Layoffs At Rocket Fuel, As Company Begins $30M ‘Efficiency’ Push

Rocket Fuel layoffsAs it grapples for profitability, ad net/programmatic media platform Rocket Fuel has initiated layoffs as part of what it called “a new efficiency program that is expected to reduce the publicly traded company’s operating costs by $30 million annually.” Read the release.

The move comes just one month after co-founder George John stepped down as CEO, and a little over two weeks after former [x+1] CEO John Nardone left the company.

A recently-filed 8-K said 11% of Rocket Fuel’s workforce, or 129 employees, had been let go. While the cuts do not affect its engineering and R&D departments, some members of the company’s business development teams had previously whispered that they saw the writing on the wall and expected to be laid off.

Rocket Fuel also raised its guidance, estimating its non-GAAP adjusted EBITDA to be a $13.6 million loss, as opposed to its prior loss expectations of $18 million to $19 million. It estimated quarterly revenues of $104.3 million, up 40% compared to last year.

Interim CEO Monte Zweben told AdExchanger when he assumed the role following John’s leaving that he was going to start “digging deep into our operational processes and deciding exactly those changes in the coming weeks that are necessary for us to drive ourselves to profitability.”

These cuts are so far Zweben’s most prominent action executing those operational changes. They also represent a sharp slide for a company whose headcount swelled to 1,123 full-time employees by the end of last year, increasing 81% from 2013 to 2014, according to SEC filings. However, Rocket Fuel cautioned it expected “a significantly slower rate of headcount growth in 2015.”

Since Rocket Fuel’s initial success, both as a private company and as a fledgling public company, competition in the space has grown, its insertion order business has fallen out of favor and Rocket Fuel has had to offer new pricing and deployment models – hence the acquisition of self-serve DSP/DMP hybrid [x+1], which it is now challenged to integrate.

While Rocket Fuel historically positioned itself as among the best performers in the industry (advertisers put spend in and get spectacular return), John has frequently bemoaned the chummy nature of the ad tech community, wherein agencies work with preferred vendors, leaving Rocket Fuel out in the cold.

Rocket Fuel has discussed constructing a team focused on building those very agency relations it feels it will need to get back to profitability, though it’s unclear if those plans are still on the table and whether the recent round of layoffs indicate the first step in that process.

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