Seeking Alpha

Online ad/analytics firm Rocket Fuel files for $100M IPO

  • Rocket Fuel, an online ad company whose business model straddles the line between Madison Ave. and MIT, has filed for a $100M IPO under the symbol FUEL. (S-1)
  • Rocket buys inventory on online ad exchanges (e.g. Google's DoubleClick, Yahoo's Right Media), uses artificial intelligence-based algorithms and mountains of  data - the S-1 has plenty of references to that beloved buzzphrase, "big data" - to predict how users within one of its 20K+ "unique audience segments" will respond to a particular ad, and then uses its findings to target and deliver ads provided by advertiser/agency partners.
  • 2/3 of Rocket's revenue is tied to ads meant to yield a particular response, such as a click or a purchase, and the rest is tied to brand ads. Tailored solutions are offered for display, video, mobile, and social media ads.
  • The company had 1H revenue of $92.6M (+134% Y/Y), and a net loss of $11.9M. Opex rose 162% to $51.7M, with 67% of it going to sales/marketing spend. 2012 revenue was $106.6M (+138%), and net loss was $10.3M.
  • Two online video ad plays that recently went public, Tremor Media and YuMe, had disappointing IPOs, But Rocket Fuel's growth and unique technology could yield a different outcome.
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