Press Release
Rubicon Project Announces Record First Quarter Financial Results
-
First quarter revenue was
$23 million , up 39% year-over-year -
First quarter managed revenue1 was approximately
$130 million , up 34% year-over-year -
Non-GAAP loss per share2 was
$0.15 - RTB managed revenue1 grew 75% year over year
“I’m pleased to report record first quarter results,” said
Q1 2014 Financial Results:
-
Revenue was
$23.0 million for the first quarter of 2014, an increase of 39% from$16.6 million for the first quarter of 2013, primarily driven by increases in our managed revenue and take rate. -
Adjusted EBITDA2 loss was
$1.6 million for the first quarter of 2014 compared to income of$2.0 million in the first quarter of 2013. -
Net loss was
$6.1 million for the first quarter of 2014 compared to a net loss of$2.2 million in the first quarter of 2013. -
Net loss per share attributable to common stockholders on a
GAAP basis was
$0.59 for the first quarter of 2014, based on 12.2 million weighted-average shares outstanding. This compares to a net loss per share of$0.28 for the first quarter of 2013, which was based on 11.3 million weighted-average shares outstanding. -
Non-GAAP loss per share2 was
$0.15 for the first quarter of 2014, based on 26.9 million non-GAAP weighted-average shares outstanding. This compares to a non-GAAP income per share of$0.00 (i.e. breakeven) for the first quarter 2013, which was based on 26.0 million non-GAAP weighted-average shares outstanding. Non-GAAP weighted-average shares outstanding used to calculate non-GAAP loss per share assume the conversion of each share of convertible preferred stock and the net exercise of a preferred stock warrant to one half share of common stock in connection with the Company’s initial public offering, but exclude the 6.4 million shares issued in our initial public offering, which closed in the second quarter.
Key Operational Measures:
-
Managed revenue1 was
$129.6 million for the first quarter of 2014, an increase of 34% from$96.4 million for the first quarter of 2013. The increase was primarily driven by an increase in pricing due to increased bidding activity. - Take rate1 was 17.8% for the first quarter of 2014, compared to 17.2% for the first quarter of 2013.
Guidance:
As of
For the second quarter of 2014, we expect:
-
Revenue between
$24.5 million and $25.5 million ; -
Adjusted EBITDA2 loss between
$5.0 million and $4.0 million ; and -
Non-GAAP loss per share2 between
$0.24 and $0.21 based on approximately 33.2 million non-GAAP weighted-average shares outstanding.
For the full year ending
-
Revenue between
$111.0 million and $114.0 million ; -
Adjusted EBITDA2 loss between
$7.0 million and $5.0 million ; and -
Non-GAAP loss per share2 between
$0.60 and $0.50 based on approximately 32.0 million non-GAAP weighted-average shares outstanding.
The non-GAAP weighted-average shares outstanding used in our guidance
for second quarter and full year non-GAAP loss per share include the 6.4
million shares issued in our initial public offering from
1 Managed revenue and take rate are operational measures. Managed revenue represents advertising spending transacted on our platform and would represent our revenue if we were to record our revenue on a gross basis instead of a net basis. Take rate represents our share of managed revenue.
2 Adjusted EBITDA and non-GAAP loss per share are non-GAAP financial measures. Please see discussion in section “Key Operational and Non-GAAP Financial Measures” and the reconciliations included at the end of this earnings release.
Conference Call Information:
The company will host a conference call on
About The
Headquartered in
Note: The
Forward-Looking Statements
This press release and management’s answers to questions during our
earnings call may contain 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, our
belief that we are executing well across our growth initiatives and that
there are exciting market opportunities, our guidance and other
statements concerning our anticipated performance, including revenue,
margin, cash flow, balance sheet, and profit expectations; development
of our technology; introduction of new offerings; scope of client
relationships; business mix; sales growth; client utilization of our
offerings; market conditions and opportunities; and operational measures
including managed revenue, paid impressions, average CPM, and take rate.
These statements are not guarantees of future performance; they reflect
our current views with respect to future events and are based on
assumptions 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 rapidly and to manage our
growth effectively; our ability to develop innovative new technology and
remain a market leader; our ability to attract and retain buyers and
sellers and increase our business with them; our ability to use our
solution to purchase and sell higher value advertising and to expand the
use of our solution by buyers and sellers utilizing evolving digital
media platforms, including mobile and video; our ability to introduce
new solutions and bring them to market in a timely manner; our ability
to maintain a supply of advertising inventory from sellers; our limited
operating history and history of losses; our ability to continue to
expand into new geographic markets; the effects of increased competition
in our market and our ability to compete effectively; 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 consummate future acquisitions of or investments in
complementary companies or technologies; our ability to comply with, and
the effect on our business of, evolving legal standards and regulations,
particularly concerning data protection and consumer privacy; and our
ability to develop and maintain our corporate infrastructure, including
our finance and information technology systems and controls. 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 caption "Risk Factors" and
“Management Discussion and Analysis of Financial Condition and Results
of Operations” in our prospectus filed with the
Key Operational and Non-GAAP Financial Measures
Rubicon Project’s management evaluates and makes operating decisions using various operational and financial measures.
Operational Measures
Managed revenue is an operational measure that represents the advertising spending transacted on our platform, and would represent our revenue if we were to record our revenue on a gross basis instead of a net basis. Managed revenue does not represent revenue reported on a GAAP basis. We review managed revenue for internal management purposes to assess market share and scale. Many companies in our industry record revenue on a gross basis, so tracking our managed revenue allows us to compare our results to the results of those companies. Our managed revenue is influenced by the volume and characteristics of paid impressions, and average CPM.
Take rate is an operational measure that represents our share of managed revenue. We review take rate for internal management purposes to assess the development of our marketplace with buyers and sellers. Our 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, the implementation of new products, platforms and solution features, and the overall development of the digital advertising ecosystem.
Financial Measures
In addition to the Company's GAAP results, management also considers
non-GAAP financial measures, including adjusted EBITDA, and non-GAAP
loss per share. Management believes that these non-GAAP financial
measures provide useful information about the Company's core operating
results and thus are appropriate to enhance the overall understanding of
the Company's past financial performance and its prospects for the
future. This press release includes information relating to adjusted
EBITDA and non-GAAP loss per share, which are financial measures that
have not been prepared in accordance with generally accepted accounting
principles in
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. Adjusted EBITDA and non-GAAP loss per share eliminate the impact of items that we do not consider indicative of our core operating performance and operating performance on a per share basis. You are encouraged to evaluate these adjustments, and review the reconciliation of these non-GAAP measures to their most comparable GAAP financial 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 net loss to adjusted EBITDA” and “Calculation of net loss attributable to common stockholders to non-GAAP loss per share” included as part of this press release.
We define adjusted EBITDA as net loss adjusted for stock-based compensation expense, depreciation and amortization, interest expense, net, change in fair value of convertible preferred stock warrant liabilities, and other income or expense, net, which mainly consists of foreign exchange gains and losses, net, certain other non-recurring income or expenses such as acquisition and related costs, and provision for income taxes. We believe adjusted EBITDA is useful to investors in evaluating our operating performance for the following reasons:
- adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as stock-based compensation expense, depreciation and amortization, interest expense, net, change in fair value of preferred stock warrant liabilities, foreign exchange gains and losses as acquisition and related costs, and provision for income taxes that 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 operating performance and the effectiveness of our business strategies, and in communications with our board of directors concerning our financial performance;
- adjusted EBITDA is sometimes used by the compensation committee of our board of directors in connection with the determination of compensation for our executive officers; and
- adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and 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 you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. These limitations include:
- depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future; adjusted EBITDA does not reflect any cash requirements for these replacements;
- adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs, capital expenditures or contractual commitments, and therefore may not reflect periodic increases in capital expenditures, such as an expected significant increase from 2013 to 2014 as a result of a larger amount of our internally developed software costs being capitalized as well as slightly higher costs associated with key initiatives;
- adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense; and
- other companies may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, we also consider other financial measures, including net loss.
Non-GAAP loss per share is calculated by dividing non-GAAP net loss by
non-GAAP weighted-average shares outstanding. Non-GAAP net loss is equal
to net loss attributable to common stockholders excluding the change in
fair value of preferred stock warrant liabilities, cumulative preferred
stock dividends, stock-based compensation, acquisition and related items
expense, foreign currency gains and losses, net, and amortization of
intangible assets. The Non-GAAP weighted-average shares outstanding used
to calculate non-GAAP loss per share assume the conversion of each share
of convertible preferred stock and the net exercise of a preferred stock
warrant to one half share of common stock in connection with the
Company’s initial public offering as if they had occurred at the
beginning of each respective period presented, but exclude the 6.4
million shares issued as part of our initial public offering. The
non-GAAP weighted-average shares outstanding used in our guidance for
second quarter and full year non-GAAP loss per share include the 6.4
million shares issued in our initial public offering from
THE RUBICON PROJECT, INC. |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands) |
||||||||
(unaudited) |
||||||||
March 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 24,464 | $ | 29,956 | ||||
Accounts receivable, net | 74,674 | 94,722 | ||||||
Prepaid expenses and other current assets | 4,421 | 4,141 | ||||||
TOTAL CURRENT ASSETS | 103,559 | 128,819 | ||||||
Property and equipment, net | 8,965 | 8,712 | ||||||
Internal use software development costs, net | 8,442 | 7,204 | ||||||
Goodwill | 1,491 | 1,491 | ||||||
Intangible assets, net | 366 | 510 | ||||||
Other assets, non-current | 4,888 | 3,151 | ||||||
TOTAL ASSETS | $ | 127,711 | $ | 149,887 | ||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND COMMON STOCKHOLDERS’ DEFICIT | ||||||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 103,176 | $ | 120,198 | ||||
Debt and capital lease obligations, current portion | 206 | 288 | ||||||
Other current liabilities | 1,647 | 2,901 | ||||||
TOTAL CURRENT LIABILITIES | 105,029 | 123,387 | ||||||
Debt and capital leases, net of current portion | 3,841 | 3,893 | ||||||
Convertible preferred stock warrant liabilities | 4,441 | 5,451 | ||||||
Other liabilities, non-current | 810 | 996 | ||||||
TOTAL LIABILITIES | 114,121 | 133,727 | ||||||
Commitments and contingencies | ||||||||
Convertible preferred stock | 52,571 | 52,571 | ||||||
COMMON STOCKHOLDERS’ DEFICIT | ||||||||
Common stock | — | — | ||||||
Additional paid-in capital | 29,061 | 25,532 | ||||||
Accumulated other comprehensive income | 111 | 96 | ||||||
Accumulated deficit | (68,153 | ) | (62,039 | ) | ||||
TOTAL COMMON STOCKHOLDERS’ DEFICIT | (38,981 | ) | (36,411 | ) | ||||
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND COMMON STOCKHOLDERS’ DEFICIT | $ | 127,711 | $ | 149,887 | ||||
THE RUBICON PROJECT, INC. |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(In thousands, except per share amounts) |
||||||||
(unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Revenue | $ | 23,015 | $ | 16,600 | ||||
Expenses: | ||||||||
Cost of revenue1 | 4,460 | 3,437 | ||||||
Sales and marketing1 | 9,027 | 6,195 | ||||||
Technology and development1 | 4,677 | 4,111 | ||||||
General and administrative1 | 11,320 | 4,634 | ||||||
Total expenses | 29,484 | 18,377 | ||||||
Loss from operations | (6,469 | ) | (1,777 | ) | ||||
Other (income) expense: | ||||||||
Interest expense, net | 57 | 91 | ||||||
Change in fair value of preferred stock warrant liabilities | (1,010 | ) | 549 | |||||
Foreign exchange (gain) loss, net | 548 | (305 | ) | |||||
Total other (income) expense, net | (405 | ) | 335 | |||||
Loss before income taxes | (6,064 | ) | (2,112 | ) | ||||
Provision for income taxes | 50 | 50 | ||||||
Net loss | (6,114 | ) | (2,162 | ) | ||||
Cumulative preferred stock dividends | (1,046 | ) | (1,045 | ) | ||||
Net loss attributable to common stockholders | $ | (7,160 | ) | $ | (3,207 | ) | ||
Basic and diluted net loss per share attributable to common stockholders | $ | (0.59 | ) | $ | (0.28 | ) | ||
Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders | 12,215 | 11,327 | ||||||
1 Includes stock-based compensation expense as follows (in thousands):
Three Months Ended | |||||||
March 31, 2014 | March 31, 2013 | ||||||
Cost of revenue | $ | 31 | $ | 18 | |||
Selling and marketing | 577 | 340 | |||||
Technology and development | 303 | 368 | |||||
General and administrative | 1,567 | 778 | |||||
Total stock-based compensation | $ | 2,478 | $ | 1,504 | |||
THE RUBICON PROJECT, INC. |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
(unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (6,114 | ) | $ | (2,162 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Depreciation and amortization | 2,375 | 2,061 | ||||||
Stock-based compensation | 2,478 | 1,504 | ||||||
Loss on disposal of property and equipment, net | 24 | — | ||||||
Change in fair value of preferred stock warrant liabilities | (1,010 | ) | 549 | |||||
Unrealized foreign currency loss | 189 | 414 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 20,140 | 8,636 | ||||||
Prepaid expenses and other assets | (580 | ) | (105 | ) | ||||
Accounts payable and accrued expenses | (17,858 | ) | (13,962 | ) | ||||
Other liabilities | (1,453 | ) | 822 | |||||
Net cash used in operating activities | (1,809 | ) | (2,243 | ) | ||||
INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment, net | (1,127 | ) | (1,782 | ) | ||||
Capitalized internal use software development costs | (1,995 | ) | (773 | ) | ||||
Change in restricted cash | 50 | (1,300 | ) | |||||
Net cash used in investing activities | (3,072 | ) | (3,855 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of stock options | 944 | 131 | ||||||
Payments of initial public offering costs | (1,473 | ) | — | |||||
Repayment of debt and capital lease obligations | (135 | ) | (301 | ) | ||||
Net cash used in financing activities | (664 | ) | (170 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 53 | (355 | ) | |||||
CHANGE IN CASH | (5,492 | ) | (6,623 | ) | ||||
CASH--Beginning of period | 29,956 | 21,616 | ||||||
CASH--End of period | $ | 24,464 | $ | 14,993 | ||||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | ||||||||
Capitalized assets financed by accounts payable and accrued expenses | $ | 711 | $ | 359 | ||||
Capitalized stock-based compensation | $ | 107 | $ | 33 | ||||
Deferred offering costs included in accounts payable and accrued expenses | $ | 1,161 | $ | — | ||||
THE RUBICON PROJECT, INC. |
||||||||
KEY OPERATIONAL AND FINANCIAL MEASURES |
||||||||
(unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2014 | March 31,2013 | |||||||
Operational Measures: | ||||||||
Managed revenue (in thousands) | $ | 129,566 | $ | 96,359 | ||||
Take rate | 17.8 | % | 17.2 | % | ||||
Financial Measures: | ||||||||
Revenue (in thousands) | $ | 23,015 | $ | 16,600 | ||||
Adjusted EBITDA (in thousands) | $ | (1,616 | ) | $ | 1,976 | |||
THE RUBICON PROJECT, INC. |
||||||||
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA |
||||||||
(In thousands) |
||||||||
(unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Financial Measure: | ||||||||
Net loss | $ | (6,114 | ) | $ | (2,162 | ) | ||
Add back (deduct): | ||||||||
Depreciation and amortization expense | 2,375 | 2,061 | ||||||
Stock-based compensation expense | 2,478 | 1,504 | ||||||
Acquisition and related items | — | 188 | ||||||
Interest expense, net | 57 | 91 | ||||||
Change in fair value of preferred stock warrant liabilities | (1,010 | ) | 549 | |||||
Foreign currency (gain) loss, net | 548 | (305 | ) | |||||
Provision for income taxes | 50 | 50 | ||||||
Adjusted EBITDA | $ | (1,616 | ) | $ | 1,976 | |||
THE RUBICON PROJECT, INC. |
||||||||
CALCULATION OF NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS TO NON-GAAP LOSS PER SHARE |
||||||||
(In thousands, except per share amounts) |
||||||||
(unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, 2014 | March 31, 2013 | |||||||
Calculation of non-GAAP loss per share: | ||||||||
Net loss attributable to common stockholders | $ | (7,160 | ) | $ | (3,207 | ) | ||
Add back (deduct): | ||||||||
Change in fair value of preferred stock warrant liabilities | (1,010 | ) | 549 | |||||
Cumulative preferred stock dividends | 1,046 | 1,045 | ||||||
Stock-based compensation | 2,478 | 1,504 | ||||||
Acquisition and related items | — | 188 | ||||||
Foreign currency (gain) loss, net | 548 | (305 | ) | |||||
Amortization of intangible assets | 143 | 312 | ||||||
Non-GAAP net (loss) income | $ | (3,955 | ) | $ | 86 | |||
Non-GAAP loss per share | $ | (0.15 | ) | $ | — | |||
Non-GAAP weighted-average shares outstanding | 26,911 | 26,023 | ||||||
Reconciliation of basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders to non-GAAP weighted-average shares outstanding: | ||||||||
Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders | 12,215 | 11,327 | ||||||
Conversion of preferred stock | 14,410 | 14,410 | ||||||
Conversion of net exercised preferred stock warrant | 286 | 286 | ||||||
Non-GAAP weighted-average shares outstanding | 26,911 | 26,023 |
Source: The
Investor Relations Contact
ICR
Denise Garcia,
203-682-8335
Investor@rubiconproject.com
or
Media
Contact
HORN Group for Rubicon Project
Ben Billingsley,
646-202-9766
Press@rubiconproject.com