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Wix has record-setting Q2 thanks to Covid

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Company nearly doubles its marketing spend as businesses move online.

Image of an explosion with the words "Demand for websites and domain names is booming as businesses respond to COVID-19"

Website builder Wix (NASDAQ: WIX) reported second quarter earnings today, setting records thanks to the pandemic-induced rush to get online.

The company reported a remarkable 64% year-over-year increase in sign-ups with 9.3 million. Most of the new registrations use the free service or don’t convert, but the company grew its paid userbase to over 5 million by adding a net 346,000 subscribers during the quarter. That’s about double the number it added in the first quarter.

Collections—which other companies called bookings—were up 35% year-over-year.

“The need for business owners to move online quickly, communicate with customers, and deliver goods and services has never been more imminent,” said Wix CEO Avishai Abrahami.

Wix nearly doubled its advertising spend to take advantage of the situation. It plans to continue with elevated ad spend as long as it converts. This will suppress free cash flow but should pay long-term dividends.

 

Endurance experiences Covid tailwinds as revenue grows

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Increase is businesses going online helps Endurance in second quarter.

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Endurance International Group (NASDAQ: EIGI), a rollup of domain name, hosting and marketing services for small businesses, reported earnings this morning.

Its numbers were fairly strong in the second quarter as the company experienced a Covid boost like many of its peers that provide online services.

The company reported a slight uptick in revenue compared to the same quarter last year. Revenue came in at $274.0 million, which is up 1% year-over-year when you exclude revenue from SinglePlatform, a business it sold at the end of last year. While 1% isn’t a big jump, it’s a positive sign for a company that has mostly reported declining trends.

Bookings, adjusted EBITDA, and subscriber numbers were also up year-over-year.

Revenue for its Web Presence segment, which includes brands such as Domain.com and HostGator, was up slightly compared to both Q2 2019 and the first quarter of this year.

Endurance forecasts about $1.1 billion in revenue for the year, up slightly from last year when accounting for the SinglePlatform sale. Adjusted EBITDA guidance is about $300 million, down from $310 million last year excluding SinglePlatform.

MMX: Registrations and billings up, revenue down in H1

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Registrations at domain name registrars grew while one-off brokered sales dropped.

Picture of Toby Hall, CEO of domain company MMX

MMX CEO Toby Hall speaking at a domain name event.

Top level domain name registry MMX (aka Minds + Machines, London AIM: MMX) issued high-level earnings information today for the first half of 2020.

Year-on-year registrations grew 31% to 2.38 million as of 30 June 2020. Total first-half billings were up 7% year-over-year to $7.9 million.

One-off brokered transactions dropped by $0.8 million to $0.1 million. The company has been moving from these brokered deals to focusing on recurring registrations. And just in time, as evidenced by the precipitous fall in 2020 as the world reacted to the pandemic.

Because regular billings are recognized over the life of the registration but brokered transactions are recognized all at once, MMX’s recognized revenue dipped by 5% in the first half.

The company says that bookings for its brand-protection services also slowed in the first half in response to the pandemic, but it believes these will rebound in the second half of the year.

CentralNic shuns dividend to look for more acquisitions

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Company sees acquisition opportunities in current economic environment.

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CentralNic (London AIM: CNIC) has decided to delay its first-ever dividend to hunt for more acquisition opportunities.

The company announced the plan with the announcement of its final results for 2019 issued today. It believes the current market (read: economic uncertainty due to the pandemic) might make for some interesting opportunities and wants to preserve its cash.

CentralNic already reported its topline number for 2019: $109 million revenue. It broke this down in today’s report.

This breaks down into the company’s three segments:

  1. Reseller services. This includes registrars like Hexonet and Key-Systems, as well as the registry platform it operates on behalf of ccTLD and new top level domain owners. It generated $60.7 million revenue in 2019. It has 25.6 million domains under management (DUMs) and 29,000 customers. (Its revenue per domain is substantially smaller than other segments, in part because this includes the registry platform business for new top level domains.)
  2. Small business segment. This is CentralNic’s direct-to-consumer registrar business. It generated $37.8 million revenue in 2019. It has 2.2 million DUMs and 340,000 customers.
  3. Corporate.  This covers corporate/intellectual property clients. It generated $10.8 million revenue with 1,000 customers and 154,000 domains. CentralNic has added Team Internet to this segment. It doesn’t really make sense here, but it doesn’t fit nicely into any of the segments. Team Internet is a domain monetization platform.

Overall, the company posted an operating loss of $519k after share-based expenses and a total loss of $12.2 million. Its adjusted EBITDA was $17.9 million.

CentralNic believes that it should hold up well during the pandemic. It notes that “CentralNic Group has a loyal and sticky customer base, with approximately 80% of CentralNic Group’s revenues derived from recurring annual fees that were agreed in years prior to 2019.”

It will be interesting to see how Team Internet,  which CentralNic is counting on for a big boost of high margin revenue in 2020, will fare. Ad markets are down, but this won’t necessarily hurt the business because it creates interesting traffic arbitrage opportunities. It depends a lot on what ad segments Team Internet’s clients target.

Revenues tick up at Verisign as it adds 1.27 million domains

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Profits grow even faster at .com domain name registry.

Verisign logoVerisign (NASDAQ: VRSN) reported earnings today after the market close.

Revenue for the third quarter was $308.421 million, up slightly from $305.777 million in the same quarter of 2018.

It kept its costs down, however, so its operating income jumped from $194.997 million to $205.616 million.

The total base of registered .com and .net domains increased 3.8% year-over-year. During the quarter, a net 1.27 million .com and .net domains were added after accounting for deletions. That brings the total to 157.4 million domains.

9.9 million .com/.net domains were registered during the quarter, up from 9.5 million in the same quarter last year.

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