Marin Software Incorporated (NASDAQ:MRIN) Q4 2023 Earnings Call Transcript

Marin Software Incorporated (NASDAQ:MRIN) Q4 2023 Earnings Call Transcript February 22, 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 Fourth 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. It is now my pleasure to introduce your host, Bob Bertz. Thank you. You may begin.

Bob Bertz: Thank you. Good afternoon, everyone, and welcome to Marin Software’s fourth quarter 2023 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. 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 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 grow or sustain 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 cost and cost savings from our restructuring efforts and our expected Q1 2024 and future financial results.

We make these statements as of February 22, 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-K and Form 10-Q as well as our other SEC filings. This presentation contains 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 fourth 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 full year and provide an update on our initiatives to grow our business. Bob will then provide additional detail on our fourth quarter and full year results for 2023 and our outlook for the first quarter of 2024. As I discuss on each call, we remain committed to returning Marin to growth and maximizing 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 returns from their online advertising investments. Our efforts are focused on growing our business and we continue to believe that our strategy is sound as we report ongoing moderation in our revenue decline on a year-over-year basis.

And as I did on our last call, I’m pleased to share that we continue to receive encouraging customer feedback on our new offerings from brands and agencies. As announced in today’s earnings release, Q4 revenues came in at $4.4 million, which was in line with the high end of our previously published guidance for Q4, but still down from Q4 in the prior year. On a sequential basis, Marin’s revenues were down just slightly from Q3. Our Q4 non-GAAP operating loss was also above the high end of our guidance, despite our lower revenue for the quarter and continued investment in Marin One and our team. Our total cash balance at the end of Q4 was $11.4 million, providing Marin with resources to pursue our strategy and to support our customers. At year-end, our global headcount was approximately 108.

About half of our team is in technology roles, reflecting our significant investment in delivering products to drive results for leading brands in their agencies. As this has been our practice, we will continue to balance investments with cost management. 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 the fragmented world of performance marketing. In talking to our customers and prospects, we also have discovered that digital marketing needs vary and we need to better tailor our product offering and associated marketing messaging to better meet the needs of leading digital marketers.

As part of these learnings and to better meet the varying needs of digital marketers, you will now see on our website at www.marinsoftware.com, three 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 one of understanding your digital advertising spending is to have reliable comprehensive reporting in a format that addresses your particular business needs. Ascend builds on the data foundation provided by Connect, helping advertisers maximize the return on their marketing investment. Ascend’s AI-based optimization methodologies support budget compliance at scale for agencies.

It also allows brands to estimate the impact of increased or decreased advertising spend and to understand optimal spend allocation across campaigns, publishers and channels. Historically, these budgeting decisions have been done with spreadsheets and a highly manual and potentially error-prone approach. Marin provides marketers with a powerful UI to automate these budgeting decisions while providing flexible budgeting controls. These tools are compatible with various bidding approaches, including support for Google’s smart bidding. Ascend supports a range of publishers and channels, and just this quarter we enhanced our support for LinkedIn, TikTok, Apple Search Ads and Tabula to include Marin’s proprietary forecast in budget models and simulations.

This functionality uses machine learning combined with customizable rules to help advertisers maximize the return on their marketing investment. Marin will continue to advance and expand our budget optimization functionality as we see this as an enduring area for an independent ad management platform to add value. It is impractical and not feasible for a publisher to provide forecasting and pacing for other publishers. Creating what we believe is a compelling opportunity for Marin’s optimization offering. I’m pleased to report that initial customer results with Marin Ascend are encouraging for both financial lift and time savings. Using our Ascend functionality, Marin’s platform saved time and increased revenue for an agency customer by 20% with intelligent budget pacing with dynamic allocation.

And in Q4, Marin doubled lead volume for Alumni Ventures and reduced cost per lead by 33% with our budgeting optimization functionality. We are looking forward to sharing more customer specific case studies and testimonials in the coming months as we continue to add to Ascend functionality. Ascend already has played a role in various customer renewals as well as new business wins. We also seek to complement the publisher tools by enabling management at scale for large paid media programs, driving time savings and financial lift. Customer examples in the past quarter include increased revenue for Yotel by 323% using Marin’s Google to Microsoft Sync and Internet brands increased revenue 30% by uniting customer lifecycle data with Marin’s Revenue Hub.

In the past quarter, Marin continued to expand our support for Amazon ads. Our team enhanced in app e-commerce data to include Amazon shopping, product level cost and revenue across both paid and organic sales for greater transparency and more comprehensive revenue reporting. We also enabled support for Amazon Store Spotlight and Sponsored Brand Video, critical ad types to drive brand awareness to deliver more comprehensive campaign management on Amazon’s platform. With many companies facing uncertain business outlooks and reducing their staffing levels, Marin stands ready to provide managed services capabilities flexibly to supplement our self-service SaaS platform. As new publishers become more important and full time staffing levels come under increased pressure, Marin’s ability to supplement in-house teams at brands and agencies with Marin’s experienced digital marketers is resonating in the marketplace.