Q3 2019 Earnings Call

Thank you for standing by this is the conference.

Welcome to the Marin Softwares third quarter 2019 earnings conference call.

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I'd now like to turn the conference.

To Mr. Brad <unk>. Please go ahead.

Thank you good afternoon, everyone and welcome to Marin Softwares third quarter 2019 earnings Conference call. My name is Brad Cashman CFO joining me today as christening Morons CEO I know you should have received a copy of our earnings release, which crossed the wire short time ago.

If you need a copy of the release. Please go to investors Dufresne software dot com to find electronic version.

Call participants are advised the audio this conference call is being recorded playback purposes and that this recording will be made available on the investor Relations section or website within a few hours.

Before we begin I'd like to note that our discussion today will include forward looking statements within the meaning of the Securities Act of 1933 in the Securities Exchange Act of 1934.

These forward looking statements include statements about our business outlook and strategy.

The stock results that may suggest trends for our business, our expectations about our ability to improve customer attention and new bookings and returned to growth.

Ability to manage our expenses and cash resources impact of investments in product and technology progress on product development efforts product capabilities and future financial results. We make these statements as of November 7th 2019, and disclaim any duty to update.

For more information regarding these and other risks or uncertainties that could cause our actual results to differ materially from those expressed or implied and these forward looking statements as well as Russ relating to our business in general.

We refer you to the section entitled Risk factors in our most recent report on Form 10-Q , and our other FCC filings.

This presentation contains certain financial performance measures that are different from the financial measures calculated in accordance with gap and maybe different from similar calculations or measures used by other companies.

Quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available in our third quarter 2019 earnings release with that let me turn the call over to Chris.

Thank you Brad good afternoon, everyone and thank you for joining our call today.

I'll review the corridor and provide an update on our initiatives to return are integral.

Brad will then provide additional detail on our third quarter results and our outlook for Q4.

As we've discussed before we remain focused on returning to growth and maximizing shareholder value.

We intend to achieve yes, I do agree a leading cross channel advertising than it's been platform to enable brands and their agencies to grow and optimize returns from their online advertising investments. We call. This platform are written one.

Our efforts to return to growth are taking longer than any of us would've preferred and our revenues continued to be under pressure.

At the same time, we continue to believe that our strategy is sound and that are unless you guys will show results in the coming quarters.

Additionally, there's some green shoots precedent, even if not yet sufficient to return we're going to grow.

Our view is that as we deliver more compelling product where market and good results will follow.

As such we continue to invest a substantial amount in product development to better meet the needs of the digital marketer.

As announced in today's earnings release Q3 revenues came in at 11.7 million, which was above the high end up our guidance, but still down from the prior year.

We also outperformed our forecast operating loss our cash balance at the end of Q3 was 10.1 million, reflecting a modest use of cash of $700000, reflecting our ongoing commitment to manage costs will continue to monitor our cash uses closely balancing investments in cost savings and we're committed to making sure that Miranda.

Adequately funded.

Right it seems to be an ally in digital for the world's leading brands in their agencies customers and prospects traverse a range of channels devices and publishers online.

Their path to purchase.

Marketers need a cross channel platform to engage at all points of this customer journey and as we've highlighted.

The walled gardens, a Google Facebook and Amazon did not play well together, we've been grants to connect the dots on their own.

Britain helps these advertisers to measure managing optimize their online advertising investments to maximize their results to acquire customers and to drive revenue.

Today tools from the publishers understandably focused on how to enable the given advertiser spend more money on adds from that particular publisher.

In serves as a performance layer to supplement their capabilities and to provide an objective independent measurement of advertising performance as we've highlighted in previous discussions can you imagine a publisher toolsets and forming an advertiser that his or her marginal dollar she'd be invested on a competitor's platform.

Where it is uniquely positioned to meet this growing demand, but as we've shared before our vision remains ahead of many brands and agencies right not yet ready to make this change overtime. We believe Marines approach will become the new standards and marine will be rewarded for its leadership as the online advertising management category evolves to this new state.

As we invest in product innovation, we're creating more compelling reasons for brands in their agencies to select Moran.

As we've discussed in the past we've been investing in the development in adoption number in one our next generation Cross channel platform.

Having neighboring want available to all customers in recent quarters. We're now focused on delivering differentiated functionality to brands to enable them to enjoy greater performance in efficiency from their online advertising investments.

As part of the suffer right continues to invest in marine one bidding as a key area, where marine can add value to complement publisher functionality.

For example, Google has begun sun setting the average position metric, which many advertisers used for position based bidding moving your impression share metrics.

Marinas debuted support for impressions share based reporting and bidding.

Putting algorithmically driven awareness targeting bit strategies.

Rents customers have begun using this new bidding approach with early results showing a smooth transition and incremental performance improvement.

Britain ones bidding for awareness targeting provides greater visibility and control and googles own tools offer.

Within her in one we also launched what we refer to as full final optimization, so that advertisers with longer sales cycles can optimize to upper funnel leads when factoring in the downstream say alden lifetime customer value.

This is a differentiated offering from Iran and is more sophisticated publisher offerings and enables marketers to drive incremental performance from their ad investments.

Our goal with marine one it's enabled brands to measure managing optimize their online advertising investments across the leading publishers in search social and E. Commerce as part of these efforts you'll recall that marine now provides algorithmic bidding support for Apple search ads, which provides our customers with leading optimization capabilities in this emerging channel.

Businesses that have an app offering are drawn to this advertising channel to drive more app downloads in installs.

Our recent support for linked in advertising reporting we now we're seeing promising early adoption from me to be advertisers and I would add the marine also supports reporting for pin dressed ads, which is another emerging channel for brands.

We continue investing our support for Amazon advertising and this quarter, we have added by box metrics, including day party to enable advertisers to adjust their campaigns based on whether they are the default purchase option, which generally corresponds with higher conversion rates.

Amazon continues to be morons fastest growing publisher, albeit off of the smaller base and brands are looking for tools that enable them to scale up their programs rent is investing to support their needs.

Right also is working with participants in the Amazon attribution program data, which provides advertisers with insights into how their marketing investments outside of Amazon contribute to shopping activity on Amazon.

This program is in its early stages and remains invite only at this time, but it's another cross channel used case that rent supports for leading brands.

Right also continues to invest in our support a social advertising and we debuted support for Facebook automatic placements, giving advertisers the ability to optimize their ads across the entire Facebook family of apps and service has come a ride the broadest reach possible versus having a manually selected placements.

Its functionality, both saves time and drives better performance and social marketers adjust their ad targeting to maximize performance.

As we discussed last time, we believe brand should leverage booked a publisher auction signals as well as their own first party data, which includes new versus existing acted versus lapsed like 10% transaction value off quite conversion and other advertiser specific data.

Really open flexible architecture supplemented by our highly experienced field teams enables advertisers to unlock this data to drive incremental performance.

Publisher solutions generally are designed for the money and you're not support this bespoke integration with advertisers forced to fit into standard optimization approaches that may not be best suited to their specific business situations.

As customers engage with them or in one platform, we're able to highlight their success with this new offering.

An example of a customer seen cross channel performance from around one is our recent case study with World first a fast growing foreign exchange platform for individuals and international businesses based out of the UK.

How did in 2004 able over 400000 global customers and over 150000 global businesses using them for international transactions.

Using were in one world first was able to leverage to additional tools to improve social performance, helping that seem to see value that social campaigns were bringing their overall strategy.

Right, what budget optimizer isn't rooms, budgeting management solution, making it easier for marketers to forecast monitor and automatically reallocate budgets across their most efficient marketing channels with ease.

We watch it optimizer the world first team created budget plans in advance and leverage Marines algorithms to pace the budget across search and social to achieve the best results. All based on historical performance. In addition, the world's first team incorporated search and 10 audiences into their campaign strategy to automatically create an up.

Dave Facebook custom audiences based on intent demonstrated through search engine activity.

This means that marketers are able to show adds to consumers, who search for specific keywords, well using facebooks targeting capabilities to find more customers like.

This strategy helped align their search engine marketing and social advertising mixing the power of intent with repeated brand exposure on a high growth channel.

In the coming quarters, we expect to showcase more examples are performance in cross channel success from customer adoption number in one.

Despite our current challenges I continue to believe that Brent has tremendous opportunity and then our best days lie ahead, and now Brad will review, our third quarter financial results and our outlook for the fourth quarter of 2019.

Thank you Chris I'll provide an overview of our results and then share our forecast for the upcoming quarter I'll begin with a review of our income statement. Let me start with revenue for the third quarter of 2019 Moran generated 11.7 million in revenue, beating the high end of our guidance for the quarter by 400000.

Q3, 19 revenues were down 11% compared with Q3 18.

Our revenue during Q3 was aided by our strategic partnership with Google and lower churn as compared to the first half of the year. We also benefited from better than forecast spend levels from our continuing customers. Those positives were offset by slow bookings in the quarter.

Our geographic split for the third quarter revenue was 75% U.S. and 25% International.

Now let me now let me move onto the operating results on our balance sheet. As a reminder, our financial statements and a reconciliation of our GAAP to non-GAAP financial measures can be found in our earnings release.

For the third quarter, our non-GAAP operating loss was 2.9 million as compared to a loss of 4.8 million for the third quarter 2018.

The 2.9 million operating loss was 100000 better than the high end of our guidance for the quarter.

During the quarter, we continued to take meaningful steps to reduce our overall cost structure or total headcount ended the quarter at 257 down from 292 at year end. Similarly, our overall non-GAAP operating expenses were down 19% on a year over year basis.

During the remainder of 2019, we will continue to align our cost with revenue as we seek to operate a breakeven.

In terms of our balance sheet, our cash into the quarter at 10.1 million, representing a cash decline of 700000 over the previous quarter.

Our cash balances benefited from strong collections of accounts receivable and effective working capital management during the quarter, which helped offset our net loss.

During the quarter, we did not so any shares via our aftermarket equity distribution agreements.

Now moving onto our outlook for Q4, we expect revenues to be in the range of $10.4 million to $10.9 million and non-GAAP operating loss is expected to be in the range of $3.2 million to $3.7 million that concludes our call for today, we want to thank you for your time and we look forward to updating you again at the end.

End of Q4 2019.

This concludes todays conference call you may now disconnect. Your lines. Thank you for participating and have a great day.