Quotient Technology Inc.

Q1 revenue was $59.3 million versus $61.5 million in Q1 2022 on a comparable basis, though management noted last year included a $17 million contribution from items they excluded this year; non-GAAP gross profit was $29.9 million and non-GAAP gross margin was 50% versus 41% in Q1 last year. Non-GAAP operating expenses were $31.4 million versus $41.2 million a year ago, adjusted EBITDA was $1.8 million versus a loss of $7 million, and operating cash usage was $6.6 million versus $19 million more usage than in Q1 last year. For Q2, the company guided to revenue of $67 million to $72 million, gross profit of $34 million to $38 million, adjusted EBITDA of $3 million to $6 million, and operating cash flow of $0 million to $5 million. Full-year 2023 guidance was maintained at revenue of $275 million to $305 million, gross profit of $145 million to $165 million, adjusted EBITDA of $32 million to $45 million, and operating cash flow of $10 million to $25 million.

Matt Krepsik framed the quarter as early proof of the company’s transformation from a managed-services agency to a technology platform with better margin potential and scale. He emphasized improving internal indicators, including stronger network performance, more brands on the platform, and expansion into new areas like adult beverage, Digital Out-of-Home, and Shopmium. His tone was constructive and optimistic, but he also noted that the business is still in the early innings of the transition.

Yuneeb Khan focused on profitability, cost discipline, and liquidity. He highlighted $59.3 million of revenue, $29.9 million of gross profit, 50% gross margin, $31.4 million of OpEx, $1.8 million of adjusted EBITDA, and $6.6 million of operating cash usage; he also said the company ended the quarter with $44 million of cash plus access to an unused ABL facility. On guidance, he reiterated Q2 and full-year ranges and said gross margin should improve through the year as revenue grows and fixed costs are better absorbed.

Analysts pressed on how important Digital Out-of-Home will be in 2023, with management saying it represented about 50% of media revenue in Q1 and should keep building. Questions also focused on why gross margin improvement may not be as strong this year, and management explained Q1 seasonality and lower revenue absorption, while saying margins should trend higher as the year progresses. Analysts asked about mix and media recovery, and management said media should become a larger mix in the second half, while promo remains strong and may benefit from macro pressure on CPG volumes and elevated inflation.