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What Donuts’ data tell us about the new top level domain market

by — Domain Sales 8 Comments

A look at premium sales and which TLDs drive the most volume

Picture of four donuts with the words "Donuts domain trends"

Donuts, the largest top level domain operator in terms of number of strings, published a report about its sales in October. While the company doesn’t provide absolute numbers in its report, it does give us some insight into the new top level domain market.

Let’s start with premium domains. Donuts lists its top 20 premium domains registered in October, ranked by wholesale price. The top sale was prime.mortgage, followed by health.studio.

Running some checks at domain registrars, I believe the wholesale price for prime.mortgage is about $2,500 and health.studio is about $1,000. The 20th highest sale on the chart, millionaire.dating, is about $800 a year wholesale. So sales of $1k+/year premium domains are still meager, but there’s a lot of activity sub-$1,000. (Keep in mind that this list doesn’t include renewals of premium domains.)

The company also lists its top 10 top level domains in terms of registrations. The list is topped by .live again, but this doesn’t tell us too much about success. While .live is one of Donuts’ better domains, first-year registrations are only a few bucks, so price has a lot to do with the volume. It would be interesting to see this list ranked by total registration revenue.

As I pointed out last month, people tend to register second level domains in new TLDs that are similar to the terms they register in .com. Online and Life are the top two at Donuts.

You can view the full monthly report here.

Big shakeup at MMX after accounting investigation

by — Uncategorized 2 Comments

CEO and CFO are out after board investigates company’s finances.

Picture of Toby Hall, CEO of domain company MMX

MMX CEO Toby Hall speaking at a domain name event. He has been removed from the company after an accounting investigation.

The Board of top level domain name company MMX (London AIM: MMX) has concluded an investigation into revenue recognization at the company. The casualties include the company’s CEO, CFO, and income statement.

Earlier this month, the board announced it was looking into a contract under which it believed revenue was prematurely recognized. The board issued a statement today:

The Board believes that revenue attached to the specific contract has been incorrectly recognised. As previously announced, cash of $1.125m was received in connection with the specific contract and revenue of $938,000 was recognised in FY-2019. Following its investigation the Board believes that any cash sums initially received pursuant to this contract should have been classified as a deposit against future sales and then recognised as revenue as the Company’s partner made sales to end-users. To date, the Company’s partner has made $201,900 of end-user sales under the contract.

The board also discovered two additional contracts that were incorrectly recognized:

In addition to the above, the investigation has identified two additional contracts entered into in FY-2019 totaling $790,000 where receipts were incorrectly categorised as revenue. These contracts were offset with payment contracts that have been recorded as deferred charges or capital expenditures, thereby impacting earnings. The reversal of these amounts will not impact the cash position of the Company.

The impact on MMX’s financials is as follows:

restated financials for MMX

It’s unclear who the counterparties were on these transactions.

Toby Hall, Chief Executive Officer, and Michael Salazar, Chief Financial Officer, have resigned from the MMX board in the wake of the investigation. They have apparently left the company, too: Tony Farrow has been named interim Chief Executive Officer and Bryan Disher is the interim CFO.

MMX postponed a £3.0m tender offer it planned for November.

 

Are companies flocking to the .ltd domain extension?

by — Uncategorized 6 Comments

How the .LTD “corporate identifier” domain is resonating with Chinese companies.

Picture of a mangifying glass and the words "analyzing .ltd"

I was reading Chinese domain news the other day and the top level domain .ltd was mentioned, so I did a little bit of study on this extension.

On the surface, the extension makes sense because many companies in China and other countries have “Co., Ltd” or simply “Ltd” in their names. Also, .ltd domains are very affordable to own – costing less than $10 to register one.

To find such domains adopted by end users, you can use the search term site:ext where ext is the name of a domain extension. Entering site:ltd into Baidu search returned 334,000 results including many Chinese companies such as TYmetro.ltd (road infrastructure), Max.ltd (domain registrar), and IIM.ltd (robotics).

However, data provided by Namestat.org does not look very rosy. According to the site, the .ltd extension was launched in 2016 and most buyers come from China. Registrations peaked at 655,000 in 2018 and have been declining since then. Currently, the number is about 104,000. See the chart below taken from the site.

A chart showing the number of .ltd domains registered. It peaked at over 600,000 and is now about 100,000

Reported sales of .ltd domains have been few and far between. Namebio lists only 8 transactions, as shown below.

Domain Price Year
Co.ltd $115,000 2016
Home.ltd $2,300 2017
1000miglia.ltd $500 2018
Millemiglia.ltd $500 2018
Scarf.ltd $450 2017
Law.ltd $275 2017
HDbank.ltd $199 2018
Anpaper.ltd $199 2018

In short, do your research if you are interested in investing in this domain extension.

.Blog jumps from Nominet to CentralNic

by — Services 0 Comments

CentralNic wins another registry contract.

Logo for WordPress' .blog top level domain nameAutomattic, the company behind WordPress, is switching backend registry providers for its .blog top level domain name.

The company has used Nominet since the launch but will switch to CentralNic (London AIM: CNIC) later this year.

Nominet is the registry for .uk domain names. CentralNic is a diversified domain name company that has won many registry contracts with its flexible pricing.

Michele Neylon, CEO of domain name registrar Blacknight, noted that many new TLD operators signed contracts before they knew how big their zones would be. Now that they have a better idea, they might get a better deal from another backend registry provider.

He also pointed out that registry provider switches are a pain for registrars. I suspect registrars are getting used to these changes as the original contracts come up for renewal.

Digging into MMX and its earnings

by — Services 0 Comments

Top level domain seller has improved its revenue base but still struggles with its legacy.

Earlier today I wrote about Minds + Machine’s (MMX) first-half revenue. This afternoon I had the chance to talk to MMX CEO Toby Hall and dive into the company’s full earnings report.

Hall is confident in the company’s trajectory. The company forecasts that its renewal revenue will begin covering its full cost base within the next 24 months.

Renewal revenue is something Hall has been harping on since he took over as CEO of the company. He believes that investors understand subscription businesses and will reward the company if it creates a stable base of renewal revenue.

That’s clearly part of the rationale behind the company’s purchase of ICM Registry earlier this year. The company has a steady base of registrations and renewals across its TLDs, most notably .XXX.

MMX picked it up for about 9 times profit. It will help shore up MMX’s revenue base to help investors value the company. When Hall took over, the company’s market valuation wasn’t based on any fundamentals. Now investors are valuing it at about 15-17 times operating profit.

The steady base of revenue is helping MMX look at different opportunities. Hall is particularly excited about what the company is doing with the .Luxe domain and Ethereum Name Service. It remains to be seen how the Ethereum Name Service deal will impact registrations, but Hall looks it kind of like R&D.

The company is still struggling with some of the legacy of the company, though. In its published earnings report it gave details on a burdensome contract that it has already renegotiated once:

In 2016, the Company successfully renegotiated aspects of the given contract to reduce the then marketing obligations of $10.8 million to nearly half this amount under the condition that those marketing funds be provided directly to the commercial partner to manage. In addition, the Company negotiated that the runway on its 2017 minimum guaranteed commitment be extended from 12 months to 17 months to allow the revised marketing strategy to come into effect. To date, a significant portion of that marketing budget has been spent by the partner with minimal impact on revenues in the current year and no expectation of any material uplift in future periods. Accordingly, given recent performance, and expected future performance, the Company is now impairing the asset ($4.1 million) and is providing for a one-time onerous contract provision in the amount of $7 million, reflecting the future expected losses of $1.7 million per year above revenue for the remainder of the contract, based on flat growth of the asset. The provision reflects net future obligations (i.e., cash due above total revenue per annum), which will be paid from 2018 until the contract end in August 2021. The Company will seek to renegotiate a more equitable settlement given the losses incurred on this asset (c. $11.9 million) since the start of the contract, as a result of the terms agreed by former management.

Although the company will not disclose this partnership by name, it’s quite clearly .London. There are a couple of observations here.

First, broad marketing of namespaces isn’t moving the needle.

Second, the deal MMX inked with .London before new TLDs came out shows just how bullish the company’s founders were. That contract was a heck of a bet for such an early stage company. It turned out to be a very bad bet.

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