Bulk transfer during Q1 hits revenue at Tucows.
Domain name company Tucows (NASDAQ: TCX) reported second quarter 2018 earnings after the market closed yesterday.
Revenue fell 4% year-over-year to $81.1 million. This was not a surprise and it mostly relates to the bulk transfer of 2.65 million domain name to Namecheap. The Namecheap contract was low margin; the gross margin for the wholesale domain business fell by only $350,000.
Net income fell 31% year-over-year to $3.6 million, but Tucows’ adjusted EBITDA number posted an 8% gain to $11.2 million.
While Namecheap hurt the overall revenue from the domains business, its retail domain operation and portfolio business showed gains. Ting Mobile also showed growth.
C.S. Watch says
Who is driving the bus at Tucows. Wakey wakey eggs and irrelevancy.
Enom’s registrar ranking (‘we’re the second largest’) was a primary selling point for potential customers, along with, ‘this domainer uses them so they must be good.’ Tucows has tossed that bedrock free marketing out the window.
Enom pricing went from 9.99 to 13.99 per domain in one cold slap in the face. All the laissez-faire domainers who have been with them for the two decades since they were BulkRegister are forced to roll over on their opium sofas and transfer out. Domainers were paying thousands per year more without complaint, just because they couldn’t be arsed to move. Tucows has poked a bear who was keeping them aloft from a sea of competitors. Effectively, this year they said, ‘Thank you for the seven figures you’ve paid us, Skippy. Now GTFO.’
A side point, Enom offered to keep alive the 9.99, ‘IF’ one had more than 50K per year in billing AND (?) registered X new domains per year. Ancient domainers, who are basically retirees, don’t like to be told that they need to step and fetch it. But Enom’s terms may have contained a semantic error, because they contacted folks asking why they were abandoning ship, even those with 50K+ in billing who don’t register more than a few new domains per year.
If it was just a semantic error, it is poetic justice.