Millennial Media profit misses after higher payments to ad partners
(Reuters) - Millennial Media Inc (MM.N), which helps companies advertise on mobiles, reported a lower-than-expected quarterly profit after it aggressively purchased advertising space, sending its shares down more than 21 percent in extended trading.
The company paid more to its app developer partners and publishers of web-based mobile sites for advertising space to strengthen its relationships during the "period of uncertainty" following its acquisition of mobile ad network Jumptap, Chief Financial Officer Michael Avon said.
"The result of this more aggressive inventory purchasing was higher cost of sales and lower gross margins ...," he said on a post-earnings conference call on Wednesday.
Millennial Media bought Jumptap in August in a deal valued at about $225 million.
The company's net loss widened to $4.6 million, or 6 cents per share, in the third quarter from $1.8 million, or 2 cents per share, a year earlier.
Excluding items, the company reported breakeven earnings.
Revenue rose 39 percent to $86.3 million. Excluding contribution from Jumptap, revenue rose 18 percent to $56.1 million.
Analysts on average had expected earnings of 4 cents per share on revenue of $67.8 million, according to Thomson Reuters I/B/E/S.
Millennial Media, which helps mobile app developers and advertisers to focus on smartphones, tablets and other mobile devices, also forecast current-quarter pro forma combined revenue of $95 million to $100 million.
Shares of the company fell to a low of $5.93 in after market trading. They closed at $7.18 on the New York Stock Exchange.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sriraj Kalluvila)