Despite parking meltdown, Sedo’s sales success keeps it on the right path.
AdLINK Group, parent organization of Sedo, recently released its quarterly financial report (pdf). Despite a weak environment for domain parking revenue, the company seems to be holding its own in the current downturn.
Sales for the first nine months of 2008 are down 5.4% compared to the same period last year, with sales of EUR 42.4M. However, when you factor in adverse exchange rate conditions, the company grew revenue 6.25%.
Adlink blames weakness on domain parking:
This was due in particular to the changes in the policy and algorithms of one of our most important partner in the search engine business during the first quarter of 2008.
That partner is Google.
Given that domain parking revenue is down, and domain parking is a higher margin business than domain sales (which earn Sedo at most 10% gross margin), this means that domain sales at Sedo are increasing significantly.
Although the company doesn’t break out revenue between parking and sales, we can back into a decent estimate. In 2007 the company sold EUR 49.8M worth of domains. Let’s assume an average 10% commission, meaning sales commissions generated EUR 5M for the company. Last year the company paid EUR 34.5M to parking customers. If we assume the company paid out 50% of its parking revenue, then it earned about EUR 34.5M in 2007 from parking.
This obviously doesn’t add up to the company’s total sales, but it just shows how important parking is to the company’s income. Since know parking has been hit hard this year, you can decipher that domain sales are substantially higher in 2008 for the company to maintain level revenue numbers.
General user data also shows this increase:
-14.3 million domains, up 61% from same period last year
-6.1 million domains for sale, up 45%
-859,000 registered users, up 48%
-175 employees, up 22%