UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2014

 

 

Marin Software Incorporated

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35838   20-4647180

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

123 Mission Street, 25 th Floor

San Francisco, California 94105

  94105
(Address of principal executive offices)   (Zip Code)

(415) 399-2580

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02 Results of Operations and Financial Condition.

On May 7, 2014, Marin Software Incorporated (the “ Company ”) issued a press release announcing its financial results for the quarter ended March 31, 2014. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto (the “ 2.02 Information ”) are being furnished pursuant to Item 2.02 of Form 8-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of that section, nor will the 2.02 Information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(b)

The information set forth below under Item 5.02(c) is hereby incorporated by referenced into this Item 5.02(b).

 

(c)

On May 4, 2014, upon recommendation from the Nominating and Corporate Governance Committee of the Board of Directors (the “ Board ”) of the Company, the Board appointed David A. Yovanno, 43, as the Company’s Chief Executive Officer, effective as of May 7, 2014. On May 4, 2014, the Board also elected Mr. Yovanno to the Board as a Class II Director, effective as of May 7, 2014. Mr. Yovanno will serve until the Company’s 2015 Annual Meeting of Stockholders or until his successor is duly elected and qualified or the earlier of his death, resignation or removal. There are no arrangements or understandings between Mr. Yovanno and any other persons pursuant to which he was selected as a director and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Prior to joining the Company, Mr. Yovanno served as President and Executive Vice President, Technology Solutions at Conversant, Inc. (formerly ValueClick, Inc.), an online marketing company, since April 2011. Prior to that, Mr. Yovanno served as Chief Executive Officer and Director of Gigya, Inc., a developer of social software, from October 2008 until April 2011. From March 2000 until October 2008, Mr. Yovanno held several positions at Conversant, Inc., including Chief Operating Officer of U.S. Media. As the Company’s Chief Executive Officer, Mr. Yovanno will be the general manager of the Company’s business, directing the Company’s management team to achieve strategic, financial and operating goals, and his presence as a member of the Board will bring his knowledge of the Company into the Board’s strategic and policy-making discussions. Additionally, Mr. Yovanno has considerable experience in the Company’s industry that he will bring to the Board.

Concurrently with Mr. Yovanno’s appointment as the Company’s Chief Executive Officer, Christopher Lien ceased to serve as the Company’s Chief Executive Officer, but will continue as the Chairman of the Board. Additionally, the Board appointed Mr. Lien as the Company’s Executive Chairman.

On May 7, 2014, the Company issued a press release announcing the appointment of Mr. Yovanno as Chief Executive Officer of the Company. The press release is being attached as Exhibit 99.2 to this Current Report on Form 8-K.

 

(d)

The information set forth above under Item 5.02(c) is hereby incorporated by referenced into this Item 5.02(d).

(e)

In connection with Mr. Yovanno’s appointment as Chief Executive Officer, Mr. Yovanno and the Company entered into an offer letter providing for the terms of Mr. Yovanno’s employment with the Company (the “ Offer Letter ”). Pursuant to his Offer Letter, Mr. Yovanno will be entitled to receive an annualized base salary of $400,000 and will be eligible to receive an annual bonus of $200,000 per year pursuant to the Company’s 2014 Executive Bonus Plan (the “ 2014 Bonus Plan ”) based 100% on the achievement of the corporate goals set forth under the 2014 Bonus Plan.

The Company also will reimburse Mr. Yovanno for (i) costs Mr. Yovanno incurs for weekly travel to and from his home in Ventura to the Company’s office in San Francisco, not to exceed $15,000.00 per year and (ii) rent for an apartment in San Francisco, not to exceed $6,300.00 per month. Each month, the Company will pay Mr. Yovanno a tax bonus equal to all applicable withholding and payroll taxes required by law to be paid by Mr. Yovanno with respect to the income Mr. Yovanno realizes upon the Company’s reimbursement of Mr. Yovanno’s rent and commuting expenses plus a cash payment in an amount such that, after subtracting all applicable federal, state and local income and withholding taxes with respect to the tax bonus (calculated based on the highest marginal tax rate applicable to Mr. Yovanno for 2014), the amount retained by Mr. Yovanno from the tax bonus and the cash payment, equals the tax bonus.

Additionally, on May 4, 2014, the Board approved:

 

  •   The grant of an option to purchase 900,000 shares of the Company’s common stock (the “ Stock Option ”) to Mr. Yovanno, pursuant to the Company’s 2013 Equity Incentive Plan, with an exercise price per share equal to the closing price per share of the Company’s common stock on The New York Stock Exchange as of May 12, 2014. The Stock Option will vest over a four-year period with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting monthly thereafter for the following thirty-six (36) months until all of the shares subject to the Stock Option are fully vested, for so long as Mr. Yovanno is providing services to the Company.

 

  •   The grant of 90,000 restricted stock units settleable in the Company’s common stock (the “ RSUs ”) to Mr. Yovanno, pursuant to the Company’s 2013 Equity Incentive Plan. The RSUs will vest over a four-year period with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting quarterly thereafter for the following twelve (12) quarters until all of the RSUs are fully vested, for so long as Mr. Yovanno is providing services to the Company.

Pursuant to his Offer Letter, Mr. Yovanno also entered into the Company’s standard form of Indemnification Agreement and standard form of Severance and Change in Control Agreement (the “ Severance and Change in Control Agreement ”) applicable to all of the Company’s executive officers. Pursuant to the Severance and Change in Control Agreement, if Mr. Yovanno’s employment is terminated without Cause (as defined in the Severance and Change in Control Agreement), Mr. Yovanno shall be entitled to receive severance benefits equal to nine months of Mr. Yovanno’s then current annual base salary and monthly benefits premium under COBRA for nine months. Mr. Yovanno’s Severance and Change in Control Agreement also provides that if Mr. Yovanno’s employment is terminated without Cause or if Mr. Yovanno resigns for Good Reason (as defined in the Severance and Change in Control Agreement) within 3 months before or 12 months following a Change in Control (as defined in the Severance and Change in Control Agreement) of the Company, Mr. Yovanno shall be entitled to receive severance benefits equal to nine months of Mr. Yovanno’s then current annual base salary and monthly benefits premium under COBRA for nine months. In addition, the shares underlying all equity awards held by Mr. Yovanno immediately prior to his termination shall become vested and exercisable in full.

The description of Mr. Yovanno’s compensation arrangements set forth herein is qualified in its entirety by reference to the full text of the Offer Letter and the form of Severance and Change in Control Agreement, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

  

Exhibit Title

10.1    Offer Letter, dated May 4, 2014, between Marin Software Incorporated and David A. Yovanno.
10.2    Form of Severance and Change in Control Agreement between Marin Software Incorporated and each of the executive officers. (Incorporated by reference to Exhibit 10.9 filed with Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 11, 2013.)
99.1    Press release of Marin Software Incorporated announcing earnings results, dated May 7, 2014.
99.2    Press release of Marin Software Incorporated announcing the appointment of David A. Yovanno as Chief Executive Officer and a director, dated May 7, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

        Marin Software Incorporated
Date: May 7, 2014       By:  

/s/ John A. Kaelle

        John A. Kaelle
        Chief Financial Officer

EXHIBIT INDEX

 

Exhibit No.

  

Exhibit Title

10.1    Offer Letter, dated May 4, 2014, between Marin Software Incorporated and David Yovanno.
10.2    Form of Severance and Change in Control Agreement between Marin Software Incorporated and each of the executive officers. (Incorporated by reference to Exhibit 10.9 filed with Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 11, 2013.)
99.1    Press release of Marin Software Incorporated announcing earnings results, dated May 7, 2014.
99.2    Press release of Marin Software Incorporated announcing the appointment of David A. Yovanno as Chief Executive Officer and a director, dated May 7, 2014.

Exhibit 10.1

 

LOGO

May 4, 2014                                                                     

David A. Yovanno

[PRIVATE ADDRESS]

Offer of Employment by Marin Software Incorporated

Dear David:

I am very pleased to confirm our offer to you of employment with Marin Software Incorporated (the “ Company ”) in the position of Chief Executive Officer based in our San Francisco office. Your start date shall be on May 7, 2014. The terms of our offer and the benefits currently provided by the Company are as follows:

1. Starting Salary . Your starting salary will be at the annualized rate of $400,000.00 USD per year (less normal payroll deductions and withholdings), and will be subject to review on an annual basis. In addition you will be eligible to receive an annual bonus of $200,000.00 USD per year (less normal payroll deductions and withholdings) pursuant to the Company’s FY2014 Executive Bonus Plan (the “ 2014 Bonus Plan ”) based 100% on the achievement of the corporate goals set forth therein, subject to the terms and conditions of the 2014 Bonus Plan.

2. (a) Benefits . In addition, you will be eligible to participate in regular health, vision and dental insurance, 401(k), and other employee benefit plans established by the Company for its employees from time to time. Comprehensive medical benefits go into effect on the first of every month. If your start date falls any time after the first of the month, your benefits will start on the first day of the following month. Except as expressly provided herein, the Company reserves the right to change or otherwise modify, in its sole discretion, the preceding terms of employment, as well as any of the terms set forth herein at any time in the future. US management (Vice Presidents and above) do not accrue paid time off (PTO). In addition 12 regular Company holidays each calendar year and unlimited sick days are provided.

(b) Commute Benefits . The Company also will reimburse you for (i) costs you incur for weekly travel to and from your home in Ventura to the Company’s office in San Francisco, not to exceed $15,000.00 per year and (ii) rent for an apartment in San Francisco, not to exceed $6,300.00 per month. All such expenses must be submitted in accordance with the Company’s travel and expense policy. The Company will review and adjust the maximum monthly rent payment for your apartment in San Francisco upon each renewal of the applicable lease. Each month, the Company will pay you a tax bonus equal to all applicable withholding and payroll taxes required by law to be paid by you with respect to the income you realize upon our reimbursement of your rent and commuting expenses under this Section 2(b), plus a Gross-Up Payment (as defined below). The Gross-Up Payment shall be paid on the same date as the tax bonus to which it relates. “Gross-Up Payment” means a cash payment in an amount such that, after subtracting all applicable federal, state and local income and withholding taxes with respect to the tax bonus (calculated based on the highest marginal tax rate applicable to you for 2014), the amount retained by you from the tax bonus and the cash payment, equals the tax bonus.

3. Confidentiality . As an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interests of the Company, you will need to sign the Company’s standard “Employee Invention Assignment and Confidentiality Agreement” as a condition of your employment. We wish to impress upon you that we do not want you to, and we hereby direct you not to, bring with you any confidential or proprietary material of any former employer or to violate any other obligations you may have to any former employer. During the period that you render services to the Company, you agree to not engage in any employment, business or activity that is in any way competitive with the business or proposed business of the Company. You will disclose to the Company in writing with updates from time-to-time as requested any other gainful employment, business or activity that you are currently associated with or participate in. You will not assist any other person or organization in competing with the Company or in preparing to engage in competition with the business or proposed

LOGO

 

Page 2 of 3

 

business of the Company. You represent that your signing of this offer letter and the Company’s Employee Invention Assignment and Confidentiality Agreement and your commencement of employment with the Company will not violate any agreement currently in place between yourself and current or past employers. Notwithstanding anything in this Agreement to the contrary, you may engage in charitable activities and community affairs, and with the prior approval of the Board of Directors you may serve as a director of any corporation which does not compete in any way with Company business or proposed business; provided that such activities are not inconsistent with your obligations to the Company.

4. (a) Options . On or concurrently with your date of hire, we will recommend to the Compensation Committee (the “ Committee ”) of the Board of Directors of the Company that you be granted an option to purchase 900,000 shares of Company common stock (the “ Shares ”), with an exercise price per share equal to the closing price per share of Company common stock on The New York Stock Exchange as of the date of the Committee’s approval of the grant. The vesting and the other terms of the option will be set by the Committee. Any option granted to you will be governed by the terms and conditions of the applicable grant agreement and the Marin Software Incorporated 2013 Equity Incentive Plan.

(b) RSUs . On or concurrently with your date of hire, we will recommend to the Committee that you be granted 90,000 Restricted Stock Units (“ RSUs ”), the terms and conditions of which will be governed by the applicable award agreement and the Marin Software Incorporated 2013 Equity and Incentive Plan. The vesting, settlement and other terms of the RSUs will be set by the Committee.

5. (a) At Will Employment . While we look forward to a profitable relationship, should you decide to accept our offer, you will be an at-will employee of the Company, which means the employment or other relationship can be terminated by either of us for any reason, at any time, with or without prior notice and with or without cause. You should regard any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) as ineffective. Further, your participation in any stock option or benefit program is not to be regarded as assuring you of continuing employment or service for any particular period of time. Any modification or change in your at-will employment status may only occur by way of a written employment agreement signed by you and an authorized officer of the Company (other than you), and approved by the Company’s Board of Directors.

(b) Severance and Change in Control Agreement . You agree to sign the Company’s standard Severance and Change in Control Agreement applicable to executive and senior officers of the Company, which provides certain severance benefits if your employment relationship is terminated under certain circumstances. You will not be entitled to any severance benefits if your employment is terminated by the Company for Cause (as defined in the Severance and Change in Control Agreement).

6. Authorization to Work . Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within three (3) business days of starting your new position you will need to present documentation demonstrating that you have authorization to work in the United States.

7. Arbitration . You and the Company shall submit to mandatory and exclusive binding arbitration of any controversy or claim arising out of, or relating to, this Agreement or any breach hereof, provided , however , that the parties retain their right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining equitable relief from a court having jurisdiction over the parties. Such arbitration shall be governed by the Federal Arbitration Act and conducted through the American Arbitration Association in the State of California, San Francisco County, before a single neutral arbitrator, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at that time. The parties may conduct only essential discovery prior to the hearing, as defined by the AAA arbitrator. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based. You shall bear only those costs of arbitration you would otherwise bear had you brought a claim covered by this Agreement in court. Judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In addition to any other award, the arbitrator shall award the prevailing party attorneys’ fees, costs and arbitration costs, incurred by the prevailing party as a result of the arbitration.

 

123 Mission Street, 25 th Floor | San Francisco, CA 94105 | (415) 399-2580 | (415) 704-3085 (fax) | www.marinsoftware.com

LOGO

 

Page 3 of 3

 

8. Successors, Binding Agreement . This Agreement shall not automatically be terminated by the voluntary or involuntary dissolution of the Company or by any merger or consolidation, whether or not the Company is the surviving or resulting corporation, or upon any transfer of all or substantially all of the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall bind and inure to the benefit of the surviving or resulting corporation, or the corporation to which such assets shall have been transferred, as the case may be; provided, however, that the Company will require any successor to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

9. Miscellaneous . This Agreement shall be construed and enforced in accordance with the laws of the State of California without giving effect to California’s choice of law rules. No waiver of any term of this Agreement constitutes a waiver of any other term of this Agreement. This Agreement may be amended only in writing by an agreement specifically referencing this Agreement which is signed by both you and the Company. In the event that a court or other trier of fact invalidates one or more terms of this Agreement, all the other terms of this Agreement shall remain valid and enforceable. You shall have no duty to mitigate any damages caused by the breach of the Company of this Agreement. You represent that your performance of all the terms of this Agreement and your duties as an employee of the Company will not breach any invention assignment, proprietary information, confidentiality, non-competition or similar agreement with any former employer or other party. You represent that you will not bring with you to the Company or use in the performance of your duties for the Company any documents or materials or intangibles of a former employer or third party that are not generally available to the public or have not been legally transferred to the Company. Concurrently with the execution of this offer letter, you and the Company will sign the Company’s standard Indemnity Agreement.

10. Acceptance . This offer is contingent on a satisfactory background check. If you decide to accept our offer, and I hope you will, please sign the enclosed copy of this letter in the space indicated and return it to Nancy Kato, Chief People Officer. Your signature will acknowledge that you have read and understood and agreed to the terms and conditions of this offer letter and the attached documents, if any. Should you have anything else that you wish to discuss, please do not hesitate to call Nancy or me.

We look forward to the opportunity to welcome you to the Company.

 

Very truly yours,
Bruce W. Dunlevie, Lead Independent Director

I have read and understood this offer letter and hereby acknowledge, accept and agree to the terms as set forth above and further acknowledge that no other commitments were made to me as part of my employment offer except as specifically set forth herein.

 

    
David A. Yovanno      Date: May 4, 2014

 

123 Mission Street, 25 th Floor | San Francisco, CA 94105 | (415) 399-2580 | (415) 704-3085 (fax) | www.marinsoftware.com

Exhibit 99.1

Marin Software Announces First Quarter 2014 Financial Results

•      Record first quarter net revenues of $22.8 million, up 33% year-over-year

•      20 th consecutive quarter of sequential quarterly revenue growth

San Francisco, CA (May 7, 2014) – Marin Software Incorporated (NYSE: MRIN), provider of a leading Revenue Acquisition Management platform for advertisers and agencies, today announced financial results for the first quarter ended March 31, 2014.

“We are pleased to report strong results in Q1, as revenue growth accelerated to its highest rate since Q4 2012” said Chris Lien, Founder and Executive Chairman of Marin. “Revenue for the quarter was $22.8 million, up 33% year over year. We saw increased spending on our platform from both existing and recently acquired customers offsetting the seasonal pattern we had previously expected. This success is a strong testament to the value we are delivering through our leading Revenue Acquisition Management platform and the business results we are driving on behalf of our customers.”

“I am excited to announce that David A. Yovanno has joined Marin as CEO to partner with me, the rest of the team, and our Board to help scale Marin to its next stage of growth,” said Lien. “Marin’s record results for the first quarter demonstrate our tremendous market opportunity and momentum. Now is the right time to bring in Dave, who has more than 20 years of operating experience and strong digital marketing expertise. I am confident Dave will build on Marin’s success to drive the company to even greater levels of achievement. In my new role as Executive Chairman, I look forward to working closely with Dave and the entire team to extend Marin’s leadership position in Revenue Acquisition Management as we seek to serve more advertisers and agencies worldwide.”

First Quarter 2014 Financial Highlights:

 

  •   Net Revenues: Net revenues totaled $22.8 million, a year-over-year increase of 33% when compared to $17.2 million in the first quarter of 2013.

 

  •   Gross profit: GAAP gross profit was $14.4 million, resulting in gross margin of 63%, compared to GAAP gross margin of 57% during the first quarter of 2013. Non-GAAP gross profit was $15.1 million, resulting in non-GAAP gross margin of 66%, compared to non-GAAP gross margin of 60% during the first quarter of 2013.

 

  •   Loss from operations: GAAP loss from operations was ($8.1) million, compared to ($9.8) million for the first quarter of 2013. GAAP operating margin was (35%), compared to (57%) during the first quarter of 2013. Non-GAAP loss from operations was ($6.7) million, compared to ($9.0) million for the first quarter of 2013. Non-GAAP operating margin was (30%), compared to (52%) during the first quarter of 2013.

 

  •   Net loss: Net loss was ($8.3) million or ($0.25) per share based on 33.1 million weighted average shares outstanding. This compares to a net loss of ($10.5) million or ($1.43) per share based upon 7.4 million weighted average shares outstanding for the first quarter of 2013.

 

  •   Non-GAAP net loss : Non-GAAP net loss was ($6.9) million or ($0.21) per share based upon 33.1 million weighted average shares outstanding. This compares to ($9.4) million or ($0.39) per share based on 24.2 million weighted average shares outstanding during the first quarter of 2013, which assumes our convertible preferred stock was converted to common stock for the full first quarter of 2013.

  •   Adjusted EBITDA: Adjusted EBITDA was ($5.4) million, as compared to ($8.0) million for the first quarter of 2013.

 

  •   Balance Sheet: As of March 31, 2014, cash and cash equivalents totaled $96.1 million, compared to $104.4 million as of December 31, 2013.

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.”

First Quarter 2014 Business Highlights

 

  •   Developed Marin Context Connect to help advertisers better adapt to external factors that impact consumer buying patterns. The new capability lets advertisers incorporate contextual data such as weather, product inventory, TV or print advertising, sports scores, stock market returns and other data into their digital marketing campaign strategies. Marin Context Connect is Marin’s first solution that enables performance marketers to execute smarter optimization strategies by automatically capitalizing on environmental changes that affect their business.

 

  •   Enhanced the functionality of Marin Channel Connect, enabling advertisers to incorporate cost and performance data from publishers at both the keyword level and creative level. The enhancement opens the Marin platform even further, providing greater visibility into the attribution of performance across a broader array of publishers, as well as a single source to measure performance, track revenue and optimize bidding.

 

  •   Developed additional support for new ad publisher features including full support for Facebook’s new campaign structure and latest mobile ad offerings, allowing advertisers to take full advantage of mobile success in social advertising. Marin’s bidding algorithm was extended to support mobile ads on Yahoo! Japan, and support for Baidu’s latest API was developed, furthering our presence in China.

 

  •   Initiated a beta API program as part of Marin’s open stack architecture, empowering partners with the ability to build connection to the Marin platform directly. This API program will provide advertisers an increased level of visibility and control over their own data and enable our growing ecosystem of advertising technology partners to further leverage the Marin platform.

 

  •   Increased the number of active advertisers leveraging the Marin platform. During the first quarter, 704 active advertisers utilized the Marin platform, compared to 542 during the first quarter of 2013. Marin defines active advertisers as an advertiser from whom Marin recognized revenues in excess of $2,000 in at least one month during the quarter.

Financial Outlook:

As of May 7 th , 2014, Marin is initiating guidance for its second quarter and improving guidance for the full year 2014 as follows:

 

Forward-Looking Guidance

In millions, except per share data

 
     Range of Estimate  
     From     To  

Three Months Ending June 30, 2014

    

Revenues, net

   $ 22.9      $ 23.3   

Non-GAAP loss from operations

   $ (8.7 )    $ (8.3 ) 

Non-GAAP net loss per share

   $ (0.28 )    $ (0.26 ) 

Weighted average shares outstanding

     33.4     

Year Ending December 31, 2014

    

Revenues, net

   $ 96.8      $ 98.0   

Non-GAAP loss from operations

   $ (29.2 )    $ (28.0 ) 

Non-GAAP net loss per share

   $ (0.90 )    $ (0.87 ) 

Weighted average shares outstanding

     33. 5     

Non-GAAP loss from operations and non-GAAP net loss per share excludes the effects of stock-based compensation, amortization of internally developed software, noncash expenses related to warrants 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 ended March 31, 2014 and its outlook for the future. To access the call, please dial (877) 705-6003 in the U.S. or (201) 493-6725 internationally. Passcode is 13579770. A live webcast of the conference will be accessible from Marin Software’s website at: http://investor.marinsoftware.com/ . Following the completion of the call through 11:59 p.m. EST on May 7, 2015 a recording will be available for replay at: http://investor.marinsoftware.com/ and through 11:59 p.m. EST on May 14, 2014 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 13579770.

About Marin Software

Marin Software Incorporated (NYSE: MRIN) provides a leading Revenue Acquisition Management platform used by advertisers and agencies to measure, manage and optimize more than $6 billion in annualized ad spend. Offering an integrated platform for search, display, social, and mobile advertising, Marin helps advertisers and agencies improve financial performance, save time, and make better decisions. Headquartered in San Francisco, with offices worldwide, Marin’s technology powers marketing campaigns in more than 160 countries. For more information about Marin’s products, please visit: http://www.marinsoftware.com/solutions/overview .

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.

Marin defines 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 capitalization of internally developed software, noncash expenses related to the issuance of warrants, and the amortization of internally developed software. 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.

Marin defines Adjusted EBITDA as net loss, adjusted for stock-based compensation expense, depreciation, the amortization of internally developed software, the capitalization of internally developed software, interest expense, net, provision for income taxes and other income (expenses), net. 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 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 reflect 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.

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding Marin’s business, growth, momentum, and future financial results, including its outlook for the second quarter of 2014 and fiscal year 2014. 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 (i) adverse changes in general economic or market conditions; (ii) delays, reductions or slower growth in the amount spent on online and mobile advertising and the development of the market for cloud-based software; (iii) competitive factors, including but not limited to pricing pressures, entry of new competitors and new applications; (iv) adverse changes in our relationships with and access to publishers and advertising agencies; (v) level of usage and advertising spend

managed on our platform; (vi) our ability to expand sales of our solutions in channels other than search advertising; (vii) our ability to expand our sales and marketing capabilities and manage our growth effectively; (viii) the development of the market for digital advertising or revenue acquisition management; (ix) acceptance and continued usage of our platform and services by customers and our ability to provide high-quality technical support to our customers; (x) material defects in our platform, service interruptions at our single third-party data center or breaches in our security measures; (xi) our ability to develop enhancements to our platform; (xii) our ability to protect our intellectual property; (xiii) our ability to manage risks associated with international operations; (xiv) 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; (xv) our ability to retain and attract qualified management and technical personnel; and (xvi) the ability to acquire and integrate other businesses. 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 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 May 7, 2014. Marin assumes no obligation to, and expressly disclaims any obligation to update any such forward-looking statements after the date of this release.

Investor Relations Contact:

Greg Kleiner

ICR for Marin Software

415-762-0327

ir@marinsoftware.com

Media Contact:

Greg Kunkel

Corporate Communications, Marin Software

415-857-7663

press@marinsoftware.com

Condensed Consolidated Balance Sheets

(On a GAAP basis)

(Unaudited; in thousands, except par value)

 

     March 31,     December 31,  
     2014     2013  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 96,134      $ 104,407   

Accounts receivable, net

     14,761        14,921   

Prepaid expenses and other current assets

     3,183        2,695   
  

 

 

   

 

 

 

Total current assets

     114,078        122,023   

Property and equipment, net

     13,913        14,417   

Other noncurrent assets

     1,145        937   
  

 

 

   

 

 

 

Total assets

   $ 129,136      $ 137,377   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 1,234      $ 1,018   

Accrued expenses and other current liabilities

     9,580        10,950   

Deferred revenue

     2,075        2,566   

Current portion of long-term debt

     3,093        3,253   
  

 

 

   

 

 

 

Total current liabilities

     15,982        17,787   

Long-term debt, less current portion

     2,291        2,962   

Other long term liabilities

     1,161        1,284   
  

 

 

   

 

 

 

Total liabilities

     19,434        22,033   
  

 

 

   

 

 

 

Stockholders’ equity

    

Common stock, $0.001 par value

     33        33   

Additional paid-in capital

     231,047        228,512   

Accumulated deficit

     (121,507 )      (113,201 ) 

Accumulated other comprehensive income

     129        —     
  

 

 

   

 

 

 

Total stockholders’ equity

     109,702        115,344   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 129,136      $ 137,377   
  

 

 

   

 

 

 

Condensed Consolidated Statements of Operations

(On a GAAP basis)

(Unaudited; in thousands, except per share data)

 

     Three Months Ended
March 31, 		 
     2014     2013  

Revenues, net

   $ 22,815      $ 17,155   

Cost of revenues (1)

     8,383        7,372   
  

 

 

   

 

 

 

Gross profit

     14,432        9,783   
  

 

 

   

 

 

 

Operating expenses (1)

    

Sales and marketing

     11,989        10,459   

Research and development

     6,083        5,079   

General and administrative

     4,416        4,048   
  

 

 

   

 

 

 

Total operating expenses

     22,488        19,586   
  

 

 

   

 

 

 

Loss from operations

     (8,056 )      (9,803 ) 

Interest expense, net

     (66 )      (184 ) 

Other income (expenses), net

     4        (408 ) 
  

 

 

   

 

 

 

Loss before provision for income taxes

     (8,118 )      (10,395 ) 

Provision for income taxes

     (188 )      (106 ) 
  

 

 

   

 

 

 

Net loss

   $ (8,306 )    $ (10,501 ) 
  

 

 

   

 

 

 

Net loss per common share, basic and diluted

   $ (0.25 )    $ (1.43 ) 
  

 

 

   

 

 

 

Weighted-average shares outstanding, basic and diluted

     33,112        7,365   
  

 

 

   

 

 

 

(1)    Includes stock-based compensation as follows:

       

Cost of revenues

   $ 211      $ 205   

Sales and marketing

     403        293   

Research and development

     437        308   

General and administrative

     446        419   
  

 

 

   

 

 

 
   $ 1,497      $ 1,225   
  

 

 

   

 

 

 

Condensed Consolidated Statements of Cash Flows

(On a GAAP basis)

(Unaudited; in thousands)

 

     Three Months Ended
March 31, 		 
     2014     2013  

Operating activities

    

Net loss

   $ (8,306 )    $ (10,501 ) 

Adjustments to reconcile net loss to net cash used in operating activities

    

Depreciation

     1,350        1,008   

Amortization of internal-use software

     445        227   

Noncash interest expense related to warrants issued in connection with debt

     46        310   

Stock-based compensation

     1,497        1,225   

Provision for bad debt

     167        84   

Excess tax benefits from stock-based award activities

     (69 )      —     

Other noncash expenses

     148        —     

Changes in operating assets and liabilities

    

Accounts receivable

     (155 )      933   

Prepaid expenses and other current assets

     (488 )      (757 ) 

Other assets

     (208 )      16   

Accounts payable

     324        496   

Deferred revenue

     (491 )      764   

Accrued expenses and other liabilities

     (1,569 )      5   
  

 

 

   

 

 

 

Net cash used in operating activities

     (7,309 )      (6,190 ) 
  

 

 

   

 

 

 

Investing activities

    

Purchases of property and equipment

     (782 )      (992 ) 

Capitalization of internally developed software

     (617 )      (632 ) 
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,399 )      (1,624 ) 
  

 

 

   

 

 

 

Financing activities

    

Proceeds from issuance of common stock in initial public offering, net of issuance costs

     —          97,258   

Proceeds from issuance of note payable, net of issuance costs

     —          1,667   

Repayment of note payable

     (877 )      (7,553 ) 

Repurchase of unvested shares

     (1 )      (15 ) 

Proceeds from exercise of common stock options

     768        407   

Proceeds from employee stock purchase plan

     347        —     

Excess tax benefits from stock-based award activities

     69        —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     306        91,764   
  

 

 

   

 

 

 

Effect of foreign exchange rate on cash and cash equivalents

     129        —     

Net increase in cash and cash equivalents

     (8,273 )      83,950   

Cash and cash equivalents

    

Beginning of period

     104,407        31,540   
  

 

 

   

 

 

 

End of period

   $ 96,134      $ 115,490   
  

 

 

   

 

 

 

Supplemental disclosure of noncash investing and financing activities

    

Accounts payable related purchases of property and equipment

   $ 100      $ 1,242   

Conversion of convertible preferred stock to common stock

     —          105,710   

Conversion of warrant to purchase Series B convertible preferred stock to common stock warrant

     —          745   

Acquisition of equipment through capital lease

     —          1,004   

Unpaid deferred initial public offering costs

     —          2,281   

Amounts receivable for stock option exercises

     —          369   

Reconciliation of GAAP to Non-GAAP Measures

(Unaudited; in thousands)

 

    Three Months Ended     Year Ended     Three Months Ended  
    March 31,     June 30,     September 30,     December 31,     December 31,     March 31,  
    2013     2013     2013     2013     2013     2014  

Gross Profit (GAAP)

  $ 9,783      $ 10,522      $ 12,169      $ 13,732      $ 46,206      $ 14,432   

Plus Stock-based compensation

    205        245        239        198        887        211   

Plus Amortization of internally developed software

    227        256        303        370        1,156        445   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit (Non-GAAP)

  $ 10,215      $ 11,023      $ 12,711      $ 14,300      $ 48,249      $ 15,088   

Operating Loss (GAAP)

  $ (9,803 )    $ (8,758 )    $ (7,865 )    $ (7,910 )    $ (34,336 )    $ (8,056 ) 

Plus Stock-based compensation

    1,225        1,309        1,418        1,266        5,218        1,497   

Plus Amortization of internally developed software

    227        256        303        370        1,156        445   

Less Capitalization of internally developed software

    (632 )      (916 )      (1,018 )      (650 )      (3,216 )      (617 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Loss (Non-GAAP)

  $ (8,983 )    $ (8,109 )    $ (7,162 )    $ (6,924 )    $ (31,178 )    $ (6,731 ) 

Net Loss (GAAP)

  $ (10,501 )    $ (9,097 )    $ (8,193 )    $ (8,061 )    $ (35,852 )    $ (8,306 ) 

Plus Stock-based compensation

    1,225        1,309        1,418        1,266        5,218        1,497   

Plus Amortization of internally developed software

    227        256        303        370        1,156        445   

Plus Noncash expenses related to warrants

    310        73        53        53        489        46   

Less Capitalization of internally developed software

    (632 )      (916 )      (1,018 )      (650 )      (3,216 )      (617 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss (Non-GAAP)

  $ (9,371 )    $ (8,375 )    $ (7,437 )    $ (7,022 )    $ (32,205 )    $ (6,935 ) 

Calculation of Non-GAAP Earnings Per Share

(Unaudited; in thousands, except per share data)

 

    Three Months Ended     Year Ended     Three Months Ended  
    March 31,     June 30,     September 30,     December 31,     December 31,     March 31,  
    2013     2013     2013     2013     2013     2014  

Net Loss (Non-GAAP)

  $ (9,371 )    $ (8,375 )    $ (7,437 )    $ (7,022 )    $ (32,205 )    $ (6,935 ) 

Weighted-average shares outstanding, basic and diluted

    7,365        32,237        32,522        32,768        26,312        33,112   

Additional weighted average shares giving effect to conversion of convertible preferred stock at the beginning of the period

    16,877        —          —          —          4,162        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in computing non-GAAP net loss per share, basic and diluted

    24,242        32,237        32,522        32,768        30,474        33,112   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss per common share, basic and diluted

  $ (0.39 )    $ (0.26 )    $ (0.23 )    $ (0.21 )    $ (1.06 )    $ (0.21 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Reconciliation of Net Loss to Adjusted EBITDA   
(Unaudited; in thousands)   
    Three Months Ended     Year Ended     Three Months Ended  
    March 31,     June 30,     September 30,     December 31,     December 31,     March 31,  
    2013     2013     2013     2013     2013     2014  

Net loss

  $ (10,501 )    $ (9,097 )    $ (8,193 )    $ (8,061 )    $ (35,852 )    $ (8,306 ) 

Depreciation

    1,008        1,121        1,299        1,294        4,722        1,350   

Amortization of internally developed software

    227        256        303        370        1,156        445   

Interest expense, net

    184        109        82        78        453        66   

Provision for income taxes

    106        149        230        7        492        188   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    (8,976 )      (7,462 )      (6,279 )      (6,312 )      (29,029 )      (6,257 ) 

Stock-based compensation

    1,225        1,309        1,418        1,266        5,218        1,497   

Capitalization of internally developed software

    (632 )      (916 )      (1,018 )      (650 )      (3,216 )      (617 ) 

Other (income) expenses, net

    408        81        16        66        571        (4 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ (7,975 )    $ (6,988 )    $ (5,863 )    $ (5,630 )    $ (26,456 )    $ (5,381 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Exhibit 99.2

Marin Software Announces CEO Transition to Position Company for Next Phase of Growth

David A. Yovanno joins as new CEO bringing significant executive, operating, and digital advertising experience

Founder Chris Lien transitions to role of Executive Chairman

San Francisco, CA (May 7, 2014) – Marin Software Incorporated (NYSE: MRIN), provider of a leading Revenue Acquisition Management platform for advertisers and agencies, today announced David A. Yovanno has joined as Chief Executive Officer. Chris Lien, who founded Marin in April 2006 and has served as CEO since inception, will continue to be actively involved day-to-day with Marin in his new role of Executive Chairman.

“I am excited to announce that Dave has joined Marin as CEO to partner with me, the rest of the team, and our Board to help scale Marin to its next stage of growth,” said Lien. “Marin’s record results for the first quarter demonstrate our tremendous market opportunity and momentum. Now is the right time to bring in Dave, who has more than 20 years of operating experience and strong digital marketing expertise. I am confident Dave will build on Marin’s success to drive the company to even greater levels of achievement. In my new role as Executive Chairman, I look forward to working closely with Dave and the entire team to extend Marin’s leadership position in Revenue Acquisition Management as we seek to serve more advertisers and agencies worldwide.”

Marin Software, launched in 2006 and publicly traded since March 2013, has grown to be the world’s leading Revenue Acquisition Management platform. Advertisers and agencies globally use Marin’s platform to measure, manage, and optimize their revenue generation and customer acquisition activities across search, display, social, and mobile channels. As of year-end 2013, Marin’s customers managed $6 billion of annualized online advertising spending via the Marin platform, supported by Marin’s over 500 employees in 13 offices worldwide.

“I am honored to join Marin Software as CEO to help the company scale to even greater levels in the years ahead,” said Yovanno. “Chris and the Marin team have defined and led the Revenue Acquisition Management space, which I believe is a rapidly growing opportunity in the multi-billion dollar digital advertising market. I am excited to leverage my executive, operational, and digital marketing experience to expand the company’s leadership position. I very much look forward to working with our customers, employees, partners and investors.”

David A. Yovanno has nearly 20 years of experience in the technology industry, most recently as Executive Vice President, Technology Solutions at Conversant which last year had revenues in excess of $500 million. Dave has broad experience in the digital advertising industry and has proven his operational leadership capabilities at a global scale. Dave joined Conversant, Inc. (formerly ValueClick, Inc.) in 2000 and held a number of leadership positions, including executive vice president of sales and marketing, general manager and chief operating officer until 2008. Dave left Conversant in 2008 to serve as CEO of Gigya, a high-growth social technology SaaS company based in Silicon Valley, and rejoined Conversant in 2011. Most recently, Dave served as President and Executive Vice President, Technology Solutions

(formerly Mediaplex) for Conversant from 2011 until joining Marin. He was responsible for the company’s Technology Solutions, Media Solutions internationally, and DSP solution, along with driving cross-solution synergies and assisting with the company’s corporate development program. Dave has served on the board of the Interactive Advertising Bureau and in the United States Navy as a Lieutenant and CIO. He is a graduate of The George Washington University in Washington, D.C., where he earned his bachelor’s degree in marketing and master’s degree in health services administration.

About Marin Software

Marin Software provides a leading Revenue Acquisition Management platform used by advertisers and agencies to measure, manage and optimize more than $6 billion in annualized ad spend. Offering an integrated platform for search, display, social, and mobile advertising, Marin helps advertisers and agencies improve financial performance, save time, and make better decisions. Headquartered in San Francisco, with offices worldwide, Marin’s technology powers marketing campaigns in more than 160 countries. For more information about Marin’s products, please visit: http://www.marinsoftware.com/solutions/overview .

Investor Relations Contact:

Greg Kleiner

ICR for Marin Software

415-762-0327

ir@marinsoftware.com

Media Contact:

Greg Kunkel

Corporate Communications, Marin Software

415-857-7663

press@marinsoftware.com