Tremor Video’s growth continued in Q1 2015 as the company netted $40.6 million in revenue (16.4% YoY growth), above analysts’ predictions. Read the release.
Eighteen percent of that revenue came from programmatic, which has been growing at a steady pace. Last quarter, programmatic was 14% of Tremor’s revenue; it was 4% this time last year.
Company CEO Bill Day anticipated ongoing sequential growth in programmatic through 2015. This business includes its demand-side platform (DSP), called VideoHub, its supply-side platform (SSP) and the trading desk aspects of its managed services.
And both the SSP and DSP business is growing, Day said, as they get “higher levels of liquidity from both publishers and agencies.” Last quarter, the SSP – which rolled out in late 2014 – had 50 publisher partners. This quarter, it has 70 plugged into the platform, and 30 signed deals with companies like Rovio and Warner Bros.
Even as self-service grows, however, managed services remains the bulk of Tremor’s business, said Day and CFO Todd Sloan, who’ll step down at the end of this month. Both executives warned the growth of self-service will eventually impact margins. Gross margins in Q1 were about 40%, compared to 34% this time last year. Don’t expect that rate to continue, however.
“Managed services has higher margins than the programmatic business and as the mix shifts a little, we’re predicting it will have an effect,” Sloan said. Day added that the data self-serve clients input into Tremor’s tech platforms isn’t shared with its managed services units.
Other growth areas for Tremor include its ad-targeting tool All-Screen, which makes up 45% of the company’s total revenue (last quarter it was 40%). Its performance-based products were about 30%.
“Combined, these proprietary, higher-margin products represented more than 55% of our total revenue,” Day said.
All-Screen’s ad targeting helps position media across desktop video, mobile, tablets, connected television and, thanks to a partnership with placemedia revealed last Monday, linear TV. (Targeting across over-the-top devices is also in the cards.)
Day described placemedia as an SSP that enables ad targeting in linear TV. “As we integrate with them, we’ll look to incorporate those placements into the overall mix of how we deliver ads through our All-Screen product,” he said.
He emphasized that Tremor is well positioned to benefit as ad dollars shift from television – a change that’s happening as online video matures toward quality.
“Historically, lack of transparency kept buyers in the dark where they couldn’t appreciate the things we deliver well: showing placement, the size of the ads we deliver and the high viewability percent,” Day said. On average, Tremor logs north of $100,000 in spend per client – a number that Day is comfortable with, though an analyst noted that while per client spend had grown in earlier quarters, it seems to have plateaued lately.
Nevertheless, Day felt Tremor was in good standing. “We believe the company is very well positioned because, whether self-service or managed service, we offer it all,” he said.
