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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)
Short URL: http://vator.tv/n/1103

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)

 


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Richard Rosenblatt
Chairman and CEO,
Demand Media
Bio: Internet Entreprenuer. Currently Founder, Chairman and CEO of Demand Media. Formerly Chairman of Myspace and CEO of Intermix Media. Fou...

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Comments

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!


Comment_gbg
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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