Rightside Registry Revenue Grows 52% To $2.9 Million

Rightside Group, Ltd. (Nasdaq:NAME), today announced financial results for the second quarter ended June 30, 2016.

Rightside’s 39 gTLDs in general availability ended the quarter with approximately 523,000 registered domains, up over 70% from the second quarter of 2015.  Registered Domains have increased 30% since December 31, 2015. Registry services revenue increased 52% to $2.9 million compared to $1.9 million.

Rightside announced yesterday that it sold 2 adult .live domains for 6 figures each.

Business Highlights

• Rightside recently added .GAMES to its owned and operated gTLD portfolio and now has 40 gTLDs in its portfolio, with 39 in general availability.
• Rightside’s 39 gTLDs in general availability ended the quarter with approximately 523,000 registered domains, up over 70% from the second quarter of 2015.  Registered Domains have increased 30% since December 31, 2015.
• Rightside’s retail registrar, Name.com, grew revenue approximately 20% year-over-year with almost half of that growth driven by higher margin new gTLDs.
• With approximately 16.6 million total domains under management as of June 30, 2016, including over 2.9 million domain names registered through its retail outlets, Rightside remains one of the world’s largest registrars.
• Rightside’s .LIVE extension has quickly become our fastest growing TLD, selling over 56,000 units for an aggregate of more than $1.3 million in cash revenue to date in 2016.

“We delivered strong second quarter results as Rightside continues to focus on growing awareness and demand for new gTLDs through our retail registrar and expanding network of distribution partners.  We are focused on accelerating growth in our high margin businesses while reducing costs across the board,” said Chief Executive Officer Taryn Naidu.

“Our registry services business continues to be core to the Company’s strategy and its revenue grew 52% to $2.9 million.  Name.com’s revenue grew 20% year-over-year, to an all-time high on both a GAAP revenue and unit registration basis,  due to a higher mix of new gTLDs with an average selling price approximately three times that of legacy gTLDs.  This quarter, we also reported Adjusted EBITDA of $2.3 million, nearly three times higher than the prior year period as we’ve continued to grow our mix of higher margin registry services revenue and drive cost synergies throughout the business.”

Second Quarter 2016 Financial Highlights
(Unless otherwise noted, all comparisons are relative to the fiscal second quarter 2015.)

• Registrar services revenue increased to $44.2 million compared to $43.3 million.
• Registry services revenue increased 52% to $2.9 million compared to $1.9 million.
• Aftermarket and other revenue increased to $7.8 million compared to $7.5 million.
• Total revenue increased to $54.0 million compared to $52.2 million.
• Net loss was $2.5 million, compared to $5.7 million.
• Adjusted EBITDA increased to $2.3 million, compared to $779,000.
• Gain on other assets, net was $2.2 million representing the gain on withdrawals of its interest in gTLD applications and the sale of its non-core registrar credentials.

Financial Summary
(in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
			2016				2015				2016				2015
Registrar services		$	44,157			$	43,281			$	88,175			$	85,280
Registry services			2,932				1,925				5,571				3,530
Aftermarket and other			7,839				7,544				17,108				14,876
Eliminations (1)			(891	)			(579	)			(1,693	)			(984	)
Total revenue		$	54,037			$	52,171			$	109,161			$	102,702
(Gain) loss on other assets, net		$	(2,219	)		$	262			$	(2,218	)		$	(6,961	)
Loss before income tax		$	(2,546	)		$	(6,401	)		$	(8,021	)		$	(5,468	)
Income tax benefit			(75	)			(728	)			(443	)			(1,671	)
Net loss		$	(2,471	)		$	(5,673	)		$	(7,578	)		$	(3,797	)
Adjusted EBITDA (2)		$	2,314			$	779			$	4,123			$	1,347

	(1	)	Amounts in the eliminations line reflect the elimination of intercompany charges between our Registrar and Registry services businesses.
	(2	)	This Non-GAAP financial measure is described below and reconciled to GAAP net loss in the accompanying table.

 

Registrar Services Operating Metrics
		Three Months Ended												Six Months Ended
		June 30,												June 30,
			2016				2015				Change				2016				2015				Change
End of period domains (in millions) (1)			16.3				16.3				0.0	%			16.3				16.3				0.0	%
Average revenue per domain (2)		$	10.82			$	10.66				1.5	%		$	10.84			$	10.58				2.5	%
Renewal rate (3)			73.3	%			74.1	%							75.3	%			75.8	%

	(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 June 30, 2016, cash and cash equivalents increased to $47.8 million, compared to $47.0 million as of March 31, 2016.
• At the end of the second quarter, the Company had letters of credit totaling $11 million outstanding and approximately $19 million of available borrowing capacity under its revolving credit facility with Silicon Valley Bank.

Business Outlook

For the full year ending December 31, 2016, Rightside reaffirms its revenue and Adjusted EBITDA guidance:

• Total revenue of $218 million to $228 million, inclusive of $12 million to $15 million of GAAP revenue from our Registry Services Business.
• Total Adjusted EBITDA of $8 million to $11 million.