Rubicon spikes higer after results indicate stabilizing fundamentals - InvestingChannel

Rubicon spikes higer after results indicate stabilizing fundamentals

Shares of digital advertising firm The Rubicon Project (RUBI) are advancing this afternoon after the company reported quarterly earnings Wednesday night. Rubicon reported a fourth quarter loss of (28c) on revenue of 31.4M. Revenues for the December quarter fell 57% from last year’s Q4 but were ahead of analyst expectations of $29.36M. Rubicon’s net loss per share of (28c) was better than estimates of a (29c) loss. On its earnings call, Rubicon CEO Michael Barret said, “Revenue is still down significantly year-over-year because of our fee reduction, but we remain optimistic that as we grow our amounts paid to sellers, we elevate in preference with our sellers, which in turn leads to more and better inventory and ultimately converts to revenue.” The firm is continuing to reduce its workforce along with other cost-dampening initiatives. “These actions plus reductions in other OpEx and CapEx reduced our total cost structure by $44M or 23%, based on a Q4 2017 annual run rate level of $190Min combined OpEx and CapEx. As a result, we expect to be adjusted EBITDA positive in Q4 of this year,” added Barret. GUIDANCE: On its quarterly earnings call, the CEO said he sees Q1 revenue above $23M. Analysts are expecting revenue for Q1 to come in at $24.17M. “We have taken cost-cutting measures that we believe are prudent and that we believe balance the right-sizing of our cost structure without unduly impacting growth prospects as we look to return Rubicon Project to positive adjusted EBITDA in Q4 of 2018,” said Barrett. RECENT DEVELOPMENTS: In early March, Rubicon announced it has opened up its exchange to DSPs for programmatic buying in guaranteed private marketplaces. Google’s (GOOG) DoubleClick Bid Manager is the first DSP to integrate with Rubicon Project’s exchange for programmatic guaranteed buying. Rubicon Project is the only third-party exchange to currently offer programmatic guaranteed buying for all deal types within the DoubleClick Bid Manager Marketplace Interface. STABILIZING FUNDAMENTALS: Before the market open, SunTrust analyst Matthew Thornton upgraded Rubicon Project to Buy from Hold while keeping a $3 price target. The analyst pointed to the company’s stabilizing fundamentals such as improving advertising spending and take rate as well as new cost actions that should lead to higher profitability. Thornton anticipates the company to remain supported in the growing market given Rubicon’s “improved header bidding and auctioning tools.” PRICE ACTION: Shares of The Rubicon Project are up over 15% to $1.98 per share in afternoon trading. PEERS TO WATCH: Others in the advertising technology space include Telaria (TLRA), Criteo (CRTO), Marin Software (MRIN), and Social (SRAX).

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