Rightside’s (NASDAQ:NAME) CEO Taryn Naidu and CFO Tracy Knox gave a presentation yesterday about the company’s sale of eNom to Tucows.
Here are some interesting takeaways:
New TLDs are still the smallest part of Rightside’s business. Name.com is the biggest part, followed by aftermarket revenue. Aftermarket includes money the company makes from its portfolio of 250,000 (mostly .com) domain names as well as parking domains for others.
But the company still expects new TLDs to become its big revenue generator very soon. Rightside still expects new TLDs to generate $50 million to $75 million in revenue per year within 3-5 years. That would make new TLDs the largest revenue component of its business and have about 90% margin.
The company wants to acquire more top level domains. Two companies – XYZ and Donuts – tried to buy some or all of Rightside’s TLDs last year. Now the tables are turned a bit. Rightside is seeking to acquire other TLDs to add to its portfolio.
It can become an acquirer thanks to its healthy cash position. Rightside paid off all of its debt after selling eNom and looks to still have about $100 million in cash (based on end of Q3 balance sheet) after doing so. The company is considering how to return some of this cash to shareholders and may consider tuck-in acquisitions in addition to acquiring new TLDs.
As can be expected, A lot of people lost their jobs as a result of this deal and restructuring. On the conference call, Knox said 15 people were let go immediately. The presentation discloses that 36 positions will be eliminated as part of a restructuring that will save $3-$5M year.
Ron says
Enom support sucked, ask anyone.
Maybe tucows can turn it around, but the brand is a bit tarnished.
Golden says
The layoffs hurt. eNOM needed to pay off their debt so there wasn’t a way out besides selling the lagger asset to Tucows.
Remarkable with the stock moves as Tucows literally used their credit facility to pay for an asset that they didn’t have enough cash for. Better keep the cash flow going or else some heads will roll.
Andrew Allemann says
If I told you that you could buy a domain that generates $20 m a year in revenue and you can finance it at a cost of, say, $2m a year, would you do it?
Golden says
Didn’t eNom run at a loss? If what Tucows picked up was so super why didn’t another company offer a bid well above the $ that Tucows paided?
The reseller market is incredibly vast and the landscape is constantly changing. Even Tucows admitted to this.
Andrew Allemann says
I mistakenly reported that it ran at a loss. But Tucows has been consistent in saying they expect $15M EBITA growing to $20M EBITDA/year.
Garth says
Tucows get 50% of NameJet. Tucows may now send their pre-release inventory over there. Happy days.