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Demand Reports: Media Business Negatively Impacted by Declines in Search Referral Traffic & Advertising Demand

Posted on the 07 November 2013 by Worldwide @thedomains

 Demand Media, Inc. (DMD), reported its earnings after the market closed today.

Demand’s earnings were in line with estimates, but revenue was above estimates.

However it seems like Demand is fighting a losing battle on the eHow front as changes in Google search algorithm is negatively effecting that part of the business.

For Demand in My opinion the spin off of the domain service business can’t happen soon enough

“This quarter, our media business was negatively impacted by declines in search referral traffic and advertising demand. ”

Q3 2013 Operating Metrics:

  • Owned & Operated page views increased 21% year-over-year to 4.1 billion, driven primarily by mobile page view growth on our core Owned & Operated sites, which more than offset significant declines in search engine referral traffic. Owned & Operated RPMs decreased 13% 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 the sale of undeveloped websites and revenue from Society6.
  • Network page views decreased 37% year-over-year to 3.1 billion, as the Company made the strategic decision to refocus its direct sales efforts on its Owned & Operated properties. Network RPM ex-TAC decreased 20% year-over-year, reflecting lower revenue from the Company’s YouTube Channels and the previously mentioned unfavorable revenue adjustment.
  • End of period domains increased 7% year-over-year to 14.6 million, driven by the acquisition of Name.com, with average revenue per domain up 5% year-over-year, due to higher domain pricing and higher average revenue per domain on Name.com.

Business Outlook

The Company’s fourth quarter and fiscal year guidance assumes that the recent substantial declines in search engine referrals to some of the Company’s websites will not reverse.

The Company’s guidance is as follows:

Fourth Quarter 2013

  • Revenue in the range of $98.0 – $101.0 million
  • Revenue ex-TAC in the range of $93.0 – $96.0 million
  • Adjusted EBITDA in the range of $16.0 – $19.0 million
  • Adjusted EPS in the range of $0.03 – $0.04 per share
  • Weighted average diluted shares 90.5 – 91.5 million

Full Year 2013

  • Revenue in the range of $396.0 – $399.0 million
  • Revenue ex-TAC in the range of $378.0 – $381.0 million
  • Adjusted EBITDA in the range of $86.0 – $89.0 million
  • Adjusted EPS in the range of $0.26 – $0.28 per share
  • Weighted average diluted shares 88.5-89.5 million

The Company’s guidance excludes estimated expenses in 2013 of $8 to $10 million related to the Company’s gTLD initiative and $6 to $8 million associated with separating Demand Media into two distinct publicly traded companies.…


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