Rubicon Project (NYSE: RUBI), the global exchange for
advertising, today reported its results of operations for the
fourth quarter and full year 2018.
Recent Highlights
- Revenue was $41.4 million for Q4 2018, up 32% from Q4 2017
- Ad spend(1) grew 22% in Q4 2018 as compared to Q4 2017
- Q1 2019 year over year revenue expected to grow
approximately 25%
- Take rate(2) increased to 13.8% in Q4 2018, up 150 basis points
from 12.3% in Q3 2018
- Mobile revenue grew 43% in Q4 2018 year over year and
represented 55% of total revenue
- Desktop revenue grew 21% in Q4 2018 year over year
- Video revenue more than doubled in Q4 2018 year over year
- Net loss(3) for Q4 2018 was $2.2 million, or loss per share(3)
of $0.04, compared to net loss of $23.8 million, or loss per share
of $0.48 for the fourth quarter of 2017
- Adjusted EBITDA(1) was a positive $9.9 million with an Adjusted
EBITDA margin of 24%, compared to adjusted EBITDA loss of $6.2
million for the fourth quarter of 2017
- Non-GAAP earnings per share(1) was $0.03, compared to $0.28
non-GAAP loss per share for the fourth quarter of 2017
- Full year 2018 revenue was $124.7 million, a decrease of 20%
from full year 2017 due primarily to reduction and ultimate
elimination of buyer fees in late 2017
- Full year 2018 ad spend grew 18% to $992.1 million with a 12.6%
take rate, down from an 18.5% take rate in 2017
“We hit a number of significant financial milestones in the
fourth quarter—we returned to strong year-over-year revenue growth,
we were adjusted EBITDA positive with a margin of 24%, and most
importantly, we were cash flow positive, excluding working capital
swings, a year ahead of target,” said Michael G. Barrett, President
and CEO of Rubicon Project. “Our strong revenue performance was
based on solid market share gains as we meaningfully outpaced
market growth in video, audio and mobile.”
Fourth
Quarter and Full Year 2018 Results Summary |
|
|
|
|
|
|
|
|
|
|
(in millions,
except per share amounts and percentages) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
Change Favorable/(Unfavorable) |
|
December 31,2018 |
|
December 31,2017 |
|
Change Favorable/(Unfavorable) |
Revenue |
$41.4 |
|
$31.4 |
|
32% |
|
$124.7 |
|
$155.5 |
|
(20%) |
Advertising spend(1) |
$301.2 |
|
$246.3 |
|
22% |
|
$992.1 |
|
$837.2 |
|
18% |
Non-GAAP
net revenue(1) |
$41.4 |
|
$31.4 |
|
32% |
|
$124.7 |
|
$154.9 |
|
(20%) |
Take
rate(2) |
13.8% |
|
12.8% |
|
1
ppt |
|
12.6% |
|
18.5% |
|
(6
ppt) |
Net
loss |
($2.2) |
|
($23.8) |
|
91% |
|
($61.8) |
|
($154.8) |
|
60% |
Adjusted
EBITDA(1) |
$9.9 |
|
($6.2) |
|
nm |
|
($11.2) |
|
($4.4 |
|
154% |
Adjusted
EBITDA margin(3) |
24% |
|
(20%) |
|
44
ppt |
|
(9%) |
|
(3%) |
|
(6
ppt) |
Basic and
diluted loss per share |
($0.04) |
|
($0.48) |
|
92% |
|
($1.23) |
|
($3.17) |
|
61% |
Non-GAAP
earnings (loss) per share(1) |
$0.03 |
|
($0.28) |
|
nm |
|
($0.85) |
|
($0.68) |
|
(25%) |
Definitions: |
(1 |
) |
Non-GAAP net revenue,
Adjusted EBITDA, non-GAAP earnings (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, 2017 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 |
not meaningful |
Fourth Quarter 2018 Results Conference Call and
Webcast:
The Company will host a conference call on February 27,
2019 at 1:30 PM (PT) / 4:30 PM (ET) to discuss the results for its
fourth quarter of 2018.
Live conference
call |
|
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" |
|
|
Conference call
replay |
|
Toll free number: |
(877) 344-7529 (for
domestic callers) |
Direct dial
number: |
(412) 317-0088 (for
international callers) |
Passcode: |
10127783 |
Webcast link: |
http://investor.rubiconproject.com, under "Events and
Presentations" |
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 income (loss) per share, profitability, net
income (loss), Adjusted EBITDA, earnings per share, and cash flow;
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; user reach;
certain statements regarding future operational performance
measures including ad requests, fill rate, paid impressions,
average CPM, take rate, and advertising spend; benefiting from
supply path optimization; 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 continue to grow and to manage our
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 advertising inventory from sellers
and to fill the increased inventory; the effect on the advertising
market and our business from difficult economic conditions or
uncertainty; 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 to purchase and sell higher
value advertising 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; the increased prevalence of header bidding and its
effect on our competitive position; uncertainty of our estimates
and expectations associated with new offerings, including header
bidding, private marketplace, mobile, and video; lower 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 and increasing our fill rate; our vulnerability to the
depletion of our cash resources as we incur additional investments
in products and technology; our ability to support our growth
objectives with reduced resources from our cost reduction
initiatives; our ability to raise additional capital if needed
and/or to renew our working capital line of credit; our limited
operating history and history of losses; our ability to continue to
expand into new geographic markets; our ability to adapt
effectively to shifts in digital advertising; increased prevalence
of ad-blocking or cookie-blocking technologies; the slowing growth
rate of desktop 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 from buyers and sellers 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, 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"
and "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, 2018 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:
In addition to our GAAP results, we review certain non-GAAP
financial measures to help us evaluate our business, measure our
performance, identify trends affecting our business, establish
budgets, measure the effectiveness of investments in our technology
and development and sales and marketing, and assess our operational
efficiencies. These non-GAAP measures include advertising spend,
non-GAAP net revenue, and Adjusted EBITDA, which are discussed
immediately following the table below, along with the operational
performance measure take rate. Although we historically provided
advertising spend and take rate as key performance metrics on a
quarterly basis, we have determined that we will share specific
metrics in these areas on an annual basis. These metrics were
historically more important when we had GAAP revenue that was
reported on both a gross and a net basis prior to early 2017. More
recently, they were important given our removal of buyer fees in
late 2017, which significantly lowered our take rate, and made it
challenging to understand our business during that time of
significant transition. Given that these informational needs
are lessened, competitive sensitivities, and in particular given
that the comparison year for the significant take rate change is
behind us, we believe now is an appropriate time to make this
change.
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 income (loss)" and
"Reconciliation of GAAP loss per share to non-GAAP earnings (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. We also
use advertising spend for internal management purposes to assess
market share of total advertising spending. As discussed above, we
no longer expect to present our advertising spend on a quarterly
basis beginning in 2019.
Our advertising spend may be influenced by demand for our
services, the volume and characteristics of paid impressions,
average CPM, our ability to fill ad 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 18% for the year
ended December 31, 2018 compared to 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 EMR for our header bidding inventory.
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 Income (Loss) and Non-GAAP Earnings (Loss) per
Share:
We define non-GAAP earnings (loss) per share as non-GAAP income
(loss) divided by non-GAAP weighted-average shares outstanding.
Non-GAAP 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 we have non-GAAP net income, non-GAAP
weighted-average shares outstanding used to calculate non-GAAP
earnings 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).
THE RUBICON PROJECT,
INC.CONSOLIDATED BALANCE
SHEETS(In
thousands)(unaudited)
|
December 31, 2018 |
|
December 31, 2017 |
ASSETS |
Current assets: |
|
|
|
Cash
and cash equivalents |
$ |
80,452 |
|
|
$ |
76,642 |
|
Marketable securities |
7,524 |
|
|
52,504 |
|
Accounts receivable, net |
205,683 |
|
|
165,890 |
|
Prepaid expenses and other current assets |
6,882 |
|
|
9,620 |
|
TOTAL CURRENT
ASSETS |
300,541 |
|
|
304,656 |
|
Property and equipment,
net |
33,487 |
|
|
47,393 |
|
Internal use software
development costs, net |
14,570 |
|
|
12,734 |
|
Other assets,
non-current |
1,240 |
|
|
5,493 |
|
Intangible assets,
net |
10,174 |
|
|
13,359 |
|
TOTAL ASSETS |
$ |
360,012 |
|
|
$ |
383,635 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
239,678 |
|
|
$ |
214,103 |
|
Other
current liabilities |
1,304 |
|
|
3,141 |
|
TOTAL CURRENT LIABILITIES |
240,982 |
|
|
217,244 |
|
Other liabilities,
non-current |
1,017 |
|
|
1,780 |
|
TOTAL LIABILITIES |
241,999 |
|
|
219,024 |
|
STOCKHOLDERS' EQUITY |
|
|
|
Common stock |
1 |
|
|
— |
|
Additional paid-in
capital |
433,877 |
|
|
418,354 |
|
Accumulated other
comprehensive income (loss) |
(259 |
) |
|
41 |
|
Accumulated deficit |
(315,606 |
) |
|
(253,784 |
) |
TOTAL STOCKHOLDER'S
EQUITY |
118,013 |
|
|
164,611 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
$ |
360,012 |
|
|
$ |
383,635 |
|
THE RUBICON PROJECT,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
amounts)(unaudited)
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Revenue |
$ |
41,432 |
|
|
$ |
31,397 |
|
|
$ |
124,685 |
|
|
$ |
155,545 |
|
Expenses (1)(2): |
|
|
|
|
|
|
|
Cost of
revenue |
15,489 |
|
|
15,465 |
|
|
60,003 |
|
|
56,836 |
|
Sales and
marketing |
10,510 |
|
|
12,134 |
|
|
44,556 |
|
|
51,794 |
|
Technology and development |
8,825 |
|
|
11,123 |
|
|
37,863 |
|
|
47,500 |
|
General
and administrative |
9,091 |
|
|
12,517 |
|
|
42,431 |
|
|
55,596 |
|
Restructuring and other exit costs |
— |
|
|
— |
|
|
3,440 |
|
|
5,959 |
|
Impairment of intangible assets and internal use software |
— |
|
|
4,585 |
|
|
— |
|
|
4,585 |
|
Impairment of goodwill |
— |
|
|
— |
|
|
— |
|
|
90,251 |
|
Total expenses |
43,915 |
|
|
55,824 |
|
|
188,293 |
|
|
312,521 |
|
Loss from
operations |
(2,483 |
) |
|
(24,427 |
) |
|
(63,608 |
) |
|
(156,976 |
) |
Other (income)
expense: |
|
|
|
|
|
|
|
Interest
income, net |
(211 |
) |
|
(244 |
) |
|
(988 |
) |
|
(908 |
) |
Other
income |
(140 |
) |
|
(186 |
) |
|
(766 |
) |
|
(688 |
) |
Foreign
exchange (gain) loss, net |
(26 |
) |
|
72 |
|
|
(389 |
) |
|
1,165 |
|
Total other income,
net |
(377 |
) |
|
(358 |
) |
|
(2,143 |
) |
|
(431 |
) |
Loss before income
taxes |
(2,106 |
) |
|
(24,069 |
) |
|
(61,465 |
) |
|
(156,545 |
) |
Provision
(benefit) for income taxes |
124 |
|
|
(252 |
) |
|
357 |
|
|
(1,762 |
) |
Net loss |
$ |
(2,230 |
) |
|
$ |
(23,817 |
) |
|
$ |
(61,822 |
) |
|
$ |
(154,783 |
) |
Net loss per share: |
|
|
|
|
|
|
|
Basic and
Diluted |
$ |
(0.04 |
) |
|
$ |
(0.48 |
) |
|
$ |
(1.23 |
) |
|
$ |
(3.17 |
) |
Weighted average shares
used to compute net loss per share: |
|
|
|
|
|
|
|
Basic and
Diluted |
50,746 |
|
|
49,293 |
|
|
50,259 |
|
|
48,869 |
|
(1) Stock-based
compensation expense included in our expenses was as follows: |
|
Three Months Ended |
|
Year Ended |
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Cost of revenue |
$ |
65 |
|
|
$ |
109 |
|
|
$ |
321 |
|
|
$ |
404 |
|
Sales and marketing |
1,027 |
|
|
1,058 |
|
|
4,557 |
|
|
4,582 |
|
Technology and
development |
704 |
|
|
856 |
|
|
2,867 |
|
|
4,034 |
|
General and
administrative |
1,470 |
|
|
2,293 |
|
|
8,139 |
|
|
9,924 |
|
Restructuring and other
exit costs |
— |
|
|
— |
|
|
398 |
|
|
1,560 |
|
Total stock-based
compensation expense |
$ |
3,266 |
|
|
$ |
4,316 |
|
|
$ |
16,282 |
|
|
$ |
20,504 |
|
(2) Depreciation and
amortization expense included in our expenses was as follows: |
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Cost of revenue |
$ |
8,521 |
|
|
$ |
8,336 |
|
|
$ |
33,306 |
|
|
$ |
31,981 |
|
Sales and marketing |
131 |
|
|
178 |
|
|
586 |
|
|
1,066 |
|
Technology and
development |
199 |
|
|
345 |
|
|
882 |
|
|
1,957 |
|
General and
administrative |
132 |
|
|
212 |
|
|
564 |
|
|
1,221 |
|
Total depreciation and
amortization expense |
$ |
8,983 |
|
|
$ |
9,071 |
|
|
$ |
35,338 |
|
|
$ |
36,225 |
|
THE RUBICON PROJECT,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(unaudited)
|
Year Ended |
|
December 31, 2018 |
|
December 31, 2017 |
OPERATING
ACTIVITIES: |
|
|
|
Net
loss |
$ |
(61,822 |
) |
|
$ |
(154,783 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
35,338 |
|
|
36,225 |
|
Stock-based compensation |
16,282 |
|
|
20,504 |
|
Impairment of intangible assets and internal use software |
— |
|
|
4,585 |
|
Impairment of goodwill |
— |
|
|
90,251 |
|
Loss on
disposal of property and equipment |
243 |
|
|
195 |
|
Provision
for doubtful accounts |
758 |
|
|
580 |
|
Accretion
of available for sale securities |
(412 |
) |
|
(276 |
) |
Unrealized foreign currency gains, net |
(897 |
) |
|
970 |
|
Deferred
income taxes |
(42 |
) |
|
(1,564 |
) |
Changes
in operating assets and liabilities, net of effect of business
acquisitions: |
|
|
|
Accounts receivable |
(40,688 |
) |
|
26,051 |
|
Prepaid expenses and other assets |
4,519 |
|
|
(224 |
) |
Accounts payable and accrued expenses |
26,612 |
|
|
(502 |
) |
Other liabilities |
(2,577 |
) |
|
(477 |
) |
Net cash provided by (used in) operating
activities |
(22,686 |
) |
|
21,535 |
|
INVESTING
ACTIVITIES: |
|
|
|
Purchases
of property and equipment |
(11,433 |
) |
|
(32,438 |
) |
Capitalized internal use software development costs |
(8,507 |
) |
|
(7,988 |
) |
Acquisitions, net of cash acquired |
— |
|
|
(38,610 |
) |
Investments in available-for-sale securities |
(23,991 |
) |
|
(95,224 |
) |
Maturities of available-for-sale securities |
62,650 |
|
|
81,050 |
|
Sales of
available-for-sale securities |
9,228 |
|
|
— |
|
Net cash provided by (used in) investing activities |
27,947 |
|
|
(93,210 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Proceeds
from exercise of stock options |
45 |
|
|
394 |
|
Proceeds
from issuance of common stock under employee stock purchase
plan |
314 |
|
|
629 |
|
Taxes
paid related to net share settlement |
(1,638 |
) |
|
(2,403 |
) |
Net cash used in financing activities |
(1,279 |
) |
|
(1,380 |
) |
EFFECT OF EXCHANGE RATE
CHANGES ON CASH, CASH EQUIVALENTSAND RESTRICTED CASH |
(172 |
) |
|
199 |
|
CHANGE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH |
3,810 |
|
|
(72,856 |
) |
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH — Beginning of period |
76,642 |
|
|
149,498 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH — End of period |
$ |
80,452 |
|
|
$ |
76,642 |
|
SUPPLEMENTAL
DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
|
|
|
Cash paid for income
taxes |
$ |
379 |
|
|
$ |
382 |
|
Cash paid for
interest |
$ |
46 |
|
|
$ |
61 |
|
Capitalized assets
financed by accounts payable and accrued expenses |
$ |
6 |
|
|
$ |
109 |
|
Capitalized stock-based
compensation |
$ |
520 |
|
|
$ |
443 |
|
THE RUBICON PROJECT,
INC.RECONCILIATION OF REVENUE TO ADVERTISING SPEND
AND REVENUE TO NON-GAAP NET REVENUE(In
thousands)(unaudited)
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Revenue |
$ |
41,432 |
|
|
$ |
31,397 |
|
|
$ |
124,685 |
|
|
$ |
155,545 |
|
Plus
amounts paid to sellers(1) |
259,799 |
|
|
214,874 |
|
|
867,402 |
|
|
681,676 |
|
Advertising spend |
$ |
301,231 |
|
|
$ |
246,271 |
|
|
$ |
992,087 |
|
|
$ |
837,221 |
|
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Revenue |
$ |
41,432 |
|
|
$ |
31,397 |
|
|
$ |
124,685 |
|
|
$ |
155,545 |
|
Less
amounts paid to sellers reflected in cost of revenue(2) |
— |
|
|
(16 |
) |
|
— |
|
|
617 |
|
Non-GAAP net
revenue |
$ |
41,432 |
|
|
$ |
31,413 |
|
|
$ |
124,685 |
|
|
$ |
154,928 |
|
(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 |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Net loss |
$ |
(2,230 |
) |
|
$ |
(23,817 |
) |
|
$ |
(61,822 |
) |
|
$ |
(154,783 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
Depreciation and amortization expense, excludingamortization of
acquired intangible assets |
8,186 |
|
|
7,810 |
|
|
32,153 |
|
|
31,443 |
|
Amortization of acquired intangibles |
797 |
|
|
1,261 |
|
|
3,185 |
|
|
4,782 |
|
Stock-based compensation expense |
3,266 |
|
|
4,316 |
|
|
16,282 |
|
|
20,504 |
|
Impairment of intangible assets and internal usesoftware |
— |
|
|
4,585 |
|
|
— |
|
|
4,585 |
|
Impairment of goodwill |
— |
|
|
— |
|
|
— |
|
|
90,251 |
|
Acquisition and related items |
— |
|
|
35 |
|
|
— |
|
|
303 |
|
Interest
income, net |
(211 |
) |
|
(244 |
) |
|
(988 |
) |
|
(908 |
) |
Foreign
exchange (gain) loss, net |
(26 |
) |
|
72 |
|
|
(389 |
) |
|
1,165 |
|
Provision
(benefit) for income taxes |
124 |
|
|
(252 |
) |
|
357 |
|
|
(1,762 |
) |
Adjusted EBITDA |
$ |
9,906 |
|
|
$ |
(6,234 |
) |
|
$ |
(11,222 |
) |
|
$ |
(4,420 |
) |
THE RUBICON PROJECT,
INC.RECONCILIATION OF NET LOSS TO NON-GAAP INCOME
(LOSS)(In
thousands)(unaudited)
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
Net loss |
$ |
(2,230 |
) |
|
$ |
(23,817 |
) |
|
$ |
(61,822 |
) |
|
$ |
(154,783 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
Acquisition and related items, including amortizationof acquired
intangibles |
797 |
|
|
1,296 |
|
|
3,185 |
|
|
5,085 |
|
Stock-based compensation expense |
3,266 |
|
|
4,316 |
|
|
16,282 |
|
|
20,504 |
|
Impairment of intangible assets and internal usesoftware |
— |
|
|
4,585 |
|
|
— |
|
|
4,585 |
|
Impairment of goodwill |
— |
|
|
— |
|
|
— |
|
|
90,251 |
|
Foreign
exchange (gain) loss, net |
(26 |
) |
|
72 |
|
|
(389 |
) |
|
1,165 |
|
Tax
effect of Non-GAAP adjustments (1) |
(17 |
) |
|
(65 |
) |
|
(81 |
) |
|
(152 |
) |
Non-GAAP income
(loss) |
$ |
1,790 |
|
|
$ |
(13,613 |
) |
|
$ |
(42,825 |
) |
|
$ |
(33,345 |
) |
(1 |
) |
Non-GAAP income (loss)
includes the estimated tax impact from the expense items
reconciling between net loss and non-GAAP income (loss). |
THE RUBICON PROJECT,
INC.RECONCILIATION OF GAAP NET LOSS PER SHARE TO
NON-GAAP EARNINGS (LOSS) PER SHARE(In thousands,
except per share amounts)(unaudited)
|
Three Months Ended |
|
Year Ended |
|
December 31,2018 |
|
December 31,2017 |
|
December 31,2018 |
|
December 31,2017 |
GAAP net loss per share
(1): |
|
|
|
|
|
|
|
Basic and
Diluted |
$ |
(0.04 |
) |
|
$ |
(0.48 |
) |
|
$ |
(1.23 |
) |
|
$ |
(3.17 |
) |
|
|
|
|
|
|
|
|
Non-GAAP income (loss)
(2) |
$ |
1,790 |
|
|
$ |
(13,613 |
) |
|
$ |
(42,825 |
) |
|
$ |
(33,345 |
) |
|
|
|
|
|
|
|
|
Reconciliation of
weighted-average shares used to compute netloss per share to
non-GAAP weighted average sharesoutstanding: |
|
|
|
|
|
|
|
Weighted-average shares
used to compute net loss per share: |
50,746 |
|
|
49,293 |
|
|
50,259 |
|
|
48,869 |
|
Dilutive
effect of weighted-average common stock options,RSAs, RSUs, and
ESPP(3) |
3,489 |
|
|
— |
|
|
— |
|
|
— |
|
Non-GAAP
weighted-average shares outstanding |
54,235 |
|
|
49,293 |
|
|
50,259 |
|
|
48,869 |
|
Non-GAAP earnings
(loss) per share |
$ |
0.03 |
|
|
$ |
(0.28 |
) |
|
$ |
(0.85 |
) |
|
$ |
(0.68 |
) |
(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 income (loss). |
(3) In most
periods in which net income is positive, the weighted-average
shares used to compute diluted earnings per share already include
the dilutive effect of common stock options, RSAs, RSUs,
acquisition related contingent and escrow shares, and ESPP using
the treasury stock method. In periods of GAAP net loss per
share, these shares would be anti-dilutive and are excluded from
the calculation of net loss per share. |
THE RUBICON PROJECT,
INC.REVENUE AND ADVERTISING SPEND BY
CHANNEL(In thousands, except
percentages)(unaudited)
|
Revenue |
|
Advertising Spend |
|
Three Months Ended |
|
Three Months Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
(in thousands, except
percentages) |
Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
$ |
18,586 |
|
|
45 |
% |
|
$ |
15,371 |
|
|
49 |
% |
|
$ |
131,496 |
|
|
44 |
% |
|
$ |
129,777 |
|
|
53 |
% |
Mobile |
22,846 |
|
|
55 |
|
|
16,026 |
|
|
51 |
|
|
169,735 |
|
|
56 |
|
|
116,494 |
|
|
47 |
|
Total |
$ |
41,432 |
|
|
100 |
% |
|
$ |
31,397 |
|
|
100 |
% |
|
$ |
301,231 |
|
|
100 |
% |
|
$ |
246,271 |
|
|
100 |
% |
|
Revenue |
|
Advertising Spend |
|
Year Ended |
|
Year Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
(in thousands, except
percentages) |
Channel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Desktop |
$ |
59,039 |
|
|
47 |
% |
|
$ |
84,327 |
|
|
54 |
% |
|
$ |
477,900 |
|
|
48 |
% |
|
$ |
475,258 |
|
|
57 |
% |
Mobile |
65,646 |
|
|
53 |
|
|
71,218 |
|
|
46 |
|
|
514,187 |
|
|
52 |
|
|
361,963 |
|
|
43 |
|
Total |
$ |
124,685 |
|
|
100 |
% |
|
$ |
155,545 |
|
|
100 |
% |
|
$ |
992,087 |
|
|
100 |
% |
|
$ |
837,221 |
|
|
100 |
% |
Investor Relations Contact
Nick Kormeluk
(949) 500-0003
nkormeluk@rubiconproject.com
Media Contact
Charlstie Veith
(516) 300-3569
press@rubiconproject.com
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