Q3 2021 Marin Software Inc Earnings Call

Suggest transfer of business.

Our expectations about our ability to improve customer retention and new business bookings and to return to growth.

Our ability to manage our expenses and cash resources the.

The impact of investments in products and technology and any head count increases.

Progress on product development efforts product capabilities, our relationships with publishers and other parties and the digital advertising market.

Expectations for future economic activity and digital AD spending and are expected Q4, Q Q4 in future financial results.

We make these statements as of November 4th 2021, and just claim any duty to update them.

For more information regarding these and other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward looking statements.

As well as risks relating to our business in general we refer you to the section entitled Risk factors in our most recent report on Form 10-Q, inForm 10-K as well as our other SEC filings.

Any comments on recent trading activity in our stock are not predictive of any potential future trading activity.

This presentation contains certain financial performance measures that are different from the financial measures calculated in accordance with gap and.

And may also be different from similar measures or calculations used by other companies.

Quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our third quarter of 2021 earnings release.

With that let me turn the call over to Chris.

Thank you Bob.

Good afternoon, everyone and thank you for joining our call today.

Sure My observations on the quarter and provided an update on our initiatives to return Miranda growth.

Bobble them provide additional tell on our third quarter and our outlook for the fourth quarter.

We remain committed to return marine to grow and to maximize shareholder value Ah.

A plan to achieve that is focused on delivering a leading cross channel advertising management platform to enable brands and their agencies to grow and optimize returns from the online advertising investments.

We call this platform or in one.

Our efforts to return Miranda growth have taken longer than any of us would have preferred.

Based on discussions with digital advertisers, we continue to believe that our strategy is sound and more importantly, our initiatives are beginning to show early positive results.

With the encouraging feedback that we are receiving on marine one we believe that we are on the right track after many quarters of investment to develop and launch a new platform.

Countries, such as in the cart <unk> retail media and citrus ads and outside of retail media with publishers, such as Apple search ads and Linkedin marketing solutions further fragment the advertising landscape, increasing the value of a third party platform.

Marin helps these advertisers to measure manage and optimize their online advertising investments driving performance time savings and better business insights.

As we've highlighted tools from the publishers understandably focus on how to enable a given advertiser to spend more money on ads from that particular publisher.

Brand seek a view of their online advertising investments focused on customers and revenues not the individual publisher silos.

Marine serves as a performance layer to supplement the publisher capabilities and to provide an objective independent measurement of advertising performance.

With 100% of our revenue now running on Marine one we continue to gather feedback on marine one as part of its rollout and adoption across <unk> customer base and to further tune the user experience feed.

Feedback continues to be encouraging, but we also faced the expected challenge of change management as long time users need to adopt the new platform with its enhanced functionality.

Even when something is better there is a nursery around change in our account management teams are engaging with those customers to help them to make the transition to marine one and unlock its benefits for their advertising programs.

Continuing an early trend that we saw in the first and second quarters of 2021, we are seeing improvements in retention due to marine one.

This is taking place across a range of industry verticals in Q4 and into 2022, we intend to invest more in Marines marketing activities to bring marine wanted to more brands and agencies to drive our new business efforts.

Marine one serves as the foundation on which all Marine innovation is based as we continue to add to its functionality and they bring marketers more tools to enjoy financial performance gains and management at scale.

Furthermore, in one is marine one analytics, which gives our customers powerful and flexible analysis capabilities using intraday data fractional conversions and device level segmentation.

We also provide cross client and cross publisher reporting to enable brands to take a business centric or customer centric approach to their advertising versus the publisher centric approach of the publisher tools.

This functionality also enables marine one customers to easily compare performance across publishers as they evaluate current and future advertising investments.

As a reminder, and as part of Marine ones rollout, we have launched marine one bidding Marines newest machine learning powered optimization algorithms designed to deliver better bidding performance through improved accuracy advanced.

Advanced clustering algorithms simplified bidding setup and faster bid calculations.

Our benchmarking has shown an average of 10% to 20 per kind of improved performance versus Marines prior bidding, which already was industry leading.

This technology also enables faster bid processing for intraday bid and larger accounts and recent head to head bid trials versus Google's <unk> hundred 60 bidding marine has delivered better results reinforcing rins positioning for performance driven advertisers.

Our investment in Marine one bidding also includes a focus on marine and auto pilot, which was our functionality for budget pacing and forecasting.

This functionality overlays on marine its own bidding or Google smart bidding to provide brands with more transparency and control over their online advertising investments as they seek to hit business performance targets during a specified time period.

Autopilot is available now for deployment with search campaigns and marine plans to make this functionality cross channel in the future.

It's just the current version.

And R E Commerce Macho Marine is dedicated space for brands to manage e-commerce and marketplace advertising programs customers can now view their instacart, Google shopping Microsoft shopping and critical retail campaigns and a single dashboard, enabling a comprehensive view across publishers, including Amazon.

Marine also added support for Amazon sponsored display audience target and marine continues to be one of the few Amazon adds partners that overlays our own proprietary bidding technology on Amazon's native bidding to drive better advertising performance for brands.

The digital advertising industry continues to adapt to Apple's changes to use their tracking which were first deployed and its I O F 14.5 update which as consumers to opt into tracking versus opt out a change that are significantly curtailed app based tracking.

Marine continues to lead in our efforts to support advertisers in a world, where privacy and cookie based tracking or influx in particular, Lorenzo and marine tracker enabled server to server tracking which is both privacy compliance and also is able to accurately measure conversions on Apple's Safari browser, which was a growing challenge for <unk>.

Grams, using cookie based tracking approaches as.

As we've noted before where and use the first party tracking and has not impacted by this change, but these changes do bring additional burdens to digital advertisers and their agencies.

The Spider challenges I continue to believe that marine has a tremendous opportunity ahead. We believe the balance of 2021 will see an uptick in overall economic activity as Covid continues to recede with digital advertising investment, earning its fair share as businesses seek to engage with customers and prospects across search social.

<unk> and e-commerce channels.

Marine with us for in one platform deployed should benefit from these expected trends. We also are encouraged with our greater cash resources and our renewed agreement with Google that marine can invest to advance our products and a better support our customers and now Bob will review, our third quarter financial results and our outlook for the fourth quarter of 20th.

21.

Thank you, Chris I'll provide an overview of our third quarter results and ensure a forecast for the fourth quarter of 2021 I'll.

I'll begin with a review of her income statements.

Using this facility, we generated net proceeds of $38 $8 million in the third quarter on the sale of $4 3 million shares of our common stock.

This third quarter capital raise strengthened our balance sheet and enables us to make product and head count investments that we believe will accelerate our return to growth strategy.

During the third quarter, we also entered into a new equity distribution agreement with JMP Securities.

<unk> to which we may offer and sell from time to time up to $50 million in common stock. This new facility gives us a tool by which we may be able to raise additional capital in the future.

As Chris mentioned above we renewed our strategic partnership with Google in September for an additional three year term.

And the new agreement commenced on October one.

Under the terms of the new agreement, we expect to recognize approximately $1 $8 million in quarterly revenue payments versus approximately $2 3 million in quarterly revenue that we recognized in the first three quarters of 2021 under the expiring agreement.

In addition to the expected quarterly revenue payments. We may also be eligible to earn incremental revenue share payments under the new Google agreement, if our managed spend exceed specified levels.

Moving onto our outlook for the fourth quarter.

For Q4, 2021, we expect revenues to be in the range of five six to $6 1 million.

Our guidance for Q4 revenue includes the impact of the approximately $500000 reduction in the amount of quarterly revenue expected to be recognized under the new Google agreement versus the amount recognized under the previous agreement with Google During the first three quarters of 2021.

Our non-GAAP operating loss is expected to be in the range of four $5 million to $4 million.

Our non-GAAP operating loss guidance includes the impact of expected investments in our engineering and sales and marketing teams as well as the impact of a nonrecurring charge of approximately $700000 related to incentive compensation for achievements expected to occur in the fourth quarter.

Our non-GAAP operating loss guidance excludes the estimated savings of approximately $500000 from the employee retention credit expected for the fourth quarter.

This concludes our call for today. Thank you for your time and we look forward to updating you again during our Q4 2021 earnings call.

This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.