Quotient Technology Inc.
Q4 2017 Earnings Call Transcript

Published: 14 Feb 2018

[Operator:]

Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Quotient Q4 and Full Year 2017 Conference Call. [Operator Instructions]. Thank you. Stacie Clements, you may begin your conference.

[Stacie Clements:]

Hello, everyone, and welcome to our fourth quarter and year-end 2017 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; 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. This forward-looking statements include projections for our first quarter and full year 2018, our expectations for our Retailer iQ platform and consumer and CPG patterns, the success of extending our software marketing and media business, Coupons.com mobile app, the company's expectations regarding its new pricing strategies 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 that could potentially impact our financial results can be found in today's press release and in the risk factors identified in our quarterly report on Form 10-Q filed with the SEC on November 3, 2017. 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 results press release issued today and on the slide deck posted on the company's website. And with that, I'll now turn the call over to Mir.

[Mir Aamir:]

Thank you, Stacie, and welcome, everyone. We had a great fourth quarter, capping off a solid year in which we saw significant momentum across the business. Total revenue in the fourth quarter was up 23% over Q4 last year, driven by strength in both promotions and media. Total digital coupon transactions reached 971 million in the fourth quarter and we closed the year at a record $3.5 billion, up 45% from 2016, driven by Retailer iQ. These digital transactions, which averaged almost 10 million a day, provide valuable data that fuels our targeted media and promotions campaigns, which help build shopper loyalty and drive profitable sales growth for our consumer package goods brands and retailers. Our growing ability to influence shoppers comes as CPGs and retailers are moving with urgency to transform their businesses to meet today's digital realities. Their urgency is providing a tailwind for our growth, as we have become a trusted strategic partner for thousands of brands and many large retailers. In Q4, our promotion revenue from CPGs grew 20% over Q4 of last year. Digital media revenue in Q4 of 2017 increased 76% versus Q4 of 2016. That growth came as we enhanced our media solutions and our ability to target specific audience segments using in-store purchase and online shopper data and to attribute sales directly to media campaigns. Something that's critical in today's tough environment where CPGs must justify every dollar of marketing spend. I'll quickly recap the fourth quarter and some of the highlights from the year before moving on to 2018. We delivered record revenue of $93.1 million in Q4, up 23% over Q4 last year, driven by both promotions and media. Adjusted EBITDA was $13.9 million as we continue to grow revenue, while driving efficiencies across the business. For the year, revenue was $322.1 million, up 17% over 2016. Adjusted EBITDA was $47 million, up 45% over last year. At the beginning of 2017, I talked about the following key areas of focus, one, growing the shopper base through mobile; two, growing distribution and use of digital coupons through Retailer iQ; three, expanding our shopper marketing business; and four, leveraging data to drive media. I'm very pleased with our performance on each of these fronts. We now have about 60 million shoppers registered to savings programs powered by Retailer iQ, which represents about half of all U.S. households. Almost all signed retail banners are now live on the platform, representing about $400 billion in annual gross resale, and most of those are marketing. This includes a club retailer, which began marketing in Q4. Marketing activities include offering incentives for signing up for the program, advertising in weekly circulars, in-store and digital marketing campaigns and sending personalized e-mails with digital coupons. In addition, we've seen strong usage of our flagship Coupons.com app and website. According to comScore, monthly unique visitors to Coupons.com mobile properties averaged 18 million in the back half of 2017. As you'll recall, we rolled out a new version of the Coupons.com app early in 2017, giving shoppers another way to add digital coupons directly to their retailer accounts as well as the ability to redeem digital coupons using receipt scanning at retailers that aren't on a Retailer iQ platform. Engagement with Coupons.com provides another important source of shopper data such as purchase intent, which is valuable for targeting coupons and ads. All of this has significantly increased demand for digital coupons from millions of shoppers on our platform and we have worked closely with our CPG partners to shift more of their budgets to digital, thereby providing a growing supply of coupons on our network. We see evidence of that shift. In 2017, we distributed about $5.4 billion in savings to shoppers across our network, a 50% increase from 2016, and we still have a huge opportunity ahead of us. About 80% of all CPG coupon redemptions still come from paper coupons. To help accelerate the shift to digital, last year, we began experimenting with new ROI-based pricing strategies. An example of which is price for redemption rather than price for activation. This pricing strategy, coupled with brand commitments to keep coupons available for the length of a campaign, also known as always-on, helps brands overcome monthly or quarterly budget constraints and increases the supply of coupons, giving shoppers a reason to come back for more savings. It also links the cost directly to brand sales, allows retailers to better support brands and their marketing activities and ultimately provides a greater incentive for brands to shift promotion budgets from off-line to digital. Due to the early success we have seen, we are in planning discussions with additional CPGs on such programs for 2018. We are very excited with the momentum in our business. Our Retailer iQ platform, with a large user base and significant shopper data, is also fueling our revenue growth from shopper marketing, which focuses on reaching consumers along their path to purchase to drive sales. The way shopper marketers operates is fundamentally changing as the majority of marketing efforts in both brand and retailers, shifts to digital. Brands are taking a combined approach using digital marketing to build brand equity and to drive sales. Efforts that historically have been handled by different teams. These lines between these marketing functions are blurring, and Quotient is playing an important and growing role as we work to capture a share of the $19 billion shopper marketers are expected to spend annually. Our solutions fits squarely within these new combined marketing objectives. Our acquisition of Crisp Mobile, a shopper marketing digital ad company, has greatly improved our ability to be a full-service media solution, providing the technology, dynamic, creative and robust analytics that advertisers demand to measure campaign performance and ROI. The acquisition is proving a perfect fit as we leverage proprietary purchase data from Retailer iQ to give us a powerful media offering that blends both CPG brand equity and retailer code action campaigns. Increasingly, we're delivering targeted mobile ads at scale that are engaging and dynamic with integrated coupons, shopping lists, weekly specials and other interactive features like callouts for local sports teams. We believe such capability is a key differentiator, while driving high ROI for advertisers. Overall, CPG demand for our media solutions is very strong, growing our media revenue at an accelerating rate. Our Quotient Media Exchange, or QMX platform, now has a verified buyer audience of about 100 million, allowing CPG brands to target specific consumer segments based on brand preferences, location, frequency and hundreds of other factors. Another key differentiator of our media solutions our data analytics, which measure the impact of media into actual sales based on proprietary purchase data. Additionally, our media technology and services are powering the performance media capabilities of retailers using data to target ads served on retailer properties across the web and on social. We believe this key trend in the grocery space, which began with e-commerce retailers, has much more significant opportunity to attract media dollars from CPG brands by using in-store and online data to target and measure ads at a scale never seen before in the industry. As we look to the remainder of this year, we will continue to build on accomplishments of 2017 and deliver on our strategy to be the digital commerce marketing platform of brands and retailers. CPGs spend about $225 billion in marketing each year, including coupons, media, shopper marketing and trade promotions. 2017 was a pivotal year for the CPG and retail industry, marked by increased competition, unprecedented focus on e-commerce and new business models. Our long-held thesis that promotions, media and data would converge to enable efficient marketing spend through digital is happening. We believe with our solutions, we are serving as a catalyst for this transformation, just as Retailer iQ made possible the shift from paper to digital coupons at scale. Marketing to shoppers through digital in their paths to purchase has never been more critical. Over 95% of groceries are still purchased in stores and more than 60% of those are influenced digitally. Our differentiated technology, data and shopper reach give us a significant competitive advantage and provide a strong foundation for CPG brands and retailers to digitally influence shoppers whether they purchase online for store pickup or home delivery or shop in-store. We look forward to 2018 as another defining breakout year for us. I'll now turn the call over to Ron.

[Ronald Fior:]

Thank you, Mir, and welcome, everyone. We had a strong fourth quarter closing out another successful year, driven by significant growth in media and continued growth in Retailer iQ promotions. Total revenues in Q4 were a record $93.1 million, up 23% over Q4 of 2016. Transactions in the fourth quarter were 971 million, up 40% over Q4 of last year. For the year, transactions grew 45% over 2016, climbing to a record 3.5 billion. We recorded a fourth quarter GAAP net profit of $4.2 million compared to a GAAP net profit of $3.5 million in Q4 of 2016. The GAAP net profit in the fourth quarter was primarily due to a $5.5 million net benefit related to the change in the fair value of escrowed shares and contingent consideration. Adjusted EBITDA, which excludes the net change in fair value of escrowed shares and contingent consideration, stock-based comp, restructuring charges, ERP implementation costs and certain acquisition-related costs, was $13.9 million, up from $11.3 million in Q4 2016. For the year, we delivered an adjusted EBITDA margin of 15% compared to 12% a year ago. We ended the year with a cash and short-term investment balance of $394.5 million, which includes a net $193.8 million raised from the convertible debt offering. We generated $48.5 million in cash from operations in 2017, more than double our cash generated in 2016 of $21.8 million. In summary, we were very pleased with our performance in the fourth quarter and for the year. Drilling down into our $93.1 million Q4 revenues, promotions revenue came in at $63.4 million, an 8% increase over last year, which included 20% revenue growth from CPGs, offset by an expected 34% decline in specialty retail. Revenue from media in the quarter was $29.7 million, a 76% increase over last year and up 24% over Q3. Total revenue for the year was $322.1 million, up 17% over 2016. Promotions revenue grew 12% over 2016 and included 22% revenue growth from CPGs, offset by a decline in specialty retail. Media revenue grew 35% over 2016, reflecting increased contribution from shopper media, the launch of QMX and our acquisition of Crisp Mobile. As our business continues to evolve, we've included some additional color to help with modeling. You can see that during 2017, one, full year Retailer iQ revenue grew over 57% year-on-year; two, looking at Retailer iQ and media combined, the 2 fastest growing parts of our business, grew over 47% over last year and accounted for approximately 67% of our total revenue; and three, total promotion revenue in 2017, excluding Specialty Retail, grew 22% over 2016. Flipping to the next slide. We've provided some analysis by CPG cohort. Retailer iQ revenue from our top 10 CPGs this year grew 148% over 2016. This far outpaced the rest of our Retailer iQ CPG customers who still grew a healthy 27% year-over-year. At the same time, our top 10 CPGs more than doubled their proportion of promotion revenues. Let's look at transactions. Total transactions in the fourth quarter were 971 million, up 40% from a year ago and slightly down sequentially. Digital paperless transactions or Retailer iQ grew 53% from a year ago and represented 83% of total transactions in the fourth quarter. Digital print transactions increased 2% from the same period last year, while declining 10% sequentially. For the year, total transactions were a record 3.5 billion, up 45% over 2016. As retailers continued to market their digital savings programs while CPGs added more coupon content to meet the higher shopper demands. Digital paperless transactions grew 73% from a year ago and represented 80% of total transactions for the full year. Digital print transactions decreased 13% from a year ago. Promotion revenue per transaction in the fourth quarter was calculated at approximately $0.065, up from $0.059 in Q3. Keep in mind our focus is on growing revenue and not revenue per promotion transaction. Moving on to the P&L. GAAP gross margin in the fourth quarter was 52.7% and reflected the continuing change in mix between media and promotion revenues. This compares to a gross margin of 54.2% in Q3 of this year and 61.1% in Q4 2016. Non-GAAP gross margin, which excludes amortization of acquired intangible assets, stock-based compensation expense and restructuring charges came in at 56.2%. This was down from Q4 2016 and last quarter, and was primarily a function of the product mix changes I described previously. GAAP gross margin for the year was 56.3%, down from 2016's 58.3%. Non-GAAP gross margin was 60.1%, down from 63.8% a year ago. Operating expenses. For the fourth quarter, GAAP operating expenses were $44.5 million, which included a $5.5 million net gain in fair value of escrowed shares and contingent consideration, and $2.1 million expense for facility restructure costs. Q4 operating expenses were significantly down from Q3 of 2017 and slightly higher than Q4 of last year, primarily due to the gain offsetting other spend. Non-GAAP operating expenses in Q4 were $40.1 million, which excludes stock-based compensation, the net change in fair value of escrowed shares and contingent consideration, amortization of acquired intangible assets, our ERP implementation cost, certain acquisition-related costs and restructuring charges. Q4 operating expenses were slightly higher, sequentially, and slightly lower from Q4 of last year. In percentage terms, non-GAAP operating costs were 43% of revenues in Q4 of 2017, down from last quarter's 45% level and a significant improvement over last year's 55% level, reflecting a combination of increased revenue and leverage in our overall operating expenses. Full year GAAP operating expenses were in absolute dollar -- were up in absolute dollars compared to 2016, primarily due to restructuring charges related to facility exit cost, severance for impacted employees, acquisition-related costs and the net change in the fair value of escrowed shares and contingent consideration, but still down as a percentage of revenue. Non-GAAP operating expenses for the full year were down slightly in absolute dollars compared to 2016 while showing significant improvement as a percentage of revenue, moving from 58% for full year 2016 down to 48% for 2017. This represents continued expense management and leverage as we grow the business. Keep in mind, the back half of 2017 had the added expense from Crisp. In the fourth quarter, adjusted EBITDA came in at $13.9 million, representing a 15% margin. This was flat compared to last quarter's margin as well as 1 year ago. Adjusted EBITDA for the year was $47 million, a 45% increase over 2016, delivering record performance. This represents a 15% margin as compared to a 12% margin in 2016 and reflects the combination of growth and revenue as well as progress and leverage in managing expenses. As our business evolves, we continue to focus on improving EBITDA margins with continuing revenue growth in digital promotions and media, and a balanced approach between investments and operational efficiencies. Moving on to cash. We ended the year with $394.5 million, up $211.3 million from the prior quarter including the cash raised in our convertible debt offering. We operate in the large and growing market, and planned to use proceeds from the debt offering to help grow our business, whether its adding technology, talent or scale through M&A in any of our key focus areas, promotions, media or data. We ended the year with cash from operations of $48.5 million, more than double that of last year's $21.8 million. Free cash flow for the year was $42 million compared to $15.5 million 1 year ago. Let's now talk about guidance. For the first quarter 2018, we expect revenue to be in a range of $83 million to $87 million. We expect adjusted EBITDA to be in a range of $11 million to $13 million. Looking at seasonality throughout the year and given the increased proportion of media, we expect revenue to be stronger in the back half of the year, roughly consistent with 2017. On the expense side, the first quarter is negatively impacted by approximately $2 million related to the increased FICA charges resulting from the annual FICA reset as well as our national sales meeting. For the full year 2018, we expect revenue in the range of $379 million to $394 million or approximately 20% growth at the midpoint. We expect the media growth rate to be somewhat higher than Retailer iQ given we will have a full year impact of our QMX product as well as the Crisp acquisition. Adjusted EBITDA for the full year 2018 is expected to be in a range of $65 million to $73 million or approximately 17% to 19% of revenue, a solid increase over 2017's margin of 15%. We expect stock-based compensation to be approximately flat over 2017. We will that continue to balance between driving for growth while tightly managing expenses towards improving margins and building shareholder value. We believe we have a large opportunity in front of us as retailers and CPGs continue to reach and engage shoppers through digital channels. This quarter, we will be attending the Morgan Stanley and JMP investor conferences in San Francisco and look forward to seeing you there. We will now open the call for questions. Operator?

[Operator:]

[Operator Instructions]. Your first question comes from Mark Mahaney with RBC Capital Markets.

[Mark Mahaney:]

Two questions. First is, could you help us think about revenue trends for your CPG customer base and your specialty retailer customer base going forward? Should we be extrapolating from the trends of the December quarter kind of 20-ish percentage growth for CPG and that includes 30% year-over-year declines for Specialty Retail? Just how to think about those two buckets. And then the other question I wanted to ask about the high level is this transition to ROI-based Pricing. could you just talk about what kind of reception, what kind of traction do you think that's gaining with your customer base?

[Mir Aamir:]

Sure. Mark, I'll address those. So if your modeling 2018, I think you're accurate. So I would advise that if you look at specialty -- it's hard to predict what's going to happen, but suffice to say that the rate of decline in 2017 carried over 2018 is probably okay. If you look at the CPG promotions business, we grew about 20% in 2017. It's suffice to say that is also okay to carry forward in 2018. And then that leaves the media piece of it, which is also largely CPG but it's at a much faster growth rate. That, if you look at the total 2017 growth rate, 2018, you could expect it to be growing at a faster rate than that a little bit. So that will give you some color on how to model 2018. On the ROI-based pricing, like we had mentioned in the last quarter, that's the first time that we started entertaining these conversations with some of the larger CPGs. And we are in planning discussions right now, as I mentioned in my prepared remarks. It's being received very favorably. Of course, the nuance there is it requires planning and details because the requirement for us for the CPGs is to be always on. So there's a budgeting exercise and a forecasting exercise here, but the overall sentiment is very positive.

[Operator:]

Your next question come from Aaron Turner with Wedbush Securities.

[Aaron Turner:]

First off, I appreciate the additional color on the revenue segments. So thank you for that. If I read correctly, you're at about 50 million users in the middle of 2017. Now you're at 60 million. Are those new users coming predominately from newer banners to the Retailer iQ platform? Or are they coming from retailers who have been on the platform for some time? Any color you could provide there would be helpful. And then maybe I missed it, but what was the revenue contribution from Crisp in Q4?

[Mir Aamir:]

Aaron, I'll answer the first one, and Ron can take the second one. The 50 million to 60 million or any growth in registered shoppers is actually coming from both. Keep in mind, we had retailers that went live last year. Few of them that went live in the previous years, obviously. And then we had a number of retailers that increased marketing or started marketing. So all of the above, with existing retailers and new retailers, resulted in growth in the registered shoppers. One thing I'll add over there, which is very exciting, is that the registered shoppers, the conversion of registered shoppers to users and their conversion to monthly users and their conversion to more frequent users, that also is fueling our growth in coupon demand and therefore, the volume. Ron, do you want to take the second one?

[Ronald Fior:]

Relative to Crisp, we're not really breaking them out anymore because it's really, really hard to do that. I mean, they're fully integrated. But I can tell you that related to -- if you'll think about last quarter, we talked about the fact that -- and actually when we bought the company, we talked about the fact that we would add roughly 10 million to the second half of the year. And last quarter, we also indicated that it would be -- a little bit higher proportion would come in the fourth quarter, and that's pretty much what happened.

[Aaron Turner:]

Just a follow-up quickly. Would you say that the contribution -- yes, I know it's hard to break out, but would the contribution from Crisp be above what you initially thought it would be when you acquired the company sort of back of this year?

[Ronald Fior:]

No. It's about in line.

[Operator:]

Your next question goes from Ralph Schackart from William Blair.

[Ralph Schackart:]

Just a question, first, on the guidance. If you think about sort of the midpoint around 20% growth, I know you talked about media growing about that, but how should we think about the linearity for digital promotions revenue throughout '18, especially as you sort of, I guess, lap easier comps on the pricing metric? And then maybe just a follow-up to that. I know you don't run the business for an average revenue per promotion metric, but just how should we think about for modeling purposes for 2018 as Q4 is sort of a good run rate to think about for '18?

[Ronald Fior:]

Okay. So I'll try to answer the first question. From a seasonality point of view, if you think about -- we actually made a comment in here that it would be more back-end loaded, but really in line with last year. If you think of last year, our actual numbers were around, I think, 46% in the first half, 54% in the second half. And I think that that's pretty much in the ballpark. It might tweak 1 point or 2 either way, but that's pretty much where it is.

[Mir Aamir:]

Ralph, your question on promotion revenue per transaction. If you can repeat that, we'll answer that.

[Ralph Schackart:]

Sure. Just for modeling purposes for 2018, what's the best way that you think we should approach that. I know it bounces around, but at least for the last 2 quarters it's been fairly stable around $0.06 or so, call it.

[Mir Aamir:]

Yes. It's really hard to give a prediction on that because we're doing things like, well, I can mention ROI-based pricing. We're focused on revenue. And really, overall, we're going to keep driving transactions for sure because that results in revenue. But the relationship, how it transpires through the year is -- it's hard to say that, right? I would say that I wouldn't model it higher, certainly lower, and really focus on revenue growth. And that's what we based our guidance on, its revenue growth. And that's why we broke out that CPG piece, the specialty piece and the media piece just to give us some more color to help you model better.

[Ralph Schackart:]

Okay. One more if I could, just on the recent capital raise. Fairly significant raise for a company you size. Any sort of extra color you could add on that? Any major pieces of the platform that you might be looking to acquire? Or anything there would be helpful.

[Steven Boal:]

Sure. Ralph, it's Steven. Look, you have to think about it this way. We have to do things in the market just like as individuals when we have material nonpublic public -- well, when we don't have material nonpublic information. We don't have -- yes, you know what I'm saying, and we're in open windows. And if we feel like there's something that may take place in the marketplace that we want to be able to react to, we have to be very thoughtful about the timing that we go and do that. I think if you just look at the timing, just on a dollar basis, the rate that we got was pretty attractive. If we have done it again today, then we would have paid a lot more for it. And then at the end of that is the fact that we've got a pretty healthy pipeline of opportunity in front of us right now. And so as things crystallize, we'll certainly make everybody aware of them, but you should expect that we've got a pretty good pipeline of opportunities now.

[Mir Aamir:]

Yes. Ralph, and just to underscore what Ron said, those focus areas from an M&A perspective are basically promotions, media and data. Really complementing our core business but helping us accelerate the shift from off-line to digital. And I will add one more thing, which we mentioned at the time, is we didn't do this to achieve our revenue objectives for the year. So the guidance that we gave you for this year is based on our current business. It doesn't contemplate M&A transactions from this capital raise.

[Operator:]

Your next question comes from Steven Frankel from Dougherty.

[Steven Frankel:]

Can we talk about gross margins for a minute and maybe you could help us understand. How much is that decline in gross margins we've seen over the last couple of quarters is a function of the shift to the media business versus gross margin pressure on the promo business itself.

[Mir Aamir:]

It's all product mix, and Ron can add details. But it's all product mix and not just shift to the e-business. But keep in mind, we've talked about in the promotions business, you have our [indiscernible] property businesses like print at home, which are primarily desktop and specialty, which are primarily desktop. Those were naturally higher margin businesses on the decline, and our promotions' revenue growth is from Retailer iQ, which includes a distribution fee to the retailers and therefore, lower gross margin. So it's consistent with what we've talked about in the past. That's growing. Media is growing. And therefore, the mix effect is causing this. Within those lines, there isn't any pressure, downward pressure on gross margins.

[Steven Frankel:]

And would you expect that gross margin pressure to abate sometime in '18? Or margins might, in your guidance, do you contemplate that gross margins will decline all throughout the year?

[Ronald Fior:]

No. Actually, I think if you look at the gross margin, the non-GAAP gross margin in this last quarter and you think of that going forward, I mean, it's going to be around that level I think it's what we're planning. Everything could go down a little bit from there but not significantly, I don't think. That's not how we planned it. Let's put it that way.

[Steven Frankel:]

Okay. And in terms of Retailer iQ. Have you captured basically the marketplace for -- do you have a couple more customers in the pipeline that you might be able to land in 2018?

[Mir Aamir:]

No. I think we've talked about it in the past that retailers that are contracted, most of them are live. There's a couple of banners that are scheduled to go live this year that aren't live yet. They're already contracted. But all on our platform represent about $400 billion in grocery sales out of a total of $600 billion. And on the either side of that, there's $100 billion in one large retailer that doesn't have a program yet. And then the rest of the $100 million is scattered throughout very small chains. Now within the $400 billion, we're at the early stage of that penetration. So like I mentioned, a lot of registered shoppers and that's growing. But within that, the user base continues to grow every month. So a very significant opportunity for more growth from the retailers that are already on the platform and growing. I will add one more thing to that. Even today -- and you heard that from my prepared remarks. Even today, even with the user base that's there, which is a good user base but growing even more, the demand for coupons is outstripping the supply of coupons and the budgets from the CPGs. So if the budgets from the CPGs increase tomorrow, we can absorb the demand on the platform. The user base is there and the demand for coupons is there.

[Steven Frankel:]

And last question. How widly do you think ROI-based pricing will spread in '18? If it will it be more than -- will it be all of your top 10 customers in 2018?

[Mir Aamir:]

It's hard to predict that. It will come on as customers fiscal year starts, some start in the beginning of the year, some start in sort of odd times of the year and some start in the middle of the year. That's one thing. Second thing, you would expect it to be from CPGs from within the top 10. Whether it's all of the top 10 or some of the top 10 this year, it's a bit early to say.

[Operator:]

Your next question comes from Thomas Forte with D.A. Davidson.

[Thomas Forte:]

Two industry questions. One as it pertains to CPGs and one as it pertains to Retailer iQ retailers. So as long time observers of the industry for consumer packaged goods companies, are you seeing a lot more brands going to 100% digital? So essentially discontinuing their freestanding insert spending, and is that pace accelerating? And second, when you look at your number of Retailer iQ partners that are marketing, it's 23, but I recognized that there's variance. One partner may market to a greater degree than another. But it seems that with the Amazon Whole Foods acquisition that you're Retailer iQ partners ought to have greater inspiration to market your service to a greater extent. So it doesn't have to be limited to Amazon Whole Foods, but how should we think about the influences or the things that are inspiring more of your Retailer iQ partners to market your service to a greater degree?

[Mir Aamir:]

Sure. Tom, let me answer that one first, and then I'll go back to your first one on CPG. So I mentioned in my remarks, and you're right and I've underscore that debt, 2017 saw an unprecedented focus on digital by CPGs and retailers. And really, there's a lot of very good momentum in retailers and CPGs to move faster to digital, to take the relationships that indicates to retailers that they have built with millions of millions of digital -- of shoppers digitally, right, through their apps and programs, even if it's for coupons or shopping list and so on. To really accelerate that and leverage that more for even for commerce relationships to sell them products online for in-store pickup or home delivery or even influencing them from a shopping list or coupons to actually buy more in-store. The numbers from our platform, we've shared those in prior quarters about retailers seeing sales increases because of these programs, continues to be very good. So therefore, their intent and their enthusiasm and their marketing to grow this platform continues to be very good as much as it did before or more. On the CPG side, we have mentioned in the past that we did see some brands go pure digital. We are seeing more do that. And then we are hearing from and planning with several CPGs to shift more dollars out of FSI into digital, that continues. At some point, like we've mentioned in the past, there's an inflection point. That may not be this year, where it makes a lot more sense to shift out of offline into digital much faster when it reaches a critical point. And like I said, from a demand for digital coupons in our platform, we have much more demand to absorb that budget from CPGs even today.

[Operator:]

This concludes the Q&A session. At this time, I'd like to turn the call back to Mir for closing remarks.

[Mir Aamir:]

Thank you, all, for joining us today. As you saw from our results, we had a great 2017 and we're looking forward to the rest of 2018 and beyond. With the technology in place and our world-class teams, we believe Quotient is well positioned to continue transforming the promotions and media industry, to drive revenue growth for us and shareholder value. Thank you.

[Operator:]

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