ICANN has floated the idea of hosting smaller, more focused meetings that eschew tedious PowerPoint presentations and do away with the free cocktail receptions. Seeking to eliminate $10 million from its annual budget, management recently reached out to community leaders to see if they can put their heads together to make ICANN’s public meetings less […]
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ICANN has laid off 33 people, about 7% of its 485 staff, and has raised the specter of increased domain name prices, as it struggles to balance its budget. The job losses are effective today and come “across all functional areas and regions”, acting CEO Sally Costerton wrote. The Org said this evening that it […]
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ICANN is spending millions of dollars more than expected in its current financial year, which it blames mainly on inflation pushing up the price of flights and hotels.
The latest quarterly financial report, for the nine months to March 31, shows ICANN operations spent $112 million in the period, which was $6 million more than it had budgeted for. Funding was $113 million, $3 million more than expected, leading to a total deficit of $3 million.
ICANN said the costs were “driven by higher than planned costs for ICANN78, ICANN 79, community programs, and support of meetings other than ICANN Public meetings… primarily due to inflationary increases to travel and venue costs”.
ICANN 79, which took place in Puerto Rico in March, cost $600,000 more than budget. This was due to higher flight and hotel prices and more sessions than had been planned. ICANN said in February that October’s meeting in Hamburg had come in $900,000 over budget.
Funding for the nine months came in ahead of budget largely due to better-than-expected registrar fees, most likely related to drop-catching registrar Gname’s decision to buy 150 more registrar accreditations last December.
The report, which covers the third quarter of ICANN’s fiscal 2024, also breaks out how much some of the Org’s important projects have cost.
The Grant Program, which launched at the end of the quarter, has cost almost $1.4 million in development and operating expenses since July 2022, about $18,000 over budget. That’s obviously a big chunk of the $10 million ICANN intends to hand out this year, but nothing compared to the auction proceeds fund that the grants come from — that was up $9 million to $226 million since last July based on investment gains.
The Registration Data Request Service, which launched last November, has cost just shy of $2 million to develop and run since December 2022. Compare this to the $100 million a year ICANN had predicted before the ambitions of the original proposed project were massively scaled back.
Overall, ICANN’s financial position is still incredibly healthy. Its total funds under management was up $11 million to $529 million over the nine months due to investment gains.
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ICANN is looking for $8 million of cost savings, $3 million more than it expected a quarter ago, amid gloomy predictions about the domain industry’s likely performance this year.
The Org last week told community members that it’s having to revise its expected revenue down by $3 million to $145 million after it became clear domain sales won’t be as good as previously thought. The new budget is due to be approved by the board this coming weekend.
“ICANN faces an inflation of its costs and also happens to face a lack of inflation of its funding,” CFO Xavier Calvez said on one of two conference calls explaining the changes.
ICANN’s bean counters are now predicting a 4% decline in transaction fees from legacy gTLDs — a line item mostly comprising .com — for ICANN’s fiscal 2025, which begins this July. Back in December, when the first draft of the budget was published, the prediction was for 0% growth.
The grim numbers match Verisign’s own growth story for the rest of the calendar year. Company bosses last week predicted .com/.net to grow at between 0.25% and negative 1.75%, a downwards revision on its guidance in February.
Talking to Verisign and other registries and registrars and looking at the monthly transaction data they file is the main way ICANN formulates its budget predictions.
“We gauged very strong expectations of a contraction in domain name registrations,” ICANN programs director Mukesh Chulani said.
Meanwhile, ICANN estimates transaction fees for new gTLDs will increase 7% in FY25, obviously from a much lower base then legacy, compared to the December estimate of 2% growth.
ICANN was already expecting its funding to miss its spending requirements by $5 million, but that figure is now $8 million. But rather than run ops at a loss, ICANN has instead put this number on a line labelled “Cost Savings Initiatives” in order to present a balanced bottom line.
Where these cost savings might come from doesn’t seem to have been figured out yet, and there’s some community worry that services might be affected by cuts.
There was some talk of finding efficiencies in the travel budget or with contractors, but those budgets are $13 million and $24 million respectively, so any cuts there could be swingeing.
By far the largest expenditure line item is staff, which costs $90 million. But there’s been no change to the expected number of ICANN full-timers in the budget, so layoffs don’t seem to be on the cards just yet.
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