Coupons.com Incorporated Reports Second Quarter 2014 Financial Results

Delivered 32% Revenue Growth Year Over Year
Signed 3 Additional Retailers to Digital and Mobile Coupon Platform Retailer iQ
Acquired Eckim to Expand Coupons.com's Retailer Platform Capabilities

PR Newswire

MOUNTAIN VIEW, Calif., Aug. 6, 2014 /PRNewswire/ -- Coupons.com Incorporated (COUP), a leader in digital coupons, today reported financial results for the quarter ended June 30, 2014. The Company also announced the acquisition of performance marketing firm Eckim, LLC ("Eckim") to bolster the company's marketing capabilities across its product portfolio.

"We had strong performance across all areas of our business in the second quarter," said Steven Boal, President and CEO of Coupons.com. "Our results reflect the continued shift toward digital couponing, and specifically to Coupons.com. Our broad platform, consisting of over 700 CPGs, and 2,000 brands and retailers representing over 58,000 stores, enables CPGs and retailers to connect with each other to run promotional and media campaigns in a seamless, cost-effective manner. We also recently launched Retailer iQ, our digital coupon, targeting and analytics platform. I'm excited to announce that we have signed three more retailers onto Retailer iQ, including two more top 10 grocery retailers."

Boal added, "I'm pleased to welcome the Eckim team to Coupons.com. Eckim brings nearly ten years of performance marketing leadership, and over 60 top retailer relationships to Coupons.com."

Second Quarter 2014 Financial Highlights and Key Metrics

Total revenue increased 32% to $51.7 million in the second quarter of 2014, compared to $39.1 million in the second quarter of 2013. Revenues in the second quarter of 2014 from digital promotion and display advertisements accounted for 74% and 26% of total revenues, respectively, compared to 79% and 21% for the same period in 2013. Transaction volume increased to 384 million, or 22%, over the second quarter of 2013.

In the second quarter of 2014, GAAP net loss was $6.9 million, which included $6.7 million in stock-based compensation expense. GAAP net loss in the second quarter of 2013 was $2.9 million.

Adjusted EBITDA increased to $3.7 million in the second quarter of 2014, compared to $0.1 million in the second quarter of 2013.

"We're pleased with our performance this quarter, as we delivered strong revenue growth of 32% over last year," said Mir Aamir, CFO and COO of Coupons.com. "We also demonstrated significant operating leverage in our model as compared to last year. As we enter the back half of this year, we'll continue to invest in the business to drive both top and bottom line growth."

Total revenue for the six months ended June 30, 2014 was $103.2 million, compared to $75.6 million for the comparable period in 2013. GAAP net loss for the six months ended June 30, 2014 was $20.9 million, which included $21.3 million in stock-based compensation expense.  For comparison, GAAP net loss for six months ended June 30, 2013 was $11.1 million. Adjusted EBITDA for the first six months of 2014 was $7.6 million, compared to loss of $4.8 million for the first six months of last year.

Business Highlights

Retailer iQ: We continue to see momentum in Retailer iQ, our digital coupon, targeting and analytics platform that combines personalized recommendations for products and coupons, integrated shopping lists, e-receipts, and real-time reporting for retailers and CPGs. We signed three additional retailers to Retailer iQ, bringing the total retailers on the platform to nine, four of which are top-ten grocery chains. By the end of 2014, we plan to have Retailer iQ implemented in six out of the nine retailers. Additionally, Dollar General announced that, working with Coupons.com, it successfully completed the rollout of its DG Digital Coupons program to more than 11,300 stores across 40 states.

Eckim Acquisition: We completed the acquisition of Eckim, a performance marketing firm based in Los Angeles. Eckim expands Coupons.com's platform capabilities, providing broader reach and scale for our products, partners and clients. The Eckim team brings ten years of experience and strong industry relationships that compliments and enhances our businesses.

Card Linked Offers: We completed the platform integration of our YUB acquisition, and launched new Card Linked Offers with several top specialty retailers such as Petsmart, Gap, and Lord & Taylor. This service lets consumers add digital coupons directly to payment cards, including Visa, Mastercard and American Express. Since launching, we have tripled the offers available and have an exciting roster of retailers lined up as we head into the holiday season.

Business Outlook

As of today, Coupons.com is providing its outlook for the third quarter and full year 2014, which excludes estimated operating results for Eckim. Upon completion, and excluding integration and transition costs, the company expects the impact of the acquisition to be revenue and Adjusted EBITDA accretive in 2014.

For the third quarter 2014, total revenue is expected to be in the range of $52.0 million to $54.0 million. Adjusted EBITDA is expected to be in the range of $2.0 million to $3.0 million.

For the full year 2014, total revenue is expected to be in the range of $217.0 million to $223.0 million. Adjusted EBITDA is expected to be in the range of $12.0 million to $17.0 million.

Conference Call Information

Coupons.com President and CEO, Steven Boal, and CFO and COO, Mir Aamir, will host a conference call and live webcast to discuss the Company's financial results and business outlook today at 5:00 p.m. EDT / 2:00 p.m. PDT. Questions that investors would like to see asked during the call should be sent to ir@couponsinc.com.

To access the call, please dial (877) 201-0168, or outside the U.S. (647) 788-4901, with Conference ID# 71843116 at least five minutes prior to the 2:00 p.m. PT start time. The live webcast and accompanying presentation can be accessed on the Investor Relations section of the company website at: http://investors.couponsinc.com. A replay of the webcast will be available on the website following the conference call.

Use of Non-GAAP Financial Measures

Coupons.com has presented Adjusted EBITDA in this press release because it is a key measure used by its management and board of directors to understand and evaluate its core operating performance and trends, to prepare and approve its annual budget, to develop short and long-term operational plans, and to determine bonus payouts. In particular, the Company believes that the exclusion of the expenses eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of its core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of the board of directors in connection with the determination of compensation for its executive officers. Accordingly, Coupons.com believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating the Company's operating results in the same manner as its management and board of directors. Coupons.com defines Adjusted EBITDA as net loss adjusted for interest expense, other income (expense) – net, benefit from income taxes, depreciation and amortization, and stock-based compensation.

Coupons.com's use of Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of the Company's financial results as reported under GAAP. Some of these limitations are:

  • Although depreciation and amortization are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • Adjusted EBITDA does not reflect: (i) changes in, or cash requirements for, working capital needs; (ii) the potentially dilutive impact of stock-based compensation; or (iii) tax payments that may represent a reduction in cash available to Coupons.com; and other companies, including companies in its industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

These non-GAAP financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding financial measures prepared in accordance with GAAP.  Because of these and other limitations, Adjusted EBITDA should be considered along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and the Company's other GAAP financial results.

For a reconciliation of non-GAAP financial measures to the nearest comparable GAAP financial measures, see "Reconciliation of Net Loss to Adjusted EBITDA" included in this press release.

Forward-Looking Statements

This release contains forward-looking statements based largely on Coupons.com's current expectations and projections about future events and financial trends affecting its business. Forward looking statements in this release include Coupons.com's current expectations with respect to revenues and Adjusted EBITDA for the third quarter of 2014 and for the full year 2014, the Company's expectations for the continued accelerating shift to Coupons.com's digital platform, Coupons.com's expectations regarding implementing Retailer IQ with other retailer partners, Coupons.com's expectations regarding future growth and Coupons.com's expectations regarding the anticipated benefits of its acquisition of Eckim.  Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available to Coupons.com's management at the date of this release and its management's good faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, Coupons.com's financial performance, including its revenues, margins, costs, expenditures, growth rates and operating expenses, and its ability to generate positive cash flow and become profitable; the amount and timing of digital promotions by CPGs, which are affected by budget cycles, economic conditions and other factors; the Company's ability to adapt to changing market conditions; the Company's ability to retain and expand its business with existing CPGs and retailers; the Company's ability to maintain and expand the use by consumers of digital promotions on its platforms; the Company's ability to attract and retain third-party advertising agencies, performance marketing networks and other intermediaries; the Company's ability to effectively manage its growth; the effects of increased competition in the Company's markets and its ability to compete effectively; the Company's ability to effectively grow and train its sales team; the Company's ability to obtain new CPGs and retailers and to do so efficiently; the Company's ability to maintain, protect and enhance its brand and intellectual property; costs associated with defending intellectual property infringement and other claims; the Company's ability to successfully enter new markets; the Company's ability to develop and launch new services and features; the Company's ability to attract and retain qualified employees and key personnel; the Company's ability to successfully integrate Eckim into its business and other factors identified in Coupons.com's filings with the Securities and Exchange Commission (the "SEC"), including its quarterly report on Form 10-Q filed with the SEC on May 8, 2014. Additional information will also be set forth in Coupons.com's future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that the Company makes with the SEC.  Coupons.com disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Coupons.com Incorporated

Coupons.com Incorporated (COUP) operates a leading digital promotion platform that connects great brands and retailers with consumers, offering digital printable coupons, digital paperless coupons, coupon codes, card linked offers, and other promotions. For brand marketers, the company distributes digital coupons to millions of consumers through Coupons.com, the 30,000 publishers comprising the Coupons.com digital coupon network, our social presence and our mobile applications. The company also powers digital coupon initiatives in online marketing campaigns—including display advertising, email and social media programs. Clients include hundreds of consumer packaged goods companies (including Clorox, General Mills, Johnson & Johnson, Kellogg's, Kimberly-Clark, and Kraft Foods) and their brands, top retailers (such as A&P, CVS, Duane Reade, H-E-B, Kmart, Kroger, Safeway and Walgreens) and leading restaurant, toy and entertainment companies. For consumers, the company operates Coupons.com, which offers a valuable collection of digital coupons and coupon codes, and also offers Grocery iQ and Coupons.com mobile applications as well as KitchMe.com. For publishers, the company offers solutions to monetize website traffic, including branded microsites and Brandcaster, a self-service coupons syndication platform. Founded in 1998, the company is based in Mountain View, CA. To start printing coupons, visit www.coupons.com. To learn more about the company visit www.couponsinc.com. Visit Coupons.com on Facebook at www.facebook.com/couponscom.



COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)



Three Months Ended
June 30,


Six Months Ended
June 30,


2014


2013


2014


2013

Net revenues

$ 51,715


$ 39,089


$ 103,216


$ 75,579

Costs and expenses:








Cost of net revenues (1)

20,884


12,933


41,403


25,734

Sales and marketing (1)

17,621


14,167


37,132


29,070

Research and development (1)

10,981


9,651


27,248


20,604

General and administrative (1)

8,857


5,002


17,907


10,898

Total costs and expenses

58,343


41,753


123,690


86,306

Loss from operations

(6,628)


(2,664)


(20,474)


(10,727)

Interest expense

(300)


(229)


(602)


(435)

Other income (expense), net

31


5


(107)


34

Loss before benefit from income taxes

(6,897)


(2,888)


(21,183)


(11,128)

Benefit from income taxes



(244)


Net loss

$ (6,897)


$ (2,888)


$ (20,939)


$ (11,128)









Net loss per share attributable to common stockholders, basic and diluted

Weighted-average number of common shares used in computing net loss per share attributable to common stockholders, basic and diluted

$ (0.09)


$ (0.15)


$ (0.37)


$ (0.60)

77,549


18,903


56,161


18,623









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










Three Months Ended
June 30,


Six Months Ended
June 30,


2014


2013


2014


2013

Cost of revenues

$ 523


$ 85


$ 2,100


$ 171

Sales and marketing

1,284


322


5,401


704

Research and development

1,760


271


7,270


571

General and administrative

3,094


390


6,482


1,108

Total stock-based compensation

$ 6,661


$ 1,068


$ 21,253


$ 2,554











COUPONS.COM INCORPORATED

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(Unaudited, in thousands)






Three Months Ended
June 30,


Six Months Ended
June 30,


2014


2013


2014


2013

Net loss

$ (6,897)


$ (2,888)


$ (20,939)


$ (11,128)

Adjustments:








Interest expense

300


229


602


435

Other income (expense), net

(31)


(5)


107


(34)

Benefit from income taxes

-



(244)


Depreciation and amortization

3,650


1,703


6,822


3,388

Stock-based compensation

6,661


1,068


21,253


2,554

Total adjustments

$ 10,580


$ 2,995


$ 28,540


$ 6,343









Adjusted EBITDA

$ 3,683


$ 107


$ 7,601


$ (4,785)









Transactions (2)

383,693


314,765


791,478


627,642









(2) A transaction is the distribution of a digital coupon through Coupons.com's platform that generates revenues. The Company presents transactions as it believes that its ability to increase the number of transactions using its platform is an important indicator of its ability to grow revenues.



COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)



June 30,
2014


December 31,
2013

Assets




Current assets:




Cash and cash equivalents

$ 222,031


$ 38,972

Accounts receivable, net

44,060


42,185

Prefunded coupons cash deposits

1,497


920

Prepaid expenses and other current assets

4,252


3,100

Total current assets

271,840


85,177

Property and equipment, net

27,820


29,942

Intangible assets, net

3,597


1,813

Goodwill

17,880


9,887

Deferred tax assets

900


195

Other assets

3,728


7,222

Total assets

$ 325,765


$ 134,236

Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)




Current liabilities:




Accounts payable

$ 7,703


$ 5,589

Accrued compensation and benefits

10,490


13,721

Other current liabilities

14,790


13,699

Prefunded coupons cash obligations

1,497


920

Deferred revenues

7,740


6,751

Debt obligations

7,500


7,500

Debt obligations, related party

15,999


15,577

Total current liabilities

65,719


63,757

Other non-current liabilities

569


1,046

Deferred rent

940


1,222

Deferred tax liabilities

900


195

Total liabilities

68,128


66,220





Redeemable convertible preferred stock


270,262

Stockholders' equity (deficit):




Preferred stock


Common stock

1


Additional paid-in capital

509,179


28,403

Treasury stock, at cost

(61,935)


(61,935)

Accumulated other comprehensive income (loss)

82


37

Accumulated deficit

(189,690)


(168,751)

Total stockholders' equity (deficit)

257,637


(202,246)

Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)

$ 325,765


$ 134,236







COUPONS.COM INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)



Six Months Ended
June 30,


2014


2013

Cash flows from operating activities:




Net loss 

$ (20,939)


$ (11,128)

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




Depreciation and amortization 

6,822


3,388

Stock-based compensation 

21,253


2,554

Accretion of debt discount 

113


113

Loss on disposal of property and equipment 

4


37

Provision for doubtful accounts 

79


100

Benefit from deferred income taxes 

(244)


Changes in operating assets and liabilities:




Accounts receivable 

(1,755)


(4,166)

Prepaid expenses and other current assets 

262


(594)

Accounts payable and other current liabilities 

2,494


(1,027)

Accrued compensation and benefits 

(3,298)


(2,428)

Deferred revenues 

957


732

Other 

309


298

Net cash provided by (used in) operating activities 

6,057


(12,121)





Cash flows from investing activities:




Purchases of property and equipment 

(4,970)


(10,973)

Business acquisition, net of acquired cash 

859


Purchases of intangible assets 

(16)


Net cash used in investing activities 

(4,127)


(10,973)





Cash flows from financing activities:




Proceeds from issuance of common stock 

3,031


973

Proceeds from initial public offering, net of offering costs

176,525


Exercise of warrant 

1,610


498

Principal payments on capital lease obligations 

(28)


(21)

Net cash provided by financing activities 

181,138


1,450

Effect of exchange rates on cash and cash equivalents 

(9)


3

Net increase (decrease) in cash and cash equivalents 

183,059


(21,641)

Cash and cash equivalents at beginning of period 

38,972


58,395

Cash and cash equivalents at end of period 

$ 222,031


$ 36,754





 

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Coupons.com Incorporated operates a leading digital promotion platform that connects great brands and retailers with consumers.

 

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