Demand Media sees total revenue decline 26%, but losses are cut
Total revenue declined due to a 41% decline in Content & Media revenue partially offset by a 59% increase in Marketplaces
SANTA MONICA, Calif.– May 6, 2015 — Demand Media, Inc., a diversified Internet company, today reported financial results for the first quarter ended March 31, 2015.
“While we aggressively continue the transformation of eHow, we’re encouraged by another quarter of strong results from our Marketplaces, Content Solutions, and Livestrong businesses, and we are confident we are heading in the right direction,” said Sean Moriarty, CEO of Demand Media. “With strong additions to an executive leadership team that is judiciously managing cash and making investments, we are well positioned operationally.”
Demand Media’s new Chief Financial Officer, Rachel Glaser, joined the company in April. “I am very pleased to be joining Demand at this time when we have a clear set of strategic priorities, tremendous opportunities for future growth and a healthy balance sheet as a foundation,” said Glaser.
Q1 2015 Financial Summary:
Demand Media is a diversified Internet company that builds platforms across media and marketplace properties to enable communities of creators to reach passionate audiences in large and growing lifestyle categories, while helping advertisers find innovative ways to engage with their customers. Our business is comprised of two service offerings: Content & Media and Marketplaces. Our Content & Media service offering operates leading online destinations such as eHow, Livestrong.com and Cracked, as well as an innovative content creation platform powered by a large community of experts. Through our Marketplaces service offering, we operate Society6, a community of artists marketing and selling their designs on a wide variety of lifestyle products, and Saatchi Art, a community of artists marketing and selling original artwork or reproduction prints.
- Total revenue declined 26% year-over-year due to a 41% decline in Content & Media revenue partially offset by a 59% increase in Marketplaces revenue.
- Content & Media revenue declined 41% year-over-year driven primarily by desktop traffic declines to key properties, lower ad monetization yields from our cost-per-click advertising, our strategic reduction in higher yielding direct sold display advertising, content reductions on eHow and the impact from selling our CoveritLive and Pluck social media businesses.
- Marketplaces revenue grew 59% year-over-year, driven primarily by traffic growth, stronger conversion rates, new product introductions and increased average revenue per transaction driven by a shift towards higher priced items on Society6, as well as the acquisition of Saatchi Art.
- Adjusted EBITDA was $0.5 million for the quarter, primarily reflecting the expected decline in higher margin advertising revenue in our Content & Media service offering.
Cash and cash equivalents was $47.3 million at period end with no debt outstanding.
- On a consolidated basis, Demand Media ranked as the #41 US digital media property across desktop and mobile platforms in March 2015. Demand Media’s properties reached more than 57 million unique visitors in the US, including approximately 31 million mobile visitors (source: March 2015 US comScore).
Content & Media:
- The renovation of eHow continued during the first quarter, with additional improvements to the site, content library, and mobile experience. We have added media rich content and taken down a large number of articles with duplicative content. To improve the mobile experience, we changed the layout for easier readability and improved the share-ability of articles. eHow.com reached nearly 34 million unique visitors in the US in March 2015 across desktop and mobile platforms (source: March 2015 US comScore).
- Livestrong.com has seen a significant increase in traffic since it began its renovation nearly 2 years ago. This quarter, the property saw more than 10% growth in user registrations, engagement and app downloads. Livestrong/eHow Health ranked as the #4 Health property in the US in March 2015, with nearly 28 million unique visitors across desktop and mobile platforms (source: March 2015 US comScore).
- Cracked has been focusing on video content creation and promotion and has seen significant growth in views across YouTube, Facebook, and on the Cracked app. The CollegeHumor/Cracked Network ranked as the #1 Humor property in the US in March 2015, with more than 16 million unique visitors across desktop and mobile platforms. Cracked.com itself had more than 7 million unique visitors in the US across desktop and mobile platforms (source: March 2015 US comScore).
- Our Content Solutions business, which develops and executes custom content marketing strategies for brands and publishers, experienced an increase in active projects and closed several new deals during the quarter.
- Society6 launched another new product, wall tapestries, which brings the number of products available for customization on the site to 22 products. The site now has over 2 million unique designs available to be printed on these products – an increase of approximately 48% from a year ago.
- Saatchi Art saw strong growth in the number of artists and artworks on the platform and now has over 500,000 original works of art for sale on the site. This quarter, Saatchi Art also launched a new series of solo shows highlighting the work of emerging artists, the first of which was hosted in London in March.