TubeMogul (TUBE) Facing a Year of Investment - BMO

BMO Capital analyst, Daniel Salmon, sees TubeMogul, Inc (NASDAQ: TUBE) as an innovator and leader in the public ad tech space but one that faces increasing competition from lower take rate players. No change to Market Perform rating or $15 PT.

TubeMogul reported another solid beat in 4Q15, and 2016 guidance also showed upside to our and the Street’s estimates. 4Q15 revenue of $58.6mm was ahead of the Street’s $52.3mm estimate. Adjusted EBITDA of $3.7mm also beat the Street’s ($0.8mm) estimate. 1Q16 guidance calls for total spend of $108- 110mm, revenue of $40-42mm, gross profit of $28-30mm and adj. EBITDA loss of ($3-5mm). 2016 guidance calls for total spend of $569-577mm, revenue of $220-228mm compared to consensus $216mm, gross profit to $152-160mm, and adj. EBITDA of 5mm, compared to consensus $3mm.

The news that the company is anticipating access to Facebook and Instagram video inventory in 1H16 is a key positive, especially in light of YouTube inventory no longer being available on the DoubleClick Ad Exchange. Also, after several years of work the company is expected to officially launch in China in this year.

However, the main area of concern remains long-term take rate pressure. The company has been able to fend off large declines by adding features, such as à la carte fees for third-party data, audience reporting and measurement (from SCOR and NLSN), ad serving and creative. They view these developments as positive, but not overwhelmingly so to quell concerns over competition from lower take-rate players like Google/DoubleClick Bid Manager and AppNexus.

No change to Market Perform rating or $15 PT.

For an analyst ratings summary and ratings history on TubeMogul, Inc click here. For more ratings news on TubeMogul, Inc click here.

Shares of TubeMogul, Inc closed at $12.84 yesterday.

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