Business Overview
Kubient, Inc. (KBNT) is a technology company that has developed a cutting-edge, cloud-based software platform for real-time trading of digital, Programmatic Advertising. The company’s Audience Marketplace platform aims to provide advertisers and publishers with a transparent, efficient, and fraud-free ecosystem to deliver targeted advertising campaigns.
Kubient, Inc. was incorporated in May 2017 with the mission of addressing significant problems facing the global digital advertising industry. The company’s experienced team of marketing and technology veterans developed the Audience Marketplace, a modular, highly scalable, transparent, cloud-based software platform for real-time trading of digital, Programmatic Advertising. This innovative platform gives both advertisers (ad space buyers) and Publishers (ad space sellers) the ability to use machine learning in critical parts of the Programmatic Advertising inventory auction, helping to reduce exposure to ad fraud, specifically in the pre-bid environment.
A key feature of Kubient’s technology is its proprietary pre-bid ad fraud detection and prevention technology, known as Kubient Artificial Intelligence (KAI). This unique capability sets Kubient apart in the competitive Programmatic Advertising market. In November 2021, the company expanded its offerings by acquiring certain assets and personnel of MediaCrossing to bolster its Managed Services capabilities. However, throughout 2022, Kubient faced challenges with increased customer churn stemming from MediaCrossing’s legacy business, leading to further cost-cutting measures and a shift in focus towards an inorganic growth strategy.
Technology and Platform
Kubient’s Audience Marketplace platform is designed to give both advertisers and publishers the ability to leverage advanced machine learning techniques in the critical parts of the Programmatic Advertising auction process. This technology, known as Kubient Artificial Intelligence (KAI), helps to significantly reduce the exposure of advertisers and publishers to ad fraud, particularly in the pre-bid environment.
The company’s focus on fraud prevention is a key differentiator in the crowded Programmatic Advertising market. According to the company, KAI has the ability to stop fraud in the critical 300-millisecond window before an advertiser spends their budget on fraudulent ad space. This capability provides advertisers with a powerful tool to protect their advertising investments and ensure their campaigns are reaching the intended audiences.
KAI utilizes deep learning algorithms to ingest large amounts of data, identify complex patterns, and make accurate predictions to prevent the purchase of fraudulent ad impressions in the critical 300 millisecond window before an advertiser spends their budget.
Kubient believes its Audience Marketplace technology enables advertisers to reach entire audiences more efficiently, rather than buying individual ad impressions from disparate sources. By providing advertisers and publishers a unified platform that is computationally efficient, transparent, and designed to be as fraud-free as possible, Kubient aims to increase publisher revenue, lower advertiser costs, reduce latency, and provide greater economic transparency during the advertising auction process.
Revenue Model
Kubient’s revenue model is based on a percentage of the amount paid by advertisers for digital advertising campaigns, which is reduced by the amount paid to publishers for ad space. This “net” revenue recognition approach is common in the Programmatic Advertising industry, where Kubient acts as an agent facilitating the transaction between advertisers and publishers.
Financials
In the company’s latest reported quarter (Q1 2023), Kubient generated net revenues of $11.75K, a significant decrease from the $1.25M reported in the same period of the prior year. This decline was primarily attributed to the loss of certain customers that were acquired in connection with Kubient’s 2021 acquisition of MediaCrossing.
To address the customer churn, Kubient has executed further cost-cutting measures, including a reduction in force, in order to reduce expenses and shift more of its focus towards its inorganic growth strategy. These actions were intended to better align the company’s cost structure with its current revenue levels and position it for future success.
For the most recent fiscal year ended December 31, 2022, Kubient reported revenue of $2.40M, net loss of $13.62M, operating cash flow of -$9.60M, and free cash flow of -$9.62M.
In the quarter ended March 31, 2023, the company reported revenue of $11.75K, net loss of $2.47M, operating cash flow of -$2.83M, and free cash flow of -$2.83M. This represents a 99% year-over-year decline in revenue, driven primarily by the loss of certain customers that were acquired through the MediaCrossing acquisition.
Kubient’s total costs and expenses for the first quarter of 2023 were $2.50 million, down from $5.46 million in the same period of 2022. The decrease was driven by reductions in sales and marketing, technology, and general and administrative expenses, as the company executed further cost-cutting measures, including a reduction in force, to align its cost structure with the lower revenue levels.
The company operates primarily in the United States.
Liquidity
As of March 31, 2023, Kubient reported $11.83M in cash and cash equivalents, providing the company with a solid liquidity position to support its ongoing operations and strategic initiatives. The company’s working capital stood at $10.52M, indicating a favorable current ratio of 6.48.
However, Kubient’s financial performance has been challenged in recent periods, with the company reporting net losses of $2.47M and $3.63M in Q1 2023 and the full year 2022, respectively. The company’s ability to achieve profitability and generate sustainable cash flows remains a key focus area for management and investors.
As of March 31, 2023, Kubient had a debt-to-equity ratio of 0.006, with $78.90K in total debt. The company’s quick ratio was also 6.48, indicating strong liquidity. No available credit facilities were disclosed.
Challenges and Outlook
In January 2023, Kubient received a deficiency notice from The Nasdaq Stock Market, indicating that the company was not in compliance with the minimum bid price requirement of $1.00 per share for continued listing. Kubient has until July 11, 2023, to regain compliance with this requirement, which could present an additional challenge for the company.
Despite the recent headwinds, Kubient remains committed to its mission of providing a transparent, efficient, and fraud-free Programmatic Advertising ecosystem. The company’s innovative technology, focus on ad fraud prevention, and experienced management team continue to position it as a potential disruptor in the highly competitive digital advertising landscape.
In August 2022, the company received subpoenas from the SEC and the United States Attorney’s Office for the Southern District of New York requesting information related to revenue from two of its customers. Kubient is cooperating fully with both agencies.
As Kubient navigates the challenges ahead, investors will be closely monitoring the company’s ability to execute on its strategic initiatives, retain and attract key customers, and ultimately achieve profitability and sustainable growth. The company’s ability to capitalize on the growing demand for advanced Programmatic Advertising solutions will be a critical factor in determining its long-term success.
Despite the revenue decline, Kubient remained focused on advancing its Programmatic Advertising platform and technology capabilities to better serve its customers. The company continues to believe its Audience Marketplace and KAI solutions provide a differentiated offering in the digital advertising market.
Overall, Kubient is a small-cap company operating in the highly competitive digital advertising technology space. While the company has innovative technology, it has faced headwinds related to customer losses and is working to streamline its operations and focus on its core offerings. Investors should monitor the company’s progress in stabilizing its business and executing on its growth strategy.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.