Nominet to restructure, slash jobs after losing 'major deal'

Prices also set to rise after being frozen since 2020

Nominet is cutting staff on the back of market pressure, including the loss of a government cyber contract and is considering a domain registration price increase, according to an update from its CEO.

In his message to members, seen by The Register, Paul Fletcher did not elaborate on where the cuts would be, only that "up to 70 of our current roles could be made redundant."

Fletcher said he hopes the proposed reductions would be partially offset by redeployment but added that "our overall headcount will reduce."

At present, Nominet's headcount stands at 315. Even considering redeployment, that reduction looks like it is going to sting.

Nominet's woes were caused by market pressures, including the loss of a contract with UK government over provision of the Protective Domain Name Service (PDNS). The contract, estimated to be valued at £30 million ($38.8 million), is set to expire later in 2024.

Fletcher told members:

"We have consistently received positive feedback about our delivery of the PDNS service, and the impact it continues to have preventing cyber attacks on public services. However, we do not expect to be providing this service after our contract ends later this year. As we are bound by contractual commitments, we are unable to say more, but will do so when we can."

In its profit and loss accounts for the year ended March 31, 2023, Nominet said the PDNS handled "over half a trillion DNS queries over the last year, growing 29 percent. This resulted in 11 billion DNS queries being blocked for 420,000 domains."

The cyber business generated £12.6 million in revenue, down from £12.7 million, with the overall group recording an operating profit before impairment and social impact of £8.1 million. The cyber deficit for year, meanwhile, was recorded at £2.4 million, with a net loss for the year of £3.9 million.

According to Fletcher's memo, the goal of reaching "profitability" with the cyber biz was to "compensate for static or reduced demand for domains in future.

"Market pressures are squeezing margins, and competitors are pricing keenly to secure business. The viability of this income stream in the longer term depends on us being able to offer a service at a lower price while still being profitable. We are currently evaluating options open to us and will keep members updated."

All of which means that the company is looking to make up the shortfall elsewhere. Hence, a "hiring freeze", a "review of any discretionary spending", and, of course, the job cuts.

There is another lever the domain registrar can pull - wholesale domain pricing, which Nominet plans to maintain at the current level of £3.90 "until at least the end of the year."

"However, the combination of flat revenues, inflation and need for ongoing investment to ensure services for members remain world class means prices cannot be held at the level set in January 2020 indefinitely."

A Nominet spokesperson told The Register: "The loss of a major contract means we need to position ourselves accordingly to ensure we have the right people in the right place and are resourced accordingly."

The final numbers have yet to be confirmed, the spokesperson added.

Nominet said no decision on pricing has yet been taken. However, the company told us, "We did point out that this situation would not continue indefinitely."

Still, there was some light among the gloom at the company. While the PDNS contract is ending, Nominet has won a recent tender to provide DNS services to support the NHS digital estate for the next three years. It also recently secured a deal to support Assuming there are enough staff left to do the work. ®

Editor's note: This article was updated after publication to include the overall losses incurred by Nominet and its cybersecurity wing.

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