Marin Software Announces Second Quarter 2018 Financial Results
SAN FRANCISCO, Aug. 9, 2018 /PRNewswire/ -- Marin Software Incorporated (NASDAQ: MRIN), a leading provider of cross-channel, cross-device, enterprise marketing software for advertisers and agencies, today announced financial results for the second quarter ended June 30, 2018.
"As we execute on our open, independent, cross-channel strategy, I am pleased to announce that Marin's support for Amazon Ads is gaining traction in the market with Amazon proving to be our fastest growing publisher in Q2 2018," said Chris Lien, Chief Executive Officer of Marin Software. "Our MarinOne platform will help advertisers thrive in a world where Amazon joins Google and Facebook as the dominant pillars of digital advertising."
Second Quarter 2018 Business and Product Release Highlights:
-- Debuted Bidding for Amazon Sponsored Product Ads helping advertisers
drive performance on this emerging ad platform.
-- Released enhanced support for Facebook Ad Studies streaming process for
advertisers to test performance of their social ads.
-- Launched support for Yahoo Japan's Responsive Display Ads, offering
advertisers a flexible ad unit that automatically works across a variety
of devices and placements.
-- Added Impression Share as an optimization target for Google Shopping
campaigns to help advertisers ensure their products achieve a desired
share of voice on key queries and products.
-- Enabled Auto Segmentation of Google Shopping campaigns to identify and
optimize top performing products.
-- Added support for Google Parallel tracking, enabling faster page loads
for a mobile-first world.
-- Improved cross-channel Creative Asset Hub to sync with third-party
platforms, such as Google Drive, offering better collaboration between
media and creative teams.
Second Quarter 2018 Financial Updates:
-- Net revenues totaled $14.3 million, a year-over-year decrease of 24%
when compared to $18.7 million in the second quarter of 2017.
-- GAAP loss from operations was ($8.4) million, resulting in a GAAP
operating margin of (59%), compared to a GAAP loss from operations of
($9.6) million and a GAAP operating margin of (51%) for the second
quarter of 2017. Non-GAAP loss from operations was ($6.2) million,
resulting in a non-GAAP operating margin of (43%), as compared to a
non-GAAP loss from operations of ($4.7) million and a non-GAAP operating
margin of (25%) for the second quarter of 2017.
-- Cash, cash equivalents and restricted cash totaled $17.2 million as of
June 30, 2018, as compared to $28.8 million as of December 31, 2017.
Reconciliations of GAAP to non-GAAP financial measures have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading "Non-GAAP Financial Measures."
Financial Outlook:
Marin is providing guidance for its third quarter of 2018 as follows:
Forward-Looking Guidance
In millions
Range of Estimate
From To
---- ---
Three Months Ending September 30, 2018
Revenues, net $12.3 $12.8
Non-GAAP loss from operations (6.7) (6.2)
Non-GAAP loss from operations excludes the effects of stock-based compensation, amortization of internally developed software, intangible assets and deferred costs to obtain and fulfill contracts, impairment of goodwill and long-lived assets, capitalization of internally developed software, deferral of costs to obtain and fulfill contracts and non-recurring costs associated with restructurings.
Additionally, the Company does not reconcile its forward-looking non-GAAP loss from operations, due to variability between revenues and non-cash items such as stock-based compensation. The GAAP loss from operations includes stock-based compensation expense, which is affected by hiring and retention needs, as well as the future price of Marin's stock. As a result, a reconciliation of the forward-looking non-GAAP financial measures to the corresponding GAAP measures cannot be made without unreasonable effort.
Quarterly Results Conference Call
Marin Software will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the Company's financial results for the quarter ended June 30, 2018, and its outlook for the future. To access the call, please dial (877) 705-6003 in the United States or (201) 493-6725 internationally with reference to the company name and conference title. A live webcast of the conference call will be accessible at http://public.viavid.com/index.php?id=130614. Following the completion of the call through 11:59 p.m. Eastern Time on August 16, 2018, a recorded replay will be available for replay on the Company's website at: http://investor.marinsoftware.com/ and a telephone replay will be available by dialing (844) 512-2921 in the United States or (412) 317-6671 internationally with the recording access code 13681773.
About Marin Software
Marin Software Incorporated's (NASDAQ: MRIN) mission is to give advertisers the power to drive higher efficiency and transparency in their paid marketing programs that run on the world's largest publishers. Marin provides enterprise marketing software for advertisers and agencies to integrate, align, and amplify their digital advertising spend across the web and mobile devices. Offering a unified SaaS advertising management platform for search, social, display and eCommerce advertising, Marin helps digital marketers convert precise audiences, improve financial performance, and make better decisions. Headquartered in San Francisco, with offices worldwide, Marin's technology powers marketing campaigns around the globe. For more information about Marin Software, please visit: http://www.marinsoftware.com.
Non-GAAP Financial Measures
Marin uses certain non-GAAP financial measures in this release. Marin uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance. Marin believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial measures that Marin uses may differ from measures that other companies may use.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
Non-GAAP expenses, measures and net loss per share. Marin defines non-GAAP sales and marketing, non-GAAP research and development, non-GAAP general and administrative, non-GAAP gross profit, non-GAAP operating loss and non-GAAP net loss as the respective GAAP balances, adjusted for stock-based compensation, amortization of internally developed software, intangible assets and deferred costs to obtain and fulfill contracts, impairment of goodwill and long-lived assets, non-cash expenses related to debt agreements, capitalization of internally developed software, deferral of costs to obtain and fulfill contracts and non-recurring costs associated with restructurings. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by the weighted average shares outstanding.
Adjusted EBITDA. Marin defines Adjusted EBITDA as net loss, adjusted for stock-based compensation expense, depreciation, amortization of internally developed software, intangible assets and deferred costs to obtain and fulfill contracts, capitalization of internally developed software, deferral of costs to obtain and fulfill contracts, impairment of goodwill and long-lived assets, provision for income taxes, other income or expenses, net and non-recurring costs associated with restructurings. These amounts are often excluded by other companies to help investors understand the operational performance of their business. The Company uses Adjusted EBITDA as a measurement of its operating performance because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that Marin believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting its business.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Marin's business, expectations about our ability to return to growth, impact of investments in product and technology on future operating results, progress on product development efforts, product capabilities and future financial results, including its outlook for the third quarter of 2018. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to our ability to grow sales to new and existing customers; our ability to expand our sales and marketing capabilities; our ability to retain and attract qualified management and technical personnel; delays in the release of updates to our product platform or new features; competitive factors, including but not limited to pricing pressures, entry of new competitors and new applications; quarterly fluctuations in our operating results due to a number of factors; inability to adequately forecast our future revenues, expenses, Adjusted EBITDA, cash flows or other financial metrics; delays, reductions or slower growth in the amount spent on online and mobile advertising and the development of the market for cloud-based software; progress in our efforts to update our software platform; adverse changes in our relationships with and access to publishers and advertising agencies; level of usage and advertising spend managed on our platform; our ability to expand sales of our solutions in channels other than search advertising; any slow-down in the search advertising market generally; shift in customer digital advertising budgets from search to segments in which we are not as deeply penetrated; the development of the market for digital advertising; acceptance and continued usage of our platform and services by customers and our ability to provide high-quality technical support to our customers; material defects in our platform including those resulting from any updates we introduce to our platform, service interruptions at our single third-party data center or breaches in our security measures; our ability to develop enhancements to our platform; our ability to protect our intellectual property; our ability to manage risks associated with international operations; the impact of fluctuations in currency exchange rates, particularly an increase in the value of the dollar; near term changes in sales of our software services or spend under management may not be immediately reflected in our results due to our subscription business model; adverse changes in general economic or market conditions; and the ability to acquire and integrate other businesses. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent report on Form 10-K, recent reports on Form 10-Q and current reports on Form 8-K which we may file from time to time, all of which are available free of charge at the SEC's website at www.sec.gov. Any of these risks could cause actual results to differ materially from expectations set forth in the forward-looking statements. All forward-looking statements in this press release reflect Marin's expectations as of August 9, 2018. Marin assumes no obligation to, and expressly disclaims any obligation to update any such forward-looking statements after the date of this release.
Marin Software Inc.
Condensed Consolidated Balance
Sheets
(On a GAAP basis)
June 30, December 31,
(Unaudited; in thousands,
except par value) 2018 2017
---- ----
Assets
Current assets
Cash and cash equivalents $15,927 $27,544
Restricted cash 1,293 1,293
Accounts receivable, net 9,768 12,237
Prepaid expenses and other
current assets 5,787 3,989
----- -----
Total current assets 32,775 45,063
Property and equipment, net 13,832 15,559
Goodwill 16,720 16,768
Intangible assets, net 3,134 4,475
Other non-current assets 2,401 1,504
----- -----
Total assets $68,862 $83,369
======= =======
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable $1,918 $2,826
Accrued expenses and other
current liabilities 9,001 10,474
Capital lease obligations 1,445 1,416
----- -----
Total current liabilities 12,364 14,716
Capital lease obligations, non-
current 1,002 1,687
Other long-term liabilities 3,885 4,183
----- -----
Total liabilities 17,251 20,586
------ ------
Stockholders' equity
Common stock, $0.001 par value 6 6
Additional paid-in capital 293,278 291,163
Accumulated deficit (240,857) (227,704)
Accumulated other comprehensive
loss (816) (682)
---- ----
Total stockholders' equity 51,611 62,783
------ ------
Total liabilities and
stockholders' equity $68,862 $83,369
======= =======
Marin Software Inc.
Condensed Consolidated Statements of Operations
(On a GAAP basis)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
(Unaudited; in thousands, except per
share data) 2018 2017 2018 2017
---- ---- ---- ----
Revenues, net $14,251 $18,742 $29,653 $39,075
Cost of revenues 6,963 8,207 14,535 16,531
----- ----- ------ ------
Gross profit 7,288 10,535 15,118 22,544
----- ------ ------ ------
Operating expenses
Sales and marketing 6,154 6,710 13,535 13,386
Research and development 5,817 6,646 11,972 13,784
General and administrative 3,766 3,945 7,143 8,122
Impairment of goodwill - 2,797 - 2,797
--- ----- --- -----
Total operating expenses 15,737 20,098 32,650 38,089
------ ------ ------ ------
Loss from operations (8,449) (9,563) (17,532) (15,545)
Other income (expenses), net 377 (563) 672 (301)
--- ---- --- ----
Loss before provision for income
taxes (8,072) (10,126) (16,860) (15,846)
Provision for income taxes (204) (419) (528) (825)
---- ---- ---- ----
Net loss $(8,276) $(10,545) $(17,388) $(16,671)
======= ======== ======== ========
Net loss per common share, basic and
diluted $(1.44) $(1.87) $(3.02) $(2.99)
====== ====== ====== ======
Weighted-average shares outstanding,
basic and diluted 5,767 5,640 5,751 5,572
----- ----- ----- -----
Marin Software Inc.
Condensed Consolidated Statements of Cash Flows
(On a GAAP basis)
Six Months Ended June 30,
-------------------------
(Unaudited; in thousands) 2018 2017
---- ----
Operating activities
Net loss $(17,388) $(16,671)
Adjustments to reconcile net loss to net cash used in operating
activities
Impairment of goodwill - 2,797
Depreciation 1,557 2,599
Amortization of internally developed software 1,943 1,655
Amortization of intangible assets 1,341 1,451
Amortization of deferred costs to obtain and fulfill contracts 1,145 -
Unrealized foreign currency (gains) losses (25) 512
Non-cash interest expense related to debt agreements - 13
Stock-based compensation related to equity awards and
restricted stock 2,058 2,760
Provision for bad debts 35 785
Changes in operating assets and liabilities
Accounts receivable 2,438 4,846
Prepaid expenses and other assets (1,199) (1,168)
Accounts payable (877) (459)
Accrued expenses and other current liabilities (425) (374)
---- ----
Net cash used in operating activities (9,397) (1,254)
------ ------
Investing activities
Purchases of property and equipment (200) (259)
Capitalization of internally developed software (1,295) (956)
------ ----
Net cash used in investing activities (1,495) (1,215)
------ ------
Financing activities
Repayments of capital lease obligations (656) (523)
Employee taxes paid for withheld shares upon equity award
settlement (110) (171)
Proceeds from employee stock purchase plan, net 165 111
--- ---
Net cash used in financing activities (601) (583)
---- ----
Effect of foreign exchange rate changes on cash and cash
equivalents and restricted cash (124) 1,161
Net decrease in cash and cash equivalents and restricted cash (11,617) (1,891)
Cash and cash equivalents and restricted cash
Beginning of period 28,837 35,713
------ ------
End of period $17,220 $33,822
------- -------
Marin Software Inc.
Reconciliation of GAAP to Non-GAAP Expenses
Three Months Ended Year Ended Three Months Ended
------------------ ---------- ------------------
March 31, June 30, September
30, December 31, December 31, March 31, June 30,
(Unaudited; in thousands) 2017 2017 2017 2017 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
Sales and Marketing (GAAP) $6,676 $6,710 $6,630 $6,920 $26,936 $7,381 $6,154
Less Stock-based compensation (212) (200) (197) (218) (827) (240) (271)
Less Amortization of intangible assets (223) (222) (216) (216) (877) (213) (184)
Less Amortization of deferred costs to obtain
contracts - - - - - (432) (384)
Less Restructuring related expenses - - - - - (497) (48)
Plus Deferral of costs to obtain contracts - - - - - 257 335
--- --- --- --- --- --- ---
Sales and Marketing (Non-GAAP) $6,241 $6,288 $6,217 $6,486 $25,232 $6,256 $5,602
Research and Development (GAAP) $7,138 $6,646 $6,672 $6,108 $26,564 $6,155 $5,817
Less Stock-based compensation (996) (318) (326) (356) (1,996) (339) (314)
Less Amortization of intangible assets (247) (244) (239) (239) (969) (237) (234)
Less Restructuring related expenses - - - - - (115) -
Plus Capitalization of internally developed
software 543 413 442 670 2,068 693 602
--- --- --- --- ----- --- ---
Research and Development (Non-GAAP) $6,438 $6,497 $6,549 $6,183 $25,667 $6,157 $5,871
General and Administrative (GAAP) $4,177 $3,945 $3,920 $4,402 $16,444 $3,377 $3,766
Less Stock-based compensation (323) (248) (234) (254) (1,059) (245) (273)
Less Amortization of intangible assets (13) (10) (5) (5) (33) (3) -
Less Restructuring related expenses - - - - - (111) (36)
--- --- --- --- --- ---- ---
General and Administrative (Non-GAAP) $3,841 $3,687 $3,681 $4,143 $15,352 $3,018 $3,457
Marin Software Inc.
Reconciliation of GAAP to Non-GAAP Measures
Three Months Ended Year Ended Three Months Ended
------------------ ---------- ------------------
March 31, June 30, September 30, December 31, December 31, March 31, June 30,
(Unaudited; in thousands) 2017 2017 2017 2017 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
Gross Profit (GAAP) $12,009 $10,535 $9,968 $9,959 $42,471 $7,830 $7,288
Plus Stock-based compensation 311 152 166 193 822 204 172
Plus Amortization of internally developed
software 788 867 1,016 998 3,669 957 986
Plus Amortization of intangible assets 247 245 240 239 971 237 233
Plus Amortization of deferred costs to fulfill
contracts - - - - - 173 156
Plus Restructuring related expenses - - - - - 139 -
Less Deferral of costs to fulfill contracts - - - - - (115) (81)
--- --- --- --- --- ---- ---
Gross Profit (Non-GAAP) $13,355 $11,799 $11,390 $11,389 $47,933 $9,425 $8,754
Operating Loss (GAAP) $(5,982) $(9,563) $(7,254) $(7,471) $(30,270) $(9,083) $(8,449)
Plus Impairment of goodwill - 2,797 - - 2,797 - -
Plus Stock-based compensation 1,842 918 923 1,021 4,704 1,028 1,030
Plus Amortization of internally developed
software 788 867 1,016 998 3,669 957 986
Plus Amortization of intangible assets 730 721 700 699 2,850 690 651
Plus Amortization of deferred costs to fulfill
contracts - - - - - 173 156
Plus Amortization of deferred costs to obtain
contracts - - - - - 432 384
Plus Restructuring related expenses - - - - - 862 84
Less Capitalization of internally developed
software (543) (413) (442) (670) (2,068) (693) (602)
Less Deferral of costs to fulfill contracts - - - - - (115) (81)
Less Deferral of costs to obtain contracts - - - - - (257) (335)
--- --- --- --- --- ---- ----
Operating Loss (Non-GAAP) $(3,165) $(4,673) $(5,057) $(5,423) $(18,318) $(6,006) $(6,176)
Net Loss (GAAP) $(6,126) $(10,545) $(7,549) $(7,271) $(31,491) $(9,112) $(8,276)
Plus Impairment of goodwill - 2,797 - - 2,797 - -
Plus Stock-based compensation 1,842 918 923 1,021 4,704 1,028 1,030
Plus Amortization of internally developed
software 788 867 1,016 998 3,669 957 986
Plus Amortization of intangible assets 730 721 700 699 2,850 690 651
Plus Amortization of deferred costs to fulfill
contracts - - - - - 173 156
Plus Amortization of deferred costs to obtain
contracts - - - - - 432 384
Plus Non-cash expenses related to debt
agreements 6 7 2 - 15 - -
Plus Restructuring related expenses - - - - - 862 84
Less Capitalization of internally developed
software (543) (413) (442) (670) (2,068) (693) (602)
Less Deferral of costs to fulfill contracts - - - - - (115) (81)
Less Deferral of costs to obtain contracts - - - - - (257) (335)
--- --- --- --- --- ---- ----
Net Loss (Non-GAAP) $(3,303) $(5,648) $(5,350) $(5,223) $(19,524) $(6,035) $(6,003)
Marin Software Inc.
Calculation of Non-GAAP Earnings Per Share
Three Months Ended Year Ended Three Months Ended
------------------ ---------- ------------------
March 31, June 30, September
30, December 31, December 31, March 31, June 30,
(Unaudited; in
thousands,
except per share
data) 2017 2017 2017 2017 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
Net Loss (Non-
GAAP) $(3,303) $(5,648) $(5,350) $(5,223) $(19,524) $(6,035) $(6,003)
Weighted-average
shares
outstanding,
basic and
diluted 5,583 5,640 5,651 5,677 5,638 5,736 5,767
----- ----- ----- ----- ----- ----- -----
Non-GAAP net
loss per common
share, basic and
diluted $(0.59) $(1.00) $(0.95) $(0.92) $(3.46) $(1.05) $(1.04)
====== ====== ====== ====== ====== ====== ======
Marin Software Inc.
Reconciliation of Net Loss to Adjusted EBITDA
Three Months Ended Year Ended Three Months Ended
------------------ ---------- ------------------
March 31, June 30, September
30, December 31, December 31, March 31, June 30,
(Unaudited; in thousands) 2017 2017 2017 2017 2017 2018 2018
---- ---- ---- ---- ---- ---- ----
Net Loss $(6,126) $(10,545) $(7,549) $(7,271) $(31,491) $(9,112) $(8,276)
Depreciation 1,336 1,263 1,149 1,010 4,758 798 759
Amortization of internally
developed software 788 867 1,016 998 3,669 957 986
Amortization of intangible assets 730 721 700 699 2,850 690 651
Amortization of deferred costs to
obtain and fulfill contracts - - - - - 605 540
Provision for income taxes 406 419 151 31 1,007 324 204
Impairment of goodwill - 2,797 - - 2,797 - -
Stock-based compensation 1,842 918 923 1,021 4,704 1,028 1,030
Capitalization of internally
developed software (543) (413) (442) (670) (2,068) (693) (602)
Deferral of costs to obtain and
fulfill contracts - - - - - (372) (416)
Restructuring related expenses - - - - - 862 84
Other (income) expenses, net (262) 563 144 (231) 214 (295) (377)
---- --- --- ---- --- ---- ----
Adjusted EBITDA $(1,829) $(3,410) $(3,908) $(4,413) $(13,560) $(5,208) $(5,417)
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