Rocket Fuel Inc Stock Dives On Bleak Results, Downgrade

Rocket Fuel Inc Stock Dives On Bleak Results, Downgrade

Rocket Fuel, a developer of artificial intelligence, big-data predictive modeling and automated decision making platform, suffered a steep decline after reporting disappointing financial results for the fourth quarter.

The company was also impacted by the decision of analysts at Oppenheimer to downgrade their rating for the stock from Outperform to Perform due to lack of catalyst. They also removed their $22 price target for the stock.

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The stock price of Rocket Fuel plummeted almost 26% to $10.99 per share at the time of this writing, around 1:26 in the afternoon in New York.

Rocket Fuel financial results

Rocket Fuel reported net losses of $20.5 million or $0.49 per share during the fourth quarter of 2014. The company’s net losses are worse than its net losses of $2.2 million or $0.7 per share the same period in the previous year.

The company said non-GAAP net loss for the quarter was 7.4 million or $0.18 per share compared with non-GAAP net income of $2.4 million or $0.06 per share in the same period of 2013. Its non-GAAP adjusted EBITDA declined from $6.3 million to $2.8 million.

According to Rocket Fuel, its revenue increased 63% from $85.6 million to $139.5 million during the period. Rocket Fuel said its revenue was affected by the strengthening of the U.S. dollar. The company said its revenue should have been $140 million if the currency remained unchanged since November 12 until the end of the year.

Rocket Fuel said its non-GAAP net revenue was $76.7 million, up by 54% from $49.6 million in the year-ago quarter. The company has $107 million in cash and cash equivalents by end of December last year. Its customer counts increased to 1,633 by the end of the quarter.

Business outlook

For the first quarter of 2015, Rocket Fuel estimated that it will be able to achieve non-GAAP net revenue in the range of $57 million to $58 million and non-GAAP a seasonal decline in activity and non-GAAP adjusted EBITDA of a loss of -$18 million to -$19 million. The company expects a typical seasonal decline in activity.

Despite its disappointing financial performance and guidance, Rocket Fuel Chairman and CEO George John still believed that the company is “well-positioned” to capture market share given its revenue growth and the interest in its recently acquired data management platform (DMP).

“Marketers and agencies continued to benefit from Rocket Fuel’s proven high performance solutions for their digital advertising campaigns and marketing programs, resulting in our year-over-year revenue growth of 70%,” said John.

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