To the financials: Rocket Fuel reported Q1 revenue growth of 40% and a smaller-than-expected EBIDTA loss. Of the company's $104.3 million in gross revenues, just shy of 40% ($37.4 million) came from the all-important social, video and mobile channels. Mobile alone was 25%.
Non-GAAP net revenue of $58.8 million grew 32% compared to $44.7 million in the year-ago period, suggesting the company's margins – which once hovered in the high-60% range – have fallen from their highs of about a year ago. More in the earnings release.
Rocket Fuel's stock was down 2.3% in after-hours trading.
Somewhat paradoxically, management heralded inroads with agencies even as it touted its direct relationships with advertisers. These deals consisted of long-term negotiated contracts at the holding company level or with agency trading desks. Rocket Fuel claims to have comprehensive deals signed with two of the top six global trading desks.
Skeptical investment analysts on the earnings call peppered management with questions about how exactly it planned to gain inroads with the agency crowd.
In response to another question about whether Rocket Fuel's software can effectively compete in a marketplace saturated with DMPs, Zweben acknowledged, "There are a number of other DMP products, some of them at much larger companies than us."
But he said those companies – Oracle, Neustar and Adobe, among others – are geared toward the use of first-party data, whereas Rocket Fuel shines when it comes to applying anonymous audience segments to reach prospects in paid media.