Company acquired domain name portfolio, online storefronts and intellectual property for $44.9 million.
Endurance has filed its 10-Q quarterly filing with the SEC, and it details the purchase price paid for BuyDomains.
The total amount paid was $44.9 million. That includes $41.1 million in cash, plus another $4.5 million due in two years. (It took the net present value of the $4.5 million to get to the $44.9 million.)
Of the $44.9 million, Endurance has allocated $26.9 million to the portfolio of domains it acquired.
If you look at the full purchase price, it comes out to about $47 per domain name. If you look at just the $26.9 million allocated to the domain portfolio, it comes out to $28 per domain name.
When Endurance announced the acquisition, it lumped the acquisition price in with two other companies for a total of $77 million. That gave a high end estimate of $80 per domain name. We now know it’s much lower than that.
As I detailed earlier this week, valuing the company based on the number of domain names might not be a fair way of valuing it.
That is pretty bad news. Amazing how the domain portfolio could be worth that little.
Buyers at the mid 10-figure level aren’t lined up around the corner. A motivated seller can’t liquidate for that amount of cash at the drop of a hat. To me it looks like good value for the buyer, and folks at Afternic / BuyDomains seem to have been in the mood for an exit recently.
France sold the USA the entire middle 1/3 of its territory for “$236 million in 2013 dollars, less than 42 cents per acre”:
http://en.wikipedia.org/wiki/Louisiana_Purchase#mediaviewer/File:LouisianaPurchase.png
Russia sold Alaska to the USA for “around $100 million dollars in 2011” money:
“http://en.wikipedia.org/wiki/Alaska_Purchase
Placed in its historical context, BuyDomains’s sale don’t look so darn bad.
I hope those comparisons are merely a humorous aside. For a more recent historical comparison, I like to think that Endurance got upwards of 1 million domain names at one-half registration fee (which few seem to recall was $70 in 1999).
Jeff you are looking at it the wrong way. It’s a business just like any other business. Most of those domains are a liability, not an asset and the valuation is a function of the cash flow that the portfolio kicks off. I would have to imagine that cashflow has been on a significant decline as BuyDomains has sold off the vast majority of it’s high quality “liquid” domain names as well as most of it’s income generating domain names (at least the good consistent ones which are not trademarks). Frankly, as someone that has evaluated that portfolio and made many purchases from it in bulk, I think only a max 10% of the entire portfolio has real value and a likelihood of selling within a 5 year period.
If you take $27 million and you divide it by 100,000 names (10% of the portfolio apx) you get $270 per name. On a deal of this scale that ain’t all bad.
I think they did well for their shareholders by cutting the cord when they did. There are not many buyers out there with that kind of cash to swallow up a 1 million name portfolio!
On the surface, this is scary. But I wonder if there is a must have opprtunity compelling them to sell so low.
I need to find somebody to sell off the little portfolio I have.
Not all of BuyDomains’s inventory is of obvious high quality, nor is it guaranteed to sell.
The life cycle of many a borderline domain is more or less as follows. Someone hand-registers it in 2011 or 2012. Rightly or wrongly, by 2014 we have given up on the domain and let it go. At that point BuyDomains and HugeDomains and DomainMarket are circling like vultures ready to scavenge whatever they can.
And because they’re more sales-focused than some domain owners and operate streamlined, high-traffic websites with certain economies of scale, these companies can often extract value from those domain scraps clinging to the bone than a smaller domainer couldn’t or wouldn’t.
Since many of the domains BuyDomains owns were domains people like me didn’t value enough to renew at $8, the average wholesale valuation per domain will average out much lower than you might think if you’re only looking at their best inventory in isolation and in a retail setting.
Hugedomains.com hoovers up deleted domains in a massive way and that means their sales model landers are the best in the business because plenty of domains have to get sold to pay registrations and renewals.
Hugedomains strategy:
-clear price on the lander
-reasonable pricing
-buy back guarantee
-friendly looking site that is also professional
Buydomains landers in comparison were an inquiry form that doesn’t show the pricing of the domain even though most of the domains are priced at godaddy.
Buydomains landers didn’t have similar trust building characteristics that hugedomains uses.
I’m guessing the sales through rate at hugedomains is at least 2-3 times what it is at buydomains so endurance got a good deal if they start selling the domains more efficiently.
Endurance needs to either turn on the parking to get some renewal money and keep a sales link on the page OR start using hugedomains style sales landers with in your face prices and buy back guarantee.
Does anyone know what part of the 12 bucks or so that the registras actually keep. At godaddy they claim that $7 bucks is cost ,but does that include rent salarys and expenses. I know there are icann fees ,but thats added on. So forget all their cost What happens to the 12 bucks you pay.
They pay Verisign $7.85 and ICANN 18 cents. The rest covers all of that overhead, marketing expense, and any profit.
Why this major company (enduranceinternational.com) doesn’t own “endurance.international”? Looks like this is a signal, that all new TLDs are fail…?!