Q4 2022 Innovid Corp Earnings Call
[music].
Greetings and welcome to the innovate fourth quarter 2022 earnings conference call. At this time, all participants are on a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now my pleasure to introduce your host John Gilliam innovate Investor Relations. Thank you. Please go ahead.
Thank you operator before we begin I'll remind you that today's call may contain forward looking statements and the safe Harbor statement in today's earnings release available on our Investor Relations page also pertains to this call changes in our business competitive landscape technological or regulatory environment and other factors could cause actual results to <unk>.
For materially from those expressed by the forward looking statements made today, our historical results are not necessarily indicative of future performance and as 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, todays call may include non-GAAP financial measures, we use these non-GAAP measures and managing the business and believe they provide useful information for our investors. These measures should be considered in addition to and not as a substitute for our GAAP results reconciliations of the non-GAAP measures to their corresponding GAAP measures where appropriate can be found in the earnings.
Presentation and earnings release available on our website and in our filings with the SEC hosting today's call are <unk> individually co founder and CEO Tania, Andrea Passman, innovate CFO and Tulsa loosen co founder and CTO, who will participate in our Q&A session I'll now turn the call over to Zika to begin.
Thanks, John and thank you all for joining the call today.
I'll start with a few comments on the current environment and its impact on innovate some high level thoughts about the fourth quarter and some recent business highlights.
Our CFO Tania and drip Caspian will then provide details on our performance and initial 20 clinics three guidance followed by Q&A.
I'm excited to share with you an update on its progress, including our fourth quarter and full year 2022 results.
The recently completed our first full year as a public company and I'm proud of how our team has executed against our strategic objectives in a challenging environment.
In 2022, we had a number of important accomplishment.
Our full year revenue grew 41% year over year, we continued our drive towards positive adjusted EBITDA and our balance sheet remains strong.
Measurement became a significant revenue driver for innovate this year following our acquisition of T V square and represented 20% of our full year annual revenue.
We're excited about the synergies realized through the acquisition as well as the growth opportunities ahead.
We built meaningful client relationships and added a number of exciting ways, our clients make a strategic decision to invest in our critical independent infrastructure software and continue to do so despite headwinds in advertising volume and lighter spend across the overall market.
We remained very focus on the things that we can control.
Executing against our strategic objectives, leveraging the synergies and accelerating the growth of our Tvs quite acquisition cross selling and deepening our customer connections.
Ship from linear to CTV continues to drive our growth as we add more customers and gain more share in.
In Q4, we reported 13% revenue and 19% impression growth in CTV compared to the same period in 2021, our CTV accounted for 49% of revenue and 52% of total video impressions, excluding TV square.
For the full year total revenue grew 41% to $127 $1 million and we delivered $1 $2 million in adjusted EBITDA.
Ah results offer a clear evidence that demand continues to grow despite difficult advertising environment.
Let me cover some additional highlights from the quarter. There are three key metrics that we report annually to demonstrate how mission critical our platform is for our customers even in a challenging environment, our net revenue retention or in our or in 2022 was 111% and our core client count in 2022 increased by 60%.
Overall <unk>.
Equally important our core client retention rate was 90%.
Simply put our customer base is growing.
And the customers we have are not only staying with us they are using our platform more and more every year I'm happy to note recent new wins, including CMI Media Agency plus one other large player in the pharma and health care vertical I'll also note several recent client cross selling expenses, including Carnival and good luck as well.
Several partnerships, including Fox the trade desk, Vizio and Qinetiq, We recently announced two very exciting leadership updates. In addition, an a propulsion.
To further align our leadership around operational excellence the.
Additionally, David Henry.
Innovate new Chief commercial officer, who leads the commercial alignment across our revenue related functions, including sales marketing and account management. The promotion of Ken markets previously, our Chief client officer, the Chief operating Officer, who now leads operational alignment across the organization, both Dave and Ken are up and running in their new roles and are closer.
Partnering to deliver on scale and profitability.
I'm very excited to have them both in this new important positions and finally in November we hosted our first ever Investor day, and the replay is still available on our website.
It was a great event with members of our senior leadership team highlighting our strategic initiatives and the significant opportunity ahead of us.
Innovative approaches they want has always been a truck, we don't buy or sell media at all.
And we firmly believe the advertising industry needs to separate critical infrastructure and measurement technology for advertisers from media buying and selling.
That's how we built and run our business since day one.
Focus on advertisers very clear desire and need for transparency and alignment of interest with their tech providers.
The recent antitrust suit filed by the Department of Justice against Google, who monopolizing multiple digital advertising technology products. We can forces our view that neutrality in this industry is critical to our customers and to the industry at large we would encourage everyone looking to understand the current state of competition and the total addressable market opportunity.
And the advertising and advertising technology sectors to read the complaint.
We're glad to see that the industry is becoming more aware of the risks of mixing both business models under one umbrella and we're looking forward to showing our existing and potential customers. Just why our approach is better for them and better for the industry as the industry evolves innovate is in a leading position let me focus on how we are directly address.
In the current macro environment and why innovate is positioned for success in 2023.
I'm confident we'll continue to take market share from Google campaign manager.
When the economy in the AD market bounces back we believe we are well positioned to see growth multiplier effect as our growing customer base ramps back up and our clients activate more features of innovate capabilities are.
Our platform remains mission critical for our customers and our AD server personalization and measurement capabilities remains highly differentiated.
Second we remain laser focused on profitable growth, we expect positive adjusted EBITDA for the full year of 2023, which Tony will discuss later.
And we reiterate our long term target of 30% plus adjusted EBITDA margin over the long run.
Finally, we're maintaining a strong balance sheet focused on a maximum capital flexibility and Optionality. We believe our quarter end cash position provides more than enough runway to comfortably fund the business as we shift from burning to building cash.
I'm proud of what innovate and its team has accomplished in 2022 and I'm, even more excited about the future with that I'll hand, it over to our CFO, Daniel <unk> Caspian to discuss our fourth quarter results and the 2023 financial outlook Daniel.
Thanks, Anthony and good morning, everyone. We are pleased with our Q4 and full year results, particularly given the challenging macroeconomic backdrop and plenty planted and the fourth quarter.
Q4 revenue grew 30% year over year to $33.7 million.
Reported basis or 5% on a pro forma basis.
Measurement, which has become a significant training and dry their falling or can you square the position.
16% on a pro forma basis and represented 32% of total revenue in Q4, and 70% of full year reading it.
And serving and personalization services were up a combined 2% year over year and represented 78% of total revenue in Q4, and 80% of full year revenue.
As a reminder, our AD serving aircraft transition revenue closely correlates and AD impressions volume surged to the EBIT plot for.
Q4 C. T V volume grew 19% year over year and represented 52% of all media impressions.
This is up from 46% in the previous year.
Mobile volume decreased by 6% and accounted for 35% of Halsey deal impressions.
That's the volume decreasing by 8% and represented 13% of all the impressions.
As the overall AD environment bounces back weeks that with growth in our core CTV business well continue to outpace all other channels.
Continued to grow as a percentage of all their old media impressions.
Additionally, our unique combination of CTV ads Saturday personalization and measurement solutions will further boost our growth overtime.
On to our geographic breakdown.
In Q4 U S revenue.
27% on a reported basis and represented 18, 9% of our total revenue in the quarter and 90% of full year 2022.
The U S remains the global center of CTV innovation and adoption and then we're in the the deploys most of its investment.
International revenue grew 57% year over here and represented 11% of quarterly revenue up from 9% in Q4 last year.
As you know our target clients are composed of the largest global TV advertisers, we defined if core client as an advertiser and publisher that generate at least $100000 of any already.
Note that prior to acquiring <unk>, sorry, I did they own included their causes that definition.
In 2022 our core clients generated approximately 88% our annual revenue versus 91% last year.
At year end 2022 we had 174 total core clients, what's going well.
41 from TD spread versus 109, and here end of 2021.
Excluding <unk> contribution innovative core clients growth exceeded 20% in 'twenty two.
Core clients annual retention was 90% on a pro forma basis down from 97% retention of core innovate platform clients in 2021 it prior to the acquisition.
Your core clients, that's rather than get retention was 111% compared to 127% in 2020 one.
So anything until retention metrics were impacted by the expansion of our core class definitions and the inclusion of a different client mix fall indebtedness that integration.
Both metrics, however have shown strong healthy trends in a year, when particularly challenging macro trends impacting advertiser spend.
Moving on to expenses.
Cost of revenues increased by $3 million in Q4, 22, as compared to Q4 2021.
The increase is primarily attributable to the to this good acquisition.
Revenue less cost of revenues was 75% of revenue in Q4, 2022 down from 17, 9% in Q4, 2021 again utilities. Dennis go ahead acquisition and the subscale nature of tedious fed as a stand alone entity.
We believe the fully integrated business will eventually operate it all closed our pre acquisition margin.
We expect this metric to improve over time as revenue bounces back the business scales and the cross selling accelerates.
Total Q4 operating expenses, excluding depreciation amortization and impairment costs was $35.8 million.
$3 3 million or 10% year over year.
Most of the increased three Milan in future and increased installed base compensation.
The remaining increase is due to our acquisition of T. V said, which was largely offset by a reduction in one time expenses, particularly IPO related expenses incurred in Q4 of last year.
We ended this year with 531 employees, an increase of 1% year over year on a pro forma basis.
And this is before the head count reduction that is taking place in the first quarter of 2023.
Net loss in the fourth quarter was $3 $4 million or per share loss of three cents.
Adjusted EBIT in Q4, let's say Mellon, representing 9% adjusted EBITDA margin up from 7% last year.
We are very comfortable with our cash position and liquidity given our margin profile and our expectation for positive full year 'twenty, two and three adjusted EBITDA.
We ended the year with $47.5 million in cash and cash equivalent and short term bank deposits on our balance sheet and Fannie Mellon and death.
We also have available an additional $30 million revolving line of credit at favorable terms if needed.
Yeah and share count was $133 9 million shares.
Finally, I would like to discuss all alcohol.
While the macro environment has reduced visibility we remain confident in the resilience and strong strategic positioning of our business and are committed to profitable growth in 'twenty 'twenty suite.
For the first quarter was 22 and three we expect total revenue in the range of $27 million to $39 million, representing 4% to 12% year over year growth on as reported basis.
We expect Q1 adjusted EBITDA in the range of negative female one to negative $1 million.
And typically expect Q1 will be the lowest point in the year for adjusted EBITDA margin.
By the end of Q1, we expect to complete our recently announced 10% head count reduction.
And our outlook today includes the impact of Dallas cost savings actions on our operating model.
We will also remind you that when they to discuss the acquisition took place in Q1 of 2022 there were $414 million in the one time acquisition and IPO related.
Expenses reflected in dose quarterly results that will not repeat in Q1 of 'twenty 'twenty suite.
Also beginning in Q2, although no longer distinguish between pro forma and as reported basis since it'll be lapping a full year since the tennis glad to acquisition.
We have seen some encouraging early indicators in 2020 three.
But today given the current advertising market, we suggest modeling flat trading you year over year at the starting point is a return to more normal quarterly revenue seasonality than we saw in 2022.
We are carefully managing operating expenses and expect full year 2023, adjusted EBITDA margin will improve on a year over year basis.
To be clear, even if revenue is flat year over here, we expect improved profitability versus 2022.
Given our focus on cost management and the duration of efficiency, we expect to be even more profitable if the environment improves.
In conclusion, innovate is very well positioned to emerge from the current market downturn strategically and financially stronger with a unique and fully integrated platform that is absolutely critical for our customers.
We are taking actions to date to ensure our future success.
Thanks again for joining the call. So he could tell and I are now ready to answer your questions. Operator, please begin the Q&A session.
Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your Touchtone phone at this time, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing.
The Star Keys, once again Thats Star one to register a question at this time.
The first question is coming from Andrew Boone of JMP Securities. Please go ahead.
Hi, good morning. Thanks, so much for taking my questions I'd like to start with the Doj case against Google can you guys help us understand what that could mean for innovate and how clients are actually talking to you about it.
And then secondly, just on the guide.
And thinking about for Q revenue its really healthy growth in terms of core clients that was really exciting to see can you just help us understand more what's going on with individual client should we think about that as a headwind per client spend.
How do we think about just the deterioration there. Thanks.
Thanks, so much.
Thanks, Andrew.
And thanks for the questions Yeah as you could see I mean, we are a very.
Engaged excited interested in this case clearly because.
Hmm.
Neutral. It T has been you know a core part of innovate since day 115 years ago 10 years ago, we talked about how critical it is to you know we don't call from ethic, Todd and I are of the co founders went through this industry from a banking industry and we saw that there is a flaw in the system, where media buying and selling technology gets mixed together and media.
Assets are mixed together with infrastructure software.
And we decided strategically that individually is not going to buy or sell media at the same time, it's providing infrastructure and this is why we built to innovate is a critical software infrastructure company for the future of TV.
And we kept you to that for years and years. So you can make a lot of money in media and finally and not a lot of people heard understood that but this is a very long term play for us as we are planning to become a very large scalable organization to provide the infrastructure for the future of television advertising.
And it is very encouraging that the U S. Government is basically saying, what we've been saying for a long time that there is a significant issue in the system, where you own both the media and the platform. The technology platform. So the fact that the there is a focus there is definitely we expect and we hope will help us tell our story both to this audience to investors and of course to our customers or.
Are those more so importantly that was who are not our customers that they they assuming they're going to go and read this whether it's in the in the newspaper or read the lawsuit itself.
The attention to that should help us stellar story.
That's on on the Doj and I think it's definitely going to take years, but the focus on it is definitely something that we we shared the shape. The same passion about the separations of entities and when it comes to the guide for Q, you said that the core clients and the overall I mean as you indicated we are closing more busy.
And it's kind of connected to your first question.
While the strategic path, our differentiation from our competition, which is mostly a Google campaign manager our investment additional products like personalization and measurement upselling to existing clients retention rate. All of these keep kpis are very very strong throughout Q4, which was not as strong from a top line perspective and also if you look at D. C. R.
Our outlook as we see it for the year at this point.
It's it's you know at least we are seeing in the industry and this is all from our perspective, all affected by macroeconomic where everybody's seeing advertising in TV spend is going down overall advertising spend is going down because of the economical situation.
And that is the only thing that we see there we're factoring in was saying all the core kpis that we control or continue to do very strong.
But the macroeconomic is such that we basically planned the budget are we planned against a flat year and we took measures and are taking measures to make sure. It's a profitable year. So that under any circumstances. The plan is that we'll have a better EBITDA. This year than last year and this is all part in our journey to get to 30 plus plus.
<unk> EBITDA and we know if we get a lot of questions on that and this is why we're committed even in this environment to keep and be profitable and if the outcome is better from a top line as the economy recovers faster than what we think is some of our peers.
And then it's an upside.
Yeah.
Andrew do you have any additional questions.
Once again, ladies and gentlemen, if you do have a question. Please press star one on your telephone keypad at this time.
The next question is coming from Sean Patel of Susquehanna. Please go ahead.
Hey, guys congrats on a public company.
Okay.
Okay.
Guidance.
Can you guys just comment a little bit on it I'm just curious how are you.
Are you guys thinking about.
Yes.
Seasonality linearity.
You know QQ and <unk>.
How much of the outlook for the year would you say.
You know a macro kind of what youre seeing now versus other factors and how much of it is.
You know, what you're actually seeing and hearing from customers versus kind of taking additional conservatism on top of that.
So I would yeah I would address your second question first.
You know what let's start with the first one makes more sense. So as you indicated we saw software Q4 versus Q3, which is a very rare thing for this industry right. If anybody knows you know the advertise definitely the TV advertising industry Q1 is the lowest Q4 is the highest and it's kind of goes up and goes down it goes up and goes down for.
For tens and tens of years, so it actually pretty predictable model. The what happened since Covid. We started seeing different you know shockwaves in this and wild 2021 was a normal cycle in 2022 started as a normal cycle in Q4, we started seeing a decline.
And that's why you saw a difference between Q3 and Q4, which is a rare situation in a softer Q4 I believe for the entire industry not just innovate. So to your question is in terms of cycles. How do we we are assuming that this year will have.
We will have the seasonality will be normal quote unquote. So.
Because the economy. The macroeconomic is already impacting see Q4, where you see Q1, so based on our analysis and our our budget and plan, we took that throughout the entire year in terms of the plant.
So theres, a overall macro compression with a normal seasonality if that makes sense. So obviously, if if against some some people suggested that things will be better sooner right. So then you'll have another abnormal seasonality will you have a weaker than normal first half, let's say in a stronger second half, we're not saying that's what we're suggesting.
But so what we're planning is as enormous seasonality on a weaker economy and to your last question.
Absolutely 100%.
What you're seeing on the top line is a factor of macroeconomics, because if you look at the old core Kpis retention of key core clients and the amount of core clients and we closed more more more logos in Q4 and in Q1, we retained a lot of them were ups anymore or in our or even for a softer year last year was 111.
1%, we believe so all of these there's strategically Andrew asked about you know Google and the Doj, which is the Google is the biggest source of our market share for us. So currently we're not aware of any macro dynamics that will impact our internal kpis, but when because we are a pure software and we don't we're not a media.
Our business, we don't have a lot of margin to play with we're not buying and selling we're selling software so and it's based on volume. So once volume goes down because spend goes down it impacts our topline once it goes up it will improve not just the top line, but in the way, we configured the company disappoint dramatically or our bottom line.
Thank you and then I had a quick follow up.
It seems like this.
Earnings before.
You know not just this quarter, but over the past couple of quarters.
Connected TV and retail media are the two biggest.
In media right now.
Sydney, how can I get you to you guys.
Well positioned kind of all know how you guys are involved there.
Got any detailed media how does that help.
Can you just talk about how that could be an opportunity for you guys, but how you feel about that opportunity going forward.
Sure I have my co founder tell here, which I'm sure would love to answer that Todd.
Sure. Thank you very much. Thank you. Thank you Sam for the call.
So yeah, Youre, absolutely correct as you've seen from many other players.
CTV is clearly the.
The biggest trend in media followed by a buy retail media.
And we've been saying it for a very long time.
Something interesting to see is that.
As we've shown software can really make an impact in television same goes for four.
For retail media so far all of the focus has been placed in our other companies had been on the media targeting space, but obviously you read the media can play a lot in measurement by virtue of the big data for a better outcome.
And on personalization in the shape of a of a more personal life.
Commercial leveraging the data we can media network.
We've spoken in the past about strong partnership we have with target leveraging our innovate for personalization, we spoke last quarter about the retailers such as ebay leveraging innovate at speed for a full bedroom measurement.
And we're going to share a lot more in the future on that line, but we're absolutely aligned that CTV and retail media network, our Oh, great utilization of how software is going to innovate the media.
Okay.
Got it thank you guys.
Thank you once again, ladies and gentlemen, if you have a question. Please press star one on your telephone keypad at this time, we will pause a moment for any additional questions.
Yeah.
Okay.
Yeah.
Once again that is star one.
To start a question at this time.
We do have a follow up coming from Sean Patel of Susquehanna. Please go ahead.
Yeah, Hey, guys I had a few follow ups as well if.
If it's okay biopsy.
All all connected TV.
Hello, and thank you for your question as well.
Question.
<unk>.
How high do you see kind of the use of alternative I E E.
In general.
Or maybe broader not just just targeting you know it seems like there some changes going on in the industry, where some of the walled garden and existing <unk>.
Let me try to hold back some data that was previously available, but I'm just curious what.
What do you guys see happening there and how you think innovative position.
To capitalize on that and take advantage of the many situations that make them up.
Todd do you want to take this question.
Sure.
Hum.
Thanks again.
For the question Sean.
First of all I think you.
You hit a very important point that our when we do talk to investors. There's a big confusion on this point around a walled garden and fragmentation of the of the connected TV space.
The market is extremely fragmented by many large players such as Amazon and Youtube.
Roku and many other any other kind of newcomers to the advertising space Netflix and Disney.
Plus all of them are all behaving in somewhat of a walled garden and to your point, creating their own identifier the wrong.
Ways to insert data and extract data out.
So we think that the market is amazingly fragrant.
This is why we think that our strong software platform that help orchestrate media and the streaming spaces.
Mandatory for for marketing.
Your point about about identifiers, we did share in the past our our heavy investments in the products that we call. It a key part.
Part of innovate exceed which is doing exactly what you. Just described we don't believe that the industry needs yet another identifier.
There are many out there.
And the market will become even more fragmented. So what we think is is that there is a need for spine that connect all of those identifiers and the best way possible and allow marketers to just traverse the industry and deliver the right message to everyone and collect as much data out and this is what we're doing.
In partnership with.
Many of the names that I mentioned, and we will continue to to pushing dump truck.
Can you guys talk a little bit more about.
No.
Imagine an offering.
<unk>.
What I guess, what what kind of.
Uptake or kind of new business activity.
You know in a softer macro we did something that encourage it.
So we need an option because the need for greater.
Greater efficiency and effectiveness.
Is it really isn't moving additional add on that.
Oh, maybe it's impacted by the macro any more negative way how do you guys think about the measurement offering that you guys have and how it's not macro.
It won't happen.
Sure I mean, the answer is yes, and yes to those questions and I'll.
I'll explain the.
We are absolutely seeing the you know the decision to acquire TV square it <unk> exactly a year ago are in it was in a significant transaction for for innovate immediately post IPO was a very strategic long term.
Move for us because what we heard from our customers is that they need to.
To better understand how you know how TV performance versus CTV. So we're not just looking at CTV as a standalone kind of almost connected to your question on identity and how household identity. So the ability to see the entire household and saying you know X percent lets say, 70%.
Watson linear and 30% in Washington connected TV, when you're moving tens of billions of dollars from one site to another.
Really critical to see the entire picture so for us combining our excellent U see TV measurement and Tvs square TV measurement combined created a very unique offering so from the market acceptance.
Acceptance perspective, we're not surprised by it because you know we we we heard the customers before we made the transaction. So we're definitely seeing we're happy with the acquisition and integration and the level of adoption we've seen.
It is actually from a revenue perspective definitely around the number we expected to see this year.
And if this is this is a journey these things in a measurement is a major play in and it takes years to build you know to build detraction the adoption and the acceptance because it's some of it is science and some of it it's almost at the edge when you win so from that perspective strategically where extreme.
Happy with this and we're happy with the results and we're definitely seeing adoption at the same time as television advertising is all advertising budgets in an environment. Like this go down that is obviously as you know affects also investment now.
Now you could argue that in a time like this you actually need and Marc Pritchard. The CMO for PNG said I think last month at the keynote of D. A N a conference in Florida spoke about some key things that they are able to investing in and it's exactly what you said, it's looking at optimizing reach how many households.
The reach and what frequency and what's the return on investment kind of the basic stuff that any any CEO of any CFO will do and this is optimizing return on investments. So the measurement is absolutely a key component of that but it's the it's the tricky is yes, there's going to be more interested in more investment in measurement, while the budgets overall are going to shrink so while our <unk>.
The product is more like SaaS, it's a fixed you know feet throughout the year. It it it it will be naive to assume that a year. Like this is to me. The last one entire year is not going to impact our the amount of money, we make from that product while adoption. When he absolutely expect will continue to go up.
Thank you I just had one last one if I could sneak it in.
Any any commentary you guys can offer in terms of.
Hum.
Or do you mean by some context, we've heard.
Other companies talk about scatter market and the impact.
Hum.
Gross.
I'm just curious.
Anything you can offer there.
On the scatter market.
Okay I'll leave it there thank you.
Tom do you want to take this.
Of course and.
In general I think that those terms are scattered or spot.
Brahma thrown off or.
Like many other companies something important about about innovate as debt.
We service the whole market, we absolutely don't care, what what part of the market is picking up more and more significant programmatic the reserve, one and upfront buys or others.
Theres clearly throughout the year as always fluctuation from one site to another when times are a little tight we are seeing a little more focus.
Our focus on the programmatic side of the house when I did at the beginning of the of the upfront season, we are seeing a big focus on that market, but but again the beauty of our of our offering is that we really don't pick sides.
We offer a software solution for a market earth across the board.
That's literally every impression and every side of the market.
Thank you guys.
Thank you once again that is star one for any questions that you may have at this time. The next question is coming from sweeter Cutaia of Evercore ISI. Please go ahead.
Okay.
Could you. Please talk about the intra quarter trends that you saw from Q3 to Q4 seasonally Q4 is the strongest but you mentioned that it actually worsened.
Let's think about what you saw him anything in particular that you can call out and then what you've seen so far two months almost two months into the quarter.
Anything that you can call out this quarter that you've seen as it progressed that'd be helpful.
So you're absolutely right the the trend basically the way the way to look at this is 'twenty 'twenty. One was a normal year in terms of seasonality 2022 started normal and in Q4 I would argue that you could see it also somebody like Youtube results, which is obviously here you could see like you've already started seeing some.
In Q3, and definitely Q4, it was felt by the industry and you see it all over so the I would say that if you look at 2022 the seasonality was disrupted after a nice run in terms of seasonality are sequencing was it starts disrupted in Q4 and resulted in us taking <unk>.
Action to make sure because profitability is extremely important to us and in this environment also to our shareholders. We took action to make sure that and plan 2023 are in a way that under even flat circumstances, we are going to be profitable EBIT positive, while maintaining our strategic goals. So in terms of Q4.
More specifically some people ask us about you know vertical specific verticals, because that's a kind of a post COVID-19 supply chain issues in the world like ripple effects, where one part of the industry will be hurt more than another part of the industry. So.
You know, we're happy to report that auto which is again you see it on television. So the stuff you see on television is how we make money. So auto has recovered in clinic quote unquote back to normal and we see in Q4 like consumer electronics technology Telco was was declining more than than usual right. So it's like but these are <unk>.
Pacific verticals I don't the key thing here is the macro because the macro impacts everybody. So even if youll see different verticals and.
And Youll see some recovery in Q1 from certain verticals that the big story here is that the macro environment and their overall spend and I'm not sure anybody has a crystal ball to say like how exactly this year will pan out from the economy perspective, and an advertising spend perspective, but in terms of how we model. This year we modeled.
Is that the flat normal, but normal cycles, so normal seasonality.
And if there'll be a recovery earlier than youll see a much stronger H. Two then they then compared to H one but this is not how we are modeling our investments for this year.
Okay. Thanks, Peter Thank.
Thank you Sheila.
Yeah.
Thank you ladies and gentlemen, this brings us to the end of today's question and answer session and today's teleconference. If he would like to thank you for your participation and interest in <unk>.
You may disconnect your lines of log off the webcast at this time and enjoy your weekend.
[music].