Q4 2022 Viant Technology Inc Earnings Call
Speaker 1: which is a testament to the hard work of our teams managing expenses and driving operational efficiencies.
Speaker 1: Last month marked the two-year anniversary of Vyance IPO, a notable milestone for the company.
Speaker 1: While the past COVID market environment has been volatile to say the least, our mission and purpose has remained consistent. To provide advertisers with a market leading solution to buy and measure omni-channel digital advertising as the industry puts more emphasis on privacy protection and moves away from cookies and device identifiers.
Speaker 1: We've been steadfast in executing on this mission, introducing new capabilities to our platform, including our World Without Cookies release, as well as numerous other features and data solutions to help advertisers with measurement and attribution using our Household ID technology.
Speaker 1: There is no question that Viant has already been skating to where the puck is going in the programmatic advertising industry.
Speaker 1: and we feel very confident in our positioning and market opportunity for the future. Looking ahead, there are three key trends that we believe will continue to shape the ad industry and our business in 2023 and beyond. I'll touch on these trends and why I believe we are well positioned to be a better place to start.
Speaker 1: to benefit in this evolving landscape. The first is the growing importance of AI and machine learning, or as we have previously described our vision as autonomous advertising.
Speaker 1: At Viant, we are focused on delivering products that take away the laborious tasks of humans using these programmatic ad platforms.
Speaker 1: Tasks like creating an ad campaign or ad format and selecting channel, device, publisher, and ultimately deciding bid prices for inventory. By leveraging AI, we will be able to automate many of these processes and provide our customers a more efficient experience and reduce the amount of time and people it takes to optimize these complex.
Speaker 1: and almost infinite combinations of choices for programmatic traders. We made tremendous progress in this area in 2022 and believe that we have a substantial lead over our peers.
Speaker 1: We are excited to begin making these AI innovations public later in the year. Our customers can expect increased efficiency, higher return on investment, and a better and simpler experience overall as we continue to integrate AI tech into our products and services. Our focus on AI is part of a broader mission to make
Speaker 1: one third of total spend on our platform. And according to eMarketer, the US CTV ad spend market will grow by 27% in 2023. And it's expected to continue to grow at double digit rates over the next few years.
Speaker 1: The benefits of CTV over linear television are vast and we believe this is a significant driver of the ship.
Speaker 1: With CTV, advertisers can reach their target audience in a more precise manner, increasing the measurability, effectiveness, and ultimately the return on ad spend their ad campaigns. Another benefit of CTV is that it offers a more immersive experience for viewers, allowing for better storytelling opportunities and enhanced brand awareness. It also offers an environment where viewers are less likely to multitask.
Speaker 1: smart speakers, and mobile and desktop devices, and then deliver ads that are tailored to their viewing habits and preferences.
Speaker 1: This allows for more effective ad campaigns and the ability to provide higher return on ad spend for our customers today. Additionally, because the household idea is deterministic, we can match data with precision. Meaning, our customers can use our platform to run more cost-efficient campaigns, reaching their desired audience.
Speaker 1: without wasting ad spend on irrelevant viewers. Viance Scaled Household ID is just one of the many differentiating factors driving our customers to consolidate their ad spend on our platform. And it distinguishes us from our peers that are reliant on cookie-based tech.
Speaker 1: that does not scale in the new emerging technology channels such as CTV. Looking to the future, we believe that the shift from linear TV to CTV is still in its early stages.
Speaker 1: There is still over $60 billion of linear TV ads, that is yet to move to CTV.
Speaker 1: And we expect this to happen over the coming years. With Vyant's focus on innovation and commitment to providing value to our customers, we believe we are well positioned to capitalize on this shift and continue to drive growth in the CTV market.
Speaker 1: The third trend that we are seeing this year is the increasing focus on sustainability.
Speaker 1: Here at Vient we believe that sustainability is not just a trend, but a responsibility. Our ad tricity program is a prime example of how we are leveraging our technology to help our customers achieve their carbon reduction goals.
Speaker 1: According to recent statistics, 83% of the Fortune 500 companies have a stated carbon reduction goal, and 75% of consumers consider sustainability in their purchase decisions.
Speaker 1: The electricity program is designed to help our customers, both ad agencies and advertisers, accelerate their carbon reduction goals through the purchase of wind and solar renewable energy credits.
Speaker 1: which can be used to advance their publicly stated carbon reduction timelines. This means that by selecting ViAN as their DSP, our customers can significantly advance their sustainability goals.
Speaker 1: We're proud to be focused on this area and believe that programmatic advertising can lead the way in promoting a sustainable economy. We're also focused on sustainability in terms of the programmatic supply chain. We have partnered with scope three.
Speaker 1: An independent company offering a carbon calculator that provides a comprehensive view of carbon emissions throughout the digital ad supply chain. Scope 3 is quickly becoming recognized as an unbiased standard for measuring carbon emissions across the advertising industry. Their rigorous methodology assesses every website and app.
Speaker 1: providing detailed information on carbon emissions at each stage of the supply chain. This valuable partnership enables Viant to identify heavy polluting publishers and intermediaries and enables our customers to accelerate the reduction of their carbon footprint through sustainable ad spend. This partnership, in combination with our Adtricity program, allows Viant to identify heavy polluting publishers and intermediaries.
Speaker 1: enables our customers to reduce their scope to and scope three carbon emissions. At Vient, we have committed to becoming carbon neutral with respect to all known and measurable emissions from our energy usage by the end of 2023.
Speaker 1: Sustainability is a key part of our mission, and we're excited to continue driving progress in this area. In closing, we see the growing importance of AI and the accelerating adoption of CTV as two major tailwinds that we stand to benefit from in the years ahead. At the same time.
Speaker 1: We are leading the industry in our mission to support our customers as they look to meet their sustainability goals and believes this presents a meaningful opportunity for Viant in the long term. We are well positioned to win share in the market as we continue to deliver innovation for our customers. Now I'll hand the call over to Chris to discuss more around the business.
Speaker 1: Thanks, Tim. We had a strong end of the year with active customers, increasing 6% year-over-year to 326 in Q4, driven by growth in mid-market ad agencies and client-direct customer segments, which help drive advertiser spend.
Speaker 1: per active customer by 9% year over year. Additionally, we continue to see growth in emerging channels in Q4, with digital out of home increasing 55% year over year, and streaming audio increasing 38% year over year.
Speaker 1: As many of you know, our primary focus is on mid-market agencies and direct advertisers. I wanted to highlight our strong growth in this area in 2022.
Speaker 1: For full year 2022, these two customer segments represented about 65% or total advertisers spend. I'd like to unpack this a bit more and talk about why we are succeeding in these market segments. First, mid-market agencies not only select us based on our innovative programmatic ad buying platform, our proprietary data services, and forward programs like Adtricity.
Speaker 1: But they also value our flexible engagement models and our team focus on customer success and support.
Speaker 1: Our scale competitors often evolve to a one-size-fits-all model geared towards the largest, most resourced companies and the five largest ad agency holding companies.
Speaker 1: According to Statista, there are over 14,000 advertising agencies in the U.S., which means there is a very large mid-market opportunity that exists today.
Speaker 1: Most of these agencies sit outside the few large agency holding company groups. Yet they control a large portion of the total advertising spend market. Mid-market agencies have become an increasingly popular choice for many brands and advertisers in recent years.
Speaker 1: This is because these agencies often provide more flexible engagement models that cater to the unique needs of mid-sized businesses while also offering a more tailored approach to advertising and marketing services.
Speaker 1: Additionally, the mid-market agencies tend to have clients that require a greater focus on their return on ad spend. This focus is a big reason why our measurement offering has such great adoption with these clients. A new partnership in 2023 that I would like to highlight is with Empower Media.
Speaker 1: America's largest female-owned media agency. And power is a strong independent agency led by Ashley Clark with an exciting roster of both national and regional clients.
Speaker 1: As a preferred DSP, we not only help power their programmatic advertising capabilities, but we enable them to bring true differentiation to their current clients, and we look forward to helping them as a partner in winning new business.
Speaker 1: Our mid-market advertisers are another segment of growth and are responsible for emerging vertical growth areas like sports betting, direct-to-consumer, and retail media, just to name a few. These businesses are rooted in first-party data, efficient programmatic buying, and driving customer acquisition growth.
Speaker 1: all common traits and what we look for in bringing on the right types of mid-market customers. Next, I would like to highlight some of our top business priorities in 2023.
Speaker 1: Number one, we will be launching a major upgrade to our Vient Data Lake that will now be named the Vient Data Platform. This upgrade will include all of the incredible features of our Data Lake offering with significant improvements to the overall user experience. Additionally, we will be introducing enhanced capabilities to continue our lead in cross cloud is
Speaker 1: and cross-clean room identity matching, as well as measurement solutions for our clients. The Bryant Data Platform will allow customers to seamlessly match their first party data across publishers and platforms where cookies don't exist. This is the process utilized when targeting audiences and measuring return-on-ad spend in cookie-less environments.
Speaker 1: We believe this will be the way forward how the industry operates in a post cookie world. Moving to number two. We have previously discussed our vision for autonomous advertising and at the core of that vision is our ability to develop products leveraging machine learning and artificial intelligence. This year we will release a steady cadence of these features.
Speaker 1: that are all aimed at helping our clients achieve the most efficient CPM pricing while increasing campaign performance KPIs, which results in lower customer acquisition costs and higher return on Mad Stunt,
Speaker 1: And lastly number three, we're launching a new program called Direct Access. Direct Access is a program that creates the most efficient supply path for our customers.
Speaker 1: by creating partnerships with premium content owners to merchandise their premium content to our clients directly. This program will drive a more efficient supply chain, provide bids on ad impressions directly to publishers, and eliminate unnecessary carbon emissions by eradicating duplicative ad requests sent to our platform.
Speaker 1: We know innovation drives success in our industry and we're squarely focused on winning here.
Speaker 1: Next, I'd like to touch on the cost-realignment efforts we undertook in the second half of 2022. This included reducing our employee head count by approximately 13% in Q4 and actively managing our expenses. Despite the reduction in non-gap operating expenses, we were still able to invest in our product and technology.
Speaker 1: market increase substantially from a year ago.
Speaker 1: Our new team members come to us from Amazon, Apple, Meta, and Snapchat to name a few. And we'll help accelerate our ability to fulfill on the autonomous advertising platform we envision.
Speaker 1: Our efforts to reduce cost and increase efficiency will continue, and we are confident that we can maintain our strong position in the market.
Speaker 1: To that end, we were recently awarded G2's 2023 Best Software Award for Marketing and Advertising, which is real validation by actual users of these software platforms.
Speaker 1: We will continue creating a lane for ourselves in this massive market opportunity of programmatic advertising.
Speaker 1: Thank you, and I will now turn it over to Larry to provide more details on our financial performance.
Speaker 2: Thanks, Chris, and thank you everyone for joining us today. Before I begin, I'd like to remind everyone that we have posted a presentation to our investor relations website with supplemental financial information to accompany today's presentation. As Tim mentioned, we are pleased to report that our Q4 performance was within our previously issued guidance.
Speaker 2: for advertisers spend growth, revenue and contribution X-TAC. And so the quarter, we had seeded the high end of our previously issued Adjusted EVA and die guidance by 160%.
Speaker 2: I will talk more about this in a moment, but during the quarter remained extremely focused on driving operational efficiencies in the business.
Speaker 2: which we believe sets us up for meaningful adjusted EBITDA profitability in 2023. For the fourth quarter, advertisers spend across our platform decreased 13% over the prior year while increasing 9% over Q3. For the full year, advertisers spend increased 15% year over year.
Speaker 2: In the fourth quarter, revenue was $54.5 million, a decrease of 34% versus the prior year period, and an increase of 12% versus Q3.
Speaker 2: For the year, revenue totaled $197.2 million representing a decrease of 12% year over year. Contribution X tax for the fourth quarter was $33.4 million, a decrease of 31% versus the prior year period, and an increase of 4% over Q3.
Speaker 2: For the year, contribution extract totaled 124.7 million, representing a year-over-year decrease of 12%.
Speaker 2: There are several key points I'd like to highlight relatives to both Q4 and the full year 2022 top line performance. To begin with, we started 2022 with accelerating growth and spend across our platform.
Speaker 2: Advertisers spending Q1 increase 44% well above industry growth rates. That momentum continued in Q2 and we again saw strong growth of 32% for the quarter.
Speaker 2: We began seeing the early stages of a pullback in spend by some of our clients in June due to macroeconomic concerns. That pullback continued in Q3 with growth in spend slowing to 19%, and ultimately these challenging conditions resulted in spend declining year over year in Q4.
Speaker 2: In terms of customer verticals, as we discussed on our last earnings call in Q4 2021, we did exceptionally well in the jobs and employment customer vertical. These customers spent significantly to close out 2021 in an effort to capitalize on the heightened demand for labor, leveraging our fixed price pricing options.
Speaker 2: In Q4 2022, customers across this vertical reduced their spend by more than 95% as labor markets cooled.
Speaker 2: This dynamic alone contributed to about half of the revenue decline and well over 40% of the decline in contribution X-TAC in Q4.
Speaker 2: The good news is that we do not expect any continued weakness across this vertical to have a material impact on 2023, as spend throughout 2022 across this vertical was de minimis due to the changes in the labor market.
Speaker 2: In terms of other notable customer verticals, I'd first like to touch on our largest customer vertical retail. As we mentioned last quarter, growth across this vertical began slowing in Q3 and that trend continued in Q4 with retail spend down year over year in the quarter.
Speaker 2: In contrast, our travel and gaming verticals continue to perform exceptionally well despite the macro weakness with both posting strong growth in Q4. And for the first time in several quarters, our CPG and automotive verticals showed solid growth during the quarter. In terms of advertising formats and channels.
Speaker 2: Video, which includes CTD, continues to represent over 60% of advertisers spend on the platform. As Chris mentioned, streaming audio and digital out of home continue to perform exceptionally well in the quarter with more and more customers engaging with these emerging channels.
Speaker 2: We ended the year with 326 active customers, an increase of 6% for 17 net new customers on a year-over-year basis.
Speaker 2: Advertisers spend per active customer also increased 9% on a year-over-year basis, and percent of spend customers spent on average nearly three times more than fixed-price customers in 2022. non-GAAP operating expenses, which are defined as the difference between contribution xtac and adjusted EBITDA.
Speaker 2: total 30.7 million in the quarter, representing a year over your decrease of 1% and a quarter over quarter decrease of 9%. During the quarter, we prudently manage costs, reducing our workforce by approximately 13% in December and significantly curtailing our discretionary spending.
Speaker 2: As Chris mentioned, at the same time, we continue to invest in our product and engineering teams to further advance our efforts towards our goal of developing an autonomous advertising platform.
Speaker 2: Our actions in Q4 re-aligned our costs with our top priorities for 2023. For the fourth quarter, we generated adjusted EBITDAV 2.6 million, which exceeded the midpoint of our guidance by approximately $3 million.
Speaker 2: The better than expected result is due to the previously mentioned cost optimization actions that we took during the second half of the year. From a liquidity perspective, we ended the quarter with 207 million in cash or $3.35 per share outstanding. We also had 228 million of positive work in capital and no debt.
Speaker 2: We believe our strong balance sheet positions us extremely well to take advantage of the significant market opportunity in front of us.
Speaker 2: With that, I'll now turn to our guidance for Q1, and I'll provide some color on a full year 2023 expectations.
Speaker 2: Many of our customers are navigating a challenging macroeconomic environment, which creates a volatile demand environment. Given this uncertainty, we believe there could be a wider range of outcomes for Q1, which was reflected in our Q1 guidance. For the first quarter of 2023, we expect revenue in the range of 39 to 42 million.
Speaker 2: which represents a year of year decline of 5% at the midpoint of guidance. Contribution extract in the range of 25.5, 27.5 million, which represents a year of a year decline of 4% at the midpoint of guidance. Non-GAP operating expenses of approximately 30 million.
Speaker 2: which represents a year over year decline of 5% and a quarter over quarter decline of 2%. And adjusted eva dot in the range of negative 2.5 to negative 4.5 million.
Speaker 2: A couple of general observations that are guides for Q1 and our outlook for the year. Q1 2022 was a strong quarter for Vian, creating a tough comp for the current quarter. As I mentioned earlier, in Q1 of last year, we saw 44% growth in ad spend across the platform.
Speaker 2: As we move through 2023, year-over-year comms will become easier as we began seeing the impact of the macro weakness beginning in June of last year. As such, we expect improving revenue and contribution-expect growth rates as we move through the year. We also expect adjusted E-DOT increase each quarter as we move through 2023.
Speaker 2: driven by the cost reduction initiatives in the second half of 2022 and increasing revenue and contribution xtac. We intend to closely manage expenses in 2023 while continuing to make focused strategic investments with the goal of generating meaningful positive EBITDA in 2023. In closing, while macroeconomic uncertainties are contributing to a challenge _____
Speaker 2: that are strong balance sheet, strategic investments in technology, and discipline cost management during these challenging times, position us to continue growing our market share in this fast, growing, programmatic market.
Speaker 2: That concludes our prepared remarks today and with that I will now turn it back over to the operator to open the video with the questions.
Speaker 2: our prepared remarks today and with that I will now turn it back over to the operator to open the video to questions. Operator?
Speaker 3: Thank you so much, Larry. And again, we will now move into taking your questions. As a reminder, please use the raise hand function located at the bottom of your screen to ask your question. And our first question will come from Nat Schindler with BFA. Great. Hey, thanks, guys. So Larry, you said that you at the Combs ease on because the macro concerns affected your business.
Speaker 4: Mostly in the second half of last year that you'd had to see growth improving throughout the year. We're still really kind of waiting for this recession that everybody's been calling for.
Speaker 4: What would happen to your customer base and their spending habits if we really saw a consumer begin to feel this recession and consumer spending fall off?
Speaker 2: Yeah, I mean, the comments I gave on the 23 guide really assume a somewhat of an improvement in the second half. It doesn't assume a full improvement in the second half by any means. Certainly if things turn out worse.
Speaker 2: based on what's going on in the economy, we could have further softness. But we're pretty comfortable right now based on what we put out. I think that are realistic targets at this point for us. Matt, this is Tim. I would just add to that. Programmatic advertising, generally speaking, is a leading indicator for recessions, just ad spending in general.
Speaker 1: It's one of the variable expenses given the nature of programmatic that you can hit pause or scale back at any moment. And so I always view us as a forward indicator and I think we as you see us start to rebound or other players in the space that would be a leading indicator for the economy.
Speaker 4: And if you look across a lot of the online brand spend players, they took it in the teeth the worst around Q3. And you're predictions coming into Q4, you got better than you expected.
Speaker 4: What was happening, call it September , October , versus what was happening November , December , January , February , that kind of changes the view of how advertisers are acting.
Speaker 1: I would call it stabilized. I would say it's slow but stable is the best classification that I would call it where we saw in the back half of 2022 a deceleration continuing. So the first month of the quarter would start out and it would continually weaken throughout the quarter.
Speaker 1: I would just classify it as starting to stabilize at this point still slow but stable. And I clearly, if any of us are talking about the economy, we're only pontificating. However, what I do think is based on a lot of our discussions with clients and just hearing other companies, I think that everyone was waiting for the other shoe to drop last year.
Speaker 1: We're slow to get budget set. And therefore, delayed ad spending. That's just across the board here and that everywhere. But I do, I would characterize it that, I don't think the outlook is as unstable as it was in Q4 and I think it has stabilized. And we do see that there is gonna be a pickup. I mean, we're seeing it. We saw it in February . We saw a nice bounce.
Speaker 2: from January , and you know, it was pretty strong. And we think that that continues. But again, I think we're being pretty realistic in our outlook. Yeah, one other data point that I would give you that is, so retail, which is our largest customer vertical, was down pretty significantly in Q4. While it's still down in Q1, it is not down nearly as much as it was down in Q4. So, you know, that speaks to the kind of stabilization of what we're seeing across our clients.
Speaker 3: Okay, make a lot of sense. Thank you. And we will now move on to Laura Martin with Needham and Company. Hi there, you guys. So just a couple for me. I loved all the new business stuff. So data direct access, which I'm going to call open path, because that's what trade does call it and measurement. My question is business models. Are those upsells? Are they just going to be wrapped into the platform? So you...
Speaker 1: make more money, but really simplify the supply chamber hearing it from a ton of clients around that. I see that as us being able to win new customers. That's the
Speaker 1: First comment on that one Measurements so that the big thing on measurement is if you go back, you know The digital marketer in years past just had this easy report And it was in double click and they can look at all they could they could attribute all of their sales or conversions to all of their impressions sort of speak and Over the last you know 18 months that is no longer the case marketers have a hard time Understanding when they spend money. What are they getting what are they getting in return?
Speaker 1: And so they're looking at platforms like us to do more, and we really stand out there. And that actually is a bit of an upsell. That is more of a premium offering that we get paid a little bit more for. So I think that that, for us, is more of a driver there. Data platform. And I would say data platform, data platform is really gonna be meant, the data platform is gonna be meant to be a platform that's gonna be a platform that's gonna be a platform that's gonna be a platform
Speaker 1: So the change of the name one and then two, the feature sets that we're really adding on is really going to drive. It's going to allow customers. All of these customers of ours that have signed up to companies like snowflake and you know all these other clean rooms. They've all done it and the data's there, but they have no idea how to get it out of there and put it to use and advertising. Same thing we're seeing with content owners. They have.
Speaker 1: large authenticated user bases watching CTV, but they don't know how to connect that data in a privacy friendly way with market or first party data for targeting and then also for measurement. So again, I think that what we're doing is making it very seamless from publisher to advertiser to match first party data sets to really drive the buying. That I see is a massive differentiator and it's going that's also in the active customer growth bucket. Super helpful.
Speaker 2: And then one of the things that leaned last year on revenue growth was this transition from managed service to self-service. Are we prudent or is that continued into Q4 and continuing going directly to self-service from managed service? Yeah, in Q1 we pretty much laughed the impact that that accelerated a mixed shift that happened in 22. So in Q1 are growth rates.
Speaker 2: Because what happened last year, you could see that our spend growth rates far exceeded, or significantly exceeded our growth and revenue and our growth and X-TAC. In 23, that is not going to be the case. They're going to be much closer because the midship really occurred all throughout last year. It will continue to some degree this year, but on a much smaller scale. Okay, that's fantastic. Thanks you guys. Thanks a lot. Thank you. Andrew Boone, JMP has the next question.
Hi guys, thanks so much for taking my questions. I want to try two industry questions. So one of which is, can you guys just talk about how clients are speaking about the DOJKs against Google? What are they saying to you? How are you guys thinking about that? And then secondly on CTB.
Disney has now live with their ad products so is Netflix as you guys are starting to see more supply come into the market Are you guys seeing any changes there as just consumption on the user side continues to ramp with a bot? I'll take the the DOJ these I think that
With a player, the size of Google, I think if there was any smaller player that was Kawha their hand in the cookie jar the way that they were, you know, they would, the major punishment right away. But because of the size of Google, I think that that was slower. And I don't think that any of this was news because a lot of this was leaked out there already. But it is so clear when talking to clients.
that Google is so conflicted and when you have the level of market power that they do that they use it To their own benefit and I believe that that is driving a big push for More independence and why buy side only at least for us. I think plays really well
We're definitely seeing that. I definitely believe that they've been losing share on the DSP side because of those concerns. But now I think it's really come to the foray and clients are looking. I do believe there will be a lot of switching there that that clients want an independent.
buy side to represent them as the buyer of the ad, and they don't want someone conflicted on the sell side as well. So I think that that plays really well for us, especially on continuing to grow active customers this year.
On the supply question just around Disney and Netflix adding their supply, I mean, what does increase supply like that mean for connected TV? It means it's more competitive this year versus compared to last year when against linear TV. And again, linear TV is the budget that all of us are focused on pulling from to drive our CTV growth figures.
And so now with Netflix that isn't available on linear TV, that's gonna cause more budget to shift from linear to CTV. But I think all content owners are pretty much aligned at this point, the major media companies that streaming is the future. Linear television, the traditional cable and satellite is the past. And so I think even when you look at their content selections, they're putting content on their streaming apps first.
which then reinforces that consumer demand to go there to get it. So for us, the increase in supplies and increasing competitiveness, I think when you couple the increase of supply with the ad recession that we're currently going through, that's a big win for programmatic advertising, because we are usually plugged in to fill that gap in demand. And I see that as a big positive for DSPs in programmatic in general this year.
All right. Thank you. Thanks. And we will now hear from Marie Silmunios with Raymond Jeans.
Thank you for taking my question. This is Mauricio in for Andrew today. Just wondering if you could talk about the competitive landscape. It looks like a 4Q marks the second consecutive quarter of sequential declines in active customers.
If you did more of a macro driven advertising tool that or are you seeing any object in spending consolidation across advertising and agencies that are maybe looking to reduce their number of advertising partners? So, which you could provide some call around that please.
Yeah, I can talk about the active customers. So we did see in Q4 a 2% quarter over quarter decline, a net reduction of eight customers. This was primarily related to the fixed price side of our business. So for the year, our percentage of spent customers increased 16%, the number of active customers, and fixed price decreased 6%.
In Q4, in particular, as we talked about on the prepared marks, across our jobs in employment vertical, that vertical customers in that vertical spent significantly in 21 and largely when dark in 2022 for the reasons we mentioned. So those fell out of the...
the customer account. We think they will come back when their business is improved. But generally speaking, we did see weakness across fixed price, especially in the second half of the year. And we believe that's due to the macro concerns. fixed price tends to be a bit more discretionary in nature. So as
It's easier for the marketers to kind of pull those cut those budgets when they're looking to reduce spend so I think it's really a macro issue Specifically tied to the fixed price side of our business But again that you know that being said we feel pretty confident that we can get these customers back once they start reengaging and spending
That's very helpful. Thank you. And they have one on capital allocation. So you finally have 200 million in cash and no debt. And it usually you are cautiously optimistic about a potential rebound. Sometimes in the second half of 2023. So with the understanding that you will remain disciplined on Spain.
Yep.
I'll take that. I mean just from a capital allocation perspective, we do have a fantastic balance sheet with the amount of cash that we have and no debt. And this year we're estimating positive adjusted EBITDA, so we feel very comfortable in that our balance sheet is protected. The primary uses of that capital will be towards M&A. We're active in the market. We have been for some time.
Thank you so much. Thanks, Marie Chiu. Our next question will come from Cal Bartazole with Craig Hallam.
Hey, just stepping on here for Jason, a couple questions from me. So first, just wanted to talk, could you go a little bit deeper on what you're seeing in CTV and maybe any potential signals that were rebound coming in that? And then secondly, you talked about some progress in digital auto home and audio and those emerging categories, but...
Just wanted to know if you had any more color on any progressions in the video game advertising we're just trying to understand if you think the industry is ready for this and if there's really any real volumes of impressions available for you guys to monetize. Thanks. Yeah.
Around CTV rebound, I mean, I think that as far as the market goes, we're going to see a significant amount of new money from linear shifting to CTV. That's undeniable. So regardless of what the total industry does, CTV is definitely going to grow. And for us, I think that we have...
We feel really confident around CTV. We have a lot of differentiation there. Tim talked in our prepared remarks around our household ID and really the efficiencies that that drives for marketers being able to control their spending with what we call frequency capping and then also measuring what they're what their impact is. I think also our direct access not to get too far ahead of that but our direct access programs squarely going to be aimed at that.
A lot of them have rates that are more than 30 years old.
And when they look at someone like Vient and they look at our differentiation as a demand source and the market that we serve in the mid market Those are not the those are not the top 25 to 50 spenders in the US So that is really we are like differentiated demand for them and that's new money coming to them
If I'm a large CBG company, talking to these premium content owners, they're the ones striking those deals. If you look at our customers in the mid-market, they're not striking deals and upfront with the largest content owners. So that's the reason why they're interested in partnering with us. So from a CTV perspective, I think that opens up a lot of really interesting opportunities.
It's gonna be great for our customers, gonna save them some costs as well. But really, I think that's gonna bode well for us, our direct access program in CTV, but we remain really bullish there. I'll take the in-game question as well. I would classify in-game as still experimental budgets with marketers. Any attorney stance whoSecond qualified or... well, it doesn't change, tested with Yeltsin or waiting toizz wondering what it was tires who vertical was Tito one when the favor to Hypoc comma
In game advertising, I wouldn't say that it's a supply problem. There's certainly a huge amount of daily active users and monthly active users playing Minecraft, Roblox, and all the different other areas that were integrated there. But certainly the audience is there and the time spent is there in mass.
to reach that the younger audience, the younger players that are playing video games daily for huge amounts of time. I think the friction point for marketers to unlock budget there is around the ad format itself. They don't have these creative assets built by their creative agency in the brand style and tone that they want. And so there's a big effort to get those formats created once they understand what the value is in placing media in these...
or Spotify, etc. All the major streaming audio, but now it's becoming more and more regular and normal as another ad format that that marketer has ready to go off the shelf. I would expect 2023 to be experimental for in-game, and I would expect 24 for it to be a normal part of the buy as we get through this experimental period and can show the returns. They'll start regularly making these.
Smart objects as the correct ad format as part of their normal course and we'll see it on most spies then.
Perfect. Thank you, guys. Thanks, Gal. We have time for one additional question, which will come from Chris Contourage with UBS.
Hi, thanks for taking the question here. I may have missed it, but is there any ad spin guide implied in the one Q revenue guide?
We actually did not put that out yet or put it out this quarter and really what's going on there. As I mentioned earlier, in 2023, the spend growth will be much closer to revenue growth and the next tech growth. So the fact that our growth rates are all starting to align, which was not the case last year.
Last year we specifically would put out spend growth guides because it was so much different than the revenue and extract guide because of the mixture that was happening this year we're not going to see that so we did not put a spend growth number out but it will be within the range or pretty close to the revenue guide we gave growth guide and extract growth guide.
Okay, so definitely still declining. I guess as we think about the reacceleration in the second half of the year, what would need to happen in order for AdSpin to reaccelerate to 20% ad growth? It's really, I mean, you think about it, we were impacted in the second half of 2022.
So the comps, as I said earlier, are a lot easier to beat. And the business really is about, you know, we are growing, notwithstanding what's happening. The impact of the economic situation is impacting our growth, So as we start getting into laughing, the... laughingly...
macro impact on our prior quarters. We're not expecting huge growth or a huge improvement in the economy. We're really expecting a stabilization to happen as we move into the second half, which we think can drive growth based on the comps that we have for last year. We're expecting a growth impact as we move into the second half, which we think can drive growth based on the comps that we have for last year. We're expecting a stabilization to happen as we move into the third half, which we think can drive growth based on the comps that we have for last year.
And Chris, just to add a little bit more color, just a little bit more tactically what we're doing on the business side. What we ended up doing as part of our cost realignment, we also ended up realigning our Salesforce we talked a lot about, and have been talking a lot about the mid-market. We actually continue, we do this every couple of years where we assess where are we seeing the most penetration
As we talked about, Tim and I did around some of these new innovation that we're going to be launching this year around AI feature sets within the platform. Really what that is, those are all things that are going to improve campaign performance. And I don't care what market we're in. When campaigns perform, the budgets continue, they will continue to grow if you're hitting the producers, by their success.
customer acquisition targets, return on ad spend targets. So we have some things in the works that we'll see the light of day here pretty shortly, that are gonna improve. And then again, the last piece I'll say, yes, it's a slow start, but it is stable. And then just again to focus people around, regardless of what the macro looks like, the shift of linear into CTV is naturally a big growth tail end.
And that's going to be another leg of growth for us. So I think those three things are tactically what we're expecting to re-accelerate growth into the areas that you talked about.
Got it. And as I just want to last question here, you call about the mid market opportunity re-accelerating customer growth. Should we be thinking about customers growing in one key on a sequential basis and just as we're thinking about 23 and kind of the scope of this opportunity with mid market, you grew by if I have this right 17 customers in 22 on a year over your basis, it's down.
from where you were in 21. Should we be thinking about kind of like low double digit, high teams? How should we think about the scope of that opportunity and how that factors into one queue? It's hard to say exactly when customers make the switch and so I think on an annualized basis it's pretty consistent. Within any given quarter it could be choppy. Some might not be ready to go in Q1, some might be ready to go in Q1. So it really just depends on where the customers are at in their cycle and so to me...
I don't look at it on a quarter by quarter, but more of an annualized basis. Certainly, that's the focus of our organization is on those mid-market agencies, winning new customers. Then with our current customers, consolidating that ad spend more and more to grow the average spend per customer. That's going to be our focus. I wouldn't read into any one quarter or the other, but we're very focused on getting those customers into the percent of spend.
large with the majority of our customers.
especially on the percentage of spend side consistently scale, they spend more in year two after year one and so forth. So as we cycle through some of those low spending customers, there will be some negative impact on the customer count as we move through 23. Although we don't expect it to be that significant, the impact from cycling through those customers will not be significant on from a spend perspective though, but it could.
on customer count, but you'll see the spend proactive customer actually then grow.
Thank you. Thanks, Chris. And again, that does conclude our Q&A session for today. Larry, Chris, Tim, any closing comments?
That's it. Thanks everyone for joining the call and we'll see you next quarter. Absolutely. Again, that does conclude today's earnings webinar. Again, we thank you all for your participation. You may now disconnect.