Demand Media Reports: Beats Expectations Sends Stock Soaring & Spends $18M On New gTLD’s
Demand Media, Inc. (NYSE: DMD) just reported its earnings for the 1st Q of 2012 beating expectations and sending the stock soaring in aftermarket trading up almost 20%
Some interesting stuff in this report including that Demand invested $18 Million in new gTLD’s.
Previously Demand reported it was allocating $5 Million for new gTLD’s meaning that they were going to apply for some 25 new gTLD’s but now at $18 Million Demand is going to be one of the biggest players for new gTLD program as this equates to some 100 new gTLD applications.
Demand now become a way to play the new gTLD market without having to apply yourself.
eNom revenue was up 17% and grew by about 600,000 domains in the quarter.
These results maybe why Demand reportedly turned down an offer of $1.2 Billion a couple of weeks ago to go private.
Q1 2012 Financial Summary:
- Content & Media revenue ex-TAC grew 4% year-over-year and increased 1% compared to the fourth quarter of 2011. Year-over-year comparisons were impacted by early 2011 search algorithm changes. The 1% sequential improvement included the second consecutive quarter of revenue growth for eHow.
- Registrar revenue (eNom) grew 17% year-over-year and 3% compared to the fourth quarter of 2011.
- During the first quarter of 2012, the number of registered domains grew by a net 593,000 compared to 442,000 in the first quarter of 2011, due to growth from new partners and organic growth from resellers.
- Loss from operations and net loss include $1.8 million of accelerated non-cash amortization expense associated with content intangible assets removed from service in conjunction with the Company’s previously announced plan to improve its content creation and distribution platform.
- Free cash flow increased by $11.8 million year-over-year. The increase was driven by an 81% reduction of investment in intangible assets to $2.7 million. The intangible assets investment decline was the result of planned decreased content spend on eHow as the Company continued to make improvements to its content creation and distribution platform.
“Our first quarter growth and significant free cash flow marks a great start for 2012, particularly in light of a tough year-over-year comparison due to early 2011 search algorithm changes,” said Charles Hilliard, President and CFO. “Demand Media’s increased guidance reflects our first quarter performance, our improved outlook for the remainder of 2012 and, for the first time in more than a year, a return to accelerating year-over-year revenue growth beginning in Q2.”
- In April 2012, Demand Media invested $18 million in pursuit of its generic Top Level Domain (“gTLD”) initiative, which it believes represents a complementary strategic growth opportunity for its Registrar services.
- On a consolidated basis, Demand Media ranked as a top 20 US web property
- throughout the first quarter of 2012, ranking as #18 in March 2012(1). Demand Media’s worldwide unique users exceeded 104 million in March 2012(1).
- On a standalone basis, eHow.com ranked as the #17 website in the US in March 2012, up from #19 in July 2011(1).
- LIVESTRONG.COM/eHow Health continued to rank as the #3 Health property in the US based on unique visits throughout the first quarter of 2012(1). In May 2012, LIVESTRONG.COM won the People’s Voice Webby award for Health Websites.
- Cracked.com continued its ranking as the most visited humor site in the US throughout the first quarter of 2012(1), and more time was spent on the site than any other humor website(1). In May 2012, Cracked.com won the People’s Voice Webby award for Humor Websites.
- In February 2012, Demand Media introduced its innovative Social Feed ads, which allow advertisers to deliver customized social media content directly into their live rich media ads.
- In March 2012, Demand Media launched the eHow.com Tech channel, with RadioShack as its lead sponsor, to help users master everyday tech-related tasks and projects.
- In April 2012, Demand Media launched eHow Pets, the third major channel in its partnership with YouTube.
- During the first quarter of 2012, Demand Media repurchased 421,000 shares of common stock for $3 million under its Board-authorized $50 million share repurchase program. Since the program’s inception, the Company has repurchased 2.8 million shares of common stock for $20 million.
“Driven by continued growth across our businesses, our first quarter revenue exceeded our seasonally strong Q4 2011 results,” said Richard Rosenblatt, Chairman and CEO of Demand Media. “We are pleased with our first quarter results and remain focused on investing in our long-term growth initiatives, including enhancing the quality of our Owned & Operated properties, expanding our content distribution channels and partnerships, and pursuing new generic Top Level Domain opportunities.”