Q4 2021 Viant Technology Inc Earnings Call
We undertake no obligation to update those statements except as required by law for.
For more information about factors that may cause actual results to differ materially from our forward looking statements. Please refer to the press release issued today as well as to the risks and uncertainties described in our annual report on Form 10-K , and other filings with the SEC.
During today's call, we will discuss GAAP and non-GAAP financial measures and some operational metrics additional definitions and disclosures regarding these non-GAAP measures and operational metrics, including reconciliation of GAAP to non-GAAP measures are included in the press release, we issued today and in our filings with the SEC let.
Let me turn the call over to Tim <unk>, Chief Executive officer of volumes.
Good afternoon, and welcome everyone. We had a fantastic fourth quarter of 2021 to cap off a terrific first year as a public company.
I am incredibly proud of our team and the accomplishments we achieved together this last year.
As the leader of our team there is no better feeling in the World then to challenge your team and watch them delivered.
One foundational principle that I have witnessed in my life is that the Internet continues to expand its reach every single year.
Chris and I have witnessed its commercialization on desktop computers the expansion the laptops the smartphone Revolution and now it has once again expanded to our television.
Our company has managed to identify those substantial expansion and accelerate our R&D investments in advance to translate those visions by being focused on answering the question of what this all means for advertisers in.
In 2015, we started sounding the alarm on identifiers that were given to us from Big Tech and we introduced an entirely brand new way to transact digital advertising called the people based approach. It was created with the thinking that the Internet does not belong to any one company, but it belongs.
All of us.
Are people based DSP takes away. The number you are assigned from Big Tech companies.
And replaces it with information that consumer owns and controls.
Like your name address phone number and email.
This moves our entire industry from an opt out model of cookies to a more privacy friendly opt in model using real consumer data that puts the power back in the control of the consumer.
In 2018, we transformed our delta software to operate on a newly rebuilt foundation based on data consumer's control.
The shift away from Cookie based dsp's to the Delta people based ESP is enabling our customers to create unified consumer experiences across not just their website and mobile app, but also expands our ability to include their physical retail stores and they can do this across any channel <unk>.
Just where cookies exist.
This is the biggest advantage marketers gain when moving on to the <unk> software platform and joining the new open web.
Our team's early creation and evangelism over the past seven years has catapulted buying into a leadership position today and it has now been fully realized by most of our industry.
We have grown the advertiser spend in 11 out of the last 12 quarters. It has in the past three years of back to back to back growth and our advertiser spend that gives me unwavering confidence that <unk> is emerging as the leader of the new open web and we are gaining market share across all of our.
Customer segments.
Based on all of those advantages I believe we are positioned very well to further accelerate our growth in 2022.
Since our IPO in February of last year. Despite some market challenges, we outperformed on all our financial targets.
At the IPO, we guided to $197 million in revenue, we finished 2021 at $224 million.
We guided to $23 5 million in adjusted EBITDA, and we finished the year at $37 million.
CTV continues to be a significant growth driver for the year with contribution ex Tac from CTV up 68% in 2021.
This channel is growing strongly overall and has become our largest channel.
2020 one's financial achievements confirm what we have always known our business model is strong.
<unk> and Leverages, the industry's strongest tailwind.
The role of the DSP is becoming more important as our addressable market continues to expand with new customer verticals.
Talking about the growth in legalized gambling direct to consumer companies in crypto currencies just as examples.
These are huge new advertiser verticals with strong demand for customer acquisition and engagement.
In addition to these exciting new customer verticals, we have seen an acceleration of retail media networks.
As retailers are moving their shelf space revenue models into digital advertising businesses by looking for ways to monetize their transaction data for consumers and the products they are buying.
But it's not just retailers who are building new advertising businesses. It is premium content owners connected TV hardware manufacturers telecommunications companies consumer delivery apps. The list goes on and on.
It seems like every day, we read about another new advertising business being created from all the first party data. These companies had and they are looking for a DSP partner to power of that business.
But to address this explosion of new customer opportunities. It also requires a critical identity management platform robust measurement capabilities and transparent data lakes or clean rooms to build a viable digital ad business.
These are all huge opportunities for us as a DSP as this dramatically increases our total addressable market.
I can remember a time not too long ago, when the only users of dsp's resided in ad agencies.
The best software platforms will wind business.
Looking further ahead we.
We see an opportunity to accelerate our investments in artificial intelligence machine learning and blockchain technologies to make digital advertising fully autonomous.
That's where the industry needs to go.
Eliminating the strain on programmatic traders and making digital advertising autonomous we want to lead right there.
As we endeavor to deliver on our vision, we will be investing in five key pillars of our strategic roadmap, which include developing best in class technology deploying our customer success model throughout the yard designing company's infrastructure to scale.
Elevating our brand presence and expanding our strategic partnerships.
This is going to provide more color on those key pillars in his remarks.
In wrapping up I want to emphasize that this is already a big market, but as I just talked about is getting a whole lot bigger there will be multiple winners and I think our progress in 2021 proved violent will be one of them.
I Trust our investors are increasingly understanding that our story is about something much more sustainable than just cookies going away the.
The takeaways from the 2021 results or we have further proven our business model and shown that we can grow and grow profitably, we entered 2022 and a stronger market position with the strategy and assets to further accelerate our growth.
At this point I want to hand, it off to Chris to talk about our strategic roadmap for 2022.
Tim focused on our success last year and the tremendous opportunities still ahead.
Want to talk this afternoon, a little bit more about the how.
Companies don't just grow into the future because they exist in their sector for another year or because they've grown in the past growth is not linear by simply adding more head count or investing more money.
Our team has thought a lot about our next phase of the company, where we need to invest and what it will take in order to build a company that will last for 100 years.
We're nearly a quarter of our way through that time period in our next phase will be supported by these five key pillars.
Developing best in class technology is the first pillar of our strategic roadmap to compete effectively we strive to make our delta software the easiest to use the most powerful and delivering effective campaigns and the most robust and measuring the return on customers AD spent.
Our platform should be as easy to use as E trade venmo or Amazon is for consumers.
If we can achieve that our software can be used by millions of businesses.
That's already one of the distinguishing benefits of our adult with software, but we're going to take it much further.
Tim touched on our plan for autonomous advertising in the future leading to investments in new technologies to enable that.
Tim and I have been working in this space for over 20 years, we pioneer behavioral advertising in the early two thousands built for CTV in 2011 developed for today's identity challenge back in 2015, and it's because of that early start of the <unk> household lending now covers 85% of U S households, and it is available.
Over 80% of our bidding opportunities.
I'll tell you all of that because we have a track record of delivering innovation and we're excited to build towards our vision for the future of autonomous advertising.
Developing best in class technology doesn't happen without great people. So investment in this strategic pillar will require continued investment in our engineering and product teams in 2022 augmented by potential buy versus build opportunities for accelerating development.
The second pillar of our strategic roadmap is our customer success model.
We launched that in 2021, and we'll expand it in 2022.
It is primarily a cultural in origin organizational process, providing operationalized, our mission to make it easy to buy and add anywhere and help brands measure the impact of their ad spending.
This is driving organizational changes in our customer facing teams that is ultimately focused on making customers successful on our platform.
But it also provides the infrastructure to truly scale our customer base.
We think our new customer success model is not only going to be a key differentiator felt by our clients, but it's also going to make our clients talk about buying at the dinner table.
In coordination with embracing the customer success model, we are scaling the company's infrastructure, meaning people systems and processes to handle our growth and support our team members.
Another key pillar in our roadmap is elevating our brand presence. This is one of the key hurdles we need to overcome in the market.
We can point mid market agencies to many success stories with their peers.
But to drive faster and the holding companies, we need to drive higher awareness among major brands. So that they become interested in seeing how we can improve their returns.
The new open web campaign that we launched in 2021 is driving greater awareness and will continue in 2022 and.
In addition to educating prospective customers the company's marketing programs last year drove a 72% increase in hand raisers looking to engage with us while also driving and nearly 50% increase in customer Msas in 2021.
Last year, we increased our sales team by approximately 25%.
But because of the tight labor market, we didnt get all the way through our plan and we will continue to add towards our plan. This year in the first quarter, we've already increased the sales team by another 15%.
The final key pillar is expanding our strategic partnerships Tim.
Tim earlier mentioned the examples of all the new and exciting customer verticals and digital AD business is being built who now need technology partners to enable their new revenue streams.
Many of these opportunities require a different approach than we bring to our agency and brand partners.
<unk> already has over 100 partners supporting many aspects of our business such as third party data measurement and supply.
Traditionally many of these are driven by customers requesting these entities to potentially use as a dataset and their ad campaigns.
But for 2022, we are making a concerted investment and resources to more rapidly expand our strategic partnerships with some new team members and a more proactive focus of driving revenue from these new customer segments.
With our unique market position with our household IV powered platform. We believe we have a lot to offer a partner.
Those are the key pillars in our strategic roadmap for the company's next phase of growth <unk>.
Developing best in class technology, deploying our customer success model throughout the organization designing company infrastructure to scale elevating our brand presence and expanding our strategic partnerships.
I also want to extend my personal thanks to our teams our customers and partners for making 2021, such a great success and a lot of fun.
Tim and I are happy to delve more into detail in the Q&A, but I want to give our CFO , Larry Madden and opportunity to provide some key financial color commentary.
Thanks, Chris and thank you everyone for joining us today before I begin I would like to remind everyone that we have posted supplemental financial slides to our investor relations website to accompany today's presentation.
As Tim mentioned, we are pleased to report that once again, we exceeded our previously previously issued guidance for revenue and EBITDA in Q4 that.
That represents the fourth consecutive quarter that we have exceeded our expectations. Since we went public in February of last year.
We're also seeing an acceleration in spending across our platform going into Q1, 2022, which we expect will continue throughout the year, which is a testament to the increasing customer adoption of our platform.
This afternoon I will be discussing some of the highlights of our Q4 and full year 2021 performance as well as our current expectations for 2022, and our longer term expectations for the business.
With that let me discuss some key financial and operational highlights for the quarter and the full year 2021.
In 2021, Vonage business continued to scale and performance accelerated yielding record results and we finished the year on very strong financial footing.
We continue to see the benefits of our recent Ww's software lease with customer adoption, increasing across all channels, where cookies are device identifiers do not exist or are limited such as connected TV mobile streaming audio and digital out of home.
Further investment in our team and technology has also paid dividends as evidenced by the significant increase in the number of active customers and the average contribution ex Tac per active customer over the last year.
We also benefited from the cohort affect customers ramping spend the longer they are on the platform and that trend is expected to continue.
In terms of top line metrics for the fourth quarter total advertiser spend across our platform increased 26%.
Revenue for the quarter was $82 7 million, an increase of 46% over the prior year period.
<unk> contribution ex Tac for the quarter was $48 5 million, an increase of 24% over the prior year.
For the full year 2021, total advertiser spend across our platform increased 29% revenue for the year was $224 1 million.
Increase of 36% over the prior year.
Contribution ex Tac for the year was $141 5 million an increase of 28%.
Our recent Ww's software release continues to drive an increase in omnichannel adoption by our customers as they can now leverage our unique household IV to seamlessly buy and measure their AD spend across all digital channels. Currently half of all advertisers are using Ww C and our household IV for.
Targeting and measurement on the Delta platform, and we expect that number to increase as we move through 2022.
One of the biggest drivers of our growth in both Q4 and the full year as our continued momentum in CTV contribution ex Tac from CTV has nearly tripled over the last few years and now represents nearly half of our overall mix in 2021, 74% of customers invested of our customers.
And CTV on our platform contribution ex Tac from CTV grew 66% in Q4 and represented 45% of total contribution ex Tac during the quarter.
Far outpacing market growth rates for this segment of digital advertising.
For the full year contribution ex Tac from CTV grew 68% and represented 40% 41% of the total.
We also saw solid growth in the quarter across mobile streaming audio and digital out of home channels. We expect these trends to continue as our people based targeting approach along with the performance and measurement capabilities of our software platform are uniquely suited to drive return on AD spend for our customers in these channels.
On the customer front, the number of active customers and the average contribution ex Tac per active customer continued to show strong momentum in the quarter at the end of Q4, we had 309 active customers versus 264 in the prior year period.
Representing an increase of 45 customers in the year up 40 up 17% year over year.
The biggest driver of new customer additions as our continued success with mid market agencies, which represented approximately two thirds of the customer additions over the period.
Despite strong additions of new customers in Q4, nine political and auto customers from last year did not spend it all in 2021, and then and therefore fell out of our customer count in Q4.
The roll off of political customers due to the lack of an election cycle in 2021, and the roll off of auto customers is tied to the supply chain issues we discussed.
With the exception of the loss of these nine customers. Our addition of new active customers in Q4 is in line with the growth we saw in Q2 and Q3.
Average contribution ex Tac per active customer at the end of Q4 totaled $458000 versus 419000 at the end of 2020, representing a year over year increase of 9%.
As we continue to ramp sales marketing and technology investment in 2022 and beyond we expect continued momentum around new customer acquisitions and average contribution ex Tac per active customer.
In Q4, we also continued to see the benefit of customers increasing spend the longer they are on the platform what we call the cohort perfect.
In 2021, our top 50 customers that have been on the platform for at least one year increased spending by nearly 50%.
The number of active customer spending at least $1 million per year also increased by 52% in 2021.
Growth in the number of new customers and increased spending from existing customers, coupled with 90 plus percent customer retention rates positions us extremely well for an acceleration of growth going forward and affirms that the capabilities and performance of our software platform are resonating with marketers and their agencies in this.
Fast growing programmatic advertising landscape.
Turning now to operating expenses adjusted cash operating expenses, which represents the difference between contribution ex Tac and adjusted EBITDA totaled $31 1 million in the quarter and $104 4 million for the full year, representing year over year increases of 32% and 33%.
Respectively.
The increases for both the quarter and the full year are primarily attributable to the planned investments we made across the organization with a particular emphasis on ramping our sales marketing and technology infrastructure.
In 2021, we increased our total head count by approximately 20%.
We continue to attract extremely qualified candidates and added many incredibly experienced new members to our team in 2021.
I will talk more about this in a minute, but we intend to continue growing the team at <unk> 22 to further accelerated growth in advertiser spend across the platform to drive market share increases.
Spite, our underinvestment in 2021 relative to plan, we far exceeded our original estimates for revenue contribution ex Tac and new customer wins, which speaks to the increased momentum we are seeing across the platform.
Adjusted EBITDA for the quarter was $17 4 million and our adjusted EBITDA margin as a percent of contribution ex Tac was 36% for the quarter.
For the full year adjusted EBITDA was $37 1 million and our adjusted EBIT EBITDA margin was 26%.
For the quarter non-GAAP net income, which excludes stock based comp totaled $13 4 million and non-GAAP earnings per class a share totaled <unk> 17 for the quarter.
For the full year non-GAAP net income totaled $23 9 million and non-GAAP earnings per class a share totaled <unk> 30.
From a cash flow perspective, we generated $28 7 million of net cash from operating activities in 2021, an increase of 52% over 2020, and we ended the year with $238 million in cash or approximately $4 per share outstanding.
We expect to put some of this cash to work in the future opportunistically using M&A to deepen and expand our capabilities for our customers.
That being said, we do recognize the current capital market environment and plan to be judicious in the use of our cash.
We also ended the year with a modest amount of debt totaling $17 5 million and significant availability under our line of credit.
We believe that our growth profile and healthy balance sheet position us extremely well to take advantage of the rapidly growing market opportunity in front of us.
In terms of share count we ended the year with $30 7 million class a common shares outstanding and $60 8 million total shares outstanding for the end of 2022, we expect the class a common share count to increase to approximately $15 6 million and total shares outstanding to increase to approximately $62 3 million.
The expected increases are primarily the result of investing activity under our long term incentive plan.
Before I discuss our guidance for 2022, I do want to point out that we have simplified the metrics for which we are giving guidance. This quarter, we are eliminating guidance for contribution ex Tac.
On what we believe to be the two most important metrics by which we should be measured going forward revenue and adjusted EBITDA.
Given that our percent of spend pricing option is expected to drive most of our growth going forward contribution ex Tac will become less important over time.
We will however continue to report periodically on contribution ex Tac going forward.
For modeling purposes, we expect growth rates for contribution ex Tac to be similar to growth rates for revenue in 2022.
With that I'll now turn to our guidance for Q1 and full year 2022, as well as our long term outlook.
As Tim discussed we feel great about our strong positioning we are in the very early stages of capitalizing on the fast growing market opportunity for programmatic advertising.
For the first quarter, we expect advertiser spanned across our platform to further accelerate with growth of at least 35% compared to 9% in Q1 of 2021 and most recently, 26% in Q4 of 2021.
Q4 is obviously our biggest quarter of the year.
We expect revenue in the range of $42 million to $44 million, which represents year over year growth of approximately 5% to 10% and negative adjusted EBITDA in the range of $4 million to $5 million as Q1 is our industry industry seasonally lowest volume quarter.
And for the full year 2022, we expect advertiser spend across our platform to further accelerate with growth of at least 35% compared to 29% in 2021, we expect revenue in the range of $260 million to $270 million, which represents year over year growth of approximately 16% to 20%.
And adjusted EBITDA in the range of 25% to $35 million.
We have also included longer longer term targets in our earnings release today. These targets represent what we expect to achieve by 2025.
By 2025, we expect revenue of at least 500 million, which represents a four year CAGR of at least 22% we.
We expect adjusted EBITDA margins as a percentage of contribution attack of at least 35%.
Before concluding I would like to make a few points relative to our guidance and the investments we are making.
First in terms of Q1 and full year 2022 guidance as I said, we expect to continue to gain market share in Q1 as advertiser spend on the platform is expected to accelerate from Q4 levels and increased an increase by at least 35% well in excess of the overall great growth rates expected for the U S.
Programmatic market.
We are seeing a faster than expected acceleration of growth across our percent of spend pricing option, which is far outpacing growth from fixed price and.
An increasing number of new customers are now going straight to percent of spend and existing percent of spend customers are growing their spend at increasing rates, which we believe will provide for continued outside growth in spend across the platform going forward.
As we've said before the lifetime value of a customer using our percent of spend pricing option is significantly greater than that of a fixed price customer as percent of spend customers ramp spend more significantly over time and have higher retention rates.
On a short term basis, as we increase our market share by attracting more customers spend on our platform and our percent of spend pricing options. This dynamic is putting a drag on our revenue growth rates in Q1, and full year 2022 for that matter as revenue from percent of spend is recorded after traffic acquisition costs, whereas.
Fixed price revenues recorded before deducting tax.
Percent of spend clients have higher retention rates spend significantly more over time and require less sales efforts to drive growth once fully ramped on the platform versus a fixed price customer.
Optimally percentage percentage spend is a more consistent and predictable growth driver given the cohort effect we've spoken up.
Our fixed pricing up fixed price pricing options, while a more profitable and percentage of spend is more meant as an option for customers to test our software before transitioning to a longer term agreement with us. While this creates some short term pain in terms of revenue growth rates, we believe it better positions us for long term value creation.
And market share gains.
Given the lower revenue base in Q1 due to seasonality. This trend is especially magnified in terms of revenue growth rates in the quarter, we expect revenue growth rates to improve beginning in Q2 as overall spend levels grow from Q1 levels. As a reminder, in Q1 of last year, we grew revenue by 5% in Q.
In the first quarter and finished the year with total revenue growth of 36%.
In terms of planned investments and the impact on 2022 expected results as Tim mentioned we.
And to continue investing in critical areas of our business in 2022 to further accelerate growth in advertiser spend across our platform and drive market share the wide range of EBITDA guidance for 2022 is in part based on the fact that our level of investment in 'twenty two will ultimately be determined based on.
Market conditions and other factors that we will closely monitor as the year unfolds.
So in terms of investment for 2022, we expect adjusted cash operating expenses to increase approximately 29% to 33% in 2022, roughly two thirds of the expense increase will come on the personnel side with half coming from the annualized <unk> of 2021 head count additions and half coming from new.
Head count investment in 2022.
We expect to increase our head count in 2022 by approximately 20%, which would put US north of 400 heads by the end of the year.
Increased cloud costs supporting the support.
<unk> the growth in Advertiser spend is also expected to increase total expense in 2022.
We expect to ramp up our investment in automation initiatives as well as to further build upon the ease of use of our software which is critical to scaling customer spend.
We will also be investing in marketing partnership initiatives in 'twenty two to further increase the awareness of our solution in the marketplace. We believe these incremental investments although impacting EBITDA in the short term will further accelerate our growth and market share gains going forward beyond 2022, we expect investments to be.
A more normalized as we charge towards our target of 35% EBITDA margins by 2025.
In closing our focus is on building, a sustainable and profitable business for the future as part of that we will continue to make investments to increase our scale. So we can capture a meaningful share of this fast growing market.
The utmost confidence that we can consistently grow our market share going forward as our solution is increasingly resonating with marketers as cookies and device Ids continued to become less and less prevalent. We believe that we are positioned for outside growth for many years to come.
Our conviction is centered around how marketers and agencies are responding to our solutions today as evidenced by the acceleration and advertiser spend that we're seeing across the platform going into 2022.
Our total addressable market is massive and we firmly believe that our solution uniquely and effectively addresses many of the challenges that marketers are facing in today's today's dynamic digital landscape.
That includes our prepared remarks today and with that I will now turn it back over to the operator to open the lines for questions operator.
Thank you so much and again, ladies and gentlemen, and those of you who have joined US today. Please raise your hand feature if you would like to ask a question.
And we will hear first from Maria <unk> with Canaccord.
Maria you there.
Maria can you hear us.
Hi, Maria Yeah go ahead, and Amit yourself Maria.
Okay.
Alright key human out research and thank you so much.
Thank you so much thanks, so much for taking my question.
I just wanted to go back to sort of new guidance for the first quarter and this dynamic between revenue growth and client spend on the platform can you just spoke about and why.
While we've seen this michelle.
Clarity between different pricing offset of miles, especially in Q1 can you just maybe talk about that and then related to that.
Anything you're seeing from sort of Easter being shifted to a little bit later.
Anything you're seeing in terms of campaigns that are being shifted from Q1 into Q.
And then I have a quick follow up.
Yeah, just on the headline here first question on American fill in on some of those comments were.
We're seeing explosive growth in our percentage of spend pricing option clients are scaling like crazy we are.
Based on the guide percent definitely increasing market share.
Much higher levels than we saw last year or so.
It's incredible.
We are also seeing customers, even nuance go straight to our percentage of spend pricing options. So that's also adding to a little bit of it is fair.
Is a little bit of short term pain on the revenue on the revenue growth line item.
But we think of those normalized throughout the year, but we're we're we're winning a ton of market share right now.
The percentage of expense line in our total spend total advertising spend.
And you are the lowest rates of Q1 to Q2 just around Easter.
I don't have any real.
Firm grasp on the commentary around that right.
Right now.
Easter Easter specifically.
Got it thanks, so much for that and my second question, you talked a little bit about the strength in mobile and I think the second quarter that you highlighted strength in mobile here for you so as Google Rolls out new privacy restrictions across apps on Android can you just talk about what that means for your platform and maybe if you could put that into context of the iOS.
Just that the industry has been going through.
Yes, I think what youre, referring to is the Android I'd being potentially deprecated in the future similar to what Apple.
Has done we saw one.
Apple pulled that move of idea what that caused was mobile app marketers, we're looking for new alternative ways away from social networks, which became less cost effective and we're trying new digital advertising platforms I think as Google does.
The same to Android and their I'd again, that's going to put more money back into the market. When you look at most mobile app marketers when Apple made that change of deleting IV FAA you.
You saw their response to that will shift money to Android and try new digital advertising provider. So now that Android is going to make a similar change I would expect that's more money back up in the market looking for cost effective ways to drive app installs because those the traditional ways are no longer there. So we've.
Are you at as.
Brand new market opportunity of money that was spoken for previously that needs to find a new home in the most cost efficient way and I believe we're going to win our fair share of that as we as we've proven given the household ivy its use across mobile apps and that entire ecosystem.
<unk> not relying on the IVF are Android I do so for US I think it's a big opportunity and we will see how marketers react.
That's very helpful. Thank you.
I will now move on to Laura Martin with Needham.
Yes.
Hi, So let me start with EBITDA, because I know you said you're over delivered year 2021, EBITDA promised by 50% strong over delivery in Q4.
Now you're guiding us to a much lower EBITDA than our models suggested for 'twenty, two and it's not just you.
Like every one of these AD tech companies other than trade desk has taken down our 2022 EBITDA. So I'd love an explanation because I've got this massive market, it's growing five times faster than all AD Tech companies I don't understand why we all have margin pressure.
You ever delivered revenue so the scale got bigger and yet youre going to under deliver the margin like I said as the entire industry what is going on in place I.
I think.
Number one I think if you look at us from a public so last year in 'twenty. One we are increasing our investments we're going to continue that as Larry stated this year.
Much higher to the tune.
And then let's say a little bit more mature business.
We are looking to continue to invest in and gaining market share that's really where we're at.
And I think we've heard that from investors pretty pretty significantly they want to see more market share gains and we're going to go after that so.
So I think our level of investment definitely we are stepping up that level of investment, but we did give a pretty wide range on the guidance. So we are in.
We're basically going to play that by ear.
In the second half of the year.
And Larry.
Yes, I was going to say one other factor I mean, we mentioned that we did on quote unquote underinvest in 'twenty one.
Certainly the labor challenges.
Aero market labor challenges. So some of that money is now coming back into 2022, So we probably under invested about $5 million in 2021, which was part of our EBITDA beats.
So that's coming back into 2022, plus the full annualized <unk> of the hires in 2022, which is another $10 million plus new investment we're investing additional adds of about $10 million. So.
Plus all of the strategic pillars, we talked we're putting we're putting money behind some of those initiatives all of those initiatives as well in 2022. So it is creating a short term.
Dropping of our EBITDA relative to the prior year. Okay. That's super helpful. I also have a political in order. So you said that you didn't have political this year like in 'twenty, one, but we get it back in 2002 and autos.
So there is no supply get that how much political I'll give you like for sure because you had it two years ago, how much upside does that give us single digit a percent of revenue and then if orders come back how much is it down thanks to the chip shortage and we don't know when thats going to come back, but like how much of those two verticals of air.
Revenue that sort of will come back in 'twenty two.
Hello, Larry ticket, Okay, yes.
Yes, I mean Q1, if you look at Q1.
Our growth guidance for Q1, our auto was 10% of revenue in Q1 of 2021, we think auto is going to be about two 2% of revenue in Q1 this year.
So that certainly is impacting our Q1, given the kind of smaller revenue base to begin with.
We have not assumed a significant uptick in auto I mean, as we've reported each quarter has been down significantly for us I believe it's.
Less than 5% of.
Of revenue in Q4, we think that will further deteriorate in Q1.
We haven't kind of planned to have a significant uptick in that obviously that would be upside and we're hoping that a lot of the supply chain issues do get resolved in the year.
But for now we're not assuming that that's coming back from 'twenty two significantly at least.
Super helpful for the model My last one I'll ask for the founders here supply path optimization, Alright, Jeff Green other edge supply path optimization could you give us your thoughts on supply path optimization and how it effects TST.
Yes.
Yes, I mean.
Im assuming youre referring to.
The trade desk launch of open path and going direct with publishers I would say that in connected TV.
A huge chunk of our integrations are direct to the major media companies and in that same realm. So we didn't have a formalized product, but that's kind of house connected TV works is that some of them run their own yield management in a very good at it. So I do believe there's going to be a bifurcation theres going to be public.
<unk>, our inventory owners that want to provide yield management on their own.
And we partner with them and deliver them bids directly to them today. So I would say CTV is kind of a little bit more organically built that way, but certainly <unk> play an important role for the rest of the open web that need them to provide yield management and the electronic integration too many <unk>.
They're so I see a bit of a bifurcation I think the bigger companies do it more themselves and the smaller companies all rely on a third party through yield management, that's kind of our take and we see that bifurcation currently with our integration today.
And then now.
<unk> is being is differently by different parties, but ultimately supply path optimization is the need from a marketer. So we want to make sure that their dollars.
Most of their dollars are going to the content owner, that's really where the securing those as Bob They don't want to see a lot of middleman changing the inventory changing hands with the inventory before it gets to the DSP. That's what we hear from our customers we have developed for that for well over a year.
About making sure that there is there's really only.
Direct as possible to that continent.
Sometimes the content owner is going to use in SSD and that is clearly very transparent in our platform.
That's our marketers really think about <unk> and to be honest, that's the real spirit.
<unk> is not.
Transparency of the dollar how much went to the content owner and I think the whole industry is going to never let this go until that's fully transparent.
Super helpful. Thanks, guys. Thank you. Thank you. Thank you thanks Laura.
JMP is Andrew Boone has the next question.
Hi, guys. Good afternoon. Thanks for taking my questions ill start off with the 2025 guide and just the implication of revenue acceleration beyond this year can you guys just talk about your confidence there and just the key drivers of why you guys believe that you can reaccelerate revenue.
Yeah.
Yeah.
For me I look at the cohort effect that we talked to the number of customers that we brought on the number of additions were adding and we've had more consistency in history and seeing how we perform in and then areas, where we're seeing gains in market share and where we think we can push further there. So I would say it's the past three years I mentioned, we've grown <unk>.
<unk> spend in 11 out of 12 quarters, the only one being the initial COVID-19 impact where we had the deceleration. So it's the confidence factor of when you offer a self service DSP the customers are trained in and they're busy.
Pushing all of their campaigns themselves that leads to that cohort effect, where they get comfortable on your platform in the AD spend consolidated net platform I think we've made great strides in the mid market in that area and we've made big advancements towards the Holdco in 2021, and we're seeing that pay.
<unk> in the future years, so to US I think it's the cohort affect the number of customers and the cadence that our company is executing that gives us confidence.
Just to add onto that Andrew I was just thinking if you take a look just various safely watch the trajectory of our platform spend that ultimately leads to market share the revenue growth as Larry talked about there's a little bit of a hiccup here in Q1, but we really believe that normalizes over the course of really just this year.
But the platform spend and the advertiser spend on the platform as long as that continues to accelerate the way that it is we have.
We know those.
Those are right in line with that long term guidance that we gave.
Other things I'll give you as Tim talked about time on platform.
<unk> age cohorts of customers they continue to spend more and more with.
We highlighted a lot of the focus that we put on the larger customers that we're going after are predominantly fortune 500 brands on hold because we're having a lot of good success there.
And if you remember we have talked about we put an entire team focused on that.
In 'twenty, one we hired a whole team on that and we're seeing great success there.
Our customer growth, yes definitely in later years is going to continue to add more as they aged and the cohort, but as Tim talked about we have a big focus on new customer segments and customer types.
That maybe arent brands, Iraq, and maybe aren't agencies, but we see an explosion of new customer types, whether it be retail media networks. So it would be telecom companies, whether it be <unk>.
Content owners looking to build media networks. It seems like and this wasn't our commentary it truly seemed like every day you read there is a new advertising business is being built and they need a DSP that's the core technology that thereafter and.
And we think that we have a lot to offer there and we have a team that we're investing in this year. This concerted to go after those dollars.
This may just be a little bit mundane, but I think it kind of ties <unk> question, then and what you were talking about but as I just relayed gross revenue to spend right. So the 46% of revenue versus the 26% of spend can you just help me understand the difference.
There are why they are not more closely aligned and what that implies in terms of adoption of the platform.
So we had a couple of customers that were in fixed price that are moving to our percentage of spend.
Pricing option or transfer that in Q4.
Scalar spend there and we gave them discounts as if they were a percentage of spend customer that's the disparity there. The good news is is that those are the customers. We're talking about those are wholesale customers. They are on percentage than we expect them to continue to accelerate our spending in 2002.
So thats really was a bit a bit of an anomaly in Q4, Andrew we don't expect that disparity to continue going forward.
So just a crystal clear right so take rate not taken grants but.
Revenue ex Tac margin comes back.
And kind of what we saw in prior quarters with Starwood or is that correct.
Okay.
Last question is just on building brand awareness with.
Your potential clients.
That has been a focus in 2021 and you talked about that continuing into 2022 can you talk just big picture about how you think about brand spend to just building awareness going forward and just where are you on the process right like I don't know if there are any survey metrics you can share, but any help there would be great. Yeah. Thanks, so much.
So that was one of our key pillars.
We had talked about so elevating our brand presence part of that is salesforce and feet on the street.
As we've previously talked about the additions we made in our sales force. This isn't this wasn't just feet on the street, we made a concerted effort in our investments. The first one was elevating our brand presence appliance within the holding companies we have a whole team focused on that with great professionals, we hired.
From Google and other large brands. So we feel really confident about the progress that we're making there. The other was on the enterprise a lot of what we hear from our agency customers when they want to move onto the platform they need client buying or what we call. The client mandate for the brand directly themselves. So thats kind of our enterprise.
Group that we built in 'twenty, one and we will continue to expand in 'twenty two.
What those are vertical experts and big categories.
That really talk to the clients in conjunction with their agencies. So that's going to have a really outsized impact and then outside of that is really around our marketing. We did a good job of elevating that in 'twenty. One we'll continue that in 'twenty two with our new open web AD campaign out there our thought leadership that we push out all of those things are going to.
Raise our level of awareness and buying ultimately onto the platform.
But where are we at in that journey in terms of <unk> and level of awareness that we do track. It from service I don't have those specific numbers, but we can follow up offline with you on where we're at.
But Andrew I would point to where are we at in that if we have accelerating.
Advertisers spend on the platform, that's a really good spot.
Thanks, so much guys.
I am moving on to Andrew <unk> with Raymond James.
Hey, Thanks for taking my questions I wanted to talk about the acceleration in CTV growth from <unk> in <unk> I guess are there any specific drivers on that that you would point to two to get that two point acceleration and then.
Your new sales force hires I know, there's a bit of a ramp period as they come onto the platform, but is there any productivity metrics or delta that you can share for the new hires in the sales force. Thanks.
Yes.
So just acceleration in CTV.
Really all point to a big one which is our Ww see rollout.
That has done really well as Larry said, approximately 50% advertisers have adopted that.
You look at the stats that we gave around CTV and squarely focused and CTV and other IV less or cookie less channels, but definitely in CTV. So we've previously talked about this but just to reiterate clients are seeing increased performance when using our household and CTV.
When they see increased performance. We're also seeing them accelerate their spending so that should very dead on that that's a big reason, that's driving growth in CTV acceleration on our platform.
And on the new sales force hires.
Yes.
Could you ask that question again, Andrew sorry.
That's fair just I know theres, a ramp period as new salespeople come onto the platform, but any productivity metrics you can share for some of your new sales force hires.
Yes, so as I said, we increased about 25%.
In 2021.
We have seen contribution from them, we expect that the large majority of their contribution will hit in Q2 and beyond.
Well I think we're going to see a big impact from that in Q2 I can tell you. The pipelines are strong and we feel really good about where required we did I will say we didn't as I mentioned, we didn't meet all the way to our goal last year, but we've already made tremendous uptick on bringing in new team.
Members increased another 15% already in the first quarter.
So I think thats going to make we're going to have a really robust second half.
Thank you very much really appreciate it.
Thank you alright, and everyone that is all the time that we have today for questions. We thank you all so much for joining US today. This does conclude our earnings conference.
Thank you again for your participation you may now disconnect.
Yeah.