TIDMMMX
RNS Number : 0216V
Minds + Machines Group Limited
25 January 2017
For immediate release: 25 January 2017
Minds + Machines Group Limited
("MMX" or the "Company")
Trading update
Minds + Machines Group Limited (AIM:MMX), the publicly quoted
owner and operator of Internet top-level domains ("TLDs"), is
pleased to report topline billings growth of 100% for the year
ended 31(st) December 2016. Total billings of $15.8million were
achieved for FY 2016 compared to $7.9million for FY 2015, with the
strong performance of H1 2016 continuing into H2 where billings
were up 30% at $7.7million compared to the same period last
year.
Net of partner payments, billings for the year increased over
115% to $13.9million as a result of the improved contribution from
the Group's wholly-owned TLDs in 2016.
Importantly, renewal billings increased year-on-year by 116% to
$3.8million (2015: $1.75million) with standard name renewals
accounting for 57% of the renewal billings in 2016. In 2017, the
Directors anticipate the renewal billings continuing to grow with
the contribution from standard names increasing in both quantum and
percentage terms.
2016 has also seen MMX significantly reduce the costs for the
Group's ongoing operations with operating expenditures cut by over
40% to approximately $6.8million in 2016 (2015: $12.2million).
Encouragingly, the figure for 2016 includes approximately
$1.0million of non re-occurring costs so the Group's ongoing
operating expenditures for 2017 are already below the $6.0million
run-rate previously set for the year. The Directors are also
pleased to report that cost of goods ("COG") in 2016 were contained
to $2.5million (2015: $1.3million) in spite of a near threefold
increase of domains under management to 821,136 at 31 December 2016
from 288,831 twelve months earlier.
In 2017 management will focus on further reducing the cost
income ratio, with the goal of achieving a key cross-over point in
the next 18 months where the renewal billing run-rate will be
greater than that of the Group's operating expenditures. This will
effectively mean that new sales, net of COGs, can immediately drop
to the bottom-line.
It should be noted that billings from new registration sales
grew to just under $12million in 2016 from $3.7million in 2015.
Management believes there is significant continued scope for
further substantial topline growth given over 80% of the Group's
premium inventory remains unsold and there is effectively an
unlimited stock of standard name inventory across MMX's
portfolio.
As a result of the topline growth, operating EBITDA, before
restructuring costs, as defined in the Interims, is expected to be
over $3.5million for the full year ended 31 December 2016, compared
to a $12.1million loss in 2015 (2015: gross profit of $101,000 less
$12.2million of operating expenses).
Ongoing profitable growth
The management team is also pleased to report that the one-time
restructuring of the Company has been completed on time and on
budget. Similarly, burdensome contract obligations entered into by
previous management have now been addressed. Whilst reported
figures will be impacted by one-off costs associated with these
items, the business has now been restructured to deliver ongoing
profitable growth.
Toby Hall, CEO of MMX, commented:
"We now have an organisational structure in place that will
allow the Group to continue growing profitably. This is
particularly exciting given the phenomenal growth we are seeing in
what is still effectively a nascent industry - a nascent industry
that saw a net growth of over 16million registrations during 2016 -
broadly in line with that of .com and all the country codes
combined. As we look forward into 2017, our focus will be to
continue monetising our portfolio both in terms of new
registrations and renewals across our three main regions of focus -
Asia, particularly China, Europe and the US, with a natural
emphasis towards those markets showing greatest growth."
Geographic split
In 2016, MMX successfully penetrated the China market through
the highly successful launch of .vip in May which was followed by
the domain receiving government MIIT approval in December. As a
result, the split of gross TLD billings across three regions of
focus in 2016 was approximately: China 59%, US 24%, Europe 17%.
During the year, year-on-year billings for the Group's US facing
TLDs grew by approximately 22%, greatly helped by billings growth
in .law and certain vertical strings such as .fit and .wedding as
well as the generics .work and .casa. It is worth noting that a
year-on-year drop in top-line registration numbers in a domain, as
reported by sites such as ntldstats.org, does not necessarily
signify a decline in billings. For example, in 2016 .work generated
$392,000 off 81,000 registrations compared to $206,000 off 102,000
registrations in 2015 reflecting the use of a promotional
initiative to drive registrations that year. In 2017, MMX's focus
will be to continue developing gross billings, as well as domains
under management, from each of the regions through its growing
network of registrar and distribution partners.
Premium sales
In May 2016, MMX's management team piloted a new premium pricing
policy during the launch of .vip which it believes has contributed
greatly to the domain's initial success. As of January 6, 2017, a
similar premium pricing policy has been introduced across all of
MMX's wholly owned domains, a six month notice period having to be
given to the channel to effect this change. This marks the first
step in a broader business development drive which is being
supported by the hiring of new staff to support this initiative.
MMX's management team will be closely monitoring the progress of
this activity.
New gTLD launches and geographic expansion
In 2016 the Company deliberately focused on launching one
top-level domain well rather than following the approach of the
previous year where multiple TLDs were introduced many of which
with little business development support. During 2017, the MMX
management team will follow the same approach as 2016 looking to
launch no more than two domains onto the market in the year, one of
which will be .boston.
The Company will also continue to explore the opportunities to
introduce TLDs from one geographic region into another.
Michael Salazar, COO of MMX, commented:
"After a transformational twelve months in terms of building
revenues and cutting costs, we are now beginning to see the real
benefits of being a portfolio player as we start to leverage the
experiences and insights gained across the portfolio."
The Company expects to publish its audited results for the year
ended 31 December 2016 in April.
For further information:
Minds + Machines Group Limited
Toby Hall, CEO Tel: +44 (0)
7713 341072
Michael Salazar, COO/CFO Tel: +1 (310)
740 7499
finnCap Ltd Tel: 020 7220
0500
Corporate finance - Stuart Andrews/Carl
Holmes/Simon Hicks
Corporate broking - Tim Redfern/Camille
Gochez
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
About MMX
Minds + Machines Group Limited (LSE:MMX) is the owner and
operator of a world class portfolio of top-level domain assets
(gTLDs). As a sales and marketing-led registry business, we are
focused on commercializing our portfolio in partnership with our
expanding global network of distribution partners.
The MMX portfolio is currently focused around geographic domains
(e.g. .london, .boston, .miami, .bayern), professional occupations
(e.g. .law, .abogado, and .dds), consumer interests (e.g. .fashion,
.wedding, .vip), lifestyle (e.g. .fit, .surf, .yoga), outdoor
activities (e.g..fishing, .garden, .horse) and generic names such
as .work and .casa. As a business, we work through our expanding
international network of registrars and distribution partners to
bring the benefits of affinity based domain addresses to B2B and
consumer audiences. For more information on MMX, please visit
www.mmx.co
This information is provided by RNS
The company news service from the London Stock Exchange
END
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