Quotient Technology (QUOT) Misses Q2 EPS by 4c, Revenues Miss; Offers Q3 & FY20 Revenue Guidance

Quotient Technology (NYSE: QUOT) reported Q2 EPS of ($0.21), $0.04 worse than the analyst estimate of ($0.17). Revenue for the quarter came in at $83.5 million versus the consensus estimate of $85.98 million.

• Revenue was $83.5M, within guidance
• GAAP net loss was $19.1M
• Adjusted EBITDA was $4.4M, above guidance
• Signed two new retailers onto Retailer iQ and Retail Performance Media (RPM)

Q2 2020 Summary

• Delivered $83.5M of revenue in Q2 2020, within our guidance range, and down 20% from Q2 2019 as we had anticipated in May and built into our guidance for the quarter. COVID-19 had a negative impact on our revenue in Q2 2020 as our customers adjusted their plans for promotion and media spend. In addition to these market factors, and as we have previously discussed, a portion of our media revenue is now recognized net of certain costs compared to a gross basis prior to Q2 2020. Had this media revenue been recognized gross, our Q2 revenue would have been $8.6M higher resulting in a year over year decrease in total revenues of 12%.
• Impacts from COVID-19 in the second quarter of 2020 resulted in anticipated paused, delayed or cancelled marketing campaigns from consumer packaged goods manufacturers (“CPGs”) and retailers. April and May were impacted the most as retailers and brands focused on bringing consistent inventory levels back to store shelves while also managing foot traffic in stores. This led to many campaigns being rescheduled and, in many cases, with altered media messages to better reflect the current environment.
• In May 2020, we saw our bookings and pipeline begin to stabilize as campaigns started to be rescheduled for June and into the back half of 2020. Revenue for the month of June represented only a 7% decline over the same month one year ago compared to the full quarter decline of 20%. This reflects a favorable trend, with customers returning to a more normal spending pattern. Based on early indications, we expect this momentum to continue into the back half of 2020.
• Adjusted EBITDA was $4.4 million in the second quarter of 2020, well above the top end of our guidance range and primarily driven by lower operating expenses from focused cost controls.
• We ended the second quarter of 2020 with a strong balance sheet of approximately $212 million in cash and cash equivalents. We generated $16.9 million of cash from operations in the second quarter of 2020 primarily driven by strong collections.

“I’d like to thank our entire organization for their teamwork and inspiring dedication to our customers, partners and shoppers. We are a market leader in an essential vertical where shoppers will always need to make purchases and brands will always need to maintain market share,” said Steven Boal, CEO. “Revenue in the back half of 2020 is expected to grow more than 36% over the first half of the year. Current market dynamics, and the surge in eCommerce grocery sales are providing tailwinds for growth, alongside brands’ expected return to normal spending patterns. As retailers and brands focus on digital-first strategies, our platforms provide the scale, technology, data and expertise to help shift the large promotions and advertising budgets spent in offline to digital.”

GUIDANCE:

Quotient Technology sees Q3 2020 revenue of $120-130 million, versus the consensus of $123.09 million.

Quotient Technology sees FY2020 revenue of $430-455 million, versus the consensus of $444.26 million.

Beginning April 1, 2020, we modified the way we deliver a portion of our media business, and no longer control certain services before they are transferred to our customers. This change has driven a portion of our media revenues to be recognized net of certain costs starting April 1, 2020, whereas in FY 2019 and Q1 2020 this portion of revenue was recognized on a gross basis. As a result of the modification, our projected growth rates are negatively impacted for 2020 over the comparative periods in 2019, with the exception of Q1 2020. As a result of this change, gross margin dollars as a percentage of total revenue will increase, with no direct impact to our net income (loss) or Adjusted EBITDA.

As of today, Quotient is providing the following business outlook.

• For the third quarter 2020, total revenue is expected to be in the range of $120.0 million to $130.0 million. Adjusted EBITDA for the third quarter of 2020 is expected to be in the range of $15.0 million to $20.0 million.
• For the full year 2020, total revenue is expected to be in the range of $430.0 million to $455.0 million. Adjusted EBITDA for the full year 2020 is expected to be in the range of $43.0 million to $53.0 million.

For earnings history and earnings-related data on Quotient Technology (QUOT) click here.

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