Dark Blue Sea: Domain Portfolio Worth $600 Million Retail

[Sameh]

Article source: http://domainnamewire.com/2008/03/31/dark-blue-sea-domain-portfolio-worth-600-million-retail/

Interesting (investor presentation) report included. follow the "pdf" link.

A Dark Blue Sea investor presentation (pdf) suggests that the retail value of its 570,000 domain portfolio is about $600 million. The presentation also provides a wealth of other statistics and details on its deal with domain registrar GoDaddy.

Dark Blue Sea, an Australian company, is well known to domain name investors for its Fabulous domain registrar and domain parking services.

As of the end of 2007, approximately 152,000 of the company’s domain names were profitable, meaning they eclipsed the $6.42 wholesale price of domain registration. The company estimates the average retail value of its domains to be $1,000, and also predicts that GoDaddy will help it sell 45,000 domains over the coming five years. Dark Blue Sea inked a partnership with GoDaddy earlier this year that involves a commission and options for 7% of Dark Blue Sea. The options vest according to the number of sales GoDaddy generates, which incentivizes the company to make sales. Overall, Dark Blue Sea expects $25 million to $30 million in profit from the GoDaddy deal over the next five years.

So if only a quarter of Dark Blue Sea’s domain names are profitable from pay-per-click revenue, where is the value? The company points to the retail market, where domain purchase prices have little connection to PPC multiples. For example, here are some domains the company has sold, the sales price, 12 months trailing revenue, and the implied revenue multiple:

MagazineReviews.com - $1,200 - $2.28 - 527x
CollegeInvestment.com - $2,650 - $32.08 - 83x
UraniumOxide.com - $830 - $.69 - 1197x
MexicanStocks.com - $800 - $.76 - 1058x
ArtBlankets.com - $1,200 - $.33 - 3663x

Another company that focuses on retail sales is NameMedia, which owns domain name aftermarket Afternic and sales platform BuyDomains. NameMedia says the “sweet spot” for small and medium business domain name sales is between $2,000 and $5,000.

 

[Spade]

Quite frankly, I doubt their portfolio is worth $600 million. I think part of the issue here is that these large parking portfolios are realizing that "Parking" revenue is not what it used to be, and we are seeing steady drops in revenue and changes in the industry. There is another big portfolio holder who is looking to the retail market.

 

[gazzip]

Selling based purely on PPC is overated ..you just have to look at the sales on DNJournal every week to see that.

There is another big portfolio holder who is looking to the retail market.

Come on Justin, it's Monday and we're still waiting for you to SPILL THE BEANS ! Stop teasing us and spit it out !


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[godolphin]

Interesting information!

 

[Spade]

Selling based purely on PPC is overated ..you just have to look at the sales on DNJournal every week to see that.



Come on Justin, it's Monday and we're still waiting for you to SPILL THE BEANS ! Stop teasing us and spit it out !


.

I'll post it to my blog tonight =)

 

[netfleet]

Quite frankly, I doubt their portfolio is worth $600 million. I think part of the issue here is that these large parking portfolios are realizing that "Parking" revenue is not what it used to be, and we are seeing steady drops in revenue and changes in the industry. There is another big portfolio holder who is looking to the retail market.

Me neither - to get an average of $1,000 per domain is a big deal considering how many they have. There MUST be a heap of crap in those 570K domains including plenty of worthless domains (in today's market).

So you think they are looking to flog as many off as they can due to dropping PPC rev? Will this in turn cause a drop in domain values (just as, in physical Real Estate, a reduction in rental returns can push property investors to offload their properties resulting is higher supply and lower prices)?

 

[Spade]

So you think they are looking to flog as many off as they can due to dropping PPC rev? Will this in turn cause a drop in domain values (just as, in physical Real Estate, a reduction in rental returns can push property investors to offload their properties resulting is higher supply and lower prices)?

I dont think this will cause a drop in domain values, because there not liquid. They can TRY to sell as many as they want, but that doesn't mean thats how many they WILL sell. I dont think consumers will recognize that there are 100,000 more domains on the market.

Come on Justin, it's Monday and we're still waiting for you to SPILL THE BEANS ! Stop teasing us and spit it out !

The beans have been spilled:

Blog.NameBio.com

 

[Name Trader]

I think the interesting part of their deal with GoDaddy is the options