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Demand Media Reports Third Quarter 2012 Financial Results

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

"Demand Media's audience surpassed 125 million monthly unique visitors during the third quarter, as we delivered record revenue and profitability,” said Richard Rosenblatt, Chairman and CEO of Demand Media. “For the first time in over a year, we increased our content investments for two consecutive quarters as we expanded the distribution of our content platform. We remain focused on our long-term growth initiatives, which include continuing to increase our investment in core content as well as in opportunities across mobile, video, international, and new generic Top Level Domains."

Financial Summary
In millions, except per share amounts  
        Three months ended September 30,
2011         2012       Change
Total Revenue $ 81.5 $ 98.1      

20

%

 
Content & Media Revenue ex-TAC (1) $ 47.4 $ 58.8

24

%

Registrar Revenue 30.7   34.0  

11

%

Total Revenue ex-TAC (1) $ 78.1   $ 92.8  

19

%

 
Income (loss) from Operations $ (3.3 ) $ 4.5 NA
Adjusted EBITDA (1) $ 21.7 $ 27.6

28

%

Net income (loss) $ (4.1 ) $ 3.2 NA
Adjusted net income (1) $ 5.0 $ 9.8

97

%

 
EPS $ (0.05 ) $ 0.04 NA
Adjusted EPS (1) $ 0.06 $ 0.11

83

%

 
Cash Flow from Operations $ 22.1 $ 24.6

12

%

Free Cash Flow (1) $ 6.0 $ 16.6

177

%

(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.

Q3 2012 Financial Summary:

  • Content & Media Revenue ex-TAC grew 24% year-over-year, due primarily to strong page view growth on the Company's owned & operated properties, as well as 50% growth in network RPMs, reflecting higher revenue from our growing network of content partners. Sequentially, Content & Media Revenue ex-TAC increased 6% compared to the second quarter of 2012, driven primarily by network RPM growth.
  • Registrar revenue grew 11% year-over-year and increased 2% compared to the second 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 was $16.6 million compared to $6.0 million a year ago, reflecting growth in cash flow from operations and a year-over-year reduction in intangible asset content spend, primarily on eHow. Sequentially, investment in intangible assets increased 36% compared to the second quarter of 2012.

“We continued our 2012 financial momentum in Q3 with record adjusted EBITDA and strong free cash flow growth, while increasing our investment in content sequentially,” said CFO Mel Tang. "We are raising our 2012 financial guidance and remain focused on driving Demand Media's long-term growth through continued disciplined investments."

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