Rubicon Project missed revenue projections for the quarter as programmatic changes, including the new transparency standards App.ads.txt and sellers.json, affected its topline revenue growth.
Rubicon Project’s Q3 revenue grew 27% year over year to $37.6 million. Year to date, its revenues are $107.9 million, which represents 30% growth compared to the same period last year.
“We got dinged by [App.ads.txt and sellers.json] slightly,” CEO Michael Barrett told investors on the company’s earnings call Wednesday. “I can’t imagine what happened to exchanges that aren’t as clean and well-lit and polished as ours.”
The transparency standards let buyers do supply-path optimization, or cut out resellers of publisher inventory. When buyers cut out those resellers, it hurt Rubicon Project’s revenues, since it works with both publishers and resellers of a publisher’s inventory.
“Buyers approached it with a ‘one-size-fits-all’” mindset, CEO Michael Barrett said. They paused all campaigns that weren’t deemed “direct” via the new standards and then reviewed on a case-by-case basis ones they might reconsider.
Barrett feels those buyers may add back some resellers and take a more nuanced approach in the future.
Google switching to a first-price auction and removing last look also created some initial volatility – though Barrett said the net results have been “neutral to slightly positive.”
Rubicon Project is also undertaking its own version of supply-path optimization to root out unprofitable impressions, which reduced costs even more than anticipated.
Analyzing every impression in the bidstream is expensive and inefficient, especially after header bidding created multiple paths to the same impression. Two years ago, Rubicon Project acquired nToggle to help with “traffic shaping,” or selecting fewer impressions to look at to monetize.
This quarter, Rubicon Project removed inventory from its exchange that monetized at very low CPMs, fill rates or not at all. The network optimization removed some revenue from its exchange, but made it much more profitable.
That optimization was enabled by moving its nToggle-based technology from a hardware-based to software-based deployment. The exchange then removed servers and reduced its data costs.
But nToggle has done even more to help Rubicon Project reduce costs over the past two years.
Rubicon Project spent $40 million on capex, including costs to process impressions, the year it acquired nToggle. It halved that yearly spend to $20 million in the past two years – even as ad requests doubled year over year. At a deal price of just $38.5 million, “the nToggle acquisition has greatly exceeded expectations,” Barrett said.
