Rightside Announces Q4 & 2015 Results: Revenue Grows to $8.4 Million (Up 11%)

Rightside Group, Ltd. (Nasdaq:NAME), announced financial results for the fourth quarter and full year ended December 31, 2015.

Business Highlights:

• Rightside’s 39 owned and operated gTLDs in general availability ended 2015 with over 400,000 registered domains, up 14% over Q3 2015.
• Rightside’s retail registrar, Name.com, grew revenue over 25% year over year with over half of that growth driven by higher margin new gTLDs.
• With over 16.5 million total domains under management as of December 31, 2015, including over 2.8 million domain names registered through its retail outlets, Rightside remains one of the world’s largest registrars.
• Strong momentum behind Rightside’s most recent launches – with the fourth quarter’s .LIVE and .STUDIO topping 25,000 combined registrations and .NEWS, which launched in the third quarter of 2015, now has over 60,000 registrations and is in the top spot in Rightside’s portfolio.

“In Q4, and for the full year of 2015, Rightside achieved strong financial results as we continued to execute on our mission of advancing the way businesses and consumers define and present themselves online.  We achieved record revenue in the fourth quarter closing the full year 2015 with 11% total revenue growth and Adjusted EBITDA of $4.8 million,” said Chief Executive Officer Taryn Naidu.

“Looking ahead to 2016, we are excited about our portfolio of 39 new gTLDs and the future growth opportunities as we continue to invest in market development initiatives that drive heightened awareness and growing usage for new gTLDs by consumers and businesses.  We are focused on improving profitability by driving margin expansion and growth in our Registry and retail business lines and implementing cost efficiencies throughout the business,” Naidu continued.

Financial Summary
(in thousands)

		Three months ended								Year ended
		December 31,								December 31,
			2015				2014				2015				2014
Registrar services (1)		$	44,721			$	42,321			$	173,954			$	160,168
Registry services (1)			2,526				1,097				8,438				1,917
Aftermarket and other			9,260				8,580				32,683				30,163
Eliminations (2)			(842	)			(265	)			(2,589	)			(500	)
Total revenue		$	55,665			$	51,733			$	212,486			$	191,748
Gain on other assets, net		$	(721	)		$	(7,800	)		$	(9,403	)		$	(22,103	)
(Loss) income before income tax		$	(3,820	)		$	1,778			$	(13,638	)		$	(3,186	)
Income tax expense (benefit)			303				322				(2,314	)			(1,328	)
Net (loss) income		$	(4,123	)		$	1,456			$	(11,324	)		$	(1,858	)
Adjusted EBITDA (3)		$	2,563			$	556			$	4,807			$	(3,092	)

(1)  Amounts for Registrar and Registry services revenue were previously presented on a combined basis as Domain Name Services revenue.

(2)  Amounts in the eliminations line reflect the elimination of intercompany charges between our Registrar and Registry services businesses.

(3)  This Non-GAAP financial measure is described below and reconciled to GAAP net (loss) income in the accompanying table.

Fourth Quarter 2015 Financial Highlights
(Unless otherwise noted, all comparisons are relative to the fiscal fourth quarter 2014.)

• Registrar services revenue increased 6% to $44.7 million compared to $42.3 million.
• Registry services revenue increased to $2.5 million compared to $1.1 million.
• Aftermarket and other revenue was $9.3 million compared to $8.6 million.
• Total revenue increased 8% to a record $55.7 million compared to $51.7 million.
• Net loss was $4.1 million, compared to net income of $1.5 million.
• Adjusted EBITDA was $2.6 million, compared to $0.6 million.
• Gain on other assets, net was $0.7 million representing fewer withdrawals of its interest in gTLD applications during the period compared to a gain of $7.8 million.

Full Year 2015 Financial Highlights
(Unless otherwise noted, all comparisons are relative to the fiscal full year 2014.)

• Registrar services revenue increased 9% to $174.0 million compared to $160.2 million.
• Registry services revenue increased to $8.4 million compared to $1.9 million.
• Aftermarket and other revenue was $32.7 million compared to $30.2 million.
• Total revenue increased 11% to a record $212.5 million compared to $191.7 million.
• Net loss was $11.3 million, compared to $1.9 million.
• Adjusted EBITDA was $4.8 million, compared to Adjusted EBITDA of ($3.1 million).
• Gain on other assets, net was  $9.4 million representing fewer withdrawals of its interest in gTLD applications during the period compared to a gain of $22.1 million.

Registrar Services Operating Metrics

		Three months ended										Year ended
		December 31,										December 31,
			2015				2014			Change			2015				2014			Change
End of period domains (in millions) (1)			16.3				16.0			1.9	%		16.3				16.0			1.9	%
Average revenue per domain (2)		$	11.00			$	10.66			3.2	%	$	10.79			$	10.41			3.7	%
Renewal rate (3)			74.7		%		72.7		%				75.3		%		72.9		%

(1)  A domain is defined as an individual domain name registered by a third-party customer on Rightside’s registrar platforms for which Rightside has begun to recognize revenue.

(2)  Average revenue per domain is calculated by dividing registrar services revenue for a period by the average number of domains registered on Rightside’s registrar platforms in that period.  Average revenue per domain for partial year periods is annualized.

(3)  The renewal rate is defined as the percentage of domain names on Rightside’s registrar platforms that are renewed after their original term expires.

Liquidity and Capital Resources

• As of December 31, 2015, Rightside had cash and cash equivalents of $45.1 million, compared to $45.9 million as of September 30, 2015.
• At the end of the fourth quarter, the Company had letters of credit totaling $11 million outstanding with approximately $19 million of available borrowing capacity under its revolving credit facility with Silicon Valley Bank.