Half Year 2021 Tremor International Ltd Earnings Call
Whether as a result of new information future events or otherwise, except as required by law. Additionally, the company's press release and management statements. During this conference call.
Include discussions of certain measures and financial information.
And non ifr at terms, we refer you to the company's press release for additional details, including definitions of non <unk> items and reconciliations of Rs to non ifr as result.
At this time, it's my pleasure to introduce <unk> CEO and chairman of International Ofer. Please go ahead.
Thank you Paul and welcome to everyone for joining today's earnings webcast.
This is our fifth Marysville major communications is listing on the NASDAQ on June 22nd before reviewing the highlights of our second quarter and first half of 2021 resorts I would like to talk briefly about who we are the market in which we operate and how we have positioned the business for future growth.
Afterwards.
Our Chief Financial Officer forgive me.
He will review the highlights of our Q2 financial results.
Following that we'll be able to take your questions.
Before getting into the details travel delivered amazing Q2 results that when combined with Q1 represent great progress and Testament to the success of our strategy.
Driven by our end to end platform, which is focused on video data and connected TV.
For the three months that ended June 32012, we generated contribution ex Tac of $74 million compared to 24, $28.5 million in Q2 2020.
160% growth and adjusted EBITDA of $37 million.
Two $1.2 million in Q2 of 2000.22009 time schools.
And for the six months that ended in June 30, 'twenty, one we generated contribution ex Tac of one other than $37 million in U S dollars compared to $61 million.
In H, one and 2021 other than 25% growth.
And adjusted EBITDA of $65 million compared to $1.8. During the same period last year.
35 times growth.
Our <unk> revenue grew 280% in Q2 2021 versus Q2, 2020 and grew 249% in H, one and 2021 compare to H one 2020.
Central to this performance is the strength of our end to end technology and business platform.
Later in this presentation I will also touch upon the progress we achieved in the CTV, which is also key performance to our driver for travel.
We also achieved a 46% EBITDA margin in Q2 of 2021.
Corporate revenue basis, and a 51% margin on net revenue, which is higher than the median of the directors.
Finally, 92% of our net revenue in Q2 2021 was generated in the U S highlighting <unk> strength and our most important market, but also showing the upside potential we have to expand our global footprint.
Proud to say the Trimble is recognized by the industry as the leading video and connected TV focused epic platform for.
For the second quarter of 2021 video and connected TV comprised 82% of our revenue ex Tac.
Nick.
Please note that for accounting purposes, We report contribution ex Tac, but we view this as our net revenue.
Omission.
Years ago, we set a vision and plan to transform <unk> into a unique market leading company focused on video and CTV deliver true a full end to end tech platform capitalizing on our collective experience and expertise integrating companies. We have peaked and acquired companies that were.
Committed to investing in these areas and connected them to create a powerful platform.
Successfully completing three major acquisition in about three years, we have created what we believe is one of the leading end to end technology and business platform offering video data in CTV.
Further we believe that owning.
And end to end platform comprised of our demand side platform supply side platform and data management platform give us a competitive advantage in the marketplace.
Success of this forward looking initiatives is the driving force behind our strong growth and financial results, we reported earlier today.
Die level of success, we achieved completing the integration of our newly our last acquisition in January 2020 about a year ago.
Translated into a strong organic growth and profitability.
It's worth touching upon the fact that although COVID-19 proved particularly challenging in the first half of 2020, but it also serves as an opportunity for trimble to focus our vision and accelerate our strategy and utility.
Yeah.
We have built and positioned travel to achieve success for the long term supported by favorable fundamental changes occurring within the advertising industry, which we believe will provide us with a long runway to grow over the coming years.
Now, let's look at our core strengths and differentiation.
Core differentiation is grounded in our end to end business platform, which has validated our approach and is fueling our growth and profitability Brexit at Crisil.
Become more sophisticated or two hour they reach their target audience, while simultaneously seeking to simplify the execution of their campaign.
Direct address these needs by providing flexible solutions to address the increased complexity of the industry.
With many years of product development experience and knowledge, we have established credibility in the market for best in class video and CTV capability. This level of experience is unique in the industry.
<unk> bulk clients.
The key trends driving our growth include.
The shift of advertising budget from broadcast and cable TV to digital platform growth in usage of video advertising formats.
Focus of leveraging data together with significant scale.
Which to deliver amazing audience targeting benefits and capabilities to our advertisers the growth in CTV.
And market trends, such as supply chain optimization and increased emphasize on consumer privacy around cookies.
Video is the fastest growing format in the U S markets.
In terms of AD spend and is viewed as the most engaging format by advertising.
We have established track record of video capabilities and expertise, resulting in almost 200% growth in our video segment.
Which was significantly higher than the CAGR achieved by the industry.
We are also focused on the fastest growing China's by device CTV and mobile, which collectively account for 79% of our net revenues and 86% of our programmatic connects revenues.
Our city and mobile growth has significantly outpaced industry, that's one other than 67% year over year compared to 20% for CTV and 12% for mobile in the U S.
It's the fastest growing advertising medium by expense CTV represents a tremendous growth opportunity for travel.
There is an anomaly between the AD spend on CTV, which remains lowering relatively to other digital advertising channel and the extremely high viewership and engagement from consumer while consuming content to CTV data we.
We expect that things will catch up to the eyeballs and advertisers will continue allocating meaningful portion of their budget to CTV, which will benefit tremble aesthetic CTV represent 28% of our revenues and continues to increase.
Tremor walks with premium and well known brands that have global reach and a large addressable digital expand our revenues is widely spreads across a variety of verticals, including entertainment CPG finance restaurant travel Elk and many more.
Our emphasized was that that is being supported by our ability to lay that out through our proprietary DMT and our unique partnership with other providers.
This enable our advertisers to target their audience with precision to the growing exercise on CTV, where we offer strong bridge through the growing number of our partnership.
We continue to partner closely with top brands in our industry and are proud of the strong global partnerships.
Two partnership highlights from Q2.
Include our integration with Libre.
That will help connect marketing demands two high quality publisher inventory across channels, while fortifying data driven customers insight for improve activation and measurement and our launch of in are still really targeting which will help our advertisers partners to increase their audience reach.
Finally, our in our creative studio truly Brazil pronounced truly continues to be a differentiation for <unk> international.
With some of the world's top brands leaning into our bespoke solution.
In Q2 alone while others 50, 75 different brands run over 800 million impression of truly custom creative through tremor video and unruly platform and we sold $18 million in custom creative in Q2.
With those introductions comment complete it is my pleasure to turn the call to secondary to review our financial results.
Thank you Sir and thank you everyone for joining us today.
Certainly encouraged to see our momentum building as we move ahead of the first half of 2021.
Today, well be discussing some of the highlights of our Q2 performance as well as some of the key financial and operational drivers during the quarter <unk> International achieved another outstanding record quarter in Q2 with revenue and adjusted EBITDA propelled by organic revenue growth.
In Q2, 2021, we've completed an exciting dual listing process, resulting in an equity raise we've investor endorsement and tremor, bringing the total gross proceeds of our offerings of approximately 147.
9 million before underwriting discounts and fees.
For the quarter ended June 32021, tremor generated $74 million. The net revenue the key metric we focus on in evaluating revenue performance, an increase of 159% year over year significantly stronger.
The digital AD industry growth.
Our CTV revenue grew 280% in Q2 2021 versus Q2 2020 and are poised to continue this strong momentum is increasingly more business is being transacted through programmatic platforms.
During the same period, our video revenues grew almost 200%, which again was much faster than the focused at CAGR for video advertising.
As a result of running an efficient business, we achieved adjusted EBITDA of $37 million in Q2, $2086 million in <unk> 2021.
Our adjusted EBITDA margin of 51% and 47% out of Mis revenue respectively.
Our net revenue grew 155% in Q2 year over year and came in at $74 million for Q2, 2021 versus <unk> 9 million in Q2 2020.
All of which was organic growth.
We continue to consistently generate meaningfully positive EBITDA, while investing in the critical areas of our business that can got that can drive our future growth.
We have been generating positive EBITDA since 2014, and ended Q2, 2021, and <unk> 2021, with $37 million and $65 million, respectively, representing again, a 51% and 47% margin on net revenue respectively.
We saw very strong year over year momentum in Q2, and <unk> 2021, which increased our EBITDA by 29 time, and 35 times, respectively compared to the same period in 2020 underpinned by enhancing filament of our Omnichannel product offering.
The full integration of then really business offering and relations into tremor.
And the utilization of our economy of scale and efficiencies through our cutting edge tech platform, allowing us to translate the majority of the growth directly into the bottom line.
Our early entrants into CPG, coupled with the enhancements we made to our offering during the pandemic resulted in 280% year over year CTV revenue growth in Q2 2021.
Our video net revenue increased 199% from $20 million in Q2, $2000.20 million to $61 million in Q2, 2021, and was driven by our video capabilities and focus.
Even though there is seasonality in the industry, we experienced significant growth in the first half of 2021 during which we exceeded market expectations and prove that our strategy is working.
We believe we have a competitive advantage from our Omnichannel end to end platform Vince versus one dimensional solution.
Tremor structure of running its own data centers alongside cloud based computing allows us to deliver consistent performance guaranteed quality and massive cost efficiency.
We have an efficient and profitable business model with high efficiency around operating cost needing to maximum operating leverage economies of scale and strong productivity.
Among our peers.
<unk> is one of the highest margin and operational profitability, resulting in 46% adjusted EBITDA margin in Q2, 2021 on a reported revenue basis and 51% on a net revenue basis.
Turning to our cash flow, we generated net cash from operating activities of $57 million for Q2, 2021 vessels 7 million in Q2 2020.
Cliff.
Ultimately 700%.
We ended the quarter with cash and cash equivalents of $275 million after over.
$172 million from the prior quarter, which with this regarding net proceeds of our offering grew 54.
In the quarter.
By 31st of July, we had $314 million cash and cash equivalents with no debt.
We also experienced 99% free cash flow conversion during the quarter.
Non <unk> diluted earnings per share of class a common stock is 23% for the quarter versus <unk> fluff on Q2 2020.
And finally, and now turn to our outlook for.
For the third quarter of 2021, we expect net revenue to be at least $75 million.
Which represents year over year growth of approximately 50% and adjusted EBITDA to be approximately $37 million.
Which represents year on year growth of approximately 85% and expected adjusted EBITDA margin of 49% as a percentage of net revenue.
We believe that our growth profile and healthy balance sheet positions us extremely well to take advantage of the rapidly growing market opportunity in front of us.
And with my remarks completed I'll turn the call back to offer.
Thank you Siggi to summarize Trevor operates in the fastest growing segments with digital advertising and ecosystem consisting of video CTV and usage of data. These fast growing areas of digital advertising accounts for 85% of our revenues.
We created an end to end platform that addresses the opportunities in the market mainly around the simplicity clients are looking for uses of data and supply path optimization. Our success has been proven out by the strength of operational growth and financial performance.
Our focus on CTV is evidenced a CTV represent approximately 28% of our net revenue.
And is expected to be driving force and our growth going forward and in our product roadmap.
The combination of our strong tech platform selectivity and discipline provide an excellent roadmap for our continued operational and financial success.
We strongly believe that we have a lot of room to grow and remain confident for the future.
Operator, we'll now open the call for investors question. Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster.
Our first question comes from the line of Laura Martin from Needham. Your line is now open.
Can you hear me okay.
Yes.
Great Fantastic.
Good morning, Greg Comverse, Congratulations you guys.
So I'm very anxious.
One of them.
Yes.
Most of the online video I'm very interested in whether you see the CCD cannibalizing online video, whether you see the growth coming from different types of advertisers in the category and then my second question is on news Corp, and its wonderful exclusive deal with news Corp to sell.
Our stream video unit until the end of 2022.
As a housekeeping item how much of your total revenue that is.
Correct.
Second quarter. Thank you.
Great.
And so for that for the first question about if CTV is cannibalizing online video.
What sectors are basically growing.
Growth that is coming from from both from both sections. When we're looking at CTV. This is something that people are exploding basically expanding into lately for us. So we have clients that are coming directly for CTV, but revenue for clients that we basically work with them in the past and they will expand.
<unk>.
But we see it both both China's growing regarding the questions about your scope.
So can you give like the numbers about what is the size of the of the activity. Thank you.
Yes. So first of all of course, we are very happy with the deal with news Corp.
Secondly, the theories around 30 million pounds to three years, and if I'm, taking it per quarter.
It's not meaningful out of our net revenue.
Thanks, very much Greg.
Yes.
Thank you. Thank you.
Thank you. Our next question comes from the line of Matt Swanson from RBC capital markets. Your line is now open.
Yeah. Thank you and I'll add my congratulations on the strong quarter.
Just kind of following up on <unk> question. So obviously results in CTV kind of a highlight can you expand on where you are focusing your investments in those markets and then I was really interested in the launch of the in house PV, we're targeting and measurement solution. So if you could give us a little bit more color on that from the press release.
Of course.
Yeah.
So I'll start maybe with the deteriorating targeting so we are basically doing activity targeting for a couple of years in the past we changed our providers and we are using now another provider that work with us in order to build a solution that is providing like a very strong solutions in the market regarding ACR and.
Typically targeting and we are integrated into a major in the major verticals that we are working with already for a couple of years, mostly entertainment travel automobile and so on in CPG that we are using this technology with and we see great success in one of their major Matt one of the major.
Advantage that advantages that we've got is the full end to end solution that we are driving and in that matter. In this scenario is also helping us to integrate data whenever we are basically using our DSP. When we were running managed campaigns.
When we are selling <unk> and we are able basically to offer this data is EMEA around the media that we are selling both.
Both locations, we can basically use the use the solution that we integrated rigor.
Regarding the question about the CTV.
Kenya, Kenya, basically tell me what you are looking to understand because.
Need to understand what is your question.
Yeah definitely so just seeing how fast the market's growing what are kind of your focus areas of investment around the market to continue to gain share or is it in technology as a targeting new customers. The TV re targeting essentially like you said, there's a divergence in viewership versus AD spend and is there anything company specific.
You can do to kind of drive that.
I agree.
So basically what we see is that I think that you need when you're trying to capture the wave of CTV, we need to put emphasize on all the elements, meaning we are putting much more emphasize on technology and product innovation. We said in the past that we are going to grow our investment in innovation and mostly around <unk>.
And that's what we are doing now.
This is something that we are doing is building, our launching more and more capabilities around CTV that we're offering to our clients successfully regarding clients. We have we are one of the companies that growth like really strong sales team on the ground in the U S and globally.
This team is offering of course CTV opportunities to new clients, but also to the.
Clients that we used to work with them in the past and we see we see greater adoption by clients that used to work with us on other former Smoky video shifting also to CTV because of.
Of the advantages that <unk> offering mostly reach and also engagement. According to our studies that we did in the past year. We saw that also the engagement around <unk> is very strong and compare to other formats. So it's like.
Accelerating.
The usage of CTV as a format that basically advertisers are using in order to reach their audiences. So I think it's a mix.
Answering your question, Matt I think it's a musical efforts one of them is on the innovation and products. The second one is increasing the sales also.
In all fronts, meaning increasing defense, which we are bringing new clients and also encouraging and educating clients to push their budgets into CTV. Because this is basically four demonstrates the future.
That's extremely helpful.
I had one more for sorry.
Being your first quarterly call could you just talk to us a little bit about your philosophy around guidance and any additional color on the macro environment that you might be thinking about when youre going through that process.
Sure so yes.
The first earning call we are doing business.
Good.
Anthony It is now.
As part of NASDAQ.
Fee income.
We gave guidance on the from Q3 to be cautious.
We will consider going forward.
<unk>.
Usually forecast as well.
And when we are doing our forecast of course, you know we have our platforms in place and with the pipeline both on the demand side and supply side.
Out of that we can generate.
And model like you are doing and forecast.
Next quarter and beyond that.
And that's our.
Thats, how we are doing that.
And on top of course, you know the.
COVID-19 situation.
We did impact that as well so we are trying to be cautious as well that's wrong.
Because we are not aware or we are not sure what will happen next.
And another thing that is influencing our forecast.
Going forward is as we discussed before we are going to invest much more now in product and technology in sales and marketing in order to enhance our organic growth and capture the market opportunity.
And all of this power metal of scores are influencing.
Our forecast going forward.
Alright, Thanks for your time and congrats again on numbers of Swan.
Thank you.
Thank you. Our next question comes from the line of Ron Josey from JMP Securities. Your line is now open.
Great. Thanks for taking the question another offer congratulations here over I wanted to follow up on on CTV, which is what most are asking but we're seeing accelerating growth here and another impressive quarter. You mentioned in your remarks that CTV has not yet on par with engagement and of course, we're seeing that as well, but can you just talk about the shift what needs to happen.
For CTV AD spend to be on par with engagement and any thoughts on timeline here that that'd be very helpful. And then just following up on your on your comments just now on investments.
Can you talk to us a little bit more just around margins and where you see they might level off overall.
Seeing the benefits from our revenue scale follow the bottom line.
And then margin guidance is extremely strong for <unk> as well so talk to us about how you view margins longer term as well. Thank you guys.
Okay. So.
I will start about the TV there is.
When you look at the let's.
Let's say the level of engagement of users with CTV.
Really amazing to see and I think that basically the pandemic just accelerated because people are consuming much more content through CTV channels right now and when you look at that I think that sometimes at stake.
From our experience, sometimes we know what the future will bring but we don't know how long it will take us two to reach this point. So I think that we see like a graduate education and testing and adaptational of clients to use and more and more into CTV.
And I think that this phenomena will grow and I think thats. Another element will allow more clients to get in as win.
The size of the CTV is growing the size of the media is growing and it will allow like also more let's say flexibility on pricing that will allow even more clients to jump into this opportunity and stuff.
Buying media on CTV, which in the beginning was very expensive and now with <unk>.
Changing over time, so I think that's it.
It's hard to say to give like indication of time, but I think that we are in the middle of this resolution process, where advertising so basically now adapting new format to CTV.
Moving more and more budgets into the some of them are already there and just moving more into this into the channel and some of them are just testing and still exploring if it makes sense to them to make the switch now to way too sometimes it's simply some time to make this.
Just adjustment in order to buy this new type of media, but overall I think that if you ask me I think that in the next one and half years until the end of next year, we see a much more participation in CTV coming from different type of advertisers in different verticals that we started up this model and format and with <unk>.
Grow it with.
Their budgets.
To answer your question.
Yes. Thank you so regarding.
The question about margin I think.
And we said it.
As well, our mango or AD tech peers.
We have one of the highest margin and operational profitability.
I think that most of it are coming from the competitive advantage of our Omnichannel end to end platform.
Versus the one side the solution.
And again, some things around our structure and data centers and of course, the efficiency with within our business.
I think that some of it is coming and it's coming in other companies you know from the pandemic itself where some.
Recurring costs are not being expense anymore or at a very low level, but probably.
Post the pandemic it will get into.
The usual cost so we will see a little bit the propylene the profitability going down.
And again, we are going to invest more in product R&D sales and marketing.
Having said that we will scale, our revenues and net revenue is up.
So I think going forward as we stated for Q3.
Still our margin is going to be.
Hi.
Great. Thanks, guys.
I think that also there is some philosophy in the past we were like more focused on EBITDA and we are.
Moving now to look more on growth and this is this is of course.
A period of transformation that we are managing them.
Thank you. Our next question comes from the line of <unk> Lee from Jefferies. Your line is now open.
Hi, guys, especially congrats on Australia.
I just have one question could.
Could you maybe provide the commentary Nathan pipeline Kevin.
You guys are you guys now highlight growing cash and and also like related to that.
Yes.
But anthony.
Buyback.
Yes.
It is targeting.
Thanks.
I think that your line is not I couldnt understand your Europe.
Sentences.
Sorry, Yeah, Yeah sure sorry can you hear me now.
Yes.
Yeah, Okay and I'm just wondering if you could comment on your acquisition pipeline.
Acquisition pipeline.
Yes.
Okay. So basically our company is known also for conducting successful acquisition in the past few years, we acquired <unk> and then we acquired basically within one and the last one was unworthy that we conducted in January 2020. So of course it is.
For us it's a valid growth path also to grow through acquisitions and we are.
Looking whats going in the market and we are looking for additional targets. That's of course part of the reason that we of course raise cash in order to be able to be in this position.
And I think that we also proved that we know how to basically integrate these companies in.
And if we can and efficient manner like we did in the last two acquisition over the last three years building our company from from that so we are open to that and we are looking for acquisitions in the market always.
In order to grow, but having said that as you can see in the past since we finished the integration of annuity like a year ago.
June July 2020, we also being able to grow very nicely organically.
This fact of course allow us and give us the timeframe.
Opportunity to look carefully to find our candidates for acquisitions.
We keep doing that also in parallel to the organic growth that we are demonstrating.
Okay, Great that's very helpful and apologies for Mike Maxim. Thank you.
<unk>.
Thank you. Our next question comes from the line of Andrew Marc from Raymond James Your line is now open.
Hi, Thanks for taking my questions two if I could one obviously the growth in the Americas has been really strong to date, but I guess could we get a perspective on your potential for international scale and what is the international focus on this point, particularly in APAC and EMEA and secondly, you've given some quantity.
<unk> of that in the past around your private marketplace and self serve businesses I guess, if you could just give us an update as to how those.
Aspects of your business scaled in Q2, thank you.
Okay, I will start with international potential.
Basically tremor also got.
Very interesting capabilities around the globe, we have offices in operation in Australia, and Japan, and Singapore in Germany and UK.
And some back office and development office of course in Israel.
But the activity is also down at the location that I mentioned before.
Covid basically.
Two things to us in the first thing after the acquisition of unruly lost two and most of the activity that was that is international for US is came from the activity of unruly and basically immediately almost after the acquisition. Most of these markets were shut down because of Covid and steel and they are very tough restrictions and limitations.
<unk>, so it's slowing us down in this matter of integrating them pushing more products into these locations and growing this potential.
Im sure that when this limitation will lift.
And we will be able to grow them again to grow them and integrate our capabilities also there and dislocations in order to grow this activity.
<unk>.
And in the location that we are we believe that these are the main locations as we want to basically stay and operate wishes, Australia, where we also enjoying there from from what was mentioned before the cooperation with your scope, Japan, which is really interesting market and even before you before unruly we had an office there in activity there.
We believe in this market and we want to invest in that Singapore, which is more like a regional office that we believe that because we have a lot of global partners and advertisers that are interested in this we need to provide them also solution and dislocations and we're doing it very successfully and in Europe. The two main markets that we are active in and we will see.
Hey, there is UK and Germany, which are really interesting for us and we also in the UK, we enjoyed from the partnership with steel scope.
In this in this country, which is of course meaningful because new scope is a very big player in the U K market.
So I think that Covid slows down in the.
Integrating more products in growing this revenue because of the restrictions and also the economies of some of these markets we're suffering from it.
From the effects of Covid in the last.
18 months that of course affect our capability to grow our revenues and dislocation for for now.
The second question was about demand.
Remind me about.
Second question.
Okay. It was on the PR and healthcare businesses, Okay, sorry, ASO, we disclose before yes, PMT isn't in seltzer.
I think the.
We understand that.
Okay.
Our main.
Growth driver, we start disclosing that level of increase.
Or the scaling up of this too.
<unk> API because everything is going now under the programmatic umbrella and we are disclosing only the CTV part in the video part having.
Having said that I can show, even not the exact number but it increased dramatically from Q1.
Incredibly from Q2.
2020 so.
The trends are still very high at jumping every quarter at least.
Double digit growth from quarter to quarter.
But again this is our.
Kpis and our growth drivers and as aforementioned we're going to invest more and more in our product offering in order to keep this organic growth moving forward.
Okay.
Alright, thank you.
Thank you at this time I'm showing no further questions I would like to turn the call back over to the speakers for closing remarks.
Thank you everyone for participating in this call and looking forward for the next call next quarter.
<unk>.
To keep providing good news to the market I think that it was our first call and I hope that you enjoy that enjoy that like us. Thank you.
Thank you everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
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