Please ensure Javascript is enabled for purposes of website accessibility

Why TubeMogul, Inc. Shares Plunged Today

By Anders Bylund - Aug 9, 2016 at 11:50AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Second-quarter results came in below expectations. Is the company falling apart, or should hungry investors be licking their chops over a tasty buy-in window?

Image source: TubeMogul.

What: Shares of TubeMogul (TUBE) fell as much as 22% on Tuesday morning, recovering to a milder 18% drop by 10:30 a.m. ET. The brand advertising software specialist reported second-quarter results Monday night, and fell short of Wall Street's estimates.

So what: In the second quarter, TubeMogul's sales rose 22% year over year to $55.4 million. On the bottom line, the breakeven performance in the year-ago period turned into $0.11 of net losses per share. The company's customers spent a total of $139.3 million on advertising campaigns managed by TubeMogul tools, a metric that management tracks under the name of "total spend." That's up 33% from the year-ago quarter.

Analysts had been looking for a loss of $0.07 per share on revenue near $58.1 million.

Looking ahead, TubeMogul's management expects to report third-quarter revenue of approximately $54 million, yielding an adjusted EBITDA loss of roughly $4 million.

Now what: TubeMogul CEO Brett Wilson conceded that total spend came in below expectations this time, but also noted that he was expecting this kind of market shift eventually.

"The transition in ad spending from desktop to mobile is accelerating, and while this impacted our results, this is precisely the trend we anticipated," Wilson said. "We are well positioned over the long term as brands require multiscreen solutions."

Mobile spend skyrocketed 146% higher year over year, and TV ad spending nearly doubled just from the first quarter. In other words, clients are adjusting their marketing budgets in unpredictable ways, and it will take a while to nail down accurate predictions in this environment.

Wilson is focused on next year's reshuffled market.

"We feel strongly that the investments we have made in [programmatic TV], mobile and social, along with the mix shift to these areas, positions us well to see strong topline growth in 2017," he said. "This growth will flow through to the bottom line and should result in significantly improved operating leverage in 2017."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TubeMogul, Inc. Stock Quote
TubeMogul, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.