Marin Software Inc (NASDAQ:MRIN) stock rallied a day after the surprise announcement of the 3 Year Revenue sharing agreement with Alphabet (NASDAQ:GOOGL). The deal is all the energy the stock required to impress again after shading value consecutively from its 2015 peak.
News moves the market, and for Marin Software the news was favorable which resulted to an impressive 36.17% surge on the stock. As of December 21 business day, MRIN closed at $9.75 from an opening price of $7.05. This represented a noteworthy $2.59 gain giving the company a tidy market value of $56.47 million. During the session the shares traded to a high of $10.55- almost matching the company’s 52-week high of $11.40- and a low of $7.02.
As investors’ show of excitement the company’s stock rocketed 38.5% to $3.96 before the Tuesday opening bell. According to the terms of the agreement effective October 1 and ending September 30 2021, the company will receive payments from Google on two aspects;
First, in what has been titled in the contract as “Eligible Google Search Revenue,” Marin Software will be remunerated for earnings generated on its tech platform based on its clients’ expenditure on Search Ads appearing on Google Search only.
Secondly, Marin Software is also entitled to revenue sharing from “Eligible Non-Google Search Revenue.” This as explained in the contract is proceeds from the company’s tech platform linked to its customer’s spend on Search Ads featured on Eligible Search Engines excluding Google. All the payments are limited to the relevant contract year as defined in the agreement.
The new agreement will supposedly raise the company’s profile in terms of revenue and stock prices. Marin Software had a fantastic in 2015 where its market capitalization hit an all time peak. The company then posted strong quarterly and annual revenue with its shares holding significant value.
As fate would have it, business in the tech sector declined and Marin Software was not spared the turbulence. Its core business gradually lost ground generating poor revenue amounting to half its 2015 record high.
Marin’s Business and Financial Woes
Lately, the company has been in a rather shaky financial condition having burnt substantial amount of cash in the past quarters. According to its third quarter financial results the company only had a handful $13.4 million in unrestricted cash.
However, the company has already instigated cost saving measures cutting down unnecessary expenditure significantly but its declining customer base is further threatening to nullify its recent efforts. Thanks to the Google-deal, the company is saved from diluting equity holders.
The surprise agreement had the company revising its fourth quarter revenue guidelines by about 35%. The refurbished revenue projections for the Q4 now stand at $14.4 million to $15.1 million from the previous $11.6 million to $12.1 million. The company also sliced its projected operating loss from the previous forecast of $5.4 million to $5.9 million down to $2.4 million to $2.9 million.
Setting the tone for a brighter future, Marin Software CEO Chris Lien said that, “With increased investment supported by Google, leading advertisers can expect to see even more search innovation from Marin to better help them achieve their advertising goals including harnessing the power of machine learning-based ad formats and other innovative placements.”
With a relatively certain financial future, the company can now focus on polishing its product line and boosting its general image.