Quotient Technology Inc. Reports First Quarter 2019 Financial Results

Quotient Technology Inc. (NYSE: QUOT), the leading CPG marketing
technology company offering data-driven digital promotions and media,
today reported financial results for the first quarter ended March 31,
2019.

“We had a great start to the year. We delivered financial results above
our guidance range, fueled by RPM and social influencer marketing. This
quarter we also added new retailers on RPM, and sponsored search
capabilities for brands and retailers to drive sales through retailers’
ecommerce platform,” said Mir Aamir, President and CEO of Quotient. “We
operate in a massive market, where CPGs spend about $225 billion dollars
in promotions and marketing. We believe we have a broad and powerful
technology platform that spans across digital promotions and media –
fully integrated to allow for personalized marketing to consumers at
scale, with measurement. This gives us a solid foundation and a
sustainable competitive advantage to drive revenue for years to come.”

First Quarter 2019 Financial Results

• Total revenue was $98.1 million in Q1 2019, an increase of 13% over Q1
  2018 and exceeded the high end of guidance.
• Revenues from promotions and media were $63.6 million and $34.5
  million, respectively, compared to Q1 2018 revenues of $63.8 million
  and $23.0 million, respectively.
• Retailer iQ and Media revenue combined grew over 16% in Q1 2019 over
  Q1 2018 and represented approximately 75% of our total revenue.
• GAAP net loss for Q1 2019 was $13.2 million, compared to net loss of
  $11.4 million in Q1 2018.
• Adjusted EBITDA was $8.4 million in Q1 2019, compared to $11.9 million
  in Q1 2018 and exceeded the high end of guidance.
• $9.7 million in cash from operations was generated in Q1 2019.

Adjusted EBITDA, a non-GAAP measure, is reconciled to the corresponding
GAAP measure at the end of this release.

Business Highlights

Growth from recurring customer base

• We are focused on capturing more dollars from our existing customers
  with the largest portion of our recurring customer base representing
  86% of our total revenues in 2018.
• Dollar-based net retention rates on an annual basis over the last 3
  years demonstrate that our customers spend more with us year after
  year. Our existing customer base from 2015 delivered strong year over
  year revenue growth in 2018 with an average dollar-based net retention
  rate exceeding 120%.

Consumers shifting to digital, brands and retailers are responding

• Retailers and brands are investing heavily in digital and
  personalization platforms, with online grocery sales expected to grow
  18.2% in 2019, with consistent growth expectations through 2023.⁽¹⁾
• There’s strength in shopper loyalty. In a recent survey, 85% of
  internet users would prefer to buy their groceries digitally from
  their current grocer as opposed to another omnichannel grocer or
  online only retailer.⁽¹⁾

Expanded solutions for CPG and retail marketers

• Added sponsored search and product ad placements at Albertsons Co.’s
  ecommerce platform so that CPG brands can make sure their products
  show up high on the digital shelf when people are searching Albertsons
  Co.’s store sites. Quotient added this capability with its recent acquisition
  of U.K.-based Elevaate. CPGs spend approximately $2.8 billion in
  digital search, according to eMarketer. ⁽²⁾
• Launched Quotient Audience Cloud, with over 2000 consumer segments
  available to brand marketers to target digital ads to specific
  consumers.

Retail Performance Media drives sales for brands and retailers

• Retail Performance Media powers the media platforms of five key
  retailers which together represent approximately $150 billion in U.S.
  sales.
• Launched Giant Eagle Advantage Media, a new digital media platform
  that allows CPG brands to better reach Giant Eagle shoppers with more
  precise digital ads and promotions. The platform provides CPGs many
  digital media solutions that can drive in-store and online sales,
  support new product launches and build brand loyalty.
• Albertsons
  Performance Media (APM), one year after launch has delivered as
  high as two times more return on ad spend to major CPGs compared to
  industry benchmarks set by Nielsen.
• Quotient’s social media influencer marketing solution, acquired
  through the Ahalogy acquisition last year, has enhanced retailers’
  media capabilities and efforts to secure additional CPG dollars. For
  example, campaigns delivered on APM recently include:
  • 21 influencer campaigns with 13 brands and four national campaigns
    producing over 200 million targeted, verified impressions;
  • Activated targeted social campaigns across Facebook, Instagram,
    Snapchat and Pinterest, and
  • General Mills turned to Ahalogy and APM when its Oui™ By Yoplait^®
    brand introduced a new product into their line of indulgent
    French-style yogurts—Oui™ Petites packaged in petite glass pots.

Repurchased Shares In Stock Buyback Program and Authorized New Program

As of today, we repurchased approximately $41.3 million of our common
stock under our buyback program which commenced on May 5, 2018.

In the first quarter of 2019, we
repurchased approximately 2.5 million shares of our common stock for
approximately $25.2 million. This buyback program expired on May 4, 2019.

The Company’s Board of Directors has authorized a more aggressive stock
buyback program of up to $60.0 million of the Company’s common stock,
effective May 10, 2019, through a new 10B5-1
plan that expires on May 8, 2020.

Business Outlook

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

For the second quarter 2019, total revenue is expected to be in the
range of $102.0 million to $106.0 million. Adjusted EBITDA for the
second quarter 2019 is expected to be in the range of $11.0 million to
$14.0 million.

For the full year 2019, total revenue is expected to be in the range of
$460.0 million to $470.0 million. Adjusted EBITDA for the full year 2019
is expected to be in the range of $66.0 million to $71.0 million.

A reconciliation of Adjusted EBITDA, a non-GAAP guidance measure, to a
corresponding GAAP measure is not available on a forward-looking basis
without unreasonable efforts due to the high variability and low
visibility of certain income and expenses items that are excluded in
calculating Adjusted EBITDA.

Conference Call Information

Management will host a conference call and live webcast to discuss the
Company’s financial results and business outlook today at 4:30 p.m.
EST/ 1:30 p.m. PST. Questions that investors would like to see asked
during the call should be sent to ir@quotient.com.

To access the call, please dial (833) 227-5842, or outside the U.S.
(647) 689-4069, with Conference ID# 9448188 at least five minutes prior
to the 1:30 p.m. PST start time. The live webcast and accompanying
presentation can be accessed on the Investor Relations section of the
Company website at: http://investors.quotient.com/.
A replay of the webcast will be available on the website following the
conference call.

Use of Non-GAAP Financial Measure

Quotient has presented Adjusted EBITDA, a non-GAAP financial measure, in
this press release, because it is a key measure used by Quotient’s
management and Board of Directors to understand and evaluate 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, Quotient believes that the
exclusion of certain items of income and expenses 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 metric used by the compensation committee of our Board of
Directors in connection with the determination of compensation for our
executive officers. Accordingly, Quotient believes that Adjusted EBITDA
provides useful information to investors and others in understanding and
evaluating Quotient’s operating results in the same manner as Quotient’s
management and Board of Directors.

Quotient defines Adjusted EBITDA as net income (loss) adjusted for
interest expense, provision for (benefit from) income taxes,
depreciation and amortization, stock-based compensation, change in fair
value of escrowed shares and contingent consideration, net, other income
(expense) net, charges related to certain acquisition related costs,
restructuring charges, and Enterprise Resource Planning (“ERP”) Software
implementation costs. We exclude these items because we believe that
these items do not reflect expected future operating expenses.
Additionally, certain items are inconsistent in amounts and frequency
making it difficult to contribute to a meaningful evaluation of our
current or past operating performance.

Quotient’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 Quotient’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; and
• Adjusted EBITDA does not reflect: (i) changes in, or cash requirements
  for, working capital needs; (ii) interest and tax payments that may
  represent a reduction in cash available to Quotient; (iii) the effects
  of stock-based compensation, amortization of acquired intangible
  assets, interest expense, other income (expense) net, provision for
  (benefit from) income taxes, change in fair value of escrowed shares
  and contingent consideration, net, charges related to certain
  acquisition related costs, restructuring charges, and ERP software
  implementation costs. Other companies, including companies in its
  industry, may calculate Adjusted EBITDA or similarly titled measures
  differently, which reduces its usefulness as a comparative measure.

This non-GAAP financial measure is not intended to be considered in
isolation from, as substitute 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 income (loss), and Quotient’s other GAAP financial
results.

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

Forward-Looking Statements

This press release contains forward-looking statements concerning the
Company’s current expectations and projections about future events and
financial trends affecting its business. Forward looking statements in
this press release include the Company’s current expectations with
respect to revenues and Adjusted EBITDA for the second quarter and
fiscal year 2019; the Company’s expectations for its solutions,
partnerships, pricing strategies and platforms; the Company’s
expectations regarding the future demand and behavior of consumers,
retailers and CPGs; and the Company’s expectations with respect to its
future investments and growth and ability to leverage its investments
and operating expenses. Forward-looking statements are based on the
Company’s current plans, objectives, estimates, expectations and
intentions and inherently involve significant risks and uncertainties.
Actual results and the timing of events could differ materially from
those anticipated in such forward-looking statements as a result of
these risks and uncertainties, which include, without limitation, the
Company’s ability to generate positive cash flow and become profitable;
the amount and timing of digital marketing spend by CPGs, which are
affected by budget cycles, economic conditions and other factors; the
Company’s ability to adapt to changing market conditions and data
regulations, including the Company’s ability to adapt to changes in
consumer habits and consumer data privacy concerns, the Company’s
ability to negotiate fee arrangements with CPGs and retailers; the
Company’s ability to maintain and expand the use by consumers of
promotions and offers on its platforms; the Company’s ability to execute
its media strategy; the Company’s ability to effectively manage its
growth; the performance of the Company’s various solutions; the
Company’s ability to successfully integrate acquired companies into its
business; the Company’s ability to develop and launch new services and
features; CPGs’ receptivity to the Company’s packaged solutions; our
expectations regarding growth drivers; and other factors identified in
the Company’s filings with the Securities and Exchange Commission (the
“SEC”), including its Annual Report on Form 10-K filed with the SEC on
February 27, 2019 and future filings and reports by the Company,
including the Company’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2019. Quotient 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 Inc. (NYSE: QUOT) is the leading CPG and retail
marketing technology provider that delivers personalized digital
promotions and ads to millions of shoppers daily. Quotient uses its
proprietary Promotions, Media, Audience and Analytics Cloud Platforms
and services to seamlessly target audiences, optimize performance, and
deliver measurable, incremental sales for CPG and retail marketers.
Quotient’s powerful suite of capabilities includes personalized digital
coupons, retailer-aligned dynamic ad messaging, influencer-led social
media, data analytics and audience management. Quotient’s audience data
solution is powered by 100 million verified buyer audience, derived from
its Retailer iQ partnerships. By combining technology, data and
distribution, Quotient serves hundreds of CPGs, such as Clorox, Procter
& Gamble, General Mills and Kellogg’s, and retailers like Albertsons
Companies, CVS, Dollar General, Kroger and Walgreens. Founded in 1998,
Quotient is based in Mountain View, Calif. with offices across the U.S.,
and internationally in Bangalore, Paris and London. Learn more at Quotient.com,
and follow us on Twitter @Quotient.

Quotient, the Quotient logo, Retailer iQ, Retail Performance Media,
Ahalogy and Elevaate, 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.

Footnotes:
(1) eMarketer: Grocery Ecommerce 2019, Online Food and
Beverage Sales Reach Inflection Point
(2) eMarketer: US CPG and
Consumer Products Industry StatPack 2018, Digital Ad Spending Forecast
and Trends

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