To profit in 2019, 25% revenue growth — MMX swings

MMX (Minds + Machines) had a good year in 2019, and 2020 looks solid barring COVID-19 impact.

Accounting wise, 2018 was a bad year for fresh top level domain name firm MMX (London AIM: MMX). It wrote off $11.3 million related to a contract to run .London, had bad debt write-offs of $2.1 million, and one-off costs of $1.4 million. It lost $12.6 million for the year.

The good news is that this pushed a lot of water under the bridge, making 2019 a stellar year for the firm, as detailed in the firm’s annual note.

In 2019, MMX noted a profit of $4.7 million, or 0.51 cents per share.

Sure, that was helped by a couple of accounting gains, but anyway you look at it, 2019 was a much better year for the firm.

Revenue increased 25% to $18.9 million, helped in part by a full year of the contribution of ICM Registry, a business it purchased in 2018.

Renewal revenue was $11.7 million, or 62% of the total.

Operating EBITDA was up 79% to $6.4 million.

And Adultblock, a fresh brand protection product related to the ICM Registry portfolio, generated $1.1 million in recognized revenue during the last two months of 2019.

While ICM had a lot to do with MMX’s changed fortunes, the firm also saw positive movement in some of its other top level domains. In Q4, .VIP grew by over 360,000 registrations. Importantly, 267,000 of these were standard sales at GoDaddy. (Read: not heavily discounted sales to China.)

In its annual note, the firm notes that it is closely watching the impact of COVID-19. For now, it expects the immediate-term impact to be on one-off brokered sales but those account for less than 10% of the firm’s sales.

As it monitors the impact, the firm has delayed its decision on a previously-disclosed dividend until September. In the meantime, it’s going forward with share buybacks of its (now cheaper) shares.

MMX’s note is perhaps the first financial note by a publicly-traded domain name firm in the wake of the spread of COVID-19. While the firm is hopeful, it provides caution that everyone in the domain business ought to heed:

“But to believe that we are fully insulated from the global crisis would be unwise.”