Demand Reports: Content Revenue Up 25%; Registrar Up 10%: Domains Up to 13.7 Million

Demand Media, Inc. (DMD), today reported financial results for the fourth quarter and fiscal year ended December 31, 2012 and combined with Demand’s statement that they are considering spiting the company into to different public companies, shares are up over 17% in after hours trading.

Q4 2012 Financial Summary:

Content & Media revenue ex-TAC grew 25% year-over-year, driven by 24% page view growth on the Company’s owned & operated properties as well as 37% growth in network RPMs ex-TAC, reflecting higher revenue from network content partners.

Registrar revenue grew 10% year-over-year, driven by an increase in the number of domains on our platform, due primarily to growth from new partners.

Adjusted EBITDA increased 24% year-over-year, resulting in 110 basis points of margin expansion to 30.3% of Revenue ex-TAC. This improvement was driven by the growth in higher margin Content & Media revenue and operating leverage.

Q4 2012 Operating Metrics:

Owned & Operated page views increased 24% year-over-year, driven primarily by strong traffic growth on eHow.com and LIVESTRONG.COM. Owned & Operated RPMs were relatively flat year-over-year.

Network page views decreased 8% year-over-year to 4.5 billion, due primarily to lower traffic from our social media partners. Network RPM ex-TAC increased 37% year-over-year, reflecting higher revenue from our growing network of content partners, primarily YouTube.

End of period domains increased 8% year-over-year to 13.7 million, driven primarily by the addition of higher volume customers and continued growth from existing resellers, with average revenue per domain flat year-over-year.

“In 2012 we generated over $60 million of free cash flow, which more than funded our acquisition of Name.com and the repurchase of nearly $9 million of our common stock,” said Demand Media’s CFO Mel Tang. “We plan to continue reinvesting our strong cash flows into long-term growth opportunities, such as our gTLD initiative as well as growing and diversifying our content offerings.”

Demand gave some looking forward guidance:

Excluding $5 to $10 million of estimated expenses in 2013 associated with the formation of the Company’s gTLD initiative, the Company’s guidance for the first quarter ending March 31, 2013 and fiscal year ending December 31, 2013 is as follows:

First Quarter 2013