Investor Day · 2020. 11. 19. · 3 Forward Looking Statements Forward Looking Statements and...

1

Investor DayNovember 19, 2020

2Copyright © 2020 Quotient Technology Inc. All Rights Reserved. Quotient, the Quotient logo, the Coupons.com logo, the SavingStar logo, Crisp logo, Elevaate, QMX, Quotient Retailer iQ, Ahalogy and Ubimo 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. Confidential and Proprietary Information of Quotient Technology Inc. Please Do Not Copy or Circulate. We do not make any guarantees regarding outcomes that this product will meet your company’s unique needs.

QUOTIENT

INVESTOR DAY

2020

Christine MarchuskaDirector of Investor Relations

2

3

Forward Looking Statements

Forward Looking Statements and Estimates

This presentation and the accompanying oral presentation contain “forward-looking” statements that are based on our

management’s beliefs and assumptions and on information currently available to management, including our current

expectations with respect to revenue compound annual growth rate (CAGR), non-GAAP gross margin dollars CAGR,

and Adjusted EBITDA CAGR; the Company's ability to grow revenues, non-GAAP gross margin dollars, non-GAAP

gross margins, non-GAAP operating expenses, Adjusted EBITDA, non-GAAP operating margins and non-GAAP cash

position; the Company’s operating model including its non-GAAP three-year targets; the Company’s gross margin

improvement opportunities; operating expense scalability; developments of Company’s solutions, partnerships and

product launches, including national rebates; the Company’s ability to manage its business and liquidity during and

after the COVID-19 pandemic; CPGs’ plans to reduce spending in offline solutions and increase spending on digital

solutions; growth drivers of revenue; estimated serviceable market size expansion, including Company’s ability to

increase its share of national and shopper marketing budgets of CPGs; growth in Quotient Promotions, Retail

Performance Media (“RPM”) and eCommerce businesses; increasing the number of retailers to our retailer network;

the effectiveness of our cost control measures; growth of Quotient’s Digital Out Of Home offering; product mix; the

future demands and behaviors of consumers, retailers and CPGs, particularly in light of the ongoing effects of the

COVID-19 pandemic; the future demand and behavior of consumers, retailers and CPGs; and the Company's future

investments and growth and ability to leverage its investments and operating expenses. Forward-looking statements

are based on our 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, our ability to

generate positive cash flow and become profitable; the amount and timing of digital marketing spend by CPGs and

shifts in CPG spend to digital; our ability to timely launch products; our ability to scale our solutions and platforms; our

ability to adapt to changing market conditions and privacy and data regulations, including our ability to adapt to

changes in consumer habits and consumer data privacy concerns; the impacts of the ongoing COVID-19 pandemic,

which may continue to significantly impact our business, plans and results of operations, as well as the value of our

common stock; our ability to negotiate fee arrangements with CPGs and retailers; our ability to maintain and expand

the use by consumers of promotions and offers on our platforms; our ability to execute our media strategy; our ability

to effectively manage our growth; the performance of our various solutions; our ability to successfully integrate

acquired companies into our business; our ability to develop and launch new services and features; our expectations

regarding growth drivers; and other factors identified in our filings with the Securities and Exchange Commission (the

"SEC"), including our Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020 and future filings and

reports by us. We disclaim 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.

Copyright © 2020 Quotient Technology Inc. All Rights Reserved. Quotient, the Quotient logo, the Coupons.com logo, the SavingStar logo, Crisp logo, Elevaate, QMX, Quotient Retailer iQ, Ahalogy and Ubimo are trademarks or registered trademarks of Quotient Technology Inc. and its subsidiaries in the United


This presentation and the accompanying oral presentation also contain estimates and other statistical data made by

independent parties and by us relating to market size and growth and other data about our industry. This data involves

a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In

addition, projections, assumptions and estimates of our future performance and the future performance of the markets

in which we operate are necessarily subject to a high degree of uncertainty and risk.

Use of Non-GAAP Financial Measures

In addition to the U.S. GAAP financials, this presentation and the accompanying oral presentation include certain non-

GAAP financial measures. The non-GAAP measures have limitations as analytical tools and you should not consider

them in isolation or as a substitute for an analysis of our results under U.S. GAAP. There are a number of limitations

related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other

companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their

performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

We consider these non-GAAP financial measures to be important because they provide useful measures of the

operating performance of the company, exclusive of unusual events or factors that do not directly affect what we

consider to be our core operating performance and are used by our management for that purpose. A reconciliation

between GAAP and non-GAAP measures can be found in Appendix hereto. Reconciliations of Adjusted EBITDA, non-

GAAP gross margin, Non-GAAP operating expenses, non-GAAP operating margin, and non-GAAP guidance

measures to corresponding GAAP measures are not available on a forward-looking basis without unreasonable efforts

due to: (i) the high variability and low visibility of certain (income) expense items that are excluded in calculating

Adjusted EBITDA, (ii) the high variability and low visibility of certain items that are excluded in calculating non-GAAP

gross margin, (iii) the high variability and low visibility of certain items that are excluded in calculating non-GAAP

operating expenses, and (iv) high variability and low visibility of certain items that are excluded in calculating non-

GAAP operating margin.

3

4

Steven BoalChief Executive Officer

QUOTIENT INVESTOR DAY 2020

Welcome



Focus over past year:

● Sustainable growth

● Retailer pipeline

● Operational excellence

● Navigating the pandemic

4

5

Operational Improvements

Growth Drivers

1

3

4



The Evolving Industry

2

Strategically PositionedAgenda


3 Year Financial Plan5

5

6

Scott Raskin

President

Pam Strayer

Chief Financial Officer

David Johnson

Senior Vice President,

Sales

Natalie Weymouth

General Manager,

Health and Beauty Aids

(HBA) Vertical

Jamie Clarke

Vice President,

Retail

Steven Boal

Chief Executive Officer

Chairman

Today’s Presenters



States and other countries. Other marks are the property of their respective owners. Confidential and Proprietary Information of Quotient Technology Inc. Please Do Not Copy or Circulate. We do not make any guarantees regarding outcomes that this product will meet your company’s unique needs. 6



Quotient Network Our Business is Differentiated, Scalable and Capital Efficient

100% of Fortune 500 CPGswith opportunity

for expansion

across and down

Strategically Positionedwith first and second party

data to benefit CPGs

Retailers & Shoppers

Capital efficient modelwith a focus on growth in

gross profit dollars drives

significant operating

leverage & cash

generation

Benefiting from significant market shift

& transformation

into digital

7

8

$4.3BOther

$103.7BTrade

$20.7BShopper

$51.3BDigital

$16.4BConsumer

Promotion

$28.6BTraditional Ad

Source: Cadent 2020 Marketing Spending Industry Studies



2020E

CPGs Spend

~$225B Annually

Budgets continue

to shift & transform

into digital

8



Spend is Shifting to the Bottom of the Marketing Funnel Shopper dollars

(retailer platforms)

National dollars

(multi-retailer scale)

BRAND AWARENESS

IDENTIFIABLE SHOPPERS

REGISTRANTS/PREFERENCES

PURCHASE

LOYALTY

9

10

Growth in TAM is Highly Correlated to

Growth in eCommerce



Digital Engagement Grows TAM

● Of $225B marketing spend, a majority ($117B) is

addressable on Quotient Network as spend shifts

to digital

● Grocery eCommerce and digital engagement

drives the shift to digital and a larger TAM for

Quotient to address

● Grocery eCommerce projected to grow

from 10% in 2020 to ~17% in 2023*

*Source: eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior

**Estimated TAM rounded to nearest billion dollars using the formula: ($225B total US CPG marketing

spend less $103.7B Trade budget less $4.3B Other budget) x (forecasted eCommerce %)

2020 2021-2022 2023

17%

13.5%

10%

$12B

$16B

$20B

CPG TAM Growth**(in Billions)

Digital

Engagement

$B

10

11

Growth in SAM is also Highly Correlated to

Growth in eCommerce



Digital Engagement Grows SAM ● SAM = TAM x Current Quotient market share on

network (assumes no retailer additions)

● We currently have 21%* of US Grocery retailer

market share on Quotient Network

● Digital engagement grows SAM over time

● Adding retailers or expanding market share of

existing retailers further grows SAM but that upside

is not reflected here2020 2021-2022 2023

17%

13.5%

10%

$2.5B

$3.3B

$4.2B

CPG SAM Growth**(in Billions)

Digital

Engagement$B

11

*Source: UBS January 2020 Report: U.S. Hardlines & Grocery Retail

**Estimated SAM based on estimated TAM on prior slide multiplied by estimated US Grocery

retailer market share on quotient network of 21%

12

3 Year Outlook - Capturing the Opportunity



Revenue CAGR of 15% Without Retailer Expansion

● Assumes no new retailers over next three years

● Primary growth drivers include:

○ National Promotions & Media (FSI & longtail)

○ Shopper Marketing (including RPM)

*Revenue CAGR of 20% With Minimal Retailer Expansion

● Assumes two new retailers in 2021

● Average size retailer contributions

● ~$730M Quotient 2023 Projection

● As we add retailers we will update our 3 year outlook

$4.2B2023 SAM

Quotient

2023

~$640M

~$730M*

12

Estimated SAM based on estimated TAM on slide 11 multiplied by estimated US Grocery retailer market share on quotient

network of 21%

2023 revenues shown of $640M and $730M represent forecasted numbers using different scenarios for Quotient’s growth.



Compelling 3 Year Investment Thesis

● Large uncaptured opportunity to shift off-line

spend to digital spend

● 15% Revenue CAGR - estimating mix of net revenue

● 20% Non-GAAP Gross Margin Dollars CAGR

● 41% Adjusted EBITDA Dollars CAGR

Gross Margin $(in Millions)

2020F 2023F

$M

$195

$330

Adjusted EBITDA(in Millions)

2023F2020F

$M

$41

$115

Revenue(in Millions)

2020F 2023F

$M

$424

$640

*Minimal Network Expansion Scenario

● 20% Revenue CAGR

● 24% Non-GAAP Gross Margin Dollars CAGR

● 52% Adjusted EBITDA Dollars CAGR

$143*

$374*

$730*

13

2020 forecasts represent forecasted annual non-GAAP results using September 30, 2020 year-to-date actual results + mid-point of our

guidance for Q4 2020. 2023 forecasts represent forecasted numbers using different scenarios for Quotient’s growth.

14

Operations

Scott RaskinPresident

● Improved culture

● Streamlined sales operations

and delivery

● Greater visibility and new go-to-

market initiatives




15

Improved Culture:

Retain and Attract Talent

Transforming Shopping

to Make Life Better



The world of shopping is changing rapidly. At Quotient,

we are leading that transformation with vision and

purpose—to make life better for shoppers, our

customers and our employees.

Integrity

Customer Experience

Teamwork

Sustainable Growth

Innovation

15

16

Operational Maturity



CustomerSuccess Sales Operations

Integrated to streamline and drive efficiency

● Pipeline Management

● Forecasting

● Delivery

16

17

Marketing Drives Increased Visibility





Expanding CPG Customer Base

● Sales and Customer Success alignment

● Proactive demand generation

● Best in class offerings

● Largest national retailer network

● Drives volume and unit sales

18

19

Evolving

Industry

David JohnsonSenior Vice President, Sales




● Secular shift to digital provides tailwinds

for growth

● Pandemic accelerates grocery eCommerce

by at least 3 years*

● CPGs advertise where the shoppers are

19

*Source: Mercatus, The Evolution of the Grocery Customer 2020

20

Source: eMarketer, US CPG Digital Ad Spend 2020 (Aug. 2020)



CPG Digital Advertising

16.4% Growth Forecasted for 2021

20

21

Source: eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior



“Shoppers are satisfied with online purchase

options, but demand more customization and

personalization. Fifty-eight percent of shoppers

are satisfied with the online shopping capabilities

offered by their preferred brick-and-mortar retailer.

They express high satisfaction with payment and

fulfillment options, and would like more functionality

added to online promotions and advanced

product search.”

eCommerce Demands

Shift to Digital

Online grocery will account for 21.5% of total grocery sales by 2025

an estimated $250 billion, which is a more than 60% increase

over pre-pandemic estimates.

21

22

Source: eMarketer, US CPG Digital Ad Spend 2020 (Aug. 2020)



Digital Ad Share

Google & Facebook represent 61%

of digital ad spend

22



Amazon’s % of total retail sales:

Source: Emarketer: US eCommerce by Category 2020 (July 22, 2020)

Retailers Have a Close Consumer Relationship

Google and Facebook have traffic

but they are not retailers

23

24

16.8% RPM



The Quotient NetworkCPGs Advertise Where the Shoppers Are

28.8%

10.7%

0.9%

3.1%(Target)

24

Source: Nielsen data: 52 weeks ending 11/13/2020

25

of customers are comfortable

exchanging their private information

with grocery stores for relevant offers

of in-store sales will

be influenced by

digital in 2021

81% 90%

Opportunity for Data-Driven Grocers



Source: Credit Suisse, Advertising Week Takeaways October 2019

25



Expanding Retailer Network

New Retailers

+

New Verticals

+

26



Quotient’s Food Retail Market Share: 21%

Source: UBS January 2020 Report: U.S. Hardlines & Grocery Retail

Quotient Retailers

27

28

Digital

Promotions

Natalie WeymouthGeneral Manager,

Health and Beauty Aids (HBA)

Vertical




GROWTH IN NATIONAL

28



Spending every dollar efficiently

Driving big measurable impact with one campaign

Proving results and seamlessly optimizing spend

Replacing the FSI with digital promotions

$

Brand teams are striving to build brand health

while driving efficient volume

29

National Promotions

Moves Unit Sales



National Promotions

● Budgets invested in traditional FSI are

shifting to digital

● Smaller CPGs excluded from FSI are taking

advantage of digital

● Supports existing and drives new retailer

partnerships to Quotient platform

● National budgets are integral to marketing

ecosystem

30



Success in National Promotions

Sponsored Product SearchNational Rebates

Loyalty Offers

Digital-Out-of-HomeTargeted Offers and In-Lane

31

32

Digital Redemptions

Are Increasing

Digital channels bring

efficiency + consumers on digital



Source: WSJ article, Coupon-Clipping Fades Into History as Covid-19 Accelerates Digital Shift (9/1/20)

ClippedDigital coupons surpassed paper leafletsfor the first time amid the pandemic.

Share of Product Coupon

Redemptions

Share of Coupon Redemptions,

First Half of Year

32

33

Retail

Performance

MediaJamie ClarkeVice President,

Retail




GROWTH IN SHOPPER

33

34

Source: eMarketer, Retail Media Networks 2019



Quotient checks all the boxes

RPM Delivers

34



Dollars Shifting to Retail Media

Source: Emarketer: Merkle, The Growth of eRetail, 2020

of CPGs are planning to move

more marketing dollars toretail media networks

85% 52%

of CPGs plan to do so in the next year

35

36

Source: Merkle, The Growth of Retail Report, 2020



“Retailers have identified digital media

networks as a critical growth area to create

more personalized experiences for their

customers. The primary opportunity, as

noted in the report, lies in partnerships

as retailers leverage technology and

relationships with CPG brands.”

Retailers Benefit

from Partnerships

Key Features Advertisers Want in a Retail Media Network:

36

37

Three Year

Financial Plan


Pam StrayerChief Financial Officer



● Improved internal process & transparency

● Large market opportunity as offline spend

shifts to digital

● Long-term financial model

37

38

Growth in TAM is Highly Correlated to

Growth in eCommerce



Digital Engagement Grows TAM

● Of $225B marketing spend, a majority ($117B) is

addressable on Quotient Network as spend shifts

to digital

● Grocery eCommerce and digital engagement

drives the shift to digital and a larger TAM for

Quotient to address

● Grocery eCommerce projected to grow

from 10% in 2020 to ~17% in 2023*

*Source: eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior

**Estimated TAM rounded to nearest billion dollars using the formula: ($225B total US CPG marketing

spend less $103.7B Trade budget less $4.3B Other budget) x (forecasted eCommerce %)

2020 2021-2022 2023

17%

13.5%

10%

$12B

$16B

$20B

CPG TAM Growth**(in Billions)

Digital

Engagement

$B

38

39

Growth in SAM is also Highly Correlated to

Growth in eCommerce



Digital Engagement Grows SAM ● SAM = TAM x Current Quotient market share on

network (assumes no retailer additions)

● We currently have 21%* of US Grocery retailer

market share on Quotient Network

● Digital engagement grows SAM over time

● Adding retailers or expanding market share of

existing retailers further grows SAM but that upside

is not reflected here2020 2021-2022 2023

17%

13.5%

10%

$2.5B

$3.3B

$4.2B

CPG SAM Growth**(in Billions)

Digital

Engagement$B

39

*Source: UBS January 2020 Report: U.S. Hardlines & Grocery Retail

**Estimated SAM based on estimated TAM on prior slide multiplied by estimated US Grocery


40

Revenue Growth Scenarios



Today’s platform lays foundation for

2023 Opportunity in Retail Performance

Media and National Promotions

Without adding any additional retailers

revenue CAGR is estimated to be 15%

over three years

*Minimal retailer expansion in 2021and

2022 has potential for additional

$90M resulting in a 20% CAGR

over three years

$4.2B2023 SAM

Quotient

2023

~$640M

~$730M*

Quotient

2020

~$424M

$2.5B2020 SAM

40

Estimated SAM based on estimated TAM on slide 11 multiplied by estimated US Grocery


$424M Forecasted annual Quotient 2020 Revenue represents September 30, 2020 year-to-date actual revenues +

$120M revenues for Q4 2020, using the mid-point of our guidance range. 2023 revenues shown of $640M and $730M

represent forecasted revenue numbers using different scenarios for Quotient’s growth.

41 41

Revenue 15% - 20%

Non-GAAP Gross Margin $ 20% - 24%

Adjusted EBITDA $ 41% - 52%



Scalable Operating Model

Leverage in our operating

model drives higher CAGR in Adjusted EBITDA

3 Year CAGR

41

Low end of the range represents estimates based on no additional retailers added to the network. Top end of the

range represents estimates using the minimal network expansion scenario

42

Gross Margin Improvement Opportunities

42

Improved Self-Service Higher Mix of

National RevenuesCapture National marketing spend

with higher margin profiles

More efficient customer

engagement & unlock Agency

relationships with large National

marketing spend to deploy

Continued automation where possible &

location strategy that creates centers

of excellence outside of California

Increased Automation & COE



43

Operating Model -Non-GAAP 3 Year Targets

43

Revenue Recognition Mix Will Impact Margins

Net Recognition Grows to

9% of Revenue by FY23

A higher mix of net revenue will not impact

GM $ CAGR but will impact GM %: Higher

net revenue will raise GM% and will

lower top line revenue CAGR.



Revenue

Non-GAAP Gross Margin

Non-GAAP OPEX

Non-GAAP Operating Margin

Adj EBITDA

100% 100% 100%

52% 45% 46%

39% 36% 38%

13% 9% 8%

15% 10% 10%

100%

51% - 52%

33% - 35%

17% - 19%

18% - 20%

FY19FY18 FY20F* FY23F

Target Model

- Expansion Scenario

*Based on Q3 YTD Actuals + Q4 Estimates using Q4 guidance ranges.

43

44

Example: Mix of Net Revenue Recognition and Related Impact

44

Revenue Recognition Mix

Can Impact Margin % but Not Margin $

Net Recognition Grows to

9% of Revenue by FY23

A higher mix of net revenue will not impact

GM $ CAGR but will impact GM %: Higher

net revenue will raise GM% and will

lower top line revenue CAGR.



$678 $640 $608

17% 15% 13%

$330 $330 $330

48.5% 51.5% 54.2%

$115 $115 $115

17.0% 18.0% 18.9%

9%4% 14%

Revenue (FY23)

Revenue 3-Year CAGR

Example: % of Revenue

recognized as net in FY23

Non-GAAP Gross Margin (FY23)

GM %

Adj EBITDA (FY23)

Adj EBITDA %

44

45

Operating Expense Scalability



● Inside Sales

● Customer Success

● National vs Shopper Split

● Marketing Investment and Effectiveness

● Strong business partnering organization to drive better

decision-making and more accountability

● Continued expansion to lower cost locations outside of California

● Disciplined controls over cash and costs including strategic sourcing, travel, collections

● Enterprise scale automation including Netsuite, SFDC, Cloud Infrastructure,

Concur, Workday

Improved

GTM Execution

Improved

Organizational

Process

45



Cash Flow Generation

● Significant use of cash for M&A largely behind us

● Up to $25M payout possible early 2022 for Ubimo

● Existing convertible debt of $200M matures

Dec 2022

● Capex of approximately 2% - 3% of revenue

● Positive non-GAAP net cash position expected

to build over time

Non-GAAP Net Cash Position(in Millions)

2023F2020F

$M

$134

$12

$155*

*Expansion scenario

46



Capital Allocation

Strong cash flows will provide flexibility and allow for:

● Pay down or refinance of convertible debt

● Opportunistic M&A

● Opportunistic share buy back

● Return to stockholders

47



Quotient Network Focused on Delivering Value for our Shareholders

Strategically AlignedStrong Core Businesswith additional significant growth

drivers to support long term

financial targets & goals

to benefit from market

tailwinds & opportunities

with significant operating

leverage & cash generation

Capital Efficient Model

48

49 49

Appendix



Investor Day · 2020. 11. 19. · 3 Forward Looking Statements Forward Looking Statements and...

Documents

Transcript of Investor Day · 2020. 11. 19. · 3 Forward Looking Statements Forward Looking Statements and...