Image source: TubeMogul.
TubeMogul (TUBE) posted a respectable 21% increase in sales in the third quarter, but its results were overshadowed by news that software maker Adobe Systems (ADBE 1.62%) will be acquiring the advertising company at a sizable premium.
TubeMogul results: The raw numbers
| Metric |
Q3 2016 |
Q3 2015 |
Growth (YOY) |
|---|---|---|---|
|
Revenue |
$56.081 million |
$46.485 million |
21% |
|
Net loss |
$12.426 million |
$3.754 million |
N/A |
|
Earnings per share |
($0.34) |
($0.11) |
N/A |
YOY = year over year. Data source: TubeMogul Q3 2016 earnings press release.
What happened with TubeMogul this quarter?
Total spend -- essentially the amount that customers spend through TubeMogul's platform, including the cost of media purchases and TubeMogul's fees -- rose 34% year over year to $138.3 million.
Spend on TubeMogul's Platform Direct offering, which provides software that advertisers can use to run their own digital ad campaigns, increased 38% to $103 million, representing 75% of total spend. And spend on the company's Platform Services offering, which allows advertisers to specify objectives and have TubeMogul's team execute the campaign on their behalf, rose 23% to $35 million.
In turn, this growth in spend helped to drive a 21% year-over-year rise in revenue to $56.1 million.
"Programmatic TV spend nearly tripled year over year, while other cross-screen channels such as social, display, and mobile continued to see strong adoption," said CEO Brett Wilson in a press release. "As brand advertisers are increasingly seeking to consolidate their spend on a single platform, TubeMogul's focus on cross-screen planning and automating channels beyond video is positioning us well to win new brands globally."
Still, TubeMogul remains unprofitable. Operating loss increased to $11.1 million, compared with $3 million in Q3 2015. Net loss also widened, increasing to $12.4 million from $3.8 million in the year-ago period.
Looking forward
Far outweighing the company's third-quarter results, however, was the announcement that Adobe will be acquiring TubeMogul for approximately $540 million net of cash and debt. TubeMogul stock soared more than 80% on the news, surging to a level slightly below Adobe's $14 offering price.
Adobe intends to integrate TubeMogul into its Marketing Cloud platform, thereby creating "the first end-to-end independent advertising and data management solution that spans TV and digital formats."
"With the acquisition of TubeMogul, Adobe will give customers a 'one-stop shop' for video advertising, providing even more strategic value for our Adobe Marketing Cloud customers," said Adobe executive Brad Rencher in a press release.
TubeMogul's Wilson added: "The combination of Adobe Marketing Cloud with TubeMogul's software creates a uniquely comprehensive platform that will help marketers always know what's working -- and act on it. We're thrilled to call Adobe home and believe this will be a great move for our clients, team, and shareholders."
The deal is expected to close by the end of February.
