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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Marin Software Incorporated | NASDAQ:MRIN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.14 | -5.45% | 2.43 | 2.44 | 2.52 | 2.70 | 2.40 | 2.47 | 70,635 | 01:00:00 |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
20-4647180
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
||
123 Mission Street, 27th Floor, San Francisco, CA
|
|
94105
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
||
Common Stock, $0.001 Par Value Per Share
|
MRIN
|
The Nasdaq Global Market
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
Emerging growth company
|
☐
|
PART I.
|
1
|
|
Item 1.
|
1
|
|
1
|
||
2
|
||
3
|
||
5
|
||
6
|
||
Item 2.
|
18
|
|
Item 3.
|
27
|
|
Item 4.
|
28
|
|
PART II.
|
28
|
|
Item 1.
|
28
|
|
Item 1A.
|
28
|
|
Item 2.
|
46
|
|
Item 3.
|
46
|
|
Item 4.
|
46
|
|
Item 5.
|
46
|
|
Item 6.
|
47
|
|
48
|
At June 30,
2019
|
At December 31,
2018*
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
9,886
|
$
|
10,210
|
||||
Restricted cash
|
971
|
1,293
|
||||||
Accounts receivable, net
|
9,983
|
12,906
|
||||||
Prepaid expenses and other current assets
|
3,773
|
4,642
|
||||||
Total current assets
|
24,613
|
29,051
|
||||||
Property and equipment, net
|
11,815
|
|||||||
Right-of-use assets, operating leases
|
10,410
|
—
|
||||||
Goodwill
|
1,943
|
|||||||
Intangible assets, net
|
938
|
1,938
|
||||||
Other non-current assets
|
1,549
|
2,045
|
||||||
Total assets
|
$
|
49,431
|
$
|
46,792
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
1,911
|
$
|
2,699
|
||||
Accrued expenses and other current liabilities
|
9,719
|
10,632
|
||||||
Operating lease liabilities
|
5,423
|
—
|
||||||
Total current liabilities
|
17,053
|
13,331
|
||||||
Operating lease liabilities, non-current
|
—
|
|||||||
Other long-term liabilities
|
2,299
|
4,090
|
||||||
Total liabilities
|
25,876
|
17,421
|
||||||
Commitments and contingencies (Note 13)
|
||||||||
Stockholders’ equity
|
||||||||
Common stock, $0.001 par value - 142,857 shares authorized, 6,623 and 5,938 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
7
|
6
|
||||||
Additional paid-in capital
|
297,903
|
295,116
|
||||||
Accumulated deficit
|
(273,322
|
)
|
(264,713
|
)
|
||||
Accumulated other comprehensive loss
|
(1,033
|
)
|
(1,038
|
)
|
||||
Total stockholders’ equity
|
23,555
|
29,371
|
||||||
Total liabilities and stockholders’ equity
|
$
|
49,431
|
$
|
46,792
|
* |
Derived from the Company’s audited consolidated financial statements as of December 31, 2018.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Revenues, net
|
$
|
12,476
|
$
|
14,251
|
$
|
25,924
|
$
|
29,653
|
||||||||
Cost of revenues
|
5,929
|
6,963
|
11,740
|
14,535
|
||||||||||||
Gross profit
|
6,547
|
7,288
|
14,184
|
15,118
|
||||||||||||
Operating expenses
|
||||||||||||||||
Sales and marketing
|
4,087
|
6,154
|
8,721
|
13,535
|
||||||||||||
Research and development
|
4,660
|
5,817
|
9,555
|
11,972
|
||||||||||||
General and administrative
|
2,277
|
3,766
|
5,498
|
7,143
|
||||||||||||
Total operating expenses
|
11,024
|
15,737
|
23,774
|
32,650
|
||||||||||||
Loss from operations
|
(4,477
|
)
|
(8,449
|
)
|
(9,590
|
)
|
(17,532
|
)
|
||||||||
Other income, net
|
532
|
377
|
1,072
|
672
|
||||||||||||
Loss before provision for income taxes
|
(3,945
|
)
|
(8,072
|
)
|
(8,518
|
)
|
(16,860
|
)
|
||||||||
Provision for income taxes
|
58
|
204
|
91
|
528
|
||||||||||||
Net loss
|
(4,003
|
)
|
(8,276
|
)
|
(8,609
|
)
|
(17,388
|
)
|
||||||||
Foreign currency translation adjustments
|
76
|
(578
|
)
|
(134
|
)
|
|||||||||||
Comprehensive loss
|
$
|
(3,927
|
)
|
$
|
(8,854
|
)
|
$
|
(8,604
|
)
|
$
|
(17,522
|
)
|
||||
Net loss per share available to common stockholders, basic and diluted (Note 11)
|
$
|
(0.65
|
)
|
$
|
(1.44
|
)
|
$
|
(1.42
|
)
|
$
|
(3.02
|
)
|
||||
Weighted-average shares used to compute net loss per share available to common stockholders, basic and diluted
|
6,201
|
5,767
|
6,074
|
5,751
|
||||||||||||
Stock-based compensation expense is allocated as follows (Note 8):
|
||||||||||||||||
Cost of revenues
|
$
|
142
|
$
|
172
|
$
|
267
|
$
|
376
|
||||||||
Sales and marketing
|
271
|
511
|
||||||||||||||
Research and development
|
269
|
314
|
550
|
653
|
||||||||||||
General and administrative
|
146
|
273
|
245
|
518
|
||||||||||||
Amortization of intangible assets is allocated as follows (Note 4):
|
||||||||||||||||
Cost of revenues
|
$
|
234
|
$
|
233
|
$
|
468
|
$
|
470
|
||||||||
Sales and marketing
|
184
|
397
|
||||||||||||||
Research and development
|
234
|
234
|
468
|
471
|
||||||||||||
General and administrative
|
—
|
—
|
—
|
3
|
||||||||||||
Restructuring related expenses are allocated as follows (Note 5):
|
||||||||||||||||
Cost of revenues
|
$
|
—
|
$
|
—
|
$
|
6
|
$
|
139
|
||||||||
Sales and marketing
|
66
|
48
|
223
|
545
|
||||||||||||
Research and development
|
—
|
—
|
—
|
115
|
||||||||||||
General and administrative
|
—
|
36
|
—
|
147
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||
Common Stock
|
|
|||||||||||||||||||||||
Shares
|
Par Value
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at March 31, 2019
|
5,954
|
$
|
6
|
$
|
295,745
|
$
|
(269,319
|
)
|
$
|
(1,109
|
)
|
$
|
25,323
|
|||||||||||
Issuance of common stock through equity distribution agreement, net of offering costs of $203
|
570
|
1
|
1,503
|
—
|
—
|
1,504
|
||||||||||||||||||
Issuance of common stock from vesting of restricted stock units (Note 7)
|
57
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
—
|
(195
|
)
|
—
|
—
|
(195
|
)
|
||||||||||||||||
Issuance of common stock under employee stock purchase plan
|
42
|
—
|
88
|
—
|
—
|
88
|
||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
762
|
—
|
—
|
762
|
||||||||||||||||||
Net loss
|
—
|
—
|
—
|
(4,003
|
)
|
—
|
(4,003
|
)
|
||||||||||||||||
Foreign currency translation adjustments
|
—
|
—
|
—
|
—
|
76
|
76
|
||||||||||||||||||
Balances at June 30, 2019
|
6,623
|
$
|
7
|
$
|
297,903
|
$
|
(273,322
|
)
|
$
|
(1,033
|
)
|
$
|
23,555
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
Common Stock
|
|
|||||||||||||||||||||||
Shares
|
Par Value
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at March 31, 2018
|
5,748
|
$
|
6
|
$
|
292,099
|
$
|
(232,581
|
)
|
$
|
(238
|
)
|
$
|
59,286
|
|||||||||||
Issuance of common stock from vesting of restricted stock units (Note 7)
|
5
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
—
|
(23
|
)
|
—
|
—
|
(23
|
)
|
||||||||||||||||
Issuance of common stock under employee stock purchase plan
|
31
|
—
|
172
|
—
|
—
|
172
|
||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
1,030
|
—
|
—
|
1,030
|
||||||||||||||||||
Net loss
|
—
|
—
|
—
|
(8,276
|
)
|
—
|
(8,276
|
)
|
||||||||||||||||
Foreign currency translation adjustments
|
—
|
—
|
—
|
—
|
(578
|
)
|
(578
|
)
|
||||||||||||||||
Balances at June 30, 2018
|
5,784
|
$
|
6
|
$
|
293,278
|
$
|
(240,857
|
)
|
$
|
(816
|
)
|
$
|
51,611
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||
Common Stock
|
|
|||||||||||||||||||||||
Shares
|
Par Value
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at December 31, 2018
|
5,938
|
$
|
6
|
$
|
295,116
|
$
|
(264,713
|
)
|
$
|
(1,038
|
)
|
$
|
29,371
|
|||||||||||
Issuance of common stock through equity distribution agreement, net of offering costs of $203
|
570
|
1
|
1,503
|
—
|
—
|
1,504
|
||||||||||||||||||
Issuance of common stock from vesting of restricted stock units (Note 7)
|
73
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
—
|
(251
|
)
|
—
|
—
|
(251
|
)
|
||||||||||||||||
Issuance of common stock under employee stock purchase plan
|
42
|
—
|
88
|
—
|
—
|
88
|
||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
1,447
|
—
|
—
|
1,447
|
||||||||||||||||||
Net loss
|
—
|
—
|
—
|
(8,609
|
)
|
—
|
(8,609
|
)
|
||||||||||||||||
Foreign currency translation adjustments
|
—
|
—
|
—
|
—
|
5
|
5
|
||||||||||||||||||
Balances at June 30, 2019
|
6,623
|
$
|
7
|
$
|
297,903
|
$
|
(273,322
|
)
|
$
|
(1,033
|
)
|
$
|
23,555
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
Common Stock
|
|
|||||||||||||||||||||||
Shares
|
Par Value
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
Stockholders'
Equity
|
|||||||||||||||||||
Balances at December 31, 2017
|
5,729
|
$
|
6
|
$
|
291,163
|
$
|
(227,704
|
)
|
$
|
(682
|
)
|
$
|
62,783
|
|||||||||||
Impact of adoption of Accounting Standards Codification 606 on January 1, 2018
|
—
|
—
|
—
|
4,235
|
—
|
4,235
|
||||||||||||||||||
Issuance of common stock from vesting of restricted stock units (Note 7)
|
24
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Tax withholding related to vesting of restricted stock units
|
—
|
—
|
(119
|
)
|
—
|
—
|
(119
|
)
|
||||||||||||||||
Issuance of common stock under employee stock purchase plan
|
31
|
—
|
172
|
—
|
—
|
172
|
||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
2,058
|
—
|
—
|
2,058
|
||||||||||||||||||
Net loss
|
—
|
—
|
—
|
(17,388
|
)
|
—
|
(17,388
|
)
|
||||||||||||||||
Foreign currency translation adjustments
|
—
|
—
|
4
|
—
|
(134
|
)
|
(130
|
)
|
||||||||||||||||
Balances at June 30, 2018
|
5,784
|
$
|
6
|
$
|
293,278
|
$
|
(240,857
|
)
|
$
|
(816
|
)
|
$
|
51,611
|
Six Months Ended June 30,
|
||||||||
2019
|
2018
|
|||||||
Operating activities
|
||||||||
$
|
(8,609
|
)
|
$
|
(17,388
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Depreciation
|
981
|
1,557
|
||||||
Amortization of internally developed software
|
1,705
|
1,943
|
||||||
Amortization of intangible assets
|
1,000
|
1,341
|
||||||
Loss on disposals of property and equipment and right-of-use assets
|
14
|
—
|
||||||
Amortization of deferred costs to obtain and fulfill contracts
|
881
|
1,145
|
||||||
Unrealized foreign currency gains
|
(15
|
)
|
(25
|
)
|
||||
Stock-based compensation related to equity awards and restricted stock
|
1,447
|
2,058
|
||||||
Provision for bad debts
|
(177
|
)
|
35
|
|||||
Net change in operating leases
|
(234
|
)
|
—
|
|||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable
|
3,103
|
2,438
|
||||||
Prepaid expenses and other assets
|
485
|
(1,199
|
)
|
|||||
Accounts payable
|
(777
|
)
|
(877
|
)
|
||||
Accrued expenses and other liabilities
|
(217
|
)
|
(425
|
)
|
||||
Net cash used in operating activities
|
(413
|
)
|
(9,397
|
)
|
||||
Investing activities
|
||||||||
Purchases of property and equipment
|
(86
|
)
|
(200
|
)
|
||||
Capitalization of internally developed software
|
(870
|
)
|
(1,295
|
)
|
||||
Net cash used in investing activities
|
(956
|
)
|
(1,495
|
)
|
||||
Financing activities
|
||||||||
Proceeds from issuance of common shares through equity distribution agreement, net of offering costs of $203
|
1,504
|
—
|
||||||
Payment of principal on finance lease liabilities
|
(682
|
)
|
(656
|
)
|
||||
Employee taxes paid for withheld shares upon equity award settlement
|
(190
|
)
|
(110
|
)
|
||||
Proceeds from employee stock purchase plan, net
|
80
|
165
|
||||||
Net cash provided by (used in) financing activities
|
712
|
(601
|
)
|
|||||
Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash
|
11
|
(124
|
)
|
|||||
Net decrease in cash and cash equivalents and restricted cash
|
(646
|
)
|
(11,617
|
)
|
||||
Cash and cash equivalents and restricted cash
|
||||||||
Beginning of period
|
11,503
|
28,837
|
||||||
End of period
|
$
|
10,857
|
$
|
17,220
|
||||
Supplemental disclosure of non-cash investing and financing activities
|
||||||||
Purchases of property and equipment recorded in accounts payable and accrued expenses
|
$
|
—
|
$
|
308
|
||||
Issuance of common stock under employee stock purchase plan
|
88
|
172
|
1.
|
Summary of Business and Significant Accounting Policies
|
2.
|
Revenues
|
|
● |
Identification of the contract, or contracts, with a customer;
|
|
● |
Identification of the performance obligations in the contract;
|
|
● |
Determination of the transaction price;
|
|
● |
Allocation of the transaction price to the performance obligations in the contract; and
|
|
● |
Recognition of revenue when, or as, the Company satisfies its performance obligations.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
United States of America
|
$
|
9,292
|
$
|
9,584
|
$
|
19,333
|
$
|
19,795
|
||||||||
United Kingdom
|
1,483
|
2,012
|
3,028
|
4,122
|
||||||||||||
Other (1)
|
1,701
|
2,655
|
3,563
|
5,736
|
||||||||||||
Total revenues, net
|
$
|
12,476
|
$
|
14,251
|
$
|
25,924
|
$
|
29,653
|
(1) |
No individual country within the “Other” category accounted for 10% or more of revenues, net for any period presented.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Subscriptions
|
$
|
9,427
|
$
|
13,897
|
$
|
19,853
|
$
|
28,912
|
||||||||
Strategic agreements
|
3,049
|
354
|
6,071
|
741
|
||||||||||||
Total revenues, net
|
$
|
12,476
|
$
|
14,251
|
$
|
25,924
|
$
|
29,653
|
Deferred Costs to
Obtain Contracts
|
Deferred Costs to
Fulfill Contracts
|
|||||||
Balances at December 31, 2018
|
$
|
1,413
|
$
|
606
|
||||
Costs deferred
|
275
|
101
|
||||||
Amortization
|
(571
|
)
|
(310
|
)
|
||||
Balances at June 30, 2019
|
$
|
1,117
|
$
|
397
|
3. |
Balance Sheet Components
|
|
Estimated Useful Life
|
June 30,
2019
|
December 31,
2018
|
||||||
Software, including internally developed software
|
3 years
|
$
|
26,388
|
$
|
25,518
|
||||
Computer equipment
|
3 to 4 years
|
22,728
|
22,714
|
||||||
Finance lease ROU assets
|
Shorter of useful life or lease term
|
5,067
|
5,067
|
||||||
Leasehold improvements
|
Shorter of useful life or lease term
|
4,645
|
4,778
|
||||||
Office equipment, furniture and fixtures
|
3 to 5 years
|
2,140
|
|||||||
Total property and equipment
|
60,816
|
60,217
|
|||||||
Less: Accumulated depreciation and amortization
|
(50,831
|
)
|
(48,402
|
)
|
|||||
Property and equipment, net
|
$
|
9,985
|
$
|
11,815
|
June 30,
2019
|
December 31,
2018
|
|||||||
Accrued salary and payroll-related expenses
|
$
|
2,552
|
$
|
3,695
|
||||
Deferred strategic agreement revenues
|
1,872
|
934
|
||||||
Accrued liabilities
|
1,531
|
1,249
|
||||||
Finance lease liabilities
|
937
|
866
|
||||||
846
|
883
|
|||||||
Advanced billings
|
721
|
859
|
||||||
Customer advances
|
347
|
432
|
||||||
Sales and use tax payable
|
244
|
|||||||
Deferred rent
|
—
|
538
|
||||||
Other
|
879
|
932
|
||||||
Total accrued expenses and other current liabilities
|
$
|
9,719
|
$
|
10,632
|
4. |
Goodwill and Intangible Assets
|
$
|
1,943
|
|||
Foreign currency translation adjustments
|
(7
|
)
|
||
Balance at June 30, 2019
|
$
|
1,936
|
|
Estimated Useful Life
|
June 30,
2019
|
December 31,
2018
|
||||||
Developed technology
|
5 to 6 years
|
$
|
9,910
|
$
|
9,910
|
||||
Customer relationships
|
4 years
|
—
|
2,080
|
||||||
Total intangible assets
|
9,910
|
11,990
|
|||||||
Less: accumulated amortization
|
(8,972
|
)
|
(10,052
|
)
|
|||||
Intangible assets, net
|
$
|
938
|
$
|
1,938
|
Remaining six months of 2019
|
$
|
843
|
||
Year ending December 31, 2020
|
95
|
|||
Total
|
$
|
938
|
5. |
Restructuring Activities
|
6. |
Shelf Registration Statement and At-the-Market Offering
|
7. |
Equity Award Plans
|
Options Outstanding
|
||||||||||||||||
Number of Shares
|
Weighted Average
Exercise Price Per
Share
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
Aggregate
Intrinsic Value
|
|||||||||||||
Balances at December 31, 2018
|
436
|
$
|
29.01
|
6.79
|
$
|
—
|
||||||||||
Options granted
|
128
|
4.00
|
9.87
|
—
|
||||||||||||
Options forfeited and cancelled
|
(11
|
)
|
67.56
|
—
|
—
|
|||||||||||
Balances at June 30, 2019
|
553
|
22.48
|
6.60
|
—
|
||||||||||||
Options exercisable
|
350
|
31.75
|
5.97
|
—
|
||||||||||||
Options vested
|
350
|
31.75
|
5.97
|
—
|
||||||||||||
Options vested and expected to vest
|
525
|
23.33
|
7.06
|
—
|
RSUs Outstanding
|
||||||||
Number of Shares
|
Weighted Average Grant Date
Fair Value Per Unit
|
|||||||
Granted and unvested at December 31, 2018
|
834
|
$
|
7.99
|
|||||
RSUs granted
|
646
|
4.18
|
||||||
RSUs vested
|
(74
|
)
|
10.01
|
|||||
RSUs cancelled and withheld to cover taxes
|
(254
|
)
|
7.19
|
|||||
Granted and unvested at June 30, 2019
|
1,152
|
$
|
5.90
|
8.
|
Stock-Based Compensation
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||
2019
|
2018
|
2019
|
2018
|
|||||
Dividend yield
|
—
|
—
|
—
|
—
|
||||
Expected volatility
|
66.4%
|
55.7%
|
66.4%
|
55.9%
|
||||
Risk-free interest rate
|
2.18%
|
2.56%
|
2.18%
|
2.54%
|
||||
Expected life of options (in years)
|
4.00
|
4.00
|
4.00
|
4.00
|
9.
|
Leases
|
Operating Leases
|
Finance Leases
|
|||||||
2019 (remaining six months)
|
$
|
4,087
|
$
|
597
|
||||
2020
|
3,682
|
552
|
||||||
2021
|
3,316
|
12
|
||||||
2022
|
1,865
|
—
|
||||||
Total lease payments
|
12,950
|
1,161
|
||||||
Less: Amount representing imputed interest
|
(1,003
|
)
|
(44
|
)
|
||||
Present value of lease liabilities
|
11,947
|
1,117
|
||||||
Less: Current portion of lease liabilities
|
(5,423
|
)
|
(937
|
)
|
||||
Non-current portion of lease liabilities
|
$
|
6,524
|
$
|
180
|
Six Months Ended
June 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Financing cash flows from finance leases
|
$
|
682
|
||
Operating cash flows from finance leases
|
46
|
|||
Operating cash flows from operating leases
|
4,215
|
|||
ROU assets obtained in exchange for lease liabilities:
|
||||
Finance lease liabilities
|
$
|
—
|
||
Operating lease liabilities
|
812
|
Operating Sublease Income
|
||||
2019 (remaining six months)
|
$
|
1,129
|
||
2020
|
1,768
|
|||
2021
|
1,105
|
|||
2022
|
616
|
|||
Total amounts due under subleases
|
$
|
4,618
|
10.
|
Income Taxes
|
11.
|
Net Loss Per Share Available to Common Stockholders
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss available to common stockholders
|
$
|
(4,003
|
)
|
$
|
(8,276
|
)
|
$
|
(8,609
|
)
|
$
|
(17,388
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted average number of shares, basic and diluted
|
6,201
|
5,767
|
6,074
|
5,751
|
||||||||||||
Net loss per share available to common stockholders
|
||||||||||||||||
Basic and diluted net loss per common share available to common stockholders
|
$
|
(0.65
|
)
|
$
|
(1.44
|
)
|
$
|
(1.42
|
)
|
$
|
(3.02
|
)
|
Three and Six Months Ended June 30, June 30,
|
||||
2019
|
2018
|
|||
Options to purchase common stock
|
553
|
548
|
||
Unvested RSUs
|
1,152
|
938
|
||
Total
|
1,705
|
1,486
|
12. |
Segment Reporting
|
13. |
Commitments and Contingencies
|
|
● |
measure the effectiveness of their advertising campaigns through our proprietary reporting and analytics capabilities;
|
|
● |
manage and execute campaigns through our intuitive user interface and underlying technology that streamlines and automates key functions, such as advertisement creation and bidding, across multiple publishers and channels; and
|
|
● |
optimize campaigns across multiple publishers and channels based on market and business data to achieve desired revenue outcomes using our predictive bid management technology.
|
|
● |
MarinOne
. Our next-generation solution that brings search, social and eCommerce advertising into a single-platform that helps advertisers maximize a customer journey that spans Google,
Facebook and Amazon by combining the power of Marin Search and Marin Social with new channels like Amazon, Apple Search Ads and YouTube.
|
|
● |
Marin Search
. Our original solution for large advertisers and agencies,
Marin Search
is designed to provide search advertisers with the power, scale
and flexibility required to manage large-scale advertising campaigns.
|
|
● |
Marin Social
. Helps advertisers manage their Facebook, Instagram and Twitter advertising spend at scale.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||||||||||||||||||
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
Amount
|
% of
Revenues
|
|||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Revenues, net
|
$
|
12,476
|
100
|
%
|
$
|
14,251
|
100
|
%
|
$
|
25,924
|
100
|
%
|
$
|
29,653
|
100
|
%
|
||||||||||||||||
Cost of revenues (1) (2) (3)
|
5,929
|
48
|
6,963
|
49
|
11,740
|
45
|
14,535
|
49
|
||||||||||||||||||||||||
Gross profit
|
6,547
|
52
|
7,288
|
51
|
14,184
|
55
|
15,118
|
51
|
||||||||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||||||||||
Sales and marketing (1) (2) (3)
|
4,087
|
33
|
6,154
|
43
|
8,721
|
34
|
13,535
|
46
|
||||||||||||||||||||||||
Research and development (1) (2) (3)
|
4,660
|
37
|
5,817
|
41
|
9,555
|
37
|
11,972
|
40
|
||||||||||||||||||||||||
General and administrative (1) (2) (3)
|
2,277
|
18
|
3,766
|
26
|
5,498
|
21
|
7,143
|
24
|
||||||||||||||||||||||||
Total operating expenses
|
11,024
|
88
|
15,737
|
110
|
23,774
|
92
|
32,650
|
110
|
||||||||||||||||||||||||
Loss from operations
|
(4,477
|
)
|
(36
|
)
|
(8,449
|
)
|
(59
|
)
|
(9,590
|
)
|
(37
|
)
|
(17,532
|
)
|
(59
|
)
|
||||||||||||||||
Other income, net
|
532
|
4
|
377
|
3
|
1,072
|
4
|
672
|
2
|
||||||||||||||||||||||||
Loss before provision for income taxes
|
(3,945
|
)
|
(32
|
)
|
(8,072
|
)
|
(57
|
)
|
(8,518
|
)
|
(33
|
)
|
(16,860
|
)
|
(57
|
)
|
||||||||||||||||
Provision for income taxes
|
58
|
—
|
204
|
1
|
91
|
—
|
528
|
2
|
||||||||||||||||||||||||
Net loss
|
$
|
(4,003
|
)
|
(32
|
)%
|
$
|
(8,276
|
)
|
(58
|
)%
|
$
|
(8,609
|
)
|
(33
|
)%
|
$
|
(17,388
|
)
|
(59
|
)%
|
(1) |
Stock-based compensation expense included in the unaudited condensed consolidated statements of operations data above was as follows:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
142
|
$
|
172
|
$
|
267
|
$
|
376
|
||||||||
Sales and marketing
|
205
|
271
|
385
|
511
|
||||||||||||
Research and development
|
269
|
314
|
550
|
653
|
||||||||||||
General and administrative
|
146
|
273
|
245
|
518
|
(2) |
Amortization of intangible assets included in the unaudited condensed consolidated statements of operations data above was as follows:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
234
|
$
|
233
|
$
|
468
|
$
|
470
|
||||||||
Sales and marketing
|
—
|
184
|
64
|
397
|
||||||||||||
Research and development
|
234
|
234
|
468
|
471
|
||||||||||||
General and administrative
|
—
|
—
|
—
|
3
|
(3) |
Restructuring related expenses included in the unaudited condensed consolidated statements of operations data above was as follows:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
—
|
$
|
—
|
$
|
6
|
$
|
139
|
||||||||
Sales and marketing
|
66
|
48
|
223
|
545
|
||||||||||||
Research and development
|
—
|
—
|
—
|
115
|
||||||||||||
General and administrative
|
—
|
36
|
—
|
147
|
|
● |
Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as stock-based compensation expense, depreciation and amortization, capitalized software
development costs, interest expense, net, provision for income taxes, other income or expenses, net and costs associated with acquisitions and restructurings, that can vary substantially from company to company depending upon their
financing, capital structures and the method by which assets were acquired;
|
|
● |
Our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, including the preparation of our annual operating budget, as a measure of operating performance and the effectiveness of our
business strategies and in communications with our Board concerning our financial performance; and
|
|
● |
Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and also facilitates comparisons with other peer companies, many of which use similar
non-GAAP financial measures to supplement their GAAP results.
|
|
● |
Depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future; Adjusted EBITDA does not reflect any cash requirements for these replacements;
|
|
● |
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;
|
|
● |
Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense; and
|
|
● |
Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Net loss
|
$
|
(4,003
|
)
|
$
|
(8,276
|
)
|
$
|
(8,609
|
)
|
$
|
(17,388
|
)
|
||||
Depreciation
|
482
|
759
|
981
|
1,557
|
||||||||||||
Amortization of internally developed software
|
955
|
986
|
1,705
|
1,943
|
||||||||||||
Amortization of intangible assets
|
468
|
651
|
1,000
|
1,341
|
||||||||||||
Provision for income taxes
|
58
|
204
|
91
|
528
|
||||||||||||
Stock-based compensation expense
|
762
|
1,030
|
1,447
|
2,058
|
||||||||||||
Capitalization of internally developed software
|
(388
|
)
|
(602
|
)
|
(870
|
)
|
(1,295
|
)
|
||||||||
Restructuring related expenses
|
66
|
84
|
229
|
946
|
||||||||||||
Other income, net
|
(532
|
)
|
(377
|
)
|
(1,072
|
)
|
(672
|
)
|
||||||||
Adjusted EBITDA
|
$
|
(2,132
|
)
|
$
|
(5,541
|
)
|
$
|
(5,098
|
)
|
$
|
(10,982
|
)
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Revenues, net
|
$
|
12,476
|
$
|
14,251
|
$
|
(1,775
|
)
|
(12
|
)%
|
$
|
25,924
|
$
|
29,653
|
$
|
(3,729
|
)
|
(13
|
)%
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Cost of revenues
|
$
|
5,929
|
$
|
6,963
|
$
|
(1,034
|
)
|
(15
|
)%
|
$
|
11,740
|
$
|
14,535
|
$
|
(2,795
|
)
|
(19
|
)%
|
||||||||||||||
Gross profit
|
6,547
|
7,288
|
(741
|
)
|
(10
|
)
|
14,184
|
15,118
|
(934
|
)
|
(6
|
)
|
||||||||||||||||||||
Gross profit percentage
|
52
|
%
|
51
|
%
|
55
|
%
|
51
|
%
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Sales and marketing
|
$
|
4,087
|
$
|
6,154
|
$
|
(2,067
|
)
|
(34
|
)%
|
$
|
8,721
|
$
|
13,535
|
$
|
(4,814
|
)
|
(36
|
)%
|
||||||||||||||
Percent of revenues, net
|
33
|
%
|
43
|
%
|
34
|
%
|
46
|
%
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Research and development
|
$
|
4,660
|
$
|
5,817
|
$
|
(1,157
|
)
|
(20
|
)%
|
$
|
9,555
|
$
|
11,972
|
$
|
(2,417
|
)
|
(20
|
)%
|
||||||||||||||
Percent of revenues, net
|
37
|
%
|
41
|
%
|
37
|
%
|
40
|
%
|
Three Months Ended
June 30, |
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
General and administrative
|
$
|
2,277
|
$
|
3,766
|
$
|
(1,489
|
)
|
(40
|
)%
|
$
|
5,498
|
$
|
7,143
|
$
|
(1,645
|
)
|
(23
|
)%
|
||||||||||||||
Percent of revenues, net
|
18
|
%
|
26
|
%
|
21
|
%
|
24
|
%
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Other income, net
|
532
|
377
|
155
|
41
|
%
|
1,072
|
672
|
400
|
60
|
%
|
Three Months Ended
June 30,
|
Change
|
Six Months Ended
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2019
|
2018
|
$ |
|
%
|
2019
|
2018
|
$ |
|
%
|
|||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
Provision for income taxes
|
$
|
58
|
$
|
204
|
$
|
(146
|
)
|
(72
|
)%
|
$
|
91
|
$
|
528
|
$
|
(437
|
)
|
(83
|
)%
|
Six Months Ended June
30,
|
||||||||
2019
|
2018
|
|||||||
(in thousands)
|
||||||||
Net cash used in operating activities
|
$
|
(413
|
)
|
$
|
(9,397
|
)
|
||
Net cash used in investing activities
|
(956
|
)
|
(1,495
|
)
|
||||
Net cash provided by (used in) financing activities
|
712
|
(601
|
)
|
|||||
Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash
|
11
|
(124
|
)
|
|||||
Net decrease in cash and cash equivalents and restricted cash
|
$
|
(646
|
)
|
$
|
(11,617
|
)
|
|
● |
publishers generally offer their tools for free, or at a reduced price, as their primary compensation is via the sale of advertising on their own or syndicated websites;
|
|
● |
some of our competitors, such as Adobe, Facebook and Google, have greater financial, marketing and technical resources than we do, allowing them to leverage a larger installed customer base, adopt more aggressive pricing policies,
and devote greater resources to the development, promotion and sale of their products and services than we can;
|
|
● |
channel-specific competitors, such as AdRoll Inc., Criteo S.A., Kenshoo Ltd., Nanigans, Inc. and Salesforce.com (through its wholly owned subsidiary Social.com), may devote greater resources to the development, promotion and sale of
their channel-specific products and services than we can;
|
|
● |
companies may enter our market by expanding their platforms or acquiring a competitor; and
|
|
● |
potential customers may choose to develop or continue to use internal solutions rather than paying for our solutions or may choose to use a competitor’s solution that has different or additional technical capabilities.
|
|
● |
cease offering or using technologies that incorporate the challenged intellectual property;
|
|
● |
make substantial payments for legal fees, settlement payments or other costs or damages;
|
|
● |
obtain a license, which may not be available on reasonable terms, to sell or use the relevant technology; or
|
|
● |
redesign technology to avoid infringement.
|
|
● |
the need to support and integrate with local publishers and partners;
|
|
● |
continued localization of our platform, including translation into foreign languages and associated expenses;
|
|
● |
competition with companies that have greater experience in the local markets than we do or who have pre-existing relationships with potential customers in those markets;
|
|
● |
compliance with multiple, potentially conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;
|
|
● |
compliance with anti-bribery laws, including compliance with the Foreign Corrupt Practices Act;
|
|
● |
difficulties in invoicing and collecting in foreign currencies and associated foreign currency exposure;
|
|
● |
difficulties in staffing and managing foreign operations and the increased travel, infrastructure and legal compliance costs associated with international operations;
|
|
● |
different or lesser protection of our intellectual property rights;
|
|
● |
difficulties in enforcing contracts and collecting accounts receivable, longer payment cycles and other collection difficulties;
|
|
● |
restrictions on repatriation of earnings; and
|
|
● |
regional economic and political conditions.
|
|
● |
the level of advertising spend managed through our platform for a particular quarter;
|
|
● |
fluctuations in the contractual rates of our strategic agreements with publishers;
|
|
● |
customer renewal rates, and the pricing and usage of our platform in any renewal term;
|
|
● |
demand for our platform and the size and timing of our sales;
|
|
● |
customers delaying purchasing decisions in anticipation of new releases by us or of new products by our competitors;
|
|
● |
any termination or adverse changes in the Google Revenue Share Agreement, or any changes in any other current or future strategic agreements with publishers;
|
|
● |
delays in projects to upgrade our own software platform infrastructure and any resulting delays in releasing new features;
|
|
● |
network outages, platform downtime, software bugs or security breaches and any associated credits, warranty claims or other expenses;
|
|
● |
changes in the competitive dynamics of our industry, including consolidation among competitors or customers;
|
|
● |
market acceptance of our current and future solutions;
|
|
● |
changes in spending on digital advertising or information technology and software by our current and/or prospective customers;
|
|
● |
budgeting cycles of our customers;
|
|
● |
our potentially lengthy sales cycle;
|
|
● |
our ability to control costs, including our operating expenses;
|
|
● |
the amount and timing of infrastructure costs and operating expenses related to the maintenance and expansion of our business, operations and infrastructure;
|
|
● |
hiring or separation of employees;
|
|
● |
foreign currency exchange rate fluctuations; and
|
|
● |
general economic and political conditions in our domestic and international markets.
|
|
● |
regulatory and commercial risks relating to advertising technologies we may acquire;
|
|
● |
difficulties in integrating the operations, technologies, services and personnel of acquired businesses, especially if those businesses operate outside of our core competency or in foreign countries;
|
|
● |
cultural challenges associated with integrating employees from the acquired company into our organization;
|
|
● |
reputation and perception risks associated with the acquired product or technology by the general public;
|
|
● |
ineffectiveness or incompatibility of acquired technologies or services;
|
|
● |
potential loss of key employees of acquired businesses;
|
|
● |
inability to maintain the key business relationships and the reputations of acquired businesses;
|
|
● |
diversion of management’s attention from other business concerns;
|
|
● |
litigation for activities of the acquired company, including claims from terminated employees, clients, former shareholders or other third parties;
|
|
● |
failure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company, technology, or solution, including issues related to intellectual property, solution quality or architecture, regulatory
compliance practices, revenue recognition or other accounting practices or employee or client issues;
|
|
● |
in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries; costs
necessary to establish and maintain effective internal controls for acquired businesses;
|
|
● |
failure to successfully further develop the acquired technology in order to recoup our investment; and
|
|
● |
increased fixed costs.
|
|
● |
a limited availability of market quotations for our common stock;
|
|
● |
reduced liquidity with respect to our common stock;
|
|
● |
reduced trading volume in and market price of our common stock;
|
|
● |
a limited amount of news and analyst coverage for our company; and
|
|
● |
a decreased ability to issue additional securities or obtain additional financing in the future.
|
|
● |
variations in, or forward-looking guidance regarding, our revenues, gross margin, operating results, free cash flow, loss per share, revenue retention rates, annualized advertising spend on our platform, adjusted EBITDA and how these
results compare to analyst and investor expectations;
|
|
● |
announcements of technological innovations, new products or services, strategic alliances, acquisitions or significant agreements by us or by our competitors;
|
|
● |
disruptions in our cloud-based operations or services or disruptions of other prominent cloud-based operations or services;
|
|
● |
the economy as a whole, market conditions in our industry, and the industries of our customers; and
|
|
● |
any other factors discussed herein.
|
|
● |
our Board is classified into three classes of directors with staggered three-year terms and directors can only be removed from office for cause;
|
|
● |
only our Board has the right to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board;
|
|
● |
only our chairman of the Board, our lead independent director, our chief executive officer, our president, or a majority of our Board is authorized to call a special meeting of stockholders;
|
|
● |
certain litigation against us can only be brought in Delaware;
|
|
● |
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, without the approval of the holders of common stock; and
|
|
● |
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
|
Incorporated by Reference
|
||||||||||
Number
|
Exhibit Title
|
Form
|
File No.
|
Filing Date
|
Filed
Herewith
|
|||||
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||||||||
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||||||||
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
X
|
|||||||||
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
|
X
|
|||||||||
101.INS
|
XBRL Instance Document.
|
X
|
||||||||
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
X
|
||||||||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
X
|
||||||||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
X
|
||||||||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
X
|
||||||||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
X
|
MARIN SOFTWARE INCORPORATED
|
||
Dated: August 8, 2019
|
By:
|
/s/ Christopher A. Lien
|
Christopher A. Lien
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
Dated: August 8, 2019
|
By:
|
/s/ Bradley W. Kinnish
|
Bradley W. Kinnish
|
||
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
1 Year Marin Software Chart |
1 Month Marin Software Chart |
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