With the recently announced merger just over the horizon between sell-side ad tech companies The Rubicon Project (NYSE:RUBI) and Telaria (NYSE:TLRA), Rubicon had already reported skyrocketing profitability late last month. On the heels of its impressive quarterly performance, investors were keen to see if Telaria would follow suit.

In keeping with Telaria's forecast, connected TV (CTV) accounted for the majority of the company's revenue for the first time. CTV soared to more than half of total revenue, up from just 33% in the prior-year quarter. While that metric showed that management's strategy of focusing on the CTV market was bearing fruit and should have had investors dancing in the streets, the celebration was tempered by another number that put a damper on the proceedings. 

A connected TV showing viewing options and apps.

Image source: Getty Images.

Taking the bad with the good

Telaria reported revenue that was essentially flat year over year, coming in at $19.6 million, down from $19.7 million in the year-ago quarter. This missed the low end of management's guidance range of $20.6 million to $22.6 million, while also falling short of analysts' consensus estimates of $21.3 million. CTV did its part, as revenue from the segment grew about 55% year over year to $10.1 million. Unfortunately, that wasn't enough to make up for the shortfall from other areas of the business.

Management was upbeat, however, convinced that Telaria is on the right track. "Our CTV business continues to drive our results, growing nearly 100% year over year [in 2019], outperforming our expectations for the fourth quarter and the full year," CEO Mark Zagorski said in the fourth-quarter earnings release. "As we look ahead, the market tailwinds powering CTV show no signs of abating, and our platform is extremely well-positioned to capitalize on these trends and capture market share," he said.

As the company continues to chase the opportunity afforded by CTV technology and directs its limited resources to that end, it isn't too surprising that other areas of the business -- like desktop and mobile video -- would begin to slip. It also wasn't much of a shocker that Telaria's losses mounted as the company continued to invest heavily to gain market share. It reported a net loss of $400,000, resulting in a loss per share of $0.01, a decline from earnings per share of $0.03 in the prior-year quarter.

There weren't too many surprises, as Telaria and Rubicon had issued preliminary results as the merger drew closer.

An update on the merger

Telaria also provided an update regarding the merger with The Rubicon Project: "Additionally, our integration planning activities for our merger with The Rubicon Project are proceeding well. Clients, partners, and employees are excited about aligning capabilities to become the world's largest independent omnichannel sell-side advertising platform."

The company added that the merger was "on track to close in early April 2020." Once that happens, Telaria shareholders will receive 1.082 shares of Rubicon Project stock for every Telaria share they own.

More of the same

Management is forecasting fiscal 2020 first-quarter revenue in a range of $15 million to $16 million, which would represent growth of between 10% and 18% year over year. By comparison, analysts' consensus estimates fall right near the midpoint of management's guidance, at $15.62 million. Even more importantly for the company's long-term strategy, it is guiding for CTV revenue of $8.5 million to $9.5 million, or growth of between 63% and 83% compared with Q1 2019.

With the merger scheduled to close in early April, however, this will be Telaria's last earnings report on a stand-alone basis.

Editor's note: A previous version of this article misstated the year-over-year growth rate of CTV revenue for the fourth quarter of 2019. The Fool regrets the error.