the Rubicon Project, Inc. (NYSE:RUBI) Q3 2018 Earnings Conference Call Transcript
Nov 07, 2018 • 04:30 pm ET
Good day, and welcome to the Rubicon Third Quarter Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.
I would now like to hand the conference over to Mr. Nick Kormeluk. Please go ahead.
Thank you, operator, and good afternoon, everyone. Welcome to Rubicon Project's Third Quarter 2018 Earnings Conference Call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, President and CEO; and David Day, our CFO. I would like to point out that we have posted financial highlights slides to our IR website to accompany today's presentation.
(Forward-Looking Cautionary Statements)
Our commentary today will include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our IR website. At times, in response to your questions, we may offer incremental metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be onetime in nature, and we may or may not provide an update on the future of these metrics. I encourage you to visit our IR website to access our press release, financial highlights deck, periodic SEC reports and webcast replay of today's call to learn more about Rubicon Project.
I will now turn the call over to Michael. Please go ahead.
Thank you, Nick. I'm very pleased to report that our business has continued to improve as seen by our higher ad spend growth rate this quarter and continued improvement in our take rate. Year-over-year ad spend growth increased to 24% in Q3 from 16% in Q2 and 10% in first quarter, which marks the third consecutive quarter of double-digit ad spend growth. Ad spend growth, combined with achieving our cost goals, delivered improved financial performance in Q3 and will lead to positive adjusted EBITDA in Q4 as we remain focused on achieving positive free cash flow.
I'll now touch on some of the positive drivers in our business. Our inventory continues to more than double year-over-year. Audio and video drove strong results for us, and we outpaced industry growth rates. We continue to see gains in mobile ad spend this quarter with year-over-year growth of 45%. And importantly, we also grew desktop 6%.
Header bidding continues to evolve as well. And I wanted to make some general comments about its adoption and opportunities. We have seen that even the most sophisticated publishers want help managing the complexities of header bidding. We believe the combination of transparent, open-source wrappers, easy-to-use tools and managed services is the future of header bidding. And we're already offering these solutions to some of our largest sellers.
Secondly, mobile app and video have been slower in their migration to header bidding, mobile app primarily because it has to be done server side since managing the bidding process from within the app is nearly