dot tba financial plans
TRANSCRIPT
Generic, short gTLDMost Likely Case Scenario
Wholesale Price $30This is an actual TLD financial plan that has been altered to protect the
privacy of the owner(s)
Registration Volume
Who is your target market?Are there synergies with other TLDs and markets?
How are you going to reach them?
How many existing domains exist with the term in them? What percentage will purchase a new name with the same term in them?
Considerations:• Price Point• Availability of alternatives• Penetration rate by year• Renewal rates
Generic Short TLDProjected Cash Flows Year 1 Year 2 Year 3
Most Likely
Part A: Generic Market A 1,764 1,848 1,296 Part B: Recreation 8,271 9,648 8,100 Part C: Sports 1,161 1,223 856 Part D: Educational 432 476 349 Part E: Specialty Deals 3,744 4,725 4,410 Part F: Existing Domains 711 713 357
Registration Volume in YearsOpening Balance - 23,932 60,947 New Additions 23,932 37,015 43,518
Total Registration Volume in Years 23,932 60,947 104,464
Sunrise 300 - - Landrush 700 - - # Purchases 17,208 29,977 35,307 Premium Domains: 1,125 1,456 1,488
23,932 37,015 43,518
Total sales are 16,084 yet new additions are 23,932 – Why?
Cash InflowsAs registrations may be for more than a year, the number of domains years can be higher than the number of purchases i.e. EGYPT.HOTEL is registered for 5 years
Premium names sell at a higher than normal prices and may have higher than normal renewal prices i.e. invisible.ink
Sunrise registrations are registrations from trademark holders which often includes an application fee
Registry Fee is an expense for the backend platform to manager the domains. The fee varies based on numerous service & volume factors
Generic Short TLDProjected Cash Flows Year 1 Year 2 Year 3
Most Likely
Domains Under Management 18,268 48,245 83,552 Registration Volume in Domain Years 23,932 60,947 104,464
Cash InflowsRegistrations 589,832 1,061,472 1,317,371 Premium Name Auctions (New & Renewals) 431,250 191,563 61,891 Sunrise Registrations 118,000$ -$ -$ Landrush Registrations 1,464$ -$ -$ Other Cash Inflows - interest 31,450 48,836 68,061 Best ONLY Revenue streams - - -
Total - Cash Inflows 1,171,996$ 1,301,870$ 1,447,323$
Total Cash Outflows:
Cost of Sales (cash)Registry Fee - Per Domain 77,779 120,299 140,316 ICANN Fees - Quarterly Fixed 185,000 25,000 25,000 25,000 ICANN Fees - trx fee - Var - - - Premium Name Fees 47,438 15,813 -
Total 150,217$ 161,112$ 165,316$
Gross Margin (cash Sales Basis) 1,021,780$ 1,140,759$ 1,282,007$
Cash Outflows – COS & LaborLabour varies depending on existing company resources, focus, mission, sales efforts, backend provider services
Marketing costs vary depending on how the registry plans on reaching its end users. This TLD plans on attending trade shows, banners on niche websites
Legal fees are nominal due to the open registry policies requiring minimal policing
This TLD is expecting to be profitable in every year
Generic Short TLDProjected Cash Flows Year 1 Year 2 Year 3
Labor: Cost of Living Adj?
Marketing Yes 80,000 72,000 73,800 75,645 Customer Service Yes 50,000 45,000 50,000 51,250 Admin Yes 50,000 45,000 50,000 51,250
Total Labour 162,000 173,800 178,145
Marketing Costs - Var No 500,000 300,000 300,000 200,000
General & Admin Yes 50,000 45,000 45,000 115,000
Professional Fees - Legal Yes 24,000 24,000 18,000 16,605
Other: COI Costs No 1,000 1,000 1,000 1,000 Other: Escrow: Fixed Yes One-Time 2,000 - -
Other: Escrow Variable Yes 0% 5,000 11,400 19,000 - Total Operating Cash Outflows 539,000 549,200 529,750
Taxes - - -
Total Operating Cash Outflows 689,217$ 710,312$ 695,066$
Projected Net Operating Cash Flow (cash basis) 482,780$ 591,559$ 752,257$ Cumulative 1,074,338$ 1,826,595$
Generic, short word gTLD
Worst Case ScenarioWholesale Price $25
(Note: Wholesale price change $30 in the most likely case based on the assumption that consumers are price sensitive)
Registration Volume Generic Short TLD
Projected Cash Flows Year 1 Year 2 Year 3
Worst
Part A: Amusement 1,323 1,236 648 Part B: Recreation 5,508 9,648 12,156 Part C: Sporting 873 1,427 1,712 Part D: Educational 270 556 786 Part E: Specialty Deal 2,250 4,200 5,513 Part F: Existing Domains 711 713 357
Registration Volume in YearsOpening Balance - 17,291 49,536 New Additions 17,291 32,245 47,835
Total Registration Volume in Years 17,291 49,536 97,370
Sunrise 1,000 - - Landrush 60 - - # Purchases 12,060 26,280 38,653 Premium Domains: 1,125 1,456 1,488 Total 17,291 32,245 47,835
Similar to the most likely scenario with a decrease in volume ~11k resulting in 17k in domain name registrations (prior was 16k and 24k in registrations)
Notice in year 2 the New Additions is 32k yet there are only 17k new sales.
Is this an error?
How TLDs Vary from Other Businesses – Cash Cow Effect• Payment is upfront for a registration (no risk of payment)• For accountants, revenue recognition is a portion of the
registration fee each month i.e. a $12 registration fee is $1 in recognized revenue per month• Hence, most new TLD Owners evaluate the business based on
cash flows• Reoccurring revenues from renewals will occur in year two
which is one of the key benefits of owning a TLD. Cash Cow!
Cash InflowsCash inflows decrease due to the lower registration volume and price
Cost of sales decrease from $150k to $129k – related to registry fees
Gross margin decreases by $236k – no real magic.
Generic Short TLDProjected Cash Flows Year 1 Year 2 Year 3
Worst
Projected Cash Inflows & OutflowsDomains Under Management 13,120 39,400 78,053 Registration Volume in Domain Years 17,291 49,536 97,370
Cash InflowsRegistrations 334,194 765,900 1,210,564 Premium Name Auctions (New & Renewals)431,250 191,563 61,891 Sunrise Registrations 118,000$ -$ -$ Landrush Registrations 1,464$ -$ -$ Other Cash Inflows - interest 29,050 36,419 43,546 Best ONLY Revenue streams - - -
Total - Cash Inflows 913,958$ 993,881$ 1,316,001$
Total Cash Outflows:
Cost of Sales (cash)Registry Fee - Per Domain 56,196 104,796 155,462 ICANN Fees - Quarterly Fixed 25,000 25,000 25,000 Premium Name Fees 47,438 15,813 -
Total 128,634$ 145,609$ 180,462$
Gross Margin (cash Sales Basis) 785,324$ 848,273$ 1,135,539$
Cash Outflows – COS & Labor
This registry believes their TLD marketing is related to the volume of registrations and increases their marketing labour.
Marketing costs increases from the most likely scenario with $300k in yr 1 & 2 and $200k in yr 3;
Escrow fees decline minimally due to the decreased in registrations
Generic Short TLDProjected Cash Flows Year 1 Year 2 Year 3
Labor:CEO/Manager -$ -$ -$ Marketing 135,000 138,375 141,834 Customer Service 36,000 40,000 41,000 Admin 36,000 40,000 41,000
Total Labour 207,000 218,375 223,834
Marketing Costs - Var 300,000 350,000 400,000
General & Admin 45,000 45,000 115,000
Professional Fees - Legal 24,000 15,000 12,000
Other: COI Costs 1,000 1,000 1,000 Other: Escrow: Fixed 2,000 - -
Other: Escrow Variable 4,250 8,700 16,800
Miscellaneous - - - - Total Operating Cash Outflows 583,250 638,075 768,634
Taxes - - -
Total Operating Cash Outflows 711,884$ 783,684$ 949,097$
Discounted Ooperating Cash Outflows 674,615$ 672,862$ 736,961$
Projected Net Operating Cash Flow (cash basis)202,074$ 210,198$ 366,904$ Cumulative 412,272$ 779,176$
Year 1 Year 2 Year 3 Year 4 Year 5
-$400,000
-$200,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
5 Year Projections
Total - Cash Inflows
Total - Recognized Revenue
Gross Margin (accounting sales basis)
Total Operating Cash Outflows
Net Income
Linear (Net Income)
Generic TLD 5 Year View
gTLD Focus on the Food & Restaurant
IndustryWholesale Price $15Worst Case Scenario
In this worst case scenario, management has chosen to minimize expenses and not invest in additional marketing activities to increase registrations
Registration Volume
This TLD is within the food and restaurant industry and plans to target specific niche’s within the industry.
Certain exporters are related to a specific geographic area within the world.
This TLD is also more expensive as it was in Contention (more than one applicant applied for it) and was auctioned off to the winner who paid the most in auction
Restaurant/Food TLDProjected Cash Flows Year 1 Year 2 Year 3
Worst
Part A: Restaurant/Food Industry 4,790 5,628 5,520 Penetration Rate# of Purchases 3,830 4,502 4,416
Part B: Speciality Restauranats 11,280 12,852 12,216 Penetration Rate# of Purchases 9,020 10,282 9,773
Part C: Producers/Exporters 830 950 903 Penetration Rate# of Purchases 660 760 722
Part D: Specialty Niche Target Rest. 520 533 451 Penetration Rate# of Purchases 410 427 361
Part E: Existing Domains 7,750 8,138 7,120 Penetration Rate# of Purchases 6,200 6,510 5,696
Cash InflowsAs purchasers can buy a domain name for more than one year, the number of domains in years can be higher than the number of names purchased
Sunrise registrations is the preregistration from trademark holders which often includes an ‘application fee’
Premium names sell at a higher price and can also renew at this higher price.
Restaurant/Food TLDProjected Cash Flows Year 1 Year 2 Year 3
WorstTotal Registration Volume in Years 29,005 74,959 129,584
Sunrise 400 - - Landrush 2,500 - - # Purchases 20,270 35,791 42,536 Premium Domains: 150 178 176
29,005 45,954 54,626
Projected Cash Inflows & OutflowsDomains Under Management 23,170 58,961 101,497 Registration Volume in Domain Years 29,005 74,959 129,584
Cash InflowsRegistrations 368,943 650,703 774,003 Premium Name Auctions (New & Renewals)375,000 512,750 765,088 Sunrise Registrations 27,600$ -$ -$ Landrush Registrations 61,000$ -$ -$ Other Cash Inflows - interest - - - Best ONLY Revenue streams - - -
Total - Cash Inflows 832,543$ 1,163,453$ 1,539,091$
Cash Outflows – COS & Labor
ICANN Fees are a minimal of $25k/yr with a charge of $.25 per year when the volume exceeds 50,000 names
Premium name fees are the commissions paid to the seller of the premium name
Labour varies depending on the company, existing resources, purpose of the TLD, etc.
Restaurant/Food TLD Start-UpProjected Cash Flows Costs Year 1 Year 2 Year 3
Total Cash Outflows:
Cost of Sales (cash)Registry Fee - Per Domain 113,768 168,583 193,696 ICANN Fees - Quarterly Fixed 185,000 25,000 25,000 25,000 ICANN Fees - trx fee - Var - - - Premium Name Fees 41,250 55,000 82,500 Misc. Fees 10,683 95,211 32,201
Total 190,701$ 343,794$ 333,397$
Gross Margin (cash Sales Basis) 641,842$ 819,659$ 1,205,694$ Labor:
CEO/Manager 100,000 100,000$ 100,000$ 100,000$ Marketing Director 100,000 90,000 92,250 94,556 Customer Service 80,000 73,542 153,897 Technical Director 102,000 91,800 118,008 172,650 Expenses - Best ONLY - - -
Total Labour 361,800 383,800 521,103
Cash Outflows & Net Income
Restaurant/Food TLD Start-UpProjected Cash Flows Costs Year 1 Year 2 Year 3
Marketing Costs - Var No 200,000 200,000 300,000 250,000
Senior Security Consultant Services Yes 100,000 90,000 99,000 108,900
General & Admin Yes 115,000 103,500 125,500 115,000
Professional Fees - Legal Yes 250,000 250,000 256,250 236,391
IP Clearninghouse No - 70,000 - -
Other: COI Costs No 1,000 1,000 1,000 1,000
Other: Escrow: Fixed Yes One-Time 2,500 - -
Other: Escrow Variable Yes 0% 7,850 11,000 13,750
Miscellaneous No 25,000 25,000 25,000 25,000
Debt Payment - - - -
Total Operating Cash Outflows 1,111,650 1,201,550 1,271,144
Taxes - - -
Total Operating Cash Outflows 1,450,351$ 1,645,344$ 1,804,541$
Discounted Operating Cash Outflows 1,380,010$ 1,413,188$ 1,403,128$
Projected Net Operating Cash Flow (cash basis) (469,808)$ (381,891)$ (65,450)$ Cumulative (851,698)$ (917,148)$
To date, marketing of new gTLDs has not been significant and its impact on volume is difficult to predict
Security costs vary by TLD and their mission i.e. the impacts of satan.bible could have severe impacts while other registries believe in free speech with no related security and legal costs
In the worst case, this TLD is losing money in years 1 to 3
gTLD Focus on the Food & Restaurant
IndustryWholesale Price $15
Most Likely Scenario.diet, .fish, .farm, .pizza
Registration VolumeRestaurant/Food TLDProjected Cash Flows Year 1 Year 2 Year 3
Most Likely
Part A: Restaurant/Food Businesses 4,790 5,628 5,520 Penetration Rate# of Purchases 4,790 5,628 5,520
Part B: Speciality Restaurants 11,280 12,852 12,216 Penetration Rate# of Purchases 11,280 12,852 12,216
Part C: Producers/Exporters 830 950 903 Penetration Rate# of Purchases 830 950 902
Part F: Speciallty /Niche Restaurants 520 533 451 Penetration Rate# of Purchases 520 533 451
Part G: Existing Domains 7,750 8,138 7,120 Penetration Rate# of Purchases 7,750 8,137 7,120
Registration Volume in YearsOpening Balance - 37,769 96,459 New Additions 37,769 58,690 68,955
Total Registration Volume in Years 37,769 96,459 165,414
This TLD is within the food and restaurant industry and plans to target specific niche’s within the industry.
Certain exporters are related to a specific geographic area within the world.
This TLD is also more expensive as it was in Contention (more than one applicant applied for it) and was auctioned off to the winner who paid the most in auction
Cash Inflows
Restaurant/Food TLDProjected Cash Flows Year 1 Year 2 Year 3
Most LikelySunrise 650 - - Landrush 4,500 - - # Purchases 25,320 45,664 53,644 Premium Domains: 150 178 176
37,769 58,690 68,955
Projected Cash Inflows & OutflowsDomains Under Management 30,470 76,134 129,778 Registration Volume in Domain Years 37,769 96,459 165,414
Cash InflowsRegistrations 461,546 831,747 977,690 Premium Name Auctions (New & Renewals)375,000 512,750 765,088 Sunrise Registrations 44,850$ -$ -$ Landrush Registrations 109,800$ -$ -$ Other Cash Inflows - interest - - - Best ONLY Revenue streams - - -
Total - Cash Inflows 991,196$ 1,344,497$ 1,742,778$
Resulting increased registrations of ~8,800 registrations in yr 1; ~12,700 in year 2 & Year 3 ~15,300
Results in an increase of over $543k over three years
Reflects the simple equation that the volume and price of registrations is key!
Cash Outflows – COS & LaborCost of sales have nominal changes
However, increase to labour due to the increased registrations and efforts
In some cases, registries have decided to build out some of their own domain names for increased revenues and expenses via a separate corporation
Restaurant/Food TLD Start-UpProjected Cash Flows Costs Year 1 Year 2 Year 3
Most LikelyCost of Sales (cash)
Registry Fee - Per Domain 146,635 213,119 241,698 ICANN Fees - Quarterly Fixed 185,000 25,000 25,000 25,000 Premium Name Fees 41,250 55,000 82,500 Other Fees 40,000 58,000 64,098
Total 300,885$ 351,119$ 413,296$
Gross Margin (cash Sales Basis) 690,311$ 993,378$ 1,329,482$
Labor: Cost of Living Adj?
CEO/Manager Yes - 100,000$ 100,000$ 100,000$ Marketing Director Yes 200,000 100,000 105,000 110,125 Customer Service Yes 150,000 150,000 173,542 253,897 Technical Director Yes 102,000 102,000 118,008 172,650 Expenses - Best ONLY No - - -
Total Labour 452,000 496,550 636,672
Restaurant/Food TLD Start-UpProjected Cash Flows Costs Year 1 Year 2 Year 3
Most LikelyCost of Sales (cash)
Registry Fee - Per Domain 146,635 213,119 241,698 ICANN Fees - Quarterly Fixed 185,000 25,000 25,000 25,000 Premium Name Fees 41,250 55,000 82,500 Other Fees 40,000 58,000 64,098
Total 300,885$ 351,119$ 413,296$
Gross Margin (cash Sales Basis) 690,311$ 993,378$ 1,329,482$
Labor: Cost of Living Adj?
CEO/Manager Yes - 100,000$ 100,000$ 100,000$ Marketing Director Yes 200,000 100,000 105,000 110,125 Customer Service Yes 150,000 150,000 173,542 253,897 Technical Director Yes 102,000 102,000 118,008 172,650 Expenses - Best ONLY No - - -
Total Labour 452,000 496,550 636,672
Cash Outflows & Net Income Escrow Fees have both a fixed and variable portion to them
Some TLDs have investors or loans that require repayment
Restaurant/Food TLDProjected Cash Flows Year 1 Year 2 Year 3
Marketing Costs - Var 300,000 350,000 300,000
Senior Security Consultant Services 100,000 110,000 121,000
General & Admin 115,000 127,354 146,390
Professional Fees - Legal 250,000 256,250 236,391
IP Clearninghouse 70,000 - -
Other: COI Costs 1,000 1,000 1,000 Other: Escrow: Fixed 2,500 - -
Other: Escrow Variable 8,450 11,600 15,000
Miscellaneous 25,000 25,000 25,000
Debt Payment - - - - Total Operating Cash Outflows 1,323,950 1,377,754 1,481,453
Taxes - - -
Total Operating Cash Outflows 1,624,835$ 1,728,873$ 1,894,749$
Discounted Ooperating Cash Outflows 1,544,745$ 1,482,846$ 1,471,100$
Projected Net Operating Cash Flow (cash basis)(633,639)$ (384,376)$ (151,971)$
Registration VolumeActual industry size and penetration rates have been hidden but the volume projections by market are shown
.LOVE is doing an Early Launch Program instead of Landrush which is different from other examples, it also gets the TLD into General Availability faster.
Projected Cash Flows Year 1 Year 2 Year 3
Most Likely
Part A: Romance & Occasions 2,061 2,880 3,024 Part B: Passions 1,125 3,984 8,472 Part C: Literature 1,422 1,938 1,977 Part D: Hobbies, Places, People 1,872 2,750 3,025 Part E: Dating 9,369 11,813 11,025 Part F: Wedding & Love Story 4,500 6,600 7,260 Part G: Existing Domains 3,312 10,935 21,652 Part H: Existing Domains ending w/ .LOVE 1,836 2,335 2,219
Registration Volume in YearsOpening Balance - 34,451 102,220 New Additions 34,451 67,768 108,861
Total Registration Volume in Years 34,451 102,220 211,080
.LOVEProjected Cash Flows Year 1 Year 2 Year 3
Most Likely
Sunrise 2,000 - - Landrush - - - # Purchases 25,735 57,424 92,079 Premium Domains: 238 217 184
34,451 67,768 108,861
Projected Cash Inflows & OutflowsDomains Under Management 27,735 85,158 177,238 Registration Volume in Domain Years 34,451 102,220 211,080
Cash InflowsRegistrations 730,394 1,632,987 2,627,161 Premium Name Auctions (New & Renewals)191,667 48,427 9,217 Sunrise Registrations 236,000$ -$ -$ Landrush Registrations -$ -$ -$ Other Cash Inflows - interest - - - Best ONLY Revenue streams - 1,800 3,780
Total - Cash Inflows 1,158,060$ 1,681,414$ 2,636,379$
Cash InflowsWe are targeting June as we would prefer not to launch in the summertime when the cyclical nature of domain registrations is lower
Premium name numbers have been altered for confidentiality purposes
One target market has additional revenue streams that we hope to roll out to add additional benefits to domain buyers
Cash Outflows – COS & Labor
Registrar Fees is for an expected promotion program to have users build a website and in return, receive a reduction in fees.
Once someone builds a website, they are more likely to renew the domain name in future years
.LOVEProjected Cash Flows Year 1 Year 2 Year 3
Total Cash Outflows:
Cost of Sales (cash)Registry Fee - Per Domain 75,793 149,090 239,495 ICANN Fees - Quarterly Fixed 25,000 25,000 25,000 Premium Name Fees 21,083 4,217 - Registrar Fees 73,039 163,299 262,716
Total 194,916$ 341,605$ 527,211$
Gross Margin (cash Sales Basis) 963,144$ 1,341,609$ 2,112,948$
Labor:CEO/Manager -$ -$ -$ Marketing 150,000 153,750 157,594 Customer Service 40,000 40,000 41,000 Expenses - Best ONLY - - -
Total Labour 190,000 193,750 198,594
Cash Outflows & Net IncomeMarketing expenditures targeting the areas with large volumes are in place along with general TLD awareness with other TLDs
Lean organization with the utilizing of existing business resources
In the most likely scenario, all three years are profitable with increases in year 2 & 3 due to the cash cow affects
.LOVEProjected Cash Flows Year 1 Year 2 Year 3
Total Cash Outflows:Marketing Costs - Var 500,000 400,000 300,000
Outsourcing 30,000 30,000 30,000
General & Admin 50,000 50,000 146,390
Professional Fees - Legal 24,000 24,000 12,000
Travel 75,000 75,000 75,000
Other: COI Costs 1,000 1,000 1,000 Other: Escrow: Fixed 2,000 - -
Other: Escrow Variable 5,925 15,875 30,000
Miscellaneous 8,000 8,000 8,000 - Total Operating Cash Outflows 885,925 797,625 800,984
Taxes - - -
Total Operating Cash Outflows 1,080,841$ 1,139,230$ 1,328,195$
Projected Net Operating Cash Flow (cash basis)77,219$ 543,984$ 1,311,964$ Cumulative 621,203$ 1,933,167$