Latest ICANN salary porn ruins my terrible pun

I’d always planned, if it turned out ICANN’s former interim CEO Sally Costerton was getting paid an absolutely, ridiculously, eye-popping pay packet, that it might be amusing to try to pin the nickname “Cost-a-tonne” on her.

Thanks. I’m here all week. Try the turbot.

But she wasn’t even ICANN’s highest-compensated employee last year, according to the Org’s latest tax return, which it published yesterday. That privilege went to general counsel John Jeffrey.

While her immediate predecessor Goran Marby made over a million bucks in his final years, Costerton made a more modest $835,585, compared to Jeffrey’s $837,137, the return states.

It’s the first time Costerton’s compensation has been disclosed. Previously, she was paid through her consulting company.

The form 990 (pdf) lists the 20 employees who get paid the most, with total compensation starting at $217,073. The top 10 employees received over half a million dollars in total compensation.

Some former ICANN staffers have recently said publicly that the figures in the 990 might give a misleading impression of how well rank-and-file employees are compensated.

On the corporate side, it was a relatively poor year for Jones Day, ICANN’s incumbent law firm and highest-paid contractor, which billed $3,617,243 compared to the $4,606,859 in the previous year. It was getting closer to $9 million a year not too long ago.

The top five contractors saw a new entrant at five, with HR firm ADO Professional Solutions getting $980,970 for recruitment services.

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.

$2 million Christmas bonus for ICANN

The domain industry performed better than expected in the back half of last year — well, better at least than ICANN had predicted.

The Org today said it took in $2 million more in revenue than it expected in the second half of 2024 — ICANN’s fiscal first half — because the gTLD registries and registrars that primarily fund it processed more transactions than it had planned for.

Registry and registrar transaction fees — paid on registrations, renewals and transfers — were both a million bucks ahead of budget at $29 million and $20 million respectively

Its FY25 takings to the end of December totaled $74 million, ahead of its $72 million estimate but flat on its FY24 budget.

Operating costs were in-line with expectations and down on FY24 numbers due to fewer people having their flights and hotels paid for at ICANN 82 in Istanbul last October.

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.

.io sells $40 million of domains after massive uptick

.io is now a $40-million-a-year domain, after a few years of impressive growth, judging by the registry’s latest financial reports.

UK-based Internet Computer Bureau, a subsidiary of Identity Digital, recently reported turnover of £29.6 million ($39.6 million) for 2023, up 13.9% on the £26.1 million it reported in 2022.

While that’s respectable growth, it pales compared to 2022 (which I don’t think was reported at the time), when turnover was up a whopping 59%.

Identity Digital does not reveal .io’s registration numbers, but with turnover of over $39 million and retail renewal prices bottoming out at around $39 a year, it seems quite possible that the TLD’s domains under management has reached seven digits.

When Afilias paid $70 million for ICB in 2017, it had turnover of $7 million and domains were reported at 270,000.

ICB’s gross margins are terrible — one can only assume its registry services deal with Identity Digital is rather generous to its parent — at 4.4%, with £28 million being paid out as cost of sales.

With another £3 million of unelaborated “administrative expenses”, ICB reported a 2023 net loss of £404,000 compared to a 2022 profit of £1.7 million. It paid £17,660 in UK tax, down from £277,703. It had just $69,000 cash on hand at the end of the year.

While ICB also runs .ac (Ascension Island) and .sh (Saint Helena, Ascension and Tristan da Cunha), it’s only .io that has seen broad uptake among the global domain-registering public. Tech firms like it because I/O means “input/output”.

.io is the ccTLD for the contested British Indian Ocean Territory, also known as the Chagos Archipelago, which is administered from the UK and used almost exclusively to house a strategically important US military base.

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.

ICANN financial data dump a damp squib?

It was supposed to be a means for ICANN to improve the transparency of its financials, but the latest output of a decade-long accountability project appears to be a damp squib, perhaps not even meeting community requirements.

But a newly published document appears to reveal one vendor that was paid almost $2 million in a single year, that ICANN has mysteriously not previously disclosed a relationship with.

Org has published its first “Annual Disclosure of Payments to Suppliers” (pdf), covering its fiscal 2022, but it weighs in at just one page of rather vague information, most of which was already in the public domain, printed in a font size I didn’t need my glasses to read.

The published data is less granular than what ICANN already reveals on its published tax forms, and it’s arguably less informative as a result.

The document shows that ICANN has at least 10 suppliers that received over $500,000 from the Org in FY22, and that if you aggregate all its insurance providers and landlords together each grouping also crosses that threshold.

There are three line items for payments over $2 million — the aforementioned landlords in aggregate, along with the law firm Jones Day and the software developer Architech Solutions.

Disclosing that these two companies were paid “above $2 million”, rather than the actual dollar value, is odd considering that we already know from ICANN’s 2022 tax form (pdf) that Jones Day was paid $5,164,603 and Architech was paid $2,857,500.

At the next tier down, we discover that ICANN paid IT consulting firm SHI International between $1.5 million and $2 million during the period.

This is arguably the most interesting stat on the page, as SHI doesn’t appear on ICANN’s 2022 tax return or the tax returns for 2021 and 2023, despite apparently meeting the criteria for being one of its “five highest compensated independent contractors”.

It doesn’t appear ICANN has ever publicly mentioned the firm before, but SHI is a large, decades-old IT services provider.

Paid between $1 million and $1.5 million were insurance providers in the aggregate, along with IT firms Outsource Technical and Zensar Technologies, both of which appear on the FY22 tax return with the precise dollar value they were paid.

On the lowest rung of the disclosure, each accounting for between $500,000 and $1 million in the period, are two HR outsourcing companies, two companies providing services for ICANN’s public meetings, and escrow provider NCC.

NCC was paid $800,798 in FY22, the lowest-paid of the top five contractors, according to the tax return, so we can assume the other four firms were paid less than that.

ICANN is making the disclosures in response to one of the over 100 recommendations of Work Stream 2 (WS2) of the Cross-Community Working Group on Enhancing ICANN Accountability, which were issued in 2018 after four years of community discussions, but it’s debatable whether they live up to what the community wanted.

CCWG-Accountability had issued implementation guidance stating:

In the first year of implementation ICANN should publish a register of all suppliers (name of supplier, country or origin and actual annual amount) it pays 500,000$US or more per fiscal year broken down by categories (e.g., computer equipment, software, telecommunication services, contracting etc.).

Note the references to “country or [sic] origin” and “actual annual amount”, two data points that do not seem to appear in the newly published document.

The group also said that the minimum reporting threshold should drop to $250,000 in the second reported year, so the FY23 document could be much larger. ICANN had 130 suppliers receiving six-figure payments in FY22, according to its tax return.

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.