Q1 2022 Marin Software Inc Earnings Call

Greetings and welcome to the Marin software first quarter 2022 financial results Conference call. At this time, all participants are in a listen only mode.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host buybacks Marin Software's Chief Financial Officer. Thank you. Mr. Burton you may begin.

Thank you good afternoon, everyone and welcome to Marin Software's first quarter 2022 earnings Conference call. My name is Bob Bertz, I'm <unk> CFO and joining me today is Chris lien <unk> CEO .

By now you should have received a copy of our earnings release, which crossed the wire a short time ago.

The release can also be obtained on our website at investors Dot Marin software got club.

All participants are advised that the audio of this conference call is being recorded for playback purposes and that the recording will be made available on the Investor Relations section of our 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 $19 33, and the Securities Exchange Act of $19 34.

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

Including the potential lingering effects of the COVID-19 global pandemic.

Our expectations for customer adoption and use of armor in one platform.

Historical results that may suggest trends for our 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 impact of investments in product and technology.

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

Expectations for future economic activity and digital ad spending.

And our expected Q2 and future financial results.

We make these statements as of May five 2022, and disclaim 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 reports on Form 10-Q, and Form 10-K, as well as our other SEC filings.

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

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

A quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available in our first quarter 2022 earnings release.

With that I'll turn the call over to Chris.

Thank you Bob.

Afternoon, everyone and thank you for joining our call today.

I'll share my observations on the quarter and provide an update on our initiatives to return Marin to growth.

Bob will then provide additional detail on our first quarter results for 2022, and our outlook for the second quarter of 2022.

As I highlight each call we remain committed to return Marin to growth and to maximize shareholder value our plan to achieve that and focused on delivering a leading cross channel advertising management platform to enable brands and their agencies to maximize the returns from their online advertising investments we call this platform or in one.

Marine one as a performance layer to enable brands to drive greater returns from their digital advertising investments across search social and e-commerce channels, including the rapidly growing retail media channel.

Our efforts are focused on Marines returned to growth and we continue to believe that our strategy is sound as we report a moderation in our revenue decline on a year over year basis, I'm encouraged by our new business activity and the progress that we're making to improve customer retention.

As announced in today's earnings release Q1 revenues came in at $5 2 million, which was just below the high end of our previously published guidance for Q1, but still down from Q1 in the prior year.

Our Q1 operating loss also was slightly below the high end of our guidance due to our slightly lower revenue for the quarter, even as we continue to invest in marine one and our team.

Our total cash balance at the end of Q1 with $41 $8 million, providing marine with significant resources to pursue our strategy and to support our customers.

At the end of the first quarter, our global head Count was approximately 164 about half of our team is in technology roles, reflecting our significant investment and delivering products to drive results for leading brands and their agencies.

As has been our practice, we will continue to monitor our cash use closely balancing investments with cost management.

As Ive discussed on past calls Marin seeks to be an ally in digital for the world's leading brands and their agencies customers and prospects traverse a range of channels devices and publishers online on their path to purchase.

Marketers need a cross channel platform to engage at all points of this customer journey and as we have highlighted the walled gardens of Google Facebook and Amazon do not play well together, leaving brands to connect the dots.

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

Both from the publishers understandably focus on how to enable a given advertiser to spend more money on ads from that particular publisher.

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

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

We supplement our marine one platform with support from our experienced team of digital marketing experts, who can help brands to navigate the complex, but rewarding world of digital advertising.

During the quarter and ongoing into 2022, we continue to expand and enhance marine one functionality to positive customer feedback.

In Q1, we expand them or in one support of Google shopping product, which are very popular with both brands and retailers.

As I've highlighted from time to time on these calls <unk> roots are in performance marketing and we continue to invest to enable brands to drive better performance from their digital advertising programs.

Marine expanded our support for Google Smart bidding to allow management of these campaigns from the Marine one interface. We also added to our budget management capabilities, which support a range of bidding approaches, including smart bidding Amarin zone Marin one bidding.

Marines open philosophy last summer and partner with our customers to find the bidding approach that delivers the best performance for this specific program versus the blanket method that doesn't reflect the particular business nuances of a given advertiser.

As part of budget management Marine also supports forecasting and pacing.

You're forecasting functionality, which is more robust than what is provided by the publishers enables marketers to better plan their acquisition activities to invest in those campaigns with the highest marginal returns and to secure additional budget dollars.

We see this as an excellent example, where marine can serve as a performance layer to the publishers or insufficient gated budget management capabilities give advertisers compelling reasons to use marin with the publisher tools to maximize their advertising results.

That's a cross channel platform, we continue to invest to expand our support for Amazon ads.

As we mentioned last quarter, we added functionality for Amazon's DSP, allowing customers to amplify their entire Amazon advertising portfolio.

We also introduced Amazon inventory also known as Amazon shopping products to allow users to link Amazon seller central accounts.

This gives users a more holistic view of their e-commerce efforts spanning both organic and sponsored listings.

This quarter, we enabled functionality so that e-commerce retailers can see all of their products side by side across organic and sponsored listings and marine ones shopping products grid.

Brian has been a longtime partner of Yahoo, and this past quarter, we added support for display advertising campaigns Yahoo, DSP to help advertisers understand and reach their audiences across multiple placements on different devices.

As an official Apple search apps partner, we continue to invest to support our customers who use apps to engage with their customers. We have an apple webinar planned for Q2, which will give us an opportunity to highlight the benefit of Apple search ads as part of our marketers Cross channel campaign for App downloads and customer acquisition.

As we highlighted in today's quarterly press release Marine also was recently made in apps partner for Tictoc, the fast growing global social publisher.

The integration with Tech parks AD manager gifts brands, better insights and improves the performance of their tick tock campaigns through machine learning and automation.

With 1 billion monthly active users globally Tictoc provides brands the opportunity to connect authentically with highly engaged and passionate consumers through the power of shared experience.

For <unk> advertisers bring with named an official measurement partner for Linkedin marketing solutions by Linkedin, and we now appear on their official partners page, we debuted functionality to make linking and managing campaigns easier and to enable improved conversion tracking.

In Q1, we delivered a joint webinar with the team from Lincoln that had very high engagement and we expect these leads to add to our <unk> new business results in the coming quarters.

I also would highlight from Q1 that we are seeing an increased interest in Marines managed services capabilities, whereby Marin provides services to customers to support their media buying activity.

Advertisers often have an interim need for staff, especially during the tight labor market and Marines experience digital marketers are able to help them to meet their business needs on a flexible basis.

Our activities to support brands and their agencies take place against an active backdrop, a governmental antitrust investigation at the federal and state levels as well as in the EU of the businesses have leading publishers in the digital advertising market.

Brian enjoys co-opetition relationships with the leading publishers and we do not expect significant changes in these relationships in the near term.

Although we are not a party to any of the lawsuits are targeted in these investigations Marin spent approximately $100000 in Q1 on legal fees in conjunction with responding to official request that marinas received related to these investigations.

Not a revenue recognized under the new agreement is expected to be approximately $1.8 million.

Versus approximately $2.3 million per quarter under the expired agreement.

Testing for the change in revenue under the new Google revenue share agreement R. Q1, 2022 revenue was down on approximately 11% when compared to Q1 2021.

Ah geographic split for revenue was approximately 77 per cent U S. In 2003 per cent international for the first quarter of 2022.

Moving onto our operating results.

As a reminder, our financial statements and a reconciliation of our gap to non-GAAP financial measures can be found in our earnings release issued earlier today.

Or non-GAAP operating loss was $4.3 million for the first quarter of 2022 as compared to 2.3 million dollar loss for the first quarter of 2021.

The $4.3 million non-GAAP operating loss in Q1 was near the high end of our guidance the increase in operating loss as compared to Q1 2021 is it <unk> to a combination of lower revenue and an increase in operating expense as we ramp up our sales and marketing and product development F.

Hurts.

Or non-GAAP operating expenses increased approximately 13% as compared to the first quarter of 2021.

Primarily as a result of strategic investments that we're making and our sales and marketing and product development efforts.

We ended the quarter with 164 total headcount versus 157, a year ago.

We expect our head count to continue to grow in the near term as we make investments and our sales and marketing and engineering teams.

In terms of our balance sheet, we ended the quarter with a total cash balance of $41.8 million as compared to $47.1 million at the end of 2021, we will continue to carefully monitor our cash levels as we make investments and a return to growth strategy.

During the first quarter of 2022.

S B, a forgave $3.1 million of our 3.3 million dollar P. P. P alone and we repaid the remaining 200000 dollar balance on the alone.

The 3.1 million dollar forgiveness. It alone is included in other income and our first quarter of 2022 GAAP financial statements.

Moving onto our outlook for the second quarter.

For Q2 of 2022, we expect revenue to be in the range of $4.5 million to $5 million and are non-GAAP operating losses expected to be in the range of $4.6 million to $4.1 million.

Knowing that the operating loss guidance includes the impact of expected investments in our engineering and sales and marketing teams.

This concludes our call for today. Thank you for your time and we look forward to updating you again during our Q2 2022 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.