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Lehman Brothers
SECTOR VIEW Internet Data Book
Rating: 2 - NEUTRAL April 2008
Monthly U.S. Internet Research Product
Douglas Anmuth
1.212.526.0879
danmuth@lehman.com The Lehman Brothers Internet Data Book provides up-to-date statistics on
LBI, New York the Internet industry overall, and more specifically on the 14 companies in our
Brian A. Fenske, CFA coverage universe. The Data Book contains more than 160 figures and charts,
1.212.526.7827 with an emphasis on valuation and financial metrics, broadband penetration and
bfenske@lehman.com
LBI, New York user data, online advertising, e-commerce, and company-specific information and
models.
Ronald V. Josey
1.212.526.4008
rjosey@lehman.com The ratings within our Internet coverage universe are:
LBI, New York
1-Overweight: Google, IAC, Greenfield Online, Orbitz, Harris Interactive
2-Equal weight: eBay, Amazon.com, Expedia, Blue Nile, Netflix
TechTarget, Dice, Alloy
Rating Suspended: Yahoo!
http://www.lehman.com
Lehman Brothers Internet Data Book April 2008
Table of Contents
Table of Figures
The Lehman Brothers Internet Data Book provides up-to-date statistics on the Internet
industry overall, and more specifically on the 14 companies in our coverage universe. The
Data Book contains more than 160 figures and charts that are broken down into five key
areas:
2. Broadband and Internet Usage features U.S. and global data on broadband
penetration and relevant unique visitor and page view information for leading sites;
3. Online Advertising includes our projections for domestic online ad spending through
2011, data on overall U.S. advertising spending, and a closer look at search industry
statistics, among other metrics;
4. e-Commerce features overall online retail projections by category and data on top sites
by category; and
5. Company Information and Models includes key company-specific data for our
coverage universe.
The Data Book is intended to be a primary resource for investors looking at the Internet
space. Each month, we update the Data Book as appropriate, and add charts that we
believe are increasingly relevant. We highlight the following charts on pages:
Please let us know if there is particular information you would like us to include in future
editions of the Data Book.
Introduction
Total Enterprise Value 2007 132,040 26,896 37,882 31,207 4,706 8,207
Total Enterprise Value 2008 133,688 26,517 36,403 29,777 4,593 7,319
Total Enterprise Value 2009 131,161 25,675 34,324 27,985 3,883 6,618
FCF Yield 2007 2.3% 3.4% 5.0% 3.6% 3.6% 6.7% 7.8%
FCF Yield 2008 2.9% 2.4% 5.4% 4.3% 3.7% 8.8% 8.6%
FCF Yield 2009 3.6% 2.7% 6.2% 5.0% 4.4% 10.6% 9.5%
EBITDA
EBITDA 2007 6,921 1,927 2,924 1,095 816 729
EBITDA 2008 9,027 1,850 3,135 1,383 870 800
EBITDA 2009 11,162 2,009 3,543 1,704 950 888
2007-2010 EBITDA CAGR 24% 5% 11% 24% 16% 9% 11%
REVENUE
Revenue 2007 11,660 5,113 7,672 14,836 6,373 2,665
Revenue 2008 15,703 5,645 8,674 19,303 6,558 3,022
Revenue 2009 19,984 6,415 9,963 23,875 6,650 3,389
2007-2010 Revenue CAGR 28% 12% 14% 24% 19% 3% 12%
Market Cap/Revenue 2007 12.6x 7.6x 5.7x 2.2x 7.0x 1.0x 3.0x
Market Cap/Revenue 2008 9.6x 7.0x 5.0x 1.7x 5.8x 1.0x 2.6x
Market Cap/Revenue 2009 7.7x 6.2x 4.4x 1.4x 4.9x 0.9x 2.3x
* Yahoo! estimates do not incorporate any potential transactions with Microsoft going forward.
Notes:
1) EPS for YHOO, GOOG, IACI, EXPE, EBAY, AMZN, NFLX, NILE, TTGT, OWW, DHX are all pro forma
2) P/E and P/FCF for Yahoo! does not adjust for Yahoo! Japan
Source: Company reports, Lehman Brothers estimates
Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives. The ratings and targets on Yahoo! Inc. and Microsoft Corporation
have been temporarily suspended due to Lehman Brothers' role. The estimates for Yahoo! do not incorporate this potential transaction.
Price as of 4/7/2008 $7.67 $36.35 $50.67 $8.84 $15.11 $11.29 $2.77 $7.40
Shares Outstanding 2007 84 67 17 66 41 27 55 14
Shares Outstanding 2008 85 64 17 69 46 27 53 14
Shares Outstanding 2009 86 63 17 68 47 27 53 14
Market Capitalization $647 $2,437 $852 $581 $617 $305 $152 $106
Net Debt 2007 574 (385) (122) 67 (56) (57) (38) (37)
Net Debt 2008 494 (378) (110) (3) (77) (66) (66) (55)
Net Debt 2009 384 (498) (125) (71) (104) (83) (103) (76)
Less: Non-Consolidated Assets & Investments
Plus: Minority Interest
Total Enterprise Value 2007 1,221 2,052 730 648 561 248 113 69
Total Enterprise Value 2008 1,144 1,932 740 605 616 242 81 51
Total Enterprise Value 2009 1,047 1,794 732 527 603 227 44 29
FCF Yield 2007 7.6% 1.9% 4.3% 9.6% 2.6% 4.0% 14.3% NA
FCF Yield 2008 10.0% 3.0% 5.5% 11.4% 3.4% 7.6% 24.6% NA
FCF Yield 2009 16.6% 4.2% 6.2% 11.4% 3.9% 9.8% 23.0% NA
EBITDA
EBITDA 2007 144 125 30 63 25 35 22 10
EBITDA 2008 151 157 33 73 34 41 28 21
EBITDA 2009 171 212 38 85 40 49 33 25
2007-2010 EBITDA CAGR 10% 29% 12% 17% 25% 17% 15% NA
EV/EBITDA 2007 8.5x 16.5x 24.4x 10.4x 22.9x 7.0x 5.2x 6.8x
EV/EBITDA 2008 7.6x 12.3x 22.2x 8.3x 18.1x 5.8x 2.9x 2.4x
EV/EBITDA-to-Growth 0.8x 0.4x 1.8x 0.5x 0.7x 0.3x 0.2x NA
EV/EBITDA 2009 6.1x 8.5x 19.3x 6.2x 15.0x 4.6x 1.3x 1.2x
REVENUE
Revenue 2007 859 1,205 319 142 95 129 234 202
Revenue 2008 887 1,376 354 169 120 150 267 231
Revenue 2009 953 1,640 396 198 136 172 278 258
2007-2010 Revenue CAGR 6% 16% 11% 17% 17% 15% 9% NA
Market Cap/Revenue 2007 0.8x 2.0x 2.7x 4.1x 6.5x 2.4x 0.6x 0.5x
Market Cap/Revenue 2008 0.7x 1.7x 2.4x 3.6x 5.8x 2.0x 0.6x 0.5x
Market Cap/Revenue 2009 0.7x 1.4x 2.2x 3.0x 5.2x 1.8x 0.5x NA
E-Commerce
eBay EBAY 2-EW $31.76 43,450 11.0x 9.8x 18.0x 16.7x 17.3x 16.2x
Amazon.com AMZN 2-EW $77.37 33,037 26.0x 19.5x 53.7x 39.4x 25.6x 21.2x
IAC/InterActiveCorp IACI 1-OW $21.39 6,413 6.2x 5.7x 15.1x 13.8x 15.4x 11.9x
Overstock.com OSTK 2-EW $12.02 285 22.6x 5.8x NA NA 142.9x 57.8x
Blue Nile NILE 2-EW $50.67 852 20.9x 19.0x 35.2x 32.9x 20.4x 16.0x
Netflix NFLX 2-EW $36.35 2,437 14.3x 11.3x 31.9x 24.9x 47.2x 33.2x
1-800-FLOWERS.COM FLWS -- $8.78 223 12.1x 8.9x 36.6x 27.4x 17.6x 17.6x
FTD Group, Inc. FTD -- $13.92 403 8.9x 8.8x 14.1x 12.5x 11.5x 10.7x
GSI Commerce GSIC -- $13.67 634 16.8x 11.9x 18.2x 20.1x 14.1x 11.4x
Bluefly BFLY -- $0.47 62 -- -- -- -- -- --
Drugstore.com DSCM -- $2.25 214 35.0x 12.0x -- -- -- --
Redenvelope REDE -- $0.28 3 13.0x 5.1x -- -- -- --
Travel
Expedia EXPE 2-EW $25.13 8,053 10.9x 8.8x 19.9x 16.0x 12.4x 11.2x
Orbitz OWW 1-OW $7.67 648 7.7x 5.9x 10.0x 9.5x 8.1x 5.6x
Priceline PCLN -- $127.50 4,830 14.3x 11.6x 42.1x 35.9x 56.9x 42.9x
Advertising Services
Valueclick VCLK -- $18.33 1,830 13.9x 11.7x 22.4x 18.3x 17.8x --
Omniture OMTR 2-EW $24.26 1,191 42.3x 21.3x 303.3x 80.9x 81.7x 29.7x
Internet Services
Greenfield Online SRVY 1-OW $11.29 305 8.8x 7.3x 28.4x 20.9x 30.4x 15.8x
Harris Interactive HPOL 1-OW $2.77 152 5.4x 3.0x 18.1x 13.6x 7.2x 4.2x
Alloy ALOY 2-EW $7.40 106 7.5x 2.7x NA NA NA NA
Autobytel ABTL -- $1.80 78 8.0x 6.4x -- -- -3.9x -7.5x
Napster NAPS -- $1.61 72 8.0x 6.4x -- -- -- --
Earthlink ELNK -- $7.95 980 8.0x 7.2x -- -- -- --
United Online UNTD -- $11.35 757 6.2x 6.4x 10.1x 10.8x -- --
Verisign VRSN 1-OW $34.39 8,353 14.3x 14.1x 35.8x 31.8x 22.2x 18.1x
Akamai AKAM -- $31.04 5,097 26.6x 19.4x 24.3x 18.2x 25.1x 15.6x
Digital River DRIV -- $33.28 1,376 13.3x 10.2x 15.3x 12.4x 9.4x 8.7x
Infospace INSP -- $12.41 409 13.3x 9.3x -- 103.4x -- --
Jupiter Media JUPM -- $2.11 76 9.5x 8.1x 16.2x 8.8x -- --
House Values SOLD -- $2.50 61 8.2x 9.5x -- -- 27.8x 25.0x
Move MOVE -- $3.24 502 18.3x 12.9x 108.0x 21.6x -- --
Vista Print VPRT -- $38.14 1,645 30.4x 18.8x 48.3x 33.2x -- --
Shutterfly SFLY -- $15.45 371 11.3x 8.1x 44.1x 35.1x -- --
Getty Images GYI 2-EW $32.15 1,922 8.8x 7.9x 12.8x 11.3x 9.1x 8.0x
Entertainment*
Time Warner TWX 1-OW 2-Neutral $14.64 $55,124 7.3x 6.7x 6.1x 15.2x 13.6x 11.7x 11.1x 13.9x 11.1x
Disney DIS 2-EW 2-Neutral $31.56 $64,901 8.7x 7.8x 7.0x 15.8x 13.9x 12.3x 18.1x 19.3x 14.3x
News Corp NWS 1-OW 2-Neutral $20.00 $61,693 9.6x 8.0x 7.1x 17.3x 15.1x 12.8x 22.4x 17.7x 14.1x
Viacom VIA 2-EW 2-Neutral $40.78 $27,561 10.5x 9.6x 8.9x 17.2x 15.3x 13.7x 16.9x 16.7x 12.9x
Entertainment Average 9.0x 8.0x 7.3x 16.4x 14.5x 12.6x 17.1x 16.9x 13.1x
Cable**
Comcast CMCSK 2-EW 2-Neutral $20.06 $62,416 7.4x 6.7x 6.2x 28.0x 24.6x 19.8x 31.1x 20.9x 14.9x
Liberty Global LBTYA 1-OW 2-Neutral $35.15 $13,733 9.4x 6.7x 5.8x NM NM 29.1x 30.4x 12.9x 11.8x
Cable Average 8.4x 6.7x 6.0x 28.0x 24.6x 24.5x 30.7x 16.9x 13.4x
Broadcasting***
CBS Corp CBS 2-EW 3-Negative $22.79 $16,458 7.6x 7.1x 7.2x 12.3x 11.7x 11.6x 10.0x 9.3x 9.7x
Clear Channel CCU 2-EW 3-Negative $28.24 $14,001 9.2x 9.4x 9.4x 15.0x 20.3x 19.8x 11.8x 15.6x 15.3x
Broadcasting Average 8.4x 8.3x 8.3x 13.7x 16.0x 15.7x 10.9x 12.5x 12.5x
Newspapers****
Gannett GCI 3-UW 3-Negative $30.75 $7,079 4.9x 5.5x 6.1x 7.0x 7.6x 8.3x 6.3x 6.8x 7.4x
New York Times NYT 3-UW 3-Negative $19.43 $2,793 7.2x 8.4x 8.7x 17.2x 21.4x 22.3x 9.6x 14.1x 14.6x
Newspapers Average 6.1x 6.9x 7.4x 12.1x 14.5x 15.3x 8.0x 10.4x 11.0x
Outdoor***
Clear Channel Outdoor CCO 2-EW 3-Negative $19.92 $7,091 9.8x 9.4x 8.9x 28.8x 33.2x 28.6x 21.0x 25.0x 25.0x
Lamar LAMR 2-EW 3-Negative $36.71 $3,365 11.3x 11.2x 10.7x 95.2x 107.5x 96.3x 26.5x 22.4x 22.4x
Wal-Mart WMT 1-OW 2-Neutral $54.46 $217,731 8.0x 7.3x 17.0x 15.3x 11.1x 10.1x
Target TGT 1-OW 2-Neutral $53.45 $44,593 8.3x 7.4x 14.8x 13.0x 7.4x 6.7x
Costco COST 2-EW 2-Neutral $66.25 $29,475 9.7x 8.9x 25.9x 22.8x 16.8x 15.3x
Broadlines Average 8.6x 7.9x 19.2x 17.0x 11.8x 10.7x
Amazon.com AMZN 2-EW 2-Neutral $77.37 $33,037 26.0x 19.5x 68.2x 42.7x 25.6x 21.2x
eBay EBAY 2-EW 2-Neutral $31.76 $43,450 11.0x 9.8x 149.4x 22.8x 17.3x 16.2x
Blue Nile NILE 2-EW 2-Neutral $50.67 $852 20.9x 19.0x 48.4x 35.3x 20.4x 16.0x
Internet Average 20.1x 13.5x 88.7x 40.0x 51.6x 27.8x
Note: All retail estimates are from FactSet. Lehman Brothers ratings for Wal-Mart, Target, and Costco ratings are from Department Stores/Broadlines Analyst Robert Drbul.
Source: FactSet, company reports, Lehman Brothers estimates
Figure 6: Preview of Upcoming Quarter and 2008E ($ millions, except per share data)
Revenue EPS EBITDA
Lehman Lehman Lehman
Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008 Brothers First Call - 04/02/2008
Qtr Ending Estimate Low Mean High Estimate Low Mean High Estimate Low Mean High
Yahoo! Mar-08 $1,329 $1,287 $1,320 $1,364 $0.08 $0.06 $0.09 $0.13 $426 $415 $434 $536
eBay Mar-08 $2,028 $2,025 $2,064 $2,131 $0.38 $0.38 $0.39 $0.41 $737 $654 $758 $789
Google Mar-08 $3,580 $3,301 $3,607 $3,777 $4.46 $3.88 $4.54 $4.94 $2,084 $2,015 $2,144 $2,396
Amazon.com Mar-08 $4,075 $4,036 $4,084 $4,154 $0.31 $0.29 $0.32 $0.38 $304 $250 $304 $327
IAC/InterActiveCorp Mar-08 $1,487 $1,462 $1,536 $1,700 $79.67 $0.26 $0.31 $0.41 $0 $154 $169 $181
Expedia Mar-08 $650 $627 $656 $690 $0.18 $0.12 $0.16 $0.18 $136 $133 $138 $148
Orbitz Mar-08 $213 $224 $238 $259 $0.07 $0.05 $0.12 $0.19 $29 $30 $36 $39
Blue Nile Mar-08 $70 $67 $68 $70 $0.13 $0.13 $0.14 $0.16 $5 $3 $5 $5
Netflix Mar-08 $326 $323 $326 $329 $0.22 $0.18 $0.21 $0.24 $96 $27 $77 $96
Harris Interactive Mar-08 $63 $56 $61 $63 $0.03 ($0.01) $0.01 $0.03 $6 $4 $4 $6
Greenfield Online Mar-08 $32 $31 $32 $33 $0.09 $0.01 $0.08 $0.11 $7 $6 $7 $8
Alloy Apr-08 - - - - - - - - - - - -
TechTarget Mar-08 $24 $23 $23 $24 $0.05 $0.02 $0.03 $0.05 $4 $4 $4 $4
Dice Holdings Mar-08 $39 $39 $40 $40 $0.05 $0.05 $0.06 $0.07 $16 $15 $16 $16
eBay 2008 $8,674 $8,514 $8,745 $9,013 $1.65 $1.60 $1.66 $1.72 $3,135 $2,757 $3,195 $3,471
Google 2008 $15,703 $15,310 $16,190 $17,210 $18.92 $18.06 $19.55 $21.16 $9,027 $8,790 $9,312 $10,118
Amazon.com 2008 $19,303 $19,032 $19,326 $19,700 $1.53 $1.38 $1.54 $1.70 $1,383 $935 $1,357 $1,476
IAC/InterActiveCorp 2008 $6,558 $6,346 $6,690 $6,900 $464.29 $1.47 $1.62 $1.88 $0 $803 $961 $1,099
Expedia 2008 $3,022 $2,978 $3,038 $3,105 $1.30 $1.08 $1.18 $1.30 $800 $635 $796 $828
Orbitz 2008 $887 $870 $968 $1,053 $0.55 $0.34 $0.67 $0.89 $151 $156 $164 $172
Blue Nile 2008 $354 $350 $353 $360 $1.06 $1.03 $1.06 $1.10 $33 $26 $31 $34
Netflix 2008 $1,376 $1,283 $1,355 $1,389 $1.28 $1.00 $1.22 $1.32 $416 $152 $338 $417
Harris Interactive 2008 $262 $238 $246 $262 $0.18 $0.09 $0.13 $0.18 $30 $20 $23 $26
Greenfield Online 2008 $150 $148 $149 $152 $0.65 $0.55 $0.62 $0.68 $41 $35 $39 $42
Alloy 2009 $231 $258 $258 $258 N/A - - - $21 $26 $26 $26
TechTarget 2008 $120 $118 $120 $121 $0.45 $0.28 $0.37 $0.45 $34 $33 $34 $34
Dice Holdings 2008 $169 $167 $169 $171 $0.31 $0.30 $0.31 $0.33 $73 $67 $72 $74
(1) EPS estimates are Pro Forma for stock option expense for EBAY, GOOG, EXPE, OWW, IACI, and TTGT.
(2) EPS estimates are GAAP for YHOO, AMZN, NFLX, NILE, OSTK, HPOL, SRVY and DHX.
InterActiveCorp $21.39 $6,413 -21% -28% 31% -49% -19% 48% -16% 81% -30% 67% 29% 117% -32% 223%
Expedia $25.13 $8,053 -21% 51% -12% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Orbitz $7.67 $648 -10% -41% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Netflix $36.35 $2,437 37% 3% -4% 119% -55% 396% -29% N/A N/A N/A N/A N/A N/A N/A
Blue Nile $50.67 $852 -26% 84% -8% 46% -3% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Overstock.com $12.02 $285 -23% -2% -44% -59% 247% 53% -1% N/A N/A N/A N/A N/A N/A N/A
Harris Interactive $2.77 $152 -35% -15% 17% -45% -5% 181% 2% -21% -72% -27% N/A N/A N/A N/A
Greenfield Online $11.29 $305 -23% 2% 144% -73% 18% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Alloy $7.40 $106 -21% -18% 0% -12% 55% -52% -49% 180% -51% 19% N/A N/A N/A N/A
TechTarget $15.11 $617 2% 15% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Dice Holdings $8.84 $581 11% -40% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Total Universe Average -11% 13% 4% 2% 44% 134% -3% 45% -61% 70% 497% 272% -40% 223%
NASDAQ 2,361.40 -11% 10% 10% 1% 9% 50% -32% -21% -39% 86% 40% 22% 23% 40%
S&P 500 1,367.53 -7% 4% 14% 3% 9% 26% -23% -13% -10% 20% 27% 31% 20% 34%
Source: FactSet
Google Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -36% -1% -6% -6% N/A N/A N/A N/A N/A N/A N/A N/A N/A -12%
2Q NA 14% 8% 63% N/A N/A N/A N/A N/A N/A N/A N/A N/A 28%
3Q NA 9% -4% 8% 29% N/A N/A N/A N/A N/A N/A N/A N/A 10%
4Q NA 22% 15% 31% 49% N/A N/A N/A N/A N/A N/A N/A N/A 29%
Full Year -36% 50% 11% 115% 92% N/A N/A N/A N/A N/A N/A N/A N/A 67%
eBay Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -10% 10% -9% -36% 7% 26% -15% 10% 41% 71% N/A N/A N/A 9%
2Q NA -3% -25% -11% 33% 22% 9% 89% -38% 10% N/A N/A N/A 9%
3Q NA 21% -3% 25% 0% 3% -14% -33% 26% -7% -5% N/A N/A 1%
4Q NA -15% 6% 5% 27% 20% 28% 46% -52% -11% 435% N/A N/A 49%
Full Year -10% 10% -30% -26% 80% 91% 1% 103% -47% 56% 410% N/A N/A 65%
Amazon.com Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -23% 1% -23% -23% -18% 38% 32% -34% -12% 61% 42% N/A N/A 4%
2Q NA 72% 6% -3% 26% 40% 14% 38% -46% -27% 133% -11% N/A 22%
3Q NA 36% -17% 37% -25% 33% -2% -58% 6% 28% 12% 182% N/A 21%
4Q NA -1% 23% 4% 8% 9% 19% 81% -60% -5% 188% 16% N/A 26%
Full Year -23% 135% -16% 6% -16% 179% 75% -30% -80% 42% 967% 190% N/A 132%
IAC/InterActiveCorp Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -23% 1% 4% -19% -7% 17% 16% 23% -18% 8% 6% 7% -11% 0%
2Q NA -8% -10% 8% -5% 47% -26% 17% -4% 12% -8% 23% -3% 4%
3Q NA -14% 9% -32% -27% -16% -17% -36% 1% -3% -23% 30% -22% -12%
4Q NA -9% 29% 12% 25% 2% 18% 52% -11% 43% 70% 27% 1% 22%
Full Year -23% -28% 31% -34% -19% 48% -16% 40% -30% 67% 29% 117% -32% 15%
Expedia Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -31% 10% -15% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -12%
2Q NA 26% -26% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0%
3Q NA 9% 5% -18% N/A N/A N/A N/A N/A N/A N/A N/A N/A -2%
4Q NA -1% 34% 21% N/A N/A N/A N/A N/A N/A N/A N/A N/A 18%
Full Year -31% 51% -12% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A 13%
Source: FactSet
Netflix Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q 30% -10% 7% -12% 25% 85% N/A N/A N/A N/A N/A N/A N/A 21%
2Q NA -16% -6% 51% 6% 25% -9% N/A N/A N/A N/A N/A N/A 8%
3Q NA 7% -16% 58% -57% 31% -31% N/A N/A N/A N/A N/A N/A -1%
4Q NA 28% 14% 4% -20% 63% 14% N/A N/A N/A N/A N/A N/A 17%
Full Year 30% 3% -4% 119% -55% 396% -29% N/A N/A N/A N/A N/A N/A 72%
Alloy Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -22% 3% 16% -27% -12% -54% -30% 14% 6% N/A N/A N/A N/A -12%
2Q NA -16% -22% -13% 35% 29% -4% 64% -33% -14% N/A N/A N/A 3%
3Q NA -6% 13% -6% -38% -13% -42% -14% -24% 14% N/A N/A N/A -13%
4Q NA 0% -3% 46% 113% -7% 32% 74% -10% 21% N/A N/A N/A 30%
Full Year -22% -18% 0% -12% 55% -52% 0% 180% -51% 19% N/A N/A N/A 13%
TechTarget Average
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Return
1Q -4% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -4%
2Q NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
3Q NA 32% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 32%
4Q NA -13% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -13%
Full Year -4% NA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Figure 11: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA
Average Quarterly P/E - Forward Year
Large Cap
Quarter Yahoo! Google eBay Amazon.com Average IAC/InterActiveCorp Expedia
1Q04 70.2x -- 48.8x 41.0x 53.3x 26.7x --
2Q04 71.4x -- 53.0x 34.8x 53.0x 26.5x --
3Q04 66.1x -- 53.1x 30.3x 49.9x 22.3x --
4Q04 78.4x 52.6x 66.2x 31.6x 57.2x 23.9x --
1Q05 52.2x 36.6x 40.2x 34.7x 40.9x 20.3x --
2Q05 47.5x 34.0x 33.2x 35.2x 37.5x 18.6x --
3Q05 45.9x 39.6x 36.7x 40.4x 40.7x 17.7x 16.5x
4Q05 51.8x 44.9x 41.8x 43.4x 45.5x 18.4x 17.6x
1Q06 34.7x 33.6x 30.9x 34.0x 33.3x 17.0x 16.3x
2Q06 34.0x 30.7x 24.6x 32.9x 30.6x 15.9x 15.7x
3Q06 32.6x 30.1x 21.1x 29.1x 28.2x 15.1x 13.9x
4Q06 33.2x 33.8x 25.5x 34.2x 31.7x 18.2x 15.8x
1Q07 30.7x 26.4x 21.4x 29.3x 26.9x 18.3x 15.7x
2Q07 29.8x 25.9x 21.3x 39.3x 29.0x 18.1x 18.5x
3Q07 30.2x 25.9x 21.6x 44.0x 30.4x 16.1x 21.1x
4Q07 33.9x 32.5x 20.9x 45.5x 33.2x 15.8x 22.4x
1Q08 34.6x 21.3x 14.6x 30.4x 25.2x 11.8x 13.5x
Figure 12: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
Average Quarterly P/FCF - Forward Year
90.0x
80.0x
70.0x
60.0x
50.0x
40.0x Yahoo!
30.0x Google
Amazon
20.0x
eBay
10.0x IACI
0.0x Expedia
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
Figure 13: Short Interest by Company, 2001–08 Year to Date (shares in millions)
Yahoo! Google eBay Amazon.com IAC/InterActiveCorp Expedia
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
2008 Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short
Mar-08 49.8 1337.2 4% 4.9 319.9 2% 29.2 1327.9 2% 36.4 416.8 9% 8.8 252.4 3% 18.3 260.0 7%
Feb-08 55.3 1337.2 4% 4.3 319.9 1% 28.4 1353.5 2% 31.8 416.8 8% 9.6 258.0 4% 16.2 260.0 6%
Jan-08 42.6 1336.4 3% 4.3 319.9 1% 26.3 1353.5 2% 30.8 416.0 7% 9.7 258.0 4% 15.5 258.9 6%
2007
Dec-07 39.1 1336.4 3% 4.1 317.9 1% 22.7 1353.5 2% 30.9 415.2 7% 10.0 258.0 4% 15.7 258.9 6%
Nov-07 58.3 1336.4 4% 5.5 317.9 2% 24.9 1353.5 2% 33.3 415.2 8% 11.8 258.0 5% 17.2 258.9 7%
Oct-07 66.1 1339.6 5% 5.0 317.9 2% 24.9 1353.5 2% 32.4 415.2 8% 11.9 262.6 5% 19.7 254.4 8%
Sep-07 51.8 1339.6 4% 6.6 316.6 2% 32.0 1358.5 2% 36.8 413.4 9% 12.4 262.6 5% 18.4 254.4 7%
Aug-07 62.3 1339.6 5% 5.4 316.6 2% 35.6 1358.5 3% 35.8 413.4 9% 13.5 262.6 5% 22.7 279.3 8%
Jul-07 70.8 1343.9 5% 6.4 316.6 2% 30.1 1358.5 2% 40.6 413.4 10% 13.5 261.0 5% 13.5 277.5 5%
Jun-07 72.6 1343.9 5% 6.2 315.5 2% 32.5 1363.8 2% 46.2 409.7 11% 14.7 261.0 6% 14.6 277.5 5%
May-07 79.3 1343.9 6% 4.0 315.5 1% 34.0 1363.8 2% 53.9 409.7 13% 16.1 261.0 6% 15.0 277.5 5%
Apr-07 79.0 1356.5 6% 4.4 315.5 1% 35.4 1363.8 3% 48.5 409.7 12% 16.4 260.1 6% 14.8 276.6 5%
Mar-07 82.3 1356.5 6% 5.0 314.9 2% 36.7 1369.0 3% 46.6 414.7 11% 15.7 260.1 6% 13.8 276.6 5%
Feb-07 79.9 1356.5 6% 5.1 314.9 2% 32.8 1369.0 2% 46.1 414.7 11% 14.4 268.1 5% 12.2 275.5 4%
Jan-07 84.1 1360.2 6% 5.8 314.9 2% 34.5 1394.1 2% 44.9 411.9 11% 13.8 268.1 5% 13.6 305.5 4%
2006
Dec-06 78.1 1360.2 6% 6.2 313.5 2% 37.2 1394.1 3% 42.8 411.9 10% 14.6 268.1 5% 12.9 305.5 4%
Nov-06 84.3 1360.2 6% 7.4 313.5 2% 40.6 1394.1 3% 42.8 411.9 10% 13.7 268.1 5% 12.8 305.5 4%
Oct-06 77.9 1381.2 6% 7.1 313.5 2% 47.3 1394.1 3% 44.3 411.9 11% 12.5 272.7 5% 13.7 304.6 4%
Sep-06 87.2 1381.2 6% 6.6 310.6 2% 49.0 1415.4 3% 43.6 418.9 10% 14.5 272.7 5% 14.8 304.6 5%
Aug-06 92.3 1381.2 7% 5.8 310.6 2% 51.4 1415.4 4% 40.2 418.9 10% 13.2 272.7 5% 15.9 304.6 5%
Jul-06 87.7 1408.8 6% 5.8 310.6 2% 50.0 1415.4 4% 36.5 418.9 9% 14.0 290.5 5% 16.3 324.0 5%
Jun-06 81.3 1408.8 6% 6.3 310.0 2% 46.4 1410.1 3% 36.9 417.9 9% 14.7 290.5 5% 18.4 324.0 6%
May-06 78.3 1408.8 6% 4.2 310.0 1% 46.3 1410.1 3% 34.4 417.9 8% 14.1 290.5 5% 18.0 324.0 6%
Apr-06 75.8 1414.5 5% 7.2 310.0 2% 40.7 1410.1 3% 30.5 417.9 7% 13.7 294.7 5% 18.5 323.1 6%
Mar-06 73.5 1417.9 5% 4.3 304.1 1% 42.9 1393.8 3% 35.1 416.9 8% 12.1 294.7 4% 18.1 323.1 6%
Feb-06 77.7 1414.5 5% 4.9 304.1 2% 43.0 1410.1 3% 34.7 417.9 8% 11.0 294.7 4% 17.3 317.4 5%
Jan-06 82.4 1417.9 6% 7.9 304.1 3% 49.9 1393.8 4% 34.8 416.9 8% 16.4 294.7 6% 20.2 317.4 6%
2005
Dec-05 80.0 1418.7 6% 8.2 304.0 3% 51.9 1393.8 4% 37.9 414.5 9% 14.8 293.8 5% 17.9 317.4 6%
Nov-05 86.7 1418.7 6% 9.2 304.0 3% 45.7 1393.8 3% 29.6 414.5 7% 14.9 293.8 5% 16.7 317.4 5%
Oct-05 79.2 1409.0 6% 7.4 304.0 2% 38.2 1393.8 3% 29.4 414.5 7% 12.5 309.0 4% 16.7 309.0 5%
Sep-05 79.5 1409.0 6% 8.4 289.7 3% 38.7 1353.9 3% 34.8 411.9 8% 10.1 309.0 3% 17.7 309.0 6%
Aug-05 83.3 1409.0 6% 8.3 289.7 3% 40.7 1353.9 3% 37.8 411.9 9% 15.3 309.0 5% 22.1 309.0 7%
Jul-05 75.7 1396.5 5% 7.8 289.7 3% 36.7 1353.9 3% 36.8 411.9 9% 27.6 337.2 8% 0.0 357.2 0%
Jun-05 76.9 1396.5 6% 9.5 287.2 3% 39.5 1349.1 3% 36.9 410.9 9% 29.4 299.8 10% -- -- --
May-05 78.7 1396.5 6% 9.6 287.2 3% 38.4 1349.1 3% 40.6 410.9 10% 33.3 299.8 11% -- -- --
Apr-05 77.1 1388.0 6% 8.7 287.2 3% 28.3 1349.1 2% 31.0 410.9 8% 25.7 317.1 8% -- -- --
Mar-05 75.1 1387.2 5% 9.8 286.6 3% 35.2 1344.8 3% 31.8 410.6 8% 20.0 317.1 6% -- -- --
Feb-05 76.8 1374.8 6% 13.8 286.6 5% 34.4 1344.8 3% 29.4 408.1 7% 20.6 314.0 7% -- -- --
Jan-05 76.0 1374.8 6% 11.7 286.6 4% 39.6 1325.8 3% 27.0 408.1 7% 21.0 314.0 7% -- -- --
2004
Dec-04 82.3 1374.8 6% 12.1 285.9 4% 47.4 1325.8 4% 29.1 408.1 7% 22.7 314.0 7% -- -- --
Nov-04 85.3 1374.8 6% 12.4 285.9 4% 48.8 1325.8 4% 29.6 408.1 7% 22.2 314.0 7% -- -- --
Oct-04 90.5 1360.6 7% 9.2 285.9 3% 53.0 1325.8 4% 29.0 408.1 7% 22.1 315.7 7% -- -- --
Sep-04 91.0 1360.6 7% 4.1 274.7 1% 61.7 1322.0 5% 26.5 406.9 7% 24.3 315.7 8% -- -- --
Aug-04 88.2 1360.6 6% 0.0 274.7 0% 50.7 1322.0 4% 24.4 406.9 6% 20.6 315.7 7% -- -- --
Jul-04 90.1 1346.7 7% -- -- -- 55.1 1314.7 4% 29.3 406.9 7% 22.3 318.4 7% -- -- --
Jun-04 95.4 1346.7 7% -- -- -- 59.6 1314.7 5% 30.9 405.0 8% 24.6 318.4 8% -- -- --
May-04 100.8 1346.7 7% -- -- -- 55.4 1314.7 4% 32.2 405.0 8% 26.0 318.4 8% -- -- --
Apr-04 103.5 1332.0 8% -- -- -- 59.2 1308.0 5% 35.3 405.0 9% 24.6 318.4 8% -- -- --
Mar-04 96.0 1330.3 7% -- -- -- 59.4 1308.0 5% 28.1 404.3 7% 24.5 316.1 8% -- -- --
Feb-04 56.0 1314.7 4% -- -- -- 53.2 1292.0 4% 26.6 404.3 7% 24.8 323.5 8% -- -- --
Jan-04 63.0 1314.7 5% -- -- -- 67.4 1292.0 5% 34.1 401.1 9% 23.9 323.5 7% -- -- --
2003
Dec-03 63.7 1314.7 5% -- -- -- 68.4 1292.0 5% 33.7 401.1 8% 22.8 323.5 7% -- -- --
Nov-03 63.0 1314.7 5% -- -- -- 65.4 1292.0 5% 36.1 401.1 9% 22.9 323.5 7% -- -- --
Oct-03 77.3 1225.5 6% -- -- -- 72.3 1284.2 6% 43.1 401.1 11% 22.9 330.7 7% -- -- --
Sep-03 78.5 1220.2 6% -- -- -- 69.4 1284.2 5% 43.2 397.0 11% 21.6 330.7 7% -- -- --
Aug-03 61.2 1220.2 5% -- -- -- 72.8 1284.2 6% 43.5 397.0 11% 25.0 330.7 8% -- -- --
Jul-03 61.8 1206.4 5% -- -- -- 81.7 1270.0 6% 43.7 397.0 11% 30.9 247.7 12% -- -- --
Jun-03 54.4 1206.4 5% -- -- -- 72.5 1270.0 6% 45.3 391.7 12% 27.6 247.7 11% -- -- --
May-03 67.9 1206.4 6% -- -- -- 79.9 1270.0 6% 51.4 391.7 13% 23.3 225.6 10% -- -- --
Apr-03 72.5 1196.7 6% -- -- -- 83.8 1258.2 7% 48.9 391.7 12% 18.6 218.4 9% -- -- --
Mar-03 63.6 1195.0 5% -- -- -- 91.8 1258.2 7% 54.2 388.2 14% 13.1 215.6 6% -- -- --
Feb-03 58.3 1181.8 5% -- -- -- 82.9 1234.9 7% 53.5 388.2 14% 8.9 214.6 4% -- -- --
Jan-03 64.4 1181.8 5% -- -- -- 82.8 1234.9 7% 50.7 387.9 13% 12.3 214.6 6% -- -- --
2002
Dec-02 54.6 1181.8 5% -- -- -- 77.8 1234.9 6% 51.3 381.5 13% 11.8 191.9 6% -- -- --
Nov-02 64.1 1181.8 5% -- -- -- 82.3 1234.9 7% 55.5 381.5 15% 12.5 191.9 6% -- -- --
Oct-02 73.2 1201.1 6% -- -- -- 87.6 1222.2 7% 52.3 381.5 14% 10.1 191.8 5% -- -- --
Sep-02 76.7 1201.1 6% -- -- -- 94.8 1127.3 8% 47.3 380.5 12% 11.0 191.8 6% -- -- --
Aug-02 84.3 1201.1 7% -- -- -- 98.5 1127.3 9% 43.7 380.5 11% 10.4 191.8 5% -- -- --
Jul-02 66.1 1201.1 6% -- -- -- 65.5 1120.8 6% 41.3 380.5 11% 8.2 175.1 5% -- -- --
Jun-02 49.3 1195.8 4% -- -- -- 60.2 1120.8 5% 42.3 375.1 11% 16.7 175.1 10% -- -- --
May-02 53.3 1195.8 4% -- -- -- 51.1 1120.8 5% 43.3 375.1 12% 5.2 175.1 3% -- -- --
Apr-02 54.5 1189.9 5% -- -- -- 51.0 1117.9 5% 41.1 375.1 11% 4.2 170.3 2% -- -- --
Mar-02 54.7 1189.9 5% -- -- -- 55.1 1117.9 5% 43.8 373.3 12% 2.1 169.6 1% -- -- --
Feb-02 66.4 1143.5 6% -- -- -- 53.4 1100.5 5% 48.3 373.3 13% 2.0 169.6 1% -- -- --
Jan-02 88.4 1143.5 8% -- -- -- 61.7 1100.5 6% 58.2 373.3 16% 1.6 157.0 1% -- -- --
2001
Dec-01 85.8 1139.2 8% -- -- -- 72.1 1100.5 7% 64.0 371.8 17% 1.9 157.0 1% -- -- --
Nov-01 75.4 1139.2 7% -- -- -- 74.4 1100.5 7% 51.9 371.8 14% 1.8 157.0 1% -- -- --
Oct-01 81.1 1143.5 7% -- -- -- 83.7 1093.1 8% 48.7 371.8 13% 2.2 156.3 1% -- -- --
Sep-01 87.9 1145.7 8% -- -- -- 62.4 1093.1 6% 50.0 371.0 13% 2.3 156.3 2% -- -- --
Aug-01 86.3 1145.7 8% -- -- -- 52.9 1093.1 5% 51.8 371.0 14% 1.7 156.3 1% -- -- --
Jul-01 84.2 1139.5 7% -- -- -- 56.9 1068.3 5% 47.9 362.7 13% 2.0 154.7 1% -- -- --
Jun-01 80.6 1133.8 7% -- -- -- 56.7 1080.7 5% 51.1 359.2 14% 1.3 154.7 1% -- -- --
May-01 79.1 1133.8 7% -- -- -- 52.6 1080.7 5% 51.3 359.2 14% 1.5 154.7 1% -- -- --
Apr-01 75.0 1130.9 7% -- -- -- 59.6 1077.2 6% 50.3 359.2 14% 1.4 152.8 1% -- -- --
Mar-01 61.9 1128.4 5% -- -- -- 48.8 1071.6 5% 49.9 358.6 14% 1.6 152.5 1% -- -- --
Feb-01 57.3 1116.8 5% -- -- -- 43.5 1071.6 4% 44.3 357.1 12% 1.7 152.5 1% -- -- --
Jan-01 69.7 1116.8 6% -- -- -- 41.6 1071.6 4% 43.3 357.1 12% 1.0 152.5 1% -- -- --
Figure 14: Short Interest by Company, 2001–08 Year to Date (continued) (shares in millions)
Netflix Blue Nile Harris Interactive Greenfield Online Alloy TechTarget Orbitz
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
2008 Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short Short Out. % Short
Mar-08 21.0 61.5 34% 5.8 15.8 37% 4.2 53.3 8% 1.7 26.3 6% 0.0 15.4 0% 1.3 41.9 3% 3.8 83.2 5%
Feb-08 21.9 61.2 36% 4.8 16.1 30% 3.6 53.3 7% 1.6 26.3 6% 0.1 14.1 1% 1.1 40.4 3% 2.6 83.0 3%
Jan-08 21.1 65.8 32% 4.5 16.1 28% 3.3 53.1 6% 1.5 26.2 6% 0.1 14.1 1% 1.0 40.4 2% 2.4 83.0 3%
2007
Dec-07 15.0 65.8 23% 4.3 16.1 27% 3.2 53.1 6% 1.1 26.2 4% 0.1 14.1 0% 0.7 40.4 2% 2.1 83.0 3%
Nov-07 16.0 65.8 24% 4.2 16.1 26% 3.5 53.1 7% 1.2 26.2 5% 0.1 14.0 1% 0.7 40.4 2% 2.1 83.0 3%
Oct-07 15.3 67.3 23% 3.3 15.9 21% 3.1 53.1 6% 1.2 25.9 5% 0.1 14.0 1% 0.6 40.3 2% 2.2 82.9 3%
Sep-07 14.9 67.3 22% 3.5 15.9 22% 3.5 53.1 7% 1.3 25.9 5% 0.1 14.0 1% 0.7 40.3 2% 0.5 82.9 1%
Aug-07 19.7 67.3 29% 2.8 15.9 18% 4.1 52.7 8% 1.7 25.9 6% 0.1 14.0 1% 0.8 40.3 2% 0.6 82.9 1%
Jul-07 14.7 68.3 22% 2.7 15.7 17% 3.9 52.7 7% 1.6 25.6 6% 0.1 14.0 1% 0.7 39.1 2% -- -- --
Jun-07 14.6 68.3 21% 2.5 15.7 16% 4.2 52.7 8% 0.2 25.6 1% 0.1 14.0 1% 0.1 39.1 0% -- -- --
May-07 12.7 68.3 19% 3.1 15.7 20% 4.8 52.7 9% 0.2 25.6 1% 0.1 13.6 1% 0.0 39.1 0% -- -- --
Apr-07 12.3 68.8 18% 4.0 15.8 26% 3.5 58.8 6% 0.2 25.6 1% 0.1 13.6 0% -- -- -- -- -- --
Mar-07 12.5 68.8 18% 3.6 15.8 23% 3.0 58.8 5% 0.4 25.6 1% 0.1 14.2 1% -- -- -- -- -- --
Feb-07 11.5 68.5 17% 4.1 16.0 26% 2.3 58.8 4% 0.3 25.4 1% 0.1 14.2 1% -- -- -- -- -- --
Jan-07 9.1 68.5 13% 4.1 16.0 26% 1.7 59.1 3% 0.4 25.4 1% 0.1 14.2 1% -- -- -- -- -- --
2006
Dec-06 8.5 68.5 12% 3.9 16.0 25% 1.9 59.1 3% 0.4 25.4 2% 0.1 14.2 1% -- -- -- -- -- --
Nov-06 8.7 68.5 13% 3.8 16.0 24% 2.1 59.1 4% 0.5 25.4 2% 0.3 12.4 2% -- -- -- -- -- --
Oct-06 11.1 68.2 16% 4.2 16.0 27% 2.4 58.8 4% 0.4 25.4 2% 0.3 12.4 2% -- -- -- -- -- --
Sep-06 12.0 68.1 18% 4.3 16.0 27% 2.7 58.8 5% 0.5 25.4 2% 0.7 12.4 5% -- -- -- -- -- --
Aug-06 11.3 68.1 17% 4.1 16.0 26% 2.3 61.8 4% 0.6 25.4 2% 0.8 12.4 7% -- -- -- -- -- --
Jul-06 13.5 59.5 23% 4.0 17.4 23% 2.3 61.8 4% 0.9 25.3 4% 0.9 12.4 7% -- -- -- -- -- --
Jun-06 12.9 59.5 22% 4.3 17.4 25% 2.3 61.8 4% 1.7 25.3 7% 1.3 12.4 11% -- -- -- -- -- --
May-06 12.3 59.5 21% 4.6 17.4 26% 1.9 61.8 3% 1.7 25.3 7% 1.2 12.4 10% -- -- -- -- -- --
Apr-06 14.0 55.4 25% 4.8 17.3 28% 1.8 61.6 3% 1.3 25.3 5% 1.1 11.7 9% -- -- -- -- -- --
Mar-06 15.2 55.4 27% 5.0 17.3 29% 1.8 61.6 3% 1.2 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Feb-06 15.5 54.4 28% 4.6 17.3 27% 1.6 61.6 3% 1.3 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Jan-06 13.9 54.4 26% 3.3 17.3 19% 1.6 61.6 3% 1.1 25.3 4% 0.9 11.7 7% -- -- -- -- -- --
2005
Dec-05 12.8 54.4 23% 3.1 17.3 18% 1.5 61.5 2% 1.3 25.3 5% 0.9 11.7 8% -- -- -- -- -- --
Nov-05 13.6 54.4 25% 3.9 17.3 22% 1.6 61.5 3% 1.4 25.3 6% 1.1 11.7 9% -- -- -- -- -- --
Oct-05 12.9 53.6 24% 4.3 17.5 25% 1.7 61.4 3% 1.6 25.3 6% 1.0 11.7 9% -- -- -- -- -- --
Sep-05 14.9 53.6 28% 4.5 17.5 26% 1.4 61.4 2% 1.8 25.3 7% 1.0 11.7 9% -- -- -- -- -- --
Aug-05 15.2 53.6 28% 4.4 17.5 25% 1.4 61.4 2% 2.0 25.3 8% 0.9 10.8 8% -- -- -- -- -- --
Jul-05 14.8 53.2 28% 4.6 17.6 26% 1.6 61.4 3% 2.6 25.2 10% 0.9 10.8 8% -- -- -- -- -- --
Jun-05 14.8 53.2 28% 4.2 17.6 24% 2.3 61.4 4% 2.0 25.2 8% 0.9 10.8 9% -- -- -- -- -- --
May-05 14.0 53.2 26% 3.7 17.6 21% 2.4 61.4 4% 2.1 25.2 8% 1.0 10.8 10% -- -- -- -- -- --
Apr-05 14.6 52.9 28% 2.9 17.7 16% 2.3 61.5 4% 1.9 21.3 9% 1.4 10.8 13% -- -- -- -- -- --
Mar-05 15.1 52.9 29% 2.7 17.7 15% 2.3 61.5 4% 1.7 21.3 8% 1.5 10.8 14% -- -- -- -- -- --
Feb-05 15.5 52.4 30% 2.5 17.7 14% 2.1 61.5 3% 1.7 21.9 8% 1.4 10.8 13% -- -- -- -- -- --
Jan-05 16.8 52.4 32% 2.0 17.7 11% 1.8 60.6 3% 1.3 21.9 6% 1.4 10.8 13% -- -- -- -- -- --
2004
Dec-04 19.1 52.4 36% 1.6 17.7 9% 1.1 60.6 2% 1.1 21.9 5% 1.2 10.8 11% -- -- -- -- -- --
Nov-04 19.5 52.4 37% 1.8 17.7 10% 1.1 60.6 2% 0.5 21.0 2% 1.4 10.8 13% -- -- -- -- -- --
Oct-04 21.9 52.2 42% 1.1 17.7 6% 1.3 57.0 2% 0.4 16.5 2% 1.5 10.8 14% -- -- -- -- -- --
Sep-04 18.8 52.2 36% 1.2 17.7 7% 1.3 57.0 2% 0.2 16.5 1% 1.5 10.8 14% -- -- -- -- -- --
Aug-04 18.2 52.2 35% 1.0 17.7 6% 1.2 56.9 2% 0.2 16.5 1% 1.5 10.7 14% -- -- -- -- -- --
Jul-04 19.8 51.6 38% 0.5 17.3 3% 1.2 56.9 2% 0.0 16.5 0% 1.6 10.7 15% -- -- -- -- -- --
Jun-04 20.2 51.6 39% 0.2 17.3 1% 1.2 56.9 2% -- -- -- 1.7 10.7 16% -- -- -- -- -- --
May-04 20.0 51.6 39% 0.0 17.3 0% 1.1 56.9 2% -- -- -- 1.6 10.7 15% -- -- -- -- -- --
Apr-04 19.1 51.5 37% -- -- -- 0.9 56.4 2% -- -- -- 1.4 10.5 14% -- -- -- -- -- --
Mar-04 18.7 51.5 36% -- -- -- 0.8 56.4 1% -- -- -- 1.4 10.5 14% -- -- -- -- -- --
Feb-04 12.0 49.5 24% -- -- -- 1.0 56.4 2% -- -- -- 1.4 10.5 13% -- -- -- -- -- --
Jan-04 19.0 49.5 38% -- -- -- 1.2 56.1 2% -- -- -- 1.2 10.5 11% -- -- -- -- -- --
2003
Dec-03 15.5 49.5 31% -- -- -- 1.4 56.1 3% -- -- -- 1.3 10.5 12% -- -- -- -- -- --
Nov-03 0.0 49.5 0% -- -- -- 1.5 56.1 3% -- -- -- 1.2 10.3 11% -- -- -- -- -- --
Oct-03 17.7 49.5 36% -- -- -- 1.2 55.4 2% -- -- -- 1.4 10.3 13% -- -- -- -- -- --
Sep-03 19.2 48.0 40% -- -- -- 0.7 55.4 1% -- -- -- 1.2 10.3 12% -- -- -- -- -- --
Aug-03 16.5 48.0 34% -- -- -- 0.6 63.3 1% -- -- -- 1.3 10.3 12% -- -- -- -- -- --
Jul-03 18.0 48.0 37% -- -- -- 0.5 53.6 1% -- -- -- 1.4 10.3 13% -- -- -- -- -- --
Jun-03 16.2 47.5 34% -- -- -- 0.4 53.6 1% -- -- -- 1.4 10.3 14% -- -- -- -- -- --
May-03 16.0 47.5 34% -- -- -- 0.2 53.6 0% -- -- -- 1.5 10.3 15% -- -- -- -- -- --
Apr-03 14.6 46.0 32% -- -- -- 0.3 52.5 0% -- -- -- 1.6 9.9 16% -- -- -- -- -- --
Mar-03 11.6 44.9 26% -- -- -- 0.3 52.5 1% -- -- -- 1.7 9.9 17% -- -- -- -- -- --
Feb-03 8.8 44.9 20% -- -- -- 0.1 52.5 0% -- -- -- 1.5 9.9 15% -- -- -- -- -- --
Jan-03 7.6 44.9 17% -- -- -- 0.0 52.5 0% -- -- -- 1.6 9.9 16% -- -- -- -- -- --
2002
Dec-02 6.7 44.3 15% -- -- -- 0.1 52.5 0% -- -- -- 1.6 9.9 17% -- -- -- -- -- --
Nov-02 7.7 44.3 17% -- -- -- 0.2 52.5 0% -- -- -- 1.7 9.8 18% -- -- -- -- -- --
Oct-02 7.6 44.1 17% -- -- -- 0.4 52.5 1% -- -- -- 1.8 9.8 18% -- -- -- -- -- --
Sep-02 7.2 44.1 16% -- -- -- 0.7 52.4 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Aug-02 5.1 44.1 12% -- -- -- 0.8 52.8 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Jul-02 3.4 42.9 8% -- -- -- 0.7 52.1 1% -- -- -- 1.7 9.8 18% -- -- -- -- -- --
Jun-02 1.2 42.9 3% -- -- -- 0.5 52.1 1% -- -- -- 1.6 9.8 17% -- -- -- -- -- --
May-02 0.0 41.2 0% -- -- -- 0.3 52.8 1% -- -- -- 1.6 9.8 16% -- -- -- -- -- --
Apr-02 -- -- -- -- -- -- 0.3 51.7 0% -- -- -- 1.3 9.7 14% -- -- -- -- -- --
Mar-02 -- -- -- -- -- -- 0.2 51.7 0% -- -- -- 1.4 9.7 15% -- -- -- -- -- --
Feb-02 -- -- -- -- -- -- 0.2 51.7 0% -- -- -- 0.7 9.7 7% -- -- -- -- -- --
Jan-02 -- -- -- -- -- -- 0.2 35.0 1% -- -- -- 0.4 8.2 5% -- -- -- -- -- --
2001
Dec-01 -- -- -- -- -- -- 0.2 35.0 1% -- -- -- 0.4 8.2 4% -- -- -- -- -- --
Nov-01 -- -- -- -- -- -- 0.3 35.0 1% -- -- -- 0.5 6.3 8% -- -- -- -- -- --
Oct-01 -- -- -- -- -- -- 0.8 34.4 2% -- -- -- 0.3 6.3 5% -- -- -- -- -- --
Sep-01 -- -- -- -- -- -- 0.4 34.4 1% -- -- -- 0.3 6.3 5% -- -- -- -- -- --
Aug-01 -- -- -- -- -- -- 0.1 34.4 0% -- -- -- 0.4 5.8 7% -- -- -- -- -- --
Jul-01 -- -- -- -- -- -- 0.0 34.2 0% -- -- -- 0.4 5.8 6% -- -- -- -- -- --
Jun-01 -- -- -- -- -- -- 0.0 34.2 0% -- -- -- 0.4 5.8 6% -- -- -- -- -- --
May-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.4 3% -- -- -- -- -- --
Apr-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 3% -- -- -- -- -- --
Mar-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 4% -- -- -- -- -- --
Feb-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.2 5.2 5% -- -- -- -- -- --
Jan-01 -- -- -- -- -- -- 0.0 34.3 0% -- -- -- 0.1 5.2 2% -- -- -- -- -- --
Dice Holdings
Shares Shares
2008 Short Out. % Short
Mar-08 2.0 62.2 0.0
Feb-08 1.8 62.0 3%
Jan-08 1.8 62.0 3%
2007
Dec-07 1.2 62.0 2%
Nov-07 1.0 62.0 2%
Oct-07 1.4 62.0 2%
Sep-07 0.5 62.0 1%
Aug-07 0.3 62.0 1%
Jul-07 -- -- --
Jun-07 -- -- --
May-07 -- -- --
Apr-07 -- -- --
Mar-07 -- -- --
Feb-07 -- -- --
Jan-07 -- -- --
Notes:
(1) Yahoo! share repurchase totals include open market purchases as well as structured stock transactions that settle during that calendar year.
(2) Expedia YTD 2007 repurchases include tender offer which company completed on Jan. 19, for 30M shares @ $22.00 per share;
also includes tender completed on Aug 8, for 25M shares @ $29.00 per share.
(3) Harris Interactive's fiscal year ends June 30.
(4) Alloy's fiscal year ends January 31.
Figure 27: U.S. Households with Broadband & Broadband Penetration, 2001–10E
(in millions) 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E
Total U.S. Households 106.7 108.0 109.2 110.5 111.8 113.1 114.4 115.7 117.1 118.4
Total Online Homes 54.8 60.9 66.8 71.1 73.7 76.2 79.2 83.4 88.2 92.9
% of U.S. Households 51% 56% 61% 64% 66% 67% 69% 72% 75% 78%
Total Narrowband 44.2 43.4 38.6 33.5 29.4 22.0 16.6 13.0 10.6 9.1
% change 15% -2% -11% -13% -12% -25% -25% -22% -18% -15%
Total Cable Broadband 7.2 11.6 16.4 21.0 24.5 29.4 33.3 36.3 38.8 40.3
% change 95% 61% 41% 28% 17% 20% 13% 9% 7% 4%
Total DSL Broadband 3.2 5.1 9.5 13.7 16.3 23.9 28.4 33.2 37.9 42.6
% change 129% 59% 86% 44% 19% 46% 19% 17% 14% 12%
Other Broadband 0.2 0.8 2.3 2.9 3.5 1.0 0.9 0.9 0.9 0.8
% change 100% 300% 188% 26% 21% -73% -4% -2% NM NM
Total Broadband 10.6 17.5 28.2 37.6 44.3 54.2 62.7 70.4 77.6 83.8
% change 104% 65% 61% 33% 18% 22% 16% 12% 10% 8%
Share of Online Homes
Narrowband 81% 71% 58% 47% 40% 29% 21% 16% 12% 10%
Broadband 19% 29% 42% 53% 60% 71% 79% 84% 88% 90%
Share of Broadband Homes
Cable 68% 66% 58% 56% 55% 54% 53% 52% 50% 48%
DSL 30% 29% 34% 36% 37% 44% 45% 47% 49% 51%
Other 2% 5% 8% 8% 8% 2% 1% 1% NM NM
Source: Veronis Suhler, PQ Media, Kagan Worldwide Media, Forrester, Lehman Brothers estimates, company reports
90 80%
80
US Broadband Households (MM)
70%
70
60%
60
50%
50
40%
40
30%
30
20%
20
10 10%
0 0%
2000 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E 2012E
Figure 30: Global Internet Penetration – Top 20 Countries with Most Internet Users
Source: Internet World Stats (http://www.internetworldstats.com/top20.htm), compiled from various sources including Nielsen/NetRatings & ITU, June 2007, CNNIC
US households 105.5 106.7 108.0 109.2 110.5 111.8 113.1 114.4 115.7 117.1 118.4 119.8 121.2
Radio, 19%
Video or DVD, 11%
Video Games, 3%
Magazines, 6%
Newspapers, 9%
TV, 33%
Internet, 19%
Figure 34: Share of Time Spent Online, December 2005–December 2006 and January 2007–February 2008
Activity Dec-05 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Content 36% 44% 46% 46% 47% 47% 48% 50% 51% 50% 50% 49% 48% 49% 43% 42%
Community - - - - - - - - - - - - - - 8% 7%
Communications 41% 33% 34% 34% 33% 33% 33% 32% 30% 32% 31% 31% 30% 29% 29% 30%
Commerce 19% 18% 16% 16% 16% 15% 14% 14% 14% 14% 15% 15% 17% 18% 16% 15%
Search 4% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Portal/Search Engine 2000 2001 2002 2003 2004 2005 2006 2007
Yahoo!, Inc. 74 73 76 78 78 80 76 79
Google, Inc. NM NM 80 82 82 82 81 78
Internet Portals/Search Engines 63 65 68 71 72 76 77 75
All Others 67 72 72 78 78 77 78 75
Ask.com NM NM 62 69 71 72 71 75
MSN 71 67 72 74 75 75 74 75
AOL, LLC 56 58 59 65 67 71 74 67
AltaVista NM NM 61 63 66 NM NM NM
Source: ACSI
Figure 36: Top 50 U.S. Web Properties by Unique Visitors, February 2007–February 2008 (in thousands)
Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
Yahoo! Sites 128,559 131,227 131,392 130,526 133,093 133,428 135,251 135,578 136,775 136,180 136,634 138,059 136,767
Y/Y growth 7% 6% 3% 0% 3% 3% 3% 5% 6% 5% 4% 7% 6%
Google Sites 114,694 118,492 119,640 120,010 123,601 123,892 128,544 129,508 131,639 131,538 132,954 134,886 135,970
Y/Y growth 21% 14% 10% 15% 20% 19% 19% 21% 20% 21% 18% 19% 19%
Microsoft Sites 114,155 118,716 115,605 113,916 116,824 118,154 118,392 119,193 120,502 119,194 120,034 119,297 118,355
Y/Y growth 3% 2% -4% -4% -1% 0% -1% 0% 2% 2% 3% 4% 4%
AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 109,442 108,911
Y/Y growth - - - - - - - - - - - - -
Fox Interactive Media 77,969 80,098 80,789 82,260 83,598 81,233 79,966 79,951 84,205 81,325 81,847 83,752 83,638
Y/Y growth 461% 346% 370% 283% 529% 521% 11% 13% 18% 10% 12% 12% 7%
eBay 79,559 80,154 79,167 79,428 81,224 79,787 79,707 78,105 79,669 80,510 79,892 78,789 77,864
Y/Y growth 19% 13% 4% 2% 4% 5% -1% -1% -1% -3% -5% -2% -2%
Wikipedia Sites 43,656 47,011 49,632 48,743 47,031 46,372 48,386 52,800 56,104 55,157 51,851 55,589 55,906
Y/Y growth 122% 84% 66% 55% 72% 65% 56% 51% 44% 41% 34% 30% 28%
Amazon Sites 48,905 49,980 48,914 51,567 53,285 52,702 53,904 53,803 56,746 59,058 65,205 59,003 55,172
Y/Y growth 15% 6% 1% 7% 9% 13% 11% 9% 11% 12% 15% 16% 13%
Ask Network 48,722 46,346 47,926 50,068 52,600 51,885 52,075 51,723 55,512 51,636 49,509 52,102 54,120
Y/Y growth 13% -5% -11% -8% 0% 0% -3% -6% 0% -5% -11% 6% 11%
Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 52,645 52,661
Y/Y growth - - - - - - - - - - - - -
New York Times Digital 39,769 41,464 43,127 43,603 42,718 42,710 44,113 45,276 49,816 47,997 44,362 48,471 47,632
Y/Y growth 14% 14% 9% 8% 12% 12% 15% 12% 16% 13% 13% 21% 20%
Apple Inc. 36,767 27,317 38,789 41,909 44,114 42,561 42,744 43,122 43,157 43,775 47,724 48,413 47,048
Y/Y growth 51% 2% 35% 36% 42% 37% 35% 35% 34% 30% 21% 25% 28%
Viacom Digital 39,128 39,724 39,514 40,462 42,212 43,056 44,888 44,300 43,345 42,796 43,109 42,011 41,216
Y/Y growth - - - - - 40% 40% 26% 18% 8% 8% 13% 5%
Weather Channel, The 37,374 36,189 39,555 38,496 39,865 38,534 38,905 37,571 38,796 34,124 40,663 40,478 41,057
Y/Y growth 34% 13% 13% 8% 10% 10% 12% 13% 14% 6% 25% 14% 10%
CNET Networks 29,881 30,984 30,789 30,954 31,023 32,182 32,490 32,687 35,336 35,731 35,773 34,859 33,320
Y/Y growth 13% 7% 3% 7% 10% 6% 2% 14% 22% 13% 12% 13% 12%
FACEBOOK.COM 16,737 20,896 23,042 26,649 27,965 30,557 33,745 30,601 32,910 33,660 34,658 33,861 32,436
Y/Y growth 59% 62% 85% 89% 103% 113% 128% 129% 118% 102% 81% 79% 94%
Adobe Sites 26,035 26,842 29,477 28,458 36,441 33,361 31,231 30,847 30,592 31,848 30,798 31,169 30,620
Y/Y growth 19% 6% 5% 8% 36% 11% 7% 17% 21% 26% 19% 19% 18%
Glam Media 8,410 10,048 12,221 17,299 19,075 20,656 20,058 22,421 25,487 25,394 25,028 24,626 29,136
Y/Y growth - - 2526% 3638% 1232% 778% 677% 581% 742% 561% 213% 251% 246%
Wal-Mart 25,125 25,679 28,362 27,796 27,922 29,213 28,510 27,036 29,238 42,462 44,341 30,747 27,651
Y/Y growth 20% 18% 16% 7% 10% 10% 9% 8% 8% -1% 1% 14% 10%
Superpages.com Network 15,236 21,727 19,970 20,956 21,426 22,526 21,344 18,980 19,402 25,603 23,448 28,299 27,526
Y/Y growth - - - - - - - - - - - 68% 81%
Verizon Communications Corporation 21,265 23,251 21,903 23,669 23,876 25,151 25,033 23,982 24,389 29,072 28,656 27,220 27,101
Y/Y growth -34% -33% -38% -35% -32% -31% -34% -30% -28% -13% -17% 20% 27%
Disney Online 21,959 20,183 19,626 20,127 23,443 23,948 25,606 21,343 21,133 23,822 26,167 27,524 27,094
Y/Y growth - - -11% -6% -12% -7% 3% -9% -16% -4% 4% 10% 23%
craigslist, inc. 15,991 17,793 18,934 20,581 22,529 23,946 23,987 23,124 23,992 24,427 24,468 26,660 26,822
Y/Y growth - - 69% 75% 72% 73% 64% 68% 67% 71% 74% 75% 68%
Gorilla Nation 29,098 28,852 28,573 29,547 30,721 32,560 30,776 30,097 31,889 26,556 26,642 27,119 26,710
Y/Y growth 40% 26% 19% 26% 22% 23% 18% 23% 26% 7% 5% 14% -8%
Target Corporation 23,038 25,123 25,064 26,013 28,323 30,391 31,042 28,749 31,090 41,933 42,634 27,874 26,631
Y/Y growth 16% 18% 7% 12% 21% 30% 22% 26% 28% 26% 24% 16% 16%
AT&T, Inc. 27,391 27,349 26,608 26,975 29,992 29,692 28,501 28,301 33,749 29,843 30,212 27,890 26,385
Y/Y growth 23% 14% 4% 4% 17% 18% 8% 4% 39% 36% 27% -3% -4%
Shopzilla.com Sites 16,744 17,532 19,040 19,137 21,417 21,983 21,644 22,272 23,569 25,023 26,524 24,210 24,782
Y/Y growth -10% -10% -5% -6% 14% 18% 10% 9% 7% 12% 16% 22% 48%
Comcast Corporation 16,986 18,342 18,302 17,860 19,267 20,659 25,279 24,007 25,277 26,479 26,445 27,068 24,466
Y/Y growth 1% -5% 9% 6% 12% 17% 37% 35% 47% 46% 41% 53% 44%
Yellowpages.com Network 16,274 18,122 17,750 19,826 19,340 20,600 21,347 22,808 24,921 24,221 24,453 22,869 23,691
Y/Y growth - - - - - - - - 117% 125% 51% 42% 46%
CBS Corporation 23,045 26,815 21,952 21,951 21,838 22,258 25,821 30,118 28,262 28,714 25,083 23,643 23,564
Y/Y growth 23% 7% 0% 0% 6% 7% 5% 14% 18% 14% 8% 5% 2%
Gannett Sites 18,619 20,724 20,630 19,262 18,999 20,089 20,050 20,829 22,807 22,272 20,163 22,997 23,407
Y/Y growth -1% 1% -1% -4% -4% 2% -3% 2% 13% 10% 11% 23% 26%
Expedia Inc 25,060 27,039 24,435 25,212 28,238 29,243 27,034 25,058 24,575 21,796 18,702 23,454 23,150
Y/Y growth -1% -2% -11% -9% -2% -2% -3% 9% 9% 2% -4% -8% -8%
Bank of America 21,695 21,848 21,843 21,414 23,240 23,325 23,809 22,997 22,761 23,354 23,771 22,990 23,111
Y/Y growth 3% 2% -5% -7% 0% -1% 2% 3% 4% 10% 5% -1% 7%
Monster Worldwide 22,794 23,515 22,062 24,879 25,825 25,753 27,986 25,615 26,013 23,390 22,565 24,185 22,389
Y/Y growth -5% -12% -22% -17% -12% -9% 7% 3% 6% -1% -2% -3% -2%
CareerBuilder LLC 20,834 20,823 20,750 21,266 21,723 21,723 20,202 22,507 23,000 17,021 13,914 24,752 22,357
Y/Y growth 6% 0% -1% -5% 3% 4% -2% 3% 2% 1% 0% 17% 7%
United Online, Inc 24,773 24,277 23,548 21,430 24,199 23,683 26,255 22,908 23,913 19,305 19,617 22,065 21,966
Y/Y growth 0% -10% -23% -20% -6% -12% -11% -13% -13% -24% -16% -10% -11%
Photobucket.com LLC 16,751 17,978 19,020 21,168 22,873 24,188 23,727 21,349 22,177 19,628 18,060 20,497 20,917
Y/Y growth 133% 93% 88% 93% 65% 56% 63% 45% 47% 26% 8% 16% 25%
Atrinsic, Inc. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 20,473
Y/Y growth - - - - - - - - - - - - -
E.W. Scripps 16,346 16,343 14,501 14,329 14,164 16,819 16,501 17,080 19,254 21,045 20,207 20,952 20,005
Y/Y growth - - - - -5% 5% 4% 9% 24% 18% 24% 19% 22%
AmericanGreetings Property 11,155 7,568 9,385 8,146 7,340 7,254 6,312 6,561 10,257 16,444 18,102 16,771 19,884
Y/Y growth - - - - - - - - -19% 33% 51% 107% 78%
WebMD Health 16,466 17,801 16,883 16,578 17,127 16,829 16,945 18,366 19,904 18,346 15,597 19,219 19,637
Y/Y growth 26% 22% 16% 9% 28% 23% 15% 29% 32% 22% 15% 13% 19%
WorldNow - ABC Owned Sites 12,188 10,645 10,312 9,824 10,354 11,184 11,783 13,230 16,539 14,014 15,474 19,115 19,426
Y/Y growth - - - - - - - - #N/A 43% 78% 86% 59%
Real.com Network 18,032 18,988 18,795 18,684 19,130 20,298 20,116 19,998 20,108 20,242 20,988 19,747 18,498
Y/Y growth 5% 0% -20% -23% -10% -3% -4% -2% 0% -6% 2% 7% 3%
NBC Universal 15,189 15,902 15,277 15,682 14,984 15,012 16,107 17,132 17,462 16,933 17,309 17,828 17,863
Y/Y growth - - - - 25% 33% 44% -13% 24% 26% 25% 19% 18%
IRS.GOV 17,319 12,104 12,808 4,967 4,065 3,711 3,435 3,430 4,065 4,096 4,442 12,495 17,863
Y/Y growth - - - - - - - - - - 2% -6% 3%
ESPN 15,207 19,199 17,689 17,572 17,473 18,227 19,740 24,168 22,937 22,186 20,667 19,166 17,836
Y/Y growth -15% 3% 1% 9% -2% 5% 11% 19% 13% 19% 21% 18% 17%
Lycos Sites 22,341 22,387 22,584 21,540 20,900 20,268 20,375 20,273 20,229 18,335 18,427 19,484 17,702
Y/Y growth -5% -10% -3% -12% -11% -14% -21% -21% -24% -21% -18% -19% -21%
Cox Enterprises Inc. 15,709 16,187 16,433 16,185 17,370 17,777 18,025 16,224 16,414 16,058 15,450 17,286 17,603
Y/Y growth 9% 7% -2% -6% 7% 4% 2% 12% 9% 11% 7% 6% 12%
Demand Media 6,748 7,345 8,538 10,724 11,927 14,444 13,226 13,615 15,843 15,132 14,958 16,673 17,532
Y/Y growth - - - - - - - - - - 149% 125% 160%
Weatherbug Property 15,025 15,474 16,394 15,714 16,375 16,289 16,722 16,772 17,051 16,274 17,077 17,456 17,256
Y/Y growth -2% 3% 4% -2% 3% 2% 4% 9% 12% 4% 7% 19% 15%
Total Internet : Total Audience 175,653 177,372 178,079 177,487 178,839 180,078 181,257 181,858 182,206 182,362 183,619 184,239 185,017
Y/Y growth 5% 3% 4% 3% 3% 4% 5% 5% 5% 5% 5% 5% 5%
Figure 37: Top 50 U.S. Web Properties by Page Views, February 2007–February 2008 (in millions)
Rank Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
1 Fox Interactive Media 42,901 44,432 44,765 45,134 48,088 47,712 46,016 45,007 45,956 42,796 38,889 44,013 39,781
Y/Y growth 12803% 9861% 9014% 9680% 16298% 17264% 36% 26% 19% 8% -6% 9% -7%
2 Yahoo! Sites 34,863 36,282 37,490 36,232 34,927 34,919 36,356 35,502 36,853 34,894 32,756 32,361 30,206
Y/Y growth 15% 10% 1% -5% -12% -7% -8% -11% -11% -8% -9% -9% -13%
3 Google Sites 14,349 15,716 16,450 18,425 19,089 19,922 20,123 21,313 22,912 23,854 23,507 26,138 25,860
Y/Y growth 86% 76% 67% 88% 88% 94% 100% 108% 103% 101% 76% 91% 80%
4 Microsoft Sites 17,603 18,788 18,086 20,335 20,418 19,876 20,302 19,493 20,476 18,893 18,560 19,937 18,972
Y/Y growth -3% -7% -15% 2% 6% 2% 0% 4% 6% 6% 3% 10% 8%
5 AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 16,568
Y/Y growth - - - - - - - - - - - - -
6 FACEBOOK.COM 10,779 12,179 14,997 15,841 14,785 14,985 15,260 14,687 15,178 14,832 12,984 12,743 11,707
Y/Y growth 96% 61% 110% 143% 143% 145% 136% 105% 61% 64% 43% 23% 9%
7 eBay 9,758 10,754 9,910 8,761 8,998 9,430 8,882 8,468 8,527 8,958 9,025 9,028 8,503
Y/Y growth -8% -8% -24% -30% -22% -16% -17% -23% -20% -20% -18% -3% -13%
8 craigslist, inc. 4,209 5,346 5,696 5,378 5,904 6,575 6,379 6,404 7,240 6,560 6,602 7,152 6,866
Y/Y growth 127% 125% 114% 88% 109% 111% 88% 102% 116% 135% 119% 69% 63%
9 Comcast Corporation 2,847 3,116 3,063 2,996 3,068 3,261 3,402 3,627 4,290 4,706 4,083 4,225 3,803
Y/Y growth 12% 45% 21% 30% 35% 41% 38% 44% 63% 78% 44% 57% 34%
10 Viacom Digital 2,493 2,427 2,506 2,521 3,222 3,597 3,253 2,622 2,317 2,378 2,668 2,574 2,499
Y/Y growth - - - - - 5% -3% -18% -23% -34% -24% 16% 0%
11 Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2,367 2,432
Y/Y growth - - - - - - - - - - - - -
12 Intuit 2,082 989 1,201 264 222 224 271 244 320 287 284 1,413 2,023
Y/Y growth 20% 18% 24% -10% -3% 21% 208% 164% 294% 156% 47% -2% -3%
13 AT&T, Inc. 1,555 1,678 1,672 1,725 1,818 1,800 1,977 2,052 2,127 1,881 1,825 2,064 1,890
Y/Y growth 82% 97% 92% 80% 75% 76% 85% 101% 142% 128% 113% 24% 22%
14 Amazon Sites 1,352 1,532 1,580 1,589 1,678 1,942 1,896 1,770 1,819 2,058 2,571 2,057 1,671
Y/Y growth -10% -8% -7% -4% -6% 24% 21% 23% 25% 11% 25% 31% 24%
15 EA Online 1,267 1,412 1,149 1,182 1,219 1,374 1,332 1,360 1,522 1,382 1,423 1,686 1,608
Y/Y growth -25% -10% -15% -10% -10% -4% -15% -9% 2% -6% 17% 34% 27%
16 Ask Network 1,434 1,450 1,483 1,606 1,675 1,747 1,788 1,679 1,700 1,575 1,433 1,528 1,412
Y/Y growth -6% -17% -26% -13% -11% -3% -4% -6% -3% -6% -16% 2% -2%
17 Photobucket.com LLC 764 824 1,141 1,666 1,912 2,101 2,247 2,207 2,445 2,146 2,104 1,180 1,302
Y/Y growth 190% 144% 195% 219% 148% 208% 193% 256% 340% 211% 179% 51% 71%
18 Bank of America 1,201 1,229 1,148 1,152 1,223 1,258 1,295 1,262 1,295 1,280 1,307 1,333 1,282
Y/Y growth 11% 4% -8% -6% -3% 2% 5% 11% 7% 6% 7% 9% 7%
19 Verizon Communications Corporation 995 1,068 978 895 920 1,040 1,065 1,081 1,113 1,189 1,205 1,267 1,199
Y/Y growth 4% -6% -18% -22% -20% -12% -15% -8% -5% 6% 5% 27% 21%
20 Cox Enterprises Inc. 906 950 910 912 991 1,067 1,010 985 943 921 946 1,104 1,132
Y/Y growth 3% 5% -23% -5% 9% 9% -1% 8% 1% 16% 14% 10% 25%
21 Disney Online 945 726 655 715 879 962 993 722 624 853 1,039 1,100 1,090
Y/Y growth - - -38% -27% -43% -34% -22% -34% -37% -21% -3% 11% 15%
22 United Online, Inc 1,238 1,352 1,294 1,180 1,235 1,136 1,105 1,027 1,133 949 1,023 984 953
Y/Y growth 23% 25% 4% 18% 25% 14% -9% -8% 8% -10% -21% -19% -23%
23 Glam Media 85 101 130 373 460 734 768 666 685 719 756 860 891
Y/Y growth - - 5886% 21479% 5630% 3193% 2071% 1637% 1891% 1448% 1333% 1209% 946%
24 ESPN 687 1,043 920 854 899 977 1,245 1,888 1,849 1,667 1,310 949 885
Y/Y growth -19% -7% -18% 30% -5% 41% 58% 77% 61% 77% 36% 24% 29%
25 Wal-Mart 734 724 769 744 778 876 820 757 876 1,609 1,800 917 809
Y/Y growth 7% -6% -1% -11% -9% 10% 10% -2% 3% 11% 25% 22% 10%
26 Pearson Education 398 304 307 352 393 293 362 585 695 669 531 643 793
Y/Y growth - - - - - - - 44% 61% 58% 79% 93% 99%
27 Wikipedia Sites 598 701 817 846 826 925 846 841 931 832 781 805 751
Y/Y growth 180% 161% 125% 104% 117% 146% 87% 82% 88% 39% 35% 39% 26%
28 JPMorgan Chase Property 650 697 713 691 660 714 722 729 819 794 784 843 735
Y/Y growth 27% 15% 8% 11% 6% 22% 20% 32% 36% 35% 20% 42% 13%
29 Weather Channel, The 591 510 578 551 600 546 558 451 508 396 672 681 685
Y/Y growth 21% -32% -22% -33% -29% -28% -18% -32% -23% -33% 12% -12% 16%
30 Weatherbug Property 682 752 723 726 808 771 757 656 681 584 711 699 666
Y/Y growth 5% 7% -3% -10% 6% -1% 1% -2% 8% -4% 13% 9% -2%
31 Gorilla Nation 556 529 523 578 705 724 577 525 777 723 718 747 641
Y/Y growth 40% 18% 6% 20% 26% 17% -6% -7% 41% 66% 68% 85% 15%
32 Gannett Sites 445 493 493 479 518 573 602 612 630 537 528 586 594
Y/Y growth 26% 14% -1% 11% 20% 28% 25% 43% 31% 12% 23% 32% 34%
33 Expedia Inc 790 942 712 672 704 800 673 572 522 444 413 626 572
Y/Y growth -5% 5% -16% -21% -29% -13% -19% -7% -17% -16% -16% -18% -28%
34 New York Times Digital 462 508 569 509 508 505 519 535 610 546 484 557 547
Y/Y growth 9% 9% -2% 4% 8% 2% -3% 7% 9% -3% 1% 11% 18%
35 Target Corporation 505 598 528 549 620 698 609 531 604 914 931 564 547
Y/Y growth -2% 5% -14% -8% 4% 28% 2% 10% 4% 16% 17% 10% 8%
36 Apple Inc. 440 452 418 526 478 501 486 541 491 511 694 603 545
Y/Y growth 33% 36% 20% 37% 18% 32% 26% 17% 8% 5% -1% 17% 24%
37 Wells Fargo 495 588 560 546 571 565 619 581 616 585 587 627 541
Y/Y growth -9% -2% -7% -3% -5% 3% 3% 1% 11% 20% 20% 24% 9%
38 JCPenney Sites 538 630 491 495 439 505 525 490 506 678 674 512 528
Y/Y growth 36% 13% 2% 9% -7% -3% -2% -14% -4% -17% -12% -3% -2%
39 E.W. Scripps 447 387 324 346 348 395 395 410 466 571 507 617 492
Y/Y growth -6% -8% -16% -9% -10% 2% 11% 13% 32% 32% 15% 19% 10%
40 CNET Networks 532 561 568 560 579 653 666 640 567 498 476 468 471
Y/Y growth -52% -42% -42% -45% -38% -24% -14% 4% -14% -30% -26% -24% -12%
41 CBS Corporation 513 751 696 640 603 509 651 1,036 976 851 613 452 465
Y/Y growth - 5% 2% -6% -15% -19% -25% -4% -2% -11% -17% 0% -9%
42 Sprint Nextel Corporation 483 479 461 452 500 526 526 459 458 530 507 444 463
Y/Y growth 12% 9% -2% -3% 4% 14% 5% -6% -7% 7% 4% -8% -4%
43 WorldNow - ABC Owned Sites 244 213 245 220 289 304 316 311 315 271 331 428 460
Y/Y growth - - - - - - - - - 57% 98% 108% 88%
44 CareerBuilder LLC 414 439 449 406 432 428 429 411 430 327 267 460 459
Y/Y growth 17% 13% 14% -11% -6% -8% -22% -8% -8% -8% -19% 8% 11%
45 Citigroup 580 552 509 482 476 483 498 493 601 500 484 489 439
Y/Y growth 9% -2% -25% -34% -37% -33% -34% -22% 3% -4% -14% -22% -24%
46 Monster Worldwide 483 532 530 531 527 531 541 574 561 461 378 482 396
Y/Y growth -21% -18% -26% -24% -26% -26% -18% -5% -1% -14% -23% -22% -18%
47 NETFLIX.COM 329 347 305 277 315 338 343 325 324 314 335 428 385
Y/Y growth - - - - - - - - - -1% 0% 13% 17%
48 Capital One 374 393 343 306 345 334 353 329 378 451 398 406 379
Y/Y growth - - - - - - -12% -8% 3% 37% 8% 10% 1%
49 Macy's Inc. 391 302 269 320 323 303 273 281 340 441 521 398 356
Y/Y growth - - - - - - - -3% 10% 10% 7% 0% -9%
50 Hearst Corporation N/A N/A N/A N/A N/A N/A N/A N/A N/A 403 381 361 353
Y/Y growth - - - - - - - - - - - - -
Total Internet : Total Audience 456,035 473,502 471,849 459,025 473,831 475,063 474,003 462,970 485,718 469,819 456,584 495,481 458,811
Y/Y growth 13% 6% -1% -5% -4% -3% -5% 0% 3% 3% 1% 12% 1%
Figure 38: Top 50 Global Properties by Unique Visitors, February 2007–February 2008 (in thousands)
Rank Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
1 Google Sites 503,033 528,005 527,572 536,401 544,783 552,035 561,090 570,480 583,445 581,085 587,806 597,234 605,576
Y/Y growth 13% 13% 12% 18% 20% 20% 20% 22% 24% 22% 19% 19% 20%
2 Microsoft Sites 507,317 526,999 520,238 528,078 529,156 532,351 525,541 528,651 539,364 531,087 540,285 545,608 542,751
Y/Y growth 5% 4% 3% 5% 6% 5% 4% 5% 7% 6% 6% 7% 7%
3 Yahoo! Sites 458,985 476,256 467,642 469,826 471,924 475,826 478,723 481,511 495,901 490,019 484,674 495,335 487,573
Y/Y growth 1% 1% -1% -2% -2% -1% -1% 0% 4% 3% 2% 6% 6%
4 AOL LLC N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 247,880 240,810
Y/Y growth - - - - - - - - - - - - -
5 Wikipedia Sites 192,176 212,171 208,906 217,464 208,120 198,746 210,811 228,830 244,474 241,533 226,119 242,554 240,754
Y/Y growth 93% 82% 71% 60% 63% 57% 52% 48% 49% 40% 37% 28% 25%
6 eBay 248,558 256,270 248,006 258,678 264,732 247,666 240,357 243,348 253,685 254,867 251,847 249,307 239,900
Y/Y growth 2% 0% -4% -1% 3% 3% 1% 3% 6% 2% 0% 0% -3%
7 Fox Interactive Media 140,500 151,203 147,760 151,369 163,546 161,700 158,232 154,975 160,958 156,328 158,418 160,625 158,216
Y/Y growth 390% 336% 313% 278% 502% 469% 30% 32% 29% 20% 17% 15% 13%
8 Amazon Sites 143,084 149,643 136,655 141,578 145,947 148,366 151,944 154,210 160,286 163,417 170,599 165,959 155,193
Y/Y growth 11% 7% 1% 5% 13% 13% 13% 15% 16% 14% 13% 11% 8%
9 Apple Inc. 111,877 109,988 115,262 120,982 123,554 123,834 124,069 126,575 126,880 127,023 137,355 140,309 139,213
Y/Y growth 37% 23% 29% 27% 34% 34% 32% 33% 34% 29% 24% 20% 24%
10 CNET Networks 116,394 129,384 119,865 121,423 116,579 124,081 122,240 124,598 135,449 130,635 126,451 125,565 124,750
Y/Y growth 33% 32% 33% 39% 38% 39% 33% 48% 45% 30% 10% 6% 7%
11 Ask Network 108,663 111,427 110,553 113,954 115,655 116,918 121,604 121,470 131,387 127,588 119,799 121,303 116,420
Y/Y growth -4% -6% -9% -4% 3% 2% 5% 8% 16% 15% 5% 11% 7%
12 Adobe Sites 98,748 105,955 101,133 103,165 121,966 115,820 108,728 107,877 113,544 116,496 111,112 112,819 107,954
Y/Y growth 1% -1% -5% 3% 27% 13% 8% 13% 23% 19% 11% 11% 9%
13 FACEBOOK.COM 24,782 32,115 38,764 47,208 52,167 60,491 69,256 73,521 85,636 92,754 97,792 100,668 100,319
Y/Y growth 129% 145% 204% 235% 270% 304% 348% 420% 424% 399% 330% 305% 305%
14 Time Warner - Excluding AOL N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 91,744 90,468
Y/Y growth - - - - - - - - - - - - -
15 Connexus 39,140 42,484 39,244 42,465 42,422 42,136 41,805 41,469 44,896 99,350 105,204 97,567 84,322
Y/Y growth -41% -36% -39% -28% -19% -21% -22% -14% -8% 100% 123% 105% 115%
16 Viacom Digital 76,625 83,358 81,344 85,522 88,655 91,243 92,373 91,697 89,993 87,219 88,745 86,008 83,583
Y/Y growth - - - - - 70% 68% 39% 32% 16% 17% 13% 9%
17 The Mozilla Organization 49,812 61,918 39,759 47,129 70,851 73,989 72,514 76,030 79,676 88,294 81,253 47,989 82,593
Y/Y growth 146% 243% 59% 64% 136% 167% 107% 106% 176% 97% 75% 28% 66%
18 WordPress N/A N/A N/A 37,980 41,898 46,060 52,346 62,615 69,617 72,335 71,027 78,766 78,784
Y/Y growth - - - - - - - - - - - - -
19 New York Times Digital 70,984 75,057 68,485 68,225 66,230 66,534 67,751 69,959 77,237 75,074 69,435 76,331 75,371
Y/Y growth 16% 14% 6% 3% 7% 6% 6% 7% 10% 6% 2% 6% 6%
20 Baidu.com Inc. 52,724 59,226 58,595 58,958 60,062 63,134 58,816 63,344 66,905 67,534 69,558 70,050 66,711
Y/Y growth - - - - - - - - - - - 24% 27%
21 TENCENT Inc. 53,175 60,175 59,473 57,381 61,970 66,223 63,140 65,787 68,485 70,974 68,769 70,643 66,228
Y/Y growth - - - - 8% 15% 16% 26% 27% 26% 19% 27% 25%
22 Lycos Sites 86,581 87,426 79,110 80,728 77,518 78,265 76,789 74,550 77,743 73,739 70,017 70,576 65,454
Y/Y growth 95% 92% -14% -14% -11% -12% -18% -18% -14% -13% -16% -22% -24%
23 SINA Corporation 54,191 60,480 57,520 58,803 60,729 62,464 58,072 59,957 65,750 60,244 60,362 60,970 59,507
Y/Y growth - - - - -4% 0% -1% 5% 15% 4% 3% 6% 10%
24 Orange Sites 51,442 65,010 62,199 65,093 60,847 58,225 62,986 63,173 66,973 62,485 59,326 57,913 58,415
Y/Y growth - - - - - - - 58% 24% 16% 17% 9% 14%
25 Gorilla Nation 65,240 68,628 65,883 67,909 67,789 70,137 68,155 63,066 66,682 52,803 52,931 57,350 55,597
Y/Y growth 39% 34% 33% 43% 38% 36% 31% 31% 34% 1% -4% 3% -15%
26 Sony Online 57,666 61,096 59,963 58,318 53,393 54,054 53,064 51,896 58,076 59,233 66,097 61,933 55,358
Y/Y growth 8% 3% 5% 1% 2% -1% -2% -4% 9% -2% 4% 1% -4%
27 Expedia Inc 51,579 58,498 54,307 55,638 59,551 64,757 62,427 56,938 56,228 53,746 48,780 59,357 53,986
Y/Y growth -6% -6% -11% -5% 4% 1% 3% 12% 12% 16% 14% 8% 5%
28 Glam Media 15,040 18,038 21,901 30,912 33,185 35,036 32,868 37,157 43,548 44,465 44,912 46,853 53,017
Y/Y growth - - - - 1031% 557% 443% 451% 515% 418% 212% 272% 252%
29 Lycos Europe Sites 36,570 48,507 54,190 56,649 53,649 52,985 54,187 55,546 57,828 57,639 56,584 56,338 52,953
Y/Y growth -18% 6% -41% 33% 46% 52% 47% 51% 57% 51% 56% 46% 45%
30 Real.com Network 57,684 62,042 59,122 56,571 55,532 57,857 55,009 56,068 57,065 55,940 56,003 53,802 50,574
Y/Y growth -14% -15% -24% -27% -18% -16% -17% -13% -9% -13% -10% -11% -12%
31 Disney Online 41,056 43,240 40,238 43,841 43,772 45,939 48,647 44,054 49,805 49,787 54,190 51,765 49,645
Y/Y growth 10% 11% -1% 15% 6% 2% 12% 12% 18% 23% 27% 17% 21%
32 NetEase.com Inc. 40,654 44,260 43,331 43,507 46,648 49,654 44,563 47,396 49,188 49,794 48,638 51,422 49,330
Y/Y growth - - - -16% -7% 1% 3% 9% 20% 19% 16% 24% 21%
33 Weather Channel, The 45,097 43,813 47,014 48,864 49,897 49,998 51,120 47,745 49,105 43,945 49,265 48,926 48,323
Y/Y growth 16% -2% 0% 8% 7% 12% 15% 16% 20% 14% 26% 14% 7%
34 Oversee.net Network N/A N/A 48,769 51,536 52,733 50,936 52,361 50,781 53,407 51,628 48,617 51,580 47,742
Y/Y growth - - - - - - - - - - - - -
35 Peerflix Media Network N/A N/A N/A N/A N/A N/A N/A N/A N/A 254 417 29,767 46,675
Y/Y growth - - - - - - - - - - - - -
36 Terra Networks 58,645 60,337 59,445 63,256 63,021 64,067 63,399 62,559 56,391 51,518 49,602 49,259 46,161
Y/Y growth 9% 4% 9% 32% 36% 27% 27% 34% 18% -5% -20% -22% -21%
37 Ares Galaxy - P2P (App) 22,373 25,411 27,588 29,934 32,194 34,463 36,316 38,573 40,581 41,436 44,090 43,920 44,722
Y/Y growth - - - 166% 177% 162% 158% 161% 165% 134% 117% 104% 100%
38 Monster Worldwide 50,931 55,381 49,215 50,725 50,636 49,549 50,516 50,275 50,634 45,198 41,276 46,359 44,656
Y/Y growth -31% -30% -33% -36% -30% -35% -26% -16% -13% -16% -18% -17% -12%
39 ARTISTdirect Network 39,964 45,077 45,424 50,599 49,041 50,572 50,749 49,010 52,134 48,900 47,753 44,658 44,544
Y/Y growth 34% 32% 26% 47% 42% 22% 23% 27% 40% 31% 18% 10% 11%
40 Alibaba.com Corporation 33,972 38,824 36,952 36,991 40,152 40,800 35,788 40,868 43,915 45,263 46,971 47,089 44,455
Y/Y growth - - - - - -11% -16% 6% 8% 6% 3% 28% 31%
41 BBC Sites 46,354 47,579 46,357 47,364 45,615 45,264 44,777 46,338 47,760 45,967 42,975 45,610 44,103
Y/Y growth 6% 0% 2% 1% 1% 4% 4% 6% 12% 5% -2% -6% -5%
42 AmericanGreetings Property 28,585 20,640 23,270 19,520 19,660 19,804 18,088 19,896 23,838 38,616 43,199 40,488 42,249
Y/Y growth - - - - - - - -6% -12% 48% 45% 79% 48%
43 Sohu.com Inc. 40,214 43,466 43,033 43,611 48,465 48,005 42,503 42,622 47,262 45,814 45,805 44,901 41,600
Y/Y growth - - - -18% -9% -10% -11% -3% 9% 6% 3% 5% 3%
44 Photobucket.com LLC 27,706 29,836 29,972 33,695 34,630 38,467 38,674 37,491 38,849 35,611 35,887 39,152 39,556
Y/Y growth #N/A 93% 88% 100% 80% 75% 83% 81% 74% 51% 38% 44% 43%
45 HI5.COM 27,914 27,149 29,345 28,492 28,174 32,211 34,898 35,064 31,422 31,058 31,428 38,344 39,297
Y/Y growth - - - - 56% 51% 54% 51% 25% 35% 35% 61% 41%
46 RapidShare AG 26,078 27,306 26,670 28,591 30,428 30,640 32,399 32,743 35,521 34,730 36,414 38,726 37,662
Y/Y growth - - - - - - - - - - 38% 49% 44%
47 FRIENDSTER.COM 20,284 21,083 22,517 24,684 24,675 25,817 27,378 26,504 28,261 28,408 29,735 34,083 37,114
Y/Y growth - - - - - - - - - - 59% 76% 83%
48 CBS Corporation 29,176 31,800 26,370 26,209 34,358 33,754 39,086 42,501 41,302 42,325 36,656 35,214 36,781
Y/Y growth - - - - - - - - - - 34% 27% 26%
49 UGO 24,857 25,978 25,484 27,882 28,771 29,640 31,062 28,507 29,722 28,702 35,792 35,671 35,965
Y/Y growth - - - - - - - - - - 48% 45% 45%
50 Shopzilla.com Sites 27,277 28,689 30,452 31,337 31,964 32,831 33,127 34,221 36,024 37,531 39,795 37,113 35,456
Y/Y growth - - - - - - 8% 9% 7% 9% 11% 15% 30%
Total Internet : Total Audience 739,835 762,736 766,188 771,997 778,310 784,692 791,338 797,836 804,546 810,779 815,797 824,435 822,990
Y/Y growth 10% 10% 10% 9% 9% 9% 9% 10% 10% 10% 10% 10% 11%
Figure 39: Top 50 Global Properties by Page Views, February 2007–February 2008 (in millions)
Rank Web Property Feb-2007 Mar-2007 Apr-2007 May-2007 Jun-2007 Jul-2007 Aug-2007 Sep-2007 Oct-2007 Nov-2007 Dec-2007 Jan-2008 Feb-2008
1 Google Sites 120,477 141,384 137,240 148,150 150,149 154,132 153,189 153,693 168,531 166,587 166,343 181,558 169,587
Y/Y growth 62% 63% 61% 74% 78% 68% 78% 80% 85% 76% 57% 52% 41%
2 Yahoo! Sites 99,543 109,887 107,055 106,530 105,776 107,514 106,541 102,521 107,227 105,931 102,052 103,216 96,011
Y/Y growth -6% -7% -8% -7% -9% -7% -6% -9% -6% 1% 3% 0% -4%
3 Microsoft Sites 78,825 85,938 80,655 84,508 83,223 81,190 78,484 77,151 81,501 78,621 75,934 80,874 74,584
Y/Y growth 5% 2% 2% 12% 11% 6% 3% 7% 8% 6% 3% 6% -5%
4 Fox Interactive Media 48,152 51,732 50,143 51,760 54,114 52,856 51,983 50,907 52,245 48,746 44,649 50,342 45,517
Y/Y growth 11253% 8608% 7526% 8520% 14180% 14260% 45% 36% 28% 16% -2% 10% -5%
5 FACEBOOK.COM 15,500 20,049 26,655 29,882 29,075 30,799 32,967 34,535 38,689 41,581 37,998 41,752 39,681
Y/Y growth 177% 191% 271% 355% 385% 403% 410% 364% 285% 311% 254% 203% 156%
6 eBay 34,546 35,169 31,069 30,872 29,497 29,833 27,790 28,066 29,738 31,005 29,080 29,882 27,568
Y/Y growth -2% -13% -18% -23% -15% -13% -17% -19% -14% -14% -11% -11% -20%
7 AOL LLC NA NA NA NA NA NA NA NA NA NA NA 20,249 19,204
Y/Y growth - - - - - - - - - - - - -
8 FRIENDSTER.COM 4,938 6,081 6,402 8,990 9,507 11,219 10,422 11,172 11,946 10,627 11,328 13,759 16,096
Y/Y growth 84% 140% 230% 311% 308% 368% 257% 278% 228% 178% 152% 194% 226%
9 TENCENT Inc. 26,487 31,390 31,208 32,224 39,950 44,124 26,210 18,821 20,878 20,427 19,195 19,787 15,818
Y/Y growth - - - - 56% 50% -1% 10% 33% -7% -11% -1% -40%
10 NHN Corporation 21,006 21,770 22,287 24,123 22,183 21,164 19,375 15,310 17,650 17,249 16,927 16,792 13,528
Y/Y growth - - - - - - - - - - - -28% -36%
11 HI5.COM 5,985 6,842 7,280 7,192 6,779 7,184 9,116 9,869 10,647 11,163 11,927 14,549 13,102
Y/Y growth 54% 65% 65% 51% 52% 66% 131% 189% 202% 183% 163% 153% 119%
12 Baidu.com Inc. 6,006 7,210 6,925 7,684 9,053 9,781 9,431 7,944 10,129 10,280 9,131 8,005 8,361
Y/Y growth - - - - - - - - - - - 46% 39%
13 Lycos Sites 14,836 13,393 11,815 12,763 12,616 12,473 11,857 10,201 11,308 11,085 9,632 9,538 7,888
Y/Y growth -35% -41% -45% -37% -40% -43% -40% -37% -30% -22% -29% -39% -47%
14 Groupe Hi-Media ... ... 254 295 348 363 5,682 5,887 6,215 6,162 6,573 7,095 7,389
Y/Y growth - - - - - - - - - - - - -
15 Craigslist.org 4,026 5,347 5,789 5,529 6,011 6,428 6,486 6,508 7,178 6,390 6,314 6,876 6,951
Y/Y growth 112% 122% 115% 93% 109% 97% 89% 110% 123% 124% 113% 72% 73%
16 Alibaba.com Corporation 3,209 4,820 4,888 6,014 6,684 7,642 7,979 9,359 10,964 12,548 9,186 8,738 5,969
Y/Y growth - - - - - 41% 75% 144% 219% 202% 119% 161% 86%
17 SINA Corporation 10,685 9,493 8,853 8,519 12,893 10,885 8,302 7,122 7,913 8,020 7,623 6,490 4,680
Y/Y growth - - - -20% -12% -26% -35% -31% -24% -31% -24% -35% -56%
18 NetEase.com Inc. 4,429 5,629 4,469 4,473 5,038 5,861 4,794 5,353 6,224 6,996 6,105 6,675 4,665
Y/Y growth - - - -56% -49% -42% -46% -30% 10% 8% 1% 19% 5%
19 Viacom Digital 4,289 4,240 4,645 4,569 5,358 5,302 5,311 4,262 4,111 4,013 4,730 4,474 4,249
Y/Y growth - - - - - 14% 8% 8% 3% -10% -3% 9% -1%
20 Amazon Sites 3,699 3,963 3,389 3,430 3,655 4,045 4,059 3,956 4,175 4,574 5,301 4,773 3,848
Y/Y growth -3% -5% -12% -6% 3% 16% 15% 16% 14% 7% 14% 20% 4%
21 Wikipedia Sites 3,093 3,673 3,454 3,730 3,530 3,340 3,232 3,586 3,959 3,854 3,305 3,852 3,711
Y/Y growth 157% 157% 128% 103% 112% 96% 77% 72% 66% 43% 38% 32% 20%
22 Orange Sites 4,052 4,661 4,080 4,374 4,120 4,068 3,792 3,995 4,422 4,251 3,900 4,045 3,629
Y/Y growth - - - - - - - -1% -4% -1% 2% -1% -10%
23 Comcast Corporation 2,796 3,026 2,863 2,840 2,910 3,099 3,224 3,493 4,081 4,536 3,897 3,887 3,475
Y/Y growth - - - 27% 32% 38% 34% 43% 58% 78% 47% 46% 24%
24 Sohu.com Inc. 6,755 7,142 6,762 7,084 8,575 7,504 6,014 5,550 6,470 5,729 5,067 4,866 3,429
Y/Y growth - - - -32% -30% -37% -37% -34% -18% -32% -31% -27% -49%
25 Rakuten Inc 3,302 3,513 3,384 3,152 3,260 3,511 3,348 3,281 3,274 3,424 3,453 3,599 3,347
Y/Y growth -3% -7% -9% -9% 9% 10% 9% 4% 6% 15% 21% 7% 1%
26 Terra Networks 4,059 4,421 4,267 4,513 4,109 4,462 3,933 3,746 3,855 3,717 3,417 3,619 3,317
Y/Y growth -4% 4% 10% 6% 3% 8% -1% -15% -9% -5% -18% -17% -18%
27 Time Warner - Excluding AOL NA NA NA NA NA NA NA NA NA NA NA 3,170 3,160
Y/Y growth - - - - - - - - - - - - -
28 FC2 inc. NA NA NA NA NA 2,056 1,958 1,967 1,944 2,219 2,311 2,300 2,371
Y/Y growth - - - - - 64% 60% - - - - - -
29 Ask Network 2,325 2,501 2,405 2,581 2,612 2,740 2,752 2,732 2,827 2,586 2,361 2,469 2,245
Y/Y growth -17% -17% -26% -16% -10% -4% -1% 2% 10% 3% -6% 6% -3%
30 DAILYMOTION.COM 710 980 1,254 1,411 1,720 1,429 1,518 1,632 1,984 2,081 1,909 1,962 1,933
Y/Y growth 2935% 2093% 1916% 2137% 2601% 1375% 783% 576% 496% 348% 244% 222% 172%
31 BBC Sites 2,122 2,322 2,129 2,184 2,015 2,006 2,059 1,919 2,009 1,992 1,887 2,188 1,850
Y/Y growth 6% 2% 5% 8% -2% 5% 8% 4% 7% 3% -5% 0% -13%
32 CNET Networks 2,156 2,448 2,350 2,542 2,283 2,607 2,493 2,087 2,129 1,958 1,905 1,880 1,832
Y/Y growth -2% 12% 12% 23% 24% 48% 54% 51% 12% 0% -11% -8% -15%
33 Disney Online 1,645 1,505 1,380 1,365 1,499 1,703 1,712 1,518 1,407 1,636 1,775 1,834 1,791
Y/Y growth 13% 0% -12% -3% -12% -13% -6% 4% -8% 10% 11% 7% 9%
34 AT&T, Inc. 1,559 1,682 1,617 1,680 1,731 1,671 1,810 1,943 2,036 1,786 1,731 1,951 1,789
Y/Y growth 72% 82% 75% 71% 66% 60% 64% 86% 127% 118% 104% 18% 15%
35 Photobucket.com LLC 973 1,087 1,319 1,841 2,025 2,286 2,407 2,677 3,040 2,778 2,807 1,616 1,761
Y/Y growth 150% 126% 150% 181% 144% 177% 163% 250% 314% 230% 220% 64% 81%
36 ESPN 1,377 1,767 1,555 1,516 1,471 1,653 1,981 2,797 2,639 2,538 2,268 1,944 1,653
Y/Y growth -13% -20% -17% 29% -12% 36% 56% 71% 62% 64% 25% 16% 20%
37 Spill Group NA NA NA NA NA 696 958 1,083 1,288 1,455 2,020 1,873 1,623
Y/Y growth - - - - - - - - - - - - -
38 TUDOU.COM 1,235 1,618 1,931 1,028 1,099 1,684 1,026 1,043 1,262 1,242 1,071 1,919 1,452
Y/Y growth - - - - - - - - 699% 329% 163% 183% 18%
39 Bank of America 1,234 1,262 1,162 1,158 1,234 1,268 1,320 1,275 1,319 1,288 1,319 1,349 1,277
Y/Y growth 12% 5% -7% -6% -3% 3% 6% 11% 9% 8% 7% 7% 3%
40 Xunlei Networking NA NA NA NA NA NA 3,000 1,691 2,011 1,957 1,705 1,456 1,141
Y/Y growth - - - - - - - - - - - - -
41 NTT Group NA NA 1,106 1,082 1,030 1,306 1,096 1,021 1,061 1,171 1,106 1,129 1,133
Y/Y growth - - - - - - - - - - - - -
42 Verizon Communications Corporation 974 1,038 940 867 867 972 1,030 1,036 1,077 1,138 1,128 1,185 1,114
Y/Y growth -3% -13% -23% -27% -27% -19% -18% -11% -9% 1% -2% 21% 14%
43 Monster Worldwide 1,339 1,550 1,349 1,365 1,297 1,256 1,235 1,224 1,518 1,285 1,016 1,132 1,110
Y/Y growth -42% -35% -25% -24% -27% -34% -33% -16% -2% -23% -25% -27% -17%
44 Glam Media 137 170 192 474 564 809 786 741 841 924 972 1,101 1,097
Y/Y growth - - - - - - - - - - 947% 918% 700%
45 Apple Inc. 936 1,075 877 997 971 1,004 973 1,160 1,082 1,124 1,404 1,254 1,095
Y/Y growth - 29% 11% 25% 24% 20% 22% 26% 21% 21% 14% 18% 17%
46 United Online, Inc 1,334 1,500 1,307 1,251 1,291 1,200 1,166 1,098 1,163 1,008 1,041 1,118 1,066
Y/Y growth - - - - - - - - - - -26% -18% -20%
47 MercadoLibre 1,252 1,437 1,445 1,467 1,315 1,380 1,363 1,247 1,321 1,140 1,326 1,191 1,058
Y/Y growth 43% 56% 69% 40% 25% 12% -16% -12% 5% -9% 5% -21% -16%
48 Lycos Europe Sites 1,758 2,199 1,301 1,352 1,344 1,295 1,281 1,267 1,304 1,229 1,199 1,227 1,039
Y/Y growth 38% 50% -2% 12% 34% 38% 37% 17% 35% -39% -33% -37% -41%
49 Groupe PPR 935 1,074 910 1,059 1,028 973 853 903 965 1,020 991 1,216 1,006
Y/Y growth -14% -12% -23% -15% -16% -10% -20% -17% -11% -13% -6% 7% 8%
50 Gorilla Nation 926 991 990 984 1,089 1,127 926 845 1,109 1,011 998 1,084 990
Y/Y growth - - - - - - - - - - - - -
Total Internet : Total Audience 1,838,417 2,009,919 1,925,110 1,944,666 1,975,534 2,004,579 1,947,320 1,915,743 2,059,327 2,005,557 1,962,912 2,127,210 1,951,904
Y/Y growth 7% 5% 5% 6% 7% 6% 7% 13% 19% 15% 14% 17% 6%
Figure 41: Online Subscription Revenue by Subscription Period and Category ($ in millions)
2001 2002 2003 2004 2005
Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total Monthly Annual Other Total
Entertainment/Lifestyle 89.6 16.8 5.6 112.0 102.4 109.2 15.9 227.5 87.3 114.2 16.1 217.6 261.3 126.5 25.6 413.5 353.5 191.1 29.3 573.8
Y/Y Growth 14% 550% 184% 103% -15% 5% 1% -4% 199% 11% 59% 90% 35% 51% 14% 39%
Personals/Dating 38.9 15.8 17.3 72.0 178.2 87.6 36.3 302.1 256.7 144.7 48.1 449.5 306.6 89.7 73.2 469.5 357.4 92.1 53.9 503.4
Y/Y Growth 358% 453% 110% 320% 44% 65% 33% 49% 19% -38% 52% 4% 17% 3% -26% 7%
Business Content/Investment 40.7 158.6 15.0 214.3 84.7 186.9 20.4 292.0 146.7 162.4 25.1 334.1 147.4 145.8 19.7 312.9 159.5 138.7 22.1 320.3
Y/Y Growth 108% 18% 36% 36% 73% -13% 23% 14% 0% -10% -21% -6% 8% -5% 12% 2%
Research 9.3 48.6 0.0 57.9 35.2 66.1 5.3 106.6 52.0 48.2 8.4 108.6 55.4 53.6 6.1 115.1 78.1 68.1 6.1 152.3
Y/Y Growth 280% 36% NA 84% 48% -27% 57% 2% 6% 11% -27% 6% 41% 27% 0% 32%
Personal Growth 4.7 19.8 0.2 24.7 21.7 15.9 6.6 44.3 53.1 29.0 8.6 90.7 61.4 25.8 9.4 96.5 85.5 23.2 8.6 117.3
Y/Y Growth 363% -19% 2590% 79% 144% 82% 30% 105% 16% -11% 9% 6% 39% -10% -9% 22%
Games 44.6 1.9 0.0 46.5 51.1 18.0 2.9 72.0 44.7 24.7 3.5 73.0 53.4 31.9 3.6 88.8 84.8 20.3 3.4 108.4
Y/Y Growth 15% 868% NA 55% -12% 37% 22% 1% 19% 29% 1% 22% 59% -36% -5% 22%
General News 48.7 3.1 0.0 51.8 55.3 10.5 4.2 70.0 64.5 17.8 5.3 87.5 69.3 13.6 5.0 87.9 59.7 14.6 4.5 78.7
Y/Y Growth 14% 238% NA 35% 17% 69% 25% 25% 7% -23% -5% 0% -14% 7% -10% -10%
Community-Made Directories 2.8 34.1 9.2 46.1 15.5 61.9 13.7 91.1 22.4 53.1 11.6 87.0 14.6 43.3 12.6 70.5 12.8 36.7 16.0 65.4
Y/Y Growth 460% 82% 48% 98% 44% -14% -15% -5% -35% -18% 9% -19% -13% -15% 26% -7%
Sports 2.4 6.1 1.5 10.0 15.8 10.3 4.2 30.3 19.7 14.5 4.0 38.2 25.7 22.0 5.1 52.8 21.0 26.5 3.8 51.3
Y/Y Growth 557% 69% 183% 203% 25% 41% -5% 26% 30% 52% 28% 38% -18% 20% -26% -3%
Greeting Cards 1.0 1.1 0.0 2.1 10.9 22.8 2.5 36.2 22.7 15.6 2.4 40.6 22.1 19.1 2.2 43.4 26.0 18.0 1.7 45.7
Y/Y Growth 1024% 1911% NA 1624% 109% -32% -7% 12% -2% 22% -6% 7% 18% -6% -22% 5%
Credit Help 3.9 28.5 0.0 32.4 8.1 30.7 1.6 40.4 6.7 26.9 3.0 36.6 4.1 21.7 1.4 27.1 3.2 24.2 1.1 28.4
Y/Y Growth 108% 8% NA 25% -18% -12% 86% -9% -39% -20% -55% -26% -22% 12% -22% 5%
Total 286.5 334.4 48.8 669.8 578.8 620.0 113.7 1,312.5 776.3 651.2 135.9 1,563.4 1,021.1 593.0 163.9 1,778.0 1,241.3 653.4 150.3 2,045.0
Y/Y Growth 102% 85% 133% 96% 34% 5% 20% 19% 32% -9% 21% 14% 22% 10% -8% 15%
Online Advertising
Figure 42: Lehman Brothers U.S. Online Advertising Forecast ($ in millions), 2001–11E
(in millions) 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E
Display Advertising $5,351 $3,907 $3,198 $3,754 $4,264 $5,373 $6,630 $7,956 $9,309 $10,612 $11,886
% Y/Y growth -28% -27% -18% 17% 14% 26% 23% 20% 17% 14% 12%
% of total 75% 65% 44% 39% 34% 32% 31% 30% 30% 29% 29%
% of total growth NA NA NA 24% 17% 26% 29% 27% 26% 26% 25%
Search $285 $902 $2,543 $3,850 $5,142 $6,799 $8,907 $11,401 $14,023 $16,547 $19,029
% Y/Y growth 253% 216% 182% 51% 34% 32% 31% 28% 23% 18% 15%
% of total 4% 15% 35% 40% 41% 40% 42% 44% 45% 45% 46%
% of total growth NA NA 131% 55% 44% 38% 49% 50% 50% 50% 50%
Classifieds $1,141 $902 $1,235 $1,733 $2,132 $3,059 $3,457 $3,975 $4,532 $5,075 $5,583
% Y/Y growth 102% -21% 37% 40% 23% 43% 13% 15% 14% 12% 10%
% of total 16% 15% 17% 18% 17% 18% 16% 15% 14% 14% 13%
% of total growth NA NA 27% 21% 14% 21% 9% 10% 11% 11% 10%
Lead Generation/E-mail $357 $301 $291 $289 $1,004 $1,648 $2,208 $2,871 $3,589 $4,306 $5,038
% Y/Y growth -37% -16% -3% -1% 247% 64% 34% 30% 25% 20% 17%
% of total 5% 5% 4% 3% 8% 10% 10% 11% 11% 12% 12%
% of total growth NA NA -1% 0% 25% 15% 13% 13% 14% 14% 15%
Total Online Advertising $7,134 $6,010 $7,267 $9,626 $12,542 $16,879 $21,202 $26,203 $31,452 $36,541 $41,536
% Y/Y growth -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0% 16.2% 13.7%
Total U.S. Advertising $234,185 $239,595 $248,764 $268,617 $278,166 $291,964 $299,633 $310,835 $319,421 $333,291 $343,377
% Y/Y growth -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8% 4.3% 3.0%
Online as a % of Total 3.0% 2.5% 2.9% 3.6% 4.5% 5.8% 7.1% 8.4% 9.8% 11.0% 12.1%
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates. Total U.S. Advertising figures through 2011 are from Lehman Brothers
U.S. Media & Internet research team
TOTAL U.S. ONLINE ADVERTISING $8,087 $7,134 $6,010 $7,267 $9,626 $12,542 $16,879 $21,202 $26,203 $31,452 $36,541
% Y/Y growth 75% -12% -16% 21% 32% 30% 35% 26% 24% 20% 16%
1. Google $19 $52 $230 $589 $1,176 $2,220 $3,726 $5,443 $6,604 $8,005 $9,158
% Y/Y growth -- 170% 345% 156% 100% 89% 68% 46% 21% 21% 14%
% share 0% 1% 4% 8% 12% 18% 22% 26% 25% 25% 25%
2. Yahoo! $838 $496 $631 $1,003 $1,689 $2,290 $2,822 $3,177 $3,633 $4,130 $4,638
% Y/Y growth -- -41% 27% 59% 68% 36% 23% 13% 14% 14% 12%
% share 10% 7% 10% 14% 18% 18% 17% 15% 14% 13% 13%
3. MSN $458 $496 $600 $837 $1,024 $1,136 $1,274 $1,564 $1,705 $1,933 $2,153
% Y/Y growth -- 8% 21% 40% 22% 11% 12% 23% 9% 13% 11%
% share 6% 7% 10% 12% 11% 9% 8% 7% 7% 6% 6%
4. eBay * $238 $370 $490 $638 $840 $1,082 $1,311 $1,490 $1,497 $1,434 $1,363
% Y/Y growth -- 55% 32% 30% 32% 29% 21% 14% 0% -4% -5%
% share 3% 5% 8% 9% 9% 9% 8% 7% 6% 5% 4%
5. AOL $1,779 $1,427 $1,093 $630 $784 $1,016 $1,235 $1,379 $1,396 $1,527 $1,632
% Y/Y growth -- -20% -23% -42% 25% 30% 22% 12% 1% 9% 7%
% share 22% 20% 18% 9% 8% 8% 7% 7% 5% 5% 4%
6. Monster Worldwide $296 $413 $310 $320 $448 $583 $771 $927 $1,076 $1,211 $1,332
% Y/Y growth -- 40% -25% 3% 40% 30% 32% 20% 16% 13% 10%
% share 4% 6% 5% 4% 5% 5% 5% 4% 4% 4% 4%
8. InterActiveCorp ** $136 $107 $103 $136 $292 $418 $544 $759 $795 $889 $991
% Y/Y growth -- -21% -4% 33% 115% 43% 30% 39% 5% 12% 11%
% share 2% 1% 2% 2% 3% 3% 3% 4% 3% 3% 3%
9. Gannett $75 $71 $91 $131 $201 $300 $400 $460 $518 $569 $615
% Y/Y growth -- -5% 28% 44% 53% 50% 33% 15% 13% 10% 8%
% share 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2%
10. CareerBuilder *** $45 $63 $54 $80 $141 $248 $337 $387 $426 $458 $485
% Y/Y growth -- 39% -13% 48% 76% 75% 36% 15% 10% 8% 6%
% share 1% 1% 1% 1% 1% 2% 2% 2% 2% 1% 1%
Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates, company reports
Newspapers 48,670 44,305 44,102 44,939 46,712 47,407 46,611 42,795 40,228 38,621
% Change 5.1% -9.0% -0.5% 1.9% 3.9% 1.5% -1.7% -8.2% -6.0% -4.0%
Magazines 12,370 11,095 10,995 11,435 12,247 12,847 13,168 13,497 13,767 14,042
% Change 8.2% -10.3% -0.9% 4.0% 7.1% 4.9% 2.5% 2.5% 2.0% 2.0%
Broadcast TV 44,802 38,881 42,068 41,932 46,264 44,293 46,880 46,743 49,059 47,123
% Change 12.0% -13.2% 8.2% -0.3% 10.3% -4.3% 5.8% -0.3% 5.0% -3.9%
Cable TV 15,455 15,736 16,297 18,814 21,527 23,654 25,025 26,816 28,365 30,003
% Change 23.0% 1.8% 3.6% 15.4% 14.4% 9.9% 5.8% 7.2% 5.8% 5.8%
Radio 19,848 18,369 19,409 20,863 21,411 21,455 21,665 21,366 20,982 20,683
% Change 12.3% -7.5% 5.7% 7.5% 2.6% 0.2% 1.0% -1.4% -1.8% -1.4%
Yellow Pages 13,704 14,384 14,709 14,906 15,486 15,970 16,289 16,632 16,299 15,998
% Change 6.9% 5.0% 2.3% 1.3% 3.9% 3.1% 2.0% 2.1% -2.0% -1.8%
Direct Mail 44,591 44,725 46,067 48,370 52,191 55,218 58,647 62,166 65,896 69,850
% Change 7.2% 0.3% 3.0% 5.0% 7.9% 5.8% 6.2% 6.0% 6.0% 6.0%
Business Papers 4,915 4,468 3,976 4,004 4,072 4,170 4,195 4,195 4,195 4,195
% Change 10.6% -9.1% -11.0% 0.7% 1.7% 2.4% 0.6% 0.0% 0.0% 0.0%
Outdoor 5,235 5,193 5,232 5,504 5,834 6,301 6,805 7,239 7,627 8,035
% Change 8.3% -0.8% 0.8% 5.2% 6.0% 8.0% 8.0% 6.4% 5.4% 5.4%
Internet 8,087 7,134 6,010 7,267 9,626 12,542 16,879 21,202 26,203 31,452
% Change 75.0% -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0%
Miscellaneous 32,083 29,895 30,730 31,990 34,645 35,692 37,321 38,655 40,039 41,317
% Change 1.7% -6.8% 2.8% 4.1% 8.3% 3.0% 4.6% 3.6% 3.6% 3.2%
Grand Total 249,760 234,185 239,595 248,764 268,617 278,166 291,964 299,633 310,835 319,421
% Change 9.6% -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8%
Real GDP ($ billions) 9,817 9,891 10,049 10,321 10,756 11,049 11,415 11,655 11,888 12,126
% Change 3.7% 0.8% 1.6% 2.7% 4.2% 2.7% 2.9% 2.1% 2.0% 2.0%
Nominal GDP ($ billions) 9,817 10,128 10,470 10,971 11,734 12,456 13,247 13,882 14,479 15,102
% Change 5.9% 3.2% 3.4% 4.8% 7.0% 6.1% 6.1% 4.8% 4.3% 4.3%
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising
Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
Newspapers 19.5% 18.9% 18.4% 18.1% 17.4% 17.0% 16.0% 14.3% 12.9% 12.1%
Magazines 5.0% 4.7% 4.6% 4.6% 4.6% 4.6% 4.5% 4.5% 4.4% 4.4%
Broadcast TV 17.9% 16.6% 17.6% 16.9% 17.2% 15.9% 16.1% 15.6% 15.8% 14.8%
Cable TV 6.2% 6.7% 6.8% 7.6% 8.0% 8.5% 8.6% 8.9% 9.1% 9.4%
Radio 7.9% 7.8% 8.1% 8.4% 8.0% 7.7% 7.4% 7.1% 6.8% 6.5%
Yellow Pages 5.5% 6.1% 6.1% 6.0% 5.8% 5.7% 5.6% 5.6% 5.2% 5.0%
Direct Mail 17.9% 19.1% 19.2% 19.4% 19.4% 19.9% 20.1% 20.7% 21.2% 21.9%
Business Papers 2.0% 1.9% 1.7% 1.6% 1.5% 1.5% 1.4% 1.4% 1.3% 1.3%
Outdoor 2.1% 2.2% 2.2% 2.2% 2.2% 2.3% 2.3% 2.4% 2.5% 2.5%
Internet 3.2% 3.0% 2.5% 2.9% 3.6% 4.5% 5.8% 7.1% 8.4% 9.8%
Miscellaneous 12.8% 12.8% 12.8% 12.9% 12.9% 12.8% 12.8% 12.9% 12.9% 12.9%
Grand Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising
Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
Newspapers 5.1% -9.0% -0.5% 1.9% 3.9% 1.5% -1.7% -8.2% -6.0% -4.0%
Magazines 8.2% -10.3% -0.9% 4.0% 7.1% 4.9% 2.5% 2.5% 2.0% 2.0%
Broadcast TV 12.0% -13.2% 8.2% -0.3% 10.3% -4.3% 5.8% -0.3% 5.0% -3.9%
Cable TV 23.0% 1.8% 3.6% 15.4% 14.4% 9.9% 5.8% 7.2% 5.8% 5.8%
Radio 12.3% -7.5% 5.7% 7.5% 2.6% 0.2% 1.0% -1.4% -1.8% -1.4%
Yellow Pages 6.9% 5.0% 2.3% 1.3% 3.9% 3.1% 2.0% 2.1% -2.0% -1.8%
Direct Mail 7.2% 0.3% 3.0% 5.0% 7.9% 5.8% 6.2% 6.0% 6.0% 6.0%
Business Papers 10.6% -9.1% -11.0% 0.7% 1.7% 2.4% 0.6% 0.0% 0.0% 0.0%
Total Outdoor 8.3% -0.8% 0.8% 5.2% 6.0% 8.0% 8.0% 6.4% 5.4% 5.4%
Internet 75.0% -11.8% -15.8% 20.9% 32.5% 30.3% 34.6% 25.6% 23.6% 20.0%
Miscellaneous 1.7% -6.8% 2.8% 4.1% 8.3% 3.0% 4.6% 3.6% 3.6% 3.2%
Grand Total 9.6% -6.2% 2.3% 3.8% 8.0% 3.6% 5.0% 2.6% 3.7% 2.8%
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising
Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
Newspapers 10.9% 28.0% -3.8% 9.1% 8.9% 7.3% -5.8% -49.8% -22.9% -18.7%
Magazines 4.3% 8.2% -1.8% 4.8% 4.1% 6.3% 2.3% 4.3% 2.4% 3.2%
Broadcast TV 21.9% 38.0% 58.9% -1.5% 21.8% -20.6% 18.7% -1.8% 20.7% -22.6%
Cable TV 13.2% -1.8% 10.4% 27.5% 13.7% 22.3% 9.9% 23.4% 13.8% 19.1%
Radio 9.9% 9.5% 19.2% 15.9% 2.8% 0.5% 1.5% -3.9% -3.4% -3.5%
Yellow Pages 4.0% -4.4% 6.0% 2.1% 2.9% 5.1% 2.3% 4.5% -3.0% -3.5%
Direct Mail 13.6% -0.9% 24.8% 25.1% 19.2% 31.7% 24.9% 45.9% 33.3% 46.1%
Business Papers 2.2% 2.9% -9.1% 0.3% 0.3% 1.0% 0.2% 0.0% 0.0% 0.0%
Outdoor 1.8% 0.3% 0.7% 3.0% 1.7% 4.9% 3.7% 5.7% 3.5% 4.8%
Internet 15.8% 6.1% -20.8% 13.7% 11.9% 30.5% 31.4% 56.4% 44.6% 61.1%
Miscellaneous 2.5% 14.0% 15.4% 13.7% 13.4% 11.0% 11.8% 17.4% 12.4% 14.9%
Grand Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising
Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers
Figure 49: Initial Year Growth Comparisons – Internet Advertising vs. Broadcast & Cable Television
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Broadcast 358 1,012 2,162 2,787 3,698 5,030 6,557 7,885 8,188 8,859 9,766
Y/Y Growth 183% 114% 29% 33% 36% 30% 20% 4% 8% 10%
Cable 147 295 499 745 1,190 1,580 1,853 2,080 2,490 3,180 3,654
Y/Y Growth 101% 69% 49% 60% 33% 17% 12% 20% 28% 15%
Internet 55 267 907 1,920 4,621 8,087 7,134 6,010 7,267 9,626 12,542
Y/Y Growth 385% 240% 112% 141% 75% -12% -16% 21% 32% 30%
*Note: $5.9B represents IAB’s preliminary estimate for 4Q07 announced on February 25, 2008.
Note: Total dollar amounts differ slightly from reported historical numbers because the above totals are driven by percentage mix.
Figure 52: U.S. Online Advertising Revenue by Pricing Model ($ in millions), 1998–2006
Online Advertising Revenue by Pricing Models
1998 1999 2000 2001 2002 2003 2004 2005 2006
Performance 77 322 820 856 1,262 2,689 3,947 5,142 7,933
CPM 941 1,840 3,526 3,424 2,705 3,125 4,043 5,769 8,102
Hybrid 902 2,438 3,854 2,854 2,043 1,453 1,636 1,630 844
Total 1,920 4,600 8,200 7,134 6,010 7,267 9,626 12,542 16,879
Figure 53: Total U.S. Measured Media Advertising by Category and Medium ($ in millions), 2006
Rank Measured Media U.S. Measured Media Breakout 2006
2006 2005 Category 2006 % Chg. Magazine Biz Pub Newspaper Outdoor TV Cable Nets Radio Internet
1 1 Automobile 19,799.0 -5.7 2,089.2 85.5 5,024.5 343.8 8,637.0 1,348.0 1,543.8 727.2
2 2 Retail 19,114.0 2.0 1,992.5 105.4 6,763.2 387.4 5,420.0 1,039.7 2,148.4 1,257.5
3 3 Telecom,internet,ISP 10,950.2 9.6 681.5 217.2 2,172.6 278.4 4,061.7 1,269.7 774.6 1,494.7
4 5 Medicine & remedies 9,192.9 9.0 2,730.1 56.4 279.5 22.7 4,038.7 1,382.0 304.1 379.3
5 6 General services 8,702.0 10.4 698.3 335.2 2,270.8 583.5 2,302.8 454.2 1,319.5 737.7
6 4 Financial services 8,689.0 2.1 927.9 260.9 1,891.3 245.2 2,224.3 932.3 725.0 1,481.9
7 7 Food, beverages & candy 7,225.0 -1.2 1,892.3 104.9 50.3 76.5 3,190.3 1,450.8 326.3 133.7
8 8 Personal care 5,732.0 1.2 2,347.5 40.2 29.4 13.5 2,345.5 796.7 53.9 105.5
9 10 Airlines, hotels, car rental 5,415.6 -1.3 1,233.7 250.5 1,412.9 331.9 876.1 515.4 342.9 452.2
10 9 Movie, video & music 5.379.9 -3.6 239.0 78.1 1,028.3 91.8 2,447.0 1,047.4 258.7 189.7
11 11 Restaurants 5,291.5 4.5 132.9 2.1 183.8 240.2 3,339.1 810.6 534.2 48.5
12 12 Media 5,050.5 2.5 1,527.3 216.8 1,269.0 246.5 266.1 67.2 741.1 716.4
13 16 Government, politics, religion 3,510.6 43.0 342.7 43.8 530.1 148.9 1,585.9 238.6 465.0 155.6
14 13 Insurance 3,446.2 19.2 220.4 57.2 385.9 113.3 1,499.7 635.0 383.6 151.2
15 15 Real estate 3,132.3 20.3 363.0 17.8 1,894.1 258.2 251.8 77.2 138.4 131.7
16 14 Apparel 2,911.7 6.8 2,105.2 81.1 59.6 28.7 353.4 223.4 20.8 39.4
17 17 Computers, software 2,509.8 13.5 451.3 714.6 226.4 49.2 381.8 167.7 62.8 456.0
18 19 Home Furnishings, appliances, electronics 2,213.6 7.6 882.4 187.3 114.1 17.0 551.6 307.8 68.8 84.6
19 18 Beer, wine & liquor 2,099.9 -4.9 505.4 14.8 54.2 163.9 734.4 340.5 225.7 61.0
20 21 Education 1,942.4 8.5 153.2 229.1 342.4 74.6 544.9 166.9 157.7 273.7
21 20 Home supplies & cleaners 1,938.0 4.0 358.3 9.5 5.8 2.6 978.5 525.9 27.6 29.8
22 22 Toys & games 1,253.4 -2.9 97.0 82.6 7.5 3.3 286.8 607.9 8.3 159.9
23 23 Hardware & home building 1,028.3 -1.3 368.0 151.5 103.8 8.6 169.1 168.8 32.2 26.3
24 25 Sporting goods 562.3 5.8 374.2 1.9 28.2 5.0 86.0 48.1 5.5 13.5
25 24 Gas & oil 524.0 -3.7 104.2 7.8 70.1 34.5 149.1 73.6 72.9 11.8
26 26 Pet food & pet care 490.1 -1.0 149.6 1.9 3.2 0.1 209.5 98.1 6.6 21.3
27 27 Office equipment 334.2 -8.5 102.1 43.0 25.1 2.2 94.1 36.4 20.9 10.4
28 28 Shipping & freight 326.8 -8.9 33.1 32.9 14.2 3.2 147.1 41.7 43.4 11.2
29 29 Cigarettes & tobacco 155.6 0.1 105.2 4.7 1.6 0.5 31.2 5.7 0.5 6.2
Direct response advertising 6,461.6 5.4 2,347.1 139.0 493.7 1.9 1,154.0 2,121.1 69.8 135.0
Miscellaneous 4,306.4 2.0 952.2 944.4 1,285.2 54.2 356.3 275.2 171.9 266.9
Total 149,688.7 3.6 26,506.7 4,518.1 28,020.8 3,831.3 48,713.8 17,273.5 11,054.9 9,769.8
Figure 54: Total U.S. Measured Media Advertising by Category and Medium – % Mix, ($ in millions), 2006
Rank Measured Media U.S. Measured Media Breakout in % terms 2006
2006 2005 Category 2006 % Chg. Magazine Biz Pub Newspaper Outdoor TV Cable Nets Radio Internet
1 1 Automobile 19,799.0 -5.7 10.55% 0.43% 25.38% 1.74% 43.62% 6.81% 7.80% 3.67%
2 2 Retail 19,114.0 2.0 10.42% 0.55% 35.38% 2.03% 28.36% 5.44% 11.24% 6.58%
3 3 Telecom,internet,ISP 10,950.2 9.6 6.22% 1.98% 19.84% 2.54% 37.09% 11.60% 7.07% 13.65%
4 4 Medicine & remedies 9,192.9 9.0 29.70% 0.61% 3.04% 0.25% 43.93% 15.03% 3.31% 4.13%
5 5 General services 8,702.0 10.4 8.02% 3.85% 26.10% 6.71% 26.46% 5.22% 15.16% 8.48%
6 6 Financial services 8,689.0 2.1 10.68% 3.00% 21.77% 2.82% 25.60% 10.73% 8.34% 17.05%
7 7 Food, beverages & candy 7,225.0 -1.2 26.19% 1.45% 0.70% 1.06% 44.16% 20.08% 4.52% 1.85%
8 8 Personal care 5,732.0 1.2 40.95% 0.70% 0.51% 0.24% 40.92% 13.90% 0.94% 1.84%
9 9 Airlines, hotels, car rental 5,415.6 -1.3 22.78% 4.63% 26.09% 6.13% 16.18% 9.52% 6.33% 8.35%
10 10 Movie, video & music 5.379.9 -3.6 4.44% 1.45% 19.11% 1.71% 45.48% 19.47% 4.81% 3.53%
11 11 Restaurants 5,291.5 4.5 2.51% 0.04% 3.47% 4.54% 63.10% 15.32% 10.10% 0.92%
12 12 Media 5,050.5 2.5 30.24% 4.29% 25.13% 4.88% 5.27% 1.33% 14.67% 14.18%
13 13 Government, politics, religion 3,510.6 43.0 9.76% 1.25% 15.10% 4.24% 45.17% 6.80% 13.25% 4.43%
14 14 Insurance 3,446.2 19.2 6.40% 1.66% 11.20% 3.29% 43.52% 18.43% 11.13% 4.39%
15 15 Real estate 3,132.3 20.3 11.59% 0.57% 60.47% 8.24% 8.04% 2.46% 4.42% 4.20%
16 16 Apparel 2,911.7 6.8 72.30% 2.79% 2.05% 0.99% 12.14% 7.67% 0.71% 1.35%
17 17 Computers, software 2,509.8 13.5 17.98% 28.47% 9.02% 1.96% 15.21% 6.68% 2.50% 18.17%
18 18 Home Furnishings, appliances, electronics 2,213.6 7.6 39.86% 8.46% 5.15% 0.77% 24.92% 13.90% 3.11% 3.82%
19 19 Beer, wine & liquor 2,099.9 -4.9 24.07% 0.70% 2.58% 7.81% 34.97% 16.22% 10.75% 2.90%
20 20 Education 1,942.4 8.5 7.89% 11.79% 17.63% 3.84% 28.05% 8.59% 8.12% 14.09%
21 21 Home supplies & cleaners 1,938.0 4.0 18.49% 0.49% 0.30% 0.13% 50.49% 27.14% 1.42% 1.54%
22 22 Toys & games 1,253.4 -2.9 7.74% 6.59% 0.60% 0.26% 22.88% 48.50% 0.66% 12.76%
23 23 Hardware & home building 1,028.3 -1.3 35.79% 14.73% 10.09% 0.84% 16.44% 16.42% 3.13% 2.56%
24 24 Sporting goods 562.3 5.8 66.55% 0.34% 5.02% 0.89% 15.29% 8.55% 0.98% 2.40%
25 25 Gas & oil 524.0 -3.7 19.89% 1.49% 13.38% 6.58% 28.45% 14.05% 13.91% 2.25%
26 26 Pet food & pet care 490.1 -1.0 30.52% 0.39% 0.65% 0.02% 42.75% 20.02% 1.35% 4.35%
27 27 Office equipment 334.2 -8.5 30.55% 12.87% 7.51% 0.66% 28.16% 10.89% 6.25% 3.11%
28 28 Shipping & freight 326.8 -8.9 10.13% 10.07% 4.35% 0.98% 45.01% 12.76% 13.28% 3.43%
29 29 Cigarettes & tobacco 155.6 0.1 67.61% 3.02% 1.03% 0.32% 20.05% 3.66% 0.32% 3.98%
Direct response advertising 6,461.6 5.4 36.32% 2.15% 7.64% 0.03% 17.86% 32.83% 1.08% 2.09%
Miscellaneous 4,306.4 2.0 22.11% 21.93% 29.84% 1.26% 8.27% 6.39% 3.99% 6.20%
Total 149,688.7 3.6 17.71% 3.02% 18.72% 2.56% 32.54% 11.54% 7.39% 6.53%
Figure 55: Top U.S. Advertisers (1–50) with Total Spend and Internet Spend ($ in millions)
Internet Advertising
Rank Total Ad Spending Total Internet Ad Spending As % of Total Advertising
2006 2005 Marketer Headquarters 2006 2005 %CHG 2006 2005 %CHG 2006 2005
1 1 Procter & Gamble Co. Cincinnati 4,898.0 4,587.9 6.8 54.0 33.5 61.1 1.10% 0.73%
2 5 AT&T San Antanio 3,344.7 2,653.6 26.0 168.7 56.2 200.3 5.04% 2.12%
3 2 General Motors Corp. Detroit 3,296.0 4,110.1 -19.8 118.2 110.5 7.0 3.59% 2.69%
4 3 Time Warner New York 3,088.8 3,518.3 -12.2 90.6 166.1 -45.4 2.93% 4.72%
5 7 Verizon Communications New York 2,821.8 2,481.3 13.7 123.6 144.0 -14.2 4.38% 5.80%
6 6 Ford Motors Co. Dearborn, Mich. 2,576.8 2,611.8 -1.3 99.1 55.0 80.1 3.85% 2.11%
7 9 GlaxoSmithKline Brentford, Middlesex, U.K. 2,444.2 2,249.8 8.6 15.1 14.1 7.3 0.62% 0.63%
8 8 Walt Disney Co. Burbank, Calif. 2,320.0 2,291.7 1.2 133.2 90.3 47.5 5.74% 3.94%
9 4 Johnson & Johnson New Brunswick, N.J. 2,290.5 2,669.4 -14.2 34.1 24.6 38.5 1.49% 0.92%
10 12 Unilever London/Rotterdam 2,098.3 1,943.5 8.0 27.9 13.4 108.5 1.33% 0.69%
11 14 Toyota Motor Corp. Toyota City, Japan 1,995.3 1,783.2 11.9 55.6 32.9 69.1 2.79% 1.84%
12 13 Sony Corp. Tokyo 1,994.0 1,801.8 10.7 73.6 44.1 67.0 3.69% 2.45%
13 10 DaimlerChrysler Auburn Hills, Mich./Stuttgart,Germany 1,952.2 2,181.2 -10.5 44.6 31.6 41.3 2.28% 1.45%
14 11 General Electric Co. Fairfield, Conn. 1,860.2 1,979.9 -6.0 60.8 36.8 65.2 3.27% 1.86%
15 16 Sprint Nextel Corp. Reston, Va. 1,775.2 1,715.2 3.5 37.5 26.6 40.7 2.11% 1.55%
16 17 McDonald's Corp. Oak Brook,Ill. 1,748.3 1,656.8 5.5 13.9 12.5 11.4 0.80% 0.75%
17 15 Sears Holdings Corp. Hoffman Estates, Ill. 1,652.8 1,715.3 -3.6 24.3 6.4 282.5 1.47% 0.37%
18 19 L'Oreal Clinchy, France 1,456.3 1,464.2 -0.5 7.8 6.9 12.3 0.54% 0.47%
19 22 Kraft Foods Northfield, Ill. 1,423.2 1,428.9 -0.4 22.9 -- -- 1.61% --
20 23 Federated Departmet Stores Cincinnati 1,361.2 1,346.7 1.1 4.5 2.8 60.5 0.33% 0.21%
21 24 Honda Motor Co. Tokyo 1,350.8 1,314.9 2.7 34.3 11.2 207.4 2.54% 0.85%
22 18 Bank of America Corp. Charlotte, N.C. 1,334.4 1,497.0 -10.9 42.7 24.5 73.9 3.20% 1.64%
23 21 Nissan Motor Co. Tokyo 1,328.9 1,441.8 -7.8 28.6 6.9 312.8 2.15% 0.48%
24 20 PepsiCo Purchase, N.Y. 1,322.7 1,461.0 -9.5 14.3 19.1 -25.2 1.08% 1.31%
25 25 Nestle Vevey, Switzerland 1,315.0 1,270.9 3.5 20.9 51.4 -59.4 1.59% 4.05%
26 28 News Corp. New York 1,244.5 1,166.4 6.7 55.7 47.6 17.0 4.48% 4.08%
27 30 J.C. Penny Co. Plano, Texas 1,162.3 1,084.9 7.1 33.1 32.5 1.9 2.85% 2.99%
28 34 Target Corp. Minneapolis 1,156.9 1,021.2 13.3 56.7 36.9 53.7 4.90% 3.61%
29 26 U.S. Government Washington 1,132.7 1,230.2 -7.9 43.7 30.5 43.1 3.86% 2.48%
30 29 Home Depot Atlanta 1,118.1 1,109.3 0.8 7.4 2.4 214.5 0.66% 0.21%
31 45 Pfizer New York 1,104.9 849.2 30.1 23.2 20.9 10.7 2.10% 2.47%
32 39 Berkshire Hathaway Omaha 1,093.4 919.6 18.9 13.9 2.2 529.0 1.27% 0.24%
33 41 Wyeth Madison, N.J. 1,076.8 892.7 20.6 17.8 19.0 -6.3 1.65% 2.13%
34 36 Wal-Mart Stores Bentonville, Ark. 1,072.6 970.3 10.5 61.2 34.2 78.8 5.71% 3.53%
35 38 JP Morgan Chase & Co. New York 1,062.5 922.2 15.2 27.8 31.2 -10.9 2.62% 3.38%
36 27 Novartis Basel, Switzerland 1,052.2 1,175.3 -10.5 27.3 25.5 7.0 2.59% 2.17%
37 33 Estee Lauder Cos. New York 1,031.3 1,039.0 -0.7 1.7 0.5 252.0 0.16% 0.05%
38 65 Merck & Co. Whitehouse Station, N.J. 1,024.2 538.6 90.2 17.9 7.5 137.8 1.75% 1.40%
39 35 Citigroup New York 1,012.2 1,000.5 1.2 24.8 33.7 -26.5 2.45% 3.37%
40 48 Astra Zeneca London 1,005.3 826.0 21.7 29.9 24.8 20.3 2.97% 3.01%
41 31 Viacom New York 934.1 1,075.5 -13.1 30.0 36.3 -17.3 3.21% 3.37%
42 43 Schering-Plough Corp. Kenilworth,N.J. 931.5 854.7 9.0 4.8 5.1 -5.8 0.52% 0.60%
43 32 American Express Co. New York 928.7 1,068.9 -13.1 80.8 28.1 188.0 8.70% 2.62%
44 44 General Mills Minneapolis 920.5 852.0 8.0 15.7 20.3 -22.6 1.71% 2.38%
45 46 Microsoft Corp. Redmond, Wash. 912.2 839.9 8.6 81.6 103.0 -20.8 8.95% 12.27%
46 42 Yum Brands Lousiville, Ky. 902.0 866.7 4.1 2.8 0.9 204.0 0.31% 0.11%
47 37 Dell Round Rock, Texas 882.5 945.8 -6.7 137.8 156.6 -12.0 15.61% 16.56%
48 50 Best Buy Co. Richfield, Minn. 878.7 823.5 6.7 31.6 13.5 134.7 3.60% 1.63%
49 49 Capital One Finance Corp. McLean, VA. 863.7 824.8 4.7 53.1 33.0 61.1 6.15% 4.00%
50 51 Lowe's Co. Mooresville, N.C. 838.5 778.2 7.7 19.5 8.0 145.0 2.33% 1.02%
Figure 56: Top U.S. Advertisers (51–100) – with Total Spend and Internet Spend ($ in millions)
Internet Advertising
Rank Total Ad Spending Total Internet Ad Spending As % of Total Advertising
2006 2005 Marketer Headquarters 2006 2005 %CHG 2006 2005 %CHG 2006 2005
51 47 Hewlett-Packard Co. Palo Alto, Calif. 828.8 831.8 -0.4 111.4 108.0 3.2 13.44% 12.98%
52 53 Deutsche Telekom Bonn, Germany 815.1 714.6 14.1 35.0 13.0 168.7 4.29% 1.82%
53 40 Anheuser-Busch Cos. St. Louis 813.4 919.2 -11.5 6.1 2.6 132.0 0.75% 0.29%
54 59 Hyundai Motors Co. Seoul 785.9 608.5 29.2 14.4 8.7 66.0 1.83% 1.43%
55 55 Kohl's Corp. Menomonee Falls, Wis. 765.9 646.6 18.5 4.0 4.5 -10.9 0.52% 0.69%
56 52 Kellog Co. Battle Creek, Mich 765.1 725.2 5.5 9.3 10.6 -12.3 1.22% 1.46%
57 71 IAC/InterActiveCorp New York 743.5 496.1 49.9 122.1 -- -- 16.42% --
58 54 Coca-Cola Co. Atlanta 740.8 711.2 4.2 21.3 5.9 258.4 2.88% 0.84%
59 61 Bristol-Myers Squibb Co. New York 691.1 585.4 18.1 17.1 7.9 115.9 2.47% 1.35%
60 58 Nike Beaverton.Ore. 678.4 608.6 11.5 11.0 3.0 268.9 1.62% 0.49%
61 56 Mars Inc. McLean, VA. 658.2 636.5 3.4 11.1 2.6 327.7 1.69% 0.41%
62 57 Cadbury Schweppes London 643.7 628.2 2.5 6.6 1.5 340.9 1.03% 0.24%
63 68 Victoria's Secret Corp. Columbus, Ohio 600.5 515.0 16.6 45.3 13.9 226.7 7.54% 2.69%
64 69 Visa International San Francisco 597.1 500.3 19.3 17.2 20.9 -17.7 2.88% 4.18%
65 62 SC Johnson Racine, Wis. 596.5 575.7 3.6 1.7 0.3 509.3 0.28% 0.05%
66 63 Clorox Co. Oakland, Calif. 584.2 572.4 2.1 8.8 2.6 240.8 1.51% 0.45%
67 70 Comcast Corp. Philadelphia 568.5 497.1 14.4 32.1 7.4 335.9 5.65% 1.48%
68 73 Campbell Soup Co. Camden, N.J. 564.3 484.0 16.6 4.1 3.1 34.3 0.73% 0.63%
69 75 Eli Lilly & Co. Indianapolis 561.0 475.3 18.0 9.2 9.1 0.9 1.64% 1.92%
70 79 Bayer Leverkusen, Germany 553.6 452.7 22.3 11.3 0.8 1,323.2 2.04% 0.18%
71 72 Doctor's Associates Milford, Conn. 539.8 486.8 10.9 2.3 2.4 -3.2 0.43% 0.49%
72 74 Safeway Pleasanton, Calif. 533.6 481.7 10.8 0.7 0.0 7,677.8 0.13% 0.00%
73 66 Kroger Co. Cincinnati 527.5 537.5 -1.9 1.0 0.8 24.2 0.19% 0.15%
74 64 IBM Corp. Armonk, N.Y. 516.5 547.0 -5.6 13.0 9.9 32.0 2.52% 1.80%
75 83 Circuit City Stores Richmond, Va. 498.2 426.5 16.8 49.4 50.3 -1.8 9.92% 11.79%
76 82 Gap Inc. San Francisco 489.4 432.1 13.3 5.8 5.3 9.4 1.19% 1.23%
77 76 MasterCard International Purchase, N.Y. 486.3 466.0 4.4 21.6 10.3 109.5 4.44% 2.21%
78 92 Allstate Corp. Northbrook, Ill. 476.9 394.0 21.0 18.6 20.3 -8.3 3.90% 5.15%
79 85 Vonage Holdings Corp. Holmdel, N.J. 465.1 413.7 12.4 185.7 275.7 -32.7 39.93% 66.65%
80 67 Sanofi-Aventis Paris 463.1 518.3 -10.7 8.8 8.2 6.8 1.90% 1.59%
81 87 Staples Framingham, MA 457.2 404.9 12.92 1.9 -- -- 0.42% --
82 80 Wells Fargo & Co. San Francisco, CA. 456.1 443.1 2.9 7.1 -- -- 1.56% --
83 90 eBay San Jose, CA 453.3 396.6 14.3 51.7 -- -- 11.41% --
84 86 Washington Mutual Seattle, WA 443.0 406.9 8.9 17.7 -- -- 4.00% --
85 77 Wendy's International Dublin, Ohio 435.2 453.4 -4.0 6.9 4.6 51.3 1.59% 1.01%
86 60 Volkswagen Wolfsburg, Germany 419.3 590.0 -28.9 19.5 19.9 -1.9 4.65% 3.37%
87 91 Diageo London 418.9 394.3 6.2 10.5 2.6 305.7 2.51% 0.66%
88 95 Mattel El Segundo, Calif. 394.1 383.6 2.7 2.8 1.7 61.2 0.71% 0.45%
89 156 Apple Cupertino, CA 383.7 219.5 74.8 14.6 -- -- 3.81% --
90 101 Burger King Corp. Miami 379.5 354.5 7.1 1.8 0.9 91.7 0.47% 0.26%
91 81 Abbot Laboratories Abbott Park, Ill 374.4 436.4 -14.2 3.3 2.5 33.7 0.88% 0.57%
92 78 SABMiller London 370.8 452.9 -18.1 4.5 4.5 -1.1 1.21% 1.00%
93 89 Molson Coors Brewing Co. Denver/Montreal 369.5 400.9 -7.8 6.5 2.3 183.6 1.76% 0.57%
94 84 CBS Corp. New York, NY 369.2 426.5 -13.4 13.9 -- -- 3.76% --
95 97 Reckitt Benckiser Sloth, Berkshire, U.K. 366.7 369.3 -0.7 0.6 0.6 -0.7 0.16% 0.16%
96 100 ConAgra Foods Omaha 366.2 355.8 2.9 0.6 1.0 -41.7 0.16% 0.29%
97 102 Qwest Communications International Denver, CO. 362.4 352.6 2.8 2.6 -- -- 0.72% --
98 103 Philips Electronics Amsterdam 350.8 337.2 4.0 3.5 8.1 -56.9 1.00% 2.41%
99 109 Office Depot Delray Beach, Fl. 342.7 314.4 9.0 12.5 -- -- 3.65% --
100 88 State Farm Mutual Auto Insurance Co. Bloomington, Ill 338.1 401.7 -15.8 33.9 15.5 118.0 10.03% 3.87%
Total 104,795.0 101,634.1 3.1 3,273.0 2,449.5 33.6 3.12% 2.41%
Figure 57: Domestic Search Share Comparison by Data Source, October 2007–February 2008
Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Provider comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise comScore NetRatings Hitwise
Google 58.5% 55.5% 64.5% 58.6% 57.7% 65.1% 58.4% 56.3% 66.0% 58.5% 56.9% 66.0% 59.2% 58.7% 66.4%
Yahoo! 22.9% 18.8% 21.7% 22.4% 17.9% 21.2% 22.9% 17.7% 20.9% 22.2% 19.0% 20.9% 21.6% 17.6% 20.6%
MSN 9.7% 13.8% 7.4% 9.8% 12.0% 7.1% 9.8% 13.8% 7.0% 9.8% 12.1% 6.9% 9.6% 11.2% 7.0%
AOL 4.2% 3.7% NA 4.5% 4.5% NA 4.6% 4.7% NA 4.9% 4.7% NA 4.9% 5.2% NA
Ask Network 4.7% 4.1% 4.8% 4.6% 3.9% 4.6% 4.3% 3.2% 4.1% 4.5% 3.4% 4.2% 4.6% 3.4% 4.2%
AOL, 4.9%
NHN, 2.5%
Baidu , 6.3%
60.0%
55.0%
Google, 59.2%
50.0%
45.0%
40.0%
35.0%
30.0%
Yahoo!, 21.6%
25.0%
20.0%
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Figure 62: U.S. Search Market Share and Growth, January 2007–February 2008
Total Searches Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 8,519,110,401 8,604,483,858 9,094,458,052 8,910,075,062 9,187,947,103 9,706,525,899 9,895,494,580 9,820,417,289 9,400,076,393 10,525,907,747 10,030,270,373 9,636,397,662 10,491,850,712 9,881,567,684
Google Sites 4,483,655,852 4,631,107,268 4,963,051,262 4,996,928,190 5,191,302,260 5,329,775,278 5,459,123,358 5,545,220,205 5,356,063,930 6,151,037,065 5,881,898,412 5,629,034,922 6,139,377,909 5,854,533,236
Yahoo! Sites 2,292,178,678 2,250,586,176 2,338,877,952 2,192,199,726 2,267,110,264 2,307,352,061 2,324,736,567 2,289,814,630 2,227,135,222 2,404,919,113 2,248,824,429 2,211,293,270 2,332,177,645 2,136,156,211
AOL 457,272,564 452,264,863 459,247,212 483,343,730 437,677,167 439,838,469 436,086,834 441,118,707 404,762,581 442,631,698 453,230,343 441,650,650 514,452,264 488,299,479
MSN-Microsoft Sites 889,998,489 871,035,322 924,974,018 840,896,424 874,211,385 1,180,981,364 1,213,927,571 1,105,913,080 968,568,291 1,036,165,953 983,765,779 939,632,703 1,030,367,682 952,775,597
Ask Network 396,004,819 399,490,229 408,307,608 396,706,992 417,646,027 448,578,727 461,620,250 438,350,667 443,546,368 491,153,919 462,551,410 414,786,117 475,475,212 449,803,162
M/M Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 2.0% 1.0% 5.7% -2.0% 3.1% 5.6% 1.9% -0.8% -4.3% 12.0% -4.7% -3.9% 8.9% -5.8%
Google Sites 3.9% 3.3% 7.2% 0.7% 3.9% 2.7% 2.4% 1.6% -3.4% 14.8% -4.4% -4.3% 9.1% -4.6%
Yahoo! Sites -0.3% -1.8% 3.9% -6.3% 3.4% 1.8% 0.8% -1.5% -2.7% 8.0% -6.5% -1.7% 5.5% -8.4%
AOL -1.6% -1.1% 1.5% 5.2% -9.4% 0.5% -0.9% 1.2% -8.2% 9.4% 2.4% -2.6% 16.5% -5.1%
MSN-Microsoft Sites 2.2% -2.1% 6.2% -9.1% 4.0% 35.1% 2.8% -8.9% -12.4% 7.0% -5.1% -4.5% 9.7% -7.5%
Ask Network -0.1% 0.9% 2.2% -2.8% 5.3% 7.4% 2.9% -5.0% 1.2% 10.7% -5.8% -10.3% 14.6% -5.4%
Google Sites 4,483,655,852 9,114,763,120 14,077,814,382 4,996,928,190 10,188,230,450 15,518,005,728 5,459,123,358 11,004,343,563 16,360,407,493 6,151,037,065 12,032,935,476 17,661,970,398 6,139,377,909 11,993,911,145
Yahoo! Sites 2,292,178,678 4,542,764,853 6,881,642,805 2,192,199,726 4,459,309,990 6,766,662,050 2,324,736,567 4,614,551,197 6,841,686,419 2,404,919,113 4,653,743,541 6,865,036,811 2,332,177,645 4,468,333,856
AOL 457,272,564 909,537,427 1,368,784,639 483,343,730 921,020,897 1,360,859,366 436,086,834 877,205,541 1,281,968,122 442,631,698 895,862,040 1,337,512,690 514,452,264 1,002,751,743
MSN-Microsoft Sites 889,998,489 1,761,033,811 2,686,007,830 840,896,424 1,715,107,809 2,896,089,173 1,213,927,571 2,319,840,651 3,288,408,942 1,036,165,953 2,019,931,733 2,959,564,436 1,030,367,682 1,983,143,279
Ask Network 396,004,819 795,495,048 1,203,802,656 396,706,992 814,353,019 1,262,931,746 461,620,250 899,970,917 1,343,517,285 491,153,919 953,705,329 1,368,491,446 475,475,212 925,278,374
Google Sites 9.6% 9.8% 11.6% 11.4% 11.8% 10.2% 9.2% 8.0% 5.4% 12.7% 9.3% 8.0% -0.2% -0.3%
Yahoo! Sites -4.3% -4.9% -2.8% -4.4% -1.8% -1.7% 6.0% 3.5% 1.1% 3.4% 0.8% 0.3% -3.0% -4.0%
AOL -11.0% -8.8% -6.3% 5.7% 1.3% -0.6% -9.8% -4.8% -5.8% 1.5% 2.1% 4.3% 16.2% 11.9%
MSN-Microsoft Sites -3.2% -2.9% 0.1% -5.5% -2.6% 7.8% 44.4% 35.3% 13.5% -14.6% -12.9% -10.0% -0.6% -1.8%
Ask Network -9.0% -6.9% -3.8% 0.2% 2.4% 4.9% 16.4% 10.5% 6.4% 6.4% 6.0% 1.9% -3.2% -3.0%
Search Share Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Google Sites 52.6% 53.8% 54.6% 56.1% 56.5% 54.9% 55.2% 56.5% 57.0% 58.4% 58.6% 58.4% 58.5% 59.2%
Yahoo! Sites 26.9% 26.2% 25.7% 24.6% 24.7% 23.8% 23.5% 23.3% 23.7% 22.8% 22.4% 22.9% 22.2% 21.6%
AOL 5.4% 5.3% 5.0% 5.4% 4.8% 4.5% 4.4% 4.5% 4.3% 4.2% 4.5% 4.6% 4.9% 4.9%
MSN-Microsoft Sites 10.4% 10.1% 10.2% 9.4% 9.5% 12.2% 12.3% 11.3% 10.3% 9.8% 9.8% 9.8% 9.8% 9.6%
Ask Network 4.6% 4.6% 4.5% 4.5% 4.5% 4.6% 4.7% 4.5% 4.7% 4.7% 4.6% 4.3% 4.5% 4.6%
Y/Y Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total --- --- --- 29.3% 24.9% 26.4% 37.6% 28.4% 16.8% 26.0% 19.5% 15.4% 23.2% 14.8%
Google Sites --- --- --- 60.6% 53.1% 49.7% 64.3% 55.7% 38.7% 50.4% 39.6% 30.4% 36.9% 26.4%
Yahoo! Sites --- --- --- 7.8% 4.7% 2.2% 8.4% 0.3% -4.5% 0.4% -5.6% -3.8% 1.7% -5.1%
AOL --- --- --- -2.2% -8.3% -9.3% -7.8% 14.2% -6.6% -13.9% -6.1% -5.0% 12.5% 8.0%
MSN-Microsoft Sites --- --- --- -4.6% -6.8% 19.8% 35.7% 17.9% 5.8% 12.7% 10.0% 7.9% 15.8% 9.4%
Ask Network --- --- --- 6.8% 7.5% 14.5% 29.5% -8.4% -12.4% 12.9% 10.3% 4.7% 20.1% 12.6%
Google Sites 52.6% 53.2% 53.7% 56.1% 56.3% 55.8% 55.2% 55.8% 56.2% 58.4% 58.5% 58.5% 58.5% 58.9%
Yahoo! Sites 26.9% 26.5% 26.2% 24.6% 24.6% 24.3% 23.5% 23.4% 23.5% 22.8% 22.6% 22.7% 22.2% 21.9%
AOL 5.4% 5.3% 5.2% 5.4% 5.1% 4.9% 4.4% 4.4% 4.4% 4.2% 4.4% 4.4% 4.9% 4.9%
MSN-Microsoft Sites 10.4% 10.3% 10.2% 9.4% 9.5% 10.4% 12.3% 11.8% 11.3% 9.8% 9.8% 9.8% 9.8% 9.7%
Ask Network 4.6% 4.6% 4.6% 4.5% 4.5% 4.5% 4.7% 4.6% 4.6% 4.7% 4.6% 4.5% 4.5% 4.5%
Google Sites --- --- --- 60.6% 56.7% 54.2% 64.3% 59.9% 52.3% 50.4% 44.9% 40.0% 36.9% 31.6%
Yahoo! Sites --- --- --- 7.8% 6.2% 4.8% 8.4% 4.2% 1.2% 0.4% -2.6% -3.0% 1.7% -1.6%
AOL --- --- --- -2.2% -5.2% -6.6% -7.8% 2.1% -0.8% -13.9% -10.1% -8.5% 12.5% 10.2%
MSN-Microsoft Sites --- --- --- -4.6% -5.7% 3.2% 35.7% 26.6% 19.6% 12.7% 11.4% 10.2% 15.8% 12.6%
Ask Network --- --- --- 6.8% 7.2% 9.7% 29.5% 7.7% 0.1% 12.9% 11.6% 9.4% 20.1% 16.3%
Figure 63: Global Search Market Share and Growth, January 2007–February 2008
Searches Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 39,271,472,000 38,694,282,000 45,488,285,000 43,275,654,000 45,625,287,000 46,952,761,000 47,107,205,000 46,740,210,000 46,640,845,000 51,666,583,000 50,244,495,000 48,589,823,000 52,316,984,000 48,269,655,000
Google Sites 25,950,403,000 25,750,059,000 28,865,015,000 28,079,236,000 29,852,035,000 30,272,310,000 29,738,081,000 30,051,734,000 31,037,600,000 34,349,551,000 33,503,030,000 32,316,035,000 35,464,484,000 32,849,799,000
Yahoo! Sites 8,131,394,000 7,762,525,000 8,403,888,000 7,648,882,000 7,915,866,000 7,990,425,000 8,267,802,000 8,217,840,000 7,893,794,000 8,440,644,000 8,155,221,000 8,228,126,000 8,501,574,000 7,811,186,000
Microsoft Sites 1,750,290,000 1,709,246,000 1,887,445,000 1,790,823,000 1,871,961,000 2,268,589,000 2,335,192,000 2,096,240,000 1,976,225,000 2,055,534,000 1,938,469,000 1,861,366,000 2,130,001,000 1,994,075,000
Ask Network 660,831,000 649,816,000 686,382,000 657,910,000 706,634,000 736,419,000 751,095,000 743,050,000 756,960,000 837,422,000 818,689,000 728,210,000 846,287,000 778,433,000
AOL 639,868,000 601,608,000 578,169,000 581,367,000 536,877,000 572,001,000 588,406,000 573,465,000 550,623,000 597,965,000 615,867,000 590,852,000 682,292,000 614,330,000
Baidu 2,138,686,000 2,221,028,000 2,989,118,000 2,629,753,000 2,786,308,000 3,205,715,000 3,484,004,000 3,253,213,000 2,955,795,000 3,741,321,000 3,637,055,000 3,428,278,000 3,296,143,000 3,030,778,000
NHN NA NA 2,078,268,000 1,887,683,000 1,955,606,000 1,907,302,000 1,942,625,000 1,804,668,000 1,469,848,000 1,644,146,000 1,576,164,000 1,436,956,000 1,396,203,000 1,191,054,000
Monthly Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 13.4% -1.5% 17.6% -4.9% 5.4% 2.9% 0.3% -0.8% -0.2% 10.8% -2.8% -3.3% 7.7% -7.7%
Google Sites 8.4% -0.8% 12.1% -2.7% 6.3% 1.4% -1.8% 1.1% 3.3% 10.7% -2.5% -3.5% 9.7% -7.4%
Yahoo! Sites 3.9% -4.5% 8.3% -9.0% 3.5% 0.9% 3.5% -0.6% -3.9% 6.9% -3.4% 0.9% 3.3% -8.1%
Microsoft Sites 8.4% -2.3% 10.4% -5.1% 4.5% 21.2% 2.9% -10.2% -5.7% 4.0% -5.7% -4.0% 14.4% -6.4%
Ask Network 7.6% -1.7% 5.6% -4.1% 7.4% 4.2% 2.0% -1.1% 1.9% 10.6% -2.2% -11.1% 16.2% -8.0%
AOL 0.3% -6.0% -3.9% 0.6% -7.7% 6.5% 2.9% -2.5% -4.0% 8.6% 3.0% -4.1% 15.5% -10.0%
Baidu --- 3.9% 34.6% -12.0% 6.0% 15.1% 8.7% -6.6% -9.1% 26.6% -2.8% -5.7% -3.9% -8.1%
NHN --- --- --- -9.2% 3.6% -2.5% 1.9% -7.1% -18.6% 11.9% -4.1% -8.8% -2.8% -14.7%
Search Share Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Google Sites 66.1% 66.5% 63.5% 64.9% 65.4% 64.5% 63.1% 64.3% 66.5% 66.5% 66.7% 66.5% 67.8% 68.1%
Yahoo! Sites 20.7% 20.1% 18.5% 17.7% 17.3% 17.0% 17.6% 17.6% 16.9% 16.3% 16.2% 16.9% 16.3% 16.2%
Microsoft Sites 4.5% 4.4% 4.1% 4.1% 4.1% 4.8% 5.0% 4.5% 4.2% 4.0% 3.9% 3.8% 4.1% 4.1%
Ask Network 1.7% 1.7% 1.5% 1.5% 1.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% 1.5% 1.6% 1.6%
AOL 1.6% 1.6% 1.3% 1.3% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.3% 1.3%
Baidu 5.4% 5.7% 6.6% 6.1% 6.1% 6.8% 7.4% 7.0% 6.3% 7.2% 7.2% 7.1% 6.3% 6.3%
NHN NA NA 4.6% 4.4% 4.3% 4.1% 4.1% 3.9% 3.2% 3.2% 3.1% 3.0% 2.7% 2.5%
Y/Y Change Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08
Total --- --- --- 47.5% 42.3% 42.4% 51.9% 51.8% 44.3% 58.5% 48.5% 40.3% 33.2% 24.7%
Google Sites --- --- --- 57.7% 50.3% 48.6% 51.8% 53.4% 48.7% 58.3% 46.5% 35.0% 36.7% 27.6%
Yahoo! Sites --- --- --- -2.8% -4.4% -7.5% -0.3% 1.5% -4.9% 8.1% 2.6% 5.1% 4.6% 0.6%
Microsoft Sites --- --- --- -6.4% -9.6% 7.5% 26.2% 14.7% 12.3% 20.4% 14.6% 15.3% 21.7% 16.7%
Ask Network --- --- --- 10.4% 12.5% 17.5% 25.0% 19.7% 10.7% 23.9% 25.4% 18.6% 28.1% 19.8%
AOL --- --- --- -50.0% -55.7% -53.5% -12.2% -13.6% -20.8% -14.6% -7.4% -7.4% 6.6% 2.1%
Baidu --- --- --- --- --- --- --- --- --- --- --- --- --- 36.5%
NHN --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Figure 64: Lehman Brothers Partnership Matrix, Part 1: Destination Site and Advertising Provider
Portal
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
YAHOO.COM Portal 132,174 Yahoo Yahoo Yahoo Yahoo
MSN.COM Portal 90,671 Microsoft Microsoft Microsoft Microsoft
AOL.COM Portal 81,173 Google Google Google AOL
ABOUT.COM Portal 39,349 -- Google Google --
GO.COM Portal 35,426 Yahoo Yahoo -- --
GLAM.COM Network Portal 29,136 Google Google Google Glam/Google
COMCAST.NET Portal 14,672 Google Google -- Yahoo
Search/Navigation
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
GOOGLE.COM Portal 129,560 Google Google Google --
ASK.COM Search Engine 28,569 Ask.com Google/Ask -- --
MYWEBSEARCH.COM Search Engine 13,504 Ask.com Google/Ask -- --
ANSWERS.COM Search Engine 10,113 -- Google -- --
METACAFE.COM Video Search Engine 5,847 -- -- -- Google
FINDARTICLES.COM Search Engine 6,074 LookSmart LookSmart -- --
LYCOS.COM Search Engine 3,129 Ask.com Google/Ask -- --
INFOSPACE.COM Meta Search Engine 6,396 Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask -- --
DOGPILE.COM Meta Search Engine #N/A Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask -- --
ALTAVISTA.COM Search Engine 2,149 Yahoo Yahoo -- --
IWON.COM Search Engine 3,505 Google Google -- --
TECHNORATI.COM Search Engine 1,399 -- -- Google --
News/Information
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
WEATHER.COM Weather 31,792 Yahoo Yahoo Seevast --
MSNBC.COM General News 29,070 Microsoft Microsoft Seevast --
CNN.COM General News 22,223 Google Google Google --
NYTIMES.COM Newspaper Website 12,250 Google Google Google --
FOXNEWS.COM General News 7,381 Microsoft Microsoft Quigo --
USATODAY.COM Newspaper Website 8,098 Yahoo Yahoo Quigo --
ABCNEWS.COM General News 7,349 -- -- Quigo --
WASHINGTONPOST.COM Newspaper Website 7,213 Google Google Google --
DIGG.COM Social News Ranking 5,546 -- Microsoft Microsoft --
CNET.COM Technology News 4,237 Search.com (Meta) Google Google --
ACCUWEATHER.COM Weather 3,157 Google Google Google --
CBSNEWS.COM General News 3,376 Yahoo Yahoo Yahoo --
TIME.COM General News 3,464 -- -- Quigo --
LATIMES.COM Newspaper Website 3,297 -- Google Quigo --
SALON.COM General News 1,749 Yahoo Yahoo Google --
--
Community
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
MYSPACE.COM Social Networking 67,972 Google Google Google MySpace/Google
FACEBOOK.COM Social Networking 32,436 -- -- Microsoft Facebook/Microsoft
BEBO.COM Social Networking 4,784 Yahoo Yahoo -- Yahoo (UK, Ireland)
IVILLAGE.COM Women 4,571 Yahoo Yahoo Yahoo --
FRIENDSTER.COM Social Networking 2,496 Google Google Google Google
Retail/E-Commerce
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
EBAY.COM Online Auctions 66,768 -- -- Yahoo Yahoo
AMAZON.COM Multicategory E-Commerce 44,926 Amazon (A9) Amazon (ClickRiver) -- Amazon
BIZRATE.COM Comparison Shopping 15,860 -- Google -- --
SHOPPING.COM Comparison Shopping 12,591 -- Google -- --
SHOPLOCAL.COM Comparison Shopping 7,077 -- Google -- --
SHOPZILLA.COM Comparison Shopping 11,045 -- Google -- --
DEALTIME.COM Comparison Shopping 6,201 -- Google -- --
PRICEGRABBER.COM Comparison Shopping 4,563 -- Google -- --
Business/Finance
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
FORBES.COM Financial News 5,971 Eurekster Business.com Quigo Forbes/Yahoo
CNNMONEY.COM Financial News 5,613 Yahoo Yahoo Quigo --
BUSINESSWEEK.COM Financial News 1,979 -- Business.com IndustryBrains.com --
WSJ.COM Financial News 3,335 -- Microsoft Microsoft --
CNBC.COM Financial News 998 -- -- Microsoft Microsoft
Figure 65: Lehman Brothers Partnership Matrix, Part 2: Destination Site and Advertising Provider
Directories/Resources
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
MAPQUEST.COM Maps 45,000 Google via AOL Google via AOL -- --
DICTIONARY.COM Reference 14,354 Google Google -- --
SWITCHBOARD.COM Directories 5,336 InfoSpace (Meta) InfoSpace (Meta) -- --
MATCH.COM Personals 4,312 Ask.com Google/Ask -- --
Entertainment
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
YOUTUBE.COM Online Video 63,921 -- -- -- Google
IMDB.COM Movies 22,110 -- -- Seevast --
TICKETMASTER.COM Event Tickets 13,276 Ask.com Google/Ask -- --
CITYSEARCH.COM Local Directory 12,341 Ask.com Google/Ask -- --
MTV.COM Entertainment/Music 7,433 -- Yahoo Yahoo --
TMZ.COM Entertainment News 9,393 Google via AOL Google via AOL -- --
PEOPLE.COM Entertainment News 7,539 -- -- Quigo --
ABC.COM TV 8,537 Yahoo Yahoo -- --
NBC.COM TV 7,880 SLI Systems Yahoo -- --
VH1.COM Entertainment/Music 3,947 -- Yahoo Yahoo --
WARNERBROS.COM Multimedia 2,903 Yahoo Yahoo -- --
Viacom Sites Entertainment NA -- -- -- Viacom/Microsoft
ISP
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
EARTHLINK.NET ISP 5,161 Google Google -- --
NETZERO.NET ISP 3,599 Yahoo Yahoo -- --
JUNO.COM ISP 1,936 Yahoo Yahoo -- --
Services
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
HOTMAIL.COM Email 4,507 Microsoft Microsoft Microsoft Microsoft
BLOGGER.COM Blogs 39,050 Google Google -- --
FLICKR.COM Social Networking-Photo 13,389 Yahoo Yahoo -- --
EVITE.COM Online Invitation 5,776 -- Google via Ask.com -- --
Sports
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
ESPN.COM Sports News 14,943 -- Quigo Quigo --
FOXSPORTS.COM Sports News 16,157 Microsoft Microsoft Seevast --
SI.COM Sports News 5,976 Yahoo Yahoo Quigo --
NASCAR.COM Sports News 5170 -- Seevast Seevast --
SPORTSLINE.COM Sports News 2,980 Google Google Google --
Other
Feb-08 Graphical
Web Domain Type of Site Unique Visitors Natural Search Paid Search Contextual Ads Display Advertising
HOTJOBS.COM Career Resources 14,395 Yahoo Yahoo -- --
WEBMD.COM Health 12,459 -- Yahoo -- --
CARS.COM Automotive 5,486 Google -- -- Cars/Yahoo
Ziff-Davis Media Sites Technology & Videogame sites NA -- -- -- Ziff-Davis/Yahoo
International
Jan-08
Web Domain Type of Site Country Unique Visitors Natural Search Paid Search Contextual Ads
BAIDU.COM Homepage Search Engine China 66,711 Baidu -- --
SINA.COM Sites Portal China 58,104 Google Google --
YAHOO.CO.JP Portal Japan 50,233 Yahoo Yahoo --
BBC.CO.UK News Portal U.K. 42,868 BBC -- --
NAVER.COM Portal S. Korea 23,040 Naver Yahoo --
DAUM.NET Portal S. Korea 19,312 Google Google --
ALIBABA.COM Web Services Company China 18,331 Yahoo Yahoo --
TERRA.COM Portal Spain 4,745 Google --
Software
OEM
Figure 66: Help Wanted Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Help Wanted Market - U.S.
Traditional Newspaper 7,702.1 8,026.0 8,712.6 5,704.7 4,387.5 3,977.4 4,576.3 5,126.5 4,741.1 3,769.9 2,916.4 2,551.8 2,296.7 2,067.0
Internet 182.0 411.0 740.0 877.0 798.0 859.0 1,161.0 1,601.3 2,079.2 2,431.3 2,482.2 2,651.5 2,832.8 3,026.7
Total Revenue 7,884.1 8,437.0 9,452.6 6,581.7 5,185.5 4,836.4 5,737.3 6,727.8 6,820.4 6,201.2 5,398.5 5,203.4 5,129.4 5,093.7
% Change
Traditional Newspaper -- 4.2% 8.6% -34.5% -23.1% -9.3% 15.1% 12.0% -7.5% -20.5% -22.6% -12.5% -10.0% -10.0%
Internet -- 125.8% 80.0% 18.5% -9.0% 7.6% 35.2% 37.9% 29.8% 16.9% 2.1% 6.8% 6.8% 6.8%
Total -- 7.0% 12.0% -30.4% -21.2% -6.7% 18.6% 17.3% 1.4% -9.1% -12.9% -3.6% -1.4% -0.7%
% Market Share
Traditional Newspaper 97.7% 95.1% 92.2% 86.7% 84.6% 82.2% 79.8% 76.2% 69.5% 60.8% 54.0% 49.0% 44.8% 40.6%
Internet 2.3% 4.9% 7.8% 13.3% 15.4% 17.8% 20.2% 23.8% 30.5% 39.2% 46.0% 51.0% 55.2% 59.4%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber
Figure 67: Auto Classified Advertising Market Share, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Auto Classified Market - U.S.
Traditional Newspaper 4,505.3 4,911.6 5,026.3 4,889.5 5,156.0 5,192.4 5,023.8 4,589.0 3,999.5 3,256.0 2,753.8 2,409.6 2,168.7 1,951.8
Internet 21.5 38.7 65.8 111.8 190.1 304.2 446.9 625.6 782.0 899.3 989.3 1,088.2 1,169.8 1,257.5
Total Revenue 4,526.8 4,950.3 5,092.1 5,001.3 5,346.1 5,496.6 5,470.7 5,214.6 4,781.6 4,155.4 3,743.1 3,497.8 3,338.5 3,209.3
% Change
Traditional Newspaper -- 9.0% 2.3% -2.7% 5.5% 0.7% -3.2% -8.7% -12.8% -18.6% -15.4% -12.5% -10.0% -10.0%
Internet -- 80.0% 70.0% 70.0% 70.0% 60.0% 46.9% 40.0% 25.0% 15.0% 10.0% 10.0% 7.5% 7.5%
Total -- 9.4% 2.9% -1.8% 6.9% 2.8% -0.5% -4.7% -8.3% -13.1% -9.9% -6.6% -4.6% -3.9%
% Market Share
Traditional Newspaper 99.5% 99.2% 98.7% 97.8% 96.4% 94.5% 91.8% 88.0% 83.6% 78.4% 73.6% 68.9% 65.0% 60.8%
Internet 0.5% 0.8% 1.3% 2.2% 3.6% 5.5% 8.2% 12.0% 16.4% 21.6% 26.4% 31.1% 35.0% 39.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber
Figure 68: Real Estate Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E
1998 1999 2000 2001 2002 2003 2004 2005 2006(A) 2007(E) 2008(E) 2009(E) 2010(E) 2011(E)
Real Estate Market - U.S.
Traditional Newspaper 3,094.3 3,116.3 3,166.8 3,511.8 3,668.4 3,953.7 4,221.5 4,639.4 5,155.5 3,996.4 3,155.9 2,761.4 2,485.3 2,236.8
Internet 38.4 65.3 110.9 188.6 320.6 398.0 565.1 762.9 953.6 1,096.6 1,206.3 1,326.9 1,426.4 1,533.4
Total Revenue 3,132.7 3,181.6 3,277.8 3,700.4 3,989.1 4,351.7 4,786.6 5,402.2 6,109.1 5,093.0 4,362.2 4,088.3 3,911.7 3,770.1
% Change
Traditional Newspaper -- 0.7% 1.6% 10.9% 4.5% 7.8% 6.8% 9.9% 11.1% -22.5% -21.0% -12.5% -10.0% -10.0%
Internet -- 70.0% 70.0% 70.0% 70.0% 24.1% 42.0% 35.0% 25.0% 15.0% 10.0% 10.0% 7.5% 7.5%
Total -- 1.6% 3.0% 12.9% 7.8% 9.1% 10.0% 12.9% 13.1% -16.6% -14.4% -6.3% -4.3% -3.6%
% Market Share
Traditional Newspaper 98.8% 97.9% 96.6% 94.9% 92.0% 90.9% 88.2% 85.9% 84.4% 78.5% 72.3% 67.5% 63.5% 59.3%
Internet 1.2% 2.1% 3.4% 5.1% 8.0% 9.1% 11.8% 14.1% 15.6% 21.5% 27.7% 32.5% 36.5% 40.7%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber
Figure 69: Select Internet Advertising and Usage Statistics in the U.S. and U.K. Markets, 2006 & 1H07 ($ in millions)
2006 1H 2007
US UK* US UK**
e-Commerce
Books $4,070 $4,378 $4,743 $5,268 $5,864 $6,371 $6,795 $7,150 $7,451
Trade/consumer $2,926 $3,078 $3,282 $3,621 $4,030 $4,378 $4,670 $4,914 $5,121
Academic $1,144 $1,300 $1,461 $1,648 $1,834 $1,992 $2,125 $2,236 $2,330
Computer hardware/software $13,274 $14,622 $16,221 $18,166 $20,517 $22,778 $25,018 $27,299 $29,671
Computer hardware $10,387 $11,442 $12,599 $14,131 $15,935 $17,659 $19,364 $21,100 $22,906
Computer software $1,783 $2,013 $2,356 $2,664 $3,092 $3,526 $3,973 $4,440 $4,935
Computer peripherals $1,104 $1,167 $1,265 $1,372 $1,491 $1,592 $1,680 $1,758 $1,829
Consumer electronics $4,525 $5,756 $7,796 $9,800 $11,940 $14,381 $17,117 $20,130 $23,392
Flowers/cards/gifts $4,223 $5,469 $6,811 $8,344 $10,322 $12,374 $14,407 $16,346 $18,147
Flowers $778 $1,129 $1,487 $1,833 $2,298 $2,787 $3,270 $3,721 $4,119
Cards $303 $440 $599 $723 $846 $968 $1,086 $1,196 $1,294
Gift cards and gift certificates $3,143 $3,900 $4,725 $5,788 $7,178 $8,619 $10,051 $11,429 $12,734
Cosmetics and fragrances $278 $406 $565 $760 $952 $1,139 $1,310 $1,459 $1,585
Over-the-counter personal care $519 $736 $982 $1,292 $1,621 $1,994 $2,401 $2,830 $3,269
Home furnishings $4,271 $5,953 $7,828 $10,204 $12,540 $15,041 $17,650 $20,315 $22,996
Furniture $1,578 $2,210 $3,045 $4,112 $5,191 $6,419 $7,770 $9,209 $10,696
Home décor and crafts $2,044 $2,916 $3,770 $4,929 $6,031 $7,167 $8,305 $9,429 $10,535
Linens $649 $828 $1,013 $1,163 $1,318 $1,456 $1,575 $1,678 $1,766
Appliances and tools $2,631 $3,670 $4,765 $5,904 $7,046 $8,261 $9,561 $10,965 $12,487
Tools/hardware $436 $726 $1,120 $1,574 $1,992 $2,501 $3,112 $3,832 $4,669
Garden supplies $416 $655 $916 $1,203 $1,482 $1,809 $2,183 $2,604 $3,070
Major appliances $825 $1,043 $1,209 $1,406 $1,594 $1,749 $1,873 $1,971 $2,049
Small appliances $955 $1,246 $1,519 $1,720 $1,978 $2,203 $2,394 $2,557 $2,698
Office supplies $2,721 $3,446 $4,330 $5,317 $6,279 $7,544 $8,880 $10,259 $11,656
Pet supplies $194 $294 $432 $527 $705 $928 $1,199 $1,517 $1,879
Jewelry/luxury goods $1,561 $2,388 $3,247 $4,049 $4,799 $5,627 $6,522 $7,469 $8,452
Music/video $4,658 $5,553 $6,667 $8,189 $9,945 $11,753 $13,656 $15,614 $17,593
Music $1,184 $1,344 $1,536 $1,796 $2,100 $2,329 $2,562 $2,798 $3,031
Video $3,474 $4,209 $5,131 $6,392 $7,845 $9,425 $11,094 $12,816 $14,562
Sporting goods and apparel $2,543 $3,559 $4,647 $5,758 $6,835 $8,021 $9,301 $10,654 $12,060
Sporting goods and equipment $1,701 $2,372 $3,009 $3,639 $4,228 $4,883 $5,602 $6,382 $7,217
Sporting apparel $841 $1,188 $1,638 $2,119 $2,607 $3,138 $3,699 $4,273 $4,843
Tickets $1,963 $2,832 $3,916 $5,115 $6,390 $7,897 $9,649 $11,651 $13,903
Movie tickets $297 $468 $655 $841 $1,026 $1,238 $1,477 $1,741 $2,028
Event tickets $1,666 $2,364 $3,261 $4,275 $5,364 $6,659 $8,172 $9,910 $11,874
Toys/video games $4,006 $5,076 $6,175 $7,451 $8,963 $10,444 $11,824 $13,060 $14,139
Toys $2,130 $2,663 $3,142 $3,728 $4,402 $5,035 $5,591 $6,055 $6,425
Baby products $779 $1,015 $1,305 $1,607 $1,935 $2,258 $2,557 $2,825 $3,057
Video games $1,097 $1,399 $1,728 $2,117 $2,625 $3,152 $3,675 $4,179 $4,656
Other* $4,602 $5,011 $5,457 $5,942 $6,368 $6,877 $7,490 $8,227 $9,100
General merchandise subtotal $62,960 $77,691 $95,731 $115,848 $137,506 $160,691 $184,994 $210,160 $235,991
Auto/auto parts $5,129 $7,173 $11,672 $15,930 $19,028 $22,250 $25,470 $28,568 $31,446
Food/beverage $3,424 $4,031 $4,931 $6,227 $7,236 $8,380 $9,671 $11,118 $12,728
Travel $50,466 $57,118 $64,714 $73,400 $84,600 $96,500 $108,700 $119,100 $129,413
Airline tickets $32,379 $35,810 $39,604 $43,800 $48,800 $54,200 $60,100 $63,700 $66,885
Car rentals $2,086 $2,430 $2,832 $3,300 $4,000 $4,600 $5,200 $5,800 $6,380
Full-service travel agents $773 $985 $1,255 $1,600 $2,200 $2,800 $3,300 $3,700 $4,052
Hotel reservations $15,229 $17,893 $21,023 $24,700 $29,600 $34,900 $40,100 $45,900 $52,097
Auto/grocery/travel subtotal $59,020 $68,322 $81,316 $95,557 $110,864 $127,130 $143,841 $158,786 $173,587
Total U.S. Online Retail $121,980 $146,013 $177,047 $211,405 $248,370 $287,821 $328,836 $368,946 $409,578
Note: 2006–11 estimates are pulled directly from Forrester’s five-year forecast. 2003–05 numbers are Lehman estimates derived using growth curves provided by Forrester in
both the October 2006 report as well as the previous report from September 2005.
Consumer electronics 27% 35% 26% 22% 20% 19% 18% 16%
Cosmetics and fragrances 46% 39% 34% 25% 20% 15% 11% 9%
Over-the-counter personal care 42% 33% 32% 26% 23% 20% 18% 15%
Home furnishings 39% 31% 30% 23% 20% 17% 15% 13%
Furniture 40% 38% 35% 26% 24% 21% 19% 16%
Home décor and crafts 43% 29% 31% 22% 19% 16% 14% 12%
Linens 28% 22% 15% 13% 10% 8% 7% 5%
Appliances and tools 39% 30% 24% 19% 17% 16% 15% 14%
Tools/hardware 67% 54% 41% 27% 26% 24% 23% 22%
Garden supplies 58% 40% 31% 23% 22% 21% 19% 18%
Major appliances 26% 16% 16% 13% 10% 7% 5% 4%
Small appliances 30% 22% 13% 15% 11% 9% 7% 6%
Office supplies 27% 26% 23% 18% 20% 18% 16% 14%
Pet supplies 52% 47% 22% 34% 32% 29% 27% 24%
Jewelry/luxury goods 53% 36% 25% 19% 17% 16% 15% 13%
Sporting goods and apparel 40% 31% 24% 19% 17% 16% 15% 13%
Sporting goods and equipment 39% 27% 21% 16% 15% 15% 14% 13%
Sporting apparel 41% 38% 29% 23% 20% 18% 15% 13%
Auto/auto parts 40% 63% 36% 19% 17% 14% 12% 10%
Total U.S. Online Retail 19.7% 21.3% 19.4% 17.5% 15.9% 14.2% 12.2% 11.0%
Books 14% 15% 16% 17% 19% 20% 21% 22% 22%
Trade/consumer 16% 17% 17% 19% 20% 22% 23% 23% 24%
Academic 11% 12% 14% 15% 16% 17% 18% 19% 19%
Computer hardware/software 47% 48% 49% 51% 53% 55% 56% 56% 57%
Computer hardware 50% 51% 52% 54% 56% 58% 59% 59% 60%
Computer software 38% 39% 42% 43% 45% 47% 48% 49% 49%
Computer peripherals 38% 39% 41% 43% 45% 47% 48% 49% 49%
Pet supplies 1% 1% 2% 2% 3% 3% 4% 5% 5%
Music/video 10% 12% 13% 16% 18% 20% 23% 25% 27%
Music 9% 11% 12% 14% 16% 17% 19% 21% 23%
Video 11% 12% 14% 16% 19% 21% 24% 26% 28%
Toys/video games 10% 12% 15% 18% 21% 24% 26% 28% 30%
Toys 10% 13% 15% 18% 21% 24% 26% 28% 30%
Baby products 9% 12% 15% 18% 21% 24% 26% 28% 30%
Video games 11% 13% 15% 18% 21% 24% 26% 28% 30%
Other*
General merchandise subtotal 7% 8% 9% 11% 12% 14% 15% 17% 18%
Auto/auto parts 1% 1% 1% 2% 2% 3% 3% 3% 4%
Food/beverage 1% 1% 1% 1% 1% 1% 2% 2% 2%
Travel 21% 23% 26% 29% 34% 38% 42% 46% 49%
Airline tickets 27% 30% 32% 35% 39% 43% 47% 49% 51%
Car rentals 12% 14% 16% 19% 22% 26% 28% 31% 34%
Full-service travel agents 11% 13% 17% 21% 29% 36% 42% 47% 50%
Hotel reservations 16% 18% 21% 25% 29% 34% 38% 43% 48%
Auto/grocery/travel subtotal 4% 4% 5% 6% 7% 8% 9% 9% 10%
U.S. Online as a % of Total U.S. Retail 4.9% 5.7% 6.8% 7.9% 9.0% 10.2% 11.3% 12.4% 13.4%
Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, 2000–4Q07 ($ in millions)
1Q00 2Q00 3Q00 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001 1Q02 2Q02 3Q02 4Q02 2002
Total Retail Spend 696,048 753,211 746,875 792,622 2,988,756 704,757 779,011 756,128 827,829 3,067,725 717,302 790,486 792,657 833,877 3,134,322
Y/Y Growth NA NA NA NA NA 1.3% 3.4% 1.2% 4.4% 2.6% 1.8% 1.5% 4.8% 0.7% 2.2%
Q/Q Growth -9.5% 8.2% -0.8% 6.1% NA -11.1% 10.5% -2.9% 9.5% NA -13.4% 10.2% 0.3% 5.2% NA
E-commerce Spend 5,624 6,139 6,993 9,212 27,968 8,062 8,040 8,006 11,188 35,296 10,043 10,568 11,302 14,906 46,819
Y/Y Growth NA NA NA NA NA 43.3% 31.0% 14.5% 21.5% 26% 24.6% 31.4% 41.2% 33.2% 33%
Q/Q Growth 5.8% 9.2% 13.9% 31.7% NA -12.5% -0.3% -0.4% 39.7% NA -10.2% 5.2% 6.9% 31.9% NA
E-Commerce as % of Retail 0.8% 0.8% 0.9% 1.2% 0.9% 1.1% 1.0% 1.1% 1.4% 1.2% 1.4% 1.3% 1.4% 1.8% 1.5%
1Q03 2Q03 3Q03 4Q03 2003 1Q04 2Q04 3Q04 4Q04 2004 1Q05 2Q05 3Q05 4Q05 2005
Total Retail Spend 741,060 819,232 830,692 874,493 3,265,477 794,720 870,834 872,340 936,446 3,474,340 835,280 931,513 939,788 986,849 3,693,430
Y/Y Growth 3.3% 3.6% 4.8% 4.9% 4.2% 7.2% 6.3% 5.0% 7.1% 6.4% 5.1% 7.0% 7.7% 5.4% 6.3%
Q/Q Growth -11.1% 10.5% 1.4% 5.3% NA -9.1% 9.6% 0.2% 7.3% NA -10.8% 11.5% 0.9% 5.0% NA
E-commerce Spend 12,984 13,629 14,607 18,795 60,015 17,074 17,378 18,321 23,571 76,344 20,839 21,467 22,556 28,416 93,278
Y/Y Growth 29.3% 29.0% 29.2% 26.1% 28% 31.5% 27.5% 25.4% 25.4% 27% 22.1% 23.5% 23.1% 20.6% 22.2%
Q/Q Growth -12.9% 5.0% 7.2% 28.7% NA -9.2% 1.8% 5.4% 28.7% NA -11.6% 3.0% 5.1% 26.0% NA
E-Commerce as % of Retail 1.8% 1.7% 1.8% 2.1% 1.8% 2.1% 2.0% 2.1% 2.5% 2.2% 2.5% 2.3% 2.4% 2.9% 2.5%
1Q06 2Q06 3Q06 4Q06 2006 1Q07 2Q07 3Q07 4Q07 2007
Total Retail Spend 899,329 993,153 984,776 1,027,047 3,904,305 934,619 1,030,508 1,016,550 1,078,565 4,060,242
Y/Y Growth 7.7% 6.6% 4.8% 4.1% 5.7% 3.9% 3.8% 3.2% 5.0% 4.0%
Q/Q Growth -8.9% 10.4% -0.8% 4.3% NA -9.0% 10.3% -1.4% 6.1% NA
E-commerce Spend 25,846 26,363 27,092 35,322 114,623 30,624 31,828 32,234 41,758 136,444
Y/Y Growth 24.0% 22.8% 20.1% 24.3% 22.9% 18.5% 20.7% 19.0% 18.2% 19.0%
Q/Q Growth -9.0% 2.0% 2.8% 30.4% NA -13.3% 3.9% 1.3% 29.5% NA
E-Commerce as % of Retail 2.9% 2.7% 2.8% 3.4% 2.9% 3.3% 3.1% 3.2% 3.9% 3.4%
$40,000
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Figure 75: U.S. E-Commerce as a Percentage of Total U.S. Retail, by Quarter, 2000–4Q07
4.5%
4.0%
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1.5%
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1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07
Figure 78: Top U.S. Online Retailers’ Revenue Growth Rates (1–50)
Rank Company 2005 2006
1 Amazon.com Inc. 23% 26%
2 Staples Inc. 27% 29%
3 Office Depot Inc. 23% 13%
4 Dell Inc. 14% 6%
5 HP Home & Home Office 5% 8%
6 Office Max Inc. 17% 11%
7 Sears Holding Corp. 24% 10%
8 CDW Corp. 16% 13%
9 SonyStyle.com 2% 4%
10 Newegg.com 30% 15%
11 Best Buy Co. 32% 12%
12 J.C. Penney Co. Inc. 28% 25%
13 Wal-Mart Stores Inc. 34% 20%
14 QVC Inc. 38% 24%
15 Apple Computer Inc. 49% 39%
16 Victoria's Secret Direct 452% 26%
17 Circuit City Stores Inc. 44% 20%
18 Netflix Inc 36% 45%
19 Target Corp. 19% 10%
20 Williams-Sonoma Inc. 37% 21%
21 Costco Wholesale Corp. 42% 65%
22 Quixtar Inc. 7% 10%
23 L.L. Bean Inc. 43% 10%
24 Systemax Inc. 26% 26%
25 Overstock.com Inc. 63% -1%
26 IAC/InterActiveCorp. 103% 29%
27 Gap Inc. 6% 23%
28 Redcats USA 18% 52%
29 Avon Products Inc. 24% 8%
30 Macy's Group 50% 35%
31 Zappos.com Inc 101% 61%
32 PC Connection Inc. 41% 34%
33 BarnesandNoble.com 5% -2%
34 1-800-Flowers.com Inc. 17% 19%
35 Drugstore.com Inc. 11% 4%
36 Neiman Marcus Group 30% 29%
37 The Home Depot Inc. 115% 15%
38 Buy.com Inc. 19% 15%
39 Toys "R" Us Inc. 11% -10%
40 Nordstrom Inc. 44% 30%
41 Scholastic Corp. 23% 27%
42 CompUSA Inc. 9% 8%
43 Peapod LLC 31% 25%
44 Foot Locker Inc. 15% 15%
45 Oriental Trading Co. 33% 24%
46 Coldwater Creek Inc. 22% 33%
47 Saks Fifth Avenue 38% 35%
48 Musician's Friend Inc. 30% 14%
49 Blue Nile Inc. 20% 24%
50 FTD Inc. 19% 15%
Source: Internet Retailer, 2007
Figure 79: Top U.S. Online Retailers’ Revenue Growth Rates (51–100)
Rank Company 2005 2006
51 Blockbuster Inc. 1600% 74%
52 Crate & Barrel 21% 20%
53 Spiegel Brands Inc. 7% 13%
54 Gateway Inc. -29% -25%
55 Eddie Bauer 3% -5%
56 American Eagle Outfitters 100% 54%
57 FreshDirect LLC 25% 33%
58 Army & Air Force 29% 22%
59 Lillian Vernon Corp. 41% 30%
60 Disney Direct 35% 8%
61 Recreational Equipment 48% 19%
62 The Talbots Inc. 28% 80%
63 J. Crew Group Inc. 31% 18%
64 ShopNBC.com 21% 11%
65 American Girl N/A 1%
66 Xtraplus Corp N/A 3%
67 Abercrombie & Fitch 45% 9%
68 Follett Higher Ed. 61% 30%
69 Lowe's Cos. Inc. 35% 17%
70 Abebooks Inc. 15% 13%
71 Walgreen Co. 27% 19%
72 Etronics Inc. 30% 30%
73 PC Mall Inc. 17% 4%
74 Hanover Direct Inc. 24% 19%
75 Harry and David 7% 73%
76 Northern Tool + Equip. 26% 26%
77 Nike Inc. 342% 20%
78 Bass Pro Outdoor 24% 18%
79 VistaPrint 55% 67%
80 Cabela's Inc 25% 29%
81 U.S. Auto Parts Network 173% 47%
82 Schwan's Home 5% 8%
83 CVS Corp. 21% 20%
84 MLB Advanced Media 67% 16%
85 Drs. Foster & Smith Inc. 28% 16%
86 Bidz.com Inc. 38% 47%
87 Market Day Corp. 20% 11%
88 SmartBargains.com 20% 15%
89 Crutchfield Corp. 8% 7%
90 dELiA*s Inc. 32% 18%
91 1-800 Contacts Inc. 12% 5%
92 eBags.com 41% 20%
93 Shutterfly Inc. N/A 47%
94 RealPlayer Music Store 100% 26%
95 Sierra Trading Post Inc. 259% 25%
96 Restoration Hardware 43% 60%
97 J&R Electronics Inc. 18% 20%
98 Tiffany & Co. 10% 9%
99 Palm Inc. 27% 2%
100 Charming Shoppes Inc. 96% 101%
Source: Internet Retailer, 2007
Figure 80: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (1–50)
Rank Company 2006 Online Revenue 2006 Total Revenue Online as % of Total Rev.
1 Amazon.com Inc. $10,710 $10,710 100.0%
2 Staples Inc. 4,900 18,200 26.9%
3 Office Depot Inc. 4,300 15,000 28.7%
4 Dell Inc. 3,965 57,900 6.8%
5 HP Home & Home Office 3,055 91,658 3.3%
6 Office Max Inc. 2,849 8,966 31.8%
7 Sears Holding Corp. 2,376 55,000 4.3%
8 CDW Corp. 2,001 6,800 29.4%
9 SonyStyle.com 1,690 63,541 2.7%
10 Newegg.com 1,500 1,500 100.0%
11 Best Buy Co. 1,425 30,800 4.6%
12 J.C. Penney Co. Inc. 1,300 19,903 6.5%
13 Wal-Mart Stores Inc. 1,260 348,650 0.4%
14 QVC Inc. 1,257 7,074 17.8%
15 Apple Computer Inc. 1,136 19,315 5.9%
16 Limited Brands Inc. 1,097 10,671 10.3%
17 Circuit City Stores Inc. 1,000 12,430 8.0%
18 Netflix Inc 997 997 100.0%
19 Target Corp. 986 59,490 1.7%
20 Williams-Sonoma Inc. 927 3,728 24.9%
21 Costco Wholesale Corp. 880 60,151 1.5%
22 Quixtar Inc. 880 1,118 78.7%
23 L.L. Bean Inc. 825 1,500 55.0%
24 Systemax Inc. 819 2,345 34.9%
25 Overstock.com Inc. 796 796 100.1%
26 IAC/InterActiveCorp. 792 2,933 27.0%
27 Gap Inc. 730 15,943 4.6%
28 Redcats USA 720 1,708 42.2%
29 Avon Products Inc. 612 8,764 7.0%
30 Macy's Group Inc. 608 26,970 2.3%
31 Zappos.com Inc 597 597 100.0%
32 PC Connection Inc. 514 1,636 31.4%
33 BarnesandNoble.com 433 5,300 8.2%
34 1-800-Flowers.com Inc. 430 782 55.0%
35 Drugstore.com Inc. 416 416 99.9%
36 Neiman Marcus Group 406 4,106 9.9%
37 The Home Depot Inc. 404 90,800 0.4%
38 Buy.com Inc. 397 397 100.1%
39 Toys "R" Us Inc. 384 11,275 3.4%
40 Nordstrom Inc. 377 8,600 4.4%
41 Scholastic Corp. 342 2,284 15.0%
42 CompUSA Inc. 316 4,700 6.7%
43 Peapod LLC 300 288 104.2%
44 Foot Locker Inc. 279 5,750 4.9%
45 Oriental Trading Co. 264 400 66.0%
46 Coldwater Creek Inc. 264 1,050 25.1%
47 Saks Fifth Avenue 252 2,940 8.6%
48 Musician's Friend Inc. 252 2,030 12.4%
49 Blue Nile Inc. 252 252 99.8%
50 FTD Inc. 249 465 53.5%
Source: Internet Retailer, 2007
Figure 81: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (51–100)
Rank Company 2006 Online Revenue 2006 Total Revenue Online as % of Total Rev.
51 Blockbuster Inc. 248 4,030 6.2%
52 Crate & Barrel 234 1,100 21.3%
53 Spiegel Brands Inc. 230 459 50.0%
54 Gateway Inc. 223 3,981 5.6%
55 Eddie Bauer 218 1,013 21.5%
56 American Eagle Outfitters 200 2,794 7.2%
57 FreshDirect LLC 200 200 100.0%
58 Army & Air Force 198 8,474 2.3%
59 Lillian Vernon Corp. 198 398 49.9%
60 Disney Direct 198 2,511 7.9%
61 Recreational Equipment 195 1,164 16.8%
62 The Talbots Inc. 191 2,231 8.5%
63 J. Crew Group Inc. 189 1,152 16.4%
64 ShopNBC.com 177 764 23.2%
65 American Girl 176 440 40.0%
66 Xtraplus Corp 175 175 100.0%
67 Abercrombie & Fitch 174 3,318 5.2%
68 Follett Higher Ed. 174 2,000 8.7%
69 Lowe's Cos. Inc. 174 46,900 0.4%
70 Abebooks Inc. 170 170 100.0%
71 Walgreen Co. 170 47,409 0.4%
72 Etronics Inc. 169 169 100.0%
73 PC Mall Inc. 168 1,006 16.7%
74 Hanover Direct Inc. 168 416 40.3%
75 Harry and David 166 598 27.8%
76 Northern Tool + Equip. 165 750 22.0%
77 Nike Inc 154 15,000 1.0%
78 Bass Pro Outdoor 153 1,915 8.0%
79 VistaPrint 152 152 100.1%
80 Cabela's Inc 147 2,060 7.1%
81 U.S. Auto Parts Network 145 145 99.8%
82 Schwan's Home 137 4,000 3.4%
83 CVS Corp. 136 43,814 0.3%
84 MLB Advanced Media 135 264 51.0%
85 Drs. Foster & Smith Inc. 133 228 58.3%
86 Bidz.com Inc. 132 132 100.0%
87 Market Day Corp. 131 131 100.4%
88 SmartBargains.com 127 111 114.7%
89 Crutchfield Corp. 125 211 59.2%
90 dELiA*s Inc. 125 258 48.3%
91 1-800 Contacts Inc. 124 249 49.9%
92 eBags.com 124 103 120.6%
93 Shutterfly Inc. 123 123 100.3%
94 RealPlayer Music Store 123 395 31.1%
95 Sierra Trading Post 123 250 49.2%
96 Restoration Hardware 122 713 17.2%
97 J&R Electronics 120 400 30.0%
98 Tiffany & Co. 120 2,648 4.5%
99 Palm Inc. 120 1,579 7.6%
100 Charming Shoppes 118 3,068 3.9%
Source: Internet Retailer, 2007
Figure 91: Top U.S. Online Retailers – Mass Merchant/Department Store ($ in millions)
Rank Company 2004 2005 2006
1 Amazon.com Inc. $6,921 $8,490 $10,710
2 Sears Holding Corp. 1,740 2,160 2,376
3 J.C. Penney Co. Inc. 812 1,039 1,300
4 Wal-Mart Stores Inc. 782 1,050 1,260
5 QVC Inc. 739 1,017 1,257
6 Target Corp. 756 897 986
7 Costco Wholesale Corp. 377 534 880
8 Overstock.com Inc. 495 804 796
9 IAC/InterActiveCorp. 303 614 792
10 Macy's Group Inc. 300 450 608
11 Buy.com Inc. 291 346 397
12 Army & Air Force 126 162 198
13 ShopNBC.com 131 159 184
14 SmartBargains.com 92 111 127
15 NetShops Inc, 24 66 115
16 CafePress.com 69 87 95
17 Direct Marketing Services Inc. 45 55 69
18 The Shopping Channel, A Division of Roger Media 45 58 66
19 Kohl's Corp. 21 29 32
20 Boscov's Department Store LLC 16 20 25
- Display: Can premium display return to its historic levels of growth given the increasing
- One of the largest platforms on the web with over 500 million users worldwide, giving Yahoo! popularity of user generated content, verticalization, and the willingness of advertisers to
scale, reach, and frequency of use. distribute ad dollars across premium and non-premium content? More display going through
networks?
- Diversified business model with a full suite of offerings including branded, network, search, - Search: Continuing share declines, increasing distribution costs leading to higher TAC, and
and subscription services leading to multiple cross-selling opportunities. limited overseas exposure may limit Yahoo!'s monetization improvements from Panama.
- Continued search and monetization improvements across its core O&O sites (US RPS
- Will its estimated $275 million in incremental '08 investment spending around its display
+20% in 4Q07) as Yahoo! improves ad relevancy and, importantly, monetization with
platform be sufficient to touch 20% of the online advertising demand over the next few years?
Panama.
- Display partnerships with eBay, Comcast, the newspaper consortium, and others extend
- Continued brain drain toward start-ups and other Internet companies.
Yahoo!'s premium display network and likely have lower TAC than search partnerships.
- Balance sheet has $2.5B in cash, plus ~$9.00 per share in Yahoo! Japan, Alibaba, and - Non-premium page views are growing fastest, and although monetization is improving, they
cash. are impacting overall display growth.
- Can Yahoo! position itself for growth in EBITDA and have positive operating leverage in
2009 amid its investments in 2008? Revenues excluding TAC $1,280 - $1,380 $5,350-$5,950
Other cost of revenues $250-$280 $1,030-$1,150
- Has Yahoo!'s new strategic focus on: 1. starting points; 2. becoming a 'must buy' for
advertisers; and 3. delivering industry leading platforms, led to user growth, and increased
advertiser spend and fee growth. Gross Profit $1,030 - $1,100 $4,320-$4,800
Implied Operating Expenses $900-$990 $3,398-$3,488
- Can Panama lead to sustainable double digit RPS growth going forward? RPS on Yahoo!'s
U.S. O&O sites grew 20% in 4Q07. Operating Income $100-$110 $545-$655
Depreciation & Amortization $160-$180 $670-$750
- Whether Yahoo! can gain search share or will it continue to lose share to Google?
Stock compensation expense $140-$160 $510-$570
EBITDA $400-$450 $1,725-$1,975
- If Yahoo!'s display biz can build upon its distribution relationships with eBay, Comcast,
Implied EBITDA Margin
Bebo, and the newspaper consortium, in addition to its acquisition of Blue Lithium, and sign 31.3% - 32.0% - 32.6% 32.2% - 32.7% - 33.2%
other display syndication deals. (low-mid-high)
- Whether Yahoo! can continue to successfully accelerate its non-premium CPMs by adding
its non-premium (and some premium) inventory to the Right Media exchange while growing
overall CPMs without flooding the exchange. Cash Flow from Operations $1,075-$1,225
Free Cash Flow $850-$1,000
- Greater investment in: advertising platforms (Panama, RightMedia, and Blue Lithium);
product development (SmartAds, Yahoo! Mail, mobile, and marketing); partnerships (beyond Free Cash Conversion of EBITDA 79.1% - 80.4% - 81.6%
eBay, Comcast, and the newspapers); and talent.
- Whether Yahoo! will open up its home-page to potential third party content providers and
applications.
Capex $675-$775
- Whether Yahoo!'s strategy of combining its search and display sales teams can drive
greater cross-selling and increased CPMs.
- Whether there will be additional structural changes as part of Yahoo!'s continual review of its
business model and projects.
Figure 99: Yahoo! Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Revenues $5,257.7 $6,425.7 $1,671.9 $1,697.9 $1,767.5 $1,832.0 $6,969.3 $1,773.5 $1,795.6 $1,850.1 $1,957.3 $7,376.6 $8,044.1
Traffic Acquisition Costs (TAC) $1,561.7 $1,865.9 $488.8 $454.2 $484.9 $428.9 $1,856.7 $444.3 $426.3 $447.9 $413.1 $1,731.5 $1,629.1
Net Revenues excluding TAC $3,695.9 $4,559.8 $1,183.1 $1,243.8 $1,282.6 $1,403.1 $5,112.6 $1,329.3 $1,369.3 $1,402.3 $1,544.2 $5,645.1 $6,415.0
Other cost of revenues 534.5 803.2 222.9 226.5 252.7 269.3 971.4 272.5 278.0 290.3 316.6 1,157.3 1,347.2
Gross profit 3,161.5 3,756.6 960.2 1,017.3 1,029.9 1,133.8 4,141.1 1,056.8 1,091.4 1,112.0 1,227.7 4,487.8 5,067.9
Operating expenses
Sales & marketing 1,025.2 1,167.2 317.2 338.3 340.6 367.8 1,363.9 358.9 362.9 370.9 406.1 1,498.8 1,712.8
Product development 547.1 688.3 191.2 216.6 223.1 235.1 866.0 264.5 280.7 287.5 315.0 1,147.7 1,347.2
General & administrative 319.7 410.4 115.7 123.4 140.5 156.7 536.3 156.9 143.8 140.2 151.3 592.2 705.7
Payroll taxes on option exercises - - - - - - - - - - - - -
Stock compensation expense 52.5 424.9 140.0 128.8 145.5 158.1 572.4 140.0 130.0 135.0 150.0 555.0 527.3
Amortization of intangibles 109.2 124.8 27.1 25.2 30.0 24.8 107.1 28.0 33.0 33.0 33.0 127.0 133.4
Restructuring costs - - - - - - - - - - - - -
Acquisition costs - - - - - - - - - - - - -
Total operating expenses 2,053.7 2,815.6 791.2 832.3 879.7 942.6 3,445.7 948.3 950.4 966.6 1,055.5 3,920.8 4,426.2
Operating income 1,107.7 941.0 169.0 185.0 150.2 191.2 695.4 108.5 141.0 145.4 172.2 567.1 641.7
Other income, net 1,435.9 157.0 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
Income before taxes, acctg change 2,543.6 1,098.0 204.5 215.7 193.9 235.3 849.4 133.1 164.2 167.3 196.5 661.1 767.3
Provision for income taxes 767.8 458.0 92.4 87.7 78.7 78.5 337.3 59.9 73.9 75.3 88.4 297.5 306.9
Effective tax rate 30.2% 41.7% 45.2% 40.7% 40.6% 33.4% 39.7% 45.0% 45.0% 45.0% 45.0% 45.0% 40.0%
Earnings in equity interests 128.2 112.1 29.1 32.1 36.5 52.9 150.7 33.0 33.0 33.0 33.0 132.0 143.9
Minority interest (7.8) (0.7) 1.2 0.5 (0.5) (4.0) (2.9) - - - - - -
GAAP Net Income (loss) bf Cum. Effect 1,896.2 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
Accounting change/One-time items (1,030.8) - - - - - - - - - - - -
GAAP Net income (loss) 865.4 751.4 142.4 160.6 151.3 205.7 660.0 106.2 123.3 125.0 141.1 495.6 604.2
GAAP Net income (loss) per share $0.58 $0.52 $0.10 $0.11 $0.11 $0.15 $0.47 $0.08 $0.09 $0.09 $0.10 $0.35 $0.42
Basic shares outstanding 1,400.4 1,388.7 1,352.5 1,339.6 1,335.1 1,328.8 1,339.0 1,344.0 1,349.0 1,354.0 1,359.0 1,351.5 1,366.5
Diluted shares outstanding 1,486.5 1,457.9 1,418.2 1,403.8 1,395.1 1,394.7 1,402.9 1,399.7 1,404.7 1,409.7 1,414.7 1,407.2 1,422.2
Diluted shares outstanding 1,486.5 1,457.9 1,418.2 1,403.8 1,395.1 1,394.7 1,402.9 1,399.7 1,404.7 1,409.7 1,414.7 1,407.2 1,422.2
EBITDA Reconciliation
Operating income (reported) 1,107.7 941.0 169.0 185.0 150.2 191.2 695.4 108.5 141.0 145.4 172.2 567.1 641.7
Depreciation & amortization 397.1 540.0 151.0 159.9 170.6 177.7 659.2 178.0 180.0 185.0 185.0 728.0 840.0
Stock compensation expense 52.5 424.9 140.0 128.8 145.5 158.1 572.4 140.0 130.0 135.0 150.0 555.0 527.3
EBITDA 1,557.3 1,905.9 460.0 473.6 466.3 527.1 1,927.0 426.5 451.0 465.4 507.2 1,850.1 2,008.9
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Yr/Yr Growth
Net revenues 42.7% 23.4% 8.8% 10.8% 14.4% 14.3% 12.1% 12.4% 10.1% 9.3% 10.1% 10.4% 13.6%
Gross profit 42.3% 18.8% 5.4% 9.2% 14.3% 11.9% 10.2% 10.1% 7.3% 8.0% 8.3% 8.4% 12.9%
Sales and marketing 31.8% 13.8% 8.5% 17.7% 18.0% 23.0% 16.9% 13.2% 7.3% 8.9% 10.4% 9.9% 14.3%
Product development 48.4% 25.8% 6.3% 25.5% 36.2% 36.6% 25.8% 38.4% 29.6% 28.9% 34.0% 32.5% 17.4%
General and administrative 21.7% 28.4% 18.2% 13.8% 52.8% 39.8% 30.7% 35.5% 16.5% -0.2% -3.4% 10.4% 19.2%
Total operating expenses 33.0% 37.1% 11.5% 18.5% 25.9% 33.6% 22.4% 19.9% 14.2% 9.9% 12.0% 13.8% 12.9%
Operating income 63.2% -15.1% -16.0% -19.4% -25.8% -37.9% -26.1% -35.8% -23.8% -3.2% -10.0% -18.5% 13.2%
EBITDA 52.4% 22.4% 5.8% 3.7% -1.6% -2.5% 1.1% -7.3% -4.8% -0.2% -3.8% -4.0% 8.6%
GAAP EPS 62.9% -11.5% -6.2% 2.8% -1.3% -22.1% -8.7% -24.4% -23.3% -18.2% -32.4% -25.1% 20.6%
Pro Forma EPS 56.8% 13.0% 4.9% 8.8% 12.2% -6.1% 4.0% -13.6% -12.6% -12.9% -21.6% -15.5% 9.4%
Sequential Growth
Net revenues -3.7% 5.1% 3.1% 9.4% -5.3% 3.0% 2.4% 10.1%
% of Revenues
Other cost of revenues (non-TAC) 14.5% 17.6% 18.8% 18.2% 19.7% 19.2% 19.0% 20.5% 20.3% 20.7% 20.5% 20.5% 21.0%
Sales & marketing 27.7% 25.6% 26.8% 27.2% 26.6% 26.2% 26.7% 27.0% 26.5% 26.5% 26.3% 26.6% 26.7%
Product development 14.8% 15.1% 16.2% 17.4% 17.4% 16.8% 16.9% 19.9% 20.5% 20.5% 20.4% 20.3% 21.0%
General and administrative 8.6% 9.0% 9.8% 9.9% 11.0% 11.2% 10.5% 11.8% 10.5% 10.0% 9.8% 10.5% 11.0%
Margins
Gross margin 85.5% 82.4% 81.2% 81.8% 80.3% 80.8% 81.0% 79.5% 79.7% 79.3% 79.5% 79.5% 79.0%
Operating margin 30.0% 20.6% 14.3% 14.9% 11.7% 13.6% 13.6% 8.2% 10.3% 10.4% 11.1% 10.0% 10.0%
EBITDA 42.1% 41.8% 38.9% 38.1% 36.4% 37.6% 37.7% 32.1% 32.9% 33.2% 32.8% 32.8% 31.3%
Operating Leverage/Flow-through 48.4% 40.4% 26.3% 13.8% -4.6% -7.6% 3.8% -22.9% -18.0% -0.8% -14.1% -14.5% 20.6%
Figure 100: Yahoo! Revenue Analysis, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Revenue Excluding TAC 3,695.9 4,559.8 1,183.1 1,243.8 1,282.6 1,403.1 5,112.6 1,329.3 1,369.3 1,402.3 1,544.2 5,645.1 6,415.0
Y/Y growth 42.7% 23.4% 8.8% 10.8% 14.4% 14.3% 12.1% 12.4% 10.1% 9.3% 10.1% 10.4% 13.6%
Q/Q growth -3.7% 5.1% 3.1% 9.4% -5.3% 3.0% 2.4% 10.1%
MARKETING SERVICES
Total Marketing Services Gross Revenue 4,594.0 5,627.2 1,468.6 1,486.0 1,541.6 1,590.0 6,086.2 1,570.8 1,622.3 1,672.4 1,765.1 6,630.6 7,217.1
Total Traffic Acquisition Costs (TAC) 1561.7 1865.9 488.8 454.2 482.9 428.8 1854.7 444.3 426.3 447.9 413.1 1731.5 1629.1
TAC as a % of Total Yahoo! Gross Marketing Services Revenue 33.2% 33.3% 30.6% 31.3% 27.0% 30.5% 28.3% 26.3% 26.8% 23.4% 26.1% 22.6%
Total Marketing Services Net Revenue 3,032.3 3,761.3 979.8 1,031.9 1,058.7 1,161.1 4,231.6 1,126.6 1,196.1 1,224.5 1,352.0 4,899.2 5,588.0
Y/Y growth 40.8% 24.0% 8.7% 10.6% 16.1% 14.4% 12.5% 15.0% 15.9% 15.7% 16.4% 15.8% 14.1%
Q/Q growth 5.3% 2.6% 9.7% -3.0% 6.2% 2.4% 10.4%
Marketing services revenue as % of total 82.0% 82.5% 82.8% 83.0% 82.5% 82.8% 82.8% 84.8% 87.3% 87.3% 87.6% 86.8% 87.1%
O&O SEARCH
Gross O&O Search Revenue 1,016.6 1,248.0 339.2 407.8 414.4 420.7 1,582.1 444.4 522.0 526.3 534.2 2,026.9 2,371.4
O&O Traffic Acquisition Costs 19.5 39.7 10.7 12.8 24.4 25.7 73.5 26.2 32.4 33.2 33.7 125.4 154.1
% O&O TAC of Gross Revenue 1.9% 3.2% 3.2% 3.1% 5.9% 6.1% 4.6% 5.9% 6.2% 6.3% 6.3% 6.2% 6.5%
O&O Search Net Revenue 997.1 1,208.3 328.5 395.0 390.0 395.0 1,508.6 418.2 489.6 493.1 500.6 1,901.5 2,217.3
Y/Y growth 52.7% 21.2% 8.2% 27.2% 33.9% 30.4% 24.8% 27.3% 23.9% 26.4% 26.7% 26.0% 16.6%
Q/Q growth 8.5% 20.2% -1.3% 1.3% 5.9% 17.1% 0.7% 1.5%
O&O DISPLAY 1,099.7 1,465.1 383.6 397.8 423.8 503.1 1,708.3 460.3 481.3 506.5 606.3 2,054.4 2,424.1
Y/Y growth 35.6% 33.2% 20.6% 13.0% 18.8% 19.4% 16.6% 20.0% 21.0% 19.5% 20.5% 20.3% 18.0%
Q/Q growth -10.4% 3.7% 6.5% 18.7% -8.5% 4.6% 5.2% 19.7%
O&O OTHER
Listings 166.4 189.6 50.6 51.5 49.0 50.0 201.0 55.1 55.1 52.4 53.5 216.1 233.4
Kelkoo 131.0 168.0 46.3 35.5 34.0 61.6 177.4 50.5 38.3 36.4 65.9 191.1 206.4
Total O&O Other Net Revenue 297.4 357.6 96.9 86.9 83.0 111.6 378.4 105.6 93.4 88.8 119.4 407.2 439.8
Y/Y growth 33.1% 20.3% 11.9% 8.7% 3.0% 1.0% 5.8% 9.0% 7.4% 7.0% 7.0% 7.6% 8.0%
Q/Q growth -12.3% -10.3% -4.6% 34.5% -5.4% -11.6% -4.9% 34.5%
AFFILIATE SITES
Affiliate Total Gross Revenue 2,180.4 2,556.5 648.9 593.5 620.4 554.6 2,417.4 560.5 525.6 550.9 505.2 2,142.2 1,981.8
Affiliate Total TAC 1,542.2 1,826.3 478.1 441.4 458.5 403.2 1,781.2 418.0 393.9 414.7 379.4 1,606.1 1,474.9
TAC as % of Yahoo Affiliate Gross Revenues 71.4% 73.7% 74.4% 73.9% 72.7% 73.7% 74.6% 74.9% 75.3% 75.1% 75.0% 74.4%
Affiliate Total Net Revenue 638.2 730.2 170.8 152.1 161.9 151.4 636.2 142.5 131.7 136.2 125.7 536.1 506.8
Y/Y growth 36.6% 14.4% -10.7% -18.7% -9.1% -12.9% -12.9% -16.6% -13.4% -15.9% -17.0% -15.7% -5.5%
Q/Q growth -1.7% -11.0% 6.4% -6.5% -5.9% -7.6% 3.4% -7.7%
Affiliate Net Revs as % of Total Mktg Services Net Revs 21.0% 19.4% 17.4% 14.7% 15.3% 13.0% 15.0% 12.6% 11.0% 11.1% 9.3% 10.9% 9.1%
AFFILIATE SEARCH
Gross Affiliate Search Revenue 2,180.4 2,558.3 644.1 586.4 609.9 539.3 2,379.6 541.1 504.3 524.5 474.6 2,044.4 1,840.0
Affiliate Search Traffic Acquisition Costs 1,542.2 1,826.3 476.4 438.3 453.7 395.8 1,764.2 408.5 383.2 401.2 363.5 1,556.5 1,398.4
% Affiliate TAC of Gross Revenue 71.4% 74.0% 74.7% 74.4% 73.4% 74.1% 75.5% 76.0% 76.5% 76.6% 76.1% 76.0%
Affiliate Search Net Revenue 638.2 732.0 167.7 148.1 156.2 143.4 615.4 132.6 121.0 123.3 111.0 487.9 441.6
Y/Y growth 36.6% NA -12.4% -20.8% -12.3% -18.3% -15.9% -20.9% -18.3% -21.1% -22.6% -20.7% -9.5%
Q/Q growth -4.5% -11.7% 5.5% -8.2% -7.6% -8.7% 1.8% -9.9%
FEES 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
AT&T (SBC) Access 188.6 244.9 66.2 67.1 69.1 71.0 273.5 42.0 7.3 7.6 7.9 64.7 63.7
Y/Y growth 44.5% 29.9% 17.1% 11.5% 9.6% 9.0% 11.7% -36.6% -89.1% -89.0% -88.9% -76.3% -1.6%
Monthly ARPU to Yahoo! $3.00 $2.99 $2.85 $2.75 $2.70 $2.65 $2.73 $1.50 $0.25 $0.25 $0.25 $0.54 $0.48
BT Access 62.2 86.4 22.7 22.7 23.1 23.4 91.9 23.7 24.0 24.2 24.4 96.4 104.0
Y/Y growth 226.4% 39.0% 11.7% 7.0% 4.3% 3.4% 6.5% 4.4% 5.5% 4.9% 4.4% 4.8% 8.0%
Monthly ARPU to Yahoo! $3.00 $2.99 $2.85 $2.75 $2.70 $2.65 $2.73 $2.60 $2.55 $2.50 $2.45 $2.52 $2.50
Rogers Cable Access 24.8 32.6 8.6 8.6 8.8 0.8 26.9 2.4 2.5 2.6 2.6 10.1 12.0
Y/Y growth 422.7% 31.4% 12.4% 8.3% 5.5% -90.2% -17.5% -71.7% -71.0% -70.9% 210.2% -62.3% 18.5%
Monthly ARPU to Yahoo! $3.00 $2.99 $2.85 $2.75 $2.70 $0.25 $2.10 $0.70 $0.70 $0.70 $0.70 $0.70 $0.75
Verizon Access 11.0 56.3 20.3 23.5 27.6 32.5 103.9 35.2 37.0 40.3 40.9 153.5 194.3
Y/Y growth NA NA 87.9% 83.2% 82.0% 85.7% 84.6% 73.9% 57.4% 46.0% 25.9% 47.7% 26.6%
Monthly ARPU to Yahoo! $3.00 $2.98 $2.85 $2.75 $2.70 $2.65 $2.72 $2.60 $2.55 $2.50 $2.40 $2.51 $2.55
Personals 90.9 105.8 29.5 30.3 29.9 29.8 119.5 33.0 33.6 32.9 33.1 132.7 146.0
Y/Y growth 22.4% 16.4% 13.0% 13.0% 13.0% 13.0% 13.0% 12.0% 11.0% 10.0% 11.0% 11.0% 10.0%
ARPU $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00
Other Premium Services 108.0 122.6 30.7 31.1 30.6 34.2 126.5 30.9 30.7 30.2 33.1 125.0 129.7
Y/Y growth 31.2% 13.6% 3.4% 3.5% 1.8% 4.0% 3.2% 0.8% -1.1% -1.3% -3.0% -1.2% 3.8%
ARPU $3.25 $3.22 $3.06 $3.03 $2.98 $2.95 $3.00 $2.85 $2.80 $2.75 $2.65 $2.76 $2.65
Musicmatch/Yahoo! Music Unlimited 61.0 74.4 18.2 18.9 22.3 26.9 86.3 20.4 21.1 24.9 30.1 96.6 107.2
Y/Y growth NA 21.9% 16.0% 16.0% 16.0% 16.0% 16.0% 12.0% 12.0% 12.0% 12.0% 12.0% 11.0%
Other Fees Revenue 117.3 75.5 7.0 9.7 12.5 23.4 52.5 15.0 17.0 15.0 20.0 67.0 70.0
Y/Y growth -6.5% -35.6% - - - -30.4% - - - 27.5% -
Total Fees Revenue 663.7 798.5 203.2 211.9 223.9 242.0 881.0 202.7 173.3 177.8 192.2 746.0 827.0
Y/Y growth 48.4% 20.3% 9.1% 11.7% 6.6% 13.8% 10.3% -0.3% -18.2% -20.6% -20.6% -15.3% 10.9%
Q/Q growth -4.5% 4.3% 5.7% 8.1% -16.2% -14.5% 2.6% 8.2%
Fees revenues as % of total 18.0% 17.5% 17.2% 17.0% 17.5% 17.2% 17.2% 15.2% 12.7% 12.7% 12.4% 13.2% 12.9%
Figure 101: Yahoo! Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Other (effect of exchange rate) (32.9) 56.9 4.0 7.2 21.3 7.2 39.7 - - - - - -
Net change in cash 606.0 140.2 (260.8) 216.7 2.1 (14.0) (55.9) 203.3 (501.9) 250.9 233.4 185.7 1,048.5
Cash & equivalents - BOP 823.7 1,429.6 1,569.8 1,309.0 1,525.8 1,527.9 1,569.8 1,513.9 1,717.2 1,215.3 1,466.2 1,513.9 1,699.6
Cash & equivalents - EOP 1,429.6 1,569.8 1,309.0 1,525.8 1,527.9 1,513.9 1,513.9 1,717.2 1,215.3 1,466.2 1,699.6 1,699.6 2,748.1
Average cash & marketable securities 3,332.7 3,139.8 2,957.2 2,563.1 2,563.1 2,465.1 2,315.8 2,190.3 2,432.4 2,456.3 3,073.4
Estimated annual interest rate 4.3% 3.9% 5.9% 6.9% 6.0% 4.0% 4.0% 4.0% 4.0% 3.8% 4.1%
Interest income on cash balance 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
Other (incl. Yahoo! Japan)
Other income 1435.9 157.0 35.5 30.7 43.7 44.1 154.0 24.7 23.2 21.9 24.3 94.0 125.6
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Working Capital Analysis:
Changes in:
Accounts receivable, net (272.4) (185.2) 40.2 3.2 (49.7) (82.4) (88.7) 71.9 (36.5) (59.6) (155.6) (179.9) (227.2)
Prepaid expenses and other assets (35.3) (189.0) 13.4 (25.9) 73.6 72.1 133.2 - - - - - -
Accounts payable 31.6 30.4 31.0 0.1 (19.0) 33.0 45.1 (43.2) (9.7) (4.0) 11.3 (45.7) 17.1
Accrued expenses and other liabilities 212.1 175.9 (34.7) 18.9 66.6 134.0 184.8 (75.7) 28.0 51.1 67.7 71.1 77.4
Deferred revenue 58.2 4.2 11.3 7.2 5.9 61.2 85.6 (22.9) 3.6 (5.6) 25.1 0.1 42.0
Changes in working capital (5.9) (163.7) 61.1 3.4 77.3 218.0 359.9 (69.9) (14.6) (18.2) (51.6) (154.3) (90.8)
Figure 102: Yahoo! Discounted Cash Flow Analysis ($ in millions, except per share data)
1,000.0 1 2 3 4 5 6 7 2007E-2012E
2005A 2006A 2007A 2008E 2009E 2010E 2011E 2012E CAGR
Revenue 13.5 4,559.8 5,112.6 5,645.1 6,415.0 7,171.0 7,919.1 8,725.0 11.3%
% change -99.5% 33676.0% 12.1% 10.4% 13.6% 11.8% 10.4% 10.2%
EBITDA 1,557.3 1,905.9 1,927.0 1,850.1 2,008.9 2,212.0 2,428.9 2,661.9 6.7%
% change 52.4% 22.4% 1.1% -4.0% 8.6% 10.1% 9.8% 9.6%
Cash Taxes (51.0) (65.9) (84.9) (79.3) (107.4) (146.8) (194.1) (247.8)
Capex (408.9) (689.1) (602.3) (725.0) (848.3) (975.5) (1,092.5) (1,190.9)
Change in working capital (5.9) (163.7) 359.9 (154.3) (90.8) (78.1) (77.1) (77.6)
Unlevered free cash flow 1,091.5 987.2 1,599.7 891.5 962.4 1,011.7 1,065.2 1,145.7 -6.5%
% change 47.7% -9.6% 62.0% -44.3% 8.0% 5.1% 5.3% 7.6%
2005 PV of Cash Flow 1,091.5 885.4 1,286.8 643.1 622.7 587.0 554.3 534.7 #REF!
Per Share $0.73 $0.60 $0.87 $0.43 $0.42 $0.39 $0.37 $0.36
2006 PV of Cash Flow 987.2 1,434.7 717.0 694.3 654.5 618.1 596.2
Per Share $0.68 $0.98 $0.49 $0.48 $0.45 $0.42 $0.41
#REF!
Terminal EBITDA multiple 12.0x 12.0x 12.0x 12.0x
Discount Rate 11.5% 11.5% 11.5% 11.5%
Terminal value 31,942.9 31,942.9 31,942.9 31,942.9
Implied Terminal FCF Multiple 27.9 27.9 27.9 27.9
- Strong monetization capability via relevancy-based model and continued -That Google's quality initiatives do not result in an increase in CPC sufficient
enhancements to its quality score algorithm drive enhanced user satisfaction. enough to offset a seemingly decline in sponsored clicks.
- EBITDA margins are likely to modestly decline as Google signs more network
- Broad distribution network, including AOL and Ask, increases network traffic and
partners leading to higher TAC, launches new products such as Open Social, and
stimulates keyword bidding market for Google Sites.
mobile platform Android, continues to invest in capex, and adds new hires.
- Diversified growth within search: U.S. & International, Google Sites & Google - Google has yet to materially monetize anything away from search, despite
Network , volume & monetization. investments in Google Apps, mobile, and other forms of traditional advertising.
- Focus on technology and user experience. - Risk of employees leaving for start-ups.
- That Google becomes too big to manage effectively and it loses speed and
What to Watch For innovation.
- Google reported paid click and CPC growth to be announced on its 1Q08 - That anti-Google sentiment develops as Google gets too big, too strong, and has
earnings call scheduled for April 17. too much information.
- Continued search share gains in the U.S. and internationally, with international
representing faster growth, although growth at a decelerating pace.
- Whether TAC continues to rise based on fixed cost distribution deals with
MySpace, AOL, Ask, and others that are back-end loaded.
- If Google can meaningfully build out its Search/Ads/Apps strategy and diversify
its revenue streams.
- How quickly Google can integrate DoubleClick and DFP inventory with AdSense
for Content and start taking share in display.
- If Google can contain new hire growth, which it did in 4Q07 adding ~900 new
employees and successfully absorb the ~1200 net new DoubleClick employees.
Figure 104: Google Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Revenues $6,138.6 $10,604.9 $3,664.0 $3,872.0 $4,231.4 $4,826.7 $16,594.0 $5,107.9 $5,273.2 $5,567.2 $6,130.1 $22,078.3 $27,708.6
Traffic Acquisition Costs (TAC) $2,114.9 $3,308.8 $1,125.0 $1,147.9 $1,221.1 $1,439.8 $4,933.9 $1,528.4 $1,522.0 $1,578.0 $1,746.7 $6,375.2 $7,724.1
Net Revenues excluding TAC $4,023.6 $7,296.1 $2,538.9 $2,724.1 $3,010.2 $3,386.9 $11,660.1 $3,579.5 $3,751.2 $3,989.2 $4,383.3 $15,703.2 $19,984.5
Other cost of revenues 456.6 898.6 341.0 404.7 437.4 509.8 1,692.9 536.9 573.9 610.3 683.8 $2,405.0 3,197.5
Gross profit 3,567.1 6,397.5 2,197.9 2,319.4 2,572.8 2,877.1 9,967.2 3,042.6 3,177.2 3,378.8 3,699.5 13,298.2 16,787.0
Operating expenses
Research & development 484.0 941.1 287.6 375.1 418.1 469.4 1,550.2 497.6 536.4 570.5 640.0 2,244.4 3,037.6
Sales & marketing 439.7 790.1 275.3 319.2 350.9 384.2 1,329.6 415.2 457.6 490.7 517.2 1,880.8 2,538.0
General & administrative 335.3 658.2 230.0 278.9 288.0 337.5 1,134.4 364.4 386.4 402.9 447.1 1,600.8 2,018.4
Stock compensation expense 200.7 458.1 183.9 241.5 198.0 245.3 868.6 250.6 277.6 271.3 311.2 1,110.6 1,239.0
Total operating expenses 1,459.8 2,847.5 976.7 1,214.8 1,255.0 1,436.4 4,882.8 1,527.7 1,658.0 1,735.3 1,915.5 6,836.6 8,833.1
Operating income 2,107.3 3,550.0 1,221.2 1,104.6 1,317.8 1,440.7 5,084.4 1,514.9 1,519.2 1,643.5 1,784.0 6,461.6 7,953.8
PF Operating income 2,308.0 4,008.1 1,405.1 1,346.1 1,515.8 1,686.0 5,953.0 1,765.4 1,796.8 1,914.8 2,095.2 7,572.3 9,192.9
Other income, expense and other, net 124.4 461.0 130.7 137.1 154.4 167.3 589.6 160.8 136.9 150.2 165.8 613.7 768.6
One-time items (90.0) - - - - - - - - - - - -
Income before taxes 2,141.7 4,011.0 1,351.9 1,241.7 1,472.3 1,608.0 5,674.0 1,675.6 1,656.1 1,793.8 1,949.8 7,075.3 8,722.4
Provision for income taxes 676.3 933.6 349.8 316.6 402.3 401.6 1,470.3 454.1 443.8 484.3 506.9 1,889.2 2,398.7
Effective tax rate 31.6% 23.3% 25.9% 25.5% 27.3% 25.0% 25.9% 27.1% 26.8% 27.0% 26.0% 26.7% 27.5%
GAAP Net Income (loss) 1,465.4 3,077.4 1,002.2 925.1 1,070.0 1,206.4 4,203.7 1,221.5 1,212.3 1,309.4 1,442.9 5,186.1 6,323.8
GAAP Diluted Income (loss) per share $5.02 $9.94 $3.18 $2.93 $3.38 $3.79 $13.29 $3.82 $3.77 $4.05 $4.44 $16.09 $19.20
Diluted shares outstanding 291.9 309.5 314.9 315.5 316.6 317.9 316.2 319.9 321.4 322.9 324.9 322.3 329.3
Non-recurring items:
Stock compensation expense 200.7 458.1 183.9 241.5 198.0 245.3 868.6 250.6 277.6 271.3 311.2 1,110.6 1,239.0
One-time items 61.8 (154.0) - - - - - - - - - - -
Tax Effect (83.2) (100.3) (26.8) (43.0) (31.0) (42.3) (143.0) (45.1) (50.0) (48.8) (56.0) (199.9) (223.0)
PF Net Income (loss) 1,644.8 3,281.3 1,159.3 1,123.6 1,236.9 1,409.5 4,929.3 1,427.0 1,439.9 1,531.9 1,698.1 6,096.8 7,339.8
PF Diluted Income (loss) per share $5.64 $10.60 $3.68 $3.56 $3.91 $4.43 $15.59 $4.46 $4.48 $4.74 $5.23 $18.92 $22.29
Diluted shares outstanding 291.9 309.5 314.9 315.5 316.6 317.9 316.2 319.9 321.4 322.9 324.9 322.3 329.3
EBITDA Reconciliation
Operating income (reported) 2,107.3 3,580.0 1,221.2 1,104.6 1,317.8 1,440.7 5,084.4 1,514.9 1,519.2 1,643.5 1,784.0 6,461.6 7,953.8
Depreciation & amortization 315.9 582.7 205.0 227.0 245.7 289.9 967.7 318.6 347.9 378.1 410.3 1,454.9 1,969.4
Stock compensation expense 200.7 458.1 183.9 241.5 198.0 245.3 868.6 250.6 277.6 271.3 311.2 1,110.6 1,239.0
EBITDA 2,623.8 4,620.8 1,610.1 1,573.2 1,761.5 1,976.0 6,920.7 2,084.0 2,144.7 2,292.9 2,505.5 9,027.1 11,162.3
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
YEAR/YEAR GROWTH
Gross Revenues 92.5% 72.8% 62.6% 57.7% 57.3% 50.6% 56.5% 39.4% 36.2% 31.6% 27.0% 33.1% 25.5%
Traffic Acquisition Costs (TAC) 72.1% 56.4% 55.7% 46.2% 48.0% 47.6% 49.1% 35.9% 32.6% 29.2% 21.3% 29.2% 21.2%
Net Revenues 105.2% 81.3% 65.8% 63.0% 61.5% 51.9% 59.8% 41.0% 37.7% 32.5% 29.4% 34.7% 27.3%
Gross profit 106.0% 79.4% 62.6% 57.9% 56.6% 48.8% 55.8% 38.4% 37.0% 31.3% 28.6% 33.4% 26.2%
Total operating expenses 63.9% 95.1% 60.3% 85.8% 76.3% 64.6% 71.5% 56.4% 36.5% 38.3% 33.4% 40.0% 29.2%
Operating income 150.5% 68.5% 64.4% 35.5% 41.5% 35.8% 43.2% 24.0% 37.5% 24.7% 23.8% 27.1% 23.1%
PF Operating Income 106.1% 73.7% 63.9% 45.6% 47.0% 41.1% 48.5% 25.6% 33.5% 26.3% 24.3% 27.2% 21.4%
EBITDA 105.0% 76.1% 60.6% 49.7% 48.9% 42.7% 49.8% 29.4% 36.3% 30.2% 26.8% 30.4% 23.7%
GAAP EPS 243.2% 98.0% 63.4% 26.1% 43.1% 15.4% 33.7% 20.0% 28.6% 20.0% 17.0% 21.0% 19.3%
PF EPS 131.3% 88.1% 60.1% 43.0% 49.4% 39.3% 47.1% 21.2% 25.8% 21.4% 17.9% 21.3% 17.8%
SEQUENTIAL GROWTH
Gross revenues 14.3% 5.7% 9.3% 14.1% 5.8% 3.2% 5.6% 10.1%
Traffic Acquisition Costs (TAC) 15.3% 2.0% 6.4% 17.9% 6.2% -0.4% 3.7% 10.7%
Net revenues 13.9% 7.3% 10.5% 12.5% 5.7% 4.8% 6.3% 9.9%
EBITDA 16.3% -2.3% 12.0% 12.2% 5.5% 2.9% 6.9% 9.3%
% OF NET REVENUES
Other cost of revenues (non-TAC) 11.3% 12.3% 13.4% 14.9% 14.5% 15.1% 14.5% 15.0% 15.3% 15.3% 15.6% 15.3% 16.0%
Research & development 12.0% 12.9% 11.3% 13.8% 13.9% 13.9% 13.3% 13.9% 14.3% 14.3% 14.6% 14.3% 15.2%
Sales & marketing 10.9% 10.8% 10.8% 11.7% 11.7% 11.3% 11.4% 11.6% 12.2% 12.3% 11.8% 12.0% 12.7%
General & administrative 8.3% 9.0% 9.1% 10.2% 9.6% 10.0% 9.7% 10.2% 10.3% 10.1% 10.2% 10.2% 10.1%
Stock compensation expense 5.0% 6.3% 7.2% 8.9% 6.6% 7.2% 7.4% 7.0% 7.4% 6.8% 7.1% 7.1% 6.2%
% OF GROSS REVENUES
Traffic Acquisition Costs (TAC) 34.5% 31.2% 30.7% 29.6% 28.9% 29.8% 29.7% 29.9% 28.9% 28.3% 28.5% 28.9% 27.9%
Other cost of revenues (non-TAC) 7.4% 8.5% 9.3% 10.5% 10.3% 10.6% 10.2% 10.5% 10.9% 11.0% 11.2% 10.9% 11.5%
Research & development 7.9% 8.9% 7.8% 9.7% 9.9% 9.7% 9.3% 9.7% 10.2% 10.2% 10.4% 10.2% 11.0%
Sales & marketing 7.2% 7.5% 7.5% 8.2% 8.3% 8.0% 8.0% 8.1% 8.7% 8.8% 8.4% 8.5% 9.2%
General & administrative 5.5% 6.2% 6.3% 7.2% 6.8% 7.0% 6.8% 7.1% 7.3% 7.2% 7.3% 7.3% 7.3%
Stock compensation expense 3.3% 4.3% 5.0% 6.2% 4.7% 5.1% 5.2% 4.9% 5.3% 4.9% 5.1% 5.0% 4.5%
MARGINS AS % OF NET REVENUES
Gross margin 88.7% 87.7% 86.6% 85.1% 85.5% 84.9% 85.5% 85.0% 84.7% 84.7% 84.4% 84.7% 84.0%
Operating margin 52.4% 48.7% 48.1% 40.6% 43.8% 42.5% 43.6% 42.3% 40.5% 41.2% 40.7% 41.1% 39.8%
Net margin 36.4% 42.2% 39.5% 34.0% 35.5% 35.6% 36.1% 34.1% 32.3% 32.8% 32.9% 33.0% 31.6%
EBITDA 65.2% 63.3% 63.4% 57.8% 58.5% 58.3% 59.4% 58.2% 57.2% 57.5% 57.2% 57.5% 55.9%
Operating Leverage/Flow-through 65.2% 61.0% 60.3% 49.6% 50.5% 51.1% 52.7% 45.5% 55.7% 54.3% 53.1% 52.1% 49.9%
MARGINS AS % OF GROSS REVENUES
Gross margin 58.1% 60.3% 60.0% 59.9% 60.8% 59.6% 60.1% 59.6% 60.3% 60.7% 60.4% 60.2% 60.6%
Operating margin 34.3% 33.5% 33.3% 28.5% 31.1% 29.8% 30.6% 29.7% 28.8% 29.5% 29.1% 29.3% 28.7%
Net margin 23.9% 29.0% 27.4% 23.9% 25.3% 25.0% 25.3% 23.9% 23.0% 23.5% 23.5% 23.5% 22.8%
EBITDA 42.7% 43.6% 43.9% 40.6% 41.6% 40.9% 41.7% 40.8% 40.7% 41.2% 40.9% 40.9% 40.3%
Operating Leverage/Flow-through 45.6% 44.7% 43.1% 36.9% 37.5% 36.5% 38.4% 32.8% 40.8% 39.8% 40.6% 38.4% 37.9%
Figure 105: Google Revenue Analysis, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Gross Revenues 6,138.6 10,604.9 3,664.0 3,872.0 4,231.4 4,826.7 16,594.0 5,107.9 5,273.2 5,567.2 6,130.1 22,078.3 27,708.6
TAC ANALYSIS
Google Web Sites - TAC 89.9 174.1 73.1 86.9 105.4 125.4 390.8 135.6 144.6 155.7 174.5 610.4 840.2
TAC as % of Google Sites Gross Adv. Revenues 2.7% 2.7% 3.2% 3.5% 3.9% 4.0% 3.7% 4.1% 4.2% 4.3% 4.3% 4.2% 4.5%
Y/Y growth NA 93.7% 125.6% 136.6% 134.2% 109.0% 124.4% 85.4% 66.4% 47.8% 39.2% 56.2% 37.6%
Google Network Web Sites - TAC 2,025.0 3,134.6 1,051.9 1,061.0 1,115.8 1,314.4 4,543.1 1,392.8 1,377.4 1,422.3 1,572.2 5,764.7 6,883.9
TAC as % of Google Network Gross Adv. Revenues 75.3% 75.4% 78.2% 78.5% 76.7% 80.4% 78.5% 81.2% 81.5% 80.8% 82.5% 81.5% 82.5%
Y/Y growth 64.8% 54.8% 52.4% 41.8% 43.0% 43.6% 44.9% 32.4% 29.8% 27.5% 19.6% 26.9% 19.4%
Total Traffic Acquisition Costs (TAC) 2,114.9 3,308.8 1,125.0 1,148.0 1,221.1 1,439.8 4,933.9 1,528.4 1,522.0 1,578.0 1,746.7 6,375.2 7,724.1
TAC as a % of Total Gross Adv. Revenues 34.9% 31.5% 31.0% 29.9% 29.1% 30.3% 30.1% 30.4% 29.6% 29.1% 29.3% 29.6% 28.6%
Y/Y growth 72.1% 56.4% 55.7% 46.2% 48.0% 47.6% 49.1% 35.9% 32.6% 29.2% 21.3% 29.2% 21.2%
Total Net Revenues 4,023.7 7,296.2 2,538.9 2,724.0 3,010.2 3,386.9 11,660.1 3,579.5 3,751.2 3,989.2 4,383.3 15,703.2 19,984.5
Geographic Breakdown
($ millions) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Gross Revenues 6,138.6 10,604.9 3,664.0 3,872.0 4,231.4 4,826.7 16,594.0 5,107.9 5,273.2 5,567.2 6,130.1 22,078.3 27,708.6
Y/Y growth 92.5% 72.8% 62.6% 57.7% 57.3% 50.6% 56.5% 39.4% 36.2% 31.6% 27.0% 33.1% 25.5%
Q/Q growth 14.3% 5.7% 9.3% 14.1% 5.8% 3.2% 5.6% 10.1%
United States 3,756.9 6,030.1 1,958.4 2,027.9 2,205.8 2,505.9 8,698.0 2,559.1 2,578.6 2,666.7 2,911.8 10,716.1 12,884.5
Y/Y growth 77.3% 60.5% 48.6% 42.7% 46.4% 40.4% 44.2% 30.7% 27.2% 20.9% 16.2% 23.2% 20.2%
Q/Q growth 9.7% 3.6% 8.8% 13.6% 2.1% 0.8% 3.4% 9.2%
U.S. revenues as % of Gross Revenues 61.2% 56.9% 53.4% 52.4% 52.1% 51.9% 52.4% 50.1% 48.9% 47.9% 47.5% 48.5% 46.5%
International 2,381.7 4,574.8 1,705.6 1,844.0 2,025.5 2,320.8 7,896.0 2,548.8 2,694.6 2,900.5 3,218.3 11,362.2 14,824.1
Y/Y growth 122.5% 92.1% 82.2% 78.2% 71.2% 63.4% 72.6% 49.4% 46.1% 43.2% 38.7% 43.9% 30.5%
Q/Q growth 20.1% 8.1% 9.8% 14.6% 9.8% 5.7% 7.6% 11.0%
International revenues as % of Gross Revenues 38.8% 43.1% 46.6% 47.6% 47.9% 48.1% 47.6% 49.9% 51.1% 52.1% 52.5% 51.5% 53.5%
Other Metrics
($ actual) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Full-Time Headcount 5,680 10,674 12,238 13,786 15,916 16,805 16,805 17,905 19,005 20,405 21,405 21,405 25,805
Y/Y growth 88.0% 87.9% 80.2% 73.6% 69.7% 57.4% 57.4% 46.3% 37.9% 28.2% 27.4% 27.4% 20.6%
Q/Q growth 14.7% 12.6% 15.5% 5.6% 6.5% 6.1% 7.4% 4.9%
Absolute Sequential Change in Headcount 2,659 4,994 1,564 1,548 2,130 889 6,131 1,100 1,100 1,400 1,000 4,600 4,400
Annualized Gross Revenue/Average Full Time Employee $ 1,411,001 $ 1,296,920 $ 1,279,319 $ 1,190,281 $ 1,139,681 $ 1,180,081 $ 1,207,758 $ 1,177,277 $ 1,142,931 $ 1,130,100 $ 1,172,940 $ 1,155,632 $ 1,173,843
Annualized Net Revenue/Average Full Time Employee $ 924,873 $ 892,278 $ 886,502 $ 837,389 $ 810,782 $ 828,059 $ 848,653 $ 825,011 $ 813,041 $ 809,776 $ 838,717 $ 821,941 $ 846,621
Annualized EBITDA/Average Full Time Employee $ 603,112 $ 565,102 $ 562,174 $ 483,601 $ 474,448 $ 483,107 $ 503,708 $ 480,318 $ 464,859 $ 465,439 $ 479,413 $ 472,501 $ 472,879
Annualized Cash Opex/Average Full Time Employee $ 289,407 $ 292,213 $ 276,836 $ 299,185 $ 284,697 $ 291,207 $ 292,164 $ 294,364 $ 299,199 $ 297,188 $ 306,970 $ 299,708 $ 321,716
Figure 106: Google Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Other (effect of exchange rate changes on cash & equivalents) (21.8) 19.7 5.7 1.6 20.8 12.0 40.0 - - - - - -
Net change in cash 3,450.3 (332.5) 536.7 412.3 612.8 975.2 2,536.9 (2,521.4) 944.2 1,424.4 1,341.2 1,188.4 5,786.5
Cash & equivalents - BOP 426.9 3,877.2 3,544.7 4,081.3 4,493.6 5,106.4 3,544.7 6,081.6 3,560.2 4,504.4 5,928.8 6,081.6 7,270.0
Cash & equivalents - EOP 3,877.2 3,544.7 4,081.3 4,493.6 5,106.4 6,081.6 6,081.6 3,560.2 4,504.4 5,928.8 7,270.0 7,270.0 13,056.5
2005A 2006A 3/07A 6/07A 9/07E 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Working Capital Analysis:
Changes in:
Accounts receivable, net (372.3) (624.0) (153.6) (171.5) (234.4) (277.8) (837.2) (56.8) (181.4) (132.4) (237.2) (607.8) (427.2)
Income taxes net 87.4 398.4 337.7 (4.30) 97.63 149.6 580.6 (100.0) 35.0 265.0 160.0 360.0 350.00
Prepaid revenue share, expenses and other assets (51.7) (289.2) (185.5) (22.0) (29.7) (61.4) (298.7) (63.3) (102.3) (19.5) (84.9) (270.0) (232.9)
Accounts payable 80.6 95.4 (29.3) (45.4) 94.8 50.0 70.1 (6.5) 24.5 27.0 23.6 68.6 69.0
Accrued expenses and other liabilities 166.8 291.5 (139.9) 160.8 185.6 212.4 418.9 54.0 39.9 59.4 113.7 267.0 167.3
Accrued revenue share 93.3 139.3 77.9 4.3 54.3 13.9 150.3 32.8 37.9 45.6 49.9 166.2 171.1
Deferred revenue 39.6 30.8 1.7 17.5 13.0 38.2 70.3 13.6 3.1 18.3 28.4 63.4 54.0
Changes in working capital 43.7 42.3 (91.0) (60.7) 181.3 124.7 154.3 (126.2) (143.4) 263.4 53.5 47.4 151.2
Capex Analysis:
Capex 838.2 1,902.8 596.9 575.1 552.6 678.2 2,402.8 715.9 750.2 797.8 876.7 3,140.6 3,897.0
Capex as % of net revenues 20.8% 26.1% 23.5% 21.1% 18.4% 20.0% 20.6% 20.0% 20.0% 20.0% 20.0% 20.0% 19.5%
Capex as % of operating cash flow 34.1% 53.1% 48.9% 46.8% 33.8% 40.1% 41.6% 45.2% 46.6% 37.4% 41.2% 42.1% 41.7%
FCF conversion as % of Cash Flow from Ops 65.9% 46.9% 51.1% 53.2% 66.2% 59.9% 58.4% 54.8% 53.4% 62.6% 58.8% 57.9% 58.3%
Y/Y change in CFO 151.7% 45.6% 47.9% 46.3% 62.6% 85.9% 61.3% 29.9% 30.9% 30.8% 25.7% 29.1% 25.3%
FCF as % of EBITDA 61.8% 36.3% 38.7% 41.6% 61.3% 51.4% 48.7% 41.7% 40.1% 58.3% 50.0% 47.8% 48.8%
Figure 107: Google Discounted Cash Flow Analysis ($ in millions, except per share data)
1,000.0 0 1 2 3 4 5 6 7 8 9 2007A-2012E
2003A 2004A 2005A 2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Net Revenues 939.4 1,960.6 4,023.6 7,296.1 11,660.1 15,703.2 19,984.5 24,349.9 28,124.7 31,674.8
% change 172.3% 108.7% 105.2% 81.3% 59.8% 34.7% 27.3% 21.8% 15.5% 12.6% 22.1%
EBITDA 638.5 1,279.8 2,623.8 4,620.8 6,920.7 9,027.1 11,162.3 13,277.6 15,034.1 16,619.2
% change 169.3% 100.4% 105.0% 76.1% 49.8% 30.4% 23.7% 19.0% 13.2% 10.5% 19.1%
Cash Taxes (241.0) (251.1) (676.3) (933.6) (1,470.3) (1,889.2) (2,398.7) (2,889.2) (3,337.9) (3,686.7)
Capex (176.8) (319.0) (838.2) (1,902.8) (2,402.8) (3,140.6) (3,897.0) (4,504.7) (4,921.8) (5,384.7)
Change in working capital (6.2) (253.2) 43.7 42.3 154.3 47.4 151.2 (68.3) (66.2) (73.9)
Unlevered free cash flow 214.5 456.4 1,153.1 1,826.7 3,201.9 4,044.7 5,017.9 5,815.4 6,708.3 7,473.9
% change 79.3% 112.8% 152.6% 58.4% 75.3% 26.3% 24.1% 15.9% 15.4% 11.4% 18.5%
2003 PV of Cash Flow 214.5 409.4 927.5 1,317.8 2,071.6 2,347.0 2,611.4 2,714.3 2,808.1 2,805.9
Per Share $0.82 $1.56 $3.53 $5.02 $7.89 $8.94 $9.95 $10.34 $10.70 $10.69
2004 PV of Cash Flow 456.4 1,034.2 1,469.3 2,309.9 2,616.9 2,911.7 3,026.4 3,131.0 3,128.6
Per Share $1.60 $3.62 $5.14 $8.08 $9.15 $10.18 $10.58 $10.95 $10.94
2005 PV of Cash Flow 1,153.1 1,638.3 2,575.5 2,917.8 3,246.5 3,374.5 3,491.1 3,488.4
Per Share $3.79 $5.39 $8.47 $9.60 $10.68 $11.10 $11.48 $11.48
2006 PV of Cash Flow 1,826.7 2,871.7 3,253.4 3,619.9 3,762.5 3,892.6 3,889.5
Per Share $5.83 $9.16 $10.38 $11.55 $12.00 $12.42 $12.41
Terminal EBITDA multiple 14.0x 14.0x 14.0x 14.0x 14.0x 14.0x 14.0x
Discount Rate 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
Terminal value 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4 232,668.4
Implied Terminal FCF Multiple 31.1 31.1 31.1 31.1 31.1 31.1 31.1
Present value of FCF 18,227.4 20,084.4 21,885.2 23,116.3 23,737.9 22,897.6 21,021.0
Present value of terminal value 87,350.2 97,395.4 108,595.9 121,084.4 135,009.1 150,535.2 167,846.7
Implied Firm Value $105,577.6 $117,479.9 $130,481.1 $144,200.8 $158,747.1 $173,432.8 $188,867.7
Fully diluted shares outstanding 262.6 285.9 304.0 313.5 316.2 322.3 329.3
Equity Value Per Share $403.38 $418.31 $455.68 $495.90 $547.00 $585.91 $637.90
- Community of ~ 250 million registered users, 83 million active users; - Feb '08 fee changes in US, UK, & Germany may not be significant enough to
strong barriers to entry around core auction business reaccelerate core marketplace growth; addt'l changes may be necessary
- Annualized GMV of $60B; would be ~11th largest retailer in the world - Core growth: 4Q07 GMV +8% in U.S. and +8% international (ex FX)
- Low/no growth in the U.S. and Germany which make up ~70% of eBay’s
- Vertically integrated through PayPal; exploiting off eBay opportunity
business
- PayPal a key driver, but lower-margin business and could require increased
- Rebalancing initiatives improving ASPs and conversion rates investment in '08. Competition intensifying in payments space - Google Checkout
and potentially Amazon; 2/3 of PayPal biz on eBay platform
- Strong balance sheet: $5.0 billion in cash---bought back $3.2B of stock - Is there a novelty effect to online auctions? Do e-commerce shoppers want more
and another $2.8B to go---could also lever up convenience, speed, ease of use? It looks like Amazon is taking share
- Fixed price format growing faster than auctions--away from E15 strengths
- Comps: Listings comps easier into 1H08, but also lapping RPL
improvements
Figure 109: eBay Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net revenues 4,552,401 5,969,741 1,768,074 1,834,429 1,889,220 2,180,606 7,672,329 2,027,657 2,073,260 2,125,491 2,448,059 8,674,467 9,962,705
Cost of net revenues 818,104 1,205,960 380,375 401,859 437,389 496,507 1,716,130 470,416 485,143 518,620 555,709 2,029,888 2,420,937
Gross profit 3,734,297 4,763,781 1,387,699 1,432,570 1,451,831 1,684,099 5,956,199 1,557,240 1,588,117 1,606,871 1,892,349 6,644,578 7,541,768
Operating expenses
Sales and marketing 1,230,728 1,548,841 424,029 454,682 463,048 502,335 1,844,094 486,638 503,802 514,369 563,053 2,067,862 2,351,198
Product development 328,191 413,206 121,641 128,514 143,505 150,065 543,725 148,019 149,275 163,663 178,708 639,665 712,333
General and administrative 591,715 842,039 250,362 256,001 259,556 282,593 1,048,512 285,900 288,183 297,569 330,488 1,202,139 1,364,891
Payroll expense on employeee stock options 13,015 4,400 - - - - - - - - - - -
Patent litigation expense - - - - 1,390,938 - 1,390,938 - - - - - -
Amortization of acquired intangible assets 128,941 214,929 51,890 56,846 51,888 53,313 213,937 58,000 55,000 60,000 60,000 233,000 200,000
Incremental non-cash stock-based comp (FAS123) 317,410 71,950 79,621 80,589 69,653 301,813 100,000 100,000 100,000 100,000 400,000 414,000
Total operating expenses 2,292,590 3,340,825 919,872 975,664 2,389,524 1,057,959 5,343,019 1,078,556 1,096,260 1,135,601 1,232,250 4,542,666 5,042,422
Operating income 1,441,707 1,422,956 467,827 456,906 (937,693) 626,140 613,180 478,684 491,857 471,271 660,100 2,101,912 2,499,345
PF Operating income 1,615,435 1,960,614 593,445 594,664 593,444 754,979 2,536,532 636,684 646,857 631,271 820,100 2,734,912 3,113,345
Interest and other income, net 111,148 130,017 30,020 33,967 38,363 51,921 154,271 43,658 46,501 49,934 54,491 194,583 274,060
Interest expense (3,478) (5,916) (4,542) (2,734) (2,728) (6,596) (16,600) (3,000) (3,000) (3,000) (3,000) (12,000) (12,000)
Impairment of certain equity investments - - - - - - - - -
Total non-operating expenses, net 107,670 124,101 25,478 31,233 35,635 45,325 137,671 40,658 43,501 46,934 51,491 182,583 262,060
Income (loss) before income taxes and minority interests 1,549,377 1,547,057 493,305 488,139 (902,058) 671,465 750,851 519,343 535,358 518,205 711,590 2,284,495 2,761,405
Provision for income taxes (467,285) (421,418) (116,129) (112,315) (33,577) (140,579) (402,600) (114,255) (117,779) (114,005) (156,550) (502,589) (607,509)
Tax Rate 30.2% 27.2% 23.5% 23.0% -3.7% 20.9% 53.6% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%
Minority interests in consolidated companies (49) (4) - - - - - - -
Cumulative effect of accounting change - - - - - - - - -
GAAP Net income (loss) 1,082,043 1,125,635 377,176 375,824 (935,635) 530,886 348,251 405,087 417,579 404,200 555,040 1,781,906 2,153,896
Basic income (loss) per share $0.79 $0.80 $0.28 $0.28 ($0.69) $0.39 $0.26 $0.30 $0.31 $0.30 $0.41 $1.32 $1.58
Diluted income (loss) per share $0.78 $0.79 $0.27 $0.27 ($0.69) $0.39 $0.25 $0.30 $0.31 $0.30 $0.41 $1.30 $1.57
Basic shares outstanding 1,361,656 1,399,251 1,366,915 1,361,046 1,354,786 1,352,077 1,358,706 1,352,077 1,352,077 1,352,077 1,352,077 1,352,077 1,359,077
Diluted shares outstanding 1,393,688 1,425,472 1,384,287 1,378,697 1,354,786 1,368,067 1,371,459 1,368,067 1,368,067 1,368,067 1,368,067 1,368,067 1,375,067
Non-recurring items:
Payroll expense on employeee stock options 13,015 5,319 1,778 1,291 2,281 1,522 6,872 - - - - - -
Amortization of acquired intangible assets 128,941 214,929 51,890 56,846 51,888 53,313 213,937 58,000 55,000 60,000 60,000 233,000 200,000
Impairment of certain equity investments - - - - 1,390,938 - 1,390,938 - - - - - -
Opex adj. for non-cash stock based comp. 30,170 317,410 71,950 79,621 80,589 69,653 301,813 100,000 100,000 100,000 100,000 400,000 414,000
Cost of net revenues adjustment 1,602 - 5,441 4,351 9,792 - - - - -
Interest and other income adjustment (2,260) - - - - - - - - - - - -
Tax adjustment (50,517) (171,690) (42,315) (42,532) (31,721) (48,853) (165,421) (38,147) (37,552) (38,591) (39,558) (153,847) (185,711)
Other one-time items - - - - -
Minority interests - - - - -
PF Net income (loss) 1,202,994 1,491,603 460,479 471,050 563,781 610,872 2,106,182 524,941 535,027 525,609 675,482 2,261,059 2,582,185
PF basic income (loss) per share $0.88 $1.07 $0.34 $0.35 $0.41 $0.45 $1.54 $0.39 $0.40 $0.39 $0.50 $1.67 $1.90
PF diluted income (loss) per share $0.86 $1.05 $0.33 $0.34 $0.41 $0.45 $1.53 $0.38 $0.39 $0.38 $0.49 $1.65 $1.88
Basic shares outstanding 1,361,656 1,399,251 1,366,915 1,361,046 1,373,284 1,352,077 1,363,331 1,352,077 1,353,077 1,354,077 1,354,077 1,353,327 1,359,077
Diluted shares outstanding 1,393,688 1,425,472 1,384,287 1,378,697 1,373,284 1,368,067 1,376,084 1,368,067 1,369,067 1,370,067 1,370,067 1,369,317 1,375,067
EBITDA Reconciliation
PF Operating income 1,615,435 1,960,614 593,445 594,664 593,444 754,979 2,536,532 636,684 646,857 631,271 820,100 2,734,912 3,113,345
Depreciation 249,224 329,623 91,559 89,876 99,832 106,503 387,770 100,000 100,000 100,000 100,000 400,000 430,000
EBITDA 1,864,659 2,290,237 685,004 684,540 693,276 861,482 2,924,302 736,684 746,857 731,271 920,100 3,134,912 3,543,345
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y Growth
Net sales 39.2% 31.1% 27.2% 30.0% 30.4% 26.8% 28.5% 14.7% 13.0% 12.5% 12.3% 13.1% 14.9%
Cost of net revenues 33.2% 47.4% 41.4% 41.1% 42.1% 44.2% 42.3% 23.7% 20.7% 18.6% 11.9% 18.3% 19.3%
Sales and marketing 43.5% 25.8% 12.8% 22.6% 27.8% 14.2% 19.1% 14.8% 10.8% 11.1% 12.1% 12.1% 13.7%
Product development 36.4% 25.9% 23.7% 27.3% 41.5% 33.4% 31.6% 21.7% 16.2% 14.0% 19.1% 17.6% 11.4%
General and administrative 42.3% 42.3% 34.3% 32.2% 22.0% 13.3% 24.5% 14.2% 12.6% 14.6% 16.9% 14.7% 13.5%
Total operating expenses 43.5% 45.7% 15.2% 19.8% 198.0% 14.3% 59.9% 17.3% 12.4% -52.5% 16.5% -15.0% 11.0%
Operating income 36.1% -1.3% 45.0% 46.7% -376.6% 39.2% -56.9% 2.3% 7.6% -150.3% 5.4% 242.8% 18.9%
PF Operating income 40.7% 21.4% 28.8% 29.2% 27.8% 31.3% 29.4% 7.3% 8.8% 6.4% 8.6% 7.8% 13.8%
GAAP Net income 39.0% 4.0% 51.9% 50.3% -433.1% 53.2% -69.1% 7.4% 11.1% -143.2% 4.5% 411.7% 20.9%
PF Net income 45.0% 24.0% 34.3% 34.3% 53.4% 41.9% 41.2% 14.0% 13.6% -6.8% 10.6% 7.4% 14.2%
EBITDA 39.5% 22.8% 28.7% 26.6% 26.5% 28.8% 27.7% 7.5% 9.1% 5.5% 6.8% 7.2% 13.0%
Sequential Growth
Net sales 2.8% 3.8% 3.0% 15.4% -7.0% 2.2% 2.5% 15.2%
% of Revenues
Sales and marketing 27.0% 25.9% 24.0% 24.8% 24.5% 23.0% 24.0% 24.0% 24.3% 24.2% 23.0% 23.8% 23.6%
Product development 7.2% 6.9% 6.9% 7.0% 7.6% 6.9% 7.1% 7.3% 7.2% 7.7% 7.3% 7.4% 7.2%
General and administrative 13.0% 14.1% 14.2% 14.0% 13.7% 13.0% 13.7% 14.1% 13.9% 14.0% 13.5% 13.9% 13.7%
Total operating expenses 50.4% 56.0% 52.0% 53.2% 126.5% 48.5% 69.6% 53.2% 52.9% 53.4% 50.3% 52.4% 50.6%
Margins
Gross margin 82.0% 79.8% 78.5% 78.1% 76.8% 77.2% 77.6% 76.8% 76.6% 75.6% 77.3% 76.6% 75.7%
Operating margin 31.7% 23.8% 26.5% 24.9% -49.6% 28.7% 8.0% 23.6% 23.7% 22.2% 27.0% 24.2% 25.1%
PF Operating margin 35.5% 32.8% 33.6% 32.4% 31.4% 34.6% 33.1% 31.4% 31.2% 29.7% 33.5% 31.5% 31.3%
EBITDA margin 41.0% 38.4% 38.7% 37.3% 36.7% 39.5% 38.1% 36.3% 36.0% 34.4% 37.6% 36.1% 35.6%
Operating Leverage (∆ in PF op inc / ∆ in revenues) 36.4% 24.4% 35.2% 31.7% 29.3% 39.1% 33.8% 16.7% 21.9% 16.0% 24.3% 19.8% 29.4%
Figure 110: eBay Segment Breakdown, 2005–09E ($ in thousands, except per share data)
Transaction Revenue Detail
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
TOTAL LISTINGS 1,876,800 2,365,300 588,400 559,100 555,600 637,200 2,340,300 629,270 614,159 606,774 669,060 2,519,263 2,664,902
Y/Y growth 33% 26% 2% -6% -5% 4% -1% 7% 10% 9% 5% 8% 6%
Q/Q growth -4% -5% -1% 15% -1% -2% -1% 10%
Conversion Rate 48.5% 46.0% 48.0% 49.7% 50.8% 49.9% 49.6% 48.0% 49.0% 50.0% 50.0% 49.3% 49.7%
Y/Y growth -3% -5% 4% 9% 10% 8% 8% 0% -1% -2% 0% -1% 1%
Average Selling Price (ASP) $48.69 $48.25 $50.52 $52.05 $51.05 $51.00 $51.16 $50.50 $51.57 $51.34 $51.45 $51.22 $51.77
Y/Y growth 0% -1% 7% 9% 9% 0% 6% 0% -1% 1% 1% 0% 1%
TOTAL GMV 44,299,000 52,473,000 14,281,000 14,464,000 14,395,000 16,213,000 59,353,000 15,264,767 15,524,860 15,566,222 17,227,881 63,583,730 68,544,174
Y/Y growth 30% 18% 14% 12% 14% 12% 13% 7% 7% 8% 6% 7% 8%
eBay Merchandise Take Rate 7.68% 8.01% 8.48% 8.55% 8.80% 8.76% 8.65% 8.54% 8.53% 8.68% 8.71% 8.62% 8.82%
Total Marketplaces Transaction Revenue 3,402,301 4,203,340 1,211,545 1,236,835 1,267,463 1,419,520 5,135,363 1,303,613 1,324,694 1,350,665 1,501,132 5,480,105 6,048,464
Y/Y growth 36% 24% 22% 24% 25% 18% 22% 8% 7% 7% 6% 7% 10%
Total Transaction Revenue Per Listing $1.81 $1.78 $2.06 $2.21 $2.28 $2.23 $2.19 $2.07 $2.16 $2.23 $2.24 $2.18 $2.27
Y/Y growth 3% -2% 20% 32% 31% 13% 23% 1% -2% -2% 1% -1% 4%
Q/Q growth 5% 7% 3% -2% -7% 4% 3% 1%
5.1%
US LISTINGS 916,587 1,061,900 258,400 243,100 254,400 280,600 1,036,500 272,870 264,979 270,936 294,630 1,103,415 1,164,103
Y/Y growth 18% 16% -2% -8% -2% 3.3% -2% 5.6% 9.0% 6.5% 5.0% 6.5% 5.5%
Q/Q growth -5% -6% 5% 10% -3% -3% 2% 9%
% of total listings 48.8% 44.9% 43.9% 43.5% 45.8% 44.0% 44.3% 43.4% 43.1% 44.7% 44.0% 43.8% 43.7%
Conversion Rate 49.3% 48.6% 52.1% 54.0% 52.9% 51.2% 52.5% 52.0% 53.0% 52.4% 51.0% 52.1% 52.5%
Y/Y growth 0% -1% 5% 11% 8% 9% 8% 0% -2% -1% 0% -1% 1%
Average Selling Price (ASP) $48.64 $48.94 $50.00 $51.00 $50.00 $51.00 $50.50 $50.50 $50.50 $50.60 $52.00 $50.90 $51.50
Y/Y growth 1% 1% 5% 8% 4% -4% 3% 1% -1% 1% 2% 1% 1%
US GMV 21,958,809 25,233,000 6,736,000 6,700,000 6,729,000 7,330,000 27,495,000 7,165,577 7,092,163 7,183,705 7,813,588 29,255,033 31,474,442
Y/Y growth 19% 15% 8% 10% 10% 8% 9% 6% 6% 7% 7% 6% 8%
% of total GMV 50% 48% 47% 46% 47% 45% 46% 47% 46% 46% 45% 46% 46%
Take Rate 7.9% 8.3% 8.71% 8.82% 9.15% 8.91% 8.90% 8.80% 8.75% 9.00% 8.85% 8.85% 9.10%
US TRANSACTION REVENUE 1,737,039 2,105,312 586,751 590,712 615,734 652,979 2,446,176 630,571 620,564 646,533 691,503 2,589,171 2,864,174
Y/Y growth 30% 21% 16% 20% 18% 11% 16% 7% 5% 5% 6% 6% 11%
US Transaction Revenue Per Listing $1.90 $1.98 $2.27 $2.43 $2.42 $2.33 $2.36 $2.31 $2.34 $2.39 $2.35 $2.35 $2.46
Y/Y growth 10% 5% 18% 31% 21% 8% 19% 2% -4% -1% 1% -1% 5%
Q/Q growth 5% 7% 0% -4% -1% 1% 2% -2%
INTERNATIONAL LISTINGS 960,213 1,303,400 330,000 316,000 301,200 356,600 1,303,800 356,400 349,180 335,838 374,430 1,415,848 1,500,799
Y/Y growth 50% 36% 6% -5% -7% 5.3% 0.0% 8.0% 10.5% 11.5% 5.0% 8.6% 6.0%
Q/Q growth -3% -4% -5% 18% 0% -2% -4% 11%
% of total listings 51.2% 55.1% 56.1% 56.5% 54.2% 56.0% 55.7% 56.6% 56.9% 55.3% 56.0% 56.2% 56.3%
Conversion Rate 47.7% 43.9% 44.8% 46.4% 48.9% 48.8% 47.2% 45.0% 46.0% 48.0% 49.3% 47.1% 47.5%
Y/Y growth -5% -8% 4% 9% 11% 7% 8% 0% -1% -2% 1% 0% 1%
Average Selling Price (ASP) $48.74 $47.63 $51.00 $53.00 $52.00 $51.00 $51.75 $50.50 $52.50 $52.00 $51.00 $51.50 $52.00
Y/Y growth 0% -2% 9% 10% 13% 3% 9% -1% -1% 0% 0% 0% 1%
INTERNATIONAL GMV 22,340,191 27,240,000 7,545,000 7,764,000 7,666,000 8,883,000 31,858,000 8,099,190 8,432,697 8,382,516 9,414,293 34,328,697 37,069,732
Y/Y growth 42% 22% 20% 14% 17% 16% 17% 7% 9% 9% 6% 8% 8%
% of total GMV 50% 52% 53% 54% 53% 55% 54% 53% 54% 54% 55% 54% 54%
Take Rate 7.454% 7.7% 8.28% 8.32% 8.50% 8.63% 8.44% 8.31% 8.35% 8.40% 8.60% 8.42% 8.59%
INTERNATIONAL TRANSACTION REVENUE 1,665,262 2,098,028 624,794 646,123 651,729 766,541 2,689,187 673,043 704,130 704,131 809,629 2,890,934 3,184,290
Y/Y growth 44% 26% 29% 28% 31% 25% 28% 8% 9% 8% 6% 8% 10%
INTERNATIONAL Transaction Revenue Per Listing $1.73 $1.61 $1.89 $2.04 $2.16 $2.15 $2.06 $1.89 $2.02 $2.10 $2.16 $2.04 $2.12
Y/Y growth -4% -7% 22% 34% 41% 19% 28% 0% -1% -3% 1% -1% 4%
Q/Q growth 5% 8% 6% -1% -12% 7% 4% 3%
Segment Breakdown
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
NET REVENUE BY TYPE
Transaction Net Revenues
U.S. Marketplaces 1,737,039 2,105,312 586,751 590,712 615,734 652,979 2,446,176 630,571 620,564 646,533 691,503 2,589,171 2,864,174
Y/Y growth 30% 21% 16% 20% 18% 11% 16% 7% 5% 5% 6% 6% 11%
Q/Q growth 0% 1% 4% 6% -74% -2% 4% 7%
% of Total Mkplaces Trans Rev 51% 50% 48% 48% 49% 46% 48% 48% 47% 48% 46% 47% 47%
International Marketplaces 1,665,262 2,098,028 624,794 646,123 651,729 766,541 2,689,187 673,043 704,130 704,131 809,629 2,890,934 3,184,290
Y/Y growth 44% 26% 29% 28% 31% 25% 28% 8% 9% 8% 6% 8% 10%
Q/Q growth 2% 3% 1% 18% -75% 5% 0% 15%
% of Total Mkplaces Trans Rev 38% 36% 52% 52% 51% 54% 52% 52% 53% 52% 54% 53% 53%
Total Marketplaces Transaction Rev. 3,402,301 4,203,340 1,211,545 1,236,835 1,267,463 1,419,520 5,135,363 1,303,613 1,324,694 1,350,665 1,501,132 5,480,105 6,048,464
Y/Y growth 36% 24% 22% 24% 25% 18% 22% 8% 7% 7% 6% 7% 10%
Q/Q growth 1% 2% 2% 12% -75% 2% 2% 11%
U.S. Payments Transaction Rev. 635,850 868,623 247,687 251,193 256,847 302,009 1,057,735 287,041 283,450 298,308 341,670 1,210,468 1,350,508
Y/Y growth 34% 37% 18% 22% 21% 25% 22% 16% 13% 16% 13% 14% 12%
Q/Q growth 3% 1% 2% 18% -5% -1% 5% 15%
% of Total Payments Trans Rev 63% 62% 59% 58% 57% 56% 58% 55% 54% 55% 52% 54% 50%
International Payments Transaction Rev. 366,065 533,201 171,305 181,101 191,105 237,292 780,804 234,852 241,457 244,070 315,387 1,035,766 1,350,508
Y/Y growth 76% 46% 44% 45% 50% 47% 46% 37% 33% 28% 33% 33% 30%
Q/Q growth 6% 6% 6% 24% -1% 3% 1% 29%
% of Total Payments Trans Rev 37% 38% 41% 42% 43% 44% 42% 45% 46% 45% 48% 46% 50%
Total Payments Transaction Rev. 1,001,915 1,401,824 418,992 432,294 447,952 539,301 1,838,539 521,893 524,907 542,378 657,057 2,246,235 2,701,016
Y/Y growth 47% 40% 28% 31% 32% 34% 31% 25% 21% 21% 22% 22% 20%
Q/Q growth 4% 3% 4% 20% -72% 1% 3% 21%
Communications Transaction Rev. 24,809 192,756 77,078 89,133 96,772 113,732 376,715 104,055 115,873 122,900 136,478 479,307 579,962
Y/Y growth 677% 119% 102% 93% 79% 95% 35% 30% 27% 20% 27% 21%
Q/Q growth 22% 16% 9% 18% -72% 11% 6% 11%
% of Comm. Trans revenue that is International 85% 85% 83% 83%
Total Transaction Revenue 4,429,025 5,797,920 1,707,615 1,758,262 1,812,187 2,072,553 7,350,617 1,929,561 1,965,474 2,015,944 2,294,667 8,205,646 9,329,442
Y/Y growth 39% 31% 26% 28% 29% 24% 27% 13% 12% 11% 11% 12% 14%
Q/Q growth 3% 3% 3% 14% -74% 2% 3% 14%
% of transaction revenue 89% 86% 141% 142% 143% 100% 100% 100% 100% 100% 100% 100% 100%
Advertising & other non-transaction rev 123,376 171,821 60,459 76,167 77,033 108,053 321,712 98,095 107,786 109,548 153,392 468,821 633,263
Y/Y growth 31% 39% 65% 96% 86% 96% 87% 62% 42% 42% 42% 46% 35%
Q/Q growth 10% 26% 1% 40% -70% 10% 2% 40%
Non Transaction Revenue Breakdown
U.S. Marketplaces 67,053 80,194 25,847 26,817 27,282 43,433 123,378 36,185 41,566 40,923 65,149 183,824 253,677
Y/Y growth 10% 20% 30% 42% 86% 62% 54% 40% 55% 50% 50% 49% 38%
% of adv & non-trans revenue 54% 47% 43% 35% 35% 40% 38% 37% 39% 37% 42% 39% 40%
International Marketplaces 29,783 50,756 12,808 26,900 25,887 39,554 105,150 34,582 36,315 37,536 53,398 161,832 223,328
Y/Y growth 83% 70% 31% 132% 51% 221% 107% 170% 35% 45% 35% 54% 38%
% of adv & non-trans revenue 24% 30% 21% 35% 34% 37% 33% 35% 34% 34% 35% 35% 35%
Payments 26,540 38,706 20,349 21,873 22,444 23,411 88,077 25,436 28,029 28,887 32,775 115,128 146,213
Y/Y growth 57% 46% 194% 160% 135% 69% 128% 25% 28% 29% 40% 31% 27%
% of adv & non-trans revenue 22% 23% 34% 29% 29% 22% 27% 26% 26% 26% 21% 25% 23%
Communications - 2,165 1,455 577 1,420 1,655 5,107 1,892 1,875 2,201 2,069 8,037 10,046
Y/Y growth NA NA NA NA NA -24% 136% 30% 225% 55% 25% 57% 25%
% of adv & non-trans revenue - 1% 2% 1% 2% 2% 2% 2% 2% 2% 1% 2% 2%
Total Advertising & Non-Transaction Rev. 123,376 171,821 60,459 76,167 77,033 108,053 321,712 98,095 107,786 109,548 153,392 468,821 633,263
Y/Y growth 31% 39% 65% 96% 86% 96% 87% 62% 42% 42% 42% 46% 35%
Total Net Revenue 4,552,401 5,969,741 1,768,074 1,834,429 1,889,220 2,180,606 7,672,329 2,027,657 2,073,260 2,125,491 2,448,059 8,674,467 9,962,705
Y/Y growth 39% 31% 27% 30% 30% 27% 29% 15% 13% 13% 12% 13% 15%
Q/Q growth 3% 4% 3% 15% -7% 2% 3% 15%
Figure 111: eBay Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Effect of exchange-rate on cash and equivalents (45,230) 133,255 27,532 29,294 143,073 103,929 303,828 - -
Net change in cash (16,465) 1,349,208 304,217 451,339 494,242 308,600 1,558,398 289,314 279,120 407,492 503,898 1,479,824 2,300,969
Cash & equivalents - BOP 1,330,045 1,313,580 2,662,788 2,967,005 3,418,344 3,912,586 2,662,788 4,221,186 4,510,500 4,789,620 5,197,112 4,221,186 5,701,010
Cash & equivalents - EOP 1,313,580 2,662,788 2,967,005 3,418,344 3,912,586 4,221,186 4,221,186 4,510,500 4,789,620 5,197,112 5,701,010 5,701,010 8,001,979
Capex 338,281 515,448 85,413 121,328 119,293 127,933 453,967 150,000 150,000 150,000 150,000 600,000 681,000
Capex as % of net revenue 7.4% 8.6% 4.8% 6.6% 6.3% 5.9% 5.9% 7.4% 7.2% 7.1% 6.1% 6.9% 6.8%
Figure 112: eBay Discounted Cash Flow Analysis ($ in thousands, except per share data)
Periods from Today 1 2 3 4 5 6 7 2007E-2012E
2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Revenue 5,969,741 7,672,329 8,674,467 9,962,705 11,346,908 12,748,240 14,038,456
% change 31.1% 28.5% 13.1% 14.9% 13.9% 12.3% 10.1% 12.8%
Figure 113: eBay Sum-of-the-Parts Analysis ($ in thousands, except per share data)
2008E
EBITDA
Revenue EBITDA Margin % Multiple 2008E
Consolidated Operations:
U.S. Marketplace Transaction 2,589,171 EBITDA -
International Marketplace Transaction 2,890,934 EBITDA
Global eBay Marketplaces Transaction 5,480,105 2,301,644 42.0% EBITDA 10.0x 23,016,439
PayPal Transaction 2,246,235 494,172 22.0% EBITDA 16.0x 7,906,746
Skype Transaction 479,307 28,758 6.0% EBITDA 14.0x 402,618
Advertising/Non-Transaction 468,821 234,410 50.0% EBITDA 12.0x 2,812,923
Corporate/Other 0.0 75,928 NA 11.2x 847,365
Total Consolidated Operations 8,674,467 3,134,912 36.1% 11.2x $34,986,091
Equity Investments
Mercado Libre - Latin America JV (18.5% interest post-IPO) 298,839
TomOnline - China JV (49% interest) 125,000
PChome Online - Taiwan JV (estimated 33% interest) 60,000
Craigslist.org (~25% interest) 25,000
GittiGidiyor - Turkey 5,000
Figure 114: eBay Fee Changes—Auction-Style and Fixed Price, U.S. Only
Insertion Fees for Auction-style listings
Starting or Reserve Insertion Fee %
Price Current Insertion Fee (effective 2/20/08) Change
$0.01 - $0.99 $0.20 $0.15 -25%
$1.00 - $9.99 $0.40 $0.35 -13%
$10.00 - $24.99 $0.60 $0.55 -8%
$25.00 - $49.99 $1.20 $1.00 -17%
$50.00 - $199.99 $2.40 $2.00 -17%
$200.00 - $499.99 $3.60 $3.00 -17%
$500 or more $4.80 $4.00 -17%
- Consumer-centric company with 76M active users - Tougher comps should result in profit growth slowdown in '08
- Virtual model results in lower overhead and invested capital, enables - Tech and content spending slowing, but profitability levels could remain low due to free
technology spending shipping, Prime, low prices, product-mix
- Turns inventory ~11-12 times per year, results in negative working capital
cash cycle - Is another round of investment needed in N-T?
- Investing in long-term loyalty via free shipping, Amazon Prime, low prices; - Media growth accelerating, but still 64% of biz and at risk of category shifting to digital;
has been paying off in last several quarters still very early with Unbox, MP3
- Amazon Prime gaining traction; driving incremental sales across - Competition continues to increase from search, comparison shopping, traditional
categories; accelerating revenue growth, increasing loyalty retailers shifting online
- Business benefitting from Prime, supplier efficiencies, int’l 3rd party, media
mix, lower tech & content spend
Figure 116: Amazon Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net sales 8,490,000 10,711,000 3,015,000 2,886,000 3,262,000 5,673,000 14,836,000 4,075,190 3,784,410 4,134,600 7,308,870 19,303,070 23,874,976
Cost of sales 6,452,000 8,256,000 2,296,000 2,185,000 2,500,000 4,503,000 11,484,000 3,127,841 2,893,499 3,175,129 5,822,573 15,019,042 18,640,240
Gross profit 2,038,000 2,455,000 719,000 701,000 762,000 1,170,000 3,352,000 947,349 890,911 959,471 1,486,297 4,284,028 5,234,736
Operating expenses
Fulfillment 727,901 912,000 253,000 248,000 285,000 467,000 1,253,000 342,316 321,675 355,576 606,636 1,626,203 1,981,623
Marketing 192,001 259,000 71,000 63,000 72,000 131,000 337,000 95,767 87,041 90,961 160,795 434,565 513,312
Technology and content 405,901 607,000 167,000 176,000 181,000 190,000 714,000 211,910 210,035 219,134 226,575 867,653 1,026,624
General and administrative 145,701 176,000 49,000 49,000 47,000 54,000 199,000 58,702 57,460 56,718 51,036 223,915 272,515
Stock-based compensation 87,696 101,000 34,000 46,000 51,000 54,000 185,000 55,000 60,000 60,000 65,000 240,000 247,200
Amortization of other intangibles 3,250 10,000 - 3,000 3,000 3,000 9,000 2,000 2,000 2,000 2,000 8,000 8,000
Restructuring related and other 44,000 - - - - - - - -
Total operating expenses 1,606,450 2,065,000 574,000 585,000 639,000 899,000 2,697,000 765,694 738,211 784,388 1,112,042 3,400,336 4,049,274
Operating income 431,550 390,000 145,000 116,000 123,000 271,000 655,000 181,655 152,700 175,083 374,255 883,692 1,185,463
PF Operating income 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
Interest income 44,000 60,000 20,000 20,000 23,000 28,000 91,000 28,960 28,805 32,221 40,687 130,673 148,195
Interest expense (92,000) (80,000) (19,000) (19,000) (19,000) (21,000) (78,000) (19,230) (19,230) (19,230) (19,230) (76,920) (26,263)
Other income, net 2,000 (4,000) - (1,000) (1,000) 1,000 (1,000) - -
Remeasurement of 6.875% PEACS, other 42,000 11,000 (2,000) (5,000) (2,000) 2,000 (7,000) - -
Total non-operating expenses, net (4,000) (13,000) (1,000) (5,000) 1,000 10,000 5,000 9,730 9,575 12,991 21,457 53,753 121,932
Income (loss) before equity-method investees 427,550 377,000 144,000 111,000 124,000 281,000 660,000 191,385 162,274 188,074 395,712 937,445 1,307,395
Equity in losses of equity-method investees, net - - - - - - - - -
Income (loss) before income taxes 427,550 377,000 144,000 111,000 124,000 281,000 660,000 191,385 162,274 188,074 395,712 937,445 1,307,395
Provision (benefit) for income taxes 95,000 187,000 33,000 33,000 44,000 74,000 184,000 57,415 48,682 56,422 118,714 281,233 392,218
Effective Tax Rate 22.2% 49.6% 22.9% 29.7% 35.5% 26.3% 27.9% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
Income before change in acctg/ Fully Taxed Income 332,550 190,000 111,000 78,000 80,000 207,000 476,000 133,969 113,592 131,652 276,998 656,211 915,176
Cumulative effect of change in acctng principle 26,000 - - - - - - - - - - - -
GAAP Net income (loss) 358,550 190,000 111,000 78,000 80,000 207,000 476,000 133,969 113,592 131,652 276,998 656,211 915,176
Basic income (loss) per share $0.87 $0.46 $0.27 $0.19 $0.19 $0.50 $1.15 $0.32 $0.27 $0.31 $0.66 $1.57 $2.17
Diluted income (loss) per share $0.84 $0.45 $0.26 $0.19 $0.19 $0.48 $1.12 $0.31 $0.27 $0.31 $0.64 $1.53 $2.12
Basic shares outstanding 412,250 416,250 412,000 412,000 414,000 416,000 413,500 416,750 417,500 418,250 419,000 417,875 420,875
Diluted shares outstanding 425,500 424,500 420,000 423,000 425,000 427,000 423,750 427,750 428,500 429,250 430,000 428,875 431,875
Non-recurring items:
Stock-based compensation 87,696 101,000 34,000 46,000 51,000 54,000 185,000 55,000 60,000 60,000 65,000 240,000 247,200
Amortization of other intangibles 3,250 10,000 - 3,000 3,000 3,000 9,000 2,000 2,000 2,000 2,000 8,000 8,000
Restructuring related and other 44,000 - - - - - - - - - - - -
Remeasurement of 6.875% PEACS, other (42,000) (11,000) 2,000 5,000 2,000 (2,000) 7,000 - - - - - -
Equity in losses of equity-method investees, net - - - - - - - - - - - - -
Cum. Effect of change in acctg/Other one-time items (64,000) - - - - - - - - - - - -
PF Net income (loss) 387,496 290,000 147,000 132,000 136,000 262,000 677,000 190,969 175,592 193,652 343,998 904,211 1,170,376
PF basic income (loss) per share $0.94 $0.70 $0.36 $0.32 $0.33 $0.63 $1.64 $0.46 $0.42 $0.46 $0.82 $2.16 $2.78
PF diluted income (loss) per share $0.91 $0.68 $0.35 $0.31 $0.32 $0.61 $1.60 $0.45 $0.41 $0.45 $0.80 $2.11 $2.71
PF diluted fully-taxed EPS (normalized) $0.80 $0.73 $0.28 $0.25 $0.28 $0.51 $1.32 $0.38 $0.34 $0.38 $0.70 $1.80 $2.35
Basic shares outstanding 412,250 416,250 412,000 412,000 414,000 416,000 413,500 416,750 417,500 418,250 419,000 417,875 420,875
Diluted shares outstanding 425,500 424,500 420,000 423,000 425,000 427,000 423,750 427,750 428,500 429,250 430,000 428,875 431,875
EBITDA Reconciliation
PF Operating income 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
Depreciation and other amortization 120,000 205,000 62,000 60,000 61,000 63,000 246,000 65,000 64,000 62,000 60,000 251,000 263,550
EBITDA 686,496 706,000 241,000 225,000 238,000 391,000 1,095,000 303,655 278,700 299,083 501,255 1,382,692 1,704,213
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y Growth
Net sales 22.7% 26.2% 32.3% 34.9% 41.4% 42.3% 38.5% 35.2% 31.1% 26.8% 28.8% 30.1% 23.7%
Gross profit 27.2% 20.5% 31.4% 37.7% 38.8% 37.6% 36.5% 31.8% 27.1% 25.9% 27.0% 27.8% 22.2%
Fulfillment 23.3% 25.3% 33.2% 36.3% 36.4% 41.1% 37.4% 35.3% 29.7% 24.8% 29.9% 29.8% 21.9%
Marketing 21.5% 34.9% 31.5% 21.2% 14.3% 45.6% 30.1% 34.9% 38.2% 26.3% 22.7% 29.0% 18.1%
Technology and content 61.6% 49.5% 21.0% 16.6% 16.0% 17.3% 17.6% 26.9% 19.3% 21.1% 19.2% 21.5% 18.3%
General and administrative 29.8% 20.8% 8.9% 11.4% -4.1% 42.1% 13.1% 19.8% 17.3% 20.7% -5.5% 12.5% 21.7%
Total cash operating expenses 32.3% 32.8% 26.5% 24.9% 22.6% 35.6% 28.1% 31.2% 26.2% 23.5% 24.1% 25.9% 20.4%
Operating income -2.0% -9.6% 36.8% 146.8% 207.5% 37.6% 67.9% 25.3% 31.6% 42.3% 38.1% 34.9% 34.1%
PF Operating income 15.6% -11.6% 49.2% 106.3% 145.8% 43.2% 69.5% 33.3% 30.1% 33.9% 34.5% 33.3% 27.3%
GAAP Net income -39.1% -47.0% 117.6% 254.5% 321.1% 111.2% 150.5% 20.7% 45.6% 64.6% 33.8% 37.9% 39.5%
PF Net income -1.9% -25.2% 116.2% 207.0% 172.0% 103.1% 133.4% 29.9% 33.0% 42.4% 31.3% 33.6% 29.4%
GAAP EPS -39.2% -46.9% 120.8% 260.9% 320.1% 108.8% 151.0% 18.5% 42.2% 62.9% 32.9% 36.2% 38.5%
PF EPS -2.1% -25.0% 119.3% 209.2% 171.4% 100.7% 133.9% 27.6% 31.3% 41.0% 30.4% 32.0% 28.5%
PF diluted FT EPS (normalized) 27.8% -8.1% 61.6% 121.6% 160.3% 50.9% 80.8% 35.5% 34.2% 37.6% 36.8% 36.0% 30.9%
EBITDA 21.3% 2.8% 50.6% 82.9% 76.3% 35.8% 55.1% 26.0% 23.9% 25.7% 28.2% 26.3% 23.3%
Sequential Growth
Net sales -24.4% -4.3% 13.0% 73.9% -28.2% -7.1% 9.3% 76.8%
% of Revenues
Cost of sales 76.0% 77.1% 76.2% 75.7% 76.6% 79.4% 77.4% 76.8% 76.5% 76.8% 79.7% 77.8% 78.1%
Fulfillment 8.6% 8.5% 8.4% 8.6% 8.7% 8.2% 8.4% 8.4% 8.5% 8.6% 8.3% 8.4% 8.3%
Marketing 2.3% 2.4% 2.4% 2.2% 2.2% 2.3% 2.3% 2.4% 2.3% 2.2% 2.2% 2.3% 2.2%
Technology and content 4.8% 5.7% 5.5% 6.1% 5.5% 3.3% 4.8% 5.2% 5.6% 5.3% 3.1% 4.5% 4.3%
General and administrative 1.7% 1.6% 1.6% 1.7% 1.4% 1.0% 1.3% 1.4% 1.5% 1.4% 0.7% 1.2% 1.1%
Total cash operating expenses 17.3% 18.2% 17.9% 18.6% 17.9% 14.8% 16.9% 17.4% 17.9% 17.5% 14.3% 16.3% 15.9%
Margins
Gross margin 24.0% 22.9% 23.8% 24.3% 23.4% 20.6% 22.6% 23.2% 23.5% 23.2% 20.3% 22.2% 21.9%
Operating margin 5.1% 3.6% 4.8% 4.0% 3.8% 4.8% 4.4% 4.5% 4.0% 4.2% 5.1% 4.6% 5.0%
PF Operating margin 6.7% 4.7% 5.9% 5.7% 5.4% 5.8% 5.7% 5.9% 5.7% 5.7% 6.0% 5.9% 6.0%
EBITDA margin 8.1% 6.6% 8.0% 7.8% 7.3% 6.9% 7.4% 7.5% 7.4% 7.2% 6.9% 7.2% 7.1%
PF Operating Profit/Gross Profit 27.8% 20.4% 24.9% 23.5% 23.2% 28.0% 25.3% 25.2% 24.1% 24.7% 29.7% 26.4% 27.5%
Operating Leverage (∆ PF op inc / ∆ Revenues) 4.9% -2.9% 8.0% 11.4% 11.0% 5.9% 8.4% 5.6% 5.5% 6.9% 6.9% 6.3% 6.8%
Figure 117: Amazon Segment Analysis, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
NET SALES
North America
Media 3,045,000 3,581,000 990,000 923,000 1,081,000 1,637,000 4,631,000 1,257,300 1,135,290 1,275,580 2,046,250 5,714,420 6,743,016
% change 17.6% 17.6% 21.5% 26.4% 37.7% 30.9% 29.3% 27.0% 23.0% 18.0% 25.0% 23.4% 18.0%
Electronics and other general merchandise 1,444,000 2,024,000 564,000 606,000 631,000 1,336,000 3,137,000 817,800 860,520 870,780 1,843,680 4,392,780 5,842,397
% change 28.0% 40.2% 50.8% 66.0% 54.3% 52.5% 55.0% 45.0% 42.0% 38.0% 38.0% 40.0% 33.0%
Other 222,000 264,000 68,000 72,000 76,000 111,000 327,000 89,760 90,000 91,200 130,980 401,940 474,289
% change 70.6% 18.9% 17.2% 16.1% 20.6% 37.0% 23.9% 32.0% 25.0% 20.0% 18.0% 22.9% 18.0%
Total North America Sales 4,711,000 5,869,000 1,622,000 1,601,000 1,788,000 3,084,000 8,095,000 2,164,860 2,085,810 2,237,560 4,020,910 10,509,140 13,059,702
% change 22.4% 24.6% 30.1% 38.4% 42.2% 39.7% 37.9% 33.5% 30.3% 25.1% 30.4% 29.8% 24.3%
International
Media 2,886,000 3,485,000 1,000,000 910,000 1,010,000 1,692,000 4,612,000 1,310,000 1,146,600 1,252,400 2,064,240 5,773,240 6,812,423
% change 14.8% 20.8% 31.1% 26.7% 33.4% 35.7% 32.3% 31.0% 26.0% 24.0% 22.0% 25.2% 18.0%
Electronics and other general merchandise 885,000 1,337,000 383,000 364,000 448,000 877,000 2,072,000 578,330 527,800 618,240 1,192,720 2,917,090 3,850,559
% change 58.5% 51.1% 44.5% 40.5% 54.5% 67.7% 55.0% 51.0% 45.0% 38.0% 36.0% 40.8% 32.0%
Other 8,000 20,000 10,000 11,000 16,000 20,000 57,000 22,000 24,200 26,400 31,000 103,600 152,292
% change 236.3% 150.0% 150.0% 120.0% 433.3% 150.0% 185.0% 120.0% 120.0% 65.0% 55.0% 81.8% 47.0%
Total International Sales 3,779,000 4,842,000 1,393,000 1,285,000 1,474,000 2,589,000 6,741,000 1,910,330 1,698,600 1,897,040 3,287,960 8,793,930 10,815,274
% change 22.9% 28.1% 35.0% 30.9% 40.4% 45.6% 39.2% 37.1% 32.2% 28.7% 27.0% 30.5% 23.0%
GROSS PROFIT
North America 1,267,000 1,525,000 439,000 434,000 460,000 698,000 2,031,000 567,193 544,396 570,578 884,600 2,566,768 3,147,388
% change 24% 20% 29% 40% 34% 31% 33% 29% 25% 24% 27% 26% 23%
% margin 26.9% 26.0% 27.1% 27.1% 25.7% 22.6% 25.1% 26.2% 26.1% 25.5% 22.0% 24.4% 24.1%
International 771,000 930,000 280,000 267,000 302,000 472,000 1,321,000 380,156 346,514 388,893 601,697 1,717,260 2,087,348
% change 33% 21% 36% 34% 47% 48% 42% 36% 30% 29% 27% 30% 22%
% margin 20.4% 19.2% 20.1% 20.8% 20.5% 18.2% 19.6% 19.9% 20.4% 20.5% 18.3% 19.5% 19.3%
Total Consolidated 2,038,000 2,455,000 719,000 701,000 762,000 1,170,000 3,352,000 947,349 890,911 959,471 1,486,297 4,284,028 5,234,736
% change 27% 20% 31% 38% 39% 38% 37% 32% 27% 26% 27% 28% 22%
% margin 24.0% 22.9% 23.8% 24.3% 23.4% 20.6% 22.6% 23.2% 23.5% 23.2% 20.3% 22.2% 21.9%
PF OPERATING INCOME
North America 296,000 232,000 86,000 82,000 79,000 153,000 400,000 112,573 104,291 111,878 211,098 539,839 705,224
% change -8% -22% 39% 228% 259% 24% 72% 31% 27% 42% 38% 35% 31%
% margin 6.3% 4.0% 5.3% 5.1% 4.4% 5.0% 4.9% 5.2% 5.0% 5.0% 5.3% 5.1% 5.4%
International 270,496 269,000 93,000 83,000 98,000 175,000 449,000 126,082 110,409 125,205 230,157 591,853 735,439
% change 60% -1% 60% 51% 96% 65% 67% 36% 33% 28% 32% 32% 24%
% margin 7.2% 5.6% 6.7% 6.5% 6.6% 6.8% 6.7% 6.6% 6.5% 6.6% 7.0% 6.7% 6.8%
Total Consolidated 566,496 501,000 179,000 165,000 177,000 328,000 849,000 238,655 214,700 237,083 441,255 1,131,692 1,440,663
% change 16% -12% 49% 106% 146% 43% 69% 33% 30% 34% 35% 33% 27%
% margin 6.7% 4.7% 5.9% 5.7% 5.4% 5.8% 5.7% 5.9% 5.7% 5.7% 6.0% 5.9% 6.0%
Figure 118: Amazon Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006E 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Effect of exchange-rate on cash and equivalents (53,000) 40,000 2,000 4,000 18,000 (4,000) 20,000 - -
Net change in cash (290,000) 9,000 (274,000) 256,000 362,000 1,173,000 1,517,000 (431,506) 400,770 282,486 1,410,672 1,662,422 1,037,301
Cash & equivalents - BOP 1,302,600 1,012,600 1,021,600 747,600 1,003,600 1,365,600 1,021,600 2,538,600 2,107,094 2,507,864 2,790,350 2,538,600 4,201,022
Cash & equivalents - EOP 1,012,600 1,021,600 747,600 1,003,600 1,365,600 2,538,600 2,538,600 2,107,094 2,507,864 2,790,350 4,201,022 4,201,022 5,238,323
Cumulative Free Cash Flow last four quarters 521,000 701,000 801,000 1,183,000 1,034,494 1,148,264 1,227,750 1,437,422
% change -3.7% 68.9% 118.9% 143.9% 98.6% 63.8% 53.3% 21.5%
Free Cash Flow Conversion of Operating Cash Flow 78% 69% NA 84% 71% 94% 84% 83% 82%
Revenue 8,490,000 10,711,000 3,015,000 2,886,000 3,262,000 5,673,000 14,836,000 4,075,190 3,784,410 4,134,600 7,308,870 19,303,070 23,874,976
Capex 203,000 216,000 34,000 47,000 69,000 73,000 223,000 61,128 56,766 74,423 109,633 301,950 382,000
Y/Y Growth 128% 6% -26% -19% 11% 46% 3% 80% 21% 8% 50% 35% 27%
Capex as % of Revenue 2.4% 2.0% 1.1% 1.6% 2.1% 1.3% 1.5% 1.5% 1.5% 1.8% 1.5% 1.6% 1.6%
Figure 119: Amazon Discounted Cash Flow Analysis ($ in thousands, except per share data)
2007E-2012E
2006A 2007E 2008E 2009E 2010E 2011E 2012E CAGR
Net Sales 10,711,000 14,836,000 19,303,070 23,874,976 28,446,451 32,708,503 36,635,086 19.8%
% change 26.2% 38.5% 30.1% 23.7% 19.1% 15.0% 12.0%
2006 PV of Cash Flow 720,000 1,501,786 1,282,421 1,292,144 1,208,251 1,200,338 1,143,820
Per Share $1.70 $3.54 $3.02 $3.04 $2.85 $2.83 $2.69
3,046,070.7
2007 PV of Cash Flow 1,682,000 1,436,311 1,447,201 1,353,242 1,344,378 1,281,078
Per Share $3.97 $3.39 $3.42 $3.19 $3.17 $3.02
- The two largest businesses, Retailing and Ticketing, generate solid FCF and fund - Will be challenging for HSN to close gap w/ QVC; operational issues, brand
investment in emerging properties recognition, scale, channel placement
- Ask.com's renewed search partnership with Google should provide incremental - Tough N-T macro trends around Lending; loan origination increases overall risk
upside to 2008 numbers and beyond. profile
- Net L-T buyer of its own stock. Repurchased 15.6M shares in 2007, 6M YTD
2008; 44.8M shares remain under authorization - Whether HSN can continue to outperform given overall retail trends
- Strong balance sheet: $2.4 billion in cash & investments, and ~$1 billion in debt - No growth in 1Q08
- Trends in the overall ticket & event mkt along with Ticketmaster pricing power &
rev splits
Figure 121: IAC/InterActiveCorp Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 5,416.5 5,908.9 1,490.1 1,509.8 1,513.3 1,860.1 6,373.3 1,487.2 1,556.8 1,588.2 1,926.0 6,558.3 6,649.8
Cost of revenue 2,855.2 2,980.4 838.5 784.8 801.6 1,017.6 3,442.5 795.7 797.1 827.4 1,003.5 3,423.7 3,457.9
Gross profit 2,561.3 2,928.5 651.6 725.0 711.7 842.6 2,930.9 691.6 759.7 760.7 922.6 3,134.6 3,191.9
Selling and marketing expense 946.2 1,265.8 343.4 345.1 301.9 361.5 1,352.0 297.4 350.3 317.6 375.6 1,340.9 1,316.7
General and administrative expense 656.8 748.2 212.0 205.9 208.7 225.3 852.0 208.2 199.3 203.3 227.3 838.0 837.9
Other operating expense 85.2 114.2 37.0 28.0 14.8 33.1 112.9 24.5 29.4 11.4 20.2 85.5 87.3
Other (one-time expenses, restructuring, etc.) - - - - - - - - - - - - -
EBITDA 873.1 959.9 179.4 173.1 211.8 251.8 816.2 161.4 180.8 228.4 299.5 870.1 950.1
Amortization of cable distribution fees 70.4 67.5 1.2 1.2 1.2 1.2 4.9 0.5 0.5 0.5 0.5 2.0 -
Depreciation 133.7 150.5 37.8 38.7 39.3 40.6 156.4 40.6 40.6 41.1 41.1 163.3 168.0
Other adjustments 9.6 (0.1) - (0.2) (0.1) (0.1) (0.4) - - - - - -
EBITA 659.4 742.1 140.4 133.4 171.4 210.1 655.3 120.3 139.7 186.8 257.9 704.8 782.1
Amortization of non-cash distrib. & mktg - 37.1 0.5 24.0 13.1 16.6 54.1 11.0 11.0 10.5 10.5 43.0 -
Amortization of non-cash compensation 137.5 92.3 24.2 26.9 25.2 29.3 105.6 25.0 25.0 25.0 25.0 100.0 95.0
Amortization of intangibles 186.5 182.7 30.2 30.4 31.1 55.7 147.4 31.0 32.0 32.0 45.0 140.0 140.0
Goodwill impairment - 189.1 - - - 507.8 507.8 - - - - - -
Merger costs - - - - - - - - - - - - -
Operating income 335.3 240.8 85.5 52.2 102.0 (399.3) (159.6) 53.3 71.7 119.3 177.4 421.8 547.1
Interest income (expense), net 63.4 10.3 4.1 3.0 0.2 (1.0) 6.3 (1.1) 1.0 2.8 7.4 10.2 29.7
Equity in income of VUE 523.5 - - - - 16.7 16.7 - - - - - -
Equity in the income (loss) of affiliates and other 60.5 31.9 8.6 13.5 15.9 26.5 64.5 12.5 12.5 12.5 12.5 50.0 50.0
Income (loss) before taxes and minority interest 982.8 283.0 98.2 68.7 118.1 (357.2) (72.1) 64.7 85.3 134.7 197.3 482.0 626.8
Income tax expense (benefit) 389.8 119.2 37.5 23.0 47.4 30.1 138.0 25.2 33.2 52.5 77.0 188.0 244.5
Effective tax rate 39.7% 42.1% 38.2% 33.5% 40.1% -8.4% -191.4% 39.0% 39.0% 39.0% 39.0% 39.0% 39.0%
Minority interest (2.3) 0.5 (0.1) 0.4 2.9 1.4 4.6 (2.0) (2.0) (2.0) (2.0) (8.0) (6.0)
Net Income (loss) from Continuing Operations 590.8 164.3 60.6 46.1 73.6 (385.9) (205.6) 37.5 50.0 80.1 118.4 286.0 376.3
Diluted income (loss) per share from continuing ops $1.68 $0.51 $0.20 $0.15 $0.25 ($1.36) ($0.72) $0.13 $0.18 $0.29 $0.43 $1.03 $1.36
One-time items 70.2 9.6 - 35.1 (1.6) - 33.5 - - - - - -
Income from discontinued operations 209.7 13.2 0.1 13.5 (1.6) 16.0 28.0 - - - - - -
Earnings before preferred dividends 870.6 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Preferred dividends (8.0) - - - - - - - - - - - -
Net earnings available to common shareholders 862.6 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Diluted earnings (loss) per share $2.45 $0.59 $0.20 $0.31 $0.24 ($1.31) ($0.50) $0.13 $0.18 $0.29 $0.43 $1.03 $1.36
Diluted shares outstanding 352.4 319.5 304.7 302.6 298.4 283.3 285.7 278.2 278.2 278.2 277.2 278.0 276.0
Adjusted Net Income Calculation
Net income 862.7 187.1 60.7 94.7 70.4 (369.9) (144.1) 37.5 50.0 80.1 118.4 286.0 376.3
Amortization of non-cash distrib. & mktg - 37.1 0.5 24.0 13.1 16.6 54.1 11.0 11.0 10.5 10.5 43.0 -
Amortization of non-cash compensation 137.5 92.4 24.2 26.9 25.2 29.3 105.6 25.0 25.0 25.0 25.0 100.0 95.0
Amortization of intangibles 186.5 182.7 30.2 30.4 31.1 55.7 147.4 31.0 32.0 32.0 45.0 140.0 140.0
Discontinued ops & other (283.2) 191.6 6.3 (50.5) (3.2) 507.8 460.4 - - - - - -
Equity in the income of VUE (545.4) - - - - (16.4) (16.4) - - - - - -
Equity in the income (loss) of affiliates and other - - - - - - - - - - - - -
Impact of income taxes and minority interest 106.7 (168.6) (21.2) (30.0) (25.8) (83.8) (160.8) (24.8) (25.2) (25.0) (29.8) (104.7) (87.0)
Adjusted Net Income 464.8 522.3 100.7 95.3 110.8 139.4 446.2 79.7 92.8 122.7 169.1 464.3 524.4
Adjusted EPS $1.31 $1.60 $0.32 $0.31 $0.36 $0.46 $1.46 $0.27 $0.32 $0.42 $0.58 $1.59 $1.81
Adjusted shares outstanding 356.0 327.3 310.8 309.3 305.2 299.8 306.3 292.3 292.3 292.3 291.3 292.1 290.1
Y/Y GROWTH
Revenue 29.5% 9.1% 10.3% 5.7% 7.4% 8.1% 7.9% -0.2% 3.1% 4.9% 3.5% 2.9% 1.4%
Cost of revenue 19.2% 4.4% 24.1% 9.2% 13.4% 15.7% 15.5% -5.1% 1.6% 3.2% -1.4% -0.5% 1.0%
Gross profit 43.5% 14.3% -3.5% 2.1% 1.4% 0.2% 0.1% 6.1% 4.8% 6.9% 9.5% 7.0% 1.8%
Selling and marketing NA 33.8% 9.6% 6.6% 2.7% 8.0% 6.8% -13.4% 1.5% 5.2% 3.9% -0.8% -1.8%
General and administrative NA 13.9% 21.6% 9.4% 9.4% 15.6% 13.9% -1.8% -3.2% -2.6% 0.9% -1.6% 0.0%
EBITDA 38.4% 9.9% -14.3% -21.9% -6.3% -16.9% -15.0% -10.1% 4.5% 7.8% 18.9% 6.6% 9.2%
EBITA 57.7% 12.5% -6.8% -18.1% 2.0% -19.3% -11.7% -14.3% 4.8% 9.0% 22.8% 7.6% 11.0%
SEQUENTIAL GROWTH
Revenue -13.4% 1.3% 0.2% 22.9% -20.0% 4.7% 2.0% 21.3%
EBITA -46.1% -5.0% 28.5% 22.6% -42.8% 16.2% 33.7% 38.0%
EBITDA -40.8% -3.5% 22.4% 18.9% -35.9% 12.1% 26.3% 31.1%
% OF REVENUES
Cost of sales 52.7% 50.4% 56.3% 52.0% 53.0% 54.7% 54.0% 53.5% 51.2% 52.1% 52.1% 52.2% 52.0%
Selling and marketing expense 17.5% 21.4% 23.0% 22.9% 20.0% 19.4% 21.2% 20.0% 22.5% 20.0% 19.5% 20.4% 19.8%
General and administrative expense 12.1% 12.7% 14.2% 13.6% 13.8% 12.1% 13.4% 14.0% 12.8% 12.8% 11.8% 12.8% 12.6%
Other operating expenses 1.6% 1.9% 2.5% 1.9% 1.0% 1.8% 1.8% 1.7% 1.9% 0.7% 1.1% 1.3% 1.3%
Total cash operating expenses 82.3% 84.5% 96.0% 90.3% 87.7% 88.0% 88.6% 89.2% 88.4% 85.6% 84.5% 85.4% 85.7%
MARGINS
Gross margin 47.3% 49.6% 43.7% 48.0% 47.0% 45.3% 46.0% 46.5% 48.8% 47.9% 47.9% 47.8% 48.0%
Operating margin 6.2% 4.1% 5.7% 3.5% 6.7% -21.5% -2.5% 3.6% 4.6% 7.5% 9.2% 6.4% 8.2%
EBITA margin 12.2% 12.6% 9.4% 8.8% 11.3% 11.3% 10.3% 8.1% 9.0% 11.8% 13.4% 10.7% 11.8%
EBITDA margin 16.1% 16.2% 12.0% 11.5% 14.0% 13.5% 12.8% 10.8% 11.6% 14.4% 15.5% 13.3% 14.3%
Operating leverage (∆EBITA / ∆Revenue) 19.5% 16.8% -7.4% -36.3% 3.2% -36.0% -18.7% 703.7% 13.5% 20.6% 72.6% 26.8% 84.5%
Transactions
Ticketmaster 950.1 1,085.4 310 303 301 355 1,269 310 339 345 406 1,399 1,260
Lending & Real Estate 425.5 485.5 113 114 77 52 356 68 74 61 48 251 239
Service Magic (Home Services) 41.0 63.8 22 25 25 22 93 25 29 27 24 105 115
Total Services 1,416.6 1,634.7 445 442 403 429 1,718 402 442 433 478 1,755 1,614
EBITA
Retailing
U.S. 277 269 40 38 47 85 211 39 43 50 90 222 238
Total Retailing 277 269 40 38 47 85 211 39 43 50 90 222 238
Transactions
Ticketmaster 219 264 72 59 62 71 264 63 68 69 77 277 252
Lending & Real Estate 64 42 (4) (4) (7) (28) (43) (12) (10) (4) (3) (28) (2)
Service Magic (Home Services) 11 16 6 7 5 2 21 5 6 6 4 21 22
Total Services 294 323 74 62 60 45 241 57 63 71 78 270 272
Emerging Businesses (12) (16) (3) 3 (5) (7) (12) (4) (7) (7) (7) (25) (25)
Corporate (106) (86) (23) (22) (21) (33) (99) (28) (27) (24) (25) (104) (104)
Subtotal 659 742 140 133 171 210 655 120 140 187 258 705 782
Intersegment Eliminations - - - - - - - - -
TOTAL EBITA 659 742 140 133 171 210 655 120 140 187 258 705 782
Figure 123: IAC/InterActiveCorp Segment Breakdown – Growth Rates and Margins, 2005–09E
($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
REVENUE GROWTH
Retailing
U.S. 40% 10% 2% 1% 2% 3% 2% 1% 1% 3% 2% 2% 3%
Total Retailing 19% 10% 2% 1% 2% 3% 2% 1% 1% 3% 2% 2% 3%
Transactions
Ticketmaster 24% 14% 26% 3% 13% 27% 17% 0% 12% 14% 14% 10% -10%
Lending & Real Estate 124% 14% -10% -7% -37% -55% -27% -40% -35% -20% -8% -29% -5%
Service Magic (Home Services) NA 56% 54% 58% 33% 43% 46% 15% 14% 10% 9% 12% 10%
Total Services 13% 15% 15% 2% -1% 5% 5% -10% 0% 8% 11% 2% -8%
EBITA GROWTH
Retailing
U.S. 42% -3% -33% -37% -18% -7% -22% -2% 11% 6% 6% 5% 7%
Total Retailing 39% -3% -33% -37% -18% -7% -22% -2% 11% 6% 6% 5% 7%
Transactions
Ticketmaster 33% 21% 9% -22% 9% 8% 0% -11% 15% 11% 9% 5% -9%
Lending & Real Estate 198% -34% -145% -138% -157% -340% -201% 230% 166% -48% -90% NA -92%
Service Magic (Home Services) NA 44% 94% 61% -10% -20% 29% -16% -15% 3% 109% 1% 7%
Total Services 45% 10% -3% -31% -20% -44% -25% -23% 2% 18% 75% 12% 1%
TOTAL EBITA 58% 13% -7% -18% 2% -19% -12% -14% 5% 9% 23% 8% 11%
EBITA MARGIN
Retailing
U.S. 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Total Retailing 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Transactions
Ticketmaster 23.0% 24.4% 23.1% 19.5% 20.5% 20.0% 20.8% 20.5% 20.0% 20.0% 19.0% 19.8% 20.0%
Lending & Real Estate 15.0% 8.7% -3.1% -3.4% -9.2% -54.3% -12.0% -17.0% -14.0% -6.0% -6.0% -11.3% -1.0%
Service Magic (Home Services) 27.4% 25.2% 28.7% 28.1% 22.0% 9.1% 22.2% 21.0% 21.0% 20.5% 17.5% 20.1% 19.5%
Total Services 20.7% 19.7% 16.7% 14.1% 14.9% 10.4% 14.1% 14.2% 14.4% 16.3% 16.4% 15.4% 16.9%
Emerging Businesses NA NA NA NA NA NA NA NA NA NA NA NA NA
Corporate NA NA NA NA NA NA NA NA NA NA NA NA NA
TOTAL EBITA MARGIN 13.1% 12.6% 9.4% 8.8% 11.3% 11.3% 10.3% 8.1% 9.0% 11.8% 13.4% 10.7% 11.8%
Figure 124: IAC/InterActiveCorp Segment Breakdown – Share of Revenue and EBITA, 2005–09E
($ in millions, except per share data)
REVENUE
Retailing
U.S. 53% 50% 46% 46% 46% 49% 47% 47% 46% 45% 48% 46% 47%
Total Retailing 53% 50% 46% 46% 46% 49% 47% 47% 46% 45% 48% 46% 47%
Transactions
Ticketmaster 19% 18% 21% 20% 20% 19% 20% 21% 22% 22% 21% 21% 19%
Lending & Real Estate 8% 8% 8% 8% 5% 3% 6% 5% 5% 4% 2% 4% 4%
Service Magic (Home Services) 1% 1% 1% 2% 2% 1% 1% 2% 2% 2% 1% 2% 2%
Total Services 28% 28% 30% 29% 27% 23% 27% 27% 28% 27% 25% 27% 24%
Emerging Businesses 0% 0% 0% 0% 1% 1% 1% 0% 0% 0% 0% 0% 1%
Intersegment Eliminations 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
TOTAL REVENUE 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
EBITA
Retailing
U.S. 42% 36% 28% 29% 28% 41% 32% 32% 30% 27% 35% 32% 30%
Total Retailing 42% 36% 28% 29% 28% 41% 32% 32% 30% 27% 35% 32% 30%
Transactions
Ticketmaster 33% 36% 51% 44% 36% 34% 40% 53% 48% 37% 30% 39% 32%
Lending & Real Estate 10% 6% -2% -3% -4% -13% -7% -10% -7% -2% -1% -4% 0%
Service Magic (Home Services) 2% 2% 4% 5% 3% 1% 3% 4% 4% 3% 2% 3% 3%
Total Services 45% 44% 53% 47% 35% 21% 37% 48% 45% 38% 30% 38% 35%
Emerging Businesses -2% -2% -2% 2% -3% -4% -2% -3% -5% -4% -3% -4% -3%
Corporate -16% -12% -16% -17% -12% -16% -15% -23% -19% -13% -10% -15% -13%
Sub Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Intersegment Eliminations 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
TOTAL EBITA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Figure 125: IAC/InterActiveCorp Breakdown – Retailing, 2005–09E ($ in millions, except per share data)
Retailing U.S.
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
FTEs - end of period 91.5 89.1 89.8 89.5 89.8 90.8 90.8 90.8 90.8 90.8 90.8 90.8 90.8
FTEs - average 91.7 89.0 89.5 89.7 89.7 90.3 90.0 90.8 90.8 90.8 90.8 90.8 90.8
Y/Y growth 4.1% -3.0% -1.5% -0.2% 1.6% 2.5% 1.2% 1.5% 1.3% 1.3% 0.6% 0.9% 0.0%
Revenue per average home $21.73 $22.33 $5.37 $4.90 $5.35 $6.76 $22.33 $5.50 $5.04 $5.50 $6.92 $22.97 $23.77
Y/Y growth 0.4% 2.8% 0.5% -0.8% -0.1% 1.7% 0.0% 2.5% 3.0% 2.8% 2.4% 2.9% 3.5%
HSN U.S. Revenue 1,992 1,987 480 439 480 610 2,009 499 458 500 628 2,085 2,158
% change 4.5% -0.3% -1.0% -1.0% 1.5% 4.3% 1.1% 4.0% 4.3% 4.1% 3.0% 3.8% 3.5%
Cornerstone Brands & Shoebuy 679 947 205 262 220 295 983 195 252 218 295 960 980
Y/Y growth NA NA 9.0% 3.8% 3.4% 0.9% 3.9% -5.0% -4.0% -1.0% 0.0% -2.3% 2.0%
# Catalogs Mailed 336 421 103 109 85 104 401
Y/Y growth 25.3% -7.2% -1.8% -8.9% -2.0% -4.8%
Total U.S. Retailing Revenue 2,671 2,933 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Y/Y growth 40.1% 9.8% 1.8% 0.7% 2.1% 3.1% 2.0% 1.3% 1.2% 2.5% 2.0% 1.8% 3.0%
Cost of goods sold 1,647 1,804 432 436 438 574 1,880 439 442 450 585 1,916 1,961
Gross profit 1,024 1,129 254 266 262 331 1,113 256 268 268 339 1,130 1,177
% gross margin 38.3% 38.5% 37.0% 37.9% 37.4% 36.6% 37.2% 36.8% 37.7% 37.3% 36.7% 37.1% 37.5%
Depreciation 41 37 9 9 9 9 35 9 9 9 9 36 36
HSN cable distribution fees 62 67 1 1 1 1 5 1 1 1 1 2 -
EBITDA 380 374 50 48 57 95 250 48 52 60 100 260 274
Y/Y growth 26.7% -1.5% -44.5% -47.2% -33.7% -10.9% -33.1% -2.3% 7.8% 4.5% 5.1% 4.0% 5.5%
% EBITDA margin 14.2% 12.7% 7.2% 6.9% 8.2% 10.5% 8.4% 7.0% 7.3% 8.3% 10.8% 8.5% 8.7%
Operating Metrics
Units shipped 50.7 55.3 12.9 12.9 13.0 17.1
Y/Y growth 25.2% 1.6% -0.8% -1.5% 3.6%
Average price point $57.72 $58.72 $59.39 $60.74 $61.01 $59.16
Y/Y growth 12.7% 1.1% 1.4% 5.1% 1.5%
TOTAL RETAILING
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Retailing Revenue 2,671 2,933 685 701 700 905 2,992 694 710 718 923 3,046 3,138
Y/Y growth 18.8% 9.8% 1.8% 0.7% 2.1% 3.1% 2.0% 1.3% 1.2% 2.5% 2.0% 1.8% 3.0%
Total Retailing EBITA 277 269 40 38 47 85 211 39 43 50 90 222 238
Y/Y growth 39.0% -2.7% -32.5% -36.5% -17.7% -7.4% -21.7% -2.3% 10.9% 6.5% 6.1% 5.5% 7.3%
% margin 10.4% 9.2% 5.8% 5.5% 6.7% 9.4% 7.0% 5.6% 6.0% 7.0% 9.8% 7.3% 7.6%
Depreciation 48 37 9 9 9 9 35 9 9 9 9 36 36
Cable distribution fees 70 67 1 1 1 1 5 1 1 1 1 2 -
Total Retailing EBITDA 395 374 50 48 57 95 250 48 52 60 100 260 274
Tickets Sold 119.4 128.2 35.9 33.2 34.4 38.8 142.3 34.8 35.7 37.5 42.7 150.7 137.2
Y/Y growth 21.5% 7.4% 14.7% 1.2% 11.3% 16.9% 11.0% -3.0% 7.6% 9.0% 10.0% 5.9% -9.0%
Revenue per ticket sold $7.96 $8.47 $8.63 $9.12 $8.76 $9.14 $8.91 $8.89 $9.48 $9.20 $9.51 $9.28 $9.19
Y/Y growth 1.8% 6.4% 10.0% 1.3% 1.9% 8.7% 5.3% 3.0% 4.0% 5.0% 4.0% 4.1% -1.0%
Total Revenue 950 1,085 310 303 301 355 1,269 310 339 345 406 1,399 1,260
Y/Y growth 23.7% 14.2% 26.1% 2.6% 13.5% 27.1% 16.9% -0.1% 11.9% 14.5% 14.4% 10.3% -9.9%
EBITA 219 264 72 59 62 71 264 63 68 69 77 277 252
Y/Y growth 33.1% 20.9% 8.8% -22.3% 8.5% 8.1% -0.4% -11.4% 14.8% 11.4% 8.6% 5.2% -9.1%
% EBITA margin 23.0% 24.4% 23.1% 19.5% 20.5% 20.0% 20.8% 20.5% 20.0% 20.0% 19.0% 19.8% 20.0%
Depreciation 37 38 10 10 10 11 42 11 11 11 11 44 45
EBITDA 255 303 81 69 72 82 305 74 79 80 88 321 297
Y/Y growth 29.2% 18.5% 8.0% -19.0% 8.7% 9.3% 0.8% -8.5% 13.8% 10.6% 7.0% 5.3% -7.7%
% EBITDA margin 26.9% 27.9% 26.3% 22.9% 24.0% 23.2% 24.1% 24.1% 23.2% 23.2% 21.7% 23.0% 23.5%
Operating Metrics
Total Average Ticket Price (incl. charges) $52.22 $54.99 $57.83 $58.52 $55.20 $62.71 $58.69 $60.14 $61.45 $59.07 $66.47 $61.98 $63.22
Y/Y growth 2.9% 5.3% 14.8% -3.6% 6.0% 11.1% 6.7% 4.0% 5.0% 7.0% 6.0% 5.6% 2.0%
Total Gross Transaction Value 6,236 7,050 2,076 1,943 1,899 2,433 8,351 2,094 2,195 2,215 2,837 9,341 8,670
Y/Y growth 25.0% 13.1% 31.7% -2.4% 18.0% 29.8% 18.5% 0.9% 13.0% 16.6% 16.6% 11.9% -7.2%
Offline tickets sold 54.5 52.9 14.0 12.3 12.0 12.8 51.1 11.1 11.4 12.4 13.7 48.6 41.1
Y/Y growth 15.7% -3.0% 4.0% -10.8% -5.0% -1.1% -3.3% -20.4% -6.9% 2.8% 6.7% -4.9% -15.3%
% tickets sold offline 45.6% 41.2% 39.0% 37.0% 35.0% 33.0% 35.9% 32.0% 32.0% 33.0% 32.0% 32.2% 30.0%
Online tickets sold 65.0 75.3 21.9 20.9 22.4 26.0 91.2 23.7 24.3 25.1 29.0 102.1 96.0
Y/Y growth 26.9% 16.0% 22.7% 9.9% 22.6% 28.4% 21.0% 8.1% 16.1% 12.4% 11.6% 12.0% -6.0%
% tickets sold online 54.4% 58.8% 61.0% 63.0% 65.0% 67.0% 64.1% 68.0% 68.0% 67.0% 68.0% 67.8% 70.0%
Depreciation 7 12 3 3 2 2 10 3 3 3 3 12 14
EBITDA 71 54 (1) (1) (5) (26) (33) (9) (7) (1) 0 (16) 12
Y/Y growth 182.5% -23.3% -106.2% -110.0% -130.3% -282.5% -160.6% 1120.9% 467.2% -85.4% -100.5% -49.7% -170.4%
% EBITDA margin 16.6% 11.1% -0.6% -1.1% -6.1% -50.1% -9.2% -12.6% -10.0% -1.1% 0.3% -6.6% 4.9%
Note: Lending Tree not consolidated within IACI financials until August, 2003. Historicals prior to this date do not impact IACI overall.
TOTAL TRANSACTIONS
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Transactions Revenue 1,417 1,635 445 442 403 429 1,718 402 442 433 478 1,755 1,614
Y/Y growth 12.5% 15.4% 15.5% 1.8% -0.8% 4.6% 5.1% -9.5% -0.1% 7.6% 11.4% 2.1% -8.0%
Total Transactions EBITA 294 323 74 62 60 45 241 57 63 71 78 270 272
Y/Y growth 44.7% 9.9% -3.3% -31.3% -20.3% -44.1% -25.2% -23.1% 2.0% 17.7% 75.4% 11.8% 0.9%
% EBITA margin 20.7% 19.7% 16.7% 14.1% 14.9% 10.4% 14.1% 14.2% 14.4% 16.3% 16.4% 15.4% 16.9%
Depreciation 44 52 13 13 14 14 54 15 15 15 15 58 61
Total Transactions EBITDA 338 375 87 76 74 59 296 72 78 85 93 328 333
Y/Y growth 31.1% 10.8% -3.1% -26.7% -16.8% -36.3% -21.0% -18.0% 3.1% 15.8% 57.5% 10.9% 1.5%
% EBITDA margin 23.9% 22.9% 19.7% 17.1% 18.3% 13.8% 17.2% 17.8% 17.6% 19.7% 19.5% 18.7% 20.6%
Network Syndication Search Revenue 126 187 66 70 85 105 326 69 66 78 95 308 314
Y/Y growth 444.1% 48.3% 78.2% 65.8% 78.8% 73.1% 73.9% 4.0% -5.0% -8.0% -10.0% -5.6% 2.0%
Q/Q growth 8.9% 5.8% 21.2% 23.9% -78.9% -3.3% 17.4% 21.2%
Network Rev. as % of IAC Search/Media 34.0% 39.8% 45.0% 46.0% 49.9% 51.7% 48.5% 45.2% 39.7% 43.0% 46.7% 43.7% 39.6%
IAC Search & Media 372 470 147 152 170 203 672 152 168 182 202 704 793
Y/Y growth 66.3% 26.6% 42.2% 33.4% 45.8% 49.0% 42.9% 3.5% 10.1% 6.9% -0.4% 4.7% 12.7%
Q/Q growth 7.7% 3.5% 11.7% 19.6% -77.4% 10.1% 8.4% 11.4%
IAC Search & Media as % of Total M&A -- 86.4% 87.4% 87.4% 89.6% 89.7% 88.6% 87.4% 88.1% 89.3% 88.8% 88.5% 89.2%
Licensing Revenue - - - - - - - - - - - - -
Y/Y growth NA NA NA NA NA NA NA NA NA NA NA NA NA
Q/Q growth NA NA NA NA NA NA NA NA
Total Media & Advertising Revenue 213 544 168 174 190 227 759 174 190 203 228 795 889
Y/Y growth NA 154.9% 42.9% 32.5% 40.1% 41.8% 39.4% 3.6% 9.2% 7.2% 0.6% 4.9% 11.8%
Q/Q growth 5.2% 3.5% 9.1% 19.4% -77.0% 9.2% 7.1% 12.0%
Total Media & Advertising EBITA 31 58 17 12 28 31 88 22 23 32 37 113 147
Y/Y growth NA 90.7% 48.3% 9.3% 73.6% 55.2% 50.4% 25.5% 94.9% 14.3% 19.0% 28.9% 29.8%
Q/Q growth -14.4% -32.0% 135.9% 13.0% -75.4% 5.7% 38.3% 17.8%
% EBITA margin 14.3% 10.7% 10.2% 6.7% 14.5% 13.8% 11.6% 12.4% 12.0% 15.5% 16.3% 14.2% 16.5%
Depreciation 13 28 8 8 8 8 31 8 8 8 8 32 34
Total Media & Advertising EBITDA 44 86 25 19 35 39 119 30 31 40 45 145 181
Y/Y growth NA 96.4% 34.8% 11.5% 54.4% 42.2% 37.6% 19.3% 58.8% 12.3% 15.4% 22.4% 24.6%
% EBITDA margin 20.5% 15.8% 14.8% 11.1% 18.5% 17.3% 15.6% 17.0% 16.2% 19.4% 19.8% 18.2% 20.3%
Incremental EBITDA margin 12.7% 4.7% 22.8% 17.4% 15.1% 79.9% 71.0% 31.7% 483.4% 71.9%
Interval (Vacations)
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Match (Personals)
$ in millions, subs in thousands
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Paid Subscribers (end of period) 1,189.4 1,275.9 1,338.9 1,312.8 1,308.8 1,286.5 1,286.5 1,370.4 1,396.0 1,375.9 1,277.8 1,277.8 1,334.0
Y/Y growth 21.0% 7.3% 1.1% 1.3% -0.8% 0.8% 0.8% 2.3% 6.3% 5.1% -0.7% -0.7% 4.4%
Average Subscribers 1,086.1 1,232.7 1,307.4 1,325.9 1,310.8 1,297.7 1,281.2 1,328.4 1,383.2 1,386.0 1,326.8 1,282.1 1,305.9
Monthly Subscription Fee $19.15 $21.04 $21.01 $21.77 $22.66 $23.27 $22.68 $22.48 $22.86 $23.56 $24.20 $24.62 $25.11
Y/Y growth 11.5% 9.9% 8.1% 9.3% 10.8% 14.1% 7.8% 7.0% 5.0% 4.0% 4.0% 8.5% 2.0%
Revenue 250 311 82 87 89 91 349 90 95 98 96 379 393
Y/Y growth 26.0% 24.7% 12.4% 10.6% 11.0% 14.1% 12.0% 8.7% 9.5% 10.0% 6.3% 8.6% 3.9%
EBITA 48 64 8 20 30 21 78 9 21 28 23 82 87
Y/Y growth 73.5% 32.7% 40.0% 13.3% 52.8% 0.0% 23.5% 1.3% 9.4% -3.7% 12.0% 4.3% 5.9%
% EBITA margin 19.2% 20.4% 10.2% 22.6% 33.1% 23.1% 22.5% 9.5% 22.6% 29.0% 24.3% 21.6% 22.0%
Depreciation 8 7 2 2 2 2 8 2 2 2 2 8 8
EBITDA 56 71 10 21 32 23 86 11 23 30 25 90 95
Y/Y growth 32.5% 26.3% 32.5% 12.6% 45.8% 1.8% 21.4% 3.5% 9.8% -3.3% 10.7% 4.5% 5.6%
Operating Metrics
New registrations 20,555 22,141 5,527 6,348 5,805 5,445 23,125 5,776 6,633 5,979 5,663 24,051 24,532
Y/Y growth 11.3% 7.7% 5.6% 5.1% 5.0% 2.0% 4.4% 4.5% 4.5% 3.0% 4.0% 4.0% 2.0%
New subscriptions 1,983 2,113 480 552 522 490 2,045 502 590 520 481 2,094 1,914
Y/Y growth 11.5% 6.5% -4.5% -2.7% -0.5% -5.4% -3.3% 4.7% 6.9% -0.4% -1.8% 2.4% -8.6%
Conversion rate of registered to new subs 9.6% 9.5% 8.7% 8.7% 9.0% 9.0% 8.8% 8.7% 8.9% 8.7% 8.5% 8.7% 7.8%
Churned Subscribers 1,776.8 2,026.7 416.7 578.4 526.5 512.4 2,033.9 418.6 564.7 540.4 579.5 2,103.1 1,857.3
Monthly Churn rate 7.9% 10.2% 9.6% 9.5% 7.8% 9.6% 9.4% 10.4% 9.7%
Entertainment (Discounts)
$ in millions
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Membership & Subscriptions Revenue 740 797 190 191 218 293 892 212 211 233 296 953 994
Y/Y growth 10.2% 7.7% 7.8% 13.1% 19.6% 8.8% 11.9% 12.0% 10.4% 6.5% 1.3% 6.8% 4.3%
Total Membership & Subscriptions EBITA 176 193 34 40 62 89 226 35 45 65 84 229 254
Y/Y growth 26.0% 9.8% 29.4% 47.3% 46.9% -8.2% 16.9% 1.1% 11.7% 4.7% -6.0% 1.2% 11.0%
% EBITA margin 23.8% 24.3% 18.1% 21.0% 28.5% 30.5% 25.3% 16.3% 21.3% 28.0% 28.3% 24.0% 25.5%
Depreciation 20 21 5 5 6 6 21 6 6 6 6 22 23
Total Membership & Subscriptions EBITDA 197 214 39 45 68 95 247 40 50 71 89 251 276
Y/Y growth 17.8% 9.0% 24.8% 39.8% 40.7% -7.2% 15.4% 2.4% 11.5% 4.4% -5.6% 1.5% 10.1%
% EBITDA margin 26.6% 26.9% 20.7% 23.7% 31.0% 32.4% 27.7% 19.0% 23.9% 30.4% 30.2% 26.3% 27.8%
Figure 129: IAC/InterActiveCorp Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net change in cash (692.2) 432.3 (204.8) (202.7) 338.5 220.4 151.4 (627.9) 102.4 130.3 234.8 (160.5) 658.8
Total cash provided by discontinued operations 706.7 (22.7) (5.8) 2.7 (6.9) (7.5) (17.5) - - - - - -
Effect of exchange-rate on cash and equivalents (27.1) 31.8 3.6 4.5 21.3 (6.2) 23.3 - - - - - -
Net (decrease) increase in cash and cash equivalents (12.6) 441.4 (207.0) (195.5) 352.9 206.7 157.2 (627.9) 102.4 130.3 234.8 (160.5) 658.8
Cash & equivalents - BOP 999.7 987.1 1,428.4 1,221.5 1,026.0 1,378.9 1,428.4 1,585.6 957.7 1,060.0 1,190.4 1,585.6 1,425.1
Cash & equivalents - EOP 987.1 1,428.4 1,221.5 1,026.0 1,378.9 1,585.6 1,585.6 957.7 1,060.0 1,190.4 1,425.1 1,425.1 2,083.9
Figure 130: IAC/InterActiveCorp Sum-of-the-Parts Analysis ($ in millions, except per share data)
2008E
2008E Metric Multiple Value
Consolidated Operations:
Retailing (HSN, Cornerstone, Shoebuy) 260 EBITDA 5.5x 1,431
Ticketmaster 321 EBITDA 8.0x 2,570
Interval (Vacations) 161 EBITDA 7.0x 1,124
IAC Search & Media, Other (Ask, Citysearch, Evite, other) 145 EBITDA 9.0x 1,306
Match.com (Personals) 90 EBITDA 7.0x 630
LendingTree & Real Estate 251 Revenue 0.0x -
Service Magic 23 EBITDA 7.5x 172
Entertainment (Discounts) 173 Revenue 0.4x 69
Corporate/Other (114) EBITDA 7.4x (846)
Total Consolidated Operations 7.4x $6,457
Equity Investments
Jupiter Shop Channel (home shopping in Japan)---30% stake 483
TM Mexico---33.3% stake 110
Front Line Management Group, Inc. ("Front Line") (United States) -- 45.99% stake 90
TVSN Holdings (home shopping in China)---21% stake 25
Evolution Artists, Inc. ("iLike.com") (U.S.) -- 40% stake 10
DJ/IAC Online Ventures, LLC (United States) -- 50% stake -
Beijing Gehua Ticketmaster Ticketing Co., Ltd. (China) -- 40% stake -
Medem, Inc. (United States) -- 36.46% stake -
Points (Canada)---3.17% stake -
MerchantCircle Inc. (United States) -- 16.48% stake -
Total Unconsolidated Operations $718
-Large scale brings more leverage in negotiating with suppliers. - International hotel business will likely become more competitive.
- Strong FCF with merchant model: $625M in 2007 -- 7.9% FCF yield;
- Need to spend aggressively on marketing long-term.
4.2% ex-WC.
- International Opportunity: 22% penetration in Europe and 12% in Asia- - Increased competition from suppliers, travel search engines, tour
Pacific vs 47% of travel booked online in the U.S during 2006. operators in Europe, and other third-party distributors.
- Heavy sales & marketing investments -- we project 37%+ of revenues. - Selling and Marketing expense expected to be up Y/Y in 2008.
- Macro travel trends; is Expedia countercyclical? - G&A expense expected to be similar percent of revenue in 2008 as 2007.
- Travel trends: airlines pricing, load factors, hotel ADRs, occupancy - Technology and Content expenses expected to increase Y/Y in 2008.
- Can EXPE close the hotel gap in Europe with PCLN? - Modest Gross Margin expansion in 2008.
Figure 132: Expedia Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 2,119.5 2,237.6 550.5 689.9 759.6 665.3 2,665.3 649.6 780.1 847.9 744.7 3,022.3 3,388.6
Cost of revenue 470.7 494.2 120.4 143.0 150.5 145.6 559.5 139.7 162.3 166.2 160.1 628.2 704.8
Gross profit 1,648.7 1,743.3 430.1 546.9 609.1 519.7 2,105.8 510.0 617.8 681.7 584.6 2,394.1 2,683.7
Selling and marketing expense 697.5 770.3 219.0 253.1 276.6 231.3 980.1 261.1 289.4 311.2 264.4 1,126.1 1,263.9
General & administrative expense 211.5 252.8 68.5 68.7 75.7 76.5 289.4 81.2 79.6 85.6 87.1 333.5 376.1
Technology & content expense 112.3 121.3 38.2 38.0 44.0 46.7 166.9 46.8 45.2 50.9 52.9 195.8 216.9
Amortization of non-cash distrib. & mktg 12.6 9.6 - - - - - - - - - - -
Amortization of non-cash compensation 91.7 80.3 15.9 14.0 14.4 18.6 62.8 18.0 15.0 14.0 20.0 67.0 73.7
Amortization of intangibles 126.1 110.8 21.2 19.5 18.6 18.3 77.6 15.0 14.0 13.0 13.5 55.5 27.8
Impairment of intangible asset - 47.0 - - - - - - - - - - -
Depreciation - - - - - - - - - - - - -
Merger costs - - - - - - - - - - - - -
Operating income 397.1 351.3 67.3 153.6 179.8 128.3 529.1 87.8 174.6 207.0 146.7 616.2 725.4
Interest income (expense), net 41.0 14.8 (3.9) 0.7 (1.1) (9.2) (13.5) 0.7 5.7 7.8 7.9 22.1 52.7
Equity income (loss) in affiliates and other 11.1 - - - - - - - - - - - -
Other income, net (36.4) 18.8 (5.5) 5.94 (13.89) (5.15) (18.6) - - - - - -
Income (loss) before taxes and minority interest 412.8 384.9 57.9 160.2 164.8 114.0 497.0 88.6 180.3 214.8 154.6 638.3 778.0
Income tax expense (benefit) 186.0 139.5 23.6 64.1 65.5 49.9 203.1 33.7 68.5 81.6 58.8 242.6 295.6
Effective tax rate 45.0% 36.2% 40.8% 40.0% 39.8% 43.8% 40.9% 38.0% 38.0% 38.0% 38.0% 38.0% 38.0%
Minority interest 0.8 (0.5) 0.5 0.0 0.3 1.2 2.0 0.5 0.2 0.3 0.8 1.8 1.8
Net Income 227.7 244.9 34.8 96.1 99.6 65.4 295.9 55.4 112.0 133.5 96.7 397.5 484.2
Diluted income (loss) per share $0.65 $0.70 $0.11 $0.30 $0.32 $0.22 $0.48 $0.18 $0.37 $0.43 $0.31 $1.30 $1.57
Diluted shares outstanding 349.5 352.2 323.7 320.2 312.8 300.5 614.2 303.5 305.5 307.5 308.5 306.3 308.3
Adjusted Net Income Calculation
Net income 227.7 244.9 34.8 96.1 99.6 65.4 295.9 55.4 112.0 133.5 96.7 397.5 484.2
Amortization 230.4 200.7 37.1 33.5 33.0 36.9 140.4 33.0 29.0 27.0 33.5 122.5 101.5
One-time items 29.5 38.9 1.4 (8.4) 2.3 0.6 (4.0) - - - - - -
Minority interest (1.8) (0.9) (0.2) (0.2) (0.1) (0.2) (0.7) - - - - 0.0 -
Income taxes (71.0) (93.1) (13.7) (7.0) (11.7) (8.1) (40.5) (12.5) (11.0) (10.3) (12.7) (46.6) (38.6)
Adjusted Net Income 414.7 390.5 59.3 114.0 123.1 94.6 391.1 75.9 130.0 150.2 117.4 473.5 547.1
Adjusted EPS $1.18 $1.09 $0.18 $0.35 $0.39 $0.31 $1.22 $0.25 $0.42 $0.48 $0.37 $1.52 $1.74
Adjusted shares outstanding 351.9 358.4 329.7 327.3 318.9 306.3 320.5 309.3 311.3 313.3 314.3 312.0 314.0
Y/Y GROWTH
Revenue 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Cost of revenue 20.6% 5.0% 3.7% 12.7% 14.6% 21.3% 13.2% 16.0% 13.5% 10.4% 10.0% 12.3% 12.2%
Gross profit 13.5% 5.7% 13.8% 16.0% 26.2% 26.4% 20.8% 18.6% 13.0% 11.9% 12.5% 13.7% 12.1%
Selling and marketing 6.8% 10.4% 11.9% 29.6% 30.4% 38.4% 27.2% 19.2% 14.3% 12.5% 14.3% 14.9% 12.2%
General & administrative expense 31.4% 19.5% 7.6% 10.3% 28.0% 13.0% 14.5% 18.6% 15.8% 13.2% 13.9% 15.3% 12.8%
Technology & content expense 32.1% 8.0% 28.0% 27.3% 40.0% 54.8% 37.6% 22.5% 19.1% 15.6% 13.3% 17.3% 10.8%
EBITDA 13.4% -4.4% 19.3% 2.5% 18.1% 13.9% 12.5% 14.4% 8.6% 9.4% 8.2% 9.7% 11.1%
EBITA 13.3% -4.5% 17.9% 1.6% 18.2% 13.0% 11.8% 15.7% 8.8% 10.0% 9.1% 10.3% 11.9%
SEQUENTIAL GROWTH
Revenue 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
EBITA -28.6% 79.2% 13.7% -22.4% -26.9% 68.5% 14.9% -23.0%
Selling and marketing 31.0% 15.6% 9.3% -16.4% 12.9% 10.8% 7.5% -15.0%
% OF REVENUES
Cost of sales 22.2% 22.1% 21.9% 20.7% 19.8% 21.9% 21.0% 21.5% 20.8% 19.6% 21.5% 20.8% 20.8%
Selling and marketing expense 32.9% 34.4% 39.8% 36.7% 36.4% 34.8% 36.8% 40.2% 37.1% 36.7% 35.5% 37.3% 37.3%
General & administrative expense 10.0% 11.3% 12.4% 10.0% 10.0% 11.5% 10.9% 12.5% 10.2% 10.1% 11.7% 11.0% 11.1%
Technology & content expense 5.3% 5.4% 6.9% 5.5% 5.8% 7.0% 6.3% 7.2% 5.8% 6.0% 7.1% 6.5% 6.4%
Total cash operating expenses 70.4% 73.2% 81.0% 72.9% 72.0% 75.2% 74.9% 81.4% 73.9% 72.4% 75.8% 75.6% 75.6%
MARGINS
Gross margin 77.8% 77.9% 78.1% 79.3% 80.2% 78.1% 79.0% 78.5% 79.2% 80.4% 78.5% 79.2% 79.2%
Operating margin 18.7% 15.7% 12.2% 22.3% 23.7% 19.3% 19.9% 13.5% 22.4% 24.4% 19.7% 20.4% 21.4%
EBITA margin 29.6% 26.8% 19.0% 27.1% 28.0% 24.8% 25.1% 18.6% 26.1% 27.6% 24.2% 24.4% 24.4%
EBITDA margin 32.0% 29.0% 21.6% 29.1% 30.0% 27.3% 27.4% 20.9% 28.0% 29.4% 26.3% 26.5% 26.2%
Operating leverage (∆EBITA / ∆Revenue) 26.7% -24.1% 28.0% 3.1% 22.5% 14.1% 16.5% 16.6% 18.3% 24.0% 18.9% 19.4% 24.1%
Figure 133: Expedia Segment Breakdown, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue 2,119 2,238 551 690 760 665 2,665 650 780 848 745 3,022 3,389
Y/Y growth 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Q/Q Growth 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
EBITA 628 599 104 187 213 165 669 121 204 234 180 739 827
Y/Y growth 13.3% -4.5% 17.9% 1.6% 18.2% 13.0% 11.8% 15.7% 8.8% 10.0% 9.1% 10.3% 11.9%
% margin 29.6% 26.8% 19.0% 27.1% 28.0% 24.8% 25.1% 18.6% 26.1% 27.6% 24.2% 24.4% 24.4%
Depreciation 50.4 49 14 14 15 16 60 15 15 16 16 61 62
EBITDA 678 648 119 201 228 181 729 136 218 250 196 800 888
Y/Y growth 13.4% -4.5% 19.3% 2.5% 18.1% 13.9% 12.5% 14.4% 8.6% 9.4% 8.2% 9.7% 11.1%
% margin 32.0% 29.0% 21.6% 29.1% 30.0% 27.3% 27.4% 20.9% 28.0% 29.4% 26.3% 26.5% 26.2%
GROSS BOOKINGS
North America 12,065 12,737 3,559 3,723 3,519 3,136 13,937 4,075 4,077 3,818 3,387 15,357 16,508
Y/Y Growth 15.8% 5.6% 1.1% 8.1% 13.4% 17.6% 9.4% 14.5% 9.5% 8.5% 8.0% 10.2% 7.5%
Q/Q Growth 33.5% 4.6% -5.5% -10.9% 29.9% 0.0% -6.3% -11.3%
% of total bookings 78% 74% 71% 71% 68% 68% 70% 68% 68% 66% 66% 67% 64%
Europe 2,515 3,001 1,032 1,035 1,163 994 4,224 1,404 1,325 1,442 1,218 5,388 6,681
Y/Y Growth 6.8% 19.3% 32.3% 37.6% 46.8% 46.8% 40.8% 36.0% 28.0% 24.0% 22.5% 27.6% 24.0%
Q/Q Growth 52.4% 0.3% 12.4% -14.5% 41.2% -5.6% 8.9% -15.6%
% of total bookings 16% 17% 21% 20% 23% 22% 21% 23% 22% 25% 24% 23% 26%
Other 972 1,424 425 466 465 466 1,822 536 569 558 550 2,212 2,610
Y/Y Growth NA 46.5% 22.5% 26.6% 27.4% 35.5% 27.9% 26.0% 22.0% 20.0% 18.0% 21.4% 18.0%
Q/Q Growth 23.5% 9.6% -0.2% 0.2% 14.9% 6.2% -1.9% -1.5%
% of total bookings 6% 8% 8% 9% 9% 10% 9% 9% 10% 10% 11% 10% 10%
Total Gross Bookings 15,552 17,162 5,016 5,224 5,147 4,596 19,983 6,014 5,970 5,818 5,154 22,957 25,800
Y/Y Growth 21.7% 10.4% 7.9% 14.4% 20.8% 24.7% 16.4% 19.9% 14.3% 13.0% 12.1% 14.9% 12.4%
Q/Q Growth 36.0% 4.1% -1.5% -10.7% 30.9% -0.7% -2.5% -11.4%
% of total bookings 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
NET REVENUE
North America NA 1,666 407 506 535 451 1,898 456 546 573 484 2,060 2,196
Y/Y Growth NA 6.5% 10.8% 18.8% 19.3% 13.9% 12.3% 8.0% 7.1% 7.3% 8.5% 6.6%
Q/Q Growth 7.5% 24.5% 5.7% -15.6% 1.1% 19.7% 4.8% -15.4%
% of total revenue 74% 74% 73% 70% 68% 71% 70% 70% 68% 65% 68% 65%
Europe NA 452 110 145 183 169 607 149 185 225 207 766 955
Y/Y Growth NA 29.0% 29.5% 36.6% 39.7% 34.2% 35.2% 27.9% 22.9% 22.5% 26.2% 24.7%
Q/Q Growth -9.1% 31.8% 26.2% -7.7% -12.0% 24.7% 21.3% -8.0%
% of total revenue 20% 20% 21% 24% 25% 23% 23% 24% 27% 28% 25% 28%
Other NA 119 34 39 42 45 160 44 48 50 53 196 238
Y/Y Growth 25.9% 30.0% 40.0% 40.6% 34.5% 30.7% 23.9% 19.6% 18.5% 22.7% 21.0%
Q/Q Growth 6.3% 14.7% 7.7% 7.1% -1.2% 8.7% 3.9% 6.2%
% of total revenue 5% 6% 6% 6% 7% 6% 7% 6% 6% 7% 6% 7%
Total Net Revenue 2,119 2,238 551 690 760 665 2,665 650 780 848 745 3,022 3,389
Y/Y Growth 15.0% 5.6% 11.5% 15.3% 23.7% 25.2% 19.1% 18.0% 13.1% 11.6% 11.9% 13.4% 12.1%
Q/Q Growth 3.6% 25.3% 10.1% -12.4% -2.4% 20.1% 8.7% -12.2%
% of total revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 12/08E 12/08E 12/08E 12/08E 2008E 2009E
GROSS BOOKINGS BY BRAND
Expedia 12,303 13,667 4,039 4,129 3,976 3,621 15,765 4,751 4,657 4,527 4,072 18,006 20,124
Y/Y Growth 24.6% 11.1% 9.2% 14.3% 18.1% 21.3% 15.4% 17.6% 12.8% 13.8% 12.5% 14.2% 11.8%
Q/Q Growth 35.3% 2.2% -3.7% -8.9% 31.2% -2.0% -2.8% -10.0%
% of total gross bookings 79% 80% 81% 79% 77% 79% 79% 79% 78% 78% 79% 78% 78%
Hotels.com 1,889 2,259 612 696 730 579 2,617 782 836 826 670 3,114 3,612
Y/Y Growth 6.4% 19.6% 5.2% 12.1% 21.7% 27.0% 15.8% 27.7% 20.1% 13.2% 15.7% 19.0% 16.0%
Q/Q Growth 34.2% 13.7% 4.9% -20.7% 35.0% 6.9% -1.1% -18.9%
% of total gross bookings 12% 13% 12% 13% 14% 13% 13% 13% 14% 14% 13% 14% 14%
Other 1,360 1,236 365 399 441 396 1,601 481 478 465 412 1,837 2,064
Y/Y Growth 21.4% -9.1% -0.5% 20.9% 50.5% 61.0% 29.5% 31.8% 19.7% 5.5% 4.1% 14.7% 12.4%
Q/Q Growth 48.4% 9.3% 10.5% -10.2% 21.5% -0.7% -2.5% -11.4%
% of total gross bookings 9% 7% 7% 8% 9% 9% 8% 8% 8% 8% 8% 8% 8%
Total Gross Bookings 15,552 17,162 5,016 5,224 5,147 4,596 19,983 6,014 5,970 5,818 5,154 22,957 25,800
EBITA
North America - 735 164 227 239 192 822
Y/Y Growth - - 11.6% 7.1% 17.2% 11.6% 11.8%
Q/Q Growth - - -4.7% 38.4% 5.3% -19.7%
% of total EBITA - 123% 156% 121% 112% 116% 123%
% Net Revenue 44% 40% 45% 45% 43% 43%
Europe - 158 26 43 68 71 208
Y/Y Growth - - 73.3% 7.5% 41.7% 29.1% 31.6%
Q/Q Growth - - -52.7% 65.4% 58.1% 4.4%
% of total EBITA - 26% 25% 23% 32% 43% 31%
% Net Revenue 35% 24% 30% 37% 42% 34%
Other - (295) (85) (83) (94) (97) (359)
Y/Y Growth - - - - - - -
Q/Q Growth - - - -
% of total EBITA - -49% -81% -44% -44% -58% -54%
% Net Revenue - - - - - -
Total EBITA - 598 105 187 213 166 671
Y/Y Growth - 19.3% 1.6% 18.3% 13.7% 12.2%
Q/Q Growth -28.1% 78.1% 13.9% -22.1%
% of total EBITA 100% 100% 100% 100% 100% 100%
% Net Revenue 27% 19% 27% 28% 25% 25%
Figure 134: Expedia Cash Flow Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Effect of exchange-rate on cash and equivalents (8.6) 42.1 (0.4) 6.9 17.8 (2.7) 21.5 - - - - - -
Net change in cash 155.7 555.9 (215.6) 373.7 (174.9) (219.1) (235.9) 445.62 216.44 65.03 (50.95) 676.1 751.3
Cash & equivalents - BOP 141.7 297.4 853.3 637.7 1,011.4 836.5 853.3 617.4 1,063.0 1,279.4 1,344.5 617.4 1,293.5
Cash & equivalents - EOP 297.4 853.3 637.7 1,011.4 836.5 617.4 617.4 1,063.0 1,279.4 1,344.5 1,293.5 1,293.5 2,044.8
- Margin expansion potential as business continues to shift to a larger - Online travel industry dynamics can change rapidly, as the space is
percentage of higher-margin non-air. We project 17% adjusted EBITDA directly affected by fluctuations in the overall travel industry and the macro
margin in 2008, growing to 19% in 2010. economy.
Figure 136: Orbitz Income Statement, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Costs of revenue 101.0 113.0 38.0 42.0 36.0 41.0 157.0 40.5 41.7 36.8 36.1 155.1 166.9
Gross profit 585.0 639.0 174.0 187.0 185.0 156.0 702.0 172.5 190.0 193.2 176.4 732.2 786.6
Selling, General, & Administrative 517.0 579.0 152.0 176.0 149.0 126.0 603.0 144.9 154.5 149.0 138.2 586.6 619.8
Depreciation & amortization 78.0 55.0 13.0 12.0 17.0 15.0 57.0 18.0 18.0 19.0 20.0 75.0 90.0
Impairment of goodwill and intangibles 400.0 122.0 - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total operating expenses 995.0 756.0 165.0 188.0 166.0 141.0 660.0 162.9 172.5 168.0 158.2 661.6 709.8
Operating income (410.0) (117.0) 9.0 (1.0) 19.0 15.0 42.0 9.7 17.4 25.2 18.3 70.6 76.9
Interest income (expense), net (22.0) (27.0) (19.0) (28.0) (19.0) (17.0) (83.0) (12.6) (11.6) (11.3) (11.5) (47.0) (42.4)
Equity income (loss) in affiliates and other - - - - - - - - - - - - -
Other income, net 2.0 0.0 - - - - - - - - - - -
Income (loss) before taxes and minority interest (430.0) (144.0) (10.0) (29.0) 0.0 (2.0) (41.0) (2.9) 5.8 13.8 6.8 23.6 34.5
Income tax expense (benefit) (42.0) 2.0 - 3.0 32.0 8.0 43.0 (1.1) 2.2 5.2 2.5 8.8 12.9
Effective tax rate 9.8% -1.4% 0.0% -10.3% NM NM NM 37.5% 37.5% 37.5% 37.5% 37.5% 37.5%
Minority interest - - - - - (1.0) (1.00) - - - - - -
GAAP Net Income (loss) (388.0) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Basic income (loss) per share ($1.76) ($0.12) ($0.39) ($0.39) ($0.13) ($1.02) ($0.02) $0.04 $0.10 $0.05 $0.17 $0.25
Diluted income (loss) per share ($1.71) ($0.12) ($0.37) ($0.38) ($0.13) ($1.02) ($0.02) $0.04 $0.10 $0.05 $0.17 $0.25
Basic shares outstanding 82.9 82.9 82.9 83.0 83.1 83.0 83.7 84.3 84.9 85.5 84.6 86.3
Diluted shares outstanding 85.6 85.6 85.6 83.1 83.2 83.0 83.8 84.4 85.0 85.6 84.7 86.4
Pro Forma Adj. Net Income Calculation
Net income (loss) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Amortization of intangibles 12.0 5.0 5.0 5.0 5.0 20.0 4.9 4.9 5.1 5.4 20.3 21.6
Interest on debt (40.0) 3.0 14.0 3.0 - 20.0 - - - - - -
Non-cash interest 19.0 3.0 3.0 5.0 3.0 14.0 4.0 4.0 4.0 4.0 16.0 18.5
Stock based compensation 6.0 1.0 2.0 0.5 4.0 7.5 3.5 3.5 3.5 3.5 14.0 18.0
Other adjustments 173.0 8.0 22.0 6.0 4.0 40.0 (2.1) (2.1) (2.1) (2.1) (8.3) (14.0)
Minority interest - - - - - - - - - - - -
Tax Effect (book tax rate) (17.0) 2.0 - 32.0 5.0 39.0 (2.4) (2.4) (2.5) (2.6) (9.7) (9.6)
PF Adjusted Net Income (loss) 7.0 12.0 14.0 19.5 10.0 55.5 6.1 11.6 16.7 12.5 47.0 56.1
PF Adjusted Diluted EPS $0.07 $0.16 $0.15 $0.23 $0.12 $0.66 $0.07 $0.14 $0.20 $0.15 $0.55 $0.65
Adjusted diluted shares outstanding 85.6 85.6 85.6 83.1 83.2 84.4 83.8 84.4 85.0 85.6 84.7 86.4
EBITDA Reconciliation:
Net Income (loss) -- reported (388.0) (146.0) (10.0) (32.0) (32.0) (11.0) (85.0) (1.8) 3.7 8.6 4.2 14.7 21.6
Interest expense 22.0 27.0 19.0 28.0 19.0 17.0 83.0 12.6 11.6 11.3 11.5 47.0 42.4
Provision for income taxes (42.0) 2.0 - 3.0 32.0 8.0 43.0 (1.1) 2.2 5.2 2.5 8.8 12.9
Depreciation and amortization 78.0 55.0 13.0 12.0 17.0 15.0 57.0 18.0 18.0 19.0 20.0 75.0 90.0
EBITDA (330.0) (62.0) 22.0 11.0 36.0 29.0 98.0 27.7 35.4 44.2 38.3 145.6 166.9
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Y/Y GROWTH
Gross Bookings 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Revenue 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Cost of goods sold 134.9% 11.9% 31.0% 44.8% 20.0% 64.0% 38.9% 6.5% -0.7% 2.2% -11.9% -1.2% 7.6%
Gross profit 191.0% 9.2% 13.7% 5.1% 20.1% 1.3% 9.9% -0.8% 1.6% 4.4% 13.1% 4.3% 7.4%
Selling, General, & Administrative 138.2% 12.0% 4.8% 15.8% 5.7% -10.6% 4.1% -4.7% -12.2% 0.0% 9.7% -2.7% 5.7%
Total operating expenses 284.2% -24.0% 2.5% -34.5% 7.1% -7.8% -12.7% -1.3% -8.2% 1.2% 12.2% 0.2% 7.3%
Adjusted EBITDA NA NA 200.0% -5.6% 22.9% 15.6% 27.4% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
SEQUENTIAL GROWTH
Revenue 18.4% 8.0% -3.5% -10.9% 8.1% 8.8% -0.7% -7.6%
Adjusted EBITDA -6.3% 13.3% 26.5% -14.0% -21.3% 26.6% 23.6% -12.9%
% OF REVENUES
Cost of revenues 14.7% 15.0% 17.9% 18.3% 16.3% 20.8% 18.3% 19.0% 18.0% 16.0% 17.0% 17.5% 17.5%
Selling, General, & Administrative 75.4% 77.0% 71.7% 76.9% 67.4% 64.0% 70.2% 68.0% 66.7% 64.8% 65.0% 66.1% 65.0%
Depreciation & amortization 11.4% 7.3% 6.1% 5.2% 7.7% 7.6% 6.6% 8.4% 7.8% 8.3% 9.4% 8.5% 9.4%
Total operating expenses 145.0% 100.5% 95.8% 100.4% 91.4% 92.4% 95.1% 95.4% 92.5% 89.1% 91.4% 92.0% 91.9%
MARGINS
Gross margin 85.3% 85.0% 82.1% 81.7% 83.7% 79.2% 81.7% 81.0% 82.0% 84.0% 83.0% 82.5% 82.5%
Operating margin -59.8% -15.6% 4.2% -0.4% 8.6% 7.6% 4.9% 4.6% 7.5% 10.9% 8.6% 8.0% 8.1%
Adj. EBITDA Margin NA 15.0% 14.2% 14.8% 19.5% 18.8% 16.8% 13.7% 15.9% 19.8% 18.7% 17.0% 17.9%
Operating leverage (∆EBITDA / ∆Revenue) NA NA 66.7% -9.1% 21.6% 27.8% 29.0% -86.7% 107.5% 28.7% 17.3% 25.7% 29.6%
Figure 137: Orbitz Segment Breakdown, 2005–09E ($ in millions, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Q/Q Growth 18.4% 8.0% -3.5% -10.9% 8.1% 8.8% -0.7% -7.6%
Total Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Y/Y Growth 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Q/Q Growth 21.2% 1.8% -11.9% -10.7% 23.4% 6.0% -9.0% -7.2%
GROSS BOOKINGS
Air Bookings 5,392.0 7,443.0 2,151.0 2,245.0 1,923.8 1,760.0 8,079.8 2,086.5 2,289.9 2,027.7 1,918.4 8,322.5 8,871.7
Y/Y Growth 303.0% 38.0% 19.5% 9.5% 8.8% -4.1% 8.6% -3.0% 2.0% 5.4% 9.0% 3.0% 6.6%
% of Total Bookings 72.5% 74.2% 73.1% 75.0% 73.0% 74.7% 73.9% 71.7% 74.3% 72.3% 73.7% 73.0% 71.7%
Non-Air + Other Bookings 2,043.0 2,582.0 790.0 749.0 713.2 596.0 2,848.2 821.6 793.9 777.4 685.4 3,078.3 3,509.3
Y/Y Growth 214.8% 26.4% 25.0% 9.2% 7.5% 0.7% 10.3% 4.0% 6.0% 9.0% 15.0% 8.1% 14.0%
% of Total Bookings 27.5% 25.8% 26.9% 25.0% 27.0% 25.3% 26.1% 28.3% 25.7% 27.7% 26.3% 27.0% 28.3%
Total Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Y/Y Growth 274.2% 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Q/Q Growth 21.2% 1.8% -11.9% -10.7% 23.4% 6.0% -9.0% -7.2%
BOOKINGS BY REGION
Domestic Bookings 6,334.0 8,748.0 2,530.0 2,597.0 2,262.0 2,004.0 9,393.0 2,469.0 2,639.8 2,392.7 2,213.2 9,714.7 10,499.1
Y/Y Growth 255.4% 38.1% 18.8% 7.5% 8.2% -5.2% 7.4% -2.4% 1.6% 5.8% 10.4% 3.4% 8.1%
% of Total Bookings 85.2% 87.3% 86.0% 86.8% 85.8% 85.1% 86.0% 84.9% 85.6% 85.3% 85.0% 85.2% 84.8%
International Bookings 1,101.0 1,277.0 411.0 396.0 375.0 352.0 1,534.0 439.1 444.1 412.3 390.6 1,686.1 1,881.9
Y/Y Growth 437.1% 16.0% 35.6% 23.8% 10.3% 12.1% 20% 6.8% 12.1% 10.0% 11.0% 9.9% 11.6%
% of Total Bookings 14.8% 12.7% 14.0% 13.2% 14.2% 14.9% 14.0% 15.1% 14.4% 14.7% 15.0% 14.8% 15.2%
Total Gross Bookings 7,435.0 10,025.0 2,941.0 2,993.0 2,637.0 2,356.0 10,927.0 2,908.1 3,083.8 2,805.1 2,603.8 11,400.8 12,381.0
Y/Y Growth 274% 35% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
REVENUE
Air Revenue 323.0 355.0 99.0 103.0 92.0 81.0 375.0 93.9 103.0 91.2 84.4 372.6 381.5
Y/Y Growth 275.6% 9.9% 11.2% 7.3% 8.2% -4.7% 5.6% -5.2% 0.0% -0.8% 4.2% -0.6% 2.4%
Revenue Take Rate % 6.0% 4.8% 4.6% 4.6% 4.8% 4.6% 4.6% 4.5% 4.5% 4.5% 4.4% 4.5% 4.3%
% of Total Revenue 47% 47% 46.7% 45.0% 41.6% 41.1% 44% 44.1% 44.5% 39.7% 39.7% 42.0% 40.0%
Non-Air + Other Revenue 363.0 397.0 113.0 126.0 129.0 116.0 484.0 119.1 128.6 138.8 128.2 514.7 572.0
Y/Y Growth 129.7% 9.4% 21.5% 13.5% 30.3% 23.4% 21.9% 5.4% 2.1% 7.6% 10.5% 6.3% 11.1%
Revenue Take Rate % 17.8% 15.4% 14.3% 16.8% 18.1% 19.5% 17.0% 14.5% 16.2% 17.9% 18.7% 16.7% 16.3%
% of Total Revenue 53% 53% 53.3% 55.0% 58.4% 58.9% 56% 55.9% 55.5% 60.3% 60.3% 58.0% 60.0%
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Revenue Take Rate % 9.2% 7.5% 7.2% 7.7% 8.4% 8.4% 7.9% 7.3% 7.5% 8.2% 8.2% 7.8% 7.7%
REVENUE BY REGION
Domestic Revenue 542.0 611.0 166.0 185.0 175.0 153.0 679.0 163.4 182.6 180.6 165.8 692.3 729.4
Y/Y Growth 150.9% 12.7% 12.9% 10.8% 15.9% 4.8% 11.1% -1.6% -1.3% 3.2% 8.4% 2.0% 5.4%
Revenue Take Rate % 8.6% 7.0% 6.6% 7.1% 7.7% 7.6% 7.2% 6.6% 6.9% 7.5% 7.5% 7.1% 6.9%
% of Total Revenue 79.0% 81.3% 78.3% 80.8% 79.2% 77.7% 79.0% 76.7% 78.8% 78.5% 78.0% 78.0% 76.5%
International Revenue 144.0 141.0 46.0 44.0 46.0 44.0 180.0 49.6 49.1 49.5 46.8 195.0 224.1
Y/Y Growth 414.3% -2.1% 31.4% 10.0% 39.4% 33.3% 27.7% 7.9% 11.6% 7.5% 6.3% 8.3% 14.9%
Revenue Take Rate % 13.1% 11.0% 11.2% 11.1% 12.3% 12.5% 11.7% 11.3% 11.1% 12.0% 12.0% 11.6% 11.9%
% of Total Revenue 21% 19% 21.7% 19.2% 20.8% 22.3% 21.0% 23.3% 21.2% 21.5% 22.0% 22.0% 23.5%
Total Revenue 686.0 752.0 212.0 229.0 221.0 197.0 859.0 213.0 231.7 230.0 212.6 887.3 953.5
Y/Y Growth 181.1% 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Revenue Take Rate % 9.2% 7.5% 7.2% 7.7% 8.4% 8.4% 7.9% 7.3% 7.5% 8.2% 8.2% 7.8% 7.7%
Figure 138: Orbitz Base Financials, 2005–09E ($ in millions, except per share data)
-adjusts for Travelbag, purchase accounting, and Travelport corporate solutions to arrive at base financials; excludes FX impacts
2005A 3/06A 6/06A 9/06A 12/06A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
GROSS BOOKINGS
Reported Gross Bookings 7,435 2,432 2,735 2,431 2,427 10,025 2,941 2,993 2,637 2,356 10,927 2,908 3,084 2,805 2,604 11,401 12,381
Y/Y Growth NA NA NA NA NA 34.8% 20.9% 9.4% 8.5% -2.9% 9.0% -1.1% 3.0% 6.4% 10.5% 4.3% 8.6%
Adjustments:
Travelbag Total NA 60 55 63 67 245 66 58 12 - 136 - - - - - -
Travelbag Air NA 50 46 52 55 203 55 49 10 - 114 - - - - - -
Travelbag Non-Air NA 10 9 11 12 42 11 9 2 - 22 - - - - - -
Adjusted Gross Bookings (BASE) NA 2,372 2,680 2,368 2,360 9,780 2,875 2,935 2,625 2,356 10,791 2,908 3,084 2,805 2,604 11,401 12,381
Y/Y Growth NA NA NA NA NA NA 21.2% 9.5% 10.9% -0.2% 10.3% 1.2% 5.1% 6.9% 10.5% 5.7% 8.6%
REVENUE
Total Revenue Reported 686 182 207 184 179 752 212 229 221 197 859 213 232 230 213 887 953
Y/Y Growth NA NA NA NA NA 9.6% 16.5% 10.6% 20.1% 10.1% 14.2% 0.5% 1.2% 4.1% 7.9% 3.3% 7.5%
Adjustments:
Purchase Accounting Add-Back (+) NA - - 21 18 39 6 - - - 6 - - - - - -
Travelport corporate solutions NA 1 2 - 1 4 - - - - - - - - - - -
Travelbag Total NA 7 6 8 7 28 7 6 2 - 15 - - - - - -
Travelbag Air NA 3 4 5 4 16 4 3 1 - 8 - - - - - -
Travelbag Non-Air NA 4 2 3 3 12 3 3 1 - 7 - - - - - -
Adjusted Revenue (BASE) NA 174 199 197 189 759 211 223 219 197 850 213 232 230 213 887 953
Y/Y Growth NA NA NA NA NA NA 21.3% 12.1% 11.2% 4.2% 12.0% 1.0% 3.9% 5.0% 7.9% 4.4% 7.5%
Revenue Margin/Take Rate NA 7.3% 7.4% 8.3% 8.0% 7.8% 7.3% 7.6% 8.3% 8.4% 7.9% 7.3% 7.5% 8.2% 8.2% 7.8% 7.7%
ADJUSTED EBITDA
Reported Adjusted EBITDA 90 10 36 35 32 113 30 34 43 37 144 29 37 46 40 151 171
Y/Y Growth NA NA NA NA NA 25.6% 200.0% -5.6% 22.9% 15.6% 27.4% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
Adjustments:
Travelbag NA (2) - 3 1 2 (1) (1) - - (2) - - - - - -
Tecnovate NA 1 1 1 1 4 1 1 - - 2 - - - - - -
Adj. EBITDA Ex-T'bag & Tecnovate (BASE) NA 11 35 31 30 107 30 34 43 37 144 29 37 46 40 151 171
Y/Y Growth NA NA NA NA NA NA 172.7% -2.9% 38.7% 23.3% 34.6% -3.0% 8.4% 6.0% 7.3% 5.0% 13.0%
Adjusted EBITDA Margin Base NA 6.3% 17.6% 15.7% 15.9% 14.1% 14.2% 15.2% 19.6% 18.8% 16.9% 13.7% 15.9% 19.8% 18.7% 17.0% 17.9%
- Digital content likely to remain limited in N-T as a majority of catalog - BBI strategy: 1) Total Access/By-Mail remains key part of "triple-play" strategy, with
content remains in L-T pay TV contracts --> lengthens DVD lifespan by-mail, in-store and digital delivery
- Cable VOD day & date releases gaining some momentum, Comcast increasing HD
- Well-run company with ability to balance growth and profitability
content for VOD, but still very early
- Headline risk as competing digital platforms, including AAPL rentals, AMZN Unbox,
- Churn and usage should decline as lower priced plans gain traction with
are launched and content improves, and as content producers explore new distribution
more casual movie watchers
channels
Figure 140: Netflix Income Statement, 2005–09E ($ in millions, except per share data)
($ millions) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenues
Subscription 682.2 996.7 305.3 303.7 294.0 302.4 1,205.3 326.0 339.8 346.5 363.6 1,375.9 1,640.1
DVD & Advertising Sales --- - - - - - - - - - - - -
Total Net Revenues $682.2 $996.7 $305.3 $303.7 $294.0 $302.4 $1,205.3 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Cost of Sales
Revenue sharing 126.2 152.4 43.4 43.7 40.2 41.4 168.8 46.0 47.6 46.4 47.6 187.6 213.2
DVD amortization 91.8 134.0 47.0 48.4 45.8 52.0 193.2 63.2 59.0 59.3 64.6 246.0 314.6
Postage & packaging 174.3 246.0 74.8 74.4 72.0 73.8 295.0 78.2 83.3 84.9 85.4 331.8 380.5
Amortization of intangibles 1.4 0.3 0.1 1.0 5.6 1.5 8.1 - - - - - -
Total Cost of subscription revenue 393.8 532.6 165.2 167.6 163.7 168.7 665.1 187.4 189.8 190.6 197.6 765.4 908.3
Fulfillment 70.8 93.4 29.6 29.0 30.6 31.3 120.6 31.9 33.0 36.7 38.9 140.5 170.6
DVD & Advertising Sales - - - - - - - - - - - - -
Total Cost of Sales 464.6 626.1 194.8 196.6 194.4 200.0 785.7 219.3 222.8 227.3 236.5 905.9 1,078.9
Gross profit 217.7 370.6 110.5 107.1 99.6 102.4 419.6 106.7 117.1 119.2 127.1 470.0 561.2
Operating expenses
Technology and development 30.9 44.8 15.0 18.1 17.2 17.5 67.7 18.6 21.4 22.2 23.6 85.8 105.0
Marketing 142.0 223.4 71.6 44.7 48.6 51.2 216.1 54.6 46.9 50.7 56.0 208.2 221.1
General and administrative 29.4 30.1 10.8 12.5 11.4 12.1 46.8 12.4 13.3 13.5 14.2 53.3 62.3
Restructuring related and other (gain on disposal of DVDs) (2.0) (4.8) (0.9) (9.3) (2.3) (1.7) (14.2) (2.5) (2.5) (2.5) (2.5) (10.0) (11.0)
Stock-based compensation 14.3 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
Amortization of other intangibles - - - - - - - - -
Total operating expenses 214.7 306.2 99.3 68.8 78.1 82.3 328.4 86.3 82.0 86.9 93.4 348.7 388.2
Operating income 3.0 64.4 11.2 38.3 21.6 20.1 91.2 20.3 35.0 32.3 33.6 121.2 173.0
Operating income (ex. stock comp) 17.3 77.1 14.0 41.1 24.7 23.4 103.1 23.6 38.0 35.3 35.7 132.6 183.8
Interest income 5.8 15.9 5.4 5.0 5.1 4.9 20.3 3.1 3.2 3.5 3.7 13.5 18.4
Interest expense (0.4) - - - - - - - - - - - -
Total non-operating income (expenses) 5.3 15.9 5.4 5.0 5.1 4.9 20.3 3.1 3.2 3.5 3.7 13.5 18.4
Pre-tax income 8.3 80.3 16.6 43.2 26.6 25.1 111.5 23.4 38.2 35.7 37.3 134.7 191.4
Income tax provision (33.7) 31.2 6.7 17.7 10.9 9.3 44.5 9.4 15.3 14.3 14.9 53.9 76.6
Income tax rate NA 38.9% 40.5% 40.8% 40.9% 37.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
GAAP Net income (loss) 42.0 49.1 9.9 25.6 15.7 15.8 67.0 14.0 22.9 21.4 22.4 80.8 114.8
GAAP Basic income (loss) per share $0.79 $0.78 $0.14 $0.38 $0.24 $0.24 $1.00 $0.23 $0.38 $0.35 $0.37 $1.32 $1.87
GAAP Diluted income (loss) per share $0.64 $0.71 $0.14 $0.37 $0.23 $0.24 $0.97 $0.22 $0.36 $0.34 $0.36 $1.28 $1.81
Basic shares outstanding 53.5 62.6 68.7 68.0 66.5 65.2 67.1 61.7 61.2 61.2 61.2 61.3 61.5
Diluted shares outstanding 65.5 69.1 70.7 69.9 68.1 67.0 68.9 63.5 63.0 63.0 63.0 63.2 63.4
EBITDA Reconciliation:
Operating Income 3.0 64.4 11.2 38.3 21.6 20.1 91.2 20.3 35.0 32.3 33.6 121.2 173.0
Depreciation of PP&E 9.1 15.9 4.6 5.1 5.8 5.9 21.4 6.0 6.0 6.0 6.0 24.0 28.0
Amortization of DVD Library 96.9 141.2 49.4 51.0 48.2 54.8 203.4 66.5 62.1 62.4 68.0 258.9 327.7
Amortization of Intangibles 1.0 0.1 0.0 0.0 0.0 0.1 0.2 - - - - - -
Stock-based comp, other non-cash charges 17.5 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
EBITDA 127.5 234.2 68.1 97.2 78.7 84.1 328.1 96.1 106.1 103.6 109.7 415.6 539.5
EBITDA (excluding add-back of DVD Amortization) 30.6 93.1 18.6 46.2 30.4 29.4 124.7 29.6 44.0 41.3 41.7 156.6 211.8
Figure 141: Netflix Subscriber and Revenue Analysis, 2005–09E ($ in millions, except per share data)
SUBSCRIBER & REVENUE ANALYSIS 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Subscribers: Beginning of Period 2,610 4,179 6,316 6,797 6,742 7,028 6,316 7,479 8,227 8,449 8,774 7,479 9,340
Plus: Gross Additions 3,729 5,250 1,520 1,028 1,297 1,495 5,340 1,854 1,439 1,556 1,839 6,689 7,291
Y/Y Growth 37.3% 40.8% 10.4% -3.9% -1.0% 0.1% 1.7% 22.0% 40.0% 20.0% 23.0% 25.3% 9.0%
Q/Q Growth 0.5% -32.4% 26.2% 15.3% 6.7% -22.4% 8.1% 18.1%
Less: Cancellations 2,160 3,113 1,039 1,083 1,011 1,044 4,177 1,106 1,218 1,231 1,274 4,828 5,358
Y/Y Growth 35.6% 44.1% 50.6% 41.2% 23.7% 24.4% 34.2% 6.4% 12.5% 21.7% 22.0% 15.6% 11.0%
Q/Q Growth 23.8% 4.2% -6.6% 3.3% 5.9% 10.1% 1.0% 3.5%
Monthly Churn (cancels/(BOP subs + gross sub adds)) 4.5% 4.1% 4.4% 4.6% 4.2% 4.1% 4.3% 4.0% 4.2% 4.1% 4.0% 4.1% 4.0%
Net additions 1,569 2,137 481 (55) 286 451 1,163 748 221 326 565 1,861 1,933
TOTAL SUBSCRIBERS, END OF PERIOD 4,179 6,316 6,797 6,742 7,028 7,479 7,479 8,227 8,449 8,774 9,340 9,340 11,273
Y/Y Growth 60.1% 51.1% 39.7% 30.4% 24.1% 18.4% 18.4% 21.0% 25.3% 24.8% 24.9% 24.9% 20.7%
Q/Q Growth 7.6% -0.8% 4.2% 6.4% 10.0% 2.7% 3.9% 6.4%
Average Subscribers 3,395 5,248 6,557 6,770 6,885 7,254 6,898 7,853 8,338 8,611 9,057 8,409 10,306
Free Subscribers: end of period 153 162 121 133 183 153 153 145 158 198 161 161 169
% Change Y/Y 23.4% 5.9% -8.3% -12.5% 5.8% -5.6% -5.6% 20.0% 19.0% 8.0% 5.0% 5.0% 5.0%
Free subscribers as a % of ending subscribers 3.7% 2.6% 1.8% 2.0% 2.6% 2.0% 2.0% 1.8% 1.9% 2.3% 1.7% 1.7% 1.5%
Paid Subscribers: end of period 4,026 6,154 6,676 6,609 6,845 7,326 7,326 8,082 8,290 8,577 9,179 9,179 11,104
Y/Y Growth 61.9% 52.9% 41.0% 31.7% 24.7% 19.0% 19.0% 21.1% 25.4% 25.3% 25.3% 25.3% 21.0%
Q/Q Growth 8.5% -1.0% 3.6% 7.0% 10.3% 2.6% 3.5% 7.0%
Average Paid Subscribers 3,256 5,090 6,415 6,643 6,727 7,086 6,740 7,704 8,186 8,434 8,878 8,252 10,141
Subscriber breakdown
Free Subscribers as % of subs 3.7% 2.6% 1.8% 2.0% 2.6% 2.0% 2.0% 1.8% 1.9% 2.3% 1.7% 1.7% 1.5%
Paid Subscriber as % of subs 96.3% 97.4% 98.2% 98.0% 97.4% 98.0% 98.0% 98.2% 98.1% 97.7% 98.3% 98.3% 98.5%
Total Subscribers 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Subscription revenue per average paid sub (monthly) $17.46 $16.32 $15.83 $15.24 $14.57 $14.22 $14.89 $14.10 $13.84 $13.70 $13.65 $13.89 $13.48
Y/Y Growth -18.3% -6.5% -7.2% -6.9% -10.3% -10.4% -8.7% -10.9% -9.2% -6.0% -4.0% -6.7% -3.0%
Q/Q Growth -0.3% -3.7% -4.4% -2.4% -0.8% -1.9% -1.0% -0.3%
TOTAL SUBSCRIPTION REVENUE $682.2 $996.7 $304.6 $303.7 $294.0 $302.3 $1,204.6 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Y/Y Growth 36.3% 46.1% 35.9% 26.9% 14.9% 9.0% 20.9% 7.0% 11.9% 17.8% 20.3% 14.2% 19.2%
Q/Q Growth 9.9% -0.3% -3.2% 2.8% 7.8% 4.3% 2.0% 4.9%
TOTAL REVENUE $682.2 $996.7 $304.6 $303.7 $294.0 $302.3 $1,204.6 $326.0 $339.8 $346.5 $363.6 $1,375.9 $1,640.1
Y/Y Growth 34.8% 46.1% 35.9% 26.9% 14.9% 9.0% 20.9% 7.0% 11.9% 17.8% 20.3% 14.2% 19.2%
Q/Q Growth 9.9% -0.3% -3.2% 2.8% 7.8% 4.3% 2.0% 4.9%
MARKETING EXPENSES
Number of New Subscribers 3,729 5,250 1,520 1,028 1,297 1,495 5,340 1,854 1,439 1,556 1,839 6,689 7,291
Subscriber Acquisition Cost (SAC) - consolidated $37.87 $43.01 $47.46 $44.02 $37.91 $34.60 $41.00 $29.43 $32.57 $32.60 $30.45 $31.26 $30.32
Y/Y Growth 4.8% 13.6% 23.4% 0.2% -16.4% -21.9% -4.7% -38.0% -26.0% -14.0% -12.0% -23.7% -3.0%
Q/Q Growth 7.1% -7.2% -13.9% -8.7% -15.0% 10.7% 0.1% -6.6%
Calculated Marketing Expense 142.0 225.5 72.1 45.3 49.2 51.7 218.3 54.6 46.9 50.7 56.0 208.2 221.1
Y/Y Growth 44.9% 58.8% 36.2% -3.8% -17.2% -21.8% -3.2% -24.4% 3.6% 3.2% 8.2% -4.6% 6.2%
Q/Q Growth 9.0% -37.3% 8.7% 5.2% 5.5% -14.1% 8.2% 10.3%
Reported marketing expense 72.1 45.3 49.1 51.7
Figure 142: Netflix Cash Flow Statement, 2005–09E ($ in millions, except per share data)
($ millions) 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Cash Flows from Operating Activities
Net income (loss) 42.0 49.1 9.9 25.6 15.7 15.8 67.0 14.0 22.9 21.4 22.4 80.8 114.8
Adjustments to reconcile net income (loss) to net cash
Depreciation of property and equipment 9.1 15.9 4.6 5.1 5.8 5.9 21.4 6.0 6.0 6.0 6.0 24.0 28.0
Amortization of DVD library 96.9 141.2 49.4 51.0 48.2 54.8 203.4 66.5 62.1 62.4 68.0 258.9 327.7
Amortization of intangible assets 1.0 0.1 0.0 0.0 0.0 0.1 0.2 - -
Noncash charges for equity instruments granted - - (0.1) 0.0 0.0 0.1 0.0 - -
Stock-based compensation expense 14.3 12.7 2.8 2.8 3.1 3.2 12.0 3.3 3.0 3.0 2.1 11.4 10.8
Stock option income tax benefits - (13.2) (4.1) (12.0) (5.2) (5.0) (26.2) (6.0) (6.0) (6.0) (6.0) (24.0) (24.0)
Loss on disposal of short term investments - - (0.1) (0.0) (0.2) (0.3) (0.7) - - - - - -
Loss on disposal of property and equipment - (0.0) - - 0.1 0.0 0.1 - - - - - -
Gain on disposal of DVD's (3.6) (9.1) (2.6) (5.2) (3.9) (2.9) (14.6) (4.0) (4.0) (4.0) (4.0) (16.0) (16.0)
Non-cash interest expense 0.0 - - - - - - - - - - - -
Deferred income taxes (34.9) 16.2 (0.3) (0.5) (0.3) 0.4 (0.7) - - - - - -
Changes in Working Capital
Prepaid expenses and other current assets (4.9) (7.1) (10.3) 5.7 0.1 0.2 (4.3) (3.2) (0.7) (0.3) (0.1) (4.4) (6.3)
Accounts payable 8.2 3.2 11.4 (17.8) 6.0 (2.5) (2.9) (6.7) 4.2 8.9 5.5 11.9 14.9
Accrued expenses 12.4 17.6 7.7 14.2 11.4 (0.6) 32.8 9.2 5.3 4.5 (2.7) 16.3 12.9
Deferred revenue 16.6 21.1 (5.4) (3.7) (4.2) 15.3 2.0 13.1 3.6 1.7 0.8 19.2 15.7
Deferred rent 0.2 0.3 0.1 0.0 0.7 (0.1) 0.7 - - - - - -
Change in Working Capital 32.6 35.1 3.5 (1.6) 14.1 12.4 28.3 12.4 12.4 14.8 3.4 43.0 37.1
Net cash provided by (used in) operating activities 157.5 247.9 63.0 65.1 77.6 84.408 290.1 92.2 96.5 97.6 91.9 378.2 478.5
Capex
Revenue 682.2 996.7 305.3 303.7 294.0 302.4 1,205.3 326.0 339.8 346.5 363.6 1,375.9 1,640.1
Capex 27.7 27.3 18.0 9.0 7.4 9.9 44.3 10.4 10.9 11.1 11.6 44.0 45.9
Capex as a % of revenue 4.1% 2.7% 5.9% 3.0% 2.5% 3.3% 3.7% 3.2% 3.2% 3.2% 3.2% 3.2% 2.8%
- Access to inventory creates a competitive advantage versus both traditional - Tough top-line comps and macro could lead to flat 1Q08 growth
and online jewelers
- Low capex, high inventory turns, & favorable payment terms lead to strong - We think it is likely that AMZN will ultimately become a competitor through an
free cash flow generation alternative brand
- International expansion into the UK and Canada provide additional revenue - Higher commodities costs could negatively impact gross margins; not passing on
streams; now shipping to 12 new international markets--Japan site next? to consumers
- Strong balance sheet with $123 million in cash & equivalents at YE '07 - Rising online advertising prices, particularly in sponsored search, could weigh on
traffic generation
- $150M share repurchase authorization; we'd expect company to be a buyer - Real time inventory purchase requirements means the company is more subject to
in near-term pricing changes
- Demand at higher price points -- has been weak in '08 thus far -- $25K+ =
15% of business
Figure 144: Blue Nile Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 1Q07A 2Q07A 3Q07A 4Q07A 2007A 1Q08E 2Q08E 3Q08E 4Q08E 2008E 2009E
Net Sales 203,169 251,587 67,910 72,093 67,355 111,906 319,264 69,902 78,639 76,516 129,384 354,440 396,105
Cost of Sales 158,025 200,761 54,661 57,150 53,998 88,251 254,060 56,271 62,125 60,983 101,566 280,945 314,507
Gross profit 45,144 50,826 13,249 14,943 13,357 23,655 65,204 13,631 16,514 15,533 27,817 73,495 81,598
Operating expenses
Selling, General, and Administrative 27,095 34,269 9,564 9,909 9,744 13,575 42,792 11,254 11,639 11,309 15,526 49,728 54,662
Restructuring charges - - - - - - - - - - - - -
Operating income (loss) 18,049 16,557 3,685 5,034 3,613 10,080 22,412 2,377 4,876 4,224 12,291 23,767 26,935
Interest income 2,499 3,323 973 803 947 1,037 3,760 1,085 839 795 943 3,661 3,730
Interest expense - - - - - - - - - - - - -
Other income 5 100 203 12 13 187 415 - - - - - -
Other income, net 2,504 3,423 1,176 815 960 1,224 4,175 1,085 839 795 943 3,661 3,730
Income (loss) before income taxes- EBT 20,553 19,980 4,861 5,849 4,573 11,304 26,587 3,461 5,714 5,018 13,235 27,429 30,665
Provision (benefit) for income taxes 7,400 6,916 1,698 2,068 1,601 3,761 9,128 1,211 2,000 1,756 4,632 9,600 10,733
Effective Tax Rate 36.0% 34.6% 34.9% 35.4% 35.0% 33.3% 34.3% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
Net Income (loss) Attr. to Common (GAAP) 13,153 13,064 3,163 3,781 2,972 7,543 17,459 2,250 3,714 3,262 8,602 17,829 19,932
Basic income (loss) per share $0.75 $0.79 $0.20 $0.24 $0.19 $0.47 $1.10 $0.14 $0.23 $0.20 $0.54 $1.12 $1.24
Diluted income (loss) per share $0.71 $0.76 $0.19 $0.23 $0.18 $0.45 $1.04 $0.13 $0.22 $0.19 $0.51 $1.06 $1.18
Basic shares outstanding 17,550 16,563 15,874 15,802 15,959 16,039 15,919 15,989 15,964 15,939 15,889 15,945 16,020
Diluted shares outstanding 18,606 17,278 16,545 16,617 16,912 16,925 16,814 16,875 16,850 16,825 16,775 16,831 16,906
PF Net Income (loss) Attr. to Common 13,153 15,899 3,994 4,676 3,872 8,669 21,212 3,420 4,949 4,497 9,902 22,769 25,613
PF Diluted income (loss) per share $0.71 $0.92 $0.24 $0.28 $0.23 $0.51 $1.26 $0.20 $0.29 $0.27 $0.59 $1.35 $1.52
Diluted shares outstanding 18,606 17,278 16,545 16,617 16,912 16,925 16,814 16,875 16,850 16,825 16,775 16,831 16,906
EBITDA Reconciliation
Operating income (loss) 18,049 16,557 3,685 5,034 3,613 10,080 22,412 2,377 4,876 4,224 12,291 23,767 26,935
Depreciation and other amortization 1,717 1,868 391 385 408 588 1,772 500 500 500 500 2,000 2,160
Stock-based compensation -- 4,339 1,277 1,385 1,385 1,688 5,735 1,800 1,900 1,900 2,000 7,600 8,740
EBITDA 19,766 22,764 5,353 6,804 5,406 12,356 29,919 4,677 7,276 6,624 14,791 33,367 37,835
2005A 2006A 1Q07A 2Q07A 3Q07A 4Q07A 2007A 1Q08E 2Q08E 3Q08E 4Q08E 2008E 2009E
Y/Y GROWTH
Total Revenue 20.0% 23.8% 34.0% 26.7% 26.5% 23.3% 26.9% 2.9% 9.1% 13.6% 15.6% 11.0% 11.8%
Gross profit 19.9% 12.6% 28.1% 31.7% 28.1% 26.5% 28.3% 2.9% 10.5% 16.3% 17.6% 12.7% 11.0%
Selling, general and administrative expenses 18.9% 26.5% 24.6% 27.9% 17.8% 28.4% 24.9% 17.7% 17.5% 16.1% 14.4% 16.2% 9.9%
Operating income 21.5% -8.3% 38.3% 39.8% 67.3% 24.0% 35.4% -35.5% -3.1% 16.9% 21.9% 6.0% 13.3%
Pre-Tax Income (Loss) - EBT 31.5% -2.8% 33.2% 27.6% 61.5% 26.8% 33.1% -28.8% -2.3% 9.7% 17.1% 3.2% 11.8%
GAAP Net income 31.7% -0.7% 34.3% 20.7% 62.9% 31.1% 33.6% -28.9% -1.8% 9.8% 14.0% 2.1% 11.8%
GAAP EPS 26.6% 7.0% 48.0% 27.6% 60.6% 29.2% 37.3% -30.3% -3.1% 10.3% 15.1% 2.0% 11.3%
EBITDA 20.8% 15.2% 33.1% 35.1% 38.3% 26.1% 31.4% -12.6% 6.9% 22.5% 19.7% 11.5% 13.4%
SEQUENTIAL GROWTH
Net sales -25.2% 6.2% -6.6% 66.1% -37.5% 12.5% -2.7% 69.1%
Cost of Sales -24.1% 4.6% -5.5% 63.4% -36.2% 10.4% -1.8% 66.5%
Gross profit -29.2% 12.8% -10.6% 77.1% -42.4% 21.2% -5.9% 79.1%
% OF REVENUES
Cost of Sales 77.8% 79.8% 80.5% 79.3% 80.2% 78.9% 79.6% 80.5% 79.0% 79.7% 78.5% 79.3% 79.4%
Selling, General, and Administrative 13.3% 13.6% 14.1% 13.7% 14.5% 12.1% 13.4% 16.1% 14.8% 14.8% 12.0% 14.0% 13.8%
MARGINS
Gross margin 22.2% 20.2% 19.5% 20.7% 19.8% 21.1% 20.4% 19.5% 21.0% 20.3% 21.5% 20.7% 20.6%
Operating margin 8.9% 6.6% 5.4% 7.0% 5.4% 9.0% 7.0% 3.4% 6.2% 5.5% 9.5% 6.7% 6.8%
Net margin 6.5% 5.2% 4.7% 5.2% 4.4% 6.7% 5.5% 3.2% 4.7% 4.3% 6.6% 5.0% 5.0%
EBITDA margin 9.7% 9.0% 7.9% 9.4% 8.0% 11.0% 9.4% 6.7% 9.3% 8.7% 11.4% 9.4% 9.6%
Operating Leverage (∆ Oper income / ∆ Revenues) 9.4% -3.1% 5.9% 9.4% 10.3% 9.2% 8.7% -65.7% -2.4% 6.7% 12.7% 3.9% 7.6%
Figure 145: Blue Nile Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 1Q07A 2Q07A 3Q07A 4Q07A 2007A 1Q08E 2Q08E 3Q08E 4Q08E 2008E 2009E
Capex Analysis
Capex (1,072) (1,908) (193) (1,873) (1,511) (1,320) (4,897) (559) (629) (612) (906) (2,706) (3,169)
Capex as % of revenues 0.5% 0.8% 0.3% 2.6% 2.2% 1.2% 1.5% 0.8% 0.8% 0.8% 0.7% 0.8% 0.8%
- Well-positioned to benefit from the secular shift of market research toward the Internet. - Continued survey pricing pressure and increased competition.
- Full-service market research firms could build or acquire internal panels, reducing dependency
- Ciao provides exposure to high growth, high margin comparison shopping business.
on Greenfield.
- Online data collection model can be highly scalable. Company has returned to solid double-
- Client consolidation.
digit growth in global survey business.
- Sizable market opportunity: about $3B-$4B of the $20B+ worldwide market research - Clients are market research firms, so Greenfield does not have a direct relationship with the end-
industry is spent on fieldwork. user.
- Diversifying from panel toward real-time sampling. - Any potential deceleration in Ciao Europe business.
- Whether Ciao can maintain its leadership position in European comparision shopping versus
eBay's Shopping.com, Yahoo!'s Kelkoo, etc. Revenues $143M-$153M (+11%-19%).
- Is Ciao U.S. spending the right amount of money? Adjusted EBITDA Margin 27%-28%
--$2M revenues with $800K operating loss in 2008
Depreciation & Amortization $13.7M-$14.2M
- Whether Ciao can maintain organic traffic generation, strong growth in Europe.
Figure 147: Greenfield Online Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Net sales 89,179 100,342 27,469 30,826 32,325 38,393 129,013 32,191 35,601 37,567 44,859 150,218 172,458
Cost of Sales 24,327 24,086 7,139 8,258 8,624 8,692 32,713 8,370 9,505 9,580 10,093 37,548 42,769
Gross profit 64,852 76,256 20,330 22,568 23,701 29,701 96,300 23,821 26,096 27,988 34,765 112,670 129,688
Operating expenses
Selling, general and administrative 40,683 44,730 12,980 14,208 14,737 19,512 61,437 15,484 16,376 16,830 19,827 68,518 76,744
Panel acquisition expenses 3,762 5,527 1,048 778 859 648 3,333 1,223 926 1,014 897 4,060 5,001
Depreciation and Amortization 6,965 9,225 2,153 2,168 2,242 2,289 8,852 2,414 2,563 2,630 2,916 10,523 12,417
Research and Development 2,836 3,864 1,132 1,004 1,175 1,198 4,509 1,352 1,210 1,277 1,346 5,186 6,208
Impairment and restructuring charge 91,305 236 - - - - - - - - - - -
Total operating expenses 145,551 63,582 17,313 18,158 19,013 23,647 78,131 20,474 21,076 21,751 24,986 88,287 100,370
Operating income (80,699) 12,674 3,017 4,410 4,688 6,054 18,169 3,348 5,020 6,236 9,779 24,383 29,318
Interest income (Expense) (507) 109 143 408 355 702 1,608 200 172 218 268 858 1,577
Other income, net (54) (310) (23) (6) (241) (270) - - - - - -
Total non-operating expenses, net (561) (201) 120 402 114 702 1,338 200 172 218 268 858 1,577
Pre-tax income (81,260) 12,473 3,137 4,812 4,802 6,756 19,507 3,548 5,192 6,454 10,047 25,241 30,895
Provision for Taxes (15,746) 4,019 1,178 1,712 1,479 2,197 6,566 1,064 1,558 1,936 3,014 7,572 10,195
Reported tax rate NA 32.2% 37.6% 35.6% 30.8% 32.5% 33.7% 30.0% 30.0% 30.0% 30.0% 30.0% 33.0%
Net income (65,514) 8,454 1,959 3,100 3,323 4,559 12,941 2,484 3,634 4,518 7,033 17,669 20,700
Reported EPS to diluted ($2.67) $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Operational EPS to diluted $0.45 $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Fully taxed EPS to diluted $0.24 $0.33 $0.07 $0.11 $0.12 $0.17 $0.48 $0.09 $0.13 $0.17 $0.26 $0.65 $0.75
Pro forma fully diluted shares outstanding 24,558 25,698 26,461 27,004 27,088 27,239 27,041 27,241 27,243 27,245 27,247 27,244 27,444
EBITDA Reconciliation
Operating Income (80,698) 12,674 3,017 4,410 4,688 6,491 18,606 3,348 5,020 6,236 9,779 24,383 29,318
Other adjustments 92,288 494 (23) (6) (241) 596 326 - - - - - -
Depreciation and other amortization 9,347 12,180 2,941 2,990 3,154 3,299 12,384 3,139 3,332 3,419 3,791 13,680 16,142
EBITDA 20,937 25,348 5,935 7,394 7,601 10,386 31,316 6,487 8,352 9,655 13,570 38,063 45,460
Stock Compensation charges 878 2,524 901 742 908 914 3,465 825 800 850 875 3,350 3,350
Adjusted EBITDA 21,815 27,872 6,836 8,136 8,509 11,300 35,244 7,312 9,152 10,505 14,445 41,413 48,810
Y/Y Growth
Net sales 100.7% 12.5% 27.6% 26.1% 29.9% 30.2% 28.6% 17.2% 15.5% 16.2% 16.8% 16.4% 14.8%
Gross profit 94.5% 17.6% 27.2% 19.5% 25.4% 32.1% 26.3% 17.2% 15.6% 18.1% 17.1% 17.0% 15.1%
Selling, general and administrative 89.6% 9.9% 36.1% 32.6% 27.0% 51.5% 37.4% 19.3% 15.3% 14.2% 1.6% 11.5% 12.0%
Panel acquisition expenses 63.6% 46.9% -38.6% -36.8% -36.4% -47.7% -39.7% 16.7% 19.0% 18.1% 38.5% 21.8% 23.2%
Depreciation and Amortization 383.7% 32.4% -7.0% -9.7% -7.6% 10.0% -4.0% 12.1% 18.2% 17.3% 27.4% 18.9% 18.0%
Research and Development 183.0% 36.2% 20.3% 22.3% 20.8% 6.1% 16.7% 19.4% 20.6% 8.7% 12.3% 15.0% 19.7%
Total operating expenses 455.6% -56.3% 18.0% 19.5% 15.9% 36.5% 22.9% 18.3% 16.1% 14.4% 5.7% 13.0% 13.7%
Operating income -1228.5% -115.7% 128.9% 19.1% 88.0% 17.3% 43.4% 11.0% 13.8% 33.0% 61.5% 34.2% 20.2%
Pre-tax income -1425.9% -115.3% 160.8% 34.3% 89.3% 31.2% 56.4% 13.1% 7.9% 34.4% 48.7% 29.4% 22.4%
Net income -1245.8% -112.9% 132.9% 37.5% 80.3% 29.7% 53.1% 26.8% 17.2% 36.0% 54.3% 36.5% 17.2%
Adjusted EBITDA 112.0% 27.8% 31.8% 11.8% 26.2% 30.4% 26.4% 7.0% 12.5% 23.5% 27.8% 17.5% 17.9%
Sequential Growth
Net sales -6.8% 12.2% 4.9% 18.8% -16.2% 10.6% 5.5% 19.4%
% of Revenues
Cost of sales 27.3% 24.0% 26.0% 26.8% 26.7% 22.6% 25.4% 26.0% 26.7% 25.5% 22.5% 25.0% 24.8%
Selling, general and administrative 45.6% 44.6% 47.3% 46.1% 45.6% 50.8% 47.6% 48.1% 46.0% 44.8% 44.2% 45.6% 44.5%
Panel acquisition expenses 4.2% 5.5% 3.8% 2.5% 2.7% 1.7% 2.6% 3.8% 2.6% 2.7% 2.0% 2.7% 2.9%
Depreciation and Amortization 7.8% 9.2% 7.8% 7.0% 6.9% 6.0% 6.9% 7.5% 7.2% 7.0% 6.5% 7.0% 7.2%
Research and Development 3.2% 3.9% 4.1% 3.3% 3.6% 3.1% 3.5% 4.2% 3.4% 3.4% 3.0% 3.5% 3.6%
Total operating expenses 163.2% 63.4% 63.0% 58.9% 58.8% 61.6% 60.6% 63.6% 59.2% 57.9% 55.7% 58.8% 58.2%
Margins
Gross margin 72.7% 76.0% 74.0% 73.2% 73.3% 77.4% 74.6% 74.0% 73.3% 74.5% 77.5% 75.0% 75.2%
Operating margin -90.5% 12.6% 11.0% 14.3% 14.5% 15.8% 14.1% 10.4% 14.1% 16.6% 21.8% 16.2% 17.0%
Pre-tax income margin -91.1% 12.4% 11.4% 15.6% 14.9% 17.6% 15.1% 11.0% 14.6% 17.2% 22.4% 16.8% 17.9%
Net income margin -73.5% 8.4% 7.1% 10.1% 10.3% 11.9% 10.0% 7.7% 10.2% 12.0% 15.7% 11.8% 12.0%
Net income to common margin -73.5% 8.4% 7.1% 10.1% 10.3% 11.9% 10.0% 7.7% 10.2% 12.0% 15.7% 11.8% 12.0%
Adjusted EBITDA margin 24.5% 27.8% 24.9% 26.4% 26.3% 29.4% 27.3% 22.7% 25.7% 28.0% 32.2% 27.6% 28.3%
Operating Leverage (∆ EBITDA / ∆ Revenues) 25.8% 54.3% 27.8% 13.5% 23.7% 29.5% 25.7% 10.1% 21.3% 38.1% 48.6% 29.1% 33.3%
Figure 148: Greenfield Online Sum-of-the-Parts Analysis ($ in thousands, except per share date)
2008E
2008E 2008E EBITDA EBITDA
Sales EBITDA Mgn Multiple 2008E
Consolidated Operations:
North American Survey Solutions 77,032 12,710 16.5% 7.5x 95,327
Ciao/European Survey Solutions 26,775 6,961 26.0% 7.0x 48,730
Ciao Comparison Shopping 46,411 21,741 46.8% 14.0x 304,379
Total Consolidated Operations 150,218 41,413 27.6% 10.8x $448,435
Figure 149: Greenfield Online Segment Breakdown, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
REVENUE
North American Survey Solutions Sales 63,886 60,353 15,454 17,108 18,219 19,678 70,459 17,154 18,819 19,768 21,292 77,032 83,965
% Y/Y change 43.8% -5.5% 13.9% 15.3% 18.6% 18.7% 16.7% 11.0% 10.0% 8.5% 8.2% 9.3% 9.0%
% Q/Q change -6.8% 10.7% 6.5% 8.0% -12.8% 9.7% 5.0% 7.7%
Ciao Internet Survey Solutions Sales 16,686 20,152 5,255 6,223 5,927 6,983 24,388 5,844 6,889 6,431 7,611 26,775 29,318
% Y/Y change NA 20.8% 15.4% 15.5% 34.2% 20.6% 21.0% 11.2% 10.7% 8.5% 9.0% 9.8% 9.5%
% Q/Q change -9.3% 18.4% -4.8% 17.8% -16.3% 17.9% -6.6% 18.4%
Total Survey Solutions Sales 80,572 80,505 20,709 23,331 24,146 26,661 94,847 22,998 25,708 26,198 28,903 103,807 113,283
% Y/Y change 81.4% -0.1% 14.3% 15.4% 22.0% 19.2% 17.8% 11.1% 10.2% 8.5% 8.4% 9.4% 9.1%
% Q/Q change -7.4% 12.7% 3.5% 10.4% -13.7% 11.8% 1.9% 10.3%
Ciao Comparison Shopping Sales 8,607 19,837 6,760 7,495 8,179 11,732 34,166 9,194 9,893 11,369 15,956 46,411 59,174
% Y/Y change NA 83.7% 98.4% 77.1% 60.7% 65.0% 72.2% 36.0% 32.0% 39.0% 36.0% 35.8% 27.5%
% Q/Q change -4.9% 10.9% 9.1% 43.4% -21.6% 7.6% 14.9% 40.3%
TOTAL SALES 89,179 100,342 27,469 30,826 32,325 38,393 129,013 32,191 35,601 37,567 44,859 150,218 172,458
% Y/Y change 43.8% 12.5% 27.6% 26.1% 29.9% 30.2% 28.6% 17.2% 15.5% 16.2% 16.8% 16.4% 14.8%
% Q/Q change -6.8% 12.2% 4.9% 18.8% -16.2% 10.6% 5.5% 19.4%
Ciao Internet Survey Operating Income 8,301 10,183 1,863 2,066 1,888 3,624 9,441
% Y/Y change NA 22.7% 5.5% -38.3% -20.1% 34.1% -7.3%
% Q/Q change -31.1% 10.9% -8.6% 91.9%
Operating Margin 49.7% 50.5% 35.5% 33.2% 31.9% 51.9% 38.7%
Total Survey Solutions Operating Income 25,218 24,114 4,702 5,514 6,291 7,675 24,182
% Y/Y change NA -4.4% -1.7% -15.6% 18.1% 2.8% 0.3%
% Q/Q change -37.0% 17.3% 14.1% 22.0%
Operating Margin 31.3% 30.0% 22.7% 23.6% 26.1% 28.8% 25.5%
Ciao Comparison Shopping Operating Income 4,237 11,258 3,983 4,205 4,165 5,990 18,343
% Y/Y change NA 165.7% 141.4% 59.2% 33.2% 56.0% 62.9%
% Q/Q change 3.7% 5.6% -1.0% 43.8%
Operating Margin 49.2% 56.8% 58.9% 56.1% 50.9% 51.1% 53.7%
TOTAL SEGMENT OPERATING INCOME 29,455 35,372 8,685 9,719 10,456 13,665 42,525
% Y/Y change NA 20.1% 35.0% 5.9% 23.7% 20.9% 20.2%
% Q/Q change -23.2% 11.9% 7.6% 30.7%
Operating Margin 33.0% 35.3% 31.6% 31.5% 32.3% 35.6% 33.0%
Figure 150: Greenfield Online Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07E 2007E 3/08E 6/08E 9/08E 12/08E 2008E 2009E
- Company has sophisticated, highly scalable technology platform and six - Long-term trackers and multi-national contracts slowing conversion from bookings
years of online research experience. to revenue.
- Strong consulting business with deep vertical expertise---potential price - The company's lack of footprint in certain geographies has limited opportunities,
increases going forward. with globalization a focus moving forward.
- Trends within major verticals: healthcare, CLM, technology. Adjusted EBITDA Margin ~12% (as of FY1Q08)
Figure 152: Harris Interactive Income Statement, Fiscal 2005–09E ($ in millions, except per share data)
FY05 FY06 1QFY07 2QFY07 3QFY07 4QFY07 FY07 1QFY08 2QFY08 3QFY08 4QFY08 FY08 FY09
F05A F06A 9/06A 12/06A 3/07A 6/07A F07A 9/07E 12/07E 3/08E 6/08E F08E F09E
Net sales $197.0 $212.2 $48.0 $56.6 $52.6 $57.1 $211.8 $59.9 $68.2 $62.9 $70.6 $261.7 $273.1
Cost of Sales 93.3 102.1 23.2 27.3 26.8 28.1 103.3 28.9 32.7 31.8 34.5 127.9 132.5
Gross profit 103.6 110.1 24.8 29.2 25.7 29.0 108.5 31.0 35.5 31.1 36.2 133.8 140.7
Operating expenses
Sales & Marketing 20.5 20.5 4.6 5.3 5.6 5.5 21.2 5.5 6.1 6.2 6.5 24.4 24.0
General & Administrative 65.6 68.2 17.4 17.0 17.0 17.5 68.7 21.4 20.2 20.1 21.3 83.1 86.0
Depreciation and Amortization 7.4 7.2 1.7 1.6 1.6 1.9 6.8 2.5 2.5 2.5 2.5 10.0 10.0
Restructuring related and other 1.1 0.3 - (0.4) - (0.0) (0.5) - - - - - -
Total operating expenses 94.6 96.2 23.8 23.5 24.2 24.8 96.2 29.5 28.8 28.9 30.3 117.5 120.1
Operating income $9.0 $13.9 $1.0 $5.8 $1.5 $4.2 $12.3 $1.6 $6.6 $2.3 $5.8 $16.3 $20.6
Interest income 0.7 1.5 0.6 0.6 0.6 0.5 2.2 0.6 0.9 0.9 0.9 3.2 2.7
Interest expense (0.1) (0.0) - - - (0.3) (0.3) (0.5) (0.7) (0.8) (0.8) (2.7) (2.0)
Total non-operating expenses, net 0.6 1.5 0.6 0.6 0.6 0.2 2.0 0.0 0.2 0.1 0.1 0.4 0.7
Inc before Income Taxes 9.6 15.4 1.6 6.4 2.1 4.4 14.3 1.6 6.8 2.4 6.0 16.8 21.3
Provision for Taxes 5.1 6.2 0.7 2.7 0.9 1.0 5.3 0.7 2.8 1.0 2.5 7.0 8.8
Tax Rate 52.8% 40.3% 41.8% 43.1% 43.7% 24.0% 37.3% 41.5% 41.5% 41.5% 41.5% 41.5% 41.5%
Pre-tax income per share $0.16 $0.25 $0.03 $0.11 $0.04 $0.08 $0.25 $0.03 $0.13 $0.04 $0.11 $0.32 $0.40
Income (loss) before change in accounting 4.5 9.2 0.9 3.6 1.2 3.3 9.0 0.9 4.0 1.4 3.5 9.8 12.5
Income (loss) from discontinued operations (3.0) - - - - - - - - - - - -
GAAP Net income (loss) $1.6 $9.2 $0.9 $3.6 $1.2 $3.3 $9.0 $0.9 $4.0 $1.4 $3.5 $9.8 $12.5
Basic income (loss) per share $0.03 $0.15 $0.02 $0.06 $0.02 $0.06 $0.16 $0.02 $0.08 $0.03 $0.07 $0.19 $0.24
Diluted income (loss) per share $0.03 $0.15 $0.02 $0.06 $0.02 $0.06 $0.16 $0.02 $0.08 $0.03 $0.07 $0.18 $0.23
Basic shares outstanding 60.3 61.5 59.3 58.7 57.4 52.8 56.1 52.8 52.8 52.8 52.8 52.8 52.8
Diluted shares outstanding 61.2 61.8 59.6 59.0 57.7 53.1 56.4 53.1 53.1 53.1 53.1 53.1 53.1
Fully Taxed EPS - Continued Operations $0.07 $0.15 $0.02 $0.06 $0.02 $0.06 $0.16 $0.02 $0.08 $0.03 $0.07 $0.18 $0.23
EBITDA Reconciliation
Operating Income 9.0 13.9 1.0 5.8 1.5 4.2 12.3 1.6 6.6 2.3 5.8 16.3 20.6
Depreciation and other amortization 7.4 7.2 1.7 1.6 1.6 1.9 6.8 2.5 2.5 2.5 2.5 10.0 10.0
EBITDA $16.4 $21.1 $2.7 $7.4 $3.1 $6.0 $19.1 $4.1 $9.1 $4.8 $8.3 $26.3 $30.6
Stock based compensation - 3.1 1.0 0.9 0.9 0.7 3.5 0.9 0.9 0.9 1.0 3.7 3.9
Adjusted EBITDA $16.4 $24.2 $3.8 $8.3 $4.0 $6.7 $22.6 $5.0 $10.0 $5.7 $9.3 $30.0 $34.5
Y/Y Growth
Net sales 42.2% 7.7% -1.8% 3.2% 0.6% -2.8% -0.2% 24.7% 20.6% 19.7% 23.7% 23.5% 4.4%
Gross profit 40.2% 6.2% -2.2% 6.4% -7.3% -2.6% -1.4% 25.2% 21.3% 21.1% 24.7% 23.4% 5.1%
Sales & Marketing 72.7% 0.0% -6.2% 7.1% 9.2% 0.6% 3.0% 19.7% 16.5% 11.3% 18.5% 15.3% -1.4%
General & Administrative 49.2% 4.0% 5.7% 1.2% 1.4% -4.2% 0.8% 23.0% 18.7% 18.3% 21.7% 21.0% 3.5%
Total operating expenses 54.2% 3.0% 3.0% 2.5% 3.2% -3.1% 1.3% 22.3% 18.2% 16.5% 20.9% 19.7% 2.4%
Operating income -31.9% 53.9% -49.4% 45.6% -64.0% 4.3% -11.3% 53.7% 15.4% 54.3% 40.0% 32.6% 26.1%
GAAP Net income -94.7% 481.2% -24.8% 54.2% -54.4% 3.7% -2.7% 1.2% 9.9% 20.4% 5.2% 9.5% 27.2%
GAAP EPS -95.0% 475.4% -22.1% 61.7% -51.1% 20.3% 6.6% 13.7% 22.2% 30.9% 5.2% 16.3% 27.2%
Pre-tax income -30.2% 60.1% -27.9% 51.1% -54.3% -6.5% -7.3% 0.7% 6.9% 15.8% 36.7% 17.4% 27.2%
Pre-tax EPS -34.5% 58.5% -25.2% 58.4% -51.0% 8.5% 1.5% 13.0% 18.9% 25.9% 36.7% 24.8% 27.2%
Fully taxed EPS -51.0% 100.7% -22.1% 61.7% -51.1% 20.3% 6.6% 13.7% 22.2% 30.9% 5.2% 16.3% 27.2%
EBITDA -9.4% 28.7% -30.5% 28.0% -47.0% 4.4% -9.5% 48.7% 24.0% 54.8% 38.2% 37.9% 16.2%
% of Revenues
Cost of sales 47.4% 48.1% 48.4% 48.3% 51.1% 49.2% 48.8% 48.2% 48.0% 50.5% 48.8% 48.9% 48.5%
Sales & Marketing 10.4% 9.7% 9.6% 9.3% 10.6% 9.6% 10.0% 9.2% 9.0% 9.9% 9.2% 9.3% 8.8%
General & Administrative 33.3% 32.1% 36.3% 30.1% 32.4% 30.7% 32.4% 35.8% 29.6% 32.0% 30.2% 31.8% 31.5%
Total cash operating expenses 43.7% 41.8% 45.9% 39.4% 43.0% 40.3% 42.4% 45.0% 38.6% 41.9% 39.4% 41.1% 40.3%
Margins
Gross margin 52.6% 51.9% 51.6% 51.7% 48.9% 50.8% 51.2% 51.8% 52.0% 49.5% 51.2% 51.1% 51.5%
Operating margin 4.6% 6.5% 2.1% 10.2% 2.8% 7.3% 5.8% 2.6% 9.7% 3.6% 8.3% 6.2% 7.5%
Pre-tax income margin 4.9% 7.3% 3.3% 11.3% 3.9% 7.6% 6.7% 2.7% 10.0% 3.8% 8.4% 6.4% 7.8%
EBITDA margin 8.3% 9.9% 5.7% 13.0% 5.9% 10.6% 9.0% 6.8% 13.4% 7.6% 11.8% 10.1% 11.2%
Operating Leverage (∆ EBITDA / ∆ Revenues) -2.9% 30.9% NA 92.5% -896.7% -15.2% 525.7% 11.2% 15.2% 16.3% 17.0% 14.5% 37.2%
Adjusted EBITDA margin 8.3% 11.4% 7.9% 14.7% 7.6% 11.8% 10.7% 8.3% 14.7% 9.0% 13.2% 11.5% 12.6%
Figure 153: Harris Interactive Segment Breakdown, Fiscal 2005–09E ($ in millions, except per share data)
FY05 FY06 1QFY07 2QFY07 3QFY07 4QFY07 FY07 1QFY08 2QFY08 3QFY08 4QFY08 FY08 FY09
F05A F06A 9/06A 12/06A 3/07A 6/07A F07A 9/07E 12/07E 3/08E 6/08E F08E F09E
NET SALES
United States
Non-Internet 52.2 56.7 11.4 14.0 12.8 11.2 49.5 11.8 14.3 13.4 11.9 51.3 52.8
% change 73.5% 8.5% -6.9% -3.2% -11.0% -27.9% -12.8% 3.0% 2.0% 4.0% 6.5% 3.8% 2.8%
Internet 97.7 112.1 24.3 28.4 27.3 30.2 110.3 25.4 29.8 28.7 31.9 115.9 119.6
% change 19.3% 14.7% -1.9% -2.7% -2.5% 0.4% -1.6% 4.5% 5.0% 5.0% 5.7% 5.1% 3.2%
Total U.S. Sales $150.0 $168.8 $35.8 $42.4 $40.1 $41.4 $159.7 37.2 44.1 42.0 43.8 $167.2 $172.3
% change 33.8% 12.6% -3.6% -2.9% -5.4% -9.2% -5.4% 4.0% 4.0% 4.7% 5.9% 4.7% 3.1%
International
Non-Internet 34.9 32.7 7.0 9.4 8.1 10.0 34.5 15.3 17.1 14.5 18.6 65.5 70.1
% change 34.3% -6.4% -18.9% 17.5% 22.0% 5.7% 5.4% 120.0% 82.0% 80.0% 85.0% 90.1% 7.0%
Internet 11.6 13.3 4.5 4.0 3.5 5.7 17.6 7.4 7.0 6.4 8.2 29.0 30.7
% change 165.4% 14.6% 39.3% 25.6% 7.9% 52.9% 32.3% 65.0% 75.0% 85.0% 45.0% 64.8% 6.0%
Total International Sales $46.5 $46.0 $11.4 $13.4 $11.5 $15.7 $52.0 22.7 24.1 20.9 26.8 $94.5 $100.8
% change 53.1% -1.1% -3.1% 19.9% 17.4% 18.9% 13.2% 98.6% 79.9% 81.5% 70.6% 81.5% 6.7%
Other Revenue 0.5 - - - - - - - -
Figure 154: Harris Interactive Cash Flow Statement, Fiscal 2005–09E ($ in millions, except per share data)
FY05 FY06 1QFY07 2QFY07 3QFY07 4QFY07 FY07 1QFY08 2QFY08 3QFY08 4QFY08 FY08 FY09
F05A F06A 9/06A 12/06A 3/07A 6/07E F07E 9/07E 12/07E 3/08E 6/08E F08E F09E
Effect of exchange-rate on cash and equivalents 0.2 0.2 (0.0) 0.2 0.0 - 0.2 - - - - - -
Net cash from discontinued operations 0.7
Net change in cash 0.6 (1.7) (3.8) 23.9 (6.7) 19.8 33.1 (12.7) 17.9 (2.6) 6.2 8.8 39.3
Cash & equivalents - BOP 12.5 13.1 11.4 7.6 31.5 24.8 11.4 44.6 31.9 49.8 47.2 44.6 53.4
Cash & equivalents - EOP 13.1 11.422 7.6 31.5 24.8 44.6 44.6 31.9 49.8 47.2 53.4 53.4 92.7
Average Cash Balance 41.5 31.2 67.4 88.3 103.7 107.2 77.5
Annualized Interest Rate 4.0% 4.0% 3.3% 4.0% 3.3% 3.3% 3.5%
Calculated Interest Income 0.4 0.3 0.7 0.6 0.9 0.9 0.9 3.2 2.7
Average Debt Balance 1.1 1.0 1.0 20.6 20.6 20.6 20.6 20.6
Interest Expense on Debt 8.5% 8.0% 9.8% 9.3% 9.8% 9.8% 9.6%
Calculated Interest Expense (0.1) (0.5) (0.7) (0.8) (0.8) (2.7) (2.0)
- Alloy places ~90% of national college newspaper advertising and is the - Has yet to reap benefits from Sconex acquisition; investing in product development
leader in on-campus marketing. and user experience.
- Relatively defensible position in out-of-home market on college and high - Model shifting away from youth/college market to more out-of-home, potentially
school campuses. increases growth profile but also results in higher margin for error.
- Alloy Media and Marketing should be more focused as a standalone - Larger media companies targeting youth market more aggressively through web
company. properties.
$14.6M ($9.9M of
- Shift to higher margin products: out-of-home, online, database. Capex
which for Channel One)
Figure 156: Alloy Revenue and EBITDA Estimates, Fiscal 2005–09E ($ in millions, except per share data)
Adjusted EBITDA 25.8 3.8 5.4 12.8 5.6 27.6 2.3 3.5 11.7 3.2 20.7 32.3 37.5
% Margin 13.2% 8.6% 11.6% 20.1% 13.6% 14.1% 6.1% 6.8% 17.5% 7.0% 10.2% 14.0% 14.5%
Corporate Adjusted EBITDA (8.5) (2.3) (2.0) (1.7) (2.5) (8.6) (2.4) (2.6) (2.3) (3.2) (10.6) (11.0) (12.0)
TOTAL Adjusted EBITDA 17.3 1.5 3.4 11.1 3.0 19.0 (0.1) 0.9 9.3 0.0 10.2 21.3 25.5
Y/Y Growth 258.6% 13.4% -12.0% 22.4% 0.4% 10.2% -107.2% -74.0% -15.7% -98.5% -46.6% 109.7% 19.6%
% Margin 8.8% 3.4% 7.3% 17.4% 7.4% 9.7% -0.3% 1.7% 14.0% 0.1% 5.0% 9.2% 9.9%
- Over 4.9 million registered users consisting primarily of IT - Organic revenue growth: we estimate 2008 organic growth of 16%.
professionals and purchase decision makers with detailed user
information contributing to a valuable database of potential leads for
advertisers.
- Network of 40+ highly-specialized sector specific websites, featuring - Continued erosion of Print business will offset some total revenue growth
over 20,000 pieces of original content per year tailored for specific in the near-term.
audiences. Leader in distribution of White Papers via BitPipe
network. Online represented 67% of revenues in '07.
- Highly targeted database-driven campaigns are more effective at - Relatively high customer concentration creates risk (in 2006 top advertiser
providing measurable ROI and compare favorably to traditional CPM accounted for 11% of total revenue). Concentration could make company
based campaigns which dominate the Web. more susceptible to volatile quarter-to-quarter trends and product launches
of individual advertisers.
- Experienced management team with background in both business-to- - Client base is highly concentrated within the technology sector. As a
business and technology sectors as well as over 7 years of operating result, the macro environment around overall technology spending and
history at TechTarget and several years together prior to founding online advertising is critical.
TechTarget.
Figure 158: TechTarget Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Revenue
Online 43,662 51,176 13,709 16,330 14,687 18,960 63,686 19,056 23,189 21,296 24,838 88,378 102,518
Events 14,595 19,708 2,939 6,350 6,912 8,053 24,254 3,350 7,112 7,603 8,617 26,682 28,817
Print 8,489 8,128 1,697 1,924 1,702 1,402 6,725 1,273 1,212 1,140 1,052 4,677 4,349
Total Revenue 66,746 79,012 18,345 24,604 23,301 28,415 94,665 23,679 31,513 30,040 34,506 119,737 135,685
Cost of Revenue
Cost of Revenue - Online 10,476 12,901 3,455 3,830 3,753 4,348 15,386 4,954 5,496 5,856 5,713 22,019 24,604
Cost of Revenue - Events 6,202 6,462 1,360 2,399 2,263 2,536 8,558 1,675 2,304 2,030 2,585 8,595 9,308
Cost of Revenue - Print 5,322 5,327 1,120 989 863 801 3,773 865 836 889 589 3,180 3,045
Total Cost of Revenue 22,000 24,690 5,934 7,218 6,879 7,685 27,716 7,495 8,636 8,776 8,887 33,794 36,957
Gross Profit 44,746 54,322 12,411 17,386 16,422 20,730 66,949 16,184 22,876 21,264 25,619 85,943 98,728
Operating Expenses
Selling and Marketing 18,174 19,699 5,616 5,800 6,341 7,292 25,049 7,364 7,658 7,510 7,936 30,468 34,600
Product Development 5,756 6,205 1,675 1,523 1,593 2,195 6,986 2,155 2,143 2,103 2,070 8,471 9,769
General and Administrative 7,539 8,332 2,240 2,497 2,760 2,852 10,349 3,055 3,183 3,244 3,451 12,932 14,111
Depreciation 1,792 1,144 330 364 401 515 1,610 720 580 500 400 2,200 2,200
Amortization 5,172 5,029 759 1,041 1,171 1,769 4,740 1,470 1,300 1,300 1,200 5,270 5,270
Stock-based Compensation 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
Total Operating Expenses 38,511 41,659 11,691 12,423 13,919 16,535 54,568 17,083 17,213 17,057 17,657 69,011 76,038
Operating Income 6,235 12,663 720 4,963 2,503 4,195 12,381 (900) 5,663 4,207 7,962 16,932 22,690
PF Operating Income (ex. stock-based comp) 6,313 13,913 1,791 6,161 4,156 6,107 18,215 1,420 8,013 6,607 10,562 26,602 32,778
Interest Income (Expense), net (30) 321 (67) 377 897 624 1,831 450 457 522 581 2,010 2,997
Pre-tax Income 6,205 12,984 653 5,340 3,400 4,819 14,212 (450) 6,120 4,729 8,543 18,942 25,687
Benefit from (Provision for) Income Taxes 2,681 (5,811) (336) (2,092) (1,568) (2,050) (6,046) 198 (2,693) (2,081) (3,759) (8,334) (11,302)
Reported Tax Rate NA 44.8% 51.5% 39.2% 46.1% 42.5% 42.5% 44.0% 44.0% 44.0% 44.0% 44.0% 44.0%
GAAP Net Income (loss) 8,886 7,173 317 3,248 1,832 2,769 8,166 (252) 3,427 2,648 4,784 10,607 14,385
Basic EPS $0.30 $0.22 $0.01 $0.09 $0.05 $0.07 $0.21 ($0.01) $0.08 $0.06 $0.11 $0.25 $0.33
GAAP Diluted EPS $0.30 $0.20 $0.01 $0.08 $0.04 $0.06 $0.20 ($0.01) $0.08 $0.06 $0.10 $0.23 $0.31
Basic Shares Outstanding 29,484 33,190 33,540 37,474 40,355 40,690 38,015 41,490 42,190 42,790 42,890 42,340 43,748
Diluted Shares Outstanding 29,484 35,933 36,290 39,993 43,336 43,833 40,863 44,783 45,333 45,783 45,883 45,446 46,801
Total Stock-based Compensation 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
EBITDA Reconciliation
Operating Income 6,235 12,662 720 4,963 2,503 4,195 12,381 (900) 5,663 4,207 7,962 16,932 22,690
Depreciation & Amortization 6,964 6,173 1,089 1,405 1,572 2,284 6,350 2,190 1,880 1,800 1,600 7,470 7,470
Stock-based Compensation 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
EBITDA 13,277 20,085 2,880 7,566 5,728 8,391 24,565 3,610 9,893 8,407 12,162 34,072 40,248
Y/Y GROWTH
Online Revenue 39.3% 17.2% 32.1% 27.5% 16.9% 22.9% 24.4% 39.0% 42.0% 45.0% 31.0% 38.8% 16.0%
Events Revenue 51.3% 35.0% 26.3% 10.6% 17.3% 40.1% 23.1% 14.0% 12.0% 10.0% 7.0% 10.0% 8.0%
Print Revenue 47.9% -4.3% -23.2% -11.0% -5.9% -28.0% -17.3% -25.0% -37.0% -33.0% -25.0% -30.5% -7.0%
Total Revenue 42.8% 18.4% 23.0% 18.8% 15.0% 22.9% 19.8% 29.1% 28.1% 28.9% 21.4% 26.5% 13.3%
Gross Profit 47.2% 21.4% 29.2% 19.3% 20.6% 25.5% 23.2% 30.4% 31.6% 29.5% 23.6% 28.4% 14.9%
Selling and Marketing 28.8% 8.4% 26.7% 12.2% 29.9% 39.9% 27.2% 31.1% 32.0% 18.4% 8.8% 21.6% 13.6%
Product Development 40.3% 7.8% 7.1% -2.0% -0.9% 48.2% 12.6% 28.6% 40.7% 32.0% -5.7% 21.2% 15.3%
General and Administrative 10.6% 10.5% 27.1% 20.0% 31.0% 19.8% 24.2% 36.4% 27.5% 17.5% 21.0% 25.0% 9.1%
Total Operating Expenses 14.0% 8.2% 28.6% 18.3% 35.0% 40.6% 31.0% 46.1% 38.6% 22.5% 6.8% 26.5% 10.2%
Operating Income -283.2% 103.1% 38.6% 21.9% -24.4% -11.9% -2.2% -225.0% 14.1% 68.1% 89.8% 36.8% 34.0%
Net Income 119.2% -19.3% -27.9% 36.8% 15.5% -0.1% 13.8% -179.4% 5.5% 44.5% 72.8% 29.9% 35.6%
Diluted EPS NA -33.8% -28.6% 22.9% -4.3% -18.1% 0.1% -164.4% -6.9% 36.8% 65.1% 16.8% 31.7%
Adjusted Diluted EPS NA -22.9% 193.6% 65.7% 72.2% -0.7% 46.2% 20.8% 14.6% 37.1% 50.7% 30.2% 17.2%
EBITDA 148.1% 51.3% 55.7% 31.1% 14.0% 12.7% 22.3% 25.4% 30.8% 46.8% 44.9% 38.7% 18.1%
% OF REVENUES
Cost of Online Rev as a % of Online Rev 24.0% 25.2% 25.2% 23.5% 25.6% 22.9% 24.2% 26.0% 23.7% 27.5% 23.0% 24.9% 24.0%
Cost of Events Rev as a % of Events Rev 42.5% 32.8% 46.3% 37.8% 32.7% 31.5% 35.3% 50.0% 32.4% 26.7% 30.0% 32.2% 32.3%
Cost of Print Rev as a % of Print Rev 62.7% 65.5% 66.0% 51.4% 50.7% 57.1% 56.1% 68.0% 69.0% 78.0% 56.0% 68.0% 70.0%
Total Cost of Revenue 33.0% 31.2% 32.3% 29.3% 29.5% 27.0% 29.3% 31.7% 27.4% 29.2% 25.8% 28.2% 27.2%
Selling and Marketing 27.2% 24.9% 30.6% 23.6% 27.2% 25.7% 26.5% 31.1% 24.3% 25.0% 23.0% 25.4% 25.5%
Product Development 8.6% 7.9% 9.1% 6.2% 6.8% 7.7% 7.4% 9.1% 6.8% 7.0% 6.0% 7.1% 7.2%
General and Administrative 11.3% 10.5% 12.2% 10.1% 11.8% 10.0% 10.9% 12.9% 10.1% 10.8% 10.0% 10.8% 10.4%
Total Operating Expenses 57.7% 52.7% 63.7% 50.5% 59.7% 58.2% 57.6% 72.1% 54.6% 56.8% 51.2% 57.6% 56.0%
MARGINS
Gross Margin - Online 76.0% 74.8% 74.8% 76.5% 74.4% 77.1% 75.8% 74.0% 76.3% 72.5% 77.0% 75.1% 76.0%
Gross Margin - Events 57.5% 67.2% 53.7% 62.2% 67.3% 68.5% 64.7% 50.0% 67.6% 73.3% 70.0% 67.8% 67.7%
Gross Margin - Print 37.3% 34.5% 34.0% 48.6% 49.3% 42.9% 43.9% 32.0% 31.0% 22.0% 44.0% 32.0% 30.0%
Gross Margin 67.0% 68.8% 67.7% 70.7% 70.5% 73.0% 70.7% 68.3% 72.6% 70.8% 74.2% 71.8% 72.8%
Operating Margin 9.3% 16.0% 3.9% 20.2% 10.7% 14.8% 13.1% -3.8% 18.0% 14.0% 23.1% 14.1% 16.7%
Net Margin 13.3% 9.1% 1.7% 13.2% 7.9% 9.7% 8.6% -1.1% 10.9% 8.8% 13.9% 8.9% 10.6%
EBITDA Margin 19.9% 25.4% 15.7% 30.8% 24.6% 29.5% 25.9% 15.2% 31.4% 28.0% 35.2% 28.5% 29.7%
Operating Leverage/EBITDA Flow-through 39.6% 55.5% 30.0% 46.2% 23.2% 17.9% 28.6% 13.7% 33.7% 39.8% 61.9% 37.9% 38.7%
Figure 159: TechTarget Segment Breakdown, 2005–09E ($ in thousands, except per share data)
Segment Detail
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
TOTAL ONLINE REVENUE 43,662 51,176 13,709 16,330 14,687 18,960 63,686 19,056 23,189 21,296 24,838 88,378 102,518
Y/Y Growth 39.3% 17.2% 32.1% 27.5% 16.9% 22.9% 24.4% 39.0% 42.0% 45.0% 31.0% 38.8% 16.0%
Q/Q Growth -11.1% 19.1% -10.1% 29.1% 0.5% 21.7% -8.2% 16.6%
TOTAL EVENTS REVENUE 14,595 19,708 2,939 6,350 6,912 8,053 24,254 3,350 7,112 7,603 8,617 26,682 28,817
Y/Y Growth 51.3% 35.0% 26.3% 10.6% 17.3% 40.1% 23.1% 14.0% 12.0% 10.0% 7.0% 10.0% 8.0%
Q/Q Growth -48.9% 116.1% 8.9% 16.5% -58.4% 112.3% 6.9% 13.3%
#REF!
TOTAL PRINT REVENUE 8,489 8,128 1,697 1,924 1,702 1,402 6,725 1,273 1,212 1,140 1,052 4,677 4,349
Y/Y Growth 47.9% -4.3% -23.2% -11.0% -5.9% -28.0% -17.3% -25.0% -37.0% -33.0% -25.0% -30.5% -7.0%
Q/Q Growth -12.8% 13.4% -11.5% -17.6% -9.2% -4.8% -5.9% -7.8%
TOTAL REVENUE 66,746 79,012 18,345 24,604 23,301 28,415 94,665 23,679 31,513 30,040 34,506 119,737 135,685
42.8% 18.4% 23.0% 18.8% 15.0% 22.9% 19.8% 29.1% 28.1% 28.9% 21.4% 26.5% 13.3%
-20.6% 34.1% -5.3% 21.9% -16.7% 33.1% -4.7% 14.9%
Metrics
Segment Breakdown 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Online Revenue 65% 65% 75% 66% 63% 67% 67% 80% 74% 71% 72% 74% 76%
Events Revenue 22% 25% 16% 26% 30% 28% 26% 14% 23% 25% 25% 22% 21%
Print Revenue 13% 10% 9% 8% 7% 5% 7% 5% 4% 4% 3% 4% 3%
Total Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Seasonality
Online Revenue 100% 100% 22% 26% 23% 30% 100% 22% 26% 24% 28% 100%
Events Revenue 100% 100% 12% 26% 28% 33% 100% 13% 27% 28% 32% 100%
Print Revenue 100% 100% 25% 29% 25% 21% 100% 27% 26% 24% 22% 100%
Total Revenue 100% 100% 19% 26% 25% 30% 100% 20% 26% 25% 29% 100%
Figure 160: TechTarget Cash Flow Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07E 2007E 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Operating activities:
Net income (loss) 8,886 7,173 317 2,714 1,542 2,769 7,342 (252) 3,427 2,648 4,784 10,607 14,385
Adjustments:
Depreciation 1,792 1,144 330 364 401 515 1,610 720 580 500 400 2,200 2,200
Amortization of intangible assets 5,172 5,029 759 1,041 1,171 1,769 4,740 1,470 1,300 1,300 1,200 5,270 5,270
Provision for bad debt (124) 366 24 37 56 56 173 56 56 56 56 224 224
Stock-based compensation expense 78 1,250 1,071 1,198 1,653 1,912 5,834 2,320 2,350 2,400 2,600 9,670 10,088
Interest expense related to amortization of debt issuance costs 24 92 253 57 - - 310 - - - - - -
Deferred income taxes (2,995) 174 232 246 92 500 1,070 500 500 500 450 1,950 1,200
Realized gain/loss on foreign currency - - - - - - - - - - - - -
Excess tax benefit - stock options (2,295) (223) (2,518)
-
Changes in operating assets and liabilities:
Accounts receivable, net 1,161 (3,247) 1,099 (2,424) 884 (2,779) (3,220) (785) (1,349) 810 (2,284) (3,608) (2,904)
Other receivables - - - - - - - - - - - - -
Prepaid expenses and other assets (383) (813) (1,878) 1,713 984 1,497 2,316 825 (124) (121) 2 582 (384)
Accounts payable 1,204 (741) 448 93 (348) (121) 72 552 (401) 754 (455) 451 349
Income taxes payable 315 1,539 (1,757) (97) - 1,031 (823) - - - - - -
Accrued expenses and other current liabilities 30 399 (380) (200) 236 914 570 (105) 153 1,384 (1,421) 11 (42)
Accrued compensation expense (2,305) 446 (1,399) 387 469 821 278 - - - - - -
Deferred revenue (1,642) (418) 3,129 (57) (26) (1,829) 1,217 (446) 467 (177) (672) (828) 459
Deferred rent expense/Other liabilities 122 (54) (35) (39) (36) - - - - - - - -
Total changes in working capital (1,498) (2,889) (773) (624) 2,163 (466) 300 41 (1,254) 2,650 (4,829) (3,392) (2,522)
Net cash provided (used in) operating activities 11,335 12,339 2,213 2,738 6,855 7,055 18,861 4,855 6,959 10,054 4,661 26,530 30,845
Investing activities:
Acquisition of property and equipment (2,141) (1,263) (897) (792) (655) (650) (2,994) (725) (750) (750) (775) (3,000) (3,500)
Acquisition of businesses, net of cash acquired - (15,017) (1,013) (14,002) - (52,000) (67,015) - - - - - -
Proceeds from sale of assets 233 - - (1,013) - (1,013) - - - - - -
Purchases of short-term investments - - - (126,100) (158,147) (40,731) (324,978) - - - - - -
Proceeds from sale of short-term investments 33,000 - - 55,790 140,556 83,000 279,346 - - - - - -
Net cash provided by (used in) investing activities 31,092 (16,280) (1,910) (86,117) (18,246) (10,381) (116,654) (725) (750) (750) (775) (3,000) (3,500)
Financing activities:
IPO Proceeds - - - 83,161 - (6,000) 77,161 - - - - - -
Proceeds from issuance of Series B preferred stock - - - - - - - - - - - - -
Proceeds from issuance of Series C preferred stock - - - - - - - - - - - - -
Proceeds from bank term loan payable - 10,000 - - - - - - - - - - -
Payments of term loan payable (3,000) (23,000) (750) (750) (750) (750) (3,000) (750) (750) (750) (750) (3,000) (2,919)
Proceeds from credit facility - - - 12,000 - - 12,000 - - - - - -
Payments toward credit facility - - - (12,000) - - (12,000) - - - - - -
Proceeds from exercise of warrants/stock options 238 892 121 652 204 - 977 - - - - - -
Purchase of stock options through tender offer - - - - - - - - - - - - -
Purchase of common and preferred stock through tender offer - - - - - - - - - - - - -
Excess tax benefits - stock options 2,295 223
Net cash provided (used in) financing activities (2,762) (12,108) (629) 85,358 (323) (6,750) 75,138 (750) (750) (750) (750) (3,000) (2,919)
Total increase (decrease) in cash and cash equivalents 39,665 (16,049) (326) 1,979 (11,714) (10,076) (22,655) 3,380 5,459 8,554 3,136 20,530 24,426
Cash and cash equivalents, beginning of period 7,214 46,878 30,830 30,503 32,483 20,769 30,830 8,175 11,555 17,014 25,568 8,175 28,704
Cash and cash equivalents, end of period 46,878 30,830 30,503 32,483 20,769 10,693 8,175 11,555 17,014 25,568 28,704 28,704 53,130
Capex Analysis:
Capex 2,141 1,263 897 792 655 650 2,994 725 750 750 775 3,000 3,500
Capex as % of revenue 3.2% 1.6% 4.9% 3.2% 2.8% 2.3% 3.2% 3.1% 2.4% 2.5% 2.2% 2.5% 2.6%
Capex as % of EBITDA 16.1% 6.3% 31.1% 10.5% 11.4% 7.7% 12.2% 20.1% 7.6% 8.9% 6.4% 8.8% 8.7%
-Over 11,000 paying customers with no single customer accounting for more -Overall adjusted EBITDA margins of ~40% are significantly higher than largest
than 0.5% of revenue in 2006. competitor, Monster Worldwide, which has the resources to spend on sales and
marketing efforts more aggressively, putting pressure on Dice's business and
making margin expansion challenging.
-Solid revenue visibility, as the company books deferred revenue, reflecting -Client base is highly concentrated within the technology sector and to a lesser
recruitment package customers who have signed advertising contracts which extent, the financial sector. As a result, the macro environment around these two
extend beyond the current period. We est. ~75% of Dice customers are on broad industries will likely directly impact hiring trends and Dice's results.
annual contracts, ~10%-12% are on month-to-month contracts, and the
remaining % are on varied contract term lengths.
-Growing portfolio of specialized job sites, across various sectors: Dice.com -Sales and marketing expenses are significant, with approximately 38% of total
(technology/engineering), eFinancialCareers (financial services/banking), revenues devoted to acquiring employer/recruiter customers as well as job-seekers.
JobsInTheMoney (accounting), ClearanceJobs (gov't clearance), which Marketing and advertising costs to acquire job-seekers can potentially increase
provide both job-seekers and employers a targeted and efficient way to rapidly, as the type of targeted placement which Dice prefers is typically more
either search jobs or search for applicants. expensive than general run-of-network advertising online.
-Dice user base is typically more experienced, qualified and educated than -Increased competition could drive up online acquisition costs for Dice. Larger more
the typical user on a generalist job board. 75% have more than 5 years established competitors, such as Monster Worldwide, Careerbuilder, and Yahoo!'s
experience, almost half have 10+ yrs; Over 75% are currently employed HotJobs could potentially afford to spend more to acquire new customers online as
(often more desirable candidates); Avg Dice candidate earns $73,000; 70% they have greater resources.
have bachelor's degree or higher (based on company data)
Capex $5M
-Potential further slow down in the macro-economy may negatively impact
employment trends and subsequently employment advertising budgets could
be reduced.
Figure 162: Dice Holdings Income Statement, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Dice Online 48,986 77,285 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659 130,214
eFinancialCareers (ex-U.S.) - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720 49,678
Other 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531 18,267
Total Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910 198,159
Operating Expenses
Cost of revenues 3,579 4,628 1,826 1,946 2,443 2,431 8,646 2,203 2,345 2,691 2,613 9,852 11,493
Product development 1,645 2,359 980 982 1,178 1,047 4,187 1,141 1,173 1,259 1,152 4,724 5,548
Sales and marketing 21,958 33,456 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529 76,093
General and administrative 7,862 8,796 3,375 3,202 4,075 4,441 15,093 4,169 3,978 4,427 4,651 17,226 19,816
Share based compensation - 1,467 574 1,208 1,138 1,180 4,100 1,500 1,500 1,600 1,600 6,200 3,600
Depreciation 1,370 1,699 619 702 827 823 2,971 900 1,000 1,000 1,000 3,900 5,000
Amortization 5,416 13,092 5,228 4,773 4,661 4,389 19,051 4,700 4,500 4,500 4,600 18,300 15,400
Impairments and other charges 2,879
Total operating expenses 41,830 65,497 25,816 26,610 27,791 30,137 107,475 30,740 31,247 31,535 31,209 124,731 136,951
Operating Income (loss) 9,048 17,904 4,574 7,748 10,298 9,377 31,997 8,594 10,630 11,867 13,088 44,179 61,209
Interest expense (2,034) (4,788) (2,347) (4,293) (3,387) (3,077) (13,104) (3,373) (3,318) (3,263) (3,194) (13,148) (10,965)
Interest income 518 234 74 82 371 520 1,047 698 874 977 1,034 3,583 5,881
Other income (expense) (160) - - - - - - - - - - -
Income (loss) from cont. ops b4 taxes 7,372 13,350 2,301 3,536 7,282 6,820 19,939 5,919 8,187 9,581 10,928 34,615 56,124
Income tax expense (benefit) 3,216 5,110 (907) 1,689 2,779 3,131 6,692 2,368 3,275 3,832 4,371 13,846 22,450
Income Tax Rate % 43.6% 38.3% - 47.8% 38.2% 45.9% 33.6% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
Income (loss) from cont. ops b4 minority interes 4,156 8,240 3,208 1,847 4,503 3,689 13,247 3,551 4,912 5,749 6,557 20,769 33,675
Income (loss) from discontinued operations (525) (2,767) (949) 109 (460) (284) (1,584)
Income tax benefit (expense) from discontinued o 200 1,010 5,619 (463) 154 (1,329) 3,981
Minority interest in net loss of subsidiary 312 296 - 121 (255) (134)
Dividends - - - - -
Net Income (loss) to common shareholders 4,143 6,779 7,878 1,614 4,197 1,821 15,510 3,551 4,912 5,749 6,557 20,769 33,675
Basic Shares 10 55,300 55,300 55,200 62,000 62,500 58,750 63,500 64,000 64,500 65,500 64,375 65,663
Diluted Shares 11 62,300 62,300 58,450 64,400 65,769 62,730 66,769 67,269 67,769 68,769 67,644 68,997
Yr/Yr Growth
Net revenues 57.8% 63.9% 89.3% 78.9% 76.5% 48.8% 70.7% 29.4% 21.9% 13.9% 12.1% 18.7% 17.3%
Cost of revenues 49.6% 29.3% 67.7% 91.5% 118.5% 73.0% 86.8% 20.6% 20.5% 10.1% 7.5% 14.0% 16.7%
Product development 5.7% 43.4% 130.6% 75.0% 142.4% 18.0% 77.5% 16.4% 19.4% 6.8% 10.0% 12.8% 17.5%
Sales and marketing 46.4% 52.4% 87.3% 73.3% 64.7% 26.2% 59.7% 22.0% 21.4% 19.2% 20.4% 20.8% 17.9%
General and administrative 25.9% 11.9% 89.9% 65.6% 93.6% 49.0% 71.6% 23.5% 24.2% 8.6% 4.7% 14.1% 15.0%
Share based compensation NA NA 142.2% 399.2% 364.5% 58.8% 179.5% 161.3% 24.2% 40.6% 35.6% 51.2% -41.9%
Total operating expenses 46.2% 56.6% 85.3% 78.3% 80.3% 42.0% 64.1% 19.1% 17.4% 13.5% 3.6% 16.1% 9.8%
Operating income 149.5% 97.9% 115.4% 80.9% 67.0% 75.8% 78.7% 87.9% 37.2% 15.2% 39.6% 38.1% 38.5%
Adjusted EBITDA 115.6% 127.1% 70.0% 78.3% 73.8% 56.0% 68.4% 33.5% 17.9% 10.5% 8.8% 16.1% 17.4%
GAAP Net Income NA NA NA NA NA NA 128.8% -54.9% 204.3% 37.0% 260.1% 33.9% 62.1%
Pro Forma Net Income NA NA NA NA NA NA 89.5% -36.0% 63.6% 22.6% 99.1% 20.6% 27.1%
Sequential Growth
Net revenues 14.4% 13.1% 10.9% 3.7% -0.5% 6.5% 3.6% 2.1%
% of Revenues
Cost of revenues 7.0% 5.5% 6.0% 5.7% 6.4% 6.2% 6.1% 5.6% 5.6% 6.2% 5.9% 5.8% 5.8%
Product development 3.2% 2.8% 3.2% 2.9% 3.1% 2.6% 2.9% 2.9% 2.8% 2.9% 2.6% 2.8% 2.8%
Sales and marketing 43.2% 40.1% 43.5% 40.2% 35.4% 32.8% 37.5% 41.0% 40.0% 37.0% 35.2% 38.2% 38.4%
General and administrative 15.5% 10.5% 11.1% 9.3% 10.7% 11.2% 10.6% 10.6% 9.5% 10.2% 10.5% 10.2% 10.0%
Total operating expenses 82.2% 78.5% 84.9% 77.4% 73.0% 76.3% 75.5% 78.2% 74.6% 72.7% 70.5% 73.8% 69.1%
Margins
Net income margin 8.1% 8.1% 25.9% 4.7% 11.0% 4.6% 10.9% 9.0% 11.7% 13.2% 14.8% 12.3% 17.0%
Operating margin 17.8% 21.5% 15.1% 22.6% 27.0% 23.7% 22.5% 21.8% 25.4% 27.3% 29.5% 26.2% 30.9%
EBITDA margin 32.1% 44.5% 38.7% 43.5% 45.1% 47.2% 43.9% 39.9% 42.1% 43.7% 45.8% 43.0% 43.0%
Operating Leverage/Incremental Margin 47.0% 63.9% 33.8% 43.3% 44.2% 51.7% 43.1% 44.1% 35.7% 33.8% 34.3% 37.9% 43.2%
Figure 163: Dice Holdings Segment Breakdown, 2005–09E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Avg. Dice Recruitment Pkg Customers 5,214 7,101 8,050 8,650 8,900 8,850 8,613 8,983 9,207 9,299 9,299 9,299 9,997
Y/Y Growth 36.2% 27.7% 22.7% 19.5% 16.4% 21.3% 11.6% 6.4% 4.5% 5.1% 8.0% 7.5%
Q/Q Growth 5.9% 7.5% 2.9% -0.6% 1.5% 2.5% 1.0% 0.0%
Avg Monthly Revenue Per Customer $703 $783 $826 $830 $839 $852 $837 $859 $863 $864 $882 $867 $897
Y/Y Growth 11.0% 9.7% 7.5% 5.5% 4.8% 6.8% 4.0% 4.0% 3.0% 3.5% 3.6% 3.5%
Q/Q Growth 1.6% 0.5% 1.1% 1.5% 0.8% 0.5% 0.1% 2.0%
Total Dice Revenue 48,986 77,285 23,351 25,233 26,557 27,074 102,215 27,224 28,716 28,729 29,991 114,659 130,214
Y/Y Growth 52.0% 57.8% 51.2% 36.3% 27.6% 20.3% 32.3% 16.6% 13.8% 8.2% 10.8% 12.2% 13.6%
Q/Q Growth 3.7% 8.1% 5.2% 1.9% 0.6% 5.5% 0.0% 4.4%
eFC Revenue - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720 49,678
Y/Y Growth 62.1% 78.1% 230.6% 914.3% 75.0% 50.0% 30.0% 15.0% 37.3% 22.0%
Q/Q Growth 76.0% 26.3% 28.5% 15.8% -6.9% 8.2% 11.4% 2.4%
Other Revenue 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531 18,267
Y/Y Growth 69% 207.5% 279.8% 319.4% 146.5% 228.3% 64.0% 30.0% 20.0% 15.0% 29.1% 35.0%
Q/Q Growth 68.4% 38.8% 21.1% -12.9% 12.0% 10.0% 11.8% -16.5%
Total Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910 198,159
Y/Y Growth 57.8% 63.9% 89.3% 78.9% 76.5% 48.8% 70.7% 29.4% 21.9% 13.9% 12.1% 18.7% 17.3%
Q/Q Growth 14.4% 13.1% 10.9% 3.7% -0.5% 6.5% 3.6% 2.1%
Revenue Breakdown 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E 2009E
Dice 96% 93% 77% 73% 70% 69% 72% 69% 69% 66% 68% 68% 66%
eFC 0% 4% 17% 19% 22% 24% 21% 23% 23% 25% 25% 24% 25%
Other 4% 4% 6% 8% 8% 7% 7% 8% 8% 9% 7% 8% 9%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Revenue Seasonality
Dice 100% 23% 25% 26% 26% 100% 24% 25% 25% 26% 100%
eFC 100% 17% 22% 28% 33% 100% 22% 24% 27% 27% 100%
Other 100% 18% 25% 30% 26% 100% 23% 25% 28% 24% 100%
Total 100% 21% 24% 27% 28% 100% 23% 25% 26% 26% 100%
Figure 164: Dice Holdings Pro Forma Analysis, 2005–08E ($ in thousands, except per share data)
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
eFinancialCareers (non-U.S.) - 2,924 5,145 6,497 8,349 9,667 29,658 9,004 9,746 10,854 11,117 40,720
Other 1,892 3,192 1,894 2,628 3,183 2,773 10,478 3,106 3,416 3,820 3,189 13,531
Total GAAP Revenue 50,878 83,401 30,390 34,358 38,089 39,514 142,351 39,334 41,877 43,402 44,297 168,910
REPORTED EBITDA
Reported Adjusted EBITDA 16,350 34,152 10,995 14,431 16,924 18,648 60,998 15,694 17,630 18,967 20,288 72,579
Pro Forma Revenue Adjustments 16,107 20,983 758 518 248 - 1,524 - - - - -
Pro Forma EBITDA Adjustments 5,537 6,575 758 518 248 - 1,524 - - - - -
eFinancialCareers (non-U.S.) 9,207 16,921 5,524 6,798 8,496 9,667 30,485 9,004 9,746 10,854 11,117 40,720
Y/Y Growth 83.8% 67.0% 69.6% 81.3% 96.5% 80.2% 63.0% 43.4% 27.8% 15.0% 33.6%
Other 5,148 8,129 2,273 2,845 3,284 2,773 11,175 3,106 3,416 3,820 3,189 13,531
Y/Y Growth 57.9% 22.9% 38.8% 55.9% 30.6% 37.5% 36.7% 20.1% 16.3% 15.0% 21.1%
Pro Forma Revenue 66,985 104,384 31,148 34,876 38,337 39,514 143,875 39,334 41,877 43,402 44,297 168,910
Y/Y Growth 73.1% 55.8% 42.9% 38.3% 37.9% 33.7% 37.8% 26.3% 20.1% 13.2% 12.1% 17.4%
Pro Forma EBITDA 21,887 40,727 11,752 14,950 17,171 18,648 62,521 15,694 17,630 18,967 20,288 72,579
Y/Y Growth 188.9% 86.1% 51.5% 70.2% 64.1% 73.6% 53.5% 33.5% 17.9% 10.5% 8.8% 16.1%
Pro Forma EBITDA Margin 32.7% 39.0% 37.7% 42.9% 44.8% 47.2% 43.5% 39.9% 42.1% 43.7% 45.8% 43.0%
Operating Flow-Through/Incremental Margin 50.6% 50.4% 42.7% 63.8% 63.7% 79.4% 55.2% 48.2% 38.3% 35.5% 34.3% 40.2%
Reported Sales and Marketing Expense 21,958 33,456 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529
eFinancialCareers PF Adjustment 8,119 - - - - - - - - - -
Total PF Sales and Marketing Expense 21,958 41,575 13,214 13,797 13,469 12,947 53,427 16,127 16,751 16,059 15,592 64,529
Y/Y Growth 46% 89% 47% 34% 22% 15% 29% 22% 21% 19% 20% 21%
Sales and Marketing as % of PF Revenue 32.8% 39.8% 42.4% 39.6% 35.1% 32.8% 37.1% 41.0% 40.0% 37.0% 35.2% 38.2%
Revenue Breakdown -- Pro Forma 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
Dice 79% 76% 75% 72% 69% 69% 71% 69% 69% 66% 68% 68%
eFC 14% 16% 18% 19% 22% 24% 21% 23% 23% 25% 25% 24%
Other 8% 8% 7% 8% 9% 7% 8% 8% 8% 9% 7% 8%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
AUDIENCE AND AD METRICS
Average Monthly Domestic Unique Visitors --- 110.8 111.0 114.0 113.0 109.0 111.8 109.9 114.0 114.1 110.1 112.0
% Growth Y/Y --- --- 3.7% 0.9% 0.9% -1.8% 0.9% -1.0% 0.0% 1.0% 1.0% 0.2%
% Growth Q/Q --- --- 0.5% 2.7% -0.9% -3.5% --- 0.5% 3.7% 0.1% -3.5% ---
Total Page Views (MM) --- 197,374 43,959 52,080 47,602 49,161 192,802 44,398.6 51,038.4 47,126.0 48,669.4 191,232
% Growth Y/Y --- --- -16.5% 0.8% -2.2% 10.8% -2.3% 1.0% -2.0% -1.0% -1.0% -0.8%
% Growth Q/Q --- --- -1.0% 18.5% -8.6% 3.3% --- -9.7% 15.0% -7.7% 3.3% ---
Avg. Monthly Page Views Per Unique User --- 148.4 132.0 152.3 140.4 150.3 143.8 134.7 149.2 137.6 147.4 142.3
% Growth Y/Y --- --- -19.5% -0.1% -3.1% 13.5% -3.1% 2.0% -2.0% -2.0% -2.0% -1.1%
% Growth Q/Q --- --- -0.4% 15.4% -7.8% 7.1% --- -10.4% 10.8% -7.8% 7.1% ---
Domestic Advertising Revenue (Gross---as reported) --- $1,525.0 $443.0 $419.0 $433.0 $500.0 $1,795.0 $434.1 $454.4 $476.7 $546.7 $1,911.9
% Growth Y/Y --- --- 39.3% 16.7% 10.5% 9.6% 17.7% -2.0% 8.4% 10.1% 9.3% 6.5%
% Growth Q/Q --- --- -2.9% -5.4% 3.3% 15.5% --- -13.2% 4.7% 4.9% 14.7% ---
% of Total AOL Gross Ad Revs --- 80.9% 80.7% 80.3% 80.2% 80.6% 80.4% 79.7% 79.5% 79.2% 79.0% 79.4%
Domestic Advertising Revenue Less TAC (Net) --- $1,235.0 $345.0 $329.0 $330.0 $375.0 $1,379.0 $321.7 $344.0 $352.2 $396.0 $1,413.9
% Growth Y/Y --- --- 25.5% 11.5% 8.6% 3.9% 11.7% -6.8% 4.6% 6.7% 5.6% 2.5%
% Growth Q/Q --- --- -4.4% -4.6% 0.3% 13.6% --- -14.2% 6.9% 2.4% 12.4% ---
% of Total AOL Net Ad Revs --- 77.4% 76.5% 76.2% 75.5% 75.8% 76.0% 74.4% 74.6% 73.8% 73.2% 73.9%
Domestic Adv Revenue Less TAC Per Unique Visitor --- $11.13 $3.11 $2.89 $2.92 $3.44 $12.35 $2.93 $3.02 $3.09 $3.60 $12.63
% Growth Y/Y --- --- 20.9% 10.5% 7.6% 5.8% 11.0% -5.8% 4.6% 5.7% 4.6% 2.2%
% Growth Q/Q --- --- -4.4% -7.1% 1.2% 17.8% --- -14.9% 3.1% 2.3% 16.5% ---
Domestic Adv Revenue Less TAC Per 1,000 Page Views $6.26 $7.85 $6.32 $6.93 $7.63 $7.15 $7.24 $6.74 $7.47 $8.14 $7.39
% Growth Y/Y --- --- 50.2% 10.6% 11.0% -6.2% 14.3% -7.7% 6.7% 7.8% 6.7% 3.4%
% Growth Q/Q --- --- -3.5% -19.5% 9.7% 10.0% --- -5.0% -7.0% 10.9% 8.9% ---
International Advertising Revenue --- $361.0 $106.0 $103.0 $107.0 $120.0 $436.0 $110.6 $117.2 $125.2 $145.3 $498.2
% Growth Y/Y --- --- 43.2% 14.4% 23.0% 9.1% 20.8% 4.3% 13.8% 17.0% 21.1% 14.3%
% Growth Q/Q --- --- -3.6% -2.8% 3.9% 12.1% --- -7.9% 6.0% 6.9% 16.1% ---
% of Total AOL Gross Ad Revs --- 19.1% 19.3% 19.7% 19.8% 19.4% 19.5% 20.3% 20.5% 20.8% 21.0% 20.7%
% of Total AOL Net Ad Revs --- 22.5% 23.5% 23.8% 24.5% 24.2% 24.0% 25.6% 25.4% 26.2% 26.8% 26.1%
Total Advertising Revenue Less TAC (Net) --- $1,596.0 $451.0 $432.0 $437.0 $495.0 $1,815.0 $432.2 $461.2 $477.4 $541.3 $1,912.1
% Growth Y/Y --- --- 29.2% 12.2% 11.8% 5.1% 13.7% -4.2% 6.8% 9.3% 9.4% 5.4%
% Growth Q/Q --- --- -4.2% -4.2% 1.2% 13.3% --- -12.7% 6.7% 3.5% 13.4% ---
DISPLAY ADVERTISING 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
TOTAL DISPLAY ADVERTISING REVENUE $627.0 $819.0 $232.0 $220.9 $213.9 $252.2 $919.0 $194.9 $232.0 $228.9 $274.9 $930.6
% Growth Y/Y 9.6% 30.6% 31.8% 15.1% 5.9% 1.3% 12.2% -16.0% 5.0% 7.0% 9.0% 1.3%
TOTAL DISPLAY ADVERTISING EBITDA $261.1 $327.6 $104.4 $99.4 $96.3 $113.5 $413.6 $87.7 $104.4 $103.0 $123.7 $418.8
% Growth Y/Y -19.8% 25.5% 48.3% 29.5% 19.1% 13.9% 26.2% -16.0% 5.0% 7.0% 9.0% 1.3%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%
PAID SEARCH
Queries (MM) 7,236 7,569 1,820 1,690 1,712 1,805 7,027 1,683 1,606 1,678 1,823 6,790
% Growth Y/Y 6% 4.6% -10.1% -10.1% 3.0% -9.9% -7.2% -7.5% -5.0% -2.0% 1.0% -3.4%
% Growth Q/Q --- -9.2% -7.1% 1.3% 5.4% -6.7% -4.6% 4.5% 8.6%
Paid Click-Through Rate 19.5% 20.3% 13.4% 13.8% 14.0% 15.6% 14.2% 14.8% 15.0% 15.0% 15.4% 15.1%
Paid Introductions (MM) 1,409 1,537 244 233 240 282 998 249 241 252 281 1,022
% Growth Y/Y -4.8% 9.0% -44.1% -40.3% -23.9% -28.6% -35.0% 2.2% 3.3% 5.0% -0.3% 2.4%
Price Per Click (PPC) $0.37 $0.42 $0.74 $0.73 $0.74 $0.66 $0.72 $0.77 $0.76 $0.78 $0.72 $0.76
% Growth Y/Y 38.9% 14.2% 112.5% 77.9% 51.0% 41.5% 68.9% 3.0% 5.0% 6.0% 9.0% 5.8%
% Growth Q/Q --- --- 59.7% 1.0% 1.7% -10.8% --- 16.3% 1.0% 2.6% -8.3% ---
Gross Revenue AOL Generates for Google $522.4 $650.7 $181.5 $169.6 $177.3 $185.7 $714.1 $191.0 $183.9 $197.3 $201.8 $774.0
TAC Rate Google Pays to AOL 86.5% 90.8% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0%
--- ---
TOTAL AOL PAID SEARCH REVENUE $452.0 $591.0 $167.0 $156.1 $163.1 $170.8 $657.0 $175.7 $169.2 $181.5 $185.6 $712.1
% Growth Y/Y 34.5% 30.8% 25.6% 6.2% 14.9% 1.1% 11.2% 5.2% 8.4% 11.3% 8.7% 8.4%
% Growth Q/Q --- --- -1.2% -6.5% 4.5% 4.7% --- 2.9% -3.7% 7.3% 2.3% ---
TOTAL PAID SEARCH EBITDA $406.8 $541.1 $153.6 $143.6 $150.4 $157.5 $605.1 $161.7 $155.7 $167.4 $171.1 $655.9
% Growth Y/Y 34.5% 33.0% 28.4% 6.2% 15.1% 1.3% 11.8% 5.2% 8.4% 11.3% 8.7% 8.4%
% Margin 90.0% 91.5% 92.0% 92.0% 92.2% 92.2% 92.1% 92.0% 92.0% 92.2% 92.2% 92.1%
Revenue Per Search (RPS) $0.06 $0.08 $0.09 $0.09 $0.10 $0.09 $0.09 $0.10 $0.11 $0.11 $0.10 $0.10
% Growth Y/Y 26.9% 25.0% 39.6% 18.1% 11.5% 12.2% 19.7% 13.8% 14.1% 13.6% 7.6% 12.2%
% Growth Q/Q --- --- 8.8% 0.6% 3.1% -0.6% --- 10.3% 0.9% 2.6% -5.9% ---
Total Partner Sites TAC $153.5 $290.0 $98.0 $90.0 $103.0 $125.0 $416.0 $112.4 $110.4 $124.5 $150.7 $498.0
% TAC Growth Y/Y 146% 89% 128% 41% 17% 32% 43% 14.7% 22.7% 20.9% 20.6% 19.7%
TAC% of Total Gross 59.3% 60.9% 65.3% 62.1% 63.2% 63.5% 63.5% 64.6% 64.8% 65.0% 65.1% 64.9%
Total Net Partner Sites Revenue $105.5 $186.0 $52.0 $55.0 $60.0 $72.0 $239.0 $61.6 $60.0 $67.0 $80.8 $269.4
% Growth Y/Y 0% 76% 30% 20% 28% 36% 28% 18.5% 9.0% 11.7% 12.2% 12.7%
% Net Revenue Margin (Gross Margin) 40.7% 39.1% 34.7% 37.9% 36.8% 36.5% 36.5% 35.4% 35.2% 35.0% 34.9% 35.1%
TOTAL PARTNER SITES EBITDA $57.3 $104.4 $30.0 $29.0 $32.6 $39.4 $131.0 $34.8 $34.1 $38.3 $46.3 $153.5
% Growth Y/Y 0% 82% 37% 18% 16% 33% 26% 16% 18% 18% 18% 17.2%
% Margin 22.1% 21.9% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
TOTAL ADVERTISING SUMMARY 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $232.0 $220.9 $213.9 $252.2 $919.0 $194.9 $232.0 $228.9 $274.9 $930.6
% Growth Y/Y 9.6% 30.6% 31.8% 15.1% 5.9% 1.3% 12.2% -16.0% 5.0% 7.0% 9.0% 1.3%
Paid Search $452.0 $591.0 $167.0 $156.1 $163.1 $170.8 $657.0 $175.7 $169.2 $181.5 $185.6 $712.1
% Growth Y/Y 34.5% 30.8% 25.6% 6.2% 14.9% 1.1% 11.2% 5.2% 8.4% 11.3% 8.7% 8.4%
Partner Sites $259.0 $476.0 $150.0 $145.0 $163.0 $197.0 $655.0 $174.0 $170.4 $191.5 $231.5 $767.4
% Growth Y/Y 167.0% 83.8% 80.7% 31.8% 20.7% 30.0% 37.6% 16.0% 17.5% 17.5% 17.5% 17.2%
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $549.0 $522.0 $540.0 $620.0 $2,231.0 $544.6 $571.6 $601.9 $692.0 $2,410.1
% Growth Y/Y 33.1% 41.0% 40.1% 16.3% 12.7% 9.5% 18.3% -0.8% 9.5% 11.5% 11.6% 8.0%
% Growth Q/Q --- --- -3.0% -4.9% 3.4% 14.8% --- -12.2% 4.9% 5.3% 15.0% ---
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $104.4 $99.4 $96.3 $113.5 $413.6 $87.7 $104.4 $103.0 $123.7 $418.8
% Growth Y/Y -19.8% 25.5% 48.3% 29.5% 19.1% 13.9% 26.2% -16.0% 5.0% 7.0% 9.0% 1.3%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0% 45.0%
Paid Search $406.8 $541.1 $153.6 $143.6 $150.4 $157.5 $605.1 $161.7 $155.7 $167.4 $171.1 $655.9
% Growth Y/Y 34.5% 33.0% 28.4% 6.2% 15.1% 1.3% 11.8% 5.2% 8.4% 11.3% 8.7% 8.4%
% Margin 90.0% 91.5% 92.0% 92.0% 92.2% 92.2% 92.1% 92.0% 92.0% 92.2% 92.2% 92.1%
Partner Sites $57.3 $104.4 $30.0 $29.0 $32.6 $39.4 $131.0 $34.8 $34.1 $38.3 $46.3 $153.5
% Growth Y/Y --- 82.1% 36.9% 17.7% 15.5% 33.1% 25.5% 16.0% 17.5% 17.5% 17.5% 17.2%
% Margin 22.1% 21.9% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
TOTAL ADVERTISING EBITDA $725.2 $973.0 $288.0 $272.0 $279.2 $310.4 $1,149.6 $284.2 $294.1 $308.7 $341.1 $1,228.1
% Growth Y/Y 12.5% 34.2% 35.9% 14.9% 16.5% 9.0% 18.2% -1.3% 8.1% 10.5% 9.9% 6.8%
% Margin 54.2% 51.6% 52.5% 52.1% 51.7% 50.1% 51.5% 52.2% 51.5% 51.3% 49.3% 51.0%
Total Page Views (MM) --- 197,374 192,802 191,232 192,189 194,110 196,052
% Growth Y/Y --- --- -2% -1% 0.5% 1.0% 1.0%
% Growth Q/Q --- --- --- --- --- --- ---
Avg. Monthly Page Views Per Unique User --- 148 144 142 141 141 141
% Growth Y/Y --- --- -3% -1% -0.8% -0.2% -0.2%
% Growth Q/Q --- --- --- --- --- --- ---
Domestic Advertising Revenue (Gross---as reported) --- $1,525.0 $1,795.0 $1,911.9 $2,156.1 $2,358.9 $2,555.6
% Growth Y/Y --- --- 18% 7% 12.8% 9.4% 8.3%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Gross Ad Revs --- 81% 80% 79% 79% 78% 77%
Domestic Advertising Revenue Less TAC (Net) --- $1,235.0 $1,379.0 $1,413.9 $1,570 $1,674 $1,770
% Growth Y/Y --- --- 12% 3% 11.0% 6.7% 5.7%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Net Ad Revs --- --- 76.0% 73.9% 73.4% 71.6% 69.9%
Domestic Adv Revenue Less TAC Per Unique Visitor --- $11.1 $12.4 $12.6 $13.83 $14.58 $15.23
% Growth Y/Y --- --- 11.0% 2.2% 9.5% 5.4% 4.5%
% Growth Q/Q --- --- --- --- --- --- ---
Domestic Adv Revenue Less TAC Per 1,000 Page Views --- $6.3 $7.2 $7.4 $8.17 $8.62 $9.03
% Growth Y/Y --- --- 14.3% 3.4% 10.5% 5.6% 4.7%
% Growth Q/Q --- --- --- --- --- --- ---
International Advertising Revenue --- $361.0 $436.0 $498.2 $569.7 $665.3 $763.4
% Growth Y/Y --- --- 20.8% 14.3% 14.3% 16.8% 14.7%
% Growth Q/Q --- --- --- --- --- --- ---
% of Total AOL Gross Ad Revs --- 19.1% 19.5% 20.7% 20.9% 22.0% 23.0%
% of Total AOL Net Ad Revs --- 22.5% 24.0% 26.1% 26.6% 28.4% 30.1%
Total Advertising Revenue Less TAC (Net) --- $1,596.0 $1,815.0 $1,912.1 $2,139.2 $2,339.4 $2,533.6
% Growth Y/Y --- 0.0% 13.7% 5.4% 11.9% 9.4% 8.3%
% Growth Q/Q --- --- --- --- --- --- ---
TOTAL DISPLAY ADVERTISING EBITDA $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
% Growth Y/Y -19.8% 25.5% 26.2% 1.3% 12.5% 9.0% 8.0%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0%
Paid Click-Through Rate 19.5% 20.3% 14.2% 15.1% 15.5% 16.0% 16.3%
Paid Introductions (MM) 1,409 1,537 998 1,022 1,068 1,119 1,163
% Growth Y/Y -4.8% 9.0% -35.0% 2.4% 4.5% 4.8% 3.9%
Price Per Click (PPC) $0.37 $0.42 $0.72 $0.76 $0.80 $0.83 $0.86
% Growth Y/Y 38.9% 14.2% 68.9% 5.8% 6.0% 4.0% 3.0%
% Growth Q/Q --- --- --- --- --- --- ---
Gross Revenue AOL Generates for Google $522.4 $650.7 $714.1 $774.0 $857.2 $934.1 $999.8
TAC Rate Google Pays to AOL 86.5% 90.8% 92.0% 92.0% 92.0% 92.0% 93.0%
TOTAL AOL PAID SEARCH REVENUE $452.0 $591.0 $657.0 $712.1 $788.7 $859.4 $929.8
% Growth Y/Y 34.5% 30.8% 11.2% 8.4% 10.7% 9.0% 8.2%
% Growth Q/Q --- --- --- --- --- --- ---
TOTAL PAID SEARCH EBITDA $406.8 $541.1 $605.1 $655.9 $730.3 $798.3 $866.5
% Growth Y/Y 34.5% 33.0% 11.8% 8.4% 11.3% 9.3% 8.5%
% Margin 90.0% 91.5% 92.1% 92.1% 92.6% 92.9% 93.2%
Revenue Per Search (RPS) $0.06 $0.08 $0.09 $0.10 $0.11 $0.12 $0.13
% Growth Y/Y 26.9% 25.0% 19.7% 12.2% 9.1% 7.4% 6.1%
% Growth Q/Q --- --- --- --- --- --- ---
PARTNER SITES (ADVERTISING.COM) 2005A 2006A 2007A 2008E 2009E 2010E 2011E
TOTAL GROSS PARTNER SITES REVENUE $259.0 $476.0 $655.0 $767.4 $890.2 $1,023.7 $1,156.8
% Growth Y/Y 167.0% 83.8% 37.6% 17.2% 16.0% 15.0% 13.0%
% Growth Q/Q --- --- --- --- --- --- ---
Total Partner Sites TAC $153.5 $290.0 $416.0 $498.0 $586.6 $684.8 $785.4
% TAC Growth Y/Y 146% 89% 43% 20% 18% 17% 15%
TAC as % of Gross Revenue 59.3% 60.9% 63.5% 64.9% 65.9% 66.9% 67.9%
Total Net Partner Sites Revenue $105.5 $186.0 $239.0 $269.4 $303.6 $338.9 $371.4
% Growth Y/Y 0% 76% 28% 13% 13% 12% 10%
% Net Revenue Margin (Gross Margin) 40.7% 39.1% 36.5% 35.1% 34.1% 33.1% 32.1%
TOTAL PARTNER SITES EBITDA $57.3 $104.4 $131.0 $153.5 $177.1 $202.7 $227.9
% Growth Y/Y 0% 82% 26% 17% 15% 14% 12%
% Margin 22.1% 21.9% 20.0% 20.0% 19.9% 19.8% 19.7%
TOTAL ADVERTISING SUMMARY 2005A 2006A 2007E 2008E 2009E 2010E 2011E
ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $919.0 $930.6 $1,047.0 $1,141.2 $1,232.5
% Growth Y/Y 9.6% 30.6% 12.2% 1.3% 12.5% 9.0% 8.0%
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $2,231.0 $2,410.1 $2,725.8 $3,024.2 $3,319.0
% Growth Y/Y 33.1% 41.0% 18.3% 8.0% 13.1% 10.9% 9.7%
% Growth Q/Q --- --- --- --- --- --- ---
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
% Growth Y/Y -19.8% 25.5% 26.2% 1.3% 12.5% 9.0% 8.0%
% Margin 41.6% 40.0% 45.0% 45.0% 45.0% 45.0% 45.0%
TOTAL ADVERTISING EBITDA $725.2 $973.0 $1,149.6 $1,228.1 $1,378.6 $1,514.6 $1,649.0
% Growth Y/Y 12.5% 34.2% 18.2% 6.8% 12.2% 9.9% 8.9%
% Margin 54.2% 51.6% 51.5% 51.0% 50.6% 50.1% 49.7%
SUBSCRIPTION EBITDA
U.S. $819.5 $624.1 $245.0 $209.4 $140.8 $160.9 $756.1 $183.8 $152.4 $124.7 $122.2 $583.2
AOL Europe $245.5 $371.7 25.5 --- --- --- $25.5 --- --- --- --- ---
TOTAL SUBSCRIPTION EBITDA $1,065.0 $995.8 $270.5 $209.4 $140.8 $160.9 $781.5 $183.8 $152.4 $124.7 $122.2 $583.2
% Growth Y/Y 4.0% -6.5% 28.4% -21.3% -58.0% -12.5% -21.5% -32.1% -27.2% -11.4% -24.0% -25.4%
% Margin 15.8% 17.2% 31.0% 30.3% 22.2% 27.3% 28.0% 33.2% 29.8% 26.2% 27.5% 29.3%
ADVERTISING 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
ADVERTISING REVENUE
Display Advertising $627.0 $819.0 $232.0 $220.9 $213.9 $252.2 $919.0 $194.9 $232.0 $228.9 $274.9 $930.6
Paid Search $452.0 591.0 167.0 156.1 163.1 170.8 $657.0 175.7 169.2 181.5 185.6 $712.1
Partner Sites $259.0 476.0 150.0 145.0 163.0 197.0 $655.0 174.0 170.4 191.5 231.5 $767.4
TOTAL ADVERTISING REVENUE $1,338.0 $1,886.0 $549.0 $522.0 $540.0 $620.0 $2,231.0 $544.6 $571.6 $601.9 $692.0 $2,410.1
% Growth Y/Y 33.1% 41.0% 40.1% 16.3% 12.7% 9.5% 18.3% -0.8% 9.5% 11.5% 11.6% 8.0%
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $104.4 $99.4 $96.3 $113.5 $413.6 $87.7 $104.4 $103.0 $123.7 $418.8
Paid Search 406.8 541.1 153.6 143.6 150.4 157.5 605.1 161.7 155.7 167.4 171.1 655.9
Partner Sites 57.3 104.4 30.0 29.0 32.6 39.4 131.0 34.8 34.1 38.3 46.3 153.5
TOTAL ADVERTISING EBITDA $725.2 $973.0 $288.0 $272.0 $279.2 $310.4 $1,149.6 $284.2 $294.1 $308.7 $341.1 $1,228.1
% Growth Y/Y 12.5% 34.2% 35.9% 14.9% 16.5% 9.0% 18.2% -1.3% 8.1% 10.5% 9.9% 6.8%
% Margin 54.2% 51.6% 52.5% 52.1% 51.7% 50.1% 51.5% 52.2% 51.5% 51.3% 49.3% 51.0%
OTHER 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
TOTAL OTHER REVENUE $109.0 $116.0 $36.0 $40.0 $44.0 $42.0 $162.0 $39.6 $43.2 $46.6 $43.7 $173.1
% Growth Y/Y -48.1% 6.4% 33.3% 25.0% 25.0% 55.6% 39.7% 10.0% 8.0% 6.0% 4.0% 6.9%
TOTAL OTHER EBITDA $24.8 $23.2 $6.5 $7.2 $7.9 $7.6 $29.2 $7.1 $7.8 $8.4 $7.9 $31.2
% Growth Y/Y -51.8% -6.3% 20.0% 12.5% 32.0% 40.0% 25.7% 10.0% 8.0% 6.0% 4.0% 6.9%
% Margin 22.7% 20.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
AOL INCOME STATEMENT SUMMARY 2005A 2006A 3/07A 6/07A 9/07A 12/07A 2007A 3/08E 6/08E 9/08E 12/08E 2008E
REVENUE
Subscriptions $6,755.0 $5,784.0 $873.0 $691.2 $635.0 $589.0 $2,788.3 $554.3 $511.9 $476.6 $444.8 $1,987.6
Advertising 1,338.0 1,886.0 549.0 522.0 540.0 620.0 2,231.0 544.6 571.6 601.9 692.0 2,410.1
Other 109.0 116.0 36.0 40.0 44.0 42.0 162.0 39.6 43.2 46.6 43.7 173.1
TOTAL REVENUE $8,202.0 $7,786.0 $1,458.0 $1,253.2 $1,219.0 $1,251.0 $5,181.3 $1,138.5 $1,126.7 $1,125.2 $1,180.4 $4,570.8
% Growth Y/Y -5.6% -5.1% -25.5% -38.2% -37.9% -31.9% -33.5% -21.9% -10.1% -7.7% -5.6% -11.8%
EBITDA
Subscriptions $1,065.0 $995.8 $270.5 $209.4 $140.8 $160.9 $781.5 $183.8 $152.4 $124.7 $122.2 $583.2
Advertising 725.2 973.0 288.0 272.0 279.2 310.4 1,149.6 284.2 294.1 308.7 341.1 1,228.1
Other 24.8 23.2 6.5 7.2 7.9 7.6 29.2 7.1 7.8 8.4 7.9 31.2
OPERATING EBITDA $1,815.0 $1,992.1 $565.0 $488.6 $427.9 $478.8 $1,960.4 $475.1 $454.3 $441.8 $471.2 $1,842.4
% Growth 7.6% 9.8% 32.0% -4.0% -26.3% 1.0% -1.6% -15.9% -7.0% 3.2% -1.6% -6.0%
% Margin 22.1% 25.6% 38.8% 39.0% 35.1% 38.3% 37.8% 41.7% 40.3% 39.3% 39.9% 40.3%
Merger & Restructuring Costs (10.0) (222.0) (23.0) (4.0) --- (98.0) (125.0) --- (40.0) --- (40.0) (80.0)
ADJUSTED EBITDA $1,805.0 $1,770.1 $542.0 $484.6 $427.9 $380.8 $1,835.4 $475.1 $414.3 $441.8 $431.2 $1,762.4
% Growth Y/Y 7.6% -1.9% 26.9% -1.9% -22.8% 29.1% 3.7% -12.3% -14.5% 3.2% 13.2% -4.0%
% Margin 22.0% 22.7% 37.2% 38.7% 35.1% 30.4% 35.4% 41.7% 36.8% 39.3% 36.5% 38.6%
Gain on Disposition of Assets $10.0 $771.0 $670.0 $(1.0) $(2.0) $16.0 $683.0 --- --- --- --- ---
Impairment of Goodwill and PPE (24.0) (13.0) (1.0) --- (1.0) --- (2.0) --- --- --- --- ---
UNADJUSTED EBITDA $1,791.0 $2,528.1 $1,211.0 $483.6 $424.9 $396.8 $2,516.4 $475.1 $414.3 $441.8 $431.2 $1,762.4
% Growth Y/Y 8.7% 41.2% 182.2% -2.1% -23.3% -62.2% -0.5% -60.8% -14.3% 4.0% 8.7% -30.0%
Depreciation (548.0) (501.0) (105.0) (104.0) (103.0) (96.0) (475.4) (95.0) (90.0) (90.0) (85.0) (475.4)
Amortization (167.0) (133.0) (22.0) (20.0) (27.0) (27.0) (97.5) (25.0) (25.0) (20.0) (20.0) (97.5)
OPERATING INCOME $1,076.0 $1,894.1 $1,084.0 $359.6 $294.9 $273.8 $2,012.4 $355.1 $299.3 $331.8 $326.2 $1,312.4
% Growth Y/Y 31.4% 76.0% 309.0% 9.3% -24.4% -69.9% 6.2% -67.2% -16.8% 12.5% 19.1% -34.8%
% Margin 13.1% 24.3% 74.3% 28.7% 24.2% 21.9% 38.8% 31.2% 26.6% 29.5% 27.6% 28.7%
SUBSCRIPTION EBITDA
U.S. $819.5 $624.1 $756.1 $583.2 $432.1 $327.5 $228.8
AOL Europe 245.5 371.7 25.5 --- --- --- ---
TOTAL SUBSCRIPTION EBITDA $1,065.0 $995.8 $781.5 $583.2 $432.1 $327.5 $228.8
% Growth Y/Y 4.0% -6.5% -21.5% -25.4% -25.9% -24.2% -30.1%
% Margin 15.8% 17.2% 28.0% 29.3% 28.4% 25.8% 20.9%
ADVERTISING EBITDA
Display Advertising $261.1 $327.6 $413.6 $418.8 $471.1 $513.5 $554.6
Paid Search 406.8 541.1 605.1 655.9 730.3 798.3 866.5
Partner Sites 57.3 104.4 131.0 153.5 177.1 202.7 227.9
TOTAL ADVERTISING EBITDA $725.2 $973.0 $1,149.6 $1,228.1 $1,378.6 $1,514.6 $1,649.0
% Growth Y/Y 12.5% 34.2% 18.2% 6.8% 12.2% 9.9% 8.9%
% Margin 54.2% 51.6% 51.5% 51.0% 50.6% 50.1% 49.7%
AOL INCOME STATEMENT SUMMARY 2005A 2006A 2007E 2008E 2009E 2010E 2011E
REVENUE
Subscriptions $6,755.0 $5,784.0 $2,788.3 $1,987.6 $1,519.8 $1,268.9 $1,095.6
Advertising 1,338.0 1,886.0 2,231.0 2,410.1 2,725.8 3,024.2 3,319.0
Other 109.0 116.0 162.0 173.1 181.8 189.0 194.7
TOTAL REVENUE $8,202.0 $7,786.0 $5,181.3 $4,570.8 $4,427.3 $4,482.2 $4,609.3
% Growth Y/Y -5.6% -5.1% -33.5% -11.8% -3.1% 1.2% 2.8%
EBITDA
Subscriptions $1,065.0 $995.8 $781.5 $583.2 $432.1 $327.5 $228.8
Advertising 725.2 973.0 1,149.6 1,228.1 1,378.6 1,514.6 1,649.0
Other 24.8 23.2 29.2 31.2 32.7 34.0 35.0
OPERATING EBITDA $1,815.0 $1,992.1 $1,960.4 $1,842.4 $1,843.4 $1,876.0 $1,912.9
% Growth 7.6% 9.8% -1.6% -6.0% 0.1% 1.8% 2.0%
% Margin 22.1% 25.6% 37.8% 40.3% 41.6% 41.9% 41.5%
Merger & Restructuring Costs (10.0) (222.0) (125.0) (80.0) (60.0) (40.0) (20.0)
ADJUSTED EBITDA $1,805.0 $1,770.1 $1,835.4 $1,762.4 $1,783.4 $1,836.0 $1,892.9
% Growth Y/Y 10.3% -1.9% 3.7% -4.0% 1.2% 3.0% 3.1%
% Margin 22.0% 22.7% 35.4% 38.6% 40.3% 41.0% 41.1%
Gain on Disposition of Assets $10.0 $771.0 $683.0 --- --- --- ---
Impairment of Goodwill and PPE (24.0) (13.0) (2.0) --- --- --- ---
UNADJUSTED EBITDA $1,791.0 $2,528.1 $2,516.4 $1,762.4 $1,783.4 $1,836.0 $1,892.9
% Growth Y/Y 8.7% 41.2% -0.5% -30.0% 1.2% 3.0% 3.1%
Depreciation (548.0) (501.0) (475.4) (475.4) (451.7) (429.1) (407.6)
Amortization (167.0) (133.0) (97.5) (97.5) (82.9) (70.5) (59.9)
OPERATING INCOME $1,076.0 $1,894.1 $1,943.4 $1,189.5 $1,248.8 $1,336.5 $1,425.4
% Growth Y/Y 31.4% 76.0% 2.6% -38.8% 5.0% 7.0% 6.7%
% Margin 13.1% 24.3% 37.5% 26.0% 28.2% 29.8% 30.9%
Important Disclosures: