Q4 2020 Earnings Call
Patients officer.
Thank you operator, good afternoon and welcome. Thank you for joining us to discuss our fiscal 24th quarter and year end result.
With me today, or Scott, how our CEO and Warren Jenson, President and CFO, James Arab President and Chief commercial officer will be participating in the Q and a portion of today's call.
Today's press release and this call may contain forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially.
For a detailed description of these risks please read the risk factor section of our public filings in the press release, a copy of our press release, some financial schedules, including any reconciliation to non-GAAP financial measures is available at like ramp dotcom.
Also during the call today, we'll be referring to the slide deck posted on our website at this time I'll turn the call over to Scott.
Thank you Lauren good afternoon, and thanks for joining us today.
I'll begin by saying, we hope you and your loved ones are safe and healthy.
Say that we are an unprecedented times almost feels cliche.
What we are and the rapid onset of the Cobas 19, pandemic, well, how far reaching consequences.
It's unlikely years to calm.
This is a global time, unlike any we had fixed before and we're responding by supporting our global employees customers and partners and community.
Our first priority is always to our people and I am incredibly proud of how seamlessly or 1100 employees transition to working remote.
We are providing our teams with the tools and resources they need to be productive and serve our customers you know work from home environment.
We are doubling down on employee communications, all hands meetings and virtual events to ensure our people feel support it didn't connected to their teams.
And we are soliciting and responding to employee feedback through ongoing surveys.
We held a very successful virtual sales kick off at the end of last month and absolutely you transitioned our ramp up on the road events to a series of virtual summit.
Well it feels as though we haven't missed a beat we also recognize this is a challenging time for our employees and their families and I am so inspired by the resilience grip and customer obsession our teams have demonstrated.
There are silver linings to be found in every crisis.
For lybrand.
This period has served to strengthen the exceptional culture and character of our company.
As a technology partner, we also have a duty to support all our customers and partners.
They adjust to these challenging economic conditions by offering products and solutions that help their businesses become more resilient sufficient and innovative.
Now more than ever it is important for brands to stay close to their customers and that demonstrate that their marketing investments are driving quanta viable business results.
At Library, we remain committed to providing the critical infrastructure required for companies and their partners to connect control and activate data to deliver customer value and drive measurable return on investment.
And finally, we have a commitment to work community and in recent months, we have stepped up our data for good efforts to support organizations that are on the product lines.
For example in mid March we launched a no cost initiative to enable healthcare companies do use our products to recruit healthcare workers to tele health platforms and to reach out to patients with personalized information in a time of national crisis.
In addition.
We are supporting a variety of local nonprofit organizations.
In the cities, where we have offices.
Before turning to the quarter, let me just acknowledge the efforts of all those were working tirelessly to keep us safe and reopened the economy. During this period.
Thank you.
A final.
Important thank you before I transitioning the discussing the business is to build dillard.
Earlier today announced he would retire from our board of directors when his term expires in August.
Bill is a giant in the business world.
As CEO and chairman of Dillard's. He runs one of the biggest retailers in North America.
He has incredible business and financial intellect, and he has been a director from library.
And before that axiom for more than 30 years.
In my time as CEO.
Bill, it's been a professional and personal mentor.
Even took me to all the best Arkansan barbecue restaurants in my first year at Acxiom.
He is amazing.
And I can't thank him enough for his years of service.
We've already started a search for builds board successor.
And we're prioritizing SAS expertise operating experience diversity and deep understanding of the data ecosystem.
Switching gears now to the quarter.
Amidst a challenging macro environment.
I'm pleased to report we delivered another strong quarter.
Highlighted by continued topline execution and improving gross margin trends.
Total revenue was 106 million.
Representing 35% year over year growth.
Subscription revenue increased 28%.
Driven by strong usage of our platform to support more destinations and new use cases.
Including measurement advance TV and second party data collaboration.
Marketplace and other revenue was up 71% driven by a record data marketplace quarter.
We saw strong growth in third party data sales in Q4 to support advanced television targeting and our consumer social program.
We also closed another solid bookings quarter following record quarters in Q2 in Q3.
Up sell bookings in particular were strong and we had a number of nice safe Haven wins, driving our average SIFI the up.
Ending a our our grew 29% year over year.
And our subscription and platform that expansion metrics were a healthy 110% and 122% respectively.
But eat the topline we generated significant gross margin leverage in the quarter and remain focused on driving further efficiencies across our entire cost base in the coming year.
And finally, we continue to support our shareholders through our buyback we took advantage of the recent pull back in our stock to pull forward our planned repurchases.
As a result, we opportunistically bought back over 100 million of stock since December 31st.
Well, we are very proud of our strong finish the f. why 20 like ramp along with most companies will be impacted by the pandemic enough why 21.
We are carefully monitoring leading indicators and key activity metrics, including pipeline.
Sales cycle like conversion rates contraction and product usage to assess the potential impact this year.
We believe in the fundamental strength of our model.
But we'll feel pressure in certain areas.
For example at the end of last quarter, we began to experience a higher trending contraction amongst our smaller customers.
This in addition to some noncontrollable churn events drove the deceleration in net customer adds in Q4.
That said, we are actively pursuing a handful of initiatives to ensure we are delivering world class customer experience. During this time.
We recently released several enhancements to our you why and also made significant improvements in reliability and turnaround times, reducing the average turnaround time by as much as 40% in recent months.
We have also streamlined our customer support structure to get customers faster higher quality responses.
We are also watching our variable and data marketplace revenue closely.
In line with what others in this space are reporting year over year marketplace growth, although positive trended lower in April as certain advertisers paused campaigns spend.
However, we are seeing some early signs of stabilization in may.
While we acknowledge the macro environment will present, some headwinds for our industry and business. We also know that circumstances like these often bring opportunities.
And then the coming months in quarters, we will play from a position of strength.
By leveraging three core competitive advantages one.
The growing importance of our value proposition.
Two.
Our durable business model and three.
Our exceptionally strong balance sheet.
Let me briefly address each in turn.
First we have an attractive and increasingly important value prop for our customers and partners in this environment.
While we would never claimed to be immune to the global pullback in advertising.
We are fortunate to benefit from this secular way toward data driven performance based marketing.
As budgets shift from above the line to below line.
We play a critical role in helping our customers spend smarter and demonstrate clear return on investment.
Our product suite and in particular solutions like Ats advanced TV and Safe Haven.
Helps to ensure every marketing dollar spent his addressable accountable and measurable.
We continue to experience strong global traction with the authenticated traffic solution or a T S.
It feels like the industry is rallying around Ats as the solution for a post cookie world.
We've seen a nice uptick in recent adoption.
We currently have 18, SS Pease life with or implementing yes.
And we were excited to recently go live with Inmobi, our first mobile SSP.
On the demand side, we have 35, P.S.P. Richards bidding on the ideal we're in the process of implementing including a mobi.
These wax Creo and media Matt.
Perhaps most validating is the recent global publisher momentum we've generated.
We now have people based integrations with over 30% of the Comscore 50.
And that publishers onboard in the UK, France, Italy, Spain, Germany, Australia and Japan.
Continuing to evangelize and drive adoption of Ats will remain a top priority in the coming year.
We know this is an area of interest for many of you. So we have included additional resources on our website and plan to host another Ats focused investor web into our in June.
Next we believe the last two months of significantly accelerated our opportunity and advanced television.
If there were ever to be a tipping point for data driven television.
We are witnessing that.
With live sports cancelled and the traditional upfronts cancelled or postponed we are seeing a sharp shifted activity to regional buying and see TV.
Both of which have the opportunity to be data driven an addressable.
Rctv related revenues were again very strong in the quarter.
And our total advanced television business was up well in excess of 50%.
As the economy begins to gradually reopened and as TV advertisers reengage targeting and in particular regional targeting and measurement will become more important than ever.
We are uniquely positioned to help these advertisers find targeted audiences across addressable television and streaming platforms.
And measure how those campaigns are driving business outcomes with data plus Matt.
The dramatic shift to streaming.
And in particular Avon streaming services.
During this time also presents an interesting opportunity for us to help brands find cord cutters and cord Nevers, where they're now consuming television.
Finally, our safe Haven solution has also generated tremendous global interest since its official launch this year.
The current environment has spurred a moment for the industry to pause and reflect.
On its current strategies and practices and as a result, many retailers are looking for ways to modernize their tech stack.
Which is exactly exactly where safe Haven comes in.
I will let warren's share more of a progress in this area in a moment as safe Haven was really born out of the innovative work we've been doing internationally with car for and several other leading brands under Warren's leadership.
Well no one can predict exactly when we will see a recovery or what it will look like what we do know is that data driven advertising has an important role to play today and then even bigger one as advertisers begin to strategize how they emerge.
The other side of this pandemic.
Second.
We have a durable business model and diversified customer base in recent quarters. There has been some debate.
Around whether live ramp is treme SAS or AD tech.
We hope our performance during this period serves to take that debate off the table.
Well appears in the AD Tech space are forecasting shark year over year revenue declines we are forecasting growth.
Library, Mpas enterprise, Hsas, and we generate recurring subscription revenue.
Approximately 80% of our revenue comes from subscription contracts and more than 70% of our committed revenue or RPL is tied to multiyear deals.
This provides us more stability then most as we navigate this period.
We are also fortunate to have a diversified customer base.
With approximately 780 direct subscription customers spanning a variety of verticals and geographies.
[noise] exposure to the most impacted industries like travel hospitality and entertainment is highly manageable.
For these customers, we're developing a series of hit the ground running packages designed to help ready their data in capabilities for a quick restart when the economy stabilizes.
Finally.
We have an incredibly strong balance sheet.
With more than 700 million in cash and no debt at year end, we are fortunate to have the flexibility to continue to invest and product innovation.
And our key growth initiatives, while also making bold investments to secure our future growth.
In the coming here, we intend to aggressively invest in the continued plot formalization.
Of our infrastructure.
And in our key future growth initiatives like television and Safe Haven.
In addition, our strong financial position enables us to explore smart and strategic acquisitions and partnerships like the partnership we announced with Comscore a couple of weeks ago.
Which we believe is a game changer for outcome based television measurement.
This preferred partnership provides customers access to Comscores unified television viewership data spending tens of millions of addressable households for outcome based measurement through data plus math and additional activation and measurement use cases through safe Haven.
In short it means than an advertiser running an advanced television campaign now has even more options available for measurement segment creation and understanding business outcomes.
We are very excited to team up with Comscore to bring these combined capabilities to market.
To conclude I'll end, where I began.
We are an unprecedented times and we expect this pandemic have lasting effects on how companies do business now and in the future.
But as warranted I've, often said data usage is only growing in importance during periods of great uncertainty leaders lead and we will navigate the coming months in quarters from a position of strength.
We play a critical role in helping companies deliver relevant and meaningful experiences to consumers.
We have a set of products designed to deliver immediate value to customers by enabling their marketing spend to be addressable accountable and measurable.
We have a recurring subscription business model diverse customer base and a strong balance sheet, which provides us flexibility to drive innovation and invest for long term growth.
And importantly, we have a nimble and resilient culture and a team of global light rappers who are up for the challenge with that thanks again for joining us today and a big Thank you to our exceptional customers partners and employees for their ongoing.
Port and hard work.
I'll now turn the call over toward.
Thanks, Scott and good afternoon, everyone. Thanks for joining us.
Before jumping in I too would like to thank our associates for their awesome work over the last several weeks I feel fortunate to work with such great people.
I also hope that all as well for each of you and your families.
I'd like to focus my remarks today on four areas.
First briefly talk about Q4, highlighting the strength of our position going into this downturn.
Next share a few performance highlights from April and the first two weeks of May in other words, what we're seeing right now.
Then share a few high level observations about halfway 21, and finally, our Q1 guidance.
Q4 results library amps position of strength.
Please turn to slide four.
Well in short we entered this crisis with considerable momentum and from a position of strength.
Almost every critical metric was up close to or over 30%.
Q4 revenue was up 35% subscription revenue of 28% bookings grew by 31% current ARPO or our next 12 month backlog was up 29% an A.R.R. ended the year up 29% and notably marketplace was up 71%.
Driven by the strength of our performance in TV.
Net retention was 110% and platform net retention was a strong when 22.
Our growth initiatives are honor roll and setting the pace for innovation globally.
Hi, Graham Safe Haven earlier this year, we launched our safe Haven platform and we've been winning globally. This calendar year, we've entered into safe Haven partnerships with over 10, leading global brands, including.
Another top five U.S. retailer one of the largest pharma companies in the world.
Car, while the leading online automotive marketplace in the UK and then my Q, a programmatic media platform in China.
In addition, TV had a standout quarter TV related revenues were up over 70% year over year.
Operationally. It was also a great quarter is our gross margin exceeded 70% for the first time as a standalone business.
We have now fully absorb our extra public company infrastructure costs interestingly in the U.S.. Our gross margin was 73%, which is very close to our long term model commitment.
Our operating loss was 16 million.
As part of our year end close we scrubbed, our balance sheet and added approximately 3.5 million in incremental bad debt reserves to cover potential coated related challenges.
Our total expenses approximately 10 million was largely onetime in nature.
And lastly, we ended the year with a very strong balance sheet.
Our cash balance was 718 million and we have no doubt.
We've been through our receivables with a fine tooth comb and we feel our exposures are appropriately reserved.
We were careful over the last few months, but at the same time, we're opportunistic with our buyback.
And as a result, we took the opportunity do front end load RF way 21 repurchases.
Calendar year to date, we have repurchased 3.1 million shares for total consideration of 103 million.
Since inception of our buyback we have returned approximately 1.2 billion to our shareholders.
In summary, we ended up way 20 in an incredibly strong position.
We are in the middle of the powerful secular growth curve and have a great set of customers employees and products.
Our lagging in leading performance metrics are strong and our products are winning we're hoping to power the secular trend toward outcome driven advertising and addressability.
And finally, we have the balance sheet that is the envy of the industry.
But as we all know that was then so what are we seeing now.
For the next several minutes I'll focus my comments on three areas first metrics what are the numbers telling US next what do we done to manage the crisis and ensure we will lead and win in economic recovery and finally sharp perspective on anyway, 21 and provide guidance for Q1.
Metrics.
What are the numbers telling us.
Please turn to slide 13 industry concentration in customer concessions.
First we are Hsas and as a result, our revenues are highly durable.
As this chart shows our client mix is also diverse.
As you would expect we've worked with our customers who have been severely impacted.
For those customers in some cases, we have temporarily pause or service and billing for a short period of time, usually about three months.
Typically that accommodation Hes also included a contract extension.
To date concessions have been highly manageable and have totaled about 4 million.
These concessions will impact our near term revenue and have been factored into the guidance. We will share later on this call.
In summary, our client mix is diverse and our SaaS revenues resilient.
And well things could always change customer concessions have been manageable.
[noise] April results, please turn to slide 14.
In short we grew.
Subscription marketplace and they are all improved year over year.
We continue to win in close business further we have seen no deterioration in the records being uploaded into our platform.
In fact, our volumes indexed against the first 10 weeks of the calendar year, we're up in April and for the first two weeks of May.
However, the usage portion of our subscription revenue as a percentage of total subscription revenue did decline compared to the prior year.
Typically the variable portion has averaged between 10 and 15% of total subscription revenue.
For the month of April in the first two weeks of May variable is averaging low to mid single digits as a percentage of total subscription revenue.
Net while down as a percentage of revenue we continue to see usage from customers in excess of their committed minimums.
Before talking about our approach to and outlook for up by 21, I'd like to share a few of the challenges we are seeing.
Well, we are obviously thrilled with the resiliency of our platform and the reception of our products, we would be the last to argue that our businesses not being impacted by the downturn. It has been in is.
Specifically, we would highlight that we have seen pipeline push out.
Make no mistake, we're still closing deals but deal cycles are extending.
Next we expect our net new customer adds to slow considerably as a result of higher churn and fewer new deals closing in this environment. We felt some of this pressure in late March.
And it's conceivable that we may have a quarter, where our net adds are flat to down.
We expect our results internationally to continue to be pressured.
Next we expect our retention metrics to be pressure for the reasons mentioned above and it's very possible that there will be more requests to put our service on hold particularly in industries were recovery will lag.
In summary, we feel very fortunate to be the category creator and innovator in a business, which is benefiting from a powerful secular trend.
We are Switzerland, and the industry needs a neutral identity infrastructure.
Our products drive real results. This is more important than ever during this critical time.
We're hsas and the resiliency of our subscription business is clear and finally, we are clearly feel it while we are clearly feeling the impact of macro forces, we have and are managing the impact.
In short we are still growing.
I would now like to spend a minute ensure our approach to the macro challenges.
As many of you know I was Amazon CFO in the company's early days.
20 years ago, the markets in press turned on Amazon.
Pretty sure. It was the Wall Street Journal, who came out with the headline Amazon Dot bomb.
The stock went to $7.
That said Amazon had a unique advantage and challenge.
Its customers love the service, but the company was bleeding hundreds of millions and absent change was a garner.
Seems hard to believe today, but true.
History now tells the rest in those start days Amazon Amazon became free cash flow positive, but simultaneously drove massive innovation used goods were sold next to new.
The company and entered into platform joint ventures, with twice or us and target and as a result, the origins of Vws were ceded.
It's fulfillment centers became an asset as third party merchants could use amazons infrastructure and sell next to Amazon's owned inventory.
Let's sell them discuss though was how buttoned up Amazon became.
In short order every operational process got good.
My words, Amazon got control of the knobs really really fast.
And 20 years later, the rest is history.
So what do we have been up to it live Ram.
As the world around this changed our leadership team gathered virtually in mid March and set some objectives and guardrails for re planning the company's coming months in quarters.
Specifically, we would protect the health and well being of our employees and our company's culture.
Delight, our customers and focus on their needs.
Deal with the new realities and moved quickly to take action and finally take steps to ensure we would protect our business in the short term, but also went in recovery.
Specifically on the topline doubled down on new initiatives like Ats, TV and safe Haven and on the bottom line tighten up our operational processes to accelerate our drive toward operational excellence profitability and margin expansion.
Please turn to slide 16.
This page summarizes the financials associated with eight weeks of focus planning and activity across every function of library.
We built detailed plans for accelerating our investments in Ats TV Safe Haven, and B to B. These investments will mostly show up in R&D.
Next we have built strategies to boost productivity in every functional area of the company as an example, as a result of changing work practices, we don't intend to add any new lease space This coming year.
We have also retooled our quote to cash practices.
And where we had opportunity we went after reducing discretionary spend.
In short, we're excited and leaning in.
We have protected innovation in our doubling down on some big opportunities and at the same time have dramatically brought in our profitability timeline.
I'd like to close by summarizing our thoughts on halfway 21, and then provide specific guidance for Q1.
Please turn to slide 15.
Well, we don't intend to give traditional full year guidance, we wanted to summarize the positives the challenges and the likely implications are net takeaways are on the right.
Secular trends are in our favor.
We expect quite 21 will be a growth year, albeit modest.
Given what we see today, we expect meaningful profit improvement and manageable cash burn.
Our balance sheet and liquidity our secure.
And finally, the importance of our platform and products puts us in a great position to win and accelerate and economic recovery.
For Q1, we expect.
Revenue of approximately 88 million and a non-GAAP operating loss of up to 12 million.
Please keep in mind this guidance excludes intangibles stock based compensation and restructuring and related charges.
A few other call outs in Q1, our guidance is intended to be conservative, but it is also appropriate.
Given the sequential decline in revenue, we would expect gross margin to be down sequentially.
We expect approximately 6 million of restructuring and related spend and $1 million of Capex.
Finally for the year a few additional items.
Buyback.
Given the market dislocation, we purposely front end loaded our repurchases. Therefore, we do not expect to be in the market for the remainder of the calendar year that said.
We will not hesitate to be opportunistic should circumstances warrant.
Note that during the year, we expect to receive a tax refund of approximately $30 million as a result of being able to carry back RF way 20 tax losses.
Other full year guidance items have been included on slide 19.
Before opening the called the questions I'll close with a few final slots.
First again, a huge thank you to our customers and employees. It is you who make this company great.
Next we are approaching the coming months some quarters from a position of considerable strength, we are hsas and our revenues are resilient.
We sit at the center of the strong secular trend and have taken steps to deliver solid top and bottom line performance through the downturn and our investing and tightening to ensure we lead in recovery too.
It's a great time to be applied ramp.
With that operator, we will open the call two questions.
Thank you as a reminder, in order to ask the question Press Star then one on your telephone keypad. Our first question comes from Dan Selman with BMO capital markets. Your line is open.
Hi, good afternoon, everyone. Thanks for taking the questions.
I've got one for Scott one for Warren.
I'd be curious just to hear a little bit more of that nuance on your.
Conversations with clients, if we can and at certain remove the effective the pandemic, if thats possible and and what the tone of conversations with clients around.
Some of the key issues that were driving adoption of your your products previously, including obviously that the challenges to third party cookies and particularly the notice that a lot more people tend to take once once chrome made their announcement regarding that so I'd love to just hear what the the conversation is broadly around.
Where those priorities still lie.
And then Warren.
I understand the fiscal 21 guidance by.
Albeit modest growth.
I guess, when we see that compared against the.
Plus 14% in April I guess, it's fair to say that were.
Some of these negatives.
Around especially say pipeline pushing out in some concessions are are driving something that we would expect to be below the April rate is that how we should take modest to be.
Thank you.
So Dan it's Scott no all start but also invite James James on the call with us as well and so he can probably provide some real anecdotal color around what im about to say.
So what I would tell you that is.
There is you know a real headwind from co bid, but also a real silver lining.
And you know certainly the economy is in a different period different state than it was just three short months ago, and we absolutely work with some clients who are hard hit by that.
Travel retail automotive they have been hard hit and you can see it and.
In particular, there their television investments there broadcast television investments I mean really pulled back.
But within that backdrop, I think all of our clients have found that they have a little bit of breathing room to stop and think as opposed to just execute execute execute and so the conversations around third party cookie deprecation and their response have certainly.
Celebrated we especially see that from publishers.
I think there was kind of.
A misperception in the industry that.
The authenticated traffic solution was a replacement for third party cookies no. It is it's not an or it's on the hand that even before third party party cookies go away.
Publishers, who embrace Ats can make what was 40% of their inventory that was previously unaddressable through safari or Firefox.
You could actually lock in significantly higher yields.
20% more.
And so as a result, those conversations have really found wings.
Our direct clients also.
As they think about what spend remains and what additional spend.
They'll activate as they come out of the recession. They are really focused on measurability.
And ROI.
And those two characteristics really play to our strengths.
So.
Yeah, we were talking earlier.
We tend to be the the last one to leave in the first one back.
Meaning that.
When.
Clients turn off their efforts.
The direct accountable stuff is the last thing that they'll ever want to touch and it's the first thing that they want to reactivate coming out of a downturn.
And so that spurred additional conversations for us and things like connected television where clients realize there's no upfront.
Behavior is shifted in home behind screens and the only way to reach young people is through connected television the likes which we can provide Moreover, because we have a doubt us that.
That allows them to by far more granular orally than GRP user TRP cheese.
They can actually target their audience more effectively so a lot of good opportunities for us to go mining and this downturn.
And then Dan Hi rebate.
James go ahead.
Oh sure Thanks Mark.
Hey, Dan on Yeah, just to give you some some kinetic thats because clearly.
The covered shutdown is having an impact that no one could've predicted a few months ago.
But our conversations where their clients have always been around two primary seems and that's addressability measurability.
And the interesting thing we saw at the end of last quarter and then even in April.
Many we are seeing some pipeline push we're also seeing some other companies.
Look to this is an opportunity to really think about what to do once they're out of the covet shutdown.
And just two examples I want to give you one is with a on a.
Fantasy sports platform.
And we talked for sure our deal at the end of last quarter would be dead in the water.
But we were able to show them that once we get through this period here is all the things they need to do and they ended up signing a deal at the end of the quarter. So we're really pleased with that and that's an example of the company thinking about what happens after the shutdown I'm in another one is in the QSR space, we assigned to a new logo deal.
Seven figure deal with one of the major QSR companies out there and you know there clearly not as impacted by the Cove. It carried but they are using this as an opportunity you really think about their strategy and think about how to drive to more of a data driven approach how to drive to more measurability and more addressability.
So this there's there's certainly a lot of silver linings, and what's happening and we really believe strongly where.
Well positioned to help our customers through the recession and to really recession proof their businesses.
And Dan.
Let me add this war and let me chat a little bit about our guidance.
First let me just started up by saying we were incredibly pleased by what we saw in April and the resiliency of of our business across the board.
As you would expect however.
We'd like you were watching everything very very carefully and in particularly in particular watching the variable portion of subscription revenue and marketplace.
So what about our guidance a couple of things I Wanna mention.
First as I did in my prepared remarks, we intended our guidance to be conservative and let me just kind of put another phrase around that.
We wanted to give you guidance you can take to the bank and I'm going to mention three things first.
First of all overall revenues will be up for the year subscription revenue will be up for the year and we expect profitability improvement. So again, we fully intend to the guidance to be conservative be conservative and secondly guidance you can take to the bank.
Thank you.
Thank you.
Your next question goes for stands Blocky with Morgan Stanley. Your line is open.
All right now I think it's a much hey out ladies and gentlemen.
Thank you so much for taking my.
My questions I'll first one for me the the connected TV business.
We certainly hearing a lot about it in the industry news.
With the upfront is going away as you mentioned.
How are you thinking about.
This business and whether this really could the coded as terrible is the whole thing is that maybe this could be a massive shift in the finally pushes the whole industry away from the direct legacy way in which you know TV advertising was bought.
And really push it to this connected TV and digital.
A little buying and then have a quick follow up.
Yes, Dan it's Scott.
So connected TV for US was up very very strongly in Q4, and we expected to have another.
Very strong double digit growth year and fly 21, I do think this is close to a tipping point as we'll see.
Things are starting to move I think that the first harbinger for US is just the sheer number of client conversations that we feel that.
Yes, it's picked up perhaps than the last couple of months. However, these were strong over the last six to eight months that this trend was already coming.
The other thing that I mentioned briefly in my prepared remarks.
But.
One of the advantages that we have as a company right. Now is we do feel like we have a really strong balance sheet.
And thats going to allow us to be very strategic.
In commercial deals as well and so one of the things we announced in the last couple of weeks was our deal with Comscore.
And the television space there are kinda two things that really matter number one is addressability the ability to identify who's living behind the set top box and that's something that we've long a prided ourselves on the ability to do but the other piece of that is viewership what are the way.
Touching.
And through the Comscore.
Commercial deal that they announced on their earnings call. A couple of weeks ago. We have licensed viewership data for a really significant number of households, I mean, when you talk about both set top box and connected television.
We are talking upwards of a 80 or 90 million devices.
So that really I think allows us to bring scale.
To the conversations we have and really offer a compelling value proposition to our advertisers. So all those to say, we're really excited about what's to come here.
Got it and then just a follow up on Oh.
The expansion.
Well actually I guess, the flip side the contraction rather they use that you're you're seeing within.
Your your existing customers.
Maybe help us to break it down between the 22% of your air our that's really coming from these heavily impacted industries and what you're seeing there is that is the contraction. There you know as unlocking a full stop we're stopping everything.
And well or is it maybe just a slight pull back and then the other 78% or your business and what the contraction looks like on the other side. That's it for me. Thank you.
James and this is James.
Well go and take this so so.
Let me start by saying Q4 was a really good quarter and Scott mentioned in his prepared remarks.
It was our third largest bookings quarter ever and similar to other quarters for F. Why 20, yes, roughly 65 ish percent of that was an upsell. So we are still seeing significant growth.
And our customer base now what we experienced towards the end of Q4, and what we're being very cautious of in our guidance for F. By 21 is we did see a number a very small clients sub 50000, all your clients pull back and and we saw churn from there. The other thing we saw.
[noise] was some non controllable churn there was some major acquisitions that have happened where both of our clients both sides to our clients that we saw.
That impact us to certain extent.
And then some bankruptcies and some non payment we saw that tick up quite substantially in Q4 as well.
So all that being said.
We're always looking for ways, we can provide more valuable to value to our customers.
And we'll continue to do that.
And we've always said that that churn is an opportunity for us.
And we're really looking for ways that we can continue to drive more value now the the covert impact for specific to 22% that we outlined.
There were what we are seeing is that mass for concessions and and were being a good partner and we recognize that they're going through some very very tough times right now and we're working with them as they shut things down right now but.
We don't view this as a situation.
For the for the companies that that survived this we think many.
Our customers well, we don't necessarily view that covert shutdown is as it has a churn event in fact, just earlier today, a major hotel chain that.
Two months ago had asked us to pause because they were shutting down everything I have for allowing employees. They came back to us today and said, they're starting back up we were expecting the conversation to be hey, we're going to need another month or we're going to need another two months and it was the opposite they're already gearing up for the reopening.
So we're viewing that as a as it really positive sign.
Perfect. Thank you so much.
Sure. Thank you.
Our next question comes from Brian Fitzgerald with Wells Fargo. Your line is open.
Thanks, Ken one job well done this little bit more on on the mechanics of that lower usage is is it fewer campaigns your segments customers using fewer touch points or just the impact of that to your point.
In two or pulling back very hard in advertising and any broad.
The answer themes.
He is out there how quickly you see that bouncing back.
As we.
Thats it thanks.
Yes, I'll start and then we're running you weigh in with some of the Matt macro metrics that we're seeing so.
For the customers that have requested a pause and really this is a concession that forgiving.
It's really due to the fact that they've either completely shut off all marketing.
In many situations have furloughed employees because of the shutdown, where theres just no reason for them to be spending that money, but where we're seeing engaged with these customers for being a good partner and we're also doing is we're helping them build their startup plant. So Scott mentioned this in his remarks as well.
Once we get out of sort of Covitz shutdown mode.
There is going to be a meaningful recession, and we strongly believe we can't help our customers through recession, because budgets are going to be constrained and what they're they're going to need to maximize the value. They get out of every marketing dollar they spend and the way. They do that is through Measurability and addressability and that's the areas that we really help them.
So for for many of these customers that are on pause.
We're staying engaged we're working with them on their plans for how to restart and what they should focus on.
And we believe that will help them and will help us accelerate out of this very quickly.
A.
Couple of things, Brian that I'd mention that are also I guess, one thing very specific to the numbers and then a couple of things anecdotally.
It was really interesting.
Large global consumer brand that spends I don't know how many hundreds if not billions of dollars on advertising.
Came to us about 30 days ago, and they said we've pulled back 80% of our advertising globally, but we have also made the decision that when we come back we're going to come back with 100.
100% Addressability.
And so we are working with this brand on putting them in a position to do exactly that and that's the sort of thing that were that we're seeing from our customers.
The second thing is that.
Obviously as it comes to usage for April and for the first two weeks of May It's Dan We said low to mid single digits. So call it four or 5%. So it is down from 10 to 15, but it's still positive and would argue at least for now it's certainly certainly stable.
And then one other interesting specific.
In terms of the concessions we've given to people.
As noted in the call and I'll just repeat it typically there 30 to 90 days and then also.
For the vast majority of those we also extended our clients so or extended our contracts. So it was very much just a pause and over and then James wasn't it over 70% of those requests came in the first 10 days or so of April. So this was very much can load it and we just have not seen.
In any kind of volume like that over the course of really the last four weeks.
Yes, that's exactly right.
Got it thanks, James Thanks, Mark.
Got it.
Your next question comes some Cheyenne Patel with Susquehanna. Your line is open.
Yes, good afternoon, and thanks for all the attic transparency in color.
I wanted to ask a few questions or couple of questions around the marketplace business. It seems like it's trending much better than what we've seen for programmatic spend and I was just curious why you think that is and.
When you when you look at just the programmatic display portion of that business are you seeing any changes in terms of data elements per campaign.
Let uses there.
And then warrant.
In your and your fiscal year expectations just in your base case, how are you. How are you thinking about just the marketplace line. Thank you.
So a sham it's Scott first off on the marketplace business.
Remember that if you think about the customers of our data marketplace business, it's actually fairly broad.
Yes, we work with direct brands, but we also work with some of the large platform and tech providers and importantly, when they're ingesting data through our data marketplace, they're using it to enhance their own products. So it's not just for a programmatic it can be for probably.
Domestic it can be for television, but in many cases, it's even.
More broad than that.
I think.
There's going to be a real benefit in the coming year for us and.
With with television.
Because.
To the extent that at advertiser feels that just buying been demographic sets on broadcast television that no. One is watching anymore is as kind of a tired approach well they can actually utilize data plus bath too.
Go find a much more granular audience. So we think that.
I will be an enabler.
For that business over time.
That said it is the one area because its variable.
Much of it is not subscription.
That we think will be most impacted by.
The recession in so we put in place a conservative forecast in terms of the data elements that people are buying the mix.
It's not something I know off the top of my head, but we'll look at that and lets you know I mean, we certainly have good line of sight to that.
And then in terms of our guidance or it's just our outlook for the year.
Probably just repeat a little bit of what Scott said, where we're again very pleased by what we've seen in April and what we've seen really month to date in may.
That said just given all the uncertainty. This is one of the areas that we're watching throughout the year and we've tried to be.
Appropriately conservative in our internal outlook, such that we right size everything.
But at the same time, we're optimistic but but also cautious.
Great. Thanks, guys.
Thank you.
And our next question comes with from Kyle Evans with Stephens. Your line is open.
Hi, Thanks, Scott you May show that Hey.
You mentioned that that Ats was causing.
Some of your constituents to rally around in this kind of a solution in a post cookie world could you talk about what you've seen.
Graphically I know there are other countries that have higher exposure to suffer in Firefox I was wondering if that was a good kind of leading indicator for for what we would expect from the rest of world going forward.
Warren worn runs our international business, you want to when talking about jump in and I'll follow up okay.
In my prepared remarks, I talked about.
Just as the traction we have gotten.
Outside the U.S. I think we've signed.
Double digit international publishers in the last quarter as an example.
And in certain markets, particularly in Europe and much of Asia.
This is.
The only solution for publishers them and they have even more stringent.
Privacy regulations that they need to navigate and so it's just so important that they go out and rather than rely on someone else to sit as the intermediary and potentially disintermediate them that they collect their own authentications their own can sense.
And he publisher who as compelling content.
Is already offering a value exchange and it's just making that from being an implicit value exchange to explicit and as soon as they do that as soon as they collect those consents and literally upload a lighter code on their page.
Benefit from Ats, then they can start to generate significant advantages and monetization. Our initial tests have suggested that could be 20% or more and obviously in markets that have the.
Most adoption of Safari in Firefox or the most exposure.
Chrome the yield is going to be even greater.
And the urgency to adopt something like Ats will increase so as a result.
Lot of traction I think the biggest challenge for us is how to evangelize that without good on airplanes, but our team has done a really great job.
Hosting bid concessions webinars and we have a lot of content on our site if you're interested in learning more Kyle let me add a couple of things to what what Scott said that really excites us from an international and global perspective.
I'd, just remind everybody that ats is not a U.S. thing it's a global thing. So it is truly a global product offering for life ramp and when you think about our acceleration in recovery. This really global ice as our company much much more quickly.
We have momentum with Ats in Japan, we have momentum with Ats in Australia, we have momentum in Italy and Germany.
France UK.
And keep going in Spain. So this is a global phenomenon and it is a global phenomena with brands and many of the largest advertisers in the world again are not simply U.S. companies their global companies and they want uniform Addressability and every single market in which they operate and Thats a very very positive thing for us.
The second thing that I'd note for everybody that has had time to sit down and work with us in here about what we're doing with our safe Haven platform, Ats and and and Safe Haven are very natural partners and their natural partners for brands and their natural partners for publishers, which again.
Accelerates our opportunity.
Again, when you think about safe Haven, it just revolutionizes how companies collaborate and it was also built in a privacy first way. It was built for GDPR. So the combination of those two things really we believe speak and in fact the results are showing it.
Bode well for us globally over not only the near term, but also very much so as the world moves on from this crisis.
Great. Thank you.
No. It's all the time that we have for questions I turn the call back to Warren Jenson for any closing remarks.
Great well. Thank you operator in a again a huge thank you to everyone for joining us today and most importantly.
I'd like to repeat something I said in my prepared remarks, I'd just huge thank you to our customers and our employees. It's it's you who make this this company great I'd like to conclude with I guess, just if you few thoughts as you think about.
The year ahead, and what we've talked about today.
We will grow enough by 21, and our subscription revenue will grow in F. Why 21, when we think about momentum in the near term and we think about momentum in recovery our products are winning whether that TV, whether it's safe Haven, whether it's eight ats.
We believe we've given you guidance the you can take to the bank.
With profitability improvement and that is always for everyone. Just as we've done this past year.
We will be highly strategic with our capital.
Let me put it this way in the near term and on anything discretionary we will be very stingy, but also we intend to be very strategic so with that thank you all very much for joining us we look forward. The tucking speaking with you over the coming days. Thank you.
This concludes today's conference call you may now disconnect.
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