Quotient Technology Inc. Announces Second Quarter 2023 Results

Quarterly Revenue of $65.7M

GAAP Net Loss of $15.9M

Adjusted EBITDA of $3.0M

SALT LAKE CITY--(BUSINESS WIRE)--August 8, 2023--Quotient Technology Inc. (NYSE: QUOT), a leading digital promotions and media technology company, today reported financial results for the second quarter ended June 30, 2023. Due to the June 20, 2023 announcement of the pending acquisition of Quotient by CB Neptune Holdings, LLC (“Neptune Parent”), the direct corporate parent of Neptune Retail Solutions, Quotient will not host a conference call or live webcast to discuss these financial results. Additionally, due to the pending acquisition, Quotient is not providing forward looking financial guidance or providing comment or update on prior guidance.

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, certain business transformation and strategic initiatives costs, expenses related to legal settlements, and restructuring charges; and defines 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, impairment of certain long-lived and right-of-use assets, shareholder activism response costs, expenses related to legal settlements, restructuring charges, and certain business transformation and strategic initiatives costs. 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 stock-based compensation, amortization of acquired intangible assets, restructuring charges, impairment of certain long-lived and right-of-use assets, shareholder activism response costs, expenses related to legal settlements, and certain business transformation and strategic initiatives 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", and "Reconciliation of Operating Expenses to Non-GAAP Operating Expenses" included in this press release.

Forward-Looking Statements

This press release contains a forward-looking statement consisting of the pending acquisition of Quotient (the “Company”) by Neptune Parent. This forward-looking statement is based on the Company’s current plans, objectives, expectations and intentions and inherently involves significant risks and uncertainties. Actual outcomes and the timing of events could differ materially from those anticipated in such a forward-looking statement as a result of these risks and uncertainties, which include those identified in the Company’s filings with the SEC, including its Annual Report on Form 10-K filed with the SEC on March 16, 2023, its Form 10-K/A Amendment No. 1 filed with the SEC on April 28, 2023, its Schedule 14A (Definitive Proxy Statement Regarding the Special Meeting of Stockholders of Quotient to Consider and Vote on the Pending Acquisition by Neptune Parent) filed with the SEC on July 31, 2023, and future filings and reports by the Company. The Company 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 a 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, Unilever, CVS, Dollar General, 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)

	June 30, 2023			December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents		44,900			56,891
Accounts receivable, net		69,093			98,049
Prepaid expenses and other current assets		26,435			19,791
Total current assets		140,428			174,731
Property and equipment, net		32,065			28,773
Operating lease right-of-use-assets		12,703			14,475
Intangible assets, net		2,567			4,494
Goodwill		128,427			128,427
Other assets		10,050			12,259
Total assets	$	326,240		$	363,159
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,930		$	30,027
Accrued compensation and benefits		6,296			12,060
Other current liabilities		44,141			53,255
Deferred revenues		20,059			15,519
Short-term debt		2,750			2,750
Total current liabilities		102,176			113,611
Operating lease liabilities		18,454			21,221
Other non-current liabilities		740			468
Long-term debt		47,197			48,034
Deferred tax liabilities		2,030			2,030
Total liabilities		170,597			185,364

Stockholders’ equity:
Common stock		1			1
Additional paid-in capital		724,605			713,201
Accumulated other comprehensive loss		(1,742	)		(1,756	)
Accumulated deficit		(567,221	)		(533,651	)
Total stockholders’ equity		155,643			177,795
Total liabilities and stockholders’ equity	$	326,240		$	363,159

QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Revenues	$	65,706		$	69,251		$	124,973		$	147,707
Cost of revenues ⁽¹⁾		34,778			37,267			65,148			86,345
Gross profit		30,928			31,984			59,825			61,362
Operating Expenses:
Sales and marketing ⁽¹⁾		22,326			21,459			40,289			43,395
Research and development ⁽¹⁾		6,632			7,072			12,066			16,828
General and administrative ⁽¹⁾		15,414			42,869			36,608			65,577
Total operating expenses		44,372			71,400			88,963			125,800
Net loss from operations		(13,444	)		(39,416	)		(29,138	)		(64,438	)
Interest expense		(2,854	)		(1,179	)		(5,192	)		(2,333	)
Other (expense) income, net		153			(417	)		59			(381	)
Net loss before income taxes		(16,145	)		(41,012	)		(34,271	)		(67,152	)
Provision for (benefit from) income taxes		(247	)		2,346			(701	)		2,512
Net loss	$	(15,898	)	$	(43,358	)	$	(33,570	)	$	(69,664	)

Net loss per share, basic and diluted	$	(0.16	)	$	(0.45	)	$	(0.34	)	$	(0.73	)

Weighted-average shares used to compute net loss per share, basic and diluted		98,424			95,369			97,941			95,148

(1) The stock-based compensation expense included above was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Cost of revenues	$	280		$	500		$	502		$	1,032
Sales and marketing		510			812			1,141			1,703
Research and development		345			674			603			1,641
General and administrative		2,466			15,141			9,222			18,493
Total stock-based compensation	$	3,601		$	17,127		$	11,468		$	22,869

QUOTIENT TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
	Six Months Ended June 30,
		2023			2022
Cash flows from operating activities:
Net loss	$	(33,570	)	$	(69,664	)
Adjustments to reconcile net loss to net cash used in by operating activities:
Depreciation and amortization		9,047			9,231
Stock-based compensation		11,468			22,869
Impairment of long-lived and right-of-use assets		—			11,448
Amortization of debt discount and issuance cost		879			548
Allowance (recovery) for credit losses		(177	)		1,222
Other non-cash expenses		3,480			3,368
Changes in operating assets and liabilities:
Accounts receivable		29,134			78,915
Prepaid expenses and other assets		(6,451	)		(2,031	)
Accounts payable and other liabilities		(12,957	)		(28,944	)
Payments for contingent consideration and bonuses		—			(19,008	)
Accrued compensation and benefits		(5,757	)		(6,283	)
Deferred revenues		4,540			(7,741	)
Net cash used in operating activities		(364	)		(6,070	)
Cash flows from investing activities:
Purchases of property and equipment		(9,615	)		(8,161	)
Net cash used in investing activities		(9,615	)		(8,161	)
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans		1,332			824
Proceeds from borrowing on line of credit		40,000			—
Repayment of line of credit		(40,000	)		—
Payments for taxes related to net share settlement of equity awards		(1,922	)		(3,499	)
Principal payments on term loan		(1,375	)		—
Principal payments on promissory note and finance lease obligations		—			(98	)
Payments for contingent consideration		—			(5,686	)
Net cash used in financing activities		(1,965	)		(8,459	)
Effect of exchange rates on cash and cash equivalents		(47	)		215
Net decrease in cash and cash equivalents		(11,991	)		(22,475	)
Cash and cash equivalents at beginning of period		56,891			237,417
Cash and cash equivalents at end of period	$	44,900		$	214,942

QUOTIENT TECHNOLOGY INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
(Unaudited, in thousands)

	Three Months Ended June 30,										Six Months Ended June 30,
	2023					2022					2023					2022
	$			%		$			%		$			%		$			%
Net Loss ($) / Loss Margin (%) (2)	$	(15,898	)	(24	%)	$	(43,358	)	(63	%)	$	(33,570	)	(27	%)	$	(69,664	)	(47	%)
Adjustments:
Stock-based compensation		3,601		6	%		17,127		25	%		11,468		9	%		22,869		15	%
Depreciation and amortization		4,829		7	%		4,670		7	%		9,047		7	%		9,231		6	%
Other (1)		8,024		12	%		16,349		24	%		13,445		11	%		23,970		16	%
Interest expense		2,854		4	%		1,179		2	%		5,192		4	%		2,333		2	%
Other expense (income), net		(153	)	—			417		—			(59	)	—			381		—
Provision for (benefit from) income taxes		(247	)	—			2,346		3	%		(701	)	—			2,512		2	%

Total adjustments	$	18,908		29	%	$	42,088		61	%	$	38,392		31	%	$	61,296		41	%

Adjusted EBITDA ($) / Adjusted EBITDA Margin (%) (2)	$	3,010		5	%	$	(1,270	)	(2	%)	$	4,822		4	%	$	(8,368	)	(6	%)

(1) For the three and six months ended June 30, 2023, Other includes $6.9 million and $9.1 million, respectively, related to certain business transformation and strategic initiatives costs which include $4.1 million and $4.7 million respectively, of costs incurred in the transition and replacement of Coupons.com with Shopmium as our direct-to-consumer offering in the U.S.; $0.7 million and $3.4 million, respectively, related to restructuring charges, $0.3 million and $0.7 million, respectively, consisting of expenses related to legal settlements and $0.1 million and $0.2 million, respectively, related to shareholder activism response costs. For the three and six months ended June 30, 2022, Other includes a charge of $5.3 million and $11.4 million, respectively, related to the impairment of certain long-lived and right-of-use assets; $3.7 million and $5.1 million, respectively, related to shareholder activism response costs; $4.8 million in both respective periods related to legal settlements; and $2.6 million and $2.7 million, respectively, related to restructuring charges. Restructuring charges primarily 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)

	Q2 FY 22			Q3 FY 22			Q4 FY 22			Q1 FY 23			Q2 FY 23
Net Income (loss)	$	(43,358	)	$	(7,167	)	$	320		$	(17,672	)	$	(15,898	)
Adjustments:
Stock-based compensation		17,127			4,980			4,604			7,867			3,601
Depreciation and amortization		4,670			4,797			3,901			4,218			4,829
Other (1)		16,349			7,919			3,962			5,421			8,024
Interest expense		1,179			1,837			1,471			2,338			2,854
Other (income) expense, net		417			(200	)		(1,209	)		94			(153	)
Provision for (benefit from) income taxes		2,346			(2,138	)		148			(454	)		(247	)

Total adjustments	$	42,088		$	17,195		$	12,877		$	19,484		$	18,908

Adjusted EBITDA (1)	$	(1,270	)	$	10,028		$	13,197		$	1,812		$	3,010

Adjusted EBITDA Margin (2)		(2	%)		14	%		19	%		3	%		5	%

(1) Adjusted EBITDA, a non-GAAP financial measure, is net income (loss) adjusted for stock-based compensation, depreciation and amortization, interest expense, other (income) expense, net, provision for (benefit from) income taxes, and other, which includes: charge of $4.8 million for expenses related to legal settlements; $5.3 million related to the impairment of certain long-lived and right-of-use assets, $3.7 million related to shareholder activism response costs, and restructuring charges of $2.6 million during Q2 FY22; charge of $5.0 million for expenses related to legal settlements, $2.8 million related to restructuring charges, and $0.1 million related to shareholder activism response costs during Q3 FY22; charge of $3.4 million related to restructuring charges, $1.3 million related to certain business transformation and strategic initiatives costs which includes $1.0 million related to the launch and scaling of Shopmium in the U.S. to replace coupons.com as our direct-to-consumer offering, $0.5 million related to a recovery of expenses related to legal settlements and $0.2 million shareholder activism response costs recovery during Q4 FY22; charge of $2.8 million related to certain business transformation and strategic initiatives costs which includes $0.6 million of costs incurred in the transition and replacement of Coupons.com with Shopmium as our direct-to-consumer offering in the U.S., $2.1 million related to restructuring charges, $0.4 million in expenses related to legal settlements and $0.1 million related to shareholder activism response costs during Q1 FY23; charge of $6.9 million related to certain business transformation and strategic initiative costs which includes $4.1 million of costs incurred in the transition and replacement of Coupons.com with Shopmium as our direct-to-consumer offering in the U.S., charge of $0.7 million related to restructuring charges, charge of $0.3 million in expenses related to legal settlements and $0.1 million related to shareholder activism response costs.



(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)

		Q2 FY 22			Q1 FY 23			Q2 FY 23
Revenues		$	69,251		$	59,267		$	65,706

Cost of revenues (GAAP)		$	37,267		$	30,370		$	34,778
	(less) Stock-based compensation		(500	)		(222	)		(280	)
	(less) Amortization of acquired intangible assets		(2,219	)		(610	)		(609	)
	(less) Business transformation and strategic initiatives costs		—			(11	)		(121	)
	(less) Expenses related to legal settlements		—			(208	)		—
	(less) Impairment of certain long-lived and right-of-use assets		(1,434	)		—			—
	(less) Restructuring charges		(75	)		22			—
Cost of revenues (Non-GAAP)		$	33,039		$	29,341		$	33,768

Gross profit (GAAP)		$	31,984		$	28,897		$	30,928
	Gross margin percentage (GAAP)		46.2	%		48.8	%		47.1	%

Gross profit (Non-GAAP)*		$	36,212		$	29,926		$	31,938
	Gross margin percentage (Non-GAAP)		52.3	%		50.5	%		48.6	%

* Non-GAAP gross profit excludes stock-based compensation, amortization of acquired intangible assets, certain business transformation and strategic initiatives costs, expenses related to legal settlements and restructuring charges.

QUOTIENT TECHNOLOGY INC.
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)

		Q2 FY 22			Q3 FY 22			Q4 FY 22			Q1 FY 23			Q2 FY 23
Revenues		$	69,251		$	70,336		$	70,723		$	59,267		$	65,706
Sales and marketing expenses			21,459			19,939			20,745			17,963			22,326
	(less) Stock-based compensation		(812	)		(777	)		(733	)		(631	)		(510	)
	(less) Amortization of acquired intangible assets		(354	)		(354	)		(354	)		(354	)		(354	)
	(less) Business transformation and strategic initiatives costs		—			—			(928	)		(572	)		(4,278	)
	(less) Restructuring charges		(131	)		(762	)		(1,595	)		120			64
Non-GAAP Sales and marketing expenses		$	20,162		$	18,046		$	17,135		$	16,526		$	17,248
	Non-GAAP Sales and marketing percentage		29	%		26	%		24	%		28	%		26	%
Research and development			7,072			4,899			4,572			5,434			6,632
	(less) Stock-based compensation		(674	)		(411	)		(361	)		(258	)		(345	)
	(less) Business transformation and strategic initiatives costs		—			—			(54	)		(37	)		(91	)
	(less) Restructuring charges		(170	)		(246	)		(108	)		(15	)		(42	)
Non-GAAP Research and development expenses		$	6,228		$	4,242		$	4,049		$	5,124		$	6,154
	Non-GAAP Research and development percentage		9	%		6	%		6	%		9	%		9	%
General and administrative expenses			42,869			16,401			12,908			21,194			15,414
	(less) Stock-based compensation		(15,141	)		(3,350	)		(3,085	)		(6,756	)		(2,466	)
	(less) Restructuring charges		(2,240	)		(1,411	)		(1,037	)		(2,820	)		(744	)
	(less) Impairment of long-lived and right-of-use assets		(3,895	)		—			—			—			—
	(less) Business transformation and strategic initiatives costs		—			—			(173	)		(1,596	)		(2,437	)
	(less) Shareholder activism response costs		(3,654	)		(51	)		250			(127	)		(119	)
	(less) Expenses related to legal settlements		(4,750	)		(5,000	)		500			(177	)		(256	)
Non-GAAP General and administrative expenses		$	13,189		$	6,589		$	9,363		$	9,718		$	9,392
	Non-GAAP General and administrative percentage		19	%		9	%		13	%		16	%		14	%

Non-GAAP Operating expenses*		$	39,579		$	28,877		$	30,547		$	31,368		$	32,794
	Non-GAAP Operating expense percentage		57	%		41	%		43	%		53	%		50	%

* Non-GAAP operating expenses excludes stock-based compensation, amortization of acquired intangible assets, restructuring charges, impairment of certain long-lived and right-of-use assets, shareholder activism response costs, expenses related to legal settlements and certain business transformation and strategic initiatives costs.

Contacts

Investor Relations:
Drew Haroldson
The Blueshirt Group for Quotient
ir@quotient.com

Document and Entity Information	Aug. 08, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 08, 2023
Entity File Number	001-36331
Entity Registrant Name	Quotient Technology Inc.
Entity Central Index Key	0001115128
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0485123
Entity Address, Address Line One	1260 East Stringham Avenue
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84106
City Area Code	650
Local Phone Number	605-4600
Title of 12(b) Security	Common Stock, $0.00001 par value
Trading Symbol	QUOT
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false

Document and Entity Information

Aug. 08, 2023

Cover [Abstract]

Document Type

8-K

Amendment Flag

false

Document Period End Date

Aug. 08, 2023

Entity File Number

001-36331

Entity Registrant Name

Quotient Technology Inc.

Entity Central Index Key

0001115128

Entity Incorporation, State or Country Code

Entity Tax Identification Number

77-0485123

Entity Address, Address Line One

1260 East Stringham Avenue

Entity Address, Address Line Two

Suite 600

Entity Address, City or Town

Salt Lake City

Entity Address, State or Province

Entity Address, Postal Zip Code

84106

City Area Code

650

Local Phone Number

605-4600

Title of 12(b) Security

Common Stock, $0.00001 par value

Trading Symbol

QUOT

Security Exchange Name

NYSE

Entity Emerging Growth Company

false

Written Communications

false

Soliciting Material

false

Pre-commencement Tender Offer

false

Pre-commencement Issuer Tender Offer

false

Delaware	001-36331	77-0485123
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

1260 East Stringham Avenue, Suite 600
Salt Lake City, UT 84106
(Address of principal executive offices)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 par value		QUOT		New York Stock Exchange

	Quotient Technology Inc.

	By:	/s/ Connie Chen
		General Counsel, Compliance Officer and Secretary