Venture Capital: Bebo's Details: AOL Price Approx 7X 2009 Revenue, 15X EBITDA [Silicon Alley Insider]

четверг, 13 марта 2008 г.

Bebo's Details: AOL Price Approx 7X 2009 Revenue, 15X EBITDA [Silicon Alley Insider]

Kara Swisher reports Bebo's financial details (providided to her by folks who looked at and passed on the deal). Bottom line? $20 million in revenue and $5 million of EBITDA in 2007, expected to grow to about $125 million of revenue and $50 million of EBITDA in 2009.

Kara on Bebo:

A very small business, with nice user engagement with strong page views and minutes spent per session, but little traction beyond Britain and Ireland, and a small presence in the U.S.

Bebo's revenues for 2006 were only $7 million with $3 million in EBITDA (earnings before interest, taxes, depreciation and amortization). In 2007, the results are still small, with $20 million in revenues and $5 million in EBITDA.

Using 2007 results, that means AOL paid a handsome 42.5 times revenues and an incredible 160 times EBITDA.

AOL (TWX) might assert that this makes Bebo a bargain, given Facebook got valued at 50 times revenue when it got that $15 billion valuation from the $240 million investment from Microsoft last year. Still, Facebook has a huge presence in the U.S. and is growing strongly in Europe, including being just ahead in Bebo's strongest territory in the U.K.

Projecting outward, the company estimated-remember, these are not actual numbers, but a best guess by Bebo execs-it would have $50 million in revenue and $10 million in EBITDA in 2008; $117 million in revenue and $48 million in revenue in 2009 and $193 million in revenue and $92 million in EBITDA in 2010.

While potential is important, the high price (which was still lower than the $1 billion and above that Bebo might have fetched even six months ago) and its small presence in the U.S. was the reason several companies passed on acquiring Bebo-including News Corp., Google, Yahoo and CBS, said sources close to each of these companies. More at All Things D...

One additional thought: For early-stage companies like Bebo, the valuation on trailing numbers is basically irrelevant. What AOL (TWX) would have been looking at was 2008-2010, and it would have factored in significant "synergy" on both the top and bottom lines.

So...assuming Bebo says it could do $120 million in revenue and $50 million of EBITDA in 2009 as a stand-alone player, AOL is probably assuming it can drive at least that much as a combined entity. This obviously isn't the same thing as saying this performance is in the bag, but it would put the purchase price at a more reasonable 7X revenue and 15X EBITDA.