Congratulations to the Answers.com team on the announcement of this deal! Since I am a board member and it is a public company (NASDAQ: ANSW), there is not much commentary I can add except that I wholeheartedly agree with Bob Rosenschein’s assessment of the transaction (see press release):
"The acquisition of Lexico is a transformative event for us," explained Robert S. Rosenschein, Chairman and CEO of Answers Corporation. "We are excited about applying our experience in monetization to significantly increase Lexico’s 2008 revenues and EBITDA. Lexico’s suite of popular brands, steady direct traffic and loyal users are valuable assets that we believe will reduce our products’ reliance on search engine-driven traffic. Post-transaction, we estimate that over 70% of our total traffic will now be direct from end users or people searching specifically for the term ‘dictionary’ in search engines. Our combined size and available ad inventory should provide greater exposure among online media buyers, which we expect will lead to increased advertising sales."
As I have mentioned in earlier posts, scale matters in the Internet space and becoming a Top 28 web property in the US (according to our combined 22.5m monthly unique visitors in June based on Comscore) will provide the company with an even better opportunity to monetize our reach.
If you are interested in learning more, here are a couple of other highlights from the press release:
Lexico is a leading online provider of reference products and services, which attracted approximately 11.5 million unique monthly users in the U.S. during the month of June 2007, according to comScore Media Metrix.
Lexico is a highly profitable company that strongly complements Answers’ user base. In 2006, it generated revenues of $7 million, EBITDA of $2.9 million and net income of $2.8 million. This strategic acquisition drives Answers to a leadership position in online information publishing.
Key benefits of the acquisition include:
– Page Views: Lexico’s Web properties currently generate approximately three times the total page views of Answers.com.
– Monetization: Lexico’s Web properties currently monetize at approximately one-third the rate of Answers.com, presenting material revenue upside.
– Direct Traffic: Over 85% of Lexico’s traffic is direct from end users or people searching specifically for the term "dictionary" in search engines. The resulting shift in traffic mix should significantly reduce Answers.com’s current reliance on search engine algorithms.
– Market Leadership: Based on the June 2007 comScore data, the addition of Lexico’s Web properties will increase Answers reach to over 22.5 million monthly unique users, which would rank #28 in the top U.S. properties.
Net Income: 2.8 million.
This had better be a HUGE ‘sum of its parts’ decision, otherwise it will take a long time for this purchase to pan out.
Dictionary.com just had an amazing payday for a post bubble/ pre echo sell.