-
Demand Media Properties Reach Nearly 50 Million Unique Monthly
Visitors in the US
-
Marketplaces Revenue Grows 59% Year-over-Year
-
Total Revenue of $29.8 Million and Adjusted EBITDA of $(2.8) Million
SANTA MONICA, Calif.--(BUSINESS WIRE)--
Demand Media, Inc. (NYSE: DMD), 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."
|
|
|
Financial Summary
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
Content & Media revenue
|
|
|
|
|
$
|
19.3
|
|
|
|
$
|
36.5
|
|
|
Marketplaces revenue
|
|
|
|
|
|
10.5
|
|
|
|
|
6.6
|
|
|
Total revenue
|
|
|
|
|
$
|
29.8
|
|
|
|
$
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
|
|
|
$
|
(2.8
|
)
|
|
|
$
|
10.5
|
|
|
Net loss
|
|
|
|
|
$
|
(14.4
|
)
|
|
|
$
|
(14.3
|
)
|
|
Adjusted net income (loss)(1)
|
|
|
|
|
$
|
(4.8
|
)
|
|
|
$
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS(2)
|
|
|
|
|
$
|
(0.73
|
)
|
|
|
$
|
(0.78
|
)
|
|
Adjusted EPS(1)(2)
|
|
|
|
|
$
|
(0.24
|
)
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow(1)
|
|
|
|
|
$
|
(4.6
|
)
|
|
|
$
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These non-GAAP financial measures are described below and reconciled
to their comparable GAAP measures in the accompanying tables.
|
|
|
|
|
|
(2)
|
|
Demand Media common stock share information and related per share
amounts included in this earnings release and the accompanying
tables have been adjusted retroactively for the 2014 periods to
reflect the one-for-five reverse stock split of Demand Media common
stock that was effected on August 1, 2014.
|
|
|
|
|
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.
Business Highlights:
-
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.
Marketplaces:
-
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.
|
Operating Metrics:
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
% Change
|
|
Content & Media Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Visits(1) (in thousands)
|
|
|
|
896,846
|
|
|
|
1,012,854
|
|
|
(11
|
)%
|
|
Revenue per Visit (RPV)(2)
|
|
|
$
|
21.48
|
|
|
$
|
36.00
|
|
|
(40
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Transactions(3)
|
|
|
|
183,870
|
|
|
|
126,338
|
|
|
46
|
%
|
|
Average Revenue per Transaction(4)
|
|
|
$
|
57.14
|
|
|
$
|
52.37
|
|
|
9
|
%
|
|
(1)
|
|
Visits are defined as the total number of times users access the
company’s content across (a) one of its owned and operated online
properties and/or (b) one of its customers’ online properties, to
the extent that the visited customer web pages are hosted by the
company’s content services, in each case with breaks of access of at
least 30 minutes constituting a unique visit.
|
|
|
|
|
|
(2)
|
|
RPV is defined as Content & Media revenue per one thousand visits.
|
|
|
|
|
|
(3)
|
|
Number of transactions is defined as the total number of
successfully completed Marketplaces transactions during the
applicable period.
|
|
|
|
|
|
(4)
|
|
Average revenue per transaction is calculated by dividing
Marketplaces revenue for a period by the number of transactions in
that period.
|
|
|
|
|
Conference Call and Webcast Information
Demand Media will host a corresponding conference call and live webcast
today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). To access the
conference call, dial 888-455-2260 (US/CAN) or 719-325-2458
(International) and reference conference ID 9910699. To participate on
the live call, analysts should dial-in at least 10 minutes prior to the
commencement of the call. A live webcast also will be available on the
Investor Relations section of Demand Media’s corporate website at http://ir.demandmedia.com
and via replay beginning approximately two hours after the completion of
the call.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared
and presented in accordance with generally accepted accounting
principles in the United States of America (“GAAP”), Demand Media uses
certain non-GAAP financial measures, as described below. These non-GAAP
financial measures are presented to enhance the user’s overall
understanding of Demand Media’s financial performance and should not be
considered a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. The non-GAAP financial
measures presented in this release are the primary measures used by the
company’s management and board of directors to understand and evaluate
the company’s financial performance and operating trends, including
period-to-period comparisons, because they exclude certain expenses that
management believes are not indicative of the company’s core operating
results. Management also uses these measures to prepare and update the
company’s short and long term financial and operational plans, including
evaluating investment decisions, and in its discussions with investors,
commercial bankers, securities analysts and other users of the company’s
financial statements.
The use of non-GAAP financial measures has certain limitations because
they do not reflect all items of income and expense, or cash flows, that
affect the company’s operations. An additional limitation of non-GAAP
financial measures is that they do not have standardized meanings, and
therefore other companies, including peer companies, may use the same or
similarly named measures but exclude different items or use different
computations. Management compensates for these limitations by
reconciling these non-GAAP financial measures to their most comparable
GAAP financial measures in the tables captioned “Reconciliations of
Non-GAAP Financial Measures” included at the end of this release.
Investors and others are encouraged to review the company’s financial
information in its entirety and not rely on a single financial measure.
The company defines Adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA) as net income (loss)
less income (loss) from discontinued operations, net of taxes, excluding
net interest expense, income tax expense (benefit), and certain other
non-cash and non-recurring items impacting net income from time to time,
principally comprised of depreciation and amortization and stock-based
compensation. Management believes that the exclusion of certain expenses
in calculating Adjusted EBITDA provides a useful measure for
period-to-period comparisons of the company’s underlying recurring
revenue and operating costs that is focused more closely on the current
costs necessary to utilize previously acquired long-lived assets and
reflects the company’s ongoing business in a manner that allows for
meaningful analysis of trends. Management also believes that excluding
certain non-cash charges can be useful because the amount of such
expenses is the result of long-term investment decisions in previous
periods rather than day-to-day operating decisions.
The company defines Adjusted Net Income (Loss) as net income
(loss) less income (loss) from discontinued operations, net of taxes,
before the effect of certain non-cash items and other items not directly
related to the operation of the company’s ongoing business, principally
comprised of stock-based compensation, amortization of intangible assets
and gains or losses on asset dispositions. Adjusted Net Income (Loss) is
calculated using the application of a normalized effective tax rate. The
company defines Adjusted Earnings Per Share (Adjusted EPS) as
Adjusted Net Income (Loss) divided by the weighted average number of
shares outstanding. Management believes that Adjusted Net Income (Loss)
and Adjusted EPS provide investors with additional useful information to
measure the company’s financial performance, particularly from period to
period, because they exclude certain non-cash and other expenses that
are not directly related to the operation of the company’s ongoing
business.
The company defines Free Cash Flow as net cash provided by
operating activities net of cash outflows from acquisition and
realignment activities, capital expenditures to acquire property and
equipment and purchases of intangible assets. Management believes that
Free Cash Flow provides investors with useful information to measure
operating liquidity because it reflects the company’s underlying cash
flows from recurring operating activities after investing in capital
assets and intangible assets. Free Cash Flow is used by management, and
may also be useful for investors, to assess the company’s ability to
generate cash flow for a variety of strategic opportunities, including
reinvesting in the business, pursuing new business opportunities and
potential acquisitions, paying dividends and repurchasing shares.
About Demand Media
Demand Media, Inc. (NYSE: DMD) is a diversified Internet company that
builds platforms across its media (eHow, LIVESTRONG.com and Cracked) and
marketplace (Society6 and Saatchi Art) properties to enable communities
of creators to reach passionate audiences in large and growing lifestyle
categories. In addition, Demand Media’s branded content creation
(studioD) and programmatic advertising (Demand360) offerings help
advertisers find innovative ways to engage with their customers. For
more information about Demand Media, visit www.demandmedia.com.
Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. These forward-looking
statements involve risks and uncertainties regarding the company’s
future financial performance, and are based on current expectations,
estimates and projections about the company’s industry, financial
condition, operating performance and results of operations, including
certain assumptions related thereto. Statements containing words such as
guidance, may, believe, anticipate, expect, intend, plan, project,
projections, business outlook, and estimate or similar expressions
constitute forward-looking statements. Actual results may differ
materially from the results predicted, and reported results should not
be considered an indication of future performance. Potential risks and
uncertainties that could affect the company’s operating and financial
results are described in Demand Media’s annual report on Form 10-K for
the fiscal year ending December 31, 2014 filed with the Securities and
Exchange Commission (http://www.sec.gov)
on March 16, 2015, as such risks and uncertainties are updated in Demand
Media’s annual and quarterly reports on Form 10-K and Form 10-Q filed
with the Securities and Exchange Commission, including, without
limitation, information under the captions Risk Factors and Management's
Discussion and Analysis of Financial Condition and Results of
Operations. These risks and uncertainties include, among others: changes
in the methodologies of internet search engines, including ongoing
algorithmic changes made by Google, Bing and Yahoo!, as well as possible
future changes, and the impact such changes may have on visits and
driving search related traffic to the company’s owned & operated online
properties and its customers’ online properties; the effects of shifting
consumption of media content from desktop to mobile; the company’s
dependence on material agreements with a specific business partner for a
significant portion of its revenue; the fact that the company generates
the majority of its revenue from advertising and the potential impact of
a reduction in online advertising spending, a loss of advertisers and/or
lower advertising yields; the impact on revenue and expenses of changes
being made to the company’s Content & Media properties that are intended
to improve user experience and engagement; the company’s ability to
successfully grow new lines of business such as online marketplaces and
branded content creation; the impact of Demand Media’s separation into
two smaller, less diversified public companies; the expectation that the
separation transaction is tax-free; changes in amortization or
depreciation expense due to a variety of factors; potential write
downs, reserves against or impairment of assets including receivables,
goodwill, intangibles (including media content) or other assets; and the
company’s ability to retain key personnel. From time to time, the
company may consider acquisitions or divestitures that, if consummated,
could be material. Any forward-looking statements regarding financial
metrics are based upon the assumption that no such acquisition or
divestiture is consummated during the relevant periods. If an
acquisition or divestiture were consummated, actual results could differ
materially from any forward-looking statements. The company does not
intend to revise or update the information set forth in this press
release, except as required by law, and may not provide this type of
information in the future.
|
|
|
Demand Media, Inc. and Subsidiaries
|
|
Unaudited Condensed Consolidated Statements of Operations
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
$
|
20,067
|
|
|
|
$
|
36,397
|
|
|
|
$
|
43,292
|
|
|
|
$
|
74,661
|
|
|
Product revenue
|
|
|
|
9,701
|
|
|
|
|
6,680
|
|
|
|
|
19,686
|
|
|
|
|
13,472
|
|
|
Total revenue
|
|
|
|
29,768
|
|
|
|
|
43,077
|
|
|
|
|
62,978
|
|
|
|
|
88,133
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs (exclusive of amortization of intangible assets shown
separately below)(1)(2)
|
|
|
|
9,534
|
|
|
|
|
11,274
|
|
|
|
|
19,537
|
|
|
|
|
21,942
|
|
|
Product costs
|
|
|
|
6,768
|
|
|
|
|
5,046
|
|
|
|
|
13,602
|
|
|
|
|
10,001
|
|
|
Sales and marketing(1)(2)
|
|
|
|
4,768
|
|
|
|
|
4,592
|
|
|
|
|
9,373
|
|
|
|
|
10,723
|
|
|
Product development(1)(2)
|
|
|
|
6,045
|
|
|
|
|
6,948
|
|
|
|
|
12,403
|
|
|
|
|
14,171
|
|
|
General and administrative(1)(2)
|
|
|
|
9,955
|
|
|
|
|
12,555
|
|
|
|
|
20,317
|
|
|
|
|
24,404
|
|
|
Amortization of intangible assets
|
|
|
|
7,225
|
|
|
|
|
7,877
|
|
|
|
|
11,936
|
|
|
|
|
17,815
|
|
|
Total operating expenses
|
|
|
|
44,295
|
|
|
|
|
48,292
|
|
|
|
|
87,168
|
|
|
|
|
99,056
|
|
|
Loss from operations
|
|
|
|
(14,527
|
)
|
|
|
|
(5,215
|
)
|
|
|
|
(24,190
|
)
|
|
|
|
(10,923
|
)
|
|
Interest income (expense), net
|
|
|
|
110
|
|
|
|
|
(934
|
)
|
|
|
|
219
|
|
|
|
|
(1,704
|
)
|
|
Other income (expense), net
|
|
|
|
19
|
|
|
|
|
(23
|
)
|
|
|
|
2,846
|
|
|
|
|
(46
|
)
|
|
Loss from continuing operations before income taxes
|
|
|
|
(14,398
|
)
|
|
|
|
(6,172
|
)
|
|
|
|
(21,125
|
)
|
|
|
|
(12,673
|
)
|
|
Income tax expense
|
|
|
|
(10
|
)
|
|
|
|
(269
|
)
|
|
|
|
(32
|
)
|
|
|
|
(2,714
|
)
|
|
Net loss from continuing operations
|
|
|
|
(14,408
|
)
|
|
|
|
(6,441
|
)
|
|
|
|
(21,157
|
)
|
|
|
|
(15,387
|
)
|
|
Net loss from discontinued operations(1)(2)
|
|
|
|
—
|
|
|
|
|
(7,892
|
)
|
|
|
|
—
|
|
|
|
|
(9,902
|
)
|
|
Net loss
|
|
|
$
|
(14,408
|
)
|
|
|
$
|
(14,333
|
)
|
|
|
$
|
(21,157
|
)
|
|
|
$
|
(25,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
$
|
(0.73
|
)
|
|
|
$
|
(0.35
|
)
|
|
|
$
|
(1.07
|
)
|
|
|
$
|
(0.84
|
)
|
|
Net loss from discontinued operations
|
|
|
|
—
|
|
|
|
|
(0.43
|
)
|
|
|
|
—
|
|
|
|
|
(0.54
|
)
|
|
Net loss
|
|
|
$
|
(0.73
|
)
|
|
|
$
|
(0.78
|
)
|
|
|
$
|
(1.07
|
)
|
|
|
$
|
(1.38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares - basic and diluted(3)
|
|
|
|
19,841
|
|
|
|
|
18,286
|
|
|
|
|
19,807
|
|
|
|
|
18,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Depreciation expense included in the above line items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
|
$
|
1,125
|
|
|
|
$
|
1,710
|
|
|
|
$
|
2,622
|
|
|
|
$
|
3,564
|
|
|
Sales and marketing
|
|
|
|
17
|
|
|
|
|
40
|
|
|
|
|
37
|
|
|
|
|
78
|
|
|
Product development
|
|
|
|
50
|
|
|
|
|
118
|
|
|
|
|
107
|
|
|
|
|
247
|
|
|
General and administrative
|
|
|
|
1,242
|
|
|
|
|
1,185
|
|
|
|
|
2,507
|
|
|
|
|
2,516
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
|
1,679
|
|
|
|
|
—
|
|
|
|
|
4,103
|
|
|
Total depreciation
|
|
|
$
|
2,434
|
|
|
|
$
|
4,732
|
|
|
|
$
|
5,273
|
|
|
|
$
|
10,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Stock-based compensation included in the above line
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
|
$
|
310
|
|
|
|
$
|
407
|
|
|
|
$
|
624
|
|
|
|
$
|
696
|
|
|
Sales and marketing
|
|
|
|
129
|
|
|
|
|
180
|
|
|
|
|
310
|
|
|
|
|
333
|
|
|
Product development
|
|
|
|
458
|
|
|
|
|
850
|
|
|
|
|
927
|
|
|
|
|
1,535
|
|
|
General and administrative
|
|
|
|
992
|
|
|
|
|
2,832
|
|
|
|
|
2,263
|
|
|
|
|
5,469
|
|
|
Discontinued operations
|
|
|
|
—
|
|
|
|
|
1,095
|
|
|
|
|
—
|
|
|
|
|
2,598
|
|
|
Total stock-based compensation
|
|
|
$
|
1,889
|
|
|
|
$
|
5,364
|
|
|
|
$
|
4,124
|
|
|
|
$
|
10,631
|
|
|
(3)
|
|
Demand Media common stock share information and related per share
amounts included in this earnings release and the accompanying
tables have been adjusted retroactively for the 2014 periods to
reflect the one-for-five reverse stock split of Demand Media common
stock that was effected on August 1, 2014.
|
|
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
|
|
Unaudited Condensed Consolidated Balance Sheets
|
|
(In thousands)
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
42,292
|
|
|
|
$
|
47,820
|
|
|
Accounts receivable, net
|
|
|
|
|
|
10,570
|
|
|
|
|
14,504
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
7,863
|
|
|
|
|
7,447
|
|
|
Total current assets
|
|
|
|
|
|
60,725
|
|
|
|
|
69,771
|
|
|
Property and equipment, net
|
|
|
|
|
|
18,752
|
|
|
|
|
22,836
|
|
|
Intangible assets, net
|
|
|
|
|
|
28,607
|
|
|
|
|
40,535
|
|
|
Goodwill
|
|
|
|
|
|
10,358
|
|
|
|
|
10,358
|
|
|
Other assets
|
|
|
|
|
|
5,872
|
|
|
|
|
6,055
|
|
|
Total assets
|
|
|
|
|
$
|
124,314
|
|
|
|
$
|
149,555
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
$
|
824
|
|
|
|
$
|
4,762
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
|
|
20,765
|
|
|
|
|
24,225
|
|
|
Deferred revenue
|
|
|
|
|
|
2,767
|
|
|
|
|
3,569
|
|
|
Total current liabilities
|
|
|
|
|
|
24,356
|
|
|
|
|
32,556
|
|
|
Deferred tax liability
|
|
|
|
|
|
372
|
|
|
|
|
334
|
|
|
Other liabilities
|
|
|
|
|
|
1,712
|
|
|
|
|
1,823
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
|
|
|
502,007
|
|
|
|
|
497,809
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
|
(85
|
)
|
|
|
|
(76
|
)
|
|
Treasury stock
|
|
|
|
|
|
(30,767
|
)
|
|
|
|
(30,767
|
)
|
|
Accumulated deficit
|
|
|
|
|
|
(373,283
|
)
|
|
|
|
(352,126
|
)
|
|
Total stockholders’ equity
|
|
|
|
|
|
97,874
|
|
|
|
|
114,842
|
|
|
Total liabilities and stockholders’ equity
|
|
|
|
|
$
|
124,314
|
|
|
|
$
|
149,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
|
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
|
(In thousands)
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(14,408
|
)
|
|
|
$
|
(14,333
|
)
|
|
|
$
|
(21,157
|
)
|
|
|
$
|
(25,289
|
)
|
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
9,659
|
|
|
|
|
14,517
|
|
|
|
|
17,209
|
|
|
|
|
31,922
|
|
|
Deferred income taxes
|
|
|
|
—
|
|
|
|
|
2,225
|
|
|
|
|
—
|
|
|
|
|
4,601
|
|
|
Stock-based compensation
|
|
|
|
1,889
|
|
|
|
|
5,364
|
|
|
|
|
4,124
|
|
|
|
|
10,631
|
|
|
Gain on disposals
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(2,908
|
)
|
|
|
|
—
|
|
|
Gain on other assets, net
|
|
|
|
—
|
|
|
|
|
(887
|
)
|
|
|
|
—
|
|
|
|
|
(5,747
|
)
|
|
Other
|
|
|
|
199
|
|
|
|
|
75
|
|
|
|
|
199
|
|
|
|
|
(1,447
|
)
|
|
Change in operating assets and liabilities, net of effect of
acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
1,455
|
|
|
|
|
3,280
|
|
|
|
|
4,360
|
|
|
|
|
4,891
|
|
|
Prepaid expenses and other current assets
|
|
|
|
(132
|
)
|
|
|
|
579
|
|
|
|
|
(394
|
)
|
|
|
|
(793
|
)
|
|
Deferred registration costs
|
|
|
|
—
|
|
|
|
|
(2,533
|
)
|
|
|
|
—
|
|
|
|
|
(8,957
|
)
|
|
Deposits with registries
|
|
|
|
—
|
|
|
|
|
(54
|
)
|
|
|
|
—
|
|
|
|
|
294
|
|
|
Other long-term assets
|
|
|
|
(94
|
)
|
|
|
|
(841
|
)
|
|
|
|
(132
|
)
|
|
|
|
(674
|
)
|
|
Accounts payable
|
|
|
|
(1,284
|
)
|
|
|
|
(2,155
|
)
|
|
|
|
(3,858
|
)
|
|
|
|
(2,887
|
)
|
|
Accrued expenses and other liabilities
|
|
|
|
(1,468
|
)
|
|
|
|
3,383
|
|
|
|
|
(3,903
|
)
|
|
|
|
(127
|
)
|
|
Deferred revenue
|
|
|
|
(10
|
)
|
|
|
|
3,834
|
|
|
|
|
(149
|
)
|
|
|
|
11,724
|
|
|
Net cash (used in) provided by operating activities
|
|
|
|
(4,194
|
)
|
|
|
|
12,454
|
|
|
|
|
(6,609
|
)
|
|
|
|
18,142
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
|
(814
|
)
|
|
|
|
(3,120
|
)
|
|
|
|
(2,586
|
)
|
|
|
|
(5,910
|
)
|
|
Purchases of intangible assets
|
|
|
|
(37
|
)
|
|
|
|
(1,050
|
)
|
|
|
|
(56
|
)
|
|
|
|
(4,314
|
)
|
|
Payments for gTLD applications
|
|
|
|
—
|
|
|
|
|
(11,060
|
)
|
|
|
|
—
|
|
|
|
|
(11,460
|
)
|
|
Proceeds from gTLD withdrawals, net
|
|
|
|
—
|
|
|
|
|
1,006
|
|
|
|
|
—
|
|
|
|
|
6,105
|
|
|
Cash received from disposal of business, net of cash disposed
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3,831
|
|
|
|
|
—
|
|
|
Other
|
|
|
|
50
|
|
|
|
|
120
|
|
|
|
|
205
|
|
|
|
|
1,291
|
|
|
Net cash (used in) provided by investing activities
|
|
|
|
(801
|
)
|
|
|
|
(14,104
|
)
|
|
|
|
1,394
|
|
|
|
|
(14,288
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt repayments, net
|
|
|
|
—
|
|
|
|
|
(18,750
|
)
|
|
|
|
—
|
|
|
|
|
(22,500
|
)
|
|
Proceeds from exercises of stock options and contributions to ESPP
|
|
|
|
122
|
|
|
|
|
72
|
|
|
|
|
248
|
|
|
|
|
252
|
|
|
Net taxes paid on RSUs and options exercised
|
|
|
|
(151
|
)
|
|
|
|
(799
|
)
|
|
|
|
(440
|
)
|
|
|
|
(1,646
|
)
|
|
Cash paid for acquisition holdback
|
|
|
|
—
|
|
|
|
|
(1,042
|
)
|
|
|
|
—
|
|
|
|
|
(1,542
|
)
|
|
Other
|
|
|
|
8
|
|
|
|
|
(179
|
)
|
|
|
|
(112
|
)
|
|
|
|
(296
|
)
|
|
Net cash used in financing activities
|
|
|
|
(21
|
)
|
|
|
|
(20,698
|
)
|
|
|
|
(304
|
)
|
|
|
|
(25,732
|
)
|
|
Effect of foreign currency on cash and cash equivalents
|
|
|
|
(15
|
)
|
|
|
|
(27
|
)
|
|
|
|
(9
|
)
|
|
|
|
(45
|
)
|
|
Change in cash and cash equivalents
|
|
|
|
(5,031
|
)
|
|
|
|
(22,375
|
)
|
|
|
|
(5,528
|
)
|
|
|
|
(21,923
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
47,323
|
|
|
|
|
153,963
|
|
|
|
|
47,820
|
|
|
|
|
153,511
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
42,292
|
|
|
|
$
|
131,588
|
|
|
|
$
|
42,292
|
|
|
|
$
|
131,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
|
|
Reconciliations of Non-GAAP Financial Measures
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(14,408
|
)
|
|
|
$
|
(14,333
|
)
|
|
|
$
|
(21,157
|
)
|
|
|
$
|
(25,289
|
)
|
|
Less: Loss from discontinued operations, net of taxes
|
|
|
|
—
|
|
|
|
|
7,892
|
|
|
|
|
—
|
|
|
|
|
9,902
|
|
|
Net loss from continuing operations
|
|
|
|
(14,408
|
)
|
|
|
|
(6,441
|
)
|
|
|
|
(21,157
|
)
|
|
|
|
(15,387
|
)
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
10
|
|
|
|
|
269
|
|
|
|
|
32
|
|
|
|
|
2,714
|
|
|
Interest and other (income) expense, net
|
|
|
|
(129
|
)
|
|
|
|
957
|
|
|
|
|
(3,065
|
)
|
|
|
|
1,750
|
|
|
Depreciation and amortization(1)
|
|
|
|
9,659
|
|
|
|
|
10,930
|
|
|
|
|
17,209
|
|
|
|
|
24,220
|
|
|
Stock-based compensation(2)
|
|
|
|
1,889
|
|
|
|
|
4,269
|
|
|
|
|
4,124
|
|
|
|
|
8,033
|
|
|
Acquisition and realignment costs(3)
|
|
|
|
210
|
|
|
|
|
560
|
|
|
|
|
556
|
|
|
|
|
1,321
|
|
|
Adjusted EBITDA
|
|
|
$
|
(2,769
|
)
|
|
|
$
|
10,544
|
|
|
|
$
|
(2,301
|
)
|
|
|
$
|
22,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
$
|
(4,194
|
)
|
|
|
$
|
12,454
|
|
|
|
$
|
(6,609
|
)
|
|
|
$
|
18,142
|
|
|
Purchases of property and equipment
|
|
|
|
(814
|
)
|
|
|
|
(3,120
|
)
|
|
|
|
(2,586
|
)
|
|
|
|
(5,910
|
)
|
|
Purchases of intangible assets
|
|
|
|
(37
|
)
|
|
|
|
(1,050
|
)
|
|
|
|
(56
|
)
|
|
|
|
(4,314
|
)
|
|
Acquisition and realignment cash flows(3)
|
|
|
|
435
|
|
|
|
|
1,471
|
|
|
|
|
1,607
|
|
|
|
|
3,884
|
|
|
Free Cash Flow
|
|
|
$
|
(4,610
|
)
|
|
|
$
|
9,755
|
|
|
|
$
|
(7,644
|
)
|
|
|
$
|
11,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(14,408
|
)
|
|
|
$
|
(14,333
|
)
|
|
|
$
|
(21,157
|
)
|
|
|
$
|
(25,289
|
)
|
|
Less: Loss from discontinued operations, net of taxes
|
|
|
|
—
|
|
|
|
|
7,892
|
|
|
|
|
—
|
|
|
|
|
9,902
|
|
|
Net loss from continuing operations
|
|
|
|
(14,408
|
)
|
|
|
|
(6,441
|
)
|
|
|
|
(21,157
|
)
|
|
|
|
(15,387
|
)
|
|
(a) Stock-based compensation(2)
|
|
|
|
1,889
|
|
|
|
|
4,269
|
|
|
|
|
4,124
|
|
|
|
|
8,033
|
|
|
(b) Amortization of intangibles - M&A
|
|
|
|
1,461
|
|
|
|
|
2,492
|
|
|
|
|
3,401
|
|
|
|
|
6,818
|
|
|
(c) Accelerated depreciation related to restructuring
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
147
|
|
|
(d) Content intangible assets removed from service(4)
|
|
|
|
3,092
|
|
|
|
|
—
|
|
|
|
|
3,092
|
|
|
|
|
—
|
|
|
(e) Acquisition and realignment costs(3)
|
|
|
|
210
|
|
|
|
|
560
|
|
|
|
|
556
|
|
|
|
|
1,321
|
|
|
(f) Gain on disposals(5)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(2,908
|
)
|
|
|
|
—
|
|
|
Income tax effect of items (a) - (f) & application of 38% statutory
income tax rate to pretax income
|
|
|
|
2,953
|
|
|
|
|
(167
|
)
|
|
|
|
4,918
|
|
|
|
|
1,329
|
|
|
Adjusted Net Income (Loss)
|
|
|
$
|
(4,803
|
)
|
|
|
$
|
713
|
|
|
|
$
|
(7,974
|
)
|
|
|
$
|
2,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
|
$
|
(0.24
|
)
|
|
|
$
|
0.04
|
|
|
|
$
|
(0.40
|
)
|
|
|
$
|
0.12
|
|
|
Shares used to calculate adjusted EPS (6)
|
|
|
|
19,841
|
|
|
|
|
18,703
|
|
|
|
|
19,807
|
|
|
|
|
18,348
|
|
|
(1)
|
|
Represents depreciation expense of the company’s long-lived tangible
assets and amortization expense of its finite-lived intangible
assets, including amortization expense related to its investment in
media content assets as included in the company’s GAAP results of
operations.
|
|
(2)
|
|
Represents the fair value of stock-based awards granted to
employees, as included in the company’s GAAP results of operations.
|
|
(3)
|
|
Acquisition and realignment costs include such items, when
applicable, as (a) legal, accounting and other professional fees
directly attributable to acquisition or corporate realignment
activities, (b) employee severance and other payments attributable
to acquisition or corporate realignment activities, and (c)
expenditures related to the separation of Demand Media into two
distinct publicly traded companies.
|
|
(4)
|
|
Represents accelerated amortization expense resulting from the
company’s decision to remove certain content assets from service.
|
|
(5)
|
|
Represents the gain on sale from the disposition of the company’s
Pluck social media business in February 2015.
|
|
(6)
|
|
Demand Media common stock share information and related per share
amounts included in this earnings release and the accompanying
tables have been adjusted retroactively for the 2014 periods to
reflect the one-for-five reverse stock split of Demand Media common
stock that was effected on August 1, 2014. Shares used to calculate
adjusted EPS are basic for the three and six months ended June 30,
2015 and diluted for the three and six months ended June 30, 2014.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150806006174/en/
Source: Demand Media, Inc.