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QUOT Quotient Technology

Participants
Stacie Clements Vice President of Investor Relations
Stephen Boal CEO
Pam Strayer CFO
Scott Raskin President
Shweta Khajuria RBC
Chad Bennett Craig Hallum
Steven Frankel Dougherty
Jack Kelly Oppenheimer
Elliott Alva DA Davidson
David Gearhart First Analysis
Call transcript
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Operator

Welcome to the fourth quarter 2019 Quotient earnings conference call.

During the call, all participants will be in a listen only mode. After the presentation, we will conduct a question and answer session, [Operator Instructions] as a reminder, this conference is being recorded and will be available for replay from the investor relationship section of Quotient's website following this call. I will now turn the call over to Stacie Clements, Vice President of Investor Relations. Thank you Ms. begin. now may you Clements

Stacie Clements

Great. Thank fourth welcome our everyone operator. and year Hello quarter calls. and end to you, XXXX earnings

for call the have and In Q&A. time corporate been website are forward earnings today on the our presentation. Raskin with alongside positive look of Boal, have today's posted President. to we the our section our remarks Strayer, call Scott CFO, of our CEO, prepared the into Full investors.quotient.com remarks interest IR Pam and summarized and On Stephen me jumping press release

Before delivery partnerships, will as the first XXXX, ability we begin, investments certain to in please of quarter looking expected note to Bemo, These our our our and that year CPDs for well in plan leverage during and full our impact this in to hear media business call services, as looking exit statements the you expectations and and expenses for revenue generally. product forward launches, include FSI our growth from investments operating solutions and projections forward change CPGs statements. a

Forward and beliefs our are that team on to of information looking performances differ call as this time could unknown known or of risks the actual of and subject management cause good the to statements and are to materially. and based faith available uncertainties results

of whether potentially financial Form in can the results on could to our these otherwise. with be obligation between certain filings on today's be adjusted company's future found impact exception A expenses, on Xth, over quarterly can press and measures of factors SEC. the reconciliation issued factors XXXX loss measures net now non-GAAP financial disclaim non-GAAP the with today financial risk forward margin as slide Stephen. the update operating With to GAAP a and SEC results that expenses. been identified press to any discussed turn note new filed result call that website. release exclude in today contained I'll Additional November gross or our and in the release and information in about basis XX-Q information, on the information future revenues, the report Please that, in found our events posted a have with on and deck and the looking statements We

Stephen Boal

in more pleased ended and the quarter year the fourth revenue well be release, year consistent couldn't and afternoon call. earnings good Stacie those than release complete Along like a $XXX read rather first about I we you a few our quarter the to you how Pam delivered great We our highlighting just I with points. record from published verbatim, and guidance had to Thank some remarks revenue important saw welcome I'd we Quotient XX% spend over quarter end year with with growth. top as everyone. transcript minutes of her full of also we earnings also the million last prepared year. or with want Strayer a ending to of

the media ending the and CPGs and performance above in their EBITDA strength RPM delivered adjusted marketing $XX XXXX flush Our top performance of overall adjusted cycles social ended fourth fourth with guidance for quarter IQ, from calendar delivered end from retailer benefited budgeting EBITDA. continued fiscal million retailer those and also we influence quarter budget some we or of

we've accomplished. teamwork demonstrating of all I worked Our more and be teams have couldn't hard that collaboration and proud true

months we've team last and the to priorities operating established six forward. strengthened our key drive business Over the

EBITDA. revenues, margin gross for adjusted We on course are in now steady growth and

process changes, we're some of of delivery products. some the changes start of to our media the business with making I'll some improve

a now opposed be estimated net be and give would impact result with to revenue Pam a more XXXX $XX details to products gross. we'll about the this, on QX, basis of around revenue as but these be As starting million recognizing will from higher.

would the core XX%, been the XX% accounting range, of higher at our This If XXXX businesses. guidance you significantly stronger take the our for into this midpoint forecast net the growth of than revenue which have consideration, demonstrates accelerating margin growth includes treatment. and our

media We these margin portion I a comes products, also the process improvement mentioned with of the just of six expect additional remaining gross improvement changes and coming percentage of over process from improvement. to around drive points automation from acquisition this XXXX, five to of improvement some course our Ubimo and which

margin. will yield these believe gross Together, overall in improvement efforts we

coming has the In and a With doubled already the size. have from new company we've steady eye on of benefit chief SVP we with excellence focusing six past returned operations, and months success, internal few dollars our past can starts from new This would benefiting started the years, people customer run. revenue we've a new officer identified we past internal these SVP a revenue months a high we've this adjusted we where attention. along who our CFO, exciting brought areas almost improvements several in would teens. process been Raskin, how week. half change Since five the an and you the that of margin To forecasting EBITDA nearly improve the are on Scott changes, an understatement. without be QX operational of other over to expect to on new I've billion progress we're getting and board a a automation to say a With that

executives in these of delivering world-class records leaders their results. track strong with Each respective areas are

eliminated efficiencies. cost expanded the bringing flattened which acquired with products platform, in and making roles shopper other technology effort a of streamline our to also in demand great numerous and We decision need many senior organization an benefits have market team, on launched accountability. the Ubimo, network for clear We've also parts including certain our and

that look retail to digital transition Retailers dynamic has help tailwind for and This sectors. other with CPG the and to brands in as leverage see FSI. us sync in in them growth to of time exciting the CPGs from omnichannel. had also from our an to three to is from with a CPGs continued growth expect see planning are the This in half exit to second spend we the offline year created XXXX the they XXXX each we certain software in benefits expect

creating print As we a national of to to from come XX% out opportunity representing also than those see dollars to by an end of Quotient of growth RPM. reminder, are the CPGs FSI and more XXXX coupons to bring expect expected the

these gross merchandising. we've We spoke this digital for this CPGs opportunity. retailers to digital ramp this The seen on finally build and shifting and dollars to to initiatives. commit sales our start as to past retailers up at commit day an quarter marketing work spent industry mandate As that the at accelerated be length pace. about over at is of great strong We've X.X% foundation their momentum laid investor

We have one of the shoppers. largest networks and of retailers

our but product me that great now shift capture and of more partners. and right confidence necessary still We gives a position have shift there's and on excitement and new from partners, focused the the call There's that a leadership digital. customers, energy they things. dollars be leading over a work that we're all as Pam. market I'll employees, to done, the the to turn to to and We've working pull have We over solutions a sales team non-working customers dollars to analytics six to to lot months. drive done integrated right the heavy past we our lifting and dollars levers place, and robust the all in now insights bring

Pam Strayer

forward Thank delivered meeting year our end results and adjusted to P&L million by $XXX.X items record social I above the to QX the delivered posted We revenue full with in website influencer. you and financial for Stephen good coming IQ, you on full guidance. here and everyone. over XXXX year of revenue encourage all read prepared for the excited I'm retailer right driven but touch RPM and top detail. months. a of I'll look EBITDA to afternoon strength the additional be now, on and you today you few We

XX% and more QX of spend customers our Our when top by cohorts three combined for outside XX. with platform customer gross coming customers grew our all XXXX on growth GAAP to revenue XX% margin over continued and years our we two basis was an QX over improvement down XX improvement over it time was an it first of points the although gross approximately in QX the saw was margin. XXXX XXXX. XX.X% from in This is

product two shifts throughout absorption marketing count this expenses improvement QX of XXXX of in even mix the product XXXX. percentage compared Gross QX from QX as and margins past to margin a revenue in a by we've declined Stephen the as and and operating impacted expenses. plan with Ubimo shift gross years increased head to sales put has mentioned slightly benefited over place and been primarily mix continue

a and done in the of Over marketing we've past review our months operations effectiveness. few sales

added functions resources scale the going talent realigned forward. business more As effectively operate and a and result, we business to have and help

the we will we seasonal XXXX the and while expanding but growth throughout operating expand through leverage outpace seasonal margins spending a the in in expect increasing increase typical during expenses, margins For with that we expect in QX QX spend operating trend QX typical expenses revenue increase revenues. year a relatively year. flat to build see with year throughout with a

$XX.X for XX.X% mix full $XX.X a XXXX XX.X% of impacted onetime of over EBITDA a On compared and or EBITDA million adjusted $XXX,XXX XXXX million year or adjusted QX in margin XXXX Partly expenses. taken QX charge to which leverage by debt basis bad expense. offset and $XX.X delivered XXXX approximately We was in product down margin. by shifts operating million was

acquisition for we repurchasing expenditures cash cash XXXX equivalents from with ended shares. million cash year in approximately cash of Ubimo $X.X paid X.X $XXX.X approximately million at flow We generated capital excluding operations cash the of million during Looking fourth the quarter. million spent the we $XX.X and and approximately

both QX Starting improving a we're minute rate our a our change products. I to the this our discussing spend we and be of impact want will will change media to delivery margin. the of revenue growth to portion and business a in of media have gross XXXX making some

customer these the also as health improve but to experience, business the Not grow. they continue changes of only our we strengthen do

the recognized starting we opposed to a a gross, revenue increases were as gross reduces in media these on net and margin revenues and result XXXX we on As basis April products will from XXXX. Xst, our total which recognized

the and quantify to full QX XXXX the we as As on revenue to try of than if not spread revenue XXXX be $XX The year impact not projected effective, recognize we revenue over impact rates QX, QX if would made basis. gross million in these continue QX. to lower however approximately XXXX be a for had growth changes result these will a is to changes.

by three approximately percentage in Our improvement gross revenue over to we XXXX. approximately make growth in the remaining expect coming five from to we media change. change a improvement rate improve XXXX improvements on XXXX by approximately therefore operational the change points points Ubimo quarter products, be the the and approximately one points the in with the to addition three in of margin XX% six also from points will in would we gross our automation. This half margin Overall certain end expect operational result improvement from about

QX. business no our EBITDA, net media to midpoint for we of range expect our through be at which as income year to delivered the a change media approximately the has as business million to XX% This portion full last or in XXX XXX the adjusted revenues guidance our to net XXXX impact includes growth in of QX million for year, or in compared

quarter expect to million revenue the to of million. be in For $XXX the of range we XXXX first $XXX

to of to XX% in XX approximately XX% of revenue EBITDA half revenue $XX back mid first the delivered with for second revenues the than year the XXXX We in is Adjusted mix being be or of $XX the in expected expect XX% XXXX be between to half and to with media half for expected revenue total total approximately million of to the media similar half back to of for year, Revenue million is contributing year XXXX. XXXX XXXX. the in full be points. approximately stronger the of range promotions the

gross to is expected level EBITDA improved the revenue, fourth the and year teens EBITDA margins from margin in Adjusted the expenses. quarter grow throughout with operating high adjusted resulting increased

in million $X the of of For range quarter be million. adjusted we first to EBITDA one expect to XXXX the

in I'll more dollar for the XXXX expect XX In for call platform. believe Operator, questions. has teams operations partnerships The for outstanding our million. foundation well have of you on summary, and sustainable grow the to diluted open ecosystem. us average Quotient focus be importantly throughout technology improve We to the digital and take opportunities Closet our and believe great shares the more shift incredible way. foundation in an I retail approximately for tremendous CPG weighted to greater XXXX a that's now scale market. we're I and laid

Operator

Your first question Khajuria Shweta from RBC. the from of comes line

Shweta Khajuria

Great. you. Could called it of cadence it the A on Thank the is about, a should would through provide basis, the basis growth please. please acceleration us you as on, out comp a be Seems for we would pro that XX% few think like questions forma you the year. guidance some QX. be on from QX revenue to How year? an fair full

high know, quarter. lower teens guidance a then bit. growth, in QX. for you we revenue little third growth Any, cadence will media Second think have that margin I on on that fourth How the EBITDA it? you. a we Any guidance should XX% Thank first there, is, about just seems bit and And was talked versus expected. of color gave than guide it about any be helpful. that Pam, quarter you little would

Pam Strayer

Hi sure. is Shweta Yeah, this Pam.

bit revenue year over of at to QX quarter apples consistently will it's in apples yeah, the terms comparison, to But the a quarter to from because as basis. of through XX% QX. all guidance way So XXXX, is gross accelerate revenue the we growth year. you net over year The for expected reported if be said, look change, demand lower the as throughout the

line consistent leverage throughout going and So that that's year. at what pattern year it's whole a bottom the be us to the gets throughout

full between As I the somewhere guide, EBITDA, we see the it as to talked XX%. you for about year, to margin expect can XX%

with and and as meetings from turnover as we QX sales revenue. to our spend. every there's ramp we QX However, taxes the expenses lower a through up growth operating We step out strong do And there's a year. year, start payroll QX have small

small up QX. through flat in QX So expenses with it's like seasonal step in in QX it another operating remains and then increase

in So flat you with whether margin on think expanding margins XX% throughout the ending, low. that's was to the know, operating And then XX% going QX, your with year media year. and expenses I year, that's last gross relatively question to over EBITDA growth, throughout expand consistently close year

Shweta Khajuria

I thought, is sorry, XX% right? that

Stephen Boal

Media on year was year, XX. think growth I it

Shweta Khajuria

I of XXXX In fourth is the fourth media quarter revenue what I over thought grew XX.X% quarter read.

Pam Strayer

growth question about your rate? is And Okay. that

Stephen Boal

XXXX at it on. It growth have just, would Being year what was just expected? I on lower year that than is. you would but would depend the think We're rate on have QX in on comp looking to, what that media was Hang XX. we're

Pam Strayer

over full by XXXX XX%. Year year Yeah. media year grew for the

Stephen Boal

QX QX There so on rate, must strong was Right. that depend been back going it Was have XX%, We the four. 'XX. XX%. in what with And growth to was you it's of in QX can a to come Shweta. growth

Shweta Khajuria

Thank Okay. you.

Operator

Chad of from the Your comes Hallum. from next line question Bennett Craig

Chad Bennet

for Thanks my Yeah. taking questions.

think deceleration a fundamentally Uh, that half started part from, right you And the would to think significant of rate XX%, growth that, was maybe believing, pretty is the this going of it know, know, because material the which going we're to growth, but from you was be XX business year. the I that like going there where of business, if year that, might going be, prior thinking or I case. sauce know, seems be we was and are you to you about back you last the the our it were time caller special So going growth this media not different forward? that and

Stephen Boal

Actually, Yeah. Steven. Chad, is this

this low long business base. on was too not rate ago, media growth business, a it fast start the on standing so remember the So,

growing roughly we is as the were also we we mix to end that the at said XXXX. through Well, were with as were. we expect So product we XX fast stay even where of

smaller I and have at was over so that the base to year, see look to off of we quarterly as And, me. we expect and QX a, what again, just in don't b, was a know, promo number, this started 'XX. so in year you in mind And keeping have of year. just, getting actually front well growing

Chad Bennet

Okay.

rate the so business should growth we just wise.a industry So, view media

Stephen Boal

again, this, you need not year. on time, not, focus The to Yeah, year of a year affects definitely significant and runs It's with in quarter the just the at spend. you really for on media promotion year long talked business as know, about a move way well. we've way dollars look out and our business our

media the spend us with the products lot we and both. in money promotion clients a in Our segments segment of because have

our year, on business grew. media year so And

way on XX% you the think have year business. the about I think is year. That's now number to this

you single the the outcome hard for us quarter very are or of doesn't year future a know, quarters and rates. again, to So predict growth predict

Chad Bennet

Thank Got you. Wow. it.

Operator

your of question line the from Frankel And from comes Dougherty. Steven next

Steven Frankel

Stephen maybe more a to these insight about afternoon, CPGs. Good little with start three large

snapback the about in what are you spending tell maybe think but you budgets nice us with XXXX. on talked to on You average their year year,

Stephen Boal

so because Steve at with some through their a us. spending I on but specifically are idea their three know, we've, those about point, good talk of this can't growth with will obviously them, what to minimum CPGs gone spends have Hi, budgets Sure. have planning returned be what we've because all we you

when of so, know, we, how that's spend our factored against and that's, when our over into a course the our projections, you the thinking really with customers that's and programs now right and build XXXX. committed And we our for we Remember minimum work year. we our, do

with them. of well, and we're quarter on now last will as it point fine a continuing process this said three all we CPGs, but put we So that the those

spending this of three to those All year. returning CPGs us growth with are

Steven Frankel

you're a the material the is as growth for the decline part of forecasting Okay. year? And how FSI

Stephen Boal

I hearing ago perspective, We're would it material. were from an I a from that more quarter discussions. representing will be industry distribution that, last from offline over the as now the clients FSI say in would And quarter, than we XX% it's and more about biggest XXXX, say CPGs just I vehicles by of impact said, national the XXXX. end coupon completely are in of withdrawing

their those And of FSI. half this in on we'll basis, impact some year. are half start year they think it's And meaningful. fiscal, And to year be think it's, so anyone for that will on the very for our back for the XXXX some, who's in calendar we years see that not of calendar we

the start vehicle you when is of to start that, dynamics are of you to who change in things others happens that One left sitting the that when assets. vehicle left that a nonperforming a like in are

product down. So a being with, aggregate value value because with dollar sitting they're, utilized anymore that coupon gone in that product they're of is isn't the of

that so And process the speeds a bit. sort little up of

So quite think we it's actually meaningful.

Steven Frankel

thing to we we here, the question one could. make one Just want on comment if media

Pam Strayer

Yeah.

you our basis, give little for context to continue reported So looking on bit over year expect media as more basis. we a XX% like to to an year growth. a forward healthly to, just do On XXXX to like around grow media

when So forma like gross whole over compare have year kind business we year, year the been that would've would to media growth portion apples assuming you of pro apples as a of recognized our more our kept the XX%.

Steven Frankel

does. definitely Yeah,

about bit talk little potential and couponing the So products POS, new RPM partners. pipeline for a for also the

Stephen Boal

Absolutely. The is pipeline both for healthy.

onto quarters product. we And months Both. expect add the our more add more inline course retailers, and next over of to this the exciting, also more expect year. retailers retailers We to

Operator

question your And Kelly line of the comes from from Jack next Oppenheimer.

Jack Kelly

taking for question. my Thanks Great.

six in I and changes you're guidance? to the weighted there on since ago, half way it taken since change of you've approaching thinking company back months you're the you is over any kind was any know last the approach know, guide? year, been Stephen, your approach Pam, on you've approaching how at Just guidance, you're

Pam Strayer

he did, we we've we whole We pipeline, and asking the or you I into set at CFO if but go maybe revenue inaccuracies about you're look changes a what to what we all looking how Yeah, that, have had, downsides. take will process I lot of know, from through and don't opportunities close, that a risks guidance. the say insight guidance, former the into of forecast past upsides expected at when account set accuracies are

You you on what know, range their we from get a think will, based conservative It's be but TCGs feedback especially we budget. know, set realistic our also customers, range on from us. we on for based our a

talking think for spend getting CPGs commit with to and a now to actually of year. lot during be their of right on what will commits year the the XXXX talking made I annual in raising over progress year we've lot and We're the CPGs a commitment year.

when range the into So set we when guidance. all of taken we for the, that's account set

Jack Kelly

you And guess I then chain have answer, is, hard to I but the exposure the in coronavirus? any supply is mean, do this with

Stephen Boal

None.

Jack Kelly

been have question made now at All right. last think Stephen where you the where company the mean, months. And then, one do most me. for that you, I you've impact? you've six

Stephen Boal

would I one. number greater probably to question. a ability fair say Organizational a their accountability, lot for number culture, without do out jobs interference. That's alignment, creating greeting, roles, and and of go two, of our clarity teams

people really for go scale we jobs way had do their and time. create and the an out long to they that a for opportunity So intended do to

Operator

comes from from the Davidson. Next line Elliott of DA Alva question

Elliott Alva

Thanks. Great.

of of loyalty the with you programs? how shoppers year? And of have spending is the to then CPG retailers visibility throughout you into and the partners to their Quotient helping kind much number So want digital ask onto your work guys and separately, kind grow how quarter do secondly

Stephen Boal

Hi, it's Great. Stephen. Elliott

the take first. me second one let So

we think It our of I better as now to to gets patterns gets, forward. the good move ability So, it into little continue CPGs. a have we spending very see our bit

with better. on think non If a because marketplace. the retailers digital uh, drive So, engaged their year higher changes platforms time to FSI evidence than digital engaging the much CPG a shopper, that taking anticipated really in partners on a I spending is lot this place is getting with now the their with shopper directly in the visibility digitally and over are our ROI the is

the lot part about quarters our better, are that And Pam's manage. on goes to They visibility getting that times. us that's conservative really tough is it. to are a a view. tough of predict again, taking for to So some year And comment

have very The to and question basis do know, how best we retailer can we help to customers role to on our a and We we helping do then have grow. do in our share about practices, we partners clients grow, them with with work We very on an partners best our it. we marketing on help we've annual sitting you planning team be, quarterise in them take active in initiatives. retail many We members have to their We team, with out. cases working them day We, the them. their run day in bring programs. and their value offices,

drive going a they're dollar registrations, give promotions when to So specifics when retailer running are amplify shopper national and go registrations say, typically and And help is delivering of initiative with I will form like, more to their on you I going retailer that launch value if engagement, national some the own. suffice a to basically bring but is they a drive our program that to think network message you'd it to CPGs run to can promotion. an do

lot as of the top bring our we'll an national that they're engagement. of awful network And to bear bringing bear. part of dollars just that dollars on drives So promotion to

playing we're think I we're, grow registrants. think I in very role active those helping retailers a our So

Elliott Alva

on any impact any the these future? headwinds in seeing Great. want more, ask Helpful. you're or And expect CCPA then regulations if one from just to

Stephen Boal

tracking CCPA about quarter. uh, of two I ago, can were quarters move ago, What a out GDPR, very, is click questions opt predicted of is very this, lot that And number low. turning really of there three you their is, we the like last is people tell that accept as they know, they shoppers really data and You the banner see out quarters on.

can tell I from been for it. ready you CCPA that than the expense that all So we impact there's other getting of feel at no would

Operator

your And question the from from Analysis. Gearhart of line David First last comes

David Gearhart

quarter gross and you know, I non-strategic XXX basis a the if Was mentioned to bit margin. should the XXX that talk to greater about had the net. getting automation the question, you'd cited, it segment new you as have revenue last with in you improvement how not, little record year products you the to First that product terminating change, quarter. through Last gross you not a expectation traction. to go media quarter contemplating terms points from and And last of been guidance additive wanted

Stephen Boal

consideration, a So that lot changes. was make had was, make internally under those we work sure we to could that heavy do but of that to

process their So changes changes engagement here. here,

a but And the of so have table really it get we improvement. quantify. to have margin contemplated drive initiatives on be That gross to, part to was of the do ready the we set, getting number of to to able through to process

David Gearhart

you can us Okay. for me, And your then update lastly an give on sponsored product? search

Stephen Boal

sure. Okay,

have We today sponsored two retailers that with search. live are

being seamless Implementation integration that retailers quite very and additional rolling responses. times met that quick, with and content websites against availability. pipeline into is favorable out product good a have to We are

with So can of the up targets deliver product early we're all and and with that wrapped we're very suite product. very very that with personally we've happy it that happy there actually into days, overall it. of so It's And but far happy way pleased we're with we especially then the effectiveness can measure that's going. so we that the products in I'm our fact

David Gearhart

the Okay. for color. Thanks

Operator

We back closing call over remarks. to Quotient will now turn for the

Stephen Boal

you all today. And joining operator. thank for Thank us you,

margin Xth, also seeing of the planning you and exit share the market. focus week in revenue our merchandising positioned expand expansion combination accelerate March you've is Quotient to mandating with to FSI market, major As We're coupled retailers tailwinds a just network while and believe look growth now sharp to forward of many is shift you gross CPG to on the well to digital heard, our priorities, then. the of and margins operating converging Thank and improving continuing our including We road both on everyone. the of marketing.

Operator

for joining you Thank the conference today.

disconnect. now may You Thank you your for participation.