FriendFinder Networks, Inc. is still in the hunt for an initial public offering.  This is not a run-of-the-mill IPO, as FriendFinder is the parent company of AdultFriendFinder, a site for people looking for casual sexual encounters.  Through the entire network the company now lists its total base as being more than 28.5 million members in approximately 170 countries.

We noted originally that the company planned to raise up to $460,000,000.00 via the sale of common stock, although this new filing that includes year-end financials still shows no price range nor a set number of shares.  It noted that it has 104,956,481 shares outstanding before the offering and does not state how many shares will be outstanding after the offering.  It has applied to the NYSE to take the “FFN”stock ticker, and so far the only listed underwriter is RenaissanceCapital.

The company’s  most heavily visited websites include AdultFriendFinder.com, Amigos.com,AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com andSeniorFriendFinder.com.

Revenue to date has been primarily derived from subscription and paid-usage adult-oriented products and services.  It also produces and distributes original pictorial and video content, licenses the Penthouse brand to a variety of consumer products companies and entertainment venues and publishes branded men’s lifestyle magazines.

Last year, it showed net revenue $331.0 million, income from operations of $7.1 million, net loss of $(46.0) million and EBITDA of $57.2 million.  There was a $19.2 million reduction to net revenue due to purchase accounting that required the deferred revenue to be recorded at fair value on the date of acquisition of Various, Inc. in 2008.  The full filing also noted:

• Events of default have occurred under certain of our debt agreements, which would permit noteholders to demand payment of our 15% Senior Secured Notes due 2010 originally issued in August 2006, which we refer to as our 2006 Notes, and our 15% Senior Secured Notes due 2010 originally issued in August 2005, which we refer to as our 2005 Notes, as well as the Senior Secured Notes due 2011 of Interactive Network, Inc., or INI, a wholly-owned subsidiary which we organized in connection with our December 2007 acquisition of Various, which we refer to as the First Lien Senior Secured Notes, INI’s Subordinated Secured Notes due 2011, which we refer to as the Second Lien Subordinated Secured Notes, and INI’s 6% Subordinated Convertible Notes, which we refer to as the Subordinated Convertible Notes.

Social networking sites have found it difficult to value themselves and to monetize what traditional web sites and media operations have seen.  Classmates.com does not have the same stigma to it, and that IPO had to be dropped.  But FriendFinder also claims, “Average revenue per subscriber, or ARPU, is calculated by dividing net revenue for the period by the average number of subscribers in the period. For the year ended December 31 , 2008, our average monthly net revenue per subscriber was approximately $20.26.”

Quantcast lists FriendFinder as one of the top 5,000 sites, although we’d note that the graph shows some mixed data there that has come down if the data is accurate. Website tracking firms all offer different metrics, so that is why we note “if the data is accurate.  Alexa shows it listed as rank number 3,281 for a 3-month average, but that is ranked as being over 4,700 over the last week.

JON C. OGG
March 27, 2009

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