Thank you. Good afternoon, everyone, and welcome to Marin Software's 2013 Fourth Quarter and Year End Earnings Conference Call.

Joining me today are Chris Lien, Marin's Founder and CEO; and John Kaelle, Marin's EVP and Chief Financial Officer.

By now, you should have received a copy of our earnings release, which crossed the wire approximately 1 hour ago. If you need a copy of the release, please go to investor.marinsoftware.com to find an electronic version.

All participants are advised, the audio of this conference call is being recorded -- playback purposes and that a recording of this call will be made available on the Investor Relations section of our website within a few hours.

Before we begin, I'd like to note that our discussions today will include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements include statements about our business outlook and strategy and statements about our historical results that may suggest trends for our business.

We make these statements as of February 11, 2014, and disclaim any duty to update them. For more information regarding these and other risks and uncertainties that would -- could cause actual results to differ materially from those expressed or implied in these forward-looking statements, as well as the risks relating to our business in general, we refer you to the sections entitled Risk Factors in our more recent report on Form 10-Q and our other filings with the SEC.

This presentation contains certain financial performance measures that are different from the financial measures calculated in accordance with GAAP, and may be different from calculations or measures made by other companies. A quantitative reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available on our fourth quarter 2013 earnings press release.

With that, let me turn the call over to Chris.

Thank you. Good afternoon, and welcome to everyone on the call today.

We closed out 2013 on a high note, posting record results that were above our guidance on both the top and bottom line, as we have done consistently since our IPO in March of last year.

Revenue for the quarter came in at $21.8 million, up 28% year-over-year. We served 673 active advertisers globally, up from 531 in the fourth quarter of last year and 610 in the third quarter of this year.

I also am pleased to announce that as of year-end 2013, our customers used our platform to manage $6 billion of annualized ad spend worldwide, another first in our category and reinforcing Marin's leading position as the most widely used independent Revenue Acquisition Management platform worldwide.

As digital advertising grows increasingly fragmented and complicated, leading advertisers continue to look for platform providers, such as Marin, to increase the effectiveness of their advertising dollars. The ability to seamlessly measure, manage and optimize digital advertising spending at scale across a wide variety of channels, publishers and devices is one of our primary differentiators.

This quarter's performance was further evidence of why leading advertisers continue to turn to Marin to help them manage their digital advertising programs.

We also saw the continuation of several of the trends we spoke about last quarter in mobile and social, along with the retail vertical. Spending targeted at the mobile channel continues to grow, now accounting for a percentage of spend through our platform of over 25%.

As you will recall, at the end of July 2013, Google debuted its Enhanced Campaigns functionality, which enabled advertisers to set separate bids for desktop and mobile ad placements. Marin's platform has been in the forefront of supporting this advanced functionality to enable our customers to drive the maximum advertising impact from their campaigns.

Social continues to increase share as well within our platform. Spend through Facebook is the primary driver of this and our efforts to provide functionality in news feed ads, mobile, ad rotation and customer audience targeting have helped to drive our success in this emerging area.

While still small as an overall percentage of the mix, total Facebook spend managed on our platform in Q4 grew at a high rate, up 51% from Q3. Support for Twitter remains on track for launch in the first half of the year, and we expect will drive further growth in the future.

And I should mention, in Q4, which is the strongest quarter for retailers, Marin furthered our capabilities supporting shopping ads by equipping retailers with the tools that combine scale, transparency and automation. From January through December 2013, retail advertisers increased spend on Product Listing Ads or PLAs by nearly 300%.

By December 2013, on average, retailers were allocating 23% of the paid search budget toward PLAs, a 92% increase over January 2013.

Marin provides a comprehensive Google PLA and Bing Product Ads solution that enables marketers to efficiently create and edit campaigns, generate reports that deliver valuable insight into shopping, ad performance and optimize product target bids to maximize revenue. Through our direct sales force and agency partners, we added a number of top global brands to our customer roster during the quarter.

Let me also walk through a few highlighted wins.

We're proud to add Major League Baseball Advanced Media, the Internet and interactive branch of Major League Baseball, to our customer roster during the quarter. Responding to our platform's ability for easy customization of reports and our simple work flow for managing campaigns at scale, MLB Advanced Media chose Marin for our automation advantage and ability to manage massive campaigns.

Our platform's simple integration with the sports league's broader digital strategy was also a key factor, as they are counting on Marin for driving more time-savings and superior ROI across a wide range of their marketing efforts.

The second win I'd like to highlight is with a leading global investment bank. The bank and their agency selected Marin for many reasons, with the primary attraction being our platform's open architecture and unique ability to easily integrate data from disparate sources.

By combining the data from other publishers, channels and their analytics platform, the bank is now able to connect reporting and insights across media. And as an international advertiser, the team was also drawn to Marin's ability to easily track, measure and report on international brand campaigns and brand terms across countries.

We also added Waste Management, the largest environmental solutions provider in North America, to our customer ranks in the fourth quarter. Waste Management selected Marin to gain more visibility and control over their advertising data and decision-making.

For example, a majority of Waste Management conversions takes place offline. Marin's proven integration with third-party revenue capture systems, like call tracking, enabled Waste Management to more accurately identify and optimize the factors driving their business.

Marin's path to conversion reporting and click attribution help Waste Management understand all clicks leading to a purchase, thereby helping them shape their attribution modeling and ad spend for better ROI.

We also remain pleased with the growth of our International business. As I highlighted in the quarter, we added the Admiral Group, one of the largest car insurance providers in the U.K.

Marin's open stack position was a key driver in the Admiral Group selection. Our multichannel open platform approach enables them to build a large-scale digital marketing program with Marin as a centerpiece.

Now with an enhanced capacity to combine online and offline conversion data with a rich data found in their CRM system, the Admiral Group can fulfill the promise of analytics to action with Marin as their primary platform.

We also saw several key product launches during the quarter. On last quarter's call, I discussed one of the foundational layers of our product platform, Marin Connect.

The data on-ramp layer that enables our customers to easily incorporate a wide variety of their own sources of data into the Marin platform to drive better performance from their advertising programs.

In the third quarter, we extended this into Channel Connect, which as a reminder allows digital marketers to gain visibility into their programs across a broad spectrum of marketing channels and nontraditional publisher networks.

In the fourth quarter, we announced 2 new extensions, Audience Connect and Revenue Connect. Audience Connect brings audience base buying to digital marketing campaigns, enabling advertisers to incorporate and bid on search according to audience segments.

This new and highly differentiated offering allows advertisers to create or augment custom audience profiles based on intent data and search activity, and then applies the profiles to all marketing efforts, including display, video, mobile and social.

By unifying what companies have learned in search with their core customer data, marketers are able to create more cohesive messaging across all of their channels and drive higher returns on their advertising dollars. For example, going back to my discussion of social a moment ago, using Audience Connect and Marin's Facebook business optimization tool, marketers are able to incorporate more refined and relevant targeting information into their Facebook ad campaigns.

As part of Audience Connect, we also announced a partnership with BlueKai, an independent SaaS solution for data management analysis and activation and marketing to help further extend the audience data available for this process.

Revenue Connect gives advertisers the power to use business analytics to optimize their digital marketing campaigns and better drive revenue results by providing visibility into offline and online behavior. By combining the full spectrum of customer activity, marketers can gain a better understanding of the true customer lifetime value and invest accordingly.

We are working with LiveRamp, a leading data processing and transformation company, to help provide additional offline revenue tracking capabilities in an effort to expand the reach of our platform.

Overall, we had another record year. We increased the amount of spend managed by customers on our platform significantly to over $6 billion on an annualized basis, and the diversity of the spend increased as well.

We grew our revenue by 30%. We entered the public markets.

We extended the functionality of our platform with 11 releases and added a large number of leading logos to our customer roster. All of these has helped us extend our leadership position in the Revenue Acquisition Management space, and we have just begun to penetrate this large opportunity.

Digital advertising continues to gain share within the overall advertising budget. As consumers spend more time online and marketers seek to reach them.

As we've shared before, the digital advertising market has been and will remain highly dynamic. Global advertisers are looking to trusted partners to help them to best leverage all of the opportunities that digital advertising enables, while helping them to deal with the associated challenges of complexity, fragmentation and scale.

Point products focused at individual silos of information in single channels, while still useful in some cases, will begin to lose relevance as platform providers, such as Marin, are able to combine data from multiple online and offline sources to better create a true picture of customer lifetime value.

Armed with this improved intelligence, Marin's ability to turn the mountain of big data generated by online marketing into actionable business information, marketers can then further optimize how they engage with consumers across a wide variety of channels, devices and publishers. As the leading independent open enterprise platform for digital marketers, Marin's helped to turn this dynamic online advertising market to their advantage, driving superior revenue outcomes, time-savings and better business insights.

We will continue to invest to advance our Revenue Acquisition Management platform to meet the needs of digital marketers worldwide.

So with that, let me turn the call over to John to discuss the financials in more detail.

Thanks, Chris. As Chris mentioned earlier, revenue for the quarter came in at $21.8 million, up 9% sequentially and 28% year-over-year.

This compares to our guidance of $21.0 million to $21.4 million with the upside coming from stronger-than-expected ad spend across our platform. We saw a solid performance from both our direct and agency clients once again with the revenue mix this quarter coming in at 51% from our direct clients and 49% from our agency clients, respectively.

For the full year, the direct versus agency revenue mix was 52% and 48%, respectively. Our mix of domestic versus international business was consistent with last quarter, coming in at 67% domestic and 33% international during the quarter.

For the full year, it was 68% domestic and 32% international.

In the fourth quarter, we served 673 active advertisers, up 63 sequentially from the third quarter and 142 or 27% from the fourth quarter of 2012. As is typical in the fourth quarter, the increase in this metric was also aided by a number of advertisers moving above the $2,000 revenue threshold inherent in our active advertiser definition.

Please keep in mind that as we head into the first quarter, seasonal spending patterns will likely result in a segment of our advertisers moving below this $2,000 revenue level, similar to what we experienced in the first quarter of last year. As we've discussed in the past, there will always be a certain amount of variability from quarter-to-quarter caused by advertisers that are still active but moving above and below the $2,000 mark.

As a result, the long-term trend in this metric is a better indicator of the growth in our business and customer base.

We saw further progress in extending contract lengths in the fourth quarter. Average contract length for all active enterprise contracts now averages approximately 14 months in duration versus just over 13 months at the end of Q3.

As new and existing customers continue to make longer-term commitments to our platform based on the significant business value they are receiving.

For 2013, our revenue retention metric came in at 97%. As a reminder, revenue retention tracks revenue from all advertisers in the corresponding prior year period that remained advertisers in the current period and includes growth in spend from retained advertisers net of churn.

Before moving on to the profit and loss items, I'd like to point out that I will be discussing non-GAAP results going forward unless otherwise stated, which for the fourth quarter of 2013 exclude the total of $1.3 million in stock-based compensation, $53,000 of noncash expenses from the issuance of warrants and $370,000 of amortization of capitalized research and development costs, while adding back $650,000 of capitalized R&D costs. A detailed reconciliation of our GAAP results to the non-GAAP results can be found in our earnings release.

In the fourth quarter, gross margins increased to 66%, up from 61% in the fourth quarter of last year and 63% in the third quarter. This has been an area of focus in our cost model and we continue to see leverage from our earlier investments in global services, infrastructure and international expansion.

For the year, we reported 62%, up from 60% in 2012. While we do not plan to provide specific quarterly guidance for our gross profit margins, we do expect gross margins to tick down in the first half of 2014 to the 63% to 64% range based on some planned hiring.

We would expect to show continued annual improvement in this metric once again with the full year of 2014 gross profit margins in the 65% to 66% range.

Sales and marketing expenses were $11.4 million in Q4, up from $8.8 million in the year-ago period. As we discussed on the last call, the sequential increase here was expected and driven by some accelerated hiring and the expenditures in both the sales and marketing areas.

Research and development expenses came in at $6.0 million in the quarter, compared to $4.6 million in Q4 of last year. We plan to continue investing aggressively in R&D going forward to further extend the capabilities of our platform.

G&A expenses were $3.9 million in Q4 compared to $3.2 million for the year-ago period, with the year-over-year cost increase being driven by public company costs and our continued global expansion.

Operating losses came in at $6.9 million compared to a loss of $6.4 million in the year-ago period. This was better than our guidance of a loss of $7.4 million to $7.0 million.

We will continue to invest in growth in what we believe to be a large and growing market.

Net loss for the quarter was $7.0 million compared to a loss of $6.6 million in Q4 of last year. Based on a weighted average share count of 32.8 million, this produced a net loss per share of $0.21 compared to our guidance of $0.24 to $0.22.

This compares to a loss per share of $0.28 in Q4 of last year though last year was based on a weighted average share count of 23.3 million.

Our adjusted EBITDA for Q4 was a loss of $5.6 million compared to $5.5 million in the year-ago period. We ended the year with $104.4 million in cash and cash equivalents, down from $111.7 million at the end of the previous quarter.

Our deferred revenue balance at the end of the quarter was $2.6 million compared to $2.9 million at the end of the previous quarter. Going forward, as the majority of our customers still pay us 1 month in arrears based on their spend on our platform, this figure will be volatile on a quarterly basis and not indicative of the overall health of our business in any given period.

Now moving on to guidance. We are initiating guidance for both the first quarter and the full year 2014.

For the 2014 calendar year, we expect revenues to range from $95.0 million to $96.6 million and non-GAAP loss from operations to range from a loss of $30.5 million to a loss of $28.9 million. This should lead to a non-GAAP net loss per share in the range of $0.94 to $0.90 based upon a weighted average share count of 33.4 million.

For the quarter ending March 31, we expect revenues to range from $21.4 million to $21.8 million as the seasonal decline in spending from our retail clients should lead to revenue being flat to down slightly on a sequential basis in the quarter. We expect non-GAAP loss from operations to range from a loss of $8.9 million to a loss of $8.5 million.

This should lead to a non-GAAP net loss per share in the range of $0.28 to $0.26 based upon a weighted average share count of 33.0 million.

So in summary, we are pleased with our results in the fourth quarter as we again posted results above our guidance. The Revenue Acquisition Management market remains a large and growing opportunity at which we have just begun to penetrate.

Our investment priorities remain consistent with prior commentary as we will continue to invest aggressively in growth going forward to capitalize on the growing needs of digital advertisers worldwide.

With that, I want to thank you for your time and I'll turn it back over to the operator to open it up for questions.

This is Jamison calling for Greg. Wondered if you could talk a bit more about how the shift to PLAs will affect your business going forward?

Yes, it's Chris here. Thanks very much.

The PLA is consistent with advertisers shifting more ad spend online. PLA is a new ad format, image-driven advertising on Google and Bing for those listening in on the call.

I would say it's an example of the rise of a sub channel within paid search and customers, as they have today, are looking to Marin to manage all of these channels. So search, display, social and mobile in a single interface so that they can drive better return on their ad spend.

So we are taking a leadership position in product listing ads and will continue to invest to support those ads as they grow and become more popular with advertisers. And we share that they've already garnered a reasonable penetration of the overall online ad budget even in their brief history.

But we see a bright future for PLA advertising.

So you've launched a bunch of new products in the third and the fourth quarter, so how should we judge the contributions from these new product launches as we go through fiscal '14?

Yes. Nandan, it's Chris here.

I would say, at this point, these are all promising initiatives that we've birthed. We, obviously, have shared the guidance for the first quarter and for the full year, and that's what we're comfortable committing to at this point.

I think you will hear from us as we do the quarterly updates and as we present at different investor conferences, periodic anecdotal updates on how these new initiatives are trending. Once they reach a certain critical mass, we'll begin to break them out.

But again, all of them at this point are at a level where we're just going to comment on them anecdotally in each of the quarters.

And a quick follow-up, if I might. Where's your investment emphasis for this year?

How much goes to sales versus R&D? Clearly, you've launched a bunch of new products in the second half of this past year, is that product innovation going to be continuing to -- continue a big focus in this year as well?

Sure. So I would say there are -- there continue to be 2 key areas of ongoing investment focus for us.

One is in product and product innovation, as you highlight, and the other is in an ongoing investment in quota capacity in investment in the sales team and in what we call the customer success or account management functions. So 2 key areas of investment in product and then in quota capacity.

And a rough split between the 2, very similar to last year, a little different?

Nandan, I wouldn't -- it's John. We're not going to give you specific guidance on that.

I think Chris gives you good context just in terms of the areas and the continued investment in headcount. We're going to add quota capacity in the beginning of the year and continue to add there for sales and marketing.

We are, in terms of just leveraging the model, we were pleased with the fourth quarter progress we've made in the gross profit margin, and that's going to be a continued area of focus in 2014. And then we're starting to see leverage in G&A and you saw that number tick down sequentially in the fourth quarter.

So I wouldn't want to comment further, just on the split on R&D versus sales and marketing, other than to say that we remain in investment mode in those 2 areas.

Chris, the customer number was impressive sequentially and year-over-year. I was curious if you could just share a little more color about where you saw the strength among the enterprise accounts and also, if you could just give us an update on your emerging mid-market group and how that contribution is adding to that number as well?

Yes, Brent, why don't I take a stab at it and then Chris can fill in there. We were pleased with the number this quarter and I think you saw the growth here, like you saw in the fourth quarter of last year.

Some of that is certainly fueled by some of the smaller advertisers that crept over that $2,000 mark that's in our definition, and we tried to call some color at it. And what we saw in Q1 of last year is that some of these went back then down underneath that $2,000 mark, but we were very pleased.

We saw a good set of ads. And then on the pro or the mid-market products, we did see an increase in contribution from those advertisers as well.

So Chris, I don't know if you want to add color to that.

Yes, I think consistent with our investment in quota capacity that you would see in the coming quarters ongoing healthy ads and active advertisers, although I do want to reinforce John's comment that we expect to see the same seasonal activity from Q4 to Q1, where the seasonal retail spend downshifts and then in the first quarter, they drop below that $2,000 level. And so those advertisers, although still on the platform, will fall out of that metric.

Okay. And just a quick follow-up on some of the contract duration commitment of the size that you're seeing.

I know it's a little hard given the revenue model, but can you just give us a sense of what your -- what you saw in duration this year versus last year in effectively some of the larger contracts? Are you seeing customers step up with bigger upfront minimums or is there really no change there?

Yes, I'd say a couple of comments. We, earlier in the history of the company, we had bias to shorter-term contracts.

And as a company, and as it matured, we moved to extend contract terms. So it hasn't been that in the past.

We had tried to get longer contracts and advertisers didn't want to do that. In fact, earlier in the life of the company, advertisers wanted longer contracts than we were willing to commit to.

So I would say we're reaching a good rhythm right now with both our new accounts and our renewals where we're able to achieve contract length extensions or durations of over a year and in many cases, 2 years. And then the other comment on the contract minimums, generally, we've targeted to having a minimum at about 50% of the underlying expected monthly recurring revenue.

I would say in general that those minimums are kicking up more into the 50% to 70% monthly revenue coverage level. And that has to do primarily when we're doing renewals, where we have a pattern of activity with that advertiser and therefore, the advertiser is comfortable making a greater commitment for the minimum.

So I wanted to dive in a little bit more on the AUM figure. The $6 billion number was, it seemed like quite a nice surprise, particularly given that you're at $5 billion just entering September.

So it really does add a point to the seasonality you've been talking to. Can you walk us through some of the dynamics that you saw within that Q4 seasonality from a spending pattern standpoint?

And then how you think about that seasonality going into Q1, Q2 and basically, the linearity that we should think about modeling our own revenue stream for 2014?

Sure, Tom. Let me make some comments and then I'll turn it over to John.

So I would think, consistent with prior years, retail is our largest vertical but it's at the, call it, 21% -- 20%, 21% level. It does peak in the fourth quarter and what we see -- and you can see it on the guidance that we gave, the first quarter is generally then expected to be in line or slightly down in terms of our sequential progression.

At the same time that retail is our largest vertical and peaks in the fourth quarter, there are other verticals, be it travel or financial services or automotive or continuing education, that peak or have their high season at other points in the year. But certainly, to the extent there is seasonality in our business, it is focused in that fourth quarter due to the meaningful spike in that 1 season in retail spending, as we all know, around the holiday season.

Chris, were you surprised at all to the extent that the AUM jumped in the fourth quarter?

I wouldn't say we were surprised. I would say that we were pleased.

I mean, we have signed a number of large retailers. So prior to 2013, we had made use of the retailer.

We added in the past year L.L.Bean and REI and others, so we continue to gain share in the retail segment. But I would term it as surprised.

I would say that, as expected, retailers spent the majority of their advertising in that fourth quarter to drive those holiday sales and clearly, the platform was a beneficiary of that increase in ad spend.

Great. Last question for me.

You've set profitability targets this year to slightly lower loss than what we saw this year. Too early to suggest to us when you might think about turning the corner to a profitable model?

Is 2015 a possibility or is it not in the horizon yet?

Tom, we've talked about 2015 in the back half of the year in terms of on adjusted EBITDA profitability point that we're aiming towards. So we've been talking about that for a couple of quarters and that still remains a goal with the model.

Okay. I'd like to thank everyone for listening to our call today.

We appreciate your support and look forward to seeing you out at the investor conferences we'll be attending in the coming weeks. Thank you.