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 1, 2017 |
THE RUBICON PROJECT, INC. | ||||
Date: | August 1, 2017 | By: | /s/ David Day | |
David Day | ||||
Chief Financial Officer and Chief Accounting Officer |
Exhibit Number | Description | |
99.1 | Press release dated August 1, 2017 |
• | Acquired nToggle for $38.5 million in cash to help DSPs identify and target key audiences more effectively, win more auctions, and spend more with our publisher and app clients. |
• | Completed integration of Amazon Publisher Services’ Transparent Ad Marketplace header bidding solution. |
• | Selected by British Telecom (BT) to expand digital presence with enhanced programmatic offering. |
• | Revenue was $42.9 million, compared to $70.5 million for the second quarter of 2016; Non-GAAP net revenue(1) was $42.9 million, compared to $65.1 million for the second quarter of 2016. |
• | Net loss(2) was $11.6 million, or loss per share(2) of $0.24, compared to net loss of $2.7 million, or loss per share of $0.06 for the second quarter of 2016. The net loss for the second quarter of 2017 included restructuring and other exits costs of $1.6 million. |
• | Adjusted EBITDA(1) was $3.0 million, compared to Adjusted EBITDA of $18.4 million for the second quarter of 2016. |
• | Non-GAAP loss per share(1)(2) was $0.10, compared to $0.28 earnings per share for the second quarter of 2016. |
Second Quarter 2017 Results Summary | ||||||
(in millions, except per share amounts and percentages) | ||||||
Three Months Ended | ||||||
June 30, 2017 | June 30, 2016 | Change | ||||
Revenue | $42.9 | $70.5 | (39)% | |||
Advertising spend(1) | $204.4 | $257.4 | (21)% | |||
Non-GAAP net revenue(1) | $42.9 | $65.1 | (34)% | |||
Take rate(4) | 21.0% | 25.3% | (430 bps) | |||
Net loss (2) | ($11.6) | ($2.7) | nm | |||
Adjusted EBITDA(1) | $3.0 | $18.4 | (84)% | |||
Adjusted EBITDA margin(3) | 7% | 28% | (21 ppt) | |||
Basic and Diluted loss per share (2) | ($0.24) | ($0.06) | nm | |||
Non-GAAP earnings (loss) per share(1)(2) | ($0.10) | $0.28 | (136)% |
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) | Net loss, diluted loss per share and non-GAAP earnings per share for the second quarter 2017 and second quarter 2016 include a tax provision of $0.1 million and $4.9 million, respectively. In addition, non-GAAP earnings per share includes the tax effect of non-GAAP adjustments for the second quarter 2017 and second quarter of 2016 resulting in benefits of $0.04 million and $5.4 million, respectively. |
(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 income (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." |
(4) | 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 additional fee reductions or alternative pricing models we may implement in the future; and the overall development of the digital advertising ecosystem. |
nm | not meaningful |
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: | 10110615 |
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. 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. |
• | 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. |
June 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 165,241 | $ | 149,423 | ||||
Marketable securities | 27,365 | 40,550 | ||||||
Accounts receivable, net | 138,963 | 192,064 | ||||||
Prepaid expenses and other current assets | 10,757 | 9,540 | ||||||
TOTAL CURRENT ASSETS | 342,326 | 391,577 | ||||||
Property and equipment, net | 34,107 | 36,246 | ||||||
Internal use software development costs, net | 13,493 | 16,522 | ||||||
Other assets, non-current | 1,892 | 2,921 | ||||||
Intangible assets, net | 4,440 | 6,804 | ||||||
Goodwill | 65,705 | 65,705 | ||||||
TOTAL ASSETS | $ | 461,963 | $ | 519,775 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 174,031 | $ | 214,903 | ||||
Other current liabilities | 3,193 | 3,534 | ||||||
TOTAL CURRENT LIABILITIES | 177,224 | 218,437 | ||||||
Deferred tax liability, net | 42 | 42 | ||||||
Other liabilities, non-current | 1,736 | 1,783 | ||||||
TOTAL LIABILITIES | 179,002 | 220,262 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Additional paid-in capital | 409,360 | 398,787 | ||||||
Accumulated other comprehensive loss | (3 | ) | (273 | ) | ||||
Accumulated deficit | (126,396 | ) | (99,001 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY | 282,961 | 299,513 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 461,963 | $ | 519,775 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Revenue | $ | 42,922 | $ | 70,511 | $ | 88,937 | $ | 139,743 | ||||||||
Expenses (1)(2): | ||||||||||||||||
Cost of revenue | 13,698 | 17,540 | 28,386 | 34,323 | ||||||||||||
Sales and marketing | 12,529 | 21,966 | 27,157 | 43,244 | ||||||||||||
Technology and development | 12,044 | 13,294 | 24,797 | 25,737 | ||||||||||||
General and administrative | 14,355 | 16,390 | 29,435 | 36,995 | ||||||||||||
Restructuring and other exit costs | 1,621 | — | 5,959 | — | ||||||||||||
Total expenses | 54,247 | 69,190 | 115,734 | 140,299 | ||||||||||||
Income (loss) from operations | (11,325 | ) | 1,321 | (26,797 | ) | (556 | ) | |||||||||
Other (income) expense: | ||||||||||||||||
Interest income, net | (228 | ) | (131 | ) | (395 | ) | (225 | ) | ||||||||
Other income | (167 | ) | (197 | ) | (379 | ) | (197 | ) | ||||||||
Foreign exchange (gain) loss, net | 479 | (578 | ) | 851 | (317 | ) | ||||||||||
Total other (income) expense, net | 84 | (906 | ) | 77 | (739 | ) | ||||||||||
Income (loss) before income taxes | (11,409 | ) | 2,227 | (26,874 | ) | 183 | ||||||||||
Provision for income taxes | 146 | 4,904 | 521 | 576 | ||||||||||||
Net loss | $ | (11,555 | ) | $ | (2,677 | ) | $ | (27,395 | ) | $ | (393 | ) | ||||
Net loss per share: | ||||||||||||||||
Basic and Diluted | $ | (0.24 | ) | $ | (0.06 | ) | $ | (0.56 | ) | $ | (0.01 | ) | ||||
Weighted-average shares used to compute net loss per share: | ||||||||||||||||
Basic and Diluted | 48,783 | 46,341 | 48,559 | 45,502 |
(1) Stock-based compensation expense included in our expenses was as follows: |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Cost of revenue | $ | 96 | $ | 108 | $ | 180 | $ | 170 | ||||||||
Sales and marketing | 974 | 2,543 | 2,409 | 4,657 | ||||||||||||
Technology and development | 981 | 1,800 | 2,056 | 3,174 | ||||||||||||
General and administrative | 2,628 | 2,675 | 5,337 | 7,516 | ||||||||||||
Restructuring and other exit costs | 624 | — | 1,560 | — | ||||||||||||
Total stock-based compensation expense | $ | 5,303 | $ | 7,126 | $ | 11,542 | $ | 15,517 |
(2) Depreciation and amortization expense included in our expenses was as follows: |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Cost of revenue | $ | 8,045 | $ | 6,720 | $ | 16,424 | $ | 12,668 | ||||||||
Sales and marketing | 286 | 1,970 | 753 | 3,562 | ||||||||||||
Technology and development | 331 | 606 | 997 | 1,204 | ||||||||||||
General and administrative | 193 | 486 | 802 | 974 | ||||||||||||
Total depreciation and amortization expense | $ | 8,855 | $ | 9,782 | $ | 18,976 | $ | 18,408 |
Six Months Ended | |||||||
June 30, 2017 | June 30, 2016 | ||||||
OPERATING ACTIVITIES: | |||||||
Net loss | $ | (27,395 | ) | $ | (393 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 18,976 | 18,408 | |||||
Stock-based compensation | 11,542 | 15,517 | |||||
Loss on disposal of property and equipment | 271 | 5 | |||||
Provision for doubtful accounts | 566 | 594 | |||||
Unrealized foreign currency gains, net | 1,130 | (1,179 | ) | ||||
Deferred income taxes | 274 | 557 | |||||
Changes in operating assets and liabilities, net of effect of business acquisitions: | |||||||
Accounts receivable | 52,917 | 59,044 | |||||
Prepaid expenses and other assets | (469 | ) | (113 | ) | |||
Accounts payable and accrued expenses | (44,561 | ) | (59,252 | ) | |||
Other liabilities | (446 | ) | 62 | ||||
Net cash provided by operating activities | 12,805 | 33,250 | |||||
INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (4,839 | ) | (3,933 | ) | |||
Capitalized internal use software development costs | (4,327 | ) | (5,029 | ) | |||
Investments in available-for-sale securities | (31,789 | ) | (15,687 | ) | |||
Maturities of available-for-sale securities | 45,050 | 12,800 | |||||
Net cash provided by (used in) investing activities | 4,095 | (11,849 | ) | ||||
FINANCING ACTIVITIES: | |||||||
Proceeds from exercise of stock options | 384 | 12,859 | |||||
Proceeds from issuance of common stock under employee stock purchase plan | 444 | 1,137 | |||||
Taxes paid related to net share settlement | (2,048 | ) | (4,886 | ) | |||
Net cash provided by (used in) financing activities | (1,220 | ) | 9,110 | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 140 | (78 | ) | ||||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 15,820 | 30,433 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | 149,498 | 116,832 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $ | 165,318 | $ | 147,265 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Capitalized assets financed by accounts payable and accrued expenses | 3,944 | 1,698 | |||||
Capitalized stock-based compensation | 251 | 537 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Revenue | $ | 42,922 | $ | 70,511 | $ | 88,937 | $ | 139,743 | ||||||||
Plus amounts paid to sellers(1) | 161,469 | 186,902 | 306,994 | 366,167 | ||||||||||||
Advertising spend | $ | 204,391 | $ | 257,413 | $ | 395,931 | $ | 505,910 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Revenue | $ | 42,922 | $ | 70,511 | $ | 88,937 | $ | 139,743 | ||||||||
Less amounts paid to sellers reflected in cost of revenue(2) | — | 5,403 | 633 | 11,075 | ||||||||||||
Non-GAAP net revenue | $ | 42,922 | $ | 65,108 | $ | 88,304 | $ | 128,668 |
(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. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Net loss | $ | (11,555 | ) | $ | (2,677 | ) | $ | (27,395 | ) | $ | (393 | ) | ||||
Add back (deduct): | ||||||||||||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets | 8,076 | 5,190 | 16,612 | 9,759 | ||||||||||||
Amortization of acquired intangibles | 779 | 4,592 | 2,364 | 8,649 | ||||||||||||
Stock-based compensation expense | 5,303 | 7,126 | 11,542 | 15,517 | ||||||||||||
Acquisition and related items | — | 13 | — | 331 | ||||||||||||
Interest income, net | (228 | ) | (131 | ) | (395 | ) | (225 | ) | ||||||||
Foreign currency (gain) loss, net | 479 | (578 | ) | 851 | (317 | ) | ||||||||||
Provision for income taxes | 146 | 4,904 | 521 | 576 | ||||||||||||
Adjusted EBITDA | $ | 3,000 | $ | 18,439 | $ | 4,100 | $ | 33,897 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Net loss | $ | (11,555 | ) | $ | (2,677 | ) | $ | (27,395 | ) | $ | (393 | ) | ||||
Add back (deduct): | ||||||||||||||||
Stock-based compensation expense | 5,303 | 7,126 | 11,542 | 15,517 | ||||||||||||
Acquisition and related items, including amortization of acquired intangibles | 779 | 4,605 | 2,364 | 8,980 | ||||||||||||
Foreign currency (gain) loss, net | 479 | (578 | ) | 851 | (317 | ) | ||||||||||
Tax effect of Non-GAAP adjustments (1) | 35 | 5,353 | (9 | ) | 838 | |||||||||||
Non-GAAP net income (loss) | (4,959 | ) | 13,829 | (12,647 | ) | 24,625 |
(1 | ) | Non-GAAP net income for the second quarter of 2017 includes the estimated tax impact from the expense items reconciling between net income (loss) and non-GAAP net income (loss). For consistency, 2016 historical non-GAAP income (loss) has been adjusted to reflect the estimated tax impact of those items. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
GAAP net loss per share (1): | ||||||||||||||||
Basic and Diluted | $ | (0.24 | ) | $ | (0.06 | ) | $ | (0.56 | ) | $ | (0.01 | ) | ||||
Non-GAAP net income (loss) (2) | $ | (4,959 | ) | $ | 13,829 | $ | (12,647 | ) | $ | 24,625 | ||||||
Reconciliation of weighted-average shares used to compute net income (loss) per share to non-GAAP weighted average shares outstanding: | ||||||||||||||||
Weighted-average shares used to compute net income (loss) per share: | 48,783 | 46,341 | 48,559 | 45,502 | ||||||||||||
Dilutive effect of weighted-average common stock options, RSAs, and RSUs(3) | — | 3,003 | — | 3,117 | ||||||||||||
Dilutive effect of weighted-average escrow shares | — | 635 | — | 699 | ||||||||||||
Dilutive effect of weighted-average ESPP(3) | — | 26 | — | 22 | ||||||||||||
Non-GAAP weighted-average shares outstanding | 48,783 | 50,005 | 48,559 | 49,340 | ||||||||||||
Non-GAAP earnings (loss) per share | $ | (0.10 | ) | $ | 0.28 | $ | (0.26 | ) | $ | 0.50 |
(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 income (loss) to non-GAAP net income. |
(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. |
Revenue | Advertising Spend | |||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Channel: | ||||||||||||||||||||||||||||
Desktop | $ | 23,746 | 55 | % | $ | 46,107 | 65 | % | $ | 118,517 | 58 | % | $ | 172,453 | 67 | % | ||||||||||||
Mobile | 19,176 | 45 | 24,404 | 35 | 85,874 | 42 | 84,960 | 33 | ||||||||||||||||||||
Total | $ | 42,922 | 100 | % | $ | 70,511 | 100 | % | $ | 204,391 | 100 | % | $ | 257,413 | 100 | % |
Revenue | Advertising Spend | |||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||
Channel: | ||||||||||||||||||||||||||||
Desktop | $ | 52,075 | 59 | % | $ | 92,988 | 67 | % | $ | 242,156 | 61 | % | $ | 347,119 | 69 | % | ||||||||||||
Mobile | 36,862 | 41 | 46,755 | 33 | 153,775 | 39 | 158,791 | 31 | ||||||||||||||||||||
Total | $ | 88,937 | 100 | % | $ | 139,743 | 100 | % | $ | 395,931 | 100 | % | $ | 505,910 | 100 | % |