May 9, 2014 Last Updated 8:49 am

Demand Media reports lower revenue, small loss in Q1

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

Press Release:

SANTA MONICA, Calif. – May 8, 2014 — Demand Media, Inc., 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.”

Demand-Q1-2014

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.

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