Nominet has found itself out of pocket to the tune of $23.5 million after selling its CyGlass network security business for a dollar.
Chair Andrew Green told members last week that the .uk registry sold CyGlass to a group of its employees for the nominal sum after deciding to divest itself of non-core businesses. He said in an email:
As our involvement in CyGlass is now at an end, I am in a position to share the approximate cost of the unsuccessful investment in CyGlass with members. In addition to the $6.3m cost of purchase, Nominet invested around $16.0m in supporting the ongoing running cost of the business. Costs associated with closure will be c$1.2m – approximately equivalent to continuing to support the business for a further two months. That totals c$23.5m. Converting back to GBP over a relatively long period is complex, but the total cost over 2+ years is approximately £18m.
At the time it was sold, it was costing Nominet $600,000 a month to keep CyGlass running, he said.
The strategy of diversification from the core registry business was made under previous management and ultimately was partly the cause of last year’s boardroom bloodbath that eventually led to Green’s appointment on a back-to-basics platform.
Green told members that CyGlass “struggled as a result of changing work patterns following the Covid pandemic”, adding:
While there has been continuing interest in the offering from customers, the pipeline of opportunities has been slow in converting to new long-term customers. As a result Annual Recurring Revenue – a key driver of investor interest – has been growing imperceptibly
Now independent, CyGlass recently told the security trade press it is seeking partnerships to drive growth.
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