- Record first quarter net revenues of
$22.8 million, up 33% year-over-year
- 20th consecutive quarter of sequential
quarterly revenue growth
Marin Software Incorporated (NYSE: MRIN), provider of a leading
Revenue Acquisition Management platform for advertisers and
agencies, today announced financial results for the first quarter
ended March 31, 2014.
“We are pleased to report strong results in Q1, as revenue
growth accelerated to its highest rate since Q4 2012,” said Chris
Lien, Founder and Executive Chairman of Marin. “Revenue for the
quarter was $22.8 million, up 33% year over year. We saw increased
spending on our platform from both existing and recently acquired
customers offsetting the seasonal pattern we had previously
expected. This success is a strong testament to the value we are
delivering through our leading Revenue Acquisition Management
platform and the business results we are driving on behalf of our
customers.”
"I am excited to announce that David A. Yovanno has joined Marin
as CEO to partner with me, the rest of the team, and our Board to
help scale Marin to its next stage of growth,” said Lien. “Marin’s
record results for the first quarter demonstrate our tremendous
market opportunity and momentum. Now is the right time to bring in
Dave, who has more than 20 years of operating experience and strong
digital marketing expertise. I am confident Dave will build on
Marin’s success to drive the company to even greater levels of
achievement. In my new role as Executive Chairman, I look forward
to working closely with Dave and the entire team to extend Marin’s
leadership position in Revenue Acquisition Management as we seek to
serve more advertisers and agencies worldwide.”
First Quarter 2014 Financial
Highlights:
- Net Revenues: Net revenues
totaled $22.8 million, a year-over-year increase of 33% when
compared to $17.2 million in the first quarter of 2013.
- Gross profit: GAAP gross profit
was $14.4 million, resulting in gross margin of 63%, compared to
GAAP gross margin of 57% during the first quarter of 2013. Non-GAAP
gross profit was $15.1 million, resulting in non-GAAP gross margin
of 66%, compared to non-GAAP gross margin of 60% during the first
quarter of 2013.
- Loss from operations: GAAP loss
from operations was ($8.1) million, compared to ($9.8) million for
the first quarter of 2013. GAAP operating margin was (35%),
compared to (57%) during the first quarter of 2013. Non-GAAP loss
from operations was ($6.7) million, compared to ($9.0) million for
the first quarter of 2013. Non-GAAP operating margin was (30%),
compared to (52%) during the first quarter of 2013.
- Net loss: Net loss was ($8.3)
million or ($0.25) per share based on 33.1 million weighted average
shares outstanding. This compares to a net loss of ($10.5) million
or ($1.43) per share based upon 7.4 million weighted average shares
outstanding for the first quarter of 2013.
- Non-GAAP net loss: Non-GAAP net
loss was ($6.9) million or ($0.21) per share based upon 33.1
million weighted average shares outstanding. This compares to
($9.4) million or ($0.39) per share based on 24.2 million weighted
average shares outstanding during the first quarter of 2013, which
assumes our convertible preferred stock was converted to common
stock for the full first quarter of 2013.
- Adjusted EBITDA: Adjusted EBITDA
was ($5.4) million, as compared to ($8.0) million for the first
quarter of 2013.
- Balance Sheet: As of March 31,
2014, cash and cash equivalents totaled $96.1 million, compared to
$104.4 million as of December 31, 2013.
A reconciliation of GAAP to non-GAAP financial measures has 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."
First Quarter 2014 Business
Highlights
- Developed Marin Context Connect to help
advertisers better adapt to external factors that impact consumer
buying patterns. The new capability lets advertisers incorporate
contextual data such as weather, product inventory, TV or print
advertising, sports scores, stock market returns and other data
into their digital marketing campaign strategies. Marin Context
Connect is Marin’s first solution that enables performance
marketers to execute smarter optimization strategies by
automatically capitalizing on environmental changes that affect
their business.
- Enhanced the functionality of Marin
Channel Connect, enabling advertisers to incorporate cost and
performance data from publishers at both the keyword level and
creative level. The enhancement opens the Marin platform even
further, providing greater visibility into the attribution of
performance across a broader array of publishers, as well as a
single source to measure performance, track revenue and optimize
bidding.
- Developed additional support for new ad
publisher features including full support for Facebook’s new
campaign structure and latest mobile ad offerings, allowing
advertisers to take full advantage of mobile success in social
advertising. Marin’s bidding algorithm was extended to support
mobile ads on Yahoo! Japan, and support for Baidu’s latest API was
developed, furthering our presence in China.
- Initiated a beta API program as part of
Marin’s open stack architecture, empowering partners with the
ability to build connection to the Marin platform directly. This
API program will provide advertisers an increased level of
visibility and control over their own data and enable our growing
ecosystem of advertising technology partners to further leverage
the Marin platform.
- Increased the number of active
advertisers leveraging the Marin platform. During the first
quarter, 704 active advertisers utilized the Marin platform,
compared to 542 during the first quarter of 2013. Marin defines
active advertisers as an advertiser from whom Marin recognized
revenues in excess of $2,000 in at least one month during the
quarter.
Financial Outlook:
As of May 7th, 2014, Marin is initiating guidance for its second
quarter and improving guidance for the full year 2014 as
follows:
Forward-Looking Guidance In millions, except per share
data Range of Estimate From
To
Three Months Ending June 30,
2014
Revenues, net $ 22.9 $ 23.3 Non-GAAP loss from operations $
( 8.7) $ ( 8.3) Non-GAAP net loss per share $ ( 0.28) $ ( 0.26)
Weighted average shares outstanding 33.4
Year Ending December 31, 2014
Revenues, net $ 96.8 $ 98.0 Non-GAAP loss from operations $
( 29.2) $ ( 28.0) Non-GAAP net loss per share $ ( 0.90) $ ( 0.87)
Weighted average shares outstanding 33. 5
Non-GAAP loss from operations and non-GAAP net loss per share
excludes the effects of stock-based compensation, amortization of
internally developed software, noncash expenses related to warrants
and capitalization of internally developed software.
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 March 31, 2014 and its
outlook for the future. To access the call, please dial (877)
705-6003 in the U.S. or (201) 493-6725 internationally. Passcode is
13579770. A live webcast of the conference will be accessible from
Marin Software’s website at: http://investor.marinsoftware.com/.
Following the completion of the call through 11:59 p.m. EST on May
7, 2015 a recording will be available for replay at:
http://investor.marinsoftware.com/ and through 11:59 p.m. EST on
May 14, 2014 a telephone replay will be available by dialing (877)
870-5176 in the U.S. or (858) 384-5517 internationally with the
recording access code 13579770.
About Marin Software
Marin Software Incorporated (NYSE: MRIN) provides a leading
Revenue Acquisition Management platform used by advertisers and
agencies to measure, manage and optimize more than $6 billion in
annualized ad spend. Offering an integrated platform for search,
display, social, and mobile advertising, Marin helps advertisers
and agencies improve financial performance, save time, and make
better decisions. Headquartered in San Francisco, with offices
worldwide, Marin's technology powers marketing campaigns in more
than 160 countries. For more information about Marin’s products,
please visit: http://www.marinsoftware.com/solutions/overview.
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.
Marin defines non-GAAP gross profit, non-GAAP operating loss and
non-GAAP net loss as the respective GAAP balances, adjusted for
stock-based compensation expense, the capitalization of internally
developed software, noncash expenses related to the issuance of
warrants, and the amortization of internally developed software.
Non-GAAP net loss per share is calculated as non-GAAP net loss
divided by the weighted average shares outstanding that are
adjusted to assume the conversion of outstanding preferred shares
to common shares as of the beginning of the period.
Marin defines Adjusted EBITDA as net loss, adjusted for
stock-based compensation expense, depreciation, the amortization of
internally developed software, the capitalization of internally
developed software, interest expense, net, provision for income
taxes and other income (expenses), net. 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 reflect 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, growth, momentum, and future financial results, including
its outlook for the second quarter of 2014 and fiscal year 2014.
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 (i) adverse changes in
general economic or market conditions; (ii) delays, reductions or
slower growth in the amount spent on online and mobile advertising
and the development of the market for cloud-based software; (iii)
competitive factors, including but not limited to pricing
pressures, entry of new competitors and new applications; (iv)
adverse changes in our relationships with and access to publishers
and advertising agencies; (v) level of usage and advertising spend
managed on our platform; (vi) our ability to expand sales of our
solutions in channels other than search advertising; (vii) our
ability to expand our sales and marketing capabilities and manage
our growth effectively; (viii) the development of the market for
digital advertising or revenue acquisition management; (ix)
acceptance and continued usage of our platform and services by
customers and our ability to provide high-quality technical support
to our customers; (x) material defects in our platform, service
interruptions at our single third-party data center or breaches in
our security measures; (xi) our ability to develop enhancements to
our platform; (xii) our ability to protect our intellectual
property; (xiii) our ability to manage risks associated with
international operations; (xiv) 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;
(xv) our ability to retain and attract qualified management and
technical personnel; and (xvi) 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 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 May 7, 2014. Marin
assumes no obligation to, and expressly disclaims any obligation to
update any such forward-looking statements after the date of this
release.
Condensed Consolidated Balance
Sheets
(On a GAAP basis)
(Unaudited; in thousands, except par
value)
March 31, December 31,
2014 2013
Assets
Current assets Cash and cash equivalents $ 96,134 $ 104,407
Accounts receivable, net 14,761 14,921 Prepaid expenses and other
current assets 3,183 2,695 Total
current assets 114,078 122,023 Property and equipment, net 13,913
14,417 Other noncurrent assets 1,145 937
Total assets $ 129,136 $ 137,377
Liabilities and Stockholders'
Equity
Current liabilities Accounts payable $ 1,234 $ 1,018 Accrued
expenses and other current liabilities 9,580 10,950 Deferred
revenue 2,075 2,566 Current portion of long-term debt 3,093
3,253 Total current liabilities 15,982 17,787
Long-term debt, less current portion 2,291 2,962 Other long term
liabilities 1,161 1,284 Total
liabilities 19,434 22,033 Stockholders’
equity Common stock, $0.001 par value 33 33 Additional paid-in
capital 231,047 228,512 Accumulated deficit (121,507 ) (113,201 )
Accumulated other comprehensive income 129 -
Total stockholders’ equity 109,702
115,344 Total liabilities and stockholders’ equity $ 129,136
$ 137,377
Condensed
Consolidated Statements of Operations Three Months Ended
(On a GAAP basis) March 31, (Unaudited; in
thousands, except per share data) 2014
2013
Revenues, net $ 22,815 $ 17,155 Cost of revenues (1)
8,383 7,372 Gross profit 14,432
9,783
Operating expenses (1) Sales and
marketing 11,989 10,459 Research and development 6,083 5,079
General and administrative 4,416 4,048
Total operating expenses 22,488 19,586
Loss from operations (8,056 ) (9,803 ) Interest expense, net (66 )
(184 ) Other income (expenses), net 4 (408 )
Loss before provision for income taxes (8,118 ) (10,395 ) Provision
for income taxes (188 ) (106 ) Net loss $ (8,306 ) $
(10,501 ) Net loss per common share, basic and diluted $
(0.25 ) $ (1.43 ) Weighted-average shares outstanding, basic and
diluted 33,112 7,365 (1)
Includes stock-based compensation as follows: Cost of revenues $
211 $ 205 Sales and marketing 403 293 Research and development 437
308 General and administrative 446 419
$ 1,497 $ 1,225
Condensed Consolidated Statements of
Cash Flows
Three Months Ended
(On a GAAP basis)
March 31,
(Unaudited; in thousands)
2014 2013
Operating activities
Net loss $ (8,306 ) $ (10,501 ) Adjustments to reconcile net loss
to net cash used in operating activities Depreciation 1,350 1,008
Amortization of internal-use software 445 227 Noncash interest
expense related to warrants issued in connection with debt 46 310
Stock-based compensation 1,497 1,225 Provision for bad debt 167 84
Excess tax benefits from stock-based award activities (69 ) - Other
noncash expenses 148 - Changes in operating assets and liabilities
Accounts receivable (155 ) 933 Prepaid expenses and other current
assets (488 ) (757 ) Other assets (208 ) 16 Accounts payable 324
496 Deferred revenue (491 ) 764 Accrued expenses and other
liabilities (1,569 ) 5 Net cash used in
operating activities (7,309 ) (6,190 )
Investing activities
Purchases of property and equipment (782 ) (992 ) Capitalization of
internally developed software (617 ) (632 ) Net cash
used in investing activities (1,399 ) (1,624 )
Financing activities
Proceeds from issuance of common stock in initial public offering,
net of issuance costs - 97,258 Proceeds from issuance of note
payable, net of issuance costs - 1,667 Repayment of note payable
(877 ) (7,553 ) Repurchase of unvested shares (1 ) (15 ) Proceeds
from exercise of common stock options 768 407 Proceeds from
employee stock purchase plan 347 - Excess tax benefits from
stock-based award activities 69 - Net
cash provided by financing activities 306
91,764 Effect of foreign exchange rate on cash and cash
equivalents 129 - Net increase in cash and cash equivalents (8,273
) 83,950
Cash and cash equivalents
Beginning of period 104,407 31,540 End
of period $ 96,134 $ 115,490
Supplemental disclosure of noncash
investing and financing activities
Accounts payable related purchases of property and equipment $ 100
$ 1,242 Conversion of convertible preferred stock to common stock -
105,710 Conversion of warrant to purchase Series B convertible
preferred stock to common stock warrant - 745 Acquisition of
equipment through capital lease - 1,004 Unpaid deferred initial
public offering costs - 2,281 Amounts receivable for stock option
exercises - 369
Reconciliation of GAAP to Non-GAAP
Measures
(Unaudited; in thousands) Three Months Ended
Year Ended Three Months Ended
March 31, June 30, September
30, December 31, December 31, March 31,
2013 2013
2013 2013 2013
2014 Gross Profit (GAAP) $ 9,783
$ 10,522 $ 12,169 $ 13,732 $ 46,206 $ 14,432 Plus Stock-based
compensation 205 245 239 198 887 211 Plus Amortization of
internally developed software 227 256
303 370 1,156 445
Gross Profit (Non-GAAP) $ 10,215 $ 11,023 $ 12,711 $ 14,300
$ 48,249 $ 15,088 Operating Loss (GAAP) $ (9,803 ) $ (8,758
) $ (7,865 ) $ (7,910 ) $ (34,336 ) $ (8,056 ) Plus Stock-based
compensation 1,225 1,309 1,418 1,266 5,218 1,497 Plus Amortization
of internally developed software 227 256 303 370 1,156 445 Less
Capitalization of internally developed software (632 )
(916 ) (1,018 ) (650 ) (3,216 )
(617 ) Operating Loss (Non-GAAP) $ (8,983 ) $ (8,109 ) $ (7,162 ) $
(6,924 ) $ (31,178 ) $ (6,731 ) Net Loss (GAAP) $ (10,501 )
$ (9,097 ) $ (8,193 ) $ (8,061 ) $ (35,852 ) $ (8,306 ) Plus
Stock-based compensation 1,225 1,309 1,418 1,266 5,218 1,497 Plus
Amortization of internally developed software 227 256 303 370 1,156
445 Plus Noncash expenses related to warrants 310 73 53 53 489 46
Less Capitalization of internally developed software (632 )
(916 ) (1,018 ) (650 ) (3,216 )
(617 ) Net Loss (Non-GAAP) $ (9,371 ) $ (8,375 ) $ (7,437 ) $
(7,022 ) $ (32,205 ) $ (6,935 )
Calculation of Non-GAAP Earnings Per
Share
(Unaudited; in thousands, except per
share data)
Three Months Ended Year Ended Three Months
Ended March 31, June
30, September 30, December 31, December
31, March 31, 2013
2013 2013 2013
2013 2014 Net Loss
(Non-GAAP) $ (9,371 ) $ (8,375 ) $ (7,437 ) $ (7,022 ) $ (32,205 )
$ (6,935 ) Weighted-average shares outstanding, basic and
diluted 7,365 32,237 32,522 32,768 26,312 33,112 Additional
weighted average shares giving effect to conversion of convertible
preferred stock at the beginning of the period 16,877
- - - 4,162
- Shares used in computing non-GAAP net loss per
share, basic and diluted 24,242 32,237
32,522 32,768 30,474
33,112 Non-GAAP net loss per common share, basic and
diluted $ (0.39 ) $ (0.26 ) $ (0.23 ) $ (0.21 ) $ (1.06 ) $ (0.21 )
Reconciliation of Net Loss to Adjusted
EBITDA
(Unaudited; in thousands)
Three Months Ended Year Ended Three Months
Ended March 31, June 30, September 30,
December 31, December 31, March 31,
2013 2013 2013 2013 2013
2014 Net loss $ (10,501 ) $ (9,097 ) $ (8,193 ) $ (8,061 ) $
(35,852 ) $ (8,306 ) Depreciation 1,008 1,121 1,299 1,294 4,722
1,350 Amortization of internally developed software 227 256 303 370
1,156 445 Interest expense, net 184 109 82 78 453 66 Provision for
income taxes 106 149 230
7 492 188 EBITDA (8,976 )
(7,462 ) (6,279 ) (6,312 ) (29,029 ) (6,257 ) Stock-based
compensation 1,225 1,309 1,418 1,266 5,218 1,497 Capitalization of
internally developed software (632 ) (916 ) (1,018 ) (650 ) (3,216
) (617 ) Other (income) expenses, net 408 81
16 66 571
(4 ) Adjusted EBITDA $ (7,975 ) $ (6,988 ) $ (5,863 ) $ (5,630 ) $
(26,456 ) $ (5,381 )
Investor Relations Contact:ICR for Marin SoftwareGreg
Kleiner, 415-762-0327ir@marinsoftware.comorMedia
Contact:Marin SoftwareGreg Kunkel, 415-857-7663Corporate
Communicationspress@marinsoftware.com
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