Top level internet domains specialist Minds + Machines Group Limited (LON:MMX) is on course to deliver its maiden year of profitability as an operating business.
The first half of the year saw renewal billings nearly triple to US$3.1mln and renewal revenue more than double to the point where it accounted for 45% of revenue, compared to just 15% in the first half of 2016.
Importantly, renewal billings are now higher than fixed operating expenditure, which totalled US$2.6mln in the first half of the year as the group continued its focus on containing costs.
Move to hold back key 2017 inventory releases
Minds + Machines (MMX) has always been a company with results weighted to the second half, and that will be the case more than usual this year, owing to a decision to hold back key 2017 inventory releases (i.e. new top level domains, or TLDs) until the second half of the year.
Reflecting the decision to hold back new releases, billings eased to US$5.61mln from US$8.05mln the year before.
The group said sales of roughly US$6mln have been achieved so far in the third quarter, which means year-to-date sales are now roughly on a par with 2016.
The fourth quarter is the period when the core US and European renewal revenues occur, so management is confident that it will hit its full-year targets.
Domains under management increased 34% from 31 December 2016 to 1.1 mln registrations at 30 June 2017.
Seven domains in the portfolio are now showing registrations in excess of their end of year-one highs and the remainder are broadly in line with their end of year-one registrations; that represents an improvement on the picture at the beginning of 2016, when all of the company’s TLDs were effectively below their year one highs.
The group recorded a loss before tax of US$505,000 compared to a US$56,000 profit in the same period of last year.
Cash and cash equivalents declined to US$14.2mln at the end of June from US$15.3mln the year before, largely because of the payment of provisioned liabilities. By the end of August, cash and cash equivalents had risen to US$15.3mln, while an additional US$2.4mln of cash is due the company as a result of “withdrawal share-outs” resulting from the company’s decision to step aside in the applications for the .llc and .inc TLDs.
“The first half of 2017 has been a period of consolidating the transformational progress of 2016 and establishing a solid platform for the business to deliver its maiden year of profitability as an operating business in the current year,” the company said.