Newly public dot-dentist flogger Rightside's shares jump on strong domain sales
Domain renewal rate on the rise
In its first earnings report since going public, domain-name specialist Rightside reported revenues of $48.8m, a 7 per cent revenue increase over the year-ago quarter, causing its shares to jump by 4.5 per cent. The company is now valued at $173m.
Rightside is unique in the domain name industry in that it services every level of the market and is broadly spread across each vertical. It runs 33 generic top-level domains (gTLDs) – from .ninja to .dentist – and has 20,000 resellers for them. It also offers auctions, premium names, and a host of other related services.
That broad spread is increasingly seeing Rightside used as a benchmark for how the domain name industry as a whole is progressing, given that over 400 top-level domains have launched this year alone and several hundred more are coming in the next six months.
Sales of new domains have been disappointing, with share prices for all domain companies steadily dropping for the past several months. Rightside's earnings report may indicate that the market has found its baseline and should start growing again.
Highlighting a current trend, Rightside announced that it has received $8.6m in income in exchange for dropping its bids for seven new gTLDs (that's $1.2m each). It also said it manages 16 million domains in total, or roughly 6 per cent of all global domains, and it has 110,000 registrations under its own owned-and-operated gTLDs, making it the eighth biggest in the market.
There are two critical metrics in the domain name industry: money made per domain and renewal rate. Margins have traditionally been very tight, but this has opened up a little with the creation of new top-level domains and higher prices. Rightside makes an average of $10 per domain registration, and taken across all of its services, it makes the equivalent of $30 per domain.
The rate of domain renewals demonstrates the general health of a registry. Rightside is averaging 72.5 per cent, up from 69.5 per cent during the same period in 2013. However, this does not account for the fact that many new domains have been bought this year and so have not yet come up for renewal. The critical figure will be when the higher-priced domains (from which Rightside is making its high per-domain profit) come up for renewal in 2015.
Rightside also retains an interest in approximately 40 additional gTLDs that have yet to be awarded to an operator, many of which have significant commercial promise.
Perhaps the most significant metric, however, is that Rightside managed to turn a profit in its first quarter after going public, reporting a net income of $4.1m and earnings of $0.22 per diluted share. By comparison, it lost $2.6m during the same period a year ago.
CEO Taryn Naidu said of the results: "After only three months as a stand-alone company, the foundation for growth that we put in place for Rightside is beginning to show its long-term potential." ®
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