MMX’s year marked by terrible renewals

MMX saw its revenue dip in 2020, and it reported shocking renewal rates at two of its highest-volume gTLDs, according to the company’s annual financial results, published this morning.

The portfolio registry, which is in the process of selling off essentially its entire operating business to GoDaddy, reported revenue of $16.8 million for the year, down from $17.2 million in 2019.

Profit was up very slighty, to $2.9 million from $2.8 million.

The 2019 results included a few one-off gains, including $588,000 from losing a new gTLD auction, which accounted for most of the 2020 revenue decline.

But the company also reported a 19% decline in domains under management, from 2.46 million to 1.99 million, based on some terrible renewal rates in its .vip and .work gTLDs.

The DUM decline can be attributed mostly to .vip, a popular TLD among Chinese speculators, which started 2020 with around 1.4 million domains but finished the year with just over a million.

.work actually ended the year up on where it started, with around 709,000 names under management.

But MMX today disclosed that the renewal rates for .vip and .work were 36% and 18% respectively. In a business where 70%+ is considered healthy, these are some poor numbers indeed.

However, the company discontinued first-year promotions on these TLDs in 2020, focusing instead on selling domains likely to lead to recurring renewal revenue, which lead to 14% (.vip) and 19% (.work) increases in revenue.

Fewer domains. More money.

MMX said that it is seeing these trends continuing into 2021. Public transaction reports show both these TLDs losing 40-50,0000 names in January. The company expects revenue to fall 4% in the first quarter compared to Q1 2020.

One bright spot appears to be “The Great Relese”, the company’s move last month to mark down hundreds of thousands of premium-priced domains. That’s brought in $170,000 since its April 23 launch.

One basket where the company is placing a lot of its eggs is AdultBlock, the trademark protection service it inherited when it acquired ICM Registry a few years back. It enables customers to block their brands in .xxx, .porn, .adult and .sex without actually having to register the names.

The 10-year period ICM allowed brands to block when it launched in 2011 is coming to an end, so MMX is banking on renewals (which retail at $349 to $799 per year before multi-year discounts) to boost revenue.

“While it is early in the AdultBlock Sunrise B renewal period, we are encouraged by Registrar interest and some early sales of this product,” CEO Tony Farrow said in a statement.

This reliance on AdultBlock for short-term organic growth was one of the reasons MMX is selling up to GoDaddy.

The market-leading registrar and fast-emerging registry consolidator agreed to pay $120 million for MMX’s portfolio, which will leave MMX as a shell company only long enough to distribute the cash to investors before fading away quietly.

That deal has an August deadline to close and is dependent on approvals from business partners, ICANN and the Chinese government.

MMX vows to refocus under new boss after crappy 2020

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.

GoDaddy has a secret weapon in its push into corporate domains

While GoDaddy has been focused for the last two decades on small and microbusiness customers, its entry this year into the corporate domains management space should not be dismissed — the company has one huge advantage.

Earlier this week, the company announced the launch of GoDaddy Corporate Domains, really just a rebranding of the company Brandsight, which it acquired back in February.

The move pits GoDaddy against industry leaders such as MarkMonitor, CSC, Com Laude, Safenames et al.

But the company has one huge advantage that its new competitors do not have: cybersquatters and criminals.

Buried at the bottom of this week’s press release is the announcement of a new service, the Verified Intellectual Property program, which “provides pre-vetted, well-known and famous brands an escalation path to address IP abuse”.

It sounds basically like a trusted notifier service not unlike those offered at the registry level by the likes of Donuts and Radix.

VIP clients will be able to get sites and domains hosted on GoDaddy taken down much quicker, via a special escalation email address, a spokesperson said. Takedown requests will still be subject to manual review, he said.

VIP is currently invitation-only, but I assume being a Corporate Domains customer would help expedite an invitation.

This kind of service is something GoDaddy’s new rivals cannot offer — they generally have no retail channel or hosting, so have no cyberquatters, pirates or counterfeiters as customers. If they want to take down a domain or web site, it’s not a simple matter of flipping a switch.

They also don’t have tens of millions of domains under management, many of which, through no fault of GoDaddy, will be maliciously registered.

This is potentially a pretty cool USP for GoDaddy, which could have rivals worried.

MMX waving goodbye to .london? Boss puts focus on renewal profits, China

MMX’s revenue from domain renewals could cover all of its expenses within the next 24 months, if everything goes to plan, according to CEO Toby Hall.
Hall was speaking to DI this evening after the company reported its first-half financial results, which saw revenue up 22% to $6.4 million and a net loss of $14.7 million, which compared to a loss of $526,000 a year earlier.
MMX’s huge loss for the period was largely — to the tune of $11.8 million — attributable to the restructuring of an “onerous” contract with one of its gTLD partners.
Hall refuses point blank to name that partner, but for reasons I discussed last year, I believe it is .london sponsor London & Partners, which is affiliated with the office of the Mayor of London.
When L&P selected MMX to be its registry partner for .london back in 2012, I understand a key reason was MMX’s promise to pay L&P a fixed annual fee and commit to a certain amount of marketing spend.
But two years ago, after it became clear that .london sales were coming in waaaay below previous management’s expectations, MMX renegotiated the deal.
Under the new deal, instead of committing to spend $10.8 million on marketing the TLD itself, MMX agreed to give half that amount to L&P for L&P to do its own marketing.
It appears that L&P has already spunked much of that cash ineffectively, or, as MMX put it:

a significant portion of that marketing budget has been spent by the partner with minimal impact on revenues in the current year and no expectation of any material uplift in future periods

MMX seems to have basically written off the .london deal as a bad call, and now that MMX is no longer in the registry back-end or registrar businesses, it seems unlikely that the .london partnership will be extended when it expires in three years.
Again, Hall would not confirm this bad contract was for .london — I’m making an informed guess — but the alternatives are limited. The only other TLDs MMX runs in partnership currently are .review and .country, and not even 2012 MMX management would have bet the farm on those turkeys.
Another $2.1 million of the company’s H1 net loss is for “bad debt provisions” relating the possibility that certain US-based registrar partners may not pay their dues, but this provision is apparently related to a new accounting standard rather than known deadbeats threatening to withhold payments.
If you throw aside all of this accountancy and look at the “operating EBITDA” line, profit was up 176% to $661,000 compared to H1 2017.
While the loss may have cast a cloud over the first half, Hall is upbeat about MMX’s prospects, and it’s all about the renewals.
“Renewal revenue will be more than all the costs of business within 24 months,” he said. To get there, it needs to cross the $12 million mark.
He told DI tonight that “an increasing percentage of our business is based on renewals… just on renewal revenue alone we’ll be over $10 million this year”.
Renewal revenue was $4.7 million in 2017 and $2.4 million in 2016, he said. In the first half, it was was up 40% to $3.4 million.
MMX’s acquisition of porn domain specialist ICM Registry, which has renewal fees of over $60 per year, will certainly help the company towards its 2018 goal in the second half. ICM only contributed two weeks of revenue — $250,000 — in H1.
Remarkably, and somewhat counter-intuitively, the company is also seeing renewal strength in China.
Its .vip gTLD, which sells almost exclusively in China, saw extremely respectable renewals of 76% in the first half, which runs against the conventional wisdom that China is a volatile market
Hall said that .vip renewals run in the $5 to $10 range, so apparently TLD volume is not being propped up by cheap wholesale renewal fees. The TLD accounts for about 30% of MMX’s renewal revenue, Hall said.
About 60% of .vip’s domains under management are with Chinese registrar Alibaba. The biggest non-Chinese registrar is GoDaddy, with about 3% of the namespace.
More exposure to China, and specifically Alibaba, is expected to come soon due to MMX’s repurposing of the 2012-logic gTLD .luxe, which is being integrated into the Ethereum blockchain.
MMX said last week that some six million (mostly Chinese) users of the imToken Ethereum wallet will in November get the ability to register .luxe domains via imToken and easily integrate them with their Ethereum assets.
The announcement was made at the Alibaba Cloud Computing Conference in China last week, so you can probably guess imToken’s registrar of choice.

MMX revenue slips despite domain growth

MMX today posted a smaller loss for the first half of the year, despite managing to grow domains under management and hit some important financial milestones.
The new gTLD registry formerly known as Mind + Machines, which announced a few months ago that it’s looking to be acquired, reported an H1 loss of $526,000 compared to a loss of $1.9 million a year earlier.
Revenue and billings were both down due to the lack of any big launches in the period; H1 2016 had benefited from the strong launch of .vip in China.
Revenue, which is recognized over the duration of the domain registrations, was $5.3 million compared to $7.4 million in 2016. Billings, a measure of cash sales, were $5.6 million compared to $8.1 million.
Despite these dips, MMX is happy enough that the “quality” of its revenue is getting better.
The company said that revenue from domain renewals more than doubled to $2.4 million and represented 45% of revenue. A year ago, it was 15%.
As another measure of the health of its business, it also said that its renewal billings was greater than its operating expenditure for the first time, after cost-cutting.
Domains under management went into seven figures for the first time, to 1.1 million. That was up from 821,000 at the start of the year.
It processed 318,000 new registrations in the six months, compared to 452,000 a year earlier (when .vip’s launch provided a boost).

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 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.