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Summary

  • Tremor Video beat analysts' expectations by losing 11 cents this quarter instead of 13 cents.
  • This news has little effect on my thesis on the company's stock.
  • I was completely wrong on my opinion that this stock was a buy when it was at $4.50.

Tremor Video (NYSE:TRMR) reported an 11 cent loss for the second quarter of 2014. This was less than the 13 cent loss that the street was estimating. This compares to a loss of 4 cents in the same quarter last year. The company beat the revenue estimates that the street had as well. Tremor reported revenues of $43.7 million which compares to the consensus estimate of $40.20 million. This was a 23.2% increase from last year. Revenue for the first 6 months of the year increased 30.4% from the first 6 months of last year. The company lost $5.4 million in the second quarter. Non-GAAP adjusted EBITDA was a loss of $2.3 million. This is the equivalent to a 5 cent per share loss. Gross margins decreased from 46.5% last year to 33.9% this quarter. The first half of last year had a 45.5% gross margin compared to 34% this year.

Revenue that came from performance based pricing was 27% compared to 34% in the same quarter last year. Total revenue attributed to the all screen product which was launched this quarter made up 21% of revenues. Third quarter revenues are expected to be between $39 million and $41 million and adjusted EBITDA is expected to be between a loss of $4 million and a loss of $3 million. Full year revenues are expected to be between $158 million and $163 million. Full year adjusted EBITDA is expected to be between a loss of $11 million and a loss of $8 million.

In my article "Tremor Video: Don't Sell Yet", I was wrong about buying the stock, as it sold off immediately after I made the recommendation. I will give my opinion on the quarter now. This company is in the midst of launching new products, so it is expected that it will have losses. The gross margins stabilized this quarter. The company will be launching its SSP, so it will have more of a full swath of products to meet customers' needs. I am personally going to hold the stock until next quarter's earnings release to see how this is going. The company is going to be participating in a few conferences this month as it did last year. These will help give me more information about where the company is headed. The stock opened up 8%, but then sold off to close down 7% for the trading session. I believe that the stock wouldn't have sold off if it wasn't for the Ukrainian headlines. Please give your opinions on the company's earnings report in the comments below.

Disclosure: The author is long TRMR. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Tremor Video Earnings - What To Do Now?

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