Earnings Call Presentation Q3 2018

Transcription

1 Earnings Call Presentation Q3 2018

2 Forward Looking Statements This presentation and the accompanying oral presentation contain forward-looking statements that are based on our management s beliefs and assumptions and on information currently available to management, including our current expectations with respect to revenues and Adjusted EBITDA for the fourth quarter and fiscal year 2018; our expectations for our offerings, partnerships, pricing strategies and platforms; our expectations regarding the future demand and behavior of consumers, retailers and CPGs; and our expectations with respect to our future investments and growth and ability to leverage our investments and operating expenses. Forward-looking statements are based on our current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, our ability to generate positive cash flow and become profitable; the amount and timing of digital promotions by CPGs, which are affected by budget cycles, economic conditions and other factors; our ability to adapt to changing market conditions, including our ability to adapt to changes in consumer habits, our ability to negotiate fee arrangements with CPGs and retailers; our ability to maintain and expand the use by consumers of digital promotions on our platforms; our ability to execute our media strategy; our ability to effectively manage our growth; the performance of our various products; our ability to successfully integrate acquired companies into our business; our ability to develop and launch new services and features; and other factors identified in our filings with the Securities and Exchange Commission (the "SEC"), including our quarterly report on Form 10-Q filed with the SEC on August 3, 2018 and future filings and reports by us, including our Quarterly Report on Form 10-Q for the quarter ended September 30, We disclaim any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise and does not assume responsibility for the accuracy and completeness of the forward-looking statements. In addition to the U.S. GAAP financials, this presentation includes certain non-gaap financial measures. The non-gaap measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under U.S. GAAP. There are a number of limitations related to the use of these non-gaap financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-gaap financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-gaap financial measures as tools for comparison. We consider these non-gaap financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider to be our core operating performance and are used by our management for that purpose. The use of non-gaap measures is further discussed in the accompanying press release, which has been furnished to the SEC on Form 8-K and posted on our website. The press release also defines our non-gaap financial measure of Adjusted EBITDA. A reconciliation between GAAP and non-gaap measures can also be found in the accompanying press release and in the Appendix hereto. A reconciliation of Adjusted EB ITDA, a non-gaap guidance measure, to a corresponding GAAP measure is not available on a forward-looking basis without unreasonable efforts due to the high variability and low visibility of certain (income) expense items that are excluded in calculating Adjusted EBITDA.

3 Business Highlights Mir Aamir, President & CEO

4 Q Highlights Quotient Digital Commerce Technology Total revenue was $103.6M, up 26% Y/Y Revenue from Retailer iq grew 17% Y/Y Revenue from Media grew 69% Y/Y Revenue from Retailer iq + Media grew +39% Y/Y and represented 76% of total revenue Adjusted EBITDA was $16.4M, up 32% Y/Y

5 The Digital Convergence in Marketing CPGs spend ~$225 Billion annually in marketing PROMOTIONS CRM DIGITAL DATA Competitive pressures serve as catalyst for convergence Data and integrated solutions are key CONVERGENCE MEASUREMENT E-COMMERCE MEDIA

6 Data Drives Growth Quotient Analytics Self Service On Demand Measurement Insights Total revenue from top CPGs grew 19% Y/Y Total revenue from all other customers grew 42% Y/Y Revenue from digital paperless coupons on Retailer iq grew 17% Y/Y Quotient Analytics is a catalyst for growth and drives customer engagement Database of 1,000+ measurement studies to optimize campaigns

7 Quotient Driving Shift to Digital Consumer Scale Integrated Technology Data & Analytics 75M+ Shoppers Registered to Retailer iq Programs 20M+ Monthly Uniques on Coupons.com Mobile Digital Coupons National, Shopper, Targeted Digital Circular Digital Media CRM Ecommerce Shopper Transaction Data offline sales + online 100M+ Verified Buyer Audience 100% Reach of US Adult Consumers

8 Integrated Marketing Solution Desktop Retail Properties Across Publishing Network Coupons.com Digital Circular Offsite Dynamic Content App 8

9 Quotient as Exclusive Retailer Media Partner ~ $150 Billion 5 Retailer Partners Collective Annual Sales +2 More Retailers Launching Soon

10 Retailer.com Display Coupons.com Display Sponsored Search & Product Ads Social Influencer Ad Tech Measurement Audience Data Social Display Programmatic Display Creative Content Private Marketplace Media Services

11 Influencer Marketing on Social

12 Quotient Drives Ecommerce Sales Search and Sponsored Product Media Technology ice cream Shoppers are initiating more of their trips directly on retailer websites Brands shifting search budgets to a higher performing medium tied to product sales Brands can optimize for sales performance with proprietary algorithms, flexible bidding models, and rich analytics 12

13 CRM Solution for CPG Brands 13

14 Quotient Competitive Advantage A Connected Technology Engine The Future of CPG Marketing Consumer Data, Intelligence & Reach Unparalleled Industry Expertise Creative Content That Converts

15 Financial Review Ron J. Fior, CFO

16 Q Financial Summary Total Revenue: $103.6 million, up 26% YoY Total Transactions: 1.0 billion in the quarter, up 4% YoY, driven by continued strength in Retailer iq, offset by 20% decline in digital print GAAP Net Loss: ($7.8) million, including $4.7M charge for net change in fair value of contingent consideration and escrowed shares, $1.3M in restructuring charges, $0.8M in acquisition-related costs, and $3.4M million in convertible debt interest expense Adjusted EBITDA: $16.4 million, an increase of 32% YoY due to increased revenues and continued leverage in operating expenses Ended the quarter with a cash and investment balance of $328.6 million, down $29.4 million from Q Excluding cash used for Crisp earnout that was included in operating activities, we generated +$14 million in Cash from Operations 16

17 Revenue Quarterly Trend ($M) $23.9 $29.7 $23.0 $28.6 $ % y/y $58.1 $63.4 $63.8 $60.9 $63.3 9% y/y Q Q Q Q Q Promotions Media Revenue $82.0 $93.1 $86.8 $89.5 $103.6 QoQ 10% 14% -7% 3% 16% YoY 23% 23% 20% 20% 26% 17

18 Revenue Split $M Q1'17 Q2'17 Q3'17 Q4'17 FY Y/Y % % of Total Q1'18 Q2'18 Q3'18 Y/Y % % of Total Digital Print % 21% % 16% Retailer iq % 41% % 37% Others % 2% % 3% Total Promo Revenue from CPGs % 64% % 56% Specialty Retail % 10% % 5% Total Promotion % 74% % 61% Media % 26% % 39% Total Revenues % 100% % 100% 76% of Total Revenue Growing +39% over Q3 17 Total promotion revenue in Q3 18, excluding Specialty Retail, grew 12% over Q3 17 Digital print revenue includes revenue from digital print and set up fees 18

19 Top 10 Retailer iq Customers Continue to Grow 30% 25% 20% 15% 10% 5% 0% Top 10 Retailer iq customers as % of total promotion revenue 10% 23% 27% 2016 YTD 2017 YTD 2018 YTD Q3 18 Top 10 Retailer iq customers grew Retailer iq revenue 18% y/y Based on Q Top Retailer iq Customers 19

20 Growth In Top 10 Media Customers Q3 18 Top 10 customers grew revenue 86% y/y Growth drivers include QMX, Crisp, Retailer Performance Marketing, and Ahalogy Based on Q Top Media Customers (U.S. revenue only) 20

21 Transactions (M) , ,026 Q3 YoY growth of 4%, driven by 9% growth in digital paperless, offset by 20% decline in digital print Volume of transactions drive scale and demand on platform Q Q Q Q Q Digital Print Digital Paperless Transactions Q Q Q Q Q QoQ 24% -2% 6% -7% 8% YoY 45% 40% 29% 20% 4% 21

22 Gross Margin 54.2% 58.2% 51.6% 46.7% 49.9% 44.9% GAAP Q3 FY18 includes $4.2M in amortization of intangible assets, $0.6M in SBC expense, and $0.4M of restructuring charges QoQ decrease due to product mix and increase in associated revenue share and third-party costs Q Q Q GAAP Non-GAAP Non-GAAP Gross Margin excludes stock-based compensation expense, amortization of acquired intangible assets, and restructuring charges. A reconciliation table for the periods presented can be found in the Appendix section of this presentation 22

23 Operating Expenses Q3 FY18 GAAP Op Ex: $52.0M compared to $44.2M in Q2 FY18 Q3 FY18 Non-GAAP Op Ex: $37.3M compared to $35.4M in Q2 FY18 QoQ improvement in Non-GAAP OpEx expense due to continued operating efficiencies and cost management, with some expenses getting pushed out to Q4 Significant improvement YoY of Op Ex as % of Revenue due to 26% revenue growth, coupled with continued cost management and efficiencies Non-GAAP operating expenses exclude stock-based compensation, net change in fair value of escrowed shares and contingent consideration, amortization of acquired intangible assets, enterprise resource planning ERP software implementation costs, acquisition related costs, and restructuring charges. A reconciliation table of the period presented can be found in the Appendix section of this presentation. 23

24 Adjusted EBITDA $12.5 $13.9 $11.9 $12.9 $ % increase in Q3 FY18 Y/Y due to 26% revenue growth and continued leverage in operating expenses, offset by decline in gross margins due to product mix Q Q Q Q Q Margin 15% 15% 14% 14% 16% Adjusted EBITDA, a non-gaap financial measure, is net loss adjusted for stock-based compensation, change in fair value of escrowed shares and contingent consideration, net, interest expense, other (income) expense net, provision for (benefit from) income taxes, depreciation, amortization and other, which includes: enterprise resource planning ("ERP") software implementation costs, certain acquisition related costs and restructuring charges. A reconciliation table of the periods presented can be found in the Appendix section of this presentation. 24

25 Guidance FY2018 Q4 Full Year Low High Low High Revenue ($M) $115.0 $120.0 $395.0 $400.0 YoY Growth 24% 29% 23% 24% Q4 Full Year Adjusted EBITDA ($M) $18.0 $20.0 $59.0 $61.0 Margin 16% 17% 15% 15%

26 Thank You

27 Appendix Reconciliation Tables

28 Reconciliation of Non-GAAP Gross Margin QUOTIENT TECHNOLOGY INC. RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN (Unaudited, in thousands) Q3 FY 17 Q2 FY 18 Q3 FY 18 Revenues $ 81,950 $ 89,545 $ 103,591 Cost of revenues (GAAP) $ 37,501 $ 47,769 $ 57,073 (less) Stock-based compensation (521) (579) (571) (less) Amortization of acquired intangible assets (2,705) (3,849) (4,233) (less) Restructuring charges (387) Cost of revenues (Non-GAAP) $ 34,275 $ 43,341 $ 51,882 Gross margin (GAAP) $ 44,449 $ 41,776 $ 46,518 Gross margin percentage (GAAP) 54.2% 46.7% 44.9% Gross margin (Non-GAAP)* $ 47,675 $ 46,204 $ 51,709 Gross margin percentage (Non-GAAP) 58.2% 51.6% 49.9% * Non-GAAP gross margin excludes stock-based compensation, amortization of acquired intangible assets, and restructuring charges.

29 Reconciliation of Non-GAAP Operating Expense QUOTIENT TECHNOLOGY INC. RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES (Unaudited, in thousands) Q3 FY 17 Q2 FY 18 Q3 FY 18 Revenues $ 81,950 $ 89,545 $ 103,591 Sales and marketing expenses 22,002 20,530 22,782 (less) Stock-based compensation (1,832) (1,735) (1,689) (less) Amortization of acquired intangible assets (101) (200) (438) (less) Restructuring charges (64) (204) Non-GAAP Sales and marketing expenses $ 20,069 $ 18,531 $ 20,451 Non-GAAP Sales and marketing percentage 24% 21% 20% Research and development 12,255 12,122 11,974 (less) Stock-based compensation (1,894) (1,862) (1,908) (less) Restructuring charges (151) (379) Non-GAAP Research and development expenses $ 10,361 $ 10,109 $ 9,687 Non-GAAP Research and development percentage 13% 11% 9% General and administrative expenses 11,702 11,528 12,574 (less) Stock-based compensation (4,233) (4,063) (4,252) (less) Restructuring charges - (33) (289) (less) Acquisiton related costs (419) (693) (824) (less) ERP software implementation costs (473) * Non-GAAP operating expenses excludes changes in fair value of escrowed shares and contingent consideration, stock-based compensation, amortization of acquired intangible assets, restructuring charges, acquisition related costs, and enterprise resource planning ("ERP") software implementation costs Non-GAAP General and administrative expenses $ 6,577 $ 6,739 $ 7,209 Non-GAAP General and administrative percentage 8% 8% 7% Non-GAAP Operating expenses* $ 37,007 $ 35,379 $ 37,347 Non-GAAP Operating expense percentage 45% 40% 36%

30 Reconciliation of Net Loss to Adjusted EBITDA QUOTIENT TECHNOLOGY INC. RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND TRANSACTION DATA (Unaudited, in thousands) Q3 FY 17 Q4 FY 17 Q1 FY 18 Q2 FY 18 Q3 FY 18 Net income (loss) $ (10,827) $ 4,182 $ (11,357) $ (4,660) $ (7,805) Adjustments: Stock-based compensation 8,480 7,950 7,796 8,239 8,420 Depreciation, amortization and other (1) 5,496 6,883 5,619 7,033 8,801 Change in fair value of escrowed shares and contingent consideration, net 9,700 (5,500) 7,350 4,692 Interest expense 1,589 3,308 3,326 3,373 Other (income) expense, net (276) (391) (938) (1,270) (1,267) Provision for (benefit from) income taxes (107) (768) Total adjustments $ 23,293 $ 9,763 $ 23,237 $ 17,528 $ 24,214 Adjusted EBITDA (1) $ 12,466 $ 13,945 $ 11,880 $ 12,868 $ 16,409 Adjusted EBITDA Margin (2) 15% 15% 14% 14% 16% (1) Adjusted EBITDA, a non-gaap financial measure, is net income (loss) adjusted for stock-based compensation, change in fair value of escrowed shares and contingent consideration, net, interest expense, other (income) expense, net, provision for (benefit from) income taxes, and depreciation, amortization and other, which includes: enterprise resource planning ("ERP") software implementation costs and certain acquisition related costs of $0.5 million and $0.4 million, respectively, during Q3 FY 17; ERP software implementation costs and restructuring charges of $0.2 million and $2.1 million, respectively, during Q4 FY 17; ERP software implementation costs and restructuring charges of $0.05 million and $1.2 million, respectively, during Q1 FY 18; certain acquisition related costs and restructuring charges of $0.7 million and $0.2 million, respectively, during Q2 FY 18; and certain acquisition related costs and restructuring charges of $0.8 million and $1.3 million, respectively, during Q3 FY 18. (2) Adjusted EBITDA margin is the ratio of Adjusted EBITDA and Revenues.

31 Making Sales Happen.