Demand Media, Inc. (DMD) recently reported fourth-quarter 2015 results. Adjusted loss (excluding depreciation expenses and other one-time items but including stock-based compensation) came in at 21 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 34 cents and the year-ago quarter loss.
On a GAAP basis, the company reported a loss of 42 cents as compared to a loss of 93 cents reported in the year-ago quarter.
Quarter Details
Demand Media’ fourth-quarter revenues came in at $34.5 million, down 19.8% on a year-over-year basis. Reported revenues lagged the Zacks Consensus Estimate of $35 million. The year-over-year decline was primarily due to lower revenues from Content & Media.
Content & Media revenues decreased 43.9% on a year-over-year basis primarily due to traffic declines and lower-than-expected ad monetization yields. Marketplaces revenue on the other hand increased 29% year over year, attributed mainly to new product introductions, increased conversion rates and traffic growth on Society6. Also, average revenue per transaction increased 11% year over year, which contributed to the growth in marketplace revenues.
It is worth mentioning that revenues from Saatchi Art acquisition went up 36% year over year during the quarter.
By segment, service revenues decreased 41.3% year over year and came in at $17.2 million. Product revenues increased 26.7% year over year and came in at $17.3 million.
The company’s total operating expenses decreased 28% from the year-ago quarter and came in at $43.1 million, primarily due to product development and lower service cost and general and administrative expenses. Operating loss during the quarter came in at $8.6 million compared with a loss of $16.9 million in the year-ago period. Operating results were impacted by decline in higher margin Content & Media advertising revenue.
Demand Media exited the fourth quarter with cash and cash equivalents of $38.6 million compared with $37.9 million in the previous quarter. Receivables were $10.5 million compared with $9.6 million in the prior quarter. The company does not have any long-term debt in its balance sheet.
The company reported cash flow from operations of $1.3 million during the quarter. Free cash flow during the quarter came in at $0.7 million.
Conclusion
Headquartered in Santa Monica, CA, Demand Media operates as a media company offering two distinct but complementary services: Content & Media and Registrar. The company uses an Internet-based model to identify, create, distribute and monetize in-demand, long-lived content. It deploys its proprietary Content & Media platform both to Demand Media’s owned and operated websites. The company’s Registrar as a wholesaler, provides domain name registration services and value-added services to active resellers, including small businesses, large e-Commerce websites, Internet service providers and web-hosting companies.