Ay caramba, Quepasa
The company behind its namesake social-networking site for Latinos turned out a horrendous quarter last night. Revenue grew 59% year over year to $1.8 million, but it was actually a problematic 17% decline sequentially.
How can this be? The company has spent most of this year building up the fruits of its social-gaming releases and acquisitions, yet its casual diversions were good for only $219,000 in revenue. This isn't a model. It's a pair of Tesla Roadsters!
It doesn't get any prettier on the bottom line, where Quepasa's net loss widened to $2.3 million. Maybe it's just me, but I don't like to see companies post deficits that are larger than revenue.
Quepasa added 4.6 million registered users to Quepasa.com, but it's important to point out that the site's total user base of 38.2 million is a cumulative figure. Only a sliver of the folks who registered for the site still use it, and it's getting worse. What does it tell you when the company brags about its engagement metrics but revenue slips sequentially? After several quarters of publishing the total number of page views it served, it sheepishly abandoned that practice this time around. What does that tell you?
I've knocked Rediff.com's
Social networking isn't very scintillating beyond Facebook and LinkedIn
If all of this sounds gloomy, there's still one reason to warm up to Quepasa. Last month, Quepasa announced the acquisition of the parent company of myYearbook. The $100 million deal will find Quepasa -- a company that posted an operating loss on $6.1 million in revenue last year -- joining forces with a company that generated $4.9 million in EBITDA on $23.7 million in revenue.
It will be a dramatically accretive deal for Quepasa, as long as the myYearbook family doesn't get cold feet. This is the kind of quarterly report that may leave myYearbook wondering whether it's making a mistake if the deal closes by year's end, but it's not as if the current volatile market will warm up to a second-tier social site trying to go public on its own.
Quepasa and myYearbook need each other right now more than they did last month. I look forward to what the combined companies' reports will look like next year.
Is Quepasa going to be able to pull off its merger with myYearbook? Share your thoughts in the comments box below, and add Quepasa to My Watchlist to stay on top of its transformative merger.