Business Case Builder: Step 3
3. VIEW THE RESULTS
At the click of a button, the demand model will calculate the entire suite of essential facts and figures required to calculate monthly cash sales,monthly accounting sales, Deferred Revenue, Cost of goods sold and Gross Margin by accounting sales or by cash sales basis. The user can choose to view a very detailed domain revenue & COGS calculation or an executive summary domains Revenue & COGS calculation.
In a matter of seconds the user has their entire domain revenue, Cost of Revenue, Gross Margin and Deferred Revenue calculations at their fingertips. Without the benefit of this tool the user would spend weeks trying to research the rules of domain revenue & cost recognition and even more developing a forecast model to work it out. By leaving this specialist job to the “A” team, the user can redirect their time into value-added activities like industry benchmarking and financial analysis rather than “number crunching”.
Table 3 & Table 4 show the high level view of the demand model. A running total of the domains under administration is displayed on a month-by-month basis from your chosen launch date to as far out as 2025, split into new creates, renewals and even deletes by month This is key information on the growth of the potential domain franchise and because it deals with volume only allows the user to compare their forecast performance with other TLD launches of the past. The model also discloses the relevant domain years sold each month (see Table 3)
Table 3 (click the image to view larger): Demand Model summary section 1
Table 4 (click the image to view larger): Demand Model summary Section 2
Table 4 illustrates the key Revenue figures which are output instantaneously. The user can cash sales AND accounting sales on a month by month basis out to 2025. Once the user decides when the launch date is for Sunrise,Landrush & General Registration the demand model calculates every material figure and organises the data in a simplified view so as not to overwhelm with detail. Table 4 also displays the Deferred Revenue Movements which are essential for accurate Balance sheets.
Architelos have designed the model in a cascade fashion so that the user can seemlessly view figures for one launch phase (Sunrise) or for the entire Group. Table 5 illustrates the Demand Model for the General Registration phase only and the user flips between seeing the figures for Sunrise,Landrush, Premium Names or the entire group by changing plan from another drop-down menu – Clever design by industry experts who fully understand how financial information needs to be presented and “flipped” for many different views of the same information.
Table 5 (click the image to view larger): Viewing financial highlights for General Registration only and how we flip to other launch phases or view group results
At the click of another button, the user is presented with a Revenue,COGS & Gross Margin on a cash sales basis OR accounting sales basis. See Table 6 & 7 for both views.
Table 6 (click the image to view larger): Revenue, COGS and Gross Margin on a cash sales basis
Table 7 (click the image to view larger): Revenue, COGS & Gross Margin on a deferred revenue basis
The demand model was built by domain industry experts and designed to “demystify” the complicated world of domain industry accounting by presenting it in a simple matter and leaving all the complicated calculations hidden in the background. For detail junkies there is the ability to drill down to the minute of each micro calculation by running canned reports and by viewing the details which is readily available
The GOOD STUFF
Architelos have designed a best of breed demand model tool that takes the pain out of calculating domain revenue and costs on a deferred or cash basis. The end user is empowered to spend their time of analysing results rather than number crunching them. However we didn’t stop there!!
The demand model has a built in performance dashboard that allows the user to visually view the results of their financial planning benchmarked against incumbent domain performers. Imagine you are input the assumptions and domain volumes for your new applicant TLD into our model. Almost immediately you can view the high-level financial results for Revenue,COGS & Margin. Now at the touch of one more button you can view the main KPI’s and assess how it stacks up against .com.net.
Table 8 (click the image to view larger): Average Life Gauge
Table 9 (click the image to view larger): Renewal rate versus industry
Table 8 & Table 9 are examples of two graphs designed by Architelos and automatically available with the demand model. The “A team “ have complied all the essential KPI’s of the main incumbent TLD’s and are have designed graphs that compare the results of your inputs in the demand model against the industry. This empowers your management team to make better informed timely decisions on the future of your new TLD by constantly allowing you to compare the financial planning of your application against the industry standards. Architelos are available to help interpret the results of this industry benchmarking and will assist you tweak your business plans to optimise your results.
Architelos developed the demand model as a individual component of a overall solution to new TLD applicants. The demand model can be used as a stand-alone solution or can be bundled with financial forecasting consultancy services. All of our team have worked in senior financial capacity in Top Level Domains that have been through the launch cycle.
Some users may simply want a quick and reliable solution to calculating their Revenue and Cost of Goods on the twin cash and deferred Revene basis. Our demand model is ideal for their needs. In 2 minutes the user can input key assumptions and domain volumes and instantaneously they can view their cash sales, Accounting sales, Cost of Sales (Service Provider fees & ICANN fees, Gross margin on a cash and accounting basis, domains under administration and full deferred revenue calculations. The user could then journal these key figures into their existing forecasting model if appropriate.
Alternatively, Architelos can be engaged to build a fully customised forecasting model for the client. Architelos has a team of senior financial professionals with deep experience of financial planning in the domain industry. Architelos would collaborate closely with the clients senior management and agree on the required structure of a financial plan. Using the demand model as its base, our team would design a budget model with detailed Profit&Loss, Balance Sheet, cashflows and KPI dashboard to the clients specification.
All of this indept financial planning will take 2 minutes to input and then you will have all the essential financial information you require for accurate Revenue Forecasting for the domain industry without spending weeks crunching numbers and worrying about accuracy.
If you would like to find out how we help, please contact Architelos.
