Pureplay strategy for new top level domain name company is working; investor buys more shares.
MMX (Minds + Machines) reported first-half earnings today and announced a big investment from a Cayman-based fund backed by a Chinese investment group.
Looking at it in the best possible light, MMX had a $2.0 million operating EBITDA for the first half after excluding the registrar and backend registry business as well as restructuring costs. MMX’s top line for H1 was $7.4 million, helped by the launch of .VIP.
Its actual net profit from continuing operations was $56,000. Factor in discontinued operations and it lost $1.9 million in the first half.
But the results are quite promising, and it shows that MMX is making the right moves by shuttering its retail registrar platform and outsourcing its backend registry functions to Nominet.
The registrar business lost a whopping $4.7 million last year. It’s no wonder that the new management decided to nix this business, especially since it was creating channel conflict with other domain name registrars.
MMX shifted the majority of its customers over to Uniregistry in return for a share of renewal fees on the domain names.
The company is also changing its premium domains strategy. As disclosed in the earnings filing, the company is shifting its direct-sales strategy in which it registered domains under a company called Emerald Domains, and moving many of these domain names to the registrar channel. As I reported last month, Uniregistry is doing the same thing.
As many domain name investors know, selling domain names through the registrar channel is much more efficient than one-off negotiations, and conversions tend to be higher due to less friction.
MMX is also reducing renewal fees on premium domain names.
The company also announced that Chinese investment firm Hony Capital, through its Cayman-based Goldstream Capital Master Fund 1, is buying 42.3 million shares in the company for 13 pence each, or £5.5. This is obviously a strategic investor, as MMX simultaneously announced a tender offer to buy back up to 100 million shares at 13 pence each.
Finally, MMX has consolidated its U.S. operations in Seattle, the most popular city for domain name companies. Its neighbors include Rightside, Donuts and DomainTools.