Seeking Alpha

Rocket Fuel -23.8% due to guidance; $202M acquisition announced

  • Though Rocket Fuel (NASDAQ:FUEL) beat Q2 estimates, it's guiding for Q3 revenue $96M-$100M and full-year revenue from current operations of $385M-$405M, below consensus estimates of $109.6M and $422.6M.
  • Rocket Fuel states advertiser commitments were weaker than expected towards the end of Q2. It blames tighter control of client spend by internal ad agency trading desks, a shift towards direct licensing among advertisers, and (notably) concerns about industry ad inventory quality.
  • The online ad retargeting platform has also announced it's buying [x+1], provider of a programmatic (automated) ad platform that helps marketers manage and optimize the use of their data for ad campaigns. Rocket Fuel is paying $100M in cash + 5.4M shares (current value of $101.8M).
  • The companies predict the combo of [x+1]'s data management offerings with Rocket Fuel's A.I./analytics-driven programmatic ad platform will give CMOs "a robust toolset to control the content, timing, and frequency of messaging to their customers on a global basis." Rocket Fuel also sees opportunities to cross-sell to [x+1]'s clients, which include Fortune 100 businesses.
  • [x+1] is expected to contribute $18M-$22M to 2014 sales, assuming the deal closes early in Q4.
  • Q2 results, PR
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