RetailmeNot (SALE) 05/25/2014
Mission Statement: Our Mission is to be the number one place where consumers go to find the best offers, whether shopping online or at a store. We have created a marketplace for retailers to drive sales by showcasing their best offers to consumers.
Revenue:
RetailMeNot is able to grow its revenue not by click based compensation but when a coupon is actually used. When a customer uses one of their coupons the retailer will give them a commission on that sale. This is the majority of their revenue. A small portion is made by Advertisements on their website.
Numbers:
SALE 2011 2012 2013 1Q 2014
Revenue $80,402 $144,685 $209,836 $61,270.00 YOY-79.95% -45%
Cogs $3,980 $9,113 $13,049 $4,430
Gross Profit $76,422 $135,572 $196,787 $56,840.00
Gross Margin 95% 94% 94% 93%
Net Income $16,961 $25,993 $31,530 $6,075 YOY-53% -21.30%
Profit Margin 21% 18% 15% 10%
EPS ($64.19) $0.03 $0.23 $0.11
Shares 744 2,277 25,742 55,562
Cash $97,142 $165,881 $196,466
Debt $0 $16,650 $15,063 $15,058
Cash Flow $27,557 $39,164 $25,043 $15,914
Management:
CEO Cotter Cunningham
Chief Executive Officer
Cotter Cunningham is the founder, president and CEO of RetailMeNot, Inc., the world’s largest digital coupon marketplace. Founded in 2009, RetailMeNot, Inc. has grown to over 400 employees with offices in five countries and headquartered in Austin, TX. In 2012, the company facilitated an estimated $2.5 billion in merchant sales.
Prior to RetailMeNot, Cotter was the Senior Vice President and COO of Bankrate Inc. (NYSE: RATE) for seven years, taking the company public in 1999 and growing its revenues eight-fold over the next 7 years. Cotter was also a Vice President and General Manager with advertising agency VML and he also worked in the corporate development group at H&R Block, where he worked primarily with its CompuServe subsidiary. He wrote the book Your Financial Action Plan: 12 Simple Steps to Achieve Money Success. He has an MBA from Vanderbilt University and lives in Austin, TX.
Kelli Beougher
Chief Operating Officer
Kelli Beougher was promoted to COO in 2012, having previously served as senior vice president of operations. She leads all of RetailMeNot’s partner management, advertising sales, operations and merchandising duties. She also manages the integration of domestic and international acquisitions for the company. Since joining RetailMeNot, Inc. in 2009 as employee number two, Beougher has instrumentally grown the company in the United States and abroad by expanding the portfolio of websites and growing a team of top talent. Prior to RetailMeNot, she was the senior vice president at LinkShare, where she was responsible for advertiser and publisher services and all lines of business in North America. Kelli started her career in GE Capital’s management program. At GE, she held roles in client and corporate marketing and Six Sigma operations. Kelli holds a bachelor of business administration from the University of Texas at Austin.
Douglas Jeffries
Chief Financial Officer
Douglas Jeffries is RetailMeNot’s Chief Financial Officer. As CFO, Doug manages the company’s global finance, legal, facilities and human resource teams.
Doug brings to RetailMeNot, Inc. more than 20 years of executive leadership experience in finance and operations working for several public companies. Most recently, Doug was Executive Vice President & Chief Financial Officer of Taleo, a publicly traded, provider of SaaS HCM solutions serving thousands of customers globally. In 2012, Taleo was acquired by Oracle for a reported $1.9 billion.
Prior to Taleo, Doug was Senior Vice President and Chief Financial Officer at Palm, Inc. where he helped support the company’s rapid expansion and launch of revolutionary new smartphone products. Previously, he was Vice President of Finance and Chief Accounting Officer at eBay. He has also held executive positions at GenCorp, Red Herring Communications, Alaris Medical and Cardinal Health.
Doug started his career at Price Waterhouse and holds an MBA from University of Southern California.
Paul Rogers
Chief Technology Officer
Paul Rogers is the chief technology officer of RetailMeNot, Inc. Paul is well-known in Austin tech circles, having opened Google’s Austin office in 2008. He led the engineering team at BazaarVoice during its start-up years and held multiple development and technical management roles at Trilogy Software. Paul has worked closely with RetailMeNot, Inc. since its inception, as an advisor, as well as with Austin Ventures, the company’s venture capital firm. Paul draws upon his extensive technology leadership experience to drive RetailMeNot’s technical vision and the progress of the overall company.
Websites:
RetailMeNot.com, RetailMeNot.ca, VoucherCodes.co.uk, Deals2Buy.com, Bons-de-reduction.com, Deals.com, Actiepagina.nl, ma-Reduc.com, Poulpeo.com
Initial Public Offering
On July 24, 2013, RetailMeNot completed its initial public offering of 10,454,544 shares of common stock, at $21.00 per share, before underwriting discounts and commissions. The company sold 4,545,454 shares and existing stockholders sold an aggregate of 5,909,090 shares, including an additional 1,363,636 shares as a result of the underwriters’ exercise of their over-allotment option to purchase additional shares. The initial public offering generated net proceeds to the company of approximately $86.1 million, after deducting underwriting discounts and estimated offering expenses payable by RetailMeNot. RetailMeNot did not receive any proceeds from the sale of shares by the selling stockholders. With the proceeds of the offering, RetailMeNot paid in full all accrued but unpaid dividends on its outstanding shares of preferred stock, which totaled $52.5 million. In conjunction with the initial public offering, preferred shares converted to common.
Acquisitions:
Founded in 2006 by Australian entrepeneurs Guy King and Bevan Clark.
December 2nd, 2010 RetailMeNot was acquired by Whaleshark Media. One of the Venture capitalists that funded their company was Google Ventures
August 16th, 2011 WhaleShark Media Acquires VoucherCodes.co.uk, UK’s Top Coupon Site.
May 14th, WhaleShark Media Acquires French Online Coupon Publisher Miwim, which includes website’s Bons-de-Reduction and cash-back website, Poulpeo.
March 12th, 2013 WhaleShark Media changes corporate name to RetailMeNot, Inc.
March 13th, Acquires Actiepagina.nl Leading Dutch Online Coupon Site.
June 2013 when IPO’d changed name to RetailMeNot for branding purposes.
July 4th, 2013 acquired ma-Reduc.com, a digital coupon website in France.
October 9th, 2013 acquired ZenDeals, an early stage technology company with patent pending proprietary digital coupon verification technology. It checks each coupon automatically before showing it to you to make sure it’s valid. This is an interesting acquisition for a number of reasons. First no one likes getting coupons and going to a store only to find out they are not valid. Secondly, ZenDeals was backed by Eric Schmidt’s venture fund Innovation Endeavors, as well as by several startup CEO’s, and executives originally from Facebook and Zynga.
April 16th, 2014 acquired Pickie, a personalized shopping application provider for fashion, beauty and home goods.
This company’s main goal is to provide savings to its consumers and to provide customers to retailers. They do this by providing a digital coupon to people who either visit their website or search for coupons on Google. This is one of the main reasons for the recent sell off. Everyone assumes that RetailMeNot will lose a lot of business. If you read their financials it lists SEO (search engine optimization) as one of their concerns so it is a valid concern. But the company put out a press release on 5/22/2014 stating that it is too early to tell if it has impacted them. While their traffic with Google continues to grow year over year and the company has experienced some shift in rankings and traffic the company believes that user experience with them will help to grow the business. This is a big concern for RetailMeNot but one that they have gone through before and one that they are well positioned to act on. Could it hurt the next quarter? It’s possible but this is one thing they always keep their eye on. In fact their CTO set up Google’s Austin office. I would think that someone who worked for Google would have some insight on how to optimize their business within Google. In fact if you look at RetailMeNot you will see the theme of Google, whether it is with Eric Schmidt investing in them, or people that RetailMeNot has hired, winding through their company. I have a feeling that they have a close relationship with Google that helps them with SEO. This is a statement that Mr. Cunningham, the CEO, stated and I quote.
At our core, RetailMeNot is a marketplace where ready-to-shop consumers connect with leading retailers and brands across multiple categories and channels at scale. From a technology standpoint, via effective digitalization, mobile connectivity and social sharing, have really empowered consumers and fundamentally obtained the relationship with brand retailers and the way they shop.
Information about products, services and businesses and people are now available to users any time and anywhere just at the tap of a finger and customers are increasingly embracing these new tools.
Coupons have been around over a 100 years, during the last decade, the emergence of digital coupons have changed the landscape. Many of you heard me say that RetailMeNot, we didn’t invent the coupon and we didn’t bring it online. What we did do is create a marketplace where we could bring it to live and then make the distribution effective as scale.
Our industry is still nascent and highly fragmented. We quickly built an exciting business and pride ourselves in today being the world’s largest digital coupon marketplace. We continue to reinforce our position by not only helping consumers find our best digital coupons but also creating an efficient channel for leading retailers to engage with large enthusiastic audience. We feel we are really just getting started.
Ultimately, our vision is to create the premier marketplace where consumers come for the highest quality digital coupon just like they go to eBay as a secondary eCommerce marketplace and Priceline as a marketplace for travel and hotels.
We measure our success primarily in three areas; net revenue growth, total consumer visits and consumer engagement through mobile and email. This quarter, we delivered strong metrics in all three.
Conclusion:
RetailMeNot understands that Search Engine Optimization (SEO) is very important to their business. When reading about this company there is always a thread that seems to be woven into the fabric of the company. That thread is Google. Whether it is with the venture financing that started the business or the CTO that is working at the business it is subtly shown that Google is part of this company. They also keep surrounding their business with smart people. Whether you look at the CEO Mr. Cunningham, who was the COO of Bankrate Inc growing their revenues eight fold in seven years, or Miss Beougher, the COO, who worked for LinkShare.com, where she was responsible for advertising, or Mr. Jeffries, the CFO, who worked for Taleo before it was acquired, and finally Mr. Rogers, the CTO, Who set up Google’s office in San Antonio. I believe this to be a top notch management team that is incredibly able to run this business. I think this recent sell off is ridiculous, but as one poster put it, this stock has broken through its bottom and might not have any support. While I do not invest using technical signs I am not afraid to listen to sage advice. This stock could very well go down a lot more but I did buy some on Friday at $24.01. I see this as a strong and growing company and will not be afraid to buy some more if it does fall further. But one thing you have to be leary of is buying to much in a short period of time and therefore hurting you portfolio in the short term. But if you are not afraid of volatility and like this company for the next five years, and I do. Then buying and holding for the long term should be great. Right now its forward P/E is sitting at 26.23 which to me is incredibly cheap for a company growing revenues at 45% YoY in 2013. While their profits have been coming down which can be a worry they have been spending more on marketing and buying up companies. It seems all these companies that are trying to grow into market leaders are spending a lot of money which keeps their net income down. But with sales up, cash flow positive and profitable, if you like what this company does, selling coupons for people to save. This in my opinion is a great time to buy. But be careful because sometimes when I see a company that I think is great I tend to get a little too excited. Page post to come later.
Andy