Rubicon Project (NYSE: RUBI), a global technology company leading the
automation of advertising, today announced it has reached a definitive
agreement to acquire privately held Chango Inc., which specializes in
intent marketing technology. Chango is Canada’s fastest-growing
technology company, as recognized in 2014 by Deloitte’s Technology Fast
50 for Canada. The aggregate consideration will be approximately $122
Million (including contingent consideration), primarily in stock.
The Chango acquisition will enable Rubicon Project to expand its premium
advertising marketplace with intent marketing technology that includes
access to keyword, contextual targeting and retargeting budgets. Through
this acquisition the company will bring access to an additional $35
Billion of intent marketing spend to the Rubicon Project marketplace.
The acquisition also reinforces Rubicon Project’s direct order
automation technology and rapidly expands its Buyer Cloud initiatives,
specifically through the advancement of its Orders (Guaranteed Orders
and Non-Guaranteed Orders) platform, and will increase direct
integrations with premium brands and agencies that constitute a large
base of Chango’s current customers, including more than 60 of the
Fortune 500 advertisers.
“The team at Chango has done an extraordinary job engineering and
deploying their intent marketing technology; they have built terrific
products and a stellar team,” commented Frank Addante (@FrankAddante),
CEO, Founder & Chief Product Architect, Rubicon Project. “Chango’s
technology brings keyword, contextual targeting and retargeting to
premium display, mobile and video advertising. This will enable us to
bring intent marketing budgets to an independent, open marketplace that
serves premium buyers and sellers at scale for the first time. Our
combined capabilities will help to grow and innovate, while also fueling
a rapid acceleration of Rubicon Project’s overall Buyer Cloud business,
advancing our technology roadmap and team build out by more than one
year.”
The integration of Chango’s technology into the Rubicon Project
marketplace will provide the platform’s entire base of premium buyers
and sellers access to intent marketing capabilities.
Chango’s technology - processing 1 trillion page views per month and
billions of search events from engines such as Google, Yahoo! and Bing -
combined with Rubicon Project’s infrastructure and premium footprint of
buyers and sellers will enable the data processing technology to be
brought to market on a massive scale. While standard keyword search can
indicate a basic level of intent, Chango’s technology takes basic
keyword search data and delivers ads to consumers based on both the
initial search, plus the contextual information from the content on a
website or application’s page. The end result for marketers is a
sophisticated integration of search keyword and premium contextual
targeting capabilities. The acquisition will also enable Rubicon Project
to expand its price offerings in the future, evolving from a purely CPM
(cost per thousand impressions) model to incorporate CPC (cost per
click) and CPA (cost per acquisition) offerings currently under
development by Chango.
"Rubicon Project has been the leader in advertising automation since its
inception in 2007," commented Chris Sukornyk (@sukornyk),
CEO & Founder of Chango. "Joining the Rubicon Project team will enable
us to collectively provide buyers and sellers with a more complete way
of buying and selling premium advertising. This deal will enable us to
leverage Rubicon Project's massive reach of sellers, buyers and
consumers to accelerate our combined market share and bring intent
marketing to premium display, mobile and video advertising at an even
greater scale."
“Chango’s momentum, combined with Rubicon Project’s scale and holistic
end-to-end offering, provides tremendous synergies for not only our
business but for the entire marketplace. We expect this transaction to
be accretive within the first twelve months with strong growth
opportunities,” said Todd Tappin, COO and CFO, Rubicon Project.
Reaffirms Confidence in Q1 2015 Financial Outlook
Rubicon Project’s first quarter ending March 31, 2015 is tracking well,
and the Company reaffirmed its confidence in its financial guidance on a
stand alone basis for the first quarter of 2015 as previously provided.
Conference Call Information:
Rubicon Project will host a conference call on March 31, 2015 at 2:00 PM
(PT) / 5:00 PM (ET) to discuss its proposed acquisition of Chango. To
access the conference call by telephone, interested parties should dial
(877) 201-0168 (domestic) or (647) 788-4901 (international) and use
conference ID 15677377. A telephonic replay of the conference call will
be available for one week. To access the telephonic replay, interested
parties should dial (855) 859-2056 (domestic) or (404) 537-3406
(international) and use conference ID 15677377. An audio webcast of the
conference call will also be available within the "Events and
Presentations" section of Rubicon Project’s investor relations website.
Forward-Looking Statements
This press release and management’s prepared remarks during the
conference call referred to above include, and management’s answers to
questions during the conference call may include, forward-looking
statements, including statements based upon or relating to our
expectations, assumptions, estimates, and projections. In some cases,
you can identify forward-looking statements by terms such as “may,”
“might,” “will,” “objective,” “intend,” “should,” “could,” “can,”
“would,” “expect,” “believe,” “design,” “anticipate,” “estimate,”
“predict,” “potential,” “plan” or the negative of these terms, and
similar expressions. Forward-looking statements include, but are not
limited to, the size and growth of the intent marketing business,
continued growth in Chango’s business, acceleration in the development
of our buy-side business as a result of the transaction, development of
our Orders business and Chango’s retargeting, CPC, and CPA capabilities,
synergies between Chango’s brand and agency clients and our seller
clients, integration of Chango’s data and other technologies into our
business, our ability to leverage our platform to take advantage of
Chango’s business model including pricing and products, accretion
resulting from the transaction within 12 months, and the final purchase
price and dilution resulting from the transaction. Forward-looking
statements also include our guidance and other statements concerning our
anticipated performance, including revenue, margin, cash flow, balance
sheet, and profit expectations; development of our technology;
introduction of new offerings; scope and duration of client
relationships; business mix; sales growth; client utilization of our
offerings; market conditions and opportunities; financial measures
including Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP earnings
(loss) per share; operational measures including managed revenue, paid
impressions, average CPM, and take rate; and factors that could affect
these and other aspects of our business.
Forward-looking statements are not guarantees of future performance;
they reflect our current views with respect to future events and are
based on assumptions and estimates and subject to known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from
expectations or results projected or implied by forward-looking
statements. The intent marketing business may grow slower than
anticipated, or Chango may not benefit from growth in the market to the
degree we expect due to stronger offerings by competitors or other
factors. Integrating the Chango business with ours may be difficult for
various reasons, and Chango’s success in its market may be more
difficult to translate to our client base and infrastructure than we
anticipate, making synergies elusive. Market practices and regulation
related to data capture and use are complex and evolving, and
development or enforcement of restrictions could diminish Chango’s
data-driven competitive advantages. Integration with us could distract
Chango management or cause cultural challenges that might result in
slower than expected growth in Chango’s business, and competitive
pressures could have the same effect. Key Chango employees might be
difficult to retain. Some Chango clients might perceive conflicts with
us and shift business to Chango competitors, and some of our clients
might perceive conflicts with Chango and therefore reduce their business
with us. Market pressures could erode the profitability of Chango’s
business. Chango’s retargeting, CPC, and CPA offerings are under
development and may not be embraced by the market and grow in accordance
with our expectations. Our Orders business is still evolving and may not
meet our growth or profitability expectations. Sellers might be
reluctant to shift additional inventory types to us to meet evolving
demand we anticipate from Chango’s clients. Chango’s business is based
on short-term insertion orders, and clients may reduce or terminate
their spending with Chango on short notice and without penalty.
In addition, Chango’s business is subject to many of the same risks that
affect our business, and other risks applicable to us will affect Chango
as a part of Rubicon Project following the closing of the transaction.
These risks include our ability to grow rapidly and to manage our growth
effectively; our ability to develop innovative new technologies and
remain a market leader; our ability to attract and retain buyers and
sellers and increase our business with them; the freedom of buyers and
sellers to direct their spending and inventory to competing sources of
inventory and demand; our ability to use our solution to purchase and
sell higher value advertising and to expand the use of our solution by
buyers and sellers utilizing evolving digital media platforms; our
ability to introduce new solutions and bring them to market in a timely
manner; uncertainty of our estimates and expectations associated with
new offerings, including private marketplace, mobile, bidding, and
solutions; our ability to maintain a supply of advertising inventory
from sellers; our limited operating history and history of losses; our
ability to continue to expand into new geographic markets; the effects
of increased competition in our market and our ability to compete
effectively and to maintain our pricing and take rate; potential adverse
effects of malicious activity such as fraudulent inventory and malware;
the effects of seasonal trends on our results of operations; costs
associated with defending intellectual property infringement and other
claims; our ability to attract and retain qualified employees and key
personnel; our ability to consummate future acquisitions of or
investments in complementary companies or technologies; our ability to
comply with, and the effect on our business of, evolving legal standards
and regulations, particularly concerning data protection and consumer
privacy; and our ability to develop and maintain our corporate
infrastructure, including our finance and information technology systems
and controls.
We discuss many of these risks and additional factors that could cause
actual results to differ materially from those anticipated by our
forward-looking statements under the heading “Risk Factors” and
“Management Discussion and Analysis of Financial Condition and Results
of Operations” in our periodic reports filed with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the
year ended December 31, 2014. More detailed information, including a
copy of the Arrangement Agreement pursuant to which the transaction is
to take place, is set forth in the Current Report on Form 8-K we filed
in connection with the Chango acquisition agreement. Additional
information will also be set forth in other filings we make from time to
time with the SEC. Also, these forward-looking statements represent our
estimates and assumptions only as of the date of this press release.
Unless required by federal securities laws, we assume no obligation to
update any of these forward-looking statements, or to update the reasons
actual results could differ materially from those anticipated, to
reflect circumstances or events that occur after the statements are
made. Without limiting the foregoing, we generally give guidance only in
connection with quarterly and annual earnings announcements, without
interim updates, and we may appear at industry conferences or make other
public statements without disclosing material nonpublic information in
our possession. Given these uncertainties, investors should not place
undue reliance on these forward-looking statements. Investors should
read this press release and the documents that we reference in this
press release and have filed with the Securities and Exchange Commission
completely and with the understanding that our actual future results may
be materially different from what we expect. We qualify all of our
forward-looking statements by these cautionary statements.
The transaction, which is expected to close in the second calendar
quarter of 2015, is structured as an Arrangement under the Business
Corporations Act (Ontario) and as such is subject to approval by not
less than two-thirds of the holders of each class of shares in the
capital of Chango, voting separately, and a final order approving the
Arrangement, including the fairness of its terms and conditions, by the
Ontario Superior Court of Justice (Commercial List), as well as other
customary closing conditions. Chango shareholders owing enough shares to
meet the shareholder approval requirements have agreed to vote in favor
of the Arrangement.
The Arrangement Agreement may be terminated by either party if the
Arrangement is not consummated by May 31, 2015, by either party if an
event occurs that is reasonably likely to have a material adverse effect
on the other party, and for certain other reasons.
About Rubicon Project
Rubicon Project (NYSE: RUBI) has engineered the Advertising Automation
Cloud, one of the largest real-time cloud and Big Data computing
systems. The Company’s mission is to automate the buying and selling of
advertising by offering innovative technology solutions to connect
buyers and sellers globally. www.RubiconProject.com
@RubiconProject
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