Quotient Technology Inc (QUOT) 2016 Q1 法說會逐字稿

Welcome to the First Quarter 2016 Quotient Earnings conference call. During the call, all participants will be in a listen-only mode. After their presentation, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder this conference call is been recorded and will be available for replay from the Investor Relations section of Quotient's website following this call. I'll now turn the call over to Stacie Clements, Vice President of Investor Relations.

Thank you. Ms. Clements, you may now begin.

Thank you. Hello, everyone and welcome to our first quarter 2016 earnings call. Please note that slides to accompany the remarks on today's call are available on the IR section of our corporate website. On the call in here with me today Steven Boal, our Founder and CEO; and Jennifer Ceran, our CFO. Mir Aamir, our President and COO is also here and available for Q&A after our prepared remarks.

Before we begin, please note that during this call you will hear forward-looking statements. These forward-looking statements include our projections as far as second quarter and full year 2016. Our expectations for our Retailer iQ platform and consumer and CPG patterns as well as the expected growth of and investments in our business generally.

Forward-looking statements are based on information available to and in good faith beliefs of our management team as of the time of this call. And are subject to known and unknown risks and uncertainties that could cause actual performances or results to differ materially Additional information about factors that could potentially impact our financial results can be found in today's press release and in the risk factors identified in our annual report on Form 10-K filed with the SEC on March 11th, 2016. We disclaim any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.

Please note that with the exception of revenues, financial measures discussed today are on a non-GAAP basis. And have been adjusted to exclude certain expenses. A reconciliation between GAAP and non-GAAP measures can be found in the financial results press release issued today and on the slide deck posted on the Company's website. With that, I'll now turn the call over to Steven.

Thank you Stacie, and welcome everyone. We had a great start to the year delivering revenue of $66.1 million, and adjusted EBITDA of $4.3 million both ahead of guidance. This quarter, we continue to scale our Retail iQ, Retailer iQ digital paperless platform, and we saw momentum across the business.

We had another five retailer banners launch digital marketing programs in the quarter, and we expanded our distribution through new products on the platform. We also made steady progress with Quotient insights.

First, I'll walk through some of the highlights from the quarter starting with Quotient promotions. We delivered 537 million transactions, a record quarter and up 30% from a year ago. As our network grows, CPGs are deploying more promotions reaching millions of shoppers through digital print, digital paperless, and cashback receipt scanning. And now for the first time using Retailer iQ through online ordering channels.

This quarter we saw another lift in digital print, primarily driven by the continued rollout of our mobile printing experience which also improves the printing experience for desktop users. Digital paperless transactions also grew as more retailers marketed their digital shopper programs enabled by Retailer iQ to help grow trips and sales.

Shopper adoption continued to build in the first quarter as did the number of transactions per user. Also, mobile usage on Retailer iQ remains high at more than 70%. Remember, we monetized mobile at the same rate as desktop with the added benefit of increased frequency of use. We're very pleased with the growth momentum and are excited about the opportunity as more retailers continue to integrate digital marketing efforts across their businesses which we believe will enable CPGs to reach a larger audience and drive incremental sales.

As you know marketing is a gradual process, and each retailer is at a different stage in their efforts. Marketing programs span from emails and instore signage to more sophisticated efforts that stitch together media on mobile and web, digital circulars, e-receipts delivered in point of sale and even print.

Retailers also collaborate with shopper marketing teams and CPGs for additional promotional support and funding of (inaudible). One example of such an event that we helped facilitate in Q1 was spring cleaning week event. Leveraging our CPG relationships, we helped deliver incremental offers and provided best practices and expertise around using Retailer iQ to reach and engage shoppers.

We plan to continue helping our retail partners build and expand their marketing programs. For instance, we leverage our Coupons.com network through a range of marketing strategies to help retailers and CPGs reach an even larger consumer audience than on their own. This has an incremental effect of growing their engaged shopper base, which could increase the ability for CPG brands and retailers to personalize and target offers and media at scale.

As a result, we expect to continue delivering an increasing number of campaigns targeted at specific shopper segments. This quarter we also saw growth from Quotient Media. As CPGs and retailers continue to pair their promotional programs with media to amplify results and increase ROI.

Additionally, several retail partners have expanded their use of Retailer iQ to include targeted media on their own websites or mobile applications. We believe this is a valuable way to influence shoppers as they're planning their shopping trips. Over the year, we intend to roll out additional features to drive engagement and performance.

Also on the product front, we started to expand the distribution of Shopmium which we acquired last fall. As a reminder, Shopmium is the platform we use to deliver cash-back offers that shoppers redeem by scanning store receipts with their mobile phones. We also recently added this capability to the web and mobile experiences of a number of CPG brands.

Looking forward, we expect to see the number of offers available for receipt scanning grow. The Shopmium platform also provides us with a mechanism to collect more holistic data on shopper transactions.

I'm also excited to announce that we recently expanded Retailer iQ into a retailers online ordering experience. This quarter we had our first retailer expand their capabilities delivering the same digital coupons for in-store use directly into their ecommerce channel. A growing area of interest for most grocery, drug, [mass] and dollar retailers.

Although still in the very early days, we believe that extending our platform into online ordering provides long-term opportunities as retailers look to build omni-channel experiences for their shoppers. Whether it's through online ordering for home delivery or for curbside pickup. Retailer iQ is designed to give retailers and CPGs a full view of their shoppers. While giving shoppers choices of how, when, and where to shop.

I'll now turn to Quotient Insights, our emerging data and analytics business. CPGs and retailers are looking for ways to harness data, engage their shoppers, and increase sales. As you know, we work with several retail partners to collect and analyze an enormous amount of data a lot of which is done in real time. By combining insights from instore and online purchases in combination with purchase intent data we can help create a unique view into shopper household behavior.

We can then attribute it to current online and offline advertising and promotions. And we can do this with the immediacy necessary to make midflight campaign decisions.

For example, if a CPG ran a brand media campaign for two weeks we would be able to provide them a view of the campaign's impact on driving sales midflight. Providing an opportunity to change messaging while the campaign is running.

Brands spend an estimated 8% of their marketing budgets on analytics for media measurement which ends up being based on data that is on average three months old. We plan to change that. This market is projected to grow, and we believe we have a large opportunity in front of us.

In summary, we had a great quarter with strong momentum across the business. Promotion transactions reached record levels as consumers took advantage of the great promotions available across our network. After some unexpected delays last year, we finally saw the majority of retailers on Retailer iQ begin their marketing efforts. And our media business continues to help CPGs enhance their promotional campaigns. Our teams are focused on building great experiences for consumers, and helping CPGs and retailers engage with their shoppers across their websites, mobile apps, and our great consumer marketing destinations like Coupons.com.

We believe that the continued digitization of this industry is inevitable. And we are excited about our opportunity ahead.

I'll now turn the call over to Jenny.

Thank you, Steven, and welcome everyone. We had a strong first quarter and start to the year. Revenue was $66.1 million up 19% over a year ago reflecting healthy performance across the business in paperless, print, and media.

Transactions were $537 million, up 15% versus last quarter and 30% versus a year ago driven by strength in digital paperless and improvement in digital print. Adjusted EBITDA came in at $4.3 million reflecting higher revenue while we continued to make important investments.

We ended the quarter with a cash and short-term investment balance of $149 million, which includes $10.9 million used to acquire 1.7 million shares under our repurchase program. All in all, we were very pleased with the start to the year as Retailer iQ, our digital platform used to engage consumers with their favorite grocery, drug, [mass] and dollar retailers, drove strong paperless growth through retailer marketing efforts and shopper demand.

Let me now provide more details on the quarter. As I just mentioned, total revenue for the quarter was up 19% versus a year ago. Breaking it down even further, revenue from digital promotions was $51 million, a 20% increase over last year. And revenue from media was $15.1 million, a 15% increase over last year. Excluding the acquisition of Shopmium, which occurred in the fourth quarter of 2015, total revenue growth would have been one percentage point lower.

Moving to transactions, as Steven mentioned, we had another record quarter for transactions driven by improvement in digital prints, and acceleration in digital paperless. Compared to the fourth quarter of 2015 digital print transactions were up 11%, helped by the continued adoption of our mobile printing solution, and digital paperless transactions were up 17%.

Retailer iQ transactions, a growing subset of digital paperless, were up 47% sequentially as retailers continue to ramp their marketing efforts. Looking at transactions year over year, digital paperless grew 50% and digital print grew 10%.

Finally, average promotion revenue per transaction in the first quarter was about $0.095 cents, which was relatively in line with our historical range, but on the lower end. As we've mentioned before, this metric will fluctuate as it's dependent upon the mix of transactions and customers. And as we experiment with new pricing models and offer volume discounts, we expect this to remain in the $0.09 to $0.10 range over the course of this year.

Moving onto Retailer iQ. During the first quarter, we implemented one new retailer banner bringing the total to 16 banners implemented. We also had an additional five banners start marketing. Bringing the total number of banners marketing to 12. And as of today, we now have 17 retailer banners live and 12 marketing.

While we now have many retailers who've launched marketing efforts, as Steven mentioned. They are in varying stages of activity. A few are leveraging the full spectrum of marketing capabilities while others are in earlier stages. We are working with retailers based on their timelines to help them execute on their marketing plans.

Moving down to P&L, non-GAAP gross margin, which excludes stock-based compensation expense, was 62.6% in the first quarter, up 110 basis points compared to a year ago. Primarily due to higher revenue and expense management partially offset by a higher proportion of distribution fees from the growth and Retailer iQ. Compared to the fourth quarter the sequential decline was attributable to seasonally lower revenue partially offset by the benefit of expense management.

Let's move to the next slide. For the first quarter, non-GAAP operating expenses were $42.2 million compared to $34 million in the first quarter of last year. This quarter, we saw an increase in sales and marketing expense driven primarily by increased media and advertising spend as well as headcount-related costs.

Research and development expense declined one percentage point as we continued to grow engineering headcount in lower cost locations. Finally, general and administrative expenses were up two percentage points compared to a year ago. Driven by increased fixed expenses associated with being a public company, and headcount growth from a few key IT and finance hires.

We are making investments today to make it easier to scale in the future. And we expect our operating costs as a percentage of revenue to improve over time.

Let's move onto profitability. In the first quarter, adjusted EBITDA was $4.3 million representing a 7% margin compared to $4 million a year ago due to higher revenue offset by increased distribution fees, media costs, and other operating expenses.

Let me move onto our outlook for Q2 and full year 2016. For the second quarter we expect revenue to be in the range of $62 million to $64 million. We expected adjusted EBITDA to be in the range of $3 million to $4 million. For the full year we are raising guidance to reflect the Q1 outperformance. We now expect revenue to be in the range of $257 million to $265 million reflecting 8% to 12% growth over 2015.

We've also taken up the low end of our guidance for adjusted EBITDA. We now expect adjusted EBITDA to be in the range of $23 million to $25 million inclusive of ongoing investments to build out robust analytical capabilities around Quotient insights and improve our infrastructure.

In summary, we had a great start to the year driven by strength across our business as our network scales. Retailer iQ marketing efforts are building as retailers adopt digital marketing best practices to help drive shopper adoption. We'll continue to make investments around future opportunities while focused on margin improvement. We are pleased with the momentum we saw in the first quarter, and look forward to continuing to drive the transformation to digital promotions.

With that, we will now open up the call for questions. Operator?

(Operator Instructions) We will pause for just a moment to compile the Q&A roster. The first question comes from the line of Mark Mahaney from RBC Capital Markets. Your line is open.

Thanks. Two questions, please. First, Steven, could you talk about the investment areas through the balance of the year. Where do you think the best returns are in terms of marketing, product development, et cetera? And then, Jenny, you talk about uses of cash going forward because I know you bought back some stock. You talked about it in the press release. How you think about uses of cash and specifically share repurchases at this level through the balance of the year? Thank you.

Sure.

Hi, Mark. It's Mir, I'll take the first one. Investment through the balance of the year, expect sort of the same strategy that we've been following. So our branding campaign more for today which we talked about a couple quarters ago. We launched it back in August if you recall. We're continuing the [flights] of that. It's working well we believe and so we should expect to continue that in the same weight in the rest of the year.

So that's on awareness building and trial and marketing for Coupons.com and our owned and operated properties. On the product side, the investments that Steven alluded to in his prepared remarks would have to do with certain -- two buckets really. One is product enhancements on Retailer iQ core platform.

For example, digital circular, personalized emails, media and Retailer iQ. Those enhancements and products are in the market as we've talked about in the last few quarters. We continue to build and enhance on that so you can expect us to do more on that. And then secondly, our continued development work on Quotient Insights, the new data analytics platform.

Like we mentioned in the last quarter call, this is the year for build for that. And we expect for that to be in market and revenue generating in 2017.

Yes, and with respect to uses of cash for the year. So we bought back $10.9 million worth of stock in Q1. Of that $3 million approximately was under our new program. We look at buy back as opportunistic. And so we have a 10b5-1 program in place that kind of sets amounts based on stock price.

So we'll buy back depending on opportunistic opportunities out there. And then I would say the other thing is we're really focused on improving free cash flow and looking for opportunities to drive greater return in that area.

Thank you, Jenny. Thank you, Amir. Congratulations, Steven.

Thanks, Mark.

Your next question comes from the line of Nat Schindler from Bank of America, your line is open.

Yes, hi guys. One, you saw two things that stood out. Digital print at home papered coupons had been decelerating and it looked like people were transitioning to digital quickly. But this quarter there was significant reacceleration. One, what's driving paper to come back? And secondly, on the ARPU you're getting per coupon. I know you get more of the promotion style couponing in Q4 for Christmas holiday. But is there anything else that is driving that number a little lower than it has been in the past, and will that continue.

Nat, it's Steven. Thanks for asking. Let me take the first part here. So if you recall, we talked about the growth in mobile traffic particularly to mobile web and that for the better part of last year worked on a mobile optimized printing solution. Which also benefits desktop users. So we started rolling it out in Q4 so we continued the rollout through Q1. We've still got a little bit more to go. But that's certainly having an impact on the turnaround for digital print.

Also just on a macro basis there are about 40 million households in the US that engage with the printed freestanding insert that do not engage digitally. There's still 40 million households in the US that are predisposed to taking a scissor and cutting a piece of paper and taking that in the store. With the physicality of a piece of paper in their hand to remind them of the discount and remind them to buy the product. So those two things together I think are demonstrating the fact that there's still some opportunity for digital print.

Now that having been said, about 80%, of our clients work on the unified budget with us. Which means that they give us a budget and our system decides how to deploy whether it be digital print or digital paperless, and going forward receipt scanning will be a part of that as well.

And so as our digital paperless grows, we'll start to see cannibalization of the print business at our own hands. So as we drive more of the volume through the paperless side of the business, then it will just create less of a budget for the digital print which is not growing as fast. You'll see those two things kind of conflicting with each other, but primarily the growth in mobile and the mobile optimized printing solution that really amounts to most of the turnaround that you're seeing.

Hi, Nat it's Mir, so on your second question on promotion revenue per transaction, you're right. As we've mentioned in the past, these variations and they're kind of small variations. But they do occur mostly because of mix and quarter four is a bigger mix because of holiday sales. And some of it is especially higher in holiday sales even though it's overall a small portion of our business.

Quarter four always if you look at the last few years, quarter four has always been higher that way from a mix reason. This quarter the reason it was lower than the average of ten was also a mix reason. And the reason being that we saw a lot of our CPGs. We've talked about how volume growth results in some price brackets that are volume discount driven. And whenever that gets hit, the proportion of that, the mix of that impacts the average revenue per transaction, promotion revenue per transaction. And then because we had some significant transaction growth as you saw this quarter that resulted in that mix effect.

Mir, to follow up on that you also usually see -- on the same idea you see lower prices on your largest CPGs as you would expect because they're high volume. Are they more likely to be moving towards digital only or mobile couponing or kind of newer products than some small CPG who you were getting higher prices from causing the further mix shift?

No, it's not the adoption of them for newer products really that's causing this. It's really volume driven. And yes you are right, the bigger CPGs drive so much more volume and continue to drive more and more volume that they hit volume discounts and price breaks that results in this mix effect.

And frankly, we've mentioned it before. We're actually okay with that because in the end the more transaction we get into these platforms the less goes out in the Sunday newspaper. It's the rising tide effect. These big brands and when they show up on our properties, the retailer properties have a rising tide effect across the board, right? So that's really primarily the driver for this.

Great, thanks.

Thank you.

Your next question comes from the line of Ralph Schackart from William Blair, your line is open.

Good afternoon. Two questions, first just curious on the phasing of the marketing programs. When did they go live in Q1? Were they sort of evenly spread or was there sort of a weighting towards the sort of beginning or ending of quarter?

It was around the middle to the end of it.

Okay, and then, Mir, maybe I can just ask Nat's question a different way. On the price per unit or the promotion revenue per transaction, I think you had mentioned it's not product driven but it's mainly volume driven. And taking a leap of faith that Retailer iQ continues to sale and you see robust growth and as more transactions occur there, should we expect more volume to be sort of within this growing product category and this sort of $0.095 roughly average promotion rev per transaction? It'd be sort of more the norm.

Let me clarify, it's not product driven. It's mix driven. Where that's a little bit of a difference there in terms of the larger CPG are hitting larger volume base. Because I think there are trends that would make this be $0.095, and there are trends that would make us be higher than $0.095. Right, like we've talked about in the past.

So more and more if we get volume larger than what we had predicted and it comes from certain CPGs you start to have this effect, right? And then you can think about $0.095 for the next few quarters. But at the same time that the counter effect of this which we also start to see. Although it's in a small scale right now in terms of mix is targeted offers which command a premium.

And as that grows that starts to have a increasing effect on average revenue per transaction. So it really depends on the mix of volume in terms of CPGs and in terms of sort of which type of offer, is it national or is it targeted?

Great, one --

This is Jenny, just wanted to say that in terms of for planning purposes on our guidance we're forecasting between $0.09 and $0.10.

Okay, that's helpful, Jenny. And one more if I could, just in terms of the retailers, I'm sorry the banners that are implemented but yet aren't marketing. Just any sort of perspective thoughts in terms of when you think they'll move to the marketing phase?

You know those are typically the ones that have gone live more recently. So it's like we talked about they take two to four months on average, X number of months from live to marketing just because everything has to work and they have to feel comfortable to do that and so on from a planning cycle.

So we should expect in the next quarter or two quarters for the ones that have gone live in the last one or two quarters to start marketing. There isn't any indication yet from any of those that they wouldn?t want to do that.

Okay, thank you.

Thank you.

Your next question comes from the line of Mitch Bartlett from Craig-Hallum, your line is open.

Thank you. You've talked throughout the script about two initiatives that aren't really yielding a whole lot at this point, Shopmium and Insight. And kind of dangling them out there, maybe you could just talk a little bit further about like for Shopmium how that is planned to go forward. Is there a marketing campaign? How do you get it out into the market? When does it really load up with a whole bunch of offers?

And then Insights, is this kind of if we build it they will come? Or is there direct interest perhaps even some contracts associated with Insights? And then my second question is of the 12 retailers that are now marketing on Retailer iQ how would you assess that their effort at this point, their commitment whether they're really pushing into it at this point or not?

Sure, Mitch. Let me take the first one, Shopmium. So relatively new for the US. Shopmium's been around in France for some time now and now we're expanding in Europe outside of France for Shopmium. And you'll hear more of that over the coming months.

In the US, relatively new in terms of its ownership by us. And if you go to the app right now you'll already see that the content is a lot more than it was before, which is good. But we do expect like Steven mentioned more and more content to come into that application. And we do expect to grow it.

I would underscore one more point, underneath that is that Shopmium also provides us a capability which you can expect us to use beyond the Shopmium app. And it's one of those capabilities that allows us to be able to provide digital paperless offers, primarily mobile, across a wider spectrum of where consumers want to shop and how they want to leverage and get those offers and discounts. And it provides CPG brands an ability to reach a much wider set of audience wanting to engage in a variety of different ways whether it's digital print, whether it's paperless, download to account at a retailer, or it's through receipt scanned cash back. So those are plans for Shopmium.

Mitch, it's Steven. Why don't I touch on Insights for a minute here. So just to contextualize this a little bit, if you recall CPGs spend approximately $34 billion a year on advertising. And in 2015, consumer package good companies spent an equivalent of about 8% of that or 8% of their marketing budget on analytics. And that's projected to grow to over 10% over the next three years.

And so if you think about -- you asked the question if we build it they will come or whether or not there's a marketplace and a demand. There's certainly a marketplace demand. The big difference here is that there's immediacy in what we're building. So we're building things to be very actionable in short periods of time rather than on three months place of latent data that's typical in the industry. That's number one.

And number two we're building it to be able to measure the effects of online and offline together. And that's relatively unique as well. And so [tam-wise], you can use the equivalent of the ad spend at around $34 billion and about 8% to 11% or over 10% over the next three years of equivalent spend on marketing analytics specifically. And that marketing analytics is really what this segment for us is all about. But recall it's not 2016 revenue, it's a 2016 build and a plan for 2017 revenue.

And Mitch, your last question on the marketing retailers, the effort and commitment. Overall very good. Obviously, different retailers have taken different flavors and approaches in the marketing plan depending on the channel and what type of retailer it is and so on.

The consistent response there, the results there is what we see and which we're very excited about. Is whenever there is marketing, there is shopper adoption and there's volume. That's very consistent across the retailers. And they see the results as well. That's also been consistent which is very good for this platform.

Great, thank you.

The next question comes from the line of Blake Harper from Topeka Capital Markets. Your line is open.

Thanks. I wanted to ask about some of the comments you made in your prepared remarks about the online ordering for the CPGs. Just wondering how prevalent that is industry-wide of if that's just related to a specific and kind of how you see the demand for that across your customer base.

Sure, Blake. It's Steven. I'm sure Mir will jump in here a little bit as well. Today online ordering or ecommerce ordering of grocery-related products is quite small, in the low single digits. But that's certainly expected to grow. How big will that grow over what period of time is anybody's guess. But I think it's safe to say that just about every retailer, grocery drug, [mass] and dollar are thinking about ecommerce integration and either home delivery or curbside pickup.

Now these experiments have been going on in the industry for a while, but it seems to be gaining some momentum. And we've already seen, as you've heard us say earlier in our prepared remarks, that one retailer has done an integration publically available to allow consumers access to the same digital coupons for home delivery as they do for instore shopping.

We do expect that to continue, and we are spending some time in the marketplace working with our retail partners and others around what a kind of holistic uniform delivery might look like that the industry can use to make sure that the shopping experience is the same for consumers whether they want to shop online, be at home for delivery, or swing by the store and pick it up at curbside.

Got it. Okay, thanks. And then just another question on the Retailer iQ. I know you've talked about this but maybe one more other way to ask it, is have you been able to shorten the length of time from say sign up to live to marketing with some of these newer customers that have come onboard? Just given the lessons that you've learned and the history you've had with the product now. And if that's the case, maybe what are some of those things there that you could possibly drive some -- kind of move those customers faster down the funnel to marketing?

Sure. You know we've been sharing best practices when a retailer does something [we see] obviously we share that back with them. The overall timeline to implement is about the same for either go live. Last year the delays that we saw was the retailer delays had to do with them slotting other point of sale projects before even starting [the investigation] process. But once implementation process starts it's relative within a certain band of time. And that's approximately the same.

We obviously have in our product have repeatable processes that we bring that speeds it some more, but some of the timelines are related to what the retailer needs to do. Like we have mentioned before, it's not a very long build. On average it's like a two, three month implementation timeline with some being less than that, and some being more than that.

The time to market also from live to marketing is about the same as it has been before. It's just last year there were a lot of delays in retailers going live. That had a trickledown effect on everything else.

All right, thanks.

Thank you.

Your next question comes from the line of Aaron Turner from Wedbush Securities. Your line is open.

Hi, thanks for taking my question and congrats on the quarter. I was just wondering if you could give us a little color on some of the usage patterns you're seeing on some of the Retailer iQ users that maybe you activated last year versus this year? Are those users -- is their usage of the Retailer iQ platform stable or is it growing? And then related to that, is some of your growth coming from those users versus the ones that maybe you activated this year?

Sure. I can't get into specific numbers obviously due to confidentiality. But overall, the usage patterns are quite good. Now of course there's a funnel. You have some registered that use it one time that don't repeat. But of the repeat users and because of the marketing campaign and the maintenance marketing let's say with emails. We see a steady retention of shoppers in the program and a steady growth in those.

And the growth really comes from a frequency of use, but also from the number of digital offers engaged in any particular use. So it comes and goes, both those variables. And then of course there is the whole notion of acquiring more and more shoppers by the retailer into the program. Which still is a bigger piece of the growth as you would expect in the early stages of the program.

Got it. And then as a follow up, you know it's in your prepared remarks it sounds like your CPG partners are pleased with the Retailer iQ progress. Have you had discussions with them about maybe increasing your wallet share or your share of their promotional wallet spend at the expense of maybe paper-based solutions?

Sure, those are the discussions we have all the time, and that's the purpose obviously of digitizing what we're doing here. Look I think the theme is consistent with past quarters. It's no different. That the long-term desire to move out of for them, to move out of inefficient paper-based, non-data driven marketing vehicles like a Sunday newspaper coupon is still there. The motivation is definitely still there and very high and growing.

And even out of trade promotions that we've talked about, the $200 million expense. That sort of on-shelf discount that is subsidizing existing purchases, reducing margins for them and it's inefficient.

So the desire to move out of that is there. And we've also talked about as quickly as we can generate demand for digital on our platform and our retailer's platform that provides them the opportunity to shift more out of offline into online, right? So we continue to have those dialogs. What you see here in our results is a reflection of them committing more and more budgets to go through this vehicle, these vehicles, than the paper vehicles.

And there's still a lot of room to grow as you can see from the numbers on the market side of what goes from offline into online. And then like we mentioned earlier, we do engage with them on [continued] planning. And that really helps in terms of getting some plan and some cascade going in these campaigns versus the offline campaigns.

Got it. Thank you.

I will now turn the call over to Steven Boal for closing remarks.

Thank you. Thank you all for joining us today. I'd like to take a moment to thank our entire team for delivering another great quarter and a great first quarter to the year. I'm excited about our opportunities here as we continue to deliver more value to CPGs, retailers, and shoppers. Thank you all again.

This concludes today's conference call. You may now disconnect.