Margin contribution from domains up due to price increases and Ascio; Tucows also explains lift from moving Enom expiry stream.
Tucows (NASDAQ: TCX) released second quarter earnings (pdf) yesterday after the close of the market.
The company has three business lines: domain names, mobile service and internet service.
For the domains segment, Q2 revenue was $60.5 million, up from $56.8 million in the same quarter last year.
The domain business can be further broken down into wholesale and retail. The Wholesale Business is its reseller network including Enom, OpenSRS and Ascio. Retail includes its Hover brand.
The wholesale business contributed $51.3 million revenue and the retail business contributed $8.8 million. Tucows also generates a small amount of money from its own portfolio of domains.
Total registrations are growing very slowly. Total Q2 registrations increased 1% year-over-year to 4 million including the lift from acquiring Ascio last year. Without Ascio, registration volume dropped 3.5%.
So why is revenue going up? The company raised prices last year and it’s boosting results across the board.
Gross margin in the wholesale business was up 20% year-over-year, and the domain portion of this (excluding value-added services) was up 30%. 40% of this increase was primarily due to the price increases and the other 60% is from the Ascio resellers.
Tucows also explained why its gross margin contribution for Value-Added Services jumped 19% in Q2 compared to Q1 of this year. It’s because the company moved its Enom expired domain inventory from NameJet to GoDaddy (NYSE: GDDY).