News Column

Demand Media Posts 4th Quarter and Fiscal 2013 Results

February 28, 2014

Demand Media, Inc., on February 25, reported financial results for the fourth quarter and fiscal year ended December 31, 2013.

"The fourth quarter was highlighted by solid performance from Society6, Content Solutions and our registrar business, offset by continued declines in the Company's core eHow business. Additionally, we have made steady progress against key initiatives, such as product improvements on Society6 and relaunching the website, while continuing to prepare for our upcoming spin-off of Rightside Group," said Shawn Colo, Interim CEO of Demand Media. "I continue to be excited about long-term strategic opportunities within our large and growing markets."

Q4 2013 Financial Summary:

-Total revenue ex-TAC declined 3 percent year-over-year, with 12 percent year-over-year growth in Registrar revenue offset by an 11 percent decline in Content & Media revenue ex-TAC. Excluding the acquisitions of Society6 and, total revenue ex-TAC decreased 15 percent.

-Registrar revenue grew 12 percent year-over-year, primarily due to the addition of, which was acquired at the end of Q4 2012. Excluding the acquisition of, Registrar revenue increased 2 percent.

-Owned & Operated revenue decline of 5 percent was driven primarily by reductions in search engine referral traffic, offset by revenue of $8.4 million from Society6, which was acquired at the end of Q2 2013. Excluding the acquisition of Society6, Owned & Operated revenue decreased 23 percent.

-Network revenue ex-TAC declined 31 percent due primarily to $3.5 million less revenue from the Company's YouTube Channels as well as declines in the Company's Social Media and Network Monetization businesses, offset partially by growth in Content Solutions.

-Adjusted EBITDA decreased 39 percent year-over-year, primarily reflecting the negative impact from search engine referral traffic on high-margin revenues and a mix shift to lower margin commerce and Registrar revenue.

"We generated over $8 million of free cash flow in the fourth quarter and over $44 million for the year," said Demand Media's CFO Mel Tang. "We will continue to invest our free cash flow into our strategic content, commerce and new gTLD initiatives."

Q4 2013 Operating Metrics:

-Owned & Operated page views increased 21 percent year-over-year to 4.1 billion, driven primarily by mobile page view growth on the Company's core Owned & Operated sites, which more than offset significant declines in search engine referral traffic. Owned & Operated RPM decreased 22 percent year-over-year, reflecting the mix shift to lower yielding mobile page views as well as lower direct display advertising, offset partially by increased revenue from Society6.

-Revenue per visit to the Company's Owned & Operated Content sites was $0.05, up 25 percent year-over-year.

-Network page views decreased 50 percent year-over-year to 2.2 billion, reflecting the Company's decision in Q3 2013 to focus its monetization efforts on its Owned & Operated properties. Additionally, there were lower reported page views from its Pluck customers. Network RPM ex-TAC increased 38 percent year-over-year, reflecting higher monetization of the Company's Social Media and Monetization page views.

-End of period domains increased 9 percent year-over-year to 15.0 million, driven by the acquisition of, with average revenue per domain up 4 percent year-over-year, due to higher average revenue per domain on

Demand Media, Inc. is a digital media and domain name services company that informs and entertains one of the internet's largest audiences, helps advertisers find ways to engage with their customers and enables publishers, individuals and businesses to expand their online presence.

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