Minds + Machines Group (MMX) released its
half yearly trading results to 30 June last week. In the first half of 2019m
MMX reported a healthy year-on-year growth in registrations, up 19% to 1.82 million.
There was also strong channel growth within
the original 28 MMX new gTLDs with new sales billings through the channel up
30%. The historic decline in the ICM adult portfolio (.adult, .porn, .sex, and
.xxx), which had seen a 16% decline in billings in the corresponding first half
of 2018 (compared to 2017), has been fully stabilised at $2.8million (H1 2018:
$2.8million). MMX management believes there is now a clear pathway to drive
future growth from the ICM portfolio with significant improvements achieved in
three of the four ICM properties in the first half of 2018. Compared to the
same period last year there had been decline, with further new initiatives
coming online in the third quarter of 2019. Importantly, cash-inflows for the
period were ahead of expectations at $8.6million (H1 2018 $6.3million) with
cash generated of $3.6million including the receipt of $1.6million from
contested gTLD auctions (H1 2018 cash generation net of auction proceeds: $0.5million).
“Whilst we are not upgrading guidance
for the full year at this stage, we are extremely encouraged by the progress
made in the first half,” said Toby Hall, CEO of MMX. “Our revenues are
increasingly predictable, with healthy channel sales and strong renewal
revenues now driving the business forward. With the legacy onerous contract
issue now in the process of being resolved and innovation-based activity
supplementing our organic growth, the outlook is bright.”
Currently MMX manages 30 new gTLDs, 28 of them in General Availability, with 1.9 million domain names under management according to nTLDstats. The largest by registration numbers is .vip with 1.023 million registrations.
MMX also addressed “the ongoing drag of one
of its legacy contracts against which it had made an onerous provision in the
first half of 2018 of $7.0 million in addition to the $2.1 million contractual
marketing commitment, bringing the total liability to $9.1million at that time.
It has been reported that this legacy contract was with the .london operators. The
new gTLD for the UK’s capital peaked at around 86,500 in April 2018 and has
been on a downhill slide ever since to today’s 50,700 registrations.
Currently, the estimated liability relating
to .london stands at $7.9million. In the half yearly report MMX reports they’ve
reached an in principle agreement that it will make a one-off payment of about
$5.1m as full and final settlement for any further liability or contractual
spend offset by revised contract terms which the Directors now estimate will
generate net revenues of approximately $0.5million to MMX over the remaining
contractual period. Binding legal contract and payment is expected in H2 and
given the positive outlook can be made from the Company’s existing cash
resources.
There was also strong channel growth within
the original 28 MMX new gTLDs with new sales billings through the channel up
30%. The historic decline in the ICM adult portfolio (.adult, .porn, .sex, and
.xxx), which had seen a 16% decline in billings in the corresponding first half
of 2018 (compared to 2017), has been fully stabilised at $2.8million (H1 2018:
$2.8million). MMX management believes there is now a clear pathway to drive
future growth from the ICM portfolio with significant improvements achieved in
three of the four ICM properties in the first half of 2018. Compared to the
same period last year there had been decline, with further new initiatives
coming online in the third quarter of 2019. Importantly, cash-inflows for the
period were ahead of expectations at $8.6million (H1 2018 $6.3million) with
cash generated of $3.6million including the receipt of $1.6million from
contested gTLD auctions (H1 2018 cash generation net of auction proceeds: $0.5million).
“Whilst we are not upgrading guidance
for the full year at this stage, we are extremely encouraged by the progress
made in the first half,” said Toby Hall, CEO of MMX. “Our revenues are
increasingly predictable, with healthy channel sales and strong renewal
revenues now driving the business forward. With the legacy onerous contract
issue now in the process of being resolved and innovation-based activity
supplementing our organic growth, the outlook is bright.”
MMX also addressed “the ongoing drag of one of its legacy contracts against which it had made an onerous provision in the first half of 2018 of $7.0 million in addition to the $2.1 million contractual marketing commitment, bringing the total liability to $9.1million at that time. It has been reported that this legacy contract was with the .london operators. Currently, the estimated liability stands at $7.9million. In the half yearly report MMX reports they’ve reached an in principle agreement that it will make a one-off payment of about $5.1m as full and final settlement for any further liability or contractual spend offset by revised contract terms which the Directors now estimate will generate net revenues of approximately $0.5million to MMX over the remaining contractual period. Binding legal contract and payment is expected in H2 and given the positive outlook can be made from the Company’s existing cash resources.
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