In areas where other companies are growing fast – mobile, social and video – Rocket Fuel is actually losing market share, according to its fourth-quarter earnings report released Wednesday.
Rocket Fuel reported $46.9 million in revenue from mobile, social and video channels in the last quarter of 2015, an 18% year-over-year decline. In comparison, Rocket Fuel's Q4 2014 revenue of $57 million from mobile, social and video channels represented a 108% increase over the year before.
Bundled together, those three formats represented 36% of Rocket Fuel's revenue, so mobile is somewhere south of that percentage. Its competitor, Criteo, didn't even break out mobile last year but said in its latest earnings that 47% of its 2015 revenue came from mobile. Rubicon reported 31% of its managed revenue is mobile in its latest earnings.
In his first earnings call since being elevated from his CRO role, Rocket Fuel CEO Randy Wootton said the low spend across these newer platforms was because Rocket Fuel optimizes holistically rather than having a designated mobile bucket, for example. It also encountered a “speed bump” when Rocket Fuel switched from buying Facebook FBX inventory to its API inventory.
Overall, the numbers weren't too much better. In Q4 2015, normally the biggest quarter for advertising, overall revenue decreased 10% year over year to $125 million.
Growth appears to be sputtering. The company boosted revenue 70% from 2013 to 2014, but in 2015 growth slowed to 13%, far behind Rubicon's and Criteo’s numbers.
Rocket Fuel did hit one cost-savings goal laid out last year: positive adjusted EBITDA for 2015, meaning it didn't lose money. And it beat the Street's expectations for earnings per share, sending the stock price up more than 12% in after-hours trading.
As Rocket Fuel continues to try to turn itself around, it has hired a new CFO, Rex Jackson, who will start in March.
In Jackson's last CFO role, at JDSU, he helped split a company in two and cut operations costs. Rocket Fuel first stated a goal to cut operations costs a year ago, when it announced layoffs during its Q1 2015 earnings call.
Now Rocket Fuel has four new employees in the C-suite. Besides the new CEO and CFO, Ben Saitz joined as chief customer officer a few weeks ago, and Wootton hired Eric Duerr as CMO in mid-January.
The company’s new strategy involves cutting the cost of sale by relying more on resellers, which can package Rocket Fuel’s programmatic technology with other offerings.
Rocket Fuel is also trying to grow self-serve customers, which comprise 10% of its customer base.
It’s also reaching out more to marketers directly. Marketers accounted for 27% of customers, compared to 22% a year ago (the rest are agencies). And while companies like The Trade Desk say they are doing better because they don’t sell to brands, which reduced agency conflict, Wootton highlighted a case where it went with an agency to a buyer who chose Rocket Fuel as its DMP.
Rocket Fuel said it will be moving to a more transparent business. Its “commitment to shattering the black box” means more transparency into pricing and performance, Wootton said. But the company’s margins, a source of industry gripes, grew from 55% in Q4 2014 to 60% in Q4 2015.