UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 2014
THE RUBICON PROJECT, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-36384 | 20-8881738 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 12181 Bluff Creek Drive, Fourth Floor Los Angeles, CA |
90094 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (310) 207-0272
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On October 23, 2014, The Rubicon Project, Inc. issued a press release announcing financial results for its fiscal quarter ended September 30, 2014. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:
| 99.1 | Press release dated October 23, 2014. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE RUBICON PROJECT, INC. | ||||
| Date: October 23, 2014 | By: | /s/ Todd Tappin | ||
| Todd Tappin | ||||
| Chief Operating Officer and Chief Financial Officer | ||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press release dated October 23, 2014. | |
Exhibit 99.1
Rubicon Project Announces Record Financial Results
Leader in Advertising Technology Reports 60% Revenue Growth; Raises Outlook
| • | Third quarter revenue was $32.2 million, up 60% year-over-year |
| • | Third quarter managed revenue1 was $168.2 million, up 43% year-over-year, including RTB growth of 75% year-over-year |
| • | Third quarter adjusted EBITDA2 was $4.8 million, up 656% year-over-year |
| • | Third quarter non-GAAP earnings per share2 was $0.05 |
LOS ANGELES, California – October 23, 2014 – The Rubicon Project, Inc. (NYSE: RUBI), a leader in advertising automation and real-time trading platforms for the buying and selling of advertising, today reported financial results for the quarter ended September 30, 2014.
“Our revenue performance in the third quarter of 2014 was the best in our history and our positive adjusted EBITDA was well ahead of forecast,” said Frank Addante, CEO, Founder, and Chief Product Architect of Rubicon Project.
“Our innovations in private exchanges, mobile, and now agency marketplaces, on top of our ongoing momentum in open RTB auction technologies, fueled our 60% growth in the quarter. Our team continues to deliver outstanding results as we execute our mission to automate the buying and selling of advertising and we believe we are ideally positioned to continue to benefit from our investments and future innovations during the seasonally strong fourth quarter and beyond.”
Q3 2014 Financial Results:
| • | Revenue was $32.2 million for the third quarter of 2014, an increase of 60% from $20.1 million for the third quarter of 2013. |
| • | Adjusted EBITDA2 was $4.8 million for the third quarter of 2014 compared to $0.6 million for the third quarter of 2013. |
| • | Net loss was $4.6 million for the third quarter of 2014 compared to a net loss of $4.9 million for the third quarter of 2013. |
| • | Net loss per share attributable to common stockholders was $0.14 for the third quarter of 2014, based on 33.7 million weighted-average shares outstanding. This compares to a net loss per share of $0.52 for the third quarter of 2013, which was based on 11.5 million weighted-average shares outstanding. |
| • | Non-GAAP earnings per share2 was $0.05 for the third quarter of 2014, based on 33.7 million non-GAAP weighted-average shares outstanding. This compares to a non-GAAP net loss per share of $0.05 for the third quarter 2013, which was based on 26.2 million non-GAAP weighted-average shares outstanding. |
Key Operational Measures:
| • | Managed revenue1 was $168.2 million for the third quarter of 2014, an increase of 43% from $117.6 million for the third quarter of 2013. |
| • | Take rate1 was 19.1% for the third quarter of 2014, compared to 17.1% for the third quarter of 2013. |
Guidance:
As of October 23, 2014, the Company is providing full year ending December 31, 2014 expectations and guidance as follows:
| • | Revenue between $122 million and $123 million; |
| • | Adjusted EBITDA2 between $9 million and $10 million; and |
| • | Non-GAAP loss per share2 between $0.06 and $0.03 based on approximately 32.1 million non-GAAP weighted-average shares outstanding. |
| 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 earnings (loss) per share are non-GAAP financial measures. Please see the discussion in the section called “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 October 23, 2014 at 2:00 PM (PT) / 5:00 PM (ET) to discuss the third quarter, 2014 financial results of operations. The conference call can be accessed at (877) 201-0168 (U.S.) or (647) 788-4901 (International), conference ID# 14030031. The call will also be broadcast simultaneously at http://investor.rubiconproject.com. Following completion of the call, a recorded replay of the webcast will be available on Rubicon Project’s website. Additional investor information can be accessed at http://investor.rubiconproject.com.
About The Rubicon Project, Inc.
Rubicon Project pioneered advertising automation. Its technology platform provides leading user reach and is used by hundreds of the world’s premium publishers and applications to connect with top brands around the globe. Rubicon Project’s mission is to automate the buying and selling of advertising by offering innovative technology products to connect buyers and sellers globally.
Headquartered in Los Angeles, Rubicon Project has offices worldwide. Learn more at RubiconProject.com. Twitter: @RubiconProject.
Note: The Rubicon Project and the Rubicon Project logo are registered service marks of The Rubicon Project, Inc. All other marks mentioned are the property of their respective owners.
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 innovating in private exchanges, mobile, and agency marketplaces; our belief that there is ongoing momentum in open RTB auction technologies; our belief that we are continuing to deliver outstanding results as we execute our mission to automate the buying and selling of advertising; and our belief that we are ideally positioned to continue to benefit from our investments and future innovations during the seasonally strong fourth quarter and beyond; 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 and duration of client relationships; business mix; sales growth; client utilization of our offerings; market conditions and opportunities; operational measures including managed revenue, paid impressions, average CPM, and take rate; 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 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 technologies and remain a market leader; our ability to attract and retain buyers and sellers and increase our business with them; the freedom of buyers and sellers to direct their spending and inventory to competing sources or 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 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 and to maintain our pricing and take rate; 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 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 captions “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports filed with the Securities and
Exchange Commission. Additional information will also be set forth in other filings we make from time to time with the SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this press release. 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. 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 with the Securities and Exchange Commission 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.
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 in accordance with generally accepted accounting principles in the United States (“GAAP”). 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, product mix, the implementation of new products, platforms and solution features, auction dynamics, and the overall development of the digital advertising ecosystem.
Financial Measures
This press release includes information relating to adjusted EBITDA and non-GAAP earnings (loss) per share, which are financial measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures are used by our management and board of directors, in addition to our GAAP results, to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. Management believes that these non-GAAP financial measures provide useful information about our core operating results and thus are appropriate to enhance the overall understanding of our past financial performance and our prospects for the future.
These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP earnings (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 earnings (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 income or expense, change in fair value of pre-IPO convertible preferred stock warrant liabilities, and other income or expense, which mainly consists of foreign exchange gains and losses, 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 income or expense, change in fair value of preferred stock warrant liabilities, foreign exchange gains and losses, certain other non-recurring income or expense such 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 may sometimes be considered 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:
| • | 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; 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; |
| • | 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 earnings (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding. Non-GAAP net income (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, and amortization of intangible assets. The non-GAAP weighted-average shares outstanding used to calculate non-GAAP earnings (loss) per share assume the net exercise of a preferred stock warrant and the conversion of each share of convertible preferred stock to one half share of common stock in connection with our initial public offering as if they had occurred at the beginning of each respective period presented, whereas, weighted-average shares outstanding used to calculate GAAP earnings (loss) per share reflect the net exercise and conversion as of April 7, the date our IPO closed. The weighted-average shares used to compute net loss per share, non-GAAP weighted-average shares outstanding used to compute non-GAAP earnings (loss) per share, and non-GAAP weighted-average shares outstanding used in our guidance for the full year non-GAAP earnings (loss) per share include the 6.4 million shares issued in our initial public offering from the date our IPO closed. 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 by taking into consideration all preferred stock ownership on an as-converted 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. Because of these limitations, we also consider the comparable GAAP financial measure of net loss attributable to common stockholders.
Investor Relations Contact
Derek Brown
ICR
(415) 430-2075
Investor@rubiconproject.com
Media Contact
Dallas Lawrence
Rubicon Project
(424) 230-7947
Press@rubiconproject.com
THE RUBICON PROJECT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
| September 30, 2014 | December 31, 2013 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 104,089 | $ | 29,956 | ||||
| Accounts receivable, net |
99,913 | 94,722 | ||||||
| Prepaid expenses and other current assets |
6,336 | 4,141 | ||||||
|
|
|
|
|
|||||
| TOTAL CURRENT ASSETS |
210,338 | 128,819 | ||||||
| Property and equipment, net |
14,111 | 8,712 | ||||||
| Internal use software development costs, net |
11,221 | 7,204 | ||||||
| Goodwill |
1,491 | 1,491 | ||||||
| Intangible assets, net |
180 | 510 | ||||||
| Other assets, non-current |
1,425 | 3,151 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 238,766 | $ | 149,887 | ||||
|
|
|
|
|
|||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||
| LIABILITIES |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ | 127,982 | $ | 120,198 | ||||
| Debt and capital lease obligations, current portion |
157 | 288 | ||||||
| Other current liabilities |
2,133 | 2,901 | ||||||
|
|
|
|
|
|||||
| TOTAL CURRENT LIABILITIES |
130,272 | 123,387 | ||||||
| Debt and capital leases, net of current portion |
— | 3,893 | ||||||
| Convertible preferred stock warrant liabilities |
— | 5,451 | ||||||
| Other liabilities, non-current |
1,674 | 996 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES |
131,946 | 133,727 | ||||||
|
|
|
|
|
|||||
| Convertible preferred stock |
— | 52,571 | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||
| Preferred stock |
— | — | ||||||
| Common stock |
— | — | ||||||
| Additional paid-in capital |
188,899 | 25,532 | ||||||
| Accumulated other comprehensive income |
62 | 96 | ||||||
| Accumulated deficit |
(82,141 | ) | (62,039 | ) | ||||
|
|
|
|
|
|||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |
106,820 | (36,411 | ) | |||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 238,766 | $ | 149,887 | ||||
|
|
|
|
|
|||||
THE RUBICON PROJECT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||
| Revenue |
$ | 32,165 | $ | 20,063 | $ | 83,463 | $ | 55,698 | ||||||||
| Expenses: |
||||||||||||||||
| Cost of revenue1 |
5,144 | 4,181 | 14,456 | 11,212 | ||||||||||||
| Sales and marketing1 |
11,540 | 6,405 | 30,863 | 18,767 | ||||||||||||
| Technology and development1 |
5,766 | 4,823 | 15,041 | 14,072 | ||||||||||||
| General and administrative1 |
15,157 | 7,603 | 42,130 | 17,963 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
37,607 | 23,012 | 102,490 | 62,014 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(5,442 | ) | (2,949 | ) | (19,027 | ) | (6,316 | ) | ||||||||
| Other (income) expense: |
||||||||||||||||
| Interest expense, net |
23 | 69 | 94 | 229 | ||||||||||||
| Change in fair value of preferred stock warrant liabilities |
— | 1,090 | 732 | 2,067 | ||||||||||||
| Foreign exchange (gain) loss, net |
(826 | ) | 763 | 104 | 413 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other (income) expense, net |
(803 | ) | 1,922 | 930 | 2,709 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss before income taxes |
(4,639 | ) | (4,871 | ) | (19,957 | ) | (9,025 | ) | ||||||||
| Provision (benefit) for income taxes |
(17 | ) | 74 | 145 | 187 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
(4,622 | ) | (4,945 | ) | (20,102 | ) | (9,212 | ) | ||||||||
| Cumulative preferred stock dividends |
— | (1,070 | ) | (1,116 | ) | (3,174 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss attributable to common stockholders |
$ | (4,622 | ) | $ | (6,015 | ) | $ | (21,218 | ) | $ | (12,386 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic and diluted net loss per share attributable to common stockholders |
$ | (0.14 | ) | $ | (0.52 | ) | $ | (0.81 | ) | $ | (1.08 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders |
33,673 | 11,544 | 26,130 | 11,433 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | Includes stock-based compensation expense as follows (in thousands): |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||
| Cost of revenue |
$ | 39 | $ | 24 | $ | 127 | $ | 64 | ||||||||
| Selling and marketing |
793 | 242 | 2,070 | 805 | ||||||||||||
| Technology and development |
530 | 396 | 1,257 | 1,183 | ||||||||||||
| General and administrative |
5,788 | 887 | 13,273 | 2,515 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total stock-based compensation |
$ | 7,150 | $ | 1,549 | $ | 16,727 | $ | 4,567 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
THE RUBICON PROJECT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
| Nine Months Ended | ||||||||
| September 30, 2014 | September 30, 2013 | |||||||
| OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (20,102 | ) | $ | (9,212 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities |
||||||||
| Depreciation and amortization |
8,123 | 6,133 | ||||||
| Stock-based compensation |
16,727 | 4,567 | ||||||
| Loss (gain) on disposal of property and equipment, net |
199 | (12 | ) | |||||
| Change in fair value of preferred stock warrant liabilities |
732 | 2,067 | ||||||
| Deferred income taxes |
(43 | ) | — | |||||
| Unrealized foreign currency (gain) loss |
(1,356 | ) | 663 | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(5,301 | ) | (2,504 | ) | ||||
| Prepaid expenses and other assets |
(1,936 | ) | (796 | ) | ||||
| Accounts payable and accrued expenses |
9,115 | 6,909 | ||||||
| Other liabilities |
(906 | ) | 976 | |||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
5,252 | 8,791 | ||||||
|
|
|
|
|
|||||
| INVESTING ACTIVITIES: |
||||||||
| Purchases of property and equipment |
(8,564 | ) | (5,441 | ) | ||||
| Capitalized internal use software development costs |
(6,619 | ) | (2,384 | ) | ||||
| Change in restricted cash |
100 | (1,200 | ) | |||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(15,083 | ) | (9,025 | ) | ||||
|
|
|
|
|
|||||
| FINANCING ACTIVITIES: |
||||||||
| Proceeds from the issuance of common stock in initial public offering, net of underwriting discounts and commissions |
89,733 | — | ||||||
| Payments of initial public offering costs |
(3,037 | ) | — | |||||
| Proceeds from exercise of stock options |
1,194 | 478 | ||||||
| Repayment of debt and capital lease obligations |
(4,025 | ) | (906 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
83,865 | (428 | ) | |||||
|
|
|
|
|
|||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH |
99 | 5 | ||||||
| CHANGE IN CASH AND CASH EQUIVALENTS |
74,133 | (657 | ) | |||||
| CASH—Beginning of period |
29,956 | 21,616 | ||||||
|
|
|
|
|
|||||
| CASH AND CASH EQUIVALENTS—End of period |
$ | 104,089 | $ | 20,959 | ||||
|
|
|
|
|
|||||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
||||||||
| Capitalized assets financed by accounts payable and accrued expenses |
$ | 1,124 | $ | — | ||||
| Leasehold improvements paid by landlord |
$ | 803 | $ | — | ||||
| Capitalized stock-based compensation |
$ | 492 | $ | 103 | ||||
| Conversion of preferred stock to common stock |
$ | 52,571 | $ | — | ||||
| Reclassification of preferred stock warrant liabilities to additional-paid-in-capital |
$ | 6,183 | $ | — | ||||
| Reclassification of deferred offering costs to additional-paid-in-capital |
$ | 3,533 | $ | — | ||||
THE RUBICON PROJECT, INC.
KEY OPERATIONAL AND FINANCIAL MEASURES
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||
| Operational Measures: |
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| Managed revenue (in thousands) |
$ | 168,213 | $ | 117,554 | $ | 451,319 | $ | 326,656 | ||||||||
| Take rate |
19.1 | % | 17.1 | % | 18.5 | % | 17.1 | % | ||||||||
| Financial Measures: |
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| Revenue (in thousands) |
$ | 32,165 | $ | 20,063 | $ | 83,463 | $ | 55,698 | ||||||||
| Adjusted EBITDA (in thousands) |
$ | 4,778 | $ | 632 | $ | 5,823 | $ | 4,697 | ||||||||
THE RUBICON PROJECT, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||
| Financial Measure: |
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| Net loss |
$ | (4,622 | ) | $ | (4,945 | ) | $ | (20,102 | ) | $ | (9,212 | ) | ||||
| Add back (deduct): |
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| Depreciation and amortization expense |
3,070 | 2,032 | 8,123 | 6,133 | ||||||||||||
| Stock-based compensation expense |
7,150 | 1,549 | 16,727 | 4,567 | ||||||||||||
| Acquisition and related items |
— | — | — | 313 | ||||||||||||
| Interest expense, net |
23 | 69 | 94 | 229 | ||||||||||||
| Change in fair value of preferred stock warrant liabilities |
— | 1,090 | 732 | 2,067 | ||||||||||||
| Foreign currency (gain) loss, net |
(826 | ) | 763 | 104 | 413 | |||||||||||
| Provision (benefit) for income taxes |
(17 | ) | 74 | 145 | 187 | |||||||||||
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| Adjusted EBITDA |
$ | 4,778 | $ | 632 | $ | 5,823 | $ | 4,697 | ||||||||
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THE RUBICON PROJECT, INC.
CALCULATION OF NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS TO NON-GAAP (EARNINGS) LOSS PER SHARE
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||
| Calculation of non-GAAP earnings (loss) per share: |
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| Net loss attributable to common stockholders |
$ | (4,622 | ) | $ | (6,015 | ) | $ | (21,218 | ) | $ | (12,386 | ) | ||||
| Add back (deduct): |
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| Change in fair value of preferred stock warrant liabilities |
— | 1,090 | 732 | 2,067 | ||||||||||||
| Cumulative preferred stock dividends |
— | 1,070 | 1,116 | 3,174 | ||||||||||||
| Stock-based compensation |
7,150 | 1,549 | 16,727 | 4,567 | ||||||||||||
| Acquisition and related items |
— | — | — | 313 | ||||||||||||
| Foreign currency (gain) loss, net |
(826 | ) | 763 | 104 | 413 | |||||||||||
| Amortization of intangible assets |
68 | 168 | 329 | 744 | ||||||||||||
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| Non-GAAP net income (loss) |
$ | 1,770 | $ | (1,375 | ) | $ | (2,210 | ) | $ | (1,108 | ) | |||||
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| Non-GAAP earnings (loss) per share |
$ | 0.05 | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.04 | ) | |||||
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| Non-GAAP weighted-average shares outstanding |
33,673 | 26,240 | 31,298 | 26,129 | ||||||||||||
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| Reconciliation of basic and diluted weighted-average shares used to compute net earnings (loss) per share attributable to common stockholders to non-GAAP weighted-average shares outstanding: |
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| Basic and diluted weighted-average shares used to compute net earnings (loss) per share attributable to common stockholders |
33,673 | 11,544 | 26,130 | 11,433 | ||||||||||||
| Conversion of preferred stock, weighted-average |
— | 14,410 | 5,067 | 14,410 | ||||||||||||
| Conversion of net exercised preferred stock warrant, weighted-average |
— | 286 | 101 | 286 | ||||||||||||
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| Non-GAAP weighted-average shares outstanding |
33,673 | 26,240 | 31,298 | 26,129 | ||||||||||||
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