Numbers don’t make a lot of sense to me.
ICANN has released a projected cash flow and profit and loss statement from the new top level domain name program. It has me scratching my head.
The non-profit presents two sets of numbers.
First is an overall program cashflow statement. The program considers only 500 applications (which is near the low end of what most people are estimating). It also doesn’t show any revenue from auctions. To be fair, estimating auction revenue is basically a crap shoot.
This shows an “operating income” of about $42 million.
But then there are two expected cash outflows that net everything out to about zero: $30 million for “risk costs” (ICANN gives examples of service interruption, system failure…I’ll call it lawsuits) and $12.5 million for “historical dev costs”, which are pegged at $25,000 per application.
Now it’s been a while since I’ve practiced finance, but taking out historical cash outlays from a future cash flow statement doesn’t make a lot of sense to me.
I’d let is slide since the idea is to show the program is cost neutral, but then I start questioning the historical costs. It doesn’t seem to match the actual outlays.
Based on ICANN’s financials, I think the group has spent about $14 million on new gTLD development over the past two financial years alone.
Of course, these numbers don’t include additional ICANN fees and registry fees going forward, which would swing the program to a profit.
I’m also confused by the annual profit and loss statements that show fees from only 150 applications received in 2012 and the rest in 2013. Applications and fees are due in April 2012, right? ICANN’s financial year ends in June. I suppose ICANN may not recognize all of this revenue up front, but it seems like an odd breakdown. Or perhaps I don’t understand the timing.
If you’ve studied ICANN’s financials more, feel free to chime in.