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Minds + Machines registers a profit

Published: 02:02 10 Jun 2014 EDT

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One-off gains saw Internet domain seller Minds + Machines (LON:MMX) move into the black in 2013.

The company, formerly known as Top Level Domain Holdings, made a profit of £4.12mln from losing out in generic top level domain (gTLD) auctions; under the domain name auction system, the winning bid is divided among the losing contestants.

The net gain from gTLD auctions pushed the company into the black, with a profit before tax of £729,000 versus a loss of £3.06mln the year before, despite revenue easing to £36,000 from £420,000 in 2012.

The low revenue level reflects the fact that the company had only just started making the transition in 2013 from a company bidding for gTLDs to one also earning recurring revenue from all aspects of the domain name business, namely registry, registry service provision and registrar operations; a registrar is an organisation that helps users to register their domain names, whereas a registry is an organisation that holds the database of all registered domain names in a certain TLD, such as .london.

The company had cash reserves of £21.7mln at the end of April, providing it with plenty of firepower to compete in future gTLD auctions.

“We believe that our cash resources are more than sufficient to get us to profitability and take advantage of these tremendous opportunities. This is though only the beginning and the board is excited about the prospects for the group," said executive chairman, Fred Krueger.

Since the end of 2013, the company has successfully launched the .london domain and, speaking to Proactive Investors, the company’s chief executive Antony Vancouvering said interest in .london domains has been encouraging but suggested that a truer picture will emerge in six months or so.

With World Cup fever about to envelop us all, Vancouvering said the company had not made any play for football-related domains, opining that serving that market would require tight alliances with the shakers and movers in the footie world, but the company does have .rugby in its portfolio, not to mention .fishing for those that want to get away from football hyperbole.

As the company makes the transition to a true operating company, marketing expenditure will ramp up, the company revealed.

Marketing expenses through the first quarter of 2014 amounted to £252,000 and Vancouvering told Proactive Investors that it is difficult to put a number on how much will be spent on marketing this year, as the company is still working out what forms of marketing are most effective.

As the company begins generating revenues from the first live gTLDs in which it has an interest, it expects revenues from ongoing operations - as opposed to those derived from one-off private auctions and the equivalent - to move the group into a cash neutral position during the latter part of 2014.

“We further expect revenues to continue growing in 2015 as a result of the ongoing launch programme of our gTLD portfolio,” disclosed chief financial officer, Michael Salazar.

More to follow …

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