Google changes hit the company hard in Q3 after strong start to the year.
Earlier this week, IONOS (IOS.F) announced that it plans to sell its Sedo unit.
The reason was quite clear to industry observers: the traffic arbitrage business Sedo has relied on for much of its revenue in recent years was severely impacted by Google’s (NASDAQ: GOOG) winddown of AdSense for Domains.
Data published by the company shows that Sedo’s revenue fell 66% year over year in Q3. In Q3 2024, it reported €80.2 million in revenue. Last quarter, just €27.5 million.
It’s a significant reversal from the first half of the year, when Sedo’s revenue grew 73% year over year.
For a moment, it seemed like Sedo had managed the transition from AdSense for Domains to Related Ads for Content (RSOC) well. But two things happened last quarter.
First, Google opted-out the final batch of advertisers that were in the Domains program. Other parking companies had reported only modest revenue declines until that last batch.
While Sedo had transitioned many arbitrage companies to the RSOC product, it still relied heavily on the Domains product, especially for the millions of non-arbitrage domains parked on its platform.
Second, Google made policy changes to its RSOC product that likely impacted Sedo.
The precipitous decline in revenue hit the company hard. Sedo managed to almost break even on an EBITDA basis, thanks in part to its stable domain aftermarket business. However, some of the Google changes occurred mid-quarter, so the business has likely deteriorated further.
By putting the unit up for sale, IONOS can remove the impact from its overall reporting and push the decline into a “Discontinued Operations” line item.
Source: https://domainnamewire.com/
