Video Ad Tech Startup LiveRail Is Targeting A Late 2014 IPO Thanks To $100 Million Revenue Run Rate

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Over the past year, video ad startup LiveRail has seen its share of the ad market increase and has seen revenues grow 300 percent year-over-year. It’s on pace for a $100 million run-rate in the fourth quarter, as the company gets ready for a possible IPO in the second half of 2014.

Founded in 2008, LiveRail has steadily been introducing publishers to the joys of real-time bidding, using technology and algorithms to match publisher inventory with the highest bidder for their content. On the advertiser side, it allows brands and agencies to better target audiences in real-time, driving up the value of the ads.

With the market for programmatic ad buying expanding, the mostly quiet San Francisco-based startup is hoping to get the word out about its growth. One of the reasons LiveRail is now making revenue numbers public is that it would like to differentiate itself from some other video ad companies which IPO’d this year. Both Tremor Video and YuMe became publicly traded over the summer, but neither one has had tremendous success since then.

While YuMe’s shares have recovered somewhat since it announced its third-quarter results, it’s still down from the $9.00 listing price of its IPO. Tremor, meanwhile, has fared much worse: Its third-quarter numbers sent the company’s stock price down nearly 50 percent in November.

For LiveRail, being on pace for $100 million in revenues puts it almost on par with those who have gone before it. YuMe is expecting full year revenue to be in a range of $154.5 million and $157.5 million, while Tremor’s full-year guidance is for between $125 million and $126 million.

But it expects to grow more quickly than each of those competitors. In 2014 it’s forecasting another 200 percent growth due to a couple of factors. On the one hand, it’s signed a number of major new accounts over the past year, so it has a lot of momentum going into 2014. On the other hand, the company is seeing accelerating demand for programmatic video ad buying.

Broadcasters that it’s signed up recently include A&E Mobile, CBS Local, Fox News, Condé Nast, Demand Media, Real Networks, Univision, BET, Advance Digital, Maker Studios, Scripps, and Terra Networks. That’s on top of existing clients such as MLB.com, CBS Interactive, and PBS.

At the same time, customers are also getting more comfortable with its technology and make more inventory available for programmatic ad buying. It serves up about 5 billion ad impressions a month, and about 71 percent of its revenue today is transacted through real-time bidding, the company says.

The next step, according to LiveRail co-founder and CEO Mark Trefgarne, is to hire a CFO. The company is in the process of searching for someone to fill that role right now, and is targeting the second half of 2014 to go public.

When and if it does, its investors are probably in for a decent pay day. The company has only raised $12 million since being founded, and is already profitable. Its main investor is UK-based Pond Ventures, which invested in LiveRail pre-revenue.

Not only is it betting on continued momentum, but it’s expanded its workforce to meet demand. That includes the opening of its first full-time sales office in Europe, and growing from a headcount of 60 at the beginning of the year to 120 employees worldwide today.

The short-term vision is to serve up all online ads, but in the long term, LiveRail believes there’s a bigger opportunity to break into the traditional TV ad business.

“We fundamentally believe that if you fast-forward 10 years, it’s difficult to imagine a world where the vast majority of viewing isn’t done via IP,” Trefgarne said. “We think there’s a world coming where programmatic TV represents 80 percent of TV viewing.”

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