Marin Software Incorporated Q1 2023 Earnings Call
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Good afternoon, ladies and gentlemen, welcome to the Marin software first quarter 2023 financial results conference call. During the presentation, all participants will be in a listen only mode.
If at any time during the conference you need to reach an operator, Please press star and zero as a reminder, this conference is being recorded.
I would now like to turn the call over to Bob for Marin Softwares CFO . Please go ahead.
Thank you good afternoon, everyone and welcome to Marine Software's first quarter 2023 earnings Conference call.
My name is Bob Bertz, I'm Marine CFO and joining me today is Chris lien Marine CEO by.
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 Marine software Dot com.
Call 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 1933, and the Securities Exchange Act of 1930 for these.
These forward looking statements include statements about our business outlook and strategy, our expectations for customer adoption and use of them are in one platform historical results that may suggest transfer business.
Patients 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 party other parties in the digital advertising market expectations.
Our expectations for future economic activity and digital advertising spending.
Our exploration of potential cost savings initiatives for additional sources of financing and our expected Q2 and future financial results.
We make these statements as of May four 2023, 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 and 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 2023 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 provide an update on our initiatives to return Marin to growth.
Bob will then provide additional detail on our first quarter results for 2023, and our outlook for the second quarter of 2023.
We are committed to return Marin to growth and to maximize shareholder value. Our plan to achieve this is 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 week.
We continue to believe that our strategy is sound our marketing activities across the rest of this year are designed to bring marine wanted to the attention of more brands and their agencies.
As announced in today's earnings release Q1 revenues came in at $4 6 million was just which was just above the high end of our previously published guidance for Q1, but still down from Q1 in the prior year.
I should highlight that marine revenues declined about 11% year over year, showing moderation in our revenue decline.
Our Q1 non-GAAP operating loss was within our guidance despite our investment in marine one in our team our total cash balance at the end of Q1 was $23 $7 million.
Marine seeks to be an ally in digital for the world's leading brands and their agencies.
Online path to purchase for versus a range of channels devices and publishers marketers need to engage at all points of this customer journey and the walled gardens of Google Facebook Amazon and the other publishers do not play well together.
Had some us connect the dots where in helps these advertisers to measure manage and optimize their online advertising investments driving performance time savings and better business insights.
We do this by serving as a performance layer that complements the tools that each of the publishers provides to its customers. These publisher tools understandably are focused on the AD units of each publisher and encourage brands could spend more with that publisher.
Publisher tools generally don't compare advertising performance across publishers don't highlight opportunities to reallocate spend across publishers to improve performance and don't promote a unified view of a customer's journey across channels devices and publishers.
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.
Our goal with marine one is to provide user friendly reporting and analytics capabilities to brands and agencies to enable that business or customer view of their advertising investments rather than a publisher centric one of the publishers and their tools.
As part of these efforts, we launched Marin connect our reporting focused solution for advertisers looking to collect your performance marketing data from a variety of sources and send the data warehouses be I tools and spreadsheets.
We also added support for Google analytics for in order to prepare for the upcoming migration away from Universal analytics.
We expanded charting options to include stacked bar charts that bar chart somebody uses stack metrics to see how allocation across objects have changed over time and.
And we debuted a streamlined view builder show only the columns relevant to the publishers that have been linked to a specific account.
We also seek to complement the publisher tools by enabling management at scale for large paid media programs driving time savings and financial lift.
In the past quarter, we launched find and replace for ads, giving advertisers another tool to edit ads at scale across accounts.
This functionality can save time and effort when adjusting seasonal our promotional messaging on large campaigns or ads with many different assets such as responsive search ads.
We added a coffee tool to marine one, giving users the ability to copy objects, including campaigns groups keywords and placements and we can enhance marine once you're L builder to work across publishers and enhanced customer parameters to simplify and reduce errors and you are outside.
We are always looking for ways to save marketers' time, and unlock financial lift this quarter, we introduced marine one scripts, enabling users to leverage the power of Python to create customized solutions for reporting management and optimization to boost performance and save time.
With Scripps advertisers can change an object status that campaign budgets that bids have dimensions and much more.
And we have begun exploratory efforts to bring chat GPT and other AI and machine learning tools to marine one for the benefit of our customers. We will share updates on this work as we have results to share in the coming quarters.
A meaningful focus of our product development efforts at this time its marine its investment in budget optimization capabilities for digital advertisers and agencies.
Wayne offers the ability to set and then pasted budget across the group with publishers and associated campaigns, while managing to our business performance targets, such as return on AD spend or ROE as our cost per lead.
These budget management capability sit on top of the in channel bidding capabilities of each of the publishers and also offer the ability to forecast results from potential AD investments using what if functionality.
We recently introduced priority campaigns to budget optimizer, allowing advertisers to allocate fixed budgets specific campaigns, making it easier to prioritize spend where specific initiatives such as branded campaigns.
<unk> investment in social publishers during the quarter included simplified audience targeting on better campaign with customizable interest clusters that allow advertisers to reuse groups of interest across at Jetstream campaign for more efficient management at scale, our large social advertising programs.
We continue to invest to expand our support for Amazon that based on Marines breadth and depth of support for Amazon at Marine holds Amazon adds advanced partner status and we recently added impression share an impression ranked data for Amazon campaigns, allowing advertisers to optimize based on the share of voice metrics.
As I've highlighted on past calls marine was recognized as a strong performer in the Forrester wave to be advertising solutions Q3, 2022 and cited as best in class for BTB search and social advertising based on a thorough evaluation by Forrester of our marine one platform.
<unk> is a highly respected third party technology advisory firm and in this role is able to access and review of the leading providers in a given market space.
Forrester is validation of our cross channel strategy for <unk> marketers, it's a sign of the importance of coordinating a brand's messaging across channels to reach prospects.
We expect more PDP marketers to consider marine one for their marketing needs. As a result of this recognition and as I mentioned on our last call Marine was upgraded to a link and tier one partner their highest designation and it's now the only campaign optimization tool in this top tier reflecting rents commitment to this important growing publisher.
Our activities to support brands and their agencies take place against an active backdrop of governmental antitrust investigation of the businesses have leading publishers in the digital advertising market at the federal and state levels as well as in the EU.
They're also has the potential of federal legislation to regulate the conduct of the leading publishers that could benefit Marines role as an independent AD management platform.
Marine 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 lawsuits are targeting these investigations marine spent approximately $100000 in Q1 on legal fees in conjunction with responding to official requests that marine has received related to these various investigations.
We expect to spend at similar levels in the coming quarter based on the legal activity that we're seeing which is primarily providing information in response to various to peanuts.
I continue to believe that marine has a tremendous opportunity ahead marine can a benefit as consumers spend increasing time online and add dollars follow them trading more need for brands to measure manage and optimize these investments to acquire customers and drive revenue outcomes.
With the combined online advertising share of Google in meta below 50% and the growing fragmentation of digital advertising, we're seeing increasing interest in brands, taking a cross channel approach to their digital advertising investments.
Leveraging <unk> cross channel reporting management at scale and budget optimization.
Marine with our marine one platform and our team of digital advertising experts is well positioned to support leading brands and their agencies in these efforts.
And now Bob will review, our first quarter financial results and our outlook for the second quarter of 2023.
Thank you Chris I'll provide an overview of our first quarter results and then share our forecast for the second quarter of 2023.
I'll begin with a review of our income statement.
For the first quarter of 2023, Marin generated $4 $6 million in revenue, which beat the high end of our guidance by zero point $1 million.
First quarter revenue was down approximately 11% when compared to total revenue for the first quarter of 2020 to.
The decrease in revenue year over year is primarily attributable to the fact that existing customer churn has outpaced new bookings. Additionally, we've seen lower than expected advertising spend from some existing customers during the first quarter of 2023.
Which we attribute to current macroeconomic factors, including fears of a recession and general market pressures.
Our geographic split for revenue was approximately 80% U S and 20% international for the first quarter of 2023.
Moving onto our operating results as a reminder, our financial statements and a reconciliation of our GAAP to non-GAAP financial measures can be found in our earnings release issued earlier today.
Our non-GAAP operating loss was $5 million for the first quarter of 2023 as compared to $4 $3 million loss for the first quarter of 2022.
The $5 million non-GAAP operating loss in Q1 was toward the high end of our guidance.
The increase in operating loss as compared to Q1 2022 is primarily attributable to lower revenue in the current period as compared to last year.
Our non-GAAP operating expenses in Q1, 2023 were essentially flat when compared to the year ago quarter.
Increases in sales and marketing to research and development expenses were offset by lower general and administrative expenses.
We ended the quarter with 176 total head count globally versus 164, a year ago.
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.
In terms of our balance sheet, we ended the quarter with a total cash balance of $23 $7 million as compared to $28 million at the end of the previous quarter.
Moving onto our outlook.
For Q2, 2023, we expect revenue to be in the range of $4 to $4 $3 million and our non-GAAP operating loss is expected to be in the range of five six to $5 $3 million.
As we note in our first quarter 10-Q filed today, we need to maintain a sufficient level of liquidity to achieve our business objectives. We are exploring potential cost savings initiatives to better align our expenses with our current revenue levels and our existing cash resources.
We may also explore additional sources of financing.
Finally, as we announced earlier this week, we have been notified by NASDAQ that we are not in compliance with one of its continued listing requirements due to the fact that our stock has closed below $1 for more than 30 consecutive business days. We have an initial 180 day period to regain compliance with the continued listing requirement which ends.
On October 23, 2023, we are evaluating our options on how to best address this issue.
This concludes our call for today. Thank you for your time and we look forward to updating you again during our Q2 2023 earnings calls.
Ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
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