Minds + Machines Group (MMX) released its half yearly trading results to 30 June last week. In the first half of 2019m MMX reported a healthy year-on-year growth in registrations, up 19% to 1.82 million.

There was also strong channel growth within the original 28 MMX new gTLDs with new sales billings through the channel up 30%. The historic decline in the ICM adult portfolio (.adult, .porn, .sex, and .xxx), which had seen a 16% decline in billings in the corresponding first half of 2018 (compared to 2017), has been fully stabilised at $2.8million (H1 2018: $2.8million). MMX management believes there is now a clear pathway to drive future growth from the ICM portfolio with significant improvements achieved in three of the four ICM properties in the first half of 2018. Compared to the same period last year there had been decline, with further new initiatives coming online in the third quarter of 2019. Importantly, cash-inflows for the period were ahead of expectations at $8.6million (H1 2018 $6.3million) with cash generated of $3.6million including the receipt of $1.6million from contested gTLD auctions (H1 2018 cash generation net of auction proceeds: $0.5million).

“Whilst we are not upgrading guidance for the full year at this stage, we are extremely encouraged by the progress made in the first half,” said Toby Hall, CEO of MMX. “Our revenues are increasingly predictable, with healthy channel sales and strong renewal revenues now driving the business forward. With the legacy onerous contract issue now in the process of being resolved and innovation-based activity supplementing our organic growth, the outlook is bright.”

Currently MMX manages 30 new gTLDs, 28 of them in General Availability, with 1.9 million domain names under management according to nTLDstats. The largest by registration numbers is .vip with 1.023 million registrations.

MMX also addressed “the ongoing drag of one of its legacy contracts against which it had made an onerous provision in the first half of 2018 of $7.0 million in addition to the $2.1 million contractual marketing commitment, bringing the total liability to $9.1million at that time. It has been reported that this legacy contract was with the .london operators. The new gTLD for the UK’s capital peaked at around 86,500 in April 2018 and has been on a downhill slide ever since to today’s 50,700 registrations.

Currently, the estimated liability relating to .london stands at $7.9million. In the half yearly report MMX reports they’ve reached an in principle agreement that it will make a one-off payment of about $5.1m as full and final settlement for any further liability or contractual spend offset by revised contract terms which the Directors now estimate will generate net revenues of approximately $0.5million to MMX over the remaining contractual period. Binding legal contract and payment is expected in H2 and given the positive outlook can be made from the Company’s existing cash resources.

There was also strong channel growth within the original 28 MMX new gTLDs with new sales billings through the channel up 30%. The historic decline in the ICM adult portfolio (.adult, .porn, .sex, and .xxx), which had seen a 16% decline in billings in the corresponding first half of 2018 (compared to 2017), has been fully stabilised at $2.8million (H1 2018: $2.8million). MMX management believes there is now a clear pathway to drive future growth from the ICM portfolio with significant improvements achieved in three of the four ICM properties in the first half of 2018. Compared to the same period last year there had been decline, with further new initiatives coming online in the third quarter of 2019. Importantly, cash-inflows for the period were ahead of expectations at $8.6million (H1 2018 $6.3million) with cash generated of $3.6million including the receipt of $1.6million from contested gTLD auctions (H1 2018 cash generation net of auction proceeds: $0.5million).

“Whilst we are not upgrading guidance for the full year at this stage, we are extremely encouraged by the progress made in the first half,” said Toby Hall, CEO of MMX. “Our revenues are increasingly predictable, with healthy channel sales and strong renewal revenues now driving the business forward. With the legacy onerous contract issue now in the process of being resolved and innovation-based activity supplementing our organic growth, the outlook is bright.”

MMX also addressed “the ongoing drag of one of its legacy contracts against which it had made an onerous provision in the first half of 2018 of $7.0 million in addition to the $2.1 million contractual marketing commitment, bringing the total liability to $9.1million at that time. It has been reported that this legacy contract was with the .london operators. Currently, the estimated liability stands at $7.9million. In the half yearly report MMX reports they’ve reached an in principle agreement that it will make a one-off payment of about $5.1m as full and final settlement for any further liability or contractual spend offset by revised contract terms which the Directors now estimate will generate net revenues of approximately $0.5million to MMX over the remaining contractual period. Binding legal contract and payment is expected in H2 and given the positive outlook can be made from the Company’s existing cash resources.