Rightside Group (NAME) – A Quote And A Chart

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A quote and a chart, presented without comment.

With the two million total registration mark approaching for all new gTLDs, uptake for this program has been exceedingly strong overall. Most of our gTLDs have met or beat expectations to date. Internet users are voting with their wallets and their clicks, acclimating to a world in which specific, relevant domains support the development of meaningful online identities.

– Paul Stahura, Donuts co-founder and CEO (source)

gTLD Growth

Source: http://ntldstats.com/registry


9 Responses
  • dave Reply

    from Tucows conf call :

    While most volume metrics such as transactions and domains under management were relatively flat compared to last
    year, gross margin dollars on wholesale domains in Q2 grew more than 11%. This growth appears strong relative to the
    industry. As we move through the remainder of the year, we expect the increased contribution from ccTLDs and the
    new gTLDs to sustain this higher gross margin. We are already offering nearly 200 new gTLDs from eight different
    registry operators. We expect to add support for over 20 more in the coming months.
    Last quarter, I talked about one of the metrics that we’re watching closely. The ratio of new gTLD sales to those with
    common net. For the market as a whole, that number increased from 6.5% in Q1 to over 10% in Q2, although that does
    include some registries giving away a large number of domains for free. For OpenSRS, it grew from 3% in Q1 to 4% in
    Q2, and for Hover, it grew from 6.5% in Q1 to 9.5% in Q2, with all those domains being sold at a healthy margin.

  • Thunder Capital Reply

    You have written pretty decent articles regarding the up-side case for the Rightside.
    I beg to differ that it is an obvious short, since the current registrar business is worthless.
    I do agree that there is value with the gTLDs but not at its current market price.

    I posted my article on SeekingAlpha:
    http://seekingalpha.com/article/2492165-rightside-its-trending-on-the-wrong-side

    I look forward to a fruitful dicussion.

    • analyst Reply

      Nearly everything about your SA article is wrong. The reason it’s wrong is that you are not doing the “hard” research like talking to the folks at Tennenbaum to understand the dynamics of their debt deal. I encourage you to do more work.

  • Thunder Capital Reply

    Your investment has clearly been successful hasn’t it?
    I would encourage you to do more diligence on the industry, not relying purely on Management. It takes a bit of effort to read between the lines.

    • analyst Reply

      Two points:

      1. To make the case that “the registrar business actually has no value” shows lack of analytical quality and a deep mis-understanding / mis-representation of the business.
      2. If your time horizon is measured in weeks, you are in the wrong place.

  • Thunder Capital Reply

    Dutifully noted.

    I have followed Rightside since Demand Media IPO’d.

    You never highlighted the aftermarket services revenue, which is the crux of my article. And if you were actually a customer of eNom, you’ll know how “scammy” the aftermarket services revenue is. When your domain expires, they just load it with a page full of ads and earn that “ad” revenue.

    If you plan to defend “aftermarket services” and depict it as legitimate, then I will rest this case. We have two opposite views.

    • analyst Reply

      I’ll say it again: you really should educate yourself more before penning SA articles. A few points:

      1. AM Services is not solely spammy advertising; it’s also domain sales via NameJet. The Company has already communicated their “decision to eliminate low quality advertising traffic” (source: last Q). So it’s not like you are pointing out anything no one else knows.
      2. You write, “the core business is not profitable!” This couldn’t be further from the truth. The truth is that they are in an investment period.
      3. Why on earth is AM Services “the crux of your article”? Given it’s % contribution, that point is a non-starter.

      I suggest you refrain from using terms like you used in your SA article – phrases like “the registrar business actually has no value” serve to discredit you, not bolster your investment case.

  • Thunder Capital Reply

    “Investing” in the business would be in product development and capital expenditures.
    If you want to invest in a company that historically generated cashflows solely from aftermarket services, which the majority was “spammy advertising” as you quoted, good luck.

  • Big Juan Reply

    Thats not true at all. Investing in the business flows straight through the income statement as well. you still have maintenance expenses, SG&A, etc, have to hire people. Adding in costs to grow the business are not capitalized. Capex applies to the balance sheet as a capital cost. Your confusing capitalized costs vs operating expenses. They are not the same. Isnt this accounting 101?

    Also, the AM services revenues are relatively small portion of the business. And the company is projecting cash flow breakeven by Q4 this year.

    Kind of hard to see how thats possible without some high margin contribution in the model. ie. gTLD registry revenues.

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