My Thoughts on Rightside Q3 Earnings Report

Rightside reported its Q3 earnings after the market closed yesterday, and judging by the after hours trading, investors were happy with the company’s third quarter performance. As of right now, Rightside stock (ticker: NAME) is trading at $12.53/share, which is up 33.16% from where it closed yesterday. There isn’t much trading volume in after hours trading, so we will get a better indication when the market opens this morning. This is an interesting  contrast to what happened to Web.com stock after its earnings were released.

You can read the full report on the SEC website, but I want to share three things I found interesting in the report along with why I found the information interesting:

• There is quite a bit  of money in withdrawing new gTLD applications. According to the report, “Rightside recorded a gain on other assets, net of $8.6 million representing the gain on withdrawals of its interest in seven gTLD applications.” This is substantial, but obviously these are one-off gains. I would guess they will have other gains like this from other applications, but those will also be one-off gains. These windfalls make me wish I had applied for a few contested gTLD strings!

• Rightside and its registrars currently have  16 million  domain names under management as of Q3. This makes them one of the largest domain registrar companies in the world. I would be interested to know how many customers that means, because the more customers, the more selling opportunities for the new TLDs.

• Rightside is reporting renewal rates of 72.5%  on the domain names under management, which is up from 69.5% in 2013. This will be important to watch, especially on the higher margin new gTLDs. We won’t get an indication of renewal rates on the new domain names until next year, but this is something all registries (and registrars) are watching.

If you want to listen to the third quarter earnings conference call the company had with analysts and others after the market close yesterday, you can find it on the company’s website. You will need to provide some information about yourself to access the recorded conference call, but you might find it interesting.