Domain name company sees robust domain names sales.
I’ve written several times about how Dark Blue Sea (ASX: DBS.AX), parent company of Fabulous, has seen a massive drop in domain parking revenue. But what I haven’t highlighted is growth in the company’s domain sales. I’ve dismissed it somewhat because its latest financial year’s sales include a couple large portfolio sales. But the numbers are too much to ignore.
In its most recent annual report for the financial year ending in June, the company recorded $5.807 million in domain sales compared to $1.985 million in 2007. This does not include premium domain sales of nearly $600,000 for 2008.
Is the increase in domain sales due in part to the company’s resale agreement with GoDaddy? Dark Blue Sea estimates it will sell 45,000 domains through GoDaddy at an average price of $1,000 over its 5 year deal. So far the company keeps saying it will start to realize the benefits of this deal soon, but numbers haven’t been broken out. And since the sales numbers here are as of the end of June, we shouldn’t expect to see much of a lift from the GoDaddy deal in them.
GoDaddy has strong incentives to make it work, assuming that by boosting DBS’ end user sales it can pump up the companies ailing stock price. GoDaddy gets up to 6.5 million options in DBS as part of the sales deal, but they have a strike price of $.65 per option. DBS currently trades for $.18.
Another bright spot for DBS is its registrar business, which saw its revenues increase from $3.298 million to $5.606 million in 2008.
Will DBS manage to overcome its parking revenue shortfall through smart acquisitions and sales? It’s possible. The company uses reams of data to make buying and selling decisions. It also has the foresight to hedge against currency differences in Australia (where it pays employees) and the United States (where it gets its advertising revenue checks from).
Look for an article soon about how the Dark Blue Sea machine works and how it values domain names.
Johnny says
Sounds risky….when you sell your domain assets your PPC income falls.
Andrew says
Johnny, they are selling their domains at hundreds — even thousands — of times their annual earnings.
Claude Gelinas says
Let’s hope that their strategy works out but it’s very true that landing page pay-per-click revenues have generally fallen from 30% to 50%, over the last year.
Of course, when a name is sold, DBS has to come up with an equally good name to expect to be able to make that money… again — over time, this could become harder.