MNTN, Inc. (MNTN) Q3 2026 Earnings Call Transcript

Hello, and welcome to Mountain's third quarter 2026 results webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Brinley Johnson. Please go ahead.

Good afternoon, and thank you for joining us for Mountain's third quarter 2026. With me today are Joe Kaiser, Mountain's Lead Independent Director, Tony Weissman, CEO, and Patrick Collins, CFO. Just to remind everyone, today's call includes four looking statements that are subject to risk and uncertainties, and actual results can be clearly deferred from what they anticipated in these four looking statements. For the risks and uncertainties that may affect future results, please see our most recently filed periodic report, which is also available on our website. We will also discuss non-GAAP financial measures on today's call. Reconciliation of these measures are available in our earnings materials on our website. With that, I will turn the call over to Joe. Please go ahead.

Thank you for joining us. I'm Mountain's Lead Independent Director. As you surely saw in the press release we issued a little while ago, Tony Weissman has been appointed Mountain's new CEO effective November 2nd. The board determined it was time to bring more operational rigor to the business and asked Tony to step in as CEO. Tony joined Mountain's board earlier this year, and he has the unwavering support of Mountain's board to lead the company at this time. As a career marketer, Tony brings the voice to customers Mountain. From his time leading Digitas and serving as Chief Marketing Officer of Duncan, Tony understands the decisions our customers make about where to spend their advertising dollars. With that, please join me in welcoming our new CEO, Tony Weissman.

Thanks, Joe. Let's start with the numbers. Third quarter revenue was $80.3 million compared with the company's guidance of $86 to $89 million. Adjustment EBITDA was $19.9 million compared with guidance of $22 to $25 million. For the fourth quarter, we expect revenue to be between $75 million and $78 million, and adjusted EBITDA to be between $8 million and $10 million. Our Q3 results... We have much higher expectations. Before accepting... Our customer demand, our technology, and our sales motion. I wanted to understand what had changed and whether we had a practice or not. Included the issue was exclusively go-to-market execution. We've made significant changes. Most notably, a new compensation structure modeled after the biggest platforms in our industry, like Google and Meta. They were implemented too quickly, resulting in sales. We lost about 40% of our experienced quota-carrying sellers, reducing our ability to bring in new business. We've since corrected the call. And our first new hire class. Finally, we've added two proven executives, Lynn Kinnak from Salesforce, leading brand sales, and Frank Lee from Snap, leading agency sales. They both report to me. It will take time for these sellers to fully ramp, and our updated outlook assumes that the disruption we saw in Q3 will continue into Q4. Our new leaders have instilled more discipline around Hiring, training, and supervision. Resulting in increased new starting budgets. We've changed the leadership behind the decisions that got us here. Chris Innes and Garland Hill are no longer with Mountain. I've set my career on the advertisers' side of the table. Mountain does what marketers have always wanted. Reach the right people and measure the return on their average. In a category full of complexity, I love how Mountain keeps it simple. We provide one frictionless platform that allows customers to invest in CTV channel with clarity, simplicity, and accountability. Our technology, experience, and data help them decide which... We allocate their budgets and how to measure results all in one place as easily as they buy on Meta or Google, and we give them the attribution they've come to expect, tying their TV spend to site visits and sales. I believe our opportunity for growth remains strong. Mountain is a performance channel like search and social. Combined with the power of television, it's the ultimate business driving platform. The Mountain needs operational rigor to achieve our goals. I plan to take a three-fold approach. One, identify the opportunities and the weaknesses early and addressed. Get the right leaders in charge of each team, three. Make sure everyone is aligned. of demos into paying customers and starting budgets with the team. I plan to judge our progress. Spending and record. I plan to move quickly and... We've also begun to make changes to our leadership team. I'm pleased to announce that Anna Sayer, who led marketing at the Trade Desk for seven years, joined us this week as Mountain's Chief Marketing Officer. She'll make our offerings salient to generate new customers. at building cultures of accountability, where the teams are focused on execution. I've been delighted to learn that some of the best industry talent is already inside our company, and I'm committed to giving them the support and guidance to perform at their best. Let me wrap up by saying that I know we have to earn... While we're hiring and onboarding salespeople now, it will take time for these sellers to The measures we'll use to assess progress and what our changes are. And then we will take your questions.

$80.3 million, up 15% year over year. Revenue growth this quarter was impacted by unforeseen execution disruption in our go-to-market organization. Third quarter gross margins remain consistent at 79%, flat with the prior year period. Our expansion rate, which measures the spend of our current customers, Thank you. A positive net income of $7.7 million for a GAAP EPS of $10 million. Thank you. Thank you. We are continuing to make disciplined investments in sales and marketing, specifically in experienced hires, to drive broader customer adoption. We expect sales and marketing expenses to increase Our balance sheet remains strong, and we ended the court at $252 million in cash from cash We are reducing our fourth quarter and full-year outlook to reflect ongoing changes to our It will take time for sellers to fully ramp, and our guidance assumes that the disruption we saw in Q3 will continue into the fourth quarter. For Q4, we expect revenue to be between $75 and $78 million. We expect adjusted EBITDA to be between $8 and $10 million. Our fourth Second quarter guidance includes additional non-recurring general and administrative expenses. We are lowering our revenue guidance range to $311,000,000 to $311,000,000. Thank you for your organization. The Outlook for 2027, when we announce our fourth quarter and-

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by as we compile the Q&A roster. And your first question comes from the line of Matthew Weber with Ken Accord. Your line is open. Please go ahead.

Hi, good afternoon, and thanks for taking the question. Tony, welcome to the call. I guess just to start off, you've seen the business from the board, so you've had a view from the inside. What gives you the confidence that this is an execution problem rather than a demand or a competitive one? And then I'd have a follow-up.

Thank you, Matthew. I appreciate the welcome. I've studied this business for quite some time, and I know that it's delivering value to our customers, many of whom have been with us for a very long time, and it has proven to be one of the most effective ROAS channels. And, of course, the growth in the market underscores the overall interest in this space. I'm confident that Mountain has terrific product market fit, a terrific team. A great brand, and certainly the heritage of having essentially invented this space. The more I dug, the more I realized that it was decisions that were made in our own sales organization, primarily leading to attrition, that caused this slowdown. And those strike me as problems that are and are being fixed and can be addressed quickly so that we can get back to the historical growth we see.

Thank you. That's very helpful. And then just, is there any incremental color that you can share with us just in terms of what specifically those changes were to the compensation structure and sort of what the thought process was going into them and sort of how you've corrected today?

Thanks so much. in the frequency with which sellers were paid. These were told to the team in late Q2, but implemented at the beginning of Q3, and it just didn't work for most of the, for many of the sellers who felt disaffected, and they felt like their opportunity for earning had been diminished.

Got it. Thank you.

Thank you. Your next question comes from mine of Andrew Merrick with Raymond James. Your line is open. Please go ahead.

Hi, thanks for taking my questions. Two, if I could. So maybe again, on the kind of culture reset and the operational rigor that you were talking about, is there anything else beyond kind of the Salesforce compensation structure that you were alluding to, that you wanted to kind of put your stamp on the business in a particular way? And then I have a follow up after that.

Thank you for the question. They are most focused on and most immediate. Across the board, I believe there was an opportunity for the company to operate with greater focus on outcomes, a higher level of accountability, and more transparency across the company on the metrics that matter and that we're all pulling. in place so that we have common dashboards reporting real-time.

Got it. All right. Thank you for the color there. And then one more, if I could. Just kind of on some of these Salesforce issues, is there any way to kind of disaggregate what you were seeing in terms of new customers versus existing customer spend and kind of the shortfalls that each of those buckets attributed? Thank you. Great. Thank you.

And your next question comes from the line of Robert Kolberth with Evercore ISI. Your line is open. Please go ahead.

Great. Thank you very much for taking the question. Welcome, Tony. So I just want a couple here. So maybe Patrick first, can we just talk about the gross expansion rate versus the net? It sounds like the gross remains quite healthy, but have you seen any changes in the net expansion rate, any uptick in churn that maybe speaks to the issues that we're seeing maybe in the Q4 guide in particular? And then, Tony, in your review, it sounds like you did some diligence before taking on the role. Just wondering if you could maybe give us your assessment of the evolving competitive set. There are a couple of small players in the space who were recently acquired by much larger organizations. I was just wondering if that is at all weighing on the company's results or affects the way that you think Mountain has to grow and respond to market dynamics going forward. Thank you.

Robert, so the expansion rate, which, as you recall, measures customers in a 12-month period to, in this case, ending September 30, 26, going back 12 months, finding a customer in the prior 12-month period and seeing how much they've expanded their spend, that has been well north of 115 percent and continues to be well north of 100. We don't really use NRR internally because we went down market to the small businesses, but they continue to churn more than the mid-sized market.

Hi, Robert. Thanks for the question. On the competitive front, I do not believe that that has been a factor. In head-to-head pitches, we are winning at the same rank that we were in the past. The issue is there weren't enough opportunities. There were not enough new opportunities. I think the dynamics in the industry that you refer to, some of our competitors being acquired by larger platforms. is going to play out in such a way that potential customers are going to wonder about the difference between Mop, which is a purely independent platform that only cares about the company. and wonder where their data is going and whose interests they're serving. So I believe that's an opportunity.

Okay, thank you very much. And your next question comes from Andrew Boone with Citizens. Your line is open. Please go ahead.

Thanks so much for taking the questions. Tony, what I'm trying to understand here is kind of the direction of the business when I go forward. And so I want to go backwards in terms of some of the things that we understood previously about Mountain and kind of what you're saying today. Okay. So one of the key themes was kind of self-signup in the past in terms of Mountain, and it sounds like this is really a sales execution. And so it just, can you help us understand the evolution of what you guys need the sales team to be within a self-signup environment or whether just sales was more important there? Just tie kind of the historical messaging to now the sales execution.

Certain types and size of customers, and we want to be best in class in providing that level of service and doing it in a seamless, easy-to-use way. And customers still continue to sign up and request demos. And the sales team fields those as inbound. What we did had the best, had the highest impact on the non-sales. And demos that were brought in from the team themselves fell well below the volumes that we had seen historically in the past. So that's the area that we're focusing on, the right hiring and the right training. We have those folks on board so that they are photo-carrying going forward, and we're going to continue to operate both motions going forward.

But that's helpful. And then I'd love to ask around just the direction that's implied with the hires. So with Lynn Knapp coming over from Salesforce, who led brand, and then frankly, from Snap that led agency sales, it feels like there may be a change in direction where you guys are broadening out the platform from performance. Just one, is that right? And then two, can you step back and understood you've kind of been in the role for two days, but do you have any inclination around where you want to move the boat on a go forward direction as we think about the broader opportunity for Mountain and where you want to take that ship? Thank you.

Yeah, we'll do that. I'm giving the term to describe direct sales from our team directly to the marketer for Lynn's team, whereas Frank's team is working with agents. So the brand term there may be misleading because we are not looking to generate what would traditionally be considered as top of funnel or high awareness any differently than we have in the past. It's the distinction between the channels. I hope that clarifies that. I think the key, the future for this business lies in being seen as the undisputed leader to deliver performance. Giving them a brawl. And the right spend level to optimize the ROAS. We have the opportunity to be the premier partner, whether directly to a brand or to a performance agency, and I think my vision is for us to be seen as the most reliable, predictable partner that any of them could possibly have. I think the opportunity to manage for upright.

Thank you. There are no further questions at this time. I will now turn the call back to management for closing remarks.

I'm learning from you, from your perspective, and having an ongoing dialogue as we pursue the plans that we've outlined. I really appreciate your time and attention today, and thank you for joining us.

This concludes today's call. Thank you for attending. You may now disconnect.