Quotient Technology Inc. Reports Third Quarter 2015 Financial Results

Retailer market coverage expands, as Company adds several retailers representing over $100B of sales onto Retailer iQ Platform

Transactions from Retailer iQ grew 44% sequentially

Nov 04, 2015, 16:05 ET from Quotient Technology Inc.

MOUNTAIN VIEW, Calif., Nov. 4, 2015 /PRNewswire/ -- Quotient Technology Inc. (NYSE: QUOT), which recently changed its name from Coupons.com Incorporated, a leader in digital transformation of the multi-billion dollar promotions industry, today reported financial results for the quarter ended September 30, 2015.

Third Quarter 2015 Financial Highlights and Key Metrics

  • Total revenue was $56.5 million in Q3 2015, compared to $58.5 million in Q3 2014.
  • Revenue from media and advertising increased 3% compared to a year ago.
  • Adjusted EBITDA was $2.2 million compared to $8.1 million a year ago.
  • GAAP net loss for the third quarter 2015 was $9.8 million, which included $8.1 million in stock-based compensation expense and a benefit of $238,000 in change in fair value of contingent consideration related to our acquisition of Eckim. GAAP net loss in the third quarter of 2014 was $782,000, which included $6.5 million in stock-based compensation expense and a benefit of $2.8 million in change in fair value of contingent consideration related to the acquisition of Eckim.
  • Cash used from operations in the quarter was $522,000 compared to $718,000 in the same period last year.
  • Total digital coupon transactions during the third quarter were 403 million, up from 372 million transactions in the second quarter.

"With Retailer iQ, we have laid a solid foundation, and with new retailers set to launch, we will be in a position to reach most of the households in the U.S. The momentum we've seen to date is significant, with transaction volume up 44% from last quarter, but remember that's only from the handful of retailers that have begun marketing their programs," said Steven Boal, CEO of Quotient.

"Moreover, we believe our business is in strong shape, as we continue to launch new products for CPGs, for retailers and for consumers. I'm also excited to add Shopmium, our latest acquisition, to the Quotient family. We believe our opportunity to lead the market as it shifts from offline to digital is unrivaled as the network effect enables us to scale and meet the growing demands from our CPGs and retailer partners."

Total revenue for the nine months ended September 30, 2015 was $167.9 million, compared to $161.8 million for the comparable period in 2014. GAAP net loss for the nine months ended September 30, 2015 was $23.2 million, which included $25.5 million in stock-based compensation expense, a loss of $1.5 million in change in fair value of contingent consideration related to the acquisition of Eckim, and a benefit of $4.8 million for gain on sale of a right to use a web domain name. For comparison, GAAP net loss for the nine months ended September 30, 2014 was $21.7 million, which included $27.7 million in stock-based compensation expense and a benefit of $2.8 million in change in fair value of contingent consideration related to the acquisition of Eckim. Adjusted EBITDA for the first nine months of 2015 was $10.8 million, compared to $15.7 million for the first nine months of last year.

"Digital paperless continued to grow, increasing 26% over last year driven primarily by consumer adoption in Retailer iQ. We expect more Retailer iQ rollouts and marketing efforts from our signed retailers to drive greater momentum in the new year," said Jennifer Ceran, CFO of Quotient. "Adjusted EBITDA for the third quarter was primarily impacted by softer revenue in the quarter, as well as higher operating expenses. We expect greater leverage in Adjusted EBITDA as our revenue increases."

Business Highlights

Making mobile products easier, more personalized.

  • A few weeks ago we rolled out a new mobile printing solution for digital coupons. Now shoppers can easily print offers directly from their mobile devices, and new users on desktop no longer need to download software to enable printing capabilities.
  • We launched our first major grocery retailer with our digital circular product, which will provide shoppers a personalized experience with relevant coupons and media. This is one of several products designed to drive efficiency in trade spend, where CPGs and retailers spend approximately $200B annually.
  • Our latest Coupons.com app lets shoppers now download digital offers directly into their retailer accounts, thanks to our integration into retailers' point of sale systems. This enhancement benefits both retailers and CPG brands by putting their offers in front of our highly desirable audience of shoppers. Approximately 54% of Coupons.com users will go grocery shopping within 48 hours of visiting Coupons.com or using our mobile app.

Momentum continues to build on Retailer iQ Platform.

  • Retailer iQ transactions increased 44% sequentially, as retailers' marketing efforts begin to demonstrate strength and scale in the platform.
  • Shoppers engaged with programs powered by Retailer iQ showed average comparative sales increase of approximately 17% in the third quarter, a significant increase from the low single digits comp sales growth retailers typically report.
  • We expanded market coverage and signed several historical load-to-card retailer partners onto Retailer iQ. By upgrading to Retailer iQ, these retailers will be able to take advantage of a broader content pool and upgraded features and functionality. Our market coverage has increased by over $100B of sales under contract for Retailer iQ, which brings our total to over $350B, which is estimated to be over half of the total U.S. market.

Bolstering mobile shopper experience and expanding opportunities within our network with acquisition of Shopmium:

  • Shopmium is a synergistic addition to our great consumer portfolio, our platform and network by providing mobile receipt scanning and cash-back functionality.
  • The acquisition gives Quotient a new way to reach consumers through their mobile devices and enhances the company's data capabilities to deliver personalized and targeted media and promotions.
  • By leveraging Quotient's existing sales force and CPG and retailer relationships, we believe there is significant opportunity to grow and expand Shopmium in the U.S.

Business Outlook  

As of today, Quotient is providing the following update to its business outlook.

For the fourth quarter 2015, total revenue is expected to be in the range of $59 million to $61 million. Adjusted EBITDA for the fourth quarter 2015 is expected to be in the range of $1 million to $2 million.

For the full year of 2015, total revenue is expected to be in the range of $227 million to $229 million. Adjusted EBITDA for the full year of 2015 is expected to be in the range of $12 million to $13 million.

Conference Call Information

Quotient CEO Steven Boal, and CFO Jennifer Ceran will host a conference call and live webcast to discuss the Company's financial results and business outlook today at 5:00 p.m. EST / 2:00 p.m. PST. Questions that investors would like to see asked during the call should be sent to ir@quotient.com.

To access the call, please dial (877) 201-0168, or outside the U.S. (647) 788-4901, with Conference ID# 60811794 at least five minutes prior to the 2:00 p.m. PST start time. The live webcast and accompanying presentation can be accessed on the Investor Relations section of the company website at: http://investors.quotient.com/. A replay of the webcast will be available on the website following the conference call.

Use of Non-GAAP Financial Measures

Quotient has presented Adjusted EBITDA, a non-GAAP financial measure, in this press release, because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve its annual budget, to develop short and long-term operational plans, and to determine bonus payouts and executive officer compensation. In particular, the Company believes that the exclusion of the expenses eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of its core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of the board of directors in connection with the determination of compensation for its executive officers. Accordingly, Quotient believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating the Company's operating results in the same manner as our management and board of directors. Quotient defines Adjusted EBITDA as net income/(loss) adjusted for interest expense, other income (expense) – net, provision for (benefit from) income taxes, depreciation and amortization, stock-based compensation, gain on sale of a right to use a web domain name and change in fair value of contingent consideration.

Quotient's use of Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's financial results as reported under GAAP. Some of these limitations are:

  • Although depreciation and amortization are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditure requirements; and
  • Adjusted EBITDA does not reflect: (i) changes in, or cash requirements for, working capital needs; (ii) the potentially dilutive impact of stock-based compensation; (iii) tax payments that may represent a reduction in cash available to Quotient; (iv) the effects of interest expense, other income (expense) – net, income taxes, depreciation and amortization, stock-based compensation, gain on sale of right to use a web domain, and change in fair value of contingent consideration; and (v) other companies, including companies in its industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP. Because of these and other limitations, Adjusted EBITDA should be considered along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and the Company's other GAAP financial results.

For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measures, see "Reconciliation of Projected Net Loss to Adjusted EBITDA" included in this press release.

Forward-Looking Statements

This press release contains forward-looking statements concerning Quotient's current expectations and projections about future events and financial trends affecting its business. Forward looking statements in this press release include Quotient's current expectations with respect to revenues and Adjusted EBITDA for the full year 2015, Quotient's expectations for the Retailer iQ digital platform and other new products and apps, Quotient's expectations regarding potential opportunities for Shopmium, Quotient's expectations regarding digital coupon and mobile growth and the shift from digital print to paperless, Quotient's expecations regarding increased leverage in Adjusted EBITDA, and Quotient's expectations regarding future growth. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.  Forward-looking statements are based on information available to Quotient's management at the date of this press release and its management's good faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, possible accounting adjustments made in the process of finalizing reported financial results; Quotient's financial performance, including its revenues, margins, costs, expenditures, growth rates and operating expenses, and its ability to generate positive cash flow and become profitable; the amount and timing of digital promotions by CPGs, which are affected by budget cycles, economic conditions and other factors; the Company's ability to adapt to changing market conditions, including the Company's ability to adapt to changes in consumer habits, including mobile device usage; seasonal variations in consumer behavior; the Company's ability to retain and expand its business with existing CPGs and retailers; the Company's ability to negotiate fee arrangements with CPGs and retailers; the impact of mobile on the Company's platform; the Company's ability to maintain and expand the use by consumers of digital promotions on its platforms and add retailers to such platforms; the Company's ability to attract and retain third-party advertising agencies, performance marketing networks and other intermediaries; the Company's ability to effectively manage its growth; the effects of increased competition in the Company's markets and its ability to compete effectively; the Company's ability to effectively grow and train its sales team; the Company's ability to obtain new CPGs and retailers and to do so efficiently; the Company's ability to maintain, protect and enhance its brand and intellectual property; costs associated with defending intellectual property infringement and other claims; the Company's ability to successfully enter new markets; the Company's ability to develop and launch new services and features; the Company's ability to attract and retain qualified employees and key personnel; the Company's ability to successfully integrate acquired companies into its business, and other factors identified in Quotient's filings with the Securities and Exchange Commission (the "SEC"), including its annual report on Form 10-K filed with the SEC on March 19, 2015 and quarterly reports on Form 10-Q filed with the SEC on May 14, 2015 and August 13, 2015 with the SEC.  Additional information will also be set forth in Quotient's future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that the Company makes with the SEC. Quotient disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Quotient Technology Inc.

Quotient Technology Inc. (NYSE: QUOT), which recently changed its name from Coupons.com Incorporated, is a leading digital promotion and media platform that connects brands, retailers and consumers. We distribute digital coupons and media through a variety of products, including: digital printable couponsdigital paperless couponscoupon codes, and card linked offers. We operate Retailer iQ, a mobile-first, real-time digital coupon platform that connects directly into a retailer's point-of-sale system and provides targeting and analytics for manufacturers and retailers. We also power digital coupon initiatives in online marketing campaigns -- including display and video advertising. Our distribution network includes our flagship site, Coupons.com, approximately 30,000 third-party publishers, as well as our mobile applications, Coupons.com and Grocery iQ, and those of our many partners. Clients include hundreds of consumer packaged goods companies, such as Clorox, Procter & Gamble, General Mills and Kellogg's, as well as top retailers like Albertsons-Safeway, CVS, Dollar General, Kroger, and Walgreens. Founded in 1998, Quotient is based in Mountain View, Calif., and is bringing the multi-billion dollar offline promotions industry into the digital world. Investors interested in learning more about the company can visit http://www.quotient.com and follow us on Twitter at @couponsinc.

 

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Revenues 

$56,467

$58,544

$167,896

$161,760

Costs and expenses:

Cost of revenues (1)

22,778

23,061

66,767

64,464

Sales and marketing (1)

23,403

19,047

66,321

56,179

Research and development (1)

11,890

11,351

36,671

38,599

General and administrative (1)

8,382

7,400

24,740

25,307

Change in fair value of contingent consideration

(238)

(2,806)

1,484

(2,806)

Total costs and expenses 

66,215

58,053

195,983

181,743

Income (loss) from operations 

(9,748)

491

(28,087)

(19,983)

Interest expense

(126)

(241)

(288)

(843)

Gain on sale of a right to use a web domain name

4,800

Other income (expense), net 

47

19

26

(88)

Income (loss) before income taxes 

(9,827)

269

(23,549)

(20,914)

Provision for (benefit from) income taxes 

(9)

1,051

(388)

807

Net loss 

$ (9,818)

$    (782)

$ (23,161)

$ (21,721)

Net loss per share attributable to common stockholders, basic and diluted 

$   (0.12)

$   (0.01)

$    (0.28)

$    (0.34)

Weighted-average number of common shares used in computing net loss per    share attributable to common stockholders, basic and diluted 

82,831

78,065

83,335

63,542

(1) The stock-based compensation expense included above was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Cost of revenues 

$     419

$     494

$    1,301

$    2,594

Sales and marketing

2,723

1,498

9,097

6,899

Research and development

2,411

2,147

7,460

9,417

General and administrative

2,521

2,335

7,655

8,817

Total stock-based compensation 

$  8,074

$  6,474

$  25,513

$  27,727

 

QUOTIENT TECHNOLOGY INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)

September 30, 2015

December 31, 2014

Assets

Current assets:

Cash and cash equivalents 

$     189,988

$   201,075

Accounts receivable, net 

53,299

51,061

Prefunded coupons cash deposits 

626

740

Deferred tax assets 

410

457

Prepaid expenses and other current assets 

5,494

2,972

Total current assets 

249,817

256,305

Property and equipment, net 

26,451

25,399

Intangible assets, net 

9,839

11,818

Goodwill 

29,262

29,277

Other assets 

8,876

9,008

Total assets 

$     324,245

$   331,807

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable 

$         9,461

$        6,358

Accrued compensation and benefits 

11,560

14,861

Other current liabilities 

17,779

15,790

Prefunded coupons cash obligations 

626

740

Deferred revenues 

7,392

6,219

Debt obligation

-

7,500

Total current liabilities 

46,818

51,468

Other non-current liabilities 

18

89

Deferred rent 

683

738

Deferred tax liabilities 

2,121

2,624

Total liabilities 

49,640

54,919

Stockholders' equity:

Common stock

1

1

Additional paid-in capital 

561,187

531,018

Treasury stock, at cost 

(71,176)

(61,935)

Accumulated other comprehensive loss

(51)

(1)

Accumulated deficit 

(215,356)

(192,195)

Total stockholders' equity 

274,605

276,888

Total liabilities and stockholders' equity 

$     324,245

$   331,807

 

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Nine Months Ended September 30,

2015

2014

Cash flows from operating activities:

Net loss 

$ (23,161)

$ (21,721)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 

11,879

10,778

Stock-based compensation 

25,513

27,727

Accretion of debt discount 

116

Amortization of debt issuance cost

134

57

Loss on disposal of property and equipment

2

9

Gain on sale of a right to use a web domain name

(4,800)

Allowance for doubtful accounts 

46

138

Deferred income taxes 

(456)

807

Change in fair value of contingent consideration

1,484

(2,806)

Changes in operating assets and liabilities:

Accounts receivable 

(2,295)

(5,390)

Prepaid expenses and other current assets 

(2,790)

(4,653)

Accounts payable and other current liabilities 

2,056

1,729

Accrued compensation and benefits 

(3,279)

(1,068)

Deferred revenues 

1,190

358

Other 

5

(742)

Net cash provided by operating activities 

5,528

5,339

Cash flows from investing activities:

Purchases of property and equipment 

(9,406)

(6,621)

Acquisitions, net of acquired cash 

(11,641)

Purchase of intangible assets

(283)

(37)

Proceeds from sale of a right to use a web domain name

4,800

Net cash used in investing activities 

(4,889)

(18,299)

Cash flows from financing activities:

Proceeds from issuance of common stock 

4,656

4,083

Repurchases of common stock 

(8,852)

Proceeds from initial public offering, net of offering costs

176,525

Exercise of warrant 

1,610

Repayment of debt obligations, related party

(15,000)

Repayment of debt obligation

(7,500)

Principal payments on capital lease obligations 

(46)

(43)

Net cash (used in) provided by financing activities 

(11,742)

167,175

Effect of exchange rates on cash and cash equivalents 

16

10

Net (decrease) increase in cash and cash equivalents 

(11,087)

154,225

Cash and cash equivalents at beginning of period 

201,075

38,972

Cash and cash equivalents at end of period 

$189,988

$193,197

 

QUOTIENT TECHNOLOGY INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND TRANSACTION DATA

(Unaudited, in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net loss 

$ (9,818)

$    (782)

$  (23,161)

$  (21,721)

Adjustments:  

        Stock-based compensation 

8,074

6,474

25,513

27,727

        Depreciation and amortization 

4,099

3,956

11,879

10,778

        Change in fair value of contingent consideration 

(238)

(2,806)

1,484

(2,806)

        Interest expense 

126

241

288

843

        Other income (expense), net 

(47)

(19)

(26)

88

        Provision for (benefit from) income taxes 

(9)

1,051

(388)

807

        Gain on sale of a right to use a web domain name

(4,800)

             Total adjustments 

$12,005

$  8,897

$   33,950

$   37,437

Adjusted EBITDA 

$  2,187

$  8,115

$   10,789

$   15,716

Transactions (1)

403,382

440,092

1,188,029

1,231,570

(1) A transaction is any action that generates revenue, directly or indirectly, including per item transaction fees, revenue sharing fees, set up fees and volume-based fixed fees. Transactions exclude self-generated retailer offers where no revenue is received.

 

Logo - http://photos.prnewswire.com/prnh/20151022/279702LOGO

 

SOURCE Quotient Technology Inc.