Quotient Technology (QUOT) Q1 2019 Earnings Call Transcript

Quotient Technology (QUOT)
Q1 2019 Earnings Call
May. 07, 2019, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the first-quarter 2019 quotient earnings conference call.[Operator instructions] As a reminder, this conference is being recorded and will be available for replay from the investor relations section of Quotient's website following this call. I will now turn the call over to Stacie Clements, vice president of investor relations. Thank you. Ms.

Clements, you may now begin.

Stacie Clements -- Vice President of Investor Relations

Thank you, operator. Hello, everyone, and welcome to our first-quarter 2019 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 with me today are Mir Aamir, our president and CEO; and Ron Fior, our CFO and treasurer.

Steven Boal, our executive chairman, is here as well and available for questions after our prepared remarks. Before we begin, please note that, during this call, you will hear forward-looking statements. These forward-looking statements include projections for our second-quarter and full-year 2019; our expectations for our solutions, partnerships, pricing strategies, growth drivers, privacy and data regulations, platform, as well as the expected growth of and investments in our business generally. Forward-looking statements are based on information available to and the 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 could -- that could potentially impact our financial results can be found in today's press release and in risks factors identified in our annual report on Form 10-K filed with the SEC on February 27, 2019. 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, operating expenses, gross margins and net loss, 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 result press release issued today and on the slide deck posted on the company's website.

With that, I will now turn the call over to Mir.

Mir Aamir -- President and Chief Executive Officer

Thank you, Stacie. And welcome, everyone. We had a great start to the year. In Q1, we delivered both revenue and adjusted EBITDA beating the top end of our guidance at 98.1 and $8.4 million, respectively.

Our media cloud delivered 50% revenue growth in the quarter versus Q1 2018, driven primarily by our integrated platform, including retail performance media and our social influencer platform. Two retailer partners, Giant Eagle and Ahold Delhaize, went live on RPM in the quarter. We launched our audience cloud with over 2,000 consumer segments, with the potential to reach almost 100% of U.S. households.

And we launched sponsored search with first retailer, Albertsons. This is a large and growing market with brands eager to spend marketing dollars toward e-commerce where they can directly influence shoppers to drive sales. Overall, we're delivering on our 2019 growth strategies that we outlined during our last earnings call. We continued to innovate, bring new technologies to the market; and enabled our clients, CPG brands and retailers, to reach the right consumers with the right ad or promotion wherever they may be to drive measurable sales, all made possible by data.

While digital marketing spend is still less than off-line marketing within the $225 billion spent by CPGs annually, it is the fastest growing because of higher efficiency in driving measurable results. I will now provide more color on our 2019 growth drivers, our accomplishments in Q1 and the exciting momentum we see for the balance of the year. Our retail performance media solution built on the foundation of Retailer iQ, our digital coupon platform, was a key driver of media revenue growth in Q1. With the launch of Ahold Delhaize and Giant Eagle, we are now the digital media partner for six retailers, which together represent almost $150 billion in grocery sales.

As a reminder, RPM is connected to actual shopper transaction data through retailers' loyalty programs, which along with other behavioral and online data is used to deliver targeted brand media and analytics. In addition to CPG brands who are buying mid- to bottom-funnel media through this platform, our retailer partners are now also leveraging the platform for their own digital marketing spend. On average, campaigns through our platform typically show return on ad spend above industry benchmarks. Additionally, RPM is becoming a central component to our retailer partners' growth strategy as they look to build alternative revenue streams and align shopper media dollars to in-store and online sales.

Our social influencer media solution through Ahalogy also drove strong revenue in Q1 leveraging our extensive data. Brands understand the power of influencer marketing to inspire consumers, especially in social channels such as Instagram and Pinterest. The value of influencer marketing, however, is in how you turn that inspiration into an action to drive sales. Using our integrated platform, for example, a brand can use influencer marketing to inspire new occasions to use a product and deliver engaging ads to targeted consumers through paid social media.

All of these components work together in a single campaign strategy and technology stack tied to performance measurement and analytics. I'm also very excited to announce that another key product in our media cloud, sponsored search, went live in late Q1, and revenue is starting to flow. As we mentioned, we acquired this capability through our acquisition of Elevate in Q4 2018 and quickly integrated it into our media platform to further leverage our retail integrations, data and analytics. As a reminder, CPGs spend about $2.8 billion in digital search on platforms like Google and Amazon.

They can now also spend or shift their budget to Quotient. Said another way, CPGs now have an alternative to Google and Amazon for their media spend: where their consumers shop. There has been a lot of news in the past few quarters on the potential for e-commerce in grocery whether ordered online and picked up in store or delivered at home. Although still a small share of total grocery shares, e-commerce growth rates are strong.

Momentum is building, and CPGs and retailers are allocating larger budgets. The number of stores that offer order online and pickup in store has more than doubled in 2018 among the top retailers, going from almost 2,500 stores to 5,800 stores across the country. We're extremely excited about this opportunity and look forward to rolling out sponsored search to additional retailers. For CPGs, we provide the ability to better align their search and e-commerce-related display and social dollars to sales on retailer properties where shoppers browse products and make purchases and elsewhere on the web.

We also continue to strengthen our Quotient audience solution, whereby brands can leverage over 2,000 audience segments to reach specific consumers with relevant ads to efficiently drive sales. This solution is now live for CPGs to serve national brand ads to specific consumers at certain publishers. As a reminder, we build segments based on purchase behavior, such as serial buyers or lapsed brand buyers, as well as more advanced custom segments like snack buyers who would like to buy organic and natural products and are also price sensitive. Based on transaction and online behavior data from millions of shoppers on the retailer platform we power, we help brands reach a verified buyer audience of about 100 million, which translates to a reach of almost 100% of U.S.

adults when modeled. We are very excited about the revenue potential from our Audience Cloud, which is expected to generate gross margins of over 50%. While overall promotions revenue in Q1 was again impacted by a few CPGs reducing their overall promotion spend in the market, which Ron will cover in his remarks, the potential for revenue growth from coupons is significant, including as part of package solutions that include media. This is especially the case with targeted promotions, another growth driver in our business.

Digital coupons targeted to specific shoppers continued to grow in the first quarter, up 86% over Q1 last year. Such precision targeting of coupons also enables brands to optimize their trade promotion spend, estimated at over $100 billion per year and traditionally spent on mass discounts on shelf. Also, in the coming months, we plan to launch targeted coupons printed on receipt at checkout, expanding our reach to all shoppers at a retailer. Printed coupons at checkout, an existing market we are entering by leveraging our current retailer partnerships, is estimated at over $250 million annually.

We are very excited about this product. It unifies the shopper experience and data across all targeted promotions, whether digital or printed at checkout, and gives retailers a fully integrated marketing solution, the likes of which we believe does not exist in the market today. We believe this will drive more coupons and integrated marketing campaigns on our platform and is expected to grow overall revenue in the back half of this year. In summary.

We had a strong start to the year. We are very excited about the growth drivers for our business this year, including retail performance media, social influencer marketing, Quotient audiences, targeted coupons and sponsored search. We feel confident in our 2019 guidance targeting a revenue of $465 million at the midpoint or about 20% growth over 2018. Performance marketing is garnering attention and budgets at a scale never seen before, where each dollar spend is focused on driving sales.

We believe we have the broadest and deepest technology platform that spans all facets of digital promotions and media, fully integrated to allow for personalized marketing to consumers at scale and with measurement. This gives us a solid foundation and a sustainable competitive advantage to drive revenue growth. I will now turn the call over to Ron.

Ron Fior -- Chief Financial Officer and Treasurer

Thank you, Mir. And welcome, everyone. We had a great start to the year, and momentum across our business is building. We drove increased revenue from our RPM and social influencer platforms.

We launched our new product search solution. And we delivered both revenue and adjusted EBITDA beating the high-end of our guidance. Revenue at $98.1 million was up 13% over Q1 of 2018. And adjusted EBITDA was $8.4 million, representing a 9% margin.

We recorded a GAAP net loss of $13.2 million compared to a GAAP net loss of $11.4 million in Q1 of 2018. The increase in the GAAP net loss in the first quarter was primarily, driven by shifts in our year-over-year product mix-related reduction in gross margin. GAAP cash flow from operations for the first-quarter 2019 was $9.7 million. We ended the quarter with a cash and short-term investment balance of $286.5 million.

In summary, we continued to grow revenue, invest for future growth, gain operating efficiencies and generate cash. We are focused on total revenue growth, as our solutions have become more tightly integrated, reflecting the growing trend within CPG budgets to converge marketing spend between departments. As we mentioned in our prior quarter, this is the last quarter we will provide the following specifics around the revenue split between promotion and media, as well as the revenue contribution from our top 10 customers. Promotions revenue came in at $63.6 million, a 0.3% decrease from last year.

These revenues were impacted by a 3% decline in Retailer iQ, our digital paperless coupons, on top of the expected decline in specialty retail of 6%, and a 3% decline in digital print. We continued to see softness in promotions as the same three CPGs that impacted Q4 continued reducing their overall promotion spend in the market. Had these three CPGs kept their spend with us flat compared to a year ago, we would have delivered 21% total revenue growth over Q1 2018. Revenue from our top Retailer iQ customers declined 20% over Q1 of 2018 primarily due to the softness in the three CPGs that I just mentioned.

Revenue from Retailer iQ and media combined grew 16% over Q1 of 2018 and accounted for approximately 75% of our total revenue. Media revenue in the quarter grew 50% over Q1 of 2018, primarily, driven by retail performance media and social influencer marketing. Our top 10 media customers grew their media spend with us by 41% over Q1 of last year. Our business continues to evolve, and going forward, we'll be providing additional color and transparency that better reflects this evolution to investors.

We view our business and the success we are seeing with our customers represented in the following areas. Net dollar retention rate. Our sales force is focused on capturing more dollars from our existing customers through our integrated solutions, analytics capabilities and higher-ROI campaign results. The largest portion of our recurring customer base represents 86% of our 2018 revenues; continues to spend more with us each year, year after year, with net dollar retention rates exceeding 120%.

Customer growth over time. Drilling further down into our customer base, we have a balanced and growing portfolio of customers, which is demonstrated by stratifying our 2018 customer base into three cohorts: top 20, next 21 to 40 and the balance. Looking back at this customer set, over a three-year period, each cohort has delivered compound annual growth rates of 28%, 26%, and 15%, respectively. Given seasonality and other quarterly factors, it's best to look at the previous two slides on an annual basis.

It is our plan to provide these slides again at the end of the year to share with you how we view our business. On a quarterly basis, we look at the cohorts on a trailing 12-month basis. We plan to update this quarter -- this cohort quarterly to provide an ongoing view as to how customers are tracking. In looking at this quarter's chart, you can see we are becoming less dependent on our top 20 customers, as the balance of our portfolio is showing good growth.

Moving on to transactions. Given our focus on growth in total revenues across our customer base, this is the last quarter we will report transactions, as we no longer believe it is the best indicator of the health of the business. Total transactions in the first quarter were 945 million compared to just over 1 billion a year ago, the change primarily due to the softness in the three CPGs mentioned previously; and up 9% sequentially, reflecting 11% revenue growth in promotions over Q4 2018. Moving on to the P&L.

GAAP gross margins in the first quarter were 42.1%. Non-GAAP gross margins in the first quarter, which exclude amortization of intangible assets and stock-based compensation, were 48.1% compared to 57.1% in Q1 of last year. The decrease in gross margin as compared to Q1 of last year is primarily reflective of the change in product mix, in addition to a bit over 1% impact from increased revenue share tied to our strategic multiyear retailer partnerships. We expect our strategic partnerships to drive long-term growth in revenues and, over time, an increase in gross margin dollars.

As we grow the business, we are actively managing our costs and leveraging our operating expenses. Q1 2019 GAAP operating expenses were down almost 5% in absolute dollars compared to a year ago. The decrease in GAAP operating expense is primarily due to a decrease in restructuring charges and the net change in the fair value of escrowed shares and contingent consideration, offset by an increase in depreciation and amortization expenses. Non-GAAP operating expenses in Q1 were up just slightly in absolute dollars compared to a year ago, as we absorbed several acquisitions and increased -- and an increased head count by over 150 while continuing to invest in new products.

On a special note, our non-GAAP operating expenses were at the same level as they were in 2017, reflecting our continued focus on driving operational efficiencies. As a percentage of revenues, non-GAAP operating expenses continued to show leverage, declining from 45% of revenues in Q1 of 2018 to 42% of revenues in Q1 of 2019. Non-GAAP operating expenses exclude stock-based compensation, the net change in fair value of escrowed shares and contingent consideration, amortization of acquired intangible assets, our ERP implementation costs, certain acquisition-related costs and restructuring charges. Adjusted EBITDA.

Adjusted EBITDA in the quarter was $8.4 million versus 11.9 million in Q1 of 2018, representing a 9% margin. These results were fueled by our strong media growth while absorbing the impact of reduced gross margins primarily due to a year-over-year shift in product mix; investments in retailer partnerships, technology and new product initiatives that are expected to drive revenues in the second half of 2019 and beyond; and the impact of acquisitions and additional headcount of over 150 employees versus a year ago. Adjusted EBITDA excludes interest expense, income taxes, depreciation and amortization, the net change in fair value of escrowed shares and contingent consideration, stock-based compensation, restructuring charges, ERP implementation costs, other income and expense and certain acquisition-related costs. Stock buyback.

In May of 2018, we announced a one-year stock buyback program of up to $100 million. As of April 30, we have bought back approximately 3.8 million shares for approximately $41 million, of which approximately $25 million was spent in the first quarter of 2019. The 2018 buyback expired on May 4. And the board has authorized a new $60 million one-year stock buyback program, effective May 10, as we continue to be opportunistic on this front.

Moving to cash. We ended the quarter with $286.5 million in cash and short-term investments, down 36.3 million from the end of 2018. The reduction can be attributed to about $25 million spent on our stock repurchase program; $15 million related to our investments in retailer partnership relationships, including RPM exclusivity; and $5 million related to net share settlements upon vesting of restricted stock awards issued to our employees, which have the same effect as a stock repurchase. These are -- were partially offset by cash generated from operations.

GAAP cash flow from operations for the period was $9.7 million. Let's talk about guidance. Some upfront color. Last quarter, we outlined a number of 2019 investments, including sponsored search, targeted coupons at checkout, operations platform automation, growing more retailer participation on RPM and enhancing our technology for privacy regulations expected to go into effect in 2020 in the U.S.

These investments will continue to impact our short-term financial results, as several of the new products have costs associated with them in the first half of the year but are only expected to drive meaningful revenue in the second half the year, based on anticipated product launches. For the second quarter of 2019, we expect revenue to be in the range of 102 to $106 million, and are assuming continued lower promotion spending from the three CPG clients I previously mentioned, one of which has their fiscal year ending on June 30. We expect adjusted EBITDA to be in the range of 11 to $14 million. You should consider the Q1 EBITDA beat over the midpoint of our Q1 guidance as a spending timing difference between Q1 and Q2 of 2019.

Compared to Q2 of last year, adjusted EBITDA continues to be negatively impacted by the products mix shift and the product investments noted previously. For the full year, we continue to expect revenue growth to be stronger in the back half of the year due to seasonality. Remember media is generally stronger than promotions toward the end of the year. And as noted in the earlier comments, the timing of several of our new products and investments will only start to have a meaningful impact in the second half of the year.

Adjusted EBITDA is expected to grow in the second half of the year primarily as a result of higher revenues combined with operating expense leverage flowing through the P&L. For the full-year 2019, we are expected to -- we continue to expect revenue in the range of 460 to $470 million, or approximately 20% growth versus last year at the midpoint. Adjusted EBITDA for the full year of 2019 is also still expected to be in the range of 66 million to $71 million, or approximately 15% of revenue at the midpoint. We will continue to balance between driving revenue growth, managing costs and focusing on building shareholder value.

We believe we have a large opportunity in front of us as retailers and CPGs continue to reach and engage more shoppers through digital channels. We will now open the call for questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Chad Bennett with Craig Hallum. Chad, your line is open.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Hey guys, thanks for taking my questions. Nice job on the quarter.

Mir Aamir -- President and Chief Executive Officer

Thank you.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

So yes, I guess, first question. And I did hop on a little late, jumping between calls here, but just in terms of the breakdown, which I know you guys don't want to focus on too much anymore, but between the promotions business and the media business, specific on promotions, did you guys speak to, and again sorry if I'm being redundant, the three CPGs that slowed toward the tail end of last year and kind of their relative performance this quarter? And just have your expectations changed at all longer term or for this year obviously in the embedded revenue guidance around the growth of the promotions business?

Mir Aamir -- President and Chief Executive Officer

Chad, it's Mir. So if you recall from -- or we mentioned in our February earnings call we were expecting at that time because we had seen this toughness continue into 2019. So we had built that into our guidance for the first quarter. And if you recall, at that time, we said that as -- like one of the CPGs has their fiscal year end June 30, so it's possible that they continue this low promotion strategy throughout their fiscal year.

So we're just trying to be conservative and make sure that we factor that in. Just keep in mind, though, as a reminder that, these three CPGs, when they cut their promotion spend, they cut it across in the market across the board, not just in digital or not just with us. And they have publicly talked about that as a strategy for them to net increase their price in the market to increase margins.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

So have our expectations changed for that business in terms of the kind of fiscal year revenue outlook, Mir?

Mir Aamir -- President and Chief Executive Officer

No. From February to now, it hasn't. It's sort of just what we had anticipated as happening, and so we had factored that in. So as far as we can see right now, it's sort of the same.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Then maybe one -- go ahead, Ron.

Ron Fior -- Chief Financial Officer and Treasurer

Yes. We're assuming -- we were just saying that we're assuming that there was continued lower promotion spending from those three CPGs in our guidance, but we were still -- our guidance is our guidance. It's based on what we see happening in the promotions side and the media side of the business.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

OK. And then -- I appreciate that. And then maybe a quick follow-up for me. The Albertsons and Pepsi press release a few weeks ago, I thought, was really impressive and kind of spoke to the RPM program and what you guys are doing there.

I guess, is there kind of a relative comparison to what those two partners experienced from a, however they want to define it, ROI lift standpoint compared to what they were doing before? And I don't know if it's -- that's tough to do or not, but just kind of explain kind of the performance that you guys have provided for those two partners. Then I'll jump off.

Mir Aamir -- President and Chief Executive Officer

Sure. There were some stats in that press release on the performance which sort of went to the -- to confirm that a conversion media or performance media platform like a retailer performance media is so closely tied to data on who to target and measurable into actual in-store sales. And the results were quite good. And some of those, we are discussing those, but generally speaking, not to specifically point out one CPG or one retailer but generally speaking, what we are seeing is performance media like the ones that we do on these retailer performance media platforms does perform quite well.

And because there's better targeting, it's closer to consumer. The context is better. There is a call to action usually, like a coupon or an in-store special or an active cart for an e-commerce experience. And then it's measurable into in-store sales, all right? So that's sort of the -- what we're hearing from CPGs is that mid- to low-funnel conversion marketing at scale is very important to them.

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Great. Thanks, guys.

Operator

Your next question comes from the line of Shweta Khajuria with RBC Capital Markets. Shweta, your line is open.

Shweta Khajuria -- RBC Capital Markets -- Analyst

Great. Thank you. Two questions, please. First, on netting dollar retention rate.

So how do you view that opportunity among your current customers? How high do you think can that grow? Are you shooting for a certain goal per cohort given that these customers may have much larger budgets? And then second, on media revenue, understood that going forward you will not be breaking these out, but just how should we think about the breakout between media and digital even though you will be combining them? But as we think of gross margins, especially in 2019 and '20, Ron, I know you had mentioned it'll come down a couple points in Q4 earnings call. Can you talk a little bit more about how you're thinking about gross margins and the split between those two?

Ron Fior -- Chief Financial Officer and Treasurer

OK. Let me talk a little bit about -- first, about net retention. So I think that the key point there to remember is that this is something we've been talking about for quite a while. It's the fact that our salespeople are very, very focused on getting more and more revenues just from the same existing customers.

And we spend a lot of time looking at this and said, hey, this is a very good example of showing and illustrating to people how we have this very strong core base of customers that is growing consistently. We went back to 2015. And you can see all the way from 2015 significant growth every year, and this is really similar to this whole net retention. I think it's very similar to a SaaS-like company.

And while we're not exactly SaaS, it is very similar to the concept that where our focus is continuously on how do we sell more and more to those customers. And we have all different products that we keep selling to them that we would -- we start out in the promotions side and now we're doing on the media side. So we're really continuing to do that kind of focus on growing those revenues. Clearly, we can -- we expect to grow these at a very nice pace.

I think the other point that I would make is that, when we drill this down, and you can see that in the second slide and then even in the trailing 12 months slide, you can really see that we've got a nice balance between our top 20 and then our next 20 to 41 -- 21 to 40 and then the balance of our customers. You can see that each of those tranches is growing pretty nicely. And so it's kind of like a balanced portfolio for us. I guess that's what I would say about that.

So I think it's a really good opportunity to see how we've done that, and we'll continue to provide that information over time. Did you have anything else on that, or.

Mir Aamir -- President and Chief Executive Officer

No. You asked, Shweta, about the goals that we set for net retention rates. And so what we -- what I'll tell you is that we do set goals by account, knowing what we know about the very, very large media spend and, within that, digital media spend. I mean I mentioned in the last call CPGs are expected to spend estimated spend about $11 billion in digital media this year.

So we break that out by account and so on and we set our goals according to that. Ron, do you want to cover her question on gross margin impacts this year from the mix shift?

Ron Fior -- Chief Financial Officer and Treasurer

Yes. So when we look at gross margin. And this is we haven't changed our point of view from the end of last year. If you looked at the end of last year, I think we were about 49% on a non-GAAP basis at the end of Q4.

I think we're at 48% this quarter. We're expecting it to be somewhere in kind of in that range and stabilized at that level. It might go down maybe one point, but at this stage of the game we're really focused on trying to keep it at this 48% level.

Shweta Khajuria -- RBC Capital Markets -- Analyst

OK, thank you.

Operator

Your next question comes from the line of Jason Helfstein with Oppenheimer. Jason, your line is open.

Jason Helfstein -- Oppenheimer -- Analyst

Hey, just to revisit back on the three CPGs kind of not spending not coming back. Is there anything product related that they're asking that, if you had -- I'm not saying you could snap your fingers and have it, but is there anything products related that you could offer to bring them back? And then I guess, do you guys have any thoughts on CCPA and, to the extent that becomes kind of a new privacy rule for the U.S., how that would impact you? Do you have to make any changes to your business, etc.? And then I guess I have one more follow-up if you'll let me.

Mir Aamir -- President and Chief Executive Officer

OK. So related to those three CPGs, no, there is nothing in the product that they're asking or anything related to that at all. Look. Their spend in the whole market -- and it's public info because they've talked about it publicly.

In the whole market they reduced their promotion spend in all the vehicles, digital, promotions, on the shelf, trade discounts to everybody and so and so. That impacted us as well or their spend with us as well. It was the whole market. And they publicly talked about how they wanted to cut back expenses in the whole market so that they could actually take up their net price up and therefore then dollars revenue even though in many of those cases that have -- they've announced publicly their volumes are actually down but their revenue dollars is up and margins up.

So that's a strategy that they're employing. We don't know if it's for a few quarters to meet some financial targets or it's part of a longer-term strategy. We don't know, but it's sort of whole-market related, macro related for them. And that's what's impacting us, too.

On the -- your second question, regarding CCPA, we're obviously -- and Ron mentioned some of our investments in getting our technologies enhanced to be able to manage through that, but yes, that's important to us. We don't know if -- there's a lot of unknowns in that in terms of how that's going to sort of shape up and what federal -- what, if any, federal efforts there is going to be in that respect, but it's obviously very important to us, front and center, and we're on it.

Jason Helfstein -- Oppenheimer -- Analyst

I guess then just a quick follow-up. What do you think is kind of the minimum cash you need to run the business? And do you see anything in the M&A pipeline that's more attractive than buying your stock back?

Mir Aamir -- President and Chief Executive Officer

So we're looking at M&A, as we mentioned, opportunistically in the areas of promotion, media and data, more for capabilities. Our M&A experiences, so far, in the last couple years have been quite good, very positive. We've acquired sort of complementary technologies, put them in our platform and then our umbrella. Those capabilities have thrived quite a bit, driving our revenue growth rate.

So we continue to do that. And we're comfortable that -- what we see in the pipeline. And we're balancing that with obviously all the opportunities, including stock buyback. So now we do believe that at this juncture, and you saw us do this -- that activity in quarter one, that buying back stock is a good opportunity.

And so we executed on that opportunity.

Ron Fior -- Chief Financial Officer and Treasurer

And just to punctuate that. In our release that went out, we have -- we're getting a little bit more aggressive about how we approach the buyback.

Jason Helfstein -- Oppenheimer -- Analyst

Yes, we can tell, numerically. Thanks.

Operator

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

Ralph Schackart -- William Blair and Company -- Analyst

Good afternoon. Two questions, if I could, please. First, just on the revenue outperformance in Q1 versus your previous high end of guidance expectations. Ron, I think, in the call you talked about some expenses being pushed from Q1 to Q2.

Just curious if there was any sort of revenue pull-through in Q1 that wasn't anticipated. And if not, just curious, outside of conservatism, the thoughts around maintaining the guide for the full year on revenue. And then a follow-up question, just on sponsored search. Just curious how you're pricing that product in the market or if it's part of the packaged program; and maybe outside of Albertson, how the receptivity with customers is going.

Mir Aamir -- President and Chief Executive Officer

You'll take the first one?

Ron Fior -- Chief Financial Officer and Treasurer

Yes. So on the revenue side, no. I mean there's really no pull-through that I would say. It's really again, if you look at it, it's all about again between the quarters.

And when we look at our numbers and we look at where we're expecting the revenues to happen, I mean, the analysts, the consensus is just a little bit different than ours. And that's what happened on the revenue side. On the EBITDA side, it clearly was expenses. And we were -- had a little bit slower hiring than we anticipated.

And there are some other investments that we had -- we were going to make, and we're actually going to make them now in Q2. So that's really what it is.

Mir Aamir -- President and Chief Executive Officer

And on sponsored search, Ralph. So it -- there's -- there are various models. And it's similar to the models out there, right, in terms of how we price it in terms of sponsored search. There is a bidding engine underneath that technology based on CPC, CPA and whatever makes sense.

And sometimes, actually price is part of the package because it's part of our overall media platform. Remember e-commerce media, which is great, right, is -- sponsored search is one component of that. There is also display and social that drives to an active cart experience. Again, it's targeted elsewhere outside of retail or property, but it's all in conjunction and the same campaign very often, which works really well together to be able to drive actual conversion to sales within e-commerce.

And then so the receptivity, to your question, is very, very good. As you can imagine, brands do want to drive e-commerce sales, and they do want to drive it on places and properties where there are actually shoppers buying grocery stuff.

Operator

Your next question comes from the line of Tom Forte with D.A. Davidson.

Tom Forte -- D.A. Davidson -- Analyst

I had a couple questions related to your go-to-market strategy, as far as your sales force. So generally speaking, do all your salespeople sell all of your product offerings from promoted with the influencer all the way across to the digital transactions? So on that basis, when you add a new product like the receipt couponing that's coming later this year, you're giving them another opportunity, another tool in the tool chest, so to speak. And then second, how should we think about the pace of hiring for your sales force and what your goal is or loosely sticking for this year versus last year? And when you make acquisitions, do you then train the sales force or the companies you're acquiring on the whole portfolio? How should we think about those things?

Mir Aamir -- President and Chief Executive Officer

Sure. Look. The first point is that we've -- we work with and have always worked with almost all CPGs in the United States, so from a lead gen standpoint, we don't need any salespeople. We don't need any more expense and what have you, right? The good -- the other good news is that, all of our products, whether it's promotions and now media, they're all connected into marketing and digital marketing, which at the CPGs, even though sometimes the budgets are siloed, it's all converging.

And we're helping it converge, right? As a result of which, we do have -- revenue per salesperson has been growing consistently every year and expected to grow again this year because they can leverage this breadth of capabilities and sell to the same clients on the other side. Having said that, we do have among our larger sales organization specialist teams for certain things like social influencer, like sponsored search. And those specialist teams are very leverageable. And they do get leveraged across the rest of the sales team, and we take advantage of that.

And that answers your question also on how do we look at the sales team that comes with an acquisition. Usually, they become part of a specialist team. And usually, those numbers aren't very high, and the -- but then what happens is they get leveraged across much bigger dollar sales. And that's really helpful overall from a leverage standpoint.

Operator

[Operator instructions] Your next question comes from the line of David Gearhart with First Analysis. David, your line is open.

David Gearhart -- First Analysis -- Analyst

Hi, good afternoon. Thank you for taking my questions. My first question is in regards to the specialty retailers. The decline, the rate of decline has slowed quarter-over-quarter.

Just wondering if we're kind of reaching a bottom for the decline in that product. I know it's a smaller part of revenue but high margin, so just curious of your thoughts there.

Mir Aamir -- President and Chief Executive Officer

Yes. So we with -- it's hard to say, right? This is -- as we've talked about in the past, a lot of that specialty retail revenue that we have is SEO related and impacted by factors that are Google algorithms and other things. We haven't invested in that business much historically. We're looking at doing some things in Coupons.com this year in terms of updating, refreshing the properties; having some more functionalities and so on, but it's hard to sort of predict whether that growth rate has slowed.

Will it flatten out or not. We do think that the growth -- the decline in the growth rate will slow a little bit just because we're lapping bigger declines from last year. But it's hard to say exactly.

David Gearhart -- First Analysis -- Analyst

OK. Next question, can you give us the organic growth rate of the business in the quarter and what's expected in guidance for the year? Three acquisitions last year. I think pretty much Ahalogy was the one that had revenue but just wanted to be clear on what your organic growth rate is, if you could provide that.

Ron Fior -- Chief Financial Officer and Treasurer

Yes. So if you look at it. It's primarily Ahalogy revenues in Q1. And if you took that out, we would probably be about a 7, 8% growth rate versus the 13%.

Operator

As there are no further questions, I'll turn the call back over to management for closing remarks.

Mir Aamir -- President and Chief Executive Officer

Thank you all for joining us today. To close. We started the year very strong with revenue and adjusted EBITDA exceeding our guidance. With our audience business and sponsored search just getting started and media growing at 50% and with such a large TAM, we are very excited about the year ahead.

Thank you.

Operator

[Operator signoff]

Duration: 44 minutes

Call participants:

Stacie Clements -- Vice President of Investor Relations

Mir Aamir -- President and Chief Executive Officer

Ron Fior -- Chief Financial Officer and Treasurer

Chad Bennett -- Craig-Hallum Capital Group -- Analyst

Shweta Khajuria -- RBC Capital Markets -- Analyst

Jason Helfstein -- Oppenheimer -- Analyst

Ralph Schackart -- William Blair and Company -- Analyst

Tom Forte -- D.A. Davidson -- Analyst

David Gearhart -- First Analysis -- Analyst

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