Investor Presentation. May 2017

Transcription

1 Investor Presentation May 2017

2 Disclaimers This document and any related oral presentation does not constitute an offer or invitation to subscribe for, purchase or otherwise acquire any debt or equity securities of Leaf Group Ltd. ( Leaf Group or the Company ) and nothing contained herein or in the related oral presentation shall form the basis of any contract or commitment. The distribution of this document and any related oral presentation in certain jurisdictions may be restricted by law and persons into whose possession this document or any related oral presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdiction. The information contained herein does not constitute investment, legal, accounting, regulatory, taxation or other advice and the information does not take into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the information. You are solely responsible for seeking independent professional advice in relation to the information and any action taken on the basis of the information. This presentation contains certain forward-looking statements. All statements other than statements of historical facts contained in this presentation, including statements regarding the Company s future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. You should not rely upon forward-looking statements as guarantees of future performance. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those contained in any forward-looking statements, including those described under the heading Risk Factors in the Company s periodic reports filed from time to time with the Securities and Exchange Commission (the SEC ), which are incorporated herein by reference. Moreover, the Company operates in a very competitive and rapidly changing environment and new risks emerge from time to time. In light of these risks, uncertainties and assumptions, the forward-looking statements included in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Except as required by law, the Company undertakes no obligation to update any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in the Company s expectations. The Company is publicly traded on the New York Stock Exchange under the ticker symbol LFGR and is a registrant under the rules and regulations promulgated by the SEC. Before evaluating whether you should consider an investment in the Company s securities, you should read all of the disclosures set forth in the Company s annual, quarterly and periodic reports filed with the SEC, including the disclosures under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. The Company s SEC filings can be found at and ir.leafgroup.com. 2

3 Our Mission We build branded platforms for communities of creators to reach passionate audiences in large and growing lifestyle categories 3

4 Our Portfolio Marketplaces Media Content Partners Marketplace Model (1) 58% of total revenue in Q1 17 $16M in Revenue in Q1 17, +18% Y/Y 52M Uniques (3) Ad Supported Model 42% of total revenue in Q1 17 $11M in Revenue in Q1 17, -1% Y/Y (2) (1) Metrics exclude Deny Designs which was acquired on May 1, 2017 (2) Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of in 2016 (3) Average monthly unique visitors in the U.S. reached by all Leaf Group properties in Q1 17 across desktop and mobile (Source: January March 2017 U.S. comscore) 4

5 Key Statistics Monthly Unique Visitors Approximately 52M (1) Artists Approximately 320,000 (2) Paid to Artists in 2016 Approximately $17.0M (3) $50M $40M $41.5M $30M $20M 200 $10M $0.0M Debt Cash 100 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Diversified Revenue Mix Clean Balance Sheet Employees $27M Q1 17 (4) As of 3/31/17 Streamlining Operations (1) Average monthly unique visitors in the U.S. reached by all Leaf Group properties in Q1 17 across desktop and mobile (Source: January March 2017 U.S. comscore) (2) Total Artists: number of active Artists for Society6 and Saatchi Art in 2016; based on internal data (3) Total paid to artists: full year 2016 for Society6 and Saatchi Art; based on internal data (4) Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of in

6 Strong Media Brands With Passionate Audiences #4 #5 #2 27M 12M 1.5M #3 3M Apr 2017 (1) Represents numerical ranking in applicable Ad Supported Category (Livestrong - Health Information; ehow -Livestyle Home; Sapling (as ehow Finance) - Personal Finance; Cuteness - Lifestyle Pets) and Average monthly unique visitors in the US across desktop and mobile (Source: January March 2017 US comscore). 6

7 Reaching Audiences Across Multiple Platforms and Formats Video Produced over 250 videos in Q1 17 Over 200M video views on Facebook and YouTube in Q1 17 In-house studio and production teams Growing Audience Social 8M followers on Facebook, Instagram, Pinterest and YouTube Engaged with 25M users on Facebook in Q1 17 Preferred partner with Pinterest Content Library Over 1M articles that help people with everyday questions Established brands to consumers on search engines Continuing to invest to improve corpus and increase value 7

8 #4 in Health & Wellness Category (1) Revenue +45% Y/Y in Q1 17 Q M Avg. Monthly Uniques + 4% Y/Y (2) (1) Among ad-supported sites (Source: March 2017 U.S. comscore) (2) Average monthly unique visitors in the US across desktop and mobile (Source: January March 2017 US comscore). 8

9 6 Unique Brands for How to Everything Video Views Up 28% Y/Y (1) Facebook Followers Up 110% Y/Y to 2M (2) (1) Total monthly video views on Facebook and YouTube, or on Leaf Group or third party sites via YouTube or any other embedded video player, for January March Includes the ehow vertical sites and other YouTube channels affiliated with ehow or the other vertical sites. (2) Source: Facebook Q1 17 9

10 Multi-year Partnerships with Over a Dozen Publishers Over 200M Visits Across Partner Sites in Q (1) Content Partners 24 Sites Spanning Multiple Categories 10 (1) Source: Internal Data Google Analytics

11 (1) Revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of in (2) Source: comscore; Represents unique visitors in the U.S. reached by all Leaf Group properties. Properties sold include Cracked and certain other non-strategic properties that were disposed of in Media Traffic And Revenues Are Growing Media Revenues Pro Forma (1) ( $ in millions) ComScore Monthly Uniques (2) (in millions) $12.5 $11.4 $ $ $ $ $ $0.0 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Pro Forma Properties Sold 11

12 Opportunity For Future Improvement In Monetization Monetization Ad Stack (1) Select Advertising Partners DIRECT BRAND $1.00 PROGRAMMATIC $ $0.70 GOOGLE ADSENSE $ $0.70 THIRD PARTY $ $ (1) Source: Internal Data as of Q1 17. CPMs are based on relative scale with Direct Brand CPMs equal to $1.00.

13 Marketplaces: Building Brands in Art, Design & Decor Category Home Décor, Accessories & Apparel Home Décor & Accent Products Original Artwork Addressable Market $27B Online Home Goods Market (1) $27B Online Home Goods Market (1) $35B Art Market (2) Core Demographic Female Millennials Female Millennials & GenX GenX & Baby Boomers Gross Transaction Value (3) $68M Not Disclosed $18M Average Order Value (4) $57 $130 $1,200 Revenue Growth (5) 23% Not Disclosed 36% (1) Source: emarketer, 2015 data. (2) Source: Global Art Sales less Global Auction sales, TEFAF (3) Gross Transaction Value is shown on a trailing twelve months basis for Q2 16 Q1 17. (4) Average Order Value for Society6 and Saatchi is as of Q1 17; Deny Designs is for FY16. (5) Revenue growth is shown on a trailing twelve months basis (Q2 16 Q1 17 vs Q2 15 Q1 16). 13

14 Global Community of Over 75,000 Artists with $1.9B of Art Available for Sale 29% Y/Y Revenue Growth in Q1 17 The Other Art Fair Acquired 2016 Average Order Value ~$1, Source: Figures based on internal data for the quarter ended March 31, 2017

15 Strong wholesale and retail partnerships Artist-driven marketplace for home goods and accent products Average Order Value ~$130 (1) 15 (1) Source: Deny Designs, FY16.

16 Over $14M Revenue Q % Y/Y 240,000 Artists and 3.9M Original Designs Over 200,000 Customers in Q % Y/Y 16 Source: Figures based on internal data for the quarter ended March 31, 2017.

17 Marketplaces Growing Strongly Revenue ($M) Total Transactions (1) (in millions) (in thousands) $ % Y/Y $ % Y/Y 268 $ $ $ $ $0 Q1'15 Q1'16 Q1' Q1'15 Q1'16 Q1'17 17 (1) Number of transactions is defined as the total number of Marketplaces transactions successfully completed online by a customer during the applicable period. Excludes transactions from The Other Art Fair.

18 Financials

19 Clear Signs Of Revenue Growth (in millions) 2015 vs 2016 Q1 16 vs Q1 17 $140.0 $120.0 $100.0 Pro forma revenue: flat y/y $30.0 $25.0 $20.0 Pro forma revenue: +9% y/y $80.0 $15.0 $60.0 $40.0 $10.0 $20.0 $5.0 $0.0 $0.0 FY15 FY16 Q1'16 Q1'17 (1) (1) Media Marketplaces Disposed Assets Media Marketplaces Disposed Assets 19 (1) Media revenue is shown on a pro forma basis net of Cracked and certain other non-strategic properties that were disposed of in 2015 and 2016.

20 Cost Breakdown Headcount (1) Total Non-GAAP Expenses Excl. Product Costs (2) (in millions) $ $ $ $21.4 $ Q1'15 Q1'16 Q1'17 $15 Q1'15 Q1'16 Q1'17 (1) Headcount provided as of the end of the relevant period. (2) Non-GAAP expenses excluding product costs are GAAP expenses less depreciation, amortization, stock based compensation and product costs. 20

21 Balance Sheet Summary (in millions) As of March 31, 2017 Assets Cash & Cash Equivalents $ 41.5 Liabilities and Stockholders Equity Accounts Payable, Accrued Expenses, and Other Current Liabilities $ 14.0 Other Current Assets 12.9 Deferred Revenue 1.6 Property and Equipment, Net 11.2 Non-current Liabilities 1.6 Other Long Term Assets (1) 22.0 Stockholders Equity 70.4 Total Assets $ 87.6 Total Liabilities and Stockholders Equity $ (1) Includes intangible assets, net, goodwill and other assets

22 Executive Leadership Sean Moriarty Chief Executive Officer Prior: CEO at Saatchi Art President, CEO, EVP, Tech and COO of Ticketmaster EVP, Technology at Citysearch Brian Pike Chief Operating Officer & Chief Technology Officer Prior: CTO at Rubicon Project CTO at Ticketmaster Dion Camp Sanders EVP, Marketplaces Prior: Vice President, Emerging Businesses within the Labs Group at Disney Founder and CEO of Pacific Edison Daniel Weinrot EVP, Legal & General Counsel Tawn Albright EVP, Corporate Development Jill Angel EVP, People Jeff Misthal SVP, Finance Prior: VP & Deputy General Counsel at Las Vegas Sands Corp. Corporate associate at Latham & Watkins LLP Prior: CEO and founding partner at Rockhouse Partners Executive VP for Etix Prior: VP Operations at Saatchi Art Team leader at Cocodot, Swirl by DailyCandy, and GSI Commerce Prior: VP, Finance at Yahoo! Investment banker with Savvian and JPMorgan 22

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