How Rubicon's Financials Stack Up Against Other Programmatic IPOs

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rubicon-lineup2Rubicon Project's Tuesday IPO filing with the U.S. Securities and Exchange Commission (SEC) was a widely anticipated moment of financial transparency for the sell-side platform (SSP), but it wasn't the first programmatic player to initiate a public offering.

Rocket Fuel and Criteo both went public last fall, creating an interesting point of comparison for Rubicon Project. (Though, it should be stated, not apples-to-apples. While Rubicon has a demand-side business, the company is primarily publisher-facing and makes its money from software fees. And while Criteo and Rocket Fuel both cut direct publisher deals, they're both primarily advertiser-facing and make their money from a markup on media.)

First, let's look at revenue:

Rubicon Project: As we noted yesterday, in the first nine months of 2013, Rubicon captured $55.7 million in revenue, compared with $37.6 million during the same period in 2012. Revenue growth rate: 48%.

Criteo: Revenues excluding traffic acquisition costs (ex-TAC) were $167.9 million (€124.2 million) during 2013's first nine months, compared with $106.5 million (€78.8 million) during the same period in 2012. Revenue ex-TAC growth rate: 57.5%.  

Rocket Fuel: Revenues less media costs (ex-TAC) were $87.3 million for the first nine months of 2013, compared with $35.9 million during the first nine months of 2012. Revenue ex-TAC growth rate: 143.1%.

Now let's look at total spend running on the platforms – which Rubicon refers to as "managed revenue." For consistency, we'll present total spend for the first nine months of 2013 and 2012:

Rubicon Project:  Total managed revenue was $326.7 million for the nine months ended September 30, 2013, compared to $226.8 million in managed revenue for the same period in 2012. That represents a 44% increase year over year.

Criteo: January through September 2013 brought $416.9 million (€308.1 million) in total revenue inclusive of media costs, up 66.3 percent from $250.7 million (€185.3 million) for the period in 2012.

Rocket Fuel: $155 million in total revenue inclusive of media costs, up 133% from $66.5 million for 2013.

The two ad network companies, Rocket Fuel and Criteo, are growing faster both in terms of total spend and net revenue than the SSP Rubicon Project. Does that suggest that ad networks (albeit ones with programmatic "under the hood") are able to drive more revenue expansion than "publisher yield optimizers"? Does it suggest companies focused on media arbitrage are faster-growing than those grabbing for software fees? Could be, but it's hard to say based on just three companies.

Furthermore, among the three Rocket Fuel is growing the fastest by a significant margin. That may be in part a reflection of the relative maturity of Criteo and Rubicon Group. Criteo has reached some saturation in Europe and must look to the U.S., Asia-Pacific and other regions for growth. Rubicon says it has integrations with about 40% of the U.S. comScore 100, and may likewise need to expand overseas to maintain a high rate of growth.

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