Q3 2022 Viant Technology Inc Earnings Call
And again to everyone joining you're currently holding for today's volumes third quarter 2022 earnings conference call.
For your patience in holding will be getting started momentarily.
Hello, everyone and welcome to <unk> third quarter 2022 earnings conference call. My name is calcium and I will be your operator today before I hand the call.
Over to defiance leadership team I'd like to go over just a few housekeeping notes for the program. As a reminder, this webinar is being recorded and after the Speakers' remarks, there will be a question and answer session. If you plan to ask a question. Please ensure you set your zoom named to display your full name and firm now if you'd like to ask a question. During this time.
Please use the raise hand function located at the bottom of your screen. We thank you for your attendance today and I will now turn things over to Saundra Magnus with via technology Saundra over to you.
Thank you Kelsey good afternoon, and welcome to <unk> technologies third quarter 2022 financial results Conference call.
On the call today are Tim Vanderhoof, co founder and Chief Executive Officer, Chris Vanderhoof, Co founder and Chief operating Officer, and Larry Madden Chief Financial Officer.
I'd like to remind you that we will make forward looking statements on our call today that are based on assumptions and subject to future events risks and uncertainties that could cause actual results to differ materially from those projected.
We undertake no obligation to update these statements except as required by law.
For more information about factors that may cause actual results to differ materially from forward looking statements and our entire safe Harbor statement. Please refer to the news release issued today as well as the risks and uncertainties described in our registration statement on Form 10-K, and other filings with the SEC.
During today's call. We will also present, both GAAP and non-GAAP financial measures additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the news release, we issued today and in our filings with the FTC.
I would now like to turn the call over to Jim Vanderhoof, Chief Executive Officer of Iron Tim.
Thank you everyone for joining us for our third quarter earnings call.
We posted good operating results in the third quarter amidst a challenging environment.
Total advertisers spend on our platform grew 19% year over year ahead of market AD spend growth rates as we continue to gain share in the digital advertising market in.
In the third quarter revenue was $48 8 million a decrease of 4% versus the prior year period and contribution ex Tac was 32.1 million a decrease of 6% versus the prior year period.
Once again advertiser spend on the platform was up significantly on a year over year basis and existing customers continue to transition their spin from fixed price contracts to master services agreements paying based on a percent of spin.
This dynamic creates a drag on revenue and contribution ex Tac in the near term, but we expect that drag to subside in 2023.
Or a Delphi D. S. P continues to resonate in market as a leading self service platform to plan buy and measure digital advertising across channels.
We continue to expand customer relationships as many chose to consolidate their AD spend into our platform.
Adelphi gives buyers the ability to programmatically access publisher inventory saving them time and money.
We allow buyers to target valued customers based on a variety of criteria and interests that are relevant to the customer.
This results in a higher ROI for the buyer.
Most importantly, we provide detailed reporting on campaign performance. This helps the buyer to assess the effectiveness of the campaign and make any necessary adjustments.
These benefits are even more necessary in challenging economic times as buyers look to boost the return on their advertising investments.
Before turning the call over to Chris I want to take a moment to address what we are seeing across the macroeconomic landscape.
While the growth in advertiser spend we saw on our platform in Q3 was strong we saw a deceleration of advertising spend throughout the quarter and it is continuing into Q4 specifically.
Specifically deceleration in bellwether categories like retail has been significant and we will provide more detail on this slowing growth later in the call.
Our company is nimble and able to quickly pivot as needed. This has been a crucial benefit during these uncertain times, allowing us to stay ahead of the curve and adapt as necessary.
We delivered a 3% reduction in non-GAAP operating expenses in the third quarter compared to the previous quarter and we will continue to make changes to our product priorities. So the company is in position to generate positive EBITDA in 2023.
While we continue to adjust our cost to be more in line with the economic outlook. We continue to see strong long term tailwind I would like to remind everyone of the three big tailwind that have bias poised for future growth.
First Pete.
People still prefer to watch their favorite movies and TV shows through streaming applications.
With large companies like Disney and Netflix releasing even more AD supported content, we expect the growth rates for connected TV to be significant in the future.
Marketers will continue to shift more of their budgets away from traditional TV in favor of screening.
The addressable witty of connected TV enables marketers to achieve higher ROI than linear TV and.
And we see ourselves as a beneficiary of the more than $60 billion still to be shifted the programmatic over the next five years.
Next up is emerging channels.
We have always focused on emerging channels as they are the green shoots to large future tailwind.
Connected TV used to be an emerging channel for us, but it is now one of our largest channels.
The next two big emerging channels, our streaming audio and in game advertising.
Streaming audio has become the go to method for listeners to consume music books and podcasts.
There is a significant opportunity for marketers to take advantage of programmatic buying in this very fast growing and important channel.
Although streaming audio only makes up 6% of total spend across our platform today.
It's addressable witty and measure ability are almost identical to connected TV.
The growth rates of streaming audio over the past year show that it definitely has the potential to be a game changer in the industry as advertisers better understand how best to incorporate audio into their media plans.
As for the in game advertising opportunity. This sector of the industry is moving quickly with new AD formats and ways to place ads programmatically.
<unk> recently announced that we are the first D. S. P to offer our customers programmatic access to buy ads inside of Minecraft.
Reaching millions of highly engaged users who spend hours in this unique environment.
This entertainment for may be relatively new to programmatic advertising, but it has already gathered a large fan base, resulting in many potential future possibilities for the digital advertising industry.
Last our focus on building measurement and performance based AD buying capabilities will deliver strong growth in any type of economy.
Our goal is to be the most measurable platform for our advertisers delivering the highest ROI.
Buy into long term view on the opportunity ahead remains as strong as ever while we must acknowledge the challenging business environment. We also believe that the rich capabilities and flexible nature of our platform in times of shifting consumer spin makes our offering all the more valuable.
Now turn things over to Chris to discuss some key strategic updates across the business Chris Thanks, Tim.
In the third quarter, we continued to expand our capabilities and partnerships, bringing more value to our customers while building out one of the leading self service platforms on the market today.
We continue to see marketers and their agencies seeking independent Omnichannel DSP that is fully self service.
As industry, leading integrations across all channels and a strong measurement offering that accurately calculate return on ad spend.
Again, reinforcing our leadership position as the D. S. P with the strongest measurement capabilities a point of differentiation that brings strong tailwind of untapped spending behind it.
Over the last year, we have seen strong new customer wins with the number of active customers, increasing 10% year over year.
Additionally spend per active customer increased 18% over the same period.
As advertisers experienced strong campaign performance they continue to consolidate their spending and a topic across all channels.
The vast majority of buying customers spend through two or more channels with an increasing number of spending across more than three channels.
In Q3, we saw strong year over year growth in advertiser spend across our largest channels.
Connected TV growth accelerated from 2% in Q2 to 13% in Q3 and audio grew 51%.
Audio now represents 6% of total advertiser spend and is now on a growth trajectory. So what we saw similar to a few years ago with connected TV.
We also saw strong growth of 25% across mobile and desktop.
The fact that we are omnichannel, meaning connected TV desktop mobile audio digital out of home and in game is a major benefit to advertisers given the uncertainty in the economy.
It means that we can give them greater flexibility to shift budgets that drive the highest rois a benefit that is not present in many walled gardens.
Open web programmatic platforms that operate across all channels will be the beneficiaries of the spending fallout from walled gardens.
I'd also like to comment on the macro environment with respect to spending on our platform.
We saw strong growth in the third quarter in categories, such as travel and financial services, we recorded record growth in political advertising spend in Q3, although I would caveat that by saying this category represents a small percentage of overall advertiser spend on our platform, but gives us confidence to continue to focus on growing this.
Category in future periods.
Although we had a strong year.
Although we had strong year over year growth in spend of 19% in the quarter.
We did experience a slowdown in certain verticals, we continue to see lower than normal spending in verticals like automotive and CPG. While we also saw our fastest growing category retail began to show signs of softness in Q3 that is now extending into Q4.
Amid the backdrop of a slowdown in spending we have been saying close to our customers.
We are continuing to see greater focus by clients around measurement, which ultimately means they want performance based results from their AD spending.
These factors were narrowing our product roadmap focus as we move into next year.
One of our biggest product priorities will be to continue our industry leading work in measurement.
A substantial number of our customers rely on our unique measurement capabilities to drive campaign performance as.
As performance based buying increases throughout a recession, our platform leadership and measurement will allow us to consolidate more spend.
As campaign performance continues to be a top priority for advertisers, we continue to invest in products utilizing machine learning and artificial intelligence to further improve campaign performance in an automated fashion.
Our clients are saying a lot of success in adulthood with these products. This will not only drive more spending on our software, but it will save our customers time and money.
I've talked previously about our focus on building automation within our software as a core differentiator and this area is an important component of that.
On the partnership front, we recently announced an integration with snowflake that will allow any snowflake customer to match their customer data with our household I E.
Many advertisers data companies and content owners are hosting their data with snowflake.
As loss data is available in the midstream interoperability with companies like Snowflake, we'll offer content owners to easily authenticate their users to allow for addressable advertising to be measured.
This will be a big win.
For content owners and advertisers as the industry moves towards responsibly, delivering addressable advertising, while eliminating reliance on Apple and Google.
Lastly, I'm extremely proud of the industry wide recognition of our category leadership, where.
We were once again named as a leader in demand side platforms by G too and their fall 2022 grid report.
Additionally, this quarter G. Jus also recognized by as the leader in their enterprise grid report for cross channel advertising.
This third party validation based on the strength of our self service platform for Omnichannel advertising stems directly from the value we provide to customers.
The platform advances we are focused on today will help set us up as we move forward for sustainable long term growth and ongoing market share gains.
We are an independent buy side platform that is well positioned in the market with a fully self service solution industry, leading integrations across all channels and our leading measurement offerings.
Let me now turn things over to our CFO , Larry Madden to discuss our financials Larry.
Thanks, Chris and thank you everyone for joining us today before I begin I'd like to remind everyone that we've posted a presentation to our investor relations website with supplemental financial information to accompany today's presentation.
As Tim mentioned, we are pleased with the level of advertiser spend across our platform in Q3, especially considering the current state of the economy.
Advertiser spend across our platform increased 19% in the quarter over the prior year period, reflecting continued market share gains in both revenue and EBITDA were within our guidance for the quarter.
This afternoon I will be discussing some of the highlights of our Q3 performance the key financial and operational drivers during the quarter and our current expectations for Q4.
In terms of top line metrics for the third quarter as I said advertisers span across our platform increased 19% over the prior year period and 1% over the prior quarter.
On a year to date basis through September Advertiser spend has increased 30% from the prior year.
In the third quarter revenue was $48 8 million, a decrease of 4% versus the prior year and 5% versus the prior quarter and contribution ex Tac was $32 1 million a decrease of 6% versus the prior year period, and an increase of 1% over the prior quarter.
As a reminder, revenue from our percent of spend pricing option is recorded asked is recorded after deducting traffic acquisition costs or Tac, whereas fixed price revenue was recorded before deducting tax therefore as the percent of spend pricing option continues to make up a larger part of our advertiser spend mix relative to the.
The prior year period, we will have a near term drag on our revenue and contribution ex Tac growth rates, while the impact of this mix shift has negatively impacted revenue and contribution ex Tac growth rates in 'twenty two relative to advertisers spend growth rates, we have seen such growth rates begin to converge over the last two quarters and we expect.
That trend to continue to continue to improve as we move forward and the impact of the mix shift becomes less significant.
As we mentioned on our last earnings call beginning mid Q2, some customers began reducing their normal spending levels due to the adverse macroeconomic environment.
This trend continued throughout Q3 with year over year growth rates decelerating throughout the quarter.
The pullback has been especially pronounced across our fixed price pricing option, which tends to be less resilience during challenging macroeconomic times.
Conversely, our percent of spend pricing option has demonstrated much greater resiliency as evidenced by our customers continuing to adopt and increase their spend using this pricing option.
The growth in spend on the platform in 2022 continues to be driven by new and existing customers expanding their use of our platform through our percent of spend pricing option.
Kris and customer adoption of our percent of spend pricing option has always been our goal as we believe it creates a deeper relationship with our customers and provide for more consistent predictable long term value creation.
We believe that the lifetime value of a customer using our percent of spend pricing option is significantly greater than that of a fixed price customer as a percent of sprint customers ramp spend over time, they consolidate budgets on a platform leading to higher retention rates in Q3 customers using our percent of spend pricing option on average.
Nearly three times that of customers using our fixed price pricing option.
non-GAAP operating expenses, which is defined as the difference between contribution ex Tac and EBITDA totaled $33 9 million in the quarter, representing a year over year increase of 23% and a quarter over quarter decrease of 3%.
The year over year increase was the result of investments we've made over the last 18 months to enhance our product capabilities and expand our sales and technology teams, we have been investing to scale the business accelerate growth and drive market share gains.
However, as Tim discussed given worsening macroeconomic conditions, we significantly slowed the pace of investment in Q3 and reduced non-GAAP operating expenses in the quarter by 3% versus Q2.
For the quarter, we generated adjusted EBITDA of negative $1 8 million, which was in line with our expectations for.
For the quarter, our non-GAAP net loss, which excludes stock based compensation totaled negative $4 4 million and non-GAAP loss non-GAAP loss per diluted share of class a common stock was negative six cents for the quarter.
From a liquidity perspective, we ended the quarter with $200 million in cash 229 million of positive working capital and no debt.
With that I'll now turn to our guidance for Q4.
Many of our advertisers are navigating a challenging environment with higher inflation and weakening consumer demand, which creates a volatile demand environment.
Given this uncertainty we believe there could be a wider range of outcomes for Q4, which is reflected in our guidance.
The pullback in advertiser spend we experienced in Q3 due to the worsening worsening macroeconomic climate is continuing in Q4 since June we have seen year over year growth rates and advertiser spend decelerate each month, which spanned across our fixed price pricing option actually declining over that period.
As I said fixed price tends to be less resilient during.
During adverse macroeconomic times as compared to percent of spend.
Additionally, Q4 is being negatively impacted by a challenging fixed price comp in Q4 of last year and.
In Q4, 2021 we did exceptionally well in the jobs unemployment customer vertical across fixed price. These customers spend significantly to closeout 2021, and an effort to capitalize on the heightened demand for labor.
In 2022 customers across this vertical have significantly reduced spending across the board as the labor market has cooled with many companies either freezing hiring or announcing layoffs.
As Chris mentioned growth across our largest customer vertical retail also slowed significantly in Q3 as a result of the challenging macroeconomic environment that trend has continued into Q4 and we now expect span across our retail vertical to decline in Q4.
Based on these factors, we expect advertising spend to decline in Q4 between 11% and 20% year over year on.
On a quarter over quarter basis, we expect advertising spend to increase between 1% and 11% over Q3 levels, which is well below the normal seasonal uptick we typically see in Q4.
For Q4, we expect revenue in the range of 52 million to $57 million, which represents a year over year decline of 31% to 37%.
Pronounce decline in revenue is due to expected declines across our fixed price pricing options due to the factors discussed partially offset by continued growth across our percent of spend pricing options.
The expected year over year decline in revenue across our jobs and employment customer vertical is driving about half of the total expected revenue decline at the midpoint of our guidance for Q4 the.
The good news is that we do not expect potential continued weakness across jobs and appointed vertical to have a material impact on 2023, our spend throughout 2022 across this vertical was de minimis due to the challenges in the labor market.
Contribution ex Tac is expected to be in the range of 32 to $35 5 million for Q4, which represents a year over year decline of 27% to 34% importantly.
Importantly in Q4 contribution ex Tac is expected to decline less than revenue. This is being driven by the increased mix of spend across the percent of spend model versus fixed price versus the prior year.
This is a trend we expect to continue going forward as fixed price becomes a smaller and smaller percentage of total spend.
In Q4, we also expect advertiser spend growth rates and contribution of Tac growth rates to further converge as fixed price continues to represent a smaller share of the total mix. Another trend we expect to continue as we move into 2023.
In terms of non-GAAP operating expenses for Q4, we now expect a range of 33 five to $34 5 million, which represents a year over year increase of 8% to 11% in a quarter over quarter change of negative 1% to positive 2% as as we mentioned given the ongoing macro.
Certainly, we intend to rigorously prioritize and aggressively manage costs for 2023.
We intend to align our cost structure is such that irrespective of the challenges that the economy may pause, we are positioned to deliver positive EBITDA for the year.
And finally, we expect EBITDA in the range of negative one 5 million to positive $1 million in Q4.
In closing, while inflation supply chain shortages and higher interest rates. Among other factors are contributing to a difficult market and certainly represent a near term headwind we remain confident in our ability to deliver long term top line growth and EBITDA expansion.
We believe our points of differentiation will enable us to successfully capitalize on the market opportunity in front of us.
We are confident that our strong balance sheet and disciplined cost management. During these challenging times, we will enable us to weather this economic storm and come out the other side even stronger.
That concludes our prepared remarks today and with that I will now turn it back over to the operator to open the video to your questions operator, great. Thank you so much Larry and as a reminder to the audience. Please use the raise your hand feature located at the bottom of your screen to indicate that you do have a question.
And our first question will come from Laura Martin with Needham <unk> Company.
Hi.
Please go ahead.
Okay.
Lori you are currently muted if you'll go ahead and yes, right now I got it.
Sorry, no problem allergy and still working on my phone I got you. So the first one is <unk>.
One of the great things about your I D. Tracking has been it's been a household I D and one of the things. We're hearing from D. C is that what the regulators may go. After next is I S T privacy.
Would that affect your household I D or is your household I D not dependent on I S. T data in the home.
Our household IV is not dependent on ISP data in the home. So I don't believe it would have any impact fantastic cancer, Okay great.
So the other thing is I just want to make sure I understand the guidance. So we're going to go from 19% growth in Q3 to negative 11 to negative 20% growth in Q4 am I reading that right.
That's correct. So what do they do they just all left and went to Hawaii. How is this kind of de sell possible at a 90 day period.
Well as Larry mentioned, we've seen continual deceleration since about June of every single month as the economy continues to worsen I think the biggest impacts on ours jobs was a pretty significant contributor that's that's contributing to up to a large chunk of that spend decline.
That industry being in a very different place this year than last year and the second one I would point to as retail spending we are expecting to decelerate year over year.
So guys are canceling their AD campaigns as what that means for fourth quarter I think that you're just not seeing the holiday the bump in holiday spending that you always see.
And you can see.
Where does that we're not really seeing it.
Into the fourth quarter.
Predominantly in retail.
That's a that's the big driver hubs of where we've been doing extremely well or been our fastest growing category.
But yeah, we just really haven't seen a lot of it show up in the fourth quarter.
Okay. Thanks, guys.
And one point on that system be clear, it's not that we lost any of those customer there or anything like that we just haven't seen the increase in spending.
I would add one thing as well I mean, we're seeing more on the fixed side fixed price side of the business percentage of spend side continues to grow.
We expect it to grow in Q4, we expect it to grow at faster than the market.
And we expect that to continue going forward.
And now percentage of spend is by far the majority of our spend but the impacted fixed price is particularly a negative on the revenue growth and the ex Tac growth.
Thank you.
Thanks, Laura.
We'll move on to Andrew Boone with JMP.
Yeah.
Hi, guys. Thanks for taking my questions I wanted to touch on that last point in terms of thinking about holding on to these clients through the downturn can you guys talk about what youre doing there to just make sure that whether this is six months a year a.
A few weeks that they are there on the other side of this yes. So the first thing I would say is that we're certainly seeing a greater focus as I spoke about earlier around performance based campaigns as opposed to in a more brand based campaigns. So we see a shift going on there.
We think we excel there so and I know that by specifically think within within retail for this really reaches more broad than just retail we're.
We're doing really well there.
What I'll say, though is how long it lasts.
I can't predict what the most of this is masking.
All or nearly all of this is macro so I cant predict on whether that lets up.
But what I'll say is about an open web platform that is in all these channels are those omnichannel like we are it gives them the option of ability to continue to shift their spending with the same company in the same software to get the highest ROI why is that important.
Quite a bit of that single channel companies like some of the walled gardens are strictly a mobile app if they stop performing in that mobile app or a particular operating system. They pulled the budget. So our system is set up and youre seeing and I've talked about this to.
We're now you know what.
The majority of our customers are buying and three or more channels, which is incredible and it shows you how they can easily shift spend.
And the platform does that in an automated way for them to reach reach whatever ROI goals that they have so I'm not worried about losing these customers at all I don't think Thats a factor it really is macroeconomic and.
And.
I would say tuned for most of these customers, it's not that I think our businesses are extremely damage.
I think that is the uncertainty of what's going to happen in the economy and consumer spending uncertainty is what's giving pause to a lot of these monitor both in retail and in other categories.
And you know go into the deck Ottoman TPG were down 21% year over year, we've highlighted auto in the past as a vertical that's troubling you guys. I think you know what sounds like a year and a half ago.
Can you just talk about the puts.
Processed and you guys are going through in terms of hardening our platform for diversification that you guys have cost for advertisers that hasn't done a good job of adding more clients and just where are you guys in terms of just broader and broadening the exposure to various verticals.
Okay.
Yeah, well look we invested in our sales force pretty substantially leading up to this point and I think they're out pounding the pavement to find the different categories of advertisers that are looking for programmatic advertising or a demand side platform. That's out there. Most are currently utilizing a DSP and we're having active conversations with them regularly.
I think in terms of diversification or revenue concentration Larry do we have any concentration issues.
No not not all not all retail still is our largest.
Even though it is declining at this point.
But theres no one and we group our verticals pretty broadly Theres no one vertical that's more than.
18, 17% of our total spend.
But what I will say in terms of diversification Andrew I'm just reading in your question a little bit.
On the the jobs and employment as Larry stated, we don't have there's no material impact on that on us on a go forward basis. There was a big heavy up in that category towards the end of the end of last year.
And that that category is largely dried up.
Understandably outside of that we are I will say that we are constantly broke a lot of new categories. Every few years. This new category of advertising that pops up or.
Or becomes a large so I'll give you an example iconic casino in and online gaming space.
We've done extremely well there that was a category that largely didn't Jessica years ago.
So we mobilized pretty quickly around that.
And as as typical recessions.
Go some categories are down a nuanced new ones pop up and we usually are pretty quick to attack those.
One more and then I will pass it on.
But you guys highlighted EBITDA in 2023, clearly you've made significant investments in the sales force over the last kind of year can you just talk about your priorities in terms of investments that you guys want to maintain or continue to focus on as we think about EBIT.
EBIT profitability for 'twenty three.
I think we're going to remain opportunistic around our priorities will be around product and engineering.
Although you know what.
What I will say is we're not going to we're not going to spend like crazy there, we're going to be measured, but we know that there was great talent market.
And it is a great opportunity to pick up that talent, we have a great product roadmap as well, but we're really confident in but just overall, what we will say is that we're going to be measured around our.
Around our cost next year.
And regardless of what happens in the economy, we're going to set up going into the year that.
We'll deliver positive EBITDA in 'twenty three.
Thanks, guys.
And as a reminder to the audience. Please use the raise hand feature located at the bottom of your screen and tick to indicate you have a question and we will now hear from Maria <unk> with Canaccord.
Yeah.
Okay.
Yes.
Thank you so much for taking my question.
Just wanted to expand on the last question around verticals and my apologies. If this was already covered so what we're hearing about very early signs of recovery in the auto vertical is that something that you have sort of seen on your end and could this be sort of an area of upside over the next couple of quarters.
Well at a icon motive go ahead Larry.
I was going to say I can tell you that as you know we've talked about it a lot but that vertical has been down probably eight quarters at this point.
It represents a relatively small percentage of the total.
But we are actually seeing signs in Q4, interestingly enough of that starting to turn to the positive.
Okay.
Great. Thank you so much that's all I have.
And we'll now hear from Andrew <unk> with Raymond James.
Great. Thanks for taking my questions.
You've spoken towards this point I think a little bit previously in the Q&A session.
To the extent that the reduced spend outlook is the result of companies either shutting down AD standard or pulling back on AD spend more broadly or just kind of consolidating the number of partners that we're that they're working with.
I'm just trying to think of.
The differences between those two scenarios and how easy it would be to reacquire that business once either spend or the relationships came back yeah.
That's a good question thanks, Andrew.
No I don't know in our case, it's not that we've lost those customers that have shut down.
Spending entirely with the exception what I would say of this jobs vertical and again I don't we haven't lost those customers.
It's just due to the environment.
They they have really nosedive a lot of spend there.
But what I will say is yes to your point of bold, we're fully confident we still have those those clients, they're still on our software and it's more of a deceleration of the spend.
But we fully confident they will not stand comes back.
It will be in our software yeah, and just to remind everyone. This is the benefit of programmatic advertising, it's the flexibility to pause budgets when your business needs to pause budgets, but programmatic advertising is the first to turn back on as soon as they're ready to Reaccelerate and we've seen this cycle. Many many times and I'm sure. This is just the law, while they're fixing their own business and.
The programmatic advertising will be the first button that they pushed to turn back on.
Got it. Thank you and then one more if I could reading through the slide deck. It looks like you are you reiterating your intentions for 500 million in revenue by 2025% to 35% EBITDA margins I guess in light of the tough conditions now and assuming that that maybe last center early.
2023 can you kind of just draw that line for us in and how the thinking around the trajectory of that has changed thank you.
Yeah, I mean based on when we look at our current customers the cohorts and the expected growth with expected new customer acquisition, I think where that could go awry of new customer acquisition has a hiccup in the first half of 2023, maybe in the outer cohorts as we see it though we believe we have the customers on the platform and the scaling.
Of those cohorts is continuing as planned we talked about the percent of spend business model still doing very well and we are winning customers and they're consolidating more spend so I don't see any need that that puts risk to that 2025 number in my mind.
Chris anything else that's good.
Great. Thank you.
Thank you Craig Hallums, Jason Cracker has the next question.
Okay, sorry about that Oh, why don't talk about the cadence of Q3 Q4, just from a channel perspective, you highlighted in Q3, the Reacceleration of CTV and audio just as you go into Q or are you still seeing more resilient there or are there specific patent.
Already that are falling off versus others that are holding up better.
Yeah, I mean, we didn't give any hi, Jason we didn't give any any guide around that.
I'd have to get back to you on those splits I mean, I think what we're seeing is that really we are seeing an uptick.
Look at our guide we are we are seeing an uptick from Q3 overall by I I would expect it to be largely consistent with what we saw in Q3.
But I don't have a split for you right now on where we are in the quarter and let our guide admittedly.
Admittedly was a little bit wider than we normally again.
And part of that is just we're seeing such a late planting cycle very similar to coming out of Covid. There was a real late planting cycle coming out of Covid really for the balance of 2020.
And we're seeing that again and so we still while we still think that that and I know speaking with some clients are still budgeting up in the air even for December .
Which typically you don't you don't see it's already largely planned by this point so tough for me to give you a read on that but but just off the top I would say I would expect to be largely consistent but broadly we've.
<unk> seen brand advertising budgets give way to performance advertising budgets and I think that's the overarching shift that most advertisers have right now Larry.
Was just going to give a little bit more specific it is in fact kind of consistent across the channels.
With the exception being our streaming audio which continues even in Q4 to grow.
Albeit a relatively small percentage of the total.
Okay.
Later on maybe stick with you just on the pricing model.
When a customer welcome when an advertiser all fits the model some of that pullback will that give you the opportunity to convert them over to personal phone or does that usually lead the monoclonal earned the opportunity to get them back on the platform in Colorado.
Yeah, I think it's more kind of reducing those budgets and or pausing some of those budgets.
Chris mentioned, where we're not the clients aren't leaving.
Theres always the opportunity and were always pushing clients to convert to <unk>.
Percentage of span.
It really depends where they are and theyre kind of programmatic wise.
Cycle in terms of whether they have the training capabilities et cetera.
But we're constantly talking to our fixed price clients about converting so that doesn't change we will do that in tough times on good times.
Thank you.
And we will now hear from Chris <unk> with UBS.
Okay.
Can you hear me Okay. Yes go ahead Chris.
Great Hi, Chris on for Lloyd just maybe digging into the advertising and guide for <unk> and trying to understand the delta between the download of inbound 20 that you're guiding to should we be thinking about I guess, how should we be thinking about retail playing into how you would end up is down 20 versus down <unk> 11 and <unk>.
Would it be would it be an acceleration of those decelerating trends are we already at negative spend in October just curious how we should be thinking about retail specifically playing into that guide.
Yes.
Larry do you want to take that.
Firstly in terms of kind of where we are obviously octobers in the bag October it was we saw a.
It's a low single digit decline.
And consistent really with the last four or five months each each month since really June the DSL increases. So we're seeing that into November that in November is going down a bit more of an October went down.
On the retail side is impactful because we do expect that to decline as I said earlier that is our largest vertical.
And so the impact of that is certainly an important part of it in terms of the range I mean, it's just given the significant uncertainty out there.
We're just being pragmatic in terms of giving a wider range than we ordinarily would.
Especially mid quarter.
Just not fully understanding exactly what's going to happen we have a good sense of what's going to happen, but we.
We felt the wider range made sense given given the increased uncertainty.
Got it and as we kind of think about those like tier two tier three type of verticals the long tail for you.
Is that at all or is there an assumption baked into that guidance that it starts to the weakness that you're seeing in a couple of these vertical starts to widen out or is it really we should be thinking about retail and jobs is already kind of baked in.
I think that I think that is true there are I mean I was in and what we went through with cover there are certain verticals that actually are doing better.
But certainly retail jobs.
Travel for example is still strong even in Q4 forgive me a sense.
Okay.
To answer specifically certainly it's baked in to the guide.
Okay.
Retail and.
Oh I just lost my train of thought jobs jobs. Thank you.
Got it okay to further weakness in retail, but not in an accelerating pace of that reach out to us.
That makes sense.
Certainly accelerated downward from Q3.
Okay, Okay, and just maybe stepping back too.
Just thinking about 'twenty, three and the return to profitability.
How should we be thinking about like scenarios for you to return to double digit type of EBITDA margins for next year, what would need to happen for that to play out.
I think as we look at as we look at it it will take an acceleration of spend to get back to that double digit EBITDA I would just say we.
Slowed the pace of our hiring plans pretty tremendously relative to what we were thinking it started the year and we kind of will stay ahead of the curve in terms of just overall operating expenses. They are very much under management's control theres nothing that we feel like we have to keep spending on to be able to achieve growth in the future. It's more about just managing through this.
As you know.
Mid mid to near term hiccup.
Understood. Thank you.
Okay.
That does conclude our question and answer session for today Tam, Chris or Larry do you any of you have any closing comments for today.
That's it thanks for joining the call and we'll see you next year great. Thank you so much Christian everyone. We thank you so much for joining US today again. This does conclude today's earnings call. We thank you all for your participation and look forward to seeing you next earnings happy holidays, everyone.