Demand Media revenue falls 19% in Q1, records net loss of $11.9M
SANTA MONICA, Calif. – May 9, 2016 — Demand Media, Inc., a diversified Internet company comprised of several media and marketplace properties, today reported financial results for the first quarter ended March 31, 2016.
“All of our businesses demonstrated mobile and social growth during Q1, and our marketplace and custom content businesses grew revenue during the quarter,” said Sean Moriarty, CEO of Demand Media. “With the recent sale of Cracked, we have a more focused portfolio, a much stronger balance sheet, and an increasingly stable foundation to build from.”
Q1 2016 Financial Summary:
Demand Media is comprised of two service offerings: Content & Media and Marketplaces.
“Operating cash flow has seen strength from our marketplace businesses and our continued focus on driving efficiencies in our core infrastructure,” said Rachel Glaser, Demand Media’s CFO. “As our marketplace businesses become an increasing percentage of overall revenue, we are more seasonally weighted in the second half of the year.”
For the first quarter of 2016:
- Total revenue declined 19% year-over-year due to a 40% decline in Content & Media revenue partially offset by a 26% increase in Marketplaces revenue.
- Content & Media revenue declined 40% year-over-year driven primarily by traffic declines to eHow, lower ad monetization yields and divestitures of non-core online properties.
- Marketplaces revenue grew 26% year-over-year driven primarily by new product introductions, increased conversion rates, traffic growth and increased mobile revenue on Society6.
- Adjusted EBITDA was $(5.1) million for the quarter, primarily reflecting the decline in higher margin Content & Media advertising revenue, partially offset by growth in Marketplaces and managed reductions in operating expenses other than product and marketing costs.
- Cash and cash equivalents was $30.5 million at period end with no debt outstanding. An additional $35.1 million in cash was received in April 2016 as consideration for the sale of the
- Cracked business. The remaining $3.9 million of the purchase price was placed into an escrow account to cover certain post-closing indemnification obligations.
- On a consolidated basis, Demand Media’s properties reached more than 59 million unique visitors in the US in March 2016, including nearly 42 million mobile visitors. Demand Media’s consolidated comScore traffic for March 2016 included Cracked traffic of more than 7 million unique visitors in the US (source: March 2016 US comScore).
Content & Media:
- eHow made several product improvements during Q1, including launching infinite scroll on both mobile and desktop. eHow also saw a significant increase in traffic from email marketing and growing audiences from social channels such as Facebook and Pinterest, which it intends to capitalize on by creating media rich content optimized for these platforms. In March 2016, eHow Home ranked as the #5 Home property in the US among ad-supported websites, and eHow reached nearly 23 million unique visitors in the US across desktop and mobile platforms (source: March 2016 US comScore).
- Livestrong.com saw strong traffic growth during Q1, driven by growth across social channels, email and search. Livestrong.com also made several product improvements including releasing updates to its MyCalorie Tracker app, which currently has over 300,000 active monthly users. In March 2016, Livestrong/eHow Health ranked as the #4 Health property in the US among ad-supported websites, and Livestrong.com reached more than 26 million unique visitors in the US across desktop and mobile platforms (source: March 2016 US comScore).
- studioD’s custom content business had its largest quarter to date, with 45 new deals and 13 new customers. Over 70% of the custom content revenue in Q1 came from renewing customers.
- Society6 released three new products in Q1 – rectangular throw pillows, carry-all pouches and iPhone SE cases – and now has 29 products available for customization on the site. Society6 also launched its new iOS app in Q1 and continues to focus on optimizing the mobile web experience, with significant increases in mobile visits and revenue year-over-year.
- Saatchi Art saw strong growth in revenue, traffic and gross transaction value in Q1 versus the prior year, and Art Advisory leads doubled during the quarter. Saatchi Art continued to focus on raising brand awareness by launching Facebook advertising and mailing its second print catalog promoting the website’s artists, which helped lead to record sales in March.