Can Millennial Media Challenge Facebook and Google?

Can Millennial Media Challenge Facebook and Google?

Millennial Media will release its quarterly report on Wednesday, and shareholders of the digital-advertising company have been disappointed thus far with the stock's performance. Yet as the mobile sides of tech giants Facebook and Google have started to take off, can Millennial Media see the same success and boost its share price?

Millennial Media bills itself as the leading independent digital-advertising platform, distinguishing itself from Facebook and Google in that it doesn't have a proprietary ecosystem in which it wants to capture and retain users. With the rise of mobile devices, Millennial Media has joined Facebook and Google in concentrating on ramping up mobile-advertising penetration in an effort to make money and offset any shift away from traditional online advertising. Will that strategy be as successful for the tiny company as it has been for its larger rivals? Let's take an early look at what's been happening with Millennial Media over the past quarter and what we're likely to see in its report.

Stats on Millennial Media

Analyst EPS Estimate


Year-Ago Earnings


Revenue Estimate

$67.75 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Millennial Media keep its growth streak going?
In recent months, analysts have cut back fairly dramatically on their expectations for Millennial Media's earnings. They've cut their third-quarter estimates by a third and full-year 2013 and 2014 projections by roughly 40%. The stock has lost a quarter of its value since early August.

Much of the decline in Millennial Media's stock came from its quarterly announcement. Earnings results were only part of the focus of the announcement, with mixed figures including a 45% jump in revenue but a widening of the company's net loss. On an adjusted basis, though, Millennial beat estimates with a small profit of $0.02 per share, defying calls for an adjusted loss as well.

But the biggest news to hit Millennial Media this quarter was its acquisition of Jumptap, which was announced on the same day and likely spurred much of the share-price drop. The $230 million acquisition gives Millennial Media greater exposure to the programmatic-buying-network side of the business, helping match up better against Google and complementing Millennial's own focus on tying premium brands to their best matches among mobile developers through its recently released Millennial Media Exchange. The move will greatly boost its revenue base as well, although Millennial has caused some consternation among analysts by choosing to give only consolidated revenue estimates for the combined entity. Because most of the purchase price was in the form of Millennial shares, investors might have been unhappy about the dilution of their stake in the company as well.

Still, tiny Millennial has a lot of work to do to keep up with its larger peers. Facebook has boosted its revenue from mobile to almost half of its total sales, and analysts expect mobile revenue to continue its growth trajectory higher in the coming years. Google said in its latest quarterly report that it was starting to gain more traction in mobile as well, despite the ongoing challenge that individual mobile ads don't bring in nearly as much in sales as a comparable desktop-oriented ad.

In the Millennial Media earnings report, look closely for any breakout of figures between Millennial and Jumptap. In addition, identifying the company's new strategy will be essential in figuring out whether Facebook and Google have anything to fear from their much smaller rival.

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