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MMX releases 2015 report, discusses go-forward strategy

Company continues to restructure its business under new leadership.

Top level domain name company MMX (Minds + Machines) released its audited annual results report (pdf) today, providing color on what’s going on in its business.

In a nutshell, while billings and revenue increased last year, operating expenses still outstripped them.

Revenue hit $6.3 million for the year, compared to $1.9 million in 2014, as the company rolled out more top level domains.

Billings, which do not account for revenue recognition of domains as a subscription product, were $7.9 million in 2015 compared to $5 million in 2014.

Although operating expenses were down in 2015 compared to 2014, they were still $12.2 million.

MMX (LSE:MMX) has built a cash cushion from private domain name auctions, but this will not continue forever.

This is why the company made sweeping changes this year, ousting its founding CEO and deciding to outsource its backend registry operations and shutter its domain registrar. The company will now focus solely on being a new TLD wholesaler.

The board was also trimmed, and Guy Elliott, non-executive Chairman, noted that “a culture of over-compensation in a period of low revenues has been stopped.”

The company hopes to see benefits from the cost-cutting as well as partnerships in the second half of this year.

MMX CEO Toby Hall noted:

As a pure-play registry, it will allow MMX to be more clearly benchmarked against fellow pure-play registries at a time when we see technical back-end providers increasingly having to operate in an ever-more price competitive, commoditized environment with the inevitable downward pressure on margins.

Indeed, I suspect there will be downward pressure on backend registry service pricing over the next few years. I suspect Public Interest Registry (.org) will save significantly on its annual $30 million+ bill.

MMX also noted that Nominet’s existing integrations with registrars for .uk will help it offers its domains through more registrars.

Concerning the registrar side of the business, Hall noted:

In relation to our registrar, the registrar models that are winning are sophisticated capital intensive and require a focus and specialization of their own; others are far better placed than ourselves to succeed in that market. More importantly, as an owner of top-level domains, we want to be actively partnering with the retail channel (registrars) internationally –
not creating the perception that we are competing with them.

MMX expects to save $2 million by outsourcing its backend registry services and dropping its registrar operation. However, the company doesn’t anticipate migrating before Q4.

The report makes it clear that MMX might be a buyer or seller of TLD assets when the right opportunities present themselves.

Here are some other highlights from the company’s report:

  • Targeting annualized operational savings of $5.5 million compared to highs of 2015.
  • Launch .VIP in May, .Boston in H2
  • Additional sales and marketing staff for .law
  • Company has repurchased over $10 million in its shares
  • June 2015 peak headcount 61 down to 43 at year end
  • Under resourced in registrar development and marketing support teams, so looking to grow
  • Some sales effort shifting from outbound sales to stimulating third party channels to drive inbound leads
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