-
Demand Media Properties Reach More Than 59 Million Unique Monthly
Visitors in the US
-
Q1 Marketplaces Revenue Grows 26% Year-over-Year
-
Total Q1 Revenue of $27.0 Million
-
Cracked Business Sold for $39.0 Million in April 2016
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 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.”
|
|
|
Financial Summary
(In millions, except per share
amounts)
|
|
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
Content & Media revenue
|
|
$
|
13.5
|
|
|
$
|
22.5
|
|
|
Marketplaces revenue
|
|
|
13.5
|
|
|
|
10.7
|
|
|
Total revenue
|
|
$
|
27.0
|
|
|
$
|
33.2
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
$
|
(5.1
|
)
|
|
$
|
0.5
|
|
|
Net loss
|
|
$
|
(11.9
|
)
|
|
$
|
(6.7
|
)
|
|
Adjusted net loss(1)
|
|
$
|
(5.8
|
)
|
|
$
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
EPS
|
|
$
|
(0.59
|
)
|
|
$
|
(0.34
|
)
|
|
Adjusted EPS(1)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
Free cash flow(1)
|
|
$
|
(8.0
|
)
|
|
$
|
(3.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These non-GAAP financial measures are described below and reconciled
to their comparable GAAP measures in the accompanying tables.
|
|
|
|
|
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.
Business Highlights:
-
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.
Marketplaces:
-
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.
Operating Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
2015
|
|
%
Change
|
|
|
Content & Media Metrics:
|
|
|
|
|
|
|
|
|
|
|
Visits(1) (in thousands)
|
|
|
785,979
|
|
|
943,438
|
|
(17
|
)
|
%
|
|
Revenue per Visit (RPV)(2)
|
|
$
|
17.18
|
|
$
|
23.87
|
|
(28
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplaces Metrics:
|
|
|
|
|
|
|
|
|
|
|
Number of Transactions(3)
|
|
|
227,202
|
|
|
182,179
|
|
25
|
|
%
|
|
Average Revenue per Transaction(4)
|
|
$
|
59.25
|
|
$
|
58.65
|
|
1
|
|
%
|
|
(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, breaks of access of at
least 30 minutes constitute 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 877-201-0168 (US/CAN) or 647-788-4901
(International) and reference conference ID 99168907. 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, to
evaluate investment decisions, and in its discussions with investors,
commercial bankers, equity research 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)
excluding net interest expense, income tax expense (benefit), and
certain other non-cash or non-recurring items impacting net income
(loss) 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 core revenue and operating costs that is focused more closely
on the current costs necessary to operate our businesses 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) excluding 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; acquisition, disposition and realignment costs; 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 (used
in) operating activities net of cash outflows from acquisition,
disposition 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 and LIVESTRONG.COM) 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 content marketing solutions
(studioD) and diverse advertising 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, 2015 filed with the Securities and
Exchange Commission (http://www.sec.gov)
on March 1, 2016, 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 traffic to the company’s online properties; the effects
of shifting consumption of media content and online shopping from
desktop to mobile; the potential impact on advertising revenue of lower
ad unit rates, a reduction in online advertising spending, a loss of
advertisers, lower advertising yields and/or increased availability of
ad blocking software, particularly on mobile devices; the company’s
dependence on material agreements with a specific business partner for a
significant portion of its revenue; the impact on revenue and expenses
of changes made to the company’s Content & Media properties that are
intended to improve user experience and engagement; the company’s
ability to attract new customers to its marketplaces and successfully
grow its marketplaces business; the company’s ability to successfully
expand its current lines of business and grow new lines of business;
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
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2016
|
|
2015
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
$
|
14,505
|
|
|
$
|
23,225
|
|
|
|
|
Product revenue
|
|
|
12,464
|
|
|
|
9,985
|
|
|
|
|
Total revenue
|
|
|
26,969
|
|
|
|
33,210
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Service costs (exclusive of amortization of intangible assets shown
separately below)(1)(2)(3)
|
|
|
8,171
|
|
|
|
10,149
|
|
|
|
|
Product costs
|
|
|
8,507
|
|
|
|
6,834
|
|
|
|
|
Sales and marketing(1)(2)(3)
|
|
|
5,995
|
|
|
|
4,794
|
|
|
|
|
Product development(1)(2)(3)
|
|
|
5,614
|
|
|
|
7,036
|
|
|
|
|
General and administrative(1)(2)(3)
|
|
|
8,530
|
|
|
|
9,349
|
|
|
|
|
Amortization of intangible assets
|
|
|
3,032
|
|
|
|
4,711
|
|
|
|
|
Total operating expenses
|
|
|
39,849
|
|
|
|
42,873
|
|
|
|
|
Loss from operations
|
|
|
(12,880
|
)
|
|
|
(9,663
|
)
|
|
Interest income
|
|
|
2
|
|
|
|
180
|
|
|
Interest expense
|
|
|
—
|
|
|
|
(71
|
)
|
|
Other income, net
|
|
|
980
|
|
|
|
2,827
|
|
|
|
|
Loss from operations before income taxes
|
|
|
(11,898
|
)
|
|
|
(6,727
|
)
|
|
Income tax expense
|
|
|
(11
|
)
|
|
|
(22
|
)
|
|
|
|
Net loss
|
|
$
|
(11,909
|
)
|
|
$
|
(6,749
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(0.59
|
)
|
|
$
|
(0.34
|
)
|
|
|
|
Weighted average number of shares - basic and diluted
|
|
|
20,213
|
|
|
|
19,773
|
|
|
__________________
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Depreciation expense included in the above line items:
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
$
|
1,464
|
|
|
$
|
1,497
|
|
|
|
|
Sales and marketing
|
|
|
13
|
|
|
|
20
|
|
|
|
|
Product development
|
|
|
41
|
|
|
|
57
|
|
|
|
|
General and administrative
|
|
|
1,181
|
|
|
|
1,265
|
|
|
|
|
Total depreciation
|
|
$
|
2,699
|
|
|
$
|
2,839
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
Stock-based compensation included in the above line items(3):
|
|
|
|
|
|
|
|
|
|
Service costs
|
|
$
|
262
|
|
|
$
|
314
|
|
|
|
|
Sales and marketing
|
|
|
208
|
|
|
|
199
|
|
|
|
|
Product development
|
|
|
399
|
|
|
|
718
|
|
|
|
|
General and administrative
|
|
|
1,050
|
|
|
|
1,004
|
|
|
|
|
Total stock-based compensation
|
|
$
|
1,919
|
|
|
$
|
2,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Certain prior period amounts relating to personnel costs (including
stock-based compensation) have been reclassified to conform to the
current period presentation, resulting in the following changes in
our condensed consolidated statements of operations for the three
months ended March 31, 2015: (i) a decrease of $1.0 million in
general and administrative expense; and (ii) increases of $0.7
million in product development expense, $0.2 million in sales and
marketing expense, and $0.1 million in service costs.
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
30,513
|
|
|
$
|
38,570
|
|
|
Accounts receivable, net
|
|
|
8,597
|
|
|
|
10,469
|
|
|
Prepaid expenses and other current assets
|
|
|
4,618
|
|
|
|
4,989
|
|
|
Total current assets
|
|
|
43,728
|
|
|
|
54,028
|
|
|
Property and equipment, net
|
|
|
12,559
|
|
|
|
14,568
|
|
|
Intangible assets, net
|
|
|
18,307
|
|
|
|
21,332
|
|
|
Goodwill
|
|
|
10,358
|
|
|
|
10,358
|
|
|
Other assets
|
|
|
1,048
|
|
|
|
1,173
|
|
|
Total assets
|
|
$
|
86,000
|
|
|
$
|
101,459
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,833
|
|
|
$
|
1,973
|
|
|
Accrued expenses and other current liabilities
|
|
|
11,335
|
|
|
|
15,169
|
|
|
Deferred revenue
|
|
|
2,378
|
|
|
|
2,933
|
|
|
Total current liabilities
|
|
|
15,546
|
|
|
|
20,075
|
|
|
Deferred tax liability
|
|
|
—
|
|
|
|
551
|
|
|
Other liabilities
|
|
|
1,698
|
|
|
|
1,713
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
Common stock
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
507,147
|
|
|
|
505,603
|
|
|
Accumulated other comprehensive loss
|
|
|
(90
|
)
|
|
|
(91
|
)
|
|
Treasury stock
|
|
|
(30,767
|
)
|
|
|
(30,767
|
)
|
|
Accumulated deficit
|
|
|
(407,536
|
)
|
|
|
(395,627
|
)
|
|
Total stockholders’ equity
|
|
|
68,756
|
|
|
|
79,120
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
86,000
|
|
|
$
|
101,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,909
|
)
|
|
$
|
(6,749
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
5,731
|
|
|
|
7,550
|
|
|
Stock-based compensation
|
|
|
1,919
|
|
|
|
2,235
|
|
|
Gain on disposal of businesses and online properties
|
|
|
(973
|
)
|
|
|
(2,908
|
)
|
|
Other
|
|
|
(31
|
)
|
|
|
—
|
|
|
Change in operating assets and liabilities
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
1,872
|
|
|
|
2,905
|
|
|
Prepaid expenses and other current assets
|
|
|
462
|
|
|
|
(262
|
)
|
|
Other long-term assets
|
|
|
(12
|
)
|
|
|
(38
|
)
|
|
Accounts payable
|
|
|
(53
|
)
|
|
|
(2,574
|
)
|
|
Accrued expenses and other liabilities
|
|
|
(3,675
|
)
|
|
|
(2,435
|
)
|
|
Deferred revenue
|
|
|
(231
|
)
|
|
|
(139
|
)
|
|
Net cash used in operating activities
|
|
|
(6,900
|
)
|
|
|
(2,415
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,480
|
)
|
|
|
(1,772
|
)
|
|
Purchases of intangible assets
|
|
|
(4
|
)
|
|
|
(19
|
)
|
|
Cash received from disposal of businesses and online properties, net
of cash disposed
|
|
|
650
|
|
|
|
3,831
|
|
|
Other
|
|
|
167
|
|
|
|
155
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(667
|
)
|
|
|
2,195
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Proceeds from exercises of stock options and purchases under ESPP
|
|
|
1
|
|
|
|
126
|
|
|
Net taxes paid on restricted stock units and options exercised
|
|
|
(492
|
)
|
|
|
(289
|
)
|
|
Other
|
|
|
—
|
|
|
|
(120
|
)
|
|
Net cash used in financing activities
|
|
|
(491
|
)
|
|
|
(283
|
)
|
|
Effect of foreign currency on cash and cash equivalents
|
|
|
1
|
|
|
|
6
|
|
|
Change in cash and cash equivalents
|
|
|
(8,057
|
)
|
|
|
(497
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
38,570
|
|
|
|
47,820
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
30,513
|
|
|
$
|
47,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Media, Inc. and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
2015
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,909
|
)
|
|
$
|
(6,749
|
)
|
|
Add (deduct):
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
11
|
|
|
|
22
|
|
|
Interest and other income, net
|
|
|
(982
|
)
|
|
|
(2,936
|
)
|
|
Depreciation and amortization(1)
|
|
|
5,731
|
|
|
|
7,550
|
|
|
Stock-based compensation(2)
|
|
|
1,919
|
|
|
|
2,235
|
|
|
Acquisition, disposition and realignment costs(3)
|
|
|
175
|
|
|
|
346
|
|
|
Adjusted EBITDA
|
|
$
|
(5,055
|
)
|
|
$
|
468
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(6,900
|
)
|
|
$
|
(2,415
|
)
|
|
Purchases of property and equipment
|
|
|
(1,480
|
)
|
|
|
(1,772
|
)
|
|
Purchases of intangible assets
|
|
|
(4
|
)
|
|
|
(19
|
)
|
|
Acquisition, disposition and realignment cash flows(3)
|
|
|
366
|
|
|
|
1,172
|
|
|
Free Cash Flow
|
|
$
|
(8,018
|
)
|
|
$
|
(3,034
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted Net Loss:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,909
|
)
|
|
$
|
(6,749
|
)
|
|
(a) Stock-based compensation(2)
|
|
|
1,919
|
|
|
|
2,235
|
|
|
(b) Amortization of acquisition related intangibles
|
|
|
1,376
|
|
|
|
1,940
|
|
|
(c) Content intangible assets removed from service(4)
|
|
|
1
|
|
|
|
—
|
|
|
(d) Acquisition, disposition and realignment costs(3)
|
|
|
175
|
|
|
|
346
|
|
|
(e) Gain on disposals(5)
|
|
|
(973
|
)
|
|
|
(2,908
|
)
|
|
Income tax effect of items (a) - (e) & application of 38% statutory
income tax rate to pretax income
|
|
|
3,583
|
|
|
|
1,965
|
|
|
Adjusted Net Loss
|
|
$
|
(5,828
|
)
|
|
$
|
(3,171
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
$
|
(0.29
|
)
|
|
$
|
(0.16
|
)
|
|
Shares used to calculate adjusted EPS
|
|
|
20,213
|
|
|
|
19,773
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
Represents such items, when applicable, as (a) legal, accounting and
other professional fees directly attributable to acquisition,
disposition or corporate realignment activities and (b) employee
severance and other payments attributable to acquisition,
disposition or corporate realignment activities.
|
|
(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 certain
businesses and online properties.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160509006568/en/
Source: Demand Media, Inc.