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: three gTLDs approved for sale in Beijing

Three foreign new gTLDs have been approved for sale and resolution in Chinese capital Beijing, according to MMX.
The portfolio registry said today that its .vip is among the first to receive approval from the Beijing Communications Administration, one of China’s many regional authorities.
According to MMX, while many gTLDs have managed to pass through the Ministry of Industry and Information Technology’s stringent vetting process, the Beijing local authority has so far been slow to follow the national regulator’s lead.
But BCA approved .vip, along with GMO’s .shop and Donuts’ .ltd on August 16, the registry said in a market update.
This gives .vip national coverage in China, adding Beijing’s 22 million inhabitants.
MMX added that 188,764 different .vip sites, of the over 600,000 in its zone file, are currently indexed by Chinese search engine Baidu.
It also said that it plans to start selling Chinese-script internationalized domain names in .vip (in IDN.ascii format) in November.

MMX says .vip renewals running at 75%

MMX has revealed that its renewal rate for first-month .vip registrations in China were over 75%.
The portfolio gTLD registry, also known as Minds + Machines, said that 317,000 domains that were registered during .vip’s first month of availability have now been renewed.
The news follows a June announcement that the renewal rate would be over 70%.
The large majority of .vip names registered are registered via Chinese registrars, where prices can be around the $3 to $4 mark.
MMX CEO Toby Hall said in a statement that the company now plans to release some of its reserved “premium” .vip names.
He added that the company is confident that its recurring revenue from renewals will soon be high enough to cover its fixed overhead costs, one of its key performance benchmarks.

MMX says .vip renewals to be at 70%+

MMX believes the biggest money-spinner in its new gTLD portfolio, .vip, will see first-year renewals in excess of 70%.
The company said this morning that it is projecting renewals towards the top end of industry norms based on manual renewals to date.
.vip was a bit of a hit in China, topping a quarter-million domains in its first month of general availability a year ago. It peaked at around 750,000 domains a month ago.
MMX said in a statement:

To date, actual deletions for the first 31 days of registrations for .vip from China are currently less than 1%, with manually confirmed renewals for the same period already at over 60%, with the remainder being placed on auto-renew by registrars on behalf of their customers.
Whilst not all of those placed on auto-renew will be renewed, MMX expects the overall renewal rate for the first month of .vip registrations, which will be published in late July, to place .vip in-line with the best-in-class renewal rates of leading western facing top-level domains (i.e. c. 70% and above).

While MMX has made much of the fact that it has not sold .vip names for almost nothing, unlike some competitors, they’re still pretty cheap in China.
.vip names sell for the CNY equivalent of $3 to $4 at the major Chinese registrars. GoDaddy prices them at $20.
CEO Toby Hall said that there had been some volume-based discounts available to registrars, but “nothing which took the pricing below our general availability pricing”.
Its actual renewal rate will become clear at the end of July, MMX said.

MMX stung for $7.7 million by crappy .london contract?

Did MMX take a $7.7 million accounting hit to renegotiate a crappy .london gTLD contract? It looks a bit like that to me.
Found in the company’s full-year 2016 financial results yesterday is the disclosure that it had to pay off an undisclosed gTLD partner after originally making “overly ambitious” predictions about its likely popularity.
The deal apparently had MMX — then under previous management as Minds + Machines — making guaranteed payments to its partner on the assumption that it would sell a lot more domains than it eventually did.
.london currently has about 56,000 names in its zone file, down from a post-launch peak of about 65,000.
According to its statement to the markets, MMX recorded a 2016 one-time contract restructuring expense of $3.8 million and has added a $3.9 million intangible asset to its balance sheet in relation to the contract.
That’s a total of $7.7 million, but CEO Toby Hall told DI that the cash payment was nowhere near that amount. He said:

in reality we have paid no where near that amount and much of this is the accounting treatment of a new contract that we believe has the potential to deliver future economic value to the business and will be covered from future revenues.

The gTLD in question is not named in the statement, and Hall also declined to name it in response to a DI inquiry, but MMX says of the contract:

In very early 2012, at the time when ICANN was still accepting new generic Top Level Domain applications, the then Executive Team entered into an overly ambitious agreement that it believed would provide value to the overall profile of the Group. The agreement had very significant financial commitments over the life of the contract and did not include any clauses that could allow the Group to renegotiate those commitments should the specific top-level domain not perform to the agreed financial projections. The growth of this top-level domain has not come close to meeting those expectations and the agreement has proven – and would have continued proving – to be a significant drag on the Group’s ability to generate positive cashflow from the given TLD.
In late Q4 of 2016 the current Executive team was able to successfully conclude renegotiations of certain components of the agreement by either restructuring or buying out certain financial commitments thus making it more economically viable going forward. As a result of the renegotiation effort, the Group has revised its modeling and believes that it can derive future economic benefit from the renegotiated contract. Accordingly, based on Management’s review, a portion of the buy out ($3.8million) has been expensed as a one-off restructuring cost while the remaining portion ($3.9million) will be capitalized as an intangible asset with future economic benefit.

All the evidence points to .london being the gTLD in question.
First, MMX says that the deal was entered into in “very early 2012”, which ties up with the timing of the request for proposals by the Mayor’s marketing office, London & Partners.
Second, MMX doesn’t have any other partner-based gTLDs that would plausibly have such ambitious commitments.
Third, MMX has previously stated that it was renegotiating some “burdensome” contracts. Last year, without relating it to a renegotiation, it said in a trading update that it was “encouraging to see an increasingly commercial and flexible approach from London & Partners, our Dot London partners”.
Fourth, word on the street back in 2012 was that L&P (which remember is affiliated with the London Mayor, an elected political office) had gone with tax-haven-based MMX rather than UK-based non-profit Nominet because MMX (then Minds + Machines) had offered the best financial incentives.
The scrapping of the old deal is perhaps another indicator of the hubris that accompanied the opening of the new gTLD program five years ago.
While L&P is the “owner” of .london, for want of a better word, in practice I gather that MMX runs it pretty much as if the gTLD was part of its regular portfolio.
The news of the contract changes were made in MMX’s audited 2016 results, which showed its billings doubling to $15.8 million during the year.
Revenue was $15 million, up from $6.3 million in 2015. Less partner payments, revenue was $13.5 million versus $5.5 million a year earlier.
The statement has half a dozen or more bottom lines, depending on what costs you exclude, but the one MMX wants us to look at is “Billings Operating EBITDA before one off restructuring costs”, which was $4.2 million compared to a loss of $6.6 million in 2015.
That, in other words, means that an unprofitable company has become a profitable one.
A lot of that has to do with the revenue from hundreds of thousands of .vip domain sales in China and a swingeing restructuring that led to headcount being slashed from 43 people to 20 people.
The company also sold off its registrar business to Uniregistry and started outsourcing its back-end functions to Nominet.
For 2017, the company has already disclosed two huge sales that will boost domains under management considerably, but at the risk of concentrating a larger part of MMX’s business outlook in just a few hands.
UPDATE: This article was updated a few hours after publication to clarify what MMX has said in relation to .london in previous trading statements.

Mystery buyer pumps $500,000 into MMX gTLDs

MMX has inked a deal to sell 90,000 domain names to a mystery buyer.
The company formerly known as Minds + Machines today disclosed to the markets that the deal is worth $500,000 in the first year, and that the names will be registered at some point over the coming 12 months.
CEO Toby Hall declined to identify the buyer or the gTLDs concerned, but told DI that it’s an end-user buyer rather than a domain investor, and that the buyer is not Chinese.
It’s unrelated to the $1.3 million a Chinese domain investor paid for 200,000 .vip domains a couple weeks ago.
In both cases, the sales were disclosed to the market because they were financially material.
In this case, the 90,000 domains will cause a 37% uptick in MMX’s total registration base, if you exclude .vip from the portfolio.
The names are not registry-reserved, and are not premium-priced.
It works out to about $5.55 per domain, which is a first-year discount MMX agreed to with the undisclosed registrar that brought in the business. If they renew, they will renew at whatever the standard renewal price is at the time.
Hall said he did not know exactly when the domains will be registered, but MMX’s statement to the market said that it would be within the next 12 months.
Quite how the buyer can commit to buying 90,000 names without even knowing whether the names it wants will be available when it comes to register them, I’m not sure.
It’s all a bit mysterious, but my gut feeling is that we’re probably looking at one of those networks of low-quality, machine-aggregated, niche-content portals that spring up from time to time.
Previous efforts linked to the gTLD industry, such as Zip.pro and Socium Networks, haven’t exactly set the world alight.
But it this case it appears to buy a genuine third-party buyer, not a registry front.
Hall said that he was unaware of whether the buyer has also made large-scale purchases from other registries that do not have the same disclosure requirements, but said it was certainly possible.

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.

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.