Tucows to reanimate Tucows brand as sales flatten
Tucows has become the latest domain name company to confirm it’s experiencing the post-pandemic blues, and said that it plans to revitalize the Tucows brand.
Reporting basically flat-to-down domain numbers on Thursday night, the company said that it plans to “more closely connect the Tucows parent and the registrar brands” in the coming months.
“For more than two decades, Tucows has been synonymous with domain registration. In the coming months, you will see a stronger connection of the Tucows brand with our registrar properties, with each anchored by the rich heritage of the Tucows name,” Dave Woroch, CEO of Tucows Domains, said in prepared remarks.
It’s not clear what this will entail in practice. The company’s main brands are Hover in retail and OpenSRS and Enom in wholesale, and you’d be hard pressed to find a mention of Tucows on any of their storefronts.
First-quarter domain revenue was “essentially unchanged” from the same period a year ago, at $61.5 million compared to $61.2 million.
Retail domains revenue was down to $9.1 million from $9.2 million. While wholesale revenue was $52.5 million versus $52 million, the increase was driven by value-added services rather than domain revenue, which was basically flat.
The renewal rate was a healthy 81%.
Woroch said that domain transactions “are now settling back in at pre-pandemic levels” after the lockdown bumps experienced over the last two years. He pointed to Verisign’s recent comments to suggest these are industry trends.
Including Tucows non-domains businesses, revenue was up 14% to $81.1 million and there was an overall net loss of $3.0 million compared to a profit of $2.1 million.
Tucows says eNom may be shrinking as Melbourne IT drives 2016 growth
Tucows yesterday reported an 11% increase in revenue for 2016, driven partly by an acquisition, but warned that its more recent acquisition, eNom, may be shrinking.
The company reported revenue for 2016 of $189.8 million, up from $171 million in 2015. Net income was up 41% at $16 million.
For the fourth quarter, revenue was up 9% year-on-year at $48.8 million. Net income was down 9% at $2.8 million.
In a conference call, executives linked some of the growth to the April 2016 acquisition of Melbourne IT’s reseller business, which added 1.6 million domains to Tucows’ DUM.
While Tucows also operates its Ting mobile phone service, the majority of its revenue still comes from domains and related services.
In the fourth quarter, revenue was $30 million for this segment. Of that, $23.1 million came from domains sold via its wholesale network and $3.8 million came from Hover, its retail channel.
CEO Elliot Noss noted that the acquisition of the eNom wholesale registrar business from Rightside last month made Tucows easily the second-largest registrar after GoDaddy, but made eNom sound like a neglected business.
“The eNom business is a flat, potentially even slightly negative-growth business in terms of gross margin dollars,” he told analysts.
eNom’s channel skews more towards European and North American web hosting companies, which are a growth challenge, he said. He added:
We acquired a mature retail business and associated customers which for the past few years has been more about maintaining and servicing eNom’s existing customers as opposed to growth. It has not been actively promoted and as a result has a flat to declining trajectory. It’s something we don’t intend to change in the short-term, but as we look under the hood and get a better sense of the platform as we will with all of the operations, the long-term plan might be different.
The acquisition was “overwhelmingly about generating scale and realizing cost efficiencies”, Noss said.
Tucows paid $83.5 million for eNom, which has about $155 million in annual revenue and is expected to generate about $20 million in EBITDA per year after efficiencies are realized.
Europeans digging new gTLD more than Americans?
Are European registrants more likely to register new gTLD domain names than those in the US and elsewhere?
That’s the view of Tucows, which sees more new gTLD action from its European OpenSRS resellers than it does from others.
In a blog post last week, OpenSRS blogger Gustavo Arruda noted that Americans are still stuck in a .com mindset:
Our European resellers are leading the charge. We expected the European market to be more open to new gTLDs and that prediction proved correct. It’s a market used to ccTLDs so having a couple hundred more new gTLDs was not a big deal.
North American resellers are lagging behind. It continues to be a very .COM-centric market that is still skeptical about too much choice.
South American and Asian resellers complain about the English-centric nature of new gTLDs. A lot of the new gTLDs we have launched do not make sense in these markets so adoption has been slow.
The post came as OpenSRS recorded its 100,000th new gTLD domain sale.
One reason for the Euro-slant in the market could be the relatively good performance of city gTLDs, most of which are European, and which are easily grasped concepts for buyers familiar with ccTLDs.
Hover, Tucows’ retail registrar, is geo-targeting which TLDs it offers visitors. As DI is based in London, I get offered .london domains prominently when searching for domains there.
The only US geo-gTLDs available to date are .vegas and .nyc.
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