Web.com paid $7.4 million for SnapNames and hopes for a revenue contribution of $5 million this year.
Web.com paid $7.4 million cash to acquire SnapNames from KeyDrive, the company revealed on its investor conference call yesterday.
The company described it as a “small tuck-in acquisition” at a financially attractive price.
Web.com expects SnapNames to generate about $5 million in revenue for its period of ownership in 2014. The acquisition became public on March 1, so this suggests annual revenue of around $6 million.
The company, which owns registrars Network Solutions and Register.com, obviously hopes to grow the business and included growth in its forecast for the year.
Web.com CFO Kevin M. Carney remarked, “As we kind of get our hands into the business and start making some changes, we’ll see those margins improve over the course of the year.”
Any uplift won’t come from moving its own expired domain name inventory from competing service NameJet, a joint venture between Web.com and Demand Media (Rightside). Web.com is apparently contractually bound to continue sending its expired domain inventory to NameJet for the time being.
Spectacular investment, if one is to accept Web.com’s fugures: a revenue of $5 million this year for a $7.4 million outlay!
Where are the Wall Street wolves?
Still, with new developments on the domain names’ scene appearing daily, only time will tell if the buyer was right….
It depends on how much money it makes. Web.com’s investors don’t care about price to revenue. They care about price to earnings.