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Minds + Machines acquires 'niche' web domains, reports first year of profitability

Published: 07:32 04 May 2018 BST

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ICM had US$7.27mln of net sales in 2017

Internet domains firm Minds + Machines Group Limited (LON:MMX) has agreed a deal to acquire ICM Registry LLC, a Florida-based owner of four high value, niche top level domains.

ICM reported US$7.27mln of net sales in 2017, generating net income of US$3.5mln. Notably, 78% of the revenue was renewal based, while 14% were premium sales.

The AIM-quoted company is paying US$10mln of cash and 225mln shares, the deal is subject to approval by internet domains regulator ICANN.

READ: Minds + Machines rallies strongly after it confirms move into operating profit

"We are delighted to have entered this agreement,” said Toby Hall. Minds + Machines chief executive.

“We expect the acquisition to be earnings enhancing in the current year and believe it will deliver scale, strong recurring revenues and positive working capital to the company in 2018 and future years.

“Further, it will strengthen the quality of our revenues, both accelerating MMX's already fast-growing renewal base and improving the geographic make-up of our sales, given ICM's revenues are primarily derived from the US and Europe.

“We see this transaction as a major step forward in our ambition to introduce a progressive dividend policy over the next 18 months."

Additionally, the company has also entered into a new working capital financing facility with shareholder  London and Capital Asset Management Ltd, which is beneficially interested in 16.03% of the company’s shares.

Maiden year of profitability

Separately, Minds + Machines Group released its results statement for the twelve months ended December 31, in which it confirmed its maiden year of profitability.

The company reported a US$3.8mln profit, improving from the US$4.5mln loss in the preceding year and operating earnings (EBITDA) amounted to US$5.3mln, from a US$1.3mln loss.

Revenue from renewals doubled to US$4.8mln, from US$2.4mln and total revenue came to US$14.3mln, which was actually lower than US$15mln in the year before - the company had gross billings of US$15.6mln, versus US$15.8mln in 2016.

The company ended the year with US$15.9mln of cash.

Hall added: “2017 has been about proving out the business model: firmly locking-in the operational gains of 2016 to ensure a profitable base, and developing a long-term growth strategy.

“The acquisition of ICM marks a major step forward in our ambitions both to scale and introduce a progressive dividend policy over the next 18 months.

“It cements MMX's position as a leading registry group in the new gTLD sector as we develop into a long-term annuity-based business."

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