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Rightside Made $7.2 Million On Losing New gTLD Auctions: Revenue Up 30%

According to the news from Domain Forum of China on May 8th,Rightside Group, Ltd. (Nasdaq: NAME), today announced financial results for the first quarter ended March 31, 2015.

Share are up fractionally in aftermarket trading.

First Quarter 2015 Financial Highlights
◾Registrar services revenue increased 12% to $42.0 million compared to $37.5 million primarily due to new gTLD registrations, improved performance by existing resellers and the continued onboarding of eNom wholesale partners.
◾Registry services revenue increased to $1.6 million compared to $42 thousand.
◾Aftermarket and other revenue was $7.3 million compared to $7.0 million.
◾Total revenue increased 13% to $50.5 million compared to $44.6 million.
◾Gain on other assets, net was $7.2 million representing the gain on withdrawals of its interest in gTLD applications during the period compared to $4.9 million.
◾Net income was $1.9 million compared to a net loss of $3.9 million.
◾Adjusted EBITDA was $0.6 million, compared to adjusted EBITDA of ($2.3 million).
◾Over half of registrar service revenue growth during the first quarter came from new gTLD registrations.
◾ revenue grew over 30% during the period. Year-to-date, approximately 15% of new registrations came from new gTLDs with an average selling price of the new gTLDs over three times that of legacy gTLDs.
◾As of March 31, 2015, Rightside had cash and cash equivalents of $45.9 million, compared to $49.7 million as of December 31, 2014.

Business Outlook

For the full year ending December 31, 2015, Rightside reaffirms its guidance :
◾Total revenue of $210 million to $220 million, inclusive of $6 million to $9 million of GAAP revenue from the registry services business; and
◾Total Adjusted EBITDA to break-even as Rightside invests margin generated by the business back into driving market development efforts.

Financial Summary

(in thousands)

Three months ended
March 31,
2015 2014
Registrar services (1) $ 41,999 $37,532
Registry services (1) 1,605 42
Aftermarket and other 7,332 7,018
Eliminations (2) (405) (40)
Total revenue $ 50,531 $44,552

Gain on other assets, net $ (7,223) $ (4,860)

Income (loss) before income taxes $ 933 $ (2,557)
Income tax (benefit) expense (943) 1,364
Net income (loss) $ 1,876 $ (3,921)

Adjusted EBITDA (3) $ 568 $ (2,274)

(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 registry and registrar businesses.

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

Registrar Services Operating Metrics

Three months ended
March 31,
2015 2014 Change
End of period domains (in millions) (1) 16.2 15.2 6.6%
Average revenue per domain (2) $ 10.43 $ 10.00 4.3%
Renewal rate (3) 77.4% 75.1%

(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 March 31, 2015, Rightside had cash and cash equivalents of $45.9 million, compared to $49.7 million as of December 31, 2014.
◾As of March 31, 2015, Rightside had $11.0 million of Letters of Credit outstanding under its $30 million revolving credit facility with Silicon Valley Bank, which was established on August 1, 2014 and matures in August 2017.
◾As of March 31, 2015, Rightside had fully drawn its $30 million term loan credit facility with certain funds managed by Tennenbaum Capital Partners, LLC, which was established on August 6, 2014 and matures in August 2019.

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