Report reveals performance of domain monetization during pandemic downturn.
Did you know that public companies can pay research firms to cover them? Well, at least if the company is traded on the London AIM.
Domain name company CentralNic (London AIM: CNIC) entered into a deal to pay Edison Investment Research £49,500 per year to produce a detailed report on the company and make quarterly updates.
With that significant disclosure out of the way, Edison’s initial report is worth reading. It lays out the CentralNic roll-up investment thesis in a way that the company probably couldn’t do itself due to forecasting and guidance rules.
It also discloses more details about the company’s domain name monetization business that it acquired late last year — Team Internet.
Team Internet owns domain parking company ParkingCrew.com.
As I suspected, Team Internet has taken a bit of a hit in Q2 during the Covid-19 crisis as the ad market has come under pressure.
CentralNic grossed $56.4 in Q1 2020, but Edison forecasts $43 million in Q2 due to the ad slowdown. Domain registrations are up, so the hit on the ad business must be severe.
The report states that CentralNic hopes to cater more to domain investors with its acquisition of Team Internet.
It also discloses some of the economics of the ParkingCrew business. The service monetizes 22 million domains owned by 35,000 people. It pays 75% of its earnings to the investor and keeps the other 25%. This nets out to $10.09 on average per domain per year to the investor and $3.36 to CentralNic.
Update: Edison has updated its report, changing the numbers it reported regarding parking. The report now states:
From its share, Team Internet pays the majority (the exact percentage is based on multiple factors like the quality of traffic) to the domain name investor, retaining a small portion to run the platform. Based on 22m domain names, Team Internet’s reported revenue of US$74m (51 weeks to 24 December 2019), implies average revenue per domain name for Team Internet of c US$3.36.
I wouldn’t discount the original report details, however. I suspect that, on average, it pays out 75% and keeps 25%. Its reported revenue numbers are likely net of partner payouts.
The business generates $1.6M of revenue per employee.