. On the registrar side, GoDaddy contributed over $11.2 million.

GoDaddy’s contribution is actually a little higher than all the 131 participating ccTLDs’ voluntary donations combined, which came in at $11 million.

Expenses were $125 million, against a budget of $143 million. That was mostly due to the fact that two of its three meetings were held entirely online, so ICANN didn’t have to pay its staff and volunteers’ travel expenses.

It spent $3 million on meetings in the year, against a $10 million budget.

When the budget was passed in May 2021, ICANN had expected all three meetings to take place in person, with international travel “unrestricted” despite the pandemic.

Expenses were also affected by a lower-than-expected headcount. Average headcount was down by three on FY21 at 389, compared to the 405 predicted by the budget.

Despite the over-performance at the operating level, ICANN’s balance sheet actually declined compared to a year earlier.

It had funds under management of $505.5 million compared to $520 million, having lost $29 million due to “investment declines in the Reserve Fund due to volatility in the financial markets”. Its portfolio is still $9 million ahead compared to five years ago, however.

CentralNic revenue almost doubles

CentralNic has reported its first-half financial results, showing revenue up 93% to $334.6 million when compared to the same period last year.

Given the company’s acquisitive nature, some of the growth of course came from companies it has recently bought, but CentralNic said trailing 12-month organic revenue growth was a health 62%.

Adjusted EBITDA for the period was $38.6 million, up 97% on the first half of 2021.

Domain names, what the company calls its Online Presence segment, now account for a minority of CentralNic’s revenue, $76.8 million in the half, down a bit on last year due to currency exchange rates.

The company said it has been shaking up its strategy by reducing the amount of discounted domains it sells. Average revenue-per-domain went up from $8.90 to $9.60, but volumes were down from 6.5 million to 6 million as a result.

The Online Marketing segment grew 167% to $257.8 million. Organic revenue growth was 98%, “predominantly driven by CentralNic’s TONIC media buying business”.

Visitor sessions was up from 1.1 billion to 2 billion and RPM was up 87% from $106.