Strong end of 2015 could make for a challenging end to 2016.
.Com domain name registry Verisign reported Q4 results after the bell yesterday.
Thanks to Chinese domain name investors, the company had 12.2 million new domain name registrations for .com and .net last quarter, as compared to 8.2 million for the same quarter in 2014. This boosted its base of .com and .net by 4.6 million after deletions.
Verisign does not expect this surge to continue. It expects a return to normalcy in Q1, with net additions of 1.5 million to 2.0 million in Q1 2016.
It also warned that it might actually have a decrease in the net base in Q4 2016 as the Chinese registrations from last quarter come up for renewal. It’s hard to predict how many will be renewed, but the company noted that:
1. Renewal rates in emerging countries are usually lower than elsewhere.
2. First-year renewal rates are lower than domains that have been renewed before, about 50%.
Will these domains be different, given that the reason for their registration was very different than most domains? Maybe. But Verisign execs noted that if only half are renewed, this could easily push .com/.net into negative territory for the quarter.
If .Com finally goes negative, it might be just a one-quarter blip. It certainly will give new top level domain name companies the ability to say .com has peaked. If so, Verisign might have wished the Q4 2015 surge never happened.