We estimate that the net proceeds from our issuance and sale of 9,200,000
shares of our common stock in this offering will be approximately $107.4
million, or approximately $115.6 million if the underwriters exercise their
over-allotment option in full, based upon the initial public offering price
of $13.00 per share, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us. We will not receive any of the
proceeds from the sale of shares by the selling stockholders, although we
will bear the costs, other than underwriting discounts and commissions,
associated with those sales.
The principal purposes of this offering are to create a public market for our
common stock and to facilitate our future access to the public equity markets,
as well as to obtain additional capital. We intend to use the net proceeds
from this offering for working capital and general corporate purposes,
including further expansion of our international operations and product
development.
In addition, we may use a portion of the net proceeds from this offering to
acquire, invest in or license complementary products, technologies or
businesses, but we currently have no agreements or commitments with respect
to any potential acquisition, investment or in-license. We may allocate funds
from other sources to fund some or all of these activities.
The expected use of net proceeds from this offering represents our intentions
based upon our present plans and business conditions. We cannot predict with
certainty all of the particular uses for the proceeds of this offering or the
amounts that we will actually spend on the uses set forth above. Accordingly,
our management will have significant flexibility in applying the net proceeds
of this offering.
The timing and amount of our actual expenditures will be based on many
factors, including cash flows from operations and the anticipated growth of
our business. Pending their use, we intend to invest the net proceeds of this
offering in a variety of capital-preservation investments, including short-
and intermediate-term, interest-bearing, investment-grade securities.
The mobile advertising market is highly competitive. The competitive dynamics
of our market are unpredictable because it is in an early stage of
development, rapidly evolving, fragmented and subject to potential disruption
by new technological innovations.
Several competitors provide mobile advertising solutions. Our primary
competitors are the large advertising platforms offered by Google and Apple,
both of which focus on advertising solutions built for their proprietary
mobile operating systems, Android and iOS, respectively. We also compete
with in-house solutions used by companies who choose to coordinate mobile
advertising across their own properties, such as ESPN, The Weather Channel
and Yahoo!, as well as new, smaller entrants into the mobile advertising
market.
We believe the principal competitive factors in our industry include the
following:
• mobile advertising focus;
• proven and scalable technology;
• platform independence;
• size of the developer ecosystem;
• relationships with leading advertisers;
• quality and size of advertising inventory;
• brand awareness and reputation; and
• ability to integrate with third-party apps and technologies.
We believe that we compete favorably with respect to all of these factors
and that we are well-positioned as an independent mobile advertising
platform that can operate without regard to brand of mobile device or
operating system.
capabilities and the opportunity to deliver interactive and engaging ad
experiences to consumers on their mobile connected devices. Our proprietary
technology and data platform, known as MYDAS™, determines in real-time which
ad to deliver, as well as to whom and when, with the goal of optimizing the
effectiveness of advertising campaigns regardless of device type or operating
system. In February 2012, our platform reached over 300 million unique users
worldwide, including approximately 140 million unique users in the United
States alone. More than 30,000 apps are enabled by their developers to receive
ads delivered through our platform, and we can deliver ads on over 7,000
different mobile device types and models. Our platform is compatible with all
major mobile operating systems, including Apple iOS, Android, Windows Phone,
Blackberry and Symbian. In February 2012, we processed over 45 billion ad
impressions. According to a December 2011 report by International Data
Corporation, a market research firm, or IDC, we are the second largest mobile
display advertising platform in the United States with a 16.7% market share.
We are the only one of the three principal mobile advertising platform
companies that is not affiliated with a particular mobile operating system
or set of devices.
As smartphones, tablets and other mobile connected devices become increasingly
powerful and affordable, and mobile internet access becomes more widespread
and faster, users are consuming more content on their mobile devices. Apps
in particular are becoming a popular way for consumers to engage with and
consume personalized digital content on their mobile connected devices.
Gartner Inc., an industry research firm, or Gartner, forecasts that the
total number of downloads from mobile application stores worldwide will
increase from 8.2 billion in 2010 to 108.8 billion in 2015, representing
a compound annual growth rate of 68%. As the number of apps has proliferated,
however, it has become increasingly difficult for developers to differentiate
their apps from those of competitors in overcrowded app stores. As a result,
large and small developers are competing for advertising budgets and
visibility among users in order to realize their business objectives.
With growth in this mobile app-based economy, mobile advertising creates new
opportunities for advertisers to reach and engage audiences of potential
consumers. Mobile devices are inherently personal in nature, facilitate
anytime-anywhere access to their users, allow for engaging app-enabled
experiences and offer location-targeting capabilities. We believe that the
combination of these features creates a powerful opportunity for delivering
highly targeted, interactive advertising through mobile connected devices.
However, a number of factors, including device and operating system diversity,
as well as technological challenges, make it difficult and complex to deliver
mobile advertising effectively.
We help developers and advertisers remove complexity from mobile advertising.
By working with us, developers gain access to our tools and services that
allow their apps to display banner ads, interactive rich media ads and video
ads from our platform. In return, developers supply us with space on their
apps to deliver ads for our advertiser clients and also provide us with
access to anonymous data associated with their apps and users. We analyze
this data to build sophisticated user profiles and audience groups that, in
combination with the real-time decisioning, optimization and targeting
capabilities of our technology platform, enable us to deliver highly targeted
advertising campaigns for our advertiser clients. Advertisers pay us to
deliver their ads to mobile connected device users, and we pay developers
a fee for the use of their ad space. As we deliver more ads, we are able to
collect additional anonymous data about users, audiences and the effectiveness
of particular ad campaigns, which in turn enhances our targeting capabilities
and allows us to deliver better performance for advertisers and better
opportunities for developers to increase their revenue streams. Our use of
data for interest-based targeting, including location data, is based on
consumer consent, and we offer consumers the ability to opt out of such
targeting.
We have built relationships with developers and advertisers of all sizes. Our
developer base includes large mobile web publishers, such as CBS Interactive
and The New York Times, and large app developers, such as Zynga, Rovio and
Pandora, as well as other developers, such as UberMedia and Gogii. Our
advertiser clients include leading advertising agencies and brands, including
23 of the top 25 national advertisers as ranked by Advertising Age magazine,
or Ad Age , based upon U.S. ad spending in 2010, as well as smaller
advertisers and often the developers themselves.
We have achieved significant growth as our platform has scaled and as we have
expanded our product and service offerings. From 2009 to 2010, our revenue
increased from $16.2 million to $47.8 million, or 195%, our gross margin
improved from 29% to 34%, our net loss improved from $7.6 million to $7.1
million and our adjusted EBITDA improved from a loss of $7.0 million to
a loss of $6.4 million. From 2010 to 2011, our revenue increased from $47.8
million to $103.7 million, or 117%, our gross margin improved from 34% to
39%, our net loss improved from $7.1 million to $287,000 and our adjusted
EBITDA improved from a loss of $6.4 million to earnings of $1.8 million.
Adjusted EBITDA is a financial measure that is not calculated in accordance
with U.S. generally accepted accounting principles, or GAAP.
During the year ended December 31, 2011, approximately 10% of our revenue
was derived from outside of the United States, up from 3% during the year
ended December 31, 2010. We commenced our international operations in the
United Kingdom during the first half of 2010 and launched operations in
Singapore during the fourth quarter of 2011.
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We were incorporated under the laws of the State of Delaware on May 30, 2006.
Our principal executive office is located at 2400 Boston Street, Suite 201,
Baltimore, Maryland. Our telephone number is (410) 522-8705.
Our website address is www.millennialmedia.com.