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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35838

 

Marin Software Incorporated

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

20-4647180

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

123 Mission Street, 27th Floor, San Francisco, CA

(Address of Principal Executive Offices)

 

94105

(Zip Code)

 

(415) 399-2580

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

Common Stock, $0.001 Par Value Per Share

 

MRIN

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter time period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 1, 2021, the registrant had 15,492,355 shares of common stock outstanding.

 

 


 

Table of Contents

 

PART I.

FINANCIAL INFORMATION

 

3

Item 1.

Financial Statements (unaudited)

 

3

 

CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

 

3

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

 

4

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

 

5

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

 

7

 

Notes to Condensed Consolidated Financial Statements

 

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

28

Item 4.

Controls and Procedures

 

29

PART II.

OTHER INFORMATION

 

30

Item 1.

Legal Proceedings

 

30

Item 1A.

Risk Factors

 

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

53

Item 3.

Defaults Upon Senior Securities

 

53

Item 4.

Mine Safety Disclosures

 

53

Item 5.

Other Information

 

53

Item 6.

Exhibits

 

54

SIGNATURES

 

55

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

MARIN SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except par value)

 

 

 

At September 30,

 

 

At December 31,

 

 

 

2021

 

 

2020*

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,727

 

 

$

14,280

 

Restricted cash

 

 

431

 

 

 

540

 

Accounts receivable, net

 

 

4,613

 

 

 

5,063

 

Prepaid expenses and other current assets

 

 

2,827

 

 

 

3,039

 

Total current assets

 

 

57,598

 

 

 

22,922

 

Property and equipment, net

 

 

4,012

 

 

 

5,477

 

Right-of-use assets, operating leases

 

 

2,740

 

 

 

7,737

 

Other non-current assets

 

 

684

 

 

 

873

 

Total assets

 

$

65,034

 

 

$

37,009

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

791

 

 

$

928

 

Accrued expenses and other current liabilities

 

 

5,823

 

 

 

6,552

 

Note payable, current

 

 

2,226

 

 

 

1,854

 

Operating lease liabilities

 

 

3,222

 

 

 

6,800

 

Total current liabilities

 

 

12,062

 

 

 

16,134

 

Note payable, net of current

 

 

1,094

 

 

 

1,466

 

Operating lease liabilities, non-current

 

 

-

 

 

 

1,814

 

Other long-term liabilities

 

 

1,154

 

 

 

1,780

 

Total liabilities

 

 

14,310

 

 

 

21,194

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value - 142,857 shares authorized, 15,491 and 9,743 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

15

 

 

 

10

 

Additional paid-in capital

 

 

350,822

 

 

 

308,065

 

Accumulated deficit

 

 

(299,006

)

 

 

(291,163

)

Accumulated other comprehensive loss

 

 

(1,107

)

 

 

(1,097

)

Total stockholders’ equity

 

 

50,724

 

 

 

15,815

 

Total liabilities and stockholders’ equity

 

$

65,034

 

 

$

37,009

 

 

* Derived from the Company’s audited consolidated financial statements as of December 31, 2020.

See accompanying notes to the condensed consolidated financial statements.

3


 

MARIN SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues, net

 

$

6,155

 

 

$

6,796

 

 

$

18,557

 

 

$

22,731

 

Cost of revenues

 

 

3,175

 

 

 

4,323

 

 

 

9,591

 

 

 

14,253

 

Gross profit

 

 

2,980

 

 

 

2,473

 

 

 

8,966

 

 

 

8,478

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

1,266

 

 

 

1,491

 

 

 

3,780

 

 

 

5,683

 

Research and development

 

 

2,677

 

 

 

3,106

 

 

 

7,743

 

 

 

9,881

 

General and administrative

 

 

2,312

 

 

 

2,131

 

 

 

6,176

 

 

 

6,123

 

Total operating expenses

 

 

6,255

 

 

 

6,728

 

 

 

17,699

 

 

 

21,687

 

Loss from operations

 

 

(3,275

)

 

 

(4,255

)

 

 

(8,733

)

 

 

(13,209

)

Other income, net

 

 

298

 

 

 

111

 

 

 

846

 

 

 

1,117

 

Loss before income taxes

 

 

(2,977

)

 

 

(4,144

)

 

 

(7,887

)

 

 

(12,092

)

Income tax provision (benefit)

 

 

153

 

 

 

(72

)

 

 

(44

)

 

 

(568

)

Net loss

 

 

(3,130

)

 

 

(4,072

)

 

 

(7,843

)

 

 

(11,524

)

Foreign currency translation adjustments

 

 

26

 

 

 

(41

)

 

 

(10

)

 

 

47

 

Comprehensive loss

 

$

(3,104

)

 

$

(4,113

)

 

$

(7,853

)

 

$

(11,477

)

Net loss per share available to common stockholders, basic and diluted (Note 11)

 

$

(0.22

)

 

$

(0.58

)

 

$

(0.66

)

 

$

(1.67

)

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

 

 

14,500

 

 

 

7,017

 

 

 

11,956

 

 

 

6,916

 

 

See accompanying notes to the condensed consolidated financial statements.

4


 

MARIN SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(in thousands)

 

 

 

Three Months Ended September 30, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

Balances at June 30, 2021

 

 

11,147

 

 

$

11

 

 

$

311,675

 

 

$

(295,876

)

 

$

(1,133

)

 

$

14,677

 

Issuance of common stock from vesting of restricted stock units (Note 7)

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock through equity distribution agreement, net of offering costs of $1,345

 

 

4,316

 

 

 

4

 

 

 

38,650

 

 

 

 

 

 

 

 

 

38,654

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

 

 

 

(158

)

 

 

 

 

 

 

 

 

(158

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

655

 

 

 

 

 

 

 

 

 

655

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,130

)

 

 

 

 

 

(3,130

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

26

 

Balances at September 30, 2021

 

 

15,491

 

 

$

15

 

 

$

350,822

 

 

$

(299,006

)

 

$

(1,107

)

 

$

50,724

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

Balances at June 30, 2020

 

 

6,959

 

 

$

7

 

 

$

300,139

 

 

$

(284,564

)

 

$

(1,010

)

 

$

14,572

 

Issuance of common stock through equity distribution agreement, net of offering costs of $9

 

 

134

 

 

 

 

 

 

179

 

 

 

 

 

 

 

 

 

179

 

Issuance of common stock from vesting of restricted stock units (Note 7)

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

 

 

 

(23

)

 

 

 

 

 

 

 

 

(23

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

195

 

 

 

 

 

 

 

 

 

195

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,072

)

 

 

 

 

 

(4,072

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41

)

 

 

(41

)

Balances at September 30, 2020

 

 

7,115

 

 

$

7

 

 

$

300,490

 

 

$

(288,636

)

 

$

(1,051

)

 

$

10,810

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

Balances at December 31, 2020

 

 

9,743

 

 

$

10

 

 

$

308,065

 

 

$

(291,163

)

 

$

(1,097

)

 

$

15,815

 

Issuance of common stock through equity distribution agreement, net of offering costs of $1,502

 

 

5,502

 

 

 

5

 

 

 

41,674

 

 

 

 

 

 

 

 

 

41,679

 

Issuance of common stock from vesting of restricted stock units (Note 7)

 

 

233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

 

 

 

(269

)

 

 

 

 

 

 

 

 

(269

)

Issuance of common stock under employee stock purchase plan

 

 

13

 

 

 

 

 

 

16

 

 

 

 

 

 

 

 

 

16

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,336

 

 

 

 

 

 

 

 

 

1,336

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,843

)

 

 

 

 

 

(7,843

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

(10

)

Balances at September 30, 2021

 

 

15,491

 

 

$

15

 

 

$

350,822

 

 

$

(299,006

)

 

$

(1,107

)

 

$

50,724

 

 

5


 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Deficit

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

Balances at December 31, 2019

 

 

6,810

 

 

$

7

 

 

$

299,263

 

 

$

(277,112

)

 

$

(1,098

)

 

$

21,060

 

Issuance of common stock through equity distribution agreement, net of offering costs of $9

 

 

134

 

 

 

 

 

 

179

 

 

 

 

 

 

 

 

 

179

 

Issuance of common stock from vesting of restricted stock units (Note 7)

 

 

160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

 

 

 

(174

)

 

 

 

 

 

 

 

 

(174

)

Issuance of common stock under employee stock purchase plan

 

 

11

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

14

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,208

 

 

 

 

 

 

 

 

 

1,208

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(11,524

)

 

 

 

 

 

(11,524

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47

 

 

 

47

 

Balances at September 30, 2020

 

 

7,115

 

 

$

7

 

 

$

300,490

 

 

$

(288,636

)

 

$

(1,051

)

 

$

10,810

 

 

See accompanying notes to the condensed consolidated financial statements.

6


 

MARIN SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(7,843

)

 

$

(11,524

)

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

 

 

 

 

 

 

Depreciation

 

 

670

 

 

 

1,661

 

Amortization of internally developed software

 

 

1,806

 

 

 

2,330

 

Amortization of intangible assets

 

 

 

 

 

95

 

Amortization of deferred costs to obtain and fulfill contracts

 

 

364

 

 

 

19

 

Interest expense

 

 

6

 

 

 

700

 

Loss on disposals of property and equipment and right-of-use assets

 

 

30

 

 

 

14

 

Unrealized foreign currency losses

 

 

43

 

 

 

(29

)

Stock-based compensation related to equity awards

 

 

1,273

 

 

 

1,208

 

Provision for bad debts

 

 

(102

)

 

 

(204

)

Net change in operating leases

 

 

(396

)

 

 

(294

)

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

551

 

 

 

3,723

 

Prepaid expenses and other assets

 

 

(173

)

 

 

289

 

Accounts payable

 

 

(137

)

 

 

(482

)

Accrued expenses and other liabilities

 

 

(1,351

)

 

 

(1,994

)

Net cash used in operating activities

 

 

(5,259

)

 

 

(4,488

)

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(6

)

 

 

(14

)

Capitalization of internally developed software

 

 

(971

)

 

 

(1,442

)

Net cash used in investing activities

 

 

(977

)

 

 

(1,456

)

Financing activities:

 

 

 

 

 

 

Proceeds from issuance of common shares through at-the-market offering, net of offering costs

 

 

41,888

 

 

 

179

 

Proceeds from note payable

 

 

 

 

 

3,320

 

Payment of principal on finance lease liabilities

 

 

(15

)

 

 

(545

)

Employee taxes paid for withheld shares upon equity award settlement

 

 

(280

)

 

 

(220

)

Proceeds from employee stock purchase plan, net

 

 

29

 

 

 

19

 

Net cash provided by financing activities

 

 

41,622

 

 

 

2,753

 

Effect of foreign exchange rate changes on cash and cash equivalents and restricted cash

 

 

(48

)

 

 

36

 

Net decrease in cash and cash equivalents and restricted cash