Why Shares of Rubicon Project Are Down 26% Today

What happened

Shares of digital advertising platform provider Rubicon Project (NYSE: RUBI  ) tumbled on Wednesday following the company's fourth-quarter report. While Rubicon beat analyst estimates by a wide margin, disappointing first-quarter guidance sent the stock 26.5% lower by 11:30 a.m. EDT.

So what

Rubicon reported fourth-quarter non-GAAP (adjusted) revenue of $66.9 million, down 20% year over year but $2.9 million higher than the average analyst estimate. GAAP (generally accepted accounting principles) revenue slumped 23% to $72.7 million, while total advertising spend on the platform dropped 18% to $277.1 million.

The Rubicon Project logo.

Image source: Rubicon Project.

Non-GAAP earnings per share (EPS) came in at $0.37, down from $0.74 in the prior-year period but $0.22 better than analysts were expecting. Adjusted EBITDA slumped 39.7% to $21.7 million, while GAAP EPS was a loss of $0.44 due to charges related to the impairment of intangible assets and restructuring.

While Rubicon did better than analysts were expecting, its first-quarter guidance fell far short of expectations. The company expects non-GAAP revenue to be in the range of $41 million to $44 million, along with a non-GAAP EPS loss between $0.22 and $0.26. Analysts were expecting revenue of $57.3 million and a non-GAAP profit of $0.10 per share.

Now what

Along with its earnings release, Rubicon announced that Michael Barrett will become the new CEO, replacing founder Frank Addante. Addante discussed the progress that the company made in 2016, along with its key priorities in 2017:

We made advancements in our strategic growth areas, including mobile, video and orders, while continuing to see promising results from FastLane, our solution for header bidding. Through restructuring and divestiture during the year, we strengthened our business and refocused our energies, resources and investments on what has made Rubicon Project successful for nearly a decade: our global ad exchange business. As we move into 2017, we remain focused on signing up more publishers, application developers, and adding inventory to our global exchange, a key component to drive future growth.

With revenue and earnings slumping in the fourth quarter, and with guidance falling well short of expectations, Rubicon has a lot of work to do to prove to investors that its growth story isn't over.

10 stocks we like better than The Rubicon Project
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and The Rubicon Project wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of February 6, 2017

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4008384, ~/Articles/ArticleHandler.aspx, 3/23/2017 12:20:22 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
Change up DOW 20736.5 75.2 0.4%
Change up S&P 500 2356.5 8.1 0.3%
Change up NASD 5838.5 16.8 0.3%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/23/2017 12:04 PM
RUBI $5.57 Up +0.10 +1.83%
The Rubicon Projec… CAPS Rating: ****

Article registration testing

Revisit this page

Clear article's cache and revisit this page

Or, visit the current page, forcing Test ID to article:interrupt:106919 and

Tookie Value = 62626173160919919184858530410137