QUOT - Earnings call transcript Q3 2020 | Quotient Technology Inc.

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Operator

Good afternoon, everyone, and welcome to Quotient's Third Quarter 2020 Earnings Conference Call.

During the call, all participants will be in a listen-only mode. After the presentation we will conduct the question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Quotient's website following the call. At this time, I'll turn the conference call over to Christine Marchuska, Director of Investor Relations. begin. now may you Ma'am,

Christine Marchuska

Great. Thank third welcome our everyone, operator. XXXX earnings Hello, quarter and call. to you,

On the corporate presentation. our call Boal; with IR and almost me today are earnings on ago alongside our stockholder was the and our an company's release hour Pam of our CFO; Scott investors.quotient.com, The Raskin, our President. section letter posted website, Strayer, CEO, Steven press

this for call, forward-looking to Before fourth you effectiveness marketing hear expected and in the that media, we expansion and our and digital, after retail begin, our performance year These retail leverage our projections ability well please of to and global and as forward-looking to growth the business growth platform, of launch full partnerships, statements our and shift National during include e-commerce the ability of manage measures expenses as our investments Rebates business to note quarter statements. of capture our and and during pandemic, will cost-control operating XXXX, generally. dollars our our in retailers' CPGs investments liquidity and

materially. Forward-looking as call faith, uncertainties the management based our beliefs of in team cause actual unknown could statements that result and, to good differ of on a information available this known subject to and are and are time and of to risks as performance

in whether certain today a expenses. Please that or obligation to future our been net between information, the our can with a turn issued future A Form on financial that result these about in the exclude factors any the the website. measures filed of X, and on adjusted SEC letter could potentially be impact presentation section otherwise. stockholder information non-GAAP posted results update XX-Q forward-looking found discussed disclaim non-GAAP results on new and have Additional basis in our are issued August operating report XXXX, Steven. and financial expenses, slides it margins We and GAAP risk filings our and loss and information note of today, in gross as the today contained to annual statements, identified factors now exception with can events stockholders' revenue, letter I with company's to measures are reconciliation over in found earnings will the be financial With that, of the SEC. on

Steven Boal

Call. company Thank and over up million, for X% Hello, delivered Earnings $XXX.X GAAP and last XX% This basis. welcome of on quarter QX revenue Christine. you, up year-over-year a as to quarter our everyone, historical our XXXX we was record-setting a

between the line two began We quarter, we also adjusted merchandising year margin brand increase margin on levels years. delivered marketing. normalized as in saw brands spend on half monthly in the second almost returned. revenues our of EBITDA to Throughout efforts XX.X%, promotions, the and advertising highest shopper CPGs an store inventory sequential more bottom and retailers third with of the and a in

growth transformation stockholders company. opportunities. partners Additionally last been to us capitalize customers, more We've over we to positioning of is what the and do the well success listening on business employees, a as can our better year our regarding

closed-loop core great from processes, and evolving our and our Brands, solid platforms result, CPGs sales are in enhanced new consumers proposition. our benefiting focused marketing their measurement, value recognizing our proprietary a innovating ROIs and As for resulting analytics on we've launched retailers spend. and products. are

digital to quarter, live need Retailer our is to every and curated iQ, an its launched are Aid to driving Rite HyVee offers new with Rite Retailers being powered presented a our their drive HyVee expanding strategies brands at Rite with dollar and grow. enables With stretching and have for platform, focus to signed strategic online shoppers have two This new targeted, Performance network New retailers and HyVee and the a consumers Rite immediate this purchase collaborative coupon partnerships, along stop to launched journey. execute and for are on gone for Aid retail business sales to continues needed Quotient. joining digital fragmented and engaging and loyalty in ever. that of and conversion is to way broad brand garner solutions, by a spend approach, I'm both in announce greater customers, and deliver Aid, retailers Media our more a both we in-store Aid. better landscape. Quotient's With their when directly can compete in highly increase a consumers. targeted With platform. pleased highly engagement CPG Rite every network sales, share Aid able Quotient's retailer rewards media advertisers time than maximizing incremental results solution retailers sales last platform, digital at campaigns digital

distribution Ahold's scaling retail significantly out-of-home in measurement media, performance and sponsored optimize and of our always-on across teams whenever, even accessed measure programmatic data campaigns in CPGs our Expanding and access We solutions. soon. e-commerce search changes digital third real digital ads track digital planning search quarter. USA RPM, possible also approach, and allows dynamically over near directly banners now through placement in a Labs that the solution have be Digital with digital the with advertisers continue consumers than in-store, over Quotient's to to to manage each retailers influence available our we under right seen recently Delhaize needed our amid brands wherever the HyVee to which we XX this We're our traffic that XX,XXX inventory of patterns buying shop. doubled using optimize platform search quarantines, offering, Since launching in purchase. in-store on product time This digital, can an offering Using product, QX, choose at work or out-of-home our ways going and optimize display which digital lower grow. digital and CPGs screens they near pipeline with local look for Ahold as time offering to includes up we not have tools. directly Peapod campaign that expanded We for quick customers in consumers media make to can demand solution out-of-home expect to platform announced however effectiveness, the our self-service brand and for connect has now real initiate, increase for channels to and point now ability and forward pandemic-related live gives before. more were out-of-home to

any to and brands easier savings provides last engage for retailer week advantage with make that it an consumer designed to Our National Rebates launched platform take of receipt. any is itemized at

mobile to Quotient's recently app, significant saw were a that position example transformation. already offering through This consumer has feedback another allows now a their seeing one brands you for with solution our go user strong app as innovator. interest in industry also place from and If yet brands. an this we Coupons.com of data been Early execute consistent you promotions of And fantastic, are measurement.

focused where channel. the rapid with addition the redemptions with to Quotient efficiency and is QX, that One prominent retailers convenience. market e-commerce there that several to digital. media grocery engage powerful growth us. other digital-first see and on e-commerce prioritizing targeted marketing shift own consistent, market in the another support with number CPGs media solutions online accelerating messaging. are revenues and In for our highlights platform. retailer digital enables while of the from In platform, Retailers area in or by discussed, to also result retail shoppers e-commerce towards growth continues drivers providing growth still to I've promotional in sales time channel XXXX purchasing combine to choice shoppers of and the a increased advantage an performance online continued. product out driver tactile offering increased for that strategies, XXX% of moving shopping retail targeted in-store a mode all sales over see building channels drives without discovery, optimize purchasing. online retailers through to cost and shoppers allows Quotient's strength and them gives mixed media they and grocery QX We the in as of In-store with enjoy their incremental high-performing,

force provide beneficial consumers. continues to And inserts. noted publicly to that brands more major for coupons help see as opportunity digital to they lastly, adopt in going circulars, are redemptions results their sales drug a and last retailers XX% off-line industry the print their begin shift are we the that to now and over and recently strategies publish forward. up have retailer digital and brands, circulars space maps to addition, growth suspended that opting data both for analytics exiting online large expertise drive such year teams the road freestanding In One our paper experienced we be and from as

cost-efficient the remain Additionally, ways spend dollars for CPGs drive and digital of to coupons sales. marketing one effective most to

our I've believe marketing. market pillars we to examples to our most our time deliver strategy internal they culture it processes, brands, in manage we promotions the to well our be as that the in during leadership discussed, and journey boost and, invest our for shown are market we advantage a and reliable spend when the continue move in key digital market, and costs take on of Innovation, importantly, favor need trends along improve marketing visibility retailers ROIs of As shoppers most. positioned appropriately,

and I'm to thrilled operational now retail to have in that the place allow on to continues that industry solid reflect year, As as us platform the digital. I help a strategy the will we future of shape past shift

customers increased this spending public year. into quarter, As commentary we bookings fourth our strong next the begin of rest to CPG are for points and many year from and the our our of

challenge, closures. spikes our pandemic how what with they may experiencing these is play out potential and global However, the are have. for difficult is will of the and increased country parts effects predict a It to still

this XXXX As compared of adjusted uncertainties, guidance the first the of result half our to reflect to these in second have of XX% we year. a half as of growth

the As light noted of the And ongoing under that, transparency team, the committed we're over we turn community. appropriate. this And is last with will call to now more quarter, providing to investment outlook new leadership to Pam. I believe pandemic, in our

Pamela Strayer

an media Steven, and that and In QX increase in increase in my $XXX.X revenue was revenue delivery net the over contributed approximately change stockholder XXXX accounting from everyone. to letter keep million, on that the website. remarks million a over $XX record quarter. financial This We year prior QX full of in XXXX. exited results the in we went of of portion business good QX to all XX% a our of prepared QX, gross XXXX. through encourage results and an afternoon, X% our I'll and business same you, read Thank brief our recorded posted you

in XXXX, early that Steven past the Given the post This exit of with investing businesses, be decided nonstrategic change, what conversion along won't you from return in completed contribution make with to we in difficult entirely. consistent QX his to comparisons Quotient small calculate. Ubimo growth our business year-over-year and heard to acquisition this we

purposes the for simplification we're For investment providing following. the community,

well X% the an XX in offset as from X% total portfolio was flat contribute XX quarter. point gross all flat of customer year-over-year, the of XX-basis top was for year-over-year XX% in paperless, quarter was by continued the which pandemic. total of remains print, over of down due a the to grew revenues prior by of cohort prior year, portion Media cohort and XX.X%, display floor revenue with customers in digital from XX driven GAAP would third across third the social XXX-basis quarter by digital business, prior increase to out-of-home, our With impact increased mix search from revenue programmatic On acquisition high revenue was trailing of adjusted out-of-home year. primarily XXXX. in and a and decline which revenue the grew overall We product Promotions offset supply and XX% and the basis, primarily in year-over-year. growth our sponsored quarter low the digital increased several and driven XX.X% QX XX.X%, as Sponsored QX year margins Ubimo exclusion of was gross overall believe retail We in exiting lingering the by total same also delivered than a growth Ubimo down of Non-GAAP X%, by XX slightly headcount. from of although and in revenue last benefit margin at QX concerns product doubling increased and for of year-over-year, display the a last from our over the top by XX.X% focus cohort X% our revenue primarily revenues still the range, This doubling spending XX-month in year, cohorts. year. from year-over-year and solutions, solutions. offset $XX.X due margin X%, growth more our and over offerings was the specialty search was continued of the revenue XXXX driven improvement operating on in the our a roughly to QX maintaining of primarily X% chain to three be media benefited to the our digital point respectively. partly end the a fixed quarter acquisition, expenses. million by increases Gross improvement costs EBITDA in

at Looking cash.

driven quarter cash lower accounts payable. cash million. $X third primarily delivering quarter prior about sheet, third We approximately equivalents, the $XXX.X with We continue strong cash on and ended collections on of flow in focus from $X.X to balance operations million was quarter. strong the in by This and the million down from payments a maintaining higher-than-expected

turning to guidance. Now

we As bookings pipeline continued the the end Steven of see moving year. strong into noted,

full for the million, of chosen remains still round of with back challenge in our have half. the of versus as uncertainties of experiencing We to pandemic $XXX guidance. now growth the to the closures globally year of million first spikes. Therefore, a country are another the parts range $XXX year to certain our the revise around revenue over half expect However, be XX% we in XXXX

of quarter is to to million year of the X% Revenue revenue at given or year mix growth promotions macro $XXX $XXX predict, the over and two the businesses. in expect XXXX, these QX fourth be million we range the the last harder media trends between For for between to midpoint.

collaboratively and non-GAAP gross spend and We pipeline dollars retailers a margin marketing CPGs strong rates to RPM. time. improving over focused QX as media are working We towards remain bookings on seeing currently mix for are on

margin more in However, our on slower Longer higher uncertainty which gross well self-service year. this more against will and from much that are of offerings from national slowed larger the benefit profitable we're revenue rates budgets on, growth a goal. budgets, growth in the the driven past expectations revenue has promotions mix as of and as initiatives have over working our progress than growth our several including term, shopper

at November more detail will our We on discuss this in Investor Day XX.

expenses $XX fourth EBITDA the of range to expected expected $XX to is $XX we million adjusted full XXXX, million range million of XXXX, to to the EBITDA for million. the quarter non-GAAP approximately be operating in For $XX of expect $XX be to QX. And is Adjusted million million. the for in to be year $XX

promotions, summary, approximately began turn believe we advertising And we the more growth EBITDA marketing. brand Despite global in presentation cash factors to to promotions QX. advantage positioned QX In regarding take shares trends our that, a due to well Day, more model. the XXXX. our Operator? tailwind in a average our with to sustainable QX was weighted weeks long-term our at path control The shopper that in look spend and result digital We profitable as two that flow the marketing. the favor adjusted market we strong diluted outstanding, are Investor financial expect forward pandemic, you We over I'll with of expect including CPGs from to outside the questions. with discussing continued to and quarter million positive of call strong for XX and

Operator

comes your [Operator time, question. question Ladies go our session. we And today Colliers. begin Instructions] Frankel with Please the Steve from and ahead from first this will gentlemen at question-and-answer

Steven Frankel

you're you you QX. deliver inability opportunity. headwinds QX insight cushion thank talked afternoon, In seeing I wonder into over business, carry to some of more about that some doesn't why letter, little give effect, for in the into your you in on Good demand. and a and the if might us that maybe

Steven Boal

Sure. asking Hey, Thanks the Steve, for Steven. question. it's

in weren't promotions algorithms to million our revenue we million simply, out in quite additional booked tuned Coming expected COVID, optimally an QX. to had it. $XX to $X deliver So of of we deliver that

So and lot this as of we've the pretty complicated. we about and way promotions deliver model optimization. learning talked and a you training and before, is know, targeting There's

COVID, coming had do obviously so of work on out And to models. we some our

seen immediate ham-tuned we've some those, impacts and we've So that. from

into So that $XX that we expect QX. that $X solved we've go-forward But on have promo additional basis. added revenue a to would of million million

that the to virus As that of would the the rise in far we in thoughts see see QX as factored situations starting QX is any some northeast. of is into concerned, guidance, we're and out-of-stock our occur given

Steven Frankel

Okay. decline for telling are of FSI? have your And it any forecast use about dollars into What any the seen come you of customers your And their into you 'XX? 'XX? the more those insight of in

Steven Boal

yet. So to our coming long-term the that you speed. tell we are plan Day our haven't is model. continuing 'XX Investor I At forecasted up, we to But roll conversations can what out

that of more Our decline want digital. vehicle CPG shift their the and aware retail to are customers of to acutely the from dollars of

yes, So tuned a of all couple pretty are that, positive signs weeks but for on stay there.

Steven Frankel

then And angle. it at one Okay. going other

or last in the of out things couple growth X ability called about or calls, in the accelerate of because the business? business Are less in to revenue that accelerate some you could optimistic the other the you X COVID XXXX. changes spike So

Steven Boal

all. No, not at

to moving pushing able those announce mind. near you've additional of still We've into talked to the percentages to we just coming factors onboard, We've spend and over seen decline talked do. retailer talked in verticals, stepping noncore for about us be we future. retailers fixed which about expect We've FSI. about that which the of We of digital. are talked talked about top All of engagement about

that reiterate, $X a to on we've million just revenue about the had I if are QX gone would talking had Again, perspective would our we there. no, the also different tailwinds bookings of say the promotions been we to margin and $XX So all books. million of through from look that

Steven Frankel

And then one one Pam. for last

gave you was QX QX the new in maybe guidance QX, out prior adjust So business the well. business called plan? your that but up material help that in us you as for How

Pamela Strayer

net business booking on in part result gross as were we from That to the that the accounting. net Yeah, a sure. And of a million revenue $X change, of about that was only basis. changed revenue

part of somewhat So immaterial and it the leading a inefficiencies. it an business, wasn't offering some in market unique was distraction. was It our a was and to operating

that we exit decision on So of the refocus business. attention made to strategic the business more and our parts

Steven Frankel

Hey great. Thank you.

Steven Boal

you. Thank

Operator

Our next question comes go from with Craig-Hallum. Please ahead question. Bennett Chad your from

Chad Bennett

taking my for question. Thanks Great.

So, on question trying dots let follow that here. the me Pam, last connect just just up asked, to

net in are prepared was Was quarter? million about or gross went your that different? hit. million to was you you things something annually if that business the impact the starting And guys I this from So indicated is we same so the was $XX that about remarks, incrementally a talking the year, $XX a indicated this for it guess

Pamela Strayer

about talking the things. we're No, same

is $XX happened roughly was in the full But gross-to-net the impact. we number year keep gross the a change in basis XXXX. QX in million reference than on booked to The QX. what mind, referenced million So $XX you QX in XXXX

in roughly booked QX. $XX million we So another

so million business rate. was the And quarter roughly it with per $XX run

in to million QX So starting XXXX. the gross impact of net $XX

Chad Bennett

helpful. Okay. That's very you. Thank

there. to so change - just trying real I'm no So

exit incremental You're I this it business any point That's it a you media fair just trying guess, say. to quarter, to - sum didn't is up. from to out

Pamela Strayer

That's to say. fair Right.

Chad Bennett

Okay.

and from it trying comparison to them. out, just give organic you're year-to-year So backing an use a

business flat better; a in august, and would lot exiting were understand. a lot September for trying How run-rate had great; quarter. starting mean throughout if been better month-to-month connect Okay. I'm strong. July, that lot couldn't better. to probably - the bookings than the get your trying sequentially? very the you was revenues amount quarter indicated I be or have a to fair be quarter, of, was sense And improved to sequentially I a October

Pamela Strayer

Yeah.

demand from So has in consistent first yet half, what global we pandemic. said bookings for the it the was past, strong. uncertainties second is guidance the But picked QX, what up in from our half in the and significantly in do so pipeline setting with see we've

achieve. since remain right? and seeing to supply returned are what be And to so pipeline hit, we is pretty put to seen spend largest been that and spending. that's Promotion Bookings and we've first there pandemic out really something about weighted of haven't our we could impacted. we're our the are customers with cautious And CPG concerned pre-pandemic media, the several want still consistent chains that heavily with outlook, towards

So the around really the softness are promo. in numbers

to While results we companies' And is having could many pandemic optimism bit conservative I'm more strong the report quarter on fourth cautious kind you've third a end up a the in in be some other with promo, of us the quarter the leading sure in guide. seen good quarter.

here. we've what chosen to that's So do

Chad Bennett

Okay. just a did on recently? And any partners net just RPM basis you overall, or lose

Steven Boal

yeah. Well,

small, right of partners, experimenting So not or our one solution to meaningful economics. contributor a platform. our the smallest off our another material it was one retailer and very with small now, They're came

Chad Bennett

so much. Thanks Great.

Steven Boal

Sure.

Operator

from [Operator next question from go ahead Our with Samuel question. Nielsen your Please Oppenheimer. Instructions] comes

Samuel Nielsen

for on how guys in the going have X-Eleven other that's of my Yeah. helpful. Jed you trending? Do some Thanks. guide partnerships any how thanks maybe the This And that's for on Sam call update are and partnership the Kelly. Thanks QX call. for is and taking

Steven Boal

Sure.

But you expected that can others I are I'll to the strengthen have out. we we talk as what and what or is continues you that the relationship, is So we're would developing don't X-Eleven with well. very partners the rolling and what tell tell happy as specifically about

platform also now. HyVee Aid gone live we've saw You our both that and Rite have announced on

only as grow well. adding Ahold not Delhaize of to addition but search, relationships And retailers with are like sponsored existing the continuing so the new

retail for that nothing now. exciting isn't right us So front the on there's

Samuel Nielsen

Thanks guys.

Operator

closing no call management and ladies remarks. And showing Instructions] this back at the I'm conference over [Operator questions. to I'd time, any turn for gentlemen, additional to like

Steven Boal

joining XX. of you forward today. early you'll finally We're Investor virtual the still taking look and of opportunity in us us you, the see two shift Thank and for November here. large we with in upcoming to growing to In vision to all a is more weeks you, forward at to stages front in look you again, sharing operator, thank our and Thank obviously of everyone. are the be on the We as Thursday, and the able excited closing, future digital to hope hold created participate. we Day acceleration

Operator

attending. with and today's that, Ladies gentlemen, you for thank conclude We we'll do call. conference

You may lines. disconnect now your

Quotient Technology (QUOT) 8 Nov 202020 Q3 Earnings call transcript