(2010-08-12) Demand Media Surprises

Demand Media filed for an IPO last week.

In *multiple interviews with various publications over the past couple of years, Rosenblatt stated that Demand Media is profitable and suggested that revenue reached about $200 million in 2009. We took his word for it, as we’re forced to do with privately held companies.

So when Demand Media filed for an IPO on Friday, we eagerly pored through the 187-page filing–only to find that while the company’s revenue last year was close to $200 million its bottom line was deep in the red.

In fact, Demand Media, which spends a lot of money on acquisitions, has never been profitable since its inception, according to the filing. In 2009 its loss was $22 million, wider than a $14.2 million loss a year earlier. In the first six months of this year, the loss was $6.1 million, and its accumulated deficit stands at $52 million... Demand Media hasn’t responded to a request for comment, but like Current Media, executives may point to non-GAAP numbers in the IPO filing that exclude a host of items. These numbers–”adjusted OIBDA,” or adjusted operating income before depreciation and amortization expense–show the company made $36.8 million in 2009.* What is a pre-IPO company depreciating/amortizing? An acquisition, maybe? (Why isn't a Wall St Journal blog telling us that?)

Quant Cast reports that DM's traffic dropped heavily last week. Page Rank change? Quant Cast tracking-tag problem?