Domain Name Sales Up: DBS

Domain name firm sees robust domain names sales.

I’ve written a number of times regarding how Dark Blue Sea (ASX: DBS.AX), parent firm of Fabulous, has seen a massive drop in domain parking revenue. But what I haven’t highlighted is growth in the firm’s domain sales. I’ve dismissed it somewhat since its latest financial year’s sales include a couple sizable portfolio sales. But the numbers are too much to ignore.

In its most recent annual note for the financial year ending in June, the firm recorded $5.807 million in domain sales compared to $1.985 million in 2007. This does not include premium domain sales of nearly $600,000 for 2008.

Is the increase in domain sales due in part to the firm’s resale agreement with GoDaddy? Dark Blue Sea estimates it will sell 45,000 domains through GoDaddy at an average price of $1,000 over its 5 year deal. So far the firm keeps saying it will start to realize the benefits of this deal soon, but numbers haven’t been broken out. And since the sales numbers here are as of the end of June, we shouldn’t expect to see much of a lift from the GoDaddy deal in them.

GoDaddy has strong incentives to make it work, assuming that by boosting DBS’ end user sales it can pump up the firms ailing stock price. GoDaddy gets up to 6.5 million options in DBS as part of the sales deal, but they have a strike price of $.65 per option. DBS right now trades for $.18.

Another bright spot for DBS is its registrar business, which saw its revenues increase from $3.298 million to $5.606 million in 2008.

Will DBS manage to overcome its parking revenue shortfall through smart acquisitions and sales? It’s possible. The firm uses reams of data to make buying and selling decisions. It also has the foresight to hedge against currency differences in Australia (where it pays employees) and the United States (where it gets its advertising revenue checks from).

Look for an article soon regarding how the Dark Blue Sea machine works and how it values domain names.