Rightside 2014 Results: Revenue Up 14%, 150,000 New gTLD Registrations

Rightside Group, Ltd. today announced financial results for the fourth quarter and full year ended December 31, 2014.

“Rightside closed 2014 with a strong quarter of revenue growth across each area of our business. Additionally, in completing just our second quarter as an independent public company, we exited the year having laid the foundation that positions our company as an industry leader, poised for further growth and impact,” said Chief Executive Officer Taryn Naidu. “We now operate the largest new gTLD registry platform and one of the largest registrar platforms in the world. Rightside is beginning to reap the benefits of being the industry’s first vertically integrated domain name services company of scale, with operating performance now characterized by double-digit revenue growth, increasing average revenue per domain, and expanding margins.”

Naidu continued, “With an expanding portfolio of 36 new gTLDs, I’m excited about our prospects for 2015 as we continue investing in market development initiatives that drive heightened awareness and preference for new gTLDs by consumers and businesses.”

Financial Highlights – Fourth Quarter 2014

• Domain name services revenue for the three months ended December 31, 2014 increased 16% to $43.2 million compared to $37.2 million for the same period in 2013.  Organic growth of 15%, which excludes the acquisition related benefit from Name.com, was primarily due to an increase in domain name registrations associated with the continued onboarding of eNom wholesale partners, over 35% growth at Name.com, and $1.0 million of revenue from the new registry business.
• Aftermarket and other revenue for the three months ended December 31, 2014 was $8.6 million compared to $8.4 million for the same period in 2013.
• Total revenue for the three months ended December 31, 2014 increased 13.5% to $51.7 million compared to $45.6 million for the same period in 2013.
• During the fourth quarter of 2014, Rightside recorded a gain on other assets, net of $7.8 million representing the gain on withdrawals of its interest in gTLD applications during the period.
• Net income for the three months ended December 31, 2014 was $1.5 million compared to a net loss of $5.7 million for the same period in 2013.
• Adjusted EBITDA for the three months ended December 31, 2014 was $0.6 million, compared to Adjusted EBITDA of ($0.9 million) for the same period in 2013.

Financial Highlights – Full Year 2014

• Domain name services revenue for the year ended December 31, 2014 increased 14% to $161.6 million compared to $141.6 million for the year ended December 31, 2013.
• Aftermarket and other revenue for the year ended December 31, 2014 was $30.2 million compared to $43.6 million for the year ended December 31, 2013, primarily due to a decrease in the sales of domain names owned by Rightside and the elimination of low quality advertising traffic in the second half of 2013.
• Total revenue for the year ended December 31, 2014 increased 3.5% to $191.7 million compared to $185.2 million for the year ended December 31, 2013.
• Rightside recorded an income tax benefit of $1.3 million for 2014 resulting from taxable losses in the U.S.
• Net loss decreased to $1.9 million for the year ended December 31, 2014 compared to $10.7 million for the year ended December 31, 2013.
• Adjusted EBITDA for the year ended December 31, 2014 was ($3.1 million), compared to Adjusted EBITDA of $8.0 million for the year ended December 31, 2013. Adjusted EBITDA loss for 2014 includes $6.9 million of investment in the new registry business, net of revenue contribution.

Business Highlights

• Rightside has signed registry operator agreements with ICANN for 36 gTLDs to date, including 3 since the third quarter of 2014, and has an interest in 29 additional gTLD applications that have yet to be awarded to their ultimate registry operator.
• As of December 31, 2014, 28 of Rightside’s owned and operated gTLDs were in “general availability” for an average of 120 days each. These have generated nearly 150,000 registrations with over $5.0 million in total cash sales as of December 31, 2014.
• Half of domain name services growth during the fourth quarter came from new gTLD registrations.
• During the fourth quarter, 15% of Name.com new registrations came from new gTLDs with an average selling price of the new gTLDs over three times that of legacy gTLDs. New gTLD revenue comprised over 40% of Name.com‘s year-over-year growth for the fourth quarter of 2014.
• With over 16 million total domains under management as of December 31, 2014, including over 2.7 million domain names registered through its own retail outlets, Rightside remains one of the world’s largest registrars.