Q3 2019 Earnings Call
Ladies and gentlemen, thank you for spending by and welcome to the meat.
Core of 2019 earnings conference call.
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The difference if you require any father assistance. Please first part here. Thank you know like the conference over to your Speaker today, Mr. Leslie Arena, Vice President of Investor Relations Ma'am you may begin.
Thank you good morning, and welcome to the me groups third quarter 2019 earnings Conference call.
Me today are Geoff Cook, our CEO and Jim bump in our CFO .
The conclusion of our prepared remarks, we'll be happy to take your questions.
As a reminder, today's discussion will include statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially.
We're formation about those risks and uncertainties is contained in RCC filings.
We caution you against placing undue reliance on these statements and disclaim any intention or obligation to update them.
In addition, as we refer to earnings we also will refer to adjusted EBITDA, which we define as earnings or loss from operations before interest expense.
Yes, it or provision for income taxes, depreciation and amortization stock based compensation nonrecurring acquisition restructuring or other expenses.
Gain or loss on disposal of assets gain or loss on foreign currency transaction.
Bad debt expense outside the normal range.
Bill and long lived asset impairment charges.
We also refer to free cash flow, which we defined as net cash provided by or used in our operating activities.
This purchases of property and equipment as shown in our consolidated statements of free cash flow.
Adjusted EBITDA and free cash flow, our non-GAAP financial measures and you can find a reconciliation to GAAP and our earnings release, which is posted on the IR section of our website.
We believe that use of these measures provides additional insight for investors to use an evaluation of operating results and trends. However, they should not be considered an isolation from or as a substitute for financial information prepared in accordance with gap.
I would now like to turn the call over to Jeff.
Good morning, and thank you for joining us on the call.
We had a strong third quarter enabled by our product strategy and execution, we grew revenue, 15% year over year to $52.6 million and adjusted EBITDA to $11 million, an increase of 27% from last year's third quarter.
Both revenue and adjusted EBITDA exceed the pre released estimates we issued on October Threerd.
We grew video revenue for the quarter by approximately 85% year over year to $20.3 million. The fourth quarter is off to a good start with video revenue on our meet me up in October for instance, growing to the highest level of any month since may.
Total video revenue in October exceeded video revenue and every month for the third quarter.
Furthermore, the company expects November and December video revenue to continue to increase from October we expect to video revenue in the fourth quarter to grow tend to 16% versus the third quarter to $22.4 million to $23.7 million on continued momentum growing users and engagement.
As I've discussed on previous calls we believe there are two key metrics that drive video revenue average video revenue per daily active video user or the ARCT out and the number of daily active users engaged in video or VVA you.
In the third quarter V ARPDAU increased 27 cents.
From 14 cents, a year ago, and 26 cents sequentially.
Via you in the third quarter was 829000 or 20% of our mobile via you, reflecting a small declined as expected from 21% in the second quarter as users adopted to our tightened a moderation standards.
We expect to be Dia you'd returned to growth in Q4 based in part and the strength of our launch of next day, a live streaming data game.
Early we are seeing at approximately 20% increase in VVA you in English speaking audience on meet me in scout since the rollout of next day.
We expect to achieve 25% media you across the portfolio by the end of the first quarter with next day targeted to rollout to tag dental due in January and with additional media you enhancing initiatives.
Advertising results for the quarter were solid with mobile advertising revenue, which today comprises approximately 90% of total AD revenue growing 6% year over year or first quarter of year over year mobile AD growth since the first quarter of 2017.
We believe these results set the stage for positive momentum in the fourth quarter and also 2020.
The economics of the business are strong we generated a record high quarterly free cash flow of $12 million into third quarter, and we generated more than $25 million for the nine months ended September 30.
Financial strength has enabled us to return value to shareholders in the form of share repurchases in the third quarter, we directed 100% of our free cash flow towards repurchases.
Since authorizing a $30 million share repurchase plan in June we have bought back $17.7 million were 4.8 billion shares through November 5th and we expect to continue to purchase shares pursuant to our share repurchase program.
At the started 2019, we set forth our strategic priorities for the year, one to invest in our core business to expand into adjacent sees in three to grow margin I will now discuss our progress toward each of these goals.
We continue to invest in our core video business in the third quarter, we launched streamer levels on meet me Scouten tag, adding a game application element to live video as life streamers further audience stream more frequently and produced compelling content. They can earn streamer points and progress through the ranks unlocking new tool.
Sales and bonuses available only the streamers at that level.
We believe streamer levels has increased gifting and we expect to bring a similar progression system to viewers in the coming months similar to streamer levels, we expect the viewer levels to contribute contribute to rising video engagement and monetization.
In July we launched one on one live video on our meet me App ended September we brought it to scout one on one video provides a richer format to get to know someone that our tech space chat and we're already seeing tens of thousands of users accessing one on one video every day users mailing engaged on one of one shot with either one of their existing text chat.
Partners.
For with one of their dates from our new next day feature.
Next date is our most recent major product launch next state allows any user to be the star of their own live streaming data game launched in beta in early October users have taken to the game any streamer can initiate next day game by tapping on the heart icon, while they stream.
Once initiated the streamers viewers can queue up to have a video shop. The streamer. The streamer has 90 seconds to tap index, which ended the current Perry and skips. The next contested in the queue or day, which reciprocates the contestants interest and enables the two users to connect by 101 video chat in the future.
Next state provides one hundreds of prompts to help the stream or get to know the contestant evaluate their compatibility and keep the conversation going to launch also includes the new date tab within the life section to make it easy to find nearby and trending people playing the game and to filter by age gender and location the game as monitor.
Hi, guys today would be the same virtual gifting engine that has enabled us to grow live to an $80 million annualized video business within about two years.
We built in that state because our biggest user segment has always been and continues to be people interested in dating next stage role is to attract these users into our live streaming platform and grow VVA, you by enabling them to use live streaming today.
Next date is currently available in English on me being Scout and we expect it to launch on tagged and look to in January overtime, we expect to enhance the game with a blind date capability to add a method of monetization for users who wish to skip the line and to experiment with scheduled next stage special events to maximize.
Graphic density and matching.
Investing in our core also means continuing to invest in safety across our apps in the third quarter, we implemented numerous enhancements to our safety processes and safety related product features and we expect to end the year 29 team with approximately 55% of our workforce dedicated to safety in moderation.
Our number one priority is and will always be to provide a safe environment for millions of users to interact and connect and we were continuously to advance. These efforts through strict usage and content policies advanced machine learning algorithms and the larger well trained moderation workforce, we believe that our safety related enhancements.
Contributed to a 2% decline India you versus Q2, well combined meet me Scout Tag via you was up slightly Livia you fell as we standardize their policies to match the stricter standard of the U.S. brands. We remain focused on growing via you both at Lou where we recently launched more robust personalized profiles to help improve the.
Or dating experience and on our us brands as well within video.
In which we have been experimenting with viral snapshot sharing flows.
We expect to continue to dedicate resources to initiatives aimed at lifting retentions and engagement outside of video with the goal of driving total via you across portfolio in 2020, we expect to shift more dollars influencer marketing, including in support of next state as we see attractive opportunities and a positive return on our marketing investment.
Our second priority expanding into adjacent sees is about bringing new audiences to our platform.
As I previously discussed we believe there are opportunities to video enable third party apps in ways other than acquiring them by building a video platform as a service products, which we call the pass in which we provide the proven technology moderation systems talent management and the pool of talent stream.
As we've already developed over the past two years.
We've now completed the necessary engineering enhancements to enable the video platform as a service approach and we expect to begin testing the product on a commercial basis in the fourth quarter.
We believe the past has the potential to evolve into a material business in 2020 and to beyond.
We also expect to video enable our latest acquisition growler in the first quarter of 2020, a change from previous expectation of the fourth quarter as we dig a dedicated more of our resources to be passed.
Our third priority is to grow margins.
In the third quarter, we increased adjusted EBITDA margins to 21% up from 19% year over year end sequentially. It's early but we are beginning to realize expense savings by providing users with choice and how the access live and how they purchase credit for gifting.
Web live provides users with the same experience is mobile, but also includes audio and visual tools and available on a mobile phone when users choose to access live on web we incurred lower payment processing fees, thereby improving our video margin web live is currently available on me and we expect to bring it discount in the first quarter.
We expect to offer a broader range of alternative payment methods across our portfolio by the first quarter of 2020.
In summary, we have a growing profitable business that we've achieved by executing against a singular vision that live interaction will become increasingly important to meeting new people and to dating in live video, we've leveraged our strong community and high engagement to create a significant content business from scratch.
Our team has proven itself self capable of building bold innovative products like live streaming envy past, while at the same time executing organizationally by acquiring for companies in three years. We believe we are at the early stages of building the future of meeting new people and we plan to share more of that vision with you in the coming months as we unveil our.
Plans for 2020 and beyond.
We appreciate the trust that our investors have placed in us over the years and we're pleased to be in a position to return value to shareholders in the form a significant share repurchases.
We look forward to continuing to execute on our mission to build the best place to meet new people with that ill now pass the call to Jim.
Thanks, Jeff before reviewing our results and similar to last quarter I'll note that with the exception of Growler, which we acquired on March 15. This year our results for the third quarter are on a comparable basis to those reported in the year ago quarter.
We reported a strong quarter and continued to strengthen the financial model by growing margins to over 20% and generating record free cash flow.
Total revenue for the third quarter 2019 was $52.6 million, an increase of 15% from $45.7 million in the third quarter 2018, driven primarily by gross and user pay revenue.
User pay revenue for the third quarter of 2019 was $35.9 million up 28% from $28.1 million into third quarter 2018, due largely to the rapid growth the video revenue.
Video revenue was $20.3 million, an increase of 85% from $11 million in the third quarter 2018.
For the third quarter of 2000 for the third quarter 2019 AD revenue was $16.8 million down 5% year over year end up 11, 11% sequentially aided by seasonality.
It is important to note that mobile advertising revenue, which today comprises approximately 90% of AD revenue grew 6% in the third quarter of 2019 compared to the third quarter of 2018. This is a reversal of the declining trend in mobile AD revenue that we have experienced since 2017. We believe this marks the bottom of these decline.
Lines, and expect mobile AD revenue to grow and grow in the future as I will discuss in more detail when I review our guidance.
Offsetting the revenue gains in mobile advertising was the expected decline in our desktop and social theater products.
We expect continued headwinds to these non mobile products to have a lesser impact to total AD revenue as they constitute an increasingly smaller portion of our AD business.
Adjusted EBITDA for the third quarter 2019 was $11 million, an increase of 27% from $8.7 million into third quarter of 2018, adjusted EBITDA margins increased to 21% up from 19% sequentially ended the year ago quarter as we continue to realize leveraging key expense items while grow.
Only revenue.
GAAP net income for the third quarter, 2019 was $3 million or four cents per diluted share compared to GAAP net income of $1.3 million or two cents per share in the third quarter 2018.
Moving onto expenses sales and marketing expense for the third quarter was $8.7 million flat compared to the year ago period.
User acquisition spend as a percent of revenue was approximately 13.3% compared to 15.1% in the year ago quarter and 14.2% sequentially.
Moving to you in the third quarter 2019 was 4.46 million compared to 4.56 million in the second quarter of 2019, which we believe reflects safety related actions. We took in June in the June and July timeframe.
We will M&A you was 60.5 million an increase from 60.2 million sequentially.
Product development and content expenses for the quarter were $30.6 million up from $26.1 million in the year ago quarter due largely to an increase in variable costs associated with the increase in live video revenue.
As a reminder, the product and content line item includes variable costs related to payment fees to Apple Google and other vendors along with the rewards that we paid to streamers.
General and administrative expenses for the quarter were $5.3 million and increased from $4.9 million a year ago due largely to an increase in bad debt associated with one account, partially offset by a decrease in employee related expenses.
Moving to the balance sheet and cash flow, we ended the quarter with $27.5 million in cash cash equivalents, an increase from $26.1 million sequentially.
Our cash flow from operations was $12.7 million in the third quarter, and we generated $12.2 million in free cash flow for the quarter.
In September we announced that we had signed a new debt agreement for a three year 60 million dollar facility consisting of a 35 million dollar term loan and a $25 million revolving line of credit.
Our new term loan carries lower amortization and a lower rate of interest in a prior debt, while increasing the allowable share repurchase amount within a year from $10 million to $39.
I'll now turn to our outlook for the fourth quarter of 2019.
For the quarter, we expect revenue to be in the range of $56.9 million to $58.4 million and adjusted EBITDA to be in the range of $12.6 million to $13.1 million. We expect video revenue to increase sequentially to between $22.4 million to $23.7 million and we expect advertising revenue to be approximately 21.
$1, we expect mobile AD revenue in the fourth quarter to increased 6% year over year, but for that increase to be offset by desktop AD and social theater headwinds, yielding an overall year over year fourth quarter advertising revenue decrease of 5%.
We expect full year 2019 revenue to be in the range of $211 million to $212.5 million and we expect adjusted EBITDA to be in the range of $41.5 million to $42 million.
We have said video revenue growth in the fourth quarter coming from aren't a gating game in levels, along with holiday seasonality to contribute to full year video revenue of $84.2 million to $85.5 million.
Revenue expectations for the full year include an expected negative 3.3 million dollar foreign currency impact from Lou compared to the prior year as the Euro has continued to fall into 2019 and longer term. We continue to expect to grow video revenue to a $200 million run rate by year end 2021.
And with that we can move to QNX.
Yes.
As a reminder to ask a question you will need your press star one on your telephone.
Your question has been answered or you wish to remove yourself from the Q press. The tacky. Please standby will be compiled the Ken a roster.
Your first question comes from Darren Aftahi of Roth Capital Partners.
Christine.
Yes.
Good morning, guys. Thanks for taking my question is job in the quarter, especially that free cash flow.
A couple of questions if I may.
On your.
The Dow numbers I know there were down sequentially do you called out the safety related.
I'm just kind of curious as we head I look forward is three Q veto assumed to be.
Trough as we move forward in the future.
In Q3, Q3, Hey, Darrin. This is Jeff is Q3 readout.
Yes, a trough yes, yes.
We expect.
The Dow in Q4.
To rebound on the strength.
The next day, especially with.
We are seeing and the English speaking markets of UK in the USA.
Roughly 20% increase actually envied out in October versus September .
I mean, certainly in part to the next day.
And then could you.
Yes.
A couple more Jeff you had real.
A number of.
Mike platform kind of impacts I think scout.
Look do in terms of how safety was impacted could you just repeat those again just so I got this fully.
Yes, so as far as DVU.
Well I talk to.
Yes.
You would talk go ahead go ahead.
Yes, I think you would you were just talking about how each platform safety. It impacted it sounds like there is little bit of a lag on lets you can you just repeat those I catch all that.
Yes sure.
So my comments were meet me Scouting tag via you and in Q3 was up slightly.
Combined maybe scout TEGNA use up slightly maybe be a you.
Fell contributing to a 2% declining do you in the quarter and that we contribute that.
To to safety related.
Changes on the Blue in particular.
Moving.
16, 17 year old users on the move to match the U.S. standard, which we did I believe in July .
And we're seeing an impact to be a you as a result of that but we believe thats a onetime impact loving. It was also engaged in.
Cleaning up spam on their platform proceeds span the users.
With heightened algorithmic processing that could be having some impact as well, but in any event. We believe it's a onetime impact and we're seeing signs of stabilization.
On the.
We're also planning Agresource Dia you related projects in 2020.
We are already Resourcing now, but to continue to resource them in 2020.
Especially projects aimed at driving marketing efficiency projects aimed at retention and also with respect to word of mouth spread.
We you'll note that we also expect increasing our marketing our user acquisition spend on a total dollar basis by 4% from Q3.
No thats largely as a result of increased.
Revenue will be roughly the same percentage of revenue spent on anew at around 13%.
Sure Great. That's very helpful. So just two more if I may 1st.
On your Fourk video guidance revenue guidance can you just just fairly wide range could you talk about some of the puts and takes there and then lastly on your past initiative.
I think you talked about some in engineering undertakings in the quarter to certain ready.
So do you have a pipeline of.
Third party customers that are either piloting beta testing or actually commercially use here right now thanks guys.
Yes, I hear and as Jim I'll take the first part on the video guide, we expect video to grow nicely in Q4 itself and the range between 10 and 70% to 22.4 to 23 seven the Big reason for I think for the wider ranges were coming into the seasonal holiday Q4 period, we have a lot of promotion plan last year was our first time through that.
Cycle I think we'll do more promotions this year and we know that those had an impact.
This leading us to just giving a wider range on where we think the quarter comes out but in any event its looks very softness on started we expected growth.
Yes, I'd say some of the things that we're excited about on.
Q4 video next state of course growing media you.
The levels product continues to show some some signs of a momentum on the will also be launching viewer levels.
As well relatively shortly and then with respect to the holiday benefit we saw we saw nice holiday.
As far as the other question with respect to the defense business. We do we aren't we do expect to begin testing the product on a commercial basis.
Inside of this quarter.
And then we are working a pipeline of other potential.
Of partners that will be we'll be talking about when when there is something to say.
Next question operator.
The next question will come from Victor Anthony of Ages capital. Please proceed.
I think there.
Hi, guys sorry.
Starting with the ice and answers call.
So I apologize if any discussions of mask.
The first one is really on I guess the potential for you guys.
Extend margins by bypassing enjoyed tax.
Give us an appeal on that if you havent yet.
And second match group announced yesterday that they were.
Look into our answer there likely deal.
Streaming.
I wanted to know what sort of rolled you're playing with that there are much different partners. Thanks.
Sure so on the.
The Android question.
Yes, I think what we're looking at is alternative payment generally.
We believe user choice is important to provide to to.
Our users and how they access line, whether it's on the web or mobile device and also what payment methods they leverage.
We of course are.
Very cognizant and pay attention to what industry leaders are doing like tinder, and bumble and bumble and others with respect to.
Android in particular.
And.
Yes.
Our southern some some opportunities.
For.
For for improving margin with respect to alternative payment that we are we are pursuing and that we expect to make more progress on.
Q1 of next year, where we expect to standardize.
Our payment methods alternative payment methods across our four largest apps.
And we think that that Theres some margin improvement.
That.
With respect to the second question.
We're not going to.
Be commenting on this call and who we expect to work with on the path.
Other than say, we'd use believe that be passed can be attractive option for many potential partners.
And I think you given where where it came from yes, we had been working a pipeline of opportunities on the M&A front each of the the acquisitions, we made over the last.
Two to three years, we're all made with the single thesis of essentially powering video for for that brand.
We of course, there's some apps that we'd like to power video for but we're either unwilling or unable to acquire.
And given the expanding into adjacent sees one or.
One of our main priorities for this year, we began work on this we pass business.
We've messaged in the last call that we're building out the.
The engineering enhancements, we've now completed that that necessary engineering work to enable the video platform as a service approach and we do expect to begin testing the product on a commercial basis as I mentioned in the fourth quarter.
And we do see revenue opportunities that could be material at least if the potential of the material in 2020 and beyond.
Thank you very much.
Good.
Next question operator.
The next question will come from Mike Latimore of Northland Capital. Please proceed.
Okay, great. Thanks.
You mentioned, the 20% increase in.
I think media you for next day beta.
How should.
How should we think about kind of monetization of that any kind of early signs on monetization of the service.
Yes, I mean, I think the way we think about.
The monetization is because the gift engine is roughly the same sits at the rationale behind next state is really too.
To leverage our largest segment of users which are users interested in dating.
And bring them into lives.
Every day, our users are sending 75 million techspace chats across the portfolio that distribution is what brings people into the app. We built this large content business on top of that distribution.
And next day, it's kind of the next play to bring incrementally more users into it based on the reason there their wishes text based Chad and finding new people to meet and to the extent that will what we found is that many of our streamers in next day.
Thats, what you already have them.
What are streaming in part because they're forces interest and other users, but in part because they see the opportunities for next day to increase to follow or account once once our once these users are following next stage streamers.
Then there are getting notified every time. These these streamers go live and they began we believe it will begin to behave like other.
Like other viewers and other users of video and so ultimately next stays about driving the you.
In particular and that we expect.
VR Tao can continue to operate effectively against the incremental next day VVA.
Okay great.
And then I know you said this is sort of the first of its kind dating game.
But anyway.
Some of your other video services you have some pretty good proxy is out there.
For success any any kind of proxies that you might call out here in terms of this or is this truly kind of.
Obviously, it's pretty new we didn't really see anything like it in fact, we submitted a pad on it.
But but in any event, it's fairly new we haven't seen anything like this in China.
We havent really see anybody take the speed dating model make it public and game of Fiat and that's essentially what we've done with next day.
Got it.
And.
Was wasn't breakage in the quarter kind of as expected.
Yes.
Okay.
And then just last one on the getting to the 200 million.
Video run rate.
Is that is that comment sort of an organic comment or does that include the potential for acquisitions.
Thats been inorganic comments, we talk about how we'll get there with the users we have today by growing BD.
To your percentage to 35% NVR down to 35 cents.
We're still on the path to do that and that doesn't have an inorganic.
Non acquisition not be passed number.
Not VVIP has emerged.
Thank you.
Next question operator.
The next question is from Jed Kelly of Oppenheimer.
Your line is open.
Great. Thanks for taking my question.
Just back to the last one.
I guess, how you're using next day to increase.
The active users, but do you ever think about any strategies around.
Providing any immediate more media monetization.
And then can you just talk about other competing platforms potentially offering live streaming video.
Sure so as far as.
Any more immediate monetization beyond the gifting model of next decade.
We do have plans to add that we currently have plans to add a skip the line feature into.
That would allow either that wanted to go to the front of the line. Some of these lines can be.
Six to 12 people deep.
Which would take as much as 20 minutes to get through if you want to go to the front of that line, you'll be able to pay.
And.
And then that would be a monetization point that's unique to next day.
As it relates to what other companies might be doing I would say can can comment on that and I can't comment on this call and who we expect to work with on be Pat either but we expect that.
It will be able to say something went when the time is right.
And then.
Looks like you're driving nice leverage on sales and marketing and user acquisition can you talked about some of the key drivers.
There.
Yes, so on the sales and marketing as far as of the.
Where we're spending we're really spending on.
Facebook Instagram snapshot.
We do we see continued.
Yes, and nice results on the ROI and of that span, we've been managing to increase our dollar spend.
Incrementally, while reducing our percentage of revenue span.
On on marketing just given the growth in revenue.
We do think that there are a number of interesting marketing opportunities to pursue.
In 2020 and beyond we think next day opened up new avenues for us on the influence or side, we have ambitions to open up channels of marketing beyond the ones I just mentioned.
So we think we're going to be pretty active.
Growing new users and really getting a word out but what we're doing.
In 2020 ambient.
And then just one last one for me you mentioned I think bubbles, 90% of advertising revenue.
Growing 6%.
Is that the first time its returned to growth in is.
That's a function of easier comps or or or just new AD units and how should we expect.
Advertising to trend.
The next year.
Yes, So Q2 was actually sorry Q3 at the actual was the first growth first quarter year over year growth, we've seen since 2017.
It's a function of continued optimization.
Of the platform there is a return to seasonality that we've we've noted we've seen kind of starting last year, where every quarter of the year improves over the prior quarter, where you reach a plateau in in Q4, the pricing market has seemed to stabilize and we've seen that pattern looked like it did prior to 2017 when when the market was disruptive so.
We have said now as Q to Q3 was up we're calling for Q4 mobile to be up again.
That we've seen what we believe as the bottom of the AD declined and we expect growth.
Going forward on the mobile side as you mentioned thats approximately 90% of the revenue today and will become an increasing part of it as it continues to grow and then also the desktop and social theater products become less a smaller portion of the tool I would also add to that.
Mobile.
A big portion of that increase in year over year is actually result of.
Advertising and mobile advertising inside of our live video in particular are incented videos for users are watching videos and earning virtual currency that they can then use to give gifts and so there's a there's actually part are part of that success year over year is tied to video as well.
Thank you.
Next question operator.
Again as a reminder to ask a question you will need to press Star One Telesat. The next question is from Austin Waldo Canaccord.
Your line is open.
Hi, Thanks for taking my questions and congrats on the corner.
I wanted to.
Dig into mobile advertising, a little more what do you feel resilience.
As of that.
Revenue just given what happened back in 2017.
What's what's the risk of whatever happened then happening.
Do you feel.
I think the 2017 disruptions felt again across the industry wide.
CPM decline on programmatic ad markets.
And.
I think that what we believe that was caused by with the kind of a glut of supply.
As more and more 2016, mark to peak and Cpms as more and more publishers and App creators added mobile advertising, leading to a glut of supply while at the same time more and more incremental AD dollars went to Facebook and Google essentially do awfully.
I think these we're not we're not predicting or forecasting and returned to kind of Q4 16 cpms.
But we are seeing.
Yeah.
Advertisers value our inventory we've spent a lot of time.
Making sure that our inventories valuable in terms of.
At this rate rates conversion and we've done a lot with header bidding.
Working to get as much as half of our AD impressions through header bidding, which which helps us with had margin.
And then also rolling out.
And substantially increasing the number of Incented video advertising inside of live video live video is probably under monetized.
Today from add standpoint, and we've done that.
Very much consciously given that.
Hey, Monetizes, so well via the gifting engine, but that's something we'll likely experiment with.
Over the course of 2020.
More color there also on pricing.
I mentioned prices has an have improved and stabilize it's nowhere near the levels, we saw in 2016, which.
So I think the rate of opportunity if you're going to any sensitivity that decline is much smaller now because you just don't have that push to get more people to increase the supply like we didnt 16, with what we're probably some unsustainable prices that are coming into the market that doesn't that's not the case today.
Okay, great that that's really helpful and has the advertising EBITDA margin and consistent.
And I guess this quarter or this year has it been consistent with what it used to be before 2017. When you are mostly an advertising business. Yes. The mobile margin is consistent if theres a very.
It does not cost sniffing amount to run.
Mobile AD, we generally think of that in the near 100% margin.
And is it is that consistent on an EBITDA margin basis with the pre 2017 levels.
The flow through would be the same so yes, we think of it at the same way that an increased.
Dollar of advertising is it would have the same flow through margin.
Okay, and what kind of margins should we EBIT margins should we expect on your feet past product.
We're not forecasting that this time.
Okay and just my last question is on marketing.
Just given your comments on it.
Seems like there'll be relatively more important put on it and next year given your product opportunities.
Can you comment on how you see the percent good marketing as a percentage of revenue.
Changing from 2019 2020.
Yes, we haven't commented yet on the next year, we'll do that the next update.
Okay. Thanks for taking my questions Congrats again.
And that concludes our Q next session I would like to fund the conference back over to Mr. to conclude the call.
Thank you with no more questions, we'll end the call.
Thank you everyone for joining us today and have a nice day.
Ladies and gentlemen that concludes today's conference call. Thank you for participating.
Kevin.