Rocket Fuel, yesterday (August 5), reported results for the second quarter ended June 30, 2015. Rocket Fuel posted 30% growth in revenue. In comparison, two days ago, Criteo reported a 64% increase in revenue. Is there really more money to be made in retargeting than prospecting? 

"Rocket Fuel had a strong second quarter as results beat our prior guidance and our focus on efficiency and costs led to a faster than expected return to adjusted EBITDA profitability," said Monte Zweben, interim CEO. "We also made solid progress adding new agency and direct customers and are in discussions with some of the largest companies and brands in the world about using Rocket Fuel's AI to power their marketing programs."

Highlights

- Revenue increased by 30% to $120.1m (compared to $92.6 million in Q2 2014)

- Revenue for the quarter included $43.4m from digital advertising delivered through mobile, social and video channels, an increase of 6% from $40.8m in Q2 2014

- Revenue from mobile alone was $31m, up 7%

- Revenue from direct advertisers was 24% of total revenue, while revenue through agencies was 76%. By comparison in Q2 last year, 90% of our revenue came from agencies and only 10% from direct advertisers

- North American revenue was $102m, up 32% from Q2 last year, while revenue outside of North America, mostly from Europe was $18m for the quarter, an increase of 25% from Q2 last year

- Non-GAAP net revenue of $70.9m increased 30% compared to $54.7m in Q2 2014

- Net loss increased to $(24.4)m, or $(0.58) per diluted share, compared to a net loss of $(9.8)m, or $(0.28) per diluted share for Q2 2014

- Non-GAAP adjusted net loss for the quarter was $(7.2)m, or $(0.17) per diluted share, compared to  $(3.7)m, or $(0.10) per diluted share, in Q2 2014

- Non-GAAP adjusted EBITDA was down to $1.4m compared to $1.5m in Q2 2014

- Cash and cash equivalents were $81.1m as of June 30, 2015

- Active customer count expanded to 1,592, up from 1,444 in Q2 2014

- Employee headcount was 1,008 as of June 30, 2015

Over the past quarter, Rocket Fuel have invested heavily in developing stronger relationships with agencies and trading desks. It would appear that this strategy is paying off as agencies such as IPG's Cadreon leveraging the Rocket Fuel platform for both audience data management and programmatic marketing campaigns. The key for Rocket Fuel will be replicating this model with other holding companies, independent agencies and trading desks.

Rocket Fuel has benefitted from recently being called out as a strong performer in Forrester's Wave Demand-Side Platforms report. The report highlighted that a core advantage of the Rocket Fuel platform is its ability to optimise across multiple channels, across multiple devices.

In a recent study Rocket Fuel commissioned from Nielsen, the technology demonstrated 97.5% accuracy in predicting which devices were connected to a single consumer.

Looking to the future David M. Sankaran, CFO said "we expect to see changes in overall margins as the mix of our business changes to include some higher margin SaaS revenue and self-service deal, but also potentially some lower margin trading desk deals. For example, we may enter into some trading desk deals where we only account for our net revenue share or there could be lower margin deals where we account for the gross revenue and media cost. It will depend on the terms of each individual deal."

After Hours: 7.72 +0.46 (6.34%)

On August 4, Criteo announced record financial results for the second quarter ended June 30, 2015.

Highlights

- Revenue in Q2 2015 increased 64% (or 51% at constant currency) to €271m, compared with €165m in Q2 2014

- Revenue excluding Traffic Acquisition Costs, (or Revenue ex-TAC), in Q2 2015 grew 65% (or 52% at constant currency) to €110m, compared with €67m in Q2 2014

- Record client wins reported in Q2 2015, with more than 730 net-new clients

- At quarter end, Criteo had more than 8,500 clients globally

- Clients that were live in both Q2 2014 and Q2 2015 spent more, resulting in 25% more Revenue ex-TAC at constant currency for us compared with the prior-year period

- Net income in Q2 2015 increased to €4m, compared with €2m in Q2 2014

- Adjusted EBITDA for Q2 2015 was €22m, an increase of 64% (or 60% at constant currency), compared with €13m in Q2 2014

- Cash flow from operating activities in Q2 2015 was €11m, equal to Q2 2014

"We believe we are well positioned to capture the massive opportunity ahead of us," said JB Rudelle, co-founder & CEO.

"We have successfully executed on our growth plans for seven quarters in a row," said Benoit Fouilland, Chief Financial Officer, "and we will continue to invest in 2015 to maximise our growth potential."

Much of Criteo's success was attributed to its enhancements in creative optimisation capabilities. JB Rudelle commented "we are now able to optimise each individual creative components in all of our apps such as pumps, colour, or size and position of pictures and adjust them in almost infinite number of combination. This new capability is particularly promising for mobile in native ads. In June already 11% of our revenue ex-TAC was generated on this upgraded creative platform."

Continuing, JB Rudelle also spoke about multi-screen solutions 'it is also with the traction of our multi-screen solutions which allows us to engage in convert users immensely across all devices, browsers and apps. In Q2 85% of our clients were using a multi-screen solution compared with 69% in the prior year guide. At the same time we further strengthened our in-app solution and the mobile measurement program that we announced last quarter. In Q2 we certified five new mobile apps partners and started to launch in-app campaigns through those partnerships."

Criteo stock is now up 5%.

It would appear that while Rocket Fuel have been investing in relationships with agencies in order to strengthen sales and market share, Criteo have quietly steamed ahead with developments in mobile and creative optimisation which have allowed them to continue their strong-hold on the retargeting market.

The DSP and retargeting markets are notoriously cluttered however, there is one major difference. In retargeting there is significant competition from walled-gardens Facebook and Google, whereas in prospecting the competition comes mainly from independent technology solutions creating a more even playing field.