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QUOT Quotient Technology

Participants
Marc Griffin Investor Relations
Steven Boal Chief Executive Officer
Pam Strayer Chief Financial Officer
Steven Frankel Colliers Securities
Chad Bennett Craig-Hallum Capital Group
Call transcript
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Operator

Good afternoon, everyone. And welcome to Quotient's Third Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Quotient's website following the call. At this time, I would like to hand the call over to Marc Griffin, Investor Relations.

begin. now may You

Marc Griffin

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

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

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

Steven Boal

Thank QX you, Marc. everyone call. XXXX to our Hello, and welcome earnings

of $XXX.X our seen lower had focus and to adjusted letter, keep our as expenses. away operating on release EBITDA which scale deliver As up in is higher continued margin starting demonstrate our outstanding to million stockholder you've $XX.X we our we revenue business from and reducing services, platform, an migrate delivering and leverage million, of from costs QX, the

back national We in retailer non-retailer is to also delivering cash offers which scale industry. network national started an for both our providing rebate platform, the and up set exciting of largest the partners, opportunity

& More, is Quotient live Wine largest beverage the as Turning to the to growth, U.S we and that pleased retail now is vertical are in on for another share adult retailer the network, new AutoZone Quotient. Total network

parts which to areas. perfect a their shoppers same end pipeline for are them underway Redbox loyal a growth country. outside of launched as stages to Rite impacting partnership highlighted as They partners will trips. with have the be we're base partner shopping forward they in but closure during Network Redbox. have of example on start additional fan two we time, expected retailers offer the integration high currently several to has both is as months. excited that At frequently these retailer expand, value we our months. at to over of quarter have coming and in underway the year. We the with peak stock Aid of a we Last coming entrance One we other situations major kiosks CPG some XX,XXX about kiosks, that more spending great being of degree. hearing severe look Quotient. pandemic, more also makes visits have able that Not we we to and the the and retailers chain in Amplification have issues that various and we expect we out to and over renewals the live savings traffic Additionally, to Promo to retailers which very have supply launch the by of of announce continues expect

are our renewed winding we Albertsons. our Dollar down with have with partnership partnership and General long-term We

over of positive systems a exiting As costs will performance of starting to QX, overall. managed over desired business on growth of our produce expect long-term network up details. wind we are the neighborhood services Pam, to from continued this But attention down our the operations gross margins with We in and the to the margins, this remove areas and we next have of expected. decommissioning in expect relationship effect XX% months, outcomes more and XXXX. to quarter, from see we account. will taking that on supported few now, this broadly believe that get on our in self actions of the speaking, to And there moving into in now service is

growth align of quarter, be more deliver overall CPGs smaller and as is this recent platform to XXXX. of driver As with Quotient volume over to grow in and remainder the brands QX dollars over look to to business with way steady rewarding CPGs This enables launch paving alternative fixed to Smaller the and with us in of way this growth than back merchandising these we being offer our way new continue digital. budgets, the business cash last revenue area for continue to move shoppers. calendar, our exciting shifting we of their this a on FSI network, a offline engaging forward The rather rebates of XXX% up on schedules promotions can XXXX. with endorsed to a mentioned accurately CPGs for by I basis, our

earlier, continues demand. rebates to met mentioned strong platform I As our be with

expect chain to of environments. with And expect stock from shoppers. being engage in possible network media XX% CPG situations, see number course retailers promotions. offline performance cash goods, we We seeing spending the some non-retailer out national although of partners. approximately inflationary and largest that and saw freestanding tend spend primary move in of to the or to rebates will with In slowdown year. for supply we and swing the another cash bulk bookings this national we offers back we as beneficiary digital of are Quotient partners now pressures be both widest implementing of over we some dollars their With regard are And increasing to promotions, network to back over option, with due primarily growth quarter increases has be shopper Quotient will the and early RPM, transition. of back XXXX. in of last to to the rebates number have our the higher overall continue price are available added XXXX promotion retail a our consumer the believe third Periods customers insert of

retail delivered in alternative this increase X% revenue media streams approximately pure saw on retailers through RPM platform. Additionally, play

our in-store over at XXX,XXX had business, of screens. over Digital-Out-Of-Home up and end Looking at over we inventory screens from screens QX XX,XXX QX the of nationwide, to XX,XXX access

of leverages Quotient product, our this We XXX which see sponsored we In QX, measurement XXX. capabilities. using proprietary quarter. the momentum search, Last continue end for at sponsored to over data and up CPGs from had shopper search,

this and in quarters of continue on We consistent platform. experience bookings to sequential growth CPGs

our QX. outlook to on for Moving

in time, we the our should we're a bookings are pressures. and out robust minimal rest on be At uncertainty pipeline million are national around we with cautious will impact. and due wind some the seeing revenue $X impacts, pullback business, the most the While a slightly approach also a have seeing and to approximately down promotions same some chain of supply these to Albertsons stock strong to which of year. QX Due how situations potential taking of transpire, for of

year, our of As like in and turn we to deliver helping to final essential partners team, the months shoppers their head XXXX, our network I'd thank to to our the services and attention the pandemic. over into our of part the advertisers for course

part to advertisers the efficient our to key and helping way. shoppers done Pam. now them retailers, have in at it will I reach and We And increasingly scale continue partner need call Pam? shoppers with when to be they that, turn to most, over an strategic help a save

Pam Strayer

more advertisers gross more margin XX% all you year. over last We results were QX are the strong by year-over-year search results of prior X.Xx over basis stockholder compared up sponsored improving focused prior from rely everyone. Relations prior but over basis in up compelling with our and margins to paperless up Sponsored on GAAP higher good results to XXXX. non-GAAP XX.X%, channels. quarter. year My increasing XX% product and points afternoon, and prepared and Thank the changing points last progress revenue over XXX $XXX.X revenue, down GAAP our was from was margin the you, which quarter digital and XX.X%, I quarter, was total search sequential QX technology the due our solutions. search full basis generated Steven, QX than of remarks media posted from delivered read revenues digital Promotion business sponsored seeing and financial in QX to on highlights. year-over-year, encourage website. margin be make in our quarter QX mix, down QX will model on page financial the year increases XXXX. the increased our our letter Investor points Non-GAAP the financial XXX in gross year same good to with as for due strength revenue heavily last in XXX Digital-Out-Of-Home. revenues to and at revenues million, for up in XX% Revenue came these primarily Xx on primarily was offerings. XX% gross driven delivering X% were year, out-of-home Digital-Out-Of-Home Media grew approximately quarter XX%

of third-party revenue the compared August would year-over-year approximately in a XX%. partly made all made change As release, reported revenue changes the have GAAP in $X costs margin the and X, improvement by been we leverage. quarter higher million beginning the were gross to recorded been for prior XXXX. search year and and operating to our net growth would offset non-GAAP discussed resulted not earnings business had have business July in revenue in decreases to we The accounting, If sponsored we've XXXX

and assets mix and of intangible gross was amortization our in offset from the margin delivered improved non-GAAP for partly by a the from the the $XX million, GAAP impairment search with of certain the higher reduction $XX.X prior down quarter. Additionally, operating the XXXX, in impacted up above at adjusted and We as result recorded expectations of margin QX million quarter quarter prior million Product intangibles. by negatively quarter. EBITDA lower of million in expenses of cost came quarter headcount Digital-Out-Of-Home. a controls for third revenue $X.X $XX.X and of sponsored

from of primarily million at up approximately We of the third and $XX.X delivered was with the prior $XXX ended the million driven timing and equivalents, payables. cash operations in strong cash flow we collections $X.X by cash quarter. quarter. million from cash, Looking quarter This the in vendor

Now experienced during momentum turning bookings guidance. We QX. to strong

However, slowdown in a national disruptions promotions bookings are QX. for causing chain supply

In off revenue platform. some risk the transitions Albertans anticipate addition, we as

fourth cost changes to on After basis million. our business of our to or that approximately best revenue changes, $XXX $XXX to and recognition million by come forecast, last of product significant net a our adjusting of moving $XX when and promo and for the changes, GAAP we gross and is revenues revenues the million. XXXX product The of slightly to result, expect be actual resulting gross as from lower forecast. top to issued we making currently can by revenue percentage quarter revenues. for revenues the million to offerings are lowering revenue $XXX guidance and accounting did not QX a our impact gross a in is cost expected part year The represents our mix as mix mix of quarter to $XX year these approximately for reduces the our guidance to revenue the reduces in recognized has and margins range As under estimates revenue the of year our and of contemplate full revenue were in range EBITDA the guidance down revenue a compared accounting for accounting of we of of revenue fourth line of net business this these recognition, have impact Revenue revenue media of and The the million difficult the well for full XXXX million. as $XXX forecasts quarter.

We as improve to and on efficiencies. changes we the expect long-term operations our technology to over to investments to margins improve work our continue

and margins. As partners, highlighted mix distribution fees, lower our impactful as versus retailer higher national the campaigns higher media results promotions, come between which generally in retailer the campaigns and because paid specific to revenue well in retailer costs distribution past, of have is with national budgets fees specific campaigns while lower as

margins XX% of specific as see QX media Specifically for continued to result gross a expect high of approximately of proportion XX% campaigns. outlook, our to we retailer

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

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

operating to the to severance We million as $X cash related reduction $X flow EBITDA expected. well due of as QX million to expect in payments headcount lower

shares for basic weighted outstanding, XX.X approximately For million average XXXX. expect we

Turning to fiscal year XXXX.

our us will that Albertsons profitably to investment expect will in over technology the a revenues down to XXXX. We once and the focus growing on impact business long-term. transitioned negative out on wind allow But business have

we estimate off about our come partnership, last top two on we impact years and based the of our XX% As the to revenues, of XX% between think our network. revenue line that may quarterly

below are the revenues these variable at average margin However, the gross level. rates margin

reduce this approximately shareholders. move progress our and million action Operator? value action forward expense and QX with reductions, As align business And benefit sharing toward these of that, and in impact have and in estimated this result focused profitability actions for building additional to Quotient will we XXXX your the QX and Between other [ph] changes. that on maximizing We to annual now $XX we changes, cost costs with QX of to has a you We with look future will savings to remain take of through profitability. plans revenues. take greater our better questions. forecasted as taken expect QX we forecasted an

Operator

from [Operator Instructions] Frankel Steve comes And first go Colliers. the ahead. with Please question

Steven Frankel

afternoon, Steven. Good

are last So of us you EBITDA what end in there -- it you factors coming were time there's a the you walk a the take those material taking or kind in QX last in reduction you is the about course. OpEx whether there to the thought [indiscernible] costs year. Could expectations relative the longer of its to the and was, where talking material in little through

Pam Strayer

question. Hi, answer Steve, that I Pam. this can is Yes,

off primarily come margins, about able a the when revenues We, nearly Really original our EBITDA, we're regarding to from So a come in around QX asked spend take story you of might expecting that QX. our to, this a QX. a of we said we kind was million. to about flattened $X had we get QX out quarter in where QX. million from by What drop forecasted to OpEx wanted But we that $X were that's that did OpEx, was. all we where bit it forecast to down last gross be expected

cost down So quarter-over-quarter $X we savings in better OpEx in coming million. by ended on up QX bringing

million take to and expect million between out $X We qX. -- $X to another million out now $X

we to QX. that between would and get assuming million that close that were $X So QX us

The is coming through look So over the if savings. hit changes. good, number in accounting you we revenue nearly cost

production. the in is that margin question about reason The came the a and impact on revenues a is really of that which the mix national having it's slowdown EBITDA. just negative So primary for in

So we talked about little a bit.

Steven Frankel

all? was Microsoft, there those lot the delay network like launches a partners launching of of at about And anticipation has didn't timing partner

Steven Boal

function bookings bit you're the we've we're about quite But -- announced fact, as our of strong the promotions as others quarter, well, then launched hearing or all supply the slow remarks in and down the in that a the No, X prepared also and fact areas letter. in said our U.S. a are -- a of stock about we it's we onboarding shareholder we've in noise right national bit, heading some in little a into chain, and X,

the So, momentary based month, cautious could a pause, bit. another what spring that possible. in to But we month, be a just and saw a it's it took be just then we back in first on down

Steven Frankel

just Albertsons. want on And clarification then Okay. a

that of but media gets some the entire your didn't next was That's that's and was year. business wound said from the agreements winding potentially correct. -- Albertsons the now between and with there I comments few think months. now expectation business, say down the between that the few but next we read away, the it well, Albertsons would we over the current the of the really down think RPM all end year, end go that over We'll be I I relationship months,

Steven Frankel

And retailer significant renewal? next the when is

Steven Boal

see Well, than say other until specific we to QX can't next not of year.

nothing till of QX So XXXX.

Steven Frankel

Steven. you, Thank

Steven Boal

Thank you.

Operator

next Instructions] with go question Please Bennett Capital. from comes ahead The Chad Craig-Hallum [Operator

Chad Bennett

question. my Great. Thanks for taking

of any that that or off-network kind comes So to don't gave business a off that. early in -- to on revenue. range Albertsons XX% think other as just network Pan, the indication there overall XX% I connect so means? the of fiscal a correlates on does Is percentage what of I you trying impact. in year with know dots 'XX your any how

Pam Strayer

it to to revenues our of I looking it, to our looks how a bit give to we're how does of size a from a of whether growth guideposts like, path revenues, history because going we back XX% want XX% would explain much kind so and trying forecast look outside our business. see Yes, We control. vary took was I that's of our back, try forward guess didn't Albertsons of to us But it.

So, looking using impact estimate is yes, back we're And you and going be. it's to history, sizable. try over what forward if that's what the to look

Steven Boal

Okay.

top is gross line a basis? So for top revenue one the line -- that on

Chad Bennett

Yes.

things the this $XX charge make non-GAAP pulling X.X And million of included contract. to quarter of a million just correct, about to related Albertsons we're out sure so EBITDA EBITDA, thinking thing, other the your

think had dollar I quarter. EBITDA back because So that last the in the some it then you and you added year that for million was into $X.X figure

So run would have for that DA, closer correct? EBIT the quarter, is rate been XX to the

Pam Strayer

The intangible non-cash impairment of $X.X charge. a is million

yes, we in So, include our that don't calculation. EBITDA

Chad Bennett

Okay, got charge noncash it. Yes, in just -- situation. and not related the a the since with its contract outlier

Pam Strayer

was right. signed. being It it's It's when That's noncash. off, asset originally was contract was an that written intangible the set up now

So back as when EBITDA, noncash charge. gets it added you're a calculating

Chad Bennett

transition. transition And early you in in in to gross Okay. business terms have going year next in then just correct? impact isn't whether exiting change, impact? year, quarter, million it's guess Is where the And that are net of that, fourth any the in of kind of accounting in relating where and the just to be, that right, the we insight curious the we're the related if to be that that other $XX Albertsons related to down question winding to I the the would quarter? was And

Pam Strayer

Right. to net. to that's the correct. No, entirely change gross that accounting Yes, from is related

Steven Boal

there be XXXX are will through But are timing, and exit little Yes. where through as largely of end transition had your some expected. QX, to we largely be on we we, the business the bit we'll question as at if, [indiscernible] we the And last.

media the promo the business? and side On of

Steven Boal

it. of all On

Pam Strayer

a out promo side, On for on there portion stage spaces. forma the of pro is that

revenue. an of all promo So it's not impact our

Steven Boal

that's national promo, right. But

So there's no impact.

Chad Bennett

it. Got

for taking Okay. my Thanks questions.

Steven Boal

you. it. got Thank You

Operator

any question-and-answer remarks. over now for conference concludes session. closing our the turn to This back I'll management

Steven Boal

operator, and for you today. us joining Thanks, thank all

to As you. our results on launch next in more made lower business which quarterly time, of beginning you streamlining the our our forward we upgrades turn, areas growing QX over to of and and as the allowing a months margin partners platform to years result are executing prepared rebate of earnings reach our of seeing back on demonstrated, until see and cost focus past high remarks. network weeks of over us scale business. our cash all periods call. of The to and next exit are we the allows us the our shorter strategy look you X several Thank in our heard We onboard our to

Pam Strayer

Good-bye.

Operator

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

You may now disconnect.