Company values retail value of portfolio at approximately $1,000 USD per domain.
A Dark Blue Sea investor presentation (pdf) suggests that the retail value of its 570,000 domain portfolio is about $600 million. The presentation also provides a wealth of other statistics and details on its deal with domain registrar GoDaddy.
Dark Blue Sea, an Australian company, is well known to domain name investors for its Fabulous domain registrar and domain parking services.
As of the end of 2007, approximately 152,000 of the company’s domain names were profitable, meaning they eclipsed the $6.42 wholesale price of domain registration. The company estimates the average retail value of its domains to be $1,000, and also predicts that GoDaddy will help it sell 45,000 domains over the coming five years. Dark Blue Sea inked a partnership with GoDaddy earlier this year that involves a commission and options for 7% of Dark Blue Sea. The options vest according to the number of sales GoDaddy generates, which incentivizes the company to make sales. Overall, Dark Blue Sea expects $25 million to $30 million in profit from the GoDaddy deal over the next five years.
So if only a quarter of Dark Blue Sea’s domain names are profitable from pay-per-click revenue, where is the value? The company points to the retail market, where domain purchase prices have little connection to PPC multiples. For example, here are some domains the company has sold, the sales price, 12 months trailing revenue, and the implied revenue multiple:
MagazineReviews.com – $1,200 – $2.28 – 527x
CollegeInvestment.com – $2,650 – $32.08 – 83x
UraniumOxide.com – $830 – $.69 – 1197x
MexicanStocks.com – $800 – $.76 – 1058x
ArtBlankets.com – $1,200 – $.33 – 3663x
Another company that focuses on retail sales is NameMedia, which owns domain name aftermarket Afternic and sales platform BuyDomains. NameMedia says the “sweet spot” for small and medium business domain name sales is between $2,000 and $5,000.