Q3 2023 Marin Software Inc Earnings Call

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

By now you Should've 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 gotten ran software dot com.

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 1933, and the Securities Exchange Act of 1934.

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

Our expectations for customer adoption and use of our marine one platform and other product offerings.

Historical results that May suggest transfer our business, our expectations about our ability to improve customer retention and new business bookings and to grow our business.

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 advertising spending.

Expected restructuring.

Cost savings from our restructuring efforts and our expected Q4 and future financial results.

We make these statements as of November 2nd 20, twenty-three 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 foreign 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 third 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.

I'll share my observations on the quarter and provide an update on our initiatives to grow our business. Bob will then provide additional detail on our third quarter results for 2023, and our outlook for the fourth quarter of 2023.

That's really highlight each quarter, we are committed to our efforts to grow our business and 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 return from their online advertising investments.

As announced in today's earnings release Q3 revenues came in at $4 4 million, which was at the high end of our previously published guidance for Q3, but still down from Q3 in the prior year.

I should highlight that Marines revenues declined about 11% year over here, showing moderation and a revenue decline.

Our Q3 non-GAAP operating loss was slightly better than the high end of our guidance. Our total cash balance at the end of Q3 was $13 6 million.

In July 2023, we commenced the implementation of our restructuring and reduction enforced plan as well as other cost saving measures to reduce our operating costs, reducing our claim size by approximately 40%.

As we shared at the time of announcing these changes the various actions are expected to generate estimated pre tax annualized cost savings of approximately $10 million to $13 million.

Our non-GAAP operating loss was materially lower on a year over year basis, reflecting the initial benefits of the restructuring and reduction enforced clam.

As I've shared before seeks to be an ally in digital for the world's leading brands and their agencies.

Yeah, I'm on path to purchase 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, including kicked off snap and loved him do not play well together.

Bronze MX connect the dots.

Marin 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 of compliments the talk at each of the publishers provides to its customers.

A bunch of tools understandably are focused on the AD units of each publisher.

And encourage brands to spend more with that publisher the.

The 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 provide 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.

We've been investing significantly over the past quarters to give brands and agencies are user friendly cross channel advertising management platform, enabling them to sell more with the platform that unifies the fragmented world our performance marketing.

But we also have discovered in talking to our customers and cross docks and south digital marketing needs vary we need to better tailor, our product offering and associated marketing messages to better meet the needs of leading digital marketers.

As part of these learnings and to better meet the very needs of digital marketers you will now see on our website.

Marin software dotcom three offerings from Marin connect ascend and marine one.

And that's just a reporting focused solution for advertisers looking to collect the performance marketing data from a variety of sources and send the data warehouses be I tools and spreadsheets.

That's one of understanding your digital advertising spending is to have reliable comprehensive reporting in a format that addresses your particular business needs.

<unk> provides marketers with revenue cost and add performance data for the publishers that we support unified in Kinect.

A sudden builds on the data foundation provided by connect Marin to send offering that's our budget management pacing and forecasting solution that enables marketers to leverage Marines AI based optimization methodologies to deliver a bunch of compliance as well as to understand what else from increased or decreased advertising spend.

And to understand the optimal spend allocation across camping with publishers and channels.

Historically these kinds of budgeting decisions have been done with spreadsheets and a highly manual and potentially Arab prone approach Marin is able to provide marketers with the powerful UI to automate these budgeting decisions, while providing flexible budgeting controls and the ability to use a range of bidding approaches including support for Google Smart bidding.

Send it supports a range of publishers and channels and just this quarter. We debuted enhanced support for Linkedin tick Tock, Apple search ads and Tabouleh to include Marines proprietary forecast and budget models and simulations.

I am pleased to report that initial customer results with Marina phones are encouraging for both financial lift and time savings and we are looking forward to sharing more customer specific case studies and testimonials in the coming months as we continue to add to a sense functionality.

<unk> already has played a role in various customer renewals as well as new business wins.

Both connecting the sand are able to inter operate with other marketing software offerings, allowing brands and agencies to use what they believe is the best approach to maximize their results.

We also deepened our CRM integrations by adding hub spot, enabling our customers to optimize against the entire customer journey, including downstream and offline conversions.

We also shipped to complement the publisher tools by enabling management at scale for large paid media programs driving time savings and financial left.

Our search publishers this past quarter Marin improved search a preview to provide marin won and external users with transparent visual previous including AD copy logos and extensions.

When added to our Google performance, Max support I, adding asset group reporting and automated status changes based on preset criteria.

Marketers can better manage volume across our portfolio of Google accounts and other publishers with consolidated automation.

Marine also now enables import of Google labels into Marin to allow new customers to quickly adopt marin dimensions, adding a hierarchy to Google labels.

As we have discussed on past calls our activities to support brands and their agencies take place against an active backdrop, a governmental antitrust investigation of the business as a 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.

I continue to believe that Marin has a tremendous opportunity ahead, we're seeing very early but encouraging signs that our efforts are resonating more with customers and prospects.

Lincoln benefit of consumer spend increasing time online and add dollars follow them, creating 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 and met up 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 Marines Cross channel reporting management at scale and budget optimization.

Moran 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 third quarter financial results and our outlook for the fourth quarter of 2023.

Thank you Chris I'll provide an overview of our third quarter results and then share our forecast for the fourth quarter of 2023.

I'll begin with a review of our income statement.

For the third quarter of 2023.

Marin generated $4 $4 million in revenue at the top end of our guidance the third quarter revenue was down approximately 11%.

Total revenue for the third quarter of 2022.

The decrease in revenue year over year is primarily attributable to the fact that existing customer churn outpaced new bookings.

Our geographic split for revenue was approximately 80% U S and 20% international for the third 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 $2 $9 million for the third quarter of 2023 as compared to a $4 $5 million loss for the third quarter of 2022.

The $2 $9 million non-GAAP operating loss in Q3 beat the high end of our guidance by approximately zero point $3 million.

The decrease in operating loss as compared to Q3 'twenty 'twenty. Two is primarily attributable to realize savings from our restructuring plan implemented during the quarter, which were partially offset by lower revenue in the current period as compared to last year.

Our non-GAAP operating expenses in Q3, 2023 or $5.3 million represents a 23% decrease when compared to the year ago quarter.

The decrease is attributable to the implementation of our restructuring plan, which was nearly complete as of the end of the third quarter.

We ended the quarter with 116 total head count globally versus 173, a year ago.

The decrease in head count year over year is due to the reduction in force that was commenced in July as part of our restructuring plan.

Half of our remaining team and technology roles, which we believe allows us to continue to deliver new products features and functionality to drive results for leading brands and their agencies.

As I have mentioned, we commenced the implementation of our restructuring plan in July of 2023. The restructuring plan is expected to reduce our pretax cost structure by approximately $10 million to $13 million on an annualized basis.

Close to $10 million of the estimated annualized cost savings is it expected to come from the reduction in force, which will reduce our workforce globally by approximately 61 positions as well as approximately 15 full time equivalent contractor roles.

The reduction enforced with substantially complete by the end of the third quarter and we expect the remaining reductions to be completed by the end of this year.

We expect to incur approximately $1.8 million in restructuring costs substantially all of which relates to severance and other onetime termination benefits.

We began to realize the associated savings during the third quarter of 2023, and we expect to realize all of the estimated savings next year.

This restructuring helps to bring our expense base more in line with our current revenues.

In terms of our balance sheet, we ended the quarter with a total cash balance of $13 6 million as compared to $19 million at the end of the previous quarter.

We incurred approximately one 7 million of the total estimated one 8 million in one time restructuring costs during the third quarter.

Moving onto our outlook.

For Q4, 2023, we expect revenue to be in the range of 4.1 point $4 million and our non-GAAP operating loss is expected to be in the range of $2.3 million to $2 million.

This concludes our call for today. Thank you for your time and we look forward to updating you again during our Q4 2023 earnings call.

Thank you you may now disconnect your lines. Thank you for your participation.

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