Communicate.com Notes Record Quarterly Profit

Domain name firm sees higher e-commerce revenue.

Communicate.com (OTCBB: CMNN.ob), a domain name firm that owns valuable domains such as Boxing.com and Perfume.com, noted record quarterly revenue for the quarter ending March 31, 2007.

The firm makes money primarily through its e-commerce sites such as Perfume.com and Karate.com as well as PPC income from domains such as Call.com. Retail sites are now generating over $15,000 per day although margins remain relatively slim. This low margin is partly since the firm dropships many of its sales. This cuts margins but reduces risk. The firm is starting (or planning) to carry inventory in the future. This ought to increase margins but increase risk. PPC revenues are down compared to last year, but the firm has adjusted its parking pages and is recovering from a massive reduction in pay-per-click revenue that occurred last year. One thing I notice is that Communicate.com removed the preview pictures from its parked pages. Perhaps preview pictures don’t increase click-through rates afterall.

The firm right now shows $1.4M in intangible assets related to domain sales, leasing, and advertising. I assume this is the book value of its domain names. With active sites like Perfume.com and stellar one word domains like Brazil.com and Yen.com, this number is low — but blame that on accounting rules. The market right now values the firm at regarding $20M USD.

One possible thorn in its side is how it monetizes Cricket.com. Cricket.com predates Cricket Wireless, and Cricket.com has a disclaimer regarding not being affiliate with Cricket Wireless, but all of its ads are for cell phones. On the other hand, this domain isn’t generating more than $5,000 or so in PPC revenue per month on the high side (see comment below) and with the popularity of the sport Cricket this domain could sell for over $1M.