Marin Software Incorporated (NASDAQ: MRIN), a leading provider
of digital marketing software for performance-driven advertisers
and agencies, today announced financial results for the second
quarter ended June 30, 2023.
“We're proud of this quarter's progress, notably our enhanced
support for Google, Facebook, and Amazon's latest features,” said
Chris Lien, Marin Software’s Chairman and CEO. “With crucial
workflow enhancements, MarinOne enables performance marketers to
optimize campaign results more efficiently than ever before.”
Second Quarter 2023 Product
Highlights:
- Expanded our support for Google’s Performance Max to include
syncing and reporting for Listing Groups for more detailed
reporting and optimization.
- Added support for Facebook’s Dynamic Creatives, a Facebook ad
format that allows users to combine multiple media and multiple ad
components, then dynamically mix and match them for the best
performing ads.
- Introduced Amazon Organic Revenue for Shopping Products, a
metric column that gives customers information about non-paid
sales, resulting from customers discovering and purchasing products
without direct advertising. It includes sales from organic search
results, browsing, recommendations, and customer reviews and
enables users to calculate the total advertising cost of
sales.
- Rolled out our Impression Share and Impression Rank reporting
metrics to include Amazon.
- Introduced the Clients tab, an enhancement from our previous
Clients View. This tab allows users to see important high-level
data about all of their accounts from a single location.
- Improved workflow and usability of MarinOne, including: an
upgraded URL Builder to streamline the creation process for
tracking templates and custom parameters; Favorite and Recent
columns making it easier to find frequently used data.
- Added the ability to white label a MarinOne account by allowing
customers to add their own logo in the platform.
- Introduced the ability to add client tags via multi-edit,
allowing users to use this client-level segmentation in a way
that’s easier than ever.
- Launched a brand new help center with an updated design,
improved categorization, and an easier-to-use feedback system.
Second Quarter 2023 Financial
Updates:
- Net revenues totaled $4.4 million, a year-over-year decrease of
8% when compared to $4.7 million in the second quarter of
2022.
- GAAP loss from operations was ($6.0) million, resulting in a
GAAP operating margin of (137%), as compared to a GAAP loss from
operations of ($5.6) million and a GAAP operating margin of (119%)
for the second quarter of 2022.
- Non-GAAP loss from operations was ($4.8) million, resulting in
a non-GAAP operating margin of (111%), as compared to a non-GAAP
loss from operations of ($4.6) million and a non-GAAP operating
margin of (98%) for the second quarter of 2022.
- Cash and cash equivalents were $19.0 million in the aggregate
at June 30, 2023.
Reconciliations of GAAP to non-GAAP financial measures have been
provided in the financial statement tables included in this press
release. An explanation of these measures is also included below,
under the heading “Non-GAAP Financial Measures.”
In July 2023, after the second quarter of June 30, 2023, we
commenced the implementation of a restructuring and
reduction-in-force plan to reduce our operating costs (the "2023
Restructuring Plan"), which is expected to result in the reduction
of our global employees by approximately 64 employees, representing
approximately 37% of our global employees as of June 30, 2023. In
addition, we expect to release 14 full-time-equivalent contractors,
reducing our total full-time-equivalent employee and contractor
workforce by approximately 40% from 195 to 117. We estimate that
the 2023 Restructuring Plan will result in estimated pre-tax
annualized cost savings of approximately $10.0 million to $13.0
million, of which approximately $9.0 million to $10.0 million is
related to the 2023 Restructuring Plan. We expect to begin
realizing the savings from the 2023 Restructuring Plan in the three
months ended September 30, 2023. We expect to incur approximately
$1.0 million to $1.5 million in cash expenditures in connection
with the 2023 Restructuring Plan, substantially all of which
relates to severance costs.
Financial Outlook:
Marin is providing guidance for its third quarter of 2023 as
follows:
Forward-Looking
Guidance
In millions
Range of Estimate
From
To
Three Months Ending September 30,
2023
Revenues, net
$
4.0
$
4.4
Non-GAAP loss from operations
(3.3
)
(3.0
)
Non-GAAP loss from operations excludes the effects of
stock-based compensation, amortization of internally developed
software, impairment of long-lived assets, capitalization of
internally developed software, non-recurring costs associated with
restructurings, and certain professional fees that the Company has
incurred in responding to third-party subpoenas that the Company
has received related to governmental investigations of Google and
Facebook.
Additionally, the Company does not reconcile its forward-looking
non-GAAP loss from operations, due to variability between revenues
and non-cash items such as stock-based compensation. The GAAP loss
from operations includes stock-based compensation expense, which is
affected by hiring and retention needs, as well as the future price
of Marin’s stock. As a result, a reconciliation of the
forward-looking non-GAAP financial measures to the corresponding
GAAP measures cannot be made without unreasonable effort.
Quarterly Results Conference
Call
Marin Software will host a conference call today at 2:00 PM
Pacific Time (5:00 PM Eastern Time) to review the Company’s
financial results for the quarter ended June 30, 2023, and its
outlook for the future. To access the call, please dial (800)
954-0684 in the United States or (212) 231-2929 internationally
with reference to conference ID 13739695. A live webcast of the
conference call will be accessible at
https://viavid.webcasts.com/starthere.jsp?ei=1622870&tp_key=b8014ed5de.
Following the completion of the call through 11:59 p.m. Eastern
Time on August 10, 2023, a recorded replay will be available on the
Company’s website at http://investor.marinsoftware.com/ and a
telephone replay will be available by dialing (844) 512-2921 in the
United States or (412) 317-6671 internationally with the recording
access code 13739695.
About Marin Software
Marin Software Incorporated’s (NASDAQ: MRIN) mission is to give
advertisers the power to drive higher efficiency and transparency
in their paid marketing programs that run on the world’s largest
publishers. Marin Software provides enterprise marketing software
for advertisers and agencies to integrate, align, and amplify their
digital advertising spend across the web and mobile devices. Marin
Software offers a unified SaaS advertising management platform for
search, social, and eCommerce advertising. The Company helps
digital marketers convert precise audiences, improve financial
performance, and make better decisions. Headquartered in San
Francisco with offices worldwide, Marin Software’s technology
powers marketing campaigns around the globe. For more information
about Marin Software, please visit www.marinsoftware.com.
Non-GAAP Financial
Measures
Marin uses certain non-GAAP financial measures in this release.
Marin uses these non-GAAP financial measures internally in
analyzing its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating its
ongoing operational performance. Marin believes that the use of
these non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing our financial results with other companies in our
industry, many of which present similar non-GAAP financial measures
to investors. Non-GAAP financial measures that Marin uses may
differ from measures that other companies may use.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. A reconciliation of the non-GAAP
financial measures to their most directly comparable GAAP measures
has been provided in the financial statement tables included below
in this press release. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to their most
directly comparable GAAP financial measures.
Non-GAAP expenses, measures and net loss per share. Marin
defines non-GAAP sales and marketing, non-GAAP research and
development, non-GAAP general and administrative, non-GAAP gross
profit, non-GAAP operating loss and non-GAAP net loss as the
respective GAAP balances, adjusted for stock-based compensation,
amortization of internally developed software and intangible
assets, impairment of goodwill and long-lived assets, non-cash
expenses related to debt agreements, capitalization of internally
developed software, CARES Act employee retention credit,
non-recurring costs associated with restructurings, and certain
professional fees that the Company has incurred in responding to
third-party subpoenas that the Company has received related to
governmental investigations of Google and Facebook. Non-GAAP net
loss per share is calculated as non-GAAP net loss divided by the
weighted average shares outstanding.
Adjusted EBITDA. Marin defines Adjusted EBITDA as net loss,
adjusted for stock-based compensation expense, depreciation,
amortization of internally developed software and intangible
assets, capitalization of internally developed software, impairment
of goodwill and long-lived assets, benefit from or provision for
income taxes, CARES Act employee retention credit, other income,
net, non-recurring costs associated with restructurings, and
certain professional fees that the Company has incurred in
responding to third-party subpoenas that the Company has received
related to governmental investigations of Google and Facebook.
These amounts are often excluded by other companies to help
investors understand the operational performance of their business.
The Company uses Adjusted EBITDA as a measurement of its operating
performance because it assists in comparing the operating
performance on a consistent basis by removing the impact of certain
non-cash and non-operating items. Adjusted EBITDA reflects an
additional way of viewing aspects of the operations that Marin
believes, when viewed with the GAAP results and the accompanying
reconciliations to corresponding GAAP financial measures, provide a
more complete understanding of factors and trends affecting its
business.
Forward-Looking
Statements
This press release contains forward-looking statements
including, among other things, statements regarding Marin’s
business, impact of investments in product and technology on future
operating results, the increasing complexity in marketing, progress
on product development efforts, product capabilities, advertiser
and customer behavior, and future financial results, including its
outlook for the third quarter of 2023. These forward-looking
statements are subject to the safe harbor provisions created by the
Private Securities Litigation Reform Act of 1995. Actual results
could differ materially from those projected in the forward-looking
statements as a result of certain risk factors, including but not
limited to our ability to successfully implement a restructuring
plan that we commenced in July 2023 and the expected costs and
savings from the restructuring plan; the amount of digital
advertising spend managed by our customers using our products; the
extent of customer acceptance, adoption and usage of our MarinOne
platform; the productivity of our personnel and other aspects of
our business; our ability to maintain or grow sales to new and
existing customers; any adverse changes in our relationships with
and access to publishers and advertising agencies and strategic
business partners, including any adverse changes in our revenue
sharing agreement with Google; our ability to raise additional
capital; our ability to manage expenses; our ability to retain and
attract qualified management, technical and sales and marketing
personnel; any delays in the release of updates to our product
platform or new features or delays in customer deployment of any
such updates or features; competitive factors, including but not
limited to pricing pressures, entry of new competitors and new
applications; quarterly fluctuations in our operating results due
to a number of factors; any lingering effects of the global
outbreak of COVID-19 on demand for our products and services;
inability to adequately forecast our future revenues, expenses,
Adjusted EBITDA, cash flows or other financial metrics; delays,
reductions or slower growth in the amount spent on online and
mobile advertising and the development of the market for
cloud-based software; progress in our efforts to update our
software platform; our ability to maintain or expand sales of our
solutions in channels other than search advertising; any slow-down
in the search advertising market generally; any shift in customer
digital advertising budgets from search to segments in which we are
not as deeply penetrated; the development of the market for digital
advertising; our ability to provide high-quality technical support
to our customers; material defects in our platform including those
resulting from any updates we introduce to our platform, service
interruptions at our single third-party data center or breaches in
our security measures; our ability to develop enhancements to our
platform; our ability to protect our intellectual property; our
ability to manage risks associated with international operations;
the impact of fluctuations in currency exchange rates, particularly
an increase in the value of the dollar; near term changes in sales
of our software services or spend under management may not be
immediately reflected in our results due to our subscription
business model; our ability to maintain the listing of our common
stock on the Nasdaq; and adverse changes in general economic or
market conditions. These forward-looking statements are based on
current expectations and are subject to uncertainties and changes
in condition, significance, value and effect as well as other risks
detailed in documents filed with the Securities and Exchange
Commission, including our most recent report on Form 10-K, recent
reports on Form 10-Q and current reports on Form 8-K, which we may
file from time to time, and all of which are available free of
charge at the SEC’s website at www.sec.gov. Any of these risks
could cause actual results to differ materially from expectations
set forth in the forward-looking statements. All forward-looking
statements in this press release reflect Marin’s expectations as of
August 3, 2023. Marin assumes no obligation to, and expressly
disclaims any obligation to update any such forward-looking
statements after the date of this release.
Marin Software Incorporated
Condensed Consolidated Balance
Sheets
(On a GAAP basis)
June 30,
December 31,
(Unaudited; in thousands, except par
value)
2023
2022
Assets:
Current assets:
Cash and cash equivalents
$
18,976
$
27,957
Accounts receivable, net
3,992
4,521
Prepaid expenses and other current
assets
1,363
2,016
Total current assets
24,331
34,494
Property and equipment, net
3,586
3,213
Right-of-use assets, operating leases
2,638
3,844
Other non-current assets
512
533
Total assets
$
31,067
$
42,084
Liabilities and Stockholders'
Equity:
Current liabilities:
Accounts payable
$
891
$
1,011
Accrued expenses and other current
liabilities
3,270
3,513
Operating lease liabilities
1,473
1,645
Total current liabilities
5,634
6,169
Operating lease liabilities,
non-current
1,164
2,199
Other long-term liabilities
1,015
1,002
Total liabilities
7,813
9,370
Stockholders’ equity:
Common stock, $0.001 par value
18
17
Additional paid-in capital
358,259
355,996
Accumulated deficit
(334,034
)
(322,334
)
Accumulated other comprehensive loss
(989
)
(965
)
Total stockholders’ equity
23,254
32,714
Total liabilities and stockholders’
equity
$
31,067
$
42,084
Marin Software Incorporated
Condensed Consolidated Statements of
Operations
(On a GAAP basis)
Three Months Ended June
30,
Six Months Ended June
30,
(Unaudited; in thousands, except per
share data)
2023
2022
2023
2022
Revenues, net
$
4,360
$
4,720
$
8,943
$
9,881
Cost of revenues
3,174
3,203
6,414
6,531
Gross profit
1,186
1,517
2,529
3,350
Operating expenses:
Sales and marketing
1,935
1,588
3,960
3,375
Research and development
2,797
2,980
5,739
5,897
General and administrative
2,442
2,545
4,778
5,014
Total operating expenses
7,174
7,113
14,477
14,286
Loss from operations
(5,988
)
(5,596
)
(11,948
)
(10,936
)
Other income, net
215
297
440
3,699
Loss before income taxes
(5,773
)
(5,299
)
(11,508
)
(7,237
)
Provision for income taxes
144
75
192
136
Net loss
$
(5,917
)
$
(5,374
)
$
(11,700
)
$
(7,373
)
Net loss per common share, basic and
diluted
$
(0.34
)
$
(0.34
)
$
(0.68
)
$
(0.47
)
Weighted-average shares outstanding, basic
and diluted
17,412
15,651
17,324
15,594
Marin Software Incorporated
Condensed Consolidated Statements of
Cash Flows
(On a GAAP basis)
Six Months Ended June
30,
(Unaudited; in thousands)
2023
2022
Operating activities:
Net loss
$
(11,700
)
$
(7,373
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation
14
378
Amortization of internally developed
software
845
973
Amortization of deferred costs to obtain
and fulfill contracts
187
171
Forgiveness of Paycheck Protection Program
loan
—
(3,117
)
Interest expense
—
—
Loss on disposals of property and
equipment and right-of-use assets
—
—
Unrealized foreign currency losses
32
82
Stock-based compensation related to equity
awards
2,285
1,657
Provision for bad debts
(390
)
(63
)
Net change in operating leases
—
(294
)
Deferred income tax benefits
—
(77
)
Changes in operating assets and
liabilities
Accounts receivable
895
727
Prepaid expenses and other assets
479
748
Accounts payable
(125
)
(253
)
Accrued expenses and other liabilities
(265
)
(1,851
)
Net cash used in operating activities
(7,743
)
(8,292
)
Investing activities:
Purchases of property and equipment
—
(13
)
Capitalization of internally developed
software
(1,157
)
(894
)
Net cash used in investing activities
(1,157
)
(907
)
Financing activities:
Repayment of Paycheck Protection Program
loan
—
(203
)
Employee taxes paid for withheld shares
upon equity award settlement
(83
)
(95
)
Proceeds from employee stock purchase
plan, net
(3
)
19
Net cash provided by (used in) financing
activities
(86
)
(279
)
Effect of foreign exchange rate changes on
cash and cash equivalents and restricted cash
5
(97
)
Net decrease in cash and cash equivalents
and restricted cash
(8,981
)
(9,575
)
Cash and cash equivalents and
restricted cash:
Beginning of period
27,957
47,057
End of the period
$
18,976
$
37,482
Marin Software Incorporated
Reconciliation of GAAP to Non-GAAP
Expenses
Three Months Ended
Year Ended
Three Months Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Dec 31,
Mar 31,
Jun 30,
(Unaudited; in thousands)
2022
2022
2022
2022
2022
2023
2023
Sales and Marketing (GAAP)
$
1,787
$
1,588
$
1,660
$
1,962
$
6,997
$
2,025
$
1,935
Less Stock-based compensation
(175
)
(157
)
(99
)
(165
)
(596
)
(165
)
(184
)
Less Restructuring related expenses
—
—
—
—
—
—
—
Sales and Marketing (Non-GAAP)
$
1,612
$
1,431
$
1,561
$
1,797
$
6,401
$
1,860
$
1,751
Research and Development (GAAP)
$
2,917
$
2,980
$
3,034
$
2,901
$
11,832
$
2,942
$
2,797
Less Stock-based compensation
(224
)
(213
)
(303
)
(256
)
(996
)
(270
)
(305
)
Less Restructuring related expenses
(36
)
(59
)
(76
)
—
(171
)
—
—
Plus Capitalization of internally
developed software
512
408
449
397
1,766
579
578
Research and Development (Non-GAAP)
$
3,169
$
3,116
$
3,104
$
3,042
$
12,431
$
3,251
$
3,070
General and Administrative (GAAP)
$
2,469
$
2,545
$
2,923
$
2,459
$
10,396
$
2,336
$
2,442
Less Stock-based compensation
(334
)
(340
)
(405
)
(403
)
(1,482
)
(473
)
(627
)
Less Restructuring related expenses
—
—
(78
)
—
(78
)
—
—
Less Third-party subpoena-related
expenses
(72
)
(99
)
(198
)
(72
)
(441
)
(84
)
(45
)
General and Administrative (Non-GAAP)
$
2,063
$
2,106
$
2,242
$
1,984
$
8,395
$
1,779
$
1,770
Marin Software Incorporated
Reconciliation of GAAP to Non-GAAP
Measures
Three Months Ended
Year Ended
Three Months Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Dec 31,
Mar 31,
Jun 30,
(Unaudited; in thousands)
2022
2022
2022
2022
2022
2023
2023
Gross Profit (GAAP)
$
1,833
$
1,517
$
1,796
$
2,078
$
7,224
$
1,343
$
1,186
Plus Stock-based compensation
124
90
148
119
481
124
137
Plus Amortization of internally developed
software
542
431
419
418
1,810
419
426
Plus Restructuring related expenses
17
—
—
—
17
—
—
Gross Profit (Non-GAAP)
$
2,516
$
2,038
$
2,363
$
2,615
$
9,532
$
1,886
$
1,749
Operating Loss (GAAP)
$
(5,340
)
$
(5,596
)
$
(5,821
)
$
(5,244
)
$
(22,001
)
$
(5,960
)
$
(5,988
)
Plus Stock-based compensation
857
800
955
943
3,555
1,032
1,253
Plus Amortization of internally developed
software
542
431
419
418
1,810
419
426
Plus Restructuring related expenses
53
59
154
—
266
—
—
Less Capitalization of internally
developed software
(512
)
(408
)
(449
)
(397
)
(1,766
)
(579
)
(578
)
Plus Third-party subpoena-related
expenses
72
99
198
72
441
84
45
Operating Loss (Non-GAAP)
$
(4,328
)
$
(4,615
)
$
(4,544
)
$
(4,208
)
$
(17,695
)
$
(5,004
)
$
(4,842
)
Net Loss (GAAP)
$
(1,999
)
$
(5,374
)
$
(5,736
)
$
(5,118
)
$
(18,227
)
$
(5,783
)
$
(5,917
)
Plus Stock-based compensation
857
800
955
943
3,555
1,032
1,253
Plus Amortization of internally developed
software
542
431
419
418
1,810
419
426
Plus Restructuring related expenses
53
59
154
—
266
—
—
Less Capitalization of internally
developed software
(512
)
(408
)
(449
)
(397
)
(1,766
)
(579
)
(578
)
Plus Third-party subpoena-related
expenses
72
99
198
72
441
84
45
Less Forgiveness and repayment of Paycheck
Protection Program loan
(3,320
)
—
—
—
(3,320
)
—
—
Net Loss (Non-GAAP)
$
(4,307
)
$
(4,393
)
$
(4,459
)
$
(4,082
)
$
(17,241
)
$
(4,827
)
$
(4,771
)
Marin Software Incorporated
Calculation of Non-GAAP Earnings Per
Share
Three Months Ended
Year Ended
Three Months Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Dec 31,
Mar 31,
Jun 30,
(Unaudited; in thousands, except per
share data)
2022
2022
2022
2022
2022
2023
2023
Net Loss (Non-GAAP)
$
(4,307
)
$
(4,393
)
$
(4,459
)
$
(4,082
)
$
(17,241
)
$
(4,827
)
$
(4,771
)
Weighted-average shares outstanding, basic
and diluted
15,537
15,651
16,030
16,337
15,891
17,235
17,412
Non-GAAP net loss per common share, basic
and diluted
$
(0.28
)
$
(0.28
)
$
(0.28
)
$
(0.25
)
$
(1.08
)
$
(0.28
)
$
(0.27
)
Marin Software Incorporated
Reconciliation of Net Loss to Adjusted
EBITDA
Three Months Ended
Year Ended
Three Months Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Dec 31,
Mar 31,
Jun 30,
(Unaudited; in thousands)
2022
2022
2022
2022
2022
2023
2023
Net Loss
$
(1,999
)
$
(5,374
)
$
(5,736
)
$
(5,118
)
$
(18,227
)
$
(5,783
)
$
(5,917
)
Depreciation
179
199
57
12
447
11
3
Amortization of internally developed
software
542
431
419
418
1,810
419
426
Provision for (benefit from) income
taxes
61
75
105
64
305
48
144
Stock-based compensation
857
800
955
943
3,555
1,032
1,253
Capitalization of internally developed
software
(512
)
(408
)
(449
)
(397
)
(1,766
)
(579
)
(578
)
Restructuring related expenses
53
59
154
—
266
—
—
Other income, net
(3,402
)
(297
)
(190
)
(190
)
(4,079
)
(225
)
(215
)
Third-party subpoena-related expenses
72
99
198
72
441
84
45
Adjusted EBITDA
$
(4,149
)
$
(4,416
)
$
(4,487
)
$
(4,196
)
$
(17,248
)
$
(4,993
)
$
(4,839
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803589621/en/
Investor Relations, Marin Software
ir@marinsoftware.com
Media Contact Wesley MacLaggan Marketing, Marin Software
(415) 399-2580 press@marinsoftware.com
Marin Software (NASDAQ:MRIN)
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