Could some of you domain and registrar experts help me calculate Epik revenues so I can figure out just how ridiculous this valuation is. For example:
I don't deal with valuations but Epik is by no means a small registrar. As of the latest ICANN stats (June 2021), it has 651,046 gTLD domain names under management. Of these, 496,702 are .COM registrations. This is a good thing. The majority of its registrations are legacy gTLD registrations with new gTLDs accounting for approximately 11.3% with .XYZ registrations being the largest of its new gTLD footprint.
When looking at a registrar's domain name footprint, the blue chip TLDs are the big ccTLDs, .COM and .ORG. The last two are considered blue chip because they renew well. Some of the new gTLDs (the geographical ones) have very high first renewal rates but the discounted new gTLDs have much lower renewal rates. From a stability point of view, having a high percentage (50% or more) of new gTLDs is generally a bad thing so Epik scores quite well in this respect.
Renewals are the lifeblood of registrars and registries. They are a more important indicator of a registrar's financial health than new registrations. The complete first renewal rates are only visible after the domain names go through their first renewal cycle so many of the new registrations from the last two years are going through their first renewal or have yet to go through their first renewal. (The 2020 registrations won't renew until 2021, the 2021 registrations until 2022 etc.) I crunched the multi-year renewal rates for gTLD registrar/hoster operators from 2021 to 2000 last month based on currently hosted domain names.
1) Number of domains hosted at epik and approximate profit per domain.
With a registrar that uses fixed registration fees, this would be easy. Epik uses discounting as a marketing tool so there is a range of pricing. It might be possible to estimate the overall profit using leaked data but it is not going to be reliable without knowing which registry discount offers Epik used in its marketing. The registries regularly run promotional offers for their registrars.
2) Number of web hosting accounts and approximate revenues/profit.
You have to know the hosting tiers (shared/dedicated etc), the price per account and the costs associated with setting up and maintaining the account. With retail registrars/hosters, many clients will host outside the registrar's infrastructure. This also means that they may not be hosted on the registrar's nameservers. (They may be using Cloudflare or a DIY web builder service.)
3) Break down of any other Epik products and services.
Again, the leaked data may provide some indications but it would require the costs for these services or products to be known and the number of accounts and duration to be known.
The media coverage of the Epik databreach has been almost completely focused on the political aspect. The journalists like simple explanations that don't require them to work hard and the political aspect is about the most simplistic angle on it. It is almost completely irrelevant to the rest of the world as it is local US politics.
The sheer scale of the compromise has actually worked in Epik's favour as even researchers who understand vulnerabilities and software struggle to deal with the hugh amount of data that often relates to a business outside their area of expertise. Even with the leaked data, calulating the precise valuation, turnover and profits of Epik would be difficult.
The registrar business is incredibly territorial with the top registrars in country level markets having around 80% or so of the domain names registered in that country. The only way into most of those markets is for an operator to buy the top registrars in the market. This is what Godaddy and Newfold Digital, UI and others have been doing for the last ten years or so. I publish an Excel based transactions (new/deleted/transferred) report each month that groups the main gTLDs by registrar/hoster operators. Some of the larger registrar/hoster operators have hundreds of hosting brands.
The hosting characteristics of Epik are very different to those of a typical retail registrar/hoster. This is because much of Epik's business is focused on its sales and domainer market. Just to put that market in some kind of perspective, approximately 9.5% of .COM is on sale. That's around 15 million domain names. While some of the domain names on Epik's sales platforms may be registered via Epik, others are not. This is because many portfolio operators tend to be very loyal to their main registrar but agnostic to where they post those domain names for sale. (Epik, Dan, Afternic, Sedo etc.) This is why the registrations on sales platforms are a bit of a nightmare to break down by registrar. Epik is not an accredited registrar in some ccTLDs but it has domain names from those ccTLDs on its sales platform. These may be registrants parking the domain names on Epik's sales platform or domain names registered via Epik but outsourced to a "registrations as a service" registrar which is accredited in these ccTLDs.
Sales platforms are also a bit of a problem to evaluate because unless they are charging a fee to list, they only make a profit when the domain name is sold via the platform. As a category, these domain names have different renewal trends to ordinary retail registrations. There are premium registrations that renew well (near 100%). There are almost premiums which can renew well. Then there are the highly optimistic registrations (often registered at a discount) which tend to be one year wonders.
Working out valuations for registrars (even those that simply offer registrations rather than hosting) without the registrar's financial documents and accounts is a complex process even with the current data because it also needs the historical data, the TLD market data, and enough information (revenue per domain, costs etc) to make reliable projections.
Regards...jmcc
