What happened

Advertisers and agencies aren't spending money as expected, and shares of advertising technology (adtech) company Tremor International (TRMR 4.57%) are getting smashed today as a result. As of 12:15 p.m. ET, Tremor stock was down a painful 30% and had touched all-time lows during the session after the company announced its earnings results for the second quarter.

So what

Tremor International is both a demand-side and supply-side adtech platform with a focus on connected TV (CTV) -- most adtech companies pick one side or the other. While the company did enjoy 13% year-over-year revenue growth in the second quarter of 2023, revenue (excluding traffic acquisition costs -- a common adtech adjustment) of $84.2 million was well short of Wall Street's expectations of about $97 million.

Also disappointing investors today were Tremor's net losses. In Q2, the company had a $3.6 million loss compared with a profit of $2.4 million in the prior-year quarter. This is partially because it acquired rival Amobee in September 2022, a company that was losing money at the time.

While Tremor's management says it's already implemented $65 million in annualized savings, the Q2 loss wasn't what the market wanted to see. And there are additional frustrations with this acquisition.

Now what

Tremor acquired Amobee for $239 million -- a huge amount for a small-cap stock -- to accelerate its growth. At the time of acquisition, management said it expected the combined companies to generate $500 million in full-year 2023 revenue. Then in the fourth quarter of 2022, that guidance was lowered to $400 million.

With today's earnings results, Tremor has lowered full-year revenue guidance yet again to between $320 million and $330 million. For perspective, Tremor generated revenue of $302 million in 2021 on its own. In short, the acquisition of Amobee has come at substantial cost with nothing to show for it. And that's why investors see little reason to buy this stock today.