Glam Media, the fast-growing online media company catering to mostly women, has raised another $50 million from investors — to help it expand before going public over sometime in the next one to three years. More impressively, the company is now valued at $750 million by its investors.
I spoke to chief executive Samir Arora earlier today, and he confirmed the financing amount, including many of the details surrounding the company’s business. Notably, the company has managed to both expand its revenue at a rapid rate during the economic downturn and become profitable at the same time. The company is especially active in serving display advertising, a sector that was expected be hit hard during the economic downturn. Glam appears to have bucked expectations. Indeed, Arora said the company broke even (EBITDA profitability) in during the fourth quarter of last year.
We’re also hearing that the company generated revenue of about $19.5 million in the fourth quarter of last year, up from about $15 million the same quarter of the year before — representing about a 30 percent growth over the year. That’s significant when you consider that most other media companies are struggling to grow, let alone be profitable. Glam’s business began largely as an advertising network focused on women, whereby Glam served ads to third-party content sites that it does not own, but with which it has an exclusive advertising relationship. Over the past two years, however, Glam has built more of a content engine, to the point where it now has about 1,400 publishers (of which about 900 are standard content sites, and 500 are blogs) that have created over half a million articles.
The so-called “mezzanine round” of financing is the company’s fifth. A mezzanine round is so named because it the last round of capital that a company takes before it anticipates going public. The company has now raised $130 million in total.
The round was led by Aeris Capital, and included existing investors Burda Digital Holding (of Hubert Burda Media) and Mizuho Capital.
It has received about $50 million in this fifth round, led by Aeris Capital, the European fund, with existing investors Burda Burda Media and Mizuho Capital also participating. The valuation, our sources say, is around $750 million post-money. This is round brings the total cash raised by the company directly to about $130 million.
Of the $50 million invested, up to $15 million went to buying shares from early investors and employees. The remainder will be used to build an R&D center to keep innovating the company’s interactive ad offerings and allow Glam to also make some strategic acquisitions. The company plans to expand internationally, too, beyond Japan, the UK and Germany, after stopping those expansion plans last year in order to weather the downturn.
While large companies like Yahoo are seeing their display advertising tumble about 15 to 20 percent during the downturn, Glam has remained relatively insulated from the worst of the recession due to its focus on women. Brands wanting to reach women have curtailed their online ad spending by about two to three percent, compared to the broader cut in other areas (tech, auto, finance) of about 15 to 20 percent.
Glam had more than 72 million unique visitors for in the U.S., making it the 11th largest U.S. web property. Globally, Glam has about 160 million uniques.
While the company hit an annual revenue run-rate of $80 million at the end of last year, the company says it expects to grow. You can expect it to argue to investors that its fast growth, if it can be sustained, should let the company be valued at a multiple of about ten times revenue. In addition, valuations are usually done on future years (2010 or 2011), so that if the company can earn $100 million in revenue by next year and argue that it should be valued at ten times that in the market, it could be looking at $1 billion market value. Indeed, its only that sort of value that could justify the valuation of $750 million that investors are currently giving it.
While a $1 billion market value is huge when you consider the valuations of other “media” companies Glam’s size, it actually becomes more reasonable if you look at the valuations of other “advertising” companies, such as Admob, which commanded a $750 million valuation when it was acquired by Google and was arguably smaller than Glam at the time.
Impressively, the company has had 17 straight quarters of revenue growth, including through the downturn.