Q1 2022 AdTheorent Holding Company Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to <unk> first quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that this conference is being recorded.
I would now like to turn the conference over to your first Speaker David.
No Investor Relations David Please go ahead.
Good afternoon, and welcome to add through its first quarter 2022 earnings call.
We will be discussing the results announced in our press release issued after the market close today.
With me are Ed <unk>, Chief Executive Officer, Jim Lawson, and Chief Financial Officer Jordan.
Before we begin I'd like to remind you that today's conference call will include forward looking statements based on the Companys current expectations.
These forward looking statements are subject to a number of significant risks and uncertainties and our actual results may differ materially.
For a discussion of factors that could affect our future financial results and business.
Please refer to the disclosure in today's earnings release, and our other reports and filings with the Securities and Exchange Commission.
All of today's statements are made based upon the information available to us today, and we assume no obligation to update any such statements except as required by law.
We will also refer to both GAAP and non-GAAP financial measures. During the call you can find the reconciliation of our GAAP to non-GAAP measures, including in our press release posted to the Investor Relations section of our website at Www Dot dot.
Dot com.
Our non revenue financial measures, we discuss today are non-GAAP , unless we state otherwise with that let me turn the call over to Jim.
Thank you David and good afternoon, everyone.
Thank you for joining our first quarter 2022 earnings call.
We are extremely pleased with our performance in the quarter we.
We delivered $34 2 million in revenue, 11% year over year growth and in line with our guidance.
Greasing wallet share with existing customers.
Bringing new logos onto the platform.
Adjusted gross profit of $23 million was also up 11% exceeding the high point of our guidance.
We are pleased with our performance in the first quarter demand for our machine learning driven solution remains extremely strong and as.
As a result, we are on track to meet or exceed our guidance for full year 2022.
Before I dive into first quarter highlights I'll provide a brief overview of what we do and how we win.
While other DSP platforms focus on targeting users adhere predict the performance of media opportunities using the industry's most advanced machine learning powered media buying platform.
And we do it in a privacy forward way.
Unlike other targeting approaches adherent targeting did not rely upon third party data licenses cookies device Ids.
Or any of the new unified or individualized I'd being discussed in the market now.
Most important.
Our platform and products drive industry, leading performance.
Or are customers campaigns measured in real business terms, such as incremental sales.
Visit registration.
Travel booking online orders drug prescription Bill insurance policy sale and other business outcomes we.
We believe we are poised to lead the digital advertising industry into the post <unk> era, where machine learning and statistics give advertisers unprecedented level of targeting accuracy.
Consumers are not alienated by corporate monetization of their identities.
So that is why we win.
It is not just that we have a superior platform today.
Our platform gets better every quarter.
We operationalize and automate new and innovative machine learning advancement within our platform and vertical ad solution.
Every enhancement we launch every data partnership we bring on and every campaign that we run.
Our ability to drive campaign PPI performance.
Our brand and agency customers as.
<unk> improved the.
The gap between the return on AD spend we deliver relative to what our peers can produce content.
<unk> to increase.
Immediate result.
Wallet share as existing customers spend more of their campaign dollars with adherence.
And this momentum will increase as.
As we start to see the real benefit from our sales and marketing investments.
Importantly, we have and will continue to drive this growth.
<unk> adjusted EBITDA came in above the high point of our guidance at $1 3 million for the quarter.
Meaningful growth investments across all facets of the business.
Later in the call Chuck will walk through the drivers of this performance.
Before I turn it over to him I want to highlight a few wins from the first quarter, including strong connected television or CTV growth.
Several meaningful platform innovation.
New data partnership and some news on direct access.
Starting with connected television or CTV.
Adherents unique ml powered advancement, which we did.
On our last call.
Either increase the differentiation of our solution in this dynamic and rapidly growing channel.
As a result, we delivered 42% the TV revenue growth during the quarter.
This exceeds projected 2022 industry growth and it's better than the growth many leading market participants have reported for the quarter.
As it does on other screen, our data driven and performance focused CTV product and platform capabilities and the meaningful enhancements. We continue to release, our competitive advantage that will sustainably drive above industry revenue growth.
Now, let's talk about some of our platform enhancements for the first quarter.
Further exemplify our dedication to enhancing our existing technology advantages using focused innovation.
There are many but I would like to talk about three meaningful platform enhancements from the quarter.
Deployment of our inventory marketplace.
A big leap forward in our optimize their technology.
And groundbreaking advancements in our cost per action or CPA model and full funnel capabilities.
Yes.
Our new inventory marketplace, let customers bundle and package.
<unk> digital inventory across campaign.
Addressing a significant deficiency in the programmatic ecosystem caused by the fragmentation and inconsistency and publisher and content details.
For example.
PNM programmatic bid requests can appear in many ways.
As a state domain CNN dot com as an Android or iOS mobile app.
Whereas the CTV app to name a few.
Fragmentation makes it difficult for advertisers to target a desired publisher content.
Our inventory marketplace unifies this publisher inventory into a single targeted <unk> entity.
Unlocking operational efficiency and ease of use at.
It also allows customers to create enacted a customized groupings of publishers and content like grouping CNN into a new package for an <unk>.
End user who wants to target news content.
Groupings by reading or language and all of this lived within a robust and easily activated library within the adherent platform.
Another meaningful platform enhancement relates to our optimizer technology.
Our suite of Optimizer provides automated algorithm based campaign decisioning far more quickly and effectively than peer solutions, which are more reliant on the behaviors of individual traders.
This is a big deal because widely varying media prices across the programmatic ecosystem.
Often cause marketers to overpay for inventory, if they bid too high or exclude inventory if they bid too low this is especially true for CTV.
Pricing variation can be extreme in Q1, we released a price optimizer enhancement that can dynamically adjust a single user entered bid price.
Details about the CTV publisher content genre and rating.
This free to our customers for managing multiple often widely variant bid in.
In the first quarter alone.
Generated $1 5 million bid price adjustments were an average of 12 bid price changes per minute without a trader. We also launched the first iteration of a multi goal optimizer, which is designed to optimize campaign delivery simultaneously towards both the bid price and kpis perform.
<unk>.
Typically price and performance are independent and inconsistent variable requiring multiple tactics to manage a campaign in other words.
<unk>, an ongoing manual decision about how to balance the usually competing goals of price and performance.
Combining both price and performance into a single model.
The need for multiple tactics create operational efficiencies and advances Advertiser Bowl.
During the first quarter campaign data showed that the multi goal optimizer improved campaign API performance by over 30% and cost efficiencies by almost 20%.
During the quarter. We also made great progress expanding our full funnel approach to campaign in API optimization.
Way of background <unk>.
Advertisers invest their media budget across the entirety of the purchase funnel, meaning from preliminary awareness to investigate and discovery.
Pre sales or sales activities.
And different tactics are required at each funnel debt for.
For example, when we hope in the airlines looking to optimize bookings, we may use television capabilities to drive upper funnel conversions, such as landing page visits.
Media to drive middle funnel conversion like browsing deals.
And targeted display to drive lower funnel conversion such as bookings.
Adherence full funnel capabilities center around using machine learning intelligently to activate all of these tactics as.
As part of an integrated media plan driving conversion at each funnel depth.
Deriving learning at each stage of the funnel and increasing our revenue opportunity.
During the quarter, we launched important enhancements to our full funnel approach.
Including introducing funnel depth features into our CPA models.
Expanding on our already advanced model inherited capabilities.
And we introduced conversion influence reporting.
Validate.
Efficacy of our.
<unk> at each stage of the funnel.
To illustrate how exposure throughout the funnel drives performance.
These initiatives increased our ability to leverage the upper and middle funnel to drive superior lower funnel API conversion for our customers I will briefly unpack each of these advancements and note how they will help us drive revenue.
The new funnel depth enhancements improve how activities indicated.
<unk> upper or mid funnel conversion event inform our cost per action or CPA model.
<unk> more efficient ppas for the campaigns ultimate business goal or API.
Prior to implementing funnel depth features.
Our model did not differentiate.
Clean engagement at the different gap of the funnel.
As a result and mutually optimize toward landing page for example, or other high volume upper funnel action until this generated sufficient TPI conversion.
With two of Kpis based model.
With our new funnel depth information as soon as we have enough next level event within the funnel the model dynamically switches getting us from <unk> to 60, much more quickly and some early campaigns getting to kpis or conversion based targeting and just a couple of days.
Marketing activities by low mid or upper funnel as well as recency and frequency also allows us to score engagement at various funnel depth and have a more data driven understanding about conversion at each phase of the funnel.
Each new funnel depth enhancements represent a key advancement to our existing model inheriting capabilities.
Which is essentially our platform's ability to use the predictive score from one model.
As an input for variable to another model. For example, we can use a click through rate model or brand safety model as a variable or input and the CPA model in the end this drive operational efficiencies by reducing the number of tactics needed to create and manage.
The conversion funnel and most important the ability to guide consumers through the.
Conversion journey is paramount to advertisers.
Demonstrable ROI on their media spend and the better we do this.
More advertiser budgets, we earn.
Equally exciting and building on our full funnel capabilities during.
During Q1, we introduced our conversion important reporting.
Which highlight the effectiveness of upper and mid funnel media exposure on the resulting conversion event.
By showing how different media types line items, Creatives and strategy work together to drive conversion.
For example.
The reports highlight that one media type drive the user to a landing page while another takes the user from landing page.
Conversion or it could show that a combination of creative and tactics are required to drive that conversion event and.
In Q1, we executed a campaign to drive home and auto insurance will complete for.
For National Insurance company running a mix of cross device display and video tactics. Our conversion influence reporting shows that users are exposed to both video and display media converted at a 612% and 112% higher rate than that.
Those exposed just video or display respectively.
Reporting illustrates the efficacy of adherent capabilities and drives customer retention and revenue growth.
Moving onto our data infrastructure and how we are expanding our one key data to drive results for customers and.
In the first quarter we.
We finalized an important new partnership with a leading consumer data provider.
This critical integration.
US more than 700 additional data signals.
Our bid request, scoring and modeling.
In addition to more than tripling the number of available signals.
High quality signals are indicating strong relevant conversion uplift and increasing the predictability of our models.
As we noted in our last call programmatic advertisers value unique first party data and data insight.
And our ability to leverage our ml capabilities across valuable feed dataset.
Allows us to offer unique first party data insights, which further differentiate us and advance our proprietary predictive modeling and measurement capabilities.
This continuous innovation.
This unmatched rois for our customers and drives our market share.
Finally.
I wanted to share some news on the ongoing investments, we're making behind direct access.
As we have noted our platform is our product and our customers can transact with our platform in different ways.
Shortly.
Have used adherent as an end to end full service in house digital partner leveraging our team's strategy.
Add operate campaign optimization and yield client success.
Data and analytics data science creative and more.
However, we recognize that some customers both agencies and brands.
Some of the media execution resources in house, they have not historically been at their end customers as they would prefer to leverage their internal teams to execute and manage campaigns with our platform.
As a result, offering direct access enables us to transact with a whole new subset of potential customers using an enterprise pure platform offering model.
Our direct access offering does not cannibalize our end to end offering.
We are not transitioning existing customers to it and it does not pressure our financial model, we are simply expanding our addressable market.
We are excited to note that we hired Paul Boling during the quarter in part to help spearhead the growth of this initiative.
Paul is an industry veteran with a long successful track record and programmatic AD Tech.
Higher to add Darren.
Paul was a founding member of programmatic media companies taxes.
As well as CEO of MDC partners media platform consultancy Eric.
Expertise will help guide our direct access efforts through the next phase of development as we continue to scale this offering and bring it to market.
I would like to conclude my remarks by thanking the adherent team.
Working harder and is more motivated than at any point in our 10 year history.
Our team appreciates the men.
Opportunity that our profound market differentiation makes possible.
Despite broader macroeconomic uncertainty we are tirelessly pushing the boundaries to increase our competitive advantage in the DSP landscape.
This has been instrumental to the.
Strong quarter, just reported and it's the reason we are able to reiterate confidently our guidance today.
I will now turn the call over to Chuck.
About our financial results and the exciting momentum we see in the business.
Thank you, Jim and thanks, again to everyone for joining us today.
Discussing detailed financial results I would like to point out.
And to our GAAP results I'll be discussing certain non-GAAP results our GAAP.
<unk> financial results, along with a reconciliation between GAAP and non-GAAP results can be found in our earnings release that is posted on our website.
Www dot adherent dot com.
As Jim mentioned at the outset, we extended our track record of delivering strong profitable growth in the first quarter of <unk>.
Revenues were up 11% year over year, driven by continued strength in the company's health care pharma and retail verticals.
Adjusted gross profit as a percentage of revenue was 67, 1% for the quarter in line with the first quarter of 2021.
During the quarter, we invested across all facets of the business.
Still delivered $1 3 million and adjusted EBITDA above the high end of our guidance range.
Now I'll walk you through our first quarter financial performance and then discuss our guidance for the second quarter and for the full year of 2022.
Our business is seasonal with Q1 revenues typically the lightest quarter of the year. Following our Q4, which is historically the strongest from a top line perspective.
Total revenue in the first quarter. It was $34 2 million, an increase of $3 3 million or 11% as compared to the first quarter of 2021.
Due to continued strong demand for our performance focus privacy forward offerings with both existing and new customers in our top verticals.
Our city CTV revenue grew 42% during the quarter to $2 5 million as compared to $1 8 million first quarter of 2021 fueled by expanded capabilities and integration.
In discussing the remainder of the income statement unless otherwise noted all references to our expenses and operating results are on a non-GAAP basis, you can find information on the most directly comparable GAAP metrics in our first quarter earnings press release.
Adjusted gross profit non-GAAP metric that removes traffic acquisition related platform operations cost in the first quarter was $23 million.
We're 67, 1% of revenue.
Compared to 67, 2% in the same period of the prior year.
Moving down the income statement to operating expenses first quarter operating expenses were $38 million, an increase of $10 4 million or 38% versus the first quarter of 2021.
The major drivers of this increase include increases in hiring driven salaries and related costs of $2 4 million as in the past our hiring was focused in our sales and marketing product and technology teams public.
Public company related increases in insurance legal and professional totaled approximately $2 1 million.
Revenue driven tech costs were up approximately $1 1 billion software and hosting expense was up $1 $5 million as well.
Moving to earnings we exceeded the high range of our Q1 guidance with our Q1 adjusted EBITDA coming in at $1 3 million versus $6 7 million for Q1 of 2021.
<unk> EBITDA margin for the quarter was five 6% versus 32, 4% for Q1 of 2021.
Now, let's turn to our guidance for the second quarter and full year 2022.
Second quarter 2022 revenue is expected to be between 45, 2% and $46 2 million, representing an increase of 13% to 16% compared to the second quarter of 2021.
Despite global supply chain disruptions continuing to impact the timing of the spend in.
In the aggregate, we continued to see substantial and growing demand from our customers across a diverse set of verticals.
For the full year and consistent with previously provided guidance, we expect revenue to be between $202 2 million and $206 million, representing an increase of 22% to 25% compared to 2021.
We expect growth to increase materially over the course of the year as the significant investments made in 2021, and our sales organization and platform further materialize.
Second quarter 2022, adjusted gross profit is expected to be between 30, and $30 8 million, representing an increase of 13% to 16% compared to the second quarter of 2021 for.
For the full year and consistent with previous guidance, we expect adjusted gross profit to be between 131, 5% to $134 5 million represent an increase of 20% to 23% compared to 2021.
Second quarter 2022, adjusted EBITDA is expected to be between $6 $5 7 million.
We're also reiterating our full year 2022, adjusted EBITDA results to be between 31, 6% and $32 million or approximately 24% of adjusted gross profit.
Okay.
Adjusted EBITDA guidance reflects increased year over year operating expenses driven by investments to capture additional growth opportunities some of which Jim described.
Other areas investments have been and are being made in sales and marketing to continue expanding our footprint in order to keep up with demand as well as technology and products to continue to enhance our platform and offerings and allow us to rollout more products faster.
And as anticipated.
Kris and general and administrative expenses is largely driven by public company costs not incurred in the comparable periods in 2021.
Finally, it is worth noting that our 2022 guidance does not include the impact of potential M&A.
In summary, we're pleased with our financial results outperforming our guidance for the quarter and remain very enthusiastic about our strong outlook for 2022 and beyond.
Now I would like to turn it over to the operator to moderate our Q&A session.
Thank you to ask a question you will need to press star one on your telephone to withdraw your question press the pound key again to ask a question Thats Star one.
Our first question comes from Maria risks from Canaccord. Your line is open.
Alright. Thank you so much for taking my questions.
What are you talked about some of the marketing campaigns that have been shifted close to with Q2 and maybe later in the year because of supply chain issues have you seen sort of those campaigns materialized. So just wanted to get an update on what <unk> seen that and then secondly, given your diversification from the vertical standpoint can you maybe just talk about some of the.
Verticals, how are they performing given all the sort of macro headwinds.
Yes, Maria Thanks, a lot for the question.
We feel really good about where we are.
At this point in the year.
They're in advertising Youre always going to have some movement.
From either quarter to quarter or month to month do.
So we baked that into our plan and Thats something that we expect and plan for so youre going to see a little bit of that and we saw some of that certainly in the first quarter were rare an interesting time in history.
But it wasn't anything that we werent expecting and frankly the supply chain challenges were.
There last year, and we navigated through that.
As well so we're not surprised by it we baked it into our plan we have a prudent plan.
<unk> that contemplates the macro backdrop that we're in and we believe that.
Some of the movement that we saw in the first quarter for example, or we're going to we're going to keep in the year. So we feel quite good about it and we that's why we're constantly.
Reaffirming our our projections for the year.
With respect to verticals, we are fortunate in that.
We have a wide variety and diversification of verticals.
Top verticals for us have been BFS side banking financial services insurance.
And pharmaceutical those verticals have been largely immune from many of the challenges in the supply chain.
But.
Again, we have a lot of verticals and we're seeing a lot of excitement and growth.
Across the board. So we don't report out specifically at this point the vertical growth quarter over quarter, because we are new as a public company, but we have a lot of exciting things going creating a lot of new differentiation across those verticals and it's a huge part of our growth story.
Great. Thanks, so much.
Yes.
Thank you. Our next question comes from John Blackledge with Cowen Your line is open.
Hi, Good afternoon. This is James Kopelman on for John .
With the continued push towards greater data privacy for consumers I'm curious I'm curious what kind of conversations you're having with advertisers given your platform is obviously well positioned as an alternative.
For many of these marketers and with the Upfronts now behind us as well. So what are the key trends youre seeing and do you still plan to accelerate advertising efforts to attract these advertisers.
And then as a quick follow up.
In terms of geographic expansion, which could you just remind us which territories regions should we be thinking about in terms of expansion and any color around potential timeline would be helpful. As well. Thank you.
Yes. Thank you for the question.
One of the great benefit to the.
Data approach that we take in that we do not.
Rely upon user Ids and individualized data for AD targeting is that where the most privacy forward version of programmatic advertising.
Really ever existed in the market, we believe that we're poised to lead the programmatic industry into a post <unk>.
Era and.
And that's because we use statistics, we score impression opportunities based on statistics about those opportunities and we're not in the business of profiling users. So <unk>.
Want to talk about that our clients want to talk about that and it's been a huge wind in our sales as we've.
I've been speaking about our business and our opportunities and one of the great benefits of being on this bigger stages that we have more of an audience and we're talking to a lot of great.
Great clients and opportunities about.
The predictive advertising possibilities and how you can move beyond cookie based targeting and you can move beyond segment basically targeting that are driven so we could not be more excited about the upside possibilities for the business for that.
The regions in which we operate currently.
Are the U S and Canada, having.
Having said that we're doing some very interesting testing on campaigns in Europe .
Made some great progress.
In the first quarter and we look forward to sharing some of that information as we go but we believe our.
Statistics base.
<unk> method or <unk>.
GDP our compliance by design.
And that we think that we will have some very exciting opportunities in other geographic regions as we go forward.
Great. Thanks, a lot congrats again on the quarter.
<unk>.
Thank you. Our next question comes from Laura Martin with Needham Your line is open.
Hi, there I have two strategic everyone financial.
Strategic when this way.
Everybody is trying to solve the cookie deprecation.
You guys have called it to my.
My question is Jim.
So why is it better than contextual our households, I E Commerce. When you close the loop and do you really believe that the open internet is better off without like a universal IP industry wide solution.
You think these point solutions that individual companies are taking like yourself actually work to actually make the open internet.
And of course cookies world.
Great question and thanks for that question first of all we don't see that.
The world is better off without a unified I'd, that's not tied to cookies, we support those efforts and we are actually contributing to that marketplace of ideas.
The idea is to get to a post cookie unified I'd.
Our point is that we don't need it we think youre better off being in a world where you can leverage.
Number of different statistics that are not tied back to the individual. So we are supportive of both we will support the efforts to invest in our unified I'd both here in the U S.
And in Europe .
But at the same time as that scale.
Adoption.
Driving towards scale, there we don't need.
I'd.
In order to effectively target a digital AD and I think that is the key.
Not to say that if an idea is available.
And it could be used that we would not avail ourselves of that benefit, but it is better to not be dependent upon an emerging I'd structure or infrastructure. So that's really what we what we believe on those topics, but we fully support the unified I'd.
In the U S. In Europe , we just are not dependent upon it and we believe also that.
Back to your first question.
The reason why predictive advertising, which is what <unk> delivers in our view is better is because the optimizations are tied back to conversion.
Other words, if you are trying to sell something.
And there are AD units that are driving sales in other words someone views and AD and then they purchase a product if you have inferred.
Information and data.
The attributes associated with the user that purchase that product in real time, that's more valuable than assumption.
About a user.
Of what.
They have and therefore, what buckets are put into so in our view real time literally every day every second conversion activity is a more valuable input.
Or how do you target an ad than an assumption.
That was used to put in I'd in a bucket or a profile.
Okay, perfect that's super interesting.
To say TV CTV revenue growth very impressive 42%. My question is you guys have a full funnel you focused on that full funnel products.
Offering. My question is are you seeing that CTV is being used mostly for top of funnel or is it your experience that CTV actually is being used part of our funnel so far.
Great question CTV in our view can be both.
We are very excited about our advancements in full funnel.
Because we believe that the more data we have from all aspects of the funnel the more effective we will be driving sales driving conversion. So.
<unk>.
In the market generally CTV as an upper funnel tactic.
The work that we have made and the work that we've put in that we talked about in the first after our after our.
'twenty one.
Call, we talked about our content object our metadata work.
With fraud prevention.
Prevention or work with Comscore and QR codes, a lot of things that we're doing to make post CTV view.
More focused on performance, so that's something special to add Darren, but we believe that.
CTV generally speaking in the marketplaces in upper funnel tact and we believe we're bringing more of a lower funnel. We're a whole funnel focus to it where we can use the data from the upper funnel to drive the lower funnel and we can use CTV on its own.
Performance driving tactics.
Okay.
So the way I interpret that answer that $2 5 million of CTV revenue. So far is not thinking is this upper funnel and you guys are going to try to really push people into full funnel consideration for CTV I have that right.
Yes, I mean, I think I think the customers that we're talking to about CTV are very intrigued by the way that we use data and that many of them are customers.
On other screens and they're very interested in using our CTV product because we bring so much more to it we're not just trying to find.
Screened and users on screens were trying to find who is going to view an AD and then taken action after viewing that at and we have capabilities and we're making investments to do that better.
Okay cool because I agree with you I think bottom of funnel a super exciting great. You guys are on the cutting edge of that let me ask one financial question.
Revenue growth up 11% in Q1, we're going to have to lower our second quarter estimates of Smiths to growth of about 13% and yet youre holding full year revenue estimates and I'm thinking gross revenue right now.
<unk>, 22% to 25% so that would imply in the second half of this year, you have something like 30% year over year revenue growth to actually meet your full year guidance given the lower estimates for Q2 can you can you tell US why you think you can accomplish that.
Absolutely I'm glad you asked that question.
Our 'twenty two plan assumes directionally the same level of revenue contribution in the first two quarters as our 'twenty one plan our business is seasonal and seasonal for 10 years. So we are we are fully on track with the second half of the year taking us.
Two our annual objectives.
Our annual forecast is prudent it is it is not aggressive we believe that we have exactly what we need to get there and none of the.
None of the forecast even contemplate the contribution that we're going to get from the investments that we've made on the revenue side.
The sales and marketing.
If we track the.
The contribution by quarter that we did last year, we achieve our goals if.
If we increase that we do even better so we feel really good about where we are given the investments that we're making.
To contribute to the second half of the year.
Okay, and it's not your point of view that this year second half is much worse.
<unk> with more uncertainty impacting ad.
In last year's second half that's not your point of view I guess.
No we're not seeing that at all I mean, I think last year's second half had its challenges.
Certainly.
And there was a lot of uncertainty I think with the pandemic ending.
And a lot of the optimism there we feel really good we're not seeing it we're not seeing any pullback or concern.
Worth, noting from our customer base, we see a lot of optimism in terms of marketing and advertising.
<unk> products and services across all of our different verticals, it's nice to see a lot of the vertical is coming back strong after being challenged in a pandemic environment.
Economic shutdown environment. So no we're not we're not seeing that at all.
Fantastic. Thank you so much for your answers really appreciate it very helpful. Thank.
Thank you Laura.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Andrew Boone with JMP Securities. Your line is open.
Good afternoon, and thanks for taking my question Jim.
There were three main products that you highlighted in the press release as well as in the script in terms of inventory marketplace Optimizer, and then full funnel campaign and <unk> optimizer.
Okay.
Outside it's a little hard to understand the importance of these various products that they go live is there one that really stands out in terms of really being able to move the needle.
And then what else can you really excited about in terms of the business that you think investors should be focused on and something that can change conversion rates and really drive performance for advertisers. Thanks. So much.
Yes. Thank you Andrew Great question so.
We realized when we share some of these <unk>.
Product and tech and data science advancements that many of them are quite technical but we also feel that it's valuable to share.
The level of innovation.
That's taking place.
I'd add Darren and our view on the market and our view on capturing a larger share of the market.
Is that the more differentiation that we have and the more ability that we have to drive a efficient cost per action.
So we're able to drive sales.
For less cost than the other platforms the better we do that the more opportunity we have the more revenue we have.
So.
It might seem technical but our ability to leverage upper funnel and mid funnel.
Outcomes.
As part of our CPA models, which are really the models that drive conversion activity and the lower funnel and our ability to do that better our ability to do that faster our ability to get models tuned and actually.
Okay.
<unk> based on conversions.
Drives that CPA down and makes our customers happy when our customers are happy we get bigger budgets and we have more opportunities.
We are excited about it I think it comes through and just the level of effort and the work that we're putting into this.
Advancement, but it's really going to move the needle for our business. When we think about things like model inherited the ability to take multiple models and use model inputs from one model in another model again, our cost per action model. The goal is advertisers.
Advertisers spend money with us they want to spend as little money as possible to drive action and that is what.
That is what we do that is our mission and the better we do that the more revenue we can drive.
With respect to like the conversion influence reporting that's just about us getting credit for our work. So we can drive and we can do different things at different stages of the funnel. We can use the CTV upper funnel or mid funnel, we can use rich media to drive engagement and do different things.
And really drive user engagement and then at the end of the day, we're trying to sell a product for our customer and our ability to connect the dots and identify and quantify the contribution of those media investments at different phases of the funnel again drive confidence with our customers because we're showing them. This is what you spent your money on.
This is what we delivered we are delivering a really really transparent.
Bergen of programmatic digital advertising and I don't think its ever been done before.
Thanks, so much.
Thank you Andrew.
Thank you our next question comes from.
Kronos with benchmark your line is open.
Great. Thanks, Good afternoon, Jim a couple of things I wanted to touch on.
I think the publisher unification.
Inventory unification tool is super interesting, we just hosted teeth today.
Got it.
Access to a ton of premium publisher inventory can you talk with SSP that really kind of highlight.
Kind of that extensive access and we're starting to see some repackaging of some of their own.
Tools and inventory or access to kind of different bracket, there and obviously you guys use.
<unk> SSP side of the market and I'm wondering to the extent that this sort of I know this hasn't historically been true for you, but if it deepens and potential relationships potential potentially deepens our relationships with some of the asset piece that you can get access to start sort of alerting them that hey.
This tool will simplifying a lot bracket, so that way in a brand safe <unk>.
Selective way.
Can kind of direct advertisers to your premium publishers, and thus drive up yield across them.
I'm curious if that is a potential use case for that.
Dan That's a great question, we are having some really exciting conversations with our publisher partners are ssp's, specifically about the way that we can make there.
Inventory more valuable.
And at the end of the day, there's some conversations and market about direct integrations with publishers and maybe not going directly through the not going through the <unk> for us. The real issue is do you have the best supply do you have tools to remove noise.
And resold inventory and bad supply and those types of things and we believe that our significant advantages in those areas really drive success. So our partnerships with our SSP are very valuable to us and we think that we can use our machine learning to drive profitability for.
Them as well and they see it because they know that we're able to use our machine learning to find pockets of inventory that might not be considered premium by them, but they are premium if they have the right users and if theyre the right opportunity for a given product or service. So our ability to use machine learning to find those pockets of value.
<unk> that might not be obvious to everyone is very intriguing to a lot of our SSP partners.
Got it that's helpful and then.
As far as kind of touched on the performance side of CTV.
You guys also announced after Q1, the DB certification I'm, just curious how that helps conversation.
To spur conversation if that was a contributor to accelerating growth.
Absolutely it's a component.
To having a best in class solution that we have zero tolerance for IGT and fraud, so having that certification having those low rates.
Of of fraud, and invalid traffic is obviously a key part of the solution. It's table Stakes in our view.
So definitely it's a part of our story, we use data both to drive performance, but part of doing that is identifying garbage eliminating it and not wasting your money on it.
And can you expand on the.
The partnership in the quarter declined to announce who but.
Obviously more variables better ml better output.
And throughput I'm just curious.
How we should be thinking about order of magnitude.
Investment ROI.
ROI on that just any incremental color you can give us.
Yes, so the more the more data attributes.
The better ability that we have to augment.
Our programmatic bid request with data means that our models have more to choose from when deciding what variables are driving conversions. So we've done really well in the past and we've had a couple of hundred variables generally speaking now.
Now, we're going to have 700 more variables.
Many of those demographic variables tie back to a location.
And that is going to give both our models more.
Optionality in terms of what variables feature selection what variables are going to drive conversions and then we can provide a lot more of a detailed accounting to our customers as to where conversions came from and I think that's an important part of the story as well so I mean it might.
Moving from a pure audience.
Mindset to a machine learning mindset requires an understanding that the data.
Data at a very granular level is going to drive the conversion, but there's also an expectation on the part of the customer that after the campaign you can tell them the story, where did the conversion activity come from.
Part of these new data integration in addition to having more for our model to ingest analyze and consider in deciding where to bid and again. This is all in microseconds.
We can also tell the story after the campaign.
These are where your conversions came from.
And that's interesting and Thats something that customers are quite interesting interested in talking about.
Got it.
We appreciate all the color and nice.
Nice start to the year exit Q I thought was pretty good relative to us. So it looks like it's moving in the right direction.
Thanks, Tim.
Yes. Thank you so much again.
Thank you there are no other questions in the queue I'd like to turn the call back to Mr. James <unk> CEO for closing remarks.
Thanks, a lot just wanted to thank everybody for listening today.
In closing.
We believe there has never been a better time to be part of the outdoor community, we have big plans and we're executing those plans.
And we look forward to sharing more updates as our work continues we are grateful for our investor support and we will continue to work.
Very hard to execute these ambitious goals again, thank you everybody very much for joining us today, we appreciate it.
Yes.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
Yes.
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