PR Newswire | Nov 4, 2021 04:16PM EDT

11/04 15:15 CDT

Marin Software Announces Third Quarter 2021 Financial Results SAN FRANCISCO, Nov. 4, 2021

SAN FRANCISCO, Nov. 4, 2021 /PRNewswire/ -- Marin Software Incorporated (NASDAQ: MRIN), a leading provider of digital marketing software for performance-driven advertisers and agencies, today announced financial results for the third quarter ended September 30, 2021.

"With the holiday season fast approaching, the improvements we've made this quarter to the MarinOne ecommerce module will help ensure our advertisers get the most from their marketing investments across retail media, search and social," said Chris Lien, CEO of Marin Software.

Third Quarter 2021 Product Highlights:

* Added new Insights, including Amazon Keyword Expansion, Amazon Negative Keyword Expansion, Top Performing Amazon Ads, Amazon Keyword Match Type Expansion, Low Volume Bid Strategies, and Bid Changes Preview. * Integrated SEO data from Google Search Console to improve revenue and ROAS by focusing investment on those targets that can benefit the most. * Expanded the eCommerce module to include Instacart, Google Shopping, Microsoft Shopping, and Criteo Retail, enabling a comprehensive view across publishers including Amazon. * Added reporting support for Amazon Sponsored Display Audience targets. * Introduced support for keyword recommendations on new Amazon groups, allowing advertisers with no existing keywords to get started quickly. * Introduced ad extension reporting across Google Sitelinks, Call Extensions, Callout Extensions, and Mobile App Extensions. An "All Extensions toggle" allows users to switch conveniently between just those extensions with traffic, or the complete list. * Introduced client-level forecasting charts into the Dashboard to streamline decisions. * Added optimization support for Google Dynamic Search Ads, to increase revenue and/or ROAS. * Introduced the ability to apply Bid Overrides via the multi-edit workflow. * Added the ability to roll up data by publishers and campaigns, allowing users to compare performance across publishers (i.e. Google vs. Microsoft vs. Facebook). * Introduced Client Tags in MarinOne, which allows users who run multi-client reports with Client Tags to do their reporting in MarinOne. * Added additional options to the 'More' menu in MarinOne Engine, including History, Settings history, and Settings link. * Introduced an Activity Log for MarinOne Social for users to see the status of their work more easily. * Added the Sync button to MarinOne Social, allowing users to bring down changes from Facebook more easily. * Enhanced the Help experience, serving guided tours, support center results, certification, What's New content, and access to the support team from a comprehensive, in-app menu.

Third Quarter 2021 Financial Updates:

* Net revenues totaled $6.2 million, a year-over-year decrease of 9% when compared to $6.8 million in the third quarter of 2020. * GAAP loss from operations was ($3.3) million, resulting in a GAAP operating margin of (53%), as compared to a GAAP loss from operations of ($4.3) million and a GAAP operating margin of (63%) for the third quarter of 2020. * Non-GAAP loss from operations was ($3.0) million, resulting in a non-GAAP operating margin of (48%), as compared to a non-GAAP loss from operations of ($2.8) million and a non-GAAP operating margin of (42%) for the third quarter of 2020. * 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." * Cash, cash equivalents and restricted cash were $50.2 million in the aggregate at September 30, 2021. * Raised net proceeds of $38.8 million from issuances and sales of common stock under the Company's "at-the-market" securities offering facility, at a weighted average sales price of $9.27 per share. * Filed a new $100.0 million shelf registration statement with the SEC, which includes a $50.0 million "at-the-market" securities offering facility, pursuant to which we may be able to issue and sell additional shares of our common stock. * Entered into a new three-year revenue share agreement with Google.

Financial Outlook:

Marin is providing guidance for its fourth quarter of 2021 as follows:

Forward-Looking Guidance

In millions



Range of Estimate

From To

Three Months Ending December 31, 2021

Revenues, net $5.6 $6.1

Non-GAAP loss from operations (4.5) (4.0)

The Q4 revenue guidance includes estimated Q4 revenues under the new Google revenue share agreement, under which the Company expects to earn quarterly revenue commencing October 1, 2021 that will be approximately $0.5 million less than the average quarterly revenue recognized under the expiring agreement with Google during the first three quarters of 2021. Non-GAAP loss from operations includes the impact of a non-recurring charge of approximately $0.7 million related to incentive-based compensation for achievements expected to occur in the fourth quarter and excludes the effects of stock-based compensation, amortization of internally developed software and intangible assets, impairment of goodwill and long-lived assets, capitalization of internally developed software, CARES Act employee retention credits and non-recurring costs associated with restructurings and divestitures.

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 September 30, 2021, and its outlook for the future. To access the call, please dial (877) 705-6003 in the United States or (201) 493-6725 internationally with reference to conference ID 13723659. A live webcast of the conference call will be accessible at http://public.viavid.com/index.php?id=146754. Following the completion of the call through 11:59 p.m. Eastern Time on November 11, 2021, 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 13723659.

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 and non-recurring costs associated with restructurings and divestitures. 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 and non-recurring costs associated with restructurings and divestitures. 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, progress on product development efforts, product capabilities, advertiser and customer behavior, effects of the COVID-19 pandemic, and future financial results, including its outlook for the fourth quarter of 2021. 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 any lingering effects of the global outbreak of COVID-19 on demand for our products and services; the amount of digital advertising spend managed by our customers using our products; the extent of customer acceptance and adoption 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; the success of any increased investments that we may make in our engineering and sales and marketing teams; our ability to retain and attract qualified management, technical and sales and marketing personnel; any default under or required repayment of our indebtedness or any delays or reductions in forgiveness of such indebtedness, including our loan under the Paycheck Protection Program; 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; 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; level of usage and advertising spend managed on our 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; acceptance and continued usage of our platform and services by customers and 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; 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 November 4, 2021. 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)



September 30,December 31,

(Unaudited; in thousands, except par value) 2021 2020

Assets:

Current assets:

Cash and cash equivalents $49,727 $14,280

Restricted cash 431 540

Accounts receivable, net 4,613 5,063

Prepaid expenses and other current assets 2,827 3,039

Total current assets 57,598 22,922

Property and equipment, net 4,012 5,477

Right-of-use assets, operating leases 2,740 7,737

Other non-current assets 684 873

Total assets $65,034 $37,009

Liabilities and Stockholders' Equity:

Current liabilities:

Accounts payable $791 $928

Accrued expenses and other current liabilities 5,823 6,552

Note payable, current 2,226 1,854

Operating lease liabilities 3,222 6,800

Total current liabilities 12,062 16,134

Note payable, net of current 1,094 1,466

Operating lease liabilities, non-current - 1,814

Other long-term liabilities 1,154 1,780

Total liabilities 14,310 21,194

Stockholders' equity:

Common stock, $0.001 par value 15 10

Additional paid-in capital 350,822 308,065

Accumulated deficit (299,006) (291,163)

Accumulated other comprehensive loss (1,107) (1,097)

Total stockholders' equity 50,724 15,815

Total liabilities and stockholders' equity $65,034 $37,009



Marin Software Incorporated

Condensed Consolidated Statements of Operations

(On a GAAP basis)



Three Months Ended Nine Months Ended September 30, September 30,

(Unaudited; in thousands, except per share data) 2021 2020 2021 2020

Revenues, net $6,155 $6,796 $18,557 $22,731

Cost of revenues 3,175 4,323 9,591 14,253

Gross profit 2,980 2,473 8,966 8,478

Operating expenses:

Sales and marketing 1,266 1,491 3,780 5,683

Research and development 2,677 3,106 7,743 9,881

General and administrative 2,312 2,131 6,176 6,123

Total operating expenses 6,255 6,728 17,699 21,687

Loss from operations (3,275) (4,255) (8,733) (13,209)

Other income, net 298 111 846 1,117

Loss before income taxes (2,977) (4,144) (7,887) (12,092)

Income tax provision (benefit) 153 (72) (44) (568)

Net loss $(3,130)$(4,072)$(7,843)$(11,524)

Net loss per common share, basic and diluted $(0.22) $(0.58) $(0.66) $(1.67)

Weighted-average shares outstanding, basic and diluted 14,500 7,017 11,956 6,916



Marin Software Incorporated

Condensed Consolidated Statements of Cash Flows

(On a GAAP basis)



Nine Months Ended September 30,

(Unaudited; in thousands) 2021 2020

Operating activities:

Net loss $(7,843) $ (11,524)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation 670 1,661

Amortization of internally developed software 1,806 2,330

Amortization of intangible assets - 95

Amortization of deferred costs to obtain and fulfill contracts 364 700

Interest expense 6 14

Loss on disposals of property and equipment and right-of-use assets 30 19

Unrealized foreign currency losses 43 (29)

Stock-based compensation related to equity awards 1,273 1,208

Provision for bad debts (102) (204)

Net change in operating leases (396) (294)

Changes in operating assets and liabilities

Accounts receivable 551 3,723

Prepaid expenses and other assets (173) 289

Accounts payable (137) (482)

Accrued expenses and other liabilities (1,351) (1,994)

Net cash used in operating activities (5,259) (4,488)

Investing activities:

Purchases of property and equipment (6) (14)

Capitalization of internally developed software (971) (1,442)

Net cash used in investing activities (977) (1,456)

Financing activities:

Proceeds from issuance of common shares through at-the-market offering, net of 41,888 179 offering costs

Proceeds from note payable - 3,320

Payment of principal on finance lease liabilities (15) (545)

Employee taxes paid for withheld shares upon equity award settlement (280) (220)

Proceeds from employee stock purchase plan, net 29 19

Net cash provided by financing activities 41,622 2,753

Effect of foreign exchange rate changes on cash and cash equivalents and (48) 36 restricted cash

Net decrease in cash and cash equivalents and restricted cash 35,338 (3,155)

Cash and cash equivalents and restricted cash:

Beginning of period 14,820 12,105

End of period $50,158 $ 8,950



Marin Software Incorporated

Reconciliation of GAAP to Non-GAAP Expenses



Three Months Ended Year Ended Three Months Ended

March 31,June 30,September 30,December 31,December 31,March 31,June 30,September 30,

(Unaudited; in thousands) 2020 2020 2020 2020 2020 2021 2021 2021

Sales and Marketing (GAAP) $ 2,312 $ 1,880$1,491 $ 1,275 $ 6,958 $ 1,246 $ 1,268$1,266

Less Stock-based compensation (110) (149) (24) (70) (353) (66) (70) (122)

Less Restructuring related expenses (50) - (214) (40) (304) 2 - -

Plus CARES Act employee retention credit - - - - - 42 42 60

Sales and Marketing (Non-GAAP) $ 2,152 $ 1,731$1,253 $ 1,165 $ 6,301 $ 1,224 $ 1,240$1,204

Research and Development (GAAP) $ 3,437 $ 3,338$3,106 $ 2,934 $ 12,815 $ 2,399 $ 2,667$2,677

Less Stock-based compensation (167) (217) (123) (100) (607) (98) (133) (159)

Less Amortization of intangible assets (48) - - - (48) - - -

Less Restructuring related expenses - - (185) (30) (215) (2) - -

Plus CARES Act employee retention credit - - - - - 252 238 245

Plus Capitalization of internally developed software 540 418 484 427 1,869 434 238 362

Research and Development (Non-GAAP) $ 3,762 $ 3,539$3,282 $ 3,231 $ 13,814 $ 2,985 $ 3,010$3,125

General and Administrative (GAAP) $ 1,981 $ 2,011$2,131 $ 2,436 $ 8,559 $ 1,869 $ 1,995$2,312

Less Stock-based compensation (75) (72) (67) (69) (283) (63) (130) (248)

Less Restructuring related expenses - - (123) (5) (128) (2) - -

Plus CARES Act employee retention credit - - - - - 70 66 67

General and Administrative (Non-GAAP) $ 1,906 $ 1,939$1,941 $ 2,362 $ 8,148 $ 1,874 $ 1,931$2,131



Marin Software Incorporated

Reconciliation of GAAP to Non-GAAP Measures



Three Months Ended Year Ended Three Months Ended

March 31,June 30, September 30,December 31,December 31,March 31,June 30, September 30,

(Unaudited; in thousands) 2020 2020 2020 2020 2020 2021 2021 2021

Gross Profit (GAAP) $3,315 $2,690 $ 2,473 $ 3,559 $ 12,037 $3,067 $2,919 $ 2,980

Plus Stock-based compensation 94 129 (19) 47 251 35 46 103

Plus Amortization of internally developed 864 818 648 654 2,984 624 596 586 software

Plus Amortization of intangible assets 47 - - - 47 - - -

Plus Restructuring related expenses (7) - 529 7 529 1 - -

Less CARES Act employee retention credit - - - - - (175) (179) (174)

Gross Profit (Non-GAAP) $4,313 $3,637 $ 3,631 $ 4,267 $ 15,848 $3,552 $3,382 $ 3,495

Operating Loss (GAAP) $(4,415)$(4,539)$ (4,255) $ (3,086) $ (16,295) $(2,447)$(3,011)$ (3,275)

Plus Stock-based compensation 446 567 195 286 1,494 262 379 632

Plus Amortization of internally developed 864 818 648 654 2,984 624 596 586 software

Plus Amortization of intangible assets 95 - - - 95 - - -

Plus Restructuring related expenses 43 - 1,051 82 1,176 3 - -

Less CARES Act employee retention credit - - - - - (539) (525) (546)

Less Capitalization of internally developed (540) (418) (484) (427) (1,869) (434) (238) (362) software

Operating Loss (Non-GAAP) $(3,507)$(3,572)$ (2,845) $ (2,491) $ (12,415) $(2,531)$(2,799)$ (2,965)

Net Loss (GAAP) $(3,971)$(3,481)$ (4,072) $ (2,527) $ (14,051) $(2,212)$(2,501)$ (3,130)

Plus Stock-based compensation 446 567 195 286 1,494 262 379 632

Plus Amortization of internally developed 864 818 648 654 2,984 624 596 586 software

Plus Amortization of intangible assets 95 - - - 95 - - -

Plus Restructuring related expenses 43 - 1,051 82 1,176 3 - -

Less CARES Act employee retention credit - - - - - (539) (525) (546)

Less Capitalization of internally developed (540) (418) (484) (427) (1,869) (434) (238) (362) software

Net Loss (Non-GAAP) $(3,063)$(2,514)$ (2,662) $ (1,932) $ (10,171) $(2,296)$(2,289)$ (2,820)



Marin Software Incorporated

Calculation of Non-GAAP Earnings Per Share



Three Months Ended Year Ended Three Months Ended

March 31,June 30, September 30,December 31,December 31,March 31,June 30, September 30,

(Unaudited; in thousands, except per share data)2020 2020 2020 2020 2020 2021 2021 2021

Net Loss (Non-GAAP) $(3,063)$(2,514)$ (2,662) $ (1,932) $ (10,171) $(2,296)$(2,289)$ (2,820)

Weighted-average shares outstanding, basic and 6,819 6,912 7,017 8,616 7,344 10,300 11,034 14,500 diluted

Non-GAAP net loss per common share, basic and $(0.45) $(0.36) $ (0.38) $ (0.22) $ (1.38) $(0.22) $(0.21) $ (0.19) diluted



Marin Software Incorporated

Reconciliation of Net Loss to Adjusted EBITDA



Three Months Ended Year Ended Three Months Ended

March 31,June 30, September 30,December 31,December 31,March 31,June 30, September 30,

(Unaudited; in thousands) 2020 2020 2020 2020 2020 2021 2021 2021

Net Loss $(3,971)$(3,481)$ (4,072) $ (2,527) $ (14,051) $(2,212)$(2,501)$ (3,130)

Depreciation 893 402 366 263 1,924 240 223 207

Amortization of internally developed software 864 818 648 654 2,984 624 596 586

Amortization of intangible assets 95 - - - 95 - - -

Provision for (benefit from) income taxes 25 (521) (72) (143) (711) 92 (289) 153

Stock-based compensation 446 567 195 286 1,494 262 379 632

CARES Act employee retention credit - - - - - (539) (525) (546)

Capitalization of internally developed software (540) (418) (484) (427) (1,869) (434) (238) (362)

Restructuring related expenses 43 - 1,051 82 1,176 3 - -

Other income, net (469) (537) (111) (416) (1,533) (327) (221) (298)

Adjusted EBITDA $(2,614)$(3,170)$ (2,479) $ (2,228) $ (10,491) $(2,291)$(2,576)$ (2,758)



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SOURCE Marin Software