Q4 2021 Digital Media Solutions Inc Earnings Call
[music].
Hello everyone and welcome to the Digital Media Solutions, Inc.
Hello, everyone and welcome to the digital Media Solutions, Inc.
fourth quarter 2021 earnings call. My name is Brika and I'll be today's event specialist.
Fourth quarter 2021 earnings call. My name is breaker and all these days event specialist.
Brika: You will have the opportunity to ask a question and if you wish to do so please press star 1 on your telephone keypad.
You will have the opportunity to ask a question.
If you wish to do so please press star one on your telephone keypad.
Brika: When speaking, please ensure your line is unmuted locally. I would now like to hand the call over to our host, Tom Bock, Executive Vice President of Investor Relations, to begin, so Tom, please go ahead.
When I'm speaking please ensure your line is muted lately I.
I'd now like to hand, the Kool aid that you all hoist Campbell executive Vice President of Investor Relations to begin they tell them. Please go ahead.
Thank you for joining us to discuss <unk> financial results for the fourth quarter and full year 2021.
Tom Bock: Thank you for joining us to discuss DMS's financial results for the fourth quarter and full year 2021.
Tom Bock: With me on the call are Joe Maranucci, co-founder and CEO , and Messenger Srinivas CFO .
With me on the call are Joe <unk>, <unk> co founder and CEO .
<unk> CFO .
Tom Bock: We posted our earnings announcement this afternoon in a press release and also on our investor relations website. By now, everyone should have access.
Posted in our earnings announcement. This afternoon in our press release and also on our Investor Relations website by now everyone should have access.
Tom Bock: Before we begin, I would like to call your attention to our Safe Harbor provision for forward-looking statements in our Financial Results Press Room.
Before we begin I would like to call your attention to our safe Harbor provision for forward looking statements in our financial results press release, the Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the contents per box forward looking statements for a more detailed description.
Tom Bock: The safe harbor provision identifies risk factors that may cause actual results to differ materially from the contents of our forward-looking state.
Tom Bock: For a more detailed description of the risk factors that may affect the results, including disclosure about the effects of the coronavirus pandemic, please refer to our financial results press release and our SEC filing.
Of the risk factors that may affect our results, including disclosure about the effects of the coronavirus pandemic. Please refer to our financial results press release, and our SEC filings.
Tom Bock: Also, during this call, management's commentary will include non-GAAP financial measures.
Also during this call management's commentary will include non-GAAP financial measures reconciliations between GAAP and non-GAAP financial measures for our reported results can be found in the tables of our financial results press release, which we have posted to our Investor relations website at investors.
Tom Bock: Reconciliations between GAAP and non-GAAP financial measures for our reported results can be found in the tables of our financial results press release, which we have posted to our investor relations website at investors.digitalmediasolutions.com.
Digital media solutions Dot com.
Tom Bock: The additional financial and other information to be discussed on this call can also be found on our investor relations website.
The additional financial and other information to be discussed on this call can also be found on our Investor Relations website.
Tom Bock: Now I'd like to turn the call over to Joe Maranucci, our CEO .
Now I'd like to turn the call over to Joe <unk> our CEO .
Joe Maranucci: Thanks, Tom, and good afternoon, everyone. Welcome to our fourth quarter and full year of 2021 earnings call. We posted our press release earlier this afternoon, and I'm now happy to announce, record fourth quarter GAAP revenue of $119 million, up 17% year over year, and also record adjusted revenue of $122 million, up 17% over the prior year.
Thanks, Tom and good afternoon, everyone welcome to our fourth quarter and full year 2021 earnings call. We posted our press release earlier this afternoon and I'm now happy to announce record fourth quarter GAAP revenue of $119 million up 17% year over year and also record adjusted.
Revenue of $122 million up 17% over the prior year.
Joe Maranucci: In the fourth quarter, insurance revenue grew 13% versus Q4 2020. Our insurance segment contributed 58% of our total revenue in Q4, of which auto represented 49% and health came in at 41%. We'll talk more about that split and the significance of diversification in just a bit. We also continue to maintain solid profitability with adjusted EBITDA of $15 million, which translates to a strong margin of 12%.
In the fourth quarter insurance revenue grew 13% versus Q4 2020, our insurance segment contributed 58% of our total revenue in Q4 of which auto represented 49% and help came in at 41% will talk more about that split and the significance of diversification in just a bit.
We also continued to maintain solid profitability with adjusted EBITDA of $15 million, which translates to a strong margin of 12%.
Joe Maranucci: We were also pleased with our gross margin and variable marketing margins, which came in at 30% and 36% respectively.
We were also pleased with our gross margin and variable marketing margins, which came in at 30% and 36% respectively.
Joe Maranucci: Of course, Q4 was just the culmination of a successful 2021. In 2021, we achieved gap revenue of $428 million and adjusted revenue of $442 million, increases of 29 and 30% respectively. Our adjusted EBITDA was $58 million, an increase of 7% despite significant headwinds that had the power to disrupt our momentum.
Of course Q4 was just the culmination of a successful 2021 and 2021, we achieved GAAP revenue of $428 million and adjusted revenue of 442 million increases of 29, and 30% respectively. Our adjusted EBITDA was $58 million an increase of 7% despite.
Headwinds that had the power to disrupt our momentum with Sandra our CFO will add more details. We'll also dig deeper into the numbers and go over guidance for the first quarter and the full year 2022 and a bit.
Joe Maranucci: Lucindra, our CFO , will add more details and will also dig deeper into the numbers and go over guidance for the first quarter and the full year 2022 in a bit.
Lucindra: So what drove growth for us in Q4 and throughout the year? I can highlight three things. First, scaled spend. Second, data flywheel. And third, dynamic diversification.
So what drove growth for us in Q4 and throughout the year I can highlight three things first scaled spin.
Data flywheel and third dynamic diversification. These three things combined to produce the growth momentum we experienced in Q4 and really throughout all of 2021.
Lucindra: These three things combined to produce the growth momentum we experienced in Q4 and really throughout all of 2021. Let me explain by going through each one of these.
Let me explain by going through each one of these one by one.
Lucindra: First, scaled spend. The digital transformation of advertising continues to accelerate with more and more ad spend moving from traditional channels to digital channels that have measurable ROI. In addition to the macro trends that are scaling spend for our sector, there's a reason advertisers are scaling budgets specifically with DMS.
First scaled spend the digital transformation of advertising continues to accelerate with more and more AD spend moving from traditional channels to digital channels that have measurable ROI.
Turn to the macro trends that are scaling spend for our sector Theres. A reason advertisers are scaling budget, specifically with BMS.
Lucindra: Large advertisers have and continue to devote significant budget share to DMS. Why? Because they trust us to deliver reliable ROI on their advertising spend and to do it at scale.
Large advertisers have and continue to devote significant budget share to CMS.
Because they trust us to deliver reliable ROI on their advertising spend and to do it at scale for.
Lucindra: For our top 20 advertiser clients over the last year, our retention rate is 100%. And for those top 20 advertiser clients, revenue grew by 31% from Q4 2020 to Q4 2021. This scaled spend is directly attributable to our clients trusting us to deliver the results they need.
For our top 20 advertiser clients over the last year, our retention rate is 100% and for those top 20 Advertiser clients revenue grew by 31% from Q4 2020 to Q4 2021. This scaled spend is directly attributable to our clients trusting.
Asked to deliver the results they need.
Lucindra: So why do our clients trust us and why do they scale their spend with us?
So why do our clients Trust us and why do they scale their spend with us.
Lucindra: because time and time again, we are proving the effectiveness of our data-driven, tech-enabled, digital performance advertising solutions that reach the right consumers with the right messages, in the right place, and at the right time to encourage action based on their intent. Our solutions deliver reliable ROI that is trackable, scalable, and predictable. And because of that reliable ROI, our advertiser clients trust us, and this is why they scale spend with us. So the next...
Because time and time again, we are proving the effectiveness of our data driven tech enabled digital performance advertising solutions that reach the right consumers with the right messages and the right place and at the right time to encourage actions based on their intent our solutions deliver reliable ROI that is trackable.
Scalable and predictable and because of that reliable ROI, our advertiser clients Trust us and this is why they scale spend with us. So the next obvious question is.
Lucindra: How do we deliver reliable ROI at scale to our advertiser clients?
How do we deliver reliable ROI at scale to our advertiser clients.
Lucindra: and the answer is our data flywheel. We leverage our tool set which consists of our first party data asset, proprietary technology and expansive.
Answer is our data flywheel.
We leverage our toolset, which consists of our first party data asset.
Proprietary technology and expansive media reach.
Lucindra: We've talked about this a lot. We use the tool set to connect consumers and advertisers when they're ready to make purchases.
We've talked about this a lot we use the tool set to connect consumers and advertisers when they are ready to make purchases are scaling data asset is the biggest part of that story and we talked about the power of our flywheel before.
Lucindra: Our scaling data asset is the biggest part of that story, and we've talked about the power of our flywheel before. The more we scale, spend, and engage, the more powerful our data asset becomes. The more powerful our data asset becomes, the more efficiently we target consumers and connect them with advertisers that meet their needs.
Where we scale spend and engage the more powerful our data asset becomes a more powerful our data as it becomes the more efficiently we target consumers and connect them with advertisers that meet their needs.
Lucindra: Precise targeting means higher conversion rates. That translates into better advertising ROI, and better advertising ROI means more scaled spend with DMS. So tied all together, this is why revenue from our top 20 customers grew by 31% year over year.
<unk> targeting the entire conversion rates that translates into better advertising ROI and better advertising ROI means more scaled spend with BMS to tie. It all together. This is why revenue from our top 20 customers grew by 31% year over year.
Lucindra: Our data signals program has grown dramatically since we first began talking about it. In 2021, we generated approximately 1.9 billion engagement events, and revenue attributed to data signals more than doubled versus 2020. This ties directly to our record revenue in Q4 and increased engagement as a result.
Our data signals program has grown dramatically since we first began talking about it in 2021, we generated approximately $1 9 billion engagement events and revenue attributed to data signals more than doubled versus 2020. This ties directly to our record revenue in Q4 and increased engagement as a result.
Lucindra: To help further quantify this, you see the rise again in our Consumer Engagement Score, or CES, from 76 in Q3 2021 to 82 in Q4 2021.
To help further quantify this you see the rise again in our consumer engagement score or CES from 76 in Q3 2021 to 82 in Q4 2021 and.
Lucindra: In addition, as ad targeting gets more cumbersome with third-party data sources and targeting tools being sunsetted, we are increasingly able to rely on our first-party data asset, and this helps us better understand consumer intent, and therefore the first-party data asset continues to provide us with a competitive advantage.
In addition, as AD targeting gets more cumbersome with third party data sources and targeting tools being sunset. It we are increasingly able to rely on our first party data asset and this helps us better understand consumer intent and therefore, the first party data asset continues to provide us with a competitive advantage.
Lucindra: Now let's talk about our key differentiator that was especially impactful in Q4. This is dynamic diversification.
Now, let's talk about our key differentiator that was especially impactful in Q4. This is dynamic diversification dms.
Lucindra: DMS solutions are vertical agnostic and channel agnostic. What does that mean? It means we're not relying on any one vertical or any one media channel for our growth. In Q4, for example, 28% of our revenues came from auto insurance. 23% came from health insurance. 20% from e-commerce, 10% from career and education, and 8% from consumer finance.
Dms solutions or vertical Ignostic and channel agnostic, what does that mean.
So we're not relying on any one vertical or any one media channel for our growth in Q4 for example, 28% of our revenues came from auto insurance, 23% came from health insurance, 20% for e-commerce , 10% from career and education and 8% from consumer finance Similarly.
Lucindra: Similarly, when it comes to our media channels, our brand direct and marketplace campaigns run across almost every possible digital channel. This includes search, social, email, programmatic, and more, and with no individual channel or publisher representing more than a quarter of our total supply. But it's more than that. We're not just diversified.
When it comes to our media channels, our brand direct and marketplace campaigns run across almost every possible digital channel. This includes search social E mail programmatic and more and with no individual channel or publisher representing more than a quarter of our total supply.
But it's more than that we're not just diversified.
Lucindra: We like to say we're dynamically diversified and the difference is very important and it's a big part of how we continue to scale revenue and profit. Because of our dynamic diversification, we're not tied to a specific percentage of our business coming from a specific vertical. And equally as important, we're more insulated from the ups and downs of the media channels or our publishing partners.
We like to say, we are dynamically diversified and the difference is very important and it's a big part of how we continue to scale revenue and profit because of our dynamic diversification, we're not tied to a specific percentage of our business coming from a specific vertical and equally as important we're more insulated from the ups and downs of the media channels or a pub.
<unk> partners.
Lucindra: This is the competitive advantage for us that allows for our business model to pivot quickly and in parallel with the opportunity.
This is the competitive advantage for us that allows for our business model to pivot quickly and in parallel with the opportunity.
Lucindra: Here's an example. E-commerce was different than expected this year. Macro supply chain issues disrupted demand from some of the advertisers hoping to capitalize on holiday spending. Meanwhile, other e-commerce advertisers not impacted by supply chain, including those within the health and wellness subcategory of e-com, capitalized as they were able to leverage the DMS platform to match strong consumer demand with their products and services.
Here's an example e-commerce was different than expected this year macro supply chain issues disrupted demand from some of the advertisers hoping to capitalize on holiday spending. Meanwhile, other e-commerce advertisers not impacted by supply chain, including those within the health and wellness subcategory of E com capitalized as they.
We're able to leverage the Dms platform to match strong consumer demand with their products and services. So again I spoke of advertiser demand and consumer intent pivoted, we successfully shifted and by doing this we maintained our growth momentum as a result of our agility within E Commerce.
Lucindra: So again, as both advertiser and demand and consumer intent pivoted, we successfully shifted. And by doing this, we maintained our growth momentum as a result of our agility within e-commerce.
Lucindra: Our insurance numbers also tell the story of DMS dynamic diversification very well. We all know about the loss ratio challenges restricting advertising bid prices with an auto insurance.
Our insurance numbers also tell the story of Dms dynamic diversification very well, we all know about the loss ratio challenges restricting advertising bid prices within auto insurance and.
Lucindra: In Q4 2020, auto insurance represented approximately three quarters of our insurance revenue.
In Q4, 2020 auto insurance represented approximately three quarters of our insurance revenue.
Lucindra: Looking at Q4 in 2021, auto accounted for just 49% of our insurance revenue. Even with the significant negative impact of loss ratios that lowered bid prices for major insurers, our total insurance revenue grew 13% year over year. How?
Looking at Q4, and 2021 auto accounted for just 49% bar insurance revenue, even with the significant negative impact of loss ratios that lowered bid prices for major insurers. Our total insurance revenue grew 13% year over year how.
Lucindra: because even with our insurance vertical, we are dynamically diversified and we scaled other insurance categories during 2021. In the end, insurance as a whole maintained its spot with 58% of our overall revenue.
Because even with our insurance vertical we are dynamically diversified and we scaled other insurance categories. During 2021, and the end insurance as a whole maintained its spot with 58% of our overall revenue.
Lucindra: Dynamic diversification has been a consistent go-to-market strategy for DMS as it allows us to pivot quickly to meet consumer and advertiser needs.
Dynamic diversification has been a consistent go to market strategy for BMS and it allows us to pivot quickly to meet consumer and advertiser needs or dynamic diversification encompasses both the demand and supply sides in other words, the advertising and media sides of our business and it allows us to navigate re.
Lucindra: Our dynamic diversification encompasses both the demand and supply sides, in other words, the advertising and media sides of our business, and it allows us to navigate real-time consumer behaviors, changing media prices, and more, while we leverage our data assets.
All time consumer behaviors, changing media prices and more while we leverage our data assets.
Lastly, let's talk about how our scaled spend plus our data flywheel, plus our dynamic diversification consistently deliver growth momentum.
Lucindra: Lastly, let's talk about how our scaled spend, plus our data flywheel, plus our dynamic diversification consistently deliver growth from that.
Lucindra: we had a record AEP and OEP period in Q4. Both our brand direct and marketplace solutions support health insurance clients and therefore the growth was felt across DMS.
We had a record AEP and OAP period in Q4, both our brand direct and marketplace solutions support health insurance clients and therefore, the growth was felt across DNS.
Lucindra: Revenue for our health insurance business, adjusted for the CRISP acquisition in April 2021, was up 35% organically over Q4 2020. And though we're hesitant to make any predictions on when auto insurance bid prices will spring back fully, our current visibility on Q1 has us believing that Q4 represented the floor, so we're optimistic for what's ahead.
Revenue for our health insurance business adjusting for the Crisp acquisition in April 2021 was up 35% organically over Q4 2020 and go were hesitant to make any predictions on when auto insurance bid prices will spring back fully our current visibility on Q1 has us believing that.
Q4 represented the floor. So we're optimistic for what's ahead.
Lucindra: Across the rest of our business, including e-commerce, home services, consumer finance, career and education, health and wellness, we're seeing good momentum.
Across the rest of our business, including E Commerce home services, consumer finance career, and education and health and wellness, we're seeing good momentum.
Lucindra: So as we head deeper into 2022, we're cautiously optimistic about this year, during which solid growth and strong margins are expected to be driven by scaling advertiser spend, our data flywheel, and dynamic diversification.
We had deeper into 2022, we're cautiously optimistic about this year during which solid growth and strong margins are expected to be driven by scaling advertiser spend our data flywheel and dynamic diversification.
Lucindra: I also want to take a moment to thank our amazing team. It is their grit, their agility, and their whatever-it-takes mindset that continues to be a big part of how DMS continues to deliver growth.
I also want to take a moment to thank our amazing team is their grit their agility and their whatever it takes mindset that continues to be a big part of how gms continues to deliver growth.
Lucindra: Before I turn it over to Vasundhara, I want to offer a quick update on our strategic review. As all of you know, a few months ago, we announced that we are conducting a strategic review aimed at maximizing value for our shareholders. Because this review is still ongoing, I'm unable to offer specific updates.
Before I turn it over to the Sandra I want to offer a quick update on our strategic review.
As all of you know a few months ago, we announced that we are conducting a strategic review aimed at maximizing value for our shareholders. Because this review is still ongoing.
Well to offer specific updates, but please note we are working diligently and hope to update you. All on this process by our Q1 earnings report in early May.
Vasundhara: But please know we are working diligently and hope to update you all on this process by our Q1 earnings report in early May.
Speaker Change: Now I will turn it over to DMS CFO , Vasundhra Srinivas.
Now I will turn it over to BMS CFO with some drift shred of us.
Vasundhra Srinivas: Thank you, Joe, hello and thank you to everyone for joining us today. I will start off with some color on our revenues. Reported gap revenue was $119 million, a record quarter up 17% over the same quarter last year. Insurance, which accounted for approximately 58% of our total revenues in Q4, grew 13% over the fourth quarter of 2020.
Thank you Joe Hello, and thank you to everyone for joining us today.
I will start off with some color on our revenues reported GAAP revenue was $119 million a record quarter up 17% over the same quarter last year.
Aaron's, which accounted for approximately 58% of our total revenues in Q4.
13% over the fourth quarter of 2020.
Vasundhra Srinivas: The breakdown of the insurance segment was as follows. Auto made up 49% of total insurance, health came in at 41%, followed by life at 5% and home at 5%. Diversification, as Joe has mentioned, remains key for us. In the year-ago period, auto accounted for approximately three quarters of our insurance revenue.
Breakdown at the insurance segment was as follows oil made up 49% of total insurance health came in at 41% followed by life at 5% and home at 5% diversification as Joe has mentioned remains key for us and the year ago period auto accounted for approximately.
Three quarters of our insurance revenues.
Vasundhra Srinivas: Just touching on the other sectors, career and education, which was approximately 10% of our total revenues in Q4, grew 23% year over year, driven in part by the competitive nature of this year's job market and growing wallet share from our top education advertisers.
Just touching on the other sectors career and education, which was approximately 10% of our total revenues in Q4 grew 23% year over year driven in part by the competitive nature of this year's job market and growing wallet share from our top education advertisers e-commerce , which represented 19%.
Vasundhra Srinivas: e-commerce, which represented 19% of our total revenues was up 36% compared to the year ago quarter. Consumer finance accounted for 8% of our total revenue and grew 56% in Q4 over the prior year's quarter. When macro supply chain challenges restricted growth, we expected from holiday shopping, we were able to dynamically scale health and wellness and that resulted in solid gains in this vertical.
Of our total revenues was up 36% compared to the year ago quarter consumer finance accounted for 8% of our total revenue and grew 56% in Q4 over the prior year's quarter when macro supply chain challenges restricted growth, we expected from holiday shopping.
Well to dynamically scale health and wellness and that resulted in solid gains in this vertical similarly upon the conclusion of the P. The transition traffic to support the strong consumer finance demand rolling through to the end of the year and into Q1. This is another example of how our vertical agnostic model and.
Vasundhra Srinivas: Similarly, upon the conclusion of AEP, we transitioned traffic to support the strong consumer finance demand rolling through to the end of the year and into Q1. This is another example of how our vertical agnostic model and dynamic diversification continued growth.
Dynamic diversification continued growth for.
Vasundhra Srinivas: For the fourth quarter, reported gross profit was $35 million equating to a 30% margin within the guidance range of 28 to 31% compared to 29% margin in Q3 2021 and the 27% margin we achieved a year ago.
For the fourth quarter reported gross profit was $35 million equating to a 30% margin within the guidance range of 28% to 31% compared to 29% margin in Q3, 2021, and 27% margin, we achieved a year ago.
Vasundhra Srinivas: Variable Marketing Margin, or VMM, was 36%, compared to 35% in Q3 2021, and 32% a year ago, based on strong performance from CRISP and higher utilization of DMS voice during AEP.
Variable marketing margin of BMI was 36% compared to 35% in Q3, 2021, and 32% a year ago based on strong performance from Chris and higher utilization of Dms.
Dealing A&P on a reported segment basis, excluding intercompany revenue that Q4 brand direct solutions gross margin was 24% compared to 23% in Q3, 2021 and up from 22% in the year ago quarter.
Vasundhra Srinivas: On a reported segment basis, excluding intercompany revenue, the Q4 brand direct solution gross margin was 24% compared to 23% in Q3 2021 and up from 22% in the year ago quarter.
Vasundhra Srinivas: And the Q4 Marketplace solutions gross margin was 28% compared to 25% in Q3 2021 and 26% from a year ago. Other solutions, primarily including our SaaS software business, had a gross margin of 38% contributing to our overall gross margin level.
And the Q4 marketplace solutions gross margin was 28% compared to 25% in Q3, 2021, and 26% from a year ago August solution, primarily including our SaaS software business had a gross margin of 38% contributing to our overall gross margin level.
Vasundhra Srinivas: We improved our already strong gross margins, even as auto insurance carriers creased their advertising spend through lower bid prices, and as the health insurance market became very competitive, increasing media costs.
Improved our already strong gross margins, even as auto insurance carriers Queen did their advertising spend through lower bid prices and as the health insurance market became very competitive increasing media cost it.
Vasundhra Srinivas: It is because of our ability to pivot into other categories coupled with the strategic decisions such as bringing voice-enabled call center software in-house with the launch of TMS Voice that we were able to mitigate the negative gross margin impacts occurring within the auto insurance and health insurance verticals.
It is because of our ability to pivot into other categories, coupled with the strategic decision such as bringing voice enabled call Center software in house with the launch of Dms voice that we were able to mitigate the negative gross margin impact occurring within the auto insurance and health insurance verticals.
Vasundhra Srinivas: For operating expenses, in 2021, we delivered approximately half of our projected annualized savings as part of the ETI initiative we launched in Q3. As previously mentioned, these efficiency and cost savings are not just a one-time initiative, but rather the fabric of how we execute our plan is to continue to identify and resolve redundancies throughout the business.
Our operating expenses in 2021, we delivered approximately half of our projected annualized savings as part of the ETF initiative.
In Q3 as previously mentioned these efficiency and cost savings are not just a onetime initiative, but rather the fabric of how we execute our plan is to continue to identify and resolve redundancies throughout the business.
Vasundhra Srinivas: Our total operating expenses amounted to $39 million in the fourth quarter, a decrease of $6 million year over year driven by quarterly fair market valuation of warmed expenses of $17 million offset by quarterly contingent consideration valuations of $4 million and acquisition related expenses.
Total operating expenses amounted to $39 million in the fourth quarter, a decrease of $6 million year over year, driven by quarterly fair market valuation of warmed expenses of $17 million offset by quarterly contingent consideration valuation of $4 million in acquisition related expenses.
Vasundhra Srinivas: we ended the quarter with a total headcount of approximately 580 full-time ecovillains.
We ended the quarter with a total head count of approximately 508 full time equivalents.
Vasundhra Srinivas: Finally, on profitability, our adjusted EBITDA in the quarter was $15 million, or a margin of 12%, flat versus the same quarter last year driven by investments in our workforce to retain the necessary skill sets to support and drive continued growth for the company. Our net loss came in at $4 million versus a loss of $18 million in the same quarter last year.
Finally on profitability, our adjusted EBITDA in the quarter was $15 million.
Our margin of 12% flat versus the same quarter last year, driven by investments in our workforce to retain the necessary skill sets to support and drive continued growth for the company.
Net loss came in at $4 million versus a loss of $18 million in the same quarter last year.
Vasundhra Srinivas: EPS came in at a loss of $0.11 compared to a loss of $0.32 in Q4 2020.
EPS came in at a loss of <unk> 11, compared to a loss of 32 cents in Q4 2020.
Vasundhra Srinivas: Lastly, turning to the balance sheet and liquidity, we ended the quarter with $26 million in cash, cash equivalents, and marketable securities, up $8 million from the end of Q3, reflecting normal shifts in working capital. Our total debt at quarter end was $220 million, and net of issuance costs, it was $218 million.
Lastly, turning to the balance sheet and liquidity, we ended the quarter with $26 million in cash cash equivalents and marketable securities up $8 million from the end of Q3, reflecting normal shifts in working capital our total debt at quarter end was $220 million and net of issuance costs.
It was $218 million.
Vasundhra Srinivas: As of quarter end, we had the full $50 million balance available to us on our revolving credit facility.
As of quarter end, we had the full $50 million balance available to us on our revolving credit facility.
Vasundhra Srinivas: Our net leverage stood at 3.3 times at year end. As a reminder, our credit facility from last year puts our leverage covenant at five times currently. So we feel that we have plenty of liquidity under our facility, but of course, we are very mindful of our obligation given current volatility.
Net leverage stood at three three times at year end as a reminder, our credit facility from last year puts a leverage covenant at five times. Currently so we feel that we have plenty of liquidity under our facility at the school is.
Very mindful of our obligations given the current volatility.
Vasundhra Srinivas: Turning our attention to 2022, we expect solid organic top-line growth to continue in 2022 as auto insurance recovers and demand continues across our other verticals, including health insurance, consumer finance, and e-commerce. We are closely watching all the other verticals we serve, especially including the auto insurance and health insurance market.
Turning our attention to 2022, we expect solid organic top line growth to continue in 2022 auto insurance recovers and demand continues across other verticals, including health insurance consumer finance and E Commerce.
We're closely watching all the other verticals me, so, especially including the auto insurance and health insurance market.
Vasundhra Srinivas: Inflation, continued supply chain issues, and the lag time of individual states approving rate hikes all continue to weigh on the auto insurance sector.
Inflation continued supply chain issues and a lifetime of individual states approving rate hikes, all continued to weigh on the auto insurance sector.
Vasundhra Srinivas: Although we believe auto insurance pricing has bottomed out and is showing solid trends, when compared to Q4, advertising spend is still down within auto insurance year over year, and this isn't expected to be a quick recovery. The timing and the extent of the recovery in auto is still unclear, but we are increasingly optimistic about the second half of 2022. As a reminder, in Q4, auto insurance was less than 30% of our total revenue.
Although we believe auto insurance pricing has bottomed out and is showing solid trends when compared to Q4 advertising spend is still down within auto insurance year over year and this isn't expected to be a quick recovery.
The timing and the extent of the recovery in auto it's still unclear.
Increasingly optimistic about the second half of 2022 at.
As a reminder, in Q4 auto insurance was less than 30% of our total revenues.
Vasundhra Srinivas: We expect to continue to see strong demands for the advertising solutions we provide to our Medicare clients, which is the majority of our health insurance business.
We expect to continue to see strong demand for the advertising solutions, we provide to our Medicare clients, which is the majority of our health insurance business.
Vasundhra Srinivas: Meanwhile, our Protect Medicare agency business faces challenges due to competition, rising customer churn rates, and lowered lifetime values impacting payouts. Revenue-sharing agreements are being reworked across the sector, including for us.
Meanwhile, our protect Medicare agency business faces challenges due to competition rising customer churn rates and lower lifetime values impacting payout revenue sharing agreements are being reworked across the sector, including for us inflation is already impacting us in 2022 as we have to remain.
Vasundhra Srinivas: Inflation is already impacting us in 2022, as we have to remain competitive on wages in a tight labor market. And inflation also has the ability to impact other cost areas of the business, inclusive of operational expenses and even possibly spilling over into media costs.
<unk> on wages and the tight labor markets and inflation also has the ability to impact other cost areas of the business inclusive of operational expenses, and even possibly spilling over into media costs.
Vasundhra Srinivas: Lastly, the pandemic still represents uncertainty with regards to a number of factors, including staffing for us and our publisher partners and advertiser clients. In fact, as we all remember, Omicron spikes were significant in Q1.
Lastly, the pandemic stemmed represents uncertainty with regards to a number of factors, including staffing for us and our publisher partners and advertising clients. In fact, as we all remember omicron spikes was significant in Q1.
Vasundhra Srinivas: As discussed on a prior earnings call, we have pivoted to gap revenue for both reporting and guidance. We currently feel comfortable in achieving a Q1 gap revenue range of $102 million to $107 million and a full year 2022 range of $465 million to $475 million.
As discussed on our prior earnings call, we have pivoted to GAAP revenues for both reporting and guidance. We currently feel comfortable in achieving our Q1 GAAP revenue range of $102 million to $107 million and a full year of 2022 range of 465 million to 475.
The others.
Vasundhra Srinivas: As a reminder, we're not going to be reporting adjusted revenue going forward. For those of you listening and wondering what the guidance would have been had we continued with adjusted revenue, that guidance for 2022 would have been $481 million to $491 million.
As a reminder, we're not going to be reporting adjusted revenue going forward for those of you listening and wondering what the guidance would have been had we continued with adjusted revenue that guidance for 2022 would have been $481 million to $491 million.
Vasundhra Srinivas: The macro headwinds we have been facing within auto insurance have created downward pressure on gross margin. We reacted quickly and strategically by pivoting into other categories such as Medicare, life and health insurance, mitigating the negative margin impact. A dynamic diversification, as Joe mentioned, is foundational to how we run the business as well as a key competitive advantage for us.
The macro headwind, we have been facing within auto insurance have created downward pressure on gross margin.
We acted quickly and strategically by pivoting into other categories, such as Medicare life, and health insurance mitigating the negative margin impact.
<unk> diversification as Joe mentioned is foundational to how we run the business as well as a key competitive advantage for us.
Vasundhra Srinivas: Our ability to adjust and pivot dynamically also contributes to our comfort with maintaining our previously discussed gross margin guidance range of 28 to 31% and variable marketing margin range of 32 to 36% for both Q1 and full year 2022.
Ability to adjust and pivot dynamically also contributes to our comfort with maintaining our previously discussed gross margin guidance range of 28% to 31% and variable marketing margin range of 32% to 36% for both Q1 and full year 2022, we.
Vasundhra Srinivas: We continue to expect strong EBITDA margins even with headwinds from wage inflation, rising public company costs, and pricing pressure in the auto insurance segment. Our current Q1 and Full Year EBITDA forecast is $10-12 million and $55-60 million respectively.
We continue to expect strong EBITDA margin, even with headwinds from wage inflation rising public company costs and pricing pressure in the auto insurance segment.
In Q1, and full year, EBITDA forecast is $10 million to $12 million and $55 million to $60 million respectively.
Vasundhra Srinivas: In summary, the combination of scaled spend, a data flywheel, and dynamic diversification delivered a strong Q4 with growth momentum that will propel us in Q1 and beyond. With that, we thank you for your interest in DMS, and we will now open the line for questions. Operator, please let our listeners know what they have to do to ask questions.
In summary, the combination of skills and data flywheel and dynamic diversification delivered a strong Q4 with growth momentum that will propel us in Q1 and beyond with that we thank you for your interest in Dms and we will now open the line for questions. Operator, Please let our listeners know what they have to do to ask quest.
<unk>.
Thank you.
Vasundhra Srinivas: If you would like to ask a question, please press star 1 on your telephone keypad.
If you would like to ask a question. Please press star one on your telephone keypad.
Vasundhra Srinivas: When speaking, please ensure your line is unmuted locally and if you change your mind at any time, please press star 2 to remove the question.
When speaking please ensure your line is on mute locally.
And if you change your mind at any time. Please press star Th remains the question.
Vasundhra Srinivas: As a reminder, that is star followed by 1 to ask any questions.
As a reminder, that is star followed by one trust any questions.
Speaker Change: We have our first question on the phone lines from Maria Ritz of Canaccord. So, Maria, your line is open. Great, thanks so much for taking my questions.
We have a first question on the phone lines from my favorite kind of code say Maria Your line is open.
Oh, great. Thanks, so much for taking my questions Joe.
So I appreciate your comments. So then then the diversification, but so can you maybe just talk about what youre seeing in the auto vertical and whether there was anything different that was published in point from what you sort of anticipate that maybe a few months ago and that sort of understanding that there's still a lot of uncertainty around the vertical when would you anticipate the vertical to return.
Maria Ripps: but can you maybe just talk about what you're seeing in the order of vertical and whether there was anything different from the recovery standpoint from what you sort of anticipated maybe a few months ago and that sort of understanding that there was still a lot of uncertainty around the vertical. When would you sort of anticipate the vertical to return to a more normalized sort of run rate? And then I have a quick followup.
One of them are light sort of run rate and then I have a quick follow up.
Speaker Change: Hi, Maria, good afternoon. Good to speak to you. So, we're not really seeing anything different. We anticipate what I would call a wide U-shape recovery because it takes time for the carriers to adjust their pricing. So, the regulatory environment dictates that, you know, about half the country is use and file and I guess file and use which represents faster speed to market and the other half the country's prior approval which is slower speed to market. So, there's differences in speed to market.
Hi, Marie good afternoon, good to speak to you so.
We're not really seeing anything different we anticipate what I would call a wide U shape recovery because it takes time for the carriers to adjust their pricing. So the regulatory environment dictates that you know about half the country is using filing or I guess filing use which represents faster speed to market and the other.
Half the country's prior approval, which is slower speed to market.
So there is differences in speed to market. So rates move accordingly, just to give you. An example, we still have.
Speaker Change: So rates move accordingly. Just to give you an example, we still have 19 states that are still paused based on, with various carriers that are still based on some of these approvals. So, and I think this has been widely communicated and anticipated that it was going to be this type of recovery, U-shaped, not V-shaped. And we're seeing that.
In 19 states that are still pause based on.
With various carriers that are still based on some of these approvals. So I think this has been widely communicated and anticipated that it was going to be this type of recovery you shape. These days and we're seeing that.
Speaker Change: bid prices bottomed from our perspective in
The bid prices bottomed from our perspective.
Speaker Change: November , December are now up off the bottom and through the end of February , we're up about 20% off the bottom. So we are starting to see that nice U-shape recovery in auto insurance, which is really no different than what we previously expected to see.
November December now up off the bottom end.
Through the end of February we're up about 20% off the bottom. So we are starting to see that makes U shaped recovery in auto insurance, which is really no different than what we previously expected to see.
Speaker Change: Got it, that's very helpful. And then maybe my second question, just sort of a broader question. You've had a lot of success with your health vertical and sort of as you look at your different offerings in that vertical today, how do you, sort of how do you think your position versus some of your peers? Are there any sort of assets, technology or functionality that sort of you think would be additive to that vertical?
Got it that's very helpful. And then maybe my second question.
Just sort of a broader question.
You had a lot of success with your health vertical and sort of as you look at your different offerings in that vertical today, how would you.
Sort of how would you think you are positioned versus some of your peers are there any sort of assets technology or functionality that you think would be additive to that vertical.
So yes, we obviously saw growth in health insurance.
Speaker Change: So yeah, we obviously saw growth in health insurance.
Speaker Change: I mean, we diversified, if you look at insurance, you know, for Q4 2020 versus insurance,
This quarter I mean, we diversified if you look at insurance.
For Q4, 2020 versus insurance Q4, 2021 and health insurance.
Speaker Change: Q4 2021 health insurance, you know.
<unk> significantly diversified the vertical and then just generally auto insurance.
Speaker Change: significantly diversified the vertical and then just generally auto insurance was the largest vertical at 28%, but then health insurance right behind that at 23%. Yeah, it comes straight down off the top and it leads off data.
It was the largest vertical at 28%, but then health insurance right behind that of 23%.
It comes straight down off the top and it leads off data.
Speaker Change: accompanied by technology and media reach and our ability to leverage that.
Accompanied by technology, and media reach and our ability to leverage that toolbox and then serve the competitive <unk>.
Speaker Change: toolbox and then serve the competitive marketplace.
Marketplace.
Speaker Change: has been a differentiator for us. You know, we made an acquisition this year, you know, so we did that.
Has been a differentiator for US you know we made an acquisition this year. So we did that.
Speaker Change: in conjunction with our organic growth strategy, and that has played
In conjunction with our organic growth strategy and that has played.
Speaker Change: you know, pretty much out as we expected it to be, which is why we saw a nice growth in the fourth quarter inside of the total business, inside of insurance, and then more specifically inside of health insurance. Now, I can't specifically speak to
Pretty much as we expected it to be which is why we saw a nice growth in the fourth quarter inside of the total business inside of insurance and then more specifically inside of health insurance I can't specifically speak to.
Speaker Change: the factors that might be impacting some of the peers, but we see the same things that they see, which is.
Factors that might be impacting some of the peers, but.
We see the same things that they see which is.
Speaker Change: And Vassandra mentioned this in her segment. She talked about models being adjusted for lifetime values. And I think generally that's understood to be the result of more price shopping by consumers, which has led to churn. So some of those lifetime values have been adjusted down and that's still being worked through. But we still see a competitive marketplace for digital performance marketing. In fact, I think that leads to those writing health insurance, whether it's.
<unk> mentioned this in her segment she talked about models being adjusted for <unk>.
Lifetime values and I think generally that's understood to be the result of.
More price shopping by consumers, which has led to churn. So some of those lifetime values have been adjusted down and that's still being worked through but we still see.
The competitive marketplace for digital performance marketing in fact, I think that leads to.
You know those writing health insurance, whether it's.
Over 65 are under 65 health insurance.
Speaker Change: continuing to demand accountability in their media spend. So basically, looking for linear tracking to their ROI. And that ultimately will win the day from that perspective. So we're just gonna go up top and continue to leverage data technology and media reach to do that on behalf of our customers. And that's why we saw the growth we saw in the Q4 period.
Just continuing to demand accountability in their media spend so basically looking for linear track linear.
Linear tracking to their ROI and that ultimately will win the day from that perspective. So we're just going to go up top and continue to leverage data technology and media reach to do that on behalf of our customers and that's why we saw the growth we saw in the Q4 period.
Got it thanks, so much I appreciate the color.
Of course.
Speaker Change: Thank you, Maria. We now have our next question on the line from Jason Crayer of Craig Hallam. So, please go ahead when you're ready, Jason.
Thank you Maria we now have our next question on the line from Jason <unk> of Craig Hallum. Please go ahead, when you're ready Jason.
Hey, everybody good afternoon.
Jason Crayer: Joe, so obviously really good KPIs from your top 20 customers, good retention and growth figures. Just wondering if you can talk more specifically about the actions that you can take over the next year or so to get the smaller customers to see those similar retention and spend rates and things like that.
Joe So obviously really good kpis from your top 20 customers good retention and growth figures. Just wondering if you can talk more specifically about the actions that you can take over the next year or so to get the smaller customers to see those similar retention and spend rates and things like that.
Joe Maranucci: Hey, Jason, good to talk to you again. Yeah, so top 20 customers, which represent the vast majority of our revenue, 100% retention there, obviously a really strong KPI.
Hey, Jason could you talk to you again.
Yes, so top 20 customers, which represent the vast majority of our revenue.
100% retention, there, obviously, a really strong kpis.
Joe Maranucci: You know, look, there are some macro headwinds right now. So, you know, you do have, and when I say macro headwinds, you've got them inside of insurance.
Look there are some macro headwinds right now so you do have.
Macro headwinds there.
Got them inside of insurance, you've got rising interest rates you've got inflation.
Joe Maranucci: you've got rising interest rates, you've got inflation. You know, I think generally what this means is you have a tighter labor market that ties directly to inflation. So, you know, people are gonna be managing costs more efficiently and effectively to just, you know, continue to maintain a bottom line. So, at the end of the day, like marketing spend's gotta be held accountable and.
Generally what this means is.
Tighter labor labor market that ties directly to inflation. So you know people are going to be managing costs more efficiently and effectively.
<unk> continued to maintain our bottom line. So at the end of the day like marketing spend is going to be held accountable and.
Joe Maranucci: I mean, that's the value proposition that we bring in digital performance marketing is we're aligned with the customer. So obviously...
That's the value proposition that we bring in digital performance marketing as were aligned with the customers. So I'll obviously.
Joe Maranucci: you know, the top 20 customers being the vast majority of our revenue and we're very, very focused on their needs. And for the most part, you know, they're all scheduled to grow this year. So we have to match up their plans with our ability to deliver, you know, global solutions against those plans. But at the same time, you know, we do manage the sales pipeline. The sales team is out there, you know, working active prospects, bringing them in.
The top 20 customers being the vast majority of our revenue.
Very very focused on their needs and for the most part.
They're all scheduled to grow this year. So we have to match up their plans with our ability to deliver.
Mobile solutions against those plans, but at the same time you know we do manage the sales pipeline. Our sales team is out there working active prospects, bringing them in and.
Joe Maranucci: And once we get through what I would call testing phase, our goal is always to retain the customer. And historically, we've had very high retention rates, and I don't necessarily think that that's gonna change.
Once we get through what I would call a testing phase you know our goal is always to retain the customer and historically, we've had very high retention rates and I don't necessarily think that thats going to change.
Joe Maranucci: You know, so I just, I, as you move into this type of environment where, you know, there's a lot of different things.
Okay.
So I just.
As you move into this type of environment, where there's a lot of different things.
Joe Maranucci: that are going on that concern people, we've mentioned them.
That are going on that concern people, we've mentioned them.
Joe Maranucci: For us, there's a counter-cyclical balance in that because it's going to cause a higher degree of accountability in marketing spend. And that plays to our benefit.
For us there's a counter cyclical balance in that because it's going to cause a higher degree of accountability and marketing spend and that plays to our benefit and then once we bring customers in and everybody starts as a top 20 customer.
Joe Maranucci: You know, once we bring customers in, not everybody starts as a top 20 customer. You know, they got to scale spend over time. The fact that we're retaining the top 20 to a hundred percent is indicative of what's going on below that. So we're just going to continue to deliver on those solutions. And we believe our retention rates will remain, you know, consistent with.
Scale spend over time, the fact that we're retaining the top 20% to 100% is indicative of what's going on below that so we're just going to continue to deliver on the solutions that we believe our retention rates will remain.
Consistent with what they've been in the past.
Speaker Change: Okay, and then one from Vasundhara here.
Okay, and then one for Misunder here. So if we look at the Rev. Guide, we're looking for I think its around 40% to $45 million of incremental revenue you look at your gross profit margins is probably in the ballpark of $12 million to $14 million incremental gross profit so but.
Speaker Change: If we look at the REV guide, we're looking for I think it's around $40 to $45 million of incremental revenue. You look at your gross profit margins, it's probably in the ballpark of $12 to $14 million incremental gross profit, but you're guiding to about a flat EBITDA number year over year.
You're guiding to about a flat EBITDA number year over year, So I'm just.
Speaker Change: I'm curious if you can dissect about $12-14 million in incremental OPEX, what is layering into the model that keeps that EBITDA flat, and then as we go out to 2023, do you expect to get most of that back?
I'm curious if you can dissect about $12 million to $14 million in incremental Opex. What is what is layering into the model that keeps that EBITDA flat and then as we would go out to like 2023 do you expect to get most of that back.
Yeah, Hi, Jason Yeah. Thanks for the question. So I mean, if you think about it let me kind of decipher EBITDA as it stands today right. If you look at it in the fourth quarter. It was $15 million flat year over year for the quarter and we were below about two percentage points from the prior year.
Speaker Change: Yeah. Hi, Jason. Yeah. Thanks for that question. So, I mean, if you think about it, let me kind of decipher EBITDA as it stands today, right? If you look at it in the fourth quarter, it was $15 million flat year over year, right, for the quarter. And we were below about 2% coins from the prior year. We talked about most of the reasons. Inflationary pressures is a big ticket item that we continue to work on.
Talked about most of the reasons inflationary pressures is a big ticket item that we continue to watch it.
Speaker Change: increased technology costs was one of the reasons that drove those costs up and incremental legal professional fees to stay compliant and public company costs.
Greece technology costs was one of the reasons that drove those costs up and incremental.
Legal professional fees to stay compliant and public company costs. In addition to that we had acquisition costs.
Speaker Change: In addition to that, we had acquisition related costs with people and other items associated with the acquisitions. But then we saw downward pressure from a gross margin standpoint, which we talked about bid prices and so on. So I think it's a combination of those items that drove our adjusted EBITDA to be flat year over year.
Acquisition related costs with people and other items associated with the acquisition, but then we saw downward pressure from a gross margin standpoint, which we talked about bid prices and so on so I think it's a combination of those items that drove our adjusted EBITDA to be flat year over year, how do we think about it.
Speaker Change: How do we think about it going forward? I would say, I mean, there is inflationary pressures that we continue to watch.
So I would say I mean, there is inflationary pressures that we continue to watch there is timing and extent of auto insurance recovery that is still unclear to us that.
Speaker Change: There is timing and extent of auto insurance recovery that is still unclear to us that will continue to watch and we expect that to recover in the second half.
That will continue to watch and we expect that to recover in the second half.
Speaker Change: We are facing some challenges with, you know, operating expenses in general. So if you look at our total expenses and the makeup of those total expenses.
We are facing some challenges with operating expenses in general. So if you look at our total expenses in the makeup of those total expenses one of those key items is pretty much accounting and technical entries that you see that rate contingent consideration is one item warrant valuation and so on so overall I think just considering the.
Speaker Change: One of those key items is pretty much accounting and technical entries that you see there, right? Contingent consideration is one item, warrant valuations and so on. So overall, I think just considering the pressures we're seeing on the gross margin, public company costs associated with operating expenses, acquisition related costs and inflationary pressures. I think we are cautiously optimistic here. So we've provided a conservative guidance.
Pressures, we're seeing on the gross margin public company costs associated with operating expenses acquisition related costs and inflationary pressures I think.
We are cautiously optimistic here, so that provided a conservative guidance.
Speaker Change: about 10 to 12% EBITDA margins going forward. There's definitely opportunities here with the cost initiatives that Joe alluded to that is a fabric of our organization and we'll continue to look at every opportunity there to create efficiencies both at the gross margin level as well as the operating expense level. So we are seeing some upside there go forward.
About 10% to 12% EBITDA margins going forward, there's definitely opportunity here with the cost initiatives that Joe alluded to that is the fabric of our organization and we'll continue to.
Look at every opportunity there to create efficiencies both at the gross margin level as well as the operating expense level. So we are seeing some upside that go forward.
Perfect. Thank you very much.
Yeah.
Thank you.
Speaker Change: Thank you. As a reminder, if you would like to ask any more questions, please press star followed by one on your telephone keypad.
As a reminder, if you would like to ask any more questions. Please press star followed by one on your telephone keypad.
Speaker Change: We now have a question on the line from Martin Fong of BTIG, so Marvin, please go ahead.
We now have a question on the line from.
Martin <unk> from <unk>, sorry, Marvin Please go ahead.
Martin Fong: Great. Good evening. Thanks for taking my questions. Just the first question, you know, you guys...
Great.
Good evening, Thanks for taking my questions.
Just the first question.
You guys provided.
Both.
Martin Fong: first quarter and full year guidance, so for the full year, I'm just curious, you must have some idea, you know...
First quarter and full year guidance for the full year I was just curious you must have some idea.
Martin Fong: from a category standpoint, which end markets you see doing well versus perhaps seeing a bit of pressure. So could you just kind of decompose your thoughts around four-year growth between insurance, maybe breaking that down further between auto and health, and then also career education, e-commerce, and consumer finance. Thanks. And then I have another question.
From a from a category standpoint, though.
Which end markets you do.
Do you see doing well versus perhaps.
Seeing a bit of pressure. So could you just kind of decompose your thoughts around full year growth.
Between.
<unk>.
Maybe breaking that down further between auto and health and then also career education E Commerce and consumer finance.
And then I have.
Another question.
Speaker Change: Hey Marvin, good afternoon, it's Joe speaking. Good to be on with you again. So, you know, maybe just general position.
Hey, Marvin good afternoon, it's Joe speaking to just be on with you again, so maybe just general positioning up top.
Marvin: we talked a little bit about dynamic diversification in the press release and then more on the call and
We talked a little bit about dynamic diversification in the press release, and then more on the call.
It's.
Marvin: It's really what has helped the business continue to grow, to be honest with you, because it flows down off of how we operate, which is.
It's really what has helped the business continued to grow to be honest with you because it flows down off of.
How we operate which is.
Joe Maranucci: data-driven, proprietary technology, agnostic media. It's a.
Data driven proprietary technology agnostic media it's a.
Joe Maranucci: vertical agnostic, channel agnostic model that leverages that central toolbox. Obviously, we do a lot of work in the insurance space, which is now.
Vertical agnostic channel agnostic model that Leverages that central toolbox, obviously, we do a lot of work in.
The insurance space, which is now split up in.
Joe Maranucci: between the auto and the health category and then you have home and life behind that. So we look at dynamic diversification as a.
Between the auto in the health category, and then you have home and life behind that so we look at dynamic diversification as a <unk>.
Joe Maranucci: differentiator that allows us to move through, you know, periods of what I would call, you know, modest uncertainty, which is what we're seeing right now. If you look at insurance, you know, on both sides between auto and health.
Differentiator that allows us to move through.
Periods of what I would call modest uncertainty, which is what we're seeing right now if you look at insurance on both sides between auto and health.
Joe Maranucci: You know, you do have, you know, some macro issues there and auto you have.
You do have some macro issues there in auto you have <unk>.
Joe Maranucci: loss ratios that have been widely publicized and we're into the early stages of that u-shaped recovery so I think I use the term cautiously optimistic on the on the call and I think that that is consistent with what most people are anticipating with auto insurance second half recovery cautiously optimistic we're going to get there so that would be part of the guidance when we look
Loss ratios that have been widely publicized and we're into the early stages of that U shaped recovery. So I think I use the term cautiously optimistic on the on the call and I think that that is consistent with what most people are anticipating with auto insurance second half recovery cautiously optimistic we're going to get there. So.
That would be part of the guidance.
When we look at health insurance.
Joe Maranucci: There's certainly some pressure there on the lifetime values that the various.
Yeah.
There is certainly some pressure there on the lifetime values.
With the various.
Joe Maranucci: partners that we work with are working through on their side. And ultimately, that's going to come down to us. Now, we do believe that demand for digital performance marketing will remain strong there because a high degree of accountability in the marketing spend and ROI is critical. So, there's a give and take there. And we do believe that the trend will be more accountability, continued acceleration of the digital transformation of ad spend. So we do think that.
Partners that we work with are working through on their side and ultimately that's going to come down to us now we.
We do believe that demand for digital performance marketing will remain strong there because you know high degree of accountability in the marketing spend and ROI is critical.
There is a give and take there and we do believe that the trend will be more accountability continued acceleration of the digital transformation of AD spend so.
So we do think that benefits us but.
Joe Maranucci: there's uncertainty in terms of how that plays out. And we won't get there until the Q4 period with the open enrollment periods for both AEP and OEP. So there's a bit of runway between now and then.
There is uncertainty in terms of how that plays out and we won't get there until the Q4 period with the open enrollment.
Periods for both AEP and OUP. So it was a bit of runway between now and then.
We in building.
Joe Maranucci: our guidance for this year, you know, wanted to weigh these various factors that we're discussing and, you know, take
Our guidance for this year.
Wanted to weigh these various factors that we're discussing.
And take the approach that.
Joe Maranucci: These types of situations, especially with auto U-shaped recovery, will play out, will bend into dynamic diversification so that the company will continue to grow.
These types of situations, especially with auto U shape recovery will play out will bend into dynamic diversifications that the company will continue to grow in this.
Joe Maranucci: you know, we took a degree of conservatism to, you know, some of the.
We took a degree of conservatism to some of the.
Joe Maranucci: factors that we're seeing, it gives us an opportunity to see that growth accelerate.
Factors that we're seeing it gives us an opportunity to see that growth accelerate but.
Joe Maranucci: You know, we're not just focused on 2022, obviously, we're focused on, you know, much longer term growth, we're very excited about, you know, the continued acceleration of the digital transformation of ad spend, we very much look at the business as having, you know, significant growth.
We're not just focused on 2000.
22, obviously, we're focused on much longer term growth. We're very excited about the continued acceleration of the digital transformation of AD spend we very much look at the business as having significant growth ahead, not just in 2022 through some of the uncertainty that we're discussing but.
Joe Maranucci: ahead not just in 2022 through you know some of the uncertainty that we're discussing but
Joe Maranucci: you know, further out into the future. And, you know, the business grew nicely last year. You know, we do have some modest growth numbers out there this year in guidance at about 10%.
Further out into the future and.
The business grew nicely last year.
We do have some modest growth numbers out there this year and guidance at about 10%.
Joe Maranucci: But if Cassandra said it, we'd feel that there's some upside there, but we've also talked about quite a bit of risk. So that's all.
<unk> said that we would feel that there is some upside there.
But we've also talked about quite a bit of risk. So that's all that's all baked in.
Speaker Change: Gotcha. Thanks for that. And then, I guess, the second part of that question, you know, also on guidance, you know, margins of...
Got you. Thanks, Thanks for that and then I guess the second part of that question, you'll also on guidance.
Margins of.
Speaker Change: I've always been something investors have been watching and I think you guys did a good job this quarter. Just comment on your visibility there. You've obviously mentioned that there is downward pressure from autos and the anticipated recovery will be U-shaped, but just how confident do you feel that 28% will hold as a minimum and what are your thoughts on that? Thank you.
<unk> always been something investors have been watching and I think you guys did a good job. This quarter just just comment on your visibility there you've obviously mentioned that there is downward pressure.
From autos and do you anticipate a recovery will be U shaped, but just how confident do you feel that 28% will hold as a minimum and.
Yes.
Speaker Change: Just further elaborate on what you're seeing in terms of your visibility and discussions with your clients.
Just to further elaborate on what Youre seeing in terms of your visibility on discussions with your clients.
Okay.
Speaker Change: I can take that, Joe, and you can come in if there's anything I missed.
I can take that.
And you can come in if there's anything I Miss.
<unk>.
Hi, Marvin we don't manage business to assess tech margin goal as we've said before right. We continue to focus on optimizing our services to create efficiencies, we talked about Dms voice that gives us.
Joe Maranucci: We don't manage business to a specific margin goal, as we've said before, right? We continue to focus on optimizing our services to create efficiencies. We talked about DMS voice that gives us diversification, creates efficiencies.
Diversification creates efficiencies reduces our cost of goods sold such that it's a very.
Joe Maranucci: reduces our cost of goods sold, so it's a very...
Joe Maranucci: strategic investment for us that has created a lot of efficiency within the cost of goods sold and will continue to
<unk> investment for Us that has created a lot of it shouldn't see within the cost of goods sold and we'll continue to look into that add more to our technology stack and increased efficiencies with connecting to consumers and advertisers, so overall, where I'm going with this.
Joe Maranucci: look into that, add more to our technology stack, and increase those efficiencies with connecting the consumers and advertisers. So overall...
Joe Maranucci: we are comfortable with the gross margin range of 28 to 31%. We're well aware of, you know.
Comfortable with the gross margin range of 28% to 31%.
Well aware of media cost.
Joe Maranucci: You know, they do, we have seen increases, for example, in Q4 as a result of the holiday shopping and AEP, media costs rose.
They do have seen increases for example in Q4 as a result of the holiday shopping and AEP media costs Rose.
Joe Maranucci: It's not always immediately reflected in what we can charge our clients. Therefore, it may impact gross margins and VMM. There's some seasonality in media costs, which is why we have a guidance range of 28% to 31% on gross margins and 32% to 36% on VMM.
Not always immediately reflected in what we can charge our clients. Therefore, it may impact gross margins in BMS.
There is some seasonality media costs, which is why we have a guidance range of 20% to 31% on gross margins and 32% to 36% on BMS.
Joe Maranucci: Also remember, as our advertiser clients continue to spend more with us, our first party data as it grows and our consumer targeting and engagement improves, it helps drive gross margin and BMM, even within that environment of rising CPMs and the pressures we're seeing. Future acquisitions will change that view too. It will, and I say overall, I think we're comfortable right now with the 28, 31%
Also remember as our advertising clients continue to spend more with US first party data asset grows and our consumer targeting and engagement improve it helps drive gross margin and DMM, even within that environment of rising CPM and the pressures that you're seeing.
Future acquisitions would change that view too.
It will and I would say overall I think we're comfortable right now with the 28, 31% and we have a path to get there.
The only thing Marvin I would like to stay behind that is if you look at the Q4 2021 period base.
Speaker Change: The only thing, Marvin, I would like to say behind that is if you look at the Q4 2021 period, you know, basically every vertical inside of the business grew in period. And to Vicentia's point, it's because we're managing the business for growth and
Basically every vertical inside of the business grew in period and to <unk> point, it's because we're managing the business for growth.
Speaker Change: Working in strategic partnership with our advertising clients and we're maintaining that healthy range that she discussed.
Working in strategic partnership with our advertising clients and we're maintaining that healthy range that she discussed but if.
Speaker Change: If you look at e-commerce, consumer finance, education, insurance, even
If you look at E Commerce, consumer finance education insurance even.
Speaker Change: you know, the bucket of other that is kind of everything else that doesn't fall into that every single category grew in Q4 and that comes straight down off the top data-driven business, leveraging proprietary technology, accessing expansive media reach. And we were able to grow broadly across the business and maintain margins and range. And that's the result of not being overly focused on managing to margin, but managing the business to growth objectives that meet our client and slash
The bucket of other that is kind of everything else. It doesn't fall into that every single category grew in Q4 and that comes straight down off the top data driven business leveraging proprietary technology.
<unk> expansive media reach and we were able to grow broadly across the business and maintain margins in a range and that's the result of not being overly focused on managing to margin, but managing the business to growth objectives that meet our clients.
Slash advertisers' objectives.
Speaker Change: Understood. That makes total sense. Thanks so much, Joe and Vacindra.
Understood that makes total sense. Thanks, so much Joe and for syndrome appreciate it.
Yes.
Sure.
Speaker Change: Thank you Marvin. As a reminder, if you would like to ask any further questions, please press star followed by 1 on your telephone keypads now.
Thank you Marvin as a reminder, if you would like to ask any further questions. Please press star followed by one on your telephone keypad now.
Speaker Change: There are no further questions at this time. This concludes today's conference call. You may now disconnect.
Seven days further questions at this time.
This concludes today's conference call you may now disconnect.
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