Good afternoon, and welcome to The Rubicon Project Second Quarter Earnings Conference Call. All participants will be in listen-only mode. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Rubicon Project's website following the call. After today's presentation, we will conduct a question-and-answer session. I would now like to turn the conference over to Eric Randerson, Vice President of Investor Relations for The Rubicon Project. Please go ahead.

Good afternoon, everyone, and welcome to Rubicon Project's 2016 second quarter earnings conference call. As a reminder, this conference call is being recorded. Joining me today are Frank Addante, CEO and Founder; Greg Raifman, President; and David Day, our Interim Chief Financial Officer. Before we get started, I'd like to remind our listeners that our prepared remarks and answers to questions will include expectations, predictions, estimates and other information that might be considered to be forward-looking statements, including, but not limited to, guidance we are providing and other non-historical statements related to our anticipated financial performance, operating and strategic plans, expectations regarding new initiatives, our relationships and business with buyers and sellers using our platform, competitive differentiation, fees and take rate, capital investment and organizational development, our competitive position, and market conditions and trends and growth expectations, including growth in orders, mobile and video. Forward-looking statements involve risks, uncertainties and assumptions, and actual results may differ significantly from the results suggested by forward-looking statements for various reasons, including without limitation, if such risks or uncertainties materialize or assumptions prove to be inaccurate. Further, we may adjust our plans and expectations in response to market conditions or other factors. Reported results should not be considered an indication of future performance. A discussion of these and other risks, uncertainties and assumptions is set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2015, as well as our quarterly reports on Form 10-Q, including under the headings Risk Factors and Management Discussion and Analysis of Financial Condition and Results of Operations. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary will include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release, which we have posted to the Investor Relations website at investor.rubiconproject.com. At times, in response to your questions, we may offer incremental metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be one-time in nature, and we may or may not provide an update in the future on these metrics. I encourage you to visit our investor relations website to access our press release, periodic SEC reports, a webcast replay of today's call or to learn more about Rubicon Project. With that, let me turn the call over to Frank.

Thank you, Erik, and good afternoon, everyone. Q2 was a solid quarter for Rubicon Project, highlighted by strong contributions from our key strategic growth drivers of mobile, video and orders. GAAP revenue was $70.5 million, an increase of 33% year-over-year. Non-GAAP net revenue was $65.1 million, an increase of 34% year-over-year. GAAP net loss was $2.7 million, a significant improvement from a GAAP net loss of $11.9 million in the second quarter of 2015. And adjusted EBITDA was $18.4 million, nearly tripling year-over-year. Finally, our business continued to generate healthy cash flow, further strengthening our balance sheet. Rubicon Project's ability to generate cash flow is a major differentiator in our industry that helps to position us to capitalize on future growth opportunities. While we are reporting solid second quarter results in spite of some rapidly changing market dynamics. We are lowering our full year revenue guidance to reflect changes we're seeing in the marketplace. Given the leverage in our business, despite the lower revenue guidance, we are increasing our guidance for adjusted EBITDA for the full year of 2016. From a macro perspective, the digital advertising market has experienced significant changes. Rubicon Project has benefited from a lot of these changes given our scale and our early market innovations. In mobile, for example, we continued on a rapid growth trajectory that has outpaced the industry's growth rate for mobile advertising. In Q2 we achieved 68% growth year-over-year in mobile manage revenue or advertising spend in our marketplace, further securing our position as a top three mobile exchange globally. And video is rapidly emerging and becoming a meaningful contributor to our results this year. Greg will discuss our plans to increase our video investment to further accelerate our growth potential. Advertising budgets continue to gradually shift to emerging areas such as…

Thank you, Greg. Now, to recap our results, starting with revenue; GAAP revenue for the second quarter of 2016 was $70.5 million compared to $53 million in the second quarter of 2015, representing a year-over-year increase of 33%. Managed revenue, which is the advertising spend transacted on our platform, for the second quarter of 2016 was $257.4 million compared to $227.2 million in the second quarter of 2015, an increase of 13% year-over-year. Non-GAAP net revenue for the second quarter of 2016 was $65.1 million compared to $48.5 million in the second quarter of 2015, an increase of 34% year-over-year. The deceleration of our year-over-year growth rate in managed revenue in the second quarter was primarily due to the desktop advertising trends discussed earlier, and to a lesser extent, softness in demand for our intent marketing offering, as Greg discussed. In the second quarter, managed revenue for mobile increased by 68% year-over-year, while desktop declined 2% year-over-year. Managed revenue was composed of 33% mobile and 67% desktop for the second quarter of 2016, compared to just 22% mobile and 78% desktop a year ago. In addition, managed revenue by inventory type was composed of 76% real-time bidding or RTB, 21% orders and 3% static during the second quarter of 2016 compared to 75% RTB, 17% orders and 8% static in the second quarter of 2015. Going forward, we continue to expect orders to grow as a percentage of total managed revenue. As for static, today, we announced our plans to sunset the static bidding offering. As many of you know static bidding, which pre-dates RTB, was our original offering for ad networks. In the past five years, static has decreased from nearly 100% of managed revenue to about 3% of managed revenue, as ad spending has migrated to real-time bidding.…

We will now begin the question-and-answer session. Please limit your questions to one question and a single follow-up. Our first question comes from Brian Pitz with Jefferies. Please go ahead.

Thanks. I'm a little surprised by the significant change since our May conference regarding header bidding and your outlook. Maybe you could just comment on a few things. As header bidding continues to gain share, would you talk about the longer-term impact to CPMs, and maybe what take rates will look like. And just secondly, can you tell us more about the strategic review you talked about? Thanks.

Hi, Brian. It's Frank here. So yeah, we went through this six-week strategic review that Greg will share with you in more detail. And what we've learned really in the past six weeks is that we're dealing with a little bit of a perfect storm here. Header bidding is certainly a major factor in that, that combined with the desktop, overall desktop market slowdown. We may have swung the pendulum a little too far in the mobile and video direction, I think as we did report. We're seeing terrific results there with mobile and better-than-expected results with video. Some of that has come at the expense of taking the eye off the ball there on the desktop business. Some of the execution issues that we talked about here with intent marketing, and then just a mix of smaller things, nothing meaningful overall, things like ad blocking, some smaller, technical issues that we had throughout the quarter. But all these things combined, I think, have put us in the position that we're in. I think one or two or even three of these things, I think we've been able to navigate through in the past, but a lot of these things really came to fruition in Q2 and the analysis that we did that Greg led the team through really shed a bright light on where we stand with them. With that said, we did anticipate some of them. As we mentioned, we put our header bidding product in the market in December 2015. As a reminder, we did have a product in the market that sort of resembled at least the value proposition of header bidding, very different technology, but the value proposition called Real-Time Pricing a couple of years ago in the market. It didn't work out. So, when…

The next question comes from Brett Huff with Stephens. Please go ahead.

Good afternoon. Thanks for taking my questions. I want to follow up on the header bidding question again, and I want to make sure that we understand where the competition is coming from. This is – you keep saying it's coming from smaller players. Is Google or other larger players a part of this problem, or do we have in our sights kind of who the competition is that we need to go after?

Sure. Absolutely. So yeah, primarily it's come from smaller point solutions, primarily in the U.S. market. I should also note that it's not just coming from competitive solutions. There are non-competitive solutions like Amazon is an example, has a header bidder solutions, not a competitive exchange by any means, but they're using that as an opportunity to basically get ahead of their competitors when they're trying to buy media. Criteo, as an example, also has a header bidder in the market. But when these header bidders exist in the market, they are taking away the ability for that supply to end up in our exchange. So while it's not a competitive company, it does have some impact on taking away some of those impressions. With Google, yeah, I think there is some speculation in the market that Google has also been impacted by header bidding. They've announced some initiatives that they've been taking, one of those was a pilot integration that they're working with us on. And again, just to put the header bidding into perspective, header bidding is not an elegant solution for the long term, and I think most people would agree with that. Header bidding is a piece of JavaScript that gets installed on a consumers – on a webpage that ultimately is putting sort of a pre-auction process into a consumer's browser. So your browser is going sort of – doing this JavaScript's pre-auction process, using your CPU to do that in advance of it going to an exchange or a marketplace. So it's not really an elegant technical solution, and some would argue that it just doesn't scalar, that it slows down the webpage loading or impacts the user experience. I think Google has recognized this, and this is the pilot program that they've been working with us on. And we would sort of agree with that, and that's – part of our mystery (47:24) is we tend to look at things from a technical perspective and say, what's long-term sustainable for the market, what are technologies that we think will help sort of grow the market and improve the consumer experience, and improve a publisher and application developers' page loading. So that was sort of part of our mystery (47:49). With that said, header biddings become a real thing. When we did launch our FastLane product, our header bidding product, we launched it in mobile because that's where a lot of our focus was, and I think you've seen that from our mobile reporting. In hindsight, if we were kind of focused more on the desktop market, I think we would have launched it first in desktop versus mobile.

The next question comes from Youssef Squali with Cantor Fitzgerald. Please go ahead.

Thank you very much. Hi, guys. Couple of questions. Staying with the header bidding, so as you pivot your resources to advance the header bidding solution in the second half, can you just help us understand what exactly are you doing to pivot? Is it trying to catch up with what's out there in the market, is it trying to differentiate your offer, and if so, how? And then on the guidance, David, maybe help us bridge the gap between the old revenue and the new revenue guidance between ShareFile (48:58) and desktop, header bid in, static, et cetera? And the static – does static go to zero starting in Q3, or when does it go to zero? Thanks. Gregory R. Raifman - President & Director: Okay. Let me address the first part. I'll turn it over to David for the guidance question. But, let's talk for a minute more about header bidding, because I think your question is a very good one, how are we resourcing or how are we moving or expanding further. I mean, to be fair, we've always had the approach that we are not necessarily going to be first-to-market, we're going to be best-to-market. So we look at what goes on in the marketplace and we think about everyday how we can do a better job of it. We know that we fell slightly behind in the header bidding installation. So naturally we reoriented a lot of our selling efforts and our sales engineering efforts to do a better job installing header bidders, our FastLane product, in market as quickly as possible. And as I mentioned in the script, we're very pleased that the time to installation is starting to come down over time and accelerating. So from our perspective, we see that as another…

Great. Thanks for that question Youssef. I think the primary driver in our guidance GAAP in the second half of the year does result from the slowdown in desktop, and as discussed, accentuated by the header bidding headwinds. I think secondary then are the challenges that we're having in our intent marketing business. On the static side, we do expect to wind down operations by the end of the third quarter, and don't expect any significant activity in static during the fourth quarter.

The next question comes from Aaron Kessler with Raymond James. Please go ahead. Aaron M. Kessler - Raymond James & Associates, Inc.: Great. Couple of questions. First, I think back on header bidding. Can you just give us a sense where the take rates are? I think we've heard them to a little closer to mid-teens versus kind of a 20%-plus for your RTB business. And then just an overall take rates for your business, I believe they're still up about 400 basis points year-over-year. Can you just talk about the drivers that are driving up kind of on a year-over-year basis your overall take rate? Thank you.

Sure. We don't break down take rates on a product basis. From an overall macro perspective on take rates, as mentioned, we do believe that they will be decreasing in the second half of the year. As mentioned, we believe they'll on a quarter-over-quarter basis decrease more than they did Q1 to Q2. As mentioned, there are couple of factors driving that; one, a mix factor, we've talked in the past about orders expanding or growing as part of our managed revenue, and that certainly will be a part of it; and then also in certain instances we're evaluating or already providing pricing strategies that could involve lower fees as we determine what may drive expanded and more growth in our managed revenue.

The next question comes from Kerry Rice with Needham. Please go ahead. Kerry Rice - Needham & Co. LLC: Thanks a lot. One more on header bidding, just maybe to help me understand at least. With FastLane and implementation you're talking about, I guess, I don't understand how does that change maybe the dynamics if someone like an Amazon or a Criteo or smaller competitor is diverting some impressions away from you, does FastLane prevent that? And are these diverted impressions being diverted simply because of a higher price, or they are in front of the line and the publishers worrying just about selling impressions, so they're willing to take a lower price, and going again through FastLane maybe ensures that the yield is higher? Can you give us some sense of why FastLane will kind of negate what we've seen? And then finally, given the confidence on the second half, or maybe after the second half, is there any thought about buying shares back given that the stock will likely be down? You've got a pretty good, pretty solid cash-rich balance sheet. Could you use some of that, or have you thought about using some of that for share repurchases? Thanks.

Great. Hi Kerry. So again, just to put the header bidding into context, header bidding is basically traded a pre-auction before it goes to the overall exchange or marketplace. So some of these point solutions have created this JavaScript capability to conduct this pre-auction before it goes to a platform like Rubicon Project. Our header bidder solution is a feature, just to be clear, it's not a whole different platform, it's not a different product altogether, it's a feature of our exchange, and what we're able to do now is we're able to also participate in that pre-auction. So we can participate in the pre-auction, we can participate in the typical exchange marketplace auction that we have in the past. One of the things that's particularly interesting for us from an offensive perspective with header bidding, and this is the reason that we toyed with this concept a couple of years ago, is that, combined with our orders product, if we have the ability to gain access to more impressions, and to see those impressions before they go to an ad server or before they go to other exchanges, or before they go to direct sell deals, it helps us to provide greater access for our orders product, which helps build up that marketplace. And as we've mentioned, we think that orders is the largest opportunity in the advertising space. I think it's a question of when and how much because we're early to that market. But offensively, your header bidding gives us the ability to participate in that, which we think is a great thing. Defensively we're just taking that technology and that feature and now you're going back into our existing customers where we already have integrations, we already have the relationship and saying, hey, we have one…

And we have time for just one more question. That question comes from Jason Helfstein with Oppenheimer. Please go ahead. Jason Helfstein - Oppenheimer & Co., Inc. (Broker): Hi. So just kind of trying to get a little more specific here. So if I look at the full year guidance, there is a $45 million delta in GAAP revenue, and then an $18 million delta in non-GAAP. And so obviously, the biggest difference between those two is Chango. Can you help us understand then within the $18 million how much of that is header bidding? And then, you look at what's happening in Facebook and Google are eating the world, Facebook now has got Fan that they're citing bigger numbers on, Google is clearly still doing very good things, both with Search and with DoubleClick. I mean, just help us understand specifically what's in that $18 million guide down, because I think the concern is going to be, that ultimately it's not just header bidding, it's that you have companies who have better data on consumers than you, targeting more efficiently. Thanks.

Yeah. Hey, Jason, I'll let David get into the specifics. But as you mentioned, some of that is Chango, and now we've integrated those businesses. So it's a little bit more difficult to specifically call out what was Chango and what was not Chango. But clearly we've had some challenges integration-wise, people, technological integrations with what was the formally Chango business. It didn't work out, as expected when we acquired the company. While it didn't work out as expected, I think we are better off having done it than not. I think we've gained some momentum, gained some assets, some relationships, some know-how, some technology that certainly furthered that part of our business, particularly when it comes to orders, which again we think is a great opportunity for us in the future. The Mediaocean partnership, I'm not sure that we would have been as successful, really understanding that business and learning that business. And even in our core business, really understanding what the drivers are for the end buyers of advertising, the agencies, it's really helped us strengthen a lot of those relationships. With that said, Chango was a significant contribution to that, and it didn't work out as well as expected, even though we did gain quite a bit of benefit from doing that. I'll let David address the rest of your question.

Great. Yes, Jason, that's correct. On the disproportionate impact in GAAP revenue versus net revenue, driven by Chango, which our intent marketing, which is the product that we have out of that acquisition, which is generally accounted for on a growth revenue basis. As far as the $18 million in GAAP, we don't break out guidance on a product basis, but obviously the area that we've discussed, the desktop slowdown and header bidding issues and intent marketing are both the significant drivers in that slowdown. Jason Helfstein - Oppenheimer & Co., Inc. (Broker): Maybe just real quick follow up... Gregory R. Raifman - President & Director: Jason? Jason Helfstein - Oppenheimer & Co., Inc. (Broker): Yeah. Gregory R. Raifman - President & Director: It's Greg, let me answer your other question about the walled garden, so Facebook and Google leading the world, which is a valid concern, and we saw the numbers they just posted, and they're both growing faster than the overall market. I think it is important to recognize still that we're still dealing with a $600 billion market opportunity that's growing, continues to grow, and it still does leave a lot of room for growth for a number of different players that are successful in building trust with those gardens. So one thing to keep in mind is, as we just announced our deal with Spotify, we expect to have more deals in the works with companies like Spotify that have their own smaller walled garden, if you will. So we don't feel like the entire world is going to Google and Facebook just yet, especially internationally where Google isn't as strong as it is domestically. And then finally, as Frank mentioned, there are new formats coming into our marketplace such as soon to be TV, programmatic…

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you all for joining us today. We look forward to seeing you at investor conferences in the coming weeks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.