Sedo Paid $825,000 for RevenueDirect
Wednesday, April 8th, 2009
Acquisition was small in monetary terms, but important in its signal.
According to public company financial reports, Sedo paid $825,000 for its acquisition of RevenueDirect in February. The purchase price included the customer base, RevenueDirect brand and all respective software.
The transaction price was not announced when the company was purchased in February, leading to speculation about the value of the deal. Many considered it small, and this is true from a dollar amount and perhaps the number of domains involved. But the deal was significant for a few reasons:
1. Sedo extended its relationship with Dotster, a registrar with over 1,000,000 domains under management.
2. It signifies future consolidation in the domain parking business, especially for smaller domain parking companies. (See Domain Name Industry Acquisition Watch).
3. It improves Sedo’s reach inside the United States, whereas the company is relatively stronger than its competitors outside the U.S.
Now that we know the sales price, we also have an idea of what comparable small domain parking companies might sell for. In this case it’s impossible to determine how much of the $825,000 purchase price was related to Dotster’s own domains and their monetization stream, client domains and their revenue stream, the technology, and the enhanced relationship with Dotster.
Further Reading:
- Q&A With Sam Nunez about Sedo and RevenueDirect
- Sedo Acquires RevenueDirect and Why It Makes Sense
- Sedo Adds Dotster to SedoMLS
Tags: dotster, revenuedirect, sedo
Sedo Paid $825,000 for RevenueDirect – http://tinyurl.com/cq9q7p
[...] Entries Sedo 2008 Revenue Falls to EUR 54.7 MillionSedo Paid $825,000 for RevenueDirectHow to Get Press for Your Domain Name BusinessDomain Name News Bytes for April 8Edible Arrangements [...]
Great.. Just as I originally predicted
http://domainnamewire.com/2009/02/24/sedo-acquires-revenuedirect-and-why-it-makes-sense/#comment-346232
“I’d be surprised if Sedo paid more then $1m for this acquisition.”
I still don’t know whether it was money well spent.
Hmm…
Bad move for sedo, all of revenuedirects customers are gone now because sedo sucks so bad.
[...] The company’s first quarter financial report shows that the company now has 962,000 registered members, up from 907,000 at the end of last year. At this pace, Sedo should hit the million mark sometime during Q2 2009. It’s unclear if these numbers include new registrations that were part of Sedo’s acquisition of RevenueDirect. [...]
This price is nearly impossible.
$800,000 is nearly impossible. RevenueDirect (Dotster) had 300,000 domain names resolving to its nameservers the last time I checked.
That would equal to at least $15 million in revenue per year in domain parking alone.
Not to mention, sale includes a direct google relationship, user base, software and templates, and full DNS control of 300k domain names meaning they can be placed on Sedo marketplace as well (about double the revenue).
Sedo has 1.9 million domain names resolving. If 800k price tag were true, Sedo would be worth pennies.
Sedo is worth over 200 million the last I checked.
800k is NOT POSSIBLE and this REPORT IS JUST WRONG.
Matt
Matt, the price is correct. Actually $825,000.
There’s no way RevenueDirect brought in $15M a year. That’s $50 per domain.
I disagree.
That is just a price in “public records”. The deal must’ve or should’ve gotten much farther in my opinion.
I know someone that has been using it at the time of sale and brought in over 1k in revenue per day! That is just 1 user account. That alone is worth the deal.
15 Million a year is very possible. Maybe I am even underestimating it.
We are talking about 1,000,000 total Dotster domain names, correct? With 300,000 resolving. Compare that to Parked.com which has a bit over 600,000 resolving currently.
I wouldn’t be so sure if I were you. I am doing simple math here. And 800k definitely does not make sense.
RD had one of the better AFD deals on the table. Unless they lost the feed before the sale, there is no way someone with the right mind sold off 300,000 resolving domain names for 800k. That’s crazy talk.
Matt
And you think $50 a domain name is too much? You are the one that is not doing the math.
Sedo brought in $77 million dollars in revenue from its domain parking business in 2008.
Sedo has 1.9 million domain names resolving. $77 million / 1.9 million = $40 per domain name.
Am I making sense now?
Matt
Dude, Matt, just go look at the regulatory filing. They paid $825k.
If you want to argue math, I can assure you there are more than 1.9M domains parked at Sedo (nameservers aren’t the only way domains are parked) and that $77M wasn’t all parking.
Matt, I don’t know if you’re just trying to egg on a resposne or what. I’ve talked to many people familiar with the deal. This was the sale price. A few people I talked to think it was overpriced by a couple hundred grand. Not all of Dotster’s domains are parked.
A company wouldn’t lie in its regulatory filings.
Andrew, not trying to egg you. I know you are posting the facts, but I am sharing with you my opinion based on my industry knowledge.
I am willing to argue this if you are willing to compare apples to apples. I am comparing RD nameserver domain resolution to Sedo nameserver domains resolution. Both services offered URL forwarding.
Apples to apples: Approx 2 million domains resolving at Sedo vs nearly 300,000 resolving at RevenueDirect.
You are right $77 million includes Sedo’s domain marketplace commission. Even though RD acquisition includes RD domains placed for sale on Sedo (which is apples to apples), I’ll give you the benefit of a doubt on this one. You estimated 10 million to be from sale commissions, so let’s say 66 million $ from domain parking revenue.
$66 million / 2m domains = $33 per domain
$33 per domain * 300,000 = $9.9 million per year in domain parking revenue alone.
Not to mention the rest of the deal, which seems pretty huge as well.
You’re right, 800k, maybe even a few hundred grand less seems like the reasonable sale price. NOT.
If you really think that the domain industry is just worth a few hundred grand, or even a few million dollars based on the domains parked in comparison, then I have to tell you that is not the case. The domain parking industry is worth well over a billion dollars, and RevenueDirect was one of the bigger domain parking services.
I know you post good factual information, but there is something completely wrong with this sale. Unless Dotster had some real issues with fraud or something and lost a feed, then this is very unlikely in my opinion.
We have our own views on this. I think my calculations are pretty good and I just think that RD/Sedo know something we do not know, and will never know.
Let’s leave it at that.
Matt, I don’t think RD was worth as much as other domain parking companies on a domain-by-domain basis. They probably had a much lower rev share than Sedo and I don’t know if they had the search feed. So if you want to play with the numbers, say 300k domains x $15 per domain. That’s $4.5M a year. Let’s then assume they payout 70% of what they get, that leaves them with $1.35M a year in gross profit. Then consider the other costs and it quickly turns into a sub $1M a year business. Small parking companies can easily sell for less than 1x earnings right now.
Their base rev share was 65% from what they have claimed.
It just doesn’t make sense. The deal is much bigger than the parking unit itself. And to be honest, who would sell 1x year or less, and who would not be willing to jump on a deal like this if they were the buyer? 1x year revenue, RD can lower their revenue share to 10%, and still bank on traffic that will be pointed to their nameservers for years!
Just think about it.
Matt, you are right.
I am a London property valuer and long time domain investor. I have valued property in the hundreds of millions (£). I know numbers. However, more importantly in this instance, after working with big companies, I know how they report sales and how they “account” for them.
Ask a top accountant what 1 + 1 = ? and the answer will be “whatever you want it to be, sir”.
$825,000 = FAIL