Is the Rubicon Project Google Adsense’s Only Real Competitor?

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The Rubicon Project (NYSE:RUBI), a company that provides automated online advertising services, is on the rise. At least, as a business, Rubicon Project is on the rise. Total advertising spending managed, or gross revenue, increased 34 percent on the year to $129.6 million, “primarily driven by an increase in pricing due to increased bidding activity.” The take rate, Rubicon Project’s share of managed revenue, increased 0.4 percentage points to 17.8 percent, yielding net revenue of $23 million, up 39 percent on the year.

If these numbers seem small, well, they are. As of May 14, when Rubicon Project stock was up nearly 10 percent on post-earnings euphoria, the company commanded a market cap of $431.85 million, placing it at the low end of the range generally considered small cap. Moreover, before the post-earnings pop, shares were down more than 43 percent since April 2 when the company launched its IPO.

But even though revenue is relatively low, growth is strong and the basis for the growth seems healthy. That increased bidding activity was no anomaly — according to a March 2014 report from Internet analytics firm comScore, Rubicon Project’s advertising network reached 219.8 million people, or 96.8 percent of the total Internet population.

For some context, that’s a wider reach than Google’s (NASDAQ:GOOG)(NASDAQ:GOOGL) ad network, which is the largest buy-side ad network. So even though you won’t see Rubicon Project topping net digital display ad revenue charts, such as those compiled by eMarketer, there is at least one metric on which the company competes with Google. More to the point, advertisers are willing to pay for the reach of Rubicon Project’s network.

But Rubicon Project is still losing money. In the first-quarter, the company reported a non-GAAP loss of 15 cents per share, down from break-even in the year-ago period. Worse, looking ahead to the second-quarter, non-GAAP earnings are expect to decline to a loss between 21 cents and 24 cents per share, and shares outstanding are expected to increase 27.7 percent to 33.2 million.

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