Investor presentation shows initial results from five of Rightside’s TLDs, explains how the company picked TLDs to acquire, and describes the method used to identify premium domain names.
One of the great things about having publicly traded domain name companies is that we can get more data from the companies than we can from private ones. Rightside (NASDAQ: NAME) is a prime example.
Rightside held its first Investor & Analyst Day last Friday. You can view the entire presentation with audio here. Or, if you don’t have 2+ hours to spend, you can read my summary of interesting points below.
Matt Overman, VP of Aftermarket and Premium Domains
Overman started by discussing how Rightside gets the “first look” at expired domains. When domains on its registrar platforms expire, it can either keep the domains for its own portfolio or sell them through NameJet. It has amassed over 300,000 domains through expired domain captures like this and bulk acquisitions.
With the launch of new TLDs, it can now leverage traffic to these (mostly .com) domain names to promote new top level domain names. Previously, its “for sale” messages on its owned and operated domains just tried to sell the .com. Now the pages also pitch other Rightside premium domains available for purchase.
Regarding premium domains in new TLDs, the company sells many as “buy it now” through registrars and other venues at a price of $30-$5,000. Premium domains over $5,000 are usually negotiated sales.
Here are some of the premiums in new TLDs that Rightside has sold, ranging from four-to-six figures:
Some of the domains have been sold through third party brokers (e.g. reverse.mortgage), others through Rightside’s retail team and others as buy-now sales through the registrar channel.
Overman made the point that the portfolio of domains Rightside now has available to sell has ballooned. In addition to its existing 300,000 domains, it now has over 700,000 domains priced above regular retail in its new TLDs. Unlike the 300,000 domains, these domains have no carrying cost.
Scott Ryder, VP of Product
Ryder explained how Rightside decided which top level domain names to go after. (Its method yielded very different results from other applicants, as Matt Delgado pointed out later. 28 of the 35 domains it has so far were uncontested.)
Rightside looked at registration data for words used in existing domains, search data, industry level info, census, premium name potential, and advertising data like CPC prices.
Rightside used much of this same data to identify which domains to make premium (charge more than standard rates).
One example: the company saw that 95,000 twitter profiles included the word “ninja”. In addition to determining that this would be a good TLD to apply for, it used more granular data from these profiles to determine what domains to make premium.
It created a team in 2012 to identify premium domains across the entire portfolio in a way that was both scalable and low cost. They created a system called the “Premium Domain Platform” that used data like existing registrations, ad CPC prices and social media data. Then they layered in editorial data for each TLD. This created a candidate list for each TLD to analyze further.
For example, .rehab had 600,000 premium candidates. This was later whittled down to 23,000. (CEO Taryn Naidu later mentioned that some domains had a lot fewer premium domains.)
The system helped identify “surprises” within namespaces. Initially, Rightside thought of .rehab as being limited to health-related names. But they discovered that finance and real estate terms are also important, such as credit.rehab and house.rehab.
Ryder explained that the system continually considers new data from its recent TLD launches as it analyzes future ones.
Matt Delgado, SVP Operations
In addition to picking which top level domains to go after, Deldago explained how the company determines how much to bid at auction to resolve contention sets.
In addition to Ryder’s mention about using existing domain registrations as a marker (e.g. 400,000+ existing domains have some form of “consulting” in them), the company looked at other data points. For .reviews, it considered that there are over 50 million local businesses on Yelp. There are 30 million SMB pages on Facebook that can be targets for .social. It also considered the target-able audience (nearly 150k law students and 1 million licensed lawyers for .attorney and .lawyer, over 430k members of IEEE for .engineer.)
Rightside ran a discounted cash flow analysis on each one to create a valuation. It only acquires TLDs in contention if it can get it within the valuation range. It is updating its models based on early new TLD registration numbers and using this for its future valuations.
One really interesting point: Rightside has basically funded its 35 successful applications through money made by withdrawing/selling applications.
Tracy Knox, CFO
Here’s an interesting chart showing the results of five of Rightside’s TLDs launched to date, as of November 30:
The wholesale column is how much it has been paid as the registry for registrations. The premium adds in extra money from sunrise, laundrush/EAP and premium sales. Vertical integration benefit adds the markup Rightside’s own registrars have made from selling Rightside domains. (SVP Steve Banfield earlier said that Rightside registrars account for about a quarter of all Rightside SLD registrations so far.)
Note the huge premium numbers on .lawyer, .attorney and .reviews.
Also note .Ninja. It had only 19,500 domains registered as of November 30, but it grossed $412k. It was an uncontested application, so on a gross level it paid for itself within months.
.Dance is much slower out of the gate. But even with 3,400 registrations, it has paid back about half the application fee.