Rubicon Project Lays Off 19%, Still Feeling the Pain From Header Bidding
Rubicon Project said Wednesday during its third-quarter earnings call that it didn't capture as much revenue from marketers in the period because of this year's election, saying the presidential race caused many marketers to hesitate with their digital ad spend.
But the ad-tech power is still feeling the hurt as it was slow in pushing out its header bidding solution.
It announced a workforce reduction of 125 employees, or about 19% of its workforce, as it reported its results. The move should reduce future employee-related costs on an annual basis by approximately $18 million, it said.
The company's stock last quarter tumbled nearly 35% after it told investors that it had been slow in adopting a header bidding strategy. Generally speaking, header bidding is a technology that allows all of a publisher's partners to bid on ad inventory at the same time, which often translates to more money for publishers than the previous, so-called waterfall auctions that stopped when one group of bidders made a decent-enough offer.
Rubicon Project CEO Frank Addante said during the latest quarter's call that he was going to speak off script.
"Why don't we talk about how we got here," he told investors. "We established a dominant position in desktop display that was unthreatened. And we created a premium solution that was largely unthreatened. And like most companies that create a premium solution, that allows you the opportunity to raise prices over time. We did that."
As a result, upstart companies entered the market with a header bidding product and lower price point, which eventually ate away at some of Rubicon's market share, he said.
Mr. Addante said Rubicon Project will now price itself "competitively" to better compete with its newfound rivals.
"We won't compete on price alone," Mr. Addante said. "But we have to make sure we are competitively priced. Pricing can actually become a great lever for us to further capture market share."
Rubicon last year introduced its header bidding solution, called FastLane. But the company hopes to recapture its former glory by making an aggressive bet on bringing a header bidding solution to apps and video on a large scale, something that has yet to be achieved by any major ad tech platform. (The tech is predominantly practiced on websites.) Last month, the company poached a former Google executive to fill a new role meant to consolidate functions previously organized by client type.
FastLane now accounts for 16% of Rubicon Project's total managed revenue, up more than 10% for each month the last 6 months, the company said.
Still, Header bidding technology has nonetheless created a "short term challenge" for them, Mr. Addante said Wednesday, adding that it has "work to do" before it can increase its future outlook. It hopes to turn things around in the next quarter or two.
The company posted revenue GAAP revenue of $65.8 million, a 2% increase over the third quarter of 2015. Net income came in at $3.5 million, up 217% from the same quarter last year. The overall ad spending passing through Rubicon's systems declined 1% to $242.8 million, the company said.
The company's stock fell to $6.75, down about 12% from earlier in the day. Overall, its stock is down more than a 100% from last year.