TubeMogul Reports Financial Results for Second Quarter 2016
"We saw very strong growth in our non-desktop pre-roll channels as brand clients are increasingly using our software to plan and buy campaigns across an array of inventory sources," said
Brett Wilson, CEO of
"Total Spend in Q2 came in slightly below our expectations," said Wilson. "The transition in ad spending from desktop to mobile is accelerating, and while this impacted our results, this is precisely the trend we anticipated, and we are well positioned over the long term as brands require multi-screen solutions. In particular, the investments we have made in our mobile offering over the last two years evidence our leadership. In Q2, mobile spend through our platform grew 146% and now makes up
nearly 30% of our Spend. In addition, Programmatic TV spend grew 143% year over year to over
Wilson concluded, "We feel strongly that the investments we have made in PTV, mobile and social, along with the mix shift to these areas, positions us well to see strong topline growth in 2017. This growth will flow through to the bottom-line and should result in significantly improved operating leverage in 2017."
Second Quarter 2016 Financial Highlights:
- GAAP Revenue was
\\$55.4 million , an increase of 22% compared to\\$45.4 million in the second quarter of 2015. - Total Spend1 was
\\$139.3 million , an increase of 33% compared to\\$105.0 million in the second quarter of 2015. - Gross profit was
\\$38.6 million , an increase of 28% compared to\\$30.1 million in the second quarter of 2015. - Operating loss was
\\$(3.4) million , compared to operating loss of\\$(1.5) million in the second quarter of 2015. - Net loss was
\\$(3.8) million , compared to net loss of\\$(1.3) million in the second quarter of 2015. - Adjusted EBITDA2 was
\\$2.4 million , compared to Adjusted EBITDA of\\$2.0 million in the second quarter of 2015.
1 Total Spend is a non-GAAP financial measure. Please see the discussion below under the heading "Use of Non-GAAP Measures" and the reconciliation at the end of this release.
2 Adjusted EBITDA is a non-GAAP financial measure. In
Second Quarter and Recent Business Highlights include:
-
Increasing number of large spenders: In Q2 2016 the Company had 26 Platform Direct customers that spent over
\\$1 million in the quarter, compared to 18 in Q1 2016, and 16 in Q2 2015. - Cross-screen channels continue to see strong adoption. Spend from mobile, Programmatic TV (PTV), display and social channels accounted for 48% of overall Total Spend, up from 26% in Q2 2015.
- Significant momentum with Programmatic TV. PTV spend grew 143% year over year to over
\\$20 million , nearly twice the level of PTV spend in Q1 2016. - Growth in Private Inventory through Platform Direct software. Spend from clients' Private Inventory grew 175% year over year, demonstrating the value advertisers see in consolidating their video buying via TubeMogul's software platform.
- Enhanced cross-screen and social offering through the addition of
Snapchat and Twitter inventory:- Social spend is accelerating and grew over 1100% in Q2 as clients use
TubeMogul to buy Facebook and Instagram. TubeMogul was named a Snapchat Partner, which will enable brand advertisers to buy Snap Ads using TubeMogul.Snapchat inventory will offer markerters a way to scale reach, particularly with younger audiences.TubeMogul is one of the first video advertising software platforms to join Twitter's pre-roll ads program. This program enables brand marketers to purchase real-time ads that precede in-Tweet video content posted by over 200 premium sports, TV, and digital publishers.
- Social spend is accelerating and grew over 1100% in Q2 as clients use
- Notable client updates in the quarter included:
- carsales.com Ltd, Australia's largest automotive classifieds site, named
TubeMogul its software partner for video advertising after taking programmatic buying in-house. - 22squared, an independent full-service advertising agency, named
TubeMogul one of its preferred partners for video advertising. Through the partnership, 22squared will leverageTubeMogul's software to streamline media planning, buying, reporting and optimization on behalf of its entire client roster, including Southeast Toyota, Mizuno and Publix. - A top five global beverage brand, top 10 technology company and top 10 financial services company selected
TubeMogul as their preferred video advertising platform of choice. - In Q2, over 150 executives and media traders completed our Client Certification Program. Brands certified include Clorox,
Dairy Farmers of Canada , Diageo,Foxtel ,Klick Health , Pernod Ricard, Qantas and Walmart Canada; agencies and trading desks include Boulder Strategies,Cadreon , Carat, FCB New Zealand, IKON, Mindshare,Publicis Health and UM.
- carsales.com Ltd, Australia's largest automotive classifieds site, named
- Recognized as one of the Best Workplaces for Millennials in the US. In a survey commissioned by Fortune, the Best Workplaces list recognizes top employers of millennials when it comes to pay, shared decision-making and fair promotions.
Forward Outlook:
The Company is issuing Q3 guidance as follows:
Third Quarter 2016
- GAAP Revenue in the range of
\\$53 million to\\$55 million - Total Spend in the range of
\\$134 million to\\$136 million - Gross profit in the range of
\\$35 million to\\$37 million - Adjusted EBITDA
in the range of
\\$(5) million to\\$(3) million
Given the Company's Q2 results, its expectation for normal Q3 and Q4 seasonality, and considering the accelerating transition from desktop to mobile advertising that is temporarily impacting growth, the Company is modestly lowering full year guidance as follows:
Full Year 2016
- GAAP Revenue in the range of
\\$217 million to\\$221 million - Total Spend in the range of
\\$558 million to\\$562 million - Gross profit in the range of
\\$149 million to\\$153 million - Adjusted EBITDA of
\\$1 million
The Company does not reconcile its non-GAAP guidance for Total Spend and Adjusted EBITDA to corresponding GAAP measures because doing so would require unreasonable effort due to the complexity and high variability of certain items that factor into reconciling these non-GAAP measures on a forward-looking basis. Factors that limit our ability to reconcile Total Spend guidance to GAAP revenue guidance include variability in the future rate at which clients adopt the Company's Platform Direct and Platform Services offerings or shift spend from one offering to the other. Factors that limit our ability to reconcile Adjusted EBITDA guidance to GAAP net income (loss) include future fluctuations in our share price, which impact stock-based compensation expense, and future fluctuations in multiple foreign exchange rates, which impact foreign exchange gain (loss), and both of which are excluded from Adjusted EBITDA.
Conference Call and Webcast Information
About
Forward-Looking Statements
This press release includes "forward-looking statements" regarding future events and our future financial performance, including, without limitation, statements regarding our business strategy, growth and market opportunity, our expansion into Programmatic TV and the ability to continue to drive increasing spend across our software from the largest brand advertisers, and forecasted financial results and operating metrics including Total Spend, revenue, gross profit and Adjusted EBITDA.
These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the results anticipated by such statements, including, but not limited to our limited operating history; risks associated with our growth; risks related to our future financial performance; our ability to increase or maintain our rate of revenue growth; our ability to convince our clients
to maintain or increase their advertising spend through our platform; the expansion of the market for software-based advertising solutions for brands, including Programmatic TV; our ability to adapt to changing market conditions; the effects of increased competition in our markets and our ability to compete effectively; our potential dependence on a limited number of customers for a large portion of our revenue; our ability to develop and introduce enhancements and new features and functionality of our platform that achieve market acceptance; fluctuations in our operating results; and general market, political, economic and business conditions. Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are described under "Risk Factors" in our Annual Report on Form 10-K for the year ended
| Preliminary Condensed Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Platform Direct | \\$ | 23,376 | \\$ | 17,826 | \\$ | 44,047 | \\$ | 32,130 | ||||||||
| Platform Services | 32,055 | 27,614 | 53,464 | 43,626 | ||||||||||||
| Total revenue | 55,431 | 45,440 | 97,511 | 75,756 | ||||||||||||
| Cost of revenue | 16,833 | 15,306 | 28,501 | 23,609 | ||||||||||||
| Gross profit | 38,598 | 30,134 | 69,010 | 52,147 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 13,295 | 9,503 | 25,861 | 18,272 | ||||||||||||
| Sales and marketing | 16,348 | 13,497 | 32,536 | 24,609 | ||||||||||||
| General and administrative | 12,379 | 8,615 | 22,655 | 16,442 | ||||||||||||
| Total operating expenses | 42,022 | 31,615 | 81,052 | 59,323 | ||||||||||||
| Loss from operations | (3,424 | ) | (1,481 | ) | (12,042 | ) | (7,176 | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Foreign exchange gain (loss), net | (421 | ) | 266 | 121 | (1,041 | ) | ||||||||||
| Other, net | 243 | (23 | ) | 257 | (51 | ) | ||||||||||
| Other income (expense), net | (178 | ) | 243 | 378 | (1,092 | ) | ||||||||||
| Net loss before income taxes | (3,602 | ) | (1,238 | ) | (11,664 | ) | (8,268 | ) | ||||||||
| Provision for income taxes | (215 | ) | (95 | ) | (409 | ) | (209 | ) | ||||||||
| Net loss | \\$ | (3,817 | ) | \\$ | (1,333 | ) | \\$ | (12,073 | ) | \\$ | (8,477 | ) | ||||
| Basic and diluted net loss per share | \\$ | (0.11 | ) | \\$ | (0.04 | ) | \\$ | (0.34 | ) | \\$ | (0.28 | ) | ||||
| Basic and diluted weighted-average shares used to compute net loss per share | 35,882 | 31,000 | 35,699 | 30,516 | ||||||||||||
| Preliminary Condensed Consolidated Balance Sheets | ||||||||
| (In thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
|
| ||||||||
| 2016 | 2015 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | \\$ | 83,023 | \\$ | 83,439 | ||||
| Accounts receivable, net | 174,382 | 159,899 | ||||||
| Prepaid expenses and other current assets | 4,938 | 3,752 | ||||||
| Total current assets | 262,343 | 247,090 | ||||||
| Property, equipment and software, net | 16,003 | 8,585 | ||||||
| Restricted cash | 2,563 | 1,563 | ||||||
| Other assets | 1,642 | 1,495 | ||||||
| Total assets | \\$ | 282,551 | \\$ | 258,733 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | \\$ | 74,980 | \\$ | 47,346 | ||||
| Accrued liabilities | 63,899 | 74,927 | ||||||
| Short-term debt | 7,574 | 2,898 | ||||||
| Other current liabilities | 2,028 | 853 | ||||||
| Total current liabilities | 148,481 | 126,024 | ||||||
| Other liabilities | 1,310 | 746 | ||||||
| Long-term debt | 4,809 | 1,787 | ||||||
| Total liabilities | 154,600 | 128,557 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock; | — | — | ||||||
| Common stock; shares issued and outstanding as of respectively | 36 | 35 | ||||||
| Additional paid-in capital | 177,501 | 167,316 | ||||||
| Accumulated deficit | (49,089 | ) | (37,016 | ) | ||||
| Accumulated other comprehensive loss | (497 | ) | (159 | ) | ||||
| Total stockholders' equity | 127,951 | 130,176 | ||||||
| Total liabilities and stockholders' equity | \\$ | 282,551 | \\$ | 258,733 | ||||
| Preliminary Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | \\$ | (12,073 | ) | \\$ | (8,477 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 1,842 | 872 | ||||||
| Provision for doubtful accounts | 119 | 593 | ||||||
| Provision for sales allowances | 1,304 | 1,302 | ||||||
| Stock-based compensation expense | 8,592 | 5,379 | ||||||
| Unrealized loss from forward contract derivatives | — | 234 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (15,905 | ) | (32,324 | ) | ||||
| Prepaid expenses and other current assets | (1,186 | ) | (530 | ) | ||||
| Other assets | (148 | ) | (37 | ) | ||||
| Accounts payable | 28,791 | 21,417 | ||||||
| Accrued liabilities | (11,028 | ) | (4,484 | ) | ||||
| Other current and noncurrent liabilities | 1,738 | 474 | ||||||
| Net cash provided by (used in) operating activities | 2,046 | (15,581 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Increase in restricted cash | (1,000 | ) | — | |||||
| Purchases of property, equipment and software | (6,511 | ) | (1,971 | ) | ||||
| Net cash used in investing activities | (7,511 | ) | (1,971 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from public offering of common stock, net of underwriting discounts, commission and offering costs | — | 51,975 | ||||||
| Proceeds from borrowings | 8,364 | — | ||||||
| Repayments of borrowings | (4,571 | ) | (735 | ) | ||||
| Proceeds from issuances of common stock from the exercise of options and ESPP | 1,594 | 1,097 | ||||||
| Net cash provided by financing activities | 5,387 | 52,337 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | \\$ | (338 | ) | \\$ | (157 | ) | ||
| Net (decrease) increase in cash and cash equivalents | (416 | ) | 34,628 | |||||
| Cash and cash equivalents, beginning of period | 83,439 | 46,592 | ||||||
| Cash and cash equivalents, end of period | \\$ | 83,023 | \\$ | 81,220 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid for interest | \\$ | 161 | \\$ | 67 | ||||
| Cash paid for income taxes | 310 | — | ||||||
| Equipment purchased under capital lease financing | 3,906 | — | ||||||
| Deferred offering costs recorded in accounts payable and accrued liabilities | — | 619 | ||||||
| Preliminary Key Operating and Financial Performance Metrics | ||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Key Metrics | ||||||||||||||||
| Platform Direct revenue | \\$ | 23,376 | \\$ | 17,826 | \\$ | 44,047 | \\$ | 32,130 | ||||||||
| Platform Services revenue | 32,055 | 27,614 | 53,464 | 43,626 | ||||||||||||
| Total revenue | \\$ | 55,431 | \\$ | 45,440 | \\$ | 97,511 | \\$ | 75,756 | ||||||||
| Gross profit | \\$ | 38,598 | \\$ | 30,134 | \\$ | 69,010 | \\$ | 52,147 | ||||||||
| Gross margin | 69.6 | % | 66.3 | % | 70.8 | % | 68.8 | % | ||||||||
| Adjusted EBITDA | \\$ | 2,352 | \\$ | 1,957 | \\$ | (1,358 | ) | \\$ | (925 | ) | ||||||
| Platform Direct Spend | \\$ | 107,249 | \\$ | 77,404 | \\$ | 198,623 | \\$ | 132,669 | ||||||||
| Platform Services Spend | 32,055 | 27,614 | 53,464 | 43,626 | ||||||||||||
| Total Spend | \\$ | 139,304 | \\$ | 105,018 | \\$ | 252,087 | \\$ | 176,295 | ||||||||
Use of Non-GAAP Measures
This press release includes information relating to Total Spend, Platform Direct Spend, and Adjusted EBITDA, which are financial measures that have not been prepared in accordance with generally accepted accounting principles in
For purposes of calculating Total Spend and Platform Direct Spend, we define spend as the aggregate gross dollar volume that our customers spend through our platform, which includes cost of media purchases and our fees. Platform Direct Spend does not represent revenue earned by us and is a non-GAAP financial measure defined by us as the spend through our Platform Direct offering. Platform Services Spend equals our Platform Services revenue. Total Spend does not represent revenue earned by us and is a non-GAAP financial measure defined by us as the sum of Platform Direct Spend and Platform Services Spend. We believe Platform Direct Spend and Total Spend are meaningful measures of our operating performance because our ability to generate increases in Platform Direct Spend and Total Spend are strongly correlated to our ability to generate increases in Platform Direct revenue and revenue, respectively. Platform Direct Spend and Total Spend are used by our management and Board of Directors to understand our business and make operating decisions. We review Total Spend and Platform Direct Spend for internal management purposes and to assess the total scale of our platform and, to a lesser extent, market share, as it allows us to compare our results to advertising expenditures of our clients as well at the potentially competitive companies that report all or substantially all spending transacted on their platform as GAAP revenue. A limitation of each of Platform Direct Spend and Total Spend is that each is a measure that we have defined for internal purposes that may be unique to us, and therefore it may not enhance the comparability of our results to other companies in our industry that have similar business arrangements but present the impact of media costs differently. Because of these limitations you should consider Platform Direct Spend and Total Spend along with the corresponding GAAP-based measures.
Adjusted EBITDA is a non-GAAP financial measure defined by us as net loss before interest income (expense), net, provision
for income tax, depreciation and amortization expense, stock-based compensation expense and foreign exchange gains and losses, both realized and unrealized. We have presented Adjusted EBITDA in this press release because it is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In particular, we believe that the exclusion of the amounts in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Adjusted EBITDA should not be considered as an alternative to
net loss, operating loss or any other measure of financial performance calculated and presented in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Adjusted EBITDA is used by investors and security analysts to measure a company's performance without regard to items we exclude in calculating this measure, which can vary substantially from company to company, depending on the amount of stock-based compensation, tax structure, their financing, capital structures and the method by which assets were acquired. In
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:
- although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, including costs incurred for internally developed software;
- although stock-based compensation is a non-cash charge, the potentially dilutive impact of stock-based compensation is not reflected in Adjusted EBITDA. Stock-based compensation is, and will remain, an element of our long term incentive compensation, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
- Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) the potentially dilutive impact of stock-based compensation; (3) impact of foreign exchange gains and losses, both realized and unrealized; or (4) tax payments that may represent a reduction in cash available to us; and
- other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.
Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and our GAAP financial results.
For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measures for each of the periods indicated, see "Reconciliation of Preliminary Total Spend and Platform Direct Spend," and "Reconciliation of Preliminary Adjusted EBITDA" included in this press release.
| Reconciliation of Preliminary Total Spend and Platform Direct Spend | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Platform Direct Revenue | \\$ | 23,376 | \\$ | 17,826 | \\$ | 44,047 | \\$ | 32,130 | ||||||||
| Plus: Non-GAAP Platform Direct Media Cost | 83,873 | 59,578 | 154,576 | 100,539 | ||||||||||||
| Platform Direct Spend | \\$ | 107,249 | \\$ | 77,404 | \\$ | 198,623 | \\$ | 132,669 | ||||||||
| Platform Services Spend | \\$ | 32,055 | \\$ | 27,614 | \\$ | 53,464 | \\$ | 43,626 | ||||||||
| Total Spend | \\$ | 139,304 | \\$ | 105,018 | \\$ | 252,087 | \\$ | 176,295 | ||||||||
| Reconciliation of Preliminary Adjusted EBITDA | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net loss | \\$ | (3,817 | ) | \\$ | (1,333 | ) | \\$ | (12,073 | ) | \\$ | (8,477 | ) | ||||
| Interest income (expense), net | 7 | 23 | (7 | ) | 51 | |||||||||||
| Provision for income taxes | 215 | 95 | 409 | 209 | ||||||||||||
| Depreciation and amortization expense | 993 | 460 | 1,842 | 872 | ||||||||||||
| Stock-based compensation expense | 4,533 | 2,978 | 8,592 | 5,379 | ||||||||||||
| Foreign exchange (gain) loss, net | 421 | (266 | ) | (121 | ) | 1,041 | ||||||||||
| Adjusted EBITDA | \\$ | 2,352 | \\$ | 1,957 | \\$ | (1,358 | ) | \\$ | (925 | ) | ||||||
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