First Quarter 2022

  • Quarterly Revenue of $78.5M
  • GAAP Net Loss of $26.3M
  • Adjusted EBITDA of ($7.1)M

SALT LAKE CITY–(BUSINESS WIRE)–Quotient Technology Inc. (NYSE: QUOT), the leading digital media and promotions technology company, today reported financial results for the first quarter ended March 31, 2022. Quotient’s complete first quarter 2022 financial results and management commentary can be found by accessing the Company’s stockholder letter under Key Resources on the overview page of the investor relations website.

“2022 is off to a solid start. We continue to focus on transforming Quotient’s business model from providing individual transactions to offering scalable solutions. I have the utmost faith in Matt and the leadership team to deliver strong revenue improvement, margin expansion and sustainable, profitable growth in the future,” said Steven Boal, CEO.

Matt Krepsik, CTO and CEO-Designee added, “We are making progress executing our strategy, leveraging the strength of our technology platform and the reach of our networks to make it easier for brands to reach consumers and shoppers to utilize promotions. We believe we will create value by delivering on our three growth pillars to expand our promotions network, simplify retail media buying and integrate media and promotions to drive outcomes for brands. As we enhance our product portfolio, streamline our business operations and expand our network expansion model, we believe Quotient will yield meaningful long-term returns for all of our stakeholders.”

As of February 26th, we fully exited our relationship with Albertsons Companies, Inc. (Albertsons). While we implemented cost cutting measures in advance of their transitioning off our platform, certain infrastructure was required to maintain service to Albertsons and to minimize disruption to our consumer packaged goods (CPG) clients. With the exiting of Albertsons now complete, we intend to focus on removing related stranded overhead costs, and intend to continue to lower our operating expenses over the course of the year.

As discussed previously, due to changes in our business model, portions of our media and promotions business have moved from gross revenue recognition to net revenue recognition, excluding third-party cost of revenues. Our Q1 2022 guidance assumed a reduction in our revenue of $15 million based on our estimate of the impact of these changes. The actual reduction to revenue was approximately $13 million. There is no impact from these adjustments on gross profits, adjusted EBITDA, operating cash flow or EPS. Given the impact these business changes will have on our reported revenue and our gross margin, we believe the best way to look at our business going forward will be on a gross profit basis.

Quotient continues to serve its 2,000+ brand partners in delivering performance-based marketing solutions designed to produce a high return on investment (ROI). The company’s focus remains on innovating to deliver further flexibility, automation and personalization to advertisers and retailers, and ultimately on increasing value to shoppers.

Outlook

Our Q2 and FY 2022 guidance reflects the loss of Albertsons in late February 2022 as well as an estimate of the impact to revenue from the transition of a portion of our promotions and media revenues to be recognized net of third-party costs.

For the second quarter of 2022 we expect:

  • Revenue: $68 million to $76 million
  • Non-GAAP Gross Profit: $35 million to $39 million
  • Adjusted EBITDA: ($2) million to $2 million
  • Operating Cash Flow: $7 million to $12 million

We reiterate our guidance for the full year 2022:

  • Revenue: $330 million to $345 million
  • Non-GAAP Gross Profit: $180 million to $190 million
  • Adjusted EBITDA: $35 million to $45 million
  • Operating Cash Flow: $15 million to $25 million

Call Information

The Company has posted a stockholder letter and an earnings presentation on the Investor Relations section of the Company’s website at: http://investors.quotient.com/. Management will host a conference call and live webcast to discuss the highlights of the quarter and address questions today at 5:00 p.m. ET/ 2:00 p.m. PT.

To access the call, we encourage you to pre-register to eliminate long wait times using this link: Quotient Q1 2022 Earnings Pre Registration. After registering, a confirmation will be sent via email and will include dial-in details and a unique PIN code for entry to the call. Registration will be open through the live call. You may also access the call and register with a live operator by dialing 1 (844) 200 6205, 1 (833) 950 0062 for Canada or +1 (929) 526 1599 for outside the U.S. You will be able to access the call by using code 501372. We suggest registering for call at least 15 minutes prior to the 2:00 p.m. PDT start time. The live webcast and all accompanying materials 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 reports its financial statements in accordance with generally accepted accounting principles in the United States (GAAP) and the rules of the Securities and Exchange Commission (SEC). To supplement its financial statements presented in accordance with GAAP, Quotient provides investors in this press release with non-GAAP Gross Profit, non-GAAP Gross Margin, Adjusted EBITDA, Adjusted EBITDA margin and non-GAAP Operating Expenses, each a non-GAAP financial measure. Quotient believes that these non-GAAP measures provide investors with additional useful information used by Quotient’s management and Board of Directors for financial and operating decision making. In particular, Quotient believes that the exclusion of certain income and expenses in calculating these metrics can provide useful measures for period-to-period comparisons of its core business as well as a useful comparison to peer companies.

Quotient defines non-GAAP Gross Profit as revenue less cost of revenues adjusted for stock-based compensation, amortization of acquired intangible assets, and restructuring charges, and non-GAAP Gross Margin as non-GAAP Gross Profit divided by Revenue.

Quotient defines Adjusted EBITDA as net income (loss) adjusted for interest expense, provision for (benefit from) income taxes, other (income) expense, net, depreciation and amortization, stock-based compensation, change in fair value of contingent consideration, impairment of certain intangible assets, certain acquisition-related costs, impairment of certain long-lived and right-of-use assets, shareholder activism response costs and restructuring charges. In addition, Quotient defines Adjusted EBITDA margin as the ratio of Adjusted EBITDA and revenues; and non-GAAP operating expenses as operating expenses adjusted for changes in fair value of contingent consideration, stock-based compensation, amortization of acquired intangible assets, restructuring charges, acquisition related costs, impairment of certain long-lived and right-of-use assets, and shareholder activism response costs.

Quotient excludes certain GAAP items from these measures because it believes these items are not indicative of ordinary results of operations and do not reflect expected future operating expenses. Additionally, certain items are inconsistent in size and frequency—making it difficult to contribute to a meaningful evaluation of Quotient’s current or past operating performance.

There are a number of limitations related to the use of these non-GAAP financial measures. Quotient compensates for these limitations by providing specific information regarding the GAAP amount excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant GAAP financial measures.

These non-GAAP financial measures are not intended to be considered in isolation from, as substitute for, or as superior to the corresponding financial measure prepared in accordance with GAAP. Because of these and other limitations, the non-GAAP financial measures used in this press release should be considered along with other GAAP-based financial performance measures, including various cash flow metrics, net income (loss) and Quotient’s other GAAP financial results.

For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures, see “Reconciliation of Net Loss to Adjusted EBITDA and Adjusted EBITDA Margin”, “Reconciliation of Gross Profit to Non-GAAP Gross Profit”, “Reconciliation of Operating Expenses to Non-GAAP Operating Expenses” and “Reconciliation of Gross Profit to Non-GAAP Gross Profit (Forecasted)” included in this press release.

A reconciliation of the Adjusted EBITDA guidance metrics, which are non-GAAP guidance measures, to a corresponding GAAP measure is not available on a forward-looking basis without unreasonable efforts due to the high variability and low visibility of certain (income) expense items that are excluded in calculating Adjusted EBITDA.

Forward-Looking Statements

This press release contains forward-looking statements concerning the Company’s current expectations and projections about future events and financial trends affecting its business. Forward-looking statements in this press release include the Company’s ability to transform its business model from one based on providing individual transactions to one offering scalable solutions; the Company’s planned business model change as setting the Company up for strong revenue improvement, margin expansion and sustainable, profitable growth in the future; the Company announcements in the near term about new partnerships; the Company’s continuing to build out its media demand side platform by providing automated and self-serve solutions that make it easy to plan, build, buy and measure campaigns and simplify campaign execution, and the expectation that this will lead to improved ROI for clients and better economics for the Company; the Company’s intent to focus on removing Albertsons-related overhead costs, and its intent to continue to lower its operating expenses over the remainder of fiscal 2022; Gross Profit as being the best way to assess the Company’s business going forward; the Company’s performance-based marketing solutions as being designed to produce a high ROI; and the future financial performance of Quotient including estimates for the second quarter of 2022 and the full fiscal year 2022, which include the Company’s estimate of the impact to revenue from the transition of a portion of the Company’s promotions and media revenues to be recognized net of third-party costs; Forward-looking statements are based on the Company’s current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the Company’s strategies relating to the growth of its platforms and its business, including pricing strategies; the Company’s expectations regarding the shift to digital promotions and advertising from off-line channels, and the size of the addressable market for the solutions the Company offers; the Company’s ability to adapt to CPGs and retailer’s changes in marketing goals, strategies and budgets and the timing of their spending on media and promotions solutions; the rate at which transitions in the Company’s business model will occur and the expected benefits to advertisers and retail partners; the Company’s ability to successfully and timely implement changes in its business model, including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing and increasing the proportion of self-service and automated solutions on the Company’s platforms; the Company’s ability to maintain and grow the size of its targetable audience; the Company’s ability to expand the use of its media and promotions offerings by consumers; the Company’s ability to innovate its consumer solutions and experiences to retain and grow its consumer base; the Company’s ability to increase revenues from CPGs already on its platforms, as well as expand its CPG base of customers; the Company’s ability to increase the number of smaller CPG advertisers that use, or desire to use, the Company’s solutions; the Company’s ability to maintain and grow retailers in its network, increase the number of marketing distribution partners in its network, and expand its network with new verticals; the Company’s ability to expand the number, variety, quality, and relevance of promotions available on the Company’s platforms and through its network; the Company’s ability to grow its digital promotions business by increasing the reach of its promotions platforms, and the Company’s ability to successfully execute and expand its promotions solutions into areas such as national promotions and national rebates; and the Company’s ability to demonstrate the value of its platforms through trusted measurement metrics; the impacts of the ongoing COVID-19 pandemic, which may continue to impact the Company’s business, plans and results of operations, as well as the value of the Company’s common stock; and other factors identified in the Company’s filings with the SEC, including its Annual Report on Form 10-K filed with the SEC on March 1, 2022, its Form 10-K/A Amendment No. 1 filed with the SEC on April 29, 2022, and future filings and reports by the Company. Quotient disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise and does not assume responsibility for the accuracy and completeness of the forward-looking statements.

About Quotient Technology Inc.

Quotient Technology (NYSE: QUOT) is the leading digital media and promotions technology company for advertisers, retailers and consumers. Quotient’s omnichannel platform is powered by exclusive consumer spending data, location intelligence and purchase intent data to reach millions of shoppers daily and deliver measurable, incremental sales.

Quotient partners with leading advertisers, publishers and retailers, including Clorox, Procter & Gamble, General Mills, Unilever, CVS, Dollar General, Peapod Digital Labs, a company of Ahold Delhaize USA, Amazon and Microsoft. Quotient is headquartered in Salt Lake City, Utah, and has offices across the US as well as in Bangalore, Paris, London and Tel Aviv. For more information visit www.quotient.com.

Quotient and the Quotient logo are trademarks or registered trademarks of Quotient Technology Inc. and its subsidiaries in the United States and other countries. Other marks are the property of their respective owners.

 
QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
March 31,
2022
December 31,
2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents

 

202,583

 

 

237,417

 

Accounts receivable, net

 

114,263

 

 

177,216

 

Prepaid expenses and other current assets

 

20,514

 

 

19,312

 

Total current assets

 

337,360

 

 

433,945

 

Property and equipment, net

 

21,845

 

 

22,660

 

Operating lease right-of-use-assets

 

19,393

 

 

23,874

 

Intangible assets, net

 

10,355

 

 

13,003

 

Goodwill

 

128,427

 

 

128,427

 

Other assets

 

12,895

 

 

13,571

 

Total assets

$

530,275

 

$

635,480

 

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable

$

8,578

 

$

18,021

 

Accrued compensation and benefits

 

12,241

 

 

20,223

 

Other current liabilities

 

58,009

 

 

95,279

 

Deferred revenues

 

21,209

 

 

26,778

 

Contingent consideration related to acquisitions

 

 

 

22,275

 

Convertible senior notes, net

 

199,377

 

 

188,786

 

Total current liabilities

 

299,414

 

 

371,362

 

Operating lease liabilities

 

25,551

 

 

26,903

 

Other non-current liabilities

 

419

 

 

522

 

Deferred tax liabilities

 

1,991

 

 

1,991

 

Total liabilities

 

327,375

 

 

400,778

 

 
Stockholders’ equity:
Common stock

 

1

 

 

1

 

Additional paid-in capital

 

687,557

 

 

731,672

 

Accumulated other comprehensive loss

 

(1,213

)

 

(1,099

)

Accumulated deficit

 

(483,445

)

 

(495,872

)

Total stockholders’ equity

 

202,900

 

 

234,702

 

Total liabilities and stockholders’ equity

$

530,275

 

$

635,480

 

 
QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
 
Three Months Ended
March 31,

2022

2021

Revenues

$

78,456

 

$

115,316

 

Cost of revenues (1)

 

49,078

 

 

71,984

 

Gross profit

 

29,378

 

 

43,332

 

Operating Expenses:
Sales and marketing (1)

 

21,936

 

 

27,365

 

Research and development (1)

 

9,756

 

 

12,056

 

General and administrative (1)

 

22,708

 

 

12,833

 

Change in fair value of contingent consideration

 

 

 

285

 

Total operating expenses

 

54,400

 

 

52,539

 

Loss from operations

 

(25,022

)

 

(9,207

)

Interest expense

 

(1,154

)

 

(3,730

)

Other income (expense), net

 

36

 

 

(228

)

Loss before income taxes

 

(26,140

)

 

(13,165

)

Provision for income taxes

 

166

 

 

249

 

Net loss

$

(26,306

)

$

(13,414

)

 
Net loss per share, basic and diluted

$

(0.28

)

$

(0.15

)

 
Weighted-average shares used to compute net loss per share, basic and diluted

 

94,924

 

 

92,413

 

 
(1) The stock-based compensation expense included above was as follows:
 
Three Months Ended
March 31,

2022

2021

Cost of revenues

$

532

 

$

423

 

Sales and marketing

 

891

 

 

1,255

 

Research and development

 

967

 

 

972

 

General and administrative

 

3,352

 

 

3,194

 

Total stock-based compensation

$

5,742

 

$

5,844

 

 
QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Three Months Ended
March 31,

2022

2021

 
Cash flows from operating activities:
Net loss

$

(26,306

)

$

(13,414

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization

 

4,562

 

 

9,431

 

Stock-based compensation

 

5,742

 

 

5,844

 

Amortization of debt discount and issuance cost

 

247

 

 

2,846

 

Impairment of long-lived and right-of-use assets

 

5,981

 

 

 

Allowance (recovery) for credit losses

 

(396

)

 

(143

)

Deferred income taxes

 

 

 

249

 

Change in fair value of contingent consideration

 

 

 

285

 

Other non-cash expenses

 

1,540

 

 

958

 

Changes in operating assets and liabilities:
Accounts receivable

 

63,348

 

 

18,125

 

Prepaid expenses and other assets

 

(1,168

)

 

4,984

 

Accounts payable and other liabilities

 

(46,577

)

 

(16,761

)

Payments for contingent consideration and bonuses

 

(19,008

)

 

 

Accrued compensation and benefits

 

(8,003

)

 

(1,771

)

Deferred revenues

 

(5,570

)

 

(123

)

Net cash (used in) provided by operating activities

 

(25,608

)

 

10,510

 

 
Cash flows from investing activities:
Purchases of property and equipment

 

(2,557

)

 

(2,797

)

Net cash used in investing activities

 

(2,557

)

 

(2,797

)

 
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans

 

 

 

13,070

 

Payments for taxes related to net share settlement of equity awards

 

(969

)

 

(2,246

)

Principal payments on promissory note and capital lease obligations

 

(89

)

 

(163

)

Payments for contingent consideration

 

(5,686

)

 

 

Net cash (used in) provided by financing activities

 

(6,744

)

 

10,661

 

Effect of exchange rates on cash and cash equivalents

 

75

 

 

(40

)

Net (decrease) increase in cash and cash equivalents

 

(34,834

)

 

18,334

 

Cash and cash equivalents at beginning of period

 

237,417

 

 

222,752

 

Cash and cash equivalents at end of period

$

202,583

 

$

241,086

 

 

QUOTIENT TECHNOLOGY INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(Unaudited, in thousands)

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

2022

 

2021

 

$

%

 

$

%

Net Loss ($) / Loss Margin (%) (2)

$

(26,306

)

(33

%)

 

$

(13,414

)

(11

%)

Adjustments:

 

 

 

 

 

Stock-based compensation

 

5,742

 

7

%

 

 

5,844

 

5

%

Depreciation and amortization

 

4,561

 

6

%

 

 

9,431

 

8

%

Acquistion related costs and other (1)

 

7,621

 

10

%

 

 

482

 

1

%

Change in fair value of contingent consideration

 

 

 

 

 

285

 

 

Interest expense

 

1,154

 

1

%

 

 

3,730

 

3

%

Other (income) expense, net

 

(36

)

 

 

 

228

 

 

Provision for income taxes

 

166

 

 

 

 

249

 

 

 

 

 

 

 

 

Total adjustments

$

19,208

 

24

%

 

$

20,249

 

17

%

 

 

 

 

 

 

Adjusted EBITDA ($) / Adjusted EBITDA Margin (%) (2)

$

(7,098

)

(9

%)

 

$

6,835

 

6

%

 

 

 

 

 

 

(1) For the three months ended March 31, 2022, Other includes a charge of $6.1 million related to the impairment of certain long-lived and right-of-use assets, $1.4 million related to shareholder activism response costs, and $0.1 million related to restructuring charges. The three months ended March 31, 2021, include no other costs. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period and diligence, accounting, and legal expenses incurred related to certain acquisitions. Restructuring charges relate to severance for impacted employees.

 

 

 

 

 

 

(2) Profit (Loss) Margin and Adjusted EBITDA Margin is the ratio of Profit (Loss) to Revenues and Adjusted EBITDA to Revenues.

 

QUOTIENT TECHNOLOGY INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(Unaudited, in thousands)

 

 

 

 

 

 

 

Q1 FY 21

Q2 FY 21

Q3 FY 21

Q4 FY 21

Q1 FY 22

Net loss

$

(13,414

)

$

(17,201

)

$

(7,843

)

$

(7,110

)

$

(26,306

)

Adjustments:

 

 

 

 

 

Stock-based compensation

 

5,844

 

 

6,540

 

 

4,690

 

 

5,738

 

 

5,742

 

Depreciation and amortization

 

9,431

 

 

7,707

 

 

7,287

 

 

5,039

 

 

4,561

 

Acquistion related costs and other (1)

 

482

 

 

3,251

 

 

8,720

 

 

1,980

 

 

7,621

 

Change in fair value of contingent consideration

 

285

 

 

242

 

 

245

 

 

620

 

 

 

Interest expense

 

3,730

 

 

3,767

 

 

3,809

 

 

3,871

 

 

1,154

 

Other (income) expense, net

 

228

 

 

(194

)

 

96

 

 

80

 

 

(36

)

Provision for income taxes

 

249

 

 

218

 

 

323

 

 

2,841

 

 

166

 

 

 

 

 

 

 

Total adjustments

$

20,249

 

$

21,531

 

$

25,170

 

$

20,169

 

$

19,208

 

 

 

 

 

 

 

Adjusted EBITDA (1)

$

6,835

 

$

4,330

 

$

17,327

 

$

13,059

 

$

(7,098

)

 

 

 

 

 

 

Adjusted EBITDA Margin (2)

 

6

%

 

3

%

 

13

%

 

9

%

 

(9

%)

 

 

 

 

 

 

 

 

(1) Adjusted EBITDA, a non-GAAP financial measure, is net loss adjusted for stock-based compensation, depreciation and amortization, change in fair value of contingent consideration, interest expense, other (income) expense, net, provision for income taxes, and acquistion related costs and other, which includes: charge of $2.6 million related to the impairment of a promotion service right and restructuring charges of $0.2 million during Q2 FY21; charge of $6.5 million related to the impairment of certain intangible assets and restructuring charges of $1.8 million during Q3 FY21; shareholder activism response costs of $0.9 million and restructuring charges of $0.7 million during Q4 FY21; charge of $6.1 million related to the impairment of certain long-lived and right-of-use assets, $1.4 million related to shareholder activism response costs, and $0.1 million related to restructuring charges during Q1 FY22.
 
(2) Adjusted EBITDA margin is the ratio of Adjusted EBITDA and Revenues.
 

QUOTIENT TECHNOLOGY INC.

RECONCILIATION OF GROSS PROFIT TO NON-GAAP GROSS PROFIT

(Unaudited, in thousands)

 

 

 

 

 

Q1 FY 21

Q4 FY 21

Q1 FY 22

Revenues

$

115,316

 

$

146,414

 

$

78,456

 

 

 

 

 

Cost of revenues (GAAP)

$

71,984

 

$

91,992

 

$

49,078

 

(less) Stock-based compensation

 

(423

)

 

(556

)

 

(532

)

(less) Amortization of acquired intangible assets

 

(6,593

)

 

(2,337

)

 

(2,294

)

(less) Restructuring charges

 

 

 

(158

)

 

(13

)

Cost of revenues (Non-GAAP)

$

64,968

 

$

88,941

 

$

46,239

 

 

 

 

 

Gross profit (GAAP)

$

43,332

 

$

54,422

 

$

29,378

 

Gross margin percentage (GAAP)

 

37.6

%

 

37.2

%

 

37.4

%

 

 

 

 

Gross profit (Non-GAAP)*

$

50,348

 

$

57,473

 

$

32,217

 

Gross margin percentage (Non-GAAP)

 

43.7

%

 

39.3

%

 

41.1

%

 

 

 

 

* Non-GAAP gross profit excludes stock-based compensation, amortization of acquired intangible assets, and restructuring charges.

Contacts

Investor Relations:
Marla Sims

Vice President of Investor Relations

msims@quotient.com

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