“We see the consolidation of spend there that we weren’t seeing a year ago,” Wootton said. “I think some of the spend in the UK can be associated with uncertainty around Brexit, though I can’t point to anything exact.”
On the bright side, the platform solutions business continues to hum along – with GAAP revenue up 141% YoY and representing 19% of Rocket Fuel’s total revenue, compared to 8% last year. In Q2, platform solutions constituted 18% of Rocket Fuel’s total revenue.
Another positive: The three prospective holding company deals Wootton discussed last quarter will soon bear fruit.
Rocket Fuel recently signed with one (unnamed) holding company, Wootton said, but that deal is still being activated and isn’t reflected in Q3 earnings. Media spend from independent agencies trailed off during Q3, leading to a 3% YoY decline in Rocket Fuel’s North America GAAP revenue to $90.9 million. It’ll take a quarter or two before Rocket Fuel’s earnings reflect the new holding company deal, Wootton said.
Wootton wouldn’t elaborate on the status of the other two holding company trials, other than to say they were going well. Both trials mark a shift in the company’s traditional relationships with the agency world, once slightly contentious because of the high margins Rocket Fuel generated for itself. That has changed.
“[The holding companies] see us coming forward with a solution orientation to make them successful,” he said.
So Rocket Fuel’s intent to be profitable in 2017 is still apparently going as planned, though Wootton wants to add more color to the Q4 earnings.
“Our future is in the platform solutions business, long-term relationships with a couple of the top holding companies, independent agencies who get digital and big brands who like lots of data,” Wootton said.