Dotdash Meredith Financial Analysis

Dotdash Meredith is a media conglomerate that formed when Dotdash merged with Meredith at the end of 2021. It publishes content across health, finance, food and drink, home, beauty and style, travel, tech, and entertainment. Many of its most well known brands include Better Homes & Gardens, Real Simple, Investopedia, and The Spruce, among other things.

Dotdash Meredith’s strategy is to acquire properties and quickly rebuild them on its proprietary technology stack. By increasing the speed of these sites—both with better tech and fewer ads—the team believes revenue will rise.

Full Year 2024

Full Year 2023

Q1 2023 Commentary

• By and large, the migration is complete and it appears that the majority of the Meredith sites are now on the Dotash technology. Parents, InStyle, and Shape remain in a weaker position when discussing traffic than they were prior to the deal, which is concerning. Based on their expected traffic growth, the sites should be up 10-30%, but are, in fact, still not in the right place.
  • People’s traffic is also down from last year, but DDM doesn’t blame that on the migration. On the earnings call, IAC COO/CFO Christopher Halpin said, “People is yellow, that is nothing about the migration. That’s purely because last April, May, there was the Oscar swap, as well as the Johnny Depp trial. So traffic has been tougher there recently, but we had an excellent first quarter, once we lap the Johnny Depp verdict, we expect to return to strong growth there. Feel very good about that property.”
  • This is an example of how People doesn’t fit into the DDM model. DDM is focused on evergreen, non-news content. People needs news to thrive. It remains a question what the company will do with the brand.
• In the advertising markets, Health/Pharma, Beauty/Style, Travel, and Retail are growing, but Finance, Media, Technology, and Home remain weak. The company doesn’t expect those trends to change in the near-term.
  • Halpin said: “We expect revenue to be down 5% to 10% each quarter for the remainder of 2023. That decline will be most pronounced in Q2 as we had a number of lower — a sort of a spike in lower value revenues during that period last year and stripping that or that push towards quality. And then we would expect revenue in Q3 and Q4 to be at the down less in that 5% to 10% range on a year-over-year basis.”
  • We should expect every upcoming quarter to be better than the list if the ad markets the historical trends of starting weak and getting progressively stronger.
• DDM is preparing for a post-cookie world with the launch of a new contextual ad product. According to its earnings release: “We are launching a major new advertising product next week which brings the strengths of the new Dotdash Meredith to life by offering advertisers targeted, intent-driven campaigns across the properties using no cookies. We believe this is a product only Dotdash Meredith can offer, given the depth of our brands and the nature of our content. We don’t need to guess what our users want – they naturally (and anonymously) provide that information based on the information they seek on our sites. It doesn’t take a technological breakthrough to know that a user reading about travel is interested in travel, and a user reading about wallpaper is interested in wallpaper. Based on early reactions, we expect strong client interest as we roll it out broadly.”

Full Year 2022

Q4 2022 Commentary

• There are two main headwinds that are holding the company back. First, the integration has taken longer than the company might have expected. All sites have transitioned to the new technology—read more about how Dotdash Meredith does integration—but not all sites have reached growth in traffic as expected. Second, the ad markets were not as strong as many might have expected when planning in early 2022.
  • According to the IAC Q4 Shareholder letter: “The ad market softened appreciably in November and December, as many brands froze their marketing spending in a season when budgets normally peak. We saw this trend in both premium direct and programmatic demand, with large holiday campaigns significantly cut back and programmatic CPMs down 10-15%. 
  • There is little expectation that the ad marketing will have returned in Q1, so the company anticipates a rocky quarter. 
• Dotdash, as a business, benefited immensely from an increase in traffic during the pandemic and it is seeing itself recalibrate to a potentially new norm. According to Christopher Halpin, COO & CFO at IAC, “To get to revenue stability, which is our goal, you know, we need stability both in traffic, aggregate traffic as well as ad pricing. Aggregate traffic volumes across the portfolio is still down circa 5% to 6%, mainly driven by real weakness in a number of the historical Dotdash sites that just had large booms during the pandemic.”