Domain registrar and e-commerce services business NetRegistry has scaled back on staff and research and development projects to focus on profitability.
The company has been stripped back from 43 to 22 staff to reduce cash-burn rates, and has also put long-term research and development projects on the backburner. Most of the staff made redundant were recently recruited senior executives (such as the company's chief financial officer and public relations director) hired for a planned initial public offering, which has now been abandoned in favour of private funding.
Chief executive Larry Bloch said the company went through extensive cash-burn rates of about $350,000 during both the July and September periods, in tune with the GST and the Olympics respectively, and over the last eight months it has spent around half that amount. With the new structural changes, Bloch said the company is now cash positive.
"We recognised the market wasn't where it was in April, and we're quite comfortable with the decision," he said. "We are still looking at capital raising and have an aggressive growth strategy, but it's not going to be the IPO market."
Instead, Bloch said the company would focus on revenue-gaining areas of the business and seek further private funding.
"I wouldn't go as far as to say that the private investment market is bullish, but there is a general trend in the investment community to move out of high-growth, high-risk investments into more stable investments," he said. "And Venture Capital funds are cashed up with no good investments to put money in."
Domain name registration only accounts for around 30 per cent of NetRegistry's revenues, with the bulk of its income being earnt from value-added services such as e-commerce, hosting and e-mail management.
"The volumes aren't climbing as high as they had in the past, but I believe it is a relatively temporary change until the fundamental benefits of the Internet, based on realistic expectations, are again realised," said Bloch. "We're feeling a lot more comfortable now we have demonstrated the business is profitable."