Shopzilla Q2 2010 Revenue down 8.6% Y/Y

Shopzilla, which is the Interactive Services division of Scripps Network Interactive, saw revenue decline 8.6% compared to last year. Here are the details from the press release:

Interactive Services revenue was $37.3 million compared with $40.8 million in the year-ago quarter.

Segment expenses decreased 6.3 percent to $31.3 million.

Segment profit was $6.0 million compared with $7.3 million.

Direct leads to Shopzilla merchant partners increased 20 percent year-over-year during the quarter. The lead volume metric measures the value Shopzilla delivers to its merchant partners, as well as the level of engagement consumers have with its branded comparison shopping Web sites, BizRate.com, Beso and Shopzilla.com.

Yes, the bad economy has battered the shopping engines, but Google has also put tremendous pressure on Shopzilla, Shopping.com, PriceGrabber, etc. Back in the boom days, Shopzilla delivered revenue of $50M+ in in the second quarter:
-Q2 2006: $65M Revenue, $16.5M Earnings*
-Q2 2007: $59M Revenue, $6.8M Earnings*
-Q2 2008: $57.2M Revenue, $12.9M Earnings*

Shopzilla should be applauded for maintaining revenue of aprx. $37M in such a tough environment, but it’s obviously coming at a higher and higher cost. If leads to Shopzilla merchants increased 20% Y/Y but revenue decreased 8.6%, that means that Shopzilla is not able to monetize leads to merchants as well as before, most likely because the company has to pay a hefty revenue share to its publisher partners. I talked about this last quarter as well. The introduction of a site like Beso, which according to Compete has reached nearly 1M unique users (very cool to see), is a necessary step for Shopzilla, but it’s not enough.

And I’m not sure what is enough at this point.

*I’m 97% sure I’m accurate with these numbers. I can show multiple examples where Shopzilla revenue was reported differently at different times. And I’m not talking about adjustments due to uSwitch. A press release would say revenue = $x and then the next year it would say revenue grew y% to $z, but those numbers didn’t always add up.

Shopzilla Q4 2009 Results – with calculations for year over year Revenue and Profit

All my numbers were gathered from public earnings releases on Scripps and Scripps Network Interactive. I was careful to double check my numbers, but I found some discrepancies in the releases which I can’t explain. Remember, I’m not a financial analyst. If you’d like the raw numbers I worked off of, please email me.

Shopzilla is one of the few major shopping engines for which we still have transparency into financial results as Scripps Networks Interactive breaks out Shopzilla results.

Here’s the relevant information from the press release:

Interactive Services revenue was $49.0 million compared with $65.3 million in the year-ago quarter.

Segment expenses decreased 13 percent to $39.0 million.

Segment profit was $10.1 million compared with $20.3 million.

The company’s initiatives to reposition and differentiate Shopzilla’s products continue to show positive trends. Leads to Shopzilla merchant partners in the quarter grew 11 percent year over year. The lead volume metric is important because it measures the value Shopzilla is delivering to its direct merchant partners, as well as the level of engagement that consumers are having with the core content on its branded comparison shopping Web sites at bizrate.com and Shopzilla.com.

For full year 2009, Shopzilla had revenues of aprx. $180m.
For comparison sake, revenues for Shopzilla in Q2 – Q4 2008 were aprx. $175m. Note that this doesn’t include Q1 2008. In that quarter, the Interactive division – with uSwitch – had revenues of $77.5m. I can’t find Q1 2008 numbers for Shopzilla alone, so I’ll be extremely conservative and say that uSwitch contributed 15% of revenues, which means that Shopzilla would have had revenues of aprx. $66m, bringing total revenue for Shopzilla for 2008 to aprx. $240m.

For full year 2009, Shopzilla had segment profit of aprx. 30.8m.
For comparison sake, I have to do similar math to the above to figure out what Q1 profit for Shopzilla would have been. I’ll say that uSwitch contributed 20% of Q1 2008 profit, which means that Shopzilla would have had profit of 16.8m in Q1 2008. That would bring total profit for Shopzilla for 2008 to aprx. $61.5m.

So what were the effects of the recession on Shopzilla?
Shopzilla went from revenues of $240m and profit of $61.5m in 2008 to revenues of $180m and profit of $30.8m in 2009.

And does Scripps Network Interactive expect Shopzilla to have a resounding rebound in 2010?
According to the press release, not exactly. 2010 guidance is for “Segment profit from the company’s Shopzilla comparison shopping business is expected to be $33 million to $35 million.”

Search. Compare. Conquer. BizRate’s new look.

I really haven’t dug deep enough to see what’s under the new coat of paint at bizrate, but it’s worth mentioning that the site is definitely repositioning itself around price as opposed to just being a consumer ratings company. From the press releases, bizrate seems to be focusing on value.

The left hand nav bar now focuses on price as opposed to other product attributes that Shopzilla focuses on:

Focusing on value? Seems like a good move for this cash and credit strapped economy.