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Minds + Machines Group Limited

Minds + Machines gains momentum as cash generation and renewals drive business forward

Snapshot

  • Owner of top-level domain portfolio
  • International network of registrars and domain distributors
  • Recently announced £1mln share buyback
.com domain

Quick facts: Minds + Machines Group Limited

Price: 6.5 GBX

Market: AIM
Market Cap: £59.74 m
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What Minds + Machines does:

Minds + Machines Group PLC (LON:MMX) owns and operates a portfolio for generic top-level domains (TLDs).

TLDs are the suffixes attached to the end of website addresses (e.g. .com, .org, .net), with MMX’s portfolio mainly focusing on geographic domains (.london, .boston, .miami), professional occupations (.law), consumer interests (.fashion, .wedding, cooking), lifestyle (.fit, .surf, .yoga), outdoor activities (.fishing, .garden, .horse) and generic names (.vip, .work, .casa).

In total, MMX owns around 26 TLDs. A particular highlight is its ‘.luxe’ domain, which looks to provide a  standardised naming convention for blockchain addresses.

MMX works with an international network of registrars and domain distributors to help disseminate its portfolio, counting registrars like US-based GoDaddy Inc (NYSE:GDDY) among its partners.

 

How is it doing:

In a trading statement for the six months ended 30 June, the company said that results for the period were expected to be in line with management expectations.

Registrations in the first half had risen 19% to 1.82mln year-on-year while new sales billings through its original 28 properties has increased by 30%.

MMX also said that cash in-flows for the period had been “ahead of expectations” at US$8.6mln, up from US$6.3mln in the prior year.

Meanwhile, the firm said a historical decline in its ICM portfolio had stabilised in the first half delivering US$2.8mln, the same as the prior year but an improvement on the 16% decline in the first half of 2018.

MMX said it now believed that there was a “clear pathway” to future growth for the ICM division, with new initiatives due to come online in its third quarter.

Following the “positive” performance for the first half, MMX said it had also agreed a one-off payment of US$5.1mln to settle a legacy onerous contract issue, with payment due in the second half.

 

Inflexion points:

  • In June, MMX announced that domain name regulator ICANN is to introduce a new blocking service that will allow trademark holders to better protect their naming rights across the .xxx, .sex, .porn and .adult TLDs. MMX owns four adult-themed domains after acquiring ICM Registry in 2018
  • In July, the company kicked off a £1mln share buyback programme after trading gave it confidence that the business was on a “solid cash-generative footing”

 

What the boss says – CEO Toby Hall:

In the firm’s first half update, Hall said the group was “extremely encouraged” by its progress in the period.

“Our revenues are increasingly predictable, with healthy channel sales and strong renewal revenues now driving the business forward”, the CEO said, adding that with the legacy contract issue in the process of being resolved and innovation activity supporting organic growth, the outlook for the firm was “bright”.

 

CEO Interview:

 

What the broker says:

In a July note, analysts at MMX's 'house' broker finnCap reiterated their 17p target price on the stock, saying that the company was continuing to deliver on its strategy of “profitable organic growth allied to targeted acquisitions and innovative development”.

The broker added that they expected MMX’s revenue growth to deliver “strong cash generation” and that the market would be looking for more visibility on execution at the interims.

With the shares trading at 5.6p as of 3 September, Minds + Machines carries a market cap of £52mln.

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Watch

Minds + Machines Group 'now generating real cash' as business momentum continues

Minds + Machines Group Ltd's (LON:MMX) Toby Hall caught up with Proactive London's Andrew Scott to discuss the firm's interim results to June 2019. The internet registry, which owns internet TLDs including .luxe and .xxx, generated revenue of US$8.9mln in the six months to 30 June, up 39%...

on 26/9/19

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