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Tucows announces earnings, $40 million buyback

by — Domain Registrars 0 Comments

Domain name business continues to chug along.

Picture of stock chart with the words earnings report

Tucows (NASDAQ: TCX) announced Q4 and full-year 2020 earnings after the market closed yesterday. It also announced that its board authorized the purchase of up to $40 million of its stock on the open market.

The earnings report requires some backstory to fully appreciate it.

Until late last year, Tucows had three main services:

  1. Mobile phone services sold under its Ting brand.
  2. Fiber-to-the home internet services sold under its Ting brand.
  3. Domain name services including Enom, OpenSRS, Hover, and a couple of other brands.

It sold its mobile virtual network operator (MVNO) business to DISH last year. The deal is an earn-out arrangement in which DISH pays based on the performance of the Ting subscribers it took over. Tucows will also provide a mobile services enabler (MSE) platform to help MVNOs with billing, provisioning, customer service, etc.

Q4 mobile service revenue plummeted due to exiting the business. But the Fiber and Domains businesses continued to chug along.

Domain Name Wire readers mostly care about the domain business, so let’s dig in a bit.

The wholesale arm of the business saw modest Q4 revenue growth from $51.4 million in 2019 to $52.8 million in 2020. Retail was essentially flat year over year. And aftermarket (portfolio) domain sales dropped to about $300,000 because Tucows sold the rest of its portfolio (save for surname domains) at the end of 2019. (The company still earns aftermarket revenue from its expired domain stream but does not break out this number.)

The net-net is that total Q4 domain revenue and profit was flat year over year.

Tucows has been shifting the focus to improving margins in the domain business. If you take out the bulk domain portfolio sale from Q4 of 2019, gross margin dollars from the domain business increased 8% in 2020 compared to 2019. The number is similar for Q4 2020 compared to Q4 2019.

The company also benefited from a surge in domain registrations as businesses moved online due to the pandemic. In its wholesale channel, new registrations in Q4 were up 17% year over year. This is down from 40% in Q2 and 30% in Q3, which were the biggest growth quarters across the industry.

So, going forward, you can look at Tucows as a tale of two businesses: the cash cow domain business and the internet service (and perhaps MSE) growth business.

 

 

Tucows offers “Whois Publicity” for domain names

by — Domain Registrars 0 Comments

Customers can now publish their information in Whois.

Graphic with the acronym GDPR for General Data Protection Regulation

Tucows (NASDAQ: TCX) has started allowing customers on its Enom and OpenSRS platforms to display their information publicly in Whois—as long as their reseller enables it.

Called “Whois Publicity“, the new option allows registrants to include their registrant information in Whois. Whois will still not show Admin, Tech and Billing contacts even with the Whois Publicity option turned on.

The company masked Whois information for all “thin Whois” domains on its platform after the European Union’s General Data Protection Regulation went into effect last year.

ICANN requires all registrars to allow customers to show their information in Whois, but few have enabled this option so far. That’s because ICANN added a loophole to this requirement:

7.2.1. As soon as commercially reasonable, Registrar MUST provide the opportunity for the Registered Name Holder to provide its Consent to publish the additional contact information outlined in Section 2.3 of Appendix A for the Registered Name Holder.

“Commercially reasonable” could mean one year, two, or more. Many registrars are probably waiting for the temporary specification in which this requirement exists to be made permanent.

(Hat tip: George Kirikos)

New features? I just want domain platforms to work.

by — Services 4 Comments

Some domain platforms have major flaws that should be fixed quickly.

Frustrated man with hands on head and the words Just make it work!

I’ve read a few posts from domainers recently who want domain service providers to add new features. I want new features, too, but at a minimum, I just want the services to work. Few things are more frustrating than when services don’t work as they are intended.

Here are a few examples of services not working correctly that have caused me to pull out my hair.

NameJet – When you buy a domain name, you expect it to show up in your account. It might take a few days, and even longer when it’s a private party transaction. Things can happen that delay this but I expect NameJet to be on top of it. Earlier this year, I had to follow up to get a domain in my account. It took multiple support requests to get a response. If I hadn’t noticed this domain wasn’t added to my account, it probably wouldn’t have happened. I would have paid for the domain but never received it. This erodes trust.

Oh, and NameJet’s app alerts (still) don’t work. I don’t understand how a company can leave so much money on the table by not fixing this. Heck, redo the entire app if needed.

Enom – I’ll give Tucows a bit of a pass because I know it’s replacing the Enom system with a new backend. In the meantime, ever try to get authorization codes? Some arrive within minutes. Others arrive within weeks. Re-requesting them speeds it up sometimes, but I have serious questions about the stability of this platform.

GoDaddy – When you spend time adding domains for sale, the last thing you want is an error message that forces you to start over. I haven’t seen this error message in a while, but it sure is/was frustrating. [Update: as of 6/21/19, the error isn’t fixed.] Even for a beta, this should have been fixed earlier. I also have numerous domains that appear to be stuck in some sort of Afternic purgatory and can’t be added.

So while I understand calls for new features, I hope platforms prioritize fixing bugs and creating systems to verify the integrity of their platforms.

Scratch.org update and subpoenas

by — Policy & Law 10 Comments

Here’s why domain investors got subpoena notices from Enom.

Picture of Subpoena document

There’s been a lot of talk in domain circles today about subpoena notices for domains at Enom.

The subpoena stems from a lawsuit that Scratch Foundation, a non-profit created at MIT, filed against the domain name Scratch.org.

Scratch Foundation filed the case as in rem (meaning against the domain), but Ravi Lahoti stepped forward as the owner. Lahoti says he’s owned the domain name since 1998. DomainTools historical Whois records seem to corroborate his story, at least until Scratch Foundation was formed, although the domain has bounced around different entities/privacy services.

This brings us to the subpoena, which you can view here (pdf). Attorney David Weslow, who is representing Scratch Foundation, asked Enom for a list of Lahoti’s domains. The original subpoena was quite a bit broader than that, but these things are often narrowed between the lawyer and recipient. Regardless, Enom has apparently notified anyone who owns a domain that was at any point tied to Lahoti.

It seems that Weslow is trying to paint Lahoti as a serial cybersquatter.

Indeed, in a recent order (pdf), the judge wrote “Plaintiff has also brought various other anticybersquatting cases against Mr. Lahoti to the Court’s attention which demonstrate that Mr.
Lahoti is a notorious cybersquatter.”

Whether or not Lahoti is a notorious cybersquatter shouldn’t matter on the claim under the Anticybersquatting Consumer Protection Act so long as Lahoti proves that he owned the domain before Scratch Foundation had rights in the mark. This seems like it will be easy to do.

But there’s an interesting wrinkle in the lawsuit: it also claims trademark infringement. Should Scratch Foundation show that prior ads on Scratch.org infringed on its trademarks, could it win a judgment against the domain? I’m not familiar with how a judgment for trademark infringement works in an in rem case. But it’s clear that the trademark infringement claim is part of the effort to get control of the domain.

There’s a lesson here involving in rem lawsuits. Lahoti asked the court to name Lahoti as the defendant instead of in rem. This might make it easier to defend but also opens him up to personal liability. The court denied this request on the basis that Lahoti didn’t object early enough to in rem jurisdiction.

Big news: Enom switches from NameJet to GoDaddy for expired domains

by — Expired Domains 28 Comments

GoDaddy adds coveted Enom inventory to its expired domain name auctions.

Picture of expired parking meter.

Enom has moved its expired domain inventory to GoDaddy Auctions.

GoDaddy Auctions has another domain name registrar on its expired domain platform and this one is a doozy: Enom.

This morning I noticed many Enom domain names flowing through GoDaddy Auctions’ expiry stream.

The move is not surprising. Tucows (NASDAQ: TCX), which acquired Enom in 2017, already sends its non-Enom inventory to GoDaddy. For its Tucows domains, it essentially did a bake-off between GoDaddy Auctions and NameJet to figure out which one produced the most revenue. GoDaddy won.

The Enom acquisition came with a 50% ownership interest in NameJet and Tucows kept Enom’s expired domains on NameJet while sending its other domains to GoDaddy. But Tucows sold its stake in NameJet to Web.com late last year.

At the time of the acquisition I wrote:

The big question is if Enom domains will remain on NameJet and for how long. This was obviously part of the negotiation and ultimate purchase price. If Enom leaves the platform for GoDaddy at some point in the future, it will further degrade NameJet’s role in the marketplace.

We now have the answer.

So is this a win for domain investors? Yes and no.

On the plus side, they no longer have to manage domains at Enom. All domains they win will be added to their GoDaddy accounts.

Also, GoDaddy Auctions start at $12 (plus renewal, so about $20 total) whereas NameJet auctions start at $69.

But auctions at GoDaddy can be quite rich. Domain investors might end up paying more for domains there than if they same names ran through NameJet.

Also, I worry when there aren’t two strong competitors in a market. NameJet is getting weaker. Its valuable inventory is now mostly Web.com’s registrars Network Solutions and Register.com.

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