Embargoed until 07.00: 30 July 2020
Minds + Machines Group Limited
("MMX" or the "Company")
Trading Update and Notice of AGM
Minds + Machines Group Limited (LSE: MMX), one of the world's leading owners and operators of Internet Top-Level Domains ("TLDs"), is pleased to provide the following H1 trading update, a period in which the Company has continued to deliver top-line billings growth whilst achieving its long-term objective of removing its reliance on one-off brokered billings, with 99% of billings being generated through the automated online retail channel during the period.
During H1 2020, year-on-year registrations grew 31% to 2.38 million as of 30 June 2020 (1.82 million 30 June 2019). H1 2020 automated online channel billings (amounts invoiced) increased 20% to $7.8m (H1 2019: $6.5m), delivering overall billings growth of 7% in H1, with total H1 2020 billings closing at $7.9m (H1 2019: $7.4m). The uplift in online channel billings reflects the underlying improvement in both renewal billings and new registration billings - up 17% and 23% respectively in the period.
This improvement also reflects the success of the Company's strategy to move away from one-off brokered billings which declined by $0.8m to $0.1m in the first half. Channel billings are generally recognized as revenue over the life of the registration, whereas one-off brokered billings are generally recognized as revenue as billed, therefore this change to predominately channel billings will result in an increase in deferred revenue such that, despite the 7% increase in billings in H1, reported revenue is expected to decrease by approximately 5% when compared to H1 2019.
Management also notes that expected H1 channel sales from the Company's brand protection activity were held back due to the impact of COVID-19, but anticipates those brand protection initiatives that were delayed in Q2 will resume in H2.
Mirroring the underlying improvement in billings in the period, cash generated from operations increased 13% to approximately $2.5m (H1 2019: $2.2m), with cash on hand at 30 June 2020, net of the $1.2m share buyback in May this year, improving to $7.3m ($6.6m as at end of FY 2019).
During H1 2020, OPEX and COGs were kept broadly in-line with the Company's KPI's in spite of an additional $0.2m in costs during the period associated with closing the data centre following the ICM acquisition and staff termination related payments.
Toby Hall, CEO of MMX, commented:
"I am delighted that our business has proved so resilient to the COVID-19 crisis. The momentum we've been building in the channel over the last three years is now demonstrably coming to the fore and driving the ongoing improvement in our billings mix, with 66% of our H1 billings being renewals compared to 60% in H1 2019. It is also encouraging to note that the H1 uplift was not reliant on either brokered or brand protection billings. In short, we are now an incrementally cash generative business with a robust SaaS-type revenue model where 99% of billings in the period were through the automated channel. As a traditionally H2 weighted business, we are further encouraged by the outlook for the full-year as new partner initiatives delayed in Q2 due to COVID-19, are now set to commence in H2."
Notice of AGM
Notice is given that the Company's Annual General Meeting will be held virtually on 27 August at 14.00 (British Summer Time) via the digital platform Investor Meet Company. Copies of the Notice of AGM, Form of Proxy and Form of Instruction will shortly be available for download on the Company website at http://mmx.co/investors/circulars/.
The online AGM is open to all existing and potential shareholders and forms part of the Company's ongoing strategy to ensure appropriate communication structures are in place for all elements of its shareholder base. Questions can be submitted during the meeting via the "Ask a Question" function. Whilst the Company may not be in a position to answer every question it receives, it will seek to respond to the most prominent questions within the confines of information already disclosed to the market. Responses to the Q&A from the live presentation will be published at the earliest opportunity on the Investor Meet Company platform. Investor feedback can also be submitted directly to management post the event to ensure the company can understand the views of all elements of its shareholder base.
Investors can sign up to Investor Meet Company for free and request to meet MMX via https://www.investormeetcompany.com/minds-machines-group-limited/register-investor .
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
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For further information
Minds + Machines Group Limited (LSE: MMX) is the owner of a world class portfolio of 32 ICANN approved top-level domains (gTLDs). The Company generates revenues through the registration and annual renewal of names by organisations and individuals within each of its top-level domains, sales being processed through the Group's online network of global registrar and distribution partners.
The MMX portfolio is currently focused around generic names (e.g. .work, .vip), consumer interest (e.g. .fashion, .wedding), lifestyle (e.g. .fit, .surf, .yoga), professional occupations (e.g. .law), and geographic domains (e.g. .london, .boston, .miami, .bayern). In 2018, the Company completed its first acquisition, the ICM portfolio, and launched its first innovation based project, .luxe, which combines the strengths of the World Wide Web's naming system with that of blockchain. In 2019, it launched its second innovation initiative in the brand protection arena. For more information on MMX, please visit www.mmx.co.
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