Peter Kafka

Recent Posts by Peter Kafka

Demand Media’s First Earnings Report Includes an Actual Profit

Here’s the first quarterly report card for the first big Web IPO of the year: Demand Media, dinged in the past for claiming profitability when that wasn’t technically true, can now relax. The company earned a bona fide $1 million in net income in the last three months of 2010.

That’s a bit above the expectations the company laid out earlier this year, when it predicted it would lose as much as $1.9 in Q4 2010 or earn as much as $600,000.

Demand also topped its own revenue expectations — just barely — by posting $73.6 million for the quarter, above the $71.5 million to $73.5 million range it had set for itself. (If there are any analysts publishing their own expectations for the company, it’s news to me.)

From Demand’s perspective, the most important number to pay attention to is its “Adjusted OIBDA” results, which were up 88 percent, to $20.1 million (it had projected $17.5 million – $20.0 million).

Not everyone is on board with that metric, and there are others who raise an eyebrow or two at the way Demand accounts for its content creation costs. But so far, Wall Street seems ok with all of that, and Demand is still trading at the low $20s benchmark it set last month.

So those are the numbers. Should be interesting to hear the management commentary, and questions from analysts, which Kara Swisher will be covering later this afternoon.

Expect to hear at least one riff on whether or not the company feels threatened by Google and changes the search engine is making to push “content farms” out of its results.

CEO Richard Rosenblatt insists that his company is not a content farm, and that Google is just fine with his stuff, but I have a feeling the issue won’t go away just yet.