Domain name company sees higher e-commerce revenue.
Communicate.com (OTCBB: CMNN.ob), a domain name company that owns valuable domains such as Boxing.com and Perfume.com, reported record quarterly revenue for the quarter ending March 31, 2007.
The company makes money primarily through its e-commerce sites such as Perfume.com and Karate.com as well as PPC income from domains such as Call.com. Retail sites are now generating over $15,000 per day although margins remain relatively slim. This low margin is partly because the company dropships many of its sales. This cuts margins but reduces risk. The company is starting (or planning) to carry inventory in the future. This should increase margins but increase risk. PPC revenues are down compared to last year, but the company has adjusted its parking pages and is recovering from a massive reduction in pay-per-click revenue that occurred last year. One thing I notice is that Communicate.com removed the preview pictures from its parked pages. Perhaps preview pictures don’t increase click-through rates afterall.
The company currently shows $1.4M in intangible assets related to domain sales, leasing, and advertising. I assume this is the book value of its domain names. With active sites like Perfume.com and stellar one word domains like Brazil.com and Yen.com, this number is low — but blame that on accounting rules. The market currently values the company at about $20M USD.
One possible thorn in its side is how it monetizes Cricket.com. Cricket.com predates Cricket Wireless, and Cricket.com has a disclaimer about not being affiliate with Cricket Wireless, but all of its ads are for cell phones. On the other hand, this domain isn’t generating more than $5,000 or so in PPC revenue per month on the high side (see comment below) and with the popularity of the sport Cricket this domain could sell for over $1M.