OnlineDomain.com Domain Name News & Opinions
- Revenue ex-TAC of $87.4 Million and Adjusted EBITDA of $11.5 Million
- Registrar Revenue Increases 11% Year-over-Year to $39.1 Million
- 13 New gTLDs Launched and 29 New gTLD Registry Operator Agreements Signed to Date
SANTA MONICA, Calif.–(BUSINESS WIRE)– Demand Media, Inc. (NYSE: DMD), a leading digital content & media and domain name services company, today reported financial results for the first quarter ended March 31, 2014.
“The first quarter was highlighted by the launch of our first new gTLDs and accelerating momentum in the overall marketplace of gTLDs,” said Shawn Colo , Interim CEO of Demand Media. “Additionally, during the quarter we took important steps to strengthen our owned and operated media brands through product and content enhancements.”
| Financial Summary | ||||||
| (In millions, except per share amounts) | ||||||
| Three months ended,March 31, | ||||||
| 2014 | 2013 | |||||
| Total revenue | $ | 89.8 | $ | 100.6 | ||
| Content & Media revenue ex-TAC(1) | $ | 48.3 | $ | 59.9 | ||
| Registrar revenue | 39.1 | 35.3 | ||||
| Total revenue ex-TAC(1) | $ | 87.4 | $ | 95.2 | ||
| Income (loss) from operations | $ | (13.9 | ) | $ | 1.3 | |
| Adjusted EBITDA(1) | $ | 11.5 | $ | 25.4 | ||
| Net income (loss) | $ | (11.0 | ) | $ | 0.7 | |
| Adjusted net income (loss)(1) | $ | (0.6 | ) | $ | 8.2 | |
| EPS – diluted | $ | (0.12 | ) | $ | 0.01 | |
| Adjusted EPS(1) | $ | (0.01 | ) | $ | 0.09 | |
| Cash flow from operations | $ | 5.7 | $ | 26.8 | ||
| Free cash flow(1) | $ | 2.0 | $ | 18.6 | ||
| (1) | These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables. | ||
Q1 2014 Financial Summary:
- Total revenue ex-TAC declined 8% year-over-year, with 11% year-over-year growth in Registrar revenue offset by a 19% decline in Content & Media revenue ex-TAC. Excluding the acquisition of Society6, total revenue ex-TAC decreased 15%.
- Registrar revenue grew 11% year-over-year, primarily due to growth in Name.com domains under management.
- Owned & Operated revenue declined 18%, driven primarily by lower traffic to key properties and the strategic shift away from higher CPM direct sold display advertising sales, partially offset by revenue of $6.7 million from Society6. Excluding the acquisition of Society6, which was acquired at the end of Q2 2013, Owned & Operated revenue decreased 32%.
- Network revenue ex-TAC declined 27% due to lower revenue from our domain monetization and Pluck social tools businesses, offset partially by 33% growth in our Content Solutions business.
- Adjusted EBITDA decreased 55% year-over-year, primarily reflecting the negative impact from traffic declines on high-margin revenues and a mix shift to lower margin commerce and Registrar revenue.
“Our results in the first quarter were in line with our expectations, and we remain optimistic about our long term opportunities. We are focused on making targeted investments to reaccelerate revenue growth and increase shareholder value,” said Demand Media’s CFO Mel Tang . “Additionally, we are preparing for and are on track to complete the separation of the business into two standalone companies this summer.”
Business Highlights:
Content & Media:
- March 2014 US and Worldwide comScore Rankings:
- On a consolidated basis, Demand Media ranked as the #21 US web property and Demand Media’s properties reached more than 80 million unique users worldwide.
- eHow.com ranked as the #31 website in the US and reached more than 46 million unique users worldwide.
- Livestrong/eHow Health ranked as the #3 Health property in the US, with more than 17 million unique users worldwide.
- CollegeHumor/Cracked Network ranked as the #2 Humor property in the US, with more than 15 million unique users worldwide. Cracked.com itself had more than 6 million unique users worldwide.
- During Q1 2014, Society6 membership grew to over 550,000, a 114% year-over-year increase from a year ago. Additionally, image uploads increased 35% year-over-year, and there are now more than 1 million unique designs available on the site.
Domain Name Services:
- Rightside has signed 29 registry operator agreements with ICANN to date, and we have an interest in over 80 applications or registry operator agreements. Seven of our extensions, including .ninja, .reviews and .social are currently in “landrush” phase and six of our extensions, including .consulting, .actor and .pub, are currently in their “sunrise” launch phases.
- Our owned and operated registrar channels offer the broadest selection of new gTLDs as we now distribute 156 of the 165 new gTLD extensions. To date, businesses and consumers have registered over 80,000 new gTLD domains at eNom and Name.com, making us one of the largest distributors of new gTLDs.
- Our back-end registry platform now powers over 100 of the 165 new gTLDs and has processed almost 500,000 new gTLD domain registrations to date.
Operating Metrics:
| Three months ended,March 31, | ||||||||||||||||||||
| 2014 | 2013 | % Change | ||||||||||||||||||
| Content & Media Metrics: | ||||||||||||||||||||
| Owned & operated | ||||||||||||||||||||
| Page views(1) (in millions) | 4,599 | 3,780 | 22 | % | ||||||||||||||||
| RPM(2) | $ | 8.86 | $ | 13.15 | (33 | )% | ||||||||||||||
| Network of customer websites | ||||||||||||||||||||
| Page views(1) (in millions) | 1,849 | 4,867 | (62 | )% | ||||||||||||||||
| RPM(2) | $ | 5.34 | $ | 3.20 | 67 | % | ||||||||||||||
| RPM ex-TAC(3) | $ | 4.07 | $ | 2.09 | 95 | % | ||||||||||||||
| Registrar Metrics: | ||||||||||||||||||||
| End of Period # of Domains(4) (in millions) | 15.4 | 14.0 | 10 | % | ||||||||||||||||
| Average Revenue per Domain(5) | $ | 10.32 | $ | 10.22 | 1 | % | ||||||||||||||
| (1) | Page views represent the total number of web pages viewed across (a) our owned and operated websites and/or (b) our network of customer websites, to the extent that the viewed customer web pages host our monetization, social media and/or content services. | ||
| (2) | RPM is defined as Content & Media revenue per one thousand page views. | ||
| (3) | RPM ex-TAC is defined as Content & Media revenue ex-TAC per one thousand page views. | ||
| (4) | A domain is defined as an individual domain name registered by a third-party customer on our platform for which we have begun to recognize revenue. | ||
| (5) | Average revenue per domain is calculated by dividing Registrar revenue for a period by the average number of domains registered in that period. Average revenue per domain for partial year periods is annualized. | ||
Q1 2014 Operating Metrics:
- Owned & Operated page views increased 22% year-over-year to 4.6 billion, driven primarily by mobile page view growth on our core Owned & Operated sites, which more than offset the continuing impact of the traffic declines we experienced in the second half of 2013. Owned & Operated RPM decreased 33% year-over-year, reflecting the mix shift to lower yielding mobile page views as well as a strategic shift away from higher CPM direct display advertising, offset partially by revenue generated by Society6.
- Network page views decreased 62% year-over-year to 1.8 billion, reflecting the Company’s decision in Q3 2013 to reduce the number of network partner sites we represent as part of our Indieclick network. Network RPM ex-TAC increased 95% year-over-year, reflecting the removal of lower monetizing page views from the Indieclick network.
- End of period domains increased 10% year-over-year to 15.4 million, driven by growth in Name.com.
