Delaware | 001-36384 | 20-8881738 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
12181 Bluff Creek Drive, 4th Floor | ||
Los Angeles, CA 90094 | ||
(Address of principal executive offices, including zip code) | ||
(310) 207-0272 | ||
(Registrant’s telephone number, including area code) | ||
Not applicable | ||
(Former name or former address, if changed since last report) |
(d) | Exhibits |
Exhibit Number | Description | |
99.1 | Press release dated August 2, 2016 |
THE RUBICON PROJECT, INC. | ||||
Date: | August 2, 2016 | By: | /s/ David Day | |
David Day | ||||
Chief Financial Officer and Chief Accounting Officer |
Exhibit Number | Description | |
99.1 | Press release dated August 2, 2016 |
• | Q2 GAAP revenue of $70.5 million, an increase of 33% year-over-year |
• | Q2 non-GAAP net revenue(1) of $65.1 million, an increase of 34% year-over-year |
• | Q2 GAAP net loss of ($2.7) million, an improvement of 78% year-over-year |
• | Q2 Adjusted EBITDA(1) of $18.4 million, an increase of 177% year-over-year, and representing an Adjusted EBITDA margin(2) of 28% |
• | Q2 GAAP diluted loss per share(3) of ($0.06), an improvement of 80% year-over-year |
• | Q2 non-GAAP earnings per share(1) of $0.17, an increase of 183% year-over-year |
Second Quarter 2016 Results Summary | ||||||
(in millions, except per share amounts and percentages) | ||||||
Three Months Ended | ||||||
June 30, 2016 | June 30, 2015 | Change | ||||
GAAP revenue | $70.5 | $53.0 | 33% | |||
Managed revenue (advertising spending)(1) | $257.4 | $227.2 | 13% | |||
Non-GAAP net revenue(1) | $65.1 | $48.5 | 34% | |||
Take rate(4) | 25.3% | 21.4% | 4 ppt | |||
Net loss(3) | ($2.7) | ($11.9) | (78%) | |||
Adjusted EBITDA(1) | $18.4 | $6.7 | 177% | |||
Adjusted EBITDA margin(2) | 28% | 14% | 15 ppt | |||
Diluted loss per share(3) | ($0.06) | ($0.30) | (80%) | |||
Non-GAAP earnings per share(1) | $0.17 | $0.06 | 183% |
• | The Company had cash and liquid assets of $186.9 million (including cash and cash equivalents of $147.2 million and marketable securities of $39.7 million) and was debt free as of June 30, 2016. |
Definitions: | |
(1) | Managed revenue (advertising spending), non-GAAP net revenue, Adjusted EBITDA, and non-GAAP earnings per share 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) | Adjusted EBITDA margin is calculated as Adjusted EBITDA divided 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" at the end of this press release. |
(3) | Net loss, diluted loss per share, and non-GAAP EPS for the second quarter of 2016 include a tax provision of $4.9 million. Our outlook does not currently reflect a tax provision or benefit in future periods; however, our actual results may materially differ from these expectations. |
(4) | Take rate is an operational performance measure calculated as non-GAAP net revenue divided by managed revenue (advertising spending). Reconciliations for revenue to both managed revenue (advertising spending) and non-GAAP net revenue are included at the end of this press release. For further discussion, please see "Non-GAAP Financial Measures" at the end of this press release. 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 types, the implementation of new products, platforms and solution features, auction dynamics, competitive factors, and the overall development of the digital advertising ecosystem. |
Q3 and Full Year 2016 Outlook | ||||
Q3 2016 | Full Year 2016 | |||
GAAP revenue | $64 - $70 million | $275 - $305 million | ||
Non-GAAP net revenue(5) | $60 - $64 million | $260 - $275 million | ||
Adjusted EBITDA(6) | $9 - $11 million | $60 - $68 million | ||
Non-GAAP earnings per share(6) | $0.07 - $0.09 | $0.75 - $0.85 |
Additional Notes on Q3 and Full Year 2016 Outlook: | |
(5) | Non-GAAP net revenue is calculated as GAAP revenue less amounts we pay sellers that are included within cost of revenue for the portion of our revenue reported on a gross basis. |
(6) | We do not provide a reconciliation of our non-GAAP financial guidance for Adjusted EBITDA and non-GAAP earnings per share to the corresponding GAAP measures because the amount and timing of many future charges that impact these measures (such as asset impairment, amortization of future acquired intangible assets, acquisition-related charges, foreign exchange (gain) loss, net, stock-based compensation, and provision or benefit for income taxes) are variable, uncertain, or out of our control and therefore cannot be reasonably predicted without unreasonable effort, if at all. In addition, we believe such reconciliations could imply a degree of precision that might be confusing or misleading to investors. |
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: | 10088173 |
Webcast link: | http://investor.rubiconproject.com, under "Events and Presentations" |
• | 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, and Adjusted EBITDA is also used as a metric for determining payment of cash incentive compensation; and |
• | 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. |
• | stock-based compensation is a non-cash charge and is 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; |
• | 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; and |
• | other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
June 30, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 147,188 | $ | 116,499 | ||||
Accounts receivable, net | 158,333 | 218,235 | ||||||
Marketable securities | 39,700 | 23,349 | ||||||
Prepaid expenses and other current assets | 7,303 | 7,624 | ||||||
TOTAL CURRENT ASSETS | 352,524 | 365,707 | ||||||
Property and equipment, net | 24,845 | 25,403 | ||||||
Internal use software development costs, net | 15,789 | 13,929 | ||||||
Goodwill | 65,705 | 65,705 | ||||||
Intangible assets, net | 41,923 | 50,783 | ||||||
Marketable securities and other assets, non-current | 1,900 | 15,209 | ||||||
TOTAL ASSETS | $ | 502,686 | $ | 536,736 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 188,557 | $ | 247,967 | ||||
Other current liabilities | 2,556 | 2,196 | ||||||
TOTAL CURRENT LIABILITIES | 191,113 | 250,163 | ||||||
Deferred tax liability, net | 6,774 | 6,225 | ||||||
Other liabilities, non-current | 1,954 | 2,247 | ||||||
TOTAL LIABILITIES | 199,841 | 258,635 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Preferred stock | — | — | ||||||
Common stock | — | — | ||||||
Additional paid-in capital | 383,570 | 358,406 | ||||||
Accumulated other comprehensive loss | (42 | ) | (15 | ) | ||||
Accumulated deficit | (80,683 | ) | (80,290 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY | 302,845 | 278,101 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 502,686 | $ | 536,736 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Revenue | $ | 70,511 | $ | 53,046 | $ | 139,743 | $ | 90,224 | ||||||||
Expenses: | ||||||||||||||||
Costs of revenue(1)(2) | 17,540 | 14,009 | 34,323 | 20,570 | ||||||||||||
Sales and marketing(1)(2) | 21,966 | 22,161 | 43,244 | 37,210 | ||||||||||||
Technology and development(1)(2) | 13,294 | 10,390 | 25,737 | 18,804 | ||||||||||||
General and administrative(1)(2) | 16,390 | 17,984 | 36,995 | 32,263 | ||||||||||||
Total expenses | 69,190 | 64,544 | 140,299 | 108,847 | ||||||||||||
Income (loss) from operations | 1,321 | (11,498 | ) | (556 | ) | (18,623 | ) | |||||||||
Other (income) expense | ||||||||||||||||
Interest (income) expense, net | (131 | ) | 11 | (225 | ) | 23 | ||||||||||
Other income | (197 | ) | — | (197 | ) | — | ||||||||||
Foreign exchange (gain) loss, net | (578 | ) | 847 | (317 | ) | (1,343 | ) | |||||||||
Total other (income) expense, net | (906 | ) | 858 | (739 | ) | (1,320 | ) | |||||||||
Income (loss) before income taxes | 2,227 | (12,356 | ) | 183 | (17,303 | ) | ||||||||||
Provision (benefit) for income taxes | 4,904 | (413 | ) | 576 | (329 | ) | ||||||||||
Net loss | $ | (2,677 | ) | $ | (11,943 | ) | $ | (393 | ) | $ | (16,974 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.30 | ) | $ | (0.01 | ) | $ | (0.45 | ) | ||||
Diluted | $ | (0.06 | ) | $ | (0.30 | ) | $ | (0.01 | ) | $ | (0.45 | ) | ||||
Weighted-average shares used to compute net loss per share: | ||||||||||||||||
Basic | 46,341 | 39,414 | 45,502 | 37,596 | ||||||||||||
Diluted | 46,341 | 39,414 | 45,502 | 37,596 |
(1) | Stock-based compensation expense included in our expenses was as follows: |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Cost of revenue | $ | 108 | $ | 70 | $ | 170 | $ | 112 | ||||||||
Sales and marketing | 2,543 | 1,858 | 4,657 | 2,983 | ||||||||||||
Technology and development | 1,800 | 1,116 | 3,174 | 1,906 | ||||||||||||
General and administrative | 2,675 | 4,695 | 7,516 | 8,236 | ||||||||||||
Total stock-based compensation expense | $ | 7,126 | $ | 7,739 | $ | 15,517 | $ | 13,237 |
(2) | Depreciation and amortization expense included in our expenses was as follows: |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Cost of revenue | $ | 6,720 | $ | 5,258 | $ | 12,668 | $ | 8,729 | ||||||||
Sales and marketing | 1,970 | 3,240 | 3,562 | 3,745 | ||||||||||||
Technology and development | 606 | 479 | 1,204 | 733 | ||||||||||||
General and administrative | 486 | 482 | 974 | 642 | ||||||||||||
Total depreciation and amortization expense | $ | 9,782 | $ | 9,459 | $ | 18,408 | $ | 13,849 |
Six Months Ended | |||||||
June 30, 2016 | June 30, 2015 | ||||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (393 | ) | $ | (16,974 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 18,408 | 13,849 | |||||
Stock-based compensation | 15,517 | 13,237 | |||||
Loss on disposal of property and equipment, net | 5 | 29 | |||||
Change in fair value of contingent consideration | — | 3 | |||||
Unrealized foreign currency (gains) losses, net | (1,179 | ) | 508 | ||||
Deferred income taxes | 557 | (11 | ) | ||||
Changes in operating assets and liabilities, net of effect of business acquisitions: | |||||||
Accounts receivable | 59,638 | (1,007 | ) | ||||
Prepaid expenses and other assets | (113 | ) | 97 | ||||
Accounts payable and accrued expenses | (59,252 | ) | 19,845 | ||||
Other liabilities | 62 | (950 | ) | ||||
Net cash provided by operating activities | 33,250 | 28,626 | |||||
INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment, net | (3,933 | ) | (4,246 | ) | |||
Capitalized internal use software development costs | (5,029 | ) | (4,061 | ) | |||
Acquisitions, net of cash acquired | — | (8,647 | ) | ||||
Investments in available-for-sale securities | (15,687 | ) | (18,052 | ) | |||
Maturities of available-for-sale securities | 12,800 | — | |||||
Change in restricted cash | 256 | 1,100 | |||||
Net cash used by investing activities | (11,593 | ) | (33,906 | ) | |||
FINANCING ACTIVITIES: | |||||||
Proceeds from exercise of stock options | 12,859 | 6,710 | |||||
Proceeds from issuance of common stock under employee stock purchase plan | 1,137 | 759 | |||||
Taxes paid related to net share settlement | (4,886 | ) | — | ||||
Repayment of debt and capital lease obligations | — | (105 | ) | ||||
Net cash provided by financing activities | 9,110 | 7,364 | |||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (78 | ) | (46 | ) | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 30,689 | 2,038 | |||||
CASH AND CASH EQUIVALENTS--Beginning of period | 116,499 | 97,196 | |||||
CASH AND CASH EQUIVALENTS--End of period | $ | 147,188 | $ | 99,234 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Capitalized assets financed by accounts payable and accrued expenses | $ | 1,698 | $ | 1,910 | |||
Capitalized stock-based compensation | $ | 537 | $ | 360 | |||
Common stock and options issued for business acquisitions | $ | — | $ | 76,795 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Revenue | $ | 70,511 | $ | 53,046 | $ | 139,743 | $ | 90,224 | ||||||||
Plus amounts paid to sellers(1) | 186,902 | 174,106 | 366,167 | 334,148 | ||||||||||||
Managed revenue (advertising spending) | $ | 257,413 | $ | 227,152 | $ | 505,910 | $ | 424,372 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Revenue | $ | 70,511 | $ | 53,046 | $ | 139,743 | $ | 90,224 | ||||||||
Less amounts paid to sellers reflected in cost of revenue(2) | 5,403 | 4,502 | 11,075 | 4,502 | ||||||||||||
Non-GAAP net revenue | $ | 65,108 | $ | 48,544 | $ | 128,668 | $ | 85,722 |
(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. Before our acquisition of Chango in April 2015, we recorded all revenue on a net basis and therefore payments to sellers were not included in cost of revenue prior to April 2015. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Net loss | $ | (2,677 | ) | $ | (11,943 | ) | $ | (393 | ) | $ | (16,974 | ) | ||||
Add back (deduct): | ||||||||||||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets | 5,190 | 4,191 | 9,759 | 7,565 | ||||||||||||
Amortization of acquired intangibles | 4,592 | 5,268 | 8,649 | 6,284 | ||||||||||||
Stock-based compensation expense | 7,126 | 7,739 | 15,517 | 13,237 | ||||||||||||
Acquisition and related items | 13 | 967 | 331 | 2,396 | ||||||||||||
Interest (income) expense, net | (131 | ) | 11 | (225 | ) | 23 | ||||||||||
Foreign currency (gain) loss, net | (578 | ) | 847 | (317 | ) | (1,343 | ) | |||||||||
Provision (benefit) for income taxes | 4,904 | (413 | ) | 576 | (329 | ) | ||||||||||
Adjusted EBITDA | $ | 18,439 | $ | 6,667 | $ | 33,897 | $ | 10,859 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
Net loss | $ | (2,677 | ) | $ | (11,943 | ) | $ | (393 | ) | $ | (16,974 | ) | ||||
Add back (deduct): | ||||||||||||||||
Stock-based compensation expense | 7,126 | 7,739 | 15,517 | 13,237 | ||||||||||||
Acquisition and related items, including amortization of acquired intangibles | 4,605 | 6,235 | 8,980 | 8,680 | ||||||||||||
Foreign currency (gain) loss, net | (578 | ) | 847 | (317 | ) | (1,343 | ) | |||||||||
Non-GAAP net income | $ | 8,476 | $ | 2,878 | $ | 23,787 | $ | 3,600 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
GAAP net loss per share (1): | ||||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.30 | ) | $ | (0.01 | ) | $ | (0.45 | ) | ||||
Diluted | $ | (0.06 | ) | $ | (0.30 | ) | $ | (0.01 | ) | $ | (0.45 | ) | ||||
Non-GAAP net income(2) | $ | 8,476 | $ | 2,878 | $ | 23,787 | $ | 3,600 | ||||||||
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 diluted loss per share | 46,341 | 39,414 | 45,502 | 37,596 | ||||||||||||
Dilutive effect of weighted-average common stock options, RSAs, and RSUs(3) | 3,003 | 4,278 | 3,117 | 4,111 | ||||||||||||
Dilutive effect of weighted-average acquisition-related contingent shares(3) | — | 1,552 | — | 1,110 | ||||||||||||
Dilutive effect of weighted-average acquisition related escrow shares(3) | 635 | 638 | 699 | 381 | ||||||||||||
Dilutive effect of weighted-average ESPP(3) | 26 | 28 | 22 | 28 | ||||||||||||
Non-GAAP weighted-average shares outstanding | $ | 50,005 | $ | 45,910 | $ | 49,340 | $ | 43,226 | ||||||||
Non-GAAP earnings per diluted share | $ | 0.17 | $ | 0.06 | $ | 0.48 | $ | 0.08 |
(1) | Calculated as net loss divided by basic and diluted 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 income. |
(3) | In most periods in which net income (loss) 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. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
(in thousands) | ||||||||||||||||
Managed revenue (advertising spending) by inventory type: | ||||||||||||||||
Real time bidding (RTB) | $ | 194,528 | $ | 170,307 | $ | 387,631 | $ | 320,004 | ||||||||
Orders | 53,880 | 38,948 | 95,994 | 68,360 | ||||||||||||
Static bidding | 9,005 | 17,897 | 22,285 | 36,008 | ||||||||||||
Total managed revenue (advertising spending) | $ | 257,413 | $ | 227,152 | $ | 505,910 | $ | 424,372 | ||||||||
Managed revenue (advertising spending) by channel: | ||||||||||||||||
Desktop | $ | 172,453 | $ | 176,574 | $ | 347,119 | $ | 334,732 | ||||||||
Mobile | 84,960 | 50,578 | 158,791 | 89,640 | ||||||||||||
Total managed revenue (advertising spending) | $ | 257,413 | $ | 227,152 | $ | 505,910 | $ | 424,372 |
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||
Managed revenue (advertising spending) by inventory type: | ||||||||||||
RTB | 76 | % | 75 | % | 77 | % | 75 | % | ||||
Orders | 21 | % | 17 | % | 19 | % | 16 | % | ||||
Static bidding | 3 | % | 8 | % | 4 | % | 9 | % | ||||
Total managed revenue (advertising spending) | 100 | % | 100 | % | 100 | % | 100 | % | ||||
Managed revenue (advertising spending) by channel: | ||||||||||||
Desktop | 67 | % | 78 | % | 69 | % | 79 | % | ||||
Mobile | 33 | % | 22 | % | 31 | % | 21 | % | ||||
Total managed revenue (advertising spending) | 100 | % | 100 | % | 100 | % | 100 | % |