Q4 2021 Integral Ad Science Holding Corp Earnings Call
Okay.
Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the I S. 2021 fourth quarter and full year financial results Conference call. At this time, all participants are in a listen only mode.
So to speak his presentation, there will be a question and answer session to ask a question. During the session you will need to press. The Star then the one key on your Touchstone telephone.
If you call offer assistance at any time. Please press Star then zero.
I would now like to turn the conference over to your Speaker host, Jonathan Schaffer head of Investor Relations of <unk>.
Please go ahead.
Thank you good afternoon, and welcome to the I asked 2021 fourth quarter and full year financial results conference call I'm.
I'm joined today by Liza, one Schneider CEO and Joe per Golar CFO .
Before we begin please note that today's call contains forward looking statements. We refer you to the company's filings with the SEC for more details about important risks and uncertainties that could cause actual results to differ materially from our expectations.
On today's call. We will also refer to non-GAAP measures a reconciliation of non-GAAP measures. The most directly comparable GAAP measures is contained in today's earnings release available on the company's IR site investors dot integral adds dot com.
So with these formalities out of the way I'd now like to turn the call over to our CEO Lisa Hood Schneider, Lisa you may begin.
Thanks, Jonathan and welcome to everyone joining today's call I'm delighted to share our strong fourth quarter and year end results for our first year as a public company. We also introduced the positive financial outlook for the coming year, our fourth quarter results exceeded our prior guy.
<unk> and capped off a tremendous year of growth and innovation for I S. Our investments in our technology people customers and partners set the stage for durable growth and performance in 2022 and beyond.
Throughout the fourth quarter and full year 2021 we extended our leadership position in digital media quality, while advancing our capabilities to address high growth opportunities. Our focus remains on innovating for our customers to help drive business outcomes.
Many of the top global brands, including Adidas Danone, each nerve block each P shopify, Sony and Warner Media partner with I S. Because they value the effective media quality solutions, we provide.
Through our core verification solutions, we ensure that marketers adds are viewable by real humans in brands see brand suitable contacts M within the desired campaign geographies.
Because of I S as deep integration across the digital ecosystem, we processed a significant amount of data we analyze over 100 billion web transactions and score over 1 billion web pages daily.
By leading with deep technology, we have expanded our capabilities to go beyond verification, we help marketers validate their media quality and optimize their advertising investments and contextually target their campaigns with unmatched precision.
Our holistic end to end approach to media quality enables marketers to drive better outcomes with greater efficiency.
Before diving into our fourth quarter results and recent progress on our four growth pillars I'd like to highlight some key accomplishments from 2021 .
We realized double digit revenue gains for the full year across our business by expanding the depth and breadth of our solutions to help marketers drive outcomes.
Highlights include the rapid adoption of contexts control the launch of our pre bid brand safety solution in the live feed it kicked off and the growth of our C. T V solutions.
We strengthened our enterprise relationships and extended our market position as the trusted partner in technology innovator.
I joined <unk> three years ago with the Tech leadership background at Microsoft Amazon and Yahoo.
My focus said I asked has been on building enterprise level relationships are strong net revenue retention rate was 128% for the fourth quarter and the average customer tenure of our top 100 accounts is now 6.9 years once again we.
Zero churn in our top 100 customers in the quarter.
During 2021 we successfully completed three acquisitions, including immuno payments publica in context, all three tech acquisitions have accelerate our product roadmap in important growth areas, including contextual targeting C. T V social media and supply.
<unk> optimization.
I S has a strong track record of making strategic acquisitions that are quickly integrated and monetize.
We expanded our international footprint in 2021 launching our products in over 100 in each countries, which is a key differentiator for I S. Inner.
International revenue, including Publica represented 34% of total revenue in the fourth quarter of 2021 .
Our strong international presence is critical as global marketers look to partner with one provider across geographies.
We scaled our organization to meet heightened demand for our solutions. We ended the year with 760 employees.
Lastly, we became a public company in 2021 raising net proceeds of approximately $275 million and providing us with currency and liquidity to grow our business and attract and retain top talent.
Our IPO has also helped to increase visibility and awareness of I asked with marketers publishers and partners. We're excited about the opportunities that come with being a public company and look forward to continuing to share our value proposition with you.
Turning to our fourth quarter results, we exceed our guidance for revenue and profitability in the period revenue grew 31% to 102.5 million gross margin was 84%.
Adjusted EBITDA reached 33.4 million at a 33% margin.
Consistent with our prior quarterly calls I'd like to review the four key growth pillars that drove our performance in the fourth quarter.
These include programmatic, including contexts control, our contextual avoidance and targeting solution.
Social media, where we are cracking the code in the live feed of social platforms.
C T V, where we are leveraging our acquired publica talent and technology to provide marketers greater transparency and better monetization opportunities for publishers and.
In international where we are extending our leadership position in both new and existing markets.
Let's start with programmatic, which is benefiting from favorable industry trends the.
The March towards a cookie less future is a tailwind for our contextual business marketers recognize the need to transition from audience based targeting reliant on consumer data and third party cookies. There are also increasingly aware of the value of contextual based avoidance and Todd.
We're getting in support of their campaign objectives and outcomes.
We offer marketers the ability to avoid and target content with greater precision and customization.
Context control, our contextual intelligence technology uses natural language processing to accurately and scalable we classify content based on semantic indicators, such as the sentiment and emotional be medics at the page level. We then help marketers.
Defy contextual adjacencies that will better drive campaign objectives, while avoiding context that Don.
We offer more than 300 industry vertical seasonal topical and audience proxy segments to help marketers engage with desired audiences via contextually relevant content in.
In the fourth quarter alone, we released 20, new segments, including luxury goods and travel enthusiasts.
We continue to work with all of our demand side platform or DSP partners to drive awareness of our programmatic solutions, including our contextual targeting solutions.
Context control represents a higher C. P M by for our customers as we are delivering added value.
The adoption rate for avoidance solutions has been very strong domestically with increasing traction internationally.
We continue to develop our capabilities to help marketers target desirable and highly relevant content.
During the quarter, we added 39, new contextual targeting customers.
For example, one of the top insurance providers in the U S uses I asses contextual targeting segments across they're always on performance campaigns to drive one of the lowest cost per quote metrics across their media plan.
By using a combination of our contextual targeting segments that provider is able to target content, specifically about insurance in.
In addition, they gain expanded reach by targeting articles of interest for audiences looking to buy a car or home by targeting content, such as vehicle buying chips and investment property advice.
The value proposition of context control comes down to driving quality outcomes for marketers, such as improved performance and greater cost efficiencies.
Recently, an agency partner conducted a head to head tests between context control and traditional third party audience targeting.
The agency found that context control drove 21% increase in click through rate of 36% improvement in cost per click and then 19% lift in cost per action versus cookie based audience solutions. These metrics indicate that context.
Control was both more effective and more cost efficient than cookie based audience targeting.
In addition, we're enhancing our quality path optimization solutions and developing corresponding pre bid segments inclusive of a quality C. P. M. Hughes C. P M metric with new D. S. P integrations.
Hughes C. P. M helps marketers understand both the quality of media they are buying and the cost efficiency at which is being purchased.
We believe we are the only media quality company with the data to provide a view of both quality and costs for purposes of campaign optimization.
In a recent case study we found that utilizing our solutions help marketers increase average quality spend by 20%, resulting in significantly reduced campaign wastage.
Lastly, we are introducing a campaign sing solution for D. S. P integration to enable clients to mirror their post spin and pre bid settings with ease further increasing campaign effectiveness.
Turning to social media, we continue to drive technology innovation within live social feeds for a growing number of platforms.
Since the pandemic began user adoption and consumer engagement across the major social platforms has exploded marketers following the consumers have fully embraced this shift in the media landscape and are demanding the same transparency in social feeds that are standard across.
Off the web.
Marketers are requiring their social media campaigns run next to brand safe brands suitable content.
In addition, they are requesting that social media platforms open their live feeds to I S and other third party providers.
During the quarter 60, new marketers activated I S as social media verification solutions.
In 2020 , one we launched our in feed brand safety solution for tick tock.
Our prepaid solution is 100% machine learning based and classifies video audio and tax according to Gartner The global Alliance for responsible media standards.
It is currently available in the U S, Germany, and France in three languages with more than 50 marketers. The feedback for marketers has been very positive and we are working with tic toc to expand availability to additional markets in multiple languages.
Our prepaid brand safety offering provides marketers like Disney loyal Toyota and Volkswagen on tick tock with the most robust solutions available.
We've also expanded our relationship with Linkedin after a successful beta in the fourth quarter with over 30 advertisers Linkedin is now integrated with our postpaid measurement solutions, helping to enable view ability for in feed video for linked in owned and operated inventory.
Tory.
The integration unlocks more inventory for marketers to measure on Linkedin and represents an important step in solidifying our relationship.
At the end of the fourth quarter, we acquired Paris based context context accelerates our existing multi media classification technology capabilities with next generation AI and enables us to go beyond Garms standards and other industry frameworks with grew.
Later granularity.
For example, we'll have the ability for a brand to identify and avoid video content that portrays its logo in a negative light.
Cross channel applications of our enhanced classification capabilities will help marketers address quickly emerging challenges in video channels, such as social and CTV.
We also see an opportunity to enhance our text based context control offering and provide video and image classification programmatically in the open web.
As part of the context acquisition, we have been agreed a top notch team of more than 15 mathematicians data scientists and engineers in France, and Poland, who give us speed to market with new products and features as we integrate their tech into our own weird.
Delighted to welcome CEO , Jack Hey, Bob and the entire context team to I S.
In the fourth quarter, we made further inroads in the fast growing CTV market, where we have differentiated products in place to continue to disrupt C. T D.
We're very pleased with the ongoing integration of Publica acquired last August .
Public has enabled us to extend our position in CTV with additional capabilities and relationships with top publishers, including Samsung MLB, and Viacom CBS and more than 35 S S piece or supply side platforms.
Publica exceeded our forecasted revenue for the fourth quarter, and we expect publica to be a meaningful contributor to our growth story moving forward.
In 'twenty 'twenty. One did you de recognized publica is the best C. T V sell side programmatic platform.
Our CTV strategy is focused on providing marketers with the same level of transparency they've come to expect in linear television.
I S was first to market in CTV in 2019 with verification solutions, including video AD to play completion and AD fraud detection.
We launched six CTV releases in 2021 and continued to lead with solutions to increase transparency beyond just app and device data.
In the fourth quarter, we launched in beta the industry's first live media quality reporting for CTV.
In January we expanded our I S signal reporting platform and introduced a new CTV dashboard in free preview.
Marketers can access advanced tools to manage media quality across CTV and make real time optimization decisions.
We now offer insights on where CTV ads run based on the device that channel genre content category and reading.
This level of clarity is a huge differentiator for I S and illustrates our tech innovation in CTV with publica.
CTV as a long term opportunity, we believe that our focus on providing greater transparency and visibility for marketers will help with their decisioning around budget allocation and the shift from linear to CTV.
International represents our fourth growth pillar and is a key point of differentiation for ies.
Where other providers had just started investing internationally, we have an established global presence built over the last eight years, which provides us with a distinct first mover advantage.
I S provides global and regional support to over 2000 active advertising customers in 108 countries inner.
International represented 34% of our revenue in the fourth quarter that number includes a full quarter of public is revenue, which is almost exclusively in the U S. We are expanding our global sales team with dedicated resources to address the massive greenfield opportunity in CTV with publica.
Both in the U S and internationally.
We're extending our presence internationally, including in India, Indonesia, and South Korea, while continuing to invest in key markets across Latam.
As I S continues to grow we are hiring in curing the best talent in the market.
In the fourth quarter once again, we hired over 100 people, our second consecutive quarter with over 100, new hires excluding acquisitions hiring.
Hiring in the fourth quarter was across functions and throughout our global network nearly 20% of hires were in EMEA. The most we've ever had in a single quarter.
We ended the year with 760 employees with approximately 40% of our new employees excluding acquisitions in R&D.
In 2022 we've continued to expand our hiring efforts with 50 new hires in January .
I'm also extremely proud that alongside our rapid expansion success working remotely built in named I as a best place to work in Chicago and in New York City.
In addition, I S was named a best company for diversity by comparably and was recognized in the human rights campaign Foundation's 2022 corporate equality index as a best place to work for LGBTQ plus equality diversity.
<unk> equity and inclusion are incredibly important to I S and we believe in walking the walk our commitment starts at the top which includes a diverse board with majority female representation.
Before handing it over to Joe to review the financials I'd like to outline some of the priorities for 2022 .
Since our IPO I S has demonstrated an ability to deliver on the targets we set.
We believe in consistency and execution and we will strive to achieve results for our customers and in turn for our shareholders.
At our core we are a technology company, we are addressing a massive opportunity with market leading solutions to delight our customers.
In 2022 we will continue to develop innovative unique and differentiated technology that is disruptive across multiple platforms.
Within our growth pillars, we will focus on delivering transparency and precision to programmatic, including contextual targeting cracking the code for brand safety and suitability and the live feeds of social platforms with our enhanced video image and Audi.
Oh classification capabilities.
Bringing increased transparency and inventory yield optimization to see T b.
And building on our industry, leading international presence in new and existing markets.
As our suite of solutions has expanded to include both measurement and effectiveness, we will help marketers move closer to their goal of more efficient media buying to drive return on their advertising spend.
In 2022 we will continue to take a strategic approach to enhancing our existing products and technology.
We've demonstrated our success with our build by partner approach and we will continue to pursue external opportunities to complement our organic growth and accelerate our time to market and product roadmap.
I'd like to thank all of you on today's call for your ongoing support and interest.
I'd also like to thank the entire I S team for their dedication and commitment.
We're pleased to have delivered another quarter of strong performance and we're excited about our prospects in the coming year.
And with that I'll turn it over to Joe to review the financials.
Thanks, Lisa and welcome to everyone joining today's call our results for the fourth quarter and full year 2021 exceeded our prior expectations I'm pleased to walk you through our performance and discuss our business momentum, which is highlighted by our strong financial outlook for 2022.
As a reminder, I S has an agile and scalable business model focused on high revenue growth and margins. We have significant reoccurring revenue that provides us with visibility and predictability.
We partner closely with our advertisers and publishers to build multi year minimum impression commitments as well as fixed fee agreements independent of the media rate, We command premium CPM rates for our solutions, including contact control video and see TV products.
Turning to our results for the fourth quarter total revenue increased 31% to $102.5 million compared to $78 $3 million in the prior year and ahead of our prior guidance of $94 million to $96 million.
Expanding on our revenue performance, our advertiser direct revenue, which includes open web and social platforms increased 7% year over year.
Key accounts, including Coca Cola, Disney Samsung and Nestle amongst others.
Within Advertiser direct we continue to see volume shift from open web to social platforms with increased video adoption video commands a pricing premium and accounted for 45% of total advertiser direct revenue up from 42% in the 2021 third quarter.
Social accounted for almost 40% of advertiser direct revenue in the periods.
We acquired Paris based context on December 31st in a cash and stock transaction valued at approximately $33 million net of assumption of short term debt context is expected to enhance our multimedia classification capabilities, particularly with video and social and CTV applications. What it is.
Not expected to contribute materially to our financial performance on a standalone basis.
Our programmatic revenue for the fourth quarter grew 43% year over year COO.
Context control architectural avoidance targeting solution represented 38% of total programmatic revenue up from 36% in the 2021 third quarter.
We're very pleased with the continued growth in context control more than 70 of our top 100 accounts now use complex control, we've seen stronger customer uptake of context controlling verticals, including travel and entertainment CPG retail <unk> and finance, we see tremendous opportunity to.
Engage with our customers around contracts control for a audience as well as contextual targeting solutions.
On a combined basis revenue from advertisers, including Advertiser direct and programmatic revenue represented 84% over our fourth quarter revenue.
Flight side revenue from publishers increased to $16 $2 million, which includes a 7.5 million dollar contribution from publica public as contribution exceeded our prior outlook of $7 million for the quarter in total publica contributed $10.7 million in revenue in the third and fourth quarters of 2002.
'twenty one.
Total supply site revenue represented 16% of our fourth quarter revenue.
In 2022, we expect publica to continue to add new clients and drive deeper integrations with key partners, including Samsung and follow.
We continue to increase our leading global market presence international revenue grew 13% in the quarter and represented 34% of total revenue.
Full year International revenue grew 29% and represented 37% of total revenue.
As anticipated.
Our current revenue mix between Americas, and rest of world reflect the acquisition of Publica, which has been U S focused to date, we see significant opportunity to leverage our existing global footprint to expand public those international reach.
Geographic revenue split for the fourth quarter with growth across all regions was as follows.
For the Americas total revenue for the quarter was $67.4 million up 43%.
EMEA was $25 million up 9% and APAC was $10 million up 24%.
Gross profit for the fourth quarter increased 31% to $86 $1 million with an 84% gross margin comparable to the prior year period.
non-GAAP operating expenses, which exclude stock based compensation expenses and other items for comparability increased at a rate below our top line growth, reflecting our efficient operating model as well as lower costs due to COVID-19 .
Total operating expenses for the fourth quarter of 2021 includes higher G&A costs related to hiring talent and professional fees to support our growth.
Stock based compensation expense for the period was $9 $1 million for the full year stock based compensation expense was $58 $8 million.
Moving onto where adjusted EBITDA metrics adjusted EBIT for the fourth quarter, which excludes stock based comp and other one time items increased 22% year over year to $33.4 million or 33% margin.
The combination of topline growth and strong adjusted EBITDA margin performance enabled us to reach the rule of 60 for the period.
Our fourth quarter net revenue retention or an IRR was a 128%, reflecting our ability to meet the growing needs of our clients with value added solutions.
We did not experience any churn in our top 100 customers in the quarter.
Total advertising customers grew by 11% year over year to 2073 advertisers.
Our total number of large advertising customers with annual revenue over $200000 grew by 14% year over year to 183.
Publisher Count at quarter end was 137. Please note that we cannot consider publisher count as the Kpis and we'll disclose publisher count on an annual basis.
To summarize full year 2021 performance total revenue increased 34% to $323 $5 million, excluding publica total revenue increased 30% to $312.8 million.
Gross margin for fiscal 2021 was $268 $9 million or 34% increase gross profit margin was 83%.
Total operating expenses were $165 $8 million.
Adjusted EBITDA increased to $103 $3 million with an adjusted EBITDA margin of 32%.
In terms of our financial condition, we ended the fourth quarter with cash and equivalents of $73 $2 million compared to $51.7 million at year end 2020 base.
Based on current cash flows and our new credit facility. We believe we have ample access to capital to fuel our growth initiatives for the foreseeable future.
Turning to our guidance, which includes publica for the first quarter ending March 31st 2022, we expect total revenue in the range of 85 million to $87 million.
Adjusted EBIT for Q1 in the range of 22 million to $24 million.
For the full year ending December 31, 2022, we expect total revenue in the range of $416 million to $424 million.
We anticipate publica will represent approximately 8% of our total revenue for 2022.
Adjusted EBITDA for the full year is expected in the range of 127 million to $135 million.
A few additional modeling points are.
Our business in 2022, including Publica should follow typical seasonality ramping from Q1 with Q4 being our biggest quarter as.
As a result of the increased contribution from contacts control programmatic is expected to surpass advertiser direct at the largest component of total advertiser revenue starting in the 2020 to first quarter.
Stock based compensation expense for the first quarter of 2022 is expected in the range of $8 5 million to $9 $5 million for the full year stock based compensation expense is expected in the range of 34 million to $38 million.
Shares outstanding for the first quarter as expected in the range of approximately $154 4 million to $155 4 million for the full year shares outstanding is expected in the range of $155 6 million to $156 6 million.
As Lisa mentioned, we continue to hire at a record pace and expect adjusted EBITDA margins to reflect increased employee expenses in future quarters, We do expect adjusted EBITDA margins to increase throughout the year.
In conclusion, we're very pleased to close out the year with our strong fourth quarter performance, we expect our business momentum to continue as reflected in our positive 2022 outlook.
Lisa and I are now ready to take your questions operator.
Thank you ladies and gentlemen, you collect asked a question at this time. Please press the Star then the one key on your Touchtone telephone.
To remove yourself from Niki May press the pound key.
Our first question coming from the line up Mark Mahaney from Evercore ISI. Your line is open.
Okay. Thanks, Let me try two questions first Joe just in terms of the revenue guidance for the full year organically. If you were to take out publica, what would be the growth rate or if you include publica for both periods what would be the growth rate just in terms of helping us figure out what the growth rate will be post this year.
And then.
Second question want to ask about the tick Tock integration. There was a couple of interesting data points. There I don't know I would ask you just to qualify or quantify how far along is the integration with tic Toc, how much more upside is there in terms of.
Different markets different properties within Tictoc that where you could integrate thank you.
Yeah, Hi, Martin.
Regarding the guide for the year and with Publica.
We anticipate public does it contribute 8% to our total revenue.
And then follow same as seasonality trends.
Obviously, a window to think through the growth rate, though like organically or on a full pro forma basis publicly if it had been in last year or two sort of way to think through that.
I would say, we would expect continued top line accretive growth from publica.
Contributing to our numbers.
Along with also adjusted EBITDA margin contribution.
Okay.
Okay, Hi, Mark.
The second question about tick Tock. So you might remember that we launched our multimedia classification tech with Tic Toc last September .
We launched it in three markets U S, France, and Germany, we've seen incredibly positive feedback from our marketers and high demand for the product today.
To date we've.
Apply the product to 80 campaigns across those three markets. We are on track with their tick tock roadmap for the first half of this year.
The plan is to go roll up.
Existing product to multiple international markets.
Then also to launch.
What's been product one other thing I'll call out about Tictoc is Mark you probably remember remember, we also announced an acquisition of the company contacts at the end of fourth quarter and context is has a leading AI technology that only enhances our classification capability.
So stay tuned for additional information about what the content integration means for our attack.
Okay.
Okay. Thank you Lisa Thank you Jim.
Thanks Mark.
Our next question coming from the line of Brent Thill from Jefferies. Your line is open.
Thanks.
Lisa programmatic growth, 43% above odd.
Correct Advertiser can you just walk through the dynamics and what Youre seeing.
There.
Sure Brian So we're thrilled that programmatic continues to be a tailwind for our business and it continues to drive accelerated growth. He might remember its conflicts control that is driving a good portion of that growth as more and more marketers shift away from audience based targeting.
Brian the P II data over to a contextual targeting.
The Great news is as in fourth quarter, we actually added 39, new contextual targeting.
Customers and also we believe 20, new segments, including luxury goods and travel enthusiasts.
For 2020 , two we'll continue to drive context control both from an avoidance perspective marketers looking to avoid certain types of content, but we now have the sales team really double down and focused on driving the contextual targeting with marketers are hoping marketers seek out appropriate.
Content for their brands.
Yeah.
And in Lisa just on cracking the code and social what what else needs to happen here for you to fully crack. It open can you can you walk through you know you're a little bit of a playbook in how you are opening up that market.
Sure Brennan I love that you're speaking my language cracking the code and social so as I had mentioned to Mark earlier Tictoc is our first platform social platform that we launched our multimedia classification Tac.
Being high adoption. There. We're also marching down the path with Twitter that roadmap for 'twenty 'twenty. Two first half is also moving along nicely meta we all know meta announced publicly in fourth quarter that there.
To open up their lives.
Two third party verification companies they.
They have not announced yet publicly who the selective but we're keeping a close eye on meta and continue to ensure that our partnership is strategic with Madden. So those are the first three platforms that we're taking a look at but the good news is is that the technology that we built that is 100% machine learning.
And AI based it is scalable everything we build is to scale and global and will be able to transport that tech over to future social platforms. When they open up their lives.
Thank you.
Thanks Brent.
And our next question coming from the line of Jason <unk> with Oppenheimer. Your line is open.
Allowing us to did you see any weakness in the fourth quarter from macro pressure I mean, we heard that for most companies.
Or is any macro pressure than anticipated in the first quarter guide given that I think the full year guidance does it does imply a second half acceleration.
And then.
Also is there a way to say how large video and CTV combined is as a percent of the business today, and where do you see that going over the next few years.
Okay. Thanks, Jason for the two questions I'll take the first one so we're keeping a close eye on the macro issues, one being supply chain, but similar to what I've said in fourth quarter. It's a non issue for our business, we're seeing one offs.
Examples, but really no material impact on our business.
The same thing for first quarter, keeping a close eye, but.
Just don't see a material impact on our business.
Yeah, Hey, Jason It's Joe <unk> on the video question no. We keep video early around 40% of our advertiser direct accelerating to 50% as we continue to go deeper and deeper into the social platforms, where we have premium video CPM C.
CTV is going to continue to accelerate some combo to add with the video side of things, but especially with the acquisition of public though.
We see accretive growth there.
Yeah.
And our next question coming from the lineup Dan Salmon with BMO capital markets. Your line is open.
All right. Good afternoon, everyone. Thank you for taking my question I wanted to follow up on context control you mentioned, the big shift to selling it for targeting as well as measurement and that said new important use case and then maybe another way to look at it is we still got.
Over a year until chrome addresses cookies in the two year Android clock just started and so.
Still a lot of surface area to which these types of tools will need to be applied.
So my question I'll, just ask the baseball analogy what inning are we in with with context control is there a lot more to go a little more to go would love to just hear your bigger picture thoughts on how long that can remain sustained driver of the programmatic business.
And then for either lease or Joe.
As you continue to expand the product base any updated thoughts on pursuing more dynamic or variable pricing for your services.
Okay I'll take the first question, Dan So context control loved the baseball analogy. So you might remember as I just mentioned the product there is actually two parts of the product. The first is avoidance so that the content that brands.
Find unsafe for their brands they don't want to run any brands, Jason to the content over 90% of our context control revenue is avoided so in terms of baseball for avoidance I would say sixth inning, but 67th inning, but one thing I'll add is the majority of our COO.
Context, Controle revenue actually is in the U S. So where we're seeing nice adoption is in the international markets of contexts control. So.
Earlier in the baseball game internationally when it comes to avoid inside of contexts control. If you shift to what I called a proactive contextual targeting for that.
The content that marketers.
Let's wait for the brands they like the brand did you see I'd call. It first inning and so now we have the sales team was trained them up it is a different conversation with the marketer you are now talking about campaign by campaign.
It's one of a set it and forget it the way avoidance works.
But we are engaged with our marketers globally, we are pitching the product hard but the good news of contextual targeting is the Tam is quite sizable. So there is a ton of runway ahead, when it comes to contextual targeting especially as more and more marketers are shifting.
Away from the P I audience based targeting and leaning into contextual targeting.
Hi, Dan This is Joe I'll take the dynamic pricing question.
Yes, sorry.
We have premium pricing across our <unk> programmatic and our economy.
<unk> controlled channels. So we're still a very high reoccurring revenue model transactional business revenue model.
That's what the market is demanding marketers want to purchase from us in that way.
And when we see that globally.
And my belief is just one follow up on avoidance versus targeting.
As you put it with avoidance, it's more of a set it and forget it with customers, whereas more campaign by campaign on targeting the very early there, but you said, it's more maybe the bigger Tam overall do you think in the end targeting is bigger than avoidance.
Indiana contextual targeting is bigger than avoidance, yes, yes fantastic.
Okay. Thank you thanks.
Thanks, Dan.
Sure.
Our next question coming from the line of Brian Nowak with Morgan Stanley . Your line is open.
Great. Thanks for taking my question.
But probably a pretty easy one just got to go back to one of the earlier questions from Mark how big was that was public in 2021 from a revenue perspective, and then can you just sort of help us out in the 2022 revenue guide what are you assuming total revenue from publica anthem context, just so we can sort of do a waterfall of core business.
And M&A over that period.
Yeah, Hi, Brian So for 2021.
Contributed $10 $7 million.
And then for 2022 and as we outlined earlier in the prepared remarks.
We're guiding towards.
Modeling estimate of 8%.
Contribution of revenue.
And then for context control.
At the end of the year, we're at 38% adoption.
Yes.
And for 2022, you will see continued acceleration now that we're adding targeting on top of avoidance.
It's still early innings.
Are there.
The public perspective are there any specific products or offerings or features that you buy you've now sort of integrated realize that are actually proving to be better than expected I think that's a pretty good public a number for 2022. So just curious as to what you've learned now versus when you acquired yes, that's potentially driving that that's pretty good growth there.
Yeah, I can take that question, Brian So the way we think about public.
Thrilled about the acquisition it gives us access to the promise of connected TV and will go back to the baseball analogy. It is first inning of a long game with <unk> TV and the way to think about bringing together the assets of publica and I as it gives us differentiated access to data for publishers.
And transparency for marketers and I personally spend a lot of time with marketers and when I hear their primary reason why they're not shifting more linear TV dollars over into programmatic CTV is because they don't know where they're at ran on CTV.
And at the end of fourth quarter, we actually launched the product.
Which we announced in our press release in January and we're now providing transparency for marketers and where they're at is running in programmatic CTV. So we're now providing transparency like where did the AD run on the device the app channel genre content <unk>.
<unk> is a first for the industry all of that data lives within I S signal and it's just one example of leveraging I S. As data assets with public as assets to provide greater transparency for marketers to encourage marketers to shift more of their.
Linear TV dollars over into programmatic CTV and it also drives better yield or the video publishers.
We can't wait until we can share more of our TV roadmap for 2022, but again the way we're thinking about CTV, it's ripe for disruption.
We are poised to continue to drive and launch differentiated products both for the for the buy side and the sell side.
Great and Brian its helpful.
Got you.
I just wanted to circle back regarding our context acquisition.
So for 2020, when we acquire them at the end of the year zero revenue contribution and really that acquisition is all about accelerating our capabilities with context classification, particularly from video and images. So they have a very unique and advanced capability or image and video recognition and it's really positions us well for those nextgen salute.
So our revenue contribution in 2022 is it is part and parcel to the overall so.
So it's immaterial at this time.
Got it okay and last one I apologize if I can squeeze I would've thought with you.
Where you talked about the new products coming out of.
The acquired assets as you sort of think through that 8% contribution.
Are there new on launch products in that number.
Now as we kind of watch all the press releases or as we watch new things that do that are not included in that.
Current guide.
From that perspective.
That's based on the current course of business public.
Got it okay great.
Yeah.
Thanks, Brian .
Yeah.
And our next question coming from the line of Brian Fitzgerald from Wells Fargo. Your line is open.
Thanks, a couple of questions maybe a follow up to brents question on the <unk>.
<unk> outperformance of programmatic versus advertiser direct open web in walled garden.
We were wondering what youre seeing with respect to clients adjusting media mix, giving the challenges that some of the walled gardens were having.
With the iOS.
And then in terms of topics.
Google's, new cookie replacement effort bit of semantics, maybe but it seems to me. It's still very early days seems to be interest based targeting any thoughts on whether that is competitive with contextual targeting.
Alternatively wondering if theres anything you can do in partnership with publishers around interest based advertising that's a different thing.
Interest based audience segments maybe.
Is that something you can help your partners with where the value prop of your contextual products extend beyond kind of what's being consumed right now.
Okay. Thanks, Thanks pits.
So I'll take the first question about the ship with programmatic and open web M walled garden.
So the way our business is trending is similar to the macro trends that we're seeing in digital advertising.
What I mean by that is I S. We're growing faster than overall digital advertising, our programmatic business is growing faster than global programmatic. It says.
And with those trends. We're also seeing our programmatic revenue up open web is starting to decrease over time as programmatic increases, but the walled garden revenue social in particular I'd like to say marketers go where the users are and especially over the last year.
Your social platform adoption is skyrocketing right. So that's an area, where we're definitely doubling down with walled gardens and in terms of your question around I iOS, we don't see that impacting the trends that I just spoke to the growth accelerators.
Our programmatic walled garden and connected TV for business and then in terms of your second question tied to cookies and interest based targeting.
<unk> contextual targeting we don't see those two types of targeting competing with one another and the way we think about our contextual targeting product is we continue to receive feedback from our marketers and tie in the types of segments.
They are interested in pursuing both in terms of avoidance and ink contextual targeting and again, we cant.
Constantly releasing new segments based on the interest and demands of our marketers and their verticals seasonal topical audience proxy segments and will continue to innovate in context control for our marketers.
Got it appreciate it thank you.
Pets.
And our next question coming from the line of Mark Kelley with Stifel. Your line is open.
Great. Thank you very much.
I'm going to try the public a question one more one more time.
I know, we've got the stub period after.
Publica was announced but it would be helpful to have an idea what the full year would've been publica was.
Standalone that's the first question.
And then the second one is.
Just on the social.
Integrations.
As you see them I know you talked about meta we don't really have all the details there, but as you prepare for that.
The walled gardens opening up the platforms and technologies such as such as IHS. I guess is there anything else you think you need to build.
Build or buy and.
In preparation for that it does sound like the contacts acquisition will help with anything else.
Any other thoughts would be helpful. Thank you.
Hi, Mark.
The first question so.
For public a full year.
<unk> pre acquisition post acquisition, it would have been a little bit north of $18 million for the full year.
Perfect.
You have to factor in the acceleration in that business as well as the international expansion for 2022.
Alright, great.
And then to follow up on the second question Mark regarding the walled gardens in cracking the code in the life when it comes to brand safety and brand suitability.
Again, we're thrilled with our most recent acquisition of context, which will enhance our multi media classification within the live feed we actually that have all of the tech that we need to continue to build and launch prepaid postpaid solution.
Within the walled gardens and everything like I said before is built to scale and are 100% machine learning Tech is portables, we can pick it up imported over to the next social platform.
Alright, perfect. Thank you both I appreciate it thank.
Thank you.
Yeah.
Okay.
Our next question coming from the lineup Andrew Lee from Raymond James Your line is open.
Hi, Thanks for taking my questions I just had two I think you mentioned that over 70 of your top 100 accounts have adopted context control. So that's pretty strong adoptions, so far but what gets the last 20 to 30 using the product is at an awareness issue or is it some type of capability or functionality that they are holding.
And then second with geopolitical tensions ramping up in content around that becoming more prominent has that been a catalyst for increased discussions around brand safety and suitability with that with some of your customers. Thank you.
Okay I can take these things Andrew So the first question about the 70 of the top 100 have adopted context control.
Again, we are thrilled with the adoption levels, we're seeing with context control.
It's purely an awareness.
Opportunity for our sales teams continue to share the best practices that marketers are seeing in the results that they're seeing with the context control products and again, it's early innings in the international markets. When it comes to context control. So we'll continue to.
Tell our story and drive adoption of the product.
In the U S and internationally.
And in terms of geopolitical.
And whether or not that's impacting our business.
My response to that is that our technology and services have never been more relevant.
The relevancy has carried throughout this year last year, given all of the unprecedented events.
That we have all experienced and again marketers they continue to lean into our brand safety brand suitability solutions, especially as we're seeing that rapid adoption on the social platforms. The dynamic nature of social platforms and also the unpredictability.
<unk>.
Yes.
Got it thank you.
Thank you Andrew.
So with that.
I am showing no further questions at this time I'll turn the call back to you Lisa Schneider for any closing remarks.
Okay, great. So thanks again to everyone for joining us on today's call. We are excited to enter 2022 with strong business momentum and favorable demand trends our focus in 2022 will be on driving sustainable growth with differentiated solutions and expanding our marketing.
Leading global presence and we look forward to speaking with you soon.
Yes.
Ladies and gentlemen that doesn't go conference for today. Thank you for your participation you may now disconnect.
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