- Robert Libetti/ Business Insider
AppNexus, one of the companies hotly tipped to be the next ad tech IPO, is restructuring and laying off more than 13% of its staff as it prepares to go public.
The New York-based company will shed 150 roles, bringing its headcount down from 1,125 to around 975, a company spokesman confirmed.
The thinking behind the restructure is that the company currently has two separate business units: A division providing technology to help advertisers buy ads and a division to help publishers sell ads.
However, over the past year, most of AppNexus’ biggest customers – such as Microsoft, LinkedIn, News Corp, and Wayfair – are using the ad tech company to both buy ads programmatically across the web and sell ads across their own online properties.
AppNexus thought it didn’t make sense, therefore, to have two product, engineering, account management teams, and so on, working for those customers separately when it could just have one group to cover all their needs. The layoffs have hit roles where there is duplication, mostly across sales, account management, finance, and marketing.
Brian O’Kelley, AppNexus CEO, told Business Insider: “This is a dynamic and quickly evolving industry. We have a responsibility to our customers and partners to think ahead and to make strategic decisions that set them up for long-term, sustained success. We’re confident that this reorganization places AppNexus and its customers in the best position possible as we head into 2017 and beyond.”
Are we finally about to see the AppNexus IPO?
Another consideration behind the headcount reduction was clearly AppNexus’ forthcoming IPO, although the spokesman declined to comment on any matters related to the company preparing to go public.
AppNexus’ long-awaited IPO appears to be drawing closer and most people in the ad tech community believe it will land in the first quarter of 2017, largely due to the fact that Q4 is seasonally the most lucrative month in ad-funded businesses, so it will have strong numbers to display on its roadshow.
In November last year, Business Insider reported AppNexus had been meeting with investment banks, including Goldman Sachs, to discuss its IPO plans. In June this year, AdExchanger reported AppNexus was close to filing its S1 document with the Securities and Exchange Commission.
A lighter headcount may make AppNexus look more attractive in the eyes of investors – or potential acquirers – and the reduction may be looked upon favorably as a company willing to keep its costs under control in order to maintain or steer itself towards profitability.
But AppNexus’ reduced headcount is still far higher than the most recent ad tech company to IPO. The Trade Desk had 387 employees as of June 2016, according to its S1 filing. The Trade Desk went public at $28.75 per share and was trading at $25 at the time of writing.
That said, The Trade Desk booked $113.8 million in revenue in 2015, while our estimates pitch AppNexus’ annual net revenue at around $250 million or higher. AppNexus has always declined to comment on its revenue number.
Last month, AppNexus raised a $31 million funding round, which included a $10 million investment from News Corp, plus involvement from Yahoo Japan and existing investors. The financing brought its total funding up to $282 million.