Web.com in reporting its earnings earlier today had a few comments on its earnings call that should be of concern to all domain name regisrtrars:
CEO David L. Brown noted “the increased availability of [domain] names has had a near-term negative impact on domain-related revenue,” primarily related to “non-core domain-related revenue such as sales of premium domain names and bulk domain sales.”
Non-domain businesses (do-it-yourself websites, hosting, etc.) have been hurt by the “unintended consequences” of new marketing/bundled pricing tactics on product retention, and “the unanticipated impact of recent changes made by one of our highest-converting do-it-for-me lead generation partners” on telesales.
Web.com has launched a $100M buyback.
After accounting for the post-earnings drop, $100M will get Web.com 12% of its shares at current levels which should support the shares.
The question I have is with Web.com now trading $15.50 less than half of its 52 week high what does that mean for Godaddy who has filed to go public?
Since Godaddy filed for its IPO, Google announced it was getting into the domain name registration business, which caused investors to bail out of Web.com sending its shares down over 20% back in June to $27.
Web.com then in August missed its 2nd Quarter numbers dropping the stock share 25% to $20 a share.
Today Web.com is telling investors that not only is the domaining community reducing domain registrations and aftermarket purchases though its registrars, but the small business customer that all registrars, but particularly Web.com and Godaddy.com have been heavily marketing to with a build your own website type of product are in decline as well sending its shares down over 22% again today to $15 a share.
Godaddy.com of course is in the same business as Web.com has its own aftermarket auction product and owns Afternic.com which powers many premium domain name sales across 100+ registrars.
So if registration volume is down, aftermarket sales are down you think that would be effectin sales on Afternic as well.
Since Godaddy.com is has filed for its IPO neither Afternic nor Godaddy have released any sales information either from Godaddy.com auction marketplace or Afternic.com sales through the registrar channel.
Afternic.com and Godaddy which were issuing weekly sales report, hasn’t issued on since June 10th 2014.
Today’s Web.com numbers were for the third quarter for which Godaddy/Afternic haven’t released any numbers for in terms of auction and aftermarket sales.
Certainly Web.com issues are something that investors in Godaddy should consider when Godaddy shares begin trading.