Richard Moore: CEO, Dark Blue Sea – Financial Modeling

Richard Moore is the CEO of Dark Blue Sea. Given the fact DBS own Fabulous, it was a very interesting insight into how they apply financial modeling.

Domain name portfolios have:

• Two revenue streams. 1.Advertising – monetizing the direct navigation traffic. 2. Domain sales
• One expense – Registration cost

Modeling Advertising Revenue

• Advertising revenue = volume * price
• Volume is the number of unique visitors. Search volume data (google, wordtracker)
• “Heartbeats” (Overture with extension)
• Price is the amount received per unique visitor. For example, bid price data and number of advertisers.

Five Different Types Of Prices

• Wholesale price. eg:$100
• Flipper price. eg:$200
• Retail price – one that would list through a sales channel
• High retail price – portfolio owners who say they will sell for $X
• Very high retail price – An astronomic price for a domain name

Modeling Probability of Sale

• Actual number of sales divided by size of portfolio
• Depends on sales strategy (flipper -> 50%, retail 1% to 4%, very high retail 0.01%).
• Optimal strategy is average sales price * probability of sale – restocking cost

Restocking is if you sell a domain, can you go out on the retail market and buy another?