Layoffs, plan for cash and more: Minds + Machines
Big updates from one of the biggest fresh top level domain name firms.
Publicly traded Minds + Machines (London AIM: MMX) released a corporate update today, and it’s big.
The firm has close to $50 million in cash in the bank, which gives it plenty of time to wait out the hoped-for surge in acceptance of fresh top level domain names. But it’s not going to sit back and watch its cash position dwindle each quarter. Instead, it’s taking action to become profitable soon and find a way to return the cash to shareholders. I think these are smart moves that ought to please shareholders.
Here are key items from the update.
1. Minds + Machines had layoffs last month, for the right reasons. The firm states this will save the firm $1.3 million per year and it is hunting for more ways to save money. It’s also moving from technical expertise to a sales organization.
Most importantly, it targets becoming profitable next year.
2. It’s going to find a way to return some of its cash to shareholders. Regarding half of M+M’s market cap is in cash. That’s not a good thing if it doesn’t have a way to invest it. Its cash position strengthened significantly thanks to getting paid to give up fresh TLD applications.
The firm is considering two ways to return some of this cash to shareholders. It can either do a special dividend, which puts cash directly in shareholders’ pockets but lowers the share price, or it can do buybacks, which increase the value of the stock. Tucows’ Elliot Noss is on the board of M+M, and Tucows has done significant buybacks over the years.
3. It continues to transition the purpose of its registrar. Registries can now own registrars, and Minds + Machines set up its own registrar (which uses the same name of the firm). Its original hope was to create a solid direct-to-consumer sales channel that would bypass registrars.
This is hard, and the firm has backpedaled from this plan. Instead, it’s using the registrar as a direct channel for vertical markets. It’s also using it for promotions, such as the free .casa and .work domains it gave away recently.
The registrar also dumped Mozart, the site creation system created by co-founder Fred Krueger, who was pushed out of the firm last quarter. Instead, it’s offering standard site building and email tools.
4. The firm is hitting some KPIs at the expense of others. The firm hit its goals for domains under management (217,200 at the end of June) and standard name sales growth, but this came at the expense of revenue per domain, since it gave away free and heavily discounted domains to reach these registration numbers. It’s hitting its goal for premium names.
5. It’s registering its owns premium names to enhance their sales distribution. Minds + Machines has created a fresh wholly-owned firm, Emerald Names, to register up to 30,000 names across its TLDs. It will set up “for sale” pages for these domains and add them to sales inventory through third-party marketplaces, so they show up in distributed premium search results. Although the press release doesn’t state this, I assume they are working with Afternic or Sedo (or both) and their distributed listing services.
6. Early Access is coming. For the first time, Minds + Machines will run an early access phase for some of its TLDs when it launches .law and .abogado in October. Early Access has become a popular way to launch a TLD instead of a traditional landrush. Early Access is a sort of dutch auction for domain names.
Overall, I think this is a big step in the right direction for Minds + Machines. I’ve watched stock chat boards discussing Minds + Machines for a long time. Between there and comments posted on Reglike, there have been legitimate questions regarding what the firm will do with its cash. Would it just milk it for salaries as the bank account dwindled? It’s now clear that’s not the case.
I also think de-emphasizing its registrar business is a good idea. The cost of acquiring clients just doesn’ make sense. I think owning a registrar is a good idea, but only to create a direct onboarding channel for niche vertical promotions.
Minds + Machines and Rightside are the two public firms focused on fresh TLDs, and both firms are providing good intel into the success of fresh top level domain names to date. I’ll continue monitoring them.
