Q1 2022 Perion Network Ltd Earnings Call
<unk>.
The company does not undertake to update any forward looking statements reflect future events or circumstances as in prior quarters. The results reported today will be analyzed both on GAAP and non-GAAP basis.
While mentioning EBITDA, we will be referring to adjusted EBITDA.
We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures in our earnings release, which is available on our website and has also been filed on form 6K.
Hosting the call today are the longer sell Purion, Chief Executive Officer, <unk>, <unk>, Chief Financial Officer, I would now like to turn the call over to the longest though please go ahead.
Thank you Kevin.
Hi, everyone I Hope you can hear me well.
Under one year sell in this deal together these most grown our CFO and thanks for joining our first quarter 2020.
Too early Paul.
Get started.
And so.
Earlier today, we reported the first quarter of 2022 was a record quarter for us.
Both in terms of in revenue and EBITDA revenue first and then but but I very much would like to emphasis on this call.
Even though it's a huge growth.
It is definitely not a one time event and that's the reason I would like very much to share with you.
That in the last three years.
The reason I am.
I highlighted here.
The first quarter of 2029, the first quarter of 2020 to the first quarter of 2029, the 2021 and of course, the current quarter were you able to see that this is the sustained and predictable business model, which is very much the seamless my presentation.
So we very much would like to take what is the what is behind it.
The main drivers behind this sustained and predictable business model.
And the most important thing as I highlighted in last is that.
We are build all our strategy from the point of view of the Chief Digital officer of any given brand.
Or the Chief Digital Officer main challenge is how to allocate the budget.
Across the three main pillars of digital advertising.
Search advertising, social advertising and display advertising, while the challenge is how to allocate it we've seen more than once and it had been quite often that the chief digital officer is allocating its budget differently and it has to do with all kinds of things that is happening around us and things.
Which is being affected.
Our our strategy is that we are capitalized on any changes and this is something that not hurting the business as if we were only buying into a one pillar that's the heart of our strategy.
Yeah.
Okay.
Just to give you. An example of the changes and how we supply to our business from a diversification standpoint, you're able to see the shift that is happening happened in the company between last year and this year while last year.
Search advertising was 58% of our business and display was only 42. This quarter. This is definitely being changed where display was going up to a 55% and search is only 45% it allow us to focus on our high growth categories and the high growth category.
In this business, which is in display advertising business is definitely on the video side and we are able to grow our business from a 15%.
Video share out of the entire display advertising to 40% CTV grew by almost doubled from 3% to 5% and now the company is definitely looking here about another area, where we are focusing will be financed with a high growth category for us it's really the begin.
<unk> of the year, but we're very happy with the fact that we're working with some prominent brand on the retail side and offering a very very interesting product to retail. So that's those are the area, but it demonstrates our ability how are we able to shift and able to focus on the high growth category, which in.
Overall drive great growth.
And.
And the EBITDA.
It is so.
So before going into the EBITDA on the revenue side I very much would like to look at it from above while the.
The category of Ed Tech is growing by 23% on a CAGR between 2020 'twenty two is you're all familiar with apparently is growing well.
79% on a CAGR between 2020 two.
And that's very much a point that allows us to drive exceptional growth. Despite changes in market dynamics I will go and definitely elaborate more how we are able to take market share from our competitor which is.
As a result of is growing almost double of what the category is growing.
Yeah.
Yeah.
Okay.
Now from an EBITDA perspective, the numbers are even more impressive and I use the same type of format, which we're not just talking about the 158% year over year growth between the first quarter of 2021 to the first quarter of 2022.
I would like to emphasize the point that this is a continuous growth.
Of our EBITDA and very much has to do with two main drivers that help us to increase our net margin to get them to a point, where we were on below 20% of EBITDA to revenue ex Tac to a number which we're so proud of.
That our EBITDA percentage is for the tool EBITDA to revenue excluding media cost 42%.
What is what is behind it what is behind it is very much our structure and I explained it.
In previous call and I would very much would like to focus because it's a key differentiator for our company the ability very much to connect all assets demand and supply into a central intelligent hub.
Hub that allows us to drive scalable operational efficiency and improve media margin as models, we'll talk about it in his presentation. The two factors the operational efficiency and improved media margin is definitely reflected on our EBITDA numbers here.
Talking about our intelligence hub, so I illustrated it in a way that you can able to see the demand deficit that we have here that are connected to brand agency DSP to our partner Microsoft.
Dean and then the supply assets that we have on the right. So first and foremost from a diversification standpoint, the ability to generate revenue from both sides the demand side and the supply side, which is very important and then the huge investment that we did on the technology to connect.
All all possible data into a one single intelligent hub.
And the benefit of doing it is clear those are the three things I touched the operational costs and I touched the media costs, but I would like to stop and very much elaborate on what we really proud though is to what extent this hub and spoke structure, which we are.
<unk> so much data that is coming from all sides of the house demand and supply.
Allows us to increase customer value and the first product that we launched <unk>. This is a popular solution. We saw that mid October and the results are astonished.
This is the operation behind it what we are doing on a 24 by seven and then what we're doing on a predictive analytics. The moment, we are getting an opportunity, but what is more important that we are.
Working with the certification body of material.
And the reason that we are working with them is that every quarter, we're spending our performance in our results. The campaign performance that we did in the given quarter and we asked them to certify them because every something and this is something between six with our customer and we have more than 100.
<unk> 10, since we launched it the sort solution every product every campaign that we're doing we insist that it will have.
A cookie less targeting and loan side of using third party cookies. So thats been in every campaign that is really helping them to certify the fact and coming would disappoint that sort demonstrate the ability to outperform.
Additional third party of the taxis and show the largest slips when paired with high impact formats. As an example, I would like to talk about this campaign that we did which is Colorado tourism campaign.
And very very successful campaign, but what is more important what is really more important is these numbers.
These numbers represent the fact that we're able to show a huge list of click through rate, that's 100 seats and and also in all formats here. It's a huge lift and that this is this is all about the fact that now advertisers they have it.
They have a choice to scale they have a choice what is more important.
To keep privacy of their consumer and yet.
And yet not compromise on performance.
Very important to note that our solution not required any integration whatsoever with publisher, nor with the user and I want to mention that there are other solutions out there like you I need to point out.
That you're well familiar with that require the user to provided even we were growing into a different direction, where there is no whatsoever.
It required any interaction between the user nor with the publisher now what you're able to see here, which is an interesting thing that once you're running those AD units, we're able to see the symbol and when you click on this table you're able to see that what is this is our brand.
Safe and that's what extend behind it which is creating for us a perfect flywheel.
The perfect flywheel is because we've seen more and more fleets actually people would like.
<unk> safety to click on these type of ads, where they identified that there is the source symbol, which is there.
Those those fleets drives more CPR for obvious reason and then it increases the return on that spend which drives more advertiser and at this point, we're really proud to say that in seems to be launched.
The storage solution mid October we did the 100 intend campaign that is being exposed to 150 million impression delivered translated we have two to 3 million people that click on those yet.
And that's an amazing amazing product, which is a result of the IHOP, which is result of our ability to connect all assets into a central piece.
And able to deliver I think such a such a great product to our customer.
Okay.
Okay from a display advertising standpoint again it.
<unk>.
The huge growth, it's an 80% growth between the Q1 2021 in Q1 2020. This growth is continue I mentioned, the fact that it allows us to focus on our key growth strategic areas in the market, but from other things that we are hearing everything that we're hearing brand.
An agency is looking for a full funnel solution.
This is was always the Holy Grail, if the industry were you able to take the consumer from awareness stage.
From awareness stage, all the way through or by stage.
And I would like to demonstrate it with the campaign that we did with <unk>.
The vitamin authentic tomb.
And this campaign was very much allows us to take the user for a different type of multiple format.
Their mobile if it's their CTV and what we were using here, we're using the connected car, which is very interesting thing because at the end of the day for some of the CPG products.
Those consumer with very much would like and we really don't know when they will be convinced that they will be at the point, where they want to make that transaction. So from every point, we allowed them to make this transaction and this will give them the hub to go all the way to the shopping cart and in this case that's the warm.
Shopping cart and you all by the way invited to send this QR code and you're able to see how it. So effectively that you don't know you don't need to add any more flex between the QR code all the way to the guests shopping cart and you need to pay and then you are then you are out there the performance is huge.
From these customers.
And in the in the two months period, we're able to add 112000 products to the Walmart card.
Worth $1 million plus of product value, but the most important thing is we all need to look at is the CPR. That's two five time display CPR higher than the Google benchmarks, which is between one two and 0.4 seats. That's the point. This is the value that we're providing to our.
Customer data, allowing us.
To ask for more business and that's translated into.
At 42% increase on average client spend so when we are talking about where the growth is coming from and when I talk about increased market share and we're taking market share from our rivals it's come from a point that we deliver value and the value has been translated only on this parameter.
And in digital advertising everything is measurable and as you can see this value has translated into.
A higher increase every time spent and the point here from the innovation part is our ability to synchronize.
Different parts of the funnel and.
Think that the company.
The company is coming from the point of awareness to performance. That's what advertisers are really wants to see.
From our search advertising standpoint, the numbers with broad business by 10% between the first quarter.
2021 to the first quarter of 2022.
The most important kpis of this business has to do with the average daily monetize search those are the every daily monetize search we are at $18 1 million daily monetize search and you're able to see that between 2019 and 20.
In 2000, and 2020 and 2021 the numbers increase.
Significantly which translated.
Into the revenue as you can see it here what is behind it what's behind it is the fact that we are able to increase our number of publisher 95.
We share in the first quarter of 2021 and now we have 120 publisher and I can tell you that there is some sign for the fact that we are recovering from Covid and we see that travel is back since we are monetizing carefully.
Those searches and we see that there is a growing growing interest on travel way more than it was before so that gives us a huge optimism for 'twenty 2022 and beyond.
With that I would like to.
Pass it to more to review our financial.
For Q1.
Thank you dawn.
Although the shipment trend.
Yeah.
Yeah.
Thank you Don and good morning, everybody.
First quarter financial performance is the continued demonstration of the company's strong execution and superior growth.
While keeping all the margin is growing as well and this momentum continues.
Now, let me share with you three of the main achievements of the first quarter.
Revenue of $125 3 million and near record, reflecting 40% year over year growth the highest first quarter revenue growth since 2016 adjust.
Adjusted EBITDA of $22 7 million, 18% from revenue compared to 10% last year, a new record with 158 year over year growth the highest first quarter adjusted EBITDA area.
non-GAAP diluted earnings per share of 44% and <unk> with 132% year over year growth.
This exceptional growth increased profitability and significant cash flow generation is the result of the diversity of other of our revenue streams and the scalability of DRAM business model translate into unprecedented profitability.
We are disciplined in how we manage growth and deploy capital and how we successfully integrate acquisitions.
As we did with video in October 2021 .
The all the first quarter show that we have a scalable operating model built for profitable growth and demonstrating sustainable earnings power. We have the financial strength to continue to execute our strategic plan of organic and inorganic growth and are well positioned for another successful year.
In 2022.
Turning now to the quarterly results.
As I said before revenue for the first quarter was $125 3 million, an increase of 40% and 30% on a pro forma basis, we are consistently delivering strong double digit revenue growth the growth both display and search advertising.
Display advertising revenue was $68 6 million during the first quarter of 2022 up 80% and an increase of 52% on a pro forma basis.
The 341% year over year growth in video and CTV served as a key driver to the overall display advertising growth leading to an increase of average client spending by 42% and two an increase of clients by 3%.
Search advertising revenue was $56 7 million during the first quarter of benefit into an increase of 10% year over year growth was achieved primarily due to $18 1 million average daily commercial searches compared to $17 7 million in the first quarter of 2021 .
As well as the addition of 25, new publishers to our network.
Okay.
In terms of revenue mix display advertising revenue represented 55% of the first quarter revenue compared to 42% in 2021 with search advertising represented 45% of revenue compared to 58% in 2020 . One this change in revenue mix.
Is aligned with our diversification strategy.
Revenue, excluding <unk> was $54 3 million or 43% of revenue compared to 35 billion in the first quarter of <unk> 21, or 39% of revenue. The increase of 4% was primarily due to a favorable product mix offset formats an hour.
Our ready to connect the supply and demand side of the open web to our central Iowa and intelligent control system.
Opex and Cogs <unk> expenses were 38% of revenue in the first quarter of 'twenty has been into compared to 35% of revenue in the first quarter of Spanish anymore. We are achieving I operating leverage mainly due to the scalability embedded in our business model as well as the continued successful.
Implementation of fire.
Net income was $15 5 million or 33 centers diluted share an increase of 368% compared to $3 3 million or nine centers diluted share in the first quarter of 2021 .
non-GAAP net income was $20 7 million or 44 cents per diluted share an increase of 196% compared to <unk> 7 million or 19 cents per diluted share in the first quarter of 2021.
Adjusted EBITDA increased by 168% year over year to $22 7 million in the first quarter of 2022, representing 18% of revenue compared to $8 8 million, representing 10% of revenue in the first quarter of 2021.
This significant improvement is again, the result of the ice scalability within our business model as well as the successful implementation of fire.
Adjusted EBITDA of revenue, excluding stock increased from 25% in the first quarter of 2021% to 42% during the first quarter of 2022.
Our efforts to keep the media margin levels stable and to general and to generate incremental revenue with low variable costs continue to improve <unk> efficiency and profitability.
Net cash provided by operating activities was $3 6 million compared to $13 5 million in the first quarter of 2021, reflecting a 75% year over year growth.
As of March 31st when it went into <unk>, we had cash cash equivalents and short term bank deposits of $342 million compared to 322 million as of December 31st Venezuela.
This concludes my financial overview for the first quarter of 2021, I will now turn the call back to dawn.
Okay.
So for an ending notes.
I would like to close the loop and reemphasize. The fact or what is what is really behind our sustained and predictable business model.
We defined it as a three dimensional diversified business strategy and the three dimensional is the cross channel as I mentioned at the beginning the ability to generate revenue both from a demand and supply of the open web and our unique structure of an oven spoke where we able to connect all asset into a central and <unk>.
Almonds traded with the first product that we launched to the market.
That is sort.
With with depth with.
With the sustainability and predictability of the business.
We are feeling.
The confidence we have the confidence of improving the 2022 guide.
Guidance.
<unk> that has to do with the revenue.
Put the new guidance on the range between $6 20 to $6 40, which represents 32% year over year growth, but I think the most the most dramatic.
Improvement of the guidance has to do with the profitability.
Mid point of $100 million this year.
Which represent a 40%.
40% of EBITDA two ex Tac.
It was <unk> 36 last year and it was 25% the year before and I can tell you that we're really feeling great about it because we'll start seeing that this whole structure that we bring into place is really kicking off and we are able to turn it into.
To a great processes and leverage our expense.
Last slide.
We we released earlier today, the fact that Microsoft advertisement.
Microsoft advertising is choose pairing and needs a search advertising subsidiary called fuel.
As a global supplier partner of the year. This is a huge huge achievement. We just celebrate 10 years of partnership with Microsoft advertising.
Advertisement we are a we are in the four year contracts, which is going to end in 2024, but what is more important for us is our ability now to.
To leverage the great partnerships that we had with being into other part of Microsoft advertising.
So with the vendor acquisition and the fact that Theyre going all the way into retail is fits very well some of the strategic efforts.
That we are doing and I have no doubt.
But we are able to leverage this success and take it into other other important area.
It's important to mention that it's a really hard work from all the team and besides cartoon there are other almost 500 employees that worked really really hard in this quarter and continue doing it.
Order of quarter after quarter, and I'm really proud to be it's important for me and I feel I should mention the contribution of our 32 cranium employee that we have.
And that despite of the war they are working and they are essential factor behind this quarter's success I would like to thanks them locked in.
And pray.
For their health.
With that I would like to turn and open the call for Q&A. Thank you so much.
Thank you well now be conducting a question and answer session. If you'd like to ask a question you have dialed in via phone. Please press star one on your telephone keypad. We assume please use the raise your hand function to ask a question at this time one moment. Please while we poll for questions.
Our first question today is coming from Jason House came from Oppenheimer. Your line is alive.
Okay.
Thanks, I'll ask you two questions I have.
Two questions.
The first we've seen really good improvement on the margin X on Paragon at tag.
So maybe talk about as Youre, making about acquisitions go into cloud and selling how do you think about adding roads versus being able to maintain the margin.
And then secondly, perhaps talk about your outlook for CTV, you've been able to move that number nicely over the past year, but it's still a relatively small percent of the business maybe expand upon that a bit. Thank you.
Thank you so first of all in on several occasion, but the two question is leading to a one.
That has to do with acquisition in CTV. So we identify.
The CTV is definitely a strategic area.
And that.
For us in order to leverage the growing spend in this area.
Require.
A different approach.
We identified a few companies.
And we narrow it into.
Into three and I do believe that.
By the end of the year for sure.
We will able to.
To have.
Some significant strategic acquisition in this direction when I'm talking about significant don't take it into the sides. We all we all know how we are doing the acquisition and what what is.
What is our philosophy in terms of the acquisition and so but what we are definitely.
Crystal clear.
On this.
On this direction now I think that when it comes to your first question that has to do with maintaining the profitability or even grow it.
<unk> more than what we're seeing I think we are very much enjoying the fact that.
And that we enjoy different different parts of digital advertising and while you connected them in a smart way and I must say that.
The huge technology investments that we did in order to optimize it.
Dimension.
Call It appeared the brain and the match between impression and request.
The demand side than the supply side.
A huge advantage huge advantage in terms of optimizing our margin, which translating it later on.
Optimizing our media cost and translated later on into a net margin.
Having any further question Jason.
Yes.
Our next question today is coming from Andrew Mok. Your line is now live.
Okay.
Hi, Bryan. Thank you for taking my question and congrats on a great quarter wanted to talk a bit about the search business, so with Google calling out strength in search and Microsoft posting a solid quarter I know theyre not directly comparable to your search business, but how should we think about how carry on search growth trends relative to that.
And with publishers growing to 120 for 95, how should we think about the publisher opportunity.
So first and foremost we're not competing with them, we are partnering with them and.
Basically we are providing them search fees in other words, we are working with our partners.
And we are using.
Using a lot of <unk>.
This case has been via the partner there are tools how to increase the number of quality searches and that's very much the idea.
So I think that what we what we've seen is that.
From again from the Advertiser standpoint.
The attractiveness of search advertising is definitely definitely bear user express.
The highest possible intent that advertiser are so much looking for.
We see that.
The RPM, which the equivalent to our CPM is going up.
We've seen that in some categories and now we have a very very good view, how much advertising spend on what keywords et cetera, only the fact that we are exposed to.
And a huge amount of searches every day there are some categories that are growing there is some did not.
I mentioned, the fact that the travel is growing and growing very nicely.
It's only the beginning it was it snapped at the point that in towards before let me put it this way, but it's definitely in the right direction.
So I'm very optimistic as far as the as far as the search is our search business.
Great and then one more just kind of on a tactical perspective from from margins.
<unk> is typically kind of a low point of EBITDA margins in the year from a seasonal perspective, but this year is 42% of revenue ex Tac with guidance for the full year of 40% suggests that that necessarily won't be the case this year.
I guess, how should we think about the scale and phasing of investments over the rest of the year.
So definitely there.
We are continuing I think that our arpin engineering R&D investment is just growing we see ourselves as a technology company.
With all the impressive number and the EBITDA is growing the amount of technology in dollars that we're investing on developing the predictive analytics, which is the heart of the IHOP was there I'm very happy to just encourage us to do more.
So it is a huge investment from our end just to get into a point.
You can imagine that you can beat.
The third party Cookie CPR.
Without having any kind of.
And interaction or.
With the publisher that's a huge huge investment with people that are most of them are data scientist.
AI engineers that are very costly.
To get in.
So we are continuing it because we are able to get dividend on this type of investment and Thats something that we see so we truly believe that there is a scale and keep in mind that sort is.
This is the first full quarter of sorts, let me put it this way.
Just being launched.
We've seen more and more advertisers are looking for these type of solution.
They are looking for a solution, which not recur integration that thats clear and you know I wish that from this point it will be a call up it's a bit provocative called out, but I will use the stage and basically asked.
How come investors are now jumping would be sworn in at this point, we're not charging.
Talking about the future, but we're not charging for sort so if it <unk> perform better and you are providing a better citizenship, but not stocking your consumer why why not using sort.
So we are now we are after 100 campaigns proved very much that we performed and performed well than the conventional use of cookies, we start getting some great leads and as I mentioned before it's the first kpis that I'm looking at is the average deal size.
The average transaction, which is growing rapidly. So the scalability is definitely there and as I mentioned from years from my background.
As an enterprise software Guy I truly believe that technology makes a difference.
In our case, it's make it made a difference and it continues to be definitely something which is the torch of barium.
Thank you. Our next question today is coming from Laura Martin from Needham <unk> Company. Your line is a lot.
Hi, Good morning. My first question is on sort of building on what you just said so I think.
Sure I would say that new ideas.
It's really important to illustrate the price.
Mr. North Escalations, a cookie they open internet industry, and therefore, an industry wide solution is better than individual companies and also a little more on people, but the ear requirements.
Soma opt wrong and that feels like the last one kind of follow up.
Our privacy so could you talk about why.
I know you I need to point out.
For a year as part of this open internet industry, and how your solution or sorry, actually it's consistent with the E is well locked down now on <unk>.
Must have choice to opt out of tracking.
Thanks for the question so first and foremost when you are looking about the UAE where support the UAE because there are some publisher that basically said we already have UAV in if you want to put your head there.
To support USB Uavs and open source, everyone is able to support it and it's in a way, even though driven by trade the trade desk. It's a it's an open source and every everyone can integrate with it.
We were kind of form of design thinking standpoint.
Project that started two years ago, let me put it this way.
We put the very.
We put the constraints here and our main constraints was that the user.
And is not required to co operate with that solution in other words, we're not asking the user.
To provide its email.
That was the that was the idea.
And I think it's still very much relevant and you're right in a way that we've seen a trend in Europe .
I must tell you that we're very very close to what's going on there and there is some resistance with some from the audience.
The user inform the community about providing it.
So I think Laura it's too early.
To say.
We are we are very happy with our technology, we're very happy with the performance that we provide.
And.
I wish other will join because at this point I think that there is.
The consumer drives it and I think the consumer demand and.
I I I I truly believe that it will be more than one solution in the market.
And especially those solution that we call non intrusive solution.
That require any kind of entry not with the publisher and nor with the users.
So we are all in this case.
Yeah.
Okay and my other question is just following up on Facebook call last night, they made a call out about e-commerce advertising and <unk>.
Much weaker, but retail advertising, which is with omni channel both technical.
Physical brick and mortar as well as e-commerce coming back have you seen that kind of shift in the retail category in your revenue line as well.
So we are we are seeing it it's.
Is that a shift I must say that they're from CPG standpoint, we are we're definitely see that there is growing interest.
We're getting a lot of I think a.
Positive feedback from the fact that we're able to provide this connected car, which is very much able to CPG type of type of clients.
Where.
The deal size is not that significant in consumer able to do.
The purchase.
With the one one clip.
So I must say that this is definitely a growing trend.
At the same time, we combined the two into a shopper marketing as well and we are working and that is the retail part.
Where the whole personalise type of circular is going into a huge transformation in the market.
We're investing a lot in order to personalize those circular we're working very very closely with allbritton in this regard they are our design partner and.
In offering the personalized shopper will market their marketing offering and so that's that's going to be one of the key growth driver.
Behind our display advertising in 2022 2023.
And then just following up on that so this is my last question you were thinking of taking inventory to help them.
Grow that business, how you now doing that or whats the status of your taking on physical inventory levels fell on that one click product.
No we are not taking not taking an inventory we're not.
The whole idea was that.
From a Walmart standpoint.
We are offering kind of.
For guests don't need even to logging in every senior very very easy a nice way for them to click and buy which is happening in other E com platform.
Now we are developing something which is in the next generation is as far as offering substitute in case. This product is not available in stock.
Just two missed opportunity where consumer did all the way click on it now it's on the car and you will end it with this product is not available. So we are working closely on the next generation of these solutions.
Thank you very much great numbers congratulations thank you.
Thank you. Our next question today is coming from Mark Kelley from Stifel. Your line is now live.
Okay.
Great. Thank you very much. Thank you Raj two quick ones. The first one I guess for both of US sorry, but the first one is you just mentioned that you started working on sort.
Two years ago.
Give or take which is before all of these apple changes that were made have you had to make any adjustments along the way with anything that Apple has come out with.
Are there more privacy centric.
Demand across.
The apps.
<unk> installed base and then number two if you do decide to especially charged for short.
What might that look like.
Not expecting a timeline here, but just conceptually how would that how would that work.
So the first question from a design factor standpoint, sort was not aimed to do any kind of an in app.
To support the new net simply because we're not doing any NEP advertising.
There.
<unk> modification of their iOS is is targeting.
Mainly apps and the ability to.
Transfer knowledge or data from one app to another so sort and this will not require any kind of modification.
That's the first question as far as the pricing.
So first of all keep in mind that this.
If we provide.
Twice the ctr.
That's translated into return on that spend.
That's very much it so while everything is equal we provide to us the value.
And we always like to price it.
Based on value.
So it can be two things.
One thing can be okay. You know what we are with this performance you have the choice other to pay or to double your spend that's very much. What we're doing currently we're going in a way where customers see the value and instead of charging they increased their spend.
So for me. It's like is we are being charged because that's that was that's a key driver for us too.
To turn sort into revenue and margin generator.
So we don't need to charge for sort preset in order to impact our topline and bottom line. So that's the current philosophy that we're getting a side of it.
And that has to do with what Laura was saying it has to do with the UAV to know that there is the rates out there and the point here that is the six first six months, we get 100.
100 campaigns I continue now that on every campaign, we were running store.
Yes alongside of their cookies, and we want to be any point, where are we reaching the <unk>.
Number of 1000 campaign by the end of the year of using source. So we are able to get way way more advertiser that is being exposed to this number but more than that.
Every campaign that we're doing allows us to improve the model. That's the beauty of this kind of AI and machine learning.
And currently the fact that we're not putting any constraints of putting a price or doing like this is just helping us.
Not just to proliferate the solution, but also to improve the predicted the prediction analytics of this which is the key for us to drive two times ctr and even more than that because we are shooting for a way higher numbers.
That makes perfect sense, if I if I can maybe ask a quick follow up to the to my first question about the Apple changes I know you don't do any in App.
Advertising, but I'm just curious.
There's been some reports that apple might be clamping down on us.
Fingerprinting I don't know if thats it looks like you're taking a lot of different signals from you know.
A handful of different places is there anything that youre doing that can be considered.
Fingerprinting.
In the eyes of Apple.
No.
Not at this point perfect. Thank you very much. Thank you.
Thank you. Our next question today is coming from Eric Martin Wilkie from Lake Street. Your line is now live.
Yes, I wanted to dive into the display advertising topic again.
Talking about an increase of average client spend by 42% and a 3% increase in number of clients.
Wanted to focus on that 3% number and ask what are what are you doing.
It would seem like people are they beating a path to your door, but its more of a.
Trying to you need to get the word out to or is it just.
Folks are slower to change old habits.
From a number perspective in Q1, the average client spend was $73000 and now is the $103000. That's the average client spending.
42% increase year over year.
Now the point here is.
It's very simple. So we are we are very much trying to be aligned with our customer that you know in the.
Macro perspective always trying to minimize the numbers of vendors.
And the main point here is that those digital campaign, which is very much driven by analytics and reporting and return on AD spend and everything like that they would like as much as possible to have a single.
Single point.
Not a single point from a service standpoint, but Singapore from a data standpoint, so where they are some other pockets and the pockets where there we are very much trying and that's what we're trying to do right now and the word that I'm using is awareness to performance.
And it requires some education, let me put it this way. It was it was it was two separate kind of pillars or or budget for an awareness campaign and then from the performance campaign.
Once we were able to bridge. The two we are able to get more and more performance dollars because we as a company was very much on the awareness side of Bell <unk>.
And that's increased the spend because they truly understand that advertise able to leverage it spend on the awareness intra slated into our performance.
So this type of continuous type of flow.
The consumer funnel, where you are able to take the user from awareness to consideration to intend to buy.
And you're doing it in a.
Certain amount of product, it's not happening on all products and it has to do with the dollars. That's why I mentioned that CPG is a perfect example for it.
You are able to take dollars that were not designed for us before mainly on the performance side of the house So Oh.
And I must say that the connected car, helping us very much in defense.
The fact that we increased dramatically.
Our video offering and in this regards we are offering.
More and more.
Video video business is definitely a video solution is definitely helping us high impact CTV sweet.
Is there as well.
So all in all doors touching more and more points, where a customer is looking at us as the holistic type of solution, which reflected on average client spend.
Okay, but more to the number of new clients.
They're an expectation here that that 3% number is going to rise throughout the year, yes definitely.
Okay, Alright, and then.
In the display advertising revenue.
Are you able to pinpoint the percentage of the display advertising revenue driven by sort and what is that.
Currently.
It's close to 30% of the display business.
Yeah.
Okay.
How is that compared to last quarter.
Last quarter, we just started I mean this is definitely <unk>.
Sure huge factor the majority of the 100 <unk>.
Campaigns that we did was in this quarter I think 80 of them and even though we launched mid October we did it.
And the small step let me put it this way and we did it in a way that the majority of the campaign was still cookie base, because we try as much as possible to convince our customer and thats. What the efforts that we're doing that they will allocate more and more budget towards sort.
But we have to prove them that we are outperform.
That's required.
There is skepticism at the beginning you will not doing third party cookies and yes, you ever certification arm that you're using as a third party, but we wanted to see it we want to recognize and I think that Oh.
We I think we issued the press release of Colorado tourism speak by itself, it's not just.
The safe, we're not using the cookies element, it's very much has to do with scale.
Well, so youre not minimizing the number of people that is being exposed.
Sure.
I will send a I would say the link I'll ask rami to send the link of this of this use case and youre able to see.
Over to see it in action in all parameters.
Victor.
Got it thanks and congratulations on November eight thank you.
Okay.
Yes.
Thank you I'll turn the floor back over.
Okay.
So there are no more question Kevin.
I think there may have been one that came over.
Yeah.
Please.
Okay.
Yeah.
And in terms of it.
Yeah.
On the line.
Okay.
Okay.
Okay.
Question is coming from Jeff Martin Your line is in our lives.
Hi, Jeff.
I was able to make it back on the call on the call. Thanks for taking my questions.
Wanted to get a sense for the key drivers of the average client spend 42% an impressive number.
So what are the key drivers and two is there a potential to expand from.
From here.
Yes, so definitely so the main key driver is the fact that we have as I think I answer. It just now is the fact that we are able to.
To shift to.
To get more dollars on the performance side of the house and we were.
Up to this point, we're very much only doing them their awareness budget. So the fact that we expanded into lower funnel. That's one expand it to other channel in this regards video and we were not known in our video solution, but as you can see from the number 40% of display advertising is now video that's a huge.
Huge huge lift in <unk>.
Spending.
We are taking.
Video dollars that.
That was associated with with other companies that were known for their video solution and now we will not just close the gap, but with our high impact video suite, we're able to do way way, we more so additional checks and additional format additional area.
Is on on the funnel.
CTV to some extent all this has to do with drivers to increase average client spend.
Okay, Great and then one other if I could on the retail side to give them. Walmart example, seems like a very encouraging results there.
How would you characterize the opportunity in retail and is that one of the primary focuses.
Strategically preparing on at this point definitely definitely we founded that this is a very interesting with retail we're looking about two two parts one is to do with <unk>.
Called digital circular.
And as I mentioned that has to do with one area personalize those circular great.
Great opportunity that we have I mentioned albertsons as a key customer for us in this regards with further developing it.
It is a transformation of this business that we very much would like to tap on the GAAP and the other half to what was the reason.
In the connected car and the connected car.
That's very helpful. Thank you and congrats on a great quarter.
Thank you Dan.
Thank you we've reached end of our question and answer session I'd like to turn the floor back over for any further or closing remarks.
Thank you. Thank you everyone for joining our call <unk> excellent. Thank you bye.
Thank you that does conclude today's teleconference and webcast you may disconnect now and have a wonderful day, we thank you for your participation today.