Rubicon Project is laying off 8% of its combined staff this quarter to reduce short-term costs in response to its merger and the coronavirus pandemic.
Originally, Rubicon Project and Telaria expected to achieve $15 million to $20 million in cost synergies post-merger, but the coronavirus pandemic led the newly combined company to increase cost-cutting to more than $20 million, CEO Michael Barrett said Wednesday on the Q1 earnings call with investors.
The bulk of that cost savings comes from the employee cuts. Rubicon Project employed 444 people at the end of 2019, with Telaria employing 179, meaning roughly 50 people will be laid off. The merger closed on April 1.
Due to COVID-19, Barrett is also taking a 30% salary reduction, retainers for board members will decrease 30% and Rubicon Project is implementing a hiring freeze. Lower costs in marketing, events and travel will yield additional savings.
Rubicon Project was on track to meet Q1 investor guidance until the last two weeks in March, when the economy sunk due to the pandemic. Q1 revenue grew 12% year over year to $36.3 million.
The CTV surge
The rise in connected TV (CTV) viewership and marketers’ unwillingness to commit to the upfronts during the pandemic uncertainty will accelerate the push into CTV, President Mark Zagorski told investors.
“We are heading into a watershed moment for the future of CTV,” he said.
During Q1, Telaria’s total revenue grew 11% year over year to $15.1 million, and CTV revenue grew 74%.
As marketers canceled direct deals, publishers funneled ad inventory into open programmatic. Those forces combined led to a 25% surge in CTV ad slot availability vs. pre-COVID-19 volumes.
During the quarter, Fox acquired Tubi and started putting content such as “The Masked Singer” onto the AVOD platform, and Pluto has continued to add content from owner ViacomCBS, Zagorski said. Quality content, along with shelter-in-place orders, are leading consumers to embrace AVOD – good news for Telaria.
Demand Manager and SPO
Rubicon Project is continuing to focus on Demand Manager, its Prebid-focused product that increased to 156 live contracts this quarter, compared to just 86 at year’s end.
The increase in traffic due to the coronavirus has raised costs for DSPs and SSPs, leading The Trade Desk to require SSPs to deduplicate their traffic. Rubicon Project said its traffic-shaping tech, via its acquisition of nToggle, has kept costs in check for itself and its partners despite coronavirus-related traffic surges. Later this year, it plans to invest in more cloud capabilities, which will increase its processing costs slightly but improve its infrastructure over the long term.
Rubicon Project also said it’s assured publishers that they will get paid, at a time when many worry about the solvency of their partners. Publishers want to work with SSPs with solid public financials, Barrett predicted: “No one looks quite like us from a balance-sheet perspective.”
