Marin Software (NASDAQ:MRIN), which operates a digital marketing platform for advertisers and agencies, has been in the rally mode lately. Since late September, MRIN stock has gone from $1.25 to $2.15. Yet the market capitalization is still tiny, at $15 million.
The company has been publicly traded since March 2013. But unfortunately, the performance has been far from robust. If you take a look at the chart, it is mostly downward sloping.
Then might the recent bull move in MRIN stock may be a sign of a turnaround? Maybe we could see more gains? Well, before answering this question, let’s get a backgrounder on the company.
What Is Marin Software?
Back in 2006, Chri Lien (CEO) and Wister Walcott (executive vice president of product and technology) founded the company. They were both veterans of Silicon Valley. Lien had served as the chief operating officer at Adteractive, an online performance marketing company, and the co-founder and chairman of Sugar Media, which was sold to 2Wire.
As for Walcott, he developed the original technology architecture for Marin Software. Before this, he was the vice president of marketing at Composite Software and worked at companies like Siebel Systems and Oracle (NYSE:ORCL).
Regarding Marin Software, the co-founders set out to build a cloud-based system to help with the measurement, management and optimization of digital marketing campaigns, such as on Internet platforms like Facebook (NASDAQ:FB), Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) Google search engine and YouTube, and Amazon (NASDAQ:AMZN). The software is available for companies of any size. The company also has customers that span industries like education, financial services, retail and travel.
Impact of Marin Software
While Marin Software has continued to add features and modernize its software, it has not had much of an impact. The fact is that the online marketing category has many of tough competitors–including biggies like Google and Facebook. As a result, it is extremely difficult for a small company like Marin Software to get much attention or traction.
For example, in late October, the company announced its preliminary results for the third quarter. Revenues are expected to come in at only $6.8 million, down from $11.7 million and the net loss to be between $4.2 million to $4.5 million. The cash and restricted cash is a mere $9 million.
The sale of Marin Software’s Perfect Audience business unit to SharpSpring (NASDAQ:SHSP) helped to boost the cash position. The purchase price was $4.6 million. Yet Marin Software continues to lose money.
In the most recent 10-Q filing, management placed much of the blame for the poor performance on the impact of the Covid-19 pandemic: “Since mid-March 2020, some of our customers have reduced the amount of digital advertising spend that they manage using our product which has had an adverse effect on our results of operations and some of our customers have requested extended payment terms, reduced fees or fee waivers, early contract terminations and other forms of contract relief.”
No doubt, this is a common excuse for companies. But the reality is that there is more to the challenges for Marin Software then the Covid-19 pandemic.
Bottom Line On MRIN Stock
The 10-Q also has some ominous comments regarding the company’s liquidity. First of all, management believes that the large net losses will continue for the “next several quarters.” The company is also looking at additional sources for funding, whether from an issuance of stock or debt. According to the 10-Q: “there is no assurance that any additional financing will be available on acceptable terms, or at all.”
In other words, there could be heavy dilution if there is a financing, which will put even further pressure on MRIN. So in light of this – and with the tough market conditions and heavy competition – it’s probably best to avoid the shares for now.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.