What the bananas is up with this company? They kill it on Revenue (up 33%, a $7M beat) and EPS (up 183%, a 7 cent beat), and the shares are down 15% in after hours trading?
Their guidance was less than expected, but it ALWAYS is. If the 15% drop carries through, this company now has a PE of about 8! What is the DEAL?
Without knowing anything about the company except a small amount that I have retained from what has been posted here, it sounds like an earnings release is a predictable buying opportunity here since the earnings growth is bound to be picked up by the “weighing machine” eventually.
It does look like it fell because of their guidance:
“The digital advertising market is undergoing changes that have fueled headwinds that we expect will continue through the remainder of the year,” CEO Frank Addante says, “particularly as it relates to desktop advertising in the U.S.”
PE is now 6.5. Wow. This reminds me of Perion. Their PE is around 4. These might have to go in the “too hard” or more saliently the “doesn’t respond to results” category. I mean they are both growing, but the market is pricing them for oblivion. Maybe someone knows something we don’t.
I will say that even as PERI is growing sales, EPS has not been growing. They’ve expanded into less profitable businesses. That doesn’t seem to be the case with RUBI, however, it looks like they are forecasting that EPS will start to diverge from revenue. IE, for 2016:
RUBI says revenue is expected to be $260M-$275M. That’s up from 227M in 2015. That’s up close to 20%.
But RUBI says EPS will be $0.75-$0.85. That’s down from 1.08 last year (.72 in Q4 alone!!!)
Is this just their ultra conservative guidance? Or should we listen to the forecast?
I mean one parting thought: Non-GAAP EPS through June in 2015 was something like 8 cents. This year, 48 cents.
Header Bidding When it saw unexpected declines in desktop revenue, header bidding emerged “as a clear indicator that there was some leakage in impressions,” President Greg Raifman said. The company underwent a strategic review to figure out what went wrong.
Rubicon had been focused not on header bidding and its desktop business, but on the growing areas of mobile and video. “We swung the pendulum too far in mobile and video direction,” Addante said. It had also invested resources in its orders business, an area it expects to grow over the long term.
Plus, Rubicon had reason to think header bidding wouldn’t be big. It had already tried to create a header bidding-like product back in 2012, called real-time pricing. Only a half-dozen publishers ended up adopting it. “It didn’t work out, so when we saw header bidding, we didn’t think it would accelerate as quickly as it has,” Addante said.
Chango Pricing, which was somewhat known last quarter via AdExchanger. Its intent marketing business, which it entered via the Chango acquisition, is seeing pressure from “agency-owned tech,” Raifman said, leading to “challenges in the intent marketing business.” Chango is lowering its fees as part of its go-to-market plan, and transitioning away from the managed service model to one it’s dubbing “guaranteed audiences.”