Millennial Media IPO watch: The U.S. mobile advertising company Millennial Media announced its IPO price range of $9-$11 per share, calculated by the median of the Millennial Media IPO price range, the company’s valuation would reach about $818 million. Millennial Media offers 10.2 million shares to finance up to $102 million. Read more abou the Millennial Media IPO price range.
Let’s have a look at the financial overview of the company:
Revenue grows rapidly:
Millenial Media generated a total revenue of $69 million for the first nine months ended September 30, 2011, an increase of 137.7% compared with the same period of last year. Revenue from overseas market was $6.8 million, accounting for 9.8% of the total revenue. (Overseas revenue mainly derived from the United Kingdom. Millennial launched operations in the U.K. market in the second quarter of 2010).
73 out of the top 100 spending advertisers ranked by Advertising Age magazine chose to deliver the mobile advertisements through the platforms of Millennial Media over the first 11 months of 2011, a substantial increase in advertiser penetration, compared with the previous three years. The 73 advertisers aggregately spent $41.6 million over the 11 months and each advertiser on average spent $569,000, significantly higher than the previous three years’ figures.
Costs / Revenues fell to 61 %, losses narrowed:
Millennial Media’s costs are principally the revenue sharings with the developers of the applications. Millennial Media helps advertisers to deliver advertisements through mobile applications and web pages, while the sharings with the developers depend on the actual effect of the advertisements. Advertising sales consist of several forms such as CPM (cost per thousand), CPC (cost per click), CPA (cost per action). Smaller advertisers also can use the Millennial’s self-service advertising platform mMedia to carry out the ad delivery.
Millennial Media’s costs as a proportion of revenues fell in the recent years. Costs / revenues ratio was 79%, 71% and 66% in 2008, 2009 and 2010, respectively, and this figure declined to 61% over the first nine months of 2011, due to the company had built a more powerful bargaining position with the developers. More and more developers choose to use the Millennial’s self-service advertising system mmDev, while the use of the system will reduce the developers’ sharings with the company, resulting in the increase in gross margin.
Total operating expense was $27.44 million in the first nine months of 2011. Operating expenses include sales and marketing expenses, R&D expenses and administrative expenses.
Losses are being significantly reduced, over the first nine months of 2011, operating loss was $840,000, a net loss of $410,000 compared with an operating loss of $6.69 million, a net loss of $7.12 million in 2010.