Despite its incredible growth and success on the global stage, the Toronto-based Chango did not turn a profit by the time it was acquired by The Rubicon Project in March, new SEC filings reveal.
As first reported in AdExchanger last week, Rubicon’s most recent 8-K filing shows that Chango had a $1 million loss in 2014, despite being the fastest growing company in Canada over the previous five years, according to Deloitte. Chango’s 2014 annual revenue was $47.7 million.
Rubicon ultimately paid US$122 million in cash and stock for Chango. The deal included a US$9 million cash infusion from Rubicon to pay down existing debts and unpaid transactions.
The breakdown of Chango’s costs provided in Rubicon’s 8-K states that more than half of Chango’s 2014 cash flow ($28 million) went to cost of revenue expenses, showing just how expensive it can be to run even a mid-size ad tech business.
Chango spent more than a quarter of its budget ($13 million) on marketing and sales, which helped it build a strong global brand through initiatives like its print magazine and seminars on programmatic branding. By contrast, only $3.8 million went to technology development in its final year of operations.
Following the acquisition, Rubicon says it plans to maintain Chango’s team and business in Canada, and use the retargeting firm’s presence here to establish a greater foothold in the market.
