Photobucket

http://photobucket.com/

Posted: 29 Mar 2007 04:57 AM CDT

Silicon Valley/Colorado based photo and video sharing site Photobucket has 36 million registered users and adds another 85,000 per day. If the growth rate continues, they’ll have 60 million users by the end of the year. More users visit Photobucket each month - 17 million, than Facebook. 56% of those users are under 35, and 52% are female. 300,000 unique websites link back to Photobucket. They move a lot of data.

Fortune wrote a long article on the company yesterday - the first time mainstream press has noticed this already large startup.

Photobucket generates revenue through premium accounts, and advertising on the site. The rumor is that they are nearing break even, and aren’t spending much of the $15 million they’ve raised in venture capital ($8 million or so is left in the bank).

Basically, Photobucket is kicking butt. So the question is, how much are they worth?

$300 - $400 million or more, says Lehman Brothers, the investment bank they’ve hired to explore a sale of the company, in private talks with potential buyers.

Included in the documents distributed to buyers is a revenue breakdown of the company by year. In 2005, Photobucket revenue was $4.35 million, growing to $9.34 million in 2006 and on pace to hit over $32 million this year. Last year, advertising accounted for 68% of revenue. This year, they estimate it will grow to 79%. See full revenue breakdown in the image below.

Photobucket wouldn’t comment on this article, but our sources indicate that a number of acquirors are very interested in the company at this price. Given revenue growth and another deal in this space, this might be cheap.

4-12-07

MySpace had blocked PhotoBucket’s 40 million members from embedding videos into their MySpace pages.

But the important question isn’t who’s fault this is. What is more interesting looking forward is, can Photobucket survive without MySpace?

I say yes.

Photobucket isn’t like YouTube, which was deeply unprofitable from day one. They’ve been at or near profitability for a long time, dipping back into the red to grow headcount and infrastructure. They have a diversified revenue stream - some from premium accounts and most from on-site advertising.

I took a look at their leaked revenue numbers from last month. Most of Photobucket’s revenue is generated from on-site advertising - 63% of it in 2005, and 68% in 2006. In the leaked documents the company says they’ll do $32 million in revenue this year. That projection is probably dead on because it is being distributed to potential buyers - any future variance could kill a deal in progress and so they are probably being very conservative.

That advertising revenue isn’t going anywhere. Unlike 2006, Photobucket is now set up as a destination site - a good hedge against exactly what MySpace did last night. The company says that over half of video views are now on their site (and generating advertising revenue), way up from a year ago. They also say that only 25% of their users embed videos at MySpace. At their current growth rate, even a permanent ban only sets them back six months or less in terms of users and page views.

And many MySpace/Photobucket users will simply leave MySpace and go to one of its many competitors rather than lose the ability to embed their Photobucket media. Re-creating a profile at another social network takes a lot less time than re-uploading hours of video. In the end, Photobucket could prove to be stickier than MySpace.

Photobucket execs were in a chipper mood today when I spoke to them, noting that traffic to the site is way up and that they’ve had more press attention in the last 24 hours than in the last year combined.