Shares of Marin Software Inc. spiked 66% following an announcement from management that the company entered into a revenue share agreement with Google LLC to develop its enterprise tech platform and software products.
Marin Software Inc. provides a cloud-based digital advertising management solution for search, display, social, and mobile advertising channels to improve financial performance, realize efficiencies, as well as improve business decisions. The company’s enterprise marketing software platform is offered as an integrative SaaS solution for advertisers and agencies.
Marin Software (NASDAQ:MRIN) disclosed:
On September 17, 2021, Marin Software Incorporated (the “Company”) entered into a Revenue Share Agreement (the “Agreement”) with Google LLC (“Google” and together with the Company generally, the “Parties”) for the Company to develop its enterprise tech platform and software products. The Agreement is effective as of October 1, 2021 (the “Effective Date”).
The Agreement will take effect after the scheduled termination on September 30, 2021 of the existing Revenue Share Agreement that the Company and Google signed in December 2018. The Company will receive revenue payments from Google based on (a) revenue generated on the Company’s tech platform in connection with the Company’s clients’ spend on Search Ads (as defined in the Agreement) appearing on Google Search only, during a relevant calendar quarter (“Eligible Google Search Revenue”), and (b) revenue generated on Company’s tech platform in connection with its clients’ spend on Search Ads appearing on the Eligible Search Engines (as defined in the Agreement), excluding Google Search, during the relevant Contract Year (as defined below) (“Eligible Non-Google Search Revenue”). In the case of Eligible Google Search Revenue, following Alphabet Inc.’s public confirmation of its earnings for each calendar quarter, Google will provide the Company with the Eligible Google Search Revenue for the applicable calendar quarter and at the end of the calendar year and make a revenue payment to the Company. In the case of Eligible Non-Google Search Revenue, at the end of each annual anniversary of the Effective Date (a “Contract Year”), the Company will submit a report containing its Eligible Non-Google Search Revenue to an independent third-party auditor appointed by (the “Auditor”), whereby such Auditor will report its findings to Google on the accuracy of the reported revenue. If the Auditor determines that the Company accurately reported its Eligible Non-Google Search Revenue, Google will make a revenue share payment to the Company. If the Auditor determines that the Company inaccurately reported its Eligible Non-Google Search Revenue, then Google will have no obligation to make any revenue payment until the Auditor determines such amount to be accurately reported.
Each revenue share payment will consist of a baseline revenue payment and a potential incremental revenue payment, with the baseline revenue payment being calculated as a fixed percentage against all applicable Eligible Google Search Revenue and Eligible Non-Google Search Revenue, subject to a minimum payment amount each quarter. At the end of each Contract Year, if all aggregate Eligible Google Search Revenue and Eligible Non-Google Search Revenue for all calendar quarters during such Contract Year exceeds the aggregate minimum baseline for such revenues during the same Contract Year, then the Company will be entitled to an incremental true-up payment equal to a higher fixed percentage against the actual Eligible Google Search Revenue and Eligible Non-Google Search Revenue in excess of the aggregate minimum baseline for such revenues.
The Company will reinvest a fixed percentage of the baseline revenue payments received during the term of the Agreement to drive tech platform innovation. The Company will also reinvest a fixed percentage of its incremental revenue payments received during the term of the Agreement, where such fixed percentage escalates each Contract Year, up to 100% in the third Contract Year. Such reinvestments will be made exclusively for the growth, development, innovation and expansion of the Company’s enterprise tech business. Additionally, the Company has agreed to invest a specified amount of its own funds each Contract Year to further its enterprise business. Such investments will be subject to the review and assessment by the Auditor.
The Agreement contains customary confidentiality provisions, and representations and warranties of each of the Parties.
The Agreement terminates on September 30, 2024; provided, however, that at least three months prior to the expiration, the Parties will consider extending or renewing the Agreement. Google may terminate the Agreement under certain circumstances, including the Company’s material uncured breach of the Agreement, the Company’s breach of the confidentiality and publicity provisions of the Agreement, the Company’s breach of its representations and warranties, or the Company is unable to pay its debts as they fall due. The Company may terminate the Agreement at any time for any reason by giving at least seven days’ notice in writing. In the event that either Party experiences a Change of Control (as defined in the Agreement) then the other Party may immediately terminate the Agreement at any time for a period of 30 days following the Party’s receipt of notice of such Change of Control.
The foregoing summary of the Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the Agreement, which the Company will file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ending September 30, 2021.