Rubicon Project Expands Quickly, House Cleaning Pays Off In Q4

Rubicon Q4 EarningsRubicon Project’s focus on premium inventory, international expansion and new products looks to be paying off.

CEO Frank Addante said during the company’s Q4 earnings call – in which it posted quarterly revenue of $41.8 million, up 49% YoY – that Rubicon had avoided low-quality sellers that would have boosted short-term revenue while hurting its long-term strategic value.

Rubicon reported FY revenue of $125.3 million, up 49% YoY. Read the release.

“Automation typically begins with low-priced inventory and moves into high-priced inventory,” Addante said. “We chose the harder route because we look at this business as automating all advertising. We made investment into premium earlier.”

Rubicon shed publishers in its pursuit of premium. This initiative meant inventory went down, decreasing from 1.3 trillion in 2013 to 999 million in 2014, “due to quality control initiatives initiated in late 2013, as well as a shift from static to RTB inventory”

Meanwhile, average CPMs for the year rose from 36 cents in 2013 to 67 cents in 2014.

Additionally, Rubicon’s nascent “orders” business accounts for 10% of revenue and includes both guaranteed and non-guaranteed (private marketplaces) orders.

“[Rubicon’s orders product] 49bc merged into iSocket and Shiny ads and we’re seeing promising early adoption, but we’re still early [and] we’re making a market,” said President Greg Raifman.

At least one publisher dipped its toe in the waters: During the fourth quarter, the New York Post executed a home page takeover using the automated guaranteed product, a first for the publisher.

Direct order CPMs are often triple that of RTB CPMs, but product fees are lower. Rubicon expects to see higher managed revenue but lower take rates as adoption of the orders product increases.

Mobile managed revenue grew 300% in 2014. Its sellers include a quarter of the comScore 200 for mobile web. Partnerships with InMobi and Apple’s iAd will bring additional mobile revenue to Rubicon, which described mobile growth as one of “steady adoption,” Raifman said.

Through InMobi, Rubicon will begin to bring on more app inventory in addition to mobile web inventory.

Rubicon has grown extensively internationally, and overseas now accounts for 40% of its business. Customer wins across the pond included an expansion of its relationship with the BBC, which will now include inventory in more than 200 countries across orders and auctions, and eBay Europe as well as Triad Retail Media, which sells retailers’ inventory.

The company clearly has a lot on its plate, which is often problematic for young businesses, but so far Rubicon hasn’t had many growing pains.

“It’s a good quarter, but it didn’t feel as good as last quarter [when Rubicon grew 60%],” said Ed Bierdeman, managing director of Woodside Capital’s research group. “Criteo had over a 70% growth rate in Q4. When a small company like Rubicon Project tries to expand in too many different directions at once, it can increase the risk, but so far they’ve executed well.”

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