Q3 2022 Innovid Corp Earnings Call
Greetings and welcome to <unk> third quarter 2022 earnings call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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I'll now turn the conference over to friendly Johnson with Investor Relations.
You may now begin.
Thank you operator, and everyone for joining us today welcome to innovate third quarter 2022 conference call before we begin I would like to remind our listeners that certain information provided on this call may contain forward looking statements. The safe Harbor statement contained in today's earnings release also pertains to this call if you've not received a copy of the release please.
Yourself, the Investor Relations section of the company's website change.
Changes in our business competitive landscape technological or regulatory environment and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today, our historical results are not necessarily indicative of future performance.
Such we can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them, except as required by law. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures and managing that business.
And believe they provide useful information to our investors reconciliations of the non-GAAP measures to the corresponding GAAP measures where appropriate can be found in the earnings presentation available on our website as well as our earnings release and our filings with the SEC.
Today, we are joined by <unk> <unk> co founder and CEO , who will begin the call with a business update then he will turn the call over that Tanya Andress testing innovative CFO , who will discuss the financials of the company.
During the question and answer session towels, pillows, and co founder and CTO well soon be joining.
Lastly, I would like to highlight that we are planning to host our first Investor day on Wednesday November 16th 2022 in New York City. Please look for details of the Investor Relations section of the company's website.
With that I'd like to pass the call over the weekend Nutter Zika. Please go ahead.
Thank you for me.
Let me start thinking all military veterans and of course their families for their service.
Happy Veterans day.
Even produced strong results in the third quarter of 2022.
<unk> revenue at the high end of our guidance and extending EBITDA expectations.
Revenue increased by 47% year over year to $34 $5 million on an as reported basis.
CTV continues to break records for the business accounting for 50% of the revenue excluding TV squared in this third quarter.
We also generated a net loss of $11 $8 million and a positive adjusted EBITDA of $2 $9 million.
This exceeded our expected range of negative $2 million to breakeven.
A testament to the proactive measures, we are taking to improve margin through the post merger synergies.
We are pleased with our ability to deliver top line growth despite ongoing economic uncertainty.
We feel confident our base will continue to thrive due to our leadership position in the CTV and broader converts to the industry.
During the third quarter.
I think our position through focus on expanding the scale of the innovative platform across the full gamut to Missouri personalization and measurement.
I mean, the existing partnerships as well as introducing new partnerships to drive incremental reach and impact in particular, we see the plan to launch AD supported offerings for leading streamer, such as Disney plus Netflix and Warner Brothers Discovery.
You want to drive the next wave of growth for our business.
And if it has been trusted time and time again to power Tech automation for some of the biggest properties in TV advertising.
Includes NBC you for our deliveries in the past and upcoming Olympic Games C. B S. Empower interactive ads during the Super Bowl and people, who rely on innovate to implement creative compliance tools to achieve what we believe to be among the highest quality levels and the industry.
I'm pleased to share that innovators are working to be one of the few technology providers empowering to deliver ads on December eight when Disney plus launches its AD supported tier.
This expansion of our long standing partnership with Disney family dating back to our initial integration with Hulu over a decade ago.
The symbolic of their confidence in our platform quality controls and the ability to keep pace would it be masters concurrent live streaming.
In support of Netflix recent basic with ads watch we have also updated our asset validated to adhere to Netflix new creative specifications.
How's our advertising clients to continue leveraging innovative for streamline validation of TV ads and consistent workflow delivery across all major streamline publishers, including Netflix.
According to its own recently commissioned study one of advertisers biggest pinpoints for converged television advertising.
Recommendation.
We believe the market needs unification across platforms and inventory types.
The open internet and walled gardens or like to deliver against the promise of the new television landscape.
We believe <unk> is uniquely suited to rise to this call due to our independent stands and the depth and the coverage of our software infrastructure across converged television and digital.
I'd now like to build on the update we provided in the past earnings call and show more details on the current and future state of our business per usual I will provide these updates within the context of our four key growth drivers, which are volume growth product upsell geographic coverage and client base retention and expansion.
First volume growth once again.
You had a record breaking quarter for EBIT accounting for 54% of total video impressions volume.
Excluding TD square.
Reinforcing that the shift from traditional to streaming is growing and persistent.
Our overall CTV volume grew 36% year over year.
On spacing UFC TV, that's been according to E marketer, which is projected to grow 23% year over year in 2022.
The consensus is that linear TV advertising has passed its peak, which presents new opportunities for advertisers to adopt traditionally digital centric strategies on the big screen in the home.
We believe the demand for automated technology to help unify converge television advertising would expand as viewership increasingly pivot to the streaming space.
And innovation will continue to deliver volume growth.
Let's now move to our second growth engine product up so we believe the power of our platform to unify delivery personalization and measurement in one place is a huge value add to marketers and we are succeeding in up selling our products.
In the third quarter advanced creative revenue grew 24% year over year and measurement revenue grew 23% year over year, when not including our Tvs quite acquisition.
On or before our basis.
Last quarter, we discussed the launch of our expanding global cross platform measurement offer innovative speak with.
We launched <unk>, the first global unified Cross platform measurement solution directly integrated with absorbing data and create a personalization.
Advertisers need for simple scalable independent and actionable view of their investment across all forms of TV.
Since then.
<unk> has gained significant traction in the market and has been adopted in a task order by leading advertisers such as Astrazeneca Biagio ebay Universal parks and more.
In the third quarter, we on boarded several new large advertising clients, including American family insurance to our personalized station module. We also expanded our partnership with Verizon and long standing AD, serving clients and one of the largest TV advertisers in the U S who chose to consolidated both delivery and personalization.
Moving away from Siloed Tech partners.
They are growing their antibody partnerships into personalization Verizon has been an early adopter of our recently debuted at advance auto optimization capabilities.
These recent upgrades of our personalization offering allow advertisers to intelligently adjusts what at consumer we're seeing based on statistically significant understanding of which combination of elements drive speaks to ports.
In a recent announcements, Steve Murray director performance marketing Martech and analytics at Verizon said and I quote.
<unk> auto optimization in their neighborhoods within Decisioning to constantly iterate for the Kpis you care most about.
Simply activated but highly customizable eliminates providing the technology needed to make everyday enhancements a reality.
And of course.
Our personalization capabilities. We're also expanded in the third quarter to support dynamic creative optimization via unique purchase data sort of partnership with NCR solutions.
Through this collaboration inhibitor evidence can now leverage real time, NCS data two shifts dynamic creative delivery based on in store sales a revolutionary way to enable always on intelligence for data driven D. C O campaigns.
Another key and highly differentiated component of the innovate platform is the CTV SDK.
That enables advanced creative features such as personalization commerce and more in connected TV environment.
This quarter, we are proud to share that there'll be extended our deployment after end of an SDK to paramount plus extending years of partnerships.
We expect to continue to upsell and bring innovative new products to our impressive list of customers.
Let's move on to our third growth engine geographic.
The expansion.
We successfully introduced new capabilities beyond the U S with global entities in the third quarter, notably.
Notably we were selected by leading demand side platform. The trade desk to enable always on incremental reach analysis across CTV campaigns in the U K and Germany powered by the innovative XP measurement platform selected users of the trade desk now have access to our suite of cross platform incremental reach analysis insights for advertisers running.
Campaigns on CTV. These insights allow advertisers to surface increment Valentino streaming beyond linear TV as well as unique reach by publishers, including publisher about publisher analysis by uncovering the overlap. These advertisers can maximize household level reach for their programmatic CTV strategies in a highly fragmented market India.
Announcement of this integration, Steve Martin Vice President of data partnership EMEA, and APAC and the trader said well.
Our CTO adoption steadily increases across the globe, we are making incremental reach analysis available to advertisers that have audiences fragmented across channels and screens directly within our platform selected advertiser can now activates innovate always on automated measurement platform to ensure they reach the right audience says on the channels, where they are actually watching them.
<unk> CV content.
Expansion into other European countries, and Australia is expected in 2023.
Now, let's move to our final growth pillar expanding our client base.
This past quarter, we on boarded or a dozen new advertising clients. Many reference throughout this call.
Two very smiles over our platform spanning AD delivery personalization and of course measurement.
We have also diversified our client base and have significantly grown our pipeline of mid market advertiser opportunities before closing I'd like to address the economy.
Despite ongoing concerns about macroeconomic conditions and if its business has continued to grow.
A testament to the strength of our market position and underlying product offerings.
CTV continues to search boosted by the combination of new platforms of inventory such as Amazon Thursday night football moving into the streaming space.
While we expect to continue to see positive gross overall, we remain mindful of the economic uncertainties that are impacting the advertising industry and we're taking proactive measures to monitor and manage cost relative to the topline growth.
As we head into the last quarter of 2020, we remain committed to our core 2022 strategies and we'll continue to make investments. We believe are important to capitalize on the growing converged space.
As always we remain pragmatic in our investment approach that will continue to focus on driving efficiencies to boost both overall profitability of the business, while we focus on continuing to grow topline revenue.
I'll now pass the call to Tony who will go into greater detail regarding financial performance and guidance.
Tanya.
Thank you and good morning, everyone.
We're pleased with our third quarter results, we delivered substantial profitable growth on an adjusted EBIT basis.
Already increased by 47% year over year to 34.5 Milan.
The growth was driven by a number of factors.
Revenue from measurement, which following the acquisition of tennis glad became a significant trading and dry therefore innovate generated 23% of the total quarterly revenue.
That's up from 1% of the reading here in Q3 of Spanish VAT in Iran.
And it grew 23% on a pro forma basis.
Second.
Revenue from AD, serving and personalization services contributed 77% of total quarterly revenue and grew 16% year over year in aggregate.
Personalization grille at the higher rate of 24%.
Alright survey and personalization rubbing your closely correlates with the AD impression volume third to innovate platform.
In the third quarter CTV impression volume accounted for 54% of all video impressions up from 46% last year and it grew 36% year over year.
Mobile impression volume decreased by 1% and accounted for 33% of all video impressions.
And desktop impressions increased by 6% and accounted for 13% of all the impression.
We expect CTV AD, serving personalization and measurement offerings to continue to drive our growth.
Turning now to geographic breakdown.
This is the main contributor to our revenue.
Counting from 92% of total revenue and growing 48% year over year on as reported basis. This is the global leader in CTV adoption and innovation and our main focus for deployment of investments.
Our total international revenue grew 38% year over year on as reported basis contributing 8% of the quarterly revenue.
International revenue were impacted by the headwinds some strengthening of the U S. Dollar, which also is expected to continue through the fourth quarter of the year.
Moving to cost now.
Total operating expenses for the third quarter, excluding depreciation amortization and impairment costs were 38.6, Milan and grew 31% on as reported basis.
Nearly 90% of that increase in the quarterly operating expenses is attributed to the inclusion of Tvs third in our financials and increase in stock based compensation.
In the third quarter, we activated Pos noninterest synergies.
It drove savings in operating expenses and benefited our bottom line.
Focusing on operating efficiencies and the resource optimization is critical while navigating uncertain macroeconomic conditions.
In addition to driving cost not just synergies it'll continue as measured head count and operating expense growth, while investing in innovation that further advances our leadership position in this space.
Net loss in the third quarter was 11.8, Milan on an EPS of negative 0.09.
It was impacted by finance expenses of 5 million, primarily derived from our warrant being with values due to market volatility affecting the company's share price.
Adjusted EBITDA for the third quarter was $2 9 million, representing 8% adjusted EBITDA margin.
And then increase in adjusted EBITDA from one 5 million in the third quarter of 'twenty 'twenty. One what was the result of revenue growth improvement in overall operational efficiencies and synergies realized following the telesphere acquisition the impact of does the operational efficiencies and synergies is not 10.
Perry These actions will have a long lasting effect as a company we're laser focused on long term profitability and margin growth.
Moving to our balance sheet, our cash and cash equivalents ending balance was $46 five nealon.
Given our margin profile, we believe that we're well capitalized and this at this time.
The total common stock outstanding as of September 32022 was 133.5 Neil N.
Finally, I would like to grow our overall guidance.
Traditionally the holiday season, and the fourth quarter are the strongest for our industry.
However, this year macroeconomic uncertainty inflationary pressure and still lingering supply chain issues may create strong enough headwinds to offset the standard seasonal increase in advertising spend.
Considering the current macroeconomic environment, we are tightening our previously stated revenue range for the full year Fannie or 'twenty two.
We expect revenue to be in the range of 127 to 129 million.
This guide reflects 41% to 43% year over year growth on as reported basis, and 17% to 19% year over year growth on a pro forma basis.
We're also pleased to share that we expect near breakeven or positive adjusted EBITDA for the full year of <unk> 22, an improvement from our previously shared guide of negative minus six or better. Consequently for the fourth quarter of 'twenty 'twenty. Two we expect revenue to be in the range of 34 to 36.
Mellon.
Reflecting 31% to 39% year over year growth on as reported basis.
6% to 12% year over year golf on a pro forma basis.
We expect positive adjusted EBITDA in the range of 1 million to 3 million.
With that I would like to hand, the call back over to <unk> to take your questions. Thank you.
Thank you Todd and thank you all for joining us on this call. We'll now open the line for questions.
Operator, Please go ahead.
Thank you at this time, we'll be conducting a question and answer session.
If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
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One moment. Please so we poll for questions. Thank you.
Thank you and our first question is from the line of Andrew Boone with JMP Securities. Please proceed with your questions.
Good morning, and thanks for taking my questions I'm trying to back into organic growth for <unk>. It assumes kind of on my numbers of mid teens level.
Like it's slower than the CTV to me. So just help me understand what's going on with chair is Google taking share CTV growth being driven by smaller advertisers that you guys aren't addressing or is the CTV market overall, just slowed down to some level. That's below that so anything on share would be helpful. And then as we start to think about next year you guys.
As highlighted the post merger synergies three.
<unk> help us understand how you're thinking about opex and cost for 'twenty three thanks, so much.
Andrew Good morning, Thanks for the question.
So in terms of the and Daniel I'll say, a few words and it'll move to you.
In terms of actually in terms of sheer we where the country were not seeing shrinking share with maintaining our very high core customer retention rate, that's something was bigger between 95% to 98%.
The earlier deal wouldn't be reported it.
And we actually closed more and more our customers and logos as we shared so we definitely by far when more customers than than lose and our share continues to increase.
I would also say that CTV in general as a percentage continues to grow as we mentioned, we and I believe it will continue over every year, we'll break records with how much of our business is driven swiftly CTV. So actually while CTV continues to grow in spite of the headwinds are where you you see.
E.
A flat or decline you see it around mobile and desktop is by the way I believe some other companies reported in Q3. So CTV is actually growing 36% year over year in third quarter, which is higher than with E. Marketer suggest is for this year in spite of the headwinds actually CTV. We believe is more immune.
Two overall pressure than desktop mobile display and other formats.
I don't know that if you if you have anything to add to that.
Well, we can move to the next one and said okay and thank you to the cuts could you be a CCAR nexgen is remaining our strongest growing category. If you compare it to a desktop and mobile.
Continue this way on the operating expenses are absolutely. We are very proud that we mentioned.
Delivering great results really a profitable sustainable growth in Q3, and that's actually due to the actions that we're taking synergies.
Proving our operating efficiencies and we expect that to be effects to be felt also in the following quarters.
And on that yes.
Please go ahead.
Yes on post merger efficiencies, obviously, we you know given the headwinds that we started seeing earlier in the year, we accelerated the integration of T V squared.
From both cost efficiencies and process and organizational structure efficiencies and we're all reading seeing the fruit of this labor.
As we we obviously are very.
Tuned to what's going in the market, we have a very good perspective of the different verticals are different publishers walled gardens.
Our programmatic different devices, we see all the trends because we cover a massive part of the industry. So we're definitely seeing the pockets of softness and it's more more volatility than softness. So what we're gonna do is balanced between the constant growth and we will believe that will absolutely continue to see a girlfriend CTV advertising because.
Of the switch from linear to CTV. So the eyeballs are moving thanks, Ben is moving an AD based model.
Specially with Netflix is pushing forward Mr. Plus wishing forward. So we're definitely expecting to see that as a as a tailwind at the same time as we all know there was some softness in overall spending on advertising. So we constantly need to monitor that and we have plenty of levers that we can pull because you know innovate invest massively innovation sometimes too.
And three or four years ahead and as we demonstrated in Q3, it's relatively easy for us to change some levers in terms of how we invest.
To make sure we stay a with EBIT positive with minimal.
Yeah.
Thank you.
Sure.
Our next question is from the line of Sean Patel with Susquehanna. Please proceed with your question.
Hey, guys nice job on the execution I had a few questions.
I'm the first one.
Regarding kind of your comments on Netflix how do you guys think about the size that opportunity.
And two I guess somewhat related you know with all with the launch of all of the new large Avon services that we've either seen or going to see and the increase in available inventory.
Is that all positive for you guys. Given how you are you know you're you're more attached to kind of volume trends for CTV or are there any you know any risks that we should be aware of.
And then last question.
Do you think that CTV advertising could be counter cyclical in the sense that the weakening macro could lead to more cord cutting and accelerated shift towards CTV. Thank you guys.
Thanks, so much this item so.
Definitely yes.
<unk> is a very exciting topic for us.
We feel it's a huge win when ethics for many years was a you know as opposed to AD based model and it was actually leading that the empty AD based model for them to make this change and this was kind of a headwind from us since Dino are a round.
What's going to happen if it was we always said and it's now clear that Eva one that the people want to have the options and definitely at base and a lower cost of free cost or a way to consume content at scale has always been part of the $200 billion of television advertising in the TV industry. So absolutely. This is a very positive signal.
Yeah. So there are several benefits Netflix doing at base to your point the media prices, whether they go loring VDI because of our additional inventory none of them, saying it doesn't necessarily happen, but it's actually it doesn't really affect us in theory, you know it actually allows them.
More brands to participate and increase the volume so it's a classical supply and demand situation. So if prices go down if the budgets are set which by the way they're not necessarily set right now, but if the budget is set let's say the $100 million.
You can reach a broader audience you can better target so that actually means more volume. So since we're a volume base and not media percentage base, there's no pressure on our pricing and actually you can and should see volume going up. So it's basically you can see it as Netflix and Disney plus and others, pushing more and more people from linear television.
Connected television and that the benefit of both Disney plus and Netflix is the global aspect I believe Netflix.
Started with 12 countries and a lot of people consume Netflix around the world.
So until now Youtube was the only kind of Beall Mega power.
Hmm.
But you know now Netflix will push CTV are all over the world and we have a global footprint.
And then your last point in terms of downside there actually a third positive about this it proves the point that the future of TV is not about one or two major platform that Google for search Facebook for social Amazon, So commerce or what we referred to big tick up.
<unk>, where we believe that the future of TV, it's leased several major a major.
Power's debt are not going to be limited just to a couple. So while you may see some of them building kind of whats referred to as walled gardens, they're at analytics doing creative et cetera.
Large breasts type of our customers will always need a platform that is neutral that we'll be able to deliver to all these platforms. You know Netflix just released their own spec for creative and we'll be able to aggregate all the data back from all these platform. So if you're a procter and gamble or Apple of Horizon, you have to have a platform, which is a single point of contact.
For delivery creative optimization and measurement and this is exactly what we do and the other alternative is Google. So you can assume that if it's up to a netflix or Disney or a roku or trade desk. They would rather open their gates and have better workflow and efficiency with somebody who's not competing with them and that that is.
The nature of neutrality. So the bottom line of this is that we're extremely excited about this.
And Doug do you want to take the Kansas.
Cyclical question.
Sure.
So to your question, if we think CTV CTV advertising as a counter cyclical Linda.
We definitely agree with your with your point of view is that with Karen.
Economic stater it pushes more people to disconnect the court I think.
As many other people attest to our sports is probably the biggest driver for that so as.
As you've seen with Thursday night football lunching on on Amazon Prime driving a lot of prime subscription and Amazon.
The all time high the number of people watching streaming concurrent <unk>.
All of those events are drivers of viewers into the streaming platform and for US. This is all this.
This is all great tailwind as the as you mentioned in your in your question. We're a volume based business. So we really don't care, who wins that the very important point about our business is that it.
Like I mentioned as well, we're not leaning towards specifically a walled garden or an open internet, we monetize everything and as long as volume comes up it's positive for us. So we definitely think that the ptv could be a winner or even in the downturn.
I mean, just one point, we care, who wins, we care about our customers the brands, who we believe can achieve more via CTV.
And you know kind of actually a fragmented none monopolistic environment is good for everybody and of course, the end consumer which we care a lot about we believe the experience of watching television is going to get more better and better or less disruptive more relevant with a better ROI for both the user for the time to viewers and the marketers.
For their media dollars that will be better targeted personalized and better measurement in terms of effectiveness. So it's it's a it's a win win for all.
Yeah.
Great. Thank you guys.
Yeah.
Our next question is from the line of <unk> <unk> with Evercore. Please proceed with your question.
Okay. Thank you Zika could you please remind us E M.
How differentiated innovate XP is I mean, there are a lot of other.
Emerging.
And competitive options for measurement and attribution in connected TV somehow understood that you have.
The scale and data advantage, because you've covered a lot of households.
But remind us please how the measurement capability is different and why and why you would win and measurement and then second is how long does it take when.
It comes on.
New supply comes.
In the market, so Disney plus it can be integrated with Disney plus so that you can serve a netflix et cetera, but what is the process like thank you.
Thank you so much as whether for the questions in terms of our innovate XP just to remind everybody that the Ada with excuse the outcome of the combination between our own CTV analytics.
Product that's been available for more than two years now that did not get a lot of traction because the feedback we got from our customers was you know CTV is great. It's the future its digital but what's really been interesting to see linear versus CTV. If you want to see so like reach and frequency overlaps.
Attribute share and efficiencies all these things you have to include both and this is what led to the acquisition of T V squared immediately right after our IPO and for the first integration. So innovative speed was lunch. It in June is the first version of those two worlds combined CTV world in the linear world to a joint product and we're already.
Seeing great adoption for this product as you mentioned, whether there's there are several kind of I'll call. It unfair advantages. When we go to market is first of all we have a very strong client base that already use US you know hundreds of advertisers are getting close to half of the top 200. So these are large advertisers has been working with us for four <unk>.
Five seven years, we have older CTV data not just the future. We also have backwards older CTV impression by impression data. So from a data perspective workflow perspective efficiency perspective, a dose system. They are.
Already integrated and will be leaving 2023, we're going to release further features that rely on this integration and the reason that I'm, saying. This is an unfair advantage because the chances that either even the largest measurement provider the legacy one or some of these.
Kind of early are challengers that you mention are will have a very hard time to almost no chance to built a CTV like an AD serving CTV infrastructure like we've been building for 15 years and winning share from Google that combination. We believe is very very powerful and we're already seeing.
The early adopters for that I'm, not putting myself that to your point there are the other platforms in the market and definitely it's not going to be an overnight, we're going across the market, but we proved that we are very persistent and very focused so between the combination of the AD serving the measurement and also the creative we just mentioned the creative optimization.
Nation with Verizon, but Verizon we launched the feature.
The optimization is actually you can get signals all sorts of measurement. So if you look at the future that we're constantly delivering personalized creative measuring the outcomes across CTV and linear and optimizing and this is something that is extremely unique and we don't believe there's any other company in the world right now that he's doing the delivery the creative.
Musician measurement without the media component like a neutral so from that perspective were.
Feel very comfortable and that's why we made the acquisition and it was said, though you said many I would say that they're actually not that many and I believe the headwinds that are now in the industry. That's impacting everybody will also impact the ability for smaller companies to raise additional funds are challenged those who are not profitable like we are so I think theres also.
This type of economy there'll be the very significant headwinds to somebody who tries to enter either add surfing or a measurement.
Do you want to talk about the process of Onboarding platforms, like Disney plus and others.
Yeah.
Of course.
So thank you very much wetter for for the question.
So for US a very core component of a winner within the value that we give our customers the ability to deliver ads everywhere.
So there is north of 8000 different apps and services and devices that were integrated with and we're constantly making sure that we're aligned with TC pluses is one of them.
And we were ahead of the launch we're working with the team on aligning the quality of the ads and the other data.
Access in terms of the device idea or any type of other component that we can get access to <unk>.
And any other workflow tools that are that is needed all of that is encapsulated in our Hawaii that the annual benefit customers wanted to deliver an ads across anywhere on the internet as we said earlier in an open internet.
[noise] platform a walled garden.
Or any other place.
It all encapsulated in adverse simple workflow and they don't care that are under the Hood. There is a there was very distinct integration by the way just a shameless plug next week, we're doing our Investor day, and we're going to showcase what are what I'm, describing right now as part of her demo.
Okay. Thanks al Thanks Mika.
But just to complete the answer I believe you asked about how long it takes.
Yeah.
Doug described the incentive.
The 890% of the answer which is the incentive of those large platforms is because I'll. Just give you. An example, based on the data that Netflix released in their press release that they named a nine acre now nine advertisers that our launch partners of those nine seven of them are innovate at serving customers.
So the picture from that perspective, it is clear to them that we are is definitely a significant force in the industry and we posed no threat to them. So you could imagine it's in their best interest is in class Netflix.
To partner with us to make it seamless for their customers to deliver ads into those environments from a workflow perspective from a measurement perspective. So you read that these conversation at to your question on timing take place, sometimes six months or earlier.
And we both I believe the destination platforms indefinitely us.
There is benefit to be a partner being as close as possible to the launch of a platform or at least the let's say post beta launch like the more scaled launch of the platform.
We believe we should you know it makes sense to everybody that we will be a part of that workflow because it's it doesn't cost the platform any additional dollars. It doesn't pose any threat, we don't do anything where their data and actually make still work in their life much easier from a streamline workflow perspective.
So bottom line, we're talking six months to three months timeframe, but the more important part is there incentive to do it in disincentive potentially to do it with others.
Okay that makes sense. Thanks Heiko.
<unk>.
Thank you.
As a reminder, even for star one to ask a question at this time.
Our next question is from the line of Laura Martin with Needham and company. Please proceed with your question.
Hi, there and so my first question is I want to add.
A follow up on Stephens question and ask the other side what are the top three reasons people do not.
Adopt X P. When you run into conflict of why they're not taking it one of the top three negative. Thank you.
Okay.
Of course, I need to think festival, hi, Laura I don't need to think harder on that because it's hard to imagine why would somebody not.
But you know joke aside I mean look the it is a new offering right. If you remember you know TV squared came from which is a great benefit to US mid market. You know there. The classical you know legacy clients will be more performance television advertisers like a peloton at godaddy, which is a great place to be.
Because I think you asked us in the previous calls like you know kind of the future of CTV in terms, if you're going to see more and more new entrants that are smaller that are more going to be driving towards performance. So that's why TD squared build a really phenomenal product <unk> to track you know performance, reaching frequency and what SP does it takes this and our go to market takes it to the large customer.
That's right and an enterprise sales, it's always anywhere between six to 12 to 14 months to begin with you come to a large organization with a new solution, even if its from an existing vendor you have the relationship with the actual adoption can take three to six to nine months easily. So we have that so from the time of at least in so I would say it's.
Time, but also some of them already use obviously almost everybody's using Nielsen so someone who is using already something so its about delivering a new platform.
Making clear what the benefits are for them from this new platform.
So I would say that's the either an incumbent and that takes time like a classical enterprise sale and they are relatively new the combined offering is very unique but also relatively new so there's the classical graph of early adopters you know late adopters and all that stuff the benefit is a very hot.
Subject right now, it's something that everybody wants to talk about so in terms of taking meetings.
We're you know we have hundreds of meetings since the launch of XP. So theres a lot of interest in it. So there is engagement there in interest and then you'll get the classical cell cycle of our enterprise sale. So I believe we're gonna see more adoption and more growth throughout the 2023.
Great and then you guys. My second question is on you guys are in a really great position to look at what's happening vertical delivery. So we're hearing.
It's sort of mixed things about retail have you seen AD campaigns get pushed off it canceled in Q4, and let's go ahead and I would love your insight into when Youre looking at your actual deliveries, what's going on with auto versus retail versus CPG could you give us just a let's go out the vertical mix.
The deliveries of these guys.
Yes, I would say it's.
It is more.
Maybe even call it a tactical and strategic and I'll explain what I mean, the last that we see some we saw something very significant in the vertical.
Bases and that's probably you remember all of US remember frankly have scars from that is that the auto which was this a supply challenge issue with microchips and it was just like industry wide and it everybody cut since then we haven't seen a very dramatic shift you know in dirt attainment kind of post Covid entertainment in the movies like that.
We're not seeing that type of a volatility on a vertical basis well. We are seeing is specific brands right. So if it's like we did like all other our colleagues in the industry did when we look at our marketing budget or efficiencies, we all would it be profitable.
So does the you know the large organizations. So you see much more attention to Roy you see much more attention to return on ad spend.
To performance to measurement and much quicker.
So if sometimes you know it will be enough for us to see the spending in January February with a Brian and know how exactly the rest of the year is going to look like because they planned. It a year ahead, absolutely know what say if she gets stuck without a product do you have supply chain issues you have economical headwinds you. Even if you were a larger Brian you make very quick adjustments.
So I think what we'll see on the brand by brand. So you can be in the same vertical and one brand was decided to cut our budgets and maybe another bundle decided to make.
Use this opportunity and be more aggressive so we're seeing more volatility by large brand and I would not say I've seen it with other companies, but like reports from other companies. We don't see a very significant train on a very specific like we saw in a year ago. I think it is going to be more tactical on a brand by brand basis.
And just in general you know orders back all of the verticals that were very hurt you all back but they're all you know it's the economy situation. Its more generic thing so if there's a softness overall.
Okay.
Super interesting. Thanks, so much for answering my questions. Thank you.
Okay.
Thank you at this time, we've reached the end of our question and answer session. I will now turn the floor back to management for closing remarks.
Okay second Hum.
I was I was writing another answer here.
So I just want to take the opportunity to while these are you know are economically interesting time in volatile. We're as you may hear we're extremely confident.
<unk> about the future of CTV the future of innovate we're capitalizing on investments we've done for the last five and 10 years. So we feel I'm actually very excited about the future of what we can bring to market the market in an efficient and profitable way throughout next year and service our clients I want to thank you all for taking the time to join us today.
Oh, you know if it is on the front lines of CTV, and we're preparing yourself to continuing to capitalize on the future and TV of TV and by no means at no point falling behind but it is our job is to lead the innovation for the benefit as we discussed today are the advertisers that publishes and of course the consumers for.
A better experience yeah, we hope to see you all in the upcoming Investor Day next week in the New York Stock Exchange I hear it's going to be exciting and interesting were going to discuss our vision, but we're also going to bring a life product demo on stage. So shows the actual products in action, which is always exciting and we're going to unpack to CTV, how we see it kind of back to Laura's question.
And that's because we're going to talk more about how we see the future of CTV across.
It's very exciting and complex.
Landscape.
As always I want I'd like to thank our talented and dedicated employees. During this period loyal customer base and of course, the shareholders for trusting us.
As we continued our mission to re imagine TV advertising. Thank you all and have a great happy veterans day.
Hi.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.