Why TubeMogul Inc. Stock Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of TubeMogul (NASDAQ: TUBE  ) , a cloud-based provider of video-based advertising optimization tools for enterprise customers, skyrocketed by as much as 53% on Wednesday after the company reported its second-quarter earnings results following the closing bell yesterday.

So what: For the quarter, TubeMogul reported a mammoth 127% increase in revenue to $28.7 million, a 135% spike in gross profit to $19.6 million, and the big surprise, $2.1 million in net income compared to a loss of $2.6 million in the year-ago period. On an adjusted basis this works out to a profit of $0.01 per share. Wall Street projections had only called for TubeMogul to bring in $24.7 million in revenue and to produce a loss of $0.15 per share. In other words, TubeMogul crushed Wall Street's estimates.

Source: TubeMogul.

Looking ahead, the beatdown continued. TubeMogul is forecasting revenue of $20 million to $22 million for the current quarter, and $98 million to $102 million for the full year. Wall Street, on the other hand, is only sitting on a consensus revenue estimate of $18.9 million in the third quarter and $91.7 million for the full year. TubeMogul also issued a full-year EBITDA loss range of $12 million to $16 million.

Now what: Now that's the way you please Wall Street and investors after going public! TubeMogul, despite being a small-cap stock, still offers a lot of intrigue for me, as the formula for reaching consumers through targeted video advertising hasn't exactly been perfected yet. With video become a more popular medium to reach larger audiences, the assumption would be that TubeMogul will have little hassle growing the revenue side of its business.

The big question, of course, is whether costs will continue to match or outpace revenue growth.This isn't uncommon in a company's early years (TubeMogul was founded just seven years ago), but a few years from now investors are probably going to grow wary of borderline breakeven profit results. Based on Wall Street's current projections, revenue could grow in excess of 30% for the next few years, but profitability isn't expected on an annual basis until 2017 at the earliest. With that in mind I'd certainly consider the stock "intriguing" on any sizable pullback, but I'd suggest avoiding chasing it higher on a day like today.

Behold the next great revolution in the tech sector: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (0) | Recommend This Article (4)

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.

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: 3084646, ~/Articles/ArticleHandler.aspx, 9/1/2015 2:20:56 AM

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...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

Today's Market

updated 5 hours ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

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

8/31/2015 3:59 PM
TUBE $11.06 Down -0.66 -5.63%
TubeMogul CAPS Rating: ***