Marin Software Incorporated (NASDAQ:MRIN) Q3 2023 Earnings Call Transcript

Marin Software Incorporated (NASDAQ:MRIN) Q3 2023 Earnings Call Transcript November 2, 2023

Operator: Greetings, and welcome to the Marin Software Third Quarter 2023 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. I would now like to turn the call over to Marin Software. Please go ahead.

Robert Bertz: Thank you. Good afternoon, everyone, and welcome to Marin Software’s third quarter 2023 earnings conference call. My name is Bob Bertz, I’m Marin’s CFO. 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. 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.

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These forward-looking statements include statements about our business outlook and strategy, our expectations for customer adoption and use of our MarinOne platform and other product offerings. Historical results that may suggest trends for our business, our expectations about our ability to improve customer and new business teams 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 and cost savings from our restructuring efforts and our expected Q4 and future financial results.

We make these statements as of November 2, 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 third quarter 2023 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 grow our business detail on our third quarter results for 2023 and our outlook for the fourth quarter of 2023. As we highlight each quarter, we are committed to our efforts to 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, 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 Marin’s revenues declined about 11% year-over-year, showing moderation in our 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 a restructuring and reduction in force plan as well as other cost-saving measures to reduce our operating costs, reducing our team size by approximately 40%. As we shared at the time of announcing these changes, the various actions are expected to generate estimated pretax 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 in force plan.

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 in 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 provide a unified view of a customer’s journey across channels, devices and publishers. We supplement our MarinOne 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 significantly over the past quarters to give brands and agencies a user-friendly cross-channel advertising management platform enabling them to sell more with the platform that unifies a fragmented world of performance marketing. What we also have discovered in talking to our customers and prospects, is that digital marketing needs vary, and 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 they better meet the varying needs of digital marketers, you will now see on our website at www.marinsoftware.com, 3 offerings from Marin, Connect, Ascend and Marin One. Connect is a reporting focused solution for advertisers looking to collect their performance marketing data from a variety of sources and send the data warehouses, BI tools and spreadsheets. Step 1 of understanding your digital advertising spending is 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 Connect. 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 some increased or decreased advertising spend and to understand optimal spend allocation across campaigns, publishers and channels.