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Demand Media Reports Second Quarter 2012 Financial Results

Stocks in this article: DMD

Demand Media, Inc. (NYSE: DMD), a leading digital media company, today reported financial results for the quarter ended June 30, 2012.

“We are pleased to report another strong quarter reflecting solid company performance,” said Richard Rosenblatt, Chairman and CEO of Demand Media. “We intend to continue to execute on our long-term growth initiatives, which include expanding our content platform and large audiences into mobile, video and international channels. We also see significant opportunities in the new generic Top Level Domain process and invested over $18 million in Q2 in what we believe is a seminal event for the internet and our leading Registrar."

 
Financial Summary
In millions, except per share amounts
    Three months ended June 30,

2011

     

2012

    Change
Total Revenue $ 79.5 $ 93.1 17%
 
Content & Media Revenue ex-TAC (1) $ 47.0 $ 55.3 18%
Registrar Revenue 29.6   33.4   13%
Total Revenue ex-TAC (1) $ 76.6   $ 88.7   16%
 
Income (loss) from Operations $ (0.9 ) $ 0.9 NA
Adjusted EBITDA (1) $ 20.5 $ 24.6 20%
Net income (loss) $ (2.4 ) $ 0.1 NA
Adjusted net income (1) $ 5.0 $ 7.8 54%
 
EPS $ (0.03 ) $ NA
Adjusted EPS (1) $ 0.06 $ 0.09 50%
 
Cash Flow from Operations $ 16.8 $ 21.9 30%
Free Cash Flow (1) (2) $ (4.8 ) $ 16.6 NA
 
(1) These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables. Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. Reconciliations for both measures are available on the investor relations section of the Company's website.
 

(2) In April 2012, the Company invested $18.1 million in generic Top Level Domain (“gTLD”) applications, which did not impact its recurring Free Cash Flow metric.

Q2 2012 Financial Summary:

  • Content & Media revenue ex-TAC grew 18% year-over-year, and increased 9% compared to the first quarter of 2012, with sequential growth driven primarily by accelerating revenue and traffic in our core Owned & Operated properties.
  • Registrar revenue grew 13% year-over-year, and increased 3% compared to the first quarter of 2012. Revenue growth was driven by an increase in number of domains on our platform, due primarily to growth from new partners.
  • Free Cash Flow increased by $21.4 million year-over-year. The increase was driven by 30% growth in cash flow from operations and an 84% decline in investment in intangible assets to $2.5 million. The decrease in intangible assets investment was the result of a managed reduction in content spend, primarily on eHow, as the Company continues to make improvements to its content creation and distribution platform.

“In addition to accelerating revenue growth, expanding our EBITDA margin and growing our cash flow from operations, we delivered our first quarter of positive net income as a public company in Q2,” said Senior Vice President, Finance and incoming CFO Mel Tang. "Based on our strong first half performance and outlook for the remainder of 2012, we are increasing guidance for fiscal year 2012."

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