SOURCE: Marin Software

Marin Software

February 18, 2016 16:15 ET

Marin Software Announces Fourth Quarter and Full Year 2015 Financial Results

SAN FRANCISCO, CA--(Marketwired - Feb 18, 2016) - Marin Software Incorporated (NYSE: MRIN)

  • Reported fourth quarter Adjusted EBITDA of $3.5 million, an increase of $6.6 million, compared to ($3.1) million in the fourth quarter of 2014
  • Generated $4.0 million of cash in the quarter, compared to a decline of ($7.5) million in the fourth quarter of 2014
  • Reported first ever quarter of non-GAAP profitability, resulting in non-GAAP earnings per share of $0.04
  • Managed $7.8 billion in annualized marketing spend on Marin's platform

Marin Software Incorporated (NYSE: MRIN), provider of a leading cross-channel performance advertising cloud for advertisers and agencies, today announced financial results for the fourth quarter and full year ended December 31, 2015.

"We are pleased to report a strong finish to 2015. Not only did we exceed our revenue expectations in the fourth quarter, but we achieved positive Adjusted EBITDA, positive non-GAAP earnings per share and positive free cash flow for the first time in the Company's history," said David A. Yovanno, chief executive officer of Marin Software. "We are clearly making progress in transforming our business and we believe that our investments in the Marin platform position us to realize our multichannel Ad Cloud vision in 2016."

Fourth Quarter 2015 Financial Highlights:

  • Net revenues totaled $29.0 million, a year-over-year increase of 7% when compared to $27.0 million in the fourth quarter of 2014. On a non-GAAP constant currency basis, revenues increased year-over-year by 10% when compared to the fourth quarter of 2014.
  • GAAP gross profit was $19.6 million, resulting in a gross margin of 67%, compared to GAAP gross margin of 65% during the fourth quarter of 2014. Non-GAAP gross profit was $21.0 million, resulting in a non-GAAP gross margin of 72%, compared to non-GAAP gross margin of 69% during the fourth quarter of 2014.
  • GAAP income from operations was ($2.1) million, compared to ($7.9) million for the fourth quarter of 2014. GAAP operating margin was (7%), compared to (29%) during the fourth quarter of 2014. Non-GAAP income from operations was $1.7 million, compared to ($4.6) million for the fourth quarter of 2014. Non-GAAP operating margin was 6%, compared to (17%) during the fourth quarter of 2014.
  • GAAP net income was ($2.1) million or ($0.06) per share based on 37.2 million weighted average shares outstanding. This compares to ($8.8) million or ($0.25) per share based upon 35.1 million weighted average shares outstanding during the fourth quarter of 2014.
  • Non-GAAP net income was $1.7 million or $0.04 per share based upon 37.2 million weighted average shares outstanding. This compares to ($5.3) million or ($0.15) per share based on 35.1 million weighted average shares outstanding during the fourth quarter of 2014.
  • Adjusted EBITDA was $3.5 million, compared to ($3.1) million in the fourth quarter of 2014.
  • As of December 31, 2015, cash and cash equivalents totaled $37.3 million, up $4.0 million quarter-over-quarter, and compared to $68.3 million as of December 31, 2014.

Full Year 2015 Financial Highlights:

  • Net revenues totaled $108.5 million, a year-over-year increase of 9% when compared to $99.4 million in 2014. On a non-GAAP constant currency basis, revenues increased year-over-year by 14% when compared to 2014.
  • GAAP gross profit was $68.4 million, resulting in a gross margin of 63%, compared to GAAP gross margin of 64% during 2014. Non-GAAP gross profit was $73.3, resulting in a non-GAAP gross margin of 68%, compared to a non-GAAP gross margin of 67% during 2014.
  • GAAP income from operations was ($32.4) million, compared to ($34.0) million in 2014. GAAP operating margin was (30%), compared to (34%) during 2014. Non-GAAP income from operations was ($14.9) million, compared to ($24.5) million for 2014. Non-GAAP operating margin was (14%), compared to (25%) during 2014.
  • GAAP net income was ($33.3) million or ($0.91) per share based on 36.6 million weighted average shares outstanding. This compares to ($33.2) million or ($0.97) per share based on 34.2 million weighted average shares outstanding during 2014.
  • Non-GAAP net income was ($15.7) million or ($0.43) per share based on 36.6 million weighted average shares outstanding. This compares to ($25.9) million or ($0.76) per share based on 34.2 million weighted average shares outstanding during 2014.
  • Adjusted EBITDA was ($7.9) million, compared to ($18.8) million in 2014.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading "Non-GAAP Financial Measures."

Fourth Quarter 2015 Business and Product Release Highlights

  • Released PositionLock™, an intraday bidding optimization feature designed to maintain customers' preferred ad positions for each device type for their high traffic keywords.
  • Released several improvements for the Google Shopping Campaigns offering, including product hierarchy management which enables efficient and scalable management of Google Shopping campaigns.
  • Released support for Google Call Only Ads to help improve sales from mobile shoppers.
  • Released support for Bing Shopping Campaigns and also Bing Native ads in support of retailers advertising strategies and Microsoft owned websites respectively.
  • Released a number of enhancements to the display advertising offering including creative reach and frequency-based reporting and optimization, and bulk creative management. Marin also established several direct integrations with several leading ad exchanges including OpenX and Rubicon Project.
  • Completed a number of strategic integrations with leading third party audience data and onboarding technology providers including Tune, adjust, AppsFlyer and LiveRamp (an Acxiom-owned company).

Financial Outlook:
As of February 18, 2016, Marin is initiating guidance for its first quarter 2016 as follows:

   
Forward-Looking Guidance  
In millions, except per share data  
             
    Range of Estimate  
    From     To  
Three Months Ending March 31, 2016                
  Revenues, net   $ 26.4     $ 27.0  
  Non-GAAP income (loss) from operations   $ (1.9 )   $ (1.3 )
  Non-GAAP net income (loss) per share   $ (0.06 )   $ (0.04 )
  Weighted-average shares outstanding     37.8          
                   

Non-GAAP loss from operations and non-GAAP net loss per share excludes the effects of stock-based compensation, amortization of internally developed software, amortization of intangible assets, noncash expenses related to warrants, non-recurring costs associated with acquisitions and restructurings, benefit from income taxes related to acquisitions, and capitalization of internally developed software.

Quarterly Results Conference Call
Marin Software will host a conference call today at 2:00 PM Pacific Time (5:00 PM Eastern Time) to review the Company's financial results for the quarter and full year ended December 31, 2015, and its outlook for the future. To access the call, please dial (877) 705-6003 in the U.S. or (201) 493-6725 internationally with reference to the company name and conference title. A live webcast of the conference call will be accessible from Marin Software's website at: http://investor.marinsoftware.com/. Following the completion of the call through 11:59 p.m. Eastern Time on February 25, 2016, a recording will be available for replay at: http://investor.marinsoftware.com/ and a telephone replay will be available by dialing (877) 870-5176 in the U.S. or (858) 384-5517 internationally with the recording access code 13629366.

About Marin Software
Marin Software Incorporated (NYSE: MRIN) provides a leading cross-channel performance advertising cloud for advertisers and agencies to measure, manage and optimize more than $7.8 billion in annualized ad spend across the web and mobile devices. Offering an integrated SaaS ad management platform for search, social, and display advertising, Marin helps digital marketers improve financial performance, save time, and make better decisions. Advertisers use Marin to create, target and convert precise audiences based on recent buying signals from users' search, social, and display interactions. Headquartered in San Francisco with offices in eight countries, Marin's technology powers marketing campaigns around the globe. For more information about Marin's products, please visit: http://www.marinsoftware.com.

Non-GAAP Financial Measures
Marin uses certain non-GAAP financial measures in this release. Marin uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance. Marin believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial measures that Marin uses may differ from measures that other companies may use.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Non-GAAP expenses, measures and net loss per share. Marin defines non-GAAP sales and marketing, non-GAAP research and development, non-GAAP general and administrative, non-GAAP gross profit, non-GAAP operating loss and non-GAAP net loss as the respective GAAP balances, adjusted for stock-based compensation expense, the amortization of intangible assets, the capitalization of internally developed software, noncash expenses related to the issuance of warrants, the amortization of internally developed software, the benefit from income taxes related to acquisition and the non-recurring costs associated with acquisitions and restructurings. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by the weighted average shares outstanding that are adjusted to assume the conversion of outstanding preferred shares to common shares as of the beginning of the period.

Adjusted EBITDA. Marin defines Adjusted EBITDA as net income (loss), adjusted for stock-based compensation expense, depreciation, the amortization of internally developed software, the amortization of intangible assets, the capitalization of internally developed software, interest expense, net, the benefit from or provision for income taxes, other income or expenses, net and the non-recurring costs associated with acquisitions and restructurings. These amounts are often excluded by other companies to help investors understand the operational performance of their business. The Company uses Adjusted EBITDA as a measurement of its operating performance and for bonus compensation purposes, because it assists in comparing the operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. Adjusted EBITDA reflects an additional way of viewing aspects of the operations that Marin believes, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting its business.

Non-GAAP constant currency revenues and growth. Marin defines non-GAAP constant currency revenues as total revenues excluding the impact of foreign exchange rate movements, and uses it to determine the constant currency revenue growth on a year-over-year basis. Non-GAAP constant currency revenues are calculated by translating current quarter or year-to-date revenues using the average prior period exchange rates. Constant currency revenue growth (expressed as a percentage) is calculated by determining the increase in current quarter and year-to-date revenues over prior period revenues, where current quarter and year-to-date international revenues are translated using prior period exchange rates. The Company considers non-GAAP constant currency revenues and growth as useful metrics as they facilitate management's internal comparison to historical performance, because they exclude the effects of foreign currency volatility that are not indicative of the Company's operating results. Marin believes they provide useful supplemental information to investors about the financial performance of the business, enable a comparison of financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management in operating the business.

Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Marin's business, growth, benefits of investment in Marin's software platform, position in the industry, product capabilities and adjusted EBITDA projections and other future financial results, including its outlook for the first quarter of 2016. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to our ability to grow sales to new and existing customers; our ability to expand our sales and marketing capabilities; our ability to retain and attract qualified management and technical personnel; competitive factors, including but not limited to pricing pressures, entry of new competitors and new applications; quarterly fluctuations in our operating results due to a number of factors; inability to adequately forecast our future revenue, expenses, Adjusted EBITDA, cash flows or other financial metrics; delays, reductions or slower growth in the amount spent on online and mobile advertising and the development of the market for cloud-based software; progress in our efforts to update our software platform; adverse changes in our relationships with and access to publishers and advertising agencies; level of usage and advertising spend managed on our platform; our ability to expand sales of our solutions in channels other than search advertising; any slow-down in the search advertising market generally; shift in customer digital advertising budgets from search to segments in which we are not as deeply penetrated; the development of the market for digital advertising; acceptance and continued usage of our platform and services by customers and our ability to provide high-quality technical support to our customers; material defects in our platform including those resulting from any updates we introduce to our platform, service interruptions at our single third-party data center or breaches in our security measures; our ability to develop enhancements to our platform; our ability to protect our intellectual property; our ability to manage risks associated with international operations; the impact of fluctuations in currency exchange rates, particularly an increase in the value of the dollar; near term changes in sales of our software services or spend under management may not be immediately reflected in our results due to our subscription business model; adverse changes in general economic or market conditions; and the ability to acquire and integrate other businesses, including our acquisitions of Perfect Audience and SocialMoov. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent report on Form 10-K, recent reports on Form 10-Q and current reports on Form 8-K which we may file from time to time, all of which are available free of charge at the SEC's website at www.sec.gov. Any of these risks could cause actual results to differ materially from expectations set forth in the forward-looking statements. All forward-looking statements in this press release reflect Marin's expectations as of February 18, 2016. Marin assumes no obligation to, and expressly disclaims any obligation to update any such forward-looking statements after the date of this release.

   
   
Marin Software Inc.  
Condensed Consolidated Balance Sheets  
(On a GAAP basis)  
   
    December 31,     December 31,  
(Unaudited; in thousands, except par value)   2015     2014  
Assets                
Current assets                
  Cash and cash equivalents   $ 37,326     $ 68,253  
  Accounts receivable, net     21,718       18,726  
  Prepaid expenses and other current assets     4,186       4,751  
    Total current assets     63,230       91,730  
Property and equipment, net     21,817       16,274  
Goodwill     19,417       11,527  
Intangible assets, net     10,405       7,399  
Other noncurrent assets     1,323       1,287  
    Total assets   $ 116,192     $ 128,217  
Liabilities and Stockholders' Equity                
Current liabilities                
  Accounts payable   $ 1,710     $ 3,737  
  Accrued expenses and other current liabilities     11,185       12,053  
  Deferred revenues     1,430       2,052  
  Current portion of long-term debt     1,384       2,587  
    Total current liabilities     15,709       20,429  
Long-term debt, less current portion     1,557       621  
Other long-term liabilities     4,795       1,050  
    Total liabilities     22,061       22,100  
Stockholders' equity                
  Common stock, $0.001 par value     37       35  
  Additional paid-in capital     275,604       253,221  
  Accumulated deficit     (179,733 )     (146,392 )
  Accumulated other comprehensive loss     (1,777 )     (747 )
    Total stockholders' equity     94,131       106,117  
    Total liabilities and stockholders' equity   $ 116,192     $ 128,217  
                     
                     
                     
Marin Software Inc.  
Condensed Consolidated Statements of Operations  
(On a GAAP basis)  
   
    Three Months Ended
December 31,
    Year Ended
December 31,
 
(Unaudited; in thousands, except per share data)   2015     2014     2015     2014  
Revenues, net   $ 29,015     $ 27,002     $ 108,530     $ 99,354  
Cost of revenues (1) (2) (3)     9,454       9,323       40,137       35,614  
    Gross profit     19,561       17,679       68,393       63,740  
Operating expenses (1) (2) (3)                                
Sales and marketing     9,076       11,563       45,132       47,716  
Research and development     7,478       8,217       33,318       28,751  
General and administrative     5,134       5,791       22,391       21,257  
    Total operating expenses     21,688       25,571       100,841       97,724  
    Income (loss) from operations     (2,127 )     (7,892 )     (32,448 )     (33,984 )
Interest income (expense), net     (36 )     (16 )     (118 )     (177 )
Other income (expenses), net     356       (385 )     222       (466 )
    Loss before (provision for) benefit from income taxes     (1,807 )     (8,293 )     (32,344 )     (34,627 )
(Provision for) benefit from income taxes     (331 )     (537 )     (1,005 )     1,456  
    Net income (loss)   $ (2,138 )   $ (8,830 )   $ (33,349 )   $ (33,171 )
Net income (loss) per common share, basic and diluted   $ (0.06 )   $ (0.25 )   $ (0.91 )   $ (0.97 )
Weighted-average shares outstanding, basic and diluted     37,212       35,060       36,580       34,210  
                                 
(1) Includes stock-based compensation expense as follows:                                
  Cost of revenues   $ 371     $ 189     $ 1,171     $ 765  
  Sales and marketing     433       513       2,537       1,895  
  Research and development     1,687       1,337       7,518       3,785  
  General and administrative     1,088       849       4,393       2,797  
    Total   $ 3,579     $ 2,888     $ 15,619     $ 9,242  
                                 
(2) Includes amortization of intangible assets as follows:                                
  Cost of revenues   $ 271     $ 171     $ 1,033     $ 399  
  Sales and marketing     247       112       921       261  
  Research and development     271       170       1,034       397  
  General and administrative     37       32       146       75  
    Total   $ 826     $ 485     $ 3,134     $ 1,132  
                                 
(3) Includes restructuring related expenses as follows:                                
  Cost of revenues   $ 68     $ --     $ 173     $ --  
  Sales and marketing     59       --       718       --  
  Research and development     --       --       53       --  
  General and administrative     6       --       270       --  
    Total   $ 133     $ --     $ 1,214     $ --  
                                     
                                     
                                     
Marin Software Inc.  
Condensed Consolidated Statements of Cash Flows  
(On a GAAP basis)  
   
    Year Ended December 31,  
(Unaudited; in thousands)   2015     2014  
Operating activities            
Net income (loss)   $ (33,349 )   $ (33,171 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities                
  Depreciation     6,993       5,669  
  Amortization of internally developed software     2,550       1,905  
  Amortization of intangible assets     3,134       1,132  
  Loss on disposal of property and equipment     19       16  
  Unrealized foreign currency gains     (216 )     --  
  Noncash interest expense related to warrants issued in connection with debt     42       123  
  Stock-based compensation related to equity awards and restricted stock     15,619       9,242  
  Provision for bad debts     1,210       821  
  Deferred income tax benefits     (177 )     (2,258 )
  Excess tax benefits from stock-based award activities     (3 )     (126 )
  Changes in operating assets and liabilities, net of effect of acquisition                
    Accounts receivable     (2,986 )     (4,561 )
    Prepaid expenses and other current assets     575       (2,009 )
    Other assets     348       (497 )
    Accounts payable     (1,597 )     1,387  
    Deferred revenues     (625 )     (540 )
    Accrued expenses and other current liabilities     1,382       (1,523 )
      Net cash provided by (used in) operating activities     (7,081 )     (24,390 )
Investing activities                
Purchases of property and equipment     (8,584 )     (5,317 )
Capitalization of internally developed software     (5,568 )     (3,146 )
Acquisition of business, net of cash acquired     (7,738 )     (4,151 )
      Net cash provided by (used in) investing activities     (21,890 )     (12,614 )
Financing activities                
Repayment of notes payable     (3,649 )     (3,130 )
Debt issuance costs     (53 )     --  
Repurchase of unvested shares     (2 )     (20 )
Proceeds from exercise of common stock options     1,439       2,472  
Proceeds from employee stock purchase plan, net     968       1,402  
Excess tax benefits from stock-based award activities     3       126  
      Net cash provided by (used in) financing activities     (1,294 )     850  
        Effect of foreign exchange rate changes on cash and cash equivalents     (662 )     --  
      Net increase (decrease) in cash and cash equivalents     (30,927 )     (36,154 )
Cash and cash equivalents                
Beginning of period     68,253       104,407  
End of period   $ 37,326     $ 68,253  
Supplemental disclosure of noncash investing and financing activities                
Purchases of property and equipment recorded in accounts payable and accrued expenses   $ --     $ 1,364  
Acquisition of equipment through capital leases     2,350       --  
Issuance of common stock under employee stock purchase plan     1,035       1,402  
Issuance of common stock in connection with business combination     4,338       11,195  
                 
                 
                 
Marin Software Inc.
Reconciliation of GAAP to Non-GAAP Expenses (1)
   
  Three Months Ended     Year Ended     Three Months Ended     Year Ended  
(Unaudited; in thousands) March 31,
2014
    June 30,
2014
    September 30, 2014     December 31, 2014     December 31, 2014     March 31,
2015
    June 30,
2015
    September 30, 2015     December 31, 2015     December 31, 2015  
Sales and Marketing (GAAP) $ 11,989     $ 11,978     $ 12,186     $ 11,563     $ 47,716     $ 12,157     $ 13,064     $ 10,835     $ 9,076     $ 45,132  
  Less Stock-based compensation   (403 )     (449 )     (530 )     (513 )     (1,895 )     (715 )     (954 )     (435 )     (433 )     (2,537 )
  Less Amortization of intangible assets   --       (37 )     (112 )     (112 )     (261 )     (180 )     (247 )     (247 )     (247 )     (921 )
  Less Restructuring related expenses   --       --       --       --       --       --       --       (659 )     (59 )     (718 )
Sales and Marketing (Non-GAAP) $ 11,586     $ 11,492     $ 11,544     $ 10,938     $ 45,560     $ 11,262     $ 11,863     $ 9,494     $ 8,337     $ 40,956  
Research and Development (GAAP) $ 6,083     $ 6,627     $ 7,824     $ 8,217     $ 28,751     $ 8,484     $ 9,194     $ 8,162     $ 7,478     $ 33,318  
  Less Stock-based compensation   (437 )     (649 )     (1,362 )     (1,337 )     (3,785 )     (1,627 )     (2,340 )     (1,864 )     (1,687 )     (7,518 )
  Less Amortization of intangible assets   --       (57 )     (170 )     (170 )     (397 )     (216 )     (276 )     (271 )     (271 )     (1,034 )
  Less Restructuring related expenses   --       --       --       --       --       --       --       (53 )     --       (53 )
  Plus Capitalization of internally developed software   617       729       1,035       765       3,146       827       1,597       1,683       1,461       5,568  
Research and Development (Non-GAAP) $ 6,263     $ 6,650     $ 7,327     $ 7,475     $ 27,715     $ 7,468     $ 8,175     $ 7,657     $ 6,981     $ 30,281  
General and Administrative (GAAP) $ 4,416     $ 5,368     $ 5,682     $ 5,791     $ 21,257     $ 5,720     $ 5,655     $ 5,882     $ 5,134     $ 22,391  
  Less Stock-based compensation   (446 )     (651 )     (851 )     (849 )     (2,797 )     (924 )     (1,323 )     (1,058 )     (1,088 )     (4,393 )
  Less Amortization of intangible assets   --       (11 )     (32 )     (32 )     (75 )     (35 )     (37 )     (37 )     (37 )     (146 )
  Less Acquisition related expenses   --       (217 )     (8 )     (125 )     (350 )     (408 )     (128 )     (68 )     (9 )     (613 )
  Less Restructuring related expenses   --       --       --       --       --       --       --       (264 )     (6 )     (270 )
General and Administrative (Non-GAAP) $ 3,970     $ 4,489     $ 4,791     $ 4,785     $ 18,035     $ 4,353     $ 4,167     $ 4,455     $ 3,994     $ 16,969  
                                                                               
(1) The sum of the quarterly financial information may vary from full year financial information due to rounding.
   
   
   
Marin Software Inc.
Reconciliation of GAAP to Non-GAAP Measures (1)
   
  Three Months Ended     Year Ended     Three Months Ended     Year Ended  
(Unaudited; in thousands) March 31, 2014     June 30, 2014     September 30, 2014     December 31, 2014     December 31, 2014     March 31, 2015     June 30, 2015     September 30, 2015     December 31, 2015     December 31, 2015  
Gross Profit (GAAP) $ 14,432     $ 15,090     $ 16,539     $ 17,679     $ 63,740     $ 16,704     $ 16,176     $ 15,952     $ 19,561     $ 68,393  
  Plus Stock-based compensation   211       192       173       189       765       229       322       249       371       1,171  
  Plus Amortization of internally developed software   445       465       480       515       1,905       542       625       683       700       2,550  
  Plus Amortization of intangible assets   --       57       171       171       399       215       276       271       271       1,033  
  Plus Restructuring related expenses   --       --       --       --       --       --       --       105       68       173  
Gross Profit (Non-GAAP) $ 15,088     $ 15,804     $ 17,363     $ 18,554     $ 66,809     $ 17,690     $ 17,399     $ 17,260     $ 20,971     $ 73,320  
Operating Income (Loss) (GAAP) $ (8,056 )   $ (8,883 )   $ (9,153 )   $ (7,892 )   $ (33,984 )   $ (9,657 )   $ (11,737 )   $ (8,927 )   $ (2,127 )   $ (32,448 )
  Plus Stock-based compensation   1,497       1,941       2,916       2,888       9,242       3,495       4,939       3,606       3,579       15,619  
  Plus Amortization of internally developed software   445       465       480       515       1,905       542       625       683       700       2,550  
  Plus Amortization of intangible assets   --       162       485       485       1,132       646       836       826       826       3,134  
  Plus Acquisition related expenses   --       217       8       125       350       408       128       68       9       613  
  Plus Restructuring related expenses   --       --       --       --       --       --       --       1,081       133       1,214  
  Less Capitalization of internally developed software   (617 )     (729 )     (1,035 )     (765 )     (3,146 )     (827 )     (1,597 )     (1,683 )     (1,461 )     (5,568 )
Operating Income (Loss) (Non-GAAP) $ (6,731 )   $ (6,827 )   $ (6,299 )   $ (4,644 )   $ (24,501 )   $ (5,393 )   $ (6,806 )   $ (4,346 )   $ 1,659     $ (14,886 )
Net Income (Loss) (GAAP) $ (8,306 )   $ (6,791 )   $ (9,244 )   $ (8,830 )   $ (33,171 )   $ (9,660 )   $ (12,047 )   $ (9,504 )   $ (2,138 )   $ (33,349 )
  Plus Stock-based compensation   1,497       1,941       2,916       2,888       9,242       3,495       4,939       3,606       3,579       15,619  
  Plus Amortization of internally developed software   445       465       480       515       1,905       542       625       683       700       2,550  
  Plus Amortization of intangible assets   --       162       485       485       1,132       646       836       826       826       3,134  
  Plus Noncash expenses related to warrants   46       46       22       9       123       9       8       19       6       42  
  Plus Acquisition related expenses   --       217       8       125       350       408       128       68       9       613  
  Plus Restructuring related expenses   --       --       --       --       --       --       --       1,081       133       1,214  
  Less Capitalization of internally developed software   (617 )     (729 )     (1,035 )     (765 )     (3,146 )     (827 )     (1,597 )     (1,683 )     (1,461 )     (5,568 )
  Less Effects of income taxes related to acquisition   --       (2,603 )     --       318       (2,285 )     --       --       --       --       --  
Net Income (Loss) (Non-GAAP) $ (6,935 )   $ (7,292 )   $ (6,368 )   $ (5,255 )   $ (25,850 )   $ (5,387 )   $ (7,108 )   $ (4,904 )   $ 1,654     $ (15,745 )
                                                                               
(1) The sum of the quarterly financial information may vary from full year financial information due to rounding.
   
   
   
Marin Software Inc.
Calculation of Non-GAAP Earnings Per Share (1)
   
  Three Months Ended     Year Ended     Three Months Ended   Year Ended  
(Unaudited; in thousands, except per share data) March 31, 2014     June 30, 2014     September 30, 2014     December 31, 2014     December 31, 2014     March 31, 2015     June 30, 2015     September 30, 2015     December 31, 2015   December 31, 2015  
Net Income (Loss) (Non-GAAP) $ (6,935 )   $ (7,292 )   $ (6,368 )   $ (5,255 )   $ (25,850 )   $ (5,387 )   $ (7,108 )   $ (4,904 )   $ 1,654   $ (15,745 )
Weighted-average shares outstanding, basic and diluted   33,112       33,771       34,849       35,060       34,210       35,745       36,389       36,953       37,212     36,580  
Non-GAAP net income (loss) per common share, basic and diluted $ (0.21 )   $ (0.22 )   $ (0.18 )   $ (0.15 )   $ (0.76 )   $ (0.15 )   $ (0.20 )   $ (0.13 )   $ 0.04   $ (0.43 )
                                                                             
                                                                             
Marin Software Inc.                              
Reconciliation of Net Income (Loss) to Adjusted EBITDA (1)                              
   
  Three Months Ended     Year Ended     Three Months Ended     Year Ended  
(Unaudited; in thousands) March 31, 2014     June 30, 2014     September 30, 2014     December 31, 2014     December 31, 2014     March 31, 2015     June 30, 2015     September 30, 2015     December 31, 2015     December 31, 2015  
Net Income (Loss) $ (8,306 )   $ (6,791 )   $ (9,244 )   $ (8,830 )   $ (33,171 )   $ (9,660 )   $ (12,047 )   $ (9,504 )   $ (2,138 )   $ (33,349 )
  Depreciation   1,350       1,367       1,428       1,524       5,669       1,630       1,675       1,861       1,827       6,993  
  Amortization of internally developed software   445       465       480       515       1,905       542       625       683       700       2,550  
  Amortization of intangible assets   --       162       485       485       1,132       646       836       826       826       3,134  
  Interest expense, net   66       62       33       16       177       11       8       63       36       118  
  Provision for (benefit from) income taxes   188       (2,440 )     259       537       (1,456 )     236       138       300       331       1,005  
EBITDA $ (6,257 )   $ (7,175 )   $ (6,559 )   $ (5,753 )   $ (25,744 )   $ (6,595 )   $ (8,765 )   $ (5,771 )   $ 1,582     $ (19,549 )
  Stock-based compensation   1,497       1,941       2,916       2,888       9,242       3,495       4,939       3,606       3,579       15,619  
  Capitalization of internally developed software   (617 )     (729 )     (1,035 )     (765 )     (3,146 )     (827 )     (1,597 )     (1,683 )     (1,461 )     (5,568 )
  Acquisition related expenses   --       217       8       125       350       408       128       68       9       613  
  Restructuring related expenses   --       --       --       --       --       --       --       1,081       133       1,214  
  Other (income) expenses, net   (4 )     286       (201 )     385       466       (244 )     164       214       (356 )     (222 )
Adjusted EBITDA $ (5,381 )   $ (5,460 )   $ (4,871 )   $ (3,120 )   $ (18,832 )   $ (3,763 )   $ (5,131 )   $ (2,485 )   $ 3,486     $ (7,893 )
                                                                               
(1) The sum of the quarterly financial information may vary from full year financial information due to rounding.
   
   
   
Marin Software Inc.  
Non-GAAP Constant Currency Revenue Reconciliation (1)  
   
    Three Months Ended      
    December 31,   December 31,   Year-Over-Year  
(Unaudited; in thousands)   2015   2014   Growth  
Revenues, as reported   $ 29,015   $ 27,002   7 %
Foreign currency exchange impact on 2015 revenues using 2014 rates     776     --   --  
Revenues, at constant currency   $ 29,791   $ 27,002   10 %
                   
    Year Ended      
    December 31,   December 31,   Year-Over-Year  
(Unaudited; in thousands)   2015   2014   Growth  
Revenues, as reported   $ 108,530   $ 99,354   9 %
Foreign currency exchange impact on 2015 revenues using 2014 rates     4,337     --   --  
Revenues, at constant currency   $ 112,867   $ 99,354   14 %
                   
(1) Constant currency excludes the impact of foreign currency fluctuations and is computed by applying the average exchange rates from the three months and year ended December 31, 2014, to the revenues during the corresponding periods in 2015.

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