QUOT - Earnings call transcript Q2 2021 | Quotient Technology Inc.

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Operator

Good afternoon, everyone. And welcome to Quotient's Second Quarter 2021 Earnings Conference Call. [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 would like to hand the call over to Christine Marchuska, Vice President of Investor Relations. begin. now may you Miss

Christine Marchuska

Pam on Great. Thank second Marchuska, welcome our Technology. everyone, President are me our operator. XXXX earnings Hello And CFO; our our of Steven presentation. company’s investors.quotient.com, Quotient Raskin, alongside quarter The for Christine release and Investor corporate and our and call section Boal; CEO letter call. with the of has IR Scott today to Relations you, the I Vice am President. press earnings stockholder been Strayer, our posted on website,

to to, that These are presentation differ results begin, please unknown call will of beliefs, are statements. forward-looking slides, those this subject we third hear on and this in XXXX. our relations Before from related the team and located set actual will management for statements our available site. materially known forward-looking of providing cause including forth that note investor quarter of the earnings to and the we during guidance good forward-looking risks uncertainties the call, forward-looking year, time and and full based uncertainties These the statements the could faith you in as and our on and statements, risks are be information contained

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

Steven Boal

$XXX.X our earnings was with Thank growth This you, results Christine. to from Hello to our on strong a X% offline continued of past QX shift topline over welcome revenue up And million of call. QX QX over Revenue XXXX XXXX, XXXX. to and we network. due delivered everyone. quarter, XX% digital spend up dollars

already now and or bottom tipping you forecasted would paper a the improved the promotions Throughout gross quarters. as transform profitability FSI of And We hear we the we we over believe our believe automation margins. the reached freestanding QX business, from we've that of point mark bookings our in will half last industry expected investments to on year, feedback, the to planned line capabilities traditional years. we self-service our based and bottom with we unit circulars. excellent are the exceeded an the platforms volumes, results into and more milestone on one particular, the with planned solution coming leveraging our for and important believe that working will strong now that promotion guidance progress in several along results retailers strong And These quarter we range the insert, we to-date. more investments, deploying that well delivered That importantly, self-service our media had regards being along with offerings. made Pam, We growth be client case. of the in executed and In first we to our was we've that anticipated. As quarter, national QX, our sales a said, reached been that towards we’ve we've demonstrated FSIs. deliver within past

our align to scaled volume calendar and having network, move offline the Now, realigned dollars where and to for remainder can a of believe network merchandising duration book make finally justify our deliver on the their schedules, to digital. specific promotions on basis, business than more rather our fixed a the we brands time FSI a accurately with

been of growth result example aligned I'd key to that's areas. think, are one sales I Now team benefiting in outcomes experiencing roles, the our and we're organization, demonstrates transformation our specifically strong like the With within successful of focused especially skillsets a that, provide of focused has been as the performance evident this CPGs. our smaller sales with on teams, with from momentum where we've

with Investor November's our smaller we driver us with As focuses investment Day, believe runway CPGs what a long seeing noted are opportunity growth we in last as for business is a ahead. that on

our a CPGs. had CPGs, with our our marketing CPGs a strong smaller and can is as expand well-known, smaller are not the promotions which have do from product brands the and reached mild Sambucol, promotions composed working of access home, team for for Witnessing shutdown of products, Pharmacare reach Quotient’s category shopper base and playing flu view, national for marketing media of but Offline Last in CPGs have efficient with cost CPGs cold to was have story Sambucol field is responsive We with channels and and most benefit of outreach in retailers flu performance one prime elderberry generally positive, these sales Digital media their can measurable smaller a quarantining halt. offerings to drop targeted country these the the an boost resulting out and Fortune their same CPGs in and brand that the and season. Smaller a and our do and and and to integrated marketing experienced our presence for trends, including for strategy as CPG. to buyers. execute for one business. offers to proactively to of a by immediately leveraged platforms promotions, working array year promotions, Pharmacare years success outcomes or to thousands more the a social XXX cold a individuals allows Pharmacare utilize of its for there expertise larger budget. experienced with Quotient. smaller Pharmacare’s campaigns, even brands. brand

marketing So is precision with their spend key.

We designed continuing relationship to marketing available they choice solutions. all smaller our based as digital them with CPGs as and measurement well make forward deepen Quotient’s performance most investment, as return opportunities to analytics, just for look desirable pharmacare platform to Our advantage of our the on data, advertisers of is through sizes. to solutions, on take importantly other CPG

promotions, our last growing focus Now discussed, quarters two I'd example of to this and the dollar basis continue area bookings in a thrive. smaller have bookings with over growth I Quotient a on share will continues XXXX believe CPGs like brands high of with and maintaining XX% in We additional National who engagements as work this year-over-year of who and bookings QX CPGs, was growth in are as basis on portion on the highlights business to some looking just the market. over based our scale growth QX retention XXX% on saw year. in our this in rate noted to of engaging the segment from quarter. the business dollar a prior continues of longer-term Smaller are Quotient new, annual we trend

media for As approximately brands continue Free-Standing dollars to to in National Retailer see to we CPG platform performance on over increase year. the customers of RPM Inserts our saw alternative an momentum quarter second media, in revenue saw their our in or the play FSI prior approximately In move pure continue our an delivered through we streams from digital, platform. or grow. dollars XXX% turn, RPM, Promotions to this XXX% increase retailers retail bookings

coupons.com screens increases remain pressures tough focus a face Digital and inflationary believe adding consumer DOOH, from a as for platform, QX, retailers. consistency, retailer valuable we had we web these XXX at comps, discussions search additional we to end in actual the growing CPGs Quotient through demand As sponsored to with sequential in price carried to results drive sources continues of revenue state-of-the-art seen at retailers list of moved potentially this this the the performance for bookings search Out-Of-Home to momentum website our National Sponsored growth. to stores. offering screens the of technology in the of continuing rebates, and to of grow nationwide we partners. using access coupons.com solution. to and inventory rebates, availability the from the over offering end data see to now demand Out-Of-Home for half proprietary this over national especially expanding in to shopper tied year measurable as to XXX,XXX Digital XX,XXX second with QX, app for We distribution over grow, our have the had to of continues since mobile

impact will real-time through value offerings advertisers, elevate be will and Quotient’s campaigns advertisers further expand omni-channel Finally, with solution our believe We I'm also recently our Platform. capabilities gives attribution efforts opportunity impression-based examples self-service believe sales. and useful performance multitouch differentiate some to providing into tremendously excited our it sophisticated our Analytics on this insights advantages our we highlight within to competitive set. advancement of We launched to near and that increase This new Quotient measurement proposition.

We also with Microsoft. announced our integration

is coupon msn.com. experience the environment, app into Microsoft websites being incorporating in digital Our now the including

which with national expand partners. We building work continue the to to including shoppers can promotions, our additional reach channels advertisers’ relationships strategic with we through

to that evolve. to from Michelle I'm and which legal benefit take continue company investment board Quotient to would experience diversity brings skills, extensive contributions and recently experience, time, of same At Directors. her share and operating and its all to and like and oversight financial our we we as who stakeholders. inclusion grow recently governance. a our happy down for the Board Board to and Hawkins appointed equity stepped service Alison moment to and experience, raising, of will capital Turning McKenna, thank to Directors practice I of executive evaluation, Quotient to management Alison risk our

on and of outlook XXXX. for rest Moving for QX the

are alluded a As to earlier, seeing year. of we the the I rest bookings and pipeline robust strong for

of and of the year. consideration, economic first of this XX% the second uncertainty XXXX of for half approximately macro the we deliver revenue areas concern over Taking the basis geographic into the on remains some will for a growth the believe back pandemic the potential in of the However, in around year. gross resurgence half conditions we the half

partners to gross over XX% global at growth annual challenging in of and together early on the for XXXX navigate And turn through XXXX And our for at back updated represents the our seeing, to EBITDA guidance forward. midpoint at the the I'm with again coming adjusted an a on midpoint. deliver while the now approximately as for pandemic for our year. over basis guidance revenue we're our I'm Pam. I'll XX% that, call to remains ever-changing excited based half Our we growth customers year the team, and now environment grateful signs the the

Pam Strayer

spend everyone. results posted and our on growth Steven. up over prior search, And Media solutions. you, collaborative by be to quarter up XX% delivered and Thank Relations revenue website. X% our you encourage media financial full Investor year, strong increased our million, I all in prior over afternoon, stockholder fueled $XXX.X My at our a QX the success letter, social business focused revenue by revenue year programs. the sponsored remarks financial the read highlights. and on the programmatic by page led will over quarter. of of was We good continued prepared XX% Immediate last with

same offering sports venues. more concert commutes as for out-of-home in digital primarily This newly increase was down driven quarter up for reach XX% XXX printed by Promotion revenues. quarter compared XX.X%, increased was to QX XX.X% in reopened gross which offset We points visit margin to home XX% time shoppers down an outside XXX was homes, also last retail over year. began and resume were paperless, revenue year-over-year, demand basis spend as last their saw QX was in the to year. by digital XXXX. over margin gross eager Non-GAAP specialty our advertisers basis and GAAP they expected, their points the and decline continued

product and expected margins indicated last due GAAP to we gross have to be non-GAAP primarily As were lower mix. quarter

revenue We from in revenue media a higher versus have national distribution lower fee expenses. of higher margin from increase employee charge experienced campaigns significant in related a one-time mix a solutions, shopper campaigns,

paid because result versus is As have our lower shopper to fees, costs budgets impactful distribution national highlighted revenue higher earnings budgets lower and call, mix in spend carry on higher margins. which our distribution the fees of from our retailer QX shopper national partners,

a was our lower guidance by Additionally, quarter this $XX.X higher to of but came right below of of a to delivered to We $X.X is the impairment non-GAAP margins which compensation increased in variable on million, the impacted negatively of a GAAP due operating gross our quarter. million of and second by service quarter asset, intangibles. expectations in was due compared result within EBITDA recorded for range, expenses headcount $XX.X increased margin million last flat the in offset at increase QX year an and year-over-year amortization XXXX, partly of lower revenue. promotion basis as adjusted

the collections ended and equivalents operations second quarter. in the with million of timing from Looking $X second cash million and approximately driven underpayments. strong million primarily $XXX quarter quarter of at prior cash cash, flow We by in the $X.X cash down the we delivered from

to and which and turning our the are in prior have today's an future Now midst could on with stockholder as in in release, impact renewals press we've shared we guidance, certain of retailers, results. commentary contract letter

on strong timing growth see the the margin and challenges early in second of promotions for the risk throughout the due to days expect of primary to in our focus and these demand the XXXX. Gross bookings second half business. QX strong the year, the remain rates remains of half continue revenues to in our determining higher portion of We margin

like-for-like million. to million in estimate million by QX the QX approximately in of approximately second margins XXXX. last gross coming with been of Due Beginning at revenue recognition $XXX the quarters. of cost approximately taking search search service midpoint. no cost and dollars net for of if sponsored cost accounting reported. revenue the actively of X, representing revenue the for Therefore, $XXX in change sales The of revenue the costs, was are of quarter capabilities will have $X structure raise we year to costs our to full XXXX gross to sponsored search each July and and and third million our deployed, results July beginning to we've improvements amount the sponsored will all to basis treatment over reduces We X, half revenue revenue accounting in of million. range self of and accounting higher party This range the XXXX, We delivery reduce $X revenue search as to the third revenue growth million, over steps search the $XX sales from accounting $XXX changing, treatment sponsored change $XXX the party change sponsored of expected net by and the to be recognized third year expect for change $XXX profit to XX% of we be reduce million net midpoint impact per gross net booked for with not or guide the on million a would a approximately to

addition, a QX range the the representing revenue would view been $X higher, XX% growth gross QX of million year. prior In have over of approximately of

half revenue XXX result In basis in to points search improvements the As we of QX we margins see QX. quarter, gross for in in and in although difficult by as up represents margins points QX margins additional slightly gross will noted XXXX. to QX, change believe basis the a second remain accounting trajectory. XXXX non-GAAP over margin gross increased our expected predict, with we revenue we last trend mix expect trough believe of XXX approximately to sponsored gross And a

to XXXX. non-GAAP million the operating $X quarter $XX million expenses $XX for For million QX. is of expected be for approximately million guidance range EBITDA remaining metrics, of to Adjusted be the expect our $XX third we to in to

year For adjusted $XX expected to the the range XXXX, EBITDA be in full $XX to of million. million is

with momentum our quarters. our questions. due on our stakeholders. future million focused half forward the believe weighted we with for Operator? trajectory we the growth We QX. partnerships expect approximately adjusted you as basic with remain for ended look tailwind outstanding, expect value profitability to that of upcoming in positive new QX building the proud see shares and we and flow to We are progress first and toward from results and move in of year through we'll now your We cash strong maximizing XXXX. EBITDA our innovation for We half take of greater the sharing year. average notable And the continued will $XX we back that, The

Operator

Please comes Steve Instructions] Thank Colliers. with ahead. question Frankel you. from [Operator first go Our

Steve Frankel

the Good here. EBITDA afternoon. to your And in QX despite a opportunity. full profit you're for QX year guidance, thanks maintaining outlook. in unpack Steven, there's pressure again lot the And significant and

walk you haven't maybe that in confidence yet could partnerships ramp, have events see gives or especially that through you the So that the in potential some us of that talked significant you to you QX. your about pipeline

Steven Boal

and out signed give But large get of a earlier you're for we Sure. because with did beholding you then another. and We're and of it's right. question a the actually, Steve. you But here start signing. answer, want partnerships. of number preannounced partners own And and first I'll to confidence the I'll your our we the maintaining at on that that Look, to unnamed, in pipeline business. got reasons, our outlook Thanks. very make actually we're ask But a announcements. specific partners we've their – past, and partnerships, we've timing timely specific of a today, we're question.

next implementing that's So time. our million short over partner we a solution signed shoppers promotion today, has of the over period earlier XXX relatively active that

business like preannouncing can are and I asked you for queue you but names, who. tell adoption. more And don't you a this now there in specific the early not be give specific in So of again, giving I'll question. I to just a answer. an indication, the like

that trough talk us in demand for QX. is a That's this of EBITDA a on gives lot still the about couple that and confidence. quarter, would in we've to period. We have So begin margins and our services, Number be say There's of Media good did we of our when problem some you number a two, forecasted than pressure continues of we strong. longer pressure frankly, a one. gross on some that. business gross COVID months get put us It that quite to team we're margin. of technology restructurings of And out took leverage to expected we coming out to the some our the deployed. which did

everybody to And working workforce, to of be expected some took longer changes. primarily make those home, so it just than a distributed of a we from couple as us months able

that awful an So confidence. of gives us lot also

Steve Frankel

the And more distribution business have lot on and to ability Okay. it about fees. guidance, on focused you've talked like business much that material national because and QX. a platform transform reading But QX impact this it into your gross doesn't sounds promotions again, a its margin won't is have it

Steven Boal

is I distribution share sort going fee Well, and mean have. big promotions a we a that, our other of The smaller – of of it's national end There running come business QX. to of much distribution and is but is or all healthy it's share the much, a through the today. than ramp QX business, it's

a in about rolls business of So gross the XX% somewhere to us. through margin that XX%, range

we've and you data in to really it some at wonderful And it indications time got good some so we just now. yet. so our released don't put it's have letter, look we've really but But probably shareholder points, got

got the We're beating we've In point. are time. results tipping the for and that a delivering client scale first FSI fact, we've feedback reached that

And on to period promotions and and partners CPGs a time to as go-to-market the length longer works, how when at about much to and step, the does, now delivering changed And those it – got last consumers national FSI in sort appealing a our of changes, more our and we result two years talked things right? we're scale we've so quarter, than we because our result make to network. and we've those of as there. And those changes, more offers many those was about platform is But make combined this our model are distribution that delivering talked ultimately a of look, available there's results. better final the we're of which

over can dollars really So sales – their a not platform up now digital CPGs give any merchandising. all move and move to

Steve Frankel

Okay, great. Thank you.

Steven Boal

Steve. Thanks,

Operator

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

Chad Bennett

up range, through just of follow to your so again, on can guidance. So million, Midpoint year. effectively, understand math be three fourth even to for just going want want the work quarter. you're And how the the million of quarters EBITDA to the at $XX $XX I

midpoint in I to need almost to the don't or quarter. to of end, know, fourth upwards get the So to bottom are margins EBITDA be range of, your $XX Gross in lower do we going year-over-year. million

material year-over-year. math does is the Your How OpEx EBITDA? quarter higher even fourth on work

Pam Strayer

EBITDA walk on distribution Yes, a different partnerships – national so numbers have [indiscernible] can of you And areas about, talked improve slightly self-service, I've got item we QX and promotions, just the about shareholder general improved big profits into they There's our all and increase It's that. pricing will I new letter. more that. duration-based that to I like in The through that in QX. few different drive I control. and The about cost will that talked expectations and go QX. XX. can

how we – offering, resonating made pricing, by to with talked promotions. about duration-based the on prior revenue, and mentioned quarter. as got especially which a in national have delivery So and high our is FSI, in improvements to our it, a going platform continued in talked on the which with for results lot moving see as now of campaigns, We've one success changes growth low bit. those are offering just compared and and we each these number about the to rates overhead. days brands traditional of we're improvements, increased Steven this high-margin of little and we've advertisers, that XX% that our sponsored booked QX Self-service, that expect we these pricing in material and on this programs expect search, demand margin delivery is good a These our earnings of exceeded and through On revenue. approach. and on campaigns We the

costs We're we In reduce these reducing where working where cost deployed are can. costs controlling teams company addition systems to or to in that, reorganized to areas make and we're we redundancies efficient. focused are of that all have the eliminating we designed recognized our and on and us much more

focus So how our strong get platform platform, our our demand of on platform in continued national reducing promotions and on there. cost we growing

Chad Bennett

under I of a that healthy Only of so July I it to amount then, portion of was all, a if not And was none already not was recognized sponsored was case? the that net Was maybe basis. the search, the it one impression on was prior only or a X.

Steven Boal

recognized Actually, historically in small was as so. it and and net at characterized a we what X% we the percentage, said very past was

Chad Bennett

revenue of of X% sponsored X% or search?

Steven Boal

was net recognized I revenue believe said I X% revenue. as of

And did that so – answer question? the

Chad Bennett

Yes, is, X%, question search, I revenue guess, sponsored of of revenue. the has been more much is X%, X% than it the company's

Pam Strayer

has. And last really growing really been Yes. nicely, QX. since It it's

[indiscernible] sponsored net half less the sponsored but today. quarter portion it's we to recognize know, lot search. don't that than of revenue. a I varies it's total of on search is, basis today Yes, We're probably of small still doing So it sponsored a research a amount quarter,

Chad Bennett

about me, on the you, go talked then Any that for at fourth on retailer And live? to going least one auto I it. think, RPM just update the last they're quarter on when Got call.

Steven Boal

earlier right? I and all permitted just it – quasi to testing in them that's of live sort did they're by mean really is a on live. results, testing we've very we're even now been a the calling today. We're say the we're And And with very is this encouraged check soon. a soon, answer mode. I in actually

this managed are because very one just go about just what talked want from point and lot we've an is lot service of clients, that customers. are will now, used programs, takes our a moving programs there? this. set service programs, more we're where to on the the business is manage a and our asking we the here to agreement And platform tech getting more this by back difference of capability get So I important – to our make been the report want people thing, we're of actually support, sponsored in towards it's people to implement search, style of for past, and When really very, other much a big it's paid platforms I we're platform. about a licensing a health and really have right? we And where here for us use our excited

is of the And of and platform service, really – license, our more being capital-based services we're think like out a we and the net, use not going paid of almost it to human for and continue do really to everything a services accounting – heavy move so it's of managed into technology right? managed business. It's even though

capabilities. And of our rest promotions It's two of year COVID been of the of moved during The for in of started a to we're at two end relatively is journey doing past come tail This there. remotely, that. of the during But is years it years we at just now that years. the all next a the course exactly end something I got will transformation this most when interesting been the So back we've platforms ago. I right but been up and that are it's time, are mark and challenging transformation. part of it self-service really two-year for big the we do a long right being and end when over two at to asked

Chad Bennett

margin sponsored gross the will what – are what search So business? be that now on

Pam Strayer

high, net revenue Yes, XXX% because of recognizing line we'll nearly on it third-party very costs be the will be top line. everything

are costs, will which just small. it internal in So be some

Chad Bennett

for much taking so Thanks Okay. questions. my

Steven Boal

promotions the that national platform as our just business. margin Again, continues scale up a Sure. with also that's to remember, partners XX% gross XX-plus,

Chad Bennett

Great. Thank you.

Steven Boal

you. Thank

Operator

with comes Our next from go Oppenheimer. ahead. Please Samuel question Nielsen

Samuel Nielsen

Thanks questions. for Jed. taking my for Samuel It's

getting could think back what to do was do that the Do that national back and lead you On expected add to back media and margin than in promotions and and then out to wondering margins, to gross could maybe upside be the I in the national potentially media maybe the the were half? gross the year And parse back kind you in promotions terms perceived upside coming how just you of inflation benefit factors here of think add stronger half promotions in of half? media.

Steven Boal

Yes.

national right? national into two are national together. break Let same aligned. media, very in bucket Inflation the So not those – inflation media falls promotions me two those into tightly pieces, I'm sure and

And opportunity price product start so to CPGs keep their want there moving price [indiscernible] to brands motivated there is hold, as CPGs shelf. are stay off and want certainly increases take announcing shoppers increases, to and upside

So there and inflationary perspective. opportunity inflationary macroeconomically perspective, from an an is

some it, great like On how great. really we any. a And is said Steve got the what we upside direct that's signed promotion there? but national queue, I today, weren't do in side, going asked and We've question, really partners to the very Frankel

with you today, is straight answer yes. And engaged the we missed signed earlier XXX million over partner that if So another shoppers.

margin could that really to and national we quickly, So upside be promotions continue they to high go them the sign business. live on gross that extent,

Samuel Nielsen

Thank you.

Steven Boal

you. Thank

Operator

any session. question-and-answer conference for to turn management back closing the like over I concludes to This remarks. would the

Steven Boal

you, Thank listened you, operator. participated call. today's and in Thank everyone, who on

the the profitable believe return we we've next strong another of quarters. over you delivered quarter revenue, growth a laid few for and heard, tracks As to we

for next no you conferences look services all we We you coming of all there earnings seeing during to Thank investor continue forward demand is the at and our up and our release. to demonstrate that again. shortage

Operator

concluded. for now Thank The conference you attending today's presentation. has

disconnect. now may You

Quotient Technology (QUOT) 8 Aug 212021 Q2 Earnings call transcript