Dotdash Meredith Reports Small Revenue Growth; Shrinks Its Operating Losses
Dotdash Meredith reported its Q1 2024 financial results and remains a business clearly in transition 2.5 years after it acquired the Meredith assets. The business generated $390.5 million in revenue, which was only up 1% from $387.6 million in Q1 2023.
However, there are two stories here worth exploring.
- Digital revenue was up 13% year-over-year to $209.3 million.
- Print revenue was down 10% from $207 million to $185.9 million year-over-year.
While the business saw nominal revenue growth, the operating losses tell a different story. The business is nearly breakeven on the digital side, losing $200,000 in the quarter compared to $17.9 million last year. On the print side, the loss was $5.1 million compared to $5.8 million the year prior. Despite the significant drop in print revenue, its losses actually improved.
A big reason for this is that Dotdash Meredith has been firing bad subscribers. At the AMO Summit, Vogel explained that any subscriber they were losing money on was not worth keeping around. If it costs you $1 to fulfill the subscriber and you make $0.75, losing money on every additional dollar you generate.
As the chart shows, Dotdash Meredith is managing the decline here. The question remains to be seen whether it can turn a material profit. The team does seem confident. On the IAC earnings call, Christopher Halpin, CFO & COO of IAC, said:
As we expected print started off the year at a low profit level $2.9 million [adj. EDBITA] due to seasonality and secular revenue declines. We expect Q2 print EBITDA to be $9 million to $11 million, and then about $13 million to $15 million a quarter in the third and fourth quarters.
The goal, ultimately, appears to be moving as much advertising spend to the digital business. Halpin went on to explain that “we provided the full-year guidance of $280 million to $300 million of adjusted EBITDA for 2024. We said we expect essentially all of the consolidated EBITDA to come from digital.” And that makes sense.
On the digital side, things are slowly improving after a tough 2023 ad market. However, performance marketing was a weakness for the business. According to IAC CEO Joey Levin:
Performance marketing only grew 3% in the quarter. And that was really pulled down by a 30% decline in services such as which is overwhelmingly financial products, such as brokerage accounts and insurance. Performance marketing for e-commerce or goods, as we highlight grew 18%.
One area we’ll want to pay attention to going forward is licensing revenue, which was up 9% year over year. On Tuesday, Dotdash Meredith announced that it had signed a deal with OpenAI that included a few components:
- Dotdash Meredith will let OpenAI use its content to train its ChatGPT models.
- OpenAI will display content and links attributed to DDM in relevant ChatGPT responses.
- DDM will use OpenAI’s models to help make its D/Cipher product even stronger.
While financial terms were not released, that licensing revenue will likely start showing up in Q2’s revenue.
Overall, Q1 was a solid start to the year, especially considering that the much stronger numbers show up in the second half of the year. With new ad technology like DDM’s D/Cipher, the team is feeling very confident about where things are headed.
All of the Dotdash Meredith numbers that we track can be found here.
