GAAP Operating Cash Flow of $8.3 Million and
Non-GAAP Free Cash Flow of $3.8 Million in the Third Quarter of
2016
Rocket Fuel Inc. (NASDAQ: FUEL), a leading programmatic
marketing platform provider, today announced financial results for
the third quarter ended September 30, 2016.
“Rocket Fuel’s third quarter net revenue of $62.6 million was
slightly below our guidance of $63 to $66 million primarily due to
unexpected weakness in our political and EMEA businesses,” said
Randy Wootton, chief executive officer. “While we are disappointed
with our top-line performance, we are pleased to see steady growth
in our platform solutions business, with revenue increasing 141%
year-over-year. Our ongoing focus to drive further operational
improvements was evident, as we delivered adjusted EBITDA at the
high-end of our guidance range, representing strong improvement
both sequentially and year-over-year. Additionally, we had a good
quarter from a free cash flow perspective, and made progress
towards our stated goal of being free cash flow positive for 2016.
We remain committed to our plans to return the company to growth
and build a successful platform solutions business.”
Financial Highlights for the Third
Quarter of 2016
GAAP Revenue: $109.7 million, 2% below last year's third
quarter total of $111.8 million.
Revenue derived from North America was $90.9 million, down 3%
from last year's third quarter. Revenue from outside North America
was $18.8 million, up 2% from last year.
Platform Solutions revenue grew significantly year-on-year,
representing 19% of GAAP revenue in the third quarter versus 8% in
last year’s third quarter. Media Services revenue was 81% and
92% of GAAP revenue, respectively.
Non-GAAP Net Revenue: $62.6 million, down 8% compared to
$68.2 million non-GAAP Net Revenue in the third quarter of
2015.
GAAP Net Loss: $(10.7) million, or $(0.24) per diluted
share compared to a net loss of $(136.6) million, or $(3.19) per
diluted share, in the third quarter of 2015.
Non-GAAP Adjusted EBITDA: $6.6 million compared to $3.4
million in the third quarter of 2015.
Non-GAAP Adjusted Net Loss: $(3.6) million, or $(0.08)
per diluted share, compared to an adjusted net loss of $(7.0)
million, or $(0.16) per diluted share, for the third quarter of
2015.
GAAP Net Cash provided by Operating Activities: $8.3
million, compared to $9.5 million in the third quarter of 2015.
Non-GAAP Free Cash Flow: $3.8 million, compared to $5.6
million in the third quarter of 2015.
Cash and Cash Equivalents: $78.7 million as of
September 30, 2016, up sequentially by $12.0 million from the
second quarter 2016. Cash and Cash Equivalents was $78.6 million as
of December 31, 2015.
Top Customers: Revenue from top 50 customers was 59% of
total revenue, compared to 49% in the third quarter of fiscal year
2015. Revenue from top 250 customers was 86% of total revenue,
compared to 80% in the third quarter of fiscal year 2015.
Employee Headcount: 858 as of September 30, 2016,
down from 962 in the third quarter of 2015.
Financial Outlook for the Fourth
Quarter of 2016
For the fourth quarter of 2016, the Company expects:
- Non-GAAP net revenue between $57 million and $62 million.
- Non-GAAP Adjusted EBITDA between $1 million and $6
million.
The Company does not reconcile its forward-looking non-GAAP
financial measures, net revenue and Adjusted EBITDA, to the
corresponding GAAP measures due to the high variability and
difficulty in making accurate forecasts and projections in respect
to the interplay between revenue and the corresponding margins. Our
Media Services and Platform Solutions have different media margins
and the pace of the transition of some of our business from Media
Services to Platform Solutions, the pace of adoption, or activation
of existing Platform Solutions customers, and the corresponding
future margins cannot be reasonably predicted. The GAAP measure net
income includes stock-based compensation expense that is impacted
by future hiring and retention needs, and the future share price of
Rocket Fuel’s stock. Similarly, restructuring charges, which we
exclude from our non-GAAP measure Adjusted EBITDA, are impacted by
future decisions and by actions involving our facilities that are
difficult to predict. The actual amounts of these excluded items
will have a significant impact on the Company’s GAAP net income.
Accordingly, reconciliations of these two forward-looking non-GAAP
financial measures to the corresponding GAAP measures are not
available without unreasonable effort.
Management Changes
Today, the Company announces that Stephen Snyder, an experienced
SaaS executive, will join the Company as its Chief Financial
Officer, effective November 10, 2016. Mr. Snyder will succeed Rex
S. Jackson, who is resigning from the Company, effective October
26, 2016, to pursue another opportunity. Mr. Snyder brings to
Rocket Fuel more than 20 years of financial leadership, most
recently as CFO of a technology platform company in the energy
industry, and having served in executive roles in finance,
operations and sales at Adobe Systems and Hewlett Packard.
Beginning on October 27, 2016, Henrik Gerdes, the Company's Vice
President, Corporate Controller and Treasurer, will serve as
interim Chief Financial Officer.
“Stephen’s financial expertise will be invaluable to Rocket Fuel
as we continue our transformation into a SaaS-based platform. He is
a great addition to our strong management team,” said CEO Randy
Wootton. “Rex has made many valuable contributions to our company
that have set us up for success, and I wish him the best of luck in
his new role.”
Conference Call, Webcast and Related
Information
The Rocket Fuel third quarter 2016 teleconference and webcast is
scheduled to begin at 2:00 PM Pacific time on Tuesday,
October 25, 2016. To participate on the live call, analysts
and investors should dial 1-888-632-5006, or outside the U.S.
913-312-1448, at least ten minutes prior to the call. Rocket Fuel
will post supplemental slides with the Company's latest financial
results on http://investor.rocketfuel.com under Events &
Presentations concurrently with this earnings press release. Rocket
Fuel will also offer a live and archived webcast of the conference
call, accessible from the “Investors” section of its website at
http://investor.rocketfuel.com.
Use of Non-GAAP Measures
We provide information relating to non-GAAP net revenue,
non-GAAP adjusted EBITDA, non-GAAP adjusted net income (loss),
non-GAAP operating expenses and non-GAAP free cash flow, 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 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 costs 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
(including amortization of capitalized software development
expenses), 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 is often considered an
approximation of operating cash flow, but in our case excludes
software development costs capitalized in a current period and
excludes those costs as they are amortized over future periods;
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, the
expenses capitalized for internal-use software, 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 operating expenses as GAAP total costs and
expenses less media costs, depreciation and amortization expense
(including amortization of capitalized software development costs),
impairment charges, stock-based compensation expense and related
payroll taxes, and acquisition and restructuring related expense.
Non-GAAP 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 operating expenses is
often considered an approximation of operating cash flow, but in
our case excludes software development costs capitalized in a
current period and excludes those costs as they are amortized over
future periods; non-GAAP operating expenses does not reflect
changes in, or cash requirements for, our working capital needs;
non-GAAP operating expenses does not consider the potentially
dilutive impact of equity-based compensation; non-GAAP operating
expenses does not reflect acquisition and restructuring related
expenses, the expenses capitalized for internal-use software, 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 operating expenses differently,
which reduces its usefulness as a comparative measure. Because of
these limitations, our management considers non-GAAP operating
expenses alongside other financial performance measures, including
total expenses, cash from operating activities and our other GAAP
results.
In addition, we provide information about our non-GAAP free cash
flow. We define non-GAAP free cash flow as the net cash provided by
(or used in) operating activities less the cash used for purchases
of property, equipment and software and for capitalized
internal-use software development costs. A limitation of free cash
flow is that it 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 free cash flow differently from us.
This measure also does not represent the residual cash flow
available to us for discretionary expenditures or investments
because we have mandatory capital leases and debt service
requirements that may have a material impact on Rocket Fuel’s
liquidity. Our management compensates for these limitations by also
considering the comparable GAAP financial measure of net cash
provided by (or used in) operating activities.
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)”, “Reconciliation from GAAP Total Cost and
Expenses to Non-GAAP Operating Expenses" and “Reconciliation from
GAAP Net Cash Provided by (or Used in) Operating Activities to
Non-GAAP Free Cash Flow" 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 against achieving our three strategic imperatives; the
value of our Moment Scoring technology; our sales and marketing
execution and focus on high value accounts; expectations regarding
our platform solutions business and our media services business;
expected changes in our revenue mix and shifts in margins; our
ability to improve and activate relationships with agencies and
agency holding companies; our customer and supplier relationships;
our operating expenses and cost structure; and expectations for
fourth quarter non-GAAP net revenue and non-GAAP adjusted EBITDA,
and financial goals for fiscal year 2017. Words such as "expect,"
"believe," "intend," "plan," "goal," "focus, " "anticipate" 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; our ability to achieve
the expected benefits of our efficiency improvement plans; risks
due to employee attrition and integration of new leadership and
employees; risks associated with our growth, including growth
outside of the U.S.; risks associated with margin shifts in the
industry; our ability to adequately address competition,
particularly from agency trading desks; our ability to serve the
needs of agencies and agency holding companies and make the right
investment decisions with regard to new products, technology, and
sales strategies; and risks associated with maintaining or
increasing sales to new and existing customers and maintaining
customer satisfaction.
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 Quarterly Report on
Form 10-Q filed with the Securities and Exchange Commission (“SEC”)
on August 8, 2016 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
Rocket Fuel applies artificial intelligence and big data to
predict the potential of every moment and make marketing more
meaningful and accountable.
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.
Rocket Fuel, the Rocket Fuel logo, and Moment Scoring are
trademarks or registered trademarks of Rocket Fuel Inc. in the
United States and other countries.
Rocket Fuel Inc. UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) September
30, December 31, 2016 2015 Assets
Current Assets: Cash and cash equivalents $ 78,663 $ 78,560
Accounts receivable, net 113,169 124,998 Prepaid expenses 2,812
3,803 Other current assets 4,034 2,081 Total current
assets 198,678 209,442 Property, equipment and
software, net 65,431 82,781 Restricted cash 1,839 2,141 Intangible
assets, net 38,639 50,919 Deferred tax assets, net 676 718 Other
assets 640 1,053
Total Assets $ 305,903
$ 347,054
Liabilities and Stockholders' Equity
Current Liabilities: Accounts payable $ 64,068 $ 71,292 Accrued and
other current liabilities 33,623 40,734 Deferred revenue 3,556
2,116 Current portion of capital leases 8,807 8,602 Current portion
of debt 71,112 45,720 Total current liabilities
181,166 168,464 Debt - Less current portion — 17,617
Capital leases - Less current portion 7,911 11,855 Deferred rent -
Less current portion 15,254 14,042 Other liabilities 850
1,176 Total liabilities 205,181 213,154
Stockholders' Equity: Common stock 45 44 Additional paid-in capital
468,907 453,338 Accumulated other comprehensive loss (698 ) (151 )
Accumulated deficit (367,532 ) (319,331 ) Total stockholders'
equity 100,722 133,900
Total Liabilities and
Stockholders' Equity $ 305,903 $ 347,054
Rocket Fuel Inc. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except loss per
share data) Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015
Revenue $ 109,720 $ 111,836 $ 331,433 $ 336,235
Costs and
expenses: Media costs 47,092 43,673 140,573 138,389 Other cost
of revenue (1) 22,790 20,105 63,272 59,887 Research and development
(1) 7,913 11,022 27,990 34,136 Sales and marketing (1) 29,084
41,681 102,114 126,309 General and administrative (1) 11,912 12,328
38,998 44,663 Impairment of goodwill — 117,521 — 117,521
Restructuring — — 1,567 6,471 Total
costs and expenses 118,791 246,330 374,514
527,376 Operating loss (9,071 ) (134,494 ) (43,081 )
(191,141 ) Interest expense 1,082 1,087 3,351 3,472 Other (income)
expense, net 411 797 1,083 2,309 Loss
before income taxes $ (10,564 ) $ (136,378 ) $ (47,515 ) $ (196,922
) Income tax provision 171 213 686 942
Net loss $ (10,735 ) $ (136,591 ) $ (48,201 ) $ (197,864 )
Basic and diluted net income (loss) per share attributable
to common stockholders $ (0.24 ) $ (3.19 ) $ (1.09 ) $ (4.67 )
Basic and diluted weighted-average shares used to compute net loss
per share attributable to common stockholders 44,353 42,763
44,167 42,350
(1) Includes unaudited stock-based
compensation expense as follows (in thousands):
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015 2016
2015 Other cost of revenue $ 523 $ 465 $ 1,546 $ 1,567
Research and development 451 1,688 2,797 5,769 Sales and marketing
1,011 2,478 3,857 7,634 General and administrative 1,127
1,676 3,804 5,218 $ 3,112 $ 6,307
$ 12,004 $ 20,188
Rocket Fuel
Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands) Three Months
EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015
2016 2015 Operating Activities: Net
loss $ (10,735 ) $ (136,591 ) $ (48,201 ) $ (197,864 ) Adjustments
to reconcile net loss to net cash provided by operating activities:
Impairment of goodwill — 117,521 — 117,521 Depreciation and
amortization 12,546 14,055 37,691 38,078 Impairment of long-lived
assets — — 1,225 2,704 Accelerated amortization of leasehold
improvements — — 7,059 — Stock-based compensation 3,112 6,307
12,004 20,188 Deferred taxes (152 ) 20 41 — Other non-cash
adjustments, net 1,110 71 2,717 1,115 Changes in operating assets
and liabilities: Accounts receivable (173 ) 8,771 9,929 24,133
Prepaid expenses and other assets 1,109 3,574 (1,100 ) 9,892
Accounts payable, accrued and other liabilities 317 (3,764 ) (5,599
) (15,120 ) Deferred rent (392 ) (206 ) (6,495 ) 684 Deferred
revenue 1,568 (280 ) 1,440 1,058 Net cash
provided by operating activities 8,310 9,478 10,711
2,389
Investing Activities: Purchases
of property, equipment and software (1,977 ) (712 ) (5,032 )
(10,797 ) Business acquisition, net — (367 ) — (367 ) Capitalized
internal-use software development costs (2,496 ) (3,159 ) (8,420 )
(9,207 ) Other investing activities 92 — 424
636 Net cash used in investing activities (4,381 ) (4,238 )
(13,028 ) (19,735 )
Financing Activities: Proceeds
from issuance of stock, net of issuance costs 1,632 — 1,632 —
Proceeds from employee stock plans, net 174 234 1,254 3,373 Tax
withholdings related to net share settlements of restricted stock
units (411 ) (441 ) (1,020 ) (974 ) Repayment of capital lease
obligations (2,191 ) (1,582 ) (6,409 ) (4,337 ) Proceeds from debt
facilities, net of issuance costs 9,000 — 31,350 (242 ) Repayment
of debt facilities — (1,500 ) (24,000 ) (4,500 ) Net cash
provided by (used in) financing activities 8,204 (3,289 )
2,807 (6,680 )
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (134 ) 67 (387 ) 53
Change in Cash
and Cash Equivalents 11,999 2,018 103 (23,973 )
Cash and
Cash Equivalents—Beginning of period 66,664 81,065
78,560 107,056
Cash and Cash
Equivalents—End of period $ 78,663 $ 83,083 $
78,663 $ 83,083
Three Months
EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015
2016 2015 Supplemental Disclosures of Other
Cash Flow Information: Cash paid for income taxes, net of
refunds $ 65 $ 380 $ 449 $ 834 Cash paid for interest 939 1,009
2,876 2,930
Supplemental Disclosures of Non-Cash Investing and
Financing Activities: Purchases of property, equipment and
software recorded in accounts payable and accruals $ 556 $ 1,664 $
556 $ 1,664 Stock issuance costs recorded in in accounts payable
and accruals 132 — 132 — Property, equipment and software acquired
under capital lease obligations 2,024 3,330 2,670 5,116 Vesting of
early exercised options 39 36 64 133 Stock-based compensation
capitalized in internal-use software costs 573 732 1,881 2,018
Rocket Fuel Inc. UNAUDITED NON-GAAP MEASURES
(In thousands, except per share data)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015 2016
2015 Non-GAAP net revenue $ 62,628 $ 68,163 $ 190,860 $
197,846 Non-GAAP adjusted EBITDA $ 6,587 $ 3,422 $ 8,181 $ (8,810 )
Non-GAAP adjusted net income (loss) $ (3,597 ) $ (6,957 ) $ (22,350
) $ (39,233 ) Non-GAAP adjusted diluted net income (loss) per share
$ (0.08 ) $ (0.16 ) $ (0.51 ) $ (0.93 ) Non-GAAP operating expenses
$ 56,041 $ 64,741 $ 182,679 $ 206,656 Non-GAAP free cash flow $
3,837 $ 5,607 $ (2,741 ) $ (17,615 )
Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP REVENUE TO NON-GAAP NET
REVENUE (In thousands)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015 2016
2015 Revenue $ 109,720 $ 111,836 $ 331,433 $ 336,235 Less:
Media costs 47,092 43,673 140,573 138,389
Non-GAAP net revenue $ 62,628 $ 68,163 $ 190,860
$ 197,846
Rocket Fuel Inc. UNAUDITED
RECONCILIATION FROM GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA
(In thousands) Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 Net loss $
(10,735 ) $ (136,591 ) $ (48,201 ) $ (197,864 ) Adjustments:
Interest expense 1,082 1,087 3,351 3,472 Income tax provision
(benefit) 171 213 686 942 Amortization of intangibles 4,026 5,799
12,280 14,253 Amortization of capitalized software 2,891 2,027
7,924 5,471 Depreciation 5,629 6,229 17,487 18,354 Stock-based
compensation expense 3,112 6,307 12,004 20,188 Other (income)
expense, net 411 797 1,083 2,309 Restructuring expense (credit),
net — — 1,567 6,471 Payroll tax expense related to stock-based
compensation — 33 — 73 Impairment of goodwill — 117,521
— 117,521 Total adjustments 17,322
140,013 56,382 189,054 Non-GAAP adjusted
EBITDA $ 6,587 $ 3,422 $ 8,181 $ (8,810 )
Rocket Fuel Inc. UNAUDITED RECONCILIATION FROM
GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME (LOSS) (In
thousands, except per share data)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015 2016
2015 Net loss $ (10,735 ) $ (136,591 ) $ (48,201 ) $
(197,864 ) Stock-based compensation expense 3,112 6,307 12,004
20,188 Amortization of intangible assets 4,026 5,799 12,280 14,253
Restructuring expense (credit), net — — 1,567 6,471 Tax impact of
the above items — 7 — 198 Impairment of goodwill — 117,521
$ — 117,521 Non-GAAP adjusted net income
(loss) $ (3,597 ) $ (6,957 ) $ (22,350 ) $ (39,233 ) Basic
and diluted net income (loss) per share attributable to common
stockholders $ (0.24 ) $ (3.19 ) $ (1.09 ) $ (4.67 )
Non-GAAP adjusted net income (loss) per diluted share $ (0.08 ) $
(0.16 ) $ (0.51 ) $ (0.93 ) Weighted average shares used in
computing non-GAAP adjusted net income (loss) per diluted share
44,353 42,763 44,167 42,350
Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP TOTAL COSTS AND EXPENSES TO
NON-GAAP OPERATING EXPENSES (In thousands)
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, 2016 2015
2016 2015 Total costs and expenses $ 118,791 $
246,330 $ 374,514 $ 527,376 Less media costs 47,092 43,673 140,573
138,389 Adjustments: Amortization of intangibles 4,026 5,799 12,280
14,253 Amortization of capitalized software 2,891 2,027 7,924 5,471
Depreciation 5,629 6,229 17,487 18,354 Stock-based compensation
3,112 6,307 12,004 20,188 Restructuring expense (credit), net — —
1,567 6,471 Payroll tax expense related to stock based compensation
— 33 — 73 Impairment of goodwill — 117,521 —
117,521 Total adjustments 15,658 137,916 51,262
182,331 Non-GAAP operating expenses $ 56,041 $ 64,741
$ 182,679 $ 206,656
Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW (In
thousands) Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, 2016 2015 2016 2015 Cash
provided by (used in) operating activities 8,310 9,478 10,711 2,389
Less: Purchases of property, equipment and software (1,977 ) (712 )
(5,032 ) (10,797 ) Less: Capitalized internal-use software
development costs (2,496 ) (3,159 ) (8,420 ) (9,207 ) Non-GAAP free
cash flow $ 3,837 $ 5,607 $ (2,741 ) $ (17,615 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161025006718/en/
Investor Relations:Rocket Fuel Inc.Jane Underwood,
650-481-6082ir@rocketfuel.comorMedia Relations:Bite
Communications for Rocket FuelBethany Mullinix,
415-817-9990press@rocketfuel.com
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