.CLUB Domains is nearing profitability and poised to become a “growth engine”, despite the view that most of its current domains are not expected to renew, according to its CEO.
Colin Campbell told DI today that the company made $6.7 million in revenue last year, and is “very close” to breaking even.
The company reached one million domains under management milestone in June, but Campbell freely admits that the majority of its current domains are unlikely to renew.
Almost 700,000 of these domains are what .CLUB considers “trial accounts”, he said. These are domains that typically sold for under a dollar — .club has been seen for sale as low as $0.88 — to speculators.
The registry usually sees a 10% to 15% renewal rate on these domains, he said.
Of the remaining 300,000 “solid, regular registrations”, Campbell said he sees first-year renewals in the 68% to 70% range and subsequent years at 80% to 90%.
The company typically only discounts on its first-year registrations, so renewal rates are a much better indicator of performance.
He said .club has around 120,000 web sites (not including parked domains), some of which are showcased on its web site.
With this in mind, renewals are at the forefront of Campbell’s mind. He said a key performance indicator .CLUB uses is “average cost of acquisition per renewed domain”, which the company tracks on a per-registrar basis.
The company invested $3.3 million in marketing in 2016, he said. That does not include rebates to registrars participating in volume programs, but it does take into account acquiring prominent shelf space on key registrars, he said.
“We’re very close to break-even and we’re still going to be able to invest multi-million dollars in ad campaigns and marketing,” he said.
“We’re going to have a company that’s breaking even and is still going to be a growth engine,” he said. “We’re going to be able to sustain a path of growth. I don’t know too many TLDs who could say that. Of course, if you reduce your expenses down to nothing you can make a profit, but can you also be a growth engine?”
“That’s where I feel like a TLD needs to get to, to be a sustainable long-term presence in the market, like a .org or .net or .co,” he said.
Despite the narrowing losses and starkly higher volumes, the $6.7 million in 2016 revenue is a lower than the $7 million in 2015 revenue Campbell told Domain Name Wire about a year ago.
Campbell said today that the reason for the dip is that late 2015 saw many gTLDs (old and new, even including .com) benefit from a bump from the Chinese market. .CLUB’s top line was particularly exposed by some premium sales it made to Chinese investors during that growth spike.
Premium sales have also been performing well in 2016, Campbell said, driven by the financing options and broker program introduced in January.