go-Digital Blog on Digital Marketing

Simon Khalaf, the CEO of mobile adtech company Flurry, tells Business Insider that an IPO is inevitable in the company’s future because his business has grown so big.

There has been gossip about a possible Flurry IPO for months now. Large adtech companies are often aimed specifically at IPO “exits,” so that their venture capital funders can get a payback on their investments. Millennial Media, Tremor Video, YuMe, Criteo and Marin Software have all gone public recently. Yet when CEOs are asked directly if they want the rich rewards of floating their companies on the public markets, they usually demur or hedge.

When we asked Khalaf about an IPO exit, however, he was refreshingly direct: “I consider an IPO an entrance,” he tells us. “We don’t have a choice, our volume is too high and our scale is too big for anyone to absorb us.”

Flurry has a net revenue run-rate of about $100 million. It has 150 employees and has taken $50.5 million in funding from investors. And although that doesn’t make Flurry the biggest player in mobile adtech — InMobi and Velti still have more employees, and Millennial has greater revenues — it is one of the biggest players in big data analytics and mobile app ad reach.

Here’s a slide on the number of mobile devices — 1.1 billion — Flurry reaches with ad impressions inside apps from Khalaf’s pitch deck:

It’s an alarming slide, because everyone knows that Google has the largest share of mobile ad revenue on the planet, which is in the billions of dollars. But the Flurry slide refers to reach on devices via ads in apps. Google’s mobile ad business is largely search. And the bulk of consumer time spent on mobile devices is in apps, not on the web, Khalaf says. Here’s the slide he uses to illustrate that point:

Flurry offers the full mobile ad stack, including a “supply side platform” for mobile app publishers who want to offers ad space for sale, a “demand side platform” for buyers who want to place ads, an analytics suite to measure the whole thing, and most recently a “real-time bidding” platform so that buyers can place ads on a live auction basis. That RTB marketplace, launched in April, already has 30 DSPs buying in it, Khalaf says. The Guardian and The BBC both use Flurry as publishers.

There is one more thing Khalaf is unusually direct about. Flurry is not yet profitable, he says. Usually when adtech CEOs are asked whether their businesses make money, they launch into an explanation of how they’re investing for growth or scale (or they say something impenetrably complicated about EBITDA). When asked whether the company is profitable, Khalaf says, “No. In 2014 we’re profitable maybe.”

The reason: Flurry is spending $28 million a year on data centers. “The cost of analytics is huge,” Khalaf says. Flurry wants to create the largest HBase cluster in the business, he says, referring to the gigantic — and gigantically expensive — database serving devices that can handle millions of lines of tabled information.

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