- Record second quarter net revenues of
$23.9 million, up 31% year-over-year
- 21st consecutive quarter of sequential
quarterly revenue growth
- Completed acquisition of display and
social retargeting company Perfect Audience
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, 2014.
“We made important moves during the second quarter to help
position Marin to scale our business and serve a broader set of
needs for digital marketers worldwide,” said David A. Yovanno,
Chief Executive Officer of Marin. “We believe that the combination
of the display and social retargeting capabilities we added through
the acquisition of Perfect Audience and our leading enterprise
search marketing platform will create significant value for our
customers. While we saw some weakness in new business activity for
our base business in the quarter, we have taken steps to improve
our execution going forward.”
Second Quarter 2014 Financial
Highlights:
- Net Revenues: Net revenues
totaled $23.9 million, a year-over-year increase of 31% when
compared to $18.2 million in the second quarter of 2013.
- Gross profit: GAAP gross profit
was $15.1 million, resulting in gross margin of 63%, compared to
GAAP gross margin of 58% during the second quarter of 2013.
Non-GAAP gross profit was $15.8 million, resulting in non-GAAP
gross margin of 66%, compared to non-GAAP gross margin of 61%
during the second quarter of 2013.
- Loss from operations: GAAP loss
from operations was ($8.9) million, compared to ($8.8) million for
the second quarter of 2013. GAAP operating margin was (37%),
compared to (48%) during the second quarter of 2013. Non-GAAP loss
from operations was ($6.8) million, compared to ($8.1) million for
the second quarter of 2013. Non-GAAP operating margin was (29%),
compared to (45%) during the second quarter of 2013.
- Net loss: Net loss was ($6.8)
million or ($0.20) per share based on 33.8 million weighted average
shares outstanding. This compares to a net loss of ($9.1) million
or ($0.28) per share based upon 32.2 million weighted average
shares outstanding for the second quarter of 2013.
- Non-GAAP net loss: Non-GAAP net
loss was ($7.3) million or ($0.22) per share based upon 33.8
million weighted average shares outstanding. This compares to
($8.4) million or ($0.26) per share based on 32.2 million weighted
average shares outstanding during the second quarter of 2013.
- Adjusted EBITDA: Adjusted EBITDA
was ($5.5) million, as compared to ($7.0) million for the second
quarter of 2013.
- Balance Sheet: As of June 30,
2014, cash and cash equivalents totaled $83.9 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."
Second Quarter 2014 Business
Highlights
- Acquired San Francisco-based Perfect
Audience, a privately held display and social retargeting company.
Perfect Audience offers advertisers a powerful, easy-to-use SaaS
platform to retarget audiences across the web, Facebook and
Twitter. With the acquisition, Marin Software expands its
cross-channel capabilities, adding new programmatic display and
social advertising functions while strengthening its audience
targeting tools.
- Became the first Google API partner to
support Google AdWords Remarketing Lists for Search Ads
(RLSA). RLSA within the Marin platform allows advertisers to
retarget website visitors with more relevant ads on Google search.
Support of RLSA builds on Marin’s Audience Connect feature, which
enables advertisers to segment and target high value customers by
audience type across search, social and display.
- Developed support
for Facebook Mobile App Engagement and Conversion ads.
Advertisers can create, deploy, measure and optimize the new ad
type within Marin. Furthermore, Marin added support
for Facebook call to action buttons for News Feed ads,
which allows advertisers to leverage the following actions: “Open
Link,” “Use App,” “Shop Now,” “Watch Video” and “Play Game.”
- Released Portfolio Optimization
bidding, a new Marin-exclusive feature that evaluates bids on
keywords collectively rather than individually. This automated bid
management option strives to maximize performance for an entire
“portfolio” of keywords. During beta implementations, Portfolio
Optimization improved campaign ROI while providing customers
additional flexibility and control.
- Partnered with Channel Factory and
Productsup, furthering Marin’s cross-channel and retail
capabilities. By partnering with Channel Factory, an online video
distribution and data company, joint customers gain actionable
insights into the impact of digital marketing on video ad
campaigns, including YouTube. With Productsup’s cloud-based product
data management technology integrated with Marin’s Dynamic
Campaigns product, marketers can manage and optimize campaigns as
inventory levels fluctuate or new products are introduced.
- Increased the number of active
advertisers leveraging the Marin platform. During the second
quarter, 776 active advertisers utilized the Marin platform,
including 13 active advertisers that utilized the Perfect Audience
platform, as compared to 584 that utilized the Marin platform
during the second 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 August 6th, 2014, Marin is initiating guidance for its
third quarter and updating guidance for the full year 2014 as
follows:
Forward-Looking GuidanceIn millions, except
per share data Range of
Estimate From To Three
Months Ending September 30, 2014 Revenues, net $ 25.0 $
25.4 Non-GAAP loss from operations $ (8.4 ) $ (8.0 ) Non-GAAP net
loss per share $ (0.25 ) $ (0.23 ) Weighted average shares
outstanding 34.9
Year Ending December 31, 2014
Revenues, net $ 98.2 $ 99.0 Non-GAAP loss from operations $ (28.8 )
$ (28.0 ) Non-GAAP net loss per share $ (0.87 ) $ (0.85 ) Weighted
average shares outstanding 34.2
Non-GAAP loss from operations and non-GAAP net loss per share
excludes the effects of stock-based compensation, amortization of
internally developed software, amortization of intangible assets,
noncash expenses related to warrants, non-recurring costs
associated with acquisitions, benefit from income taxes related to
acquisition and capitalization of internally developed
software.
Quarterly Results Conference
CallMarin 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, 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 with
reference to the company name and conference title. 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 August 13, 2014 a recording will
be available for replay at: http://investor.marinsoftware.com/ and
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 13586014.
About Marin SoftwareMarin
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
MeasuresMarin 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 amortization of intangible
assets, the capitalization of internally developed software,
noncash expenses related to the issuance of warrants, the
amortization of internally developed software, the benefit from
income taxes related to acquisition and the non-recurring costs
associated with acquisitions. 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 amortization of intangible
assets, the capitalization of internally developed software,
interest expense, net, the benefit from or provision for income
taxes, other income (expenses), net and the non-recurring costs
associated with acquisitions. 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
StatementsThis 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 third 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 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 following recent
turnover in our executive team; 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; delays, reductions or slower growth in the
amount spent on online and mobile advertising and the development
of the market for cloud-based software; 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; the development of the market for
digital advertising or revenue acquisition management; 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, 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; 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, including our acquisition of Perfect Audience. 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 6, 2014.
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)
(Unaudited; in thousands, except par
value)
June 30, 2014
December 31, 2013
Assets Current assets Cash and cash equivalents $
83,922 $ 104,407 Accounts receivable, net 16,921 14,921 Prepaid
expenses and other current assets 3,591 2,695
Total current assets 104,434 122,023 Property and equipment,
net 13,519 14,417 Intangible assets, net 8,368 - Goodwill 11,593 -
Other noncurrent assets 838 937 Total
assets $ 138,752 $ 137,377
Liabilities and
Stockholders' Equity Current liabilities Accounts payable $
2,176 $ 1,018 Accrued expenses and other current liabilities 11,715
10,950 Deferred revenues 1,499 2,566 Current portion of long-term
debt 2,929 3,253 Total current
liabilities 18,319 17,787 Long-term debt, less current portion
1,721 2,962 Other long term liabilities 1,011
1,284 Total liabilities 21,051 22,033
Stockholders’ equity Common stock, $0.001 par value 35 33
Additional paid-in capital 245,748 228,512 Accumulated deficit
(128,298 ) (113,201 ) Accumulated other comprehensive income
216 - Total stockholders’ equity
117,701 115,344 Total liabilities and
stockholders’ equity $ 138,752 $ 137,377
Marin Software Inc.
Condensed Consolidated Statements of
Operations
(On a GAAP basis)
(Unaudited; in thousands, except per
share data)
Three Months EndedJune
30,
Six Months EndedJune 30,
2014 2013
2014 2013 Revenues, net $
23,853 $ 18,218 $ 46,669 $ 35,373 Cost of revenues (1) (2)
8,763 7,696 17,146 15,068
Gross profit 15,090 10,522
29,523 20,305
Operating expenses (1)
(2) Sales and marketing 11,978 10,350 23,966 20,809 Research
and development 6,627 4,904 12,710 9,983 General and administrative
5,368 4,026 9,786
8,074 Total operating expenses 23,973
19,280 46,462 38,866 Loss from
operations (8,883 ) (8,758 ) (16,939 ) (18,561 ) Interest expense,
net (62 ) (109 ) (128 ) (293 ) Other expenses, net (286 )
(81 ) (281 ) (489 ) Loss before benefit from
(provision for) income taxes (9,231 ) (8,948 ) (17,348 ) (19,343 )
Benefit from (provision for) income taxes 2,440
(149 ) 2,252 (255 ) Net loss $ (6,791 )
$ (9,097 ) $ (15,096 ) $ (19,598 )
Net loss per common share, basic and diluted $ (0.20
) $ (0.28 ) $ (0.45 ) $ (0.99 ) Weighted-average shares
outstanding, basic and diluted 33,771 32,237
33,563 19,871 (1)
Includes stock-based compensation expense as follows: Cost of
revenues $ 192 $ 245 $ 403 $ 450 Sales and marketing 449 361 852
654 Research and development 649 303 1,086 611 General and
administrative 651 400 1,097
819 Total $ 1,941 $ 1,309 $
3,438 $ 2,534 (2) Includes amortization of
intangible assets as follows: Cost of revenues $ 57 $ - $ 57 $ -
Sales and marketing 37 - 37 - Research and development 57 - 57 -
General and administrative 11 -
11 - Total $ 162 $ - $ 162
$ -
Marin Software Inc.Condensed Consolidated
Statements of Cash Flows(On a GAAP basis)(Unaudited;
in thousands) Six Months EndedJune 30,
2014 2013
Operating activities Net loss $ (15,096
) $ (19,598 ) Adjustments to reconcile net loss to net cash used in
operating activities Depreciation 2,717 2,129 Amortization of
internally developed software 910 483 Amortization of intangible
assets 162 - Noncash interest expense related to warrants issued in
connection with debt 92 383 Stock-based compensation 3,438 2,534
Loss on disposal of property and equipment 14 - Provision for bad
debt 287 114 Deferred income tax benefits (2,802 ) - Excess tax
benefits from stock-based award activities (65 ) (37 ) Other
noncash expenses 268 - Changes in operating assets and liabilities
Accounts receivable (1,913 ) 665 Prepaid expenses and other current
assets (803 ) (1,514 ) Other assets 252 16 Accounts payable 524
(826 ) Deferred revenues (1,061 ) 3,139 Accrued expenses and other
liabilities (1,167 ) 1,879 Net cash used in
operating activities (14,243 ) (10,633 )
Investing
activities Purchases of property and equipment (1,405 ) (2,934
) Capitalization of internally developed software (1,346 ) (1,548 )
Acquisition of business, net of cash acquired (4,151 )
- Net cash used in investing activities (6,902
) (4,482 )
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 Repayment of note payable (1,657 )
(8,034 ) Repurchase of unvested shares (6 ) (45 ) Proceeds from
exercise of common stock options 1,532 1,024 Proceeds from employee
stock purchase plan 726 - Excess tax benefits from stock-based
award activities 65 37 Net cash
provided by financing activities 660 104,154
Net (decrease) increase in cash and cash equivalents (20,485
) 89,039
Cash and cash equivalents Beginning of period
104,407 31,540 End of period $ 83,922
$ 120,579
Supplemental disclosure of noncash
investing and financing activities Accounts payable related
purchases of property and equipment $ 110 $ 1,661 Acquisition of
equipment through capital lease - 1,204 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 Issuance of common stock under employee stock purchase plan
715 - Issuance of common stock in connection with business
acquisition 11,195 - Unpaid deferred initial public offering costs
- 49
Marin Software Inc.
Reconciliation of GAAP to Non-GAAP
Measures
(Unaudited; in thousands)
Three Months Ended Year Ended Three Months
Ended March
31,2013 June 30,2013 September
30,2013 December 31,2013 December
31,2013 March 31,2014 June
30,2014 Gross Profit (GAAP) $ 9,783 $ 10,522 $
12,169 $ 13,732 $ 46,206 $ 14,432 $ 15,090 Plus Stock-based
compensation 205 245 239 198 887 211 192 Plus Amortization of
internally developed software 227 256 303 370 1,156 445 465
Plus Amortization of intangible assets
- - - -
- - 57 Gross Profit
(Non-GAAP) $ 10,215 $ 11,023 $ 12,711 $ 14,300 $ 48,249 $ 15,088 $
15,804 Operating Loss (GAAP) $ (9,803 ) $ (8,758 ) $ (7,865
) $ (7,910 ) $ (34,336 ) $ (8,056 ) $ (8,883 ) Plus Stock-based
compensation 1,225 1,309 1,418 1,266 5,218 1,497 1,941
Plus Amortization of internally developed
software
227 256 303 370 1,156 445 465 Plus Amortization of intangible
assets - - - - - - 162 Plus Acquisition related expenses - - - - -
- 217 Less Capitalization of internally developed software
(632 ) (916 ) (1,018 ) (650 ) (3,216 )
(617 ) (729 ) Operating Loss (Non-GAAP) $ (8,983 ) $
(8,109 ) $ (7,162 ) $ (6,924 ) $ (31,178 ) $ (6,731 ) $ (6,827 )
Net Loss (GAAP) $ (10,501 ) $ (9,097 ) $ (8,193 ) $ (8,061 )
$ (35,852 ) $ (8,306 ) $ (6,791 ) Plus Stock-based compensation
1,225 1,309 1,418 1,266 5,218 1,497 1,941
Plus Amortization of internally developed
software
227 256 303 370 1,156 445 465 Plus Amortization of intangible
assets - - - - - - 162 Plus Noncash expenses related to warrants
310 73 53 53 489 46 46 Plus Acquisition related expenses - - - - -
- 217 Less Capitalization of internally developed software (632 )
(916 ) (1,018 ) (650 ) (3,216 ) (617 ) (729 ) Less Benefit from
income taxes related to acquisition - -
- - - -
(2,603 ) Net Loss (Non-GAAP) $ (9,371 ) $ (8,375 ) $ (7,437
) $ (7,022 ) $ (32,205 ) $ (6,935 ) $ (7,292 )
Marin Software Inc.
Calculation of Non-GAAP Earnings Per
Share
(Unaudited; in thousands, except per
share data)
Three Months Ended Year Ended Three Months
Ended March 31,2013
June 30,2013 September 30,2013
December 31,2013 December 31,2013
March 31,2014 June 30,2014 Net Loss
(Non-GAAP) $ (9,371 ) $ (8,375 ) $ (7,437 ) $ (7,022 ) $ (32,205 )
$ (6,935 ) $ (7,292 ) Weighted-average shares outstanding,
basic and diluted 7,365 32,237 32,522 32,768 26,312 33,112 33,771
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 33,771 Non-GAAP net loss
per common share, basic and diluted $ (0.39 ) $ (0.26 ) $ (0.23 ) $
(0.21 ) $ (1.06 ) $ (0.21 ) $ (0.22 )
Reconciliation of Net Loss to Adjusted
EBITDA
(Unaudited; in thousands)
Three Months Ended Year Ended Three Months
Ended March 31,2013 June 30,2013
September 30,2013 December 31,2013
December 31,2013 March 31,2014 June
30,2014 Net loss $ (10,501 ) $ (9,097 ) $ (8,193 ) $
(8,061 ) $ (35,852 ) $ (8,306 ) $ (6,791 ) Depreciation 1,008 1,121
1,299 1,294 4,722 1,350 1,367 Amortization of internally developed
software 227 256 303 370 1,156 445 465 Amortization of intangible
assets - - - - - - 162 Interest expense, net 184 109 82 78 453 66
62 Provision for (benefit from) income taxes 106
149 230 7 492
188 (2,440 ) EBITDA (8,976 ) (7,462 )
(6,279 ) (6,312 ) (29,029 ) (6,257 ) (7,175 ) Stock-based
compensation 1,225 1,309 1,418 1,266 5,218 1,497 1,941
Capitalization of internally developed software (632 ) (916 )
(1,018 ) (650 ) (3,216 ) (617 ) (729 ) Acquisition related expenses
- - - - - - 217 Other expenses (income), net 408
81 16 66 571
(4 ) 286 Adjusted EBITDA $ (7,975 ) $
(6,988 ) $ (5,863 ) $ (5,630 ) $ (26,456 ) $ (5,381 ) $ (5,460 )
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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