Marin Software Incorporated (NYSE: MRIN), provider of a leading
Revenue Acquisition Management platform for advertisers and
agencies, today announced financial results for the second quarter
ended June 30, 2013.
"Marin showed strong revenue growth in the second quarter as
more advertisers and agencies adopted our cloud-based Revenue
Acquisition Management platform to measure, manage, and optimize
their digital advertising investments across search, display,
social, and mobile channels," said Chris Lien, founder and chief
executive officer of Marin. "Leading digital marketers globally
choose Marin's solution to drive better revenue and business
outcomes, while saving time and unlocking business insights."
Second Quarter 2013 Financial
Highlights:
- Net Revenues: Net revenues totaled $18.2
million, a year-over-year increase of 30% when compared to $14.0
million in the prior year period.
- Gross profit: GAAP gross profit was $10.5
million, resulting in gross margin of 58%, compared to GAAP gross
margin of 57% during the second quarter of 2012. Non-GAAP gross
profit was $11.0 million, resulting in non-GAAP gross margin of
61%, compared to non-GAAP gross margin of 59% during the second
quarter of 2012.
- Loss from operations: GAAP loss from
operations was ($8.8) million, compared to ($5.6) million for the
second quarter of 2012. GAAP operating margin was (48%), compared
to (40%) during the second quarter of 2012. Non-GAAP loss from
operations was ($8.1) million, compared to ($5.5) million for the
second quarter of 2012. Non-GAAP operating margin was (45%),
compared to (39%) during the second quarter of 2012.
- Net loss: Net loss was ($9.1) million or
($0.28) per share based on 32.2 million weighted average shares
outstanding. This compares to a net loss of ($5.8) million or
($1.37) per share based upon 4.3 million weighted average shares
outstanding for the second quarter of 2012.
- Non-GAAP net loss: Non-GAAP net loss was
($8.4) million or ($0.26) per share based upon 32.2 million
weighted average shares outstanding. This compares to ($5.7)
million or ($0.26) per share based on 21.5 million weighted average
shares outstanding during the second quarter of 2012, which assumes
our convertible preferred stock was converted to common stock for
the full quarter.
- Adjusted EBITDA: Adjusted EBITDA was a
loss of ($7.0) million, as compared to a loss of ($4.8) million for
the second quarter of 2012.
- Balance Sheet: At June 30, 2013, cash and
cash equivalents totaled $120.6 million, compared to $31.5 million
as of December 31, 2012. Marin received $109.3 million in proceeds,
net of issuance costs paid, from its initial public offering,
including exercise of the over-allotment option, during the six
months ended June 30, 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."
Second Quarter 2013 Business
Highlights
- Released additional support for Google enhanced campaigns and
Yahoo! Japan unified campaigns. Marin's new reporting and
mobile-bid adjustment capabilities for Google enhanced campaigns
improve ad campaign visibility and help maximize mobile
performance. Yahoo! Japan advertisers can now migrate existing ad
campaigns to unified campaigns, set campaign-level bid adjustments,
and create mobile-preferred ads through Marin.
- Managed the Google enhanced campaign and Yahoo! Japan unified
campaign URL build process for clients, which required over one
billion URLs to be made mobile-ready. Marin's custom device
tracking process saved clients from having to rebuild nearly 500
million URLs.
- Added additional mobile targeting options for Facebook
advertisers, allowing them to target users based on their mobile
device usage. Marin users can now reach Facebook users on specific
versions of mobile operating systems (OS) or those who are using
WIFI connections. Marin's new Facebook Campaign Wizard enables
marketers to easily create Facebook desktop and mobile campaigns at
scale. Marin launched a capability to help marketers promote their
mobile applications across unlimited audience segments, drive
downloads and track lifetime value from installations.
- Delivered improvements to platform support for Google Shopping
and Product Listing Ads in anticipation of the holiday season.
Through Marin, retailers can bulk upload product targets, saving
marketers a significant amount of time and effort.
- Increased the number of active advertisers leveraging the Marin
platform. During the second quarter, 584 active advertisers
utilized the Marin platform, compared to 487 during the second
quarter of 2012. 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.
- Appointed industry veteran, Matt Ackley, Chief Marketing
Officer to oversee global marketing for Marin. Ackley brings to
Marin over 15 years of executive-level product and marketing
experience at eBay, Google and high-growth startups.
- Added Brian Kaminski as Senior Vice President of Customer
Success with a focus on direct advertisers. Kaminski was most
recently President of Business Performance at iProspect, a leading
digital marketing agency where he worked for nearly 15 years.
- Awarded Best PPC Management Software at the European Search
Awards for the second consecutive year. Marin was also named a
winner of the 2013 San Francisco Business Times Tech and Innovation
Awards.
Financial Outlook:
As of August 7th, 2013, Marin is initiating guidance for its
third quarter and updating the full year 2013 as follows:
Forward-Looking Guidance
In millions, except per share data
---------------------------------------------------------------------------
Range of Estimate
From To
--------- ---------
Three Months Ending September 30, 2013
Revenues, net $ 19.6 $ 20.0
Non-GAAP loss from operations $ (8.5) $ (8.1)
Non-GAAP net loss per share $ (0.28) $ (0.26)
Weighted average shares outstanding 32.4
Twelve Months Ending December 31, 2013
Revenues, net $ 76.0 $ 76.8
Non-GAAP loss from operations $ (33.0) $ (32.2)
Non-GAAP net loss per share $ (1.15) $ (1.12)
Weighted average shares outstanding 30.5
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. Additionally,
the weighted average shares outstanding for the twelve months
ending December 31, 2013 gives effect to the conversion of
convertible preferred stock at the beginning of the period.
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, 2013 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 411944. A live webcast of the
conference will be accessible from Marin Software's website at:
http://investor.marinsoftware.com/. A recording will be available
for replay at: http://investor.marinsoftware.com/.
About Marin Software Marin Software
Incorporated (NYSE: MRIN) provides a leading Revenue Acquisition
Management platform used by advertisers and agencies to manage more
than $4 billion in annualized ad spend. Offering an integrated
platform for search, social, display, 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 its 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, loss from operations and
net loss as the respective GAAP balances, adjusted for stock-based
compensation expense, capitalized internal-use software development
costs, noncash expenses from the issuance of warrants, and the
amortization of capitalized internal-use 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 and amortization,
capitalized internal-use software development costs, 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 Q3 2013 and
FY 2013. 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 and 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-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 7, 2013. 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) June 30, December 31,
2013 2012
------------- -------------
Assets
Current assets
Cash and cash equivalents $ 120,579 $ 31,540
Accounts receivable, net 12,354 13,133
Prepaid expenses and other current assets 3,328 1,814
------------- -------------
Total current assets 136,261 46,487
Property and equipment, net 13,426 9,224
Other noncurrent assets 397 1,513
------------- -------------
Total assets $ 150,084 $ 57,224
============= =============
Liabilities, Preferred Stock and Stockholders'
Equity (Deficit)
Current liabilities
Accounts payable $ 1,570 $ 1,268
Accrued expenses 10,636 9,661
Deferred revenue 3,757 618
Current portion of long-term debt 2,782 1,572
------------- -------------
Total current liabilities 18,745 13,119
Long-term debt, less current portion 3,066 9,243
Other long term liabilities 1,496 1,858
------------- -------------
Total liabilities 23,307 24,220
------------- -------------
Convertible preferred stock, $0.001 par value - 105,710
Stockholders' equity (deficit)
Common stock, $0.001 par value 32 5
Additional paid-in capital 223,692 4,638
Accumulated deficit (96,947) (77,349)
------------- -------------
Total stockholders' equity (deficit) 126,777 (72,706)
------------- -------------
Total liabilities, preferred stock and
stockholders' equity (deficit) $ 150,084 $ 57,224
============= =============
Condensed Consolidated Statements of
Operations Three Months Ended Six Months Ended
(On a GAAP basis) June 30, June 30,
------------------ ------------------
(Unaudited; in thousands, except per
share data) 2013 2012 2013 2012
-------- -------- -------- --------
Revenues, net $ 18,218 $ 14,032 $ 35,373 $ 27,006
Cost of revenues (1) 7,696 5,989 15,068 11,243
-------- -------- -------- --------
Gross profit 10,522 8,043 20,305 15,763
-------- -------- -------- --------
Operating expenses (1)
Sales and marketing 10,350 8,021 20,809 14,873
Research and development 4,904 3,078 9,983 6,045
General and administrative 4,026 2,517 8,074 6,910
-------- -------- -------- --------
Total operating expenses 19,280 13,616 38,866 27,828
-------- -------- -------- --------
Loss from operations (8,758) (5,573) (18,561) (12,065)
Interest expense, net (109) (102) (293) (212)
Other expenses, net (81) (94) (489) (197)
-------- -------- -------- --------
Loss before provision for income
taxes (8,948) (5,769) (19,343) (12,474)
Provision for income taxes (149) (55) (255) (104)
-------- -------- -------- --------
Net loss $ (9,097) $ (5,824) $(19,598) $(12,578)
======== ======== ======== ========
Net loss per common share, basic and
diluted $ (0.28) $ (1.37) $ (0.99) $ (2.94)
-------- -------- -------- --------
Weighted-average shares outstanding,
basic and diluted 32,237 4,261 19,871 4,282
-------- -------- -------- --------
(1) Includes stock-based
compensation as follows:
Cost of revenues $ 245 $ 115 $ 450 $ 171
Sales and marketing 361 124 654 556
Research and development 303 132 611 496
General and administrative 400 156 819 2,195
-------- -------- -------- --------
$ 1,309 $ 527 $ 2,534 $ 3,418
======== ======== ======== ========
Condensed Consolidated Statements of Cash Flows Six Months Ended
(On a GAAP basis) June 30,
--------------------
(Unaudited; in thousands) 2013 2012
--------- ---------
Operating activities
Net loss $ (19,598) $ (12,578)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 2,129 1,102
Amortization of internally developed software 483 210
Noncash expenses related to warrants 383 273
Stock-based compensation 2,534 3,418
Provision for bad debt 114 227
Other noncash expenses - 74
Excess tax benefits from stock-based award
activities (37) -
Changes in operating assets and liabilities
Accounts receivable 665 (1,695)
Prepaid expenses and other current assets (1,514) (293)
Other assets 16 (60)
Accounts payable (826) 56
Deferred revenue 3,139 445
Accrued expenses and other liabilities 1,879 540
--------- ---------
Net cash used in operating activities (10,633) (8,281)
--------- ---------
Investing activities
Purchases of property and equipment (2,934) (2,855)
Capitalization of internally developed software (1,548) (834)
--------- ---------
Net cash used in investing activities (4,482) (3,689)
--------- ---------
Financing activities
Proceeds from issuance of common stock in initial
public offering, net of issuance costs 109,454 -
Proceeds from issuance of note payable, net of
issuance costs 1,718 7,314
Repayment of note payable (8,034) (3,383)
Redemption of common stock and unvested shares subject
to repurchase (45) (4,502)
Proceeds from issuance of convertible, preferred
stock, net of issuance costs - 34,294
Proceeds from common stock purchase agreements and
option exercises 1,024 1,876
Excess tax benefits from stock-based award activities 37 -
--------- ---------
Net cash provided by financing activities 104,154 35,599
--------- ---------
Net increase in cash and cash equivalents 89,039 23,629
Cash and cash equivalents
Beginning of period 31,540 1,719
--------- ---------
End of period $ 120,579 $ 25,348
========= =========
Reconciliation of GAAP to
Non-GAAP Measures
---------
(Unaudited; in thousands) Year
Three Months Ended Ended
------------------------------------- ---------
March June September December December
31, 30, 30, 31, 31,
2012 2012 2012 2012 2012
------- ------- --------- -------- ---------
Gross Profit (GAAP) $ 7,720 $ 8,043 $ 9,016 $ 10,015 $ 34,794
Plus Stock-based
compensation 56 115 121 147 439
Plus Amortization of
internally developed
software 96 114 136 179 525
Less Capitalization of
internally developed
software - - (23) (15) (38)
------- ------- --------- -------- ---------
Gross Profit (Non-GAAP) $ 7,872 $ 8,272 $ 9,250 $ 10,326 $ 35,720
Operating loss (GAAP) $(6,492) $(5,573) $ (6,423) $ (6,797) $(25,285)
Plus Stock-based
compensation 2,891 527 829 701 4,948
Plus Amortization of
internally developed
software 96 114 136 179 525
Plus Noncash expenses
related to warrants 60 - - - 60
Less Capitalization of
internally developed
software (303) (531) (440) (469) (1,743)
------- ------- --------- -------- ---------
Operating loss (Non-GAAP) $(3,748) $(5,463) $ (5,898) $ (6,386) $(21,495)
Net Loss (GAAP) $(6,754) $(5,824) $ (6,648) $ (7,256) $(26,482)
Plus Stock-based
compensation 2,891 527 829 701 4,948
Plus Amortization of
internally developed
software 96 114 136 179 525
Plus Noncash expenses
related to warrants 223 50 61 247 581
Less Capitalization of
internally developed
software (303) (531) (440) (469) (1,743)
------- ------- --------- -------- ---------
Net Loss (Non-GAAP) $(3,847) $(5,664) $ (6,062) $ (6,598) $(22,171)
---------
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited; in thousands) Three Months
Ended
-----------------
March June
31, 30,
2013 2013
-------- -------
Gross Profit (GAAP) $ 9,783 $10,522
Plus Stock-based
compensation 205 245
Plus Amortization of
internally developed
software 227 256
Less Capitalization of
internally developed
software - -
-------- -------
Gross Profit (Non-GAAP) $ 10,215 $11,023
Operating loss (GAAP) $ (9,803) $(8,758)
Plus Stock-based
compensation 1,225 1,309
Plus Amortization of
internally developed
software 227 256
Plus Noncash expenses
related to warrants - -
Less Capitalization of
internally developed
software (632) (916)
-------- -------
Operating loss (Non-GAAP) $ (8,983) $(8,109)
Net Loss (GAAP) $(10,501) $(9,097)
Plus Stock-based
compensation 1,225 1,309
Plus Amortization of
internally developed
software 227 256
Plus Noncash expenses
related to warrants 310 73
Less Capitalization of
internally developed
software (632) (916)
-------- -------
Net Loss (Non-GAAP) $ (9,371) $(8,375)
Calculation of Non-GAAP
Earnings Per Share
----------
(Unaudited; in thousands, Year
except per share data) Three Months Ended Ended
------------------------------------- ----------
March June September December December
31, 30, 30, 31, 31,
2012 2012 2012 2012 2012
------- ------- --------- -------- ----------
Net Loss (Non-GAAP) $(3,847) $(5,664) $ (6,062) $ (6,598) $ (22,171)
Weighted-average shares
outstanding, basic and
diluted 4,254 4,261 4,404 4,559 4,417
Additional weighted
average shares giving
effect to conversion
of convertible
preferred stock at the
beginning of the
period 17,275 17,275 17,275 18,753 18,753
------- ------- --------- -------- ----------
Shares used in computing
non-GAAP net loss per
share, basic and diluted 21,529 21,536 21,679 23,312 23,170
------- ------- --------- -------- ----------
Non-GAAP net loss per
common share, basic and
diluted $ (0.18) $ (0.26) $ (0.28) $ (0.28) $ (0.96)
======= ======= ========= ======== ==========
Calculation of Non-GAAP
Earnings Per Share
(Unaudited; in thousands, Three Months
except per share data) Ended
----------------
March June
31, 30,
2013 2013
------- -------
Net Loss (Non-GAAP) $(9,371) $(8,375)
Weighted-average shares
outstanding, basic and
diluted 7,365 32,237
Additional weighted
average shares giving
effect to conversion
of convertible
preferred stock at the
beginning of the
period 16,877 -
------- -------
Shares used in computing
non-GAAP net loss per
share, basic and diluted 24,242 32,237
------- -------
Non-GAAP net loss per
common share, basic and
diluted $ (0.39) $ (0.26)
======= =======
Reconciliation of Net Loss
to Adjusted EBITDA
---------
(Unaudited; in thousands) Year
Three Months Ended Ended
------------------------------------- ---------
March June September December December
31, 30, 30, 31, 31,
2012 2012 2012 2012 2012
------- ------- --------- -------- ---------
Net loss $(6,754) $(5,824) $ (6,648) $ (7,256) $(26,482)
Depreciation 488 614 700 840 2,642
Amortization of
internally developed
software 96 114 136 179 525
Interest expense, net 110 102 137 171 520
Provision for income
taxes 49 55 63 54 221
------- ------- --------- -------- ---------
EBITDA (6,011) (4,939) (5,612) (6,012) (22,574)
Stock-based compensation 2,891 527 829 701 4,948
Capitalization of
internally developed
software (303) (531) (440) (469) (1,743)
Other (income) expenses,
net 103 94 25 234 456
------- ------- --------- -------- ---------
Adjusted EBITDA $(3,320) $(4,849) $ (5,198) $ (5,546) $(18,913)
======= ======= ========= ======== =========
Reconciliation of Net Loss
to Adjusted EBITDA
(Unaudited; in thousands) Three Months
Ended
-----------------
March June
31, 30,
2013 2013
-------- -------
Net loss $(10,501) $(9,097)
Depreciation 1,008 1,121
Amortization of
internally developed
software 227 256
Interest expense, net 184 109
Provision for income
taxes 106 149
-------- -------
EBITDA (8,976) (7,462)
Stock-based compensation 1,225 1,309
Capitalization of
internally developed
software (632) (916)
Other (income) expenses,
net 408 81
-------- -------
Adjusted EBITDA $ (7,975) $(6,988)
======== =======
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Investor Relations Contact: Greg Kleiner ICR for Marin
Software 415-762-0327 ir@marinsoftware.com Media Contact:
Greg Kunkel Corporate Communications, Marin Software 415-857-7663
press@marinsoftware.com
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