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<p><div class="image-container float_right click-to-enlarge"><div class="image"><a title_source="Martin Cathrae / Flickr, CC" title_caption="" class="zoomin" href="http://static3.businessinsider.com/image/521d0720ecad04b5353a6ba1-960/ax-5.jpg"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><a href="http://www.flickr.com/photos/suckamc/">Martin Cathrae / Flickr, CC</a></p></div></div>Things could hardly be worse at <keyword id="1755948" type="UNKNOWN" weightage="60" keywordseo="Velti">Velti</keyword>, one of the planet's largest <keyword id="6354485" type="CITY" weightage="60" keywordseo="mobile">mobile</keyword> ad companies.</p>
<p>We reported today that it has been <a href="http://www.businessinsider.com/velti-with-shareholder-lawsuit-2013-8#ixzz2dCW5xmRx">sued by shareholders</a>, who allege that the company didn't properly disclose the fact that it was having difficulty extracting payments from customers in Greece and Cyprus.</p>
<p>That came on the back of an awful Q2 2013 earnings report, which saw revenues decline <a href="http://www.sec.gov/Archives/edgar/data/1490412/000144530513002187/ex991veltijune302013earnin.htm">47 percent to </a><a href="http://www.sec.gov/Archives/edgar/data/1490412/000144530513002187/ex991veltijune302013earnin.htm">$31.2 million. </a></p>
<p>A few weeks ago, we noted that <a href="http://www.businessinsider.com/velti-has-stopped-paying-its-bills-2013-8">Velti had become slow in paying its bills</a>.</p>
<p>But a look at <a href="http://www.sec.gov/Archives/edgar/data/1490412/000149041213000035/veltiq12013form6-kdocument.htm">the company's balance sheets</a> and <a href="http://www.sec.gov/Archives/edgar/data/1490412/000144530513002187/ex991veltijune302013earnin.htm">cashflow statements</a> indicates worse may lie ahead: Absent a dramatic turnaround, or the influx of new capital, the company could be out of cash within about six months.</p>
<p>Velti began the year with $36.5 million in cash on its balance sheet. It now has only $19 million on hand.</p>
<p>It only kept that cash balance after taking on a net $20 million in debt, according to its cashflow statements, and a $22.6 million sale of stock. (We're simplifying the picture here, ignoring for the moment operations, investing and various other activities that create or use cash, which is why these numbers reflect bottom line totals only.)</p>
<p>We sent a message to Velti requesting comment; we'd love to update this post if anyone at the company has a comment.</p>
<p><strong>A terrible year so far</strong></p>
<p>Velti began the year in seemingly great shape. It had nearly $40 million in the bank.</p>
<p>But in Q1, Velti's operations burned $33 million in cash, and the company as a whole was cashflow negative by $20 million. It ended the quarter with only $16.4 million in the bank.</p>
<p>In Q2, the hemorrhaging was slowed: operations lost only $7.3 million, and total cashflow turned positive, up $3 million.</p>
<p>But that positive blip came because of the stock sale, not because of a turnaround in the business. <a href="http://www.businessinsider.com/layoffs-at-mobile-ad-companies-velti-and-tapjoy-2013-6">Velti further cut costs in Q1 by axing 200 of its 1,125 staffers</a>.</p>
<p><div class="image-container float_right click-to-enlarge"><div class="image"><a title_source="Screengrab / Mobile Interactive Group" title_caption="Alex Moukas" class="zoomin" href="http://static2.businessinsider.com/image/521d073a69bedd61063a6ba5-960/alex-moukas-1.jpg"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><a href="http://www.youtube.com/watch?v=7RMqpUnBckc">Screengrab / Mobile Interactive Group</a></p><p class="caption">Alex Moukas</p></div></div>The company says it is undergoing a radical restructuring: It has engaged Deloitte to sell its Greek and Cypriot units, and another unnamed bank to offload Mobclix, its publisher ad network. CEO Alex Moukas believes he can get $80 million in operating cost savings out of the company when he does done.</p>
<p>Let's hope that works. Otherwise, more job losses at Velti look likely: It's worth noting that the company's revenues after paying third-party (media) costs were just $8.8 million in Q2. Yet the company still has ~900 employees and a <a href="http://www.businessinsider.com/velti-sf-office-slideshow-2012-9">luxurious new corporate HQ in San Francisco</a>. The company's sales-per-head is ~$10,000 per quarter — likely not nearly enough to support all its employees (although many are employed outside the U.S. where wage costs are lower).</p>
<p>Investors don't expect much from Velti. The company's stock traded at $10+ last year. Today, it closed at 36 cents.</p>

Mobile Ad Giant Velti Is Running Out Of Cash

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>Something very odd is happening with RadiumOne right now, the San Francisco-based adtech company.</p><p>Late last week Business Insider reporters began receiving emails from anonymous sources claiming the company was in a dire financial state, having struggled to raise financing, and that it had just three months of cash left.</p><p>On Friday, RadiumOne chief executive Bill Lonergan sent out a memo to staff, flatly denying allegations that the company is in financial distress and reassuring staff that "jobs are not at risk."</p><p>On Monday, RadiumOne's former, CEO Gurbaksh "G" Chahal, tweeted that two board members - Vishal Gurbuxani and Krishna Subramanian - had resigned from the board effective immediately. (Chahal is still RadiumOne's largest shareholder even though <a href="http://www.businessinsider.com/gurbaksh-chahal-blasts-media-board-2014-4">he was ousted from the company last year after domestic violence charges against him were made public</a>. <span>The prosecution dropped felony charges but he pled guilty to two misdemeanors - domestic assault and domestic violence - following a plea bargain. He was sentenced to three years probation, a 52-week domestic violence training course, and 25 hours of community service</span>.)</p><p>So what's going on? Is the company in trouble, or is it fine?</p><p>Our investigation into those questions took a somewhat surreal turn in the last few days, and it's still not entirely clear what to believe.</p><h3>Anonymous@anonymous.com: "URGENT RADIUM ONE SAN FRANCISCO CA."</h3><p>That was the subject line of an email Business Insider received from "anonymous@anonymous.com" last Wednesday.</p><p>The email, in full, read:</p><p><strong>On Thursday, we received another email from anonymous@anonymous.com, making similar allegations.</strong></p><p>Business Insider immediately set to work contacting sources close to the company, in an attempt to ascertain the claims. Then things got weird.</p><h3>The "anonymous source" calls Business Insider from Chahal's number</h3><p><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"></div><p></p></div></div></p><p>After sending emails to Chahal and a few board members, Business Insider's Alyson Shontell promptly received three missed calls from a number that showed up on her cell as "G Chahal" (Shontell had contact with Chahal last year when he was ousted from his former company and his number was saved to her phone.)</p><p>When Shontell picked up, a woman's voice said she was the anonymous emailer, offering to connect Business Insider with board members who could confirm what the emails had said.</p><p>Shontell asked if the woman realized that the caller ID was identifying her as Chahal. The woman became quite awkward and the line went silent for a long while. When the woman eventually came back she said she was just finding a private place to talk.</p><p>Shontell again asked why it had said "G Chahal" on her caller ID, to which our "anonymous emailer" replied she didn't know, and that she didn't know Chahal.</p><p>Alyson then asked how the woman got her cell phone number. The woman replied that Alyson's number is "everywhere" and that she knows the right people who gave it to her.</p><h3>Chahal tells Business Insider he isn't the anonymous source </h3><p><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image on-image"><a title_source="Secret Millionaire Screengrab" title_caption="Gurbaksh Chahal." class="zoomin" href="https://static-ssl.businessinsider.com/image/530cc88a6da8114e5dfadc4f-960/gurbaksh-chahal-apartment-secret-millionaire-3.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="http://www.youtube.com/watch?v=dmfm8yP-FJo">Secret Millionaire Screengrab</a></span></p><p class="caption">Gurbaksh Chahal.</p></div><p></p></div></div>A conspiracy theorist (which we're definitely not) might assume that Chahal was behind those anonymous emails all along: He was ousted from the company he founded last year and said publicly he had felt l<a href="http://www.bizjournals.com/sanjose/news/2014/04/28/fired-radiumone-ceo-says-board-betrayed-him.html?page=all">et down by the board</a> over their decision; <a href="http://www.businessinsider.com/ousted-radiumone-ceo-g-chahal-wants-to-buy-the-company-2014-12">he has previously looked to regain control of the company</a> (which Radium One refused); he remains its largest shareholder; and his number showed up when our "anonymous emailer" contacted Business Insider.</p><p>Why might he want to spread rumors about his former company? So he could crush its value so he could buy what remained for cheap, and return, perhaps?</p><p>Business Insider called Chahal on Friday to put that theory to him.</p><p>We first asked why a woman had called using his number.</p><p>Chahal didn't sound surprised this had occurred, and responded that if you Google it, his number is "all over" the internet, and that he used to receive "hundreds" of phone calls.</p><p>"I don't know, I guess there's spoof apps or whatever the hell else out there. I haven't phoned, this (a different number, Chahal says, to the one that called Alyson) is my only number. I spoke to Alyson back in July I believe and I started my company back around that time and since then I have obviously [wanted] a clean slate. I don't have that number, I don't know who's playing a game, or who's trying to spoof my number, or my former number, I don't have that number," Chahal said.</p><p>We said that it was a bit of a coincidence that someone called using a number connected to him, offering to leak us details with what was happening at his former company, but then claimed not to know him.</p><p>He responded: "I don't know what you're talking about there. I know there's a lot of crazy people out there and there's a lot of disgruntled employees out there. I know that my number was publically available through Google, so you know, months ago, I changed it for the very reason that I want to keep my life more private and it not being so easily accessible. It's very easy to go ahead and spoof someone's number and hopefully that was the case and [Shontell] gets to the bottom of it."</p><p>We then put our theory to him, that Chahal might want to devalue the company so he can buy it back at a knockdown price. He answered: "I have no desire to acquire RadiumOne or be part of it, the situation as it is [Chahal's findings about the current financial situation at RadiumOne tallies with the story sent to us via email.] I've tried to help them out, that's a separate [issue.] <a href="http://adexchanger.com/ad-exchange-news/distressed-triggit-scooped-up-by-gravity4-gurbaksh-chahals-merger-machine/">I acquired Triggit last week</a> ... so I have no desire or capital to go ahead and be involved in something. I actually was hoping there would be a material outcome because I'm the largest shareholder. Don't you think that it would be more my benefit than having a demise then trying to pick up for it? I mean, why would I want to go back to an organization like that? It doesn't make any sense."</p><p>We agree - it doesn't make any sense.</p><p>On Monday Business Insider tried ringing back the old "G Chahal" number that had called Shontell, but it went to a Verizon voicemail that stated, "the number has been changed, disconnected, or is no longer in service." That serves to support Chahal's claim that he didn't ring Shontell last week on that number.</p><h3>RadiumOne CEO Bill Lonergan squashes the accusations</h3><p>On Friday, RadiumOne's chief executive Bill Lonergan sent out this memo to staff, denying that the company was in a dire financial state.</p><p>The memo confirms the claims we had received, that, yes, RadiumOne is on a fundraising mission. But no, it is not in financial trouble, and jobs will not be affected. That's a pretty strong statement, and written words that would surely come back to haunt Lonergan if the company was indeed struggling to raise investment and had just a couple of month's cash runway left.</p><h3>RadiumOne board members resign</h3><p>On Monday, <a href="https://twitter.com/gchahal/status/582689080288251904">Chahal tweeted</a> what appeared to be emails from board members Vishal Gurbuxani and Krishna Subramanian to RadiumOne's Lornegan and the board, announcing their resignations.</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Twitter/@GChahal" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/551a86c8ecad04f530f7348f-960/screen shot 2015-03-31 at 11.28.19 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="https://twitter.com/gchahal/status/582689080288251904">Twitter/@GChahal</a></span></p></div><p></p></div></div></p><p>If you click to zoom-in on the image, you can see Subramanian and Gurbuxani apparently announcing they were leaving the board effective immediately. We have contacted RadiumOne to confirm and are awaiting a response.</p><p>Gurbuxani is an adtech industry veteran who now serves as an investor and adviser to several startups. He co-founded Mobclix, a mobile <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">advertising</keyword> exchange, which was acquired by Velti in October 2010. He went on to become Velti's chief technology officer, before leaving to co-found his own company, Team In Residence, a group of entrepreneurs and venture capitalists.</p><p>Subramanian co-founded Mobclix with Gurbuxani and also followed him to Velti, becoming its SVP of advertising and marketing, and later its chief marketing officer. Subramanian is also a co-founder at Team In Residence. Prior to that he co-founded the BlueLithium advertising with Chahal in 2004, which was sold to Yahoo for $300 million in 2007.</p><h3>Who to believe?</h3><p><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"></div></div></div>We still have requests for comment out with RadiumOne, board members, and other people close to the company.</p><p>It's difficult to know precisely what is going on until those people open up and talk on the record.</p><p><span style="line-height: 1.5em;">Of the sources we spoke to outside of the company, the idea that RadiumOne was struggling to raise financing and might be in trouble didn't surprise them - but none could confirm that was the case. It last raised investment - </span><a href="https://www.crunchbase.com/organization/radiumone">$21 million in Series B financing, according to CrunchBase</a><span style="line-height: 1.5em;"> - way back in 2011. (It has <a href="http://techcrunch.com/2012/03/02/social-retargeting-ad-network-radiumone-raising-a-50m-round-at-a-500m-valuation/">previously been valued at $500 million</a>.) And one only needs to look at the recent poor financial performances of rival ad networks like </span><a href="http://seekingalpha.com/news/2312556-rocket-fuel-minus-20_9-percent-on-revenue-miss-very-weak-guidance">Rocket Fuel</a><span style="line-height: 1.5em;"> or </span><a href="http://www.bidnessetc.com/24045-millennial-media-misses-revenue-estimates-again-lowers-guidance/">Millennial Media</a><span style="line-height: 1.5em;"> to see that this a challenging sector to be in, particularly as companies like </span><a href="http://blogs.wsj.com/cmo/2015/03/23/google-fiber-targeting-kansas-city/">Google</a><span style="line-height: 1.5em;"> and </span><a href="http://www.businessinsider.com/facebook-updates-liverail-2015-3">Facebook</a><span style="line-height: 1.5em;"> steadily build out their adtech stacks.</span></p><p>A person close to the company told us that while adtech fundraising is difficult right now, RadiumOne is actually "doing well" revenue-wise, and that it could be cashflow positive depending on what it decides to invest in next. Meanwhile, two sources<span style="line-height: 1.5em;"> close to the company told us people within RadiumOne believe Chahal was behind the rumors leaked to the press.</span></p><p>Chahal told us he thinks the leaks probably came from someone within the finance team at RadiumOne.</p><p>One thing is clear: This whole Chahal-RadiumOne situation is still one hot mess.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/unboxing-new-htc-one-m9-mobile-smart-phone-2015-3">Unboxing: The HTC One M9</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="IwbzJhdDoO8VSVE3acBv8Q7jmI5Da79z-" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

There's something really weird happening at $500 million adtech startup RadiumOne, and the way we found out about it is even stranger

<p><div class="image-container float_right click-to-enlarge"><div class="image"><a title_source="InterWest Partners" title_caption="Flurry CEO Simon Khalaf" class="zoomin" href="http://static2.businessinsider.com/image/523c5c746bb3f73e578d4db5-960/simon-khalaf.png"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source on-image"><a href="https://www.youtube.com/watch?v=o_gKG9aPMQQ">InterWest Partners</a></p><p class="caption"><keyword id="191949" type="CITY" weightage="60" keywordseo="Flurry">Flurry</keyword> CEO Simon Khalaf</p></div></div>Simon Khalaf, the CEO of <keyword id="6354485" type="CITY" weightage="60" keywordseo="mobile">mobile</keyword> adtech company Flurry, tells Business Insider that an IPO is inevitable in the company's future because his business has grown so big.</p>
<p>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.</p>
<p>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."</p>
<p>Flurry has a net revenue run-rate of about $100 million. It has 150 employees and has taken $<a href="http://www.crunchbase.com/company/flurry">50.5 million in funding</a> 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.</p>
<p>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:</p>
<p><div class="image-container click-to-enlarge"><div class="image"><a title_source="" title_caption="" class="zoomin" href="http://static6.businessinsider.com/image/523c57e3eab8ea0070cb58c6-960/screen%20shot%202013-09-20%20at%209.49.24%20am.png"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source">Flurry</p></div></div></p>
<p>It's an alarming slide, because everyone knows that <a href="http://www.businessinsider.com/google-share-of-mobile-ad-revenue-2013-8">Google has the largest share of mobile ad revenue</a> 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:</p>
<p><div class="image-container click-to-enlarge"><div class="image"><a title_source="" title_caption="" class="zoomin" href="http://static3.businessinsider.com/image/523c59626bb3f7fc508d4db2-960/screen%20shot%202013-09-20%20at%209.50.01%20am.png"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source">Flurry</p></div></div></p>
<p>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 <a href="http://www.prweb.com/releases/2013/4/prweb10613471.htm">RTB marketplace, launched in April</a>, already has 30 DSPs buying in it, Khalaf says.</p>
<p>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."</p>
<p>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.</p>

You Searched For "veltis capital" and got 3 results

Mobile Ad Giant Velti Is Running Out Of Cash

Jim Edwards

There's something really weird happening at $500 million adtech startup RadiumOne, and the way we found out about it is even stranger

Lara O'Reilly

Flurry CEO Says IPO Is Inevitable As Its Mobile Ad Reach Overtakes Google's

Jim Edwards

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