Marin Software Incorporated (NASDAQ:MRIN) Q1 2024 Earnings Call Transcript

Marin Software Incorporated (NASDAQ:MRIN) Q1 2024 Earnings Call Transcript May 2, 2024

Marin Software Incorporated isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to the Marin Software First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bob Bertz, Marin Software’s Chief Executive — Chief Financial Officer. Thank you. You may begin.

Bob Bertz: Thank you. Good afternoon, everyone, and welcome to Marin Software’s first quarter 2024 earnings conference call. My name is Bob Bertz, I’m Marin’s CFO, and joining me today is Chris Lien, Marin’s 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.marinsoftware.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 1934.

These forward-looking statements include statements about our business outlook and strategy; our expectations for customer adoption and use of our services; historical results that may suggest trends for our business; our expectations about our ability to improve customer retention and new business bookings and to sustain or grow our business; our expectations about our expenses and cash resources; the impact of investments in product and technology; progress on product development efforts; product capabilities and benefits; our relationships with publishers and other parties in the digital advertising market; expectations for future economic activity and digital advertising spending; expected restructuring costs and cost savings from our restructuring efforts; and our expected Q2 2024 and future financial results.

We make these statements as of May 2, 2024, 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 2024 earnings release.

With that, let me turn the call over to Chris.

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Q&A Session

Chris Lien: 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 sustain and grow our business. Bob will then provide additional detail on our first quarter results for 2024 and our outlook for the second quarter of 2024. As we highlight each quarter, we are committed to our efforts to sustain and grow our business 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 return from their online advertising investments. As announced in today’s earnings release, Q1 revenues came in at $4 million, which was at the low end of our previously published guidance for Q1, but still down from Q1 in the prior year.

I note that Marin’s revenues declined about 12% year-over-year as our revenue decline moderates with progress in retention and bookings. Our Q1 non-GAAP operating loss was also at the low end of our guidance. Our non-GAAP operating loss was materially lower on a year-over-year basis, reflecting the initial benefits of our July 2023 restructuring and reduction in force plan. Our total cash balance at the end of Q1 was $9.6 million. As I’ve shared before, Marin seeks to be an ally in digital for the world’s leading brands and their agencies. The online path to purchase traverses 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 TikTok, Snap and LinkedIn do not play well together.

Brands must 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 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 to spend more with that publisher. 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 promote a unified view of a customer’s journey across channels, devices and publishers. We supplement our Marin 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 have been investing over the past quarters to give brands and agencies a user-friendly cross-channel advertising management platform, enabling them to sell more by unifying the fragmented world of performance marketing. To address the varying needs of digital marketers and their agencies, we offer three primary products. Connect as a reporting focused solution for advertisers looking to collect their performance marketing data from a variety of sources and sent to data warehouses BI tools and spreadsheets. Step one is understanding your digital advertising spending to have reliable comprehensive reporting in a format that addresses your particular business needs. Marin provides marketers with revenue cost and ad performance data for the publishers that we support unified in our Connect offering.

Ascend builds on the data foundation provided by Connect. Marin’s Ascend offering as our budget management pacing and forecasting solution that enables marketers to leverage Marin’s AI-based optimization methodologies to deliver budget compliance as well as to understand what if from an increased or decreased advertising spend and to understand optimal spend allocation across channels publishers and campaigns. Historically, these kinds of budgeting decisions have been done with spreadsheets in a highly manual and potentially error-prone approach. Marin is able to provide marketers with a 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.

Ascend supports a range of publishers and channels and this quarter, we debuted enhanced support for LinkedIn, TikTok, Apple Search Ads, and Tabula to include Marin’s proprietary forecasted budget models and simulations. Our optimization tools now allow fine-grain control of the posting of budgets and our targets to add platforms with Ascend. This feature ensures that budgets are dynamically adjusted to maximize campaign performance without manual intervention. Ascend complements the robust in-channel publisher bidding and provides an independent measure and means to allocate and pace online advertising investments, delivering optimal financial results and significant time savings compared to alternative manual approaches. With each passing quarter, we are encouraged as we see more advertisers and agencies benefiting from Marin Ascend.

Ascend is already helping drive both new business and renewals. And really third offering is Marin One, our flagship cross-channel advertising management platform. Marin One is designed to complement the publisher tools to enable management at scale for large paid media programs, driving time savings and financial lift. In the past quarter, we debuted additional scripting functionality to enable marketers to work cross-channel and cross-publisher to achieve their marketing goals more easily. As we all are aware and are reminded each day, AI is upon us, promising to transform our business and personal lives with efficiency gains and new capabilities. With powerful large language learning models now developed, the focus turns to how a modern marketer begins to apply AI to his or her marketing program to deliver better results for the business.

Marin is pleased to have just debuted ChatGPT-powered anomaly detection reports, designed to identify and summarize performance outliers. These reports are delivered in a concise easy-to-understand format by e-mail, enabling marketers to review and address significant deviations in campaign performance quickly. Our team intends to expand the application of AI to optimize online advertising and expects to bring additional innovations to market in the coming quarters. Additionally, in the past quarter, we launched our Marketing Calendar, which enables users to effectively track and analyze the impact of various events such as holidays, promotions, and competitor actions on campaign outcomes. This tools essential for strategic planning and optimizing marketing efforts to capitalize on these events.

This is a good example of cross-channel cross-publisher functionality that helps marketers in their day-to-day activities. We’ve also expanded the capability of Marin Scripts for those marketers who prefer this management approach by integrating them with Google Sheets and customer reports. This enhancement allows performance marketers to harness the collaborative features of Google’s cloud-based Spreadsheets and Marin’s comprehensive analytics to measure optimize and automate campaigns with the latest data available. In addition Marin Scripts now run across multiple accounts and automatically filters results tailored to specific users. This upgrade particularly benefits agencies and teams managing large-scale operations, simplifying report management and enhancing efficiency.