Demand Media files for IPO

The new media's S-1 gives everyone a look at the leading publisher of assembly-line content

Financial trends and news by Bambi Francisco Roizen
August 6, 2010 | Comments (3)
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Demand Media, which produces 5700 new pieces of content daily, is teeing up to raise more than $100 million through an initial public offering. 

It was widely expected to happen soon. See my interview with CEO and co-founder Richard Rosenblatt: Demand Media's IPO ambitions

Demand, a new media company that thrives on demand-based content generation driven primarily by what people are searching for, just today filed its S-1.

The main bankers behind the deal include Goldman Sachs as the lead, and then Morgan Stanley. Other partners in the syndicate include UBS, Allen & Co., Jefferies & Co., Stifel Nicolaus, RBC and Pacific Crest.

The takeaway from the S-1: The company has $33 million in cash, is "almost" breakeven, and could see revenue growth in the 15% to 20% range this year should the second half of 2010 improve (which it typically does for the advertising industry).

Of the $198 million in sales generated in 2009, 41% came from advertising on its own sites, eHow, Cracked, Livestrong, to name a few, as well as its network of sites. On those sales, Demand produced a net loss of $22 million and an operating loss of $18 million.

In the first six months of this year, the company generated $114 million in revenue and posted a net loss of $6 million and operating loss of $4 million, in the same period. 

Of the revenue generated in the first six months of 2010, 42% came from its registrar business, down from 46% in all of 2009.

Some interesting highlights:

1) Revenue grew 16% in 2009

2) Revenue per thousand pages (RPM) is $11.81 during the first half of 2010, up from $10.03 for the same period a year ago.

3) 21% of revenue comes from eHow during the first six months of 2010

4) Demand generates 5700 pieces of original content (articles or video) daily. They currently have a library of 2 million articles and 200,000 videos

5) Generates 3.9 billion pageviews from its owned and operated properties vs 5.8 billion pageviews from its network of customer Web sites

Here's a video with Richard talking about the company's business.

(Full disclosure: Richard Rosenblatt is an investor in Vator)


Related companies, investors and entrepreneurs

Richard Rosenblatt
Chairman and CEO,
Demand Media

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Jeremy Campbell
Jeremy Campbell, on August 7, 2010

Seems a bit early to go for the IPO while still not even profitable yet, but I love the business and content creation model, very intelligent. I wouldn't mind picking up some stock when DM first goes public!

Richard was wise to invest into VatorTV, every tech entrepreneur should thank him for that!

Bambi Francisco Roizen, on August 7, 2010

Thanks, Jeremy. We owe a lot to Richard. Have to hand it to him - he's created a business out of SEO and "demand" content. And, he's built a new model to create content that others started to follow.

Lorenzo Carver
Lorenzo Carver, on August 12, 2010

@Jeremy - Great comment on the Vator investment. I completely agree. However, the Demand Media IPO is actually perfectly timed the amount of capital they've raised and the revenue they are generating. If the markets hadn't come to a standstill their Series D financing (at a billion pre-money) would have more than qualified them for any exchange in the world. In fact, if you look at many of the venture backed IPOs this year, few of them have a market cap of more than $1 billion. This one certainly will and that's a benefit to all entrepreneurs also, because an IPOs liquidity generates new employees and new businesses faster than almost any private company (other than Facebook) can.

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