Sedo Holding Report 2013: Domain Revenue Down 12.6%, 16.5 million Domains on Platform

Sedo Holding AG published it’s annual 2013 report that reveals that while the company’s overall revenue is up 5.5% (€140.0 million compared to €132.7 million), the domain segment revenue is down 12.6%. The domain related revenues (parking and sales combined) were €27.7 million compared with the previous year‘s €31.7 million.

The number of domains tradable on the platform increased to 16.5 million as of December 31, 2013, following 14.9 million as of December 31, 2012.

In the performance-based domain parking area, around 3.7 million domains were available for marketing as of the balance sheet date (December 31, 2012: 3.8 million). That is about 2.6% less parked domains.

Sedo claims that the drop in revenue in “Domain Marketing” (sales and parking) is primarily driven by the falling revenue trend in the domain parking market. In contrast to this, the Domain Trading area achieved good sales revenue growth. Here, international activities were further expanded, and sales activities were further optimized.

Here is the Sedo Holding AG Annual Report 2013:

In the 2013 fiscal year, the Sedo Holding Group grew its sales revenues by 5.5% to € 140.0 million (previous year: € 132.7 million). This growth was driven by the Affiliate Marketing segment, although it performed significantly more weakly than expected. In parallel, the Domain Marketing segment continued to face the challenges presented by the falling domain parking market accompanied by strong competition from aggressively-priced providers, which is why the drop in sales revenues continued, as expected.

In the Domain Marketing segment, a total of € 27.7 million of sales revenues was generated in the period under review, down 12.6% compared with the previous year‘s € 31.7 million. The number of domains tradable on the platform increased to 16.5 million as of December 31, 2013, following 14.9 million as of December 31, 2012. In the performance-based domain parking area, around 3.7 million domains were available for marketing as of the balance sheet date (December 31, 2012: 3.8 million). The drop in
sales revenue in Domain Marketing is primarily driven by the falling sales revenue trend in the domain parking market. In contrast to this, the Domain Trading area achieved good sales revenue growth. Here, international activities were further expanded, and sales activities were further optimized, as announced.

As a consequence, we succeeded in 2013 in entering into several agreements with different and important registries for the coming new top-level domains (gTLDs). Through these registries, currently more than 150 TLD‘s are under contract that will launch on the market over the next few years. The agreements with the registries generally contain the exclusive implementation of auctions during the brand protection phase (Sunrise) and the competitive phase (Landrush), and the sale of so-called premium domains through
various sales channels managed by Sedo, including brokers, the marketplace, the reseller network and auctions.

In the Affiliate Marketing segment, sales revenues were up by 11.2% to € 112.3 million in the 2013 fiscal year, compared with € 101.0 million in the previous year. Reporting this growth, affilinet significantly outstripped the growth of the overall affiliate market (5-7%). The number of partner programs increased by more than 16.8% to 3,356 over the same period, and the number of participating websites by 7.0% to 600,000. Despite this revenue growth, this segment overall significantly lagged our planning due to the particularly weak summer quarter in the German affiliate marketing business, as well as structural
changes to the way that partner programs are invoiced in our business with major customers, which is also accompanied with negative revenue and earnings effects that are expected to be long-term. In addition, in the fourth quarter 2013 the expectations for affilinet Netherlands were reassessed due to a deterioration in its operating business, resulting in a € 0.3 million impairment loss being applied to the goodwill recognized
in this business unit arising from the takeover of Cleafs B.V. in 2012.

Overall, the Group reported earnings before interest, taxes, depreciation, amortization and writedowns on domains (EBITDA) of € 6.0 million in the 2013 fiscal year, after € 5.0 million in the previous year. Correspondingly, earnings before taxes (EBT) increased from € 3.7 million in the prior-year period (excluding € -60.3 million of one-offs arising from impairment losses) to € 4.6 million excluding € -0.3 million of one-offs arising from impairment losses). Earnings per share (EPS) amounted to € 0.07 in the period
under review – compared with € -1.93 of EPS in the previous-year period, which was
impacted by the aforementioned impairment losses.

For the 2014 fiscal year, the Management Board expects sales revenue to grow by around 10% compared with the 2013 fiscal year (2013 sales revenue: € 140.0 million), driven primarily by growth in the Affiliate Marketing segment. As more is to be invested in marketing in the 2014 fiscal year, and the personnel base is to be expanded, earnings before taxes of around € 4.0 million are anticipated.
Cologne, March 13, 2014