UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 24, 2016
Rocket Fuel Inc.
(Exact name of registrant as specified in its charter)
|
| | | | |
Delaware | | 001-36071 | | 30-0472319 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer
Identification No.) |
1900 Seaport Blvd.
Redwood City, CA 94063
(Address of principal executive offices, including zip code)
(650) 595-1300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 24, 2016, Rocket Fuel Inc. (the "Company") issued a press release announcing its financial results for the three and twelve months ended December 31, 2015. The press release includes a discussion of certain non-GAAP financial measures as well as a reconciliation of such non-GAAP financial measures to the corresponding GAAP financial measures.
A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
New Chief Financial Officer
On February 24, 2016, Rocket Fuel Inc. announced that Rex S. Jackson will be joining the Company as its Chief Financial Officer (“CFO”), effective March 16, 2016. Mr. Jackson will serve as the Company’s principal financial officer and principal accounting officer and will succeed Cal Hoagland, a partner with FLG Partners, LLC, who has served as the Company’s interim CFO since December 2015 and served as a financial advisor during November 2015.
From January 2013 to September 2015, Mr. Jackson, age 55, was Executive Vice President and Chief Financial Officer at JDS Uniphase Corporation, a provider of communications test and measurement solutions and optical components to the telecommunications industry, after having served as CFO on an interim basis from September 2012 to January 2013. Previously, he was Senior Vice President, Business Services at JDS Uniphase from January 2011 to September 2012. Before joining JDS Uniphase, Mr. Jackson was Executive Vice President and Chief Financial Officer at Symyx Technologies, Inc., a provider of software, content and services in the life sciences, chemicals, energy and consumer products industries, from October 2007 to July 2010, after having served as interim CFO from May to October 2007. He was also General Counsel from March 2007 to August 2008. Prior to joining Symyx, Mr. Jackson served in a series of legal and business leadership roles, primarily with technology companies. Mr. Jackson holds a B.A. in Political Science from Duke University and a J.D. from Stanford University.
There are no arrangements or understandings between Mr. Jackson and any other persons pursuant to which Mr. Jackson was selected as the CFO of the Company. There are no family relationships between Mr. Jackson and any director or executive officer of the Company, and Mr. Jackson has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, nor are any such transactions currently proposed.
Offer Letter
On February 12, 2016, the Company entered into an employment offer letter with Mr. Jackson (the “Offer Letter”). The Offer Letter has no specified term, and Mr. Jackson's employment with the Company is on an at-will basis. Under the terms of the Offer Letter, Mr. Jackson’s initial base salary as CFO will be $325,000 per year, and he will be eligible to receive an annual bonus of up to 60% of his base salary pursuant to the terms of the Company’s Executive Incentive Compensation Plan. The Offer Letter also provides that Mr. Jackson will be eligible to participate in the benefit programs generally available to employees of the Company.
The Offer Letter also provides that the Company will recommend to its board of directors or the compensation committee of its board of directors that it grant to Mr. Jackson an option to purchase 414,150 shares of the Company’s common stock with an exercise price equal to the fair market value of the stock on the date of the grant.
The foregoing description of the Offer Letter is a summary only and is qualified in its entirety by complete text of the Offer Letter, a copy of which is will be filed as an exhibit to the Company's Form 10-K annual report for the year ended December 31, 2015.
Management Retention Agreement
The Company intends to enter into its standard form of Management Retention Agreement (the "Agreement") with Mr. Jackson as soon as his employment starts. The Agreement provides for potential payments and benefits upon a qualifying termination of employment. The Agreement will terminate upon the completion of all payments (if any) thereunder or on the third anniversary of its effective date if a change in control (as defined under the Agreement) has not occurred by such date unless the term of the Agreement is extended by the parties. If, prior to the expiration of the term of the Agreement, the Company enters into a definitive agreement with a third party (or third parties), the consummation of which would result in a change in control of the Company, then the term of the Agreement will automatically be extended to 24 months following the resulting change in control, unless the definitive agreement terminates or is canceled without resulting in a change in control, in which case, the extension will not be effective.
The Agreement provides that if, during the period beginning on the date that is three months before a change in control and ending on the date that is 12 months following a change in control (the “change in control period”), (i) Mr. Jackson terminates his employment with the Company (or any parent or subsidiary) for good reason (as defined in the Agreement), or (ii) the Company (or any parent or subsidiary) terminates Mr. Jackson's employment for a reason other than cause (as defined in the Agreement) and other than death or disability (as defined in the Agreement) (a termination under clause (i) or (ii), a “Qualifying Termination”), Mr. Jackson will be eligible to receive the following severance benefits from the Company: (x) a lump-sum payment equal to the sum of (a) 100% of Mr. Jackson's annual base salary (as in effect immediately prior to (A) a change in control (if Mr. Jackson's employment terminates on or after the change in control), or (B) Mr. Jackson's termination, whichever is greater); (y) 100% of Mr. Jackson's target bonus for the fiscal year in which Mr. Jackson’s employment terminates (minus any bonus or commission payments already received for that fiscal year’s performance); and (z) reimbursement for continued group health plan coverage premiums under COBRA for 12 months following Mr. Jackson's termination, for Mr. Jackson and his spouse and/or eligible dependents. However, if the Company determines that it cannot provide the COBRA reimbursement benefits without potentially violating applicable laws, the Company will instead provide Mr. Jackson a taxable lump sum payment equal to 1.5 times the monthly COBRA premium (based on the first month’s premium) for the 12-month severance period. Additionally, if, during the change in control period, (i) Mr. Jackson has a Qualifying Termination, or (ii) Mr. Jackson's employment is terminated due to death or disability, then 100% of the shares of the Company’s common stock subject to Mr. Jackson's then outstanding unvested equity compensation awards will immediately vest (for performance-based awards, performance will be deemed achieved at 100% of target levels).
The Agreement further provides that if Mr. Jackson has a Qualifying Termination, and such termination occurs outside of the change in control period, Mr. Jackson will be eligible to receive the following severance benefits from the Company: (i) a lump-sum payment equal to six months of his annual base salary, and (ii) reimbursement for continued group health plan coverage premiums under COBRA for six months following Mr. Jackson's termination for Mr. Jackson and his spouse and/or eligible dependents. However, if the Company determines that it cannot provide the COBRA reimbursement benefits without potentially violating applicable laws, the Company will instead provide Mr. Jackson a taxable lump sum payment equal to 1.5 times the monthly COBRA premium (based on the first month’s premium) for the six-month severance period.
In order to receive severance benefits under the Agreement, Mr. Jackson must sign and not revoke a separation and release of claims agreement in a form reasonably satisfactory to the Company. The Agreement also provides that in the event that the payments and benefits provided for in the agreement or other payments and benefits payable or provided to Mr. Jackson (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) would otherwise be subject to the excise tax imposed by Section 4999 of the Code, then Mr. Jackson's payments and benefits under the agreement or other payments or benefits (the “payment”) will be reduced to either (x) the largest portion of the payment that would result in no portion of the payment being subject to the excise tax or (y) the largest portion, up to and including the total, of the payment, whichever
amount, after taking into account all applicable federal, state and local employment taxes, income taxes and the excise tax, results in Mr. Jackson's receipt, on an after-tax basis, of the greater amount of the payment, notwithstanding that all or some portion of the payment may be subject to the excise tax.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which we expect to file as an exhibit to the Company’s Form 10-Q Quarterly Report for the quarter ending March 31, 2016.
Indemnification Agreement
The Company intends to enter into its standard form of indemnification agreement with Mr. Jackson, which is filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 16, 2013 and is incorporated herein by reference.
Item 8.01 Other Events.
On February 24, 2016, the Company issued a press release announcing that, effective March 16, 2016, Rex S. Jackson will join the Company as Chief Financial Officer. A copy of the press release is furnished herewith as Exhibit 99.2.
The information set forth under this Item 8.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
|
| |
99.1 | Press release announcing financial results dated February 24, 2016 |
99.2 | Press release announcing new Chief Financial Officer dated February 24, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | |
| | ROCKET FUEL INC. |
| | |
| | By: /s/ CAL HOAGLAND |
| | Cal Hoagland Interim Chief Financial Officer
(Principal Financial and Accounting Officer) |
Date: February 24, 2016
EXHIBIT INDEX
Exhibit No. Description
|
| |
99.1 | Press release announcing earnings dated February 24, 2016 |
99.2 | Press release announcing new Chief Financial Officer dated February 24, 2016 |
Rocket Fuel Reports Financial Results for the Fourth Quarter and Full Year 2015
Full Year Revenue Grew 13% and Non-GAAP Net Revenue Grew 16%
Year over Year
Positive Adjusted EBITDA for the Fourth Quarter and Full Year
Rex Jackson to Join the Company as Chief Financial Officer
REDWOOD CITY, California - February 24, 2016 - Rocket Fuel Inc. (NASDAQ: FUEL), a leading Programmatic Marketing Platform provider, today announced financial results for the fourth quarter and fiscal year ended December 31, 2015. Rocket Fuel posted 13% growth in annual revenue and 16% growth in annual non-GAAP net revenue over 2014, plus positive non-GAAP adjusted EBITDA of $8.9 million in the fourth quarter, and $0.1 million for the full year 2015.
“Rocket Fuel’s fourth quarter results are evidence of our commitment to a new operating philosophy shaped by executional rigor. We exceeded guidance on both the top and bottom-line, and achieved Adjusted EBITDA profitability for the year, an important goal that we laid out in early 2015. We are attracting world class talent who recognize the potential of Rocket Fuel, and the strength of our Moment ScoringTM technology across devices and channels is a strategic advantage that presents many opportunities for profitable growth,” said Randy Wootton, Chief Executive Officer.
In a separate press release today, Rocket Fuel announced that Rex Jackson will join the Company as its Chief Financial Officer, effective March 16, 2016. Mr. Jackson brings significant public company experience, most recently as Chief Financial Officer of JDSU.
Financial Highlights for the Fourth Quarter of 2015
Revenue of $125.4 million increased 12% over the third quarter of 2015 and declined 10% compared to $139.5 million for the fourth quarter of 2014. Revenue derived from the delivery of digital advertising to mobile, social, and video channels collectively was $46.9 million in the fourth quarter of 2015.
Non-GAAP net revenue of $74.7 million exceeded prior guidance of $68 million to $72 million. Non-GAAP net revenue increased 10% over the third quarter of 2015 and declined 3% compared to $76.7 million for the fourth quarter of 2014.
Net loss decreased to $(12.7) million, or $(0.29) per diluted share, compared to a net loss of $(20.5) million, or $(0.49) per diluted share for the fourth quarter of 2014.
Non-GAAP adjusted net income (loss) for the quarter decreased to $(1.8) million, or $(0.04) per diluted share, compared to $(7.4) million, or $(0.18) per diluted share, for the fourth quarter of 2014.
Non-GAAP adjusted EBITDA of $8.9 million exceeded prior guidance of $3 million to $7 million, and compares to $2.8 million in the fourth quarter of 2014.
Cash and cash equivalents were $78.6 million as of December 31, 2015.
Active customer count was 1,666, up from 1,636 in the fourth quarter of 2014.
Employee headcount was 954 as of December 31, 2015.
Financial Highlights for the Fiscal Year ended December 31, 2015
Revenue of $461.6 million increased 13% compared to $408.6 million for the year ended December 31, 2014. Revenue derived from the delivery of digital advertising to mobile, social, and video channels collectively was $168.3 million for the year.
Non-GAAP net revenue of $272.5 million increased 16% compared to $235.2 million for the year ended December 31, 2014.
Net loss was $(210.5) million, or $(4.95) per diluted share, inclusive of an aggregate $124.9 million in restructuring and impairment charges, compared to a net loss of $(64.3) million, or $(1.74) per diluted share for the year ended December 31, 2014.
Non-GAAP adjusted net income (loss) for the year was $(41.1) million, or $(0.97) per diluted share, compared to $(24.1) million, or $(0.65) per diluted share, for the year ended December 31, 2014.
Non-GAAP adjusted EBITDA was $0.1 million compared to $(1.0) million for the year ended December 31, 2014.
Financial Outlook for the First Quarter of 2016
For the first quarter of 2016, the Company expects a typical seasonal decline in activity, and thus anticipates:
- Non-GAAP net revenue in the range of $53 million to $56 million,
- Non-GAAP adjusted EBITDA of a loss of $(11) million to $(14) million.
In addition to continuing to increase quarterly net revenue and Adjusted EBITDA, consistent with our typical quarterly seasonal patterns, Rocket Fuel's financial goals for 2016 include driving toward free cash flow positive for the full year.
Conference Call and Webcast Information
The Rocket Fuel fourth quarter and fiscal year 2015 teleconference and webcast is scheduled to begin at 2:00 PM Pacific Time on Wednesday, February 24, 2016. To participate on the live call, analysts and investors should dial 1-888-378-0320, or outside the U.S. 719-325-2281, at least ten minutes prior to the call. Rocket Fuel will also offer a live and archived webcast of the conference call, accessible from the “Investors” section of its website at www.rocketfuel.com
Use of Non-GAAP Measures
This press release includes information relating to non-GAAP net revenue, non-GAAP adjusted EBITDA, non-GAAP adjusted net income (loss) and non-GAAP adjusted operating expenses (which we refer to as “cash costs”), which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures have been included in this press release, or discussed on our teleconference and webcast, because they are measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans.
We define non-GAAP net revenue as GAAP revenue less media costs. Media costs consist of costs for advertising impressions we purchase from real-time advertising exchanges or other third parties. A limitation of non-GAAP net revenue is that it is a measure designed for internal purposes that may be unique to Rocket Fuel and may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that have similar business arrangements but present the impact of media costs differently. Our management compensates for this limitation by also considering the comparable GAAP financial measures of revenue, media costs and other cost of revenue.
We define non-GAAP adjusted EBITDA as GAAP net income (loss) before interest expense, other income (expense), net, income tax provision (benefit), depreciation and amortization expense, stock-based compensation expense and related payroll taxes, acquisition and restructuring related expenses, and impairment charges. Non-GAAP adjusted EBITDA has a number of limitations, including the following: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and non-GAAP adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; non-GAAP adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; non-GAAP adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; non-GAAP adjusted EBITDA does not reflect acquisition and restructuring related expenses, tax and interest expenses that may represent payments reducing the cash available to us; and other companies, including those in our industry, may calculate non-GAAP adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, our management considers non-GAAP adjusted EBITDA alongside other financial performance measures, including cash flow metrics, net income (loss) and our other GAAP results.
We define non-GAAP adjusted net income (loss) as GAAP net income (loss) excluding stock-based compensation expense, amortization of intangible assets, impairment charges, acquisition and restructuring related expenses and the estimated tax impact of the foregoing items. A limitation of non-GAAP adjusted net income (loss) is that it is a measure that may be unique to Rocket Fuel and may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that define adjusted net income (loss) differently. This measure may also exclude expenses that may have a material impact on Rocket Fuel’s reported financial results. Our management compensates for these limitations by also considering the comparable GAAP financial measure of net income (loss).
We define non-GAAP adjusted operating expenses (which we refer to as “cash costs”) as GAAP total costs and expenses and adjusted for media costs, depreciation and amortization expense, impairment charges, stock-based compensation expense and related payroll taxes, and acquisition and restructuring related expense. Non-GAAP adjusted operating expenses has a number of limitations, including the following: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and this measure does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; non-GAAP adjusted operating expenses does not reflect changes in, or cash requirements for, our working capital needs; non-GAAP adjusted operating expenses does not consider the potentially dilutive impact of equity-based compensation; non-GAAP adjusted operating expenses does not reflect acquisition and restructuring related expenses, tax and interest expenses that may represent payments reducing the cash available to us; and other companies, including those in our industry, may calculate non-GAAP adjusted operating expenses differently, which reduces its usefulness as a comparative measure. Because of these limitations, our management considers non-GAAP adjusted operating expenses alongside other financial performance measures, including total expenses, operating cash flow and our other GAAP results.
For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measures, see “Reconciliation from GAAP Revenue to Non-GAAP Net Revenue,” “Reconciliation from GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA,” “Reconciliation from GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss)” and “Reconciliation from GAAP Total Cost and Expenses to Non-GAAP Adjusted Operating Expenses ('Cash Costs')" included in this press release.
These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP.
Cautions Regarding Forward-Looking Statements
This press release and the webcast of the same date contain “forward-looking statements” regarding future events and our future financial performance, including but not limited to: expected progress towards profitable revenue growth; the anticipated positive impact of our sales and service restructuring and lower cost sales activities, our new executive hires, and our new go to market approach and sales strategy; our ability to expand customer relationships and increase revenue from direct customers; expectations regarding our strategic imperatives and other business initiatives including but not limited to our ability to grow our brand, direct response, and platform businesses; the value of our integrated DMP and DSP platform, the desired integration of brand and direct response campaigns, and the importance of programmatic TV; our ability to identify and capitalize on market trends; our technology advantage; our expectations for margins going forward; expectations regarding capital and general cash spending and cash balances; the expected financial strength provided by our cash position; and expectations for first quarter non-GAAP net revenue and non-GAAP adjusted EBITDA, and financial goals for fiscal year 2016. Words such as “expect,” “believe,” “intend,” “plan,” “goal”, “focus” and other similar words are also intended to identify forward-looking statements.
These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from the results anticipated by such statements, including, without limitation: our limited operating history, particularly as a relatively new public company; fluctuations in our operating results, including but not limited to fluctuations due to seasonality; our history of losses; failure to achieve expected synergies and efficiencies of operations between Rocket Fuel and [x+1]; failure to achieve the expected benefits of our efficiency improvement plans including various cost-cutting measures; risks associated with our growth, including growth outside of the U.S.; failure to adequately address competition, particularly from agency trading desks; failure to make the right investment decisions with regard to new products, technology, and sales strategies; risks associated with maintaining or increasing sales to new and existing customers and maintaining customer satisfaction; and general market, political, economic and business conditions.
Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2015 and in subsequent SEC filings. These forward-looking statements are made as of the date of this press release and the related webcast, and Rocket Fuel expressly disclaims any obligation or undertaking to update the forward-looking statements contained herein or therein to reflect events that occur or circumstances that exist after the date on which the statements were made.
About Rocket Fuel
A leading Programmatic Marketing Platform provider, Rocket Fuel (NASDAQ: FUEL) offers brands, agencies, and platform partners managed services, as well as a SaaS-based Data Management Platform (DMP) and Demand Side Platform (DSP), to optimize performance, awareness, and lift across marketing objectives, channels and devices. By applying artificial intelligence at big data scale, Rocket Fuel's Moment Scoring™ technology performs a real-time calculation of each ad opportunity based on a marketer's goal to determine the likelihood a consumer will engage in a desired action. Moment Scoring technology is designed to go beyond 1:1 marketing by learning to predict what marketing actions to take with a campaign at a precise moment in time, which results in a much more efficient use of marketing dollars. Rocket Fuel serves 96 of the Ad Age 100, three of the top five agency holding company trading desks, and partners with some of the world's leading CRM platforms, marketing platforms, and systems integrators. Headquartered in Redwood City, California, Rocket Fuel has more than 20 offices worldwide and trades on the NASDAQ Global Select Market under the ticker symbol "FUEL." For more information, please visit http://www.rocketfuel.com or call 1-888-717-8873.
Investor Relations:
(650) 481-6082
ir@rocketfuel.com
Rocket Fuel, the Rocket Fuel logo, Moment Scoring, Advertising That Learns and Marketing That Learns are trademarks or registered trademarks of Rocket Fuel Inc. in the United States and other countries.
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| | | | | | | |
Rocket Fuel Inc. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
| | | |
| December 31, | | December 31, |
| 2015 | | 2014 |
Assets | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 78,560 |
| | $ | 107,056 |
|
Accounts receivable, net | 124,998 |
| | 135,400 |
|
Prepaid expenses | 3,803 |
| | 3,698 |
|
Other current assets | 2,081 |
| | 12,531 |
|
Total current assets | 209,442 |
| | 258,685 |
|
Property, equipment and software, net | 82,781 |
| | 89,441 |
|
Restricted cash | 2,141 |
| | 2,915 |
|
Intangible assets, net | 50,919 |
| | 69,299 |
|
Goodwill | — |
| | 115,412 |
|
Deferred tax assets, net | 718 |
| | 2,367 |
|
Other assets | 1,053 |
| | 1,146 |
|
Total assets | $ | 347,054 |
| | $ | 539,265 |
|
| | | |
Liabilities and Stockholders' Equity | | | |
Current Liabilities: | | | |
Accounts payable | $ | 71,292 |
| | $ | 76,085 |
|
Accrued and other current liabilities | 40,734 |
| | 33,258 |
|
Deferred revenue | 2,116 |
| | 593 |
|
Current portion of capital leases | 8,602 |
| | 5,482 |
|
Current portion of debt | 45,720 |
| | 45,705 |
|
Total current liabilities | 168,464 |
| | 161,123 |
|
Debt - Less current portion | 17,617 |
| | 23,335 |
|
Capital leases - Less current portion | 11,855 |
| | 12,341 |
|
Deferred rent - Less current portion | 14,042 |
| | 26,818 |
|
Deferred tax liabilities | 39 |
| | 2,068 |
|
Other liabilities | 1,137 |
| | 814 |
|
Total liabilities | 213,154 |
| | 226,499 |
|
| | | |
Stockholders' Equity: | | | |
Common stock | 44 |
| | 42 |
|
Additional paid-in capital | 453,338 |
| | 421,630 |
|
Accumulated other comprehensive loss | (151 | ) | | (120 | ) |
Accumulated deficit | (319,331 | ) | | (108,786 | ) |
Total stockholders' equity | 133,900 |
| | 312,766 |
|
Total Liabilities and Stockholders' Equity | $ | 347,054 |
| | $ | 539,265 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except loss per share data) |
| | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenue | $ | 125,401 |
| | $ | 139,504 |
| | $ | 461,637 |
| | $ | 408,641 |
|
Costs and expenses: | | | | | | | |
Media costs | 50,700 |
| | 62,834 |
| | 189,089 |
| | 173,477 |
|
Other cost of revenue (1) | 19,980 |
| | 19,819 |
| | 79,867 |
| | 48,586 |
|
Research and development (1) | 10,786 |
| | 12,919 |
| | 44,922 |
| | 39,794 |
|
Sales and marketing (1) | 39,831 |
| | 42,461 |
| | 166,140 |
| | 146,430 |
|
General and administrative (1) | 13,691 |
| | 18,750 |
| | 58,354 |
| | 60,545 |
|
Impairment of goodwill | — |
| | — |
| | 117,521 |
| | — |
|
Restructuring | 922 |
| | — |
| | 7,393 |
| | — |
|
Total costs and expenses | 135,910 |
| | 156,783 |
| | 663,286 |
| | 468,832 |
|
Operating loss | (10,509 | ) | | (17,279 | ) | | (201,649 | ) | | (60,191 | ) |
Interest expense | 1,090 |
| | 1,007 |
| | 4,563 |
| | 3,092 |
|
Other (income) expense, net | 803 |
| | 2,824 |
| | 3,112 |
| | 5,267 |
|
Total other expense, net | 1,893 |
| | 3,831 |
| | 7,675 |
| | 8,359 |
|
Loss before income taxes | (12,402 | ) | | (21,110 | ) | | (209,324 | ) | | (68,550 | ) |
Income tax provision (benefit) | 279 |
| | (614 | ) | | 1,221 |
| | (4,239 | ) |
Net loss | $ | (12,681 | ) | | $ | (20,496 | ) | | $ | (210,545 | ) | | $ | (64,311 | ) |
| | | | | | | |
Basic and diluted net loss per share attributable to common stockholders | $ | (0.29 | ) | | $ | (0.49 | ) | | $ | (4.95 | ) | | $ | (1.74 | ) |
Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders | 43,150 |
| | 41,486 |
| | 42,551 |
| | 37,001 |
|
| |
(1) | Includes unaudited stock-based compensation expense as follows (in thousands): |
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Other cost of revenue | $ | 408 |
| | $ | 948 |
| | $ | 1,975 |
| | $ | 1,758 |
|
Research and development | 1,937 |
| | 1,462 |
| | 7,706 |
| | 5,039 |
|
Sales and marketing | 2,260 |
| | 2,774 |
| | 9,894 |
| | 10,372 |
|
General and administrative | 1,180 |
| | 1,461 |
| | 6,399 |
| | 6,361 |
|
| $ | 5,785 |
| | $ | 6,645 |
| | $ | 25,974 |
| | $ | 23,530 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
OPERATING ACTIVITIES: | | | | | | | |
Net loss | $ | (12,681 | ) | | $ | (20,496 | ) | | $ | (210,545 | ) | | $ | (64,311 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | |
Impairment of goodwill | — |
| | — |
| | 117,521 |
| | — |
|
Depreciation and amortization | 12,684 |
| | 11,111 |
| | 50,762 |
| | 23,670 |
|
Impairment of leasehold improvements | 3,929 |
| | — |
| | 6,633 |
| | — |
|
Stock-based compensation | 5,785 |
| | 6,645 |
| | 25,974 |
| | 23,838 |
|
Deferred taxes | (379 | ) | | (1,618 | ) | | (379 | ) | | (5,418 | ) |
Excess tax benefit from stock-based activity | — |
| | (99 | ) | | — |
| | (278 | ) |
Other non-cash adjustments, net | 384 |
| | 483 |
| | 1,499 |
| | 871 |
|
Changes in operating assets and liabilities, net of effects of acquisition: | | | | | | | |
Accounts receivable | (14,858 | ) | | (20,072 | ) | | 9,275 |
| | (25,134 | ) |
Prepaid expenses and other assets | (764 | ) | | 3,245 |
| | 9,128 |
| | (9,153 | ) |
Accounts payable | 9,616 |
| | 13,027 |
| | (4,015 | ) | | 26,952 |
|
Accrued and other liabilities | 1,758 |
| | 484 |
| | 269 |
| | (1,085 | ) |
Deferred rent | (3,868 | ) | | 3,597 |
| | (3,184 | ) | | 24,068 |
|
Deferred revenue | 465 |
| | (657 | ) | | 1,523 |
| | (334 | ) |
Net cash provided by (used in) operating activities | 2,071 |
| | (4,350 | ) | | 4,461 |
| | (6,314 | ) |
INVESTING ACTIVITIES: | | | | | | | |
Purchases of property, equipment and software | (715 | ) | | (7,579 | ) | | (11,512 | ) | | (47,865 | ) |
Business acquisition, net | — |
| | — |
| | (367 | ) | | (97,444 | ) |
Capitalized internal-use software development costs | (3,195 | ) | | (2,141 | ) | | (12,402 | ) | | (7,600 | ) |
Change in restricted cash | 53 |
| | — |
| | 689 |
| | (2,203 | ) |
Net cash used in investing activities | (3,857 | ) | | (9,720 | ) | | (23,592 | ) | | (155,112 | ) |
FINANCING ACTIVITIES: | | | | | | | |
Proceeds from the issuance of common stock in public offering, net of underwriting discounts and commission and issuance costs | — |
| | — |
| | — |
| | 115,403 |
|
Proceeds from exercise of common stock options | 16 |
| | 1,050 |
| | 940 |
| | 3,725 |
|
Excess tax benefit from stock-based activity | — |
| | 99 |
| | — |
| | 278 |
|
Proceeds from issuance of common stock from employee stock purchase plan | 1,130 |
| | 2,662 |
| | 3,579 |
| | 6,454 |
|
Tax withholdings related to net share settlements of restricted stock units | (458 | ) | | (326 | ) | | (1,432 | ) | | (567 | ) |
Repayment of capital lease obligations | (1,902 | ) | | (776 | ) | | (6,239 | ) | | (1,335 | ) |
Proceeds from debt facilities, net of debt issuance costs | — |
| | 9,479 |
| | (242 | ) | | 44,479 |
|
Repayment of debt facilities
| (1,500 | ) | | (2,445 | ) | | (6,000 | ) | | (13,578 | ) |
Net cash (used in) provided by financing activities | (2,714 | ) | | 9,743 |
| | (9,394 | ) | | 154,859 |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND EQUIVALENTS | (23 | ) | | (249 | ) | | 29 |
| | (250 | ) |
CHANGE IN CASH AND CASH EQUIVALENTS | (4,523 | ) | | (4,576 | ) | | (28,496 | ) | | (6,817 | ) |
CASH AND CASH EQUIVALENTS—Beginning of period | 83,083 |
| | 111,632 |
| | 107,056 |
| | 113,873 |
|
CASH AND CASH EQUIVALENTS—End of period | $ | 78,560 |
| | $ | 107,056 |
| | $ | 78,560 |
| | $ | 107,056 |
|
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | | | | | | | |
Cash paid for income taxes, net of refunds | $ | 417 |
| | $ | 840 |
| | $ | 1,251 |
| | $ | 1,035 |
|
Cash paid for interest | 1,006 |
| | 1,242 |
| | 3,936 |
| | 2,840 |
|
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | |
Purchases of property and equipment recorded in accounts payable and accruals | $ | 1,048 |
| | $ | 2,077 |
| | $ | 1,048 |
| | $ | 2,077 |
|
Property, plant and equipment acquired under capital lease obligations | 3,681 |
| | 10,764 |
| | 8,797 |
| | 18,619 |
|
Vesting of early exercised options | 34 |
| | 68 |
| | 167 |
| | 742 |
|
Stock-based compensation capitalized in internal-use software costs | 598 |
| | 460 |
| | 2,616 |
| | 1,643 |
|
Issuance of common stock in connection with acquisition | — |
| | — |
| | — |
| | 82,421 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED NON-GAAP MEASURES |
(In thousands, except per share data) |
| | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Non-GAAP net revenue | $ | 74,701 |
| | $ | 76,670 |
| | $ | 272,548 |
| | $ | 235,164 |
|
Non-GAAP adjusted EBITDA | $ | 8,899 |
| | $ | 2,844 |
| | $ | 89 |
| | $ | (966 | ) |
Non-GAAP adjusted net income (loss) | $ | (1,847 | ) | | $ | (7,434 | ) | | $ | (41,079 | ) | | $ | (24,101 | ) |
Non-GAAP adjusted net income (loss) per diluted share | $ | (0.04 | ) | | $ | (0.18 | ) | | $ | (0.97 | ) | | $ | (0.65 | ) |
Non-GAAP adjusted operating expenses ("Cash Costs") | $ | 65,802 |
| | $ | 73,826 |
| | $ | 272,459 |
| | $ | 236,130 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED RECONCILIATION FROM GAAP REVENUE TO NON-GAAP NET REVENUE |
(In thousands) |
| | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenue | $ | 125,401 |
| | $ | 139,504 |
| | $ | 461,637 |
| | $ | 408,641 |
|
Less: Media costs | 50,700 |
| | 62,834 |
| | 189,089 |
| | 173,477 |
|
Non-GAAP net revenue | $ | 74,701 |
| | $ | 76,670 |
| | $ | 272,548 |
| | $ | 235,164 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED RECONCILIATION FROM GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA |
(In thousands) |
| | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net loss | $ | (12,681 | ) | | $ | (20,496 | ) | | $ | (210,545 | ) | | $ | (64,311 | ) |
Adjustments: | | | | | | | |
Interest expense | 1,090 |
| | 1,007 |
| | 4,563 |
| | 3,092 |
|
Income tax provision (benefit) | 279 |
| | (614 | ) | | 1,221 |
| | (4,239 | ) |
Depreciation and amortization expense | 12,684 |
| | 11,111 |
| | 50,762 |
| | 23,670 |
|
Stock-based compensation expense | 5,785 |
| | 6,645 |
| | 25,974 |
| | 23,530 |
|
Other (income) expense, net | 803 |
| | 2,824 |
| | 3,112 |
| | 5,267 |
|
Acquisition expense | — |
| | 2,240 |
| | — |
| | 11,476 |
|
Restructuring expense | 922 |
| | — |
| | 7,393 |
| | — |
|
Payroll tax expense related to stock-based compensation | 17 |
| | 127 |
| | 88 |
| | 549 |
|
Impairment of goodwill | — |
| | — |
| | 117,521 |
| | — |
|
Total adjustments | 21,580 |
| | 23,340 |
| | 210,634 |
| | 63,345 |
|
Non-GAAP adjusted EBITDA | $ | 8,899 |
| | $ | 2,844 |
| | $ | 89 |
| | $ | (966 | ) |
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED RECONCILIATION FROM GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME (LOSS) |
(In thousands, except per share data) |
| | | | | | | |
| Three Months Ended | | Year Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Net loss | $ | (12,681 | ) | | $ | (20,496 | ) | | $ | (210,545 | ) | | $ | (64,311 | ) |
Stock-based compensation expense | 5,785 |
| | 6,645 |
| | 25,974 |
| | 23,530 |
|
Amortization of intangible assets | 4,127 |
| | 4,227 |
| | 18,380 |
| | 5,402 |
|
Acquisition expense | — |
| | 2,240 |
| | — |
| | 11,476 |
|
Restructuring expense | 922 |
| | — |
| | 7,393 |
| | — |
|
Tax impact of the above items | — |
| | (50 | ) | | 198 |
| | (198 | ) |
Impairment of goodwill | — |
| | — |
| | 117,521 |
| | — |
|
Non-GAAP adjusted net income (loss) | $ | (1,847 | ) | | $ | (7,434 | ) | | $ | (41,079 | ) | | $ | (24,101 | ) |
| | | | | | | |
Basic and diluted net loss per share attributable to common stockholders | $ | (0.29 | ) | | $ | (0.49 | ) | | $ | (4.95 | ) | | $ | (1.74 | ) |
| | | | | | | |
Non-GAAP adjusted net income (loss) per diluted share | $ | (0.04 | ) | | $ | (0.18 | ) | | $ | (0.97 | ) | | $ | (0.65 | ) |
| | | | | | | |
Weighted average shares used in computing non-GAAP adjusted net income (loss) per diluted share | 43,150 |
| | 41,486 |
| | 42,551 |
| | 37,001 |
|
|
| | | | | | | | | | | | | | | |
Rocket Fuel Inc. |
UNAUDITED RECONCILIATION FROM GAAP TOTAL COSTS AND EXPENSES TO NON-GAAP ADJUSTED OPERATING EXPENSES ("CASH COSTS") |
(In thousands) |
| | | | | | | |
| Three Months Ended | | Twelve Months Ended |
| December 31, | | December 31, |
| 2015 | | 2014 | | 2015 | | 2014 |
Total costs and expenses | $ | 135,910 |
| | $ | 156,783 |
| | $ | 663,286 |
| | $ | 468,832 |
|
Less media costs | 50,700 |
| | 62,834 |
| | 189,089 |
| | 173,477 |
|
Adjustments: | | | | | | | |
Depreciation and amortization expense | 12,684 |
| | 11,111 |
| | 50,762 |
| | 23,670 |
|
Stock-based compensation | 5,785 |
| | 6,645 |
| | 25,974 |
| | 23,530 |
|
Acquisition expense | — |
| | 2,240 |
| | — |
| | 11,476 |
|
Restructuring expense | 922 |
| | — |
| | 7,393 |
| | — |
|
Payroll tax expense related to stock based compensation | 17 |
| | 127 |
| | 88 |
| | 549 |
|
Impairment of goodwill | — |
| | — |
| | 117,521 |
| | — |
|
Total adjustments | 19,408 |
| | 20,123 |
| | 201,738 |
| | 59,225 |
|
Non-GAAP adjusted operating expenses ("Cash Costs") | $ | 65,802 |
| | $ | 73,826 |
| | $ | 272,459 |
| | $ | 236,130 |
|
Rocket Fuel Names Rex Jackson as Chief Financial Officer
REDWOOD CITY, Calif., Feb. 24, 2016 - Rocket Fuel (NASDAQ: FUEL), a leading Programmatic Marketing Platform provider, today announced that Rex Jackson will join the company as chief financial officer. Jackson is an experienced executive and 30-year hardware, software and services veteran with a track record of success and will focus on enabling Rocket Fuel to strengthen its financial performance. His experience as a public company CFO and hands on approach equip him to provide financial, strategic and operational leadership to Rocket Fuel. He will join the company on March 16, 2016.
Jackson brings a remarkably well-rounded executive management background to Rocket Fuel, serving as CFO for three public companies, Synopsys, Symyx and JDS Uniphase, as general counsel to both private and public companies, and in a breadth of other senior business roles. Most recently, at JDSU (now Viavi Solutions), Jackson and his teams implemented Oracle’s ERP system internationally in just eight months, and drove improvements across the finance organization while reducing costs for his organization (finance, M&A, IT and real estate/facilities) by 15-20 percent. He was also instrumental in splitting JDSU into two public companies while driving further operating savings.
“Rocket Fuel is in a strong position to succeed. All the pieces are here -- a newly formed, world-class executive team, superior technology and a fresh go-to-market approach. Rocket Fuel has a great opportunity to turn that into customer and shareholder value,” Jackson said.
“Rex has a sharp business mind, and an exceptional ability to cut to the chase, identify the right next task at hand and provide clarity on how to achieve it,” said Randy Wootton, CEO of Rocket Fuel. “Rex is a key addition to our leadership team, and represents another major step in the company’s commitment to operational excellence, strengthening our financial position and delivering consistent results. You will quickly see Rex taking clear, consistent and strategic action. I am eager to begin working with him.”
Continued Wootton, “I would like to extend a special thanks to Cal Hoagland, a partner with FLG Partners, LLC, who has served as our interim CFO since December and has led key financial strategies and negotiations while with us.” Hoagland will remain in his role as interim CFO until Jackson starts and will work closely with him to ensure a smooth transition.
About Rocket Fuel
A leading Programmatic Marketing Platform provider, Rocket Fuel (NASDAQ: FUEL) offers brands, agencies, and platform partners managed services, as well as a SaaS-based Data Management Platform (DMP) and Demand Side Platform (DSP), to optimize performance, awareness, and lift across marketing objectives, channels and devices. By applying artificial intelligence at big data scale, Rocket Fuel’s Moment Scoring™ technology performs a real-time calculation of each ad opportunity based on a marketer’s goal to determine the likelihood a consumer will engage in a desired action. Moment Scoring technology is designed to go beyond 1:1 marketing by learning to predict what marketing actions to take with a campaign at a precise moment in time, which results in a much more efficient use of marketing dollars. Rocket Fuel serves 96 of the Ad Age 100, three of the top five agency holding company trading desks, and partners with some of the world’s leading CRM platforms, marketing platforms and systems integrators. Headquartered in Redwood City, California, Rocket Fuel has more than 20 offices worldwide.
Investor Relations Contact:
The Blueshirt Group
Whitney Kukulka
ir@rocketfuel.com
415-489-2187
Media Contact:
Kristin Holloway
pr@rocketfuel.com
650-481-6178
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