TubeMogul, whose IPO is expected soon, saw revenue from direct users of its demand-side platform (DSP) ramp up dramatically in the first quarter of the year.
According to an updated S-1 filed with the Securities and Exchange Commission, total revenue for Q1 2014 grew to $22 million, 130% more than it made the first three months of 2013. That money came from a combination of Platform Direct and Platform Services revenues – i.e., software and managed services fees.
TubeMogul looked strongest in the SaaS area. For the first three months of the year, its platform revenues were $9.2 million, representing 300% growth from Q1 2013.
Meanwhile managed services (or, if you prefer, insertion order-based buying) grew more slowly, from $7.3 million to $12.8 million in the same time frame. Of the $5.5 million in new Platform Services fees, just over half ($3.4 million) came from new customers. The other $2 million or so came from additional spending by existing buyers.
TubeMogul appears well-positioned to capture growing interest from large brand advertisers in digital video – as evidenced by the glitz and star power on display at this week's digital upfront parties hosted by AOL, Google/YouTube and others.
TubeMogul's revenue growth was partly offset by rising media costs in its Platform Services.
"Cost of revenue increased $2.8 million, or 83%, during the three months ended March 31, 2014, compared to the three months ended March 31, 2013. This increase was due to a $2.7 million increase in media costs associated with the growth in Platform Services revenue," the company told investors. In other words, margins from its ad network-like business suffered as more advertisers clamored for video inventory.
But overall, TubeMogul's gross margins showed steady improvement, as one would expect given its SaaS traction: "For the years ended December 31, 2011, 2012 and 2013 and for the three months ended March 31, 2013 and 2014, our gross margin was 48%, 52%, 66%, 65% and 72%, respectively."
And TubeMogul's net losses are shrinking for the moment. Q1 net loss fell to $800,000 from $1.9 million during same period last year.
As of March 31, TubeMogul employed 280 staffers, many of them engineers. Personnel costs for the quarter rose $1.4 million.
TubeMogul is preparing to enter the public markets at a gloomy time for ad tech stocks. Stock prices for Rocket Fuel, Criteo and Rubicon Project are trading well below their market debuts.