Rocket Fuel Inc.
Rocket Fuel Inc. (Form: 8-K, Received: 08/09/2017 16:23:36)


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 9, 2017

Rocket Fuel Inc.
(Exact name of registrant as specified in its charter)

Delaware
 
001-36071
 
30-0472319
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)

2000 Seaport Blvd., Suite 400
Redwood City, CA 94063
(Address of principal executive offices, including zip code)
(650) 595-1300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  x

 






Item 2.02.    Results of Operations and Financial Condition.
 
On August 9, 2017 , the Company issued a press release announcing its financial results for the three months ended June 30, 2017 . The attached press release includes a discussion of certain non-GAAP financial measures as well as a reconciliation of such non-GAAP financial measures to the corresponding GAAP financial measures.

A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated under this Item 2.02 by reference.

The information set forth under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in any such filing.


Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits.
Exhibit No.
 
Description
99.1
 
Press release announcing financial results dated August 9, 2017
.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
ROCKET FUEL INC.
 
 
 
 
 
By:
/s/ Stephen Snyder
 
 
 
Stephen Snyder
 
 
 
Chief Financial Officer
Date: August 9, 2017






EXHIBIT INDEX

Exhibit No.
 
Description
99.1
 
Press release announcing financial results dated August 9, 2017 .





Exhibit 99.1
Rocket Fuel Reports Financial Results for Second Quarter 2017


REDWOOD CITY, Calif., August 9, 2017 - Rocket Fuel Inc. (NASDAQ: FUEL), a predictive marketing platform provider, today announced financial results for the second quarter ended June 30, 2017 .

Financial Highlights for the Second Quarter of 2017

GAAP Revenue: $90.7 million , 22% below last year's second quarter total of $117.0 million .
Revenue derived from North America was $69.9 million , down 25% from last year's second quarter. Revenue from outside North America was $20.8 million , down 14% from last year.
Platform Solutions revenue grew significantly year-on-year, representing 38% of total revenue in the second quarter versus 18% in last year’s second quarter. Media Services revenue represented 62% and 82% of total revenue in the second quarter 2017 and the second quarter 2016 , respectively.

Non-GAAP Spend: $95.8 million , down 19% compared to $118.4 million non-GAAP spend in the second quarter of 2016 .
Non-GAAP spend derived from North America was $73.6 million , down 21% from last year's second quarter. Non-GAAP spend from outside North America was $22.2 million , down 13% from last year.

Platform Solutions spend grew 77% year-on-year, representing 41% of non-GAAP spend in the second quarter versus 19% in last year’s second quarter. Media Services declined 41% year-on-year, and spend was 59% and 81% of non-GAAP spend in the second quarter 2017 and the second quarter 2016 , respectively.

Non-GAAP Net Revenue: $42.5 million , down 36% compared to $66.0 million non-GAAP Net Revenue in the second quarter of 2016 .
GAAP Net Loss: $(18.2) million , or $(0.39) per diluted share compared to a net loss of $(16.7) million , or $(0.38) per diluted share, in the second quarter of 2016 .
Non-GAAP Adjusted EBITDA: $(2.5) million , compared to  $4.2 million  in the second quarter of 2016 .
Non-GAAP Adjusted Net Loss: $(9.9) million , or $(0.21) per diluted share, compared to an adjusted net loss of $(6.7) million , or $(0.15) per diluted share, for the second quarter of 2016 .
GAAP Net Cash Provided by Operating Activities: $6.0 million , compared to $5.2 million in the second quarter of 2016 .
Non-GAAP Free Cash Flow: $3.4 million , compared to $0.9 million in the second quarter of 2016 .
Cash and Cash Equivalents: $62.4 million as of June 30, 2017 , compared to $84.0 million as of December 31, 2016 .

Debt and Capital Lease Obligation: Total outstanding obligations of $83.5 million, including a $69.5 million revolving line of credit and $14.0 million of capital leases. The Company was not in compliance with the bank-defined adjusted EBITDA covenant related to the credit facility as of June 30, 2017, however, a waiver has been obtained. Additionally, the Company has entered into an amendment to its credit facility with terms and covenants intended to align with completing the acquisition by Sizmek Inc. that was announced on July 18, 2017, or to pay down the remaining balance by October 31, 2017.




Employee Headcount: 726 as of June 30, 2017 , down from 899 in the second quarter of 2016 .

Financial Outlook for the Third Quarter of 2017
For the third quarter of 2017, the Company expects:
- Non-GAAP net revenue between $35.0 million and $40.0 million.
- Non-GAAP Adjusted EBITDA between negative $10.0 million and negative $5.0 million.
The Company does not reconcile its forward-looking non-GAAP financial measures, net revenue and adjusted EBITDA, to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections in respect to the interplay between revenue and the corresponding margins. Our Media Services and Platform Solutions have different media margins and the pace of the transition of some of our business from Media Services to Platform Solutions, the pace of adoption, or activation of existing Platform Solutions customers, and the corresponding future margins cannot be reasonably predicted. The GAAP measure net income includes stock-based compensation expense that is impacted by future hiring and retention needs, and the future share price of Rocket Fuel’s stock. Similarly, restructuring charges, which we exclude from our non-GAAP measure adjusted EBITDA, are impacted by future decisions and by actions involving our facilities that are difficult to predict. The actual amounts of these excluded items will have a significant impact on the Company’s GAAP net income. Accordingly, reconciliations of these two forward-looking non-GAAP financial measures to the corresponding GAAP measures are not available without unreasonable effort.

Conference Call, Webcast and Related Information
As a result of the announcement on July 18, 2017, regarding Rocket Fuel’s entry into a definitive agreement to be acquired by Sizmek Inc., Rocket Fuel will not be hosting a conference call to discuss its second quarter 2017 financial results.

Use of Non-GAAP Measures
We provide information relating to non-GAAP spend, non-GAAP net revenue, non-GAAP adjusted EBITDA, non-GAAP adjusted net income (loss), non-GAAP operating expenses and non-GAAP free cash flow, which are financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures have been included in this press release because they are measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans.
We define non-GAAP spend as GAAP revenue plus platform media costs for a portion of our sales arrangements (customers with revenue recognized on a net basis per GAAP). Media costs consist of costs for advertising impressions we purchase from advertising exchanges or other third parties. A limitation of non-GAAP spend is that it is a measure designed for internal purposes to assess market share and scale, and to plan for optimal levels of support for our clients that may be unique to Rocket Fuel. This may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that have similar business arrangements but present the impact of media costs differently. Our management compensates for this limitation by also considering the comparable GAAP financial measures of revenue, media costs and other costs of revenue.

We define non-GAAP net revenue as GAAP revenue less media costs. A limitation of non-GAAP net revenue is that it is a measure designed for internal purposes that may be unique to Rocket Fuel and may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that have similar business arrangements but present the impact of media costs differently. Our management compensates for this limitation by also considering the comparable GAAP financial measures of revenue, media costs and other costs of revenue.




We define non-GAAP adjusted EBITDA as GAAP net income (loss) before interest expense, other income (expense), net, income tax provision (benefit), depreciation and amortization expense (including amortization of capitalized software development expenses), stock-based compensation expense and related payroll taxes, acquisition and restructuring related expenses, and impairment charges. Non-GAAP adjusted EBITDA has a number of limitations, including the following: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and non-GAAP adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; non-GAAP adjusted EBITDA is often considered an approximation of operating cash flow, but in our case excludes software development costs capitalized in a current period and excludes those costs as they are amortized over future periods; non-GAAP adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; non-GAAP adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; non-GAAP adjusted EBITDA does not reflect acquisition and restructuring related expenses, the expenses capitalized for internal-use software, tax and interest expenses that may represent payments reducing the cash available to us; and other companies, including those in our industry, may calculate non-GAAP adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, our management considers non-GAAP adjusted EBITDA alongside other financial performance measures, including cash flow metrics, net income (loss) and our other GAAP results.
We define non-GAAP adjusted net income (loss) as GAAP net income (loss) excluding stock-based compensation expense, amortization of intangible assets, impairment charges, acquisition and restructuring related expenses and the estimated tax impact of the foregoing items. A limitation of non-GAAP adjusted net income (loss) is that it is a measure that may be unique to Rocket Fuel and may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that define adjusted net income (loss) differently. This measure may also exclude expenses that may have a material impact on Rocket Fuel’s reported financial results. Our management compensates for these limitations by also considering the comparable GAAP financial measure of net income (loss).
We define non-GAAP operating expenses as GAAP total costs and expenses less media costs, depreciation and amortization expense (including amortization of capitalized software development costs), impairment charges, stock-based compensation expense and related payroll taxes, and acquisition and restructuring related expense. Non-GAAP operating expenses has a number of limitations, including the following: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and this measure does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; non-GAAP operating expenses is often considered an approximation of operating cash flow, but in our case excludes software development costs capitalized in a current period and excludes those costs as they are amortized over future periods; non-GAAP operating expenses does not reflect changes in, or cash requirements for, our working capital needs; non-GAAP operating expenses does not consider the potentially dilutive impact of equity-based compensation; non-GAAP operating expenses does not reflect acquisition and restructuring related expenses, the expenses capitalized for internal-use software, tax and interest expenses that may represent payments reducing the cash available to us; and other companies, including those in our industry, may calculate non-GAAP operating expenses differently, which reduces its usefulness as a comparative measure. Because of these limitations, our management considers non-GAAP operating expenses alongside other financial performance measures, including total expenses, cash from operating activities and our other GAAP results.
In addition, we provide information about our non-GAAP free cash flow. We define non-GAAP free cash flow as the net cash provided by (or used in) operating activities less the cash used for purchases of property, equipment and software and for capitalized internal-use software development costs. A limitation of free cash flow is that it may be unique to Rocket Fuel and may not enhance the comparability of Rocket Fuel’s results to other companies in the same industry that define free cash flow differently from us. This measure also does not represent the residual cash flow available to us for discretionary expenditures or investments because we have mandatory capital leases and debt service requirements that may have a material impact on Rocket Fuel’s liquidity. Our management compensates for these limitations by also considering the comparable GAAP financial measure of net cash provided by (or used in) operating activities.




For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measures, see “Reconciliation from GAAP Revenue to Non-GAAP Spend,” “Reconciliation from GAAP Revenue to Non-GAAP Net Revenue,” “Reconciliation from GAAP Net Income (Loss) to Non-GAAP Adjusted EBITDA,” “Reconciliation from GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss)”, “Reconciliation from GAAP Total Cost and Expenses to Non-GAAP Operating Expenses" and “Reconciliation from GAAP Net Cash Provided by (Used in) Operating Activities to Non-GAAP Free Cash Flow" included in this press release.
These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP.
Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future financial performance, including but not limited to expectations regarding total spend as a new metric; expected progress against achieving our strategic priorities; expectations regarding our platform solutions business and our media services business; our sales and marketing execution; industry trends; trends and growth in our business; technology; our customer, supplier and channel partner relationships; our operating expenses and cost structure; guidance for third quarter non-GAAP net revenue and non-GAAP adjusted EBITDA, our expectations regarding our credit facility and amendments thereto, and financial goals for fiscal year 2017. Words such as "expect," "believe," "intend," "plan," "goal," "focus," "anticipate," and other similar words are also intended to identify forward-looking statements.
These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from the results anticipated by such statements, including, without limitation: our limited operating history, particularly as a relatively new public company; fluctuations in our operating results, including but not limited to fluctuations due to seasonality; changes in customers; our history of losses; our access to capital on acceptable terms; our ability to achieve the expected benefits of our restructuring and operating efficiency plans; risks due to employee attrition and integration of new leadership and employees; risks associated with margin shifts in our business; our ability to adequately address competition; our ability to serve the needs of agencies and agency holding companies; and risks to our ability to make the right investment decisions with regard to new products, technology, infrastructure, sales strategies and strategic imperatives in our key markets, including international.
Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2017 and in subsequent SEC filings. These forward-looking statements are made as of the date of this press release and the related webcast, and the Company expressly disclaims any obligation or undertaking to update the forward-looking statements contained herein or therein to reflect events that occur or circumstances that exist after the date on which the statements were made.
About Rocket Fuel
Rocket Fuel is a predictive marketing software company that uses artificial intelligence to empower agencies and marketers to anticipate people's need for products and services.
Headquartered in Redwood City, Calif., Rocket Fuel has more than 20 offices worldwide and trades on the NASDAQ Global Select Market under the ticker symbol "FUEL." Rocket Fuel, the Rocket Fuel logo, Moment Scoring, Advertising That Learns and Marketing That Learns are trademarks or registered trademarks of Rocket Fuel Inc. in the United States and other countries.
Investor Relations:
(650) 481-6082
ir@rocketfuel.com




Rocket Fuel Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
 
 
 
June 30,
 
December 31,
 
2017
 
2016
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
62,356

 
$
84,024

Accounts receivable, net
107,267

 
125,755

Prepaid expenses
2,831

 
2,598

Other current assets
6,046

 
3,049

Total current assets
178,500

 
215,426

Property, equipment and software, net
42,429

 
49,561

Restricted cash
1,784

 
1,749

Intangible assets, net
27,346

 
34,874

Deferred tax assets, net
793

 
574

Other assets
673

 
517

Total Assets
$
251,525

 
$
302,701

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
72,268

 
$
83,001

Accrued and other current liabilities
28,406

 
33,486

Deferred revenue
4,195

 
2,856

Current portion of capital leases
9,256

 
8,325

Current portion of debt
68,998

 
71,190

Total current liabilities
183,123

 
198,858

Capital leases - Less current portion
4,722

 
6,721

Deferred rent - Less current portion
8,840

 
9,121

Other liabilities
1,491

 
850

Total liabilities
198,176

 
215,550

 
 
 
 
Stockholders' Equity:
 
 
 
Common stock
47

 
46

Additional paid-in capital
479,699

 
473,056

Accumulated other comprehensive loss
(705
)
 
(925
)
Accumulated deficit
(425,692
)
 
(385,026
)
Total stockholders' equity
53,349

 
87,151

Total Liabilities and Stockholders' Equity
$
251,525

 
$
302,701






Rocket Fuel Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except loss per share data)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
90,747

 
$
116,968

 
$
185,919

 
$
221,713

Costs and expenses:
 
 
 
 
 
 
 
Media costs
48,239

 
50,922

 
95,995

 
93,481

Other cost of revenue (1)
20,053

 
20,397

 
41,558

 
40,482

Research and development (1)
6,863

 
9,438

 
14,133

 
20,077

Sales and marketing (1)
23,212

 
36,190

 
49,110

 
73,030

General and administrative (1)
9,280

 
12,765

 
19,981

 
27,086

Restructuring
986

 
1,766

 
4,754

 
1,567

Total costs and expenses
108,633

 
131,478

 
225,531

 
255,723

Operating loss
(17,886
)
 
(14,510
)
 
(39,612
)
 
(34,010
)
Interest expense
1,231

 
1,032

 
2,368

 
2,269

Other (income) expense, net
(1,136
)
 
866

 
(1,688
)
 
672

Loss before income taxes
$
(17,981
)
 
$
(16,408
)
 
$
(40,292
)
 
$
(36,951
)
Income tax provision
216

 
285

 
374

 
515

Net loss
$
(18,197
)
 
$
(16,693
)
 
$
(40,666
)
 
$
(37,466
)
 
 
 
 
 
 
 
 
Basic and diluted net loss per share attributable to common stockholders
$
(0.39
)
 
$
(0.38
)
 
$
(0.88
)
 
$
(0.85
)
Basic and diluted weighted-average shares used to compute net loss per share attributable to common stockholders
46,638

 
44,056

 
46,451

 
43,828


(1)
Includes unaudited stock-based compensation expense as follows (in thousands):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Other cost of revenue
$
334

 
$
493

 
$
729

 
$
1,023

Research and development
690

 
981

 
1,232

 
2,346

Sales and marketing
697

 
1,357

 
1,486

 
2,846

General and administrative
867

 
1,251

 
1,989

 
2,677

 
$
2,588

 
$
4,082

 
$
5,436

 
$
8,892







Rocket Fuel Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Operating Activities:
 
 
 
 
 
 
 
   Net loss
$
(18,197
)
 
$
(16,693
)
 
$
(40,666
)
 
$
(37,466
)
      Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
         Depreciation and amortization
10,840

 
12,881

 
23,384

 
25,145

         Impairment of long-lived assets
164

 
1,225

 
2,445

 
1,225

         Accelerated amortization of leasehold improvements

 
3,526

 

 
7,059

         Stock-based compensation expense
2,588

 
4,082

 
5,436

 
8,892

Deferred taxes
(66
)
 
197

 
(192
)
 
193

         Other non-cash adjustments, net
872

 
253

 
1,121

 
1,607

         Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
6,035

 
(4,001
)
 
17,451

 
10,102

Prepaid expenses and other assets
855

 
(413
)
 
(3,325
)
 
(2,209
)
Accounts payable, accrued and other liabilities
2,766

 
6,781

 
(15,398
)
 
(5,916
)
Deferred rent
(540
)
 
(3,029
)
 
(414
)
 
(6,103
)
Deferred revenue
657

 
346

 
1,339

 
(128
)
Net cash provided by (used in) operating activities
5,974

 
5,155

 
(8,819
)
 
2,401

 
 
 
 
 
 
 
 
Investing Activities:
 
 
 
 
 
 
 
   Purchases of property, equipment and software
(240
)
 
(1,268
)
 
(1,504
)
 
(3,055
)
   Capitalized internal-use software development costs
(2,293
)
 
(3,000
)
 
(4,798
)
 
(5,924
)
Other investing activities
8

 

 
124

 
332

Net cash used in investing activities
(2,525
)
 
(4,268
)
 
(6,178
)
 
(8,647
)
 
 
 
 
 
 
 
 
Financing Activities:
 
 
 
 
 
 
 
   Proceeds from employee stock plans, net
797

 
1,052

 
904

 
1,080

Tax withholdings related to net share settlements of restricted stock units
(260
)
 
(368
)
 
(415
)
 
(609
)
   Repayment of capital lease obligations
(2,534
)
 
(2,126
)
 
(4,974
)
 
(4,218
)
Proceeds from debt facilities, net of issuance costs

 

 
(356
)
 
22,350

Repayment of debt facilities
(2,000
)
 

 
(2,000
)
 
(24,000
)
Net cash used in financing activities
(3,997
)
 
(1,442
)
 
(6,841
)
 
(5,397
)
 
 
 
 
 
 
 
 
Effect of Exchange Rate Changes on Cash and Cash Equivalents
148

 
(173
)
 
170

 
(253
)
Change in Cash and Cash Equivalents
(400
)
 
(728
)
 
(21,668
)
 
(11,896
)
Cash and Cash Equivalents—Beginning of period
62,756

 
67,392

 
84,024

 
78,560

Cash and Cash Equivalents—End of period
$
62,356

 
$
66,664

 
$
62,356

 
$
66,664






Rocket Fuel Inc.
UNAUDITED NON-GAAP MEASURES
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Non-GAAP spend
$
95,772

 
$
118,401

 
$
194,839

 
$
224,669

Non-GAAP net revenue
$
42,508

 
$
66,046

 
$
89,924

 
$
128,232

Non-GAAP adjusted EBITDA
$
(2,488
)
 
$
4,219

 
$
(5,054
)
 
$
1,594

Non-GAAP adjusted net income (loss)
$
(9,875
)
 
$
(6,718
)
 
$
(21,963
)
 
$
(18,753
)
Non-GAAP adjusted net income (loss) per diluted share
$
(0.21
)
 
$
(0.15
)
 
$
(0.47
)
 
$
(0.43
)
Non-GAAP operating expenses
$
44,996

 
$
61,827

 
$
94,978

 
$
126,638

Non-GAAP free cash flow
$
3,441

 
$
887

 
$
(15,121
)
 
$
(6,578
)



Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP REVENUE TO NON-GAAP SPEND
(In thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
90,747

 
$
116,968

 
$
185,919

 
$
221,713

Add: Media costs reduced by net basis accounting
5,025

 
1,433

 
8,920

 
2,956

Non-GAAP spend
$
95,772

 
$
118,401

 
$
194,839

 
$
224,669




Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP REVENUE TO NON-GAAP NET REVENUE
(In thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
$
90,747

 
$
116,968

 
$
185,919

 
$
221,713

Less: Media costs
48,239

 
50,922

 
95,995

 
93,481

Non-GAAP net revenue
$
42,508

 
$
66,046

 
$
89,924

 
$
128,232








Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP NET LOSS TO NON-GAAP ADJUSTED EBITDA
(In thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(18,197
)
 
$
(16,693
)
 
$
(40,666
)
 
$
(37,466
)
Adjustments:
 
 
 
 
 
 
 
Interest expense
1,231

 
1,032

 
2,368

 
2,269

Income tax provision (benefit)
216

 
285

 
374

 
515

Amortization of intangibles
3,764

 
4,127

 
7,529

 
8,254

Amortization of capitalized software
3,023

 
2,743

 
6,028

 
5,033

Depreciation
4,053

 
6,011

 
9,827

 
11,858

Stock-based compensation expense
2,588

 
4,082

 
5,436

 
8,892

Other (income) expense, net
(1,136
)
 
866

 
(1,688
)
 
672

Restructuring expense
986

 
1,766

 
4,754


1,567

Acquisition expense
984

 

 
984

 

Total adjustments
15,709

 
20,912

 
35,612

 
39,060

Non-GAAP adjusted EBITDA
$
(2,488
)

$
4,219

 
$
(5,054
)
 
$
1,594




Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP NET LOSS TO NON-GAAP ADJUSTED NET INCOME (LOSS)
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(18,197
)
 
$
(16,693
)
 
$
(40,666
)
 
$
(37,466
)
Stock-based compensation expense
2,588

 
4,082

 
5,436

 
8,892

Amortization of intangible assets
3,764

 
4,127

 
7,529

 
8,254

Restructuring expense
986

 
1,766

 
4,754

 
1,567

Acquisition expense
984

 

 
984

 

Non-GAAP adjusted net income (loss)
$
(9,875
)

$
(6,718
)
 
$
(21,963
)
 
$
(18,753
)
 
 
 
 
 
 
 
 
Basic and diluted net loss per share attributable to common stockholders
$
(0.39
)
 
$
(0.38
)
 
$
(0.88
)
 
$
(0.85
)
 
 
 
 
 
 
 
 
Non-GAAP adjusted net income (loss) per diluted share
$
(0.21
)
 
$
(0.15
)
 
$
(0.47
)
 
$
(0.43
)
 
 
 
 
 
 
 
 
Weighted average shares used in computing non-GAAP adjusted net income (loss) per diluted share
46,638

 
44,056

 
46,451

 
43,828







Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM GAAP TOTAL COSTS AND EXPENSES TO NON-GAAP OPERATING EXPENSES
(In thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Total costs and expenses
$
108,633

 
$
131,478

 
$
225,531

 
$
255,723

Less media costs
48,239

 
50,922

 
95,995

 
93,481

Adjustments:
 
 
 
 
 
 
 
Amortization of intangibles
3,764

 
4,127

 
7,529

 
8,254

Amortization of capitalized software
3,023

 
2,743

 
6,028

 
5,033

Depreciation
4,053

 
6,011

 
9,827

 
11,858

Stock-based compensation expense
2,588

 
4,082

 
5,436

 
8,892

Restructuring expense
986

 
1,766

 
4,754

 
1,567

Acquisition expense
984

 

 
984

 

Total adjustments
15,398

 
18,729

 
34,558

 
35,604

Non-GAAP operating expenses
$
44,996

 
$
61,827

 
$
94,978

 
$
126,638


Rocket Fuel Inc.
UNAUDITED RECONCILIATION FROM CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO NON-GAAP FREE CASH FLOW
(In thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2017
 
2016
 
2017
 
2016
Net cash provided by (used in) operating activities
5,974

 
5,155

 
(8,819
)
 
2,401

Less: Purchases of property, equipment and software
(240
)
 
(1,268
)
 
(1,504
)
 
(3,055
)
Less: Capitalized internal-use software development costs
(2,293
)
 
(3,000
)
 
(4,798
)
 
(5,924
)
Non-GAAP free cash flow
$
3,441

 
$
887

 
$
(15,121
)
 
$
(6,578
)
Net cash used in investing activities
(2,525
)
 
(4,268
)
 
$
(6,178
)
 
$
(8,647
)
Net cash used in financing activities
(3,997
)
 
(1,442
)
 
$
(6,841
)
 
$
(5,397
)