Whirly lollipop on orange background.

The Rubicon Project (RUBI) is another cloud platform for digital advertising. RUBI is positioning itself as the underlying technology platform that these and nearly every other company out there is using to handle the actual automation and “real-time bidding (RTB)” between buyers and sellers of advertising.

The Rubicon Project has been around for a long time in a few different incarnations. the shares were priced at $15 (LEOR). With 36M shares outstanding post-IPO the market capitalization of RUBI will start out at $540M. Assuming they continue their 45% top line growth it would suggest $120M this year for a 4.5x P/S ratio. The shares did well in the aftermarket with a nice gain to $20/share.

RUBI joins two other recently-public players in the space, Rocket Fuel (FUEL) and Criteo (CRTO).

Rocket Fuel (FUEL) come public in August of 2013 at $29. After hitting a high of $71 the shares have pulled back sharply recently (along with many other high-multiple stocks) and now changes hands at $42-43/share. Rocket Fuel has been growing fast (100%/YoY) and looks reasonable on a valuation basis; at a $1.4B TEV the P/S ratio on 2014 estimated revenue of $433M is just over 3x. Analysts are expecting positive EBITDA this year and actual earnings in 2015.

Criteo (CRTO) completed their IPO in October 2013 at an above-the-range $31 and enjoyed a run to $60 before settling back to $40-41 recently. Criteo has been profitable for years while enjoying similar 100% top-line growth. Analysts are forecasting earnings near $0.50/share on $870M in revenue this year and almost $1.00/share on 1.18B in revenue in 2015. With a TEV of $2B the P/S ratio is 2.3x. Besides being a French company this stock has an actual P/E. Coincidently shares of CRTO dropped several points on the day that RUBI started trading. Insiders recently sold a big chunk of stock at $45.

Figuring out the relative positioning of these three companies takes some doing but here’s our summary of it:

  • RUBI can be thought of as the underlying market exchange for clearing
    ads that want to be shown and all digital impressions being made.
    They aspire to be a kind of NASDAQ for advertising buyers and
  • CRTO figures out what ads to place where that will yield the best
    conversion into real revenue. They do this by “learning” which ads convert best using lots of variables. As ads are show and
    transactions occur their knowledge base and results get better. It’s
    high ROI for the advertiser.
  • FUEL sits somewhat in the middle of the other two. They use the same
    kind of big data/AI approach to optimize advertising placement and
    spend toward getting the best clicks. So it’s one step less than
    actual conversion (as in the case of CRTO) but still has high ROI for

Based on the diagram below the revenue growth for the sector is very robust. FUEL is gaining market share relative to the other two but there are additional players (like Google!) that would need to be included for a full analysis. However it’s probably safe to say that these companies do represent the highest marginal growth rates in the online advertising segment.


Some industry insiders see these companies as too niche not to eventually “hit a wall.” Then when and how remains to be seen. And the massive industry size makes M&A a good potential longer term exit for these companies.

The roadshow slide decks for these companies are in the archive: Rocket Fuel IPO Roadshow Criteo IPO Roadshow The Rubicon Project IPO Roadshow We also have the Criteo Follow-On Roadshow

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