eHow transformation weighs on Demand Media earnings results
Total revenue falls 31 percent as Content & Media revenue declines 47 percent in the quarter
SANTA MONICA, Calif. – August 6, 2015 — Demand Media, Inc., a diversified Internet company comprised of several media and marketplace properties, today reported financial results for the second quarter ended June 30, 2015.
“I am very pleased by the growth we are seeing in several of our businesses including Society6, Cracked, and StudioD,” said Sean Moriarty, CEO of Demand Media. “We are becoming a much stronger company as we focus on building the best possible platforms and products to connect our creators and audiences. We look forward to continued progress across our businesses in the second half of the year.”
Q2 2015 Financial Summary:
Demand Media is comprised of two service offerings: Content & Media and Marketplaces.
“Our financial results this quarter are consistent with the current stage of our ongoing transformation,” said Rachel Glaser, Demand Media’s CFO. “While revenue and traffic continued to grow for several of our properties, this growth was more than offset by the impact of strategic decisions that we have made in our eHow business.”
For the second quarter of 2015:
- Total revenue declined 31% year-over-year due to a 47% decline in Content & Media revenue partially offset by a 59% increase in Marketplaces revenue.
- Content & Media revenue declined 47% year-over-year driven primarily by traffic declines to eHow and lower ad monetization yields.
- Marketplaces revenue grew 59% year-over-year, driven primarily by traffic growth, stronger conversion rates, new product introductions and increased average revenue per transaction resulting from a shift towards higher priced items on Society6, as well as the acquisition of Saatchi Art in August 2014.
- Adjusted EBITDA was $(2.8) million for the quarter, primarily reflecting the expected decline in higher margin advertising revenue in the Content & Media service offering.
- Cash and cash equivalents was $42.3 million at period end with no debt outstanding.
- On a consolidated basis, Demand Media ranked as the #57 US digital media property across desktop and mobile platforms in June 2015. Demand Media’s properties reached nearly 50 million unique visitors in the US, including nearly 29 million mobile visitors (source: June 2015 US comScore).
Content & Media:
- The eHow turnaround is now well underway. Led by eHow’s new GM, Mitchell Pavao, the team continues to be focused on building immersive products showcasing do-it-yourself creators across its key categories. eHow.com reached over 27 million unique visitors in the US in June 2015 across desktop and mobile platforms (source: June 2015 US comScore).
- Livestrong.com has seen a significant increase in traffic with total visits up 42% year-over-year in the second quarter based on internal data. To date this year, nearly 8 million workouts have been tracked on Livestrong.com and its apps, up 40% year-over-year. Livestrong/eHow Health had over 25 million unique visitors in the US in June 2015 across desktop and mobile platforms (source: June 2015 US comScore).
- Cracked has seen significant growth in video views across YouTube, Facebook, and on the Cracked site itself with total views up more than 75% year-over-year in the second quarter. The CollegeHumor/Cracked Network ranked as the #1 Humor property in the US in June 2015, with more than 18 million unique visitors across desktop and mobile platforms (source: June 2015 US comScore).
- studioD, our content solutions business, is building a content marketing and publishing platform driven by predictive insights and performance analytics and signed several deals during the quarter with new and returning customers, including Famous Footwear and Choice Hotels.
- Society6 launched two products in the second quarter – leggings and all-over print t-shirts – bringing the total number of available products to 24. The Society6 community of artists and designers has contributed over 2.3 million unique designs to date.
- This quarter, Saatchi Art continued to highlight the work of emerging artists both online – with the presentation of the seventh edition of our signature “Invest in Art” series – and offline, hosting a solo show in Manhattan and a group show in Brooklyn.