Blogs about the domain industry and the various players and companies within it.

The Rightside Challenge and the New gTLDs

Rightside, a publicly traded registrar/registry, released their quarterly earnings statement this past week and it made really interesting reading. What I found fascinating was the picture that was being played out in the domain sales space and how it reflected on the new gTLDs.

Rightside Share Price

The Rightside share price (chart above) has suffered at the hands of investors as they struggled to come to grips with the new gTLD phenomenon. The slide down from a height of $15.85 per share as ICANN dragged its feet was momentarily bolstered by the April quarter results from actual release of a number of extensions. Right now, investors are still wrestling with the potential financial windfall from new gTLDs as the share price now languishes at $7.63.

Escrow.com

It’s difficult for any business to try and communicate to all of the stakeholders the benefits of a strategy that may suddenly have an extended time horizon. This looks to be the case with the capital markets, Rightside and the new gTLDs…..but is there a glimmer of sunshine coming through the cloudy sky? Let’s begin to unpack this…

In the previous quarter’s report there were a couple of slides that really leapt out at me. The first one showed that back in Q2 2015, 83% of revenue was subscription based and that 74% of domain registrations were being renewed. It also helps that the average revenue per domain is continuing to trend upwards. These figures are underpinning a very healthy business that is continuing to grow quarter on quarter as the Rightside team executes the business plan.

Financial Model

According to the Q2 report the target revenue growth is 9-15% in 2015. I crunched some numbers and it looks like they’re currently (ie. Q3 2015) at about 13% above Q4 2014 so it looks like they are going to hit the top end of the growth target…..all good news for investors!

Despite the good news of hitting targets I thought that it would be a worth digging further into the numbers to see what was going on. If we are to look at the revenue graphs you’ll notice that both the Registrar and the Registry are very slowly trending upwards to the right.

Revenue by business unit

The Aftermarket is actually pretty flat….which is surprising given the level of cash recently being injected by Chinese investors into the domain space. It will be interesting to see if there is an uptick in the Aftermarket space in the next quarters report.

Given the renewal rates, the registrar numbers weren’t too surprising. A large number of domains produces a lot of money in subscription revenues. What did catch my eye was the registry growth.

There seems to be a huge amount of money being pumped into the new gTLD space and yet the actual revenue numbers seem to be quite small. Yes, the business unit is just over a year old but even still, I would have thought that there would have been an initial kick up in actual revenue.

Quarter on Quarter Growth Rates

The second chart shows the quarter on quarter growth rates for the three business units. In this case the registrar is very flat and typically growing at around 2-3% per quarter….although this does aggregate up to 7.6% for Q3 2015 compared to Q4 in 2014. It’s only a smidge above the annual 6.5% growth rate for the entire domain registration space but shows that Rightside is slowly gaining market share rather than losing it.

The Aftermarket is more volatile with swings from 85% of the previous quarter to 116% since Q4 2014. The business unit is doing $7.8m on average for the three quarters in 2015 which means that it is 90.3% of Q4 2014 or exactly line ball if you compare the first three quarters of 2015 vs. the last three of 2014.

What is incredible is the change in growth rate for the registry business. There has been a sharp reduction in quarterly growth from a high of 250% to a current level of 26% per quarter. It is early days for this business unit and some volatility is expected. Consideration must also be given to these figures being off a low starting base.

This registry result would be a great result for an established business but it poses a number of questions about what is happening in the new gTLD space. More than half of the Rightside Q2 report was dedicated to explaining what new gTLD’s are to investors. This makes it very clear that Rightside is putting a LOT of eggs in the new gTLD basket.

For example, there’s even a slide that poses the typical investor hockey stick scenario. It essentially says, the whole world is the market for the new gTLDs….if only we get a small slice of this big pie we will win big time! I must admit that I really don’t like these types of slides as they come across as being quite silly (slides 13 and 15 of Q2 presentation – see below).

Market Size

From the chart below the incumbents have not been able to secure the “new market opportunity” and it’s very unclear whether the new gTLDs are going to be able to either. As the market matures, I wouldn’t be surprised if the new gTLDs end up settling into a growth rate of around 6-8% per annum which means the aspiration of the “new market opportunity” will largely remain untapped.

Market Size

The fuel for the new gTLDs to secure massive growth has to be found in the sales and marketing budget, in the case of Rightside its $2.6m for the last quarter. When we’re talking about changing human behaviour on a global basis I would have thought that this budget would have had to be much, much larger. The next couple of quarters will really provide a good solid picture of the new gTLD space and whether it’s going to take off or not…..it will be interesting to see.

The problem is that the markets want Internet companies to have mega-unrealistic growth rates that they can fall in love with. They want the next dropbox or snap chat that they can madly invest in and then dump after they’ve made a capital killing on the ride up.

Here’s the challenge for Rightside….it’s a good solid business with sustainable revenue into the future. No problem at all with that….BUT….it looks and feels like a mature long established company in the mining or industrial sector that is selling widgets to other businesses. Great business but really boring.

The impression is that Rightside has looked to the new gTLDs as the sizzle that would get the market excited about them….it’s early days yet but don't think this is going to pan out quickly enough for the company. Eventually, the investors will come in and hack the expense line to pieces (ie. fire lots of people) to get the profits up since their returns are unlikely to come from capital growth.

In my opinion, what Rightside needs to do is speculate by buying a few bleeding edge innovative companies. Off the back of their good solid revenues they need a nascent technology in the domain space that is uninhibited by growth constraints. A technology that doesn’t need to convert the masses or do corporate deals that take years to come through. This is the sizzle that will get the market excited enough about the share price so that investors will once again play the capital game.

I get the feeling that if the investors give Rightside enough time then the company could become one of the great flagship in the domain space. Only time will tell whether the management team will be sucked into the vortex of quarterly targets or are given the space to revolutionise the entire domain industry with a fresh sense of vision. This will be an exceptionally difficult task but given the team line-up there is a good chance they could pull something like this off.

Just to make it very clear, I’m actually still quite bullish about the new gTLD opportunity for domain investors. What I do believe is that it’s going to be a 5-7 year time horizon for any investment to yield reasonable returns. The Rightside numbers have reinforced this perspective and my personal position of “keeping my powder dry” and waiting for the most opportune moment to invest.

I should say that I do not own any shares in Rightside and would recommend that you seek professional advice prior to investing in any company.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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mgilmour
You could be right on that.....I was looking at a possible way forward with the existing team. Acquisitions, like name.com is a po... Read More
16 November 2015
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ICANN Dublin

Once again I’ll be heading off overseas to meet up with a gathering of individuals that are entirely immersed in the world of domains. This time my trek leads me to the fair land of Ireland and a people that seem to sing their words rather than speak. This is a fact that my wife absolutely loves about the Irish!

So after a short hour or so visit to Dubai and twenty-four hours in a flying tin can I’ll arrive in Dublin. After surveying the conference agenda, the first thing that has struck me about ICANN is the crazy number of acronyms. I’m a programmer and also a private pilot and let me assure you that ICANN has managed to surpass even these two noble pursuits with the number of abbreviation they inflict on everyone.

Escrow.com

A classic example is on Sunday. I’m trying to work out whether I should go to the GAC, ICG, RySG-CEO TLDs, GNSO or ALAC sessions? Of course there is always the ccNSO or ccNSO SOP or BC-BRG as options as well. Seriously???? It looks worse than my kids texting their friends!!! I must admit that there is one session that looks particularly good…..”lunch break” J

So why am I going to be attending ICANN? It’s really simple, ICANN is a place where business gets done. It’s full of potential ParkLogic clients and the information that you can pick up from talking to individuals is nothing short of brilliant.

Like any organisation, it will take some time to get to know the ropes but this isn’t my first and I know a lot more people who attend ICANN than I did a few years ago. It will be great catching up with them to find out how many of the rapid changes to the Internet over the last 12 months are impacting their own businesses.

In the meantime, I’d better go and pack otherwise I’ll miss my flight….see you all there!

Cheers!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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Edgevaderpro
Looking forward to seeing you. Again!
18 October 2015
mgilmour
We were like ships passing in the night......need to catch-up at NamesCon :-)
28 October 2015
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Sneak Preview of ParkLogic Next

At the recent Domain Conference in Fort Lauderdale, ParkLogic released a sneak preview of what we are calling “ParkLogic Next”. We will be publishing a series of short videos featuring different aspects of Next over the weeks leading up to Namescon in January. It's something that we're really excite about!

Escrow.com

About 18 months ago, we made the big decision to rebuild our entire platform and infrastructure from the ground up. This was one of the best decision that we have ever made. With nearly a decade of accumulated knowledge and experience from extracting the full value from domain traffic we are on the cusp of releasing what we believe is a ground breaking domain platform.

We had a number of goals in designing Next:

  1. Informative – you can now view different aspects of your data at the click of a button. Everything from Excel like filters to adding trend lines are at your fingertips.
     
  2. Actionable – you can make decisions from the data before you.
     
  3. Fast – we don’t want clients to have to wait for extended periods of time for their data.
     

With these three goals in mind we have now released a video outlining some of the features of the Next dashboard. The entire dashboard has been built by accessing our own API which empowers clients to also easily integrate their own variation of the Next platform into their own systems. There is no custom secret code....everything is in the API and accessible to clients.

Putting everything into the API is an important principle. It means that larger customers, registrars and registries can easily integrate Next into their own brandable interface. It also provides a huge amount of flexibility for domain investors who like both an online interface and one that allows them to get under the numbers.

A number of the features of the dashboard include:

  • Adding trend lines at the click of a button
  • Being able to see all of your data via a slider snapshot
  • Instantly move data from a chart to a table for more detailed analysis
  • View the breakdown between mobile and desktop traffic
  • View top referrers, geo-split data and what domains made up a days data
  • Excel like filter functionality to zoom in on the data that interests you.
  • Everything exportable to a CSV file
     

During the next months we will be continuing to extend the Next dashboard and the underlying functionality that will make it the most advanced domain management interface in the world. We hope that you enjoy the first short video giving a glimpse of ParkLogic Next.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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.Club Launches Awesome Domains!

I have to give it to the team at .club, they just seem to be going from strength to strength. I just received an email from Jeff Sass, their Chief Marketing Officer, and they are now releasing a list of super premium domains for auction. Please see the press release below....it's a pretty impressive list of 2 letter and a 1 letter .club domain.

Escrow.com

PRESS RELEASE

High Value Domain Names Such As C.club, DK.club, PC.club and PJ.club

Have Strong Appeal in Asia and the West

FORT LAUDERDALE, FL --- October 7, 2015 ---C.Club and twenty-four 2-character .CLUB domain names are set to hit the auction block on October 29, 2015 in a series of five fast-moving auctions with each auction lasting three days. The popularity and value of one and two-character domains is well documented as witnessed through their global sales and usage by major corporations across verticals such as YP.com (Yellow Pages), HP.com (Hewlett Packard), SI.com (Sports Illustrated), EA.com (Electronic Arts), QQ.com (Tencent QQ), W.org (WordPress) and more. In fact, many companies’ brand identity has naturally morphed to be more prevalent in their two-character abbreviated form rather than full name.

This auction, to be held on the Chinese EachNic.com platform, marks the first time .CLUB Domains, the Registry behind one of the world’s most popular new domain extensions, is offering this set of domains in a public auction format. The domain inventory included in this auction has been hand-selected by the EachNic.com team to specifically appeal to Eastern and Western businesses and investors alike. Auction bidding starts as low as $5,000USD for the majority of two-character domains, making them accessible for businesses of all sizes and budgets.

 

.CLUB Domains has already sold reserved domains at considerable auction prices, including the sale of Wine.club for $140,000 in 2015 at the NamesCon Auction, which set the worldwide auction record for all new domain extension sales to date. This was their first and only auction, showing the demand for .CLUB domain sales. Likewise, interest in the first Eastern and Western auction of .CLUB names is expected to attract strong participation, especially with .CLUB’s active focus on buyers worldwide.

The auction platform will be available in both Chinese and English, and .CLUB will be offering a Concierge Service to assist Western buyers, thus allowing two ways to bid:

  • Bid online from the EachNic.com auction platform. Once the auction begins, create an account and bid as frequently as you like.  You can also enter a proxy bid for each auction for automated bidding.
  • Use the free Concierge Service and work with a professionalbi-lingual domain specialist to guide you through EachNic.com’s registration and bidding process on your behalf and under your directions. This provides you the freedom to set your limits anonymously before the auction ends. To learn more, contact us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Payments will be made through the familiar website Escrow.com for non-Chinese investors and through Union Pay for Chinese investors.  To accommodate investors everywhere, teams of bilingual speakers will be available throughout the auction in U.S. and China time zones.

Be sure to frequently check http://nic.club/auction/for the latest news and bidding links for this coveted set of  25 valuable domains. Auction inventory, reserves and dates can be found below.  Each auction will end promptly at 10:30 pm Eastern (7:30 pm Pacific) on the indicated End date.

 

Domain

Reserve

Start

End

HJ.CLUB

$5,000 USD

29-Oct-2015

1-Nov-2015

JC.CLUB

$5,000 USD

29-Oct-2015

1-Nov-2015

YM.CLUB

$5,000 USD

29-Oct-2015

1-Nov-2015

JS.CLUB

$5,000 USD

29-Oct-2015

1-Nov-2015

GZ.CLUB

$5,000 USD

29-Oct-2015

1-Nov-2015

PC.CLUB

$5,000 USD

30-Oct-2015

2-Nov-2015

YX.CLUB

$5,000 USD

30-Oct-2015

2-Nov-2015

QC.CLUB

$5,000 USD

30-Oct-2015

2-Nov-2015

DK.CLUB

$5,000 USD

30-Oct-2015

2-Nov-2015

PK.CLUB

$5,000 USD

30-Oct-2015

2-Nov-2015

ZS.CLUB

$5,000 USD

31-Oct-2015

3-Nov-2015

CG.CLUB

$5,000 USD

31-Oct-2015

3-Nov-2015

SQ.CLUB

$5,000 USD

31-Oct-2015

3-Nov-2015

KF.CLUB

$5,000 USD

31-Oct-2015

3-Nov-2015

ZI.CLUB

$5,000 USD

31-Oct-2015

3-Nov-2015

YC.CLUB

$5,000 USD

1-Nov-2015

4-Nov-2015

DS.CLUB

$5,000 USD

1-Nov-2015

4-Nov-2015

YQ.CLUB

$5,000 USD

1-Nov-2015

4-Nov-2015

ZQ.CLUB

$5,000 USD

1-Nov-2015

4-Nov-2015

TB.CLUB

$5,000 USD

1-Nov-2015

4-Nov-2015

C.CLUB

$50,000 USD

2-Nov-2015

5-Nov-2015

JD.CLUB

$10,000 USD

2-Nov-2015

5-Nov-2015

PJ.CLUB

$10,000 USD

2-Nov-2015

5-Nov-2015

LY.CLUB

$5,000 USD

2-Nov-2015

5-Nov-2015

GW.CLUB

$5,000 USD

2-Nov-2015

5-Nov-2015

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

 

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The Domain Conference

The overwhelming success of the recent Domain Conference is testament to the resilience and strength of the domain industry. Well over 200 domain investors and service providers gathered in Florida for an outstanding time of networking and learning about the abundant opportunities in the domain industry.

I do apologise but this article will have to be quick as I'm writing it in Sydney just before my next flight to Melbourne.....nothing like a 30 hour journey home!

So what made it such a success? The Neu family, together with their team, made all of the attendees feel welcome while at the same time ensuring that the event went off without a hitch. Congratulations should be offered to all those behind the scenes who made it such an enjoyable event.

Escrow.com

As a conference venue, the Hyatt Regency, was exceptional. The rooms were at the right price, the conference facilities were world class and everyone just seemed to hang around. This was evident by the number of people talking and doing business in the large bar area each night.

I had an interesting conversation with Jeff Saas from .club in the hotel bar one night about how to make a conference success for your own business. To paraphrase the conversation, “The repeated attending of conferences and industry events will grow your business as people get to know you and the fact that you’ll hang around.” In other words, the more you attend the more likely you’ll be successful.

I’ve made the journey across the Pacific innumerable times now and I heartily agree with Jeff. A large reason why my own company, ParkLogic, is so successful is that I’ve put in the effort and the resources to associate with my peers. There is nothing like breaking bread with someone to really learn about their business needs and to see if you can meet them.

I should also mention that ParkLogic released a sneak preview of the dashboard for our new platform at the conference. After listening to what domainers really want from a domain management platform we spent the last year in developing everything from the ground up. I will be regularly posting videos of ParkLogic Next that will feature some new and exciting features. Check out next.parklogic.com

As many of you are aware, I have recently published my debut science fiction book Battleframe. The domain industry has given me so much and as a thank-you I gave out over 100 free signed copies to conference attendees. The level of encouragement for writing the novel from the domain community was really inspiring….thank you everyone!

For those people that didn’t receive a copy of Battleframe, I’ve decided to give out a free copy of the e-book via Amazon to 50 people. All you need to do is go to battleframe.club and register for your e-book and then send me an email with the number that you receive after filling in the brief form.

The conference sessions were also excellent with some refreshing content shared by experts in their respective fields. Despite my own hectic meeting schedule, I made sure I attended a number of the sessions.

As you may have guessed the conference was so successful that it will be held again next year. If you didn’t attend this year then whatever you do, don’t miss out next year! See you then.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

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mgilmour
Joe, Thank you for your kind words. It was great catching up with you as well!
05 October 2015
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