Q3 2021 Perion Network Ltd Earnings Call
In these three years 'twenty to 2022.
We can see 53 per cent tager between those three years, so what's behind it.
Most and foremost is the implementation that we did of the hub and spoke of what we call. The intelligent hub I will talk more about the value.
The intelligent hub is bringing at least point very very much behind our ability to leverage our cost.
That's the intelligence hub second the fact that we are able to scale and have a cost leverage improved our budget control and enhanced the process automation and the amount of engineering dollars that we are investing on automating process allows us to scale our business, but at the same time being more and more.
Profitable.
Let's go and dive in into some of the growth drivers that I mentioned.
<unk> from all the statistics that we are able to get from the different source pick this one which.
Excites me very much and has to do with the average time spent per day and digital video by device. Even that's from April 2020, but the number has not changed is just growing.
And as far as we've seen just before the call it's close to two hours two hours.
That the consumer is spend per day.
On video content.
And.
That said that's that's the main trigger that first three years for the advertiser and we like to say the chase the consumer and if the consumers spend more time on video no matter what screen.
They follow the following this trend and the invest more on all kind of video advertising.
And as a result, we are growing our business and we're going to as <unk>.
You can see exponentially.
Our advertising that has to do with video and CTV.
From a year over year perspective, we almost tripled.
The revenue between the first nine months of 2020 through the first nine months of the 2021 to $32 8 million.
On a quarterly basis. It was a great great quarter for us, where we are able to grow our video and CTV business by 245%, which is definitely a key growth drivers behind this quarter, but one of the most important one.
We're not just Q4, but next year and the year after with the acquisition of <unk> and I will dive into this in later on.
I wanted to show you the slides I'm very much take you to what we believe is really inspiring and the point here.
How are we able to have minimum clicks and as you can understand this is all about minimum flex between.
Watching the AD and then <unk>.
Doing the purchase and this is a great example, I hope it will work here, but youre able to see the video running on your screen and then we're QR code, you're able to do the transaction, but the interesting part at snap the QR code that get this add on your mobile device. The QR codes April to date.
Your brands shopping experience as you can see tier on the screen to debt from the big screen through QR codes direct to the cart and Thats. The very interesting technology that we have allow us.
To be proud we sell 114.
14% CPR so from the hundreds that basically so we have one that complete the transaction astonish results by all means and taking it from the big screen CTV advertising all the way to all the way to your car.
The next example, which we're really proud of.
He is the lives CTV.
As you can imagine the lives CTV is is a very challenging one.
Only because the TV AD insertion is not planned in advanced as you're probably familiar with and the whole idea in here.
I'm very much are using one of the senior leader from drafting was looking about something exciting and how to spend the dollars on the life TV and integrated into the game, while we don't want to ruin the experience. So this is how it goes.
If you missed the first half.
Five two.
Much of it.
Even at 15%.
Susan.
Sure.
And then on the golf course.
So customers can take a swing.
First I think you've got a I think you've got the idea that we're really proud of that it's a 19% to one return on AD spend which is amazing results.
That.
We are able to combine and sophisticated.
<unk> server side AD insertion in a lie.
The live event.
And still keep the yields are very much engaged not disturbing.
The experience of the sports events or deaths.
This example, last but not least the kpis gear was talking about through our by 40% our average deal size and that's a very important factor.
Are we able to how are we able to take it from close to 80 to 100 <unk> year over year and as you can imagine the expenses of delivering this campaign is the same there is a lot of <unk>.
Fixed expenses and while we are increasing the average of insertion order or a campaign with us.
Gives us a great way of leveraging.
Our cost.
This is the this is the example of an HBO that is from the big Big screen that the CTV.
A smaller screen with your iPad to your mobile <unk>.
All being synchronizing and that synchronization allow us to take.
Take this spend to a higher level and as I mentioned, 40% and that's a growth driver no doubt about it that is definitely a growth driver seven 9% interaction right.
That's an amazing result.
Definitely allows them to spend more with us and when we talk about retention revenue, which is 109% that's very much one of the reason that this retention revenues increase overtime.
So when we talked about video I need to mention even though it's happened October 3rd then this is going to be Q4 is going to be the first.
Quarter that they were with us so all the numbers that youre seeing on the third quarter that reporting today of course, a nap, including <unk> I wanted to mention it because first and foremost I think it's described with great fit I think we checked all the boxes for those of you are aware on our analyst calls at the beginning of the year.
But when we when we talked about what we're looking for what we're looking for in terms of the acquisition. We did a very successful follow on.
We were patiently looking for the right fit I think VW is the right fit I think first from the culture standpoint.
And the founders there, but more importantly, the fact that our video using the right. How are we able to take it into the next level.
<unk>, which is the video monetization system is bring us huge amount of scale.
Of of video supply is working with their publisher that's very important and the reason I ended here the high impact media suite and by now you I think you can get an understanding what is this high impact.
And these high impact requires tight integration as you can see it on.
On the screen tight integration between the creative part.
And the player and the video monetization.
This tight integration is something that we cannot by all means get into working with third party, we reach our limitation.
So our technology guy very much require more and more and the only way of doing it is to have tight integration customize it into our own needs and definitely if you take the high impact fee deal to another level.
That's one it is accretive from day one it was another box that we that we check.
And I think the structure plays very well to what we shared with the street and I think it has to do when requiring an EDA company understanding on one hand, the race for the other hand, the potential which is a certain cash and two third.
On an earn out so in this case, we definitely checks all boxes and I think it's a dramatic increase our reach.
On general video, but more specifically into the CTV market.
Like I just added this slide I think yesterday or the day before I think it was happening Friday and we all experienced what happened in snap. So for those who are not familiar I very much would like to take you into iOS 14, probably it will it.
It will continue and be around us.
So on the left side, you'll able to see this.
The screenshots.
I will market here.
And that's a that's a message.
That's a message that you are getting from the iOS 14 of course securities an icon and from the iPhone operating system.
That very much asking you.
If you allow this app to track your activity across other companies apps website whatever.
That's the big change this is the big change.
Now for those who are not doing it.
There was a loud fine, but what we have not what's happening to the app itself that would be true escaped lose its capability to track.
What you did on the iPhone.
<unk> is one and only one purpose it has to do with targeting.
That's it.
You, usually do Youre targeting capability your advertising is not that efficient. It's all about the targeting there is another another thing that I will not get into it it has to do with the effectiveness of reporting but let's leave this aside I think targeting is definitely the big drama or let's say lack of targets.
And I must say that we were well prepared in both ways first of all that has to do with our exposure. So when I was talking about again and again about diversified.
Our advertising strategy and remains diversified and be prepared for the unknown. So in a way and be prepared Toronto and we didn't know that this is coming when we decided about diversification we've talked about that almost 45% of our business is coming from search advertising, which is nothing to do with iOS 14, no matter what.
But this is we're fine on half of the business. The second part of the business, which is 57, 9% of those display and advertising I must say that it's following third of it.
Or 18% is only on smartphone all the rest which is two third is on desktop. So let's look about only the third which is on smartphone out of it.
I must say that 90% is Andrew 90% is underway, which left only 10%.
On an iPhone or iOS or if you're looking about the entire part we talk about 2% 2%.
2% of the entire revenue is coming from advertising with us to do with iPhone. So there is definitely very little impact from Ias 14, or this but this was only one side of the call I wanted to take you into the other side of the con something that we are working because it all has to do with one thing.
Whereas in <unk> coming from it's coming from one thing it's coming from.
Consumer privacy consumer privacy that has to do with your Iowa.
Our operating system and consumer privacy that has to do with beauty, which is this one mobile and this one of desktop which is a great segue for me.
To introduce what we just announced and we announced sort sort is a privacy first cookie less targeting companies working on this AI technology for almost two years and we're very very happy to share with you that we reached a scalable cookie less targets.
<unk> solution.
In par with or better than third party cookie based targeting option I have to read the word way or that it's coming from the CEO and cofounder of Iranian buoys.
The body that certified.
Our solution. So we went through a certification that is done with <unk>.
Lives campaign, and we did the site by site sort of alongside who gives on the other side and the beauty was that we were able to achieve a higher return on AD spend translated into CPR.
CPR or interaction rate more that is being done with this.
This is amazing and this is has to do with the great.
One the investment, but the great guys that we have onboard we have an elite AI team here that is behind of this revolutionary development now what would happen advertiser that will choose to use sort.
Care about.
The privacy of their users don't want to pump will not compromise on result, and will able even to use this symbol and this symbol is a simple debt will show to their user that this AD unit. These gateways, hence beer AD unit.
<unk> not using cookies.
And we believe that one advertiser that care will definitely use this technology more and consumer that care will not be afraid that someone who is being tracked.
On what Theyre doing so it comes from both directions.
And then we are expecting the results will be the advertiser will drive more business to us that's very much what we're doing and I'm more than anything else.
I couldnt hold myself, but to be proud of what the team is doing it.
I think the most challenging slide that I have in my presentation, because it's so technical.
But at the end of the day I don't want to go into it into too much detail, but our prediction is so high that it can get into a point since you have a 12 well offer here, we definitely can say who is unlikely towards the video who is unlikely to indirect those are likely to click on cycle.
These are the people that we're able to target and guess what scaled later on.
And this is this is definitely something that we're proud we're proud of that.
Not just that we are sure about advertiser and their challenge. We also care about consumer which I think are very very important thing for us.
As a company as a consumer.
It's able to bring this innovation into the market.
As far as search advertising, so as we mentioned our overall search advertising will grow by 14% but.
But I wanted to deep dive into something which youre basically saying, okay. How come it's drawing while we able to see that this is.
Very much flat if this is the third quarter here.
It's very much flat. This is the average this is the average daily revenue that we're getting and you're able to see that the average every searches is going down. So how come we are increasing our business what is more important to pay attention.
Transactional search intent.
The whole world of search is divided into three we call. It a.
Formative directional and transactional.
Only transaction are those transactions that were getting a rev share and pay our poverty share Rev share. So what is more important is to see that.
Amount of transactional 13, 10 out of the tire searches is growing and growing rapidly and it has to do very much with what I mentioned that consumer is doing more and more e-commerce transaction and guess, what they search before they buy and where their search more they search more transactional type of thing.
Okay move on into it.
As far as the intelligent.
The intelligent hub, so how those all pieces come together.
And we added video into our chart into the hub and spoke very much model that on one hand, we have the set of supply asset on the other hand slowing.
<unk> on the other hand, we have the suppliers, but what is more important is the intelligent hub that everything is goes into this hub and this hub is being evaluated based on.
Three factors there.
The ability to create value by reduce operational costs and I mentioned it because we have calm on sure.
Asset that we're doing.
The other <unk>.
<unk> services that we're doing among the different assets. So this is already showing its fruit right now and when I talked about.
Our ability to leverage our expenses. This is juan reduced stacked because we are closing the loop, but more importantly, how we increase customer value.
And everything that we did in sort.
It has to do with the fact that we are sitting here on a gold mine, that's able to get their indicator form so.
So many customer that going through our hub consumer debt, providing this very important.
And engagement.
Indicator that allow us to develop these type of.
AI, driven sort technology that will improve over time, so our our machines are working.
407 in order to make it just better and better so you're able to see the first fruit.
For our intelligent hub, which is has to do with increased customer event.
With that I would like to pass it tomorrow.
Our financial results of the third quarter.
Thank you Dawn scanner is the presentation, yeah hold on for a second.
Yes.
Please.
Okay.
Yeah.
Okay.
Thank you Don good morning, everybody.
The progress we have made to build a truly innovative and differentiated advertising platform.
Loving powerful financial result.
Over the last 12 months, we have generated nearly $439 million revenue $56 million adjusted EBITDA, representing 38% EBITDA revenue and does it represent EBITDA to revenue excluding stock.
As Don mentioned at the beginning of October we closed the acquisition of either accretive immediately.
Under the terms of the acquisition agreement.
And acquired all of the shares of <unk>.
$35 million in cash upon closing with earn outs of $58 5 million structure that performance that is tied to Ethernet based metric.
This will be paid in full if VITAS will generate $32 4 million of EBITDA in aggregate. So at the end of 20th century.
They announced will be measured based on theoretical and accumulative EBITDA goal in the end a Spanish Venezuela.
5% from the total consideration payments allocate to 'twenty 'twenty, 214% allocated to spending 23, and 44% allocated to 'twenty 'twenty four.
This transaction is aligned with Syrian M&A model of paying one third of the consideration upon closing and two third is performance are now, including our attention elements for the earn out period.
I believe that <unk> with their unique video capabilities, we will expand our hub and spoke model and will further drive gains for stability and growth in the coming years.
Turning now to our financial results.
During the third quarter of 2021 revenue totaled a record of 100.
$21 million, an increase of 45% on $83 $583 4 million in the third quarter last year.
This growth, while continuing to improve our operating efficiency and profitability.
This increase was mainly from 82% growth in our display advertising revenue.
The growth in these revenues was primarily due to video and CTV growing by 245% for $4 million to Falcon neon in the third quarter of this year.
Representing 20% of the display advertising revenue.
Average client size grew by 30% from 78000 to 102000 in the third quarter of 2021.
The number of clients increased by 12%.
Search advertising revenue increased by 14%, mainly as a result of.
Our number of daily Mint is desirable search is very well deliver to Microsoft being in auto.
Our average daily number of searches was $14 7 million compared to $12 8 million last year.
We added 17, new publishers to our network.
In terms of the mix display advertising of 69 million represented 57% the third quarter 2021, and so you get the revenue with search advertising represented $51 8 million or four does represent over <unk> of consolidated revenue.
Yeah.
Customer acquisition costs in the third quarter of 2021.
$73 3 million or 67% of revenue compared to $49 9 million or 559, 8% of revenue in the third quarter of 2020.
Our media margin has remained stable.
Media margin for the last quarter was 39%.
Operating expenses for the third quarter of 2021 were $33 1 million or 27% of revenue compared to 27 million or 32% of revenue in the same quarter last year.
With a 5% drop of operating expenses. The revenue has continued to grow and affect the scalability of the Valeant business model.
Net income for the third quarter of 2021 was a record 10 6 million.
The diluted share compared to net income of $2 1 million or <unk> <unk> diluted share in the third quarter of 2020.
Non non-GAAP net income in the third quarter, Australia to anyone who was $50 4 million or 40 cents per diluted share compared to $5 9 million or 21 cents per diluted share in the third quarter of 2020.
Adjusted EBITDA increased to $13 6 million for the third quarter of 2021 from $8 7 million in the third quarter of 2020. This represented margin of 15% of revenue or 37% of revenue excluding classic acquisition cost.
Our continuous continuous effort to keep media margin level steady and generate incremental revenue with low variable cost is important gains of efficiency and profitability.
During the quarter, we generated $14 2 million of guest of operating activities for the third quarter compared to $6 6 million last year.
As of September 32021, we had analysts like this cash cash equivalent and short term bank deposits of $156 million compared to $60 million as of December 31st when it's raining.
So this concludes my financial overview.
I will now turn the call back to the all four closings.
Okay.
Oh.
Yeah.
No.
Okay closing statement before the slide before last has to do with revised guidance.
I must say that the fact that we are able to generate revenue from both sides of the open web demur.
Demand and supply and the fact that we able to connect all operational asset as I mentioned into a central hub.
Increased first and foremost our visibility and increased our sustained.
<unk> business model in that regards.
We are revising our guidance for 2021.
From a revenue standpoint of 45 to <unk> 4400 $65 million debt reflects.
It reflects a 40% year over year growth that's one.
And from adjusted EBITDA standpoint, the new $60 million, which reflects an 83% year over year growth and I don't think that we should noted that EBITDA to revenue ex Tac is 33%, which puts us on.
I think the high end of our peers from a 2022 guidance standpoint, we improved these guidance and dwell, we calling for $590 million at the midpoint, which reflects 28% year over year growth.
And the midpoint of EBITDA is $76 $5 million for 2022, which reflects a 20, 28% year over year growth.
And the EBITDA to revenue ex Tac in 2022 is 34%.
Which reflect a great way, how you're able to scale and leverage our fixed expenses and we are moving in this.
The direction as well.
Last but not least I would like to highlight.
Right.
Right.
Last but not least I would like to end our call with this picture which is.
Our management team. Unfortunately, the three the three executives that are in the U S. Couldnt make it then a SaaS and <unk>, we had a great time.
In the Israeli desert and we're looking forward for <unk>.
The next call. Thanks, so much.
Yeah.
Operator.
Thank you at this time, we'll be conducting a question and answer session. You may submit questions on the zoom platform by using the Q&A or raise your hand icon to the bottom of your screen.
If you joined the phone only you May press star one on your telephone to join the queue. One moment. Please while we poll for questions.
Our first question today is coming from Jason housekeeping. Your line is now live.
Okay.
Hey, guys. How are you Jason few questions I appreciate all the color on the slides. So first I wanted to ask about the video format broadly impact on gross margin gross margin has been up nicely year over year since the second quarter the mix of video broadly balk CTV.
And other IP TV display video is all going up so maybe talk about kind of should we expect gross margins to continue to move up broadly.
Or whatever in the next 18 to 24 months.
Jim maybe talk about if youre seeing inflation in Android pricing versus the iOS.
Because then what's what would the actual deprecation are you seeing that do you have a bigger mix of Android and so thats, maybe beneficial to you and then last are there any capabilities that our clients are asking for that you don't have right now given that you highlighted the big cash balance and we would expect you to continue to be focused on <unk>.
Thank you.
Very good thanks for the question, so first and foremost let's talk about.
The video margin.
I think that the direction that.
We took as far as the pivoting from the standard video and putting those.
<unk> innovative type of format.
One point Mary maybe.
Narrow our addressable market because we are really looking for the high end of the advertiser.
But first and foremost looking for keep there see a correlation between the creative vendor brand equity.
This is one second they are willing to spend and they spend very high CPM.
Compare to standard videos.
Which I must say leaves us a healthy margin.
In any in any aspect. So that's that's the direction and we our plan doing this more and more and I mentioned that we hit the the really the limitation of what we can do by using a third party player in third party monetization system that we did and this was the main lane trades.
<unk> behind the acquisition of <unk> now.
I think that the sky's the limit as far as what we can do.
Our advertiser is pushing more and more into this high impact video and CTV Sweet. So this is a this is the one thing I forgot your second question about the video so that was the video.
About Android pricing versus <unk>.
Weaker than you if you have a higher mix of Android versus iOS that should be beneficial to your buyer. So.
Right on by the way I think that we still limitation on iOS, we see kind of the gold rush.
Into an Android the competition there is.
More than what it was before.
Definitely definitely challenging.
We are hoping that how source will help us in order to overcome the competition.
That's that's too early to say, but based on early indicators that we have we're definitely can come up with.
This iOS Android kind of metal.
Stronger than we were before.
And then the last one just on <unk> are there any capabilities that clients are asking for that you don't have that we should expect you to focus.
Ongoing power to acquire going forward.
We are looking on.
Few few dimensions.
Made in a way strengthening very much.
Our relationship with with brands.
Nothing is in the let's put it this way in an LOI stage.
But we are definitely looking we need to digest the acquisition that we just did.
So nothing concrete.
I must tell you that advertiser.
Our net and they're not pushing us into any kind of in this direction I think that what we have currently.
With the fact that we cover very well.
Both sides the demand side as well as the supply side.
Our main challenge is as it is.
Executing.
It's not about adding other things, even though I've enrolled.
Thank you you're welcome.
Thank you. Our next question today is coming from Laura Martin Your line is now live.
Hi, there can you hear me, Okay, Yeah, Hi, Laura Hi, Thanks for that Hey by the way great numbers and thanks for that explanation of the marketplace I'd like you to step it up.
And go back to the snap and Facebook commentary snap is down about 30% since the channels last Thursday night and talk to that.
I've said that in the fourth quarter, they are seeing weakness in.
Labor shortages and supply chain, which is cutting AD budgets for the fourth quarter have you seen anything outside of your premium products just back in a normal world have you seen any AD budgets, it's pulling back because of these two.
Items affecting our fourth quarter outlook or early next year. So first of all as you can imagine most of the fourth quarter.
It's not going to recognize revenue what you see in our pocket in terms of insertion order so according to.
Revenue recognition, we need to delivery, but we will not see any cancellation.
We just see that there is a serious competition among those high high end brands.
There are some issues in supply as I'm reading the Wall Street Journal and other.
But we will not see any any cancellation any declines and vice versa.
I think that they're adding more and in some cases in some.
Product, we definitely see that the shopping season started earlier.
And so no slides.
Decrease on an on demand method.
Yeah.
Okay. That's super helpful can you put up the guidance slide again.
Sure.
Sure.
Just wanted to focus on the fact that yes really over delivered.
This year, Yeah. This slide right here, but you had very.
Dramatic margin expansion that adjusted EBITDA number really like double your revenue growth, but 90 here, you're showing that your EBITDA growth is going to be the same level by the way I see you're blowing through year 500, that's a rather healthy don't go on vacation for too long after you hit that metric, but they're telling me why we arent going to have.
Much more robust EBITDA margin expansion again in 2022, according to your guidance.
First of all ask for vacation and they allow us to go into weekend. So are we going to Greece.
The only thing that day.
As you can imagine they want more more and more.
But the point here when it comes to I think 2022 is the following.
And I think that what we definitely see is a floor and with all the.
The improvement that we have in terms of visibility and the modeling and diversification in the two dimension of diversification across channels on one side of the dimension and the fact that we are able to do it business from both sides of the open web is another.
Syed.
They mentioned to doubt the certification we need to be cautious here.
And <unk>.
Rather I think so on one end it's impressive the 28 that you mentioned, but on the other hand, I think we need to be.
We need to be careful and we always like to under promise and over deliver the other thing is.
And we just finished two days off site with our board.
There are definitely calling for additional investment that we're doing on our technology I must say that they are really encouraged by the investment that we did on sort we establish an H class AI team.
Which we are start seeing food they very much would guide us to double down on this technology.
And.
It's calling for additional engineering investment that we are doing here in offshore.
Crane, mainly in leukemia.
So all in all.
The beam.
A bit cautious in trying to surprise and additional engineering investment is.
Causing this.
Our growth, which you looked at the number that you need to phone a poll.
Apologize for it it's another thing, but I understand where you're coming from.
That's surprising okay.
Okay and then my last question it has to do with.
Search and the role of search search revenue was quite robust, but it does hold down your growth care overall.
It is a headwind to your overall revenue graph can you talk about why like strategically.
Well, you know how search ads to the overall story or weather.
Letting things would really actually hurt the value proposition.
So first and first and foremost the searches to two very important strategic growth.
First it's a very stabilized I think business and the fact that we are working with Microsoft being you know we added Yahoo into the picture.
It is very much stabilize it.
It's growing we have a publisher that is working for us for years.
We have a very very good stable.
Type of business and I think that the tech.
As I said, the transactional searches amongst the entire searches is growing.
That's that's great. This is from the revenue and the EBITDA.
<unk> contribution standpoint.
But the most important part and this is a very interesting and I must say that it's growing and it's growing in such a way.
That is going to be a huge factor is how search and in this case <unk> display to search display as an AD unit that we are very much place either in our site or site that we operating generating search.
This is a very very interesting.
Very interesting technology that was developed based on contextual.
Match and other things.
So we are having an endless demand that is coming from this this direction through the Microsoft Bing.
So we are definitely looking to invest more on this segment of the search business. So.
I think that we are happy with the results last note.
I think that the company two years ago made the.
Quite the decision and the main decision for US was to invest on the right side the supply side of the open web which is something that we didn't have before.
And you can do or I mean, we understand that we can do now we are able to leverage these assets that are on the supply side in order to drive business that is coming from the search demand that we have on the left side.
So it will come together.
It will grow up and it's a very nice steady type of growth business.
Thank you very much Youre welcome.
Thank you. Our next question today is coming from.
Jeff Martin Your line is now live.
Okay.
Hello.
Okay.
Hello.
And I keep getting muted sorry about that can you hear me, okay, yes, absolutely okay great.
I wanted to ask you a little bit more about sort seems like a very encouraging value proposition.
I'm curious what's your go to market strategy is there if you've had any initial feedback from from clients and if you are targeting more of the mobile side of display or if that's a cross year display business right. So thanks for the question I will.
Hold on for a second and maintenance.
Yeah.
Yeah.
So.
And the notion the notion of time.
Explain what is a very very.
Very important factor.
The very important factor is the more the more you are we are using that as the sort of the more that we are.
<unk>.
Analyzed those contextual information users signal external signals that we are doing on our network and I'm, referring to both the left side and the right side of what they showed on the hub and spoke the better we are so regardless if someone is using sort or <unk>.
Using sort what is really important is for us those machines are working again and again in order to do one thing is to increase the prediction. The prediction here of pool is going to click on this Ed that's very much. The prediction. This is what allows us first and foremost.
<unk>.
To go to market and the challenge was $4 engineering team and said, we will never ever can go to the market and showing the results ctr wise or interaction rate wise.
That's very much at that this is a pre condition, even before customer will get it. That's one now when we're talking with the brand and we're talking with some as I said, the really repeatable brand they like one thing because.
Our purpose has become a key word for them and part of the purpose that we are talking Gibson, sorry that I took 100000 feet here.
They definitely looking about how they're developing a trustworthy relationship between them and their consumer.
In this hall digital advertising business I think that's kind of the wrong image by consumer as consumers said, yes. The following outcomes. They know that I looked at this site and now the offer me death, because they know the time going.
Two as I mentioned to Greece, or I already returned from Greece, and Theyre still offering me hotel in essence.
And that create the wrong perception now this perception is not as to do instead network vendor. They use there is no one thing what is the interaction the interaction as do enhance beer is not about the AD network or the technology and the ethics that is behind it.
And the point that I wanted to make what we're hearing from advertisers is how this is going to improve their perception is on this.
Companies that definitely not tracking this user and I do believe that brands are looking for these type solution snap to overcome let's say, the Google chrome limitation or overcome their iOS 14 or overcome this no they very much would like and because.
Consumers don't care about what they care about is the brand advisors.
So.
This whole thing is was very much came with us working with our brand, which some of them are our design partners and they definitely challenge US I think that the first call was almost two years ago.
We able to gain more time by the way when at the beginning of the year, Google postpone limitation.
Limitation, chrome, which was a great thing because we.
We submit the path and then we towards the nightmare to get.
The certification here, we had to run at a light campaign as I mentioned before but all in all the trigger is coming from the brands and I think the brand is able to use it to.
In their favor and I'm glad that we pick this the gloves and able to demonstrate such a great performance.
Alright.
Forward to watch it and add it all up here.
And then second question it sounds like you're stepping up your technology investment base.
Based on commentary from the board and not really.
Recent success.
Our success in your technology spend.
I was curious if that's part of why your 2022 guidance for EBITDA margins isn't perhaps a little bit higher yes.
Absolutely Okay, Great and then last last question was.
Can you give us an update on travel related advertising I know that that was originally a pretty significant part of the advertising segment and hadn't expected that to come back to a great degree. This year curious if you could just give us an update there yes. So travel is not back to where they were before.
And in a few guys aware, but it's impossible for some countries in Europe to travel to the state yet.
Unless you are.
S and U S cities.
And so definitely not back.
I think that we're in.
If I'm, if I'm using 2019 and compared to where we are today I think that.
We are 20% to 25% when it comes to advertising spend to what it was before I'm.
Im glad that despite of it were showing.
These results and we are looking forward that this will be behind us.
I know that there are some initial discussion that we have with them.
Our travel companies.
They are trying.
Trying to be prepared towards the summer.
And huge amount of investment and I'll talk about the advertising investment is being allocated toward the next number under the assumption that.
The market will will open for travelers and I think it will be a huge boost for for the industry and large.
Wonderful Thanks for your time, Thank you Jim.
Thank you. Our next question today is coming from Erik Morton with Citi. Your line is now live.
Question regarding the iOS issue again.
You talked a little bit about Android benefiting at the expense of iOS, but is there any evidence anecdotally maybe from the undertone parks as far as campaigns.
Desktop benefiting versus mobile draw.
So.
That's a very that's a very good question.
No.
Currently mobile is growing way more.
I mean more than desktop.
Our and being used.
I think that you need to look at it so mobile definitely is.
Yes.
Getting all the all the attention you spend more on mobile I think I have it here somewhere either.
Yeah look at look at this start chart on the left when it comes to number of minutes on mobile versus desktop this is double.
I think the only because of where consumers spend the time you can imagine that advertising spending two times as much in mobile than desktop.
That's the fact of the matter.
And now another very important factor has to do of course with the CTV, which it has to do with the big screen. This is definitely a challenge but more is has to do with this.
I think it has to do with the multiple screens.
It has to do with the ability to synchronize between the big screen, the desktop and the mobile that has to do very much of a.
Ways to work at work at home.
<unk> kind of.
Way of us to synchronize in a single campaign between all those channels.
Is that answered your question.
The question was really about have you anecdotally seen evidence of the shift to desktop promo on you're saying the answer is no not really no nothing okay, Alright, and then second question for me.
It was just three weeks ago, you announced data.
What are the mechanics of integrating Xu obviously, you bundle them and as far as the guidance call, but behind the scenes the engineering part of the equation.
So first of all our philosophy when it comes to acquiring companies to leave it alone as much as we can.
After that I.
I think more than dozen acquisition that they did in my career I came into this conclusion that Amy tight.
Integration is a recipe for failure so at this point.
Keep keep them there and then try to find out how are we able to developing a synergy and the reason I pull up the intelligent hub slide is first and foremost is to do with the revenue growth not shared resources nothing I mean, just about how are we able.
The fact that we have now owned the player.
Video player and have a great network of publishers, accusing redo how are we able to scale and sell more. This is the only thing that we're doing at this point and the only thing that interest us. So how are we able to drive more synergistic type of revenue.
That's the first phase of our PMI and the second phase, we're going to get into some cost savings because as I mentioned currency theyre not utilizing a lot of the shared resources that we develop on our hub they have their own for instance, and server et cetera.
Thats definitely will come but we're doing it in two phases from PMI standpoint.
Gotcha, Okay. Thanks for taking my questions and congrats on the quarter and the strong outlook.
Okay.
Thank you we've reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.
Hey, guys. Thank you very much for joining <unk>.
I enjoyed the call as well as my own.
So <unk>.
<unk> next call. Thanks, so much take care.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.