Demand Media’s IPO has received a lot of attention lately. It can be difficult to make sense of all the numbers people have been throwing around, so we thought we’d try and make it a bit clearer. Byrne Hobart helped break things down in his post about the Demand Media IPO. Wired broke down Demand Media’s business model in detail and their S-1 filing fills in many of the gaps.
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another billion dollar seo company… LOL
Yeah, it’ll be interesting to see how their IPO actually goes.
Interesting info. I didn’t know they had eNom. One problem with being a domain registrar is that the accounting really sucks, ask Godaddy why they aren’t public. – http://www.bobparsons.me/121/godaddy-pulls-ipo-filing-why-decided-pull.html
“The accounting method we are required to use.
Because GoDaddy.com sells domain name registrations, we are required to use an accounting method that is ultra conservative.
We are required to show income on domain names – as if our customers pay for them monthly over the life of the registration.
Because we sell domain name registrations, we must recognize the income we earn on each domain name over the term of its registration. For example: if a customer registers a domain name with us for three years, we must show the income earned over the three year period. However, all of the salaries, advertising, systems and overhead costs associated with getting that domain name registration are recorded and expensed on the day the registration is sold. As a result we defer most of the income we make on every domain name until way into the future. “
That\’s way more celevr than I was expecting. Thanks!
Yeah, I can understand why the SEC wouldn’t like that. With recurring revenue you make your books look better by estimating a lifetime value for a customer. That way upfront sales / marketing costs look better also. A LCV is a pretty vague number, and depends on too many unknowns, even if you’ve been historically good at estimating, I’m sure it’s not good enough for the SEC.
I think sometimes company show greater profits just to lure investors. I do believe that Demand Media is doing pretty good and it should be estimated somewhere between $5-10 billion but i sincerely don’t think they are close to $30 billion now. Honestly, i do believe that they will reach $30 billion soon.
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