The 10-second takeaway
For the quarter ended March 31 (Q1), Demand Media beat expectations on revenues and earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP loss per share dropped.
Gross margins contracted, operating margins grew, and net margins increased.
Demand Media booked revenue of $86.2 million. The nine analysts polled by S&P Capital IQ expected to see revenue of $82.2 million on the same basis. GAAP reported sales were 8.4% higher than the prior-year quarter's $79.5 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.07. The 10 earnings estimates compiled by S&P Capital IQ predicted $0.05 per share. GAAP EPS were -$0.02 for Q1 versus -$0.13 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 52.2%, 50 basis points worse than the prior-year quarter. Operating margin was -3.4%, 190 basis points better than the prior-year quarter. Net margin was -2.1%, 490 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $86.1 million. On the bottom line, the average EPS estimate is $0.07.
Next year's average estimate for revenue is $352.4 million. The average EPS estimate is $0.31.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 33 members out of 58 rating the stock outperform, and 25 members rating it underperform. Among 23 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 12 give Demand Media a green thumbs-up, and 11 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Demand Media is outperform, with an average price target of $9.32.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.