My takeaways from Rightside’s first investor call
Naidu makes his pitch to analysts; company discloses some numbers on parking and domain sales.
Rightside just concluded its first ever investor conference call as a standalone company.
CEO Taryn Naidu and CFO Tracy Knox spent much of the time explaining Rightside’s market position to help frame the conversation with analysts.
That market position is largely betting on the success of new top level domain names. The company explained how its margins as a registry are far greater than as a registrar.
For example, it gets $20 wholesale whenever a registrar sells a .consulting domain name. It gets a 95% gross margin on that sale. If one of its own registrars sells the domain, it makes even more.
If Name.com sells a .consulting name for its retail price of $24.99, it gets the $20 wholesale plus the $4.99 retail marketup.
This is much greater than its margins on existing TLDs such as .com. It gets higher margins from some of the new TLDs, but they are still a far cry from margins on its own TLDs.
Naidu expects that margins and wholesale registry prices on horizontal domains (generics such as .web) may face downward pressure in the long run. Rightside has gone after a number of vertical domains (i.e. professions such as .attorney). The company expects this type of domain to maintain higher margins than generics.
The conference call cut out a couple times on me, but one analyst kept referring to an $11 million figure that Rightside spent on new TLDs last quarter. Rightside said this was net of proceeds from auction losses, yet it gets a bit convoluted. Knox stated that there’s a bit of a lag between the conclusion of an auction and the determination of whether its partner Donuts or Rightside gets the domain name. The Donuts/Rightside partnership is certainly confusing. (I’ll update this once Rightside releases its 10-Q with more details.)
Last quarter Rightside won rights to the new TLDs .forsale, .auction and .rip.
Moving over to domain name sales and domain parking, Rightside reported a sharp drop last quarter.
The company noted that the drop in sales of its own portfolio of domains was due, in part, to a very strong Q2 2013.
Knox said the split of its Aftermarket revenue (which was $7.1 million last quarter) is typically about 60% from domain parking and 40% from domain sales.