Chris Lien – Founder and Chairman David A. Yovanno - CEO John Kaelle – Executive Vice President and Chief Financial Officer Greg Kleiner – ICR, Investor Relations.

Greg Dunham – Goldman Sachs Nandan Amladi – Deutsche Bank Brent Thill – UBS Karen Russillo - Wells Fargo Securities.

Greetings and welcome to the Marin Software First Quarter 2014 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr.

Greg Kleiner, Investor Relations at Marin Software. Thank you. You may begin..

Thank you. Good afternoon everyone and welcome to Marin Software’s 2014 first quarter earnings conference call. Joining me today are Chris Lien, Marin’s Founder and Executive Chairman; and Dave Yovanno, Marin’s Chief Executive Officer 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 wires a short time ago. If you need a copy of this press release please go to investor.marinsoftware.com to find an electronic version.

Call participants are advised that the audio of this conference call is being recorded for playback purposes and 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 historical results that may suggest trends for our business. We make these statements as of May 7, 2014 and disclaim any duty to update them.

For more information regarding these and other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements, as well as risks relating to our business in general we refer you to the sections entitled Risk Factors in our more recent report on Form 10-K and our other filings with the SEC.

This presentation contains certain financial performance measures that are different from their 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 first quarter 2014 earnings press release. And with that let me turn the call over to Chris..

Thank you. Good afternoon and welcome to everyone on the call today. Before I cover the highlights from our first quarter results I wanted to address the announcement we made earlier today with regard to the addition of David A. Yovanno, CEO and my transition to Executive Chairman.

It's humbling for me to think about Marin's evolution from what started as an idea to be the Bloomberg terminal of online media management in 2006 to better serve digital marketers around the world to what we built over the year since then, which is the world's leading revenue acquisition management platform.

And even with Marin success today, we remain in the early inning of a rapidly expanding multi-billion-dollar digital advertising market opportunity, as we partner with our customer to enable them to maximize their business results in ever more fragmented complex and larger online advertising environment.

A few months ago I began discussions with our Board about bringing in a business partner who could build on Marin's success and help us scale to the next level. This person ideally would have digital advertising expertise, strong operating and executive experience and be passionate about scaling a global public software company.

I am very pleased to report that Dave embodies each of these attributes and I am excited to have him join our team as Marin's new CEO to help us deliver even more on Marin's cross channel, revenue acquisition management vision. David has joined the company officially today and has assumed the role of CEO.

In my new role as Executive Chairman I look forward working closely with Dave and the entire team to extend Marin's leadership position in revenue acquisition management as we seek to serve more advertisers and agencies worldwide. So with that let me hand the call over to Dave for his initial comments..

Thanks, Chris. This is my first day at Marin so I won't be outlining anything specific about my plans as CEO just yet. But what I can tell is that I couldn't more thrilled to be here in this role.

As a veteran of the digital advertising industry I've watched what Chris and his team have built from afar for many years and have always been impressed with what they've been to accomplish.

The opportunity to help build on Marin's leadership position and to scale the company to higher levels was very attractive to me from both a personal and professional standpoint.

I look forward to working with the Marin team and helping to lead them into the future as well spending time with our analysts and investors over the weeks and months to come. We have a tremendous opportunity in front of us and I am confident we can further extend our position in this multi-billion dollar digital advertising market..

Thanks Dave and welcome on board. I am looking forward to working with you to help take Marin to even greater achievements. With that let me transition back to the highlights from the quarter. We were pleased report strong results in Q1 as revenue growth accelerated to its highest rate since Q4, 2012.

Revenue for the quarter was $22.8 million, up 33% year-over-year. We saw a broad base pickup from our clients worldwide as both existing and recently acquired customers increased their spending to our platform offsetting the seasonal pattern we had previously expected.

This success is a strong testament to the value we are delivering through our leading Revenue Acquisition Management platform and the business results we are driving on behalf of our customers. One of the contributors to our results was the continued growth in spending through the mobile channel.

According to study we released in March based on customer discussion and the spending through our platform we currently estimate that mobile devices will account for 50% of Google paid search clicks by the end of 2015.

Our mobile revenues as a percentage of total revenues now at a mid to high 20% range increased each quarter throughout 2013 and again in the first quarter of 2014 as consumers are choosing to access the internet more and more via smartphones and tablets.

In social, our customer spend was down on a sequential basis as a few of our customers had launched some programs in Q1 that were particularly targeted at the holiday season. This is an area that we remain excited about and we will continue to advance our functionality to serve this growing segment.

Let me highlight some of the customer wins we had during the quarter through both our direct sales force and agency partners. Through our agency customer [RY DNA] we added cloud based file sharing and storage company Dropbox.

Dropbox leverage the Marin tracker solution to track different conversion events such as free trial sign-ups and enterprise sales leads to understand and optimize core customer lifetime value. Dropbox was able to assign a unique revenue value in each of these conversion events and automate spend based on customer lifetime value.

Additionally, the flexibility of the Marin platform allows call tracking data to be integrated in our platform with Dropbox's digital marketing data, which enables Dropbox to see the effectiveness of their online marketing and driving valuable phone enquiries.

Lift is a high profile transportation company that lets people request a ride from a network of drivers via a mobile app. After an evaluation of computing platforms Lift chose Marin to manage its paid search program due in large part to our ability integrate with other data sources.

Lift is now able to connect reporting and insights across media by easily integrating data from other publishers and channel. The increase in campaign visibility coupled with our powerful bidding tools resulted in a dramatic decline in cost per lead and more effective ad spends.

We also added flash memory manufacturing innovator Kingston Technology Corporation as a customer. The ability to manage optimize and report across channels and regions in a single interface attracted Kingston to the Marin platform. Kingston serves an international network of distributors, resellers, retailers and OEM customers on six continents.

Given Kingston’s international footprint they were attracted to Marin’s global presence scale and expertise. Marin supported major publishers Yahoo! Japan and Yandex in Russia was an important contributor as well.

On the product front our development team continues to extend the value of our platform by launching new innovative solutions while also enhancing the day-to-day value of the Marin platform. One new feature we’re excited about is Context Connect.

This industry first capability allows advertisers to incorporate contextual data such as weather, product inventory, sports scores and stock market returns into their digital marketing campaigns.

For example a retailer can set parameters based on inventory levels that would automatically boost or decrease keyword bids based on whether or not certain products are out of stock or soon to be out of stock.

This new capability will enable performance marketers to execute smarter optimization strategies and capitalize on external environmental changes. Continuing our efforts in data integration we made some enhancements to our Channel Connect product, which allows to marketers integrate data from different publishers into the Marin platform.

In Q1 we added support for cost and performance data at a creative level to better support display and social channel use cases. This is in addition to support for keyword level data.

Incorporating both creative and keyword level data gives advertisers even greater visibility and control of campaign performance across publishers allowing for simpler cross publisher optimization.

We also developed additional support for new ad publisher features including full support for Facebook’s new campaign structure and latest mobile ad offerings. Through the Marin platform Facebook advertisers will be able to take full advantage of the social network’s mobile success.

Likewise we extended our bidding algorithm to support mobile ads on Yahoo! Japan and enhanced our API support for the leading Chinese search engine, Baidu enhancing our global presence.

Marin’s always been an advocate of open stack architecture as we believe this approach enhances the value of our platform by allowing advertisers the ability to bring in data to Marin from the tools and services they prefer to use. As part of our open stack architecture we initiated a beta API program in Q1.

The program allows partners and advertisers to build a direct connection to the Marin platform. In turn Marin Software’s API will provide advertisers a greater level of access to their own data enabling our growing ecosystem with advertising partners to maximize their success on the Marin platform.

In addition we expanded our partner ecosystem by announcing two new key relationships in the quarter. In February we finalized the integration between our platform and ad creative optimization from Boost Media.

During this partnership Marin customers will be able to seamlessly access Boost Media’s network of expert copyrighters and casting technology directly in our application to enhance both search and social campaigns. This will enable advertisers to improve campaign optimization workflow along with business results.

A few years ago we announced a partnership with Visual IQ a leading cross channel marketing attribution software provider. Visual IQ is now a Marin Connect Search type partner.

As we’ve discussed in previous calls Marin Connect is a data [inaudible] player and a key foundational layer of our product enabling our customers to easily incorporate a wide variety of data sources into our platform to help drive better results for their advertising programs.

This new partnership with Visual IQ expands on our efforts here and our customers are now able to glean insight across both online and offline channels through a direct feed to their IQ deployed product. Overall we’re pleased with our results in the quarter as we exceeded our guidance on both the top and bottom line.

At high level digital advertising is gaining share within overall advertising budgets. However these dollars are now being spent across an increasingly complex and fragmented array of channels publishers and devices, driving the need for advertisers to utilize platforms such as ours to help drive superior business results.

As we’ve mentioned in the past the ability to seamlessly measure manage and optimize digital advertising spend at scale across a wide flag of channels publishers and devices is one of our primary differentiators.

We’re proud to serve a wide variety of leading advertisers across the globe and we will continue to expand the functionality of our platform to help address their ever changing needs. So with that let me turn the call over to John to discuss the financials in more detail..

Thanks, Chris and good afternoon everyone. As Chris mentioned Q1 was a great quarter for us with strength across all of our key metrics. Revenue for the quarter came in at $22.8 million, up 33% year-over-year and 5% sequentially. This revenue performance was $1 million above the top end of our guidance of $21.8 million.

Throughout the quarter we saw strong spend across many of our advertisers, particularly in the travel and leisure vertical. In years past we have typically seen a sequential decline in spend from the seasonally high Q4 but this Q1 we saw an aggregate spend on par with the Q4 2013 level.

In addition we did see a slight increase in the quarter's effective rate as is typical in the first quarter which contributed to the revenue growth. Overall we saw strength from both our direct and agency customer with the mix this quarter coming in at 52% from our direct clients and 48% from our agency clients respectively.

Our geographic mix of revenue in the quarter was 65% domestic and 35% international as growth in both regions improved over Q4. In the quarter we served 704 active advertisers on the platform, up 31 sequentially from the fourth quarter of 2013 and 162 or 30% from the first quarter of 2013.

Consistent with Q1 of last year the increase in this metric was hampered slightly by a number of advertisers moving below the $2,000 revenue threshold inherent in our active advertiser metric definition. But this was more than offset by healthy set of advertiser ads.

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 of our business and customer base.

Contract length in the quarter for all active enterprise contracts was roughly consistent with Q4 averaging approximately 14 months in duration. For the quarter we are pleased that our revenue retention metric increased back above 100% driven by strength in spend and related revenues from the advertisers.

As a reminder, revenue retention tracks revenue from all advertisers in the corresponding prior year period that remain 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 first quarter of 2014 exclude the total of $1.5 million in stock-based compensation, $46,000 of non-cash expense from the issuance of warrants, and $445,000 of amortization of capitalized research and development costs, while adding back $617,000 of capitalized R&D costs.

A detailed reconciliation of our GAAP results to the non-GAAP result can be found in our earnings release. In the first quarter gross profit margins increased to 66% up from 60% in the first quarter of last year and consistent with the strong margin performance in the fourth quarter of last year.

We had expected this year a sequential decline in the margin for Q1 but we are continuing to see leverage from our prior investments in the service and support infrastructure. In particular we made specific changes around driving customer success that have yielded positive results.

As a result we now expect to report gross profit margins in the 66% to 67% range for the full year, an increase from our prior expectations of 65% to 66%. This would be a 400 to 500 basis point improvement from 2013's 62% gross profit margin. Sales and marketing expenses were $11.6 million for Q1, up from $10.2 million in the year ago period.

The year-over-year increase here was driven largely by increased sales activity offset by some from IPO-related marketing spend in Q1 of last year. Research and development expenses came in at $6.3 million in the quarter, compared to $5.4 million in Q1 of last year.

As we’ve indicated in the past we plan to continue investing aggressively in R&D as we look to further expand the functionality of our platform. G&A expenses were $4.0 million for Q1 compared to $3.6 million for year ago period. Operating losses came in at $6.7 million compared to a loss of $9.0 million in the year ago period.

This was better than our guidance of a loss of $8.9 million to $8.5 million. The upside was driven by higher revenue and the efficiencies I mentioned earlier along with the slower pace of hiring in the beginning of the year that we expect to make further progress on throughout Q2 and Q3.

Net loss for the quarter was $6.9 million compared to a loss of $9.4 million in Q1 of last year. Based upon our weighted average share count of 33.1 million this produced a net loss per share of $0.21 improved from our guidance of a loss of $0.28 to $0.26.

This compares to a loss per share of $0.39 in Q1 of last year though last year was based on a weighted average share count of 24.2 million. Our adjusted EBITDA for Q1 was a loss of $5.4 million compared to $8.0 million in the year ago period.

On the balance sheet we ended Q1 with $96.1 million in cash and cash equivalents, down from a $104.4 million at the end of 2013. As we’ve indicated in the past we believe we have more than sufficient cash to fund us through our adjusted EBITDA breakeven goal in the back half of 2015.

Our deferred revenue balance at the end of the quarter was $2.1 million compared to $2.6 million in ended the previous quarter.

Given that a majority of our customers still pay us one month in arrears based on their spend in the 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 the second quarter and raising our guidance for the full year 2014. For the quarter ending June 30, we expect revenues to range from $22.9 million to $[23.3] million and non-GAAP loss from operations should range from a loss of $8.7 million to a loss of $8.3 million.

This should lead to a non-GAAP net loss per share in the range of $0.28 to $0.26 based up on a weighted share count of 33.4 million.

For the 2014 calendar year we’re improving our guidance and expect revenues to now range from $96.8 million to $98 million and non-GAAP loss from operations to range from a loss of $29.2 million to a loss of $28 million.

This should lead to a non-GAAP net loss per share in the range of $0.90 to $0.87 based upon a weighted average share count of 33.5 million. So in summary we’re very pleased with the strong Q1 highlighted by revenue well above the top end of our guidance and the strength across all our key margins and metrics.

We remain focused on serving the ever changing digital marketing needs of advertisers worldwide and we will continue to invest in growth to further penetrate what we believe is a large and growing opportunity in the revenue acquisition management market.

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

Thank you. Ladies and gentlemen at this time we will be conducting a question-and-answer session. (Operator Instructions). Our first question is coming from the line of Mr. Greg Dunham with Goldman Sachs. Your line is now open. You may proceed with your question. .

Yes, thanks for taking my question and congratulations Chris on the promotion and getting a seasoned executive to join and help us lead the business. .

Thanks Greg. .

And I guess I want to start with Dave, maybe I know it’s the first day but you clearly has been in industry a while and you know the players you did due diligence.

So first question for you is what about Marin got you excited what about this asset is something unique difficult to replicate and then made you want to join the firm?.

I think the most significant for me was the leadership position search, very hard position to achieve in my opinion, very few companies who can get there and get to the position that Marin has gotten to and will continue to kind of maintain and grow. And then how that position can be leveraged to potentially power other channels down the road.

I think there’s a significant amount of resources that draw upon an amazing team, the folks I've met here at Marin so far. Clearly there is resources available for the company in going public last year. I think there’s just a lot of good things happening at the company right now, there's tremendous momentum, you see that in the Q1 results.

It’s just a lot potential. I personally feel the stock is somewhat undervalued and just thought that I can draw on my experience to help the company continue to hit those top line revenue goals and try to improve the margin profile overtime and help the company diversify overtime.

But all that effect we'll be talking more about I am sure as the years progress but when I look further down the road we have a ten year for Marin that certainly has a lot of run way with the momentum that's already been created..

Okay, great. And let me switch back to Chris. Strong quarter I mean it sounds like the value of search spend was consistent with Q4 which I'd like to get kind of your perspective on why you think you saw that happen as opposed to more a sequential decline that you saw with retail.

And then can you give us a little bit under cover why the take rate actually increased and why would it increase in Q1 and that's it for me thanks..

Sure, sure Greg. So, we shared we are pleased with the quarter-over-quarter trend from Q4 to Q1 the retail remains our largest vertical but clearly the spending both in retail and in the other verticals that stayed strong in Q1 obviously it did would have picked up another verticals in Q1 to offset some of the pull back in retail.

So I think it just speaks to the diversity of the verticals that we serve with the platform.

On the take rate there we do 11 releases a year and we believe that we have differentiated functionally and we do seek to command the price premium when we are selling your business or renewing business and I think you are starting to see creep into our overall take rate.

And then also there is element where we are commanding a slightly rates for social. But again the improvement and take rate is a modest one I think you'll see trend overtime where that moves up but I don't want too much read into any one quarter in terms of that trend..

Okay, thanks guys..

Thank you. Our next question is coming from the line of Nandan Amladi with Deutsche Bank. Your line is now open. You may proceed with your question..

Hi, good afternoon, thanks for taking my question.

So Chris this quarter's outperformance how much of that would you attribute to just overall industry spending going up versus your own performance versus the slight improvement in take rates you just mentioned?.

Yeah so, if you look more broadly to the trends in surcharge, our overall year-over-year revenue growth rate was at almost double the growth rate of the overall industry.

So I would say that a big portion of the outperformance is driven the functionality in our platform and the value that we are able to offer the advertisers as opposed to just the rise tide if you will that's our approach..

Okay, thank you.

And your OpEx approach this year how do you plan to balance sales and marketing versus -- and is probably more a question Dave and John balancing sales and marketing investment versus R&D investments?.

Yeah, absolutely Nandan. So we are obviously keeping a line on that. We continue to make progress and have an eye on that stated goal of driving towards adjusted EBITDA breakeven in the back half of 2015. So we are looking for continued progress.

I think if you look at the results for this year you have seen a trend of just a gradual improvement since we have been public on all of those lines, in particular on the gross profit margin we are very pleased and this quarter was even a stronger performance or improvement than we had contemplated.

If you recall we had given some commentary on the year-end call where we thought in the front half of this year that the GP margin will be in the 63% to 64% range.

So it is a balancing act obviously and we do want to continue push R&D and push sales and marketing to continue to push for a new growth rate but we are mindful of driving towards the adjusted EBITDA target..

Thank you..

Thank you. Our next question is coming from the line of Mr. Brent Thill with UBS. Your line is now open. You may proceed with your question..

Hi, Dave, welcome to the team. Just from your prospective as an outsider coming in now. I'm curious if you can just share with us what you think that these opportunities are when you kind of size this up and seeing you have a pretty distinguish record in -- you were the CIO of the Navy and looking at a lot of different opportunities.

Can just give us a sense of what you think the biggest opportunity is? And I had a quick follow-up for John..

So maybe just adding on to my previous comments I would say that my view of the market is that I see some clear trends more and more to technology over. So this is to me that that is a big clear trend as more demands with transparency on where your media search and display and social is running once you’re paying for it.

In today’s market a big leader and the core technology platform stack business model, I mean most major brands and agencies will be consolidating on to common stack.

My investment thesis is if you’re controlling 50% of the total online ad spend which is search and you’re sitting on top of the most valuable datacenter, the intent based search based data, it would just make sense that, that same platform also be used to drive some other channels.

And so whether a brand is managing it themselves or a brand is working through an agency I think they’re going to make some tough choices on their platform of record for their online marketing.

Search is a big category, like I said it's 50% on the spend and so there’s great opportunity for Marin to continue to grow there and search overall is growing as we get into other channels down the road [inaudible] for it but yeah I think it’s reasonable to expect that platform like we’re able to diversify overtime to try and power these other channels.

I think it’s in a sweet spot of where the market is going.

I think the market is going to be less dependent on intermediaries to kind of decide how their marketing should run, the type of sales they want to put agencies they absolutely do but they want to choose a platform on record to kind of manage that spend, that helps, that’s kind of the way I view it from a very high level. .

Okay I know and look forward to hearing more from you.

And John just when you think about some of the existing contract renewals your model has been unique relative to some of the other SaaS companies that we all cover but I mean from a perspective of signing out kind of contract minimums or other thing going on in your ad spend is there any change in terms of how you’re structuring these contracts with and some of the renewals around customers that fully in platform are committing bigger dollars to you.

Are you seeing any structural changes that this is same business model sort of the pricing that we’ve seen over the last couple of years?.

Yeah I think we’ve talked about this for a couple of quarters now just in terms of when contracts come up for renewals there’s things that we’re looking for.

We’ve been pushing to extend out those contracts to go for a longer term contracts and you’ve seen over the past few quarters that average contract length has picked up in this quarter like last quarter was around 14 months. So early days we have much shorter contracts and now we’re standardizing at least down a year if not longer in many cases.

So that is an important thing for us. As it relates to the minimum fees we are looking to push those up a bit. Historically we’ve gone out and tried to anchor that minimum fee around 50% of what we think that the average monthly invoice will be in.

More recently we have been pushing that towards the 70 plus percent mark and are seeing some progress on that.

Our renewals as well that competition is a little bit easier because everyone is still looking to spending on the platform so getting them to agree, actually there’s a basis for that because we’ve seen 12 month of invoice fixed rates so we push on that.

And then the final thing ad renewals we’re looking forward to continue to increase the effective rate, Chris touched on that a bit. We’ve got 11 releases we continue to enhance the platform. But of the three items here that is the thing that prioritized the least right now.

Because it's our belief that as spend continues to grow on this platform, earnings bids are growing with advertisers so the effective rate is the concern in terms of the other things that we ask for. That said we didn’t see a tick up slightly in this quarter when compared to fourth quarter in the year ago period. .

Great, thank you. .

Thank you. Our next question is coming from the line of Mr. [Tom Robert] with Stifel. And your line is now open and you may proceed with your question. .

Hi guys, good afternoon, Dave welcome aboard and Chris congratulations on the new role for you so to the next step I guess. The question I wanted to ask was a little bit around the commentary on mobile I felt like you’re seeing really strong spend and anticipating the strongest income through mobile channel.

I want to understand how much of that spend as you see it from both direct customer and agency partners how much of that sort of cannibalizes existing sort of desktop search versus this pure additive new spend. And how are they how are they treating kind of pricing relative to traditional spend on desktop? Thanks.

Sure so, Tom a couple of questions in there so good for you. A couple of comments obviously more and more of us are using mobile as the primary access device for the internet.

The share of mobile in our media at this point is in the mid 20's to the high 20's and as we pointed out in the script has continued to grow quarter-over-quarter and we see that continuing, that partly driven the adoption of mobile in the page search channel and then also powered by the adoption of mobile in mobile display and social.

I would highlight for social mobile access is over 50% at this point as highlighted by same store sales. We see with the adoption of both mobile search and mobile social and mobile display that mobile will continue to grow within a raw percentage of our mix.

The pricing either on a CPC basis or a new CPM basis for mobile continues to move up generally quarter-over-quarter that's what we have been observing particularly with CPC pricing.

But I also would highlight you painted as cannibalization, the desk search continues to grow albeit at a slow rates and then mobile is growing at much higher rates because of a small base.

So, overall there continuous to more internet search and more internet engagement from audiences and that's where more overall internet adverting a lot of it has been channel to mobile but I don't have a view for you as to how much of mobile is cannibalizing desktop because we are still seeing growth in both of channels.

And I would also highlight that we are seeing improvement in pricing and in mobile CPCs as well..

Great. Let me shift to social I think the commentary this quarter was that it was down sequentially after you had a couple of big launches in Q4 which probably to be expected.

But more broadly speaking around social, how are you thinking about the opportunity within the agency community versus direct? In other words, are agency is really jumping at his opportunity at this point or is that going to be a little bit more of slow burn in the opportunities on the direct side?.

Yeah, I would say the opportunity for social in both tails. We are seeing yes we saw a sequential decline due to some retail oriented fourth quarter spending but there is broad adoption of social in both direct advisers used cases and then agency used cases.

And so we continue to pursue both in over the coming quarters well as we conveyed you as we continue to make more progress in the share of our overall business then is derived from social app spending..

Great. Last quick one from me.

It's a question around the path to profitability you are seeing some really nice leverage on the gross margin side so, I guess you know the two part there as where gross margin ultimately to and how are you thinking about the timeline to profitability at this point? Chris Lien Yeah, I guess I will stick to comments that I had in script.

We've given the guidance on the full year we increased that guidance. We are pleased with the progress that we making and we started up the year and about the annual GP margin would be 65 to 66 and we use to get 66 and 67%. You know we believe that we can continue to make progress there I wouldn't necessarily give a timeline or amount on that.

You know then the other margins you know we continue to push and we are into that adjusted EBITDA breakeven point in the back half of next year..

Got, it. That’s perfect. Thanks guys. Operator Thank you. Our next question is coming from the line of Karen Russillo with Wells Fargo. Your line is now open. You may proceed with your question..

Hi, yeah, thank you for taking my question. I just wanted see if you guys can talk a little bit if you have seen any behavioral changes from the competition in the last quarter on the core business and also some of the new areas like social changes in behavior pricing.

Anything on those lines? Chris Lien Yeah, it's really been steady as we go with regard to competition.

I mean we continue face our primary competitors are they build the offerings, dump those offering from Google and then attention in terms of broad platforms would get rate to each of those parties we win more than we lose and we are very pleased with those rates.

With regard to the social players we barriers in the markets there is offering from Salesforce there is Adobe offering and there are several more specialty offerings and again we compete with those in different business opportunities but I can’t say that we seeing any change in the competition if anything our run rates have increased again various of that larger platform players and so we are pleased with progress of the business and we are pleased with what we said in the competitive set..

Thank you. Ladies and gentlemen, at this time there are no further questions. I’d like to turn the floor back over to our management team for any closing remarks..

Okay, again I want to thank everyone for dialing for the first quarter results call. I want to welcome Dave as Marin's new CEO I am very excited that he has joined.

And we look forward to meeting you in the coming weeks down the road you introducing to Dave and then giving you more inside into the progress of the business and our outlook for the rest of the year. So, again thank you everyone..

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you very much for your participation..