Q1 2020 Earnings Call
[music].
Okay and welcome to the Rubicon project first quarter Twentytwenty earnings Conference call. All participants will be in listen only mode should you need assistance. Please signally conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you may proceed.
Star then one on your telephone keypad to withdraw your question. Please press Star then too. Please note. This event is being recorded I would now like to turn the conference over to Nick Karma Luke of Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone. Welcome to Rubicon project's first quarter 2020 earnings conference call. Following our merger with Lauria since Gloria merger closed subsequent to the close of the first quarter full financial results and our 10-Q will be presented on a Rubicon project Standalone basis, and we will provide.
Summary results and commentary for Glorious first quarter performance on this call. We will provide commentary on combined business trends following the impact of cobot 19 and actions, we're taking to adjust.
As a reminder, at this conference call is being recorded joining me on the call today, our Michael Barrett CEO, David Day, our CFO and Mark Sikorsky President and COO for the Q1 day session all from different locations.
I'd like to point out that we have posted our financial highlights slide store Investor Relations website to accompany today's presentation before we get started or remind you that our prepared remarks and answers to questions will include information that might be considered to be forward looking statements, including but not limited to statements concerning our anticipated financial performance and strategic objectives.
Including the potential impact of the cobot 19 pandemic on our business.
These statements are not guarantees of future performance. They reflect our current views with respect to future events and are based on assumptions and estimates and subject to known and unknown risks uncertainties and other factors that may cause our actual results performance or achievements to be materially different from expectations or results projected or implied by forward looking statements include.
And with respect to the severity and duration of the cobot 19 pandemic.
The discussion of these and other risks uncertainties and assumptions is set forth in the company's periodic reports filed with the FCC, including our 2019 annual report on form 10-K, and subsequent filings and including our 10-Q for the first quarter of 2020, we undertake no obligation to update forward looking statements all relevant risks.
Our commentary today will include non-GAAP financial measures reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and in the financial highlights deck that is posted on our Investor Relations website, we define cash flow as adjusted EBITDA less capital expenditures, which excludes changes in working capital.
At times in response to your questions. We may offer incremental metrics to provide greater insights into the dynamics of our business. Please be advised at this additional detail maybe onetime in nature, and we may or may not provide an update on the future of these metrics I encourage you to visit the Investor Relations website to access our press release financial highlights deck periodic SEC.
He reports and webcast replay of today's call to learn more about Rubicon project I will now turn the call over to Michael. Please go ahead.
Thank you Nick.
The world's health behaviors, the global economy advertising and more specific digital programmatic advertising market had law changes quite significantly since our last earnings call, which who is just 10 weeks ago.
On the one hand, we're thrilled.
With the current the completion, where merger with TLR, yet, which is transformative for a combined future.
And the other hand, it seems a bit trivial to be presenting our financial results at a time when the world is squarely focused on fighting this pandemic.
In dealing with the many lives that had been so severely impacted.
Operating safely now and returning to normal business have operations is a goal we all share.
And we take our job.
To better manage through this turbulent times their shareholders employees and customers very seriously.
So how had we've been expecting responded.
We officially closed the majority of our offices in conjunction with the California, New York orders and Friday March Twentyth in 10, senior like Milan and take it.
And we strongly encouraged working from home even before then across all of our global offices.
We continue to operate and perform at a high level with minimal disruptions as our teams have always been very adept at working while traveling and from home.
We first noticed an impact on spending revenue in mid March.
Prior to mid March we are tracking within the range of our revenue guidance for Q1.
The impact continue to worsen through the first half was April before showing signs of stabilizing in the second half with total equal revenue down roughly 30% year over year.
As a result.
We increased had previously announced synergy cost reduction targets and 15 to 20 million to now exceed $20 million in cost reductions.
We've also taken additional short term actions to lower class.
David will discuss in more detail.
On a more positive name.
CTV has continued to grow, albeit a lower rate with a year over year increase in April of approximately 10%.
It has also stabilized in the last several weeks.
As an omni channel SSD.
We have significant diversity across AD categories, and even more so post merger with CTV.
As you can imagine certain verticals had been significantly impacted since just travel in media and entertainment.
Whereas others had benefited such as E commerce technology direct to consumer and performance advertising.
It's reasonable to expect.
And as many of the sectors in the economy reopen in re bad advertising and a corresponding revenue in those areas will follow.
We've seen a surgeon add request lines in although the AD spend is late for many publishers.
The increase in AD supported CTV.
Viewership and behavioral changes has the potential to result in larger and broader audience is as we exit that pandemic.
Postpaid.
CTV add slot availability grew roughly 25%.
Compared to pre committed volumes.
We continue to evangelize the benefits of programmatic CCTV publishers looking to achieve efficiencies and monetize increased added gals correlating with the boom and viewership.
Lastly.
We remain focused on accelerating ESP show as buyers and sellers have to consolidate spend around the most financially stable companies.
Now for Q1 results.
For Rubicon project's standalone.
Q1 revenue was 36.3 million, reflecting year over year revenue growth of 12%.
As I stated at the top of the call.
We were on pace to fall within our guidance through mid March.
Q1, adjusted EBITDA was 2.8 million.
While the merger was not completed until April 1st on a standalone basis to Laureus Q1, total revenue was 15.1 million.
Up 11% year every year.
And to Larry's Q1, see TV revenue was 9.1 million, an increase of 74% year over year.
As I mentioned, we were thrilled to close or merging with to Larry the merger rational remains unchanged in the current environment.
And was driven by the scale in screen, the omni channel combined businesses and the opportunity in CKD.
We believe that adoption of AD supported CTV.
He is adding inflection point for growth in is transforming now.
Here's what we're seeing from the consumer publisher and buyer perspectives.
On the consumer side.
See TV viewership is up from the global smelter at home orders.
And consumer discretionary spending is under significant pressure from unemployment and job losses accelerating cord cutting trends in the shift from subscription to lower cost AD supported models.
On the buyer side.
Upfront AD buys from brands and agencies have been in are expected to be cancelled.
Shifting more spend from linear to the spot market the programmatic serves.
CTV has become the focal point of discussion with our buyers.
Further evidenced by the trade desk recent update.
On CTV acceleration.
From the publisher side.
Programmatic CPV.
Addresses subscription fatigue and gets publishers flexibility to optimize their revenue models.
[noise] drives higher cpms.
Allows publishers to use their first party data to make advertising more addressable.
And has the potential to drive internal efficiencies from a cost and pricing perspective.
Shifting gears, we continue to see strong adaption of demand manager.
At the end of Q1, we had 156 lagged contracts as compared to 86 at year end.
Revenue is growing and we expect it will continue to steadily grow in 2020.
The current environment is very supportive of increased demand manager adoption as publishers look to decrease costs and optimize revenue.
While the short term negative impacted Covidien 18 is unclear at this time due to lower ad spend.
We're very happy with the increase interest.
Pipeline Greg.
In long term prospects.
Key growth drivers for our business remain the same we're focused on line.
Continuing to invest in CPV as our fastest growth area.
Driving revenue synergies in the combined TT video businesses.
Accelerating STL.
As the transparent independent omni channel partner.
And growing our publisher focused pre bid offering with demand manager.
Okay.
Times like today with radical changes in daily behaviors business closures uncertainty in economic recession.
Provide transformational opportunities in markets such as ours.
Our employees have proven to be extremely resilient when facing these tough challenges in our selling their capable of doing this by working harder.
Balancing working from home.
And not just maintaining but continuing to allow our company to play offense.
I couldn't be more proud of the efforts as seen from our team in the company that we are already becoming post merger and will be on the other Sally Covidien 18.
The fact that you into a very difficult industry transition over the last few years has prepared us very well to the situation.
And as allowed us to execute in this environment very calmly and thoughtfully.
During that time, there recorders in which our year over year revenue declined by over 50%.
We cut costs.
Continues to build our tech.
We turned our business to grow and made great progress and profitability.
Which was not easy to balance.
I am very common thing than the other side of the recession.
Whenever that is we will emerge as a much stronger and better position company.
With that I will hand things over to David who will go into greater detail regarding our Q1 financial performance cost reductions.
And expectations.
Thanks, Michael.
We had very solid results for Q1, considering the revenue drop off we experienced in the second half of March.
On a standalone basis, Rubicon project delivered $36.3 million in revenue at 12% increase year over year I believe it's helpful can out that we were tracking in line with our guidance prior to the impact of covered 19.
We delivered adjusted EBITDA of $2.8 million for margin of 8% in Q1 2020 as compared to approximately breakeven adjusted EBITDA in Q1 2019.
The Q1 year over year increase in revenue was driven by 22% mobile growth and continued strength in audio.
Desktop revenue was flat year over year.
Operating expenses, which in our case includes cost of revenue for the first quarter of 2020 were $47 million versus 45.7 million in the same period a year ago.
Driven primarily by one time merger related costs.
On an adjusted EBITDA basis operating expenses, including cost of revenue.
For the first quarter were $33.5 million as compared to $33.2 million in Q4, 2019, and as compared to the $32.5 million in Q1 2019.
This was also below the 35 million in total adjusted EBITDA operating expenses expected.
We continue to benefit from the traffic shaping filtering and general efficiency gains we discussed in the past.
As a result, our gross margin for the first quarter was 61% up from 53% in the same period a year ago.
We believe these tools are crucial differentiators for us and managing infrastructure costs have we is as we have seen a large increase in AD requests in April we experienced a surge of AD request, representing a year over year increase of over 50%.
Onetime deal related costs in Q1, or approximately $2 million and are excluded from adjusted EBITDA.
Net loss was $9.7 million and the first quarter of 2020 as compared to a net loss of $12.5 million in the first quarter of 2019.
As I mentioned earlier, adjusted EBITDA was $2.8 million, which represents an 8% margin compared to adjusted EBITDA breakeven reported in the same period one year ago.
The improvements and net income and adjusted EBITDA were driven primarily by higher revenues as we've been able to run at an essentially flat cost space for the last six quarters.
GAAP loss per share was 18 cents for the first quarter of 2020 compared to Gaslog GAAP loss per share of 24 cents in the same period in 2019.
Non-GAAP loss per share in the first quarter of 2026 cents compared to non-GAAP loss per share of 14 cents reported for the same period in 2019.
Capital expenditures, including purchases of property and equipment as well as capitalized internal use software development costs.
Were $4.8 million for the first quarter of 2020 inline with our guidance.
We closed the first quarter was $71 million in cash a decrease of 18 million from the $89 million balance at the end of Q4.
The cash decrease was driven primarily by deal related costs of approximately 2 million.
Cash used to cover taxes for restricted stock testing in January 7.5 million.
End of working capital decrease of roughly $6 million.
We began this next chapter as a combined company with approximately $125 million in cash.
As a reminder, our cash balances can swing disproportionately both up and down compared to the run rate of our business since we collect and pay the gross amount of flow through to our sellers, while we record revenue on a net basis.
The potential magnitude of these swings may also be influenced by the impact of covered 19, particularly on our buyers. Although we have not experienced significant issues to date.
In connection with the clarity merger, which closed on April Onest 2020.
The company previously announced expected annual run rate cost synergies of 15 to 20 million.
As expected areas of synergy to include Duplicative public company costs vendor rationalization overlapping general and administrative costs and other operational streamlining.
We currently expects total annual run rate cost reductions from these combined activities to exceed 20 million.
As a result of these efforts we are reducing headcount by approximately 8% of our combined workforce.
The head count reductions will occur in the second quarter of 2020, although timing for a number of individuals involved in integration and transition activities will occur late in the year.
Given the timing and implementing these synergies and the impact of one time severance and other cost.
The majority of the cost savings will not be realized until late this year, but should be fully realized in early 2021.
Given the significant impact resulting from covered 19. We're also taking additional short term actions such as compensation productions, which include a 30% reduction to CEO salary and board retainer and a hiring freeze.
As expected, we will also have lower costs from marketing events and travel.
The temporary reductions will benefit us immediately and remain in place until such time as we see a sustainable recovery in revenue.
I will now share some indications for our second quarter.
In addition, given the complexities of the cost impact of the Taria merger and the related expected merger cost synergies.
The short term cost reductions due to covered 19, and some incremental tech stack investments planned for 2020.
I will also provide more detail regarding our adjusted EBITDA operating expense expectations for the rest of the year.
We expect revenue for the second quarter to be in the range of $36 million to $39 million.
These revenue expectations are based on the level of year over year revenue decline that we are currently experiencing.
It is of course challenging to handicap, how revenue will respond and use very uncertain times.
Although we have seen at revenue stabilization and are cautiously optimistic that trend will continue.
We expect to that adjusted EBITDA operating expenses in Q2, including cost of revenue will be approximately $48 million to $49 million.
We have been able to generate significant efficiencies in our business. Despite steep increases and add volumes, which were further magnified in April from covet inventory surges.
This fits efficiency comes as a direct result of the benefit from our traffic shaping and other tech stack capabilities, which are even more valuable in times like these for us and valuable and helping customers manage efficiency by keeping our limiting their TPS levels are queries for second with minimal impact.
Revenue.
Our efficiency gains and careful cost management have allowed us to keep adjusted EBITDA operating expenses relatively flat over the last six quarters, despite significant add request volume growth.
That said, we are planning for some incremental investment in our serving cost over the remainder of the year.
Part of the investment will include greater leverage of cloud capabilities, which in the short term will add incremental cost, but which we believe in the long term who will provide additional benefit to our overall serving cost efficiencies.
Inclusive of our cost reduction efforts mentioned earlier, we expect to that adjusted EBITDA expenses will increase by an additional $1 million to $2 million per quarter in Q3 and in Q4 from our Q2 expectations.
Our goal for adjusted EBITDA expense is to remain in the $50 million to $52 million range per quarter for the second half.
We expect that one time deal and merger related cash payments for both companies in Q2, 2020, including banking legal and severance costs will be approximately $60 million.
We expect Q2 2020, capex to be approximately $3.5 million and expect that capex on a combined basis for the full year 2020.
We'll be roughly 22 million compared to our prior standalone estimate of slightly higher than $20 million.
As Michael mentioned, we have successfully navigated similar challenging financial waters before.
We will continue to be prudent and our cost expenditures.
Also leveraging our balance sheet to continue important investments and CTV demand manager Tech stack efficiency and other initiatives. So that we will be ideally positioned to capture market share and more accelerated growth coming out of this recession.
We remain very excited about the market opportunity has a much stronger company following our combination with claria.
Once revenue growth returns, we are confident we will demonstrate the leverage in our financial model as we did over 2018 and 2019.
With that let's open the line Fourq Una.
We will now begin the question and answer session.
To ask your question you Me Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Jason Cryer of Craig Hallum. Please go ahead.
Hey, guys. Good afternoon hope everybody is well in quarantining.
You wanted DSS, Michael [laughter], Michael wanted to ask you just maybe you can walk through what the environment has looked like over the last eight weeks kind of on a media type or channel basis, you gave commentary on CTV. It sounds like that's been a little bit more resilient, but perhaps you can provide some quality.
Native remarks on the differences between display audio and video in different different types.
Yeah, Hey, Jason Yes, good question in them.
I think that day.
We've seen.
You know channels that were.
Growing media clay came as it were growing faster than I.
Hi channels like safely and key cash tax display performed slightly better on it in this environment just given the rate of growth that they had coming into it in the popularity from advertisers, but it's safe to say that with the latest AD load in the decrease in whole categories of advertising.
Okay that no when no one channel immediately mean from.
Decline in Spain, including CTV, but.
He said, it's a bright spot it's still growing certainly amounted to 74% range that it was in Q1, but we.
We anticipate continued to grow which is a.
A real outlier.
Okay, Thanks, and Michael I wanted to get your perspective on connected TV. This is kind of the first public forum since since the merger was completed so perhaps you can give like the Rubicon perspective on where you see connected TV going and then what rubicon needs to do to get there you know above and beyond the assets you've acquired with.
With all ARIA.
Jason Unbeknownst to you, we having special guest person on the human area, which is merck's with gorski. So.
We have the expert online to answer any specific question terrific Hell give them I'll get the Rubicon flavor, then mark can chime in but done yes, so here's here's what super exciting for me about it.
And we're getting faster speed on understanding CPV as well as it's hilarious team has but the good news is that team remains intact. There there are key asset for the new company and they have hit the ground running in there as excited as we are to be able to come as this omni channel.
Offering on so if you looked at our customer sets a yet the pure CTV players and so what can be able to kind of bring to that well I think he can bring added investment in.
Technology. It can bring added sales resources, but more importantly, we've lived through this header bidding war for the last several years and then that intimating it audit.
He is going in the way of header bidding, but there will be unified demand solutions that will come to market and I think we're really well positioned as a company with our experience in the header.
Coupled with tortillas longtime experience and see today.
And lastly, you know for companies like busy in.
Entertainment companies that have multiple media properties that do everything from banner ads to I, you know CPV audio.
Being able to be that one stop shop for them, that's independent global scaled back where we see it kind of excitement Mark do you want to expand than anything.
Sure I think I think Michael nailed the key plants I'll, just kind of just talk from two aspects. The first being a macro economic environment and then micro how it relates to US I think total backrow perspective on the CTV front.
Here are any group, we're heading into a watershed moment for the future Ctb and specifically based on some of the things that Michael mentioned in his.
Script, which is.
Hey, Scott the dynamics on the consumer time side, changing rapidly, which is cord cutting is accelerating which we're seeing across the board, but also consumer habits around watching April nod and AD supported TV, just accelerated and we've known that we see that in the statistics I think what we're dealing is recruiting.
Habits on the consumer side that are going to be hard to break on when we come out on the other side of this you know the cobot issue on the buyer side. We've also seen things like cancellation of Upfronts and turn it increases in direct to consumer spending and increases in performance.
Metrics that are needed for advertising into particularly around televisions you can you spend in those two things come together bode well for the CTV business.
No in general just saying some of the things that we've seen in the past are just getting accelerated by the current environment on a micro bases for us as a company.
I think I think Michael really set at all which is the fact that.
As the companies that we work with look to streamline and cut costs have less partners versus more there's really very few options for them to do so across multiple platforms.
Desktop mobile display.
Ill see TV and where that that option.
And then secondly, as there are drivers towards efficiencies in each of these days.
Moving towards unified auctions or more streamlined auction the capabilities that ICANN has more glass several years.
It was pretty dead and with the you know the solutions that don't I'm going to lend themselves well onto Ctb platform that that we previously the builder twice. So so you know look there are lots of things to get through but I think if you look at the macro trends and where we're sitting from a micro perspective, both from a build in a Andy.
Addition.
Strategic position.
Those are good times that there are things that look forward to.
Great Mark good to hear your voice again.
Thank you [laughter] last one for me just on demand manager can you comment anything specifically, what you're hearing from customers that are adopting the platform in this environment I mean, it would seem to be this is a great opportunity for buy versus build where you could essentially bring in an outside.
Solution that requires less had code.
In comes at a cost that would be much lower than that had cold I'm I'm wondering if you're getting that kind of feedback from publishers or or is it just something that publishers can focus on right now given the volatile economic backdrop.
No I think it yeah.
Hit the nail and ahead without that description.
You know, we've always said with demand manage yard biggest competition is pre build rate.
And open source software is a free and its open source, but it requires a quite a bit of capabilities to run it effectively into.
Maximize your monetization and unfortunately that usually means people in house engineers building special tools et cetera.
So yeah, we think it's a wonderful backdrop and we are hearing inbound from our clients who.
Not too long ago said no were covered we got the solution in house.
Reaching out and really kicking the tires. So yes, we think it's.
And opportunity for demand manager.
To to achieve all the things that you laid out when he said in your opening.
Alright, Thanks, a lot guys stay healthy.
Thanks, Jason seem to be above.
The next question comes from Lee CRO of.
B. Riley FBR. Please go ahead.
Great. Thanks for taking my questions goes and hopeful as well one of the difference to the start off on a point of clarification around guidance you guys said that.
You were you were modeling the numbers you provided based on the observed from quarter to date.
The quarter to date trim down 30% is that the red assumption that drives our guidance.
Yeah, so our.
Our April or on a weighted average basis was.
Ah 30% down the trend that we saw in April was some degradation over the first half of the month and then a stabilization in the latter half in the month until that guidance is based on you know just a few percentage points higher than that 30%.
But thats correct Weve.
We've seen stabilization and that's the visibility that we have and so our guidance is is based on that observed trend that we have so far.
Got it.
And then you kind of provided some detail on across inventory types, maybe come out from a different angle, but you know it looks like domestically revenue growth was pretty solid well.
International was flat year over year any additional color on on the dynamics of domestic versus international.
Yeah, I can take some of that and then Michael if you want to land, but the.
Last fall, we talked about the impact of a couple of things one some inventory low or.
Low value inventory, calling that we undertook and also a move to cut out a resellers and so the industry is focused on limiting the number of hops at any given any given that add slot takes an ecosystem and those impacts disproportionately impacted.
Our international business versus our domestic business and so I think that was that was one of the primary drivers.
Got it and then just based stuff kind of your enthusiasm around demand manager B.
Stated interest in contract could interest versus last quarter's okay fully appreciating the macro backdrop is what it is but is there a chance you guys could provide maybe an update to the 5 million dollar expectations for the year.
Assuming that it's more transactional based and we've seen a significant increase in total volumes of impressions that lend itself to perhaps a tracker higher than that 5 million dollar initial guide.
I think it's too early to really weigh in on that because because it is AD spend based you have you know very definitive drop in our revenue.
Because of that current environment, and so you know they'll be they'll they'll go there'll be puts and takes with just the lower revenue from the current you know base. Although we do think there there could be a an acceleration or an increase in perhaps expected installs, but it's it's really tough to try to.
Figure out how those are going to bounce out with its young with each other.
Yeah, and Lee in terms of that the pricing modeling.
Hi, because it's a relatively new product, we went to market with several or pricing models. It seems like the.
Model that publishers are most comfortable with is that share of spend model, although many of asking for more of it sounds like pricing.
You can imagine in this environment.
Side to go from the.
Caused you to go over to the cost Ledger is it is a tough journey for any vendor in so I think that that that model the share media will.
Probably stay the course for the vast majority of our clients. This year. So we're quite exposed to AD spend in that and since then.
Got it that makes sense. Thanks for taking my question Chris.
Thanks would likely.
The next question comes from Matthew Thornton of Suntrust. Please go ahead.
Hey, guys. Good afternoon, Hubble's well this is Anthony duplicity on for Matt or are they stick in the question so already Anthony.
Hey, you you would acknowledge with a little bit earlier and it is still early on in the merger, but are there any early wins in the marketplace that would provide proof points for rubicon and floria coming together, maybe relating to how you're hearing with buyers pursue supply path authorization or maybe cross selling successes that you're seeing so far with clients or anything else specifically that you want.
Right.
Yeah, I mean your read you get this is Mike laying the aye good question and.
It's certainly I you know are pretty early as deal closed for ones that we really couldn't even go to market until that point right, but ER and then there's also the uncertainty right. We didn't know if we were going to be added the offices.
For a.
Month for three weeks, where as so it was a tendency at that point to say hey added the gates lets just stay focus is to separate companies because working from home. After the merger is completed boy that's elected to us, but very quickly as we realize that this was going there.
In the new norm for quite some time, particularly for folks based in New York and Ross Angeles in London in Milan, and Tokyo that we said, okay, let's let's accelerate it was let's collapse. The teams we have dirty on day, one class. The Buyside team. So that team was able to talk to agencies as one company and we quickly collapse the sell side.
Teams. So I'm just amazed given this environment in the Oh, you know the challenges of working remotely how quickly we've been able to engage new clients that have some real sensitive conversation. So so the any jeans is daggy HST, Ghana, and I would just say look two words future AG.
Quarterly calls for proof points and in examples that we'll share with it.
That's very helpful. Thanks, guys.
The next question comes from Kyle Evans of Stephens. Please go ahead.
Thanks for taking my questions.
Of lead out with one you guys talked on the past I'm sure. All the time, we get closer to the end of the two years that chrome gave us you'll be thoroughly so you're talking about it but any update on kind of what you're seeing in the privacy sandbox in terms of replacing the targeting and tracking that's not in jeopardy because of the deprecate.
Patients from Chrome and I've got some follow ups.
Yes so.
No real.
Subs, you take that dates per se one of the.
Well timed events, we've ever had was we were able to squeeze in before the a pandemic really reared its its head we were able to squeeze in a customer chrome things and be able to include the senior Tories folks and their customers and it was.
As a full day of talking about.
Help prevent could help in that respect how can pre bid help publishers with their first party data and help how can it sink it to the buyers identifiers and.
A ton of promising discussions a ton a promising energy came out of it its one of many legitimate efforts that are out there. It's the only one and I kind of I think is truly a universal solution as opposed to proprietary solutions.
But the industry as hard at work and Unfortunately, there is no silver bullet that we can Ah report upon.
Right, that's going to be the cure all for the third party Cookie World.
Obviously, it warrants mentioning that because of over 50% or a business is mobile app, we've been working without cookies for a long time and you talked to marketing their team in the CTV World. There's never been a cookie. So we're quite used to working in a range in media between buyers and sellers without.
Cookies, but unfortunately, Kyle nothing to Earth shattering to report in terms of our efforts to come up with a unified solution.
Well, we still have some time here. So we'll figure it out yeah, we do [laughter] the maybe an update on the competitive landscape I'm interested to know kind of how how S.P.O. has been accelerated because of the the a pandemic economic downturn.
Yeah, I mean I you know, it's it's hard to say we've seen it when you're seeing that you're trending to 30% down right, but [laughter] hey, maybe that 30 could've been 50, there's no question that most of the costs and I I mean involved with from our by say partners in our.
Our self said publisher partners is all about.
Stability, it's all about bouncy, it's all about.
You know.
I'm, a seller and I've been burned previously on the sequential liability when the seismic or when.
Okay.
Video reality.
Yeah went bankrupt how my how am I getting protected by you or against this and you know obviously, we welcome to our you know strict protocols in how we manage our receivables and in down units a day they've been very static headache, I answer is very satisfied your classes.
One of their lead partners and likewise buyers and so.
You know I really think it can't quite the quality in a timely day and obviously the biggest data we got to continued again and that is a Google or but I think that if you look it independent players no one looks quite like us from a balance sheets standpoint, its ability access to capital a in somebody has been there.
Republic series for as long as we have so I feel really good if that's where we sit miss and whole piece of the S.P.O. proposal, but a puzzle morass right.
Yeah.
Last one well, maybe my last one but that the.
Any any kind of distinct differences in terms of unit volume unit pricing trends across.
Desktop mobile audio C.T.V. I mean, obviously see TV is faring, better, but 75% to 10%, which I think what you said, it's still a pretty sharp trend down just curious as to what you're seeing on sell through and rich.
Sure so honored you're talking about the on the other revenue side right. So from a pricing perspective. So yeah. So I think it's been pretty widely reported in the process. You saw you know very significant drops in tpms really across the board because you know makes sense you've got.
An increase in supply or you know in CPV and really through every channel and you've got lower demand and so those cpms have dropped but but you know the volume of paid impressions eat up compensates partially.
For that CPM drop so yeah, that's the dynamic that we've seen.
I don't like if you want to add anything to that.
No more do you have any specifics that you haven't there's CPV said that you're right there.
Yeah look I think obviously to decide what's interesting is that although we've seen some compression cpms David no. It. We also were seeing has an opportunity from new advertisers to come into the space right. So as we noted in his script see increase in direct.
Consumer in performance advertisers.
Who really never had an opportunity to get in I think this could be in again, another pivotal moment, where we've opened an entire category the advertising.
And do the actor of advertisers. So you know again lots of things influx, but because of that we've seen some some green shoots and you know different things pop up out of the place.
And I think this is maybe related to the of course I just ask some somebody alluded to kind of a 50% increase in an AD request I want to make sure that I understand exactly what's driving that dynamic. Please.
I'll jump in from the CTV side, sorry, David do you want to go go for it Mark Cook, Yeah, I know, what we've seen and I think there's too many factors. The first is massive increase in viewership.
GAAP and non AD support television. It's in that's you know companies like clear and she'll be who have no publicly stated we've seen some viewership levels go through the roof. During this during the pandemic.
Not just because of what's going on because the stay at home or is it also because if you remember you know to be was originally acquired by Fox and they have very quickly to move Fox programming on the to be so not only through Avon, but also doing some things around.
You know newer shows like Messinger and other content, we're going to be put l. continues to expand its amount of content that has been a license from the Viacom a catalog onto the system. So you've got you know more people at home watching more Avon because of cord cutting but you also have more conor.
And coming across there that has created an interesting dynamic time on advertiser side that has created you know more avails, there's just more of else because more people watching that being said there is also you know.
Pullbacks in how much has been sold directly but says you have those two factors, which is a more content more appealing and be less being sold directly because the sales forces are just not going to feel and not able to deliver a it's created an increasing number of total sales that we see.
Coming through the CTP part of our system.
Got it yeah, I'd say, that's very similar in for all of their media type Caesars said that a huge surgeon.
Viewership user chip in a decrease of direct sold resulting in a lot of publishers, reaching out that's the see if we can fill in out of though.
I get it.
Thanks, guys.
Thank you Carol.
Has there no further questions. This concludes our question and answer session I would like to turn the conference back over to Michael Barrett for any closing remarks.
Thank you.
We're pleased to deliver these Q1 results in sharing with you how we view the current market. Despite the challenges facing us we remain very excited about the future long term growth prospects of our business, especially seating they.
We look forward to talking to many of you see virtual investor conferences in May hosted by Craig Hallum in need of.
Thank you again for joining us for Q1 results call have a good evening and please stay safe and well.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect everyone else has left the call.
[noise].