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Description
Intent to Purchase Assets document sample
Document Sample
Instructions
Internationalized Domain Names (IDN) Return on Investment (ROI) Model
This spreadsheet allows you to calculate the approximate economics for sales of Internationalized Domain Name (IDN) registrations. Actual
results may vary and will depend upon many factors including similarity between your forecasted data and your actual data. This model may not
be suitable for all registrars or situations, and return on investment is not guaranteed.
Follow the instructions below. You may wish to print the instruction to make using the model easier. The instructions are also on each sheet as
"comments" (noted with a red mark in the upper right corner of the cell). To view the comment, place your cursor on the cell and the comment will
appear.
Only enter your assumptions in the boxes marked in YELLOW.
This model has data in some of the assumption boxes; this data is for demonstration purposes only. You will want to change the assumptions to
suit your situation.
There are three sheets that contain assumptions in this model:
1. Revenue Assumptions
2. Expense Assumptions
3. Capital Expense (Capex) Assumptions
The "Results" tab contains an income Statement, a Payback Analysis and a Breakeven Analysis based on the assumptions made on the previous
three sheets.
Detailed Instructions:
Revenue Assumptions Tab
STEP I: Channel Forecast
The assumptions in this section will determine the number of IDN registrations that will be sold by the Registrar directly and the number that will be
sold by the Registrar's reseller(s).
Enter the percentage (%) of IDN registrations that will be sold by the Registrar directly. Excel will then calculate the percentage of IDNs sold
A.
by a Registrar's reseller(s).
STEP II: Registration Forecast
The assumptions in this section will determine the registrations of IDNs.
A. Enter your total number of domain names (non-IDN) that you expect at end of year 0 (this year).
B. Enter the total number of IDNs that you expect at the end of year 0 (this year).
C. Enter the expected Renewal Rate (%) for domain names (non--IDN).
D. Enter the expected Renewal Rate (%) for IDNs.
E. Enter the expected growth rate (%) for domain names (non-IDNs).
F. Enter the level of awareness (%) for IDNs among those who have registered other types of domain names.
G. Enter the percentage (%) who intend to purchase IDNs (of those who have registered other types of domain names).
H. Enter the expected replacement rate (%) (the % of IDNs registered instead of other types of domain names).
I. Enter the average number of IDNs registered per customer.
STEP IV: Pricing Forecast
The assumptions in this section will determine the Registrar retail price and the Registrar reseller price. Prices are calculated using the mark-up as
a percentage increase over the wholesale cost so that price = wholesale cost*(1+mark-up%). The Registrar's retail customers and reseller(s) pay
upfront for the term of an IDN.
Enter the Registrar Direct mark-up percentage (%). This is the percentage in which the Registrar marks up an IDN for direct sale to its
A.
customers.
Enter the Registrar Reseller mark-up percentage (%). This is the percentage in which the Registrar marks-up an IDN for sale to its
B.
reseller(s).
C. Enter the length (in years) for the Average Registration term.
Expense Assumptions Tab
STEP I: Cost of Good Sold
The assumptions in this section reflect the estimated cost of good sold.
Enter the estimated cost of goods sold (as a % of total revenue) for fulfillment and delivery. Do not include the wholesale costs of IDNs due
A.
to VeriSign.
VeriSign Global Registry Services edd39c1f-149b-4028-8e41-9b71cbc8ead5.xls Page 1
Instructions
STEP II: Sales/Marketing
The assumptions in this section reflect the estimated costs for the sales and marketing efforts, including direct marketing, sales lead generation,
marketing events, etc.
A. Enter the estimated amount ($) for sales and marketing for IDN.
STEP III: Headcount
The assumptions in this section reflect the estimated costs for employees.
A. Enter the number of staff in different functions will be required to manage the IDN business. Use full-time equivalents (FTEs).
Enter an estimated "fully loaded" cost per FTE per month (salary, bonus, taxes, insurance, workspace, individual office equipment and other
B.
directly associated costs).
STEP IV: Other General and Administrative Expenses
The assumptions in this section reflect the estimated costs for other general and administrative expenses not captured elsewhere in the model.
Enter the estimate cost of annual maintenance associated with the registration system and/or other capital assets. Use a percentage (%) of
A.
the initial value of these assets.
B. Enter any additional costs not included elsewhere. Use a percentage (%) of the overall total costs.
Capital Expense (Capex) Assumptions Tab
STEP I: Capital Expenditures
The assumptions in this section reflect the estimated capital expenditures and depreciation information.
A. Enter the estimated amounts ($) for capital expenditures.
B. Enter the number of years over which these assets will depreciated.
Results Tab
STEP I: Income Statement
This section displays the Income Statement for the Registrar based on the assumptions entered on the previous sheets.
STEP II: Cash Flow and Payback Analysis
This section displays the Cash Flow and Payback Analysis for the Registrar based on the assumptions entered on the previous sheets. Payback is
indicated by the first month displayed in blue.
STEP III: Breakeven Analysis
This section calculates the breakeven point in units sold.
A. Use "Goal Seek" to calculate an approximate break even point in units sold or enter estimated units sold in cell C57 (Units to Sell to Break
KEY:
IDN: Internationalized Domain Name
NOTE: This model is greatly simplified and is only as accurate as the assumptions that are made.
Updated: January 24, 2002
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VeriSign Confidential Revenue Assumptions
Registrar Revenue Assumptions
I. Channel Forecast
A. Registrations by channel
% sold through Registrar directly: 50%
% sold through reseller(s): 50%
II. Registration Forecast
Now
Domain Name Growth Year 0 Year 1 Year 2 Year 3
A. Total Domain Names 100,000
B. Total IDNs 25,000
C. Domain Name renewal rate 60% 60% 60%
D. IDN renewal rate 60% 60% 60%
E. Annual growth rate for new Domain Names 10% 12% 15%
F. Awareness of IDN among Registrants of other Domain Names 50% 65% 80%
G. Intent to purchase 16% 18% 20%
IDNs Replacing Other Domain Names
H. Other Domain Name replacement rate 4% 4% 4%
New Growth (IDNs) 96% 96% 96%
IDNs per Customer
I. IDNs per customer (avg. number purchased) 1.0 3.0 2.0
IDN Registrations
Year 1 Year 2 Year 3
Addressable Domain Name Market
Beginning of year Domain Name Total 100,000 70,000 50,400
Renewal Domain Names 60,000 42,000 30,240
New Domain Names (added) 10,000 8,400 7,560
Base level Domain Names 70,000 50,400 37,800
Awareness of IDN among ASCII.ASCII Domain Name Registrants 35,000 32,760 30,240
Intent to purchase 5,600 5,897 6,048
New IDNs registered 5,600 17,690 12,096
Replacement of ASCII Base 224 708 484
New Growth (IDNs) 5,376 16,983 11,612
IDN renewals 15,000 12,360 18,030
Total IDN registrations and renewals 20,600 30,050 30,126
Total Revenue $ 370,800 $ 540,907 $ 542,272
III. Pricing Forecast
Sales Pricing
A. Registrar Direct Mark-up%: 300%
B. Registrar Reseller Mark-up%: 100%
C. Average Registration Term Length 1.00
D. Wholesale cost per IDN per year $6.00
Wholesale Cost $ 6.00
Registrar Direct Retail Price $ 24.00
Registrar Reseller Price $ 12.00
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Expense Assumptions
Registrar Expense Assumptions
Year 1 Year 2 Year 3
I. Cost of Goods Sold
Total
IDN Wholesale Cost $ 123,600 $ 180,302 $ 180,757 $ 484,660
Total IDN Wholesale Cost $ 123,600 $ 180,302 $ 180,757 $ 484,660
A. Other Cost of Good Sold (% of total revenue) 5% $ 18,540 $ 27,045 $ 27,114 $ 72,699
II: Sales/Marketing
A. Marketing $ 15,000 $ 15,000 $ 15,000 $ 45,000
III. Headcount
(Full time equivalent)
A. Sales and Marketing FTEs 0.25
Technical FTEs 0.25
Operations FTE 0.15
Customer Support FTE 0.25
Management FTE 0.10
Total FTEs 1.00 - -
Cumulative FTEs 1.00 1.00 1.00
B. Average Total Cost per FTE $ 50,000 Total
Headcount Total Cost $ 50,000 $ 50,000 $ 50,000 $ 150,000
IV. Other General & Admin Expenses
Total
A. Annual Maintenance as % Capex 10% $ - $ - $ - $ -
B. % of overall cost base 1% $ 2,071 $ 2,723 $ 2,729 $ 7,524
VeriSign Global Registry Services edd39c1f-149b-4028-8e41-9b71cbc8ead5.xls Page 4
Capital Expenditure Assumptions
Registrar Capital Expenditures (Capex)
A. B.
Annual
Total investment Depreciated
Item Depreciation Year 1 Year 2 Year 3
($) over # years
Expense
Software 5 $ - $ - $ - $ -
Hardware 5 $ - $ - $ - $ -
Other 5 $ - $ - $ - $ -
Other 5 $ - $ - $ - $ -
Other 5 $ - $ - $ - $ -
TOTAL $0 Total Capex Expense $0 $0 $0
VeriSign Global Registry Services edd39c1f-149b-4028-8e41-9b71cbc8ead5.xls Page 5
Results
Income Statement, Payback Analysis, Market Comparison and Breakeven Analysis
I. Income Statement
Year 1 Year 2 Year 3 Program Total
Revenues
IDN Direct Sales $ 247,200 $ 360,605 $ 361,515 $ 969,320
IDN Reseller Sales $ 123,600 $ 180,302 $ 180,757 $ 484,660
TOTAL REVENUES $ 370,800 $ 540,907 $ 542,272 $ 1,453,980
Cost of Goods Sold $ 142,140 $ 207,348 $ 207,871 $ 557,359
Sales and Marketing $ 15,000 $ 15,000 $ 15,000 $ 45,000
Headcount $ 50,000 $ 50,000 $ 50,000 $ 150,000
Other G&A $ 2,071 $ 2,723 $ 2,729 $ 7,524
TOTAL EXPENSES $ 209,211 $ 275,071 $ 275,600 $ 759,882
OPERATING PROFIT $ 161,589 $ 265,836 $ 266,673 $ 694,097
Depreciation Expense $ - $ - $ - $ -
Interest Expense $ - $ - $ - $ -
NET INCOME $ 161,589 $ 265,836 $ 266,673 $ 694,097
II. Cash Flow and Payback Analysis
Cash Inflows $ 370,800 $ 540,907 $ 542,272
Cash Outflows $ (209,211) $ (275,071) $ (275,600)
NET CASH FLOW $ 161,589 $ 265,836 $ 266,673
PAYBACK ANALYSIS $ 161,589 $ 427,425 $ 694,097
III. Breakeven Analysis
Average Selling Price $ 18
Average COGS $ 7
Average Investment + Expenses $ 202,524
Average Gross Margin $ 202,524
Difference $ -
Units to Sell to Breakeven 18,245
Use "Goal Seek" to determine the average number of units that need to be sold to breakeven.
1. Under "Tools" Menu, select "Goal Seek"
2. Enter the following into the "Goal Seek" dialog box:
Set cell: $C55
To value: 0
By changing cell: $C$57
3. Click "OK"
4. "Goal Seek" will display the results.
5. Click "OK" if you want to change the spreadsheet with the results of the "Goal
Seek" calculation or click "Cancel" to leave the spreadsheet as it was before you
used the "Goal Seek" tool.
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