OpenX’s Growth Story

Research firm Informa Telecoms and Media estimates that the worldwide mobile advertising market was worth $8 billion last year, and it is projected to grow to $12.8 billion during the current year. This rapid growth represents a major opportunity for platform providers as well. Here is a quick glance into the performance of one such company, OpenX.

OpenX’s Offerings

Los Angeles–based OpenX is a leader in digital and mobile advertising technology platforms. Through their high-speed advertising marketplace, OpenX’s customers can rent space on their sites to advertisers who want to place ads online. Their product portfolio includes OpenX Enterprise, a SaaS ad serving platform; OpenX Market, a real-time bidding enabled ad exchange; OpenX Lift, a yield optimization tool; and JumpTime, which helps in content valuation.

Their tools have been used by more than 5,000 publishers globally. At their peak, their tools help support more than one million bids per second. According to OpenX, the company’s ad exchange, OpenX Market, is used by more than 95% of leading U.S. advertisers. They have helped serve more than one trillion ad impressions in 2011 and were aiming to increase that number by 300% last year. They are expanding their operations globally and have set up five data centers in the U.S., Asia, and Europe. Recently, they also expanded operations in Japan by launching their first ad exchange in that country and setting up an office as well.

OpenX’s Financials

Early last year, OpenX disclosed their financials for the first time. OpenX earns revenues by charging commission on sales. Analysts expect that they charge an estimated 20% commission on sales. The quarter ending December 2011 was their first ever profitable quarter. As of last year, OpenX was operating at an annual revenue rate of more than $100 million.

They are venture funded and to date have received $73 million in funding from investors that include First Round Capital, Index Ventures, Mangrove Capital Partners, O’Reilly AlphaTech Ventures, DAG Ventures, Accel Partners, Jonathan Miller, SAP Ventures, AOL Ventures, Presidio Ventures, Mitsui Global Investment, and Samsung Ventures. They completed their latest round of funding last month when they raised $22.5 million from existing investors. The additional funds will be used for international expansion and to accelerate development of their revenue platform.

OpenX’s Acquisitions

As part of their growth strategy, OpenX have been acquiring smaller players. Last quarter, they completed the acquisition of content valuation company, JumpTime, for an undisclosed amount. JumpTime’s tools help publishers calculate the financial value of their content assets in real time so that they can optimize revenues by driving user engagement through content improvement. OpenX plans to leverage JumpTime’s offerings to ensure that their publishing customers are able to get higher returns on advertising and content.

Early in 2012, they acquired supply-side platform LiftDNA for an undisclosed sum. LiftDNA’s tools helped publishers automate ad sales on exchanges such as OpenX. Through the purchase, OpenX have been able to provide the Web publishers with a way to streamline ad sales and optimize revenues for all ad channels, including direct sales to ad networks and other demand-side platforms.

After the announcement of their results last year, several analysts were expecting OpenX to file for their IPO. But the company has chosen to remain private thus far. For now, they seem to be going strong at remaining independent while still managing to report solid growth.