Member Info for Silverblade

$500 not $500k. lol. SB

bakky - do you reckon we could average $500k per block as per the 2000 sold in late 2019? 20,000 would be significant income - and is it your belief that is an annual cost - i thought that was the case but that would seem a potential goldmine? SB

Totally agree Hucks. I think there are quite a few of us on the same page – bakky, SS, Norrab, Mole, Macc – even YHAL - included. History shows us what happens to CEO’s (and owners!) who step out of line (FK and AVC) – so I think Toby is doing what he can within the limits of II control. Years 1 to 4 of the ‘plan’ have been grim so far – but you can almost start to see how we could have turned the corner. It’s disappointing that Covid appears to have been used to postpone any dividend – but looks like there was never any real commitment to it anyway. Maybe next year will bear some fruit! SB

I’m not qualified to give any advice – each of us has their own decision to make here. For what its worth (and I get the sense this is shared with others here) we have known for some time the company is being restructured at both operational and commercial levels. I think there is likely a difference of opinion between our senior management team (Toby and Michael) and our major shareholders – represented by Henry T and Guy E on the board. That difference of opinion probably centres on short term returns v medium term capital appreciation. Hence the position on the dividend. What is common to all parties is the desire to make a profit – its just down to how this is achieved. Over 60% of our business is in the hands of major shareholders – and we have to accept they are calling the shots. mmx’s group business is based in the British Virgin Isles tax haven for a reason. Toby himself registered a company to hold his share options – probably for similar reasons – it is not a UK based company. This all supports a future sale as the way in which large shareholders and management make their return – nothing new here.

That aside - if the company was to distribute 50% of its free cash flow (i.e. 2 x cover) next year, and lets assume that's $3.5m (c. £2.8m) , that would be a 5% yield based on current share price and assuming all tender options are taken up – i.e. we would have about 860m shares in circulation. That would likely attract investors and should lead to an increase in the share price – a 3% return would give a price of 10p and is not unrealistic. Not great, but a lot better than present.

I’m staying put – and whether I tender any shares is dependent on whether I can make a bit of margin between the offer price and the current share price – as I’ll probably end up buying back in again – I can see a way in which 2021 could be a strong year without too much effort tbh. SB

So there we have it.

Headline reported numbers were as expected – no surprises there – lack of brokered sales primary reason.

As usual lots of high % growth stats being used – which often mask actual revenue performance. Disappointingly our renewal revenues are down to $5.6m from $6.0m – missing the previously announced target to cover 100% of all costs by now.

The $1m in anticipated cost savings in 2021 over 2020 is ok - the reduction in partner payments from the settlement of london is clearly helping 2020 already. However, overheads and COG’s have both increased this half – overall costs c$6.2m in H1 (a small element of which is non-recurring).

75% of the way though our year and our broker is still unable to provide any guidance moving forward – this seems bizarre.

We still have $13m in deferred revenue i.e. money owed to the company in future years. This seems very high imo and may reflect highly incentivized sales deals with some potential risk around future recovery.

Not a single mention of the dividend word, 5 year plan or Q3 trading. Again – bizarre. No director options awarded yet; although continued accruals ($300K) for the cost of management options.

As for the tender return – I guess we probably saw it coming – there is simply no motivation to provide shareholders with an actual return. The tender return is basically another buyback – albeit at a premium to the current low share price. This way any ‘distributions’ are looking to reduce shares in circulation and increase earnings per share. £3m at 7.5p (a 20% premium to the current price) would take out 40m shares (interesting to see if any II's take part) – or 4.5% of current shares.

Interesting reference to distributing 50% of the ‘Free Cash Flow’ in 2021 and beyond – which in H1 2020 was $1.9m. Last years FCF as -$0.7m……but we did have some large cash outflows (ie $5.1m london, $3m loan repayment). Question is – is this a real distribution (dividend) or more buybacks. FCF should be $6/7m+ in 2021 imo.

We have known it for some time – but for me these results confirm that our II’s are in clear control of the business and continue to shape the business for a future sale. Like it or lump it.

Not exactly a vinegar day. Onto 2021 methinks. SB

Sunday - as long as its business as usual the company would be in a position to pay a reasonable interim dividend - in the range 0.1 to 0.15p imo. Interestingly in H1 2019 we paid $1.5m in partner payments ($2.8m full year). These may or may not relate to .london. If they do – and that contract was effectively bought out in late 2019 through the $5.1m settlement – then we should see a significant reduction in partner payments – which would have a healthy impact on profitability. Unless the previous payment provisions were treated as liabilities in which case we should see an increase in net assets following the payment. I would rather it was the former. Will have a look in the morning. Maybe there will be a tender offer - stranger things have happened! Not exactly a flurry of activity today……..fingers crossed for a good day tomorrow – we deserve it. SB

Morning Hucks. And here was me thinking nothing could surprise me on this BB – and you bring up the vinegar stroke. Not a phrase commonly used in Scotland I have to say….at least I’ve learnt something new today. I think what toby is saying is that it will take 5 years to create the annuity business we are now morphing into – which is to replace all one-off, premium, brokered, volume (discounted) sales with regular, predictable sales and renewals across a broad global portfolio with no over exposure in certain markets – and that 2021 is the year we will be back in full growth mode following 4 years of crashing along the way with all the commercial issues which required to be dealt with. Let’s hope tomorrow provides us with the confidence that we are finally moving to an investment proposition which is attractive to the market and is recognized with an improving share price – or preferably a takeout at a decent price – now that really would be a vinegar day! SB

I will be interested in the fincapp update - as poor as it has been in the past - surely this time there will be a degree of accuracy aligned to a Q3 update - with some indication on our product innovations starting to flow some revenue. If revenue is down and costs are up - Toby is going to find it difficult to be quite so positive as in July. But with an analyst meeting and another meet the company investor event to come - we could just about, perhaps and maybe have some decent news on the horizon!! SB

To be honest bakky I’m not really sure what to be expect - I guess we know a worst case revenue prediction which could mean a $0.5m hit on profits / and what profit was left was spent on the H1 buyback. The unknown is the return - and the impact on the share price either way.....hence the buckle up! SB

Results are on wed....buckle up. SB

Fair points huck. You are correct in that it’s not about panicking – but we have become a forgotten investment backwater – and far too often we have been let down through a decade of some completely unrealistic commercial arrangements with our partners. If ever there was a one step forward, two steps back story – mmx is it. One of the things I will be looking at is the often-misleading use of billings v revenue to illustrate growth – with %’s used instead of actual $. This makes direct comparisons with previous performance difficult – I would not go as far as to say its deliberate – but it does assist to mask performance where used. I also do not like the way management options were moved away from share price (market cap) targets to cash generation. We are now overdue an update on this year’s award – and the cost (albeit non cash) impact to this year’s business. Other issues which are important to review are our ever increasing partner payments and the cost of sales, and of course our overhead – but nothing new there. I hope you are correct in that our average revenue per domain is increasing – but as we know the majority of our domains are still sub $5 – so we do need to replace low earners with higher revenue sales. Cue high end sales team…..bakky that's your starter for ten! SB

Based on prior years, we can expect an RNS this week - possibly even tomorrow. It is usual good practice to alert the market when to expect such news - not sure why we don't follow this approach. Based on what has happened in the last three weeks - spike to 7.5p to 5.8p (and we were at 5.9p on Friday before the markets tanked today) - that's £15m wiped off the market value. Despite the upbeat views of our management team it is difficult to reconcile the position we find ourselves in as shareholders and the story on how successful the business is in looking to generate shareholder value. Bigger eyes than ours must be looking at the position and asking the same questions. Lets hope whatever comes out this week/next - there are no more legacy issues falling out the cupboard - and there is some attempt to stimulate the market. SB

Hucks - I think we are talking about the same issues - % bingo! Maybe me and you need to attend bakky's mmx positivity self help group.....seems to be working wonders! SB

VIP aside (which yes does appear to be falling over but lets be optimistic and assume there is a larger decline in renewals in lower cost strings and we did surge over the last 12/18 months) - part of the issue we have continues to be smoke and mirrors with numbers. Its all great and well saying our renewals are up from 60% to 66% on billings - but why not just tell us the $$ number (which isn't actually very much....) And why do we not just stop referring to billings and use actual revenue instead for headline announcements. And what happened to the great breakover point at which renewals cover 100% of all costs - we seem to have forgotten about that KPI. SB

Loving the optimism bakky! Lets see how those words translate into hard numbers. Revenue, overheads, CoG's, partner payments, ebitda, PBT, eps, cash, dividend etc. SB

I would have said that's a great price to be in at - and in reality it should be given where we all think where the share price should be. I think the results next week could go either way - the board need to think about the here and now - and not just glaze over H1's likely underperformance with a view to 2021 being all great. That said, maybe we'll get some actual good news for a change. SB

Look on the bright side Scotty - I don't know your purchase price - but I hope you would have been able to get out without posting a loss if you had sold at 7p+ . Quite a few here have been holding a long time and would need a decent increase to walk away without taking a rather large bath.....SB

Ironic you chose that word bakky - given mmx want the business wanted to be valued on fundamentals not the s word...….!! Agreed - its a bad time at the moment. Not sure what else there is to say. SB

We started our five-year plan in 2016 and entered the year with revenue of $6m and cash of $35m, a share price of 8.4p and a market cap of £65m. (770 shares in issue). CNIC started 2016 with revenue of £10m, cash of £19m, a share price of 48.5p and a market cap of £44m (92m shares in issue).

4 years in and one earnings enhancing acquisition later mmx has likely 2020 revenue of c.$18m, $8/9m (?) cash, no debt, a share price of 6.5p and a market cap of £58m (902m shares in issue – so a 17% dilution from 2016). CNIC have made 12 acquisitions, likely revenue of $220m (before the latest purchase adds another $60m), $76m net debt, a share price of 82p and a market cap of £156m (192m shares in issue so a 110% dilution from 2016 – prior to the additional 40m shares which will be issued on 30th Sept for their latest purchase taking dilution up to 150% – adding another £30m to their market cap).

Appreciate this is just a snap shot – and does not mention the business issues we have had to deal with – but given we started 2016 relatively comparable – 4 years later the businesses are very different, and supports the ongoing concerns we have about delivering shareholder value at mmx. SB

That’s acquisition number 12 for our fellow domainers at CNIC. No more debt being added this time - but a big share issue looming to fund purchase. Takes their pro rata revenue to c.$300m. Continuing to deliver on their plan and management team showing real aspirations in their market. Good thing we’re not getting involved in such excitement eh. SB