Another dot-com filed to go public this morning, but it's not Facebook or Twitter.
Web-based advertising network Reply.com is attempting to brave the market's recently unreceptive waters by going public. Online direct marketer QuinStreet (NASDAQ:QNST) is trading well below its IPO price from two weeks ago.
It's hard to blame Reply for going public. It is coming off a strong year in which revenue soared 47% to $34.3 million and it posted its first annual profit.
Reply -- which will trade under the ticker symbol RPLY if it's able to pull off the offering -- runs a vetted ad network. It acquires traffic from a variety of sources, then hits the user up for a nugget or two of personal information before passing the user on to one of its 5,000 advertisers. It may be invasive and cumbersome for the user, but advertisers love the pre-qualified traffic.
Sponsors come mostly from the automotive and real estate industries -- for now -- making last year's 47% spike in revenue truly impressive. AOL (NYSE:AOL) and Yahoo! (NASDAQ:YHOO) delivered declining revenue in 2009, while even the mighty Google (NASDAQ:GOOG) only mustered a 9% top-line advance.
Keep that drool in check, though. Reply's revenue fell in 2007 and 2008. Last year's great revenue results appear pretty mortal at just 16% more than Reply took in three years earlier. The profit is certainly welcome, but where do we go from here?
If Reply's model is scalable and margins will improve, that would be fantastic. If not, Reply's 7.3% net profit margin is a joke when stacked against Google's 27.6% showing.
Investors may want to still tread carefully here. If the market spit out QuinStreet -- a company that is also growing revenue nicely and has been profitable longer -- it's unlikely to tag too high a price on Reply.
The upside here is that the two stateside dot-coms to go public last quarter -- Ancestry.com (NASDAQ:ACOM) and Vitamin Shoppe (NYSE:VSI) -- are both trading higher than their IPO price tags.
So what are you waiting for, private companies? Give us the Facebook or Twitter that the market is clamoring for. At this point, I would settle for LinkedIn, Zynga, or Yelp. As long as we have all remembered the lessons of the dot-com bubble bursting a decade ago, there's no harm in bringing the sexy back.
