Member Info for Silverblade

Morning SS. Agree with your thoughts and always useful to hear the views of other posters also - we all have our own perspective and are fully entitled to openly discuss them without fear of being trolled. If previous buybacks had impacted more positively on the share price it would be more palatable - as noted the scale may be too small for now - but reducing shares in circulation when the company has the cash to do it makes sense - but the one thing we all agree on is the need to increase the share price - and there are other options (dividend) which may have more of an impact than the buyback at present - I think that was the point. On your point about cutting the fat - any more info? SB

The more interesting issue here is where did the company pick up 20m shares at such a low price. SB

Deep S has been there a while - I think he has been named in some previous options awards - difficult to think he wasn’t involved in some of the recent nonsense - but that’s a bit presumptuous. These positions are not the updated ones presented to investors at the open day in Oct - hopefully the web site will be updated with the actual team we have and their jobs - there were some interesting changes. Looks like share activity picking up - good - shows there is interest and the volume indicates there is more liquidity in the market. SB

Its quite a tight spread on the buy/sell scotty so a bit hard to tell - and it doesn't help there there is little price movement either way to indicate a buy or sell! I'm hoping they are purchases. If it was fincapp we would know - so perhaps a little bit of speculation by others looking at the potential upside pre-xmas; or II's picking up shares following the recent RNS's and management changes. Interesting fincapp have not acted yet - although the purchase parameter's are possibly too tight and may need relaxed. Given there are only 30 trading days left this year they have c.£75K a day to spend which could take out more than 1.5m shares a day. SB

What’s really worrying bakky is without the $5m London settlement with its $1m partner payment saving our annual total costs were $13m - so TH and MS made some headway on costs at significant cost to the business and then increased elsewhere. Beggars belief and another reason why change was needed outwith the accounting fiasco. SB

Bakky - first half this year - partner payments $1m; COGs $1.9m; OH $3.2m. $6.1m all in.....so about $12m full year. Note in addition to our two senior departers with associated costs we will have two months of our new team - exec chairman, interim CEO and interim CFO. SB

SJL

Looks like partner payments are c.$2m this year - as you noted our law ‘partner’ is probably the main beneficiary which is a tad galling. Would be good to buy them out like London but suspect the price is too high for now - might decline if contract is time limited. So net revenue about $15m this year - $17m+ 2021. COGs are high in relation to marketing and commission costs / $1.2m in first six months alone seems OTT based on our registrar selling model - any support should target higher margin domains - so room for improvement there. Fees are fees. And then onto overheads - and we all agree where that conversation needs to end. Totally agree that the focus should be on quality (price) not volume (DUMs). This could be a great story next 12 months - would be good to have you back for the ride.
As for the masters - great for Dustin - but what about tiger on the 12th! SB

Following last week’s chat I have put down some thoughts on where me might be this year/next year – avoiding adult/non adult split…..

We now know that our total revenue in 2019 was $17.2m, generating $2.3m PBT (0.2p eps). If we assume the c.$900k AB adjustment related to the second half of the year; and the c.$800K 2 additional revenue errors were split over first and second half’s; the ‘likely’ full year would be split H1 2019 - $8.5m, H2 2019 - $8.7m – so a relatively minor second half weighting. H1 2020 has delivered comparable numbers to last year ($8.5m), and we generated a bit more PBT – possibly as revenue from the adultblock (AB) sales started to flow. There is no reason to think H2 2020 trading will be less than last year, with the potential for some AB - so lets say we can get to $9.0m revenue in H2 2020 – that would give a ‘conservative’ full year revenue of c.$17.5m. Add in a bit of growth and a few thousand AB (bearing in mind SJL’s comments that the uptake may be a relatively small % of the previous 65K Sunrise B blocks) and next year should see $19m+ revenue – very achievable imo – with ongoing reductions in total costs.

In terms of the indicative $4m positive operating cash flow for 2020 referred to in the RNS, we secured $2.3m in H1 2020. So I would expect a slightly higher amount in H2 2020. I suspect we will have restructuring costs (TH and MS compensation plus others – c.$1m?) taking us back to the $4m.

So I suspect our cash flow from operations is possibly closer to $5m in 2020 (based on my restructuring cost assumption) and the previous management regime target for 2021 was looking to secure $1m of savings before the proverbial hit the fan; so operating cash flow for 2021 is likely forecast to be $6m already – add in further cost savings and AB growth – and we could be generating $7/8m cash flow from operations - starting to get close to 1c eps (900m shares currently – up to 40/50m could be taken out using buyback cash).

Looks like TF has spent his first few days reviewing the day to day business operations and finances – with management team review to follow – looking at all costs (overheads, fees, marketing, partner payments, commissions, etc) - which based on his previous experience will prove very informative. Focus will be on ensuring a satisfactory end to this year’s trading; and providing an update to the board on his findings. This will then better inform the board on how to maximize value from the business and secure support to implement a restructure (doesn’t have to be severe – just prudent) – leaving a low cost, highly cash generative business model with 5-10% pa revenue growth adding considerably to profit. And then put a for sale sign on the company. SB

Spot on SS - we have also been making share based payments in the accounts relating to the fair value of these zero cost share options. Not sure if those payments are recoverable as the options have been cancelled. They are non cash - but they do have an impact - several $m from memory over the last few years for TH and MS awards. SB

You too SJL - great to hear the recent views of everyone here who is genuine about the issues we face and the ongoing journey to get the business focused on delivering its full potential.
As for football - any Scot posting here will still be smiling from last night - we’ve got a date night next June in Wembley to look forward to after 22 years of qualification failure.
ATB all. SB

It’s the uncomfortable truth we don’t like Hucks - I agree with you - we don’t have the finer details but there is enough to highlight major issues with our non adult business - partner deals which are killing cash flows, overhead and expenditure to sell domains which pretty clearly don’t make any money, and volume registration domains which it would appear we don’t get paid for.
But I also think we are trading below our true asset value - and that with a focused team who ‘actually’ know what they are doing then there is still a decent business waiting to come out of this. It might be a bit brutal to reengineer the company / but surely we are at rock bottom / it’s not a disaster we make money, have some growing domains, and have replaced blue sky nonsense with straight domain experience. That shows a change of direction at board level for me, which can only be good. SB

*SJL

Maybe TH and MS will sell their 2m shares to SHL!

Seriously - the company needs leadership and expertise and experience. Hopefully TF is the start. We then need a highly capable domain experienced CFO. A strong non exec with experience would also be invaluable. Guy and Henry are not in this category imo. SB

2crazy - come on - no problem with people posting views but let’s remember where we would be without ICM - and the year after year of ‘5 year plan’ nonsense we were fed from our own team. Perspective....SB

SJL/SS. Good debate - and good points both. For me this highlights the heart of the problem with mmx - there is frustration and a lack of transparency on where our gtld revenue actually comes from - adult domains aside. Yes we are in transition - again - have been for 3+ years - and it will take some time to reach a normal trading year. The legacy of bad deals continues to hurt. I agree that law is a $1m revenue earner / but look at our partner payments. The London settlement removed $1m a year in partner payments - leaving $2m pa - I suspect a lot of that goes the way of our law partner. Law cost $10m - but may not have delivered any profit to mmx. How long do our commercial partnerships last before they can be reviewed / partner payments continues to strip cash - think what a difference it would make without them. That is part of the problem highlighted by SJLs numbers - adult domains don’t have that drag.
The companies historic actions have been so poor it is sometimes difficult to agree on the problems because we see them from different perspectives.
It is difficult to comprehend TF being given any other instruction than to strip the business back to basics and determine a simple pricing and payment regime that delivers strong positive cash flows for distribution. SB

Revenue errors and management incompetence's aside - we are back to status quo with regard to shareholder value. The real board (our II's - represented by Guy and Henry) see the buyback as the way to enhance value by reducing shares. They have and may never support a dividend - its all about capital appreciation. Even a tender offer has been taken off the table. Finncap will presumably be told - within the confines of pricing requirements - pick up as many as you can in the next 6 weeks - and hopefully we will see some uplift in price. Its a form of support, uses cash which quite frankly is not being valued anyway, and does support the message that we are generating cash and the business is ok. It might encourage a bit of speculation - at least we might see some volume activity. SB

Somehow knowing you could sell twenty grand of shares at 3.85p doesn’t help me sleep any better Dr K.....! SB

Troubling times indeed - but the companies reputation is in tatters from years of financial mismanagement - our latest is openly referred to as an ‘accounting scandal’. It is very difficult not be negatively affected by the current valuation - but what else can we do apart from wait to hear from the company when it is in a position to provide any meaningful update - and that needs somehow to reassure its investors that we have a viable and problem free investment case going forward. In the meantime we will continue to see zero interest in our shares and the results of that are in plain sight for everyone. SB

The point I noted was that law domains in this ‘promotion’ are priced at £50 a pop. I know we have not delivered on the anticipated 100k registrations, but we’ve added a few K this year. Law is likely a £1m+ pa element of our portfolio with high renewals and a growing customer base. As you say bakky, it all counts as we start to rebuild some credibility. SB

The info on our web site in relation to our management team does not tie up with that presented at the investor’s day on 6th October or subsequent events. In relation to our board – we have two executive directors – Guy E (Chairman) and Bryan D (CFO); and one non exec (Henry T). None would be classed an independent – so this needs sorting imo.

Our senior management team is now led by Tony F (Interim CEO) and Bryan D (CFO).

The web site then states the remaining team as Deep Shah (Vice president, Finance); Christa Taylor (Chief Marketing Officer); Sheri Falcon (Policy and Counsel); Yuling Huang (General Manager, China); Ben Anderson (COO); Caspar Veltheim (European Sales); Lou Andreozzi (law).

What happened to Solomon Amoako (VP, Channel Management); Roman Prendergast (CTO); or Vaughn Liley (CRO)?

The presentation to investors on 6th October then listed our senior managers as Yuling H (now Global Channel Director); Ben Anderson (COO); John Matson (Americas Channel Director - possible ‘contractor’ given he runs a tech consultancy?); Sheri, Caspar and Deep as is. Christa no longer mentioned.

Hopefully TF will carry out a head count and establish who works for the company and what they do given the previous uncertainties….and then restructure. SB