Despite the headwinds in the online advertising market, Internet Brands, Inc. (NASDAQ: INET) is holding up relatively well. In Q1, the company posted revenues of $23.5 million, which is down from $24.9 million in the same period a year ago. Keep in mind that last year's results included a one-time gain of $1.1 million.
A key advantage for Internet Brands is its diversification. That is, the company operates about 200 sites in such verticals as autos, careers, home, money and business, shopping and travel. There is also a licensing segment (for auto data and software tools).
Unfortunately, the auto division was a drag. For example, there was a $2.7 million fall in related e-commerce revenues.
Yet, Internet Brands was still able to pump out a profit of $2.3 million, or 5 cents per share. Cash flow came to $10.1 million, up from $5.5 million in the same period a year ago. In all, there is about to $60 million in the bank.
And the recession is having little impact on traffic. Internet Brand's network of sites attracted 49.7 million unique visitors in March, up 44% from the same period in 2008 and up 15% from December of last year.
To keep up the momentum, Internet Brands is in the midst of an aggressive mergers & acquisitions strategy. So far this year, the company has acquired five sites (such as FinWeb.com, SmallBusinessNotes.com and Outblush.com). The good news is that the valuations have dropped and it's getting easier to scale revenues.
On a full-year basis, Internet Brands expects to grow EBITDA at 10% to 15%, amounting to $38.5 million to $40.5 million. And, if there's a pickup in the auto sector, things may be even stronger.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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