viewMinds + Machines Group Limited

Minds + Machines' .vip .getting a grip in China

The sales lay down further foundations for strong recurring revenues in subsequent years from the region

finnCap did a quick search on Baidu.com and came up with around 189k different .vip sites

Minds + Machines Group Limited (LON:MMX) has seen a spurt in orders for its .vip domain in China in the last 10 days.

The Internet top level domains (TLDs) owner and operator said that since the release of its 2017 premium inventory for China in late June 2017, premium sales in excess of US$3.4mln have been achieved for the .vip TLD, and around US$2.8mln of those have been closed in the last 10 days.

Toby Hall, chief executive officer of Minds + Machines, said the company is “building a strong, long-term, annuity based business with each of our regions now contributing well to the renewal revenue mix”.

"The exceptional renewal rates achieved in China in H1 are, in no small part, a direct result of the premium pricing policies introduced at the launch of the .vip TLD. The significant interest we are now experiencing in our 2017 premium inventory allocation follows our recent Beijing approval and, we believe, lays down further foundations for strong recurring revenues in subsequent years from the region,” Hall said.

Premium product

Hall has previously explained to Proactive Investors that the term “vip” has a slightly different connotation in China than it does in the west, where the term stands for “very important person”; in China, the connotation is closer to “premium” or “top class”, which explains why so many companies are keen on using it.

"These latest sales also mean we are making excellent progress towards achieving management's top-line billing targets for China for the current year, with more than 60% of our 2017 China premium allocation now sold in recent weeks. These sales, along with the launch of .boston in October, will however further accentuate the H2 weighted nature of our business as we now enter the main renewal seasons for our leading properties in Europe and the US," Hall told investors.

READ: Minds + Machines receives Beijing boost; strategic review going according to plan

Though China is obviously a key market for Minds + Machines, management has been encouraged by the interest now being shown in its premium inventory in the UK and US following the introduction of its revised premium pricing policies earlier this year.

House broker finnCap said: “Today MMX has disclosed that .vip premium inventory bookings in China have reached $3.4m. We estimate this represents c.50% of the comparable figure from last year; however, this been achieved in less than half the time (three months, versus eight in FY16).

“In our view, this achievement is a result of two key factors: management has managed the supply of new premium inventory (hence creating scarcity value); and .vip's brand strength has not faded one year on from launch. This news, together with July's update (.vip: 75% renewal rate) provides compelling evidence that the domain’s status within the investment community is exceptionally strong, which in turn is an excellent foundation for broader adoption with new user groups – e.g. SMEs – an opportunity that has been enhanced thanks to recent licensing approval in Beijing (22m inhabitants).

“Encouragingly, there is evidence this adoption is already taking place – with China’s leading search engine (Baidu.com) recognising c.189,000 different .vip sites,” the broker added.

Shares in Minds + Machines rose 4.1% in early deals on the update to 12.96p.

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Quick facts: Minds + Machines Group Limited

Price: 4.85 GBX

Market: AIM
Market Cap: £42.46 m

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