This document provides an overview and key metrics for Demand Media for Q1 2016. It discusses the company's portfolio including its marketplace and content & media platforms. The marketplaces section highlights metrics for Society6 and Saatchi Art showing revenue, transactions, and revenue per transaction growth. The content & media section discusses platforms like eHow, Cracked, and LIVEstrong, providing traffic, video view, and revenue metrics. Financial details are given for 2015 with the revenue composition shown to be 47% from marketplaces and 53% from content & media.
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This presentation contains certain forward-looking statements. All statements other than statements of historical facts contained in this presentation, including statements
regarding the Company’s future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. You
should not rely upon forward-looking statements as guarantees of future performance. The Company has based these forward-looking statements largely on its current
expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term
and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions
that may cause actual results to differ materially from those contained in any forward-looking statements, including those described under the heading “Risk Factors” in the
Company’s periodic reports filed from time to time with the Securities and Exchange Commission (the “SEC”), which are incorporated herein by reference. Moreover, the
Company operates in a very competitive and rapidly changing environment and new risks emerge from time to time. In light of these risks, uncertainties and assumptions,
the forward-looking statements included in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the
forward-looking statements. Except as required by law, the Company undertakes no obligation to update any forward-looking statements for any reason after the date of this
presentation to conform these statements to actual results or to changes in the Company’s expectations.
The Company is publicly traded on the New York Stock Exchange under the ticker symbol “DMD” and is a registrant under the rules and regulations promulgated by the
SEC. Before evaluating whether you should consider an investment in the Company’s securities, you should read all of the disclosures set forth in the Company’s annual,
quarterly and periodic reports filed with the SEC, including the disclosures under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” The Company’s SEC filings can be found at www.sec.gov and ir.demandmedia.com.
2
Disclaimers
3. 3
We build platforms for
communities of creators to
reach passionate
audiences in large and
growing lifestyle categories
Our Mission
5. Approximately 59M (1)
Total Unique Monthly Visitors
5
Approximately $19M (3)
Paid to Creators in 2015
Approximately 220,000 (2)
Creators Across Platforms
$126M FY2015
Diversified Revenue Mix Clean Balance Sheet
Scaling the Operation
Employees
Key Statistics
(1) Total unique visitors in the U.S. reached by Demand Media properties in January 2016 (Source: Jan. 2016 U.S. comScore)
(2) Total creators across platforms: current number of active creators for Society6, Saatchi Art and StudioD 2015; based on internal data
(3) Total paid to creators: full year 2015 for Society6, Saatchi Art and StudioD; based on internal data
$0M
$38M
–
$10M
$20M
$30M
$40M
Debt Cash
446
347
–
100
200
300
400
500
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
As of 12/31/15
9. Society6 provides artists with an online commerce
platform to feature and sell their original designs on art
prints, phone and tablet cases, t-shirts, throw pillows and
other consumer and home décor products.
Society6
Saatchi Art is an online art gallery featuring a wide
selection of original paintings, drawings, sculptures and
photography that provides a global community of artists a
curated environment in which to exhibit and sell their
work directly to consumers around the world.
Saatchi Art
9
Marketplaces
10. 10
Key Marketplace Metrics (1)
Revenue ($M) Revenue Per Transaction(2)
Total Transactions(3)
$18.3
–
$5.0
$10.0
$15.0
$20.0
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
+28% Y/Y
355K
0
50
100
150
200
250
300
350
400
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
$51.61
$0.00
$15.00
$30.00
$45.00
$60.00
$75.00
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
Marketplaces Revenue as a Percent of Total Revenue
33%
53%
10%
20%
30%
40%
50%
60%
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
(1) Saatchi Art was acquired in August 2014
(2) Number of transactions is defined as the total number of successfully completed Marketplaces transactions during the applicable period
(3) Average revenue per transaction is calculated by dividing Marketplaces revenue for a period by the number of transactions in that period
11. 11
Society6
Marketplace platform empowering artists to make their designs
available for sale on a variety of products.
Business Model
• Original designs from a global community of over 180k artists
• Over 2.7m original designs
• Print-On-Demand for 30+ Products
• Third-party vendors produce, pack and ship directly to
customers
• Artist earns a royalty on every product sold
Key Metrics
• 570k new customers / 800k total customers in 2015
• Visits up 14% y/y; transactions up 29% y/y in 2015
• Over 700k social followers (1)
• Nearly $50m in total transaction value in FY2015, up 38% y/y
(1) Source: Facebook, Instagram, Pinterest, Twitter and Google+, Jan. 2016
12. 12
Saatchi Art
A leading online art gallery, redefining the experience of
buying and selling art by making it easy, convenient and
welcoming for both collectors and artists.
Business Model
• Original art from a global community of over 60k artists
• Commission based model; artist earns 70% commission
• Best in class logistics management (packaging, shipping,
customs, delivery)
• Over $1.5b in total retail value based on list price of art on
the site
• Over 500k artworks for sale
• Have shipped to ~80 countries
• Unique Art Advisory program led by Chief Curator, Rebecca
Wilson
Key Metrics
• $12m in gross transaction value (2015)
• Average order value ~$1,200 (2015)
• 36% Y/Y revenue growth (Q4 2015)
14. Whether it is to fix, build, create or learn, eHow gives
practical and creative solutions to life’s everyday
challenges. Over 700k DIY titles and ~200k videos with a
focus in six core lifestyle categories: Home, Garden, Food,
Crafts, Tech, Finance.
eHow
14
Content & Media
Cracked is a four-time Webby Award winning humor site
filled with articles and videos providing laugh-out-loud
comedy via incredible true stories and mind-expanding
original ideas.
Cracked
15. The premier site for healthy living. Over 100k food,
fitness and health articles from over 150K experts and
influencers. 1 in 3 US adults search online for health
related content every month (comScore, Jan 2016).
LIVEstrong.com
15
Content & Media
studioD is an innovative content marketing studio connecting brands
to audiences by combining proven insights and authentic content.
studioD creates custom content informed by a data-driven strategy,
ensuring brands will reach and engage their audience through every
stage in their journey.
studioD
16. $21.44
$0.00
$10.00
$20.00
$30.00
$40.00
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
+5% Q/Q
162.7
–
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
+19% Y/Y
16
Key Content & Media Metrics
Revenue Per Visit(2)
Video Views (m)(3)
Revenue ($m)
Visits (m)(1)
$16.1
–
$10.0
$20.0
$30.0
$40.0
$50.0
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
+2% Q/Q
464
290
0
200
400
600
800
1,000
1,200
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
Desktop Mobile
-4% Q/Q
(1) Visits are defined as the total number of times users access the company’s content across (a) one of its owned and operated online properties and/or (b) one of its customers’ online properties, to the extent that the visited customer web pages are hosted by the company’s content
services. In each case, breaks of access of at least 30 minutes constitute a unique visit.
(2) Revenue Per Visit is defined as Content & Media revenue per one thousand visits.
(3) Source: YouTube, Facebook and internal data.
17. 17
eHow
Multi-Year Transformation Commences in H2’2014
• Removal of 2.4m low quality/duplicative titles between Q3’14
and Q2’15
• Removal of 3 ads per page in Q1 2015; one additional ad unit
removed Q2 2015
• New site team leadership (GM, product, content)
• Category rationalization from 24 to 6 core categories
Product
• New responsive homepage design and site wide header to
optimize mobile web experience
• Public facing contributor and user profiles
• Growing social audience and distribution channels (Pinterest,
Facebook)
Key Metrics
• 47m average monthly visitors in Q4 2015(1)
• Nearly 6m followers in social channels(2) and 33M video
streams(3)
• Management estimates $40m revenue reduction in 2015 from
proactive transformation efforts
• After 8 quarters of sequential revenue declines, in Q4 2015
eHow revenue increased 10% vs. Q3
(1) Source: Demand Media Internal Data
(2) Source: Facebook, YouTube, Pinterest, Instagram, Twitter, Feb. 2016
(3) Source: YouTube, Feb. 2016
18. 18
Cracked
Notable
• Winner The People’s Voice Webby for “Best Humor
Site” for 2012, 2013 and 2015
• The Cracked video series “After Hours” won the 2014
Webby and People’s Voice Webby for Best Writing in
Online Film & Video
Product
• Weekly podcasts and sponsored live events
• Focused on video content expansion and distribution
Key Metrics
• 8m monthly unique users (1)
• Social reach 6m+ users (2)
• Over 20m video views across Facebook and YouTube (3)
• Over 1m YouTube subscribers (4)
• 14% Revenue Growth during FY2015
(1) Source: US comScore, Dec 2015
(2) Source: Facebook, YouTube, Twitter, Feb 2016
(3) Source: YouTube and Facebook, Dec. 2015
(4) Source: YouTube, Dec. 2015
19. 19
LIVEstrong.com
Transformation Facts
• 300k articles removed Q4’14
• Reduced ad density: 3 Ads removed from every page
(2014)
Product
• Q4 2015 launched single page article with infinite scroll;
+70% session duration and +80% unique page views
• Redesigned home page; new and improved legacy content
more easily shareable
Key Metrics
• 28m monthly unique users (1)
• Significant mobile audience growth +40% FY 2015 (2)
• 5m total app downloads with 300k monthly active users (3)
• 3m average monthly video streams (4)
• Q4 2015 Revenue growth +14% vs. Q3
(1) Source: LIVEstrong / eHow Health, US comScore Jan. 2016
(2) Source: Demand Media Internal Data
(3) Source: Demand Media Internal Data
(4) Source: YouTube, Jan. 2016
20. 20
StudioD
Custom Fully-managed Hosted Platforms for Publishers and
Brands
• 29 Live Hosted Platforms with top brands, including
Samsung & Hearst
• Ad-supported model
• Original content
• Customized and optimized subdomain
Custom Content
• High quality content informed by customized content
strategy using proprietary data and insights to meet
brands’ KPIs
• Creation of 20+ text, video and visual formats, including
infographics, original photography, podcast and
whitepapers
• Over 1000 expert creators within our editorial, design and
photography network
• Social influencer activation and management
• Audience acquisition and distribution services
• Agency model with annual contract value growing Y/Y
• Q4 2015 revenue grew 162% Y/Y
23. Assets Liabilities
Cash & Cash Equivalents $ 38.6
Accounts Payable, Accrued Expenses,
and Other Current Liabilities
$ 17.1
Other Current Assets 15.5 Deferred Revenue 2.9
Property and Equipment, Net 14.6 Non-current Liabilities 2.3
Other Long Term Assets (1) 32.8 Stockholders’ Equity 79.1
Total Assets $ 101.5
Total Liabilities and Stockholders’
Equity
$ 101.5
23
Balance Sheet Summary
(in millions)
As of December 31, 2015
(1) Includes intangible assets, net, goodwill and other assets.
24. 24
Selected Recent Valuation Comparables for DMD Businesses
Art and Design
Marketplace
Humor
Content Publisher
DIY
Content Marketing
Platform
Read Article
Read Article
Read Article
Read Article
Read Article
ASX IPO - ~$300m
Enterprise Value
Univision pays $27m for
40% of The Onion
Scripps Interactive invests $50m
in Refinery 29
Scribble Live acquires Visually
News Cred raises $42m
25. 25
Executive Leadership
Rachel Glaser
Chief Financial Officer
Brian Pike
Chief Operating Officer & Chief
Technology Officer
Rachel Glaser joined Demand Media as the Chief
Financial Officer. With nearly three decades of senior
operations and financial experience, she most
recently served as CFO at Move, Inc, parent of
Realtor.com, where she helped lead the company
through its successful transformation and sale to
News Corporation. Prior to Move, she was Chief
Operating and Financial Officer at MyLife.com. Before
joining MyLife, Glaser was Senior Vice President,
Finance at Yahoo! and spent many years at The Walt
Disney Company in various finance, operations and
technology roles.
Rachel received her undergraduate degree from
University of California, Berkeley and earned her MBA
at University of Southern California – Marshall School
of Business.
Brian Pike joined Demand Media in 2014 and he
currently serves as its Chief Operating Officer and
Chief Technology Officer. Prior to Demand Media,
Brian was CTO at Rubicon Project, where he led
the engineering organization through rapid growth
and a successful IPO. Prior to joining Rubicon,
Brian was CTO at Ticketmaster where he led
efforts to transform an established retailer and
service company into a modern ecommerce
retailer. Brian has an undergraduate degree from
Stanford University and an MBA from the Anderson
School at UCLA.
Sean serves as Chief Executive Officer and a member
of the board of directors of Demand Media. Sean was
previously the CEO of Saatchi Art, which Demand
Media acquired in August 2014, and the President
and CEO of Ticketmaster, where he also served on
the board of directors. Sean held positions of
increasing responsibility during his tenure at
Ticketmaster, including EVP, Technology and Chief
Operating Officer. Sean has also served as an
Entrepreneur in Residence at Mayfield Fund and he
began his executive experience as EVP, Technology
at Citysearch.
Sean sits on several private company boards of
directors, including Eventbrite and TuneIn. Sean is
also actively involved in non-profit work with CoachArt
and the Pat Tillman Foundation.
Sean received his bachelor’s degree from the
University of South Carolina and attended graduate
school at Boston University and the University of
South Carolina.
Sean Moriarty
Chief Executive Officer
26. 26
Executive Leadership
Daniel Weinrot
EVP, Legal & General Counsel
Daniel Weinrot is the EVP, Legal & General Counsel. He
joined Demand Media in 2010 and has held several
positions within Demand’s legal department before
being elevated to General Counsel. Daniel was integral
in managing our initial public offering in January 2011,
and the tax-free spin-off of our domain name services
business in August 2014. In his current role, Daniel
oversees and manages Demand Media’s legal and risk
management functions, which includes public company
compliance, mergers & acquisitions, litigation and
insurance, among others.
Prior to joining Demand Media, Daniel was most
recently VP & Deputy General Counsel at Las Vegas
Sands Corp., the leading owner and developer of
integrated casino resort properties located in the United
States and Asia. Prior to that, Daniel was a corporate
associate at Latham & Watkins LLP, one of the leading
international law firms based in Los Angeles. Daniel
holds a JD from UCLA and a bachelor’s degree from
U.C. Berkeley.
Tawn Albright is the Executive Vice President of
Corporate Development for Demand Media. He
joined the company in 2015. Prior to Demand Media,
Albright was CEO and founding partner of the award-
winning digital marketing agency, Rockhouse
Partners. Following the sale of Rockhouse to Etix,
Albright served as Executive Vice President for Etix,
leading the integration of the two companies. Albright
has more than twenty years of experience managing
growth initiatives for companies that include
Ticketmaster/IAC, The Coca-Cola Company and Cox
Communications. He is trilingual (English, Spanish,
French), enjoys backpacking, ultimate frisbee, big
skies and music.
He’s a graduate from the University of Arizona with a
double degree in Finance and Entrepreneurship and
earned his MBA from Thunderbird School of Global
Management.
Tawn Albright
EVP, Corporate Development
Jill Angel
EVP, People
Jill Angel joined Demand Media in 2014, bringing
with her more than 15 years of leadership
experience for fast-growing companies including
large organizations and startups. Prior to working
at Demand, Jill served as VP Operations at Saatchi
Art where she headed up people management,
logistics, fulfillment, and customer service. Before
joining Saatchi Art, Jill built and led teams at
Cocodot, Swirl by DailyCandy, and GSI Commerce.