Advertising Spend Growth Rate
Accelerates
Rubicon Project (NYSE: RUBI), the global exchange for
advertising, today reported its results of operations for the third
quarter of 2018.
Recent Highlights
- Revenue was $29.7 million for Q3 2018, up 4% from Q2 2018
- Ad spend(1) growth was up 24% in Q3 2018 compared to Q3
2017
- Q4 2018 year over year revenue expected to grow over 20%
- Q4 2018 year over year ad spend is expected to grow
approximately 20%
- Take rate(2) increased to 12.3% in Q3 2018 and is expected to
approach 13% in Q4 2018
- Programmatic video and audio drove significant year-over-year
growth in ad spend
- Mobile ad spend in Q3 2018 grew 45% year over year and
represented 55% of total ad spend
- Desktop ad spend in Q3 2018 grew 6% year over year
- Company achieves cost reduction expense target
- Net loss(3) was $13.8 million, or loss per share(3) of $0.27,
compared to net loss of $103.6 million, or loss per share of $2.11
for the third quarter of 2017 (which included impairment of
goodwill).
- Adjusted EBITDA(1) was a negative $1.4 million, compared to
adjusted EBITDA loss of $2.3 million for the third quarter of
2017.
- Non-GAAP loss per share(1) was $0.18, compared to $0.14
non-GAAP loss per share for the third quarter of 2017.
“We are pleased to post accelerating ad spend growth this
quarter, and expect more than 20% year over year revenue growth in
Q4. Video, audio and mobile, combined with growth in desktop are
helping us start to generate overall market share gains,” said
Michael G. Barrett, President and CEO of Rubicon Project. “Our
strong focus on transparency and inventory quality, along with our
strong value proposition as a leading diversified independent
exchange, positions us for continued growth and much improved
financial performance with the positive leverage we have in our
business.”
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Third Quarter 2018 Results Summary |
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(in
millions, except per share amounts and percentages) |
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Three Months Ended |
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Nine Months Ended |
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September 30,2018 |
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September 30,2017 |
|
ChangeFavorable/(Unfavorable) |
|
September 30,2018 |
|
September 30,2017 |
|
ChangeFavorable/(Unfavorable) |
Revenue |
$29.7 |
|
$35.2 |
|
(16)% |
|
$83.3 |
|
$124.1 |
|
(33)% |
Advertising spend(1) |
$242.2 |
|
$195.0 |
|
24% |
|
$690.9 |
|
$591.0 |
|
17% |
Non-GAAP net revenue(1) |
$29.7 |
|
$35.2 |
|
(16)% |
|
$83.3 |
|
$123.5 |
|
(33%) |
Take rate(2) |
12.3% |
|
18.1% |
|
(6
ppt) |
|
12.1% |
|
20.9% |
|
(9
ppt) |
Net loss |
($13.8) |
|
($103.6) |
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87% |
|
($59.6) |
|
($131.0) |
|
54% |
Adjusted EBITDA(1) |
($1.4) |
|
($2.3) |
|
37% |
|
($21.1) |
|
$1.8 |
|
nm |
Adjusted EBITDA margin(3) |
(5%) |
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(6%) |
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1
ppt |
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(25%) |
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1% |
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(26
ppt) |
Basic and diluted loss per share |
($0.27) |
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($2.11) |
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87% |
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($1.19) |
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($2.69) |
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56% |
Non-GAAP loss per share(1) |
($0.18) |
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($0.14) |
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(29)% |
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($0.89) |
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($0.40) |
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(123%) |
Definitions: |
(1 |
) |
Non-GAAP net revenue,
Adjusted EBITDA, non-GAAP loss per share, and advertising spend are
non-GAAP financial measures. Please see the discussion in the
section called "Non-GAAP Financial Measures" and the
reconciliations included at the end of this press release. |
(2 |
) |
Take rate is an
operational performance measure calculated as revenue (or for
periods in which we have revenue reported on a gross basis, as
non-GAAP net revenue) divided by advertising spend. Reconciliations
for revenue to both advertising spend and non-GAAP net revenue are
included at the end of this press release. For further discussion,
please see "Non-GAAP Financial Measures." We review take rate for
internal management purposes to assess the development of our
marketplace with buyers and sellers. Our take rate (and our fees,
which drive take rate) can be affected by a variety of factors,
including the terms of our arrangements with buyers and sellers
active on our platform in a particular period; the scale of a
buyer's or seller's activity on our platform; mix of inventory or
transaction types; the implementation of new products; platforms
and solution features; auction dynamics; negotiations with clients;
header bidding; competitive factors and our strategic pricing
decisions, including strategic fee reductions we implemented during
the first half of 2017 and elimination of our buyer transaction
fees as of November 1, 2018 and additional fee reductions or
alternative pricing models we may implement in the future; and the
overall development of the digital advertising ecosystem. |
(3 |
) |
Adjusted EBITDA margin is
calculated as Adjusted EBITDA divided by revenue (or for periods in
which we have revenue reported on a gross basis, by non-GAAP net
revenue). Reconciliations for both net loss to Adjusted EBITDA and
revenue to non-GAAP net revenue are included at the end of this
press release. For further discussion, please see "Non-GAAP
Financial Measures." |
nm |
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not meaningful |
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Third Quarter 2018 Results Conference Call and
Webcast:
The Company will host a conference call on November 7, 2018
at 1:30 PM (PT) / 4:30 PM (ET) to discuss the results for its third
quarter of 2018.
Live conference call |
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Toll free number: |
(844) 875-6911 (for domestic callers) |
Direct dial number: |
(412) 902-6511 (for international callers) |
Passcode: |
Ask to join the Rubicon Project conference call |
Simultaneous audio webcast: |
http://investor.rubiconproject.com, under "Events and
Presentations" |
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Conference call replay |
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Toll free number: |
(877) 344-7529 (for domestic callers) |
Direct dial number: |
(412) 317-0088 (for international callers) |
Passcode: |
10124885 |
Webcast link: |
http://investor.rubiconproject.com, under "Events and
Presentations" |
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About Rubicon ProjectFounded in
2007, Rubicon Project is one of the world’s largest
advertising exchanges. The company helps websites and apps thrive
by giving them tools and expertise to sell ads easily and safely.
In addition, the world’s leading agencies and brands rely on
Rubicon Project’s technology to execute tens of billions of
advertising transactions each month. Rubicon Project is an
independent, publicly traded company (NYSE:RUBI) headquartered
in Los Angeles, California.
Note: The Rubicon Project and the Rubicon Project logo are
registered service marks of The Rubicon Project, Inc.
Forward-Looking Statements:
This press release and management's prepared
remarks during the conference call referred to above include, and
management's answers to questions during the conference call may
include, forward-looking statements, including statements based
upon or relating to our expectations, assumptions, estimates, and
projections. In some cases, you can identify forward-looking
statements by terms such as "may," "might," "will," "objective,"
"intend," "should," "could," "can," "would," "expect," "believe,"
"design," "anticipate," "estimate," "predict," "potential," "plan"
or the negative of these terms, and similar expressions.
Forward-looking statements may include, but are not limited to,
statements concerning our anticipated financial performance,
including, without limitation, revenue, advertising spend, non-GAAP
net revenue, non-GAAP loss per share, profitability, net income
(loss), Adjusted EBITDA, earnings per share, and cash flow; our
belief that we will achieve positive adjusted EBITDA in the fourth
quarter of 2018; strategic objectives, including focus on header
bidding, mobile, video, and private marketplace opportunities;
investments in our business; development of our technology;
introduction of new offerings; the impact of our acquisition of
nToggle and its traffic shaping technology on our business; the
effects of our cost reduction initiatives; scope and duration of
client relationships; the fees we may charge in the future;
business mix and expansion of our mobile, video and private
marketplace offerings; sales growth; client utilization of our
offerings; our competitive differentiation; our market share and
leadership position in the industry; market conditions, trends, and
opportunities; consumer reach; certain statements regarding future
operational performance measures including ad requests, fill rate,
paid impressions, average CPM, take rate, and advertising spend;
and factors that could affect these and other aspects of our
business. These statements are not guarantees of future
performance; they reflect our current views with respect to future
events and are based on assumptions and estimates and subject to
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be
materially different from expectations or results projected or
implied by forward-looking statements. These risks include, but are
not limited to: our ability to grow and to manage any growth
effectively; our ability to develop innovative new technologies and
remain a market leader; our ability to attract and retain buyers
and sellers and increase our business with them; our vulnerability
to loss of, or reduction in spending by, buyers; our reliance on
large sources of advertising demand; our ability to maintain and
grow a supply of digital advertising inventory from sellers; the
effect on the advertising market and our business from difficult
economic conditions; the freedom of buyers and sellers to direct
their spending and inventory to competing sources of inventory and
demand; our ability to use our solution for purchase and sale of
higher value digital advertising inventory and to expand the use of
our solution by buyers and sellers utilizing evolving digital media
platforms; our ability to introduce new offerings and bring them to
market in a timely manner, and otherwise adapt in response to
client demands and industry trends, including shifts in digital
advertising growth from desktop to mobile channels and from display
to video formats; the increased prevalence of header bidding and
its effect on our competitive position; our header bidding solution
not resulting in revenue growth and causing infrastructure strain
and added cost; uncertainty of our estimates and expectations
associated with new offerings, including header bidding, private
marketplace, mobile, video, guaranteed audience solutions, and
traffic shaping; declined fees and take rate and the need to grow
through advertising spend increases rather than fee increases; our
ability to compensate for a reduced take rate by increasing the
volume and/or value of transactions on our platform; our
vulnerability to the depletion of our cash resources as revenue
declines with the reduction in our take rate and as we incur
additional investments in technology required to support the
increased volume of transactions on our exchange; our ability to
support our growth objectives with reduced resources from our cost
reduction initiatives; our ability to raise additional capital if
needed; our limited operating history and history of losses; our
ability to continue to expand into new geographic markets;
increased prevalence of ad-blocking technologies and browsers that
block cookies or otherwise allow users to limit ad tracking; the
slowing growth rate of online digital display advertising; the
growing percentage of online and mobile advertising spending
captured by owned and operated sites (such as Facebook and Google);
the effects, including loss of market share, of increased
competition in our market and increasing concentration of
advertising spending, including mobile spending, in a small number
of very large competitors; the effects of consolidation in the ad
tech industry, such as AT&T's acquisition of AppNexus; acts of
competitors and other third parties that can adversely affect our
business; our ability to differentiate our offerings and compete
effectively in a market trending increasingly toward
commodification, transparency, and disintermediation; requests for
discounts, fee concessions or revisions, rebates, refunds,
favorable payment terms and greater levels of pricing transparency
and specificity; potential adverse effects of malicious activity
such as fraudulent inventory and malware; the effects of seasonal
trends on our results of operations; costs associated with
defending intellectual property infringement and other claims; our
ability to attract and retain qualified employees and key
personnel; our ability to identify future acquisitions of or
investments in complementary companies or technologies and our
ability to consummate the acquisitions and integrate such companies
or technologies; and our ability to comply with, and the effect on
our business of, the European General Data Protection Regulation,
the California Consumer Privacy Act, and other evolving legal
standards and regulations, particularly concerning data protection
and consumer privacy and evolving labor standards.
We discuss many of these risks and additional factors that could
cause actual results to differ materially from those anticipated by
our forward-looking statements under the headings "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and elsewhere in filings we have made and
will make from time to time with the Securities and Exchange
Commission, or SEC, including our Annual Report on Form 10-K for
the year ended December 31, 2017 and subsequent Quarterly Reports
on Form 10-Q. These forward-looking statements represent our
estimates and assumptions only as of the date made. Unless required
by federal securities laws, we assume no obligation to update any
of these forward-looking statements, or to update the reasons
actual results could differ materially from those anticipated, to
reflect circumstances or events that occur after the statements are
made. Without limiting the foregoing, any guidance we may provide
will generally be given only in connection with quarterly and
annual earnings announcements, without interim updates, and we may
appear at industry conferences or make other public statements
without disclosing material nonpublic information in our
possession. Given these uncertainties, investors should not place
undue reliance on these forward-looking statements. Investors
should read this press release and the documents that we reference
in this press release and have filed or will file with the SEC
completely and with the understanding that our actual future
results may be materially different from what we expect. We qualify
all of our forward-looking statements by these cautionary
statements.
Non-GAAP Financial Measures:
This press release includes information relating to advertising
spend, non-GAAP net revenue, Adjusted EBITDA, non-GAAP net loss,
and non-GAAP loss per share, which are financial measures that have
not been prepared in accordance with GAAP. These non-GAAP financial
measures are used by our management and board of directors, in
addition to our GAAP results, to understand and evaluate our
performance and trends, to prepare and approve our annual budget,
and to develop short- and long-term plans and performance
objectives. Management believes that these non-GAAP financial
measures provide useful information about our core results and thus
are appropriate to enhance the overall understanding of our past
performance and our prospects for the future.
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. You are encouraged to evaluate these adjustments, and
review the reconciliation of these non-GAAP financial measures to
their most comparable GAAP measures, and the reasons we consider
them appropriate. It is important to note that the particular items
we exclude from, or include in, our non-GAAP financial measures may
differ from the items excluded from, or included in, similar
non-GAAP financial measures used by other companies. See
"Reconciliation of revenue to advertising spend and revenue to
non-GAAP net revenue," "Reconciliation of net loss to Adjusted
EBITDA," "Reconciliation of net loss to non-GAAP net loss" and
"Reconciliation of GAAP loss per share to non-GAAP loss per share"
included as part of this press release.
Advertising Spend:
We define advertising spend as the total volume of spending
between buyers and sellers transacted on our platform. Advertising
spend does not represent revenue reported on a GAAP basis. Tracking
our advertising spend facilitates comparison of our results to the
results of companies in our industry that report GAAP revenue on a
gross basis. We also use advertising spend for internal management
purposes to assess market share of total advertising spending.
Our advertising spend may be influenced by demand for our
services, the volume and characteristics of paid impressions,
average CPM, our ability to fill bid requests, the nature and
amount of fees we charge, and other factors such as changes in the
market, our execution of the business, and competition.
Advertising spend may fluctuate due to seasonality. In the past,
we have experienced higher advertising spend during the fourth
quarter of a given year because many buyers devote a
disproportionate amount of their advertising budgets to this period
of the year to coincide with increased holiday purchasing. Buyers'
focus on the fourth quarter generates more bidding activity on our
platform, which may drive higher volumes of paid impressions,
average CPM, or both. Our advertising spend grew 24% for the three
months ended September 30, 2018 compared to the same period in
2017. The increase in advertising spend was driven by higher ad
request volumes and an increase in the CPMs generated from our
auctions. The increase in CPMs was driven by increased bidding
activity on our platform, the value of the inventory that we made
available to buyers, including PMP, mobile and video inventory that
typically carries higher pricing, and auction dynamics, including
the implementation of first price auctions and Estimated Market
Rate ("EMR") for our header bidding inventory. In January 2018, we
made first price our default auction dynamic for header bidding
transactions.
Non-GAAP Net Revenue:
We define non-GAAP net revenue as GAAP revenue less amounts we
pay sellers, where the amounts paid are included within cost of
revenue for the portion of our revenue reported on a gross basis.
The portion of our revenue reported on a gross basis was
attributable to intent marketing services, which no longer
generated revenue after the first quarter of 2017. Historically,
non-GAAP net revenue was a useful measure in assessing the
performance of our business in periods for which our revenue
included revenue reported on a gross basis, because it showed the
operating results of our business on a consistent basis without the
effect of differing revenue reporting (gross vs. net) that we
applied under GAAP across different types of transactions, and
facilitated comparison of our results to the results of companies
that report all of their revenue on a net basis. Revenue from
intent marketing services in the first quarter of 2017 created the
difference between our non-GAAP net revenue and our GAAP revenue
for that period. We ceased offering our intent marketing solution
in the first quarter of 2017, so for subsequent periods non-GAAP
net revenue is the same as GAAP revenue, as there is no longer a
reconciling item between GAAP and non-GAAP net revenue. Non-GAAP
net revenue is presented for comparative purposes as the first
quarter of 2017 still included the intent marketing solution
reconciling item.
A potential limitation of non-GAAP net revenue is that other
companies may define non-GAAP net revenue differently, which may
make comparisons difficult.
Non-GAAP net revenue is influenced by the volume and
characteristics of advertising spend and our take rate. The revenue
we have reported on a gross basis was associated with our intent
marketing business. Because we exited that business in the first
quarter of 2017, we do not expect to report any revenue on a gross
basis after the first quarter of 2017 unless and until we change
our business practices, develop new products, or make an
acquisition, in each case with characteristics that require gross
reporting.
Adjusted EBITDA:
We define Adjusted EBITDA as net income (loss) adjusted to
exclude stock-based compensation expense, depreciation and
amortization, amortization of acquired intangible assets,
impairment charges, interest income or expense, and other cash and
non-cash based income or expenses that we do not consider
indicative of our core operating performance, including, but not
limited to foreign exchange gains and losses, acquisition and
related items, and provision (benefit) for income taxes. We believe
Adjusted EBITDA is useful to investors in evaluating our
performance for the following reasons:
- Adjusted EBITDA is widely used by investors and securities
analysts to measure a company’s performance without regard to items
such as those we exclude in calculating this measure, which can
vary substantially from company to company depending upon their
financing, capital structures, and the method by which assets were
acquired.
- Our management uses Adjusted EBITDA in conjunction with GAAP
financial measures for planning purposes, including the preparation
of our annual operating budget, as a measure of performance and the
effectiveness of our business strategies, and in communications
with our board of directors concerning our performance. Adjusted
EBITDA may also be used as a metric for determining payment of cash
incentive compensation.
- Adjusted EBITDA provides a measure of consistency and
comparability with our past performance that many investors find
useful, facilitates period-to-period comparisons of operations, and
also facilitates comparisons with other peer companies, many of
which use similar non-GAAP financial measures to supplement their
GAAP results.
Although Adjusted EBITDA is frequently used by investors and
securities analysts in their evaluations of companies, Adjusted
EBITDA has limitations as an analytical tool, and should not be
considered in isolation or as a substitute for analysis of our
results of operations as reported under GAAP. These limitations
include:
- Stock-based compensation is a non-cash charge and will remain
an element of our long-term incentive compensation package,
although we exclude it as an expense when evaluating our ongoing
operating performance for a particular period.
- Depreciation and amortization are non-cash charges, and the
assets being depreciated or amortized will often have to be
replaced in the future, but Adjusted EBITDA does not reflect any
cash requirements for these replacements.
- Impairment charges are non-cash charges related to goodwill,
intangible assets and/or long-lived assets.
- Adjusted EBITDA does not reflect non-cash charges related to
acquisition and related items, such as amortization of acquired
intangible assets and changes in the fair value of contingent
consideration.
- Adjusted EBITDA does not reflect cash and non-cash charges and
changes in, or cash requirements for, acquisition and related
items, such as certain transaction expenses and expenses associated
with earn-out amounts.
- Adjusted EBITDA does not reflect changes in our working capital
needs, capital expenditures, or contractual commitments.
- Adjusted EBITDA does not reflect cash requirements for income
taxes and the cash impact of other income or expense.
- Other companies may calculate Adjusted EBITDA differently than
we do, limiting its usefulness as a comparative measure.
Our Adjusted EBITDA is influenced by fluctuations in our revenue
and the timing and amounts of our investments in our operations.
Adjusted EBITDA should not be considered as an alternative to net
income (loss), operating loss, or any other measure of financial
performance calculated and presented in accordance with GAAP.
Non-GAAP Net Income (Loss) and Non-GAAP Earnings (Loss)
per Share:
We define non-GAAP earnings (loss) per share as non-GAAP net
income (loss) divided by non-GAAP weighted-average shares
outstanding. Non-GAAP net income (loss) is equal to net income
(loss) excluding stock-based compensation, impairment charges, cash
and non-cash based acquisition and related expenses, including
amortization of acquired intangible assets, transaction expenses,
expenses associated with earn-out amounts, and foreign currency
gains and losses. In periods in which non-GAAP net income (loss) is
positive, non-GAAP weighted-average shares outstanding used to
calculate non-GAAP earnings (loss) per share includes the impact of
potentially dilutive shares. Potentially dilutive shares consist of
stock options, restricted stock awards, restricted stock units,
potential shares issued under the Employee Stock Purchase Plan,
each computed using the treasury stock method, shares held in
escrow, and potential shares issued as part of contingent
consideration as a result of business combinations. We believe
non-GAAP earnings (loss) per share is useful to investors in
evaluating our ongoing operational performance and our trends on a
per share basis, and also facilitates comparison of our financial
results on a per share basis with other companies, many of which
present a similar non-GAAP measure. However, a potential limitation
of our use of non-GAAP earnings (loss) per share is that other
companies may define non-GAAP earnings (loss) per share
differently, which may make comparison difficult. This measure may
also exclude expenses that may have a material impact on our
reported financial results. Non-GAAP earnings (loss) per share is a
performance measure and should not be used as a measure of
liquidity. Because of these limitations, we also consider the
comparable GAAP measure of net income (loss).
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THE RUBICON PROJECT,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In
thousands)(unaudited) |
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|
September 30, 2018 |
|
December 31, 2017 |
ASSETS |
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Current assets: |
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|
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Cash and cash
equivalents |
$ |
82,354 |
|
|
$ |
76,642 |
|
Marketable securities |
14,486 |
|
|
52,504 |
|
Accounts
receivable, net |
155,328 |
|
|
165,890 |
|
Prepaid
expenses and other current assets |
8,781 |
|
|
9,620 |
|
TOTAL
CURRENT ASSETS |
260,949 |
|
|
304,656 |
|
Property and equipment,
net |
33,884 |
|
|
47,393 |
|
Internal use software
development costs, net |
14,432 |
|
|
12,734 |
|
Other assets,
non-current |
879 |
|
|
5,493 |
|
Intangible assets,
net |
10,971 |
|
|
13,359 |
|
TOTAL ASSETS |
$ |
321,115 |
|
|
$ |
383,635 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
199,385 |
|
|
$ |
214,103 |
|
Other
current liabilities |
2,806 |
|
|
3,141 |
|
TOTAL
CURRENT LIABILITIES |
202,191 |
|
|
217,244 |
|
Other liabilities,
non-current |
1,172 |
|
|
1,780 |
|
TOTAL LIABILITIES |
203,363 |
|
|
219,024 |
|
STOCKHOLDERS'
EQUITY |
|
|
|
Common stock |
1 |
|
|
— |
|
Additional paid-in
capital |
431,294 |
|
|
418,354 |
|
Accumulated other
comprehensive income (loss) |
(167 |
) |
|
41 |
|
Accumulated
deficit |
(313,376 |
) |
|
(253,784 |
) |
TOTAL STOCKHOLDER'S
EQUITY |
117,752 |
|
|
164,611 |
|
TOTAL LIABILITITES AND
STOCKHOLDERS' EQUITY |
$ |
321,115 |
|
|
$ |
383,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
amounts)(unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Revenue |
$ |
29,729 |
|
|
$ |
35,211 |
|
|
$ |
83,253 |
|
|
$ |
124,148 |
|
Expenses (1)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue |
14,687 |
|
|
12,985 |
|
|
44,514 |
|
|
41,371 |
|
Sales and
marketing |
10,654 |
|
|
12,503 |
|
|
34,046 |
|
|
39,660 |
|
Technology and development |
9,299 |
|
|
11,580 |
|
|
29,038 |
|
|
36,377 |
|
General
and administrative |
9,355 |
|
|
13,644 |
|
|
33,340 |
|
|
43,079 |
|
Restructuring and other exit costs |
— |
|
|
— |
|
|
3,440 |
|
|
5,959 |
|
Impairment of goodwill |
— |
|
|
90,251 |
|
|
— |
|
|
90,251 |
|
Total expenses |
43,995 |
|
|
140,963 |
|
|
144,378 |
|
|
256,697 |
|
Loss from
operations |
(14,266 |
) |
|
(105,752 |
) |
|
(61,125 |
) |
|
(132,549 |
) |
Other (income)
expense: |
|
|
|
|
|
|
|
Interest
income, net |
(232 |
) |
|
(269 |
) |
|
(777 |
) |
|
(664 |
) |
Other
income |
(206 |
) |
|
(123 |
) |
|
(626 |
) |
|
(502 |
) |
Foreign
exchange (gain) loss, net |
(120 |
) |
|
242 |
|
|
(363 |
) |
|
1,093 |
|
Total other income,
net |
(558 |
) |
|
(150 |
) |
|
(1,766 |
) |
|
(73 |
) |
Loss before income
taxes |
(13,708 |
) |
|
(105,602 |
) |
|
(59,359 |
) |
|
(132,476 |
) |
Provision
(benefit) for income taxes |
84 |
|
|
(2,031 |
) |
|
233 |
|
|
(1,510 |
) |
Net loss |
$ |
(13,792 |
) |
|
$ |
(103,571 |
) |
|
$ |
(59,592 |
) |
|
$ |
(130,966 |
) |
Net loss per
share: |
|
|
|
|
|
|
|
Basic and
Diluted |
$ |
(0.27 |
) |
|
$ |
(2.11 |
) |
|
$ |
(1.19 |
) |
|
$ |
(2.69 |
) |
Weighted average shares
used to compute net loss per share: |
|
|
|
|
|
|
|
Basic and
Diluted |
50,513 |
|
|
49,055 |
|
|
50,095 |
|
|
48,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock-based compensation expense included in our
expenses was as follows:
|
Three Months Ended |
|
Nine Months Ended |
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Cost of revenue |
$ |
72 |
|
|
$ |
115 |
|
|
$ |
256 |
|
|
$ |
295 |
|
Sales and
marketing |
1,187 |
|
|
1,115 |
|
|
3,530 |
|
|
3,524 |
|
Technology and
development |
691 |
|
|
1,122 |
|
|
2,163 |
|
|
3,178 |
|
General and
administrative |
1,910 |
|
|
2,294 |
|
|
6,669 |
|
|
7,631 |
|
Restructuring and other
exit costs |
— |
|
|
— |
|
|
398 |
|
|
1,560 |
|
Total stock-based
compensation expense |
$ |
3,860 |
|
|
$ |
4,646 |
|
|
$ |
13,016 |
|
|
$ |
16,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
Depreciation and amortization expense included in our expenses was
as follows: |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Cost of revenue |
$ |
8,271 |
|
|
$ |
7,221 |
|
|
$ |
24,785 |
|
|
$ |
23,645 |
|
Sales and
marketing |
141 |
|
|
135 |
|
|
455 |
|
|
888 |
|
Technology and
development |
215 |
|
|
615 |
|
|
683 |
|
|
1,612 |
|
General and
administrative |
140 |
|
|
207 |
|
|
432 |
|
|
1,009 |
|
Total depreciation and
amortization expense |
$ |
8,767 |
|
|
$ |
8,178 |
|
|
$ |
26,355 |
|
|
$ |
27,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
(unaudited) |
|
|
|
Nine Months Ended |
|
September 30, 2018 |
|
September 30, 2017 |
OPERATING
ACTIVITIES: |
|
|
|
Net
loss |
$ |
(59,592 |
) |
|
$ |
(130,966 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
26,355 |
|
|
27,154 |
|
Stock-based compensation |
13,016 |
|
|
16,188 |
|
Impairment of goodwill |
— |
|
|
90,251 |
|
Loss on
disposal of property and equipment |
149 |
|
|
269 |
|
Provision
for doubtful accounts |
217 |
|
|
482 |
|
Accretion
of available for sale securities |
(374 |
) |
|
(163 |
) |
Unrealized foreign currency gains, net |
(206 |
) |
|
372 |
|
Deferred
income taxes |
— |
|
|
(1,453 |
) |
Changes
in operating assets and liabilities, net of effect of business
acquisitions: |
|
|
|
Accounts
receivable |
10,318 |
|
|
58,876 |
|
Prepaid
expenses and other assets |
2,919 |
|
|
(1,315 |
) |
Accounts
payable and accrued expenses |
(14,415 |
) |
|
(49,972 |
) |
Other
liabilities |
(939 |
) |
|
(510 |
) |
Net cash
provided by (used in) operating activities |
(22,552 |
) |
|
9,213 |
|
INVESTING
ACTIVITIES: |
|
|
|
Purchases
of property and equipment |
(5,474 |
) |
|
(14,554 |
) |
Capitalized internal use software development costs |
(6,569 |
) |
|
(6,127 |
) |
Acquisitions, net of cash acquired |
— |
|
|
(38,610 |
) |
Investments in available-for-sale securities |
(23,991 |
) |
|
(66,419 |
) |
Maturities of available-for-sale securities |
55,650 |
|
|
67,650 |
|
Sales of
available-for-sale securities |
9,228 |
|
|
— |
|
Net cash
provided by (used in) investing activities |
28,844 |
|
|
(58,060 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Proceeds
from exercise of stock options |
45 |
|
|
391 |
|
Proceeds
from issuance of common stock under employee stock purchase
plan |
143 |
|
|
444 |
|
Taxes
paid related to net share settlement |
(658 |
) |
|
(2,067 |
) |
Net cash
used in financing activities |
(470 |
) |
|
(1,232 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
(110 |
) |
|
186 |
|
CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
5,712 |
|
|
(49,893 |
) |
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH — Beginning of period |
76,642 |
|
|
149,498 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH — End of period |
$ |
82,354 |
|
|
$ |
99,605 |
|
SUPPLEMENTAL
DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
|
|
|
Cash paid for income
taxes |
$ |
272 |
|
|
$ |
348 |
|
Cash paid for
interest |
$ |
46 |
|
|
$ |
46 |
|
Capitalized assets
financed by accounts payable and accrued expenses |
$ |
3 |
|
|
$ |
2,065 |
|
Capitalized stock-based
compensation |
$ |
394 |
|
|
$ |
338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
RECONCILIATION OF REVENUE TO ADVERTISING SPEND
AND REVENUE TO NON-GAAP NET REVENUE |
(In thousands) |
(unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Revenue |
$ |
29,729 |
|
|
$ |
35,211 |
|
|
$ |
83,253 |
|
|
$ |
124,148 |
|
Plus
amounts paid to sellers(1) |
212,442 |
|
|
159,808 |
|
|
607,603 |
|
|
466,802 |
|
Advertising spend |
$ |
242,171 |
|
|
$ |
195,019 |
|
|
$ |
690,856 |
|
|
$ |
590,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Revenue |
$ |
29,729 |
|
|
$ |
35,211 |
|
|
$ |
83,253 |
|
|
$ |
124,148 |
|
Less
amounts paid to sellers reflected in cost of revenue(2) |
— |
|
|
— |
|
|
— |
|
|
633 |
|
Non-GAAP net
revenue |
$ |
29,729 |
|
|
$ |
35,211 |
|
|
$ |
83,253 |
|
|
$ |
123,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Amounts paid to sellers for the portion of our revenue reported on
a net basis for GAAP purposes. |
(2)
Amounts paid to sellers for the portion of our revenue reported on
a gross basis for GAAP purposes. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
RECONCILIATION OF NET LOSS TO ADJUSTED
EBITDA |
(In thousands) |
(unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Net loss |
$ |
(13,792 |
) |
|
$ |
(103,571 |
) |
|
$ |
(59,592 |
) |
|
$ |
(130,966 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
Depreciation and amortization expense, excluding amortization of
acquired intangible assets |
7,971 |
|
|
7,021 |
|
|
23,967 |
|
|
23,633 |
|
Amortization of acquired intangibles |
796 |
|
|
1,157 |
|
|
2,388 |
|
|
3,521 |
|
Stock-based compensation expense |
3,860 |
|
|
4,646 |
|
|
13,016 |
|
|
16,188 |
|
Impairment of goodwill |
— |
|
|
90,251 |
|
|
— |
|
|
90,251 |
|
Acquisition and related items |
— |
|
|
268 |
|
|
— |
|
|
268 |
|
Interest
income, net |
(232 |
) |
|
(269 |
) |
|
(777 |
) |
|
(664 |
) |
Foreign
exchange (gain) loss, net |
(120 |
) |
|
242 |
|
|
(363 |
) |
|
1,093 |
|
Provision
(benefit) for income taxes |
84 |
|
|
(2,031 |
) |
|
233 |
|
|
(1,510 |
) |
Adjusted EBITDA |
$ |
(1,433 |
) |
|
$ |
(2,286 |
) |
|
$ |
(21,128 |
) |
|
$ |
1,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
RECONCILIATION OF NET LOSS TO NON-GAAP NET
LOSS |
(In thousands) |
(unaudited) |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
Net loss |
$ |
(13,792 |
) |
|
$ |
(103,571 |
) |
|
$ |
(59,592 |
) |
|
$ |
(130,966 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
Acquisition and related items, including amortization of acquired
intangibles |
796 |
|
|
1,425 |
|
|
2,388 |
|
|
3,789 |
|
Stock-based compensation expense |
3,860 |
|
|
4,646 |
|
|
13,016 |
|
|
16,188 |
|
Impairment of goodwill |
— |
|
|
90,251 |
|
|
— |
|
|
90,251 |
|
Foreign
exchange (gain) loss, net |
(120 |
) |
|
242 |
|
|
(363 |
) |
|
1,093 |
|
Tax
effect of Non-GAAP adjustments (1) |
(35 |
) |
|
(79 |
) |
|
(64 |
) |
|
(88 |
) |
Non-GAAP net loss |
$ |
(9,291 |
) |
|
$ |
(7,086 |
) |
|
$ |
(44,615 |
) |
|
$ |
(19,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP net loss includes the estimated tax impact from
the expense items reconciling between net loss and non-GAAP net
loss. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
RECONCILIATION OF GAAP LOSS PER SHARE TO
NON-GAAP LOSS PER SHARE |
(In thousands, except per share
amounts) |
(unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30,2018 |
|
September 30,2017 |
|
September 30,2018 |
|
September 30,2017 |
GAAP net loss per share
(1): |
|
|
|
|
|
|
|
Basic and
Diluted |
$ |
|
(0.27 |
) |
|
$ |
(2.11 |
) |
|
$ |
(1.19 |
) |
|
$ |
(2.69 |
) |
Diluted |
$ |
|
(0.27 |
) |
|
$ |
(2.11 |
) |
|
$ |
(1.19 |
) |
|
$ |
(2.69 |
) |
|
|
|
|
|
|
|
|
Non-GAAP net loss
(2) |
$ |
|
(9,291 |
) |
|
$ |
(7,086 |
) |
|
$ |
(44,615 |
) |
|
$ |
(19,733 |
) |
|
|
|
|
|
|
|
|
Reconciliation of
weighted-average shares used to compute net loss per share to
non-GAAP weighted average shares outstanding: |
|
|
|
|
|
|
|
Weighted-average shares
used to compute net loss per share: |
50,513 |
|
|
49,055 |
|
|
50,095 |
|
|
48,726 |
|
Dilutive
effect of weighted-average common stock options, RSAs, and
RSUs(3) |
— |
|
|
— |
|
|
— |
|
|
— |
|
Dilutive
effect of weighted-average escrow shares |
— |
|
|
— |
|
|
— |
|
|
— |
|
Dilutive
effect of weighted-average ESPP(3) |
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-GAAP
weighted-average shares outstanding |
50,513 |
|
|
49,055 |
|
|
50,095 |
|
|
48,726 |
|
Non-GAAP loss per
share |
$ |
|
(0.18 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.89 |
) |
|
$ |
(0.40 |
) |
|
|
(1)
Calculated as net loss divided by basic weighted-average shares
used to compute net loss per share as included in the consolidated
statement of operations. |
(2)
Refer to reconciliation of net loss to non-GAAP net
loss. |
(3)
In most periods in which net income is positive, the
weighted-average shares used to compute diluted earnings per share
are equal to the weighted-average shares used to compute basic loss
per share and already include the dilutive effect of common stock
options, RSAs, RSUs, acquisition related contingent and escrow
shares, and ESPP using the treasury stock method. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE RUBICON PROJECT, INC. |
REVENUE AND ADVERTISING SPEND BY
CHANNEL |
(In thousands, except
percentages) |
(unaudited) |
|
|
|
|
|
Revenue |
|
Advertising Spend |
|
Three Months Ended |
|
Three Months Ended |
|
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
(in thousands, except
percentages) |
Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
$ |
12,481 |
|
|
42 |
% |
|
$ |
16,881 |
|
|
48 |
% |
|
$ |
109,317 |
|
|
45 |
% |
|
$ |
103,325 |
|
|
53 |
% |
Mobile |
17,248 |
|
|
58 |
|
|
18,330 |
|
|
52 |
|
|
132,854 |
|
|
55 |
|
|
91,694 |
|
|
47 |
|
Total |
$ |
29,729 |
|
|
100 |
% |
|
$ |
35,211 |
|
|
100 |
% |
|
$ |
242,171 |
|
|
100 |
% |
|
$ |
195,019 |
|
|
100 |
% |
|
|
|
Revenue |
|
Advertising Spend |
|
Nine Months Ended |
|
Nine Months Ended |
|
September 30, 2018 |
|
September 30, 2017 |
|
September 30, 2018 |
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
(in thousands, except
percentages) |
Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
$ |
40,453 |
|
|
49 |
% |
|
$ |
68,956 |
|
|
56 |
% |
|
$ |
346,404 |
|
|
50 |
% |
|
$ |
345,481 |
|
|
58 |
% |
Mobile |
42,800 |
|
|
51 |
|
|
55,192 |
|
|
44 |
|
|
344,452 |
|
|
50 |
|
|
245,469 |
|
|
42 |
|
Total |
$ |
83,253 |
|
|
100 |
% |
|
$ |
124,148 |
|
|
100 |
% |
|
$ |
690,856 |
|
|
100 |
% |
|
$ |
590,950 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact
Nick Kormeluk
(949) 500-0003
nkormeluk@rubiconproject.com
Media Contact
Ben Billingsley
Broadsheet Communications
press@rubiconproject.com
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