Popular domain escrow service takes a revenue hit but shows signs up improvement.
Freelancer Limited, the company that owns online escrow company Escrow.com, has posted its results (pdf) for the first half of 2017.
Gross payment volume (GPV) at Escrow.com in the first half of 2017 was down 24% (year-over-year) to $209 million. Net revenue was down 28% to $3.1 million.
The company cites two reasons for the fall: the burst of the Chinese domain bubble and the implementation of account verification (aka “know your customer”) controls.
China’s GPV was $25 million in the first half of 2017 compared to $52 million in the first half of 2016. It peaked in the second half of 2015 when it was $89 million. This chart shows the impact of China:
While China is down, the rest of the world is also down. Escrow.com attributes the additional decrease to account verification requirements put in place at the end of 2016. In its earnings presentation, the company said the process has resulted in churn because some users are reluctant to provide identification. I imagine that part of it is not reluctance so much as not wanting to go through the hassle depending on the size of the transaction. The process can include providing proof of identity and business documents.
Obviously, Escrow.com would prefer not to put customers through this hassle. Its presentation says the identity verification process makes it compliant with the US Patriot Act. It also plans to roll out enhancements to the process this quarter.
Despite the drop in the first half of this year, there’s some good news for the company: it appears to be rebounding. GPV in the second quarter of the year was up 16% compared to the first quarter.