Tuesday, October 24, 2006

RMX Valuation - Part II

Just thought I'd bubble up some interesting discussion from the comments of my previous post. Firstly, we have John Demayo chiming in with:

"Figure they are doing around 10x the volume outside of RMX direct. Call it 650m impressions per day, or 230bn per year."

A lot higher then I would have guessed.

Given John's current experience in this field, I was inclined to agree that my estimate may have been a bit rich, but then Pat McCarthy, who is one of the brains behind Right Media, adds some further weight to the argument that RMX is actually transparent and shares with us the following:

RMX Direct is just our newest publisher product, which is actually up to 100 million impressions a day now.

But, the full Right Media Exchange is much larger in volume. Over 2 billion impressions per day.

Which then leads John Krystynak to revise my estimate upwards, but taking down the CPM rate:

My guess would be that .75CPM is too generous, esp with the 2B imp number...

If they now do 2.1B / day, I'd guess average of 30cent CPM. Say they get 4cents so perhaps $80k /day take home...

$24 M /year. More like a 9X revenue valuation.

Otherwise, why would they take VC money at all!?

It's so little cash for Yahoo, it's just gotta be an interesting experiment from their point of view. I.e. "What to do with this RMS (sic) Network thing? - Should we throw some stuff their way?"

In other words, the Yahoo investment terms don't necessarily tell you a lot...

Wednesday, October 18, 2006

Right Media valuation

Totally back of the envelope here, but why not add to the speculation:

  • RMX Direct has grown over the past few months to 65m impressions per day
  • Assume growth in RMX direct over the next 12 months will be minimal wrt to entire number of impressions served across their complete publisher packag3
  • Figure they are doing around 10x the volume outside of RMX direct. Call it 650m impressions per day, or 230bn per year.
  • Assume average CPM of $0.75, and they take 10% of that. Call it $170m gross.
  • Give them a healthy 40% margin, $70m / year
  • So a valuation of $45m on 20%, or $225m all up puts them at 3X

This is obviously wildly sensitive to growth and the huge volume they do outside of RMX direct - which can be estimated elsewhere more accurately. But this multiple clearly is in the range of similar deals in the internet/auction/b2b infrastructure space.

Even so, this seems very cheap.

Update: I simply must quote my favourite blog de jour Long or Short Capital:

As noted above, these estimates are empirically proven using math and advanced probability techniques.

Tuesday, October 03, 2006

Null Hypothesis

NetFlix Prize

  1. Registered
  2. Downloaded
  3. ETL'd into Postgres
  4. Created indices
  5. Waited
  6. Free'd up more disk space
  7. Calculated marginals
  8. RMSE = 1.0560
  9. TODO: Think