Click here to close now.

Welcome!

AJAX & REA Authors: Alena Prokharchyk, Elizabeth White, Jayaram Krishnaswamy, Liz McMillan, AppDynamics Blog

News Feed Item

Demand Media Reports Second Quarter 2014 Results

Demand Media, Inc. (NYSE: DMD), a leading digital content & media company, today reported financial results for the second quarter ended June 30, 2014.

"The focus on user experience and content improvements we have made over the past several quarters are starting to show positive results,” said Shawn Colo, Interim CEO of Demand Media. “Specifically, Livestrong.com achieved record user registrations and community engagement while returning to historic traffic levels. These trends demonstrate that continued focus on our core initiatives can deliver long-term stability and growth across our consumer brands.”

 
Financial Summary
(In millions, except per share amounts)
      Three months ended June 30,
2014               2013
Total revenue $ 89.8 $ 101.1
 
Content & Media revenue ex-TAC(1) $ 45.9 $ 60.5
Registrar revenue   41.2   36.6
Total revenue ex-TAC(1) $ 87.1 $ 97.1
 
Adjusted EBITDA(1) $ 10.7 $ 26.8
Net income (loss) $ (14.3 ) $ 1.1
Adjusted net income (loss)(1) $ (1.0 ) $ 8.8
 
EPS – diluted(2) $

(0.78

) $

0.06

Adjusted EPS(1)(2) $ (0.05 ) $ 0.50
 
Cash flow from operations $ 12.5 $ 20.8
Free cash flow(1) $ 9.8 $ 7.5
 

(1)

    These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables.
 

(2)

Demand Media, Inc. common stock share information and related per share amounts included in this earnings release and the accompanying tables have been adjusted retroactively for all periods presented to reflect the one-for-five reverse stock split of Demand Media, Inc. common stock that was effected on August 1, 2014.
 

Q2 2014 Financial Summary:

  • Total revenue ex-TAC declined 10% year-over-year, with 13% year-over-year growth in Registrar revenue offset by a 24% decline in Content & Media revenue ex-TAC. Pro forma for Society6 in the prior year period, total revenue ex-TAC decreased 15%.
  • Registrar revenue grew 13% year-over-year, primarily due to growth in domain name registrations as well as higher Name.com domains under management.
  • Owned & Operated revenue decline of 25% was driven primarily by the cumulative effect of traffic declines to key properties, lower aftermarket domain sales, and the strategic shift away from higher CPM direct sold display advertising sales, partially offset by revenue of $6.6 million from Society6, which was acquired at the end of Q2 2013, and mobile monetization growth. Pro forma for Society6, Owned & Operated revenue decreased 31%.
  • Network revenue ex-TAC declined 19% due to lower revenue from our domain name monetization and social tools businesses.
  • Adjusted EBITDA decreased 60% year-over-year, primarily reflecting the impact on higher margin revenue from traffic declines and lower domain sales, the inclusion of gTLD operating expenses, and a mix shift to lower margin ecommerce and Registrar revenue.

“The successful separation of the business into two standalone companies marks a significant achievement and milestone for Demand Media,” said Demand Media's CFO Mel Tang. “Our continued strong free cash flow generation and healthy balance sheet allow us to continue to make targeted investments to reaccelerate revenue growth and increase shareholder value.”

Business Highlights:

Content & Media:

  • June 2014 US and Worldwide comScore Rankings:

    • On a consolidated basis, Demand Media ranked as the #22 US web property and Demand Media's properties reached more than 75 million unique users worldwide.
    • eHow.com reached more than 43 million unique users worldwide. In addition, eHow’s international properties reached more than 15 million unique users worldwide.
    • Livestrong/eHow Health ranked as the #3 Health property in the US, with more than 19 million unique users worldwide.
    • CollegeHumor/Cracked Network ranked as the #2 Humor property in the US, with more than 10 million unique users worldwide. Cracked.com itself had nearly 5 million unique users worldwide.
    • Demand Media ranked as the #32 US mobile web property and reached more than 28 million unique mobile users in the US.
  • During Q2 2014, Society6 membership grew to more than 600,000, a 100% increase from a year ago. Additionally, image uploads increased 22% year-over-year, and there are now more than 1.6 million unique designs available on the site.

Domain Name Services:

  • Rightside has signed 32 registry operator agreements with ICANN to date, with 13 of its extensions currently in “general availability” phase.
  • To date, businesses and consumers have registered more than 160,000 new gTLD domains at eNom and Name.com, making Rightside one of the largest distributors of new gTLDs.
  • Rightside’s back-end registry platform now powers more than 150 of the 262 new gTLDs and has processed almost 800,000 new gTLD domain registrations to date.

Operating Metrics:

      Three months ended June 30,
2014           2013           % Change
Content & Media Metrics:
Owned & operated
Page views(1) (in millions) 4,493 4,441 1 %
RPM(2) $ 8.64 $ 11.64 (26 )%
 
Network of customer websites
Page views(1) (in millions) 1,427 6,557 (78 )%
RPM(2) $ 6.80 $ 1.95 248 %
RPM ex-TAC(3) $ 4.96 $ 1.33 272 %
 
Registrar Metrics:

End of Period # of Domains(4) (in millions)

15.6 14.2 10 %

Average Revenue per Domain(5)

$ 10.65 $ 10.39 3 %
 
(1)     Page views represent the total number of web pages viewed across (a) our owned and operated websites and/or (b) our network of customer websites, to the extent that the viewed customer web pages host our monetization, social media and/or content services.
 
(2) RPM is defined as Content & Media revenue per one thousand page views.
 
(3) RPM ex-TAC is defined as Content & Media revenue ex-TAC per one thousand page views.
 
(4) A domain is defined as an individual domain name registered by a third-party customer on our platform for which we have begun to recognize revenue.
 
(5) Average revenue per domain is calculated by dividing Registrar revenue for a period by the average number of domains registered in that period. Average revenue per domain for partial year periods is annualized.
 

Q2 2014 Operating Metrics:

  • Owned & Operated page views increased 1% year-over-year to 4.5 billion, driven primarily by traffic growth on our international websites as well as mobile page view growth on Cracked.com and Livestrong.com, which more than offset the continuing impact of desktop traffic declines. Owned & Operated RPM decreased 26% year-over-year, reflecting the mix shift to lower yielding international and mobile page views, lower domain sales, and a strategic shift away from higher CPM direct display advertising, offset partially by revenue generated by Society6.
  • Network page views decreased 78% year-over-year to 1.4 billion, reflecting the Company’s decision in Q3 2013 to reduce the number of network partner sites we represent as part of our Indieclick network. Network RPM ex-TAC increased 272% year-over-year, reflecting the removal of lower monetizing page views from the Indieclick network.
  • End of period domains increased 10% year-over-year to 15.6 million, driven by growth in domain registrations as well as from Name.com.

Conference Call and Webcast Information

Demand Media will host a corresponding conference call and live webcast at 4:30 p.m. Eastern time today. To access the conference call, dial 800-890-0881 (US/CAN) or 719-325-2167 (International) and reference conference ID 1968935. 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 the Company's corporate website at http://ir.demandmedia.com and via replay beginning approximately two hours after the completion of the call.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use certain non-GAAP financial measures described below. The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of Non-GAAP Measures” included at the end of this release.

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 its financial performance and operating trends, including period-to-period comparisons, to prepare and approve its annual budget and to develop short and long term operational plans. Additionally, Adjusted EBITDA has been the primary measure used by the compensation committee of the Company's board of directors to establish the funding targets for and to fund its annual bonus pool for the Company's employees and executives. We believe our presented non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) management frequently uses them in its discussions with investors, commercial bankers, securities analysts and other users of its financial statements.

Revenue ex-TAC is defined by the Company as GAAP revenue less traffic acquisition costs (TAC). TAC comprises the portion of Content & Media GAAP revenue shared with the Company's network customers. Management believes that Revenue ex-TAC is a meaningful measure of operating performance because it is frequently used for internal managerial purposes and helps facilitate a more complete period-to-period understanding of factors and trends affecting the Company's underlying revenue performance of its Content & Media service offering.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is defined by the Company as net income (loss) before income tax expense (benefit), interest and other income (expense), net, depreciation, amortization, stock-based compensation, as well as the financial impact of acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, net gains or losses on withdrawals of interest in gTLD applications, and any gains or losses on certain asset sales or dispositions. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, (3) employee severance and other payments attributable to acquisition or corporate realignment activities and (4) expenditures related to the separation of Demand Media into two distinct publicly traded companies. Management does not consider these costs to be indicative of the Company's core operating results.

Management believes that this non-GAAP financial measure reflects the Company's business in a manner that allows for meaningful period-to-period comparisons and analysis of trends. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of the Company's underlying recurring revenue and operating costs, which is focused more closely on the current costs necessary to utilize previously acquired long-lived assets. In addition, management believes that it can be useful to exclude certain non-cash charges because the amount of such expenses is the result of long-term investment decisions in previous periods rather than day-to-day operating decisions. For example, due to the long-lived nature of a majority of its media content, the revenue generated by the Company's media content assets in a given period bears little relationship to the amount of its investment in media content in that same period. Accordingly, management believes that content acquisition costs represent a discretionary long-term capital investment decision undertaken at a point in time. This investment decision is clearly distinguishable from other ongoing business activities, and its discretionary nature and long-term impact differentiate it from specific period transactions, decisions regarding day-to-day operations, and activities that would have an immediate impact on operating or financial performance if materially changed, deferred or terminated.

Adjusted Earnings Per Share (Adjusted EPS) is defined by the Company as Adjusted Net Income divided by the weighted average number of shares outstanding. Adjusted Net Income (Loss) is defined by the Company as net income (loss) before the effect of stock-based compensation, amortization of intangible assets acquired via business combinations, accelerated amortization of content intangible assets removed from service, accelerated depreciation of fixed assets removed from services due to restructuring, acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, net gains or losses on withdrawals of interest in gTLD applications, and any gains or losses on certain asset sales or dispositions, and is calculated using the application of a normalized effective tax rate. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, (3) employee severance and other payments attributable to acquisition or corporate realignment activities, and (4) expenditures related to the separation of Demand Media into two distinct publicly traded companies. Management does not consider these costs to be indicative of the Company's core operating results.

Management believes that Adjusted Net Income and Adjusted EPS provide investors with additional useful information to measure the Company's underlying financial performance, particularly from period to period, because these measures are exclusive of certain non-cash expenses not directly related to the operation of its ongoing business (such as amortization of intangible assets acquired via business combinations, as well as certain other non-cash expenses such as purchase accounting adjustments and stock-based compensation) and include a normalized effective tax rate based on the Company's statutory tax rate.

Discretionary Free Cash Flow is defined by the Company as net cash provided by operating activities excluding cash outflows from acquisition and realignment activities, including expenditures related to the separation of Demand Media into two distinct publicly traded companies, and the formation expenses directly related to its gTLD initiative, less capital expenditures to acquire property and equipment. Free Cash Flow is defined by the Company as Discretionary Free Cash Flow less investments in intangible assets and is not impacted by net payments for gTLD applications, which were $11.5 million for the six months ended June 30, 2014, or net proceeds from the withdrawal of interest in gTLD applications, which were $6.1 million for the six months ended June 30, 2014.

Management believes that Discretionary Free Cash Flow and Free Cash Flow provide investors with additional useful information to measure operating liquidity because they reflect the Company's underlying cash flows from recurring operating activities after investing in capital assets and intangible assets. These measures are 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 reinvestment in the business, pursuing new business opportunities, potential acquisitions, payment of dividends and share repurchases.

The use of these 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 these non-GAAP financial measures is that they do not have standardized meanings, and therefore other 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 within its financial press releases. Non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The accompanying tables have more details on the GAAP financial measures and the related reconciliations.

About Demand Media

Demand Media, Inc. (NYSE: DMD) is a leading digital content & media company that informs and entertains one of the Internet's largest audiences, helps advertisers find innovative ways to engage with their customers and enables publishers and individuals to expand their online presence. Headquartered in Santa Monica, CA, Demand Media has offices in North America and South America. For more information about Demand Media, please visit www.demandmedia.com.

About Rightside

Rightside™ inspires and delivers new possibilities for consumers and businesses to define and present themselves online. The company, with its affiliates, is a leading provider of domain name services, offering one of the industry’s most comprehensive platforms for the discovery, registration, development, and monetization of domain names. This includes more than 16 million names under management, the most widely used domain name reseller platform, more than 20,000 distribution partners, an award-winning retail registrar, the leading domain name auction service through its NameJet joint venture and an interest in approximately 100 new Top Level Domain registry operator agreements or applications through its affiliate, United TLD Holdco Limited, trading as Rightside Registry. Rightside is home to some of the most admired brands in the industry, including eNom, Name.com, and NameJet (in partnership with Web.com). Headquartered in Kirkland, WA, Rightside has offices in North America, Europe and Australia. For more information please visit www.rightside.co.

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 our 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 our operating and financial results are described in our annual report on Form 10-K for the fiscal year ending December 31, 2013 filed with the Securities and Exchange Commission (http://www.sec.gov) on March 17, 2014, as such risks and uncertainties may be updated in our 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: the impact of the separation of our business into two separate smaller, less diversified public companies; the expectation that the separation transaction is tax-free; revenue and growth expectations for the two independent companies, and the ability of each company to operate as an independent entity, following the separation transaction; changes in the methodologies of internet search engines, including ongoing algorithmic changes made by Google as well as possible future changes, and the impact such changes may have on page view growth and driving search related traffic to our owned & operated websites and the websites of our network customers; the impact of product and ad format changes to improve user experience; changes in our content creation and distribution platform, including the removal of content and article rewrites designed to improve user experience, the possible repurposing of content to alternate distribution channels, and reduced investments in intangible assets; our ability to successfully grow adjacent lines of business such as commerce and content solutions as part of our growth strategy; the effects of shifting consumption of media content from desktop to mobile; our ability to successfully pursue and implement our gTLD initiative; our dependence on material agreements with a specific business partner for a significant portion of our revenue; 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 our ability to retain key personnel. From time to time, we 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,

2014     2013 2014     2013
Service revenue $ 83,086 $ 101,066 $ 166,046 $ 201,686
Product revenue   6,680   -   13,472   -
Total revenue 89,766 101,066 179,518 201,686

Service costs (exclusive of amortization of intangible assets shown separately below)(1)(2)

51,269 48,575 100,406 96,752
Product costs 5,046 - 10,001 -
Sales and marketing(1)(2) 6,797 12,243 15,728 26,326
Product development(1)(2) 10,056 10,742 21,328 21,902
General and administrative(1)(2) 18,733 17,622 36,448 33,997
Amortization of intangible assets 9,785 10,551 21,414 20,110

Interest expense

929 159 1,694 305
Other (income) expense, net 65 45 (1,239 ) 123

Gain on sale of assets, net

  (887 )   (1,229 )   (5,747 )   (1,229 )
Income (loss) before income taxes (12,027 ) 2,358 (20,515 ) 3,400
Income tax expense   (2,306 )   (1,240 )   (4,774 )   (1,613 )
Net income (loss) $ (14,333 ) $ 1,118 $ (25,289 ) $ 1,787
 
Net income (loss) per share – basic(3) $ (0.78 ) $ 0.06 $ (1.39 ) $ 0.10
Net income (loss) per share – diluted(3) $ (0.78 ) $ 0.06 $ (1.39 ) $ 0.10
Weighted average number of shares - basic(3)   18,286   17,474  

18,229

 

17,400

Weighted average number of shares - diluted(3)   18,286  

17,691

 

18,229

 

17,629

 
(1) Stock-based compensation expense included in the line items above:
Service costs $ 521 $ 726 $ 923 $ 1,337
Sales and marketing 355 1,406 1,180 3,329
Product development 1,183 1,270 2,142 2,435
General and administrative   3,305   3,478   6,386   7,042
Total stock-based compensation expense $ 5,364 $ 6,880 $ 10,631 $ 14,143

(2) Depreciation expense included in the line items above:

Service costs $ 2,878 $ 3,466 $ 6,491 $ 7,448
Sales and marketing 58 99 114 206
Product development 171 225 349 461
General and administrative   1,625   1,094   3,554   2,114
Total depreciation $ 4,732 $ 4,884 $ 10,508 $ 10,229
 

(3) Demand Media, Inc. common stock share information and related per share amounts included in this earnings release and the accompanying tables have been adjusted retroactively for all periods presented to reflect the one-for-five reverse stock split of Demand Media, Inc. 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,
2014 2013
Assets
Current assets
Cash and cash equivalents $ 131,588 $ 153,511
Accounts receivable, net 27,608 33,301
Prepaid expenses and other current assets 8,022 7,826
Deferred registration costs 73,708 66,273
Assets held-for-sale   18,038   -
Total current assets 258,964 260,911
Deferred registration costs, less current portion 14,037 12,514
Property and equipment, net 37,132 42,193
Intangible assets, net 76,707 88,766
Goodwill 334,882 347,382
Other assets   26,995   25,322
Total assets $ 748,717 $ 777,088
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 9,825 $ 12,814
Accrued expenses and other current liabilities 38,607 34,679
Deferred tax liabilities 22,431 22,415
Current portion of long-term debt - 15,000
Deferred revenue 94,572 84,955
Liabilities related to assets held-for-sale   616   -
Total current liabilities 166,051 169,863
Deferred revenue, less current portion 18,747 16,929
Other liabilities 10,105 13,041
Long-term debt 73,750 81,250
Stockholders’ equity (deficit)
Common Stock 11 11
Additional paid-in capital 620,988 611,028
Accumulated other comprehensive income (loss)

(110

) 502
Treasury stock at cost

(30,767

) (30,767 )
Accumulated deficit   (110,058 )   (84,769 )
Total stockholders’ equity   480,064   496,005
Total liabilities and stockholders’ equity $ 748,717 $ 777,088
 
 
         

Demand Media, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

 

Three months ended

June 30,

Six months ended

June 30,

2014     2013 2014     2013
Cash flows from operating activities
Net Income (loss) $ (14,333 ) $ 1,118 $ (25,289 ) $ 1,787

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 14,517 15,435 31,922 30,339
Stock-based compensation 5,364 6,880 10,631 14,143
Gain on other assets, net (887 ) (1,229) (5,747 ) (1,229)
Other 2,301 720 3,155 929

Change in operating assets and liabilities, net of effect of acquisitions

  5,492   (2,125 )   3,470   1,645

Net cash provided by operating activities

  12,454   20,799   18,142   47,614
Cash flows from investing activities
Purchases of property and equipment (3,120 ) (8,978 ) (5,910 ) (14,803 )
Purchases of intangible assets (1,050 ) (6,175 ) (4,314 ) (10,028 )
Proceeds from gTLD withdrawals, net 1,006 1,384 6,105 1,384
Payments for gTLD applications, net (11,060 ) - (11,460 ) -
Cash paid for acquisitions, net of cash acquired - (67,137 ) - (73,229 )
Other   120   511   1,291   511
Net cash used in investing activities   (14,104 )   (80,395 )   (14,288 )   (96,165 )
Cash flows from financing activities
Long-term debt (repayments) borrowing (18,750 ) 20,000 (22,500 ) 20,000
Proceeds from exercises of stock options and contributions to ESPP 72 1,603 252 3,349
Repurchases of common stock - - - (4,835 )

Payments of withholding tax on net exercise of stock-based awards

(799 ) (1,316 ) (1,646 ) (2,699 )
Cash paid for acquisition holdback (1,042 ) - (1,542 ) -
Other   (179 )   (173 )   (296 )   (265 )
Net cash used in financing activities   (20,698 )   20,114   (25,732 )   15,550
Effect of foreign currency on cash and cash equivalents (27 ) (13 ) (45 ) (56 )
Change in cash and cash equivalents (22,375 ) (39,495 ) (21,923 ) (33,057 )
Cash and cash equivalents, beginning of period   153,963   109,371   153,511   102,933
Cash and cash equivalents, end of period $ 131,588 $ 69,876 $ 131,588 $ 69,876
 
 
         

Demand Media, Inc. and Subsidiaries

Reconciliations of Non-GAAP Measures

(In thousands, except per share amounts)

 

Three months ended

June 30,

Six months ended

June 30,

2014     2013 2014     2013

Revenue ex-TAC:

Content & Media revenue $ 48,532 $ 64,499 $ 99,155 $ 129,790
Less: traffic acquisition costs (TAC)   (2,618 )   (4,045 )   (4,972 )   (9,481 )
Content & Media revenue ex-TAC 45,914 60,454 94,183 120,309
Registrar revenue   41,234   36,567   80,363   71,896
Total revenue ex-TAC $ 87,148 $ 97,021 $ 174,546 $ 192,205

Adjusted EBITDA:

Net income (loss) $ (14,333 ) $ 1,118 $ (25,289 ) $ 1,787
Income tax expense 2,306 1,240 4,774 1,613
Interest and other (income) expense, net 994 204 455 428
Gain on gTLD application withdrawals, net(1) (887 ) (1,229 ) (5,747 ) (1,229 )
Depreciation and amortization 14,517 15,435 31,922 30,339
Stock-based compensation 5,364 6,880 10,631 14,143
Acquisition and realignment costs(2) 2,756 1,076 5,478 1,452
gTLD expense(3)   -   2,052   -   3,670
Adjusted EBITDA $ 10,717 $ 26,776 $ 22,224 $ 52,203

Discretionary and Total Free Cash Flow:

Net cash provided by operating activities $ 12,454 $ 20,799 $ 18,142 $ 47,614
Purchases of property and equipment (3,120 ) (8,978 ) (5,910 ) (14,803 )
Acquisition and realignment cash flows(2) 1,471 599 3,884 901
gTLD expense cash flows(3)   -   1,242   -   2,363
Discretionary Free Cash Flow 10,805 13,662 16,116 36,075
Purchases of intangible assets   (1,050 )   (6,175 )   (4,314 )   (10,028 )
Free Cash Flow $ 9,755 $ 7,487 $ 11,802 $ 26,047

Adjusted Net Income (Loss) and Adjusted EPS:

Net income (loss) $ (14,333 ) $ 1,118 $ (25,289 ) $ 1,787
(a) Stock-based compensation 5,364 6,880 10,631 14,143
(b) Amortization of intangibles - M&A 3,177 3,024 7,977 5,815
(c) Acquisition and realignment costs(2) 2,756 1,076 5,478 1,452
(d) Gain on gTLD application withdrawals, net(1) (887 ) (1,229 ) (5,747 ) (1,229 )
(e) Gain on sale of RetailMeNot shares - - (1,362 ) -
(f) Accelerated depreciation related to restructuring - - 931 -
(g) Content intangible assets removed from service(4) - - - 66
(h) gTLD expense(3) - 2,052 - 3,670

Income tax effect of items (a) - (h) & application of 38% statutory tax rate to pre-tax income (loss)

  2,921   (4,141 )   5,765   (8,767 )
Adjusted Net Income (Loss) $ (1,002 ) $ 8,780 $ (1,616 ) $ 16,937
Adjusted EPS – diluted(5) $ (0.05 ) $ 0.50 $ (0.09 ) $ 0.96
Shares used to calculate adjusted EPS – diluted(5)   18,286  

17,691

 

18,229

 

17,629

 
(1)     Net gains on withdrawals of interest in gTLD applications, included in gain on other assets, net.
(2) Acquisition and realignment costs include such items, when applicable, as (a) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (b) legal, accounting and other professional fees directly attributable to acquisition activity, (c) employee severance and other payments attributable to acquisition or corporate realignment activities and (d) expenditures related to the separation of Demand Media into two distinct publicly traded companies. Management does not consider these costs to be indicative of the Company's core operating results.
(3) Comprises formation expenses directly related to the Company's gTLD initiative that did not generate associated revenue in 2013.
(4) The Company elected to remove certain content assets from service, resulting in accelerated amortization expense.
(5) Demand Media, Inc. common stock share information and related per share amounts included in this earnings release and the accompanying tables have been adjusted retroactively for all periods presented to reflect the one-for-five reverse stock split of Demand Media, Inc. common stock that was effected on August 1, 2014.
 
 
         

Demand Media, Inc. and Subsidiaries

Unaudited GAAP Revenue, by Revenue Source

(In thousands)

 

Three months ended

June 30,

Six months ended

June 30,

2014     2013 2014     2013
Content & Media:
Owned & operated websites $ 38,833 $ 51,709 $ 79,585 $ 101,412
Network of customer websites   9,699   12,790   19,570   28,378
Total revenue – Content & Media 48,532 64,499 99,155 129,790
Registrar   41,234   36,567   80,363   71,896
Total revenue $ 89,766 $ 101,066 $ 179,518 $ 201,686
 

Three months ended

June 30,

Six months ended

June 30,

2014 2013 2014 2013
Content & Media:
Owned & operated websites 43 % 51 % 44 % 50 %
Network of customer websites   11 %   13 %   11 %   14 %
Total revenue – Content & Media 54 % 64 % 55 % 64 %
Registrar   46 %   36 %   45 %   36 %
Total revenue   100 %   100 %   100 %   100 %
 

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@CloudExpo Stories
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applicatio...
SYS-CON Events announced today that BroadSoft, the leading global provider of Unified Communications and Collaboration (UCC) services to operators worldwide, has been named “Gold Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Compa...
ProfitBricks, the provider of painless cloud infrastructure for IaaS, today announced the release of a Node.js SDK written against its recently launched REST API. This new JavaScript based library provides coverage for all existing ProfitBricks REST API functions. With additional libraries set to release this month, ProfitBricks continues to prove its dedication to the DevOps community and commitment to making cloud migrations and cloud management painless. Node.js is an open source, cross-pl...
ProfitBricks has launched its new DevOps Central and REST API, along with support for three multi-cloud libraries and a Python SDK. This, combined with its already existing SOAP API and its new RESTful API, moves ProfitBricks into a position to better serve the DevOps community and provide the ability to automate cloud infrastructure in a multi-cloud world. Following this momentum, ProfitBricks has also introduced several libraries that enable developers to use their favorite language to code ...
What exactly is a cognitive application? In her session at 16th Cloud Expo, Ashley Hathaway, Product Manager at IBM Watson, will look at the services being offered by the IBM Watson Developer Cloud and what that means for developers and Big Data. She'll explore how IBM Watson and its partnerships will continue to grow and help define what it means to be a cognitive service, as well as take a look at the offerings on Bluemix. She will also check out how Watson and the Alchemy API team up to off...
The IoT Bootcamp is coming to Cloud Expo | @ThingsExpo on June 9-10 at the Javits Center in New York. Instructor. Registration is now available at http://iotbootcamp.sys-con.com/ Instructor Janakiram MSV previously taught the famously successful Multi-Cloud Bootcamp at Cloud Expo | @ThingsExpo in November in Santa Clara. Now he is expanding the focus to Janakiram is the founder and CTO of Get Cloud Ready Consulting, a niche Cloud Migration and Cloud Operations firm that recently got acquir...
SYS-CON Events announced today the DevOps Foundation Certification Course, being held June ?, 2015, in conjunction with DevOps Summit and 16th Cloud Expo at the Javits Center in New York City, NY. This sixteen (16) hour course provides an introduction to DevOps – the cultural and professional movement that stresses communication, collaboration, integration and automation in order to improve the flow of work between software developers and IT operations professionals. Improved workflows will res...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
SYS-CON Media announced today that @ThingsExpo Blog launched with 7,788 original stories. @ThingsExpo Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @ThingsExpo Blog can be bookmarked. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago.
As Marc Andreessen says software is eating the world. Everything is rapidly moving toward being software-defined – from our phones and cars through our washing machines to the datacenter. However, there are larger challenges when implementing software defined on a larger scale - when building software defined infrastructure. In his session at 16th Cloud Expo, Boyan Ivanov, CEO of StorPool, will provide some practical insights on what, how and why when implementing "software-defined" in the dat...
SYS-CON Events announced today that robomq.io will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. robomq.io is an interoperable and composable platform that connects any device to any application. It helps systems integrators and the solution providers build new and innovative products and service for industries requiring monitoring or intelligence from devices and sensors.
The world's leading Cloud event, Cloud Expo has launched Microservices Journal on the SYS-CON.com portal, featuring over 19,000 original articles, news stories, features, and blog entries. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. Microservices Journal offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Follow new article posts on T...
SYS-CON Events announced today that Litmus Automation will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Litmus Automation’s vision is to provide a solution for companies that are in a rush to embrace the disruptive Internet of Things technology and leverage it for real business challenges. Litmus Automation simplifies the complexity of connected devices applications with Loop, a secure and scalable clou...
In 2015, 4.9 billion connected "things" will be in use. By 2020, Gartner forecasts this amount to be 25 billion, a 410 percent increase in just five years. How will businesses handle this rapid growth of data? Hadoop will continue to improve its technology to meet business demands, by enabling businesses to access/analyze data in real time, when and where they need it. Cloudera's Chief Technologist, Eli Collins, will discuss how Big Data is keeping up with today's data demands and how in t...
SYS-CON Events announced today that Vicom Computer Services, Inc., a provider of technology and service solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. They are located at booth #427. Vicom Computer Services, Inc. is a progressive leader in the technology industry for over 30 years. Headquartered in the NY Metropolitan area. Vicom provides products and services based on today’s requirements...
DevOps tasked with driving success in the cloud need a solution to efficiently leverage multiple clouds while avoiding cloud lock-in. Flexiant today announces the commercial availability of Flexiant Concerto. With Flexiant Concerto, DevOps have cloud freedom to automate the build, deployment and operations of applications consistently across multiple clouds. Concerto is available through four disruptive pricing models aimed to deliver multi-cloud at a price point everyone can afford.
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists will discuss how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations m...
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Ras...
SYS-CON Events announced today that AIC, a leading provider of OEM/ODM server and storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. AIC is a leading provider of both standard OTS, off-the-shelf, and OEM/ODM server and storage solutions. With expert in-house design capabilities, validation, manufacturing and production, AIC's broad selection of products are highly flexible and are conf...