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Secondary market fluffs GoDaddy amid slowdown concerns

Secondary market domain sales continued to drive growth in the first quarter, GoDaddy reported this week, amid fears of slowing growth in new primary market sales.

It’s difficult to gauge exactly how well domains are selling, because the company has stopped breaking out domains as a separate revenue segment in its quarterly earnings releases.

Instead, it’s bundled domains, hosting and basic security together into a new “core platform” segment, frustrating those of us who like to see domain performance to track broader industry trends.

This “core platform” grew by 9% year-over-year in Q1, to $699.6 million, and CFO Mark McCaffrey told analysts that 40% of this growth was driven by secondary market domain sales.

“Core Platform bookings grew 5% year-over-year,” McCaffrey added. Bookings give a better indication of new sales.

A week earlier, .com registry Verisign had said that its registrars were seeing primary sales volumes growth slowing due to the easing of coronavirus restrictions that had pumped growth and general post-pandemic economic malaise.

If that is happening, GoDaddy’s secondary market sales, where it has blurred the lines between retail storefront and aftermarket sales platform in recent years, provides some insulation.

Overall, in Q1 the company saw revenue of up 11.3% at $1 billion and net income up from $10.8 million to $68.6 million.

CentralNic sees 51% growth in Q1

Kevin Murphy, April 25, 2022, Domain Registries

CentralNic says it expects to report first-quarter growth of 51% and that its 2022 performance is likely to exceed expectations.

The company, which acts as registry and registrar but now makes most of its money from domain monetization, said it expects Q1 revenue to come in at about $156 million, with and adjusted EBITDA of about 18 million.

The gains are largely driven by its online marketing segment, CentralNic said in a statement to the markets this morning.

The company said in January that its 2021 annual revenue growth was 37%.

Radix renewals drive growth as revenue hits $38 million

New gTLD registry Radix brought in revenue of $38 million in 2021, up 35% on the year before, the privately held company said today.

Profit was up 60% over the same period, Radix said, without disclosing the dollar amount.

It made almost as much in renewal revenue in 2021 as it made overall in 2020 — $27 million versus $17.9 million in the prior year. Last year 72% of revenue was standard-fee renewals versus 64% in 2020.

But the revenue from new regs was basically basically flat at $5.7 million versus $5.6 million — 15% versus 20% of overall revenue.

Revenue from premium-tier domains (both new regs and renews) was 12.5% of revenue, or $4.75 million, up from $4.5 million in 2020.

The customer country mix may be a little broader too. Radix said 47% of revenue now comes from the US, which is down from the 64% it reported for the previous year.

The company said .online is still the strongest performer in its portfolio.

CentralNic grows revenue 70% in 2021

Kevin Murphy, January 17, 2022, Domain Registries

CentralNic saw its revenue grow by about 70% last year, a bit more than half of which was organic growth, the company said this morning.

The acquisitive company expects to report revenue of about $410 million and adjusted EBITDA of about $45 million when it reports its final numbers on February 28.

That represents year-on-year organic revenue growth of 37% and a 47% growth in EBITDA, the company said.

Acquisitions closed during the year include Safebrands, Wando and NameAction. Most of its recent growth has come from its newish domain monetization business.

Verisign boss talks .web launch, timing and pricing

Kevin Murphy, October 29, 2021, Domain Registries

Verisign hasn’t fully won .web yet, but it expects to soon and is talking in general terms about what the it might look like live.

CEO Jim Bidzos yesterday told analysts that he expects the Independent Review Process panel currently considering an appeal by rival applicant Afilias to deliver its final verdict before the end of the year. No hearings are scheduled.

Afilias claims Verisign and its secret proxy, Nu Dot Co, cheated, and that ICANN broke its own rules, in the 2016 auction that saw Verisign promise to pay $135 million for .web. Verisign thinks the claims are rubbish.

Bidzos told analysts, wanting to known when they can put .web revenue into the models, that it while it’s a “bit early to speculate” when the company will launch .web, it will likely happen a “couple of quarters from delegation”.

On pricing, he noted that .web does not have the same price controls as .com and .net:

.web is, of course, different from .com and net and that it’s not a price controlled TLD… We do have flexibility with it that we don’t have with other TLDs, and premiums are available. Other sorts of options are available.

But will the company put its marketing muscle behind .web? Many people, myself included, have said that Verisign’s interest in the gTLD is more about keeping it out of its rivals hands. Bidzos said:

There certainly will be some sort of marketing launch that will occur, but I just think it’s too early to really talk about what that would look like and what the expense impact will be. But we certainly intend to market and promote .web. Our plan, our desire, as we’ve stated — and I’ll say again — is to offer our customers more choice and to make .web a very successful TLD.

His comments came as Verisign reported its third-quarter financial results.

The company reported revenue up 5.1% at $334 million and net income of $157 million compared to $171 million a year ago.

It had 172.1 million .com and .net domains in its registry at the end of the quarter, up 1.48 million sequentially and a 5.1% increase on the year-ago number.

CentralNic says it’s making more money than expected

Kevin Murphy, October 18, 2021, Domain Registries

Domain all-rounder CentralNic this morning told the markets it thinks it will hit or beat expectations this year.

CEO Ben Crawford said in a statement this morning that at the end of 2021 the company expects to be “at or above” analyst estimates of $348.6 million to $355.3 million at the top line and profit of $41.1 million to $42.0 million.

For the nine month ended September 30, CentralNic expects revenue to come in at $280 million or above, with adjusted EBIDTDA of at least $32 million, up 66% and 45% respective on the same 2020 period.

That represents organic growth, normalizing the impact of acquisitions, or 29%, the company said.

While the company did not reveal the drivers behind its growth, in recent quarters the best performer has been its domain monetization business, which provides revenue from parking ads and traffic redirection.

It will report its results November 22.

MMX vows to refocus under new boss after crappy 2020

Kevin Murphy, January 25, 2021, Domain Registries

MMX says it plans to refocus its business on higher-margin products after a 2020 marred by plummeting registrations, product delays and financial irregularities that led to senior management being oustered.

The new gTLD registry also revealed that it laid off 20% of its staff in a “right-sizing” exercise last year. Due to its modest size, this means about four or five people lost their jobs.

The company said today that acting CEO Tony Farrow has been confirmed for the job full-time, and that he will join the board of directors after regulatory checks.

Farrow took over last October, when CEO Toby Hall and CFO Michael Salazar were both ejected after admitting to over-stating MMX’s revenue and profit in 2019.

Now, Farrow says MMX will spend 2021 focusing on “quality” regs — those with a higher chance of renewing or with higher-margin reg fees — and on its AdultBlock services, which block trademarks and typos across its four porn-themed gTLDs.

Overall domains under management declined 19% in 2020, which appears to be almost entirely down to .vip, a cheap gTLD that initially performed strongly with Chinese speculators, losing about half a million names.

AdultBlock, which covers the old ICM Registry portfolio, launched at the end of 2019 with a high price tag and a couple bulk sales, but stalled during 2020. MMX blames this for a 3% decline in overall billings last year.

The company also hinted that it may try to offload some of its crappier gTLDs, saying:

The new executive team is also reviewing the contribution received from each of its TLDs and the growth prospects for each from new sales initiatives to ensure the carrying values associated with each TLD is appropriate going forward.

Farrow said in a news release:

Our FY 2021 plan will focus on AdultBlock sales, extensive release of inventory to the market, quality registrations with the view of future renewal revenue and standardized promotions for our channel partners. It is a straightforward business where focus must remain on the quality of our domain registrations and promotions with our channel partners. We lost some of the momentum after the initial launch of AdultBlock in FY 2019. However, FY 2021 was always the target year for the full rollout of this new product, and I am encouraged by the dialogue with our channel partners to really move AdultBlock in FY 2021.

AdultBlock, which sets trademark-match domains aside as non-resolving reserved names, launched with a price tag of between $349 and $799 per trademark per year.

MMX separately announced today that it is paying ICM Registry’s investors, primarily founder Stuart Lawley, over alleged (and denied) breaches of unspecified warranties made at the time of the acquisition in May 2018.

Farrow was COO of ICM from the 2011 launch of .xxx until the MMX acquisition.

CentralNic seeing no impact from coronavirus

CentralNic, the triple-play domain company, has told the markets that the coronavirus pandemic is not having an impact on its financial health.

In a statement yesterday, the company said:

To date, CentralNic has not experienced interruptions in its services to customers or in its supply chain, and the Company confirms that its current trading is in line with market expectations.

CentralNic’s business is expected to remain resilient. Its services are procured and delivered over the internet, and the majority of CentralNic’s revenues are payments from existing subscribers and customers on rolling contracts. The Company’s core product is the sale of domain names, which are core infrastructure that enable the functioning of email and websites — the most important communication tools used between work colleagues working remotely and between companies and their customers.

The company makes most of its money from the retail side of the industry nowadays, largely via a network of thousands of resellers, but it also runs its own TLD registries and acts as a back-end for some high-volume TLDs such as .xyz.

It expects to report its 2019 financial results and a summary of its Q1 performance a few weeks from now.

Radix says it’s profitable after making $12 million this year

Kevin Murphy, December 13, 2017, Domain Registries

New gTLD stable Radix said today that it expects to top $12 million in revenue this year.
The company also told DI that it is currently profitable.
Radix, which counts the likes of .site and .store among its portfolio of nine active gTLDs, said revenue so far for the calendar year has been tallied at $11.7 million.
The company said that more than half of revenue came from “non-premium domain renewals”, an important metric when considering the long-term health of a domain business.
Recurring revenue of non-premiums was almost twice as much as new registrations, Radix said. Only $1.76 million of revenue came from premium sales (14%) and renewals (86%).
The US accounted for just under half of revenue, with Germany at 14.4% and China, where .site was fully active for the whole year and four other TLDs were approved in October, coming in at 7.7%.
Radix is a private company, part of the Directi Group, and has not previously disclosed its financials.
Assuming apples-to-apples comparisons are valid (which may not be the case), its figures compare favorably to public competitors such as MMX, which expects to report 2017 in the same ball-park despite having more than twice as many gTLDs under management.

M+M turns $22m profit into $10m loss

Kevin Murphy, April 27, 2016, Domain Registries

Minds + Machines today reported a 2015 loss of $10 million and further outlined its “transformative” restructuring and China strategy.
It’s the second full year of operating results M+M has posted since its first new gTLDs went live, and they’re not encouraging.
Revenue for accounting purposes was $6.3 million, but the cost of sales was $6.2 million, leaving gross profit of just $101,000.
Factoring in $12.1 million of operating expenses, a $7.9 million gain from losing new gTLD auctions, and other expenses, the total loss before tax was $10 million.
That’s compared to the $22 million profit M+M reported for 2014, a number entirely reliant on $33.7 million of auction loss payments.
The company also reported its “billings”, a line item that does not use the accounting method of deferring revenue across the life of a domain and is therefore more in line with incoming cash.
Billings for 2015 were $7.9 million, compared to $5 million in 2014. Gross profit under that measure was $1.7 million, but the $12 million of operating costs still made the company very unprofitable.
Ignoring the auction benefits in 2015, which will not last forever, it’s pretty clear that M+M was a company spending much more operating new gTLDs than it was making from them.
COO/CFO Michael Salazar said in a statement:

However, billings of $7.9 million for the year were simply not of a sufficient scale to cover the associated cost of sales ($6.2 million) and operating expenses ($12.2 million), which combined reached $18.4 million for 2015. Similarly, the $0.6 million savings achieved in the period by the decisions mid-year to stream-line the existing operational set-up were not of a magnitude to have any material impact in the year under review. That said, forfeited cost of sales and operational expenses as a result of the 2015 cost-cutting decisions will amount to $2.7 million in 2016

It’s perhaps little wonder that activist shareholders, apparently not prepared to play the long game, threw out half of the board and key senior executives during the period.
Former PR man Toby Hall took over as CEO in February, replacing co-founder Anthony Van Couvering, and announced earlier this month that M+M is dumping its registrar and back-end registry businesses.
Its registrar customers have been sold to Uniregistry, and it will outsource its registry back-end to Nominet, to save costs.
Salazar said that the two deals will lead to $2 million in savings, but won’t be complete before the fourth quarter. It seems unlikely they’ll have a great impact on 2016 numbers.
Headcount has been reduced from a peak of 61 to 43 at the end of the year, and is expected to drop further to 25. Salazar said this will save it $4.7 million a year.
Even with these cost reductions, M+M will still need to essentially double its revenue in order to hit operating profitability, it seems.
The company is pinning some of its growth hopes on .vip, which it expects to do well in China. It launches May 18.
Hall said in a statement that M+M would not follow the lead of competitors (Famous Four Media springs to mind) by offering first-year registrations for free to build market share. He said:

Based on the enquiries received during Sunrise and feedback gained through our two recent marketing trips to China, it is clear that there is genuine interest in the domain both within and outside of China. As a result, we will not be using a year-one freemium approach to simply inflate year-one registrations. Instead, we intend to be keenly priced to ensure margin to ourselves — and registrations — as well as protect the integrity of the domain. The volume we anticipate to be generated through keen pricing will then support the sales of our premium names in this domain.

The company also plans to invest in its .law sales team, because billings for that gTLD have been behind expectations.
M+M had $34.6 million in the bank and eight outstanding contested new gTLD applications at the end of the year.