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.
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.