2017 has been a very good year so far for the stock of advertising automation technology pioneer Rubicon Project (RUBI 8.39). Shares of RUBI were up 13.1% as of Tuesday's close. Those fortunes, however, look set to turn sharply today after the company posted unsatisfying fourth quarter results and first quarter guidance, and announced a new CEO.
Shares of RUBI are indicated 22% lower in pre-market action.
It has mattered little that Rubicon Project's fourth quarter non-GAAP net revenue of $66.9 million and non-GAAP earnings per share of $0.37 topped analysts' average expectations. The point that has registered for investors is that Rubicon Project's fourth quarter performance was much weaker than the same period a year ago.
To wit, non-GAAP net revenues were down 20%; its adjusted EBITDA fell 40% to $21.7 million; and non-GAAP earnings per share plunged 50%. Advertising spend on its platform declined 18% to $277.1 million.
Founder and Chairman Frank Addante said Rubicon Project executed well against its revised outlook for the fourth quarter, yet that acknowledgment seems to be falling on deaf ears based on how the stock is trading after the report.
The first quarter guidance didn't help matters.
Rubicon Project is projecting non-GAAP net revenue to be between $41 million and $44 million and non-GAAP earnings per share to be in the range of ($0.26)-($0.22). The high end of those guidance ranges is far below analysts' average expectations; in fact, it was thought Rubicon Project would be profitable in the first quarter on a non-GAAP basis.
In conjunction with the earnings report, Rubicon Project announced Michael Barrett will be joining the company as CEO, assuming that position from Mr. Addnate who has been serving in that capacity the last 10 years. This news follows the report late last month that seven senior leaders would be leaving the company as part of a management restructuring, which also included the resignation of President Gregory R. Raifman.
Mr. Barrett, who was previously CEO of Millenial Media and Chief Revenue Officer at Yahoo!, will have a lot to deal with in getting Rubicon Project turned around. If the post-report response is any indication, however, it would seem that plenty of investors aren't feeling too confident that the turn in the company's operating performance is going to happen soon.