viewMinds + Machines Group Limited

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


  • Owner of top-level domain portfolio
  • International network of registrars and domain distributors
  • Operating profits increasing fourfold
.com domain

Quick facts: Minds + Machines Group Limited

Price: 7.85 GBX

Market: AIM
Market Cap: £72.14 m


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 its interim results for the six months ended 30 June, the internet registry stormed ahead with operating profits before exceptional costs and net of auction revenue increasing fourfold to US$2.7mln, enabling a swing to a statutory profit before tax of US$1.7mln compared to a first-half loss of US$14.7mln last time.

The company generated revenue of US$8.9mln in the six months to 30 June, up 39% compared to this time last year.

Revenue mix was much improved, with a more balanced spread geographically and with the proportion of renewal revenues rising to 68% of the total from 53% a year ago, while a big improvement in automated new sales helped profit margins.

There was also US$8.9mln cash on the balance sheet at the half year stage, following payment of a US$3mln loan facility and US$1.8mln payment to exit onerous contract, with a further US$5.1mln settlement to be paid in the second half after an in-principle agreement was made over a legacy contract that has been a substantial cash drain on the business over the last five years.

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 September note, analysts at MMX's 'house' broker finnCap reiterated their 17p target price on the stock, saying that it had been "a good half, seeing growth in registrations, group revenue and renewals, assisted by a full six months of ICM”.

Analysts at finnCap noted that "a key point is approached as renewal revenues now cover almost all costs: partner payments, cost of sales, and opex”.

This contributed to “a much more stable operation" overall: "We are seeing a much better quality of revenue stream, controlled costs, with exciting and innovative growth opportunities being explored.”

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