MMX profitable as acquisition talks drag on

New gTLD registry Minds + Machines became profitable as an operating company for the first time in 2017, the company announced on Friday.
MMX saw billings of $10 million in the second half of the year, compared to $5.6 million in the first half, as domains under management grew 67% to 1.32 million.
Billings is a measure of sales, rather than the more formal measure of revenue for accounting purposes.
Renewals accounted for $5.6 million of billings in the year, which “for the first-time has exceeded fixed operating costs which have been reduced to below $5.5 million for 2017”.
The company’s bottom line will also boosted by $2.1 million due to MMX losing the .inc and .llc new gTLD auctions.
MMX also provided an update on its “strategic review”, a code word for the “acquisition by or sale/merger of the Company” that it announced last May.
The company said “the longevity of the discussions has been at times frustrating” but that it hopes to have something to announce by the time it reports its formal 2017 results in April.
MMX had originally hoped to have concluded these talks before last September.

MMX sells 7,000 domains for $3.4 million

New gTLD registry MMX said it has sold $3.4 million in “premium” .vip domains names to Chinese domainers in the last few months.
In what is believed to be a small number of deals to a limited number of investors, “over 7,000” domains changed hands since they became available in late June.
MMX said that $2.8 million of the deals closed in the last 10 days.
While we don’t have the exact number of domains, it looks to work out in the ball-park of $485 per domain.
As $3.4 million is a materially significant number — the company’s entire revenue for 2016 was $15.6 million — it was disclosed to the financial markets this morning.
.vip has been MMX’s cash cow, so far amassing a zone file with more than 600,000 domains names in it.
For some reason it has been hugely popular in China — the vast majority of its registrations have been through Chinese registrars and 59% of its overall revenue was from China in 2016.
In April, the company sold 200,000 .vip names to a single Chinese investor for $1.3 million.
MMX has also said that renewal rates for .vip, which only launched last year, have been over 75%.

MMX billings double even as some volumes slide

MMX has reported a 100% increase in billings for 2016, despite its number of domains under management dropping in some TLDs.
The company, until recently known as Minds + Machines, said billing were $15.8 million in the year to December 31, compared to $7.9 million for in 2015.
Billings is an up-front measure of sales growth that does not take into account the way domain revenue is recognized over the life of the registration.
The company said, in a trading update to the London markets today, that billings and domains under management do not necessarily correlate. The former can be up even if the latter is down:

For example, in 2016 .work generated $392,000 off 81,000 registrations compared to $206,000 off 102,000 registrations in 2015 reflecting the use of a promotional initiative to drive registrations that year.

MMX also disclosed that China now accounts for more than half of its billings: 59%, compared to 24% for the US and 17% for Europe.
That’s largely based on its launch of .vip, which launched last May and has half a million names mainly because of the resonance of the string in China.
The company said it intends to imitate its focus on .vip in 2016 by only launching two TLDs — .boston and one other — in 2017.
MMX’s formal, audited 2016 financial results will be published in April.

Now MMX kills off premium renewals

Are we witnessing the beginning of the end for the premium renewal business model?
MMX, aka Minds + Machines today became the latest new gTLD registry to announce it is getting rid of premium renewal fees for all of its premium domain names.
The price changes are retroactive to January 6 and affect all MMX gTLDs, such as .beer, .fishing and .horse.
“We started the process of rebooting our strategy in July last year, when we alerted our many registrar partners that 100% of our premium names sold after January 6th 2017 would have standard, GA [general availability] renewal prices,” CEO Toby Hall said in a statement.
MMX also said today that it is “revisting” its existing pricing tiers.
The reduced pricing will make the domains more attractive to domainers and end users alike, but I suspect the former will be more likely to exploit the new deal at first.
It’s the second new gTLD registry, after Rightside, to announce such a move this month.
Rightside said it was abolishing premium renewals on its expensive Platinum-level domains, though they will remain on more modestly priced premiums.

Hires and promotions at Donuts, MMX and CentralNic

A few gTLD registries have announced changes to senior management positions and new hires over the last several days, so I thought I’d lump them all together into one post.
Donuts has appointed a new CEO. Venture capitalist Bruce Jaffe, who’s been on the board as an independent director for about a year, has taken over from founding CEO Paul Stahura.
Stahura is sticking around as executive chair.
The company also appointed outsider John Pollard, a veteran of Micrsoft, Expedia and various other companies, to the new role of chief revenue officer.
The company has cast the moves as a case of Donuts growing out of its startup phase.
Across the pond, Minds + Machines — which now insists on being called MMX — today announced that it has poached former Sedo chief sales officer Solomon Amoako to head up channel management as a VP.
Amoako has also held positions with Rightside and Tucows.
He’s tasked with broadening MMX’s distribution channel in the Americas and Europe.
Finally, CentralNic announced last week that it’s shipping London-based director of marketing Lexi Lavranos to Los Angeles to head up its registry business there.
As well as its stable of new gTLDs, CentralNic of course also sells the Laos ccTLD, .la, “repurposed” for the LA market.

.xyz, .club and .vip get the nod to sell in China

The Chinese government has granted licenses to operate in the country to its first tranche of new gTLDs — .vip, .club and .xyz.
The agreements mean that Chinese registrars will be able to give their Chinese customers the ability to actually use their domains for web sites.
It also means the companies will be obliged to censor domains the government does not like, but only those domains registered via Chinese registrars.
The Ministry of Industry and Information Technology announced the licenses, given to the Chinese subsidiaries of Minds + Machines, .CLUB Domains and XYZ.com respectively, today.
M+M CEO Toby Hall told DI that it’s “a great moment of support for Chinese registrars”, giving them a “very clear signal about which TLDs they can focus on”.
XYZ.com said in a blog post that some of its Chinese registrars (its biggest channel) are planning on offering discounts to celebrate the approval.
It’s always been possible for Chinese people to register new gTLD domains via Chinese registrars — it’s estimated that 42% of the 27 million new gTLD domains in existence today are Chinese-owned.
However, Chinese citizens need a government license if they want to launch a web site, and the government only issues licenses for domains in approved TLDs.
In addition to .cn and China-based gTLDs, which were the first to be given the nod, Verisign was approved earlier this year for .com.
Hall said that while .vip has been popular with Chinese domainers, the MIIT license means it can start to tap the small business market there too.
Obtaining the license means that the three registries, which are all based in the US or Europe, will have to comply with Chinese regulations when it comes to Chinese customers.
That basically means the Chinese government gets to censor pretty much anything it doesn’t like, up to and including sites that “spread rumors”.
Hall said that there’s no chance of this censorship bleeding out to affect non-Chinese customers.
M+M, along with XYZ and .CLUB, are using Chinese registry gateway ZDNS to act as a proxy between their own back-ends (Nominet for .vip, Neustar for .club and CentralNic for .xyz) and Chinese registrars.
“All of our Chinese web sites go through ZDNS, so only web sites going through ZDNS would be affected,” Hall said, referring to the censorship rules.
Hall added that he was “not aware” of there being a blocklist of politically sensitive strings that Chinese customers are not allowed to register.

CIRA becomes first new gTLD back-end since 2012

CIRA, the Canadian ccTLD manager, has become the first new registry back-end provider to enter the gTLD market since the 2012 application round closed.
The company today announced that it has signed Dot Kiwi, operator of .kiwi, as its first client.
.kiwi will become the first non-.ca TLD that CIRA runs the back-end for, according to VP of product development Dave Chiswell.
CIRA has already completed pre-delegation testing and technical evaluation with ICANN, he told DI today.
It is believed to be the first back-end provider not attached to any 2012-round application to go through the PDT process.
That would make CIRA essentially the first company to officially enter the gTLD back-end market since 2012, in other words.
The .kiwi contract was up for grabs due to the fact that Minds + Machines, its original supplier, decided to get out of the back-end business earlier this year.
All of M+M’s own stable of gTLDs are being moved to Nominet right now, but customers such as Dot Kiwi were not obliged to follow.
Chiswell said that CIRA’s system, which is called Fury, has some patent-pending “tagging” technology that cannot be found at rival providers.
He said that registry operator clients get a GUI through which they can manage pricing tiers and promotions based on criteria such as substrings and registration dates without having to fill out a ticket and get CIRA staff involved, which he said is a unique selling point.
CIRA’s goals now are to try to sign up more TLDs (cc’s or g’s) to Fury, and to attempt to get Canadian brands and cities to apply for gTLDs in the next round, whenever that may be.
The company also intends to migrate .ca over to Fury from its legacy infrastructure at some point, he said.

Chinese investor pumps $7 million into M+M as .vip pushes firm into profit

Minds + Machines made a profit, kinda, in the first half of the year, due to the popularity of .vip in China.
The company today announced a loss of $1.9 million for the six months to June 30, compared to a $1.6 million loss in the comparable 2015 period, on revenue that was up 115% at $7.4 million.
But factoring out discontinued operations — M+M started to close its registrar and registry back-end businesses during the half — it actually managed to sneak a profit of $56,000.
Its revenue was also unaffected by one-time gains from gTLD auction losses, something which had pumped up its top line regularly for the last few years.
Chairman Guy Elliot said in a statement to the markets that M+M “has successfully been navigated out of troubled waters”.
The turnaround is due in no small part to the success of .vip, which racked up over 400,000 registrations in its first month (back in May), the large majority of which were sold to Chinese investors.
The company said that $5.5 million of the $8 million in H1 billings were made in the first 21 days of .vip’s availability.
Having started 2016 with no sales in Asia whatsoever, it expects 45% of its revenue to come from China by the end of the year.
As a direct consequence of .vip’s sales, M+M has received a £5.5 million ($7.2 million) investment from Goldstream Capital Master Fund I, a Cayman Islands shell company owned by Chinese private equity firm Hony Capital.
Hony, which manages $10 billion in assets, is perhaps best known for owning the pizza restaurant chain Pizza Express, which it acquired for $1.54 billion in 2014.
According to its web site, Hony’s own investors include three large Chinese state-owned investment vehicles.
The investment deal includes clauses preventing Hony from trying to get a director on M+M’s board and/or launching a hostile takeover bid.
It will own 7.17% of M+M after buying 50 million shares at £0.13 each, assuming M+M’s simultaneously announced £13 million ($17 million) share buyback is fully subscribed.
M+M opened a subsidiary in China (a Wholly-Owned Foreign Enterprise) during the half, in order to better serve the Chinese market and comply with Chinese government regulations.
It simultaneously laid off 44% of its staff in the US — engineers no longer needed due to the shift into an almost entirely marketing-focused business — and expects to end the year with only 13 employees there.

.hotel losers gang up to threaten ICANN with legal bills

The six losing applicants for the .hotel new gTLD are collectively threatening ICANN with a second Independent Review Process action.
Together, they this week filed a Request for Reconsideration with ICANN, challenging its decision earlier this month to allow the Afilias-owned Hotel Top Level Domain Sarl application to go ahead to contracting.
HTLD won a controversial Community Priority Evaluation in 2014, effectively eliminating all rival applicants, but that decision was challenged in an IRP that ICANN ultimately won.
The other applicants think HTLD basically cobbled together a bogus “community” in order to “game” the CPE process and avoid an expensive auction.
Since the IRP decision, the six other applicants — Travel Reservations, Famous Four Media, Radix, Minds + Machines, Donuts and Fegistry — have been arguing that the HTLD application should be thrown out due to the actions of Dirk Krischenowski, a former key executive.
Krischenowski was found by ICANN to have exploited a misconfiguration in its own applicants’ portal to download documents belonging to its competitors that should have been confidential.
But at its August 9 meeting, the ICANN board noted that the timing of the downloads showed that HTLD could not have benefited from the data exposure, and that in any event Krischenowski is no longer involved in the company, and allowed the bid to proceed.
That meant the six other applicants lost the chance to win .hotel at auction and/or make a bunch of cash by losing the auction. They’re not happy about that.
It doesn’t matter that the data breach could not have aided HTLD’s application or its CPE case, they argue, the information revealed could prove a competitive advantage once .hotel goes on sale:

What matters is that the information was accessed with the obvious intent to obtain an unfair advantage over direct competitors. The future registry operator of the .hotel gTLD will compete with other registry operators. In the unlikely event that HTLD were allowed to operate the .hotel gTLD, HTLD would have an unfair advantage over competing registry operators, because of its access to sensitive business information

They also think that HTLD being given .hotel despite having been found “cheating” goes against the spirit of application rules and ICANN’s bylaws.
The RfR (pdf) also draws heavily on the findings of the IRP panel in the unrelated Dot Registry (.llc, .inc, etc) case, which were accepted by the ICANN board also on August 9.
In that case, the panel suggested that the board should conduct more thorough, meaningful reviews of CPE decisions.
It also found that ICANN staff had been “intimately involved” in the preparation of the Dot Registry CPE decision (though not, it should be noted, in the actual scoring) as drafted by the Economist Intelligence Unit.
The .hotel applicants argue that this decision is incompatible with their own IRP, which they lost in February, where the judges found a greater degree of separation between ICANN and the EIU.
Their own IRP panel was given “incomplete and misleading information” about how closely ICANN and the EIU work together, they argue, bringing the decision into doubt.
The RfR strongly hints that another IRP could be in the offing if ICANN fails to cancel HTLD application.
The applicants also want a hearing so they can argue their case in person, and a “substantive review” of the .hotel CPE.
The HTLD application for .hotel is currently “On Hold” while ICANN sorts through the mess.

M+M billings quadruple on China .vip surge

Minds + Machines this morning said that its billings increased to $8.05 million in the first half of 2016.
That’s a 300% increase on the comparable year-ago period, the company said in a preliminary statement to the markets.
It added that its domains under management grew from 217,200 at the end of June 2015 to 728,940 a year later.
While the statement did not elaborate on the reasons behind the growth, the recently launched .vip gTLD seems to be the main factor.
It went to general availability a little over two months ago and quickly topped 400,000 registrations.
Just a few weeks before the end of the reporting period, M+M said its billings and orders for .vip alone had already hit $5.5 million.
That’s due to interest from Chinese domain investors, who were courted by M+M during a conference in Beijing.
M+M will report its full interims on September 20.