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Summary

  • TUBE is an enterprise software company for digital branding, by reducing complexity, improving transparency and leveraging real-time data.
  • 2013 revenue was up 67% to $57 million vs. 2012. Q1 '14 revenue was up 130% to $22 million vs. Q1 '13.
  • The largest percentage growth area is platform direct sales, up 256% to $19 million in 2013 vs. 2012, and up 300% to $9.3 million in Q1 '14 vs. Q1 '13.

Based in Emeryville, CA, TubeMogul (Pending:TUBE) scheduled a $75 million IPO on the NYSE with a market capitalization of $344 million at a price range midpoint of $12 for Friday, July 18, 2014. TUBE recently cut the price range mid-point to $7.0.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Co-Managers: BofA Merrill Lynch, Citi, RBC Capital Markets

Joint Managers: BMO Capital Markets, Oppenheimer & Co.

End of lockup (180 days): Wednesday, January 14, 2015

End of 25-day quiet period: Tuesday, August 12, 2014

Summary

TUBE is an enterprise software company for digital branding. By reducing complexity, improving transparency and leveraging real-time data, TUBE's platform enables brands to gain greater control of their digital video advertising spend and achieve their brand advertising objectives.

2013 revenue was up 67% to $57 million vs. 2012. Q1 '14 revenue was up 130% to $22 million vs. Q1 '13.

The largest percentage growth area is platform direct sales, up 256% to $19 million in 2013 vs. 2012, and up 300% to $9.3 million in Q1 '14 vs. Q1 '13.

For Q1 '14 TUBE lost only $364,000 on sales of $22 million plus, and was essentially breakeven.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (MM)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Annualizing Q1 '14

TubeMogul

$344

3.9

-239.2

3.7

3.7

27%

(almost breakeven)

Conclusion

TUBE is experiencing explosive growth in platform direct sales and is almost breakeven.

TUBE is in the digital branding for enterprises business.

Even though the price range was cut substantially, it seems that TUBE is a buy and longer term hold.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

TUBE is an enterprise software company for digital branding. By reducing complexity, improving transparency and leveraging real-time data, TUBE's platform enables brands to gain greater control of their digital video advertising spend and achieve their brand advertising objectives.

TUBE's customers plan, buy, measure and optimize their global digital video advertising spend from TUBE's self-serve platform.

By integrating programmatic technologies and disparate sources of inventory within a single platform, TUBE enables its customers to launch sophisticated, scalable digital video advertising campaigns - onto any digital device - within minutes.

This is in contrast to the still prevailing and inefficient approach to media buying that occurs through a manual campaign-by-campaign request for proposal, or RFP, process, which often involves multiple digital advertising service providers.

TUBE customers primarily include brands, which generally refer to companies, or product lines within companies, that control advertising budgets for a single marketing brand or a group of marketing brands, and the advertising agencies that serve them.

Agency trading desks, ad networks and publishers also use TUBE's platform.

TUBE refers to its customers and other businesses that are engaged in purchasing digital marketing as advertisers.

Platform - sales up 300% in Q1 '14 vs. Q1 '13

TUBE's platform is integrated with many public digital video ad inventory sources, where individual ad impressions can be purchased dynamically utilizing real-time bidding technology, or RTB.

TUBE's platform automates the real-time purchase of ad impressions based upon campaign objectives.

Additionally, TUBE's customers can easily integrate the ad inventory they source directly from publishers and private exchanges. As a result, TUBE's platform enables holistic campaign management across public and private inventory using a single interface.

As consumers are increasingly watching video content on digital devices, advertisers are shifting more of their video advertising spend from traditional TV to digital video. As a result, advertisers want to plan, buy and measure TV and digital video on an equivalent basis.

TUBE's platform enables advertisers to plan and buy digital video advertising using industry-standard metrics such as gross rating points, or GRPs, which are a measure of reach and frequency among a target audience, and verify the audience they reach using Nielsen reporting, thereby unifying the planning and measurement of TV and digital video campaigns.

TUBE's platform measures key brand advertising metrics including brand lift, as measured by integrated brand surveys, as well as GRPs and engagement.

As a result, advertisers can verify the success and impact of their digital video advertising campaigns by measuring the audience reached by the campaign, how the audience interacted with their advertisements and the impact the campaign had on the consumer's perception of the brand.

Using these real-time insights, TUBE's platform dynamically optimizes spend based upon brand advertising objectives set by the advertiser.

Dividend Policy

No dividends are planned.

Intellectual Property

As of March 31, 2014, TUBE held one issued U.S. patent, which expires in 2028 and had filed seven non-provisional patent applications and one provisional patent application in the United States. In addition, TUBE maintains a trademark portfolio including common law trademarks, trademark applications pending in the United States, Canada and the European Union, and a trademark registration with the World Intellectual Property Organization.

Competition

Current and potential competitors, such as Google, AOL and Adobe, have greater customer relationships and financial, marketing and technical resources than TUBE, allowing them to leverage a larger customer base, adopt more aggressive pricing policies, and devote greater resources to the development, promotion and sale of their products, services and solutions, including products that may be based on new technologies or standards, than can TUBE.

Other general sector competitors include:

Criteo S.A. (NASDAQ:CRTO) enables companies to engage and convert their customers online whether they are on a desktop, laptop, tablet or smartphone. Through its predictive algorithms, the company delivers performance- based online display advertising on real-time consumer data. The company serves more than 4,000 e-commerce companies across 37 countries globally. The company's products include CPOP Platform, Programmatic Buying, Facebook Exchange, Mobile and Ad-X tracking. In February 2014, Criteo SA acquired Tedemis.

Tremor Video (NYSE:TRMR) is a provider of technology-driven video advertising solutions enabling brand advertisers to engage consumers across multiple Internet-connected devices, including computers, smartphones, tablets and connected televisions. The company's clients include brand advertisers globally, including automakers and consumer packaged goods companies. The company's technology, VideoHub, analyzes in-stream video content, detects viewer and system attributes, and leverages its repository of stored data to optimize video ad campaigns for brand-centric metrics. VideoHub also provides advertisers and agencies with analytics and measurement tools enabling them to understand why, when and where viewers engage with their video ads.

YuMe (NYSE:YUME) is engaged in providing digital video brand advertising solutions. Its technologies serve the specific needs of brand advertisers and enable them to find and target large, brand-receptive audiences across a range of Internet-connected devices and digital media properties. Its software is used by global digital media properties to monetize professionally-produced content and applications. It facilitates digital video advertising by dynamically matching relevant audiences available through its digital media property partners with appropriate advertising campaigns from its advertising customers. The Company generates revenues by delivering digital video advertisements on Internet-connected devices.

TUBE competes primarily with companies developing solutions to automate the purchase of video advertising impressions across multiple sources of inventory.

TUBE also competes with other companies that address certain aspects of the digital video advertising market, including demand-side platforms and video-focused ad networks, and in-house tools and custom solutions currently used by brand advertisers and their agencies and by publishers to manage advertising activities.

In addition, TUBE competes for advertising spend with large entities that offer digital video advertising services as part of a larger solution for digital media buying.

In the future, TUBE may compete with companies developing comprehensive marketing platforms.

Other companies that offer analytics, mediation, exchange or other third-party specific technologies may also compete with TUBE.

As its platform evolves and TUBE introduces new technologies, features and functionality of its platform, TUBE may become subject to additional competition.

Some of TUBE's current and prospective competitors in the broader digital advertising market have substantially greater resources and longer histories than TUBE in the digital advertising space, may actively seek to serve TUBE's market and have the power to significantly change the nature of the marketplace to their advantage.

These companies could develop and offer new solutions that directly compete with ours or leverage their position to make changes to their existing platforms that could be disadvantageous to TUBE's competitive position.

5% stockholders

  • Brett Wilson 8.8%
  • John E. Hughes 8.5
  • Ajay Chopra 26.2
  • Thomas Vardell 7.9
  • Entities affiliated with Trinity Ventures, LLC 26.2%
  • Entities affiliated with Foundation Capital, LLC 22.4%
  • Entities affiliated with Northgate Capital, L.L.C. 7.9%

Use of proceeds

TUBE expects to net $66 million from its IPO. Proceeds are allocated as follows:

  • primarily for general corporate purposes, including working capital, sales and marketing activities and general and administrative matters.

TUBE may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business, although TUBE has no present commitments or agreements to enter into any acquisitions or investments.

Disclaimer: This TUBE IPO report is based on a reading and analysis of TUBE's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: TubeMogul