Minds + Machines To Register 30,000 Of Its Premium Domains Under “Emerald Names”

Minds + Machines Group Limited provided an update of its operations for Q2 2015. The Company’s unaudited interim results for the six months to 30 June 2015 will be published in September 2015.

Antony Van Couvering, CEO of Minds + Machines Group Limited, said:

“The Group has evolved considerably in the last quarter as reflected in the associated Board changes. We have actively transitioned from what was a tech-heavy business in development mode that has created a highly functional registry operation and a basic registrar for specialised use, into a highly focused and sales-driven organisation that will build on our revenue-generating tech foundation. The benefits resulting from these developments have already commenced in the form of cost cutting and the development of a direct sales team, which we believe will have a very material direct effect on our bottom-line results over the next 12 months by increasing our revenues from domain name sales and by keeping our associated costs under very strict control.”

KPI’s

As announced in the Company’s financial statements for the year ended 31 December 2014, the Board has introduced a series of Key Performance Indicator targets by which to measure the progress of the business. The current status for these is as follows:

• Domains under Management (“DUM’s”): as at 30 June, DUMs stand at 217,200, representing 3.43% of total new gTLDs domain names registered and therefore within the target KPI range of 3-5%.
• Premium Name Sales Growth: this is currently running at an annualised growth rate of 1.83, in line with the 1.75-2.5x pa growth target.
• Standard Name Sales Growth: Standard Name sales growth is currently running at an annualised rate of 2.22, ahead of the 1.5-2x pa growth target.

With regards to Average Revenue per Premium Name and Standard Name, these will be disclosed in full at the time of the half-year reports. For purposes of initial guidance, management anticipates that Average Revenue per Premium Name will have trended around 8% below the KPI target for H1 owing to the fact the sales teams were not fully operational in the period.  Due to the success of the Company’s discounted promotion for .work, Standard Names Average Revenue is also likely trend below the KPI target for H1. However, management expects the revenue captured at the point of renewals in year two as a result of the promotion will in turn improve the associated Average Revenue per .work Standard Name.

Volume sales update

During Q2, the Company experienced strong growth in sales of standard names during the quarter – up 83.55% over the previous quarter, due in part to the .work promotion (see above).

Separately, the Company is pleased to report the introduction of a broad on-going promotion to the registrar channel for most of its wholly-owned top-level domains, excluding geos, and looks forward to analysing the results of this initiative in H2. So far the majority of registrars, including GoDaddy, have confirmed they will support the programme starting from August. The Board views registrars as the primary channel for driving sales volume for its standard name inventory and to that end its Registrar Sales channel reps are actively engaged programme with them.

Premium names update

During June, the recruitment process of the first two Premium Name sales teams took place. Premium Name sales teams are now operational in the UK and US. The Board looks forward to measuring the progress of the teams in H2.

Emerald Names

To support the Premium Names sales activity, the Company is also currently going through the process of registering up to 30,000 Premium Names from across its wholly-owned portfolio of TLDs through its wholly-owned entity, Emerald Names, so as to raise the visibility of its inventory amongst the broker and registrar channel, as well as with consumers.  As a result, these Premium Names will resolve to a “for sale” web site, whereas previously they returned a “not found” error when typed into a browser.  These Premium Names will also be listed for sale on the web sites of aftermarket brokers, and included in their electronic feeds of names for sale, which are carried by most major registrars, thereby providing greater exposure and more sales opportunities.  Brokers and registrars can be an important referral channel for both Premium and Super Premium names, as evidenced by the recent high-value sale of net.work. The costs to the Company of registering a name through Emerald are minimal and the Board looks forward to analysing the results of this initiative during the remainder of the current financial year.

Pioneers, Super Premiums and Business Development update

During Q2 the Group progressed a series of key Super Premium (high value) and Pioneer deals. These included Carlsberg, ALM Media and Wedding Wire. The Company is now focused on extending the range of key partners it has across those verticals where it owns a gTLD and is putting in place a dedicated business development team to develop and progress such opportunities.

Cost restructuring

As highlighted in the financial statements announced on the 26 May 2015, a key priority for the Board is to manage its operating costs so as to accelerate the time frame in which profitable growth can be achieved. To this end, the Board is pleased to report annualised savings of $1.3m have already been achieved as a result of headcount reductions made in June.

The Board is currently reviewing further measures that have the potential to deliver significant additional cost reductions to the Group without impacting its sales and marketing activity or the services it delivers; the Company is targeting to cross-over into profitability in 2016. The Company will keep Shareholders updated of this activity as it progresses.

Launch schedule and renewals

During Q2 there were no launches or first year renewals of domains within the Group’s portfolio of 34 uncontested domains in which it has an interest. During the second half of the year, the Group expects to benefit from the launch of three new gTLDs as well as renewals from the Company’s first batch of 10 gTLDs launched in September 2014.

Launches

On 2 October 2015, .miami will enter General Availability. On 12 October 2015, both .law and .abogado will both go into General Availability (“GA”). For the first time, the Company will run an early Access Program (“EAP”) in .law and in .abogado.  The Company’s EAP program provides that during the first week of GA, all names start at a higher price and then descend in price day by day until they reach their steady-state price, in a manner similar to a Dutch auction.

Separately, the Board is encouraged by the interest being shown in the .law domain ahead of its launch and likewise reflected in the recent partnership announcement with ALM Media, LLC. ALM Media is one of the world’s largest legal media companies, and is to collaborate on advertising and marketing content for .law across its legal media publications, conferences and digital platforms. In addition, ALM is adopting over 100 .law URLs for its existing legal properties and new product rollouts.

Renewals

During September ten domains in which the Group has an interest, including .london, will celebrate their first-year launch anniversaries. The anniversary dates will allow the business to assess renewal rates for the first time – and in turn provide initial information to determine an average life per domain name – across its portfolio and adjust marketing accordingly moving forward. The internal KPI for the Average Life Per Domain Name is currently set at 2.25-4 years.

Minds + Machines Registrar Update

The primary purpose of Minds + Machines registrar is to provide a mechanism through which partners can capture sales in these vertical markets. It is also used to test marketing concepts. During Q2 the registrar ran tests around .casa, .work and .wedding.

The Company also reports that on 16 July Mozart was de-coupled from the platform at no financial cost to the Company. On 27 July an email service was introduced in beta to registrar customers and during August a web-building tool is set to be introduced so that customers of the Minds + Machines registrar will have the option of standard email and web-building tools available to them.

Contested Domains and Cash Position as of 30 June 2015

The Group continues to have interests in 8 contested applications following its withdrawal from the .art private auction that took place during July. Under the private auction rules, however, the Company is not permitted to disclose the amount it received. Cash in the bank at 30 June 2015, prior to the auction, stood at $46.9 million.

Sub-Committee established to review Company share buy-back and Special Dividend options

At the Board meeting of 27 July, a sub-Committee consisting of Directors Michael Salazar, Elliot Noss, David Weill and Guy Elliott, was established and tasked with reviewing making recommendations regarding a buy-back of shares by the Company and/or a Special Dividend. The findings of the review sub-Committee will be presented to the Company’s Board at its next meeting with an announcement to be made to the market during September 2015.  The Company is currently in a closed period.