Q4 2022 Outbrain Inc Earnings Call

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Speaker 1: The.

Speaker 2: Good morning and welcome to the Outbrain Incorporated 4th Quarter and Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Now I'd like to turn the call over to your Outbrain Management Team.

Speaker 2: Good morning and thank you for joining us on today's conference call to discuss Outrames fourth quarter and fiscal year end 2022 results. Joining me on the call today we have Outrames co-founder and co-CEO, Jerome Goli, co-CEO David Cosman, and CFO Jason Kibbiat.

Speaker 2: During this conference call, management will make forward-looking statements based on current expectations and assumptions. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. These risk factors are discussed in detail in our Form 10K file for the year ended December 31, 2021. As updated in our Form 10Q and other reports.

Speaker 2: and in subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as the recall's original date, and we do not undertake any duty to update any such statement.

Speaker 2: Today's presentation also includes references to non- GAAP financial measures. You should refer to the information contained in the company's fourth quarter earnings release for definitional information and reconciliation of non- GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.albrain.com, under News and Event.

Speaker 2: With that, let me turn the call over to David.

Speaker 3: Thank you Steve. And please to report that in Q4 we exceeded the guidance provided for adjusted EBDA and we were at the higher end of our guidance for extra gross profit delivering $7 million of adjusted EBDA and $69 million of extra gross profit.

Speaker 3: For the full year 22, our revenue was 992 million, which reflects growth of 2% on a constant currency basis. Our extra gross profit was 235 million, and our adjusted EBDA was 26 million. Throughout the macroeconomic, political, and industry-specific challenges in 2022,

Speaker 3: We would remember the principles of this pipeline and focus on the core business.

Speaker 3: We gained significant market share on the premium end of the market, developed strategic drivers that we expect to deliver growth in the coming years and made measured investment in our business while staying disciplined on cost. We believe that some of the regulatory actions like the DOJ seeking to break up monopoly and focus on privacy, strengthen our competitive position.

Speaker 3: as one of the largest contextual digital advertising companies on the open web. 2022 was a record year of signing new multi-year partnerships with premium publishers, which is the segment we focus on, to give you some relevant numbers.

Speaker 3: We want from direct competition business worth more than a hundred million dollars annually, which is twice the amount we let go

Speaker 3: These market share gains remain from the largest and most important anchor publishers in the markets, such as Axis Spring and Germany, Fox News in the US, Daily Mail in the UK and JD in Italy.

Speaker 3: new business contributed for the $6 million just for Q4. This position does with commanding market share with the top 5-10 news publishers in many market globally.

Speaker 3: Most exciting for us is that we are told by partners that our monetization and engagement metrics are higher and that they choose us for our superior ad quality technology and products. Proof that our laser focus on the core is paying off.

Speaker 3: Consistent with our management approach, we're very disciplined about terms of deals, including the use of any cash prepayment as an avoiding dilution to our shareholders in order to gain business.

Speaker 3: The acquisition of video intelligence also allowed us to broaden our video and meet out to the person with our permission partners.

Speaker 3: We added VI to more than 40 of our existing publishers. We're very excited about the tension growth in the video business in 2023 and beyond, as it also fits well with our strategy for offering full funnel advertiser solutions, which I will turn on now. In total, we currently have close to 1,000 in article integration, whether through header bidding.

Speaker 3: measurable results from their awareness and consideration budgets, seeking primarily attention and engagement metrics.

Speaker 3: Predicting engagement is the cornerstone of our value proposition to performant and direct response to advertisers. So a natural extension is leveraging our core AI-based prediction capabilities to be relevant for enterprise brands.

Speaker 3: Our attractiveness to desadvertisers is also driven by the access we can give them to our exclusive premium supply in a direct way. We are in essence supply path optimized by design.

Speaker 3: As one example of our approach to enterprise brands, I'll be recently leveraged our brand studio to deliver premium and innovative advertising experiences to maximize the potential of user engagement or interactions users actively had with the creative, like Swipe, watching the video, enabling audio and clicking to

Speaker 3: drives a better user experience. This expansion of our advertising base was one of the areas of investment in 2022, and you will hear more about that throughout 2023.

Speaker 3: For performance advertisers, our focus is too forward. Increase automation and improves CPA by helping advertisers adopt the right automated optimization strategy.

Speaker 3: As a reminder, we've been implementing things like the ability to set target CPA cost requisitions.

Speaker 3: Drive for maximum conversion and allow for full automation of the CPC binning for a while.

Speaker 3: And we see continuous improvement in the performance for our advertisers. We believe that the focus we had on this direction gives us a significant competitive advantage. As a result, in the quarter we saw double digit increase in advertisers choosing our fully automated CBS mode shifting from the semi-automatic mode.

Speaker 3: And currently we have overall conversion to strategy adoption of 70% from our advertisers. In 22, we work with a record number of advertisers, which include a diversified demand mix across marketer types, vertical, ad format and goals. The direct relationship we have with these advertisers is critical.

Speaker 3: of multiple asset declined by double digit percentages 221kg.

Speaker 3: And as of the end of the year, I still approximately 10% below even 2019 levels. Therefore throughout the year, we're also acutely aware of the need to drive efficiencies and act in a disciplined way. The same way we acted in 2020 and 2021.

Speaker 3: When despite the strong growth, we managed our expenses conservatively and grew our team carefully. Similarly, as soon as we noticed the talented signs of headwind in Q1 2022, we moved quickly to cut costs and headcount, we structured some of our teams including folding our vision intelligence and the methods.

Speaker 3: and are accelerating our move of positions to lower cost geographies, implementing optimizations in our serving infrastructure, and we initiated several internal automation projects across our operation. As to the outlook for 2023, Jason will provide our guidance, but I want to highlight the few of the key assumptions. We assume no meaningful improvement in the macro environment.

Speaker 3: We believe that our consistent focus on the core, that that's our record market share gains and record page using Q4 combined with the investment meeting video full funnel offering for advertisers and optimizations in our building algorithm and the continuing focus on efficiency will support the growth, profitability and free cash flow we expect in 2023 and beyond. I'll now hand it over to you all. Thanks David. The statement alluded to 2022 was a challenging year for our industry which has caused the

Speaker 2: some of the publishers we brought into our marketplace in 2022.

Speaker 2: and they need technology to enable that diverse revenue growth at scale. This is why we introduced Keystone, which takes the best of the optimization technologies we've built at our brand for the last 15 years and build upon them a platform that enables publishers to grow the entirety of their businesses.

Speaker 2: e-commerce, subscriptions, newsletters, affiliates, et cetera, via technology. We've now added three bringing cultures in Spain, Germany, and Japan, with deploy the Keystone technology on their site.

Speaker 2: Switching years, AI has been a recent point of interest for many thanks to the advances in technologies like chat to PT.

Speaker 2: Before I outline some of the ways we built AI into the airframe stack over the years, I'd like to start with a word of caution. It's almost guaranteed that all companies in the near future will be hiking themselves with as huge benefactors of AI.

Speaker 2: Before I outline some of the ways we built AI into the airframe stack over the years, I'd like to start with a word of caution. It's almost guaranteed that all companies in the near future will be hiking themselves as huge benefactors of AI. I believe the AI story is a bit more nuanced.

Speaker 2: The AI revolution is at the same time real, overhyped, not entirely new, and partially commoditized. It's real in that there are fascinating breakthroughs happening which will allow for massive bad creations, smarter prediction algorithms, cost reductions, and more.

Speaker 2: It's also over-hyped and being presented as an immediate magical solution that will replace all units on all tasks.

Speaker 2: I think we'll find that the lead from a cool consumer user experience to industrial great solutions will require more R&D, more time, and more student support for that last mile of deliverables.

Speaker 2: It's not entirely new in that many of these technologies have been bubbling up in the past five years or so. I'll speak shortly about how we built AI into our core prediction algorithms starting in 2019.

Speaker 2: Lastly, much of AI is likely going to be quickly commoditized. For example, everyone will likely integrate chat GPP-like capabilities into their ad creative generation, which means it will be a commodity for everyone. All that said, our brain has been the leader in AI in the recommendation space.

Speaker 2: for several years. And here are a few ways we'd love her to AI in the she learning or ML for our business. First, we've been using AI technology for ad creative suggestion since 2021.

Speaker 2: This has been helping us and our advertisers in two ways.

Speaker 2: The first way is creating a large number of ad variations to quickly find those that are best performing. Secondly, is reducing the cost of human labor needed for extensive ad creatives. Close to 10% of new marketers on our platform are now using the AI Creative Generator and their Outbrain Campaigns.

Speaker 2: We are now lab testing the use of ChatGPT for ad credits and expects to make that available to our advertisers as soon as an enhancement to our existing AI technology.

Speaker 2: Second, at the core of our service, we use machine learning or ML to predict user interest and propensity to convert. These are technologies we built in deployed starting in 2019. And our systems make around 1 billion such predictions every second, making it one of the biggest AI ML systems in our space.

Speaker 2: ability to target users who we predict will have high capacity to engage with the advertiser and convert to them.

Speaker 2: We believe this will be specifically interesting for enterprise brands for looking to more smartly advertise to those users for more likely to pay attention to them.

Speaker 2: These specialized technologies are largely homegrown by Outrange R&D team, and we've open-source components that enable us to keep evolving our AI and ML capabilities in a cost-adfficient way.

Speaker 2: One of the biggest long-term lovers in our business is the continuous improvement of our algorithms and the data set our algorithms learned from.

Speaker 2: I'll start with the data that feeds our algorithms. The more data points we have, the better our CTR predictions and yield potentials become. In 2021, we've processed an average of 4.6 billion data points per minute. In 2022, we've grown that approximately 50% year earlier to about 7 billion data points per minute. When we pursue supply partnerships like the ones we mentioned earlier,

Speaker 2: It's not only the immediate financial value that we consider, but also the value of the data we obtain that we use to improve our AI algorithms. On the algorithm side, last year, our R&D team released into production several algorithm breakthroughs, including the AI technologies I just mentioned, which according to our internal AD testing, has improved our CTR and resulting ArcM yield potential.

Speaker 4: And namely our planningund.

Speaker 2: Thank you, Ram. As David mentioned, we beat our Q4 guidance for Justin Yvazov and achieved our guidance for ex-backroast profit.

Speaker 2: Last quarter, I mentioned the continued volatility of advertising budgets, warranting a cautious approach to our Q4 guidance. This proved to be proved.

Speaker 2: as we did see a softer second half of QCOR, than we would typically expect from our historical seasonality in terms of the level of advertising demand.

Speaker 2: However, along the same line, demand has been significantly stronger than expected in January and into February in both the U.S. and Europe showing signs of stability. Revenue in Q4 was approximately 258 million, a decrease of 7% in your over-year on a constant currency basis and 11% on a NAS report basis. The decrease your over-year was driven by lower yields.

Speaker 2: following largely to the headwinds on advertising demand affecting our industry. These headwinds were partially offset by growing our supply from winning new, quality long-term partnerships. These new media partners in the quarter contributed 16 percentage points, or approximately 46 million, of revenue growth year over year.

Speaker 2: by far our largest contribution of new partner revenue and page use on record. And far greater than the seven points of growth we had averaged in 2020 and 2021. Further, this growth comes in a period of demand headwind, which means that this supply growth would likely have contributed to even larger revenues in a more normal macro environment.

Speaker 2: Net revenue retention was 74%. It's likely to continue to impact the demand environment on pricing, which drove the majority of the decline year over year.

Speaker 2: Our logo retention was far higher at 96 percent for all partners that generated at least $10,000

Speaker 2: As an additional data point, our net revenue retention for full year 2022 was 86%, with essentially the entire 14% decline on existing partners to be invited to the demand environment on pricing, as our ad impressions were flat year over year, and playing 100% in a retention of ad impressions on a same-store sales basis. Additionally, effects rates remained ahead when done revenue.

Speaker 2: As a reminder, more than 60% of our revenue generated outside the US, largely in European markets. X-Tec growth profit was 59.2 million, a decrease of 21% year over year on a constant currently basis, and 23% as recorded. Consistent with what we've seen in the past several quarters, the steeper decline of X-Tec growth profit year over year versus revenue, we've driven by...

Speaker 2: And three, the impact of onboarding and optimizing significant new supply partners, which is challenged by the weaker than normal demand environment. As we sell them a prior call, we expect to grow out of this headwind in the coming quarters, assuming go further deterioration in the background environment.

Speaker 2: And three, the impact of onboarding and optimizing significant new supply partners, which is challenged by the weaker than normal demand environments. As we said on the prior call, we expect to grow out of this headwind in the coming quarters, assuming go further deterioration in the background environment. Moving to expenses.

Speaker 2: Operating expenses decrease approximately 6.6 million year- to 51.8 million in the fourth quarter. The majority of the decrease is due to higher one-time expense items incurred in the prior year. The rest of the decrease is due to the lower-personality cost, driven by lower variable compensation and favorability of FX rates, offset partially by the impact of increased headcount, mainly due to our BI acquisition in January . As mentioned in previous quarters, we implemented a series of cost reduction efforts to adjust the current business headwinds.

Speaker 2: We began 2023 with a headcount of approximately 980 FTE, which is down 7% from June and down 2% from January 2022, as we continue to focus our attention on driving greater efficiencies in our operations. We are planning to maintain headcount, which it counts for around 70% of our operating expenses to stay essentially flat for 2023. As a result, I just leave it to approximately 7.1 million in the quarter.

Speaker 2: Moving to liquidity. Free cash flow, which we define as cash provided from operating activities, less CAPEX and capitalized software costs, was approximately 11.5 million in Q4. For full year 2022, we saw a net use of cash of approximately 22 million. This was primarily driven by lower profitability.

Speaker 2: In total, we ended the quarter with 351 million of cash, cash equivalent, and investments in marketable securities on the balance sheet and 236 million of long-term convertible debt.

Speaker 2: We announced previously that in February 2022, our board authorized the $30 million share repurchase program. In November , we completed repurchasing the full amount of authorized, which resulted in the repurchase of approximately 6.4 million shares.

Speaker 2: In December , the company's board of directors authorized a new and incremental 30 million dollar share repurchase program, which we began executing in 2001. We continue to believe it is a attractive way to enhance shareholder value under current market conditions, while still investing in growth opportunities.

Speaker 2: companies board of directors authorized a new and incremental 30 million dollar share repurchase program which we began executing in Q1. We continue to believe is a attractive way to enhance shareholder value under current market conditions while still investing in growth opportunities. And then turning to our outlook.

Speaker 2: As discussed today in Empire Quarters, visibility to advertising budgets remained limited. In our guidance, we assume that current macro-conditions persist with no material deterioration or improvement and regular seeding healthy.

Speaker 2: With that context, we have provided the following guidance. For Q1, we expect X-Tech-Rose profit of $50 million to $52 million, and we expect the just a debit of negative $2.5 million to break even. For a full year 2023, we expect X-Tech-Rose profit of at least $237 million, and we expect the just a debit of at least $28 million.

Speaker 2: Provide additional context to how we see 2023. Our expectation is that we return to you or be your growth in Q3, as we begin to last the deterioration of the macro environment we saw throughout H1 2022.

Speaker 2: And we drive growth from areas that we have invested in over the past year, scaling our new supply, growing advertiser spend and improving yields through product and algorithm innovations.

Speaker 2: expanding the deployment of our video and full federal offering, and growing our relationships with existing and attracting new publishers and non-publisher platforms.

Speaker 2: As we assume a flat macro environment, our assume growth over the course of the year is driven by our execution of even deaf and areas, contributing more meaningfully in the second half of the year.

Speaker 2: The guidance also seems that expensive, the roughly flat where they have been for the past year or so. We plan to achieve this through operating our core more efficiently and strict prioritization of investment areas. However, we will monitor results and the environment closely with a focus on profitability and cash for generation. Now I'll turn it back to the operator for Q&A. Thank you. We will now be conducting a question or answer session.

Speaker 2: If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your questions in the queue. For participants using speaker equipment, it may be necessary to pick up your hand stuff before pressing the star keys. But noticeably, while we pull for questions.

Speaker 2: Thank you. Our first question is from Nostrandler with Barkley. Please continue to hear your question. Hey guys, good morning.

positive and 3Q that all sounds pretty good. You're one of the few companies that's reporting a little bit later than the rest. So, you know, we're in the first stage of easy comps, lapping the Ukraine conflict in March. What are you guys seeing right now across categories and geos as far as?

the overall environment and then what does it take to get to that positive growth rate in the back half? Is that just a function of easy comps or an improving environment in the Jason? Can you just talk over the next couple of years like without giving specifics what's the path on the X-TAC margin, the GPX-TAC margin?

And what does it take to get back to the kind of previous cadence or range that that number is normally in? Thanks a lot. Okay, well, so we're hitting.

What does it take to get back to the kind of previous cadence or range that that number is normally in? Thanks a lot. Hey, well, I'm sorry. Hey, okay, if you want to start it, oh.

Okay, so I'll start. So generally we've been saying we see stability in the market. So we saw rates of decline that started in the end of Q1 into Q2 and then those rates of decline have stabilized and we assume that that's what we're going to see going into next year. So no major improvement. But...

Relative stability, we had, I think Jason mentioned, I mean, second half of December was softer, but then January and February are definitely looking okay. We don't see any major differences currently between Europe , which is a big part of our business, and the US, so generally the trend are pretty similar.

And when we talk about the second half, I mean it's driven not just by easy accounts but really by many of our efforts and the growth drivers coming more to bare fruit in Q4 and in Q3 and Q4 and maybe I'll turn to Jason on that.

Sorry, yes. So I mean, the trends we saw really in the course of the year, our biggest distance reminder, our biggest step down to us that we saw were in Q2 and we saw a much more more normal seasonality.

into the second half and as Dickie said, December was softer. I think heard from a lot of our peers as well with relative strength in January and into February . From March, we've got positive indications from the market. So cautiously, we're expecting a normal, I would call it a normal, seasonal uptick in March.

So, you know, visibility obviously remains remains limited, but again, our diversity of our advertiser mix and without any reliance on any specific vertical is certainly an asset for us. Just from vertical's perspective, I think you might have asked in Q4, you know, we saw positive signs. Again, we don't overly rely on any one of these, but positive signs.

But we're really using our normal process for forecasting and for using for several years, which is expecting using the trends that we see into Q1, flat macro, and normal seasonality. And then to get that growth, it's really coming from yes, laughing, and the things we've done.

supply at that and we're traditionally a land and expand model of how we view our salt. That's why we report the net revenue retention and why it's been over 100% historically, you know, this is not withstanding. But we drive that growth on our existing, you know, and our recently one partners through technology, learning the audience.

driving off the adjacent expansions, getting really finding out how to best monetize for each partner, which is largely through our technology discovering that over and it takes a couple quarters from artistry and what we tend to do.

I think we'll also grow in our model through, again, adding new partners and that's both traditional publishers and what we call the platforms or the non-publisher partners. So that's the original equipment manufacturers, browsers, minus one screen. That's more than 10% of our revenue at this point. I don't expect another euro.

of 16% new growth, but certainly the seven that we came to kind of see every single time is probably more in the ballpark of what to expect there, though they're not guiding specifically to that. And yeah, we continue to invest in our algorithms and optimization. Your own mentioned on the call, we have a.

we put it in just based on what we've seen this year. And then I'll just say expansion of video and our full funnel offerings of, you know, the article placements, different times, different types of other formats and placements. And we'll probably talk more about that in the coming quarters as an area of focus.

And then at the same time keeping expenses flat, which is what we assume in our guidance for the year and we've been flat, if you look back at the last year and a half, by the way, by operating our core more efficiently and really focusing on prioritization of how we can...

you know, invest smartly and repurpose resources to expand our core. So that's really the story for the year. As far as I think your second question was just about the margin. You know, the things that I mentioned have brought the margin down are actually the same the same types of things that will bring it up.

So just what those are again, you know, mix. So it's always going to be a factor we've got, you know, thousands and thousands of partners and they all have different kind of taker rates and it depends where kind of the mix of the revenue is generated. And just to give an example, we're not talking to any specific publishers, but we're not.

We're not obsessed with the number when we're adding a new partner. If it's at a lower than average rate, but we still see the dollars are attractive and profitable. There's more to it as well. The reach and the audience that it brings us for our advertisers that might convert well for certain text advertisers and open share of wallet is also what we look at as well as the data that it has.

You mentioned just how much how many more data points were adding now with with adding all these partners and you know we view that as growing.

growing yields across our entire network when we improve our data as well. The other, that's a mix of demand, headwinds really and the supply demand imbalance is probably the biggest thing if I as a pick one that's driven it down and macro improvement will certainly be the biggest thing that drives it back up.

There's some things that we can certainly do ourselves to drive it back up through just again. Better yields, better click through rates, etc. to find some leverage there as well. Then ramping up again on these new partners, we find that it takes several quarters to drive the yield higher and a lot of these yields that means higher cake rates as well. So again, things that are brought down are the things that we'll bring back up. Thanks.

Those the longest answer in history conference calls to congratulate. I wanted to add something but it was longer now. We leave that. I think the one thing I do want to talk in the prepared much about the flywheel. I mean, the winds of premium supply and the investments we are making into made article, video and really driving more shelf-world, including our time by getting into awareness and consideration.

Good morning, thanks so much for taking my questions. I wanted to start off just on my competitive environment. Your own talked about the importance of just data. So to that angle, can you talk about what the competitive environment now looks like, that the taboo and Yahoo deal closed? How much of an advantage is scale? And does this change the competitive dynamic that you guys speak with publishers and advertisers?

I'll take that. I think the Yahoo deal of is an interesting supply deal that gives scale. But the way we look at it today, it's a big opportunity for us in the next couple of years. I mean, it's very distracting. It will take a long time. And we see a big opportunity to take market share.

on the demand side, I mean, Germany is shutting down, give us an opportunity. Gemini, by the way, had a few third-party large supply partners, we took the largest one, which is a US publisher in the summer, and I think there are also exiting other very, very large third-party supply deals. So we see opportunities there in the demand.

It's also a focused on right away. I have to admit I still look at Yahoo Finance and track all my stocks there. So I love it. It's still a Deal that will take a lot of time to materialize at the end. It does give more data But it also when we look at sort of market segments and where we're focusing on this the pure native deal

We made it this great, but we're expanding much more into, as I said, into full funnel, other areas of publishers in mid-article video consideration awareness. So again, this is very, very native-focused. And I think the great financial feel for a taller, relatively dilution to share all those of the competitor, but...

I think it's a great financial deal for Apollo, but at the end, I think once it materializes, I think it will give. Again, it's another publisher deal. I mean, it's not more than getting more data from publishers at scale, and I think that they will be able to gain good scale from additional user data. It's not very clear. I mean, I'm...

how much of the Yahoo data will be able to use there, rather than just the first party data from clicks that all of us have from publishers, so that's not clear, but definitely a deal is clear. I think we heard from some publishers, some concern about sort of such a large stake of a major publisher in a competitor. So it's balance, I think, in the next two years for us to be seated an opportunity, and congratulations.

sort of the publishers we want that we did large surveys also with a lot of publishers that when we win it because of ad quality monetization, insights that we provide and when you compare the numbers of the extract obviously the competitors that you're referring to has a lot of other things in there I mean it's coming

That makes sense. Thanks. And then I wanted to touch back on Keystone. I'd love to hear more about what publishers are telling you and then just how do you guys feel about the pipeline for 2022? Thanks so much.

I answered thanks. Thank you everyone here. So we formally announced a piece known in the middle of Q4 so it's very recent and we mentioned at the time that we're doing it with the four design partners in the US and Europe now. It just mentioned that we have three new publishers with the code on page. Okay. You know this wonderful even in the early photograph. So mishap. So do you know the

And two of those in Europe and one in Japan, which is also expanding to other countries. The, what's important to remember is we'd want this into a market that's not very favorable in terms of seeing for technology. The Keystone is a SaaS platform.

And these are paid partnerships. But we're using this in the short term, especially in these market conditions as a product differentiator as a way to establish a stronger mode with those publishers that we work with. That's more important than the short term financials. That said, we mentioned last year we did about a couple.

a couple million dollars in revenue from Keystone, and we expect that to accelerate this year faster or outpace the growth of revenue. But again, it's still small compared to the around a billion dollars of our corporate.

Thank you.

Thank you. Our next question is termed sweatup.

Kajoria with Evercore ISI. Please proceed with your question. Okay, thank you. David, you mentioned that...

When you were talking about the publisher when you mentioned few things why you what allowed you to gain share, superior at quality tech and product, etc. Can you provide more color in terms of what exactly is driving share gains on these publisher wins?

And then Jason, how did I guess how should we think about just the seasonality from Q1 to Q2 to understood that you expect growth starting Q3? Could you please help with that? Thank you.

So on the competitive winds and there were very significant the COC again significant market share around premium publishers, which is again the era we are focused on. And it's been a record year of those winds. And it's driven by a combination of technology product, superior monetization and optimization that we...

into how we can partner with publishers. These are typically very long term deals. I mean, some of them actually are beyond five years. Most of them are three to five years. So we're very excited about those. I think that when we also do these deals, we try to also increase our presence into a main article. And we have a very nice success with leveraging those to implement V.I.

We want to leverage some of the other placements in minarticle and other placements to grow our sort of enterprise brand strategy that I talked about. So it's a combination of those in the financial terms matter too. I said, well, we'll discipline the round, prepayments and cash. We'll see if we didn't give any equity to get those.

market obviously that's around referred, I think, spring-loaded supply. Again, the CPCs are still low, a potential end versus 2019. So we had record page views in Q4. So once the men recover a little bit, then obviously we continue to improve internally. We don't just hope for market recovery, but algorithmic improvements and others. I think we will see that reflected in the financial.

So, I think we'll take the second one right. So, yeah, I mean, like I said, normal seasonalities, let me expect with layering on some of these growth drivers on top. But, you know, as you can see, you know, Q1.

fully feeling the effects of laughing the tough comp and really what happened last year was we saw advertising budgets reset at the beginning of Q2 and then again you know each kind of month of Q2 so so it's still dealing with you know a partial tough comp easing up over the periods to be kind of an easier comp at the Q3 rate.

And so with that in mind, I would expect, you know, directionally not any hard numbers here, but to go from, you know, the implied year-to-year decline that we're giving in our Q1 guidance, which is clearly double digits down to be, you know, Q2 probably down single digits that they've mid to high single digits down in Q2. And then...

really scaling it again over the second half of the year. It's that helps with the model. That's very helpful. Thanks Jason. Thank you. Our next question is from the Igo Arunian, which city group? Please continue to your question. Hey, good morning guys. I guess first I just want to.

anything where we could add about where we are with that, what's left. And same thing on the move of Spongebob's video and on the mid-article. Just kind of technically, again, David, you said that's going to start contributing more over the course of the year. But where are you in conversations with advertisers publishers? What needs to get done to get that?

really we see yields improving on those deals and it's really following the patterns we've seen before. Again, the challenges that there is softness in demand and the depth of demand resulting in low CPCs is definitely not ideal when you're ramping up so much supply. We talked about winning more than 100 million dollars of new business. That's a lot for four years. But we are confident that.

you know, they're following our models and following the traditional patterns of ramping up and again the record paid views we had in Q4 will

You know, yield in better financial performance once we rent those deals also up and we see potentially some improvement in CPCs in terms of the sort of our strategy around Getting more I mean we have a big business today with enterprise brand already In many of the European countries most of our businesses of agencies and brands but what what please?

potential metrics, engagement metrics, and we believe we can drive those better than many others and really create a unique selling proposition, which goes back to why we're focused on the premium supply. I mean, these brands want to be on premium supplies. So, if you look at in the most of the large geography, we have controlling market share among the top five.

When we appear, we talk about the acquisition of the mentor and the bidding technology that we've continuously improved over the years and served as well both on our large partner Microsoft, which we've been working for a long time on this bidding. And we then and in hundreds of other properties. So that is helping us in terms of ability to be very competitive on on.

made article, the VI acquisition falls perfectly into that with the in-stream reviewer that is more awareness-type campaign format that advertisers are looking at. So it's all coming together. You'll hear more about it in 23 in a bigger way, but we're very excited about that direction.

You mentioned the DOJ in Google and obviously it's been a big topic, especially this earnings from OpenWeb, OpenWeb advertisers companies.

Maybe you want to get your expanded thoughts on what that means. What do you think it might mean for Google and?

So this is more specific to how it impacts operating and the benefits that that will drive. Thank you.

Yeah, how do you go? You're around here. I'll take that one. The Google lawsuit, you know, doesn't have any direct impact on us currently.

I think obviously one of the most meaningful things happening to the whole industry, who will need to look at the most dominant player in online advertising and compete with everyone often included, so that I'm on a publisher supply side and the demand side. The DOJ is I think pretty clear wanting to reduce Google's monopolis to co-hope on online

is looking to break Google's ad business. I think we might stand to benefit as publishers specifically, might be more cautious in giving the majority of their business to some of them that's now dealing with antitrust. And I think it'll really benefit us in others in the space that are deep with publishers and advertisers and being able to...

to really run faster on product and partnerships space.

from faster on product and partnerships space. Thanks, guys.

Thank you. Our next question is from Laura Martin with Needleman Cull. Please proceed with your question. Good morning. My first one is on guarantees. I think, Jason, you guys used to give us the percent of the tax that was guaranteed. And I'm interested in that number as well as when you're planning these new deals that unprecedented level of supply.

What was your, how, a percent of those are guarantees?

Those are guarantees. That's my first question.

Sure, yeah, we've shared, I think, the percentage of revenue that subjects to the guarantees, which we've set in the past is around 20% and it still is, by the way, around that 20% level. It hasn't changed meaningfully. On the new deals, you know, not going to specifically talk to any, you know, terms on any specific deal, but it has been a combination. So there have been, there have been.

you lost. So the way I heard those words it meant that you lost 50 million dollars with the business and I didn't understand whether does that mean you lost 50 million to a competitor or just the spending was lower or delayed. Could you clarify that please?

I'm sorry. You're muted. I'm sorry. We were talking about the wind of market. We did win well note of 100 million. I need to be cautious, but it was well note of 100 million.

I wouldn't say so. I mean, I think the general shift you've seen. I mean, we reported new business of 46 million dollars for Q4 that's much higher than we've had. You know, it's 30% higher than competition. So we feel good about those market share positions.

Thank you. There are no further questions at this time. I'd like to hand the poll back over to your own galai, Bernie Closen-Colombs. Thank you.

Thanks operator and thank you all for joining us today for our 2022 year end earnings.

Before we wrap up, I want to take this opportunity to welcome MIPIA DOS to the operating board of directors. MIPIA brings significant industry expertise in the top executive at APNECSIS among pioneers of programmatic advertising and OLO. We're very excited to have our depth of experience on our board. Last year was a challenging one for us, given the significant macro headwinds, but whether macro is challenging or accommodating.

that have been we are committed to staying focused on our core and being very disciplined in our priorities and our costs. We look forward to seeing you in our Q1 earnings call. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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And.

Incorporated, Fourth Quarter, and Fiscal Year 2022 Ernie's conference call. At this time, all participants are not listed on my mother. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Now, I'd like to turn the call over to your operating management team.

Good morning and thank you for joining us on today's conference call to discuss Outland's fourth quarter and fiscal year end 2022 results.

Joining me on the call today, we have Outbrains co-founder and co-CEO, Your Own Galai, co-CEO, David Cosmon, and CFO , Jason Kibbiat.

During this conference call, management will make forward-looking statements based on current expectations and assumptions. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. These risk factors are discussed in detail in our Form 10K file for the year ended December 31st.

2021. As updated in our form 10Q and other reports and in subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as the calls original date and we do not undertake any duty to update any such statement.

Today's presentation also includes references to non- GAAP financial measures. You should refer to the information contained in the company's fourth quarter earnings release for definitional information and reconciliation of non- GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.albrain.com, under news and event.

With that, let me turn the call over to data. Thank you Steve. And please to report that in Q4 we exceeded the guidance we provided for adjusted EBDA. And we were at the higher end of our guidance for extra gross profit, delivering $7 million of adjusted EBDA and $59 million of extra gross profit. For the Fulia 22.

Our revenue was 992 million, which reflects growth of 2% on a constant currency basis. Our extra gross profit was 235 million, and our adjusted EBDA was 26 million.

Throughout the macroeconomic, political and industry-specific challenges in 2022, we were driven by the principles of discipline and focus on the core business. We gained significant market share on the premium end of the market, developed strategic drivers that we expect to deliver growth in the coming years.

and made measured investments in our business while staying disciplined on cost. We believe that some of the regulatory actions like the DOJ seeking to break up monopoly and the focus on privacy, strengthen our competitive position is one of the largest contextual digital data that has been companies on the open web.

2022 was a record year of signing new multi-year partnerships with premium publishers, which is the segment we focus on. To give you some relevant numbers.

We want from direct competition, business worth more than a hundred million dollars annually, which is twice the amount we let go. These market share gains remain from the largest and most important anchor publishers in their markets such as Access Spring and Germany, Fox News in the US, daily mailing the UK and JD in Italy.

new business contributed $46 million just for Q4. This positions us with commanding marketures with the top 5 to 10 news publishers in many markets globally. Most exciting for us is that we are told by partners that our monetization and engagement metrics are higher and that they choose us for our superior ad quality technology and products. Proof that our laser focus on the core is paying off. Consistent with our management approach.

were very disciplined about terms of deals, including the use of any cash repayment and avoiding dilution to our shareholders in order to gain business.

The acquisition of video intelligence also allowed us to broaden our video and made article present with our publisher partners. We added VI to more than 40 of our existing publishers. We're very excited about the attention growth in the video business in 2023 and beyond, as it also fits well with our strategy for offering full funnel advertising.

our time as enterprise brands are also increasingly looking for more meaningful measurable results from their awareness and consideration budgets, seeking primarily attention and engagement

Predicting engagement is the cornerstone of our value proposition to performant and direct response advertisers. So a natural extension is leveraging our core AI-based prediction capabilities to be relevant for enterprise brands. Our track thickness to these advertisers is also driven by the access we can give them hopefully and definitely and certainly make it delivered by our F

to our exclusive premium supply in a direct way. We are in essence supply path optimized by design. As one example of our approach to enterprise brands, I'll be recently leveraged our brand studio to deliver premium and innovative advertising experiences to maximize the potential of using the engagement.

or interactions users actively had with the creative. Like Swipe, watching the video, enabling audio, and clicking through the out these sites. The complaint resulted in a more than three times high engagement versus comparable formats.

So just to close the look on this flywheel, premium global supply drives more premium brand higher quality advertising, which in turn drives a better user experience. This expansion of our advertiser base was one of the areas of investment in 2022, and you will hear more about that throughout 2023. For performance advertisers, our focus is twofold. Increase automation and improves CPA by helping advertisers adopt the right automated optimization strategy.

As a reminder, we've been implementing things like the ability to set target CPA cost per acquisition, drive for maximum conversion, and allow for full automation of the CPC bidding for a while. And we see continuous improvement in the performance for our advertisers. We believe that the focus we had on this direction gives us a significant competitive advantage. As a result, in the quarter, we saw double-digit increase in advertisers choosing our fully automated CBS mode, shifting from the semi-automatic mode.

And currently we have overall conversion to strategy adoption of 70% from our advertisers. In 22, we work with a record number of advertisers, which include a diversified demand mix across marketer types, vertical, ad format, and goals. The direct relationships we have with these advertisers is critical in times of economic uncertainty as we work closely to understand client goals and optimize the company accordingly.

However, it needs us to say, 2022 was a tough year, primarily from advertisers softness in pricing and reduction of campaign budgets. The average prices that we've seen in our market place have declined by double digits, percentages, versus 2021. And as of the end of the year, still approximately 10% below even 2019 levels.

Therefore, throughout the year, we're also acutely aware of the need to drive efficiencies and act in a disciplined way. The same way we acted in 2020 and 2021, when despite the strong growth, we managed our expenses conservatively and grew our team carefully. Similarly, as soon as we noticed the talented signs of headwinds in Q1 2022, we moved quickly to cut costs and headcount, we structured some of our teams including folding our video intelligence and demand teams into our core business, and reduced our originally planned operating expenses for 2022.

by more than $50 million, resulting in positive free cash flow in Q4. Looking to improve our cost structure in 2023, and accelerating our move of positions to lower cost geographies, implementing optimizations in our serving infrastructure, we initiated several internal automation projects across our operation.

As to the outlook for 2023, Jason will provide our guidance, but I want to highlight the few of the key assumptions. We assume no meaningful improvement in the macro environment. We believe that our consistent focus on the core, that led to our record market share games and record page using Q4, combined with the investment meeting video, full funnel offering for advertisers and optimizations in our bidding algorithm and the continuing focus on efficiency, will support the growth, profitability and free cash flow we expect in 2023 and beyond.

I now hand it over to you all. As David alluded to 2022 was a challenging year for our industry, which has caused the demand for advertisers side of our business to perform more radically than any year in the past decade plus of our business. Our focus this year was on balancing discipline cost management while investing in technologies that we believe will service well into the future, based on the spring-loaded supply winds we mentioned.

Here are a few of these areas. As I said last quarter, it's clear that revenue diversification is one of the top priorities for many of the best publishers around the world, including some of the publishers we brought into our marketplace in 2022. And they need technology to enable that diverse revenue growth at scale.

This is why we introduced Keystone, which takes the best of the optimization technologies we've built at our brain for the last 15 years, and build the Pandan platform that enables publishers to grow the entirety of their businesses, e-commerce, subscriptions, newsletters, affiliates, et cetera, via technology. We've now added three premium publishers in Spain, Germany, and Japan, who have deployed the Keystone technology on their site. Switching ears.

AI has been a recent point of interest for many thanks to the advances in technologies like chatGPT.

Before I outline some of the ways we built AI into the outprank stack over the years, I'd like to start with a word of caution. It's almost guaranteed that all companies in the near future will be hiking themselves with this huge benefactors of AI.

I believe the A.S. story is a bit more nuanced. The A.I. revolution is at the same time real, overhyped, not entirely new, and partially traumatized.

It's real in that there are fascinating breakthroughs happening which will allow for massive ad creation, smarter prediction algorithms, cost reductions, and more.

It's also over-hyped and being presented as an immediate magical solution that will replace all humans on all tasks.

I think we'll find that the lead from a cool consumer user experience to industrial and great solutions will require more R&D, more time, and more human support for that last mile of deliverables. It's not entirely new in that many of these technologies have been bubbling up in the past five years or so. I'll speak shortly about how we built AI into our core prediction algorithm starting in 2020.

in the recommendation space for several years. And here are a few ways we'd love it to AI and machine learning or ML for our business. First, we've been using AI technology for ad creative suggestions since 2021. This has been helping us and our advertisers in two ways.

The first way is creating a large number of ad variations to quickly find those that are best performing. Secondly, is reducing the cost of human labor needed for extensive ad creatives.

Close to 10% of new marketers on our platform are now using the AI Creative Generator and their Apps specialized brands that run something called practical ned Ang began using software

We are now lab testing the use of ChatGPT for ad credits and expects to make that available to our advertisers as soon as an enhancement to our existing AI technology. Second, at the core of our service, we use machine learning or ML to predict user interest and propensity to convert.

These are technologies we built in deployed starting in 2019. And our systems make around one billion such predictions every second, making it one of the biggest AI ML systems in our space.

Third, more recently, we started extending these AI-based prediction algorithms into the programmatic space.

This means that advertisers looking to buy outpring through programmatic channels such as BSTs and SSDs can now benefit from the ability to target users who we predict will have high-pensity to engage with the advertiser and convert to them. We believe this will be specifically interesting for enterprise brands who are looking to more smartly advertise to those users.

the continuous improvement of our algorithms and the data sets our algorithms learned from. I'll start with the data that feeds our algorithms.

The more data points we have, the better our CTR predictions and yield potentials become.

In 2021, we processed an average of 4.6 billion data points per minute. In 2022, we've grown that approximately 50% year by year to about 7 billion data points per minute. When we pursue supply partnerships like the ones we mentioned earlier,

It's not only the immediate financial value that we consider, but also the value of the data we've paying that we use to improve our AI algorithms. On the algorithm side, last year, our R&D team released into production several algorithms breakthroughs, including the AI technologies I just mentioned, which according to our internal AD testing has improved our CTR and resulting ART.

to the yet RCFO to discuss the financials. Thank you, Rome. As David mentioned, we beat our Q4 guidance for adjusted EBITDA and achieved our guidance for expect-gross profit. Last quarter, I mentioned the continued volatility of advertising budgets, warranting a cautious approach to our Q4 guidance.

to discuss the financials. Thank you, Ron. As David mentioned, we beat our Q4 guidance for adjusted even though it achieved our guidance for expect-gross profit. Last quarter, I mentioned the continued volatility of advertising budgets, warranting a cautious approach to our Q4 guidance. This proved to be proved.

as we did see a softer second half of Q4, than we would typically expect from our historical seasonality in terms of the level of advertising demand. However, along the same line, demand has been significantly stronger than expected in January and into February in both the US and Europe , showing signs of stability. Revenue in Q4 was approximately 258 million, a decrease of 7% in year-over-year on a constant currency basis, and 11% on an as-report basis. The decrease of your over-year was driven by lower yields.

flowing largely to the headwinds of advertising demand affecting our industry. These headwinds were partially offset by growing our supply from winning new, quality long-term partnerships. These new media partners in the quarter contributed 16 percentage points, or approximately 46 million, of revenue growth year over year. By far, our largest contribution of new partner revenue and pay dues on record. And far greater than the seven points of growth we had averaged in 2020 and 2021.

Further, this growth comes in a period of demand type 1, which means that this supply growth would likely have contributed to even larger revenues in a more normal macro environment. Net revenue retention was 74%, selecting the continued impact of the demand environment on pricing, which drove the majority of the decline year over year. Our logo retention was far higher, at 96%, for all partners that generated at least $10,000 in Q4 2021.

As an additional data point, our net revenue retention for full year 2022 was 86%, but essentially the empire 14% decline on existing partners proven by the impact of the demand environment on pricing, as our ad impression for a flat year over a year, implying 100% in a retention of ad impressions on a same-store sales basis. Additionally, effects rates remained ahead when done revenue. As a reminder, more than 60% of our revenue generated outside of the US, largely in European market.

kickling.

2. Lower performance on certain media partners. Driven in part by the demand headwinds we're seeing, which impact the portion of our take rates with certain partners. And 3. The impact of onboarding and optimizing significant use supply partners, which is challenged by the weaker than normal demand environment. As we sell them a prior call.

We expect to grow out of this headwind in the coming quarters, assuming go further deterioration in the macro environment. Moving to expenses. Operating expenses decrease approximately 6.6 million year- to 51.8 million in the fourth quarter. The majority of the decrease is due to higher one-time expense items incurred in the prior year. The rest of the decrease is due to lower-personality costs, driven by lower variable compensation and favorability of FX rate.

Offset partially by the impact of increased headcount mainly due to our BI acquisition in January . As mentioned in previous quarters, we implemented a series of cost reduction efforts to adjust the current business headwinds.

We began 2023 with a headcount of approximately 980 FTE, which is down 7% from June and down 2% from January 2022, as we continue to focus our attention on driving greater efficiencies in our operations. We are planning to maintain headcount, which accounts for around 70% of our operating expenses.

to stay essentially flat for 2023. As a result, adjusted even the approximately 7.1 million in the quarter.

Moving to liquidity. Free cash flow, which we define as cash provided from operating activity, less capex and capitalized software costs, was approximately 11.5 million in Q4. For full year 2022, we saw a net use of cash of approximately 22 million. This was primarily driven by lower profitability. In total, we ended the quarter with 351 million of cash. Cash equi-

at least 6.4 million shares. In December , the company's board of directors authorized a new and incremental very million dollar share repurchase program, which we began executing in 2-1.

We continue to believe it is a attractive way to enhance shareholder value under current market conditions while still investing in growth opportunities. Turning to our outlook, as discussed today in the fire quarters, visibility to advertising budgets remains limited. In our guidance, we assume that current macro-conditions persist with no material deterioration or improvement and regular seasonality.

With that context, we have provided the following guidance. For Q1, we expect X-Tech-Rose profit of $50 million to $52 million, and we've expected just a debita of negative $2.5 million to break even. For a full year 2023, we've expected X-Tech-Rose profit of at least $237 million, and we've expected just a debita of at least $28 million. For a wide additional context to how we see 2023, our expectation is that we return to you or be your growth in Q3.

as we begin to last the deterioration of the macro environment we saw throughout H-122. And we drive growth from areas that we have invested in over the past year, scaling our new supply, growing advertiser spend and improving yields through product and algorithm innovation.

expanding the deployment of our video and full funnel offering and growing our relationships with existing and attracting new publishers and non-publisher platforms. As we assume a flat macro environment, our assume growth over the course of the year is driven by our execution of even less than areas, contributing more meaningfully in the second half of the year. The guidance also assumes that expenses are roughly flat, where they have been for the past year or so. We plan to achieve this through operating our core more efficiently and strict priorities

the question cue. You may press star 2 if you'd like to remove your questions in the cue. For participants using speaker equipment it may be necessary to pick up your hand stuff before pressing the star 2. But momently, as well we pull for questions.

Thank you. Our first question is from Nostranlar with Barkley. Please continue to hear your questions. Hey guys, good morning. Maybe just starting with the macro, Dickie, maybe you could answer this one. And then I'm going to for Jason after that. But the guidance you said, normal seasonality for 2023, you said growth rates will be positive in 3Q. That all sounds pretty good.

You're one of the few companies that's reporting a little bit later than the rest. So, you know, we're in the first stage of easy comps, lapping the Ukraine conflict in March. What are you guys seeing right now across categories and geos as far as?

the overall environment and then what does it take to get to that positive growth rate in the back half? Is that just a function of easy comps or an improving environment in the Jason? Can you just talk over the next couple of years like without giving specifics what's the path on the X-TAC margin, the GPX-TAC margin, and what does it take to get back to the kind of previous cadence or range that that number is normally in? Thanks a lot. Hey, well, so we're hitting.

Okay. If you want to start it. Okay. So I'll start. So generally we've been saying we see stability in the market. So we saw rates of decline that started in end of Q1 into Q2 and then those rates of decline have stabilized and we assume that that's what we're going to see going into next year. So no major improvement, but relative stability. We had, I think Jason mentioned, I mean, second half of December was softer, but then generally the February are definitely looking looking okay.

We don't see any major differences currently between Europe , which is a big part of our business, and the US, generally, the trends are pretty similar. And when we talk about the second half, I mean, it's driven not just by easy accounts, but really by many of our efforts and growth drivers coming, more to their fruit in Q4, and in Q3 and Q4, and maybe I'll turn to Jason on that.

Sorry, yes. So, I mean, the trends we saw really in the course of the year, our biggest distance reminder, our biggest step down to us that we saw were in Q2 and we saw a much more normal seasonality into the second half. And as Dickie said, December was softer.

As we've heard from a lot of our peers as well with relative strength in January and into February . From March, we've got positive indications from the market. Cauchy sleep, we're expecting a normal seasonal uptick in March. Visibility obviously remains limited, but again, our diversity of our advertiser mix and without any reliance on any specific vertical is certainly an asset for us.

Just from verticals perspective, I think you might have asked in Q4. We saw positive signs. Again, we don't really rely on any one of these, but positive signs from automotive travel and retail while finance and entertainment where we're actually weaker in Q4 than Q3, which is unusual and political was minimal. We didn't expect much, so not very disappointed by that, but that was it. And then for 2023.

I think we started to say this, but we're really using our normal process for forecasting if we've been using for several years, which is expecting using the trends that we see into Q1, flat macro, and normal seasonality. And to get that growth, it's really coming from yes, laughing, and the things we've done really in the last couple quarters that will start to pay off, I think really more into the second half of this year and just to expand, you know, briefly on those.

You know, like I said, we've added a ton, a ton of supply and premium supply at that and We're traditionally a land and expand model is how we view ourselves. That's why we report the net revenue retention and why it's been over 100% Historically, you know, this you're not with standing But we drive that growth on this on our on our existing You know, and our recently one partners through technology learning the audience Driving off the adjacent expansions getting you know really finding out how to desmonetize for each partner

which is largely through our technology discovering that over and it takes a couple quarters from artistry and what we tend to do. I think we'll also grow in our models through again adding new partners and that's both traditional publishers and what we call the platforms or the non publisher partners. So that's the original equipment manufacturers, browsers, minus one screen. That's more than 10% of our revenue at this point. And I don't expect another year of 16% new growth, but certainly the seven.

that we came to kind of see every single time is probably more in the ballpark of what to expect there, though they're not guiding specifically to that. And yeah, we continue to invest in our algorithms and optimization, your own mentioned in the call. We actually saw really big gains in our prediction. We just, with the supply and demand and balance, we haven't, we haven't.

and able to see it come through our overall results yet, but more coming there, and we're obviously cautious about how we put it in just based on what we've seen this year. And then I would just say expansion of video and our full funnel offerings of the article placements, different types of other formats and placements, and we'll probably talk more about that in the coming quarters as an area of focus. And then at the same time, keeping expensive SLAT, which is what we assume in our guidance for the year, and we plan to...

up. So just what those are again, you know, mix. So it's always going to be a factor. We've got, you know, thousands and thousands of partners and they all have different kind of take rates and it depends where kind of the mix of the revenue is generated. And just to give an example, we're not talking to any specific publishers, but we're not obsessed with the number, you know, when we're adding a new partner, you know, if it's at a lower than average rate, but we still see that dollars are attractive and profitable, there's more to it as well. I mean, the.

the reach and the audience that it brings us for our advertisers that might convert well for certain text advertisers and open share of wallet is also what we look at as well as the data that it has. I think you mentioned just how much how much how many more data points we're adding now with with adding all these partners and you know we view that as growing.

growing yields across our entire network when we improve our data as well. The other, that's a mix of demand, headwinds really and the supply demand imbalance is probably the biggest thing if I as a pick one that's driven it down and macro improvement will certainly be the biggest thing that drives it back up. But I think there's some things that we can certainly do ourselves to drive it back up through just again, better yields, better click through rates, et cetera, to, uh, to, uh,

to find some leverage there as well. And then ramping up, again, on these new partners, we find that it takes several quarters to drive the yield higher. And a lot of these deals, that means higher cake rates as well. So again, things that are brought down are the things that we'll bring it back up. The longest answer in the history conference call for congratulations. It's a very great answer. I wanted to add something, but it was longer than I thought. I think the one thing I actually do want to talk in the future much about the flywheel.

I mean, the winds of premium supply and the investments we are making into made article, video and really driving more share of wallet, increasing our time by getting into awareness and consideration dollars on grants are also important drivers and we will see those, I think, materializing in the second half of the year in a more meaningful way. We expect that. Thank you. Our next question is from Andrew Boone with JMP Security. Please continue with your question. Good morning. Thanks so much for taking my questions. I wanted to start off just on my competitive environment. Your own talked about the importance of just data. So to that angle, can you talk about.

what the competitive environment now looks like, that the taboo and Yahoo Deal closed. How much of an advantage is scale? And does this change the competitive dynamic as you guys speak with publishers and advertisers? And I'll take that. So I think the Yahoo Deal obviously is an interesting supply deal that gives scale. But the way we look at it today, it's a big opportunity for us in the next couple of years. I mean, I'll see. So it's very distracting. It will take a long time. And we see a big opportunity to take a market share on the demand side. I mean, Germany is shutting down. Give us an opportunity.

we look at market segments and where we're focusing on this pure native deal. We're native is great, but we're expanding much more into, as I said, into full funnel, other areas of publishers in mid-article video consideration awareness. So again, this is very, very native focused. And I think the great financial feel for a taller, between dilution to share all those of a competitor. But...

I think it's a great financial deal for Apollo, but at the end, I think once it materializes, I think it will give. Again, it's another publisher deal. I mean, it's not more than getting more data from publishers at scale, and I think that they will be able to gain good scale from additional user data. It's not very clear, I mean, how much of the Yahoo data will be able to use there rather than just the first party data from clicks that all of us have from publishers, so that's not clear. But definitely a deal at scale, I think we heard from some publishers, some concern about such a large stake of a major publisher in a competitor. So it's balance, I think, in the next two years, what we see there's an opportunity, and congratulations to them, and my very thought.

and we estimate it could account for a few hundred basis points, there's other fees and data fees and on the operated sites like Shops, Dela and Visor, it's very difficult to compare at this point in terms of when sort of the analysts look at the expert margin.

That makes sense. Thanks. And then I wanted to touch back on Keystone. I'd love to hear more about what publishers are telling you. And then just how do you guys feel about the pipeline for 2022? Thanks so much.

And, thanks. You're run here. So we formally announced a piece known in the middle of Q4, so it's very recent. And we mentioned at the time that we're doing it with the four design partners in the US and Europe . Now, it just mentioned that we have three new publishers with codeon on page.

And two of those in Europe and one in Japan, it's also expanding to other countries. What's important to remember is we've launched this into a market that's not very favorable in terms of of saying for technology. The keystone is a SaaS platform and these are paid partnerships. But we're using this in the short term, especially in these market conditions as a product differentiator.

as a way to establish a stronger moat with those publishers that we work with. That's just more important than the short-term financial set said. We mentioned last year we did about a couple million dollars in revenue from Keystone and we expect that to accelerate this year faster or outpace the growth of revenue. But again, it's still small compared to the around billion dollars of our corporate.

a stronger moat with those publishers that we work with. That's just more important than the short-term financial set said. We mentioned last year we did about a couple million dollars in revenue from Keystone and we expect that to accelerate this year faster or outpace the growth of revenue. But again, it's still small compared to the around billion dollars of our corporate. Thank you so much.

Thank you. Our next question is from Sleda, Cajuria with Evercore ISI. Please proceed with your question. Okay. Thank you. David, you mentioned that when you were talking about the publisher when you mentioned few things, why you, what allowed you to gain share, superior at quality tech and product et cetera? Can you provide more color in terms of what exactly is driving share gains on these publisher wins? And then Jason, how did I guess, how should we think about just the seasonality from Q1 to Q2, understood that you expect growth starting Q3? Could you please help with that? Thank you. Cajuria, that's so on the competitive wins.

And there were very significant details. So we gained significant market share around premium publishers, which is again, the era we are focused on. And it's been a record year of those wins. And it's driven by a combination of technology, product, superior monetization and optimization that we bring, customer service. It's really a combination and the vision, I think people do connect with sort of our long term vision for the publisher industry. I think Keystone is an important part of those deals necessarily, but it's a very important factor in terms of the narrative and sort of how we look sort of in the next few years into how we can partner with publishers. These are typically very long term deals. I mean, some of them actually are beyond five years. You know, most of them are three to five years. So we're very excited about those. I think that.

When we also do these deals, we try to also increase our presence into a mid-article. We have a very nice success with leveraging those to implement VI. We want to leverage some of the other placements in mid-article and other placements to grow our enterprise brand strategy that I talked about. So it's a combination of those in the financial terms matter too. I said, well, we'll discipline the round, prepayment and cash. We also didn't give any equity to get those supply deals. So overall, we're comfortable, great year. Need to focus in 2023 on growing those. As Jax said, a big driver for this is sort of these deals being more and more optimized driving better yield.

with some recovering the ad market obviously that's around with but I think spring loaded supply. Again, the CPCs are still low, the 10.0 versus 2019. So we had record page views in Q4. So once the men recover a little bit, then obviously we continue to improve internally. We don't just hope for market recovery, but algorithmic improvements and others. I think we will see that reflected in the financial results. As you wish, I think Jason will take the second one right? So yeah, I mean, like I said, normal seasonalities, let me expect with.

the implied year-over-year decline that we're giving in our Q1 guidance, which is clearly double digits down to be in Q2, probably down single digits, but they've mid to high single digits down in Q2 and then really scaling again over the second half of the year.

I just have to help with the model. That's very helpful. Thanks, Jason. Thanks, David. Thank you. Our next question is from the IGLE Arunian, which city group? Please continue to your question. Take a morning, guys. I guess first, I just want to maybe get a little bit more color on some of the things we just talked about. First, on onboarding of new supplies, so it sounds like that will normalize over the next couple of quarters, but anything where we could add about where we are with that.

what's left. And same thing on the move of funnel, we're talking about video and on the mid article, just kind of technically. Again, David, you said that's gonna start contributing more over the course of the year, but where are you in conversations with advertisers publishers, what needs to get done to get that to those stages? I take the first part, thanks, Egal. The first part on the ramp up, we're following here a traditional pattern. We...

which seem for more than a decade in terms of. And when you ramp up those big partners, I mean, takes a few months, though, it's gradually, we see yields improving on those deals, and it's really following the patterns we've seen before. Again, the challenges that there is softness in demand and the depth of demand resulting in low CPCs is definitely not ideal when you're ramping up so much supply. We talked about winning more than a hundred million dollars of new business. That's a lot for four years, but we are confident that.

you know, they're following our models and following the traditional patterns of ramping up. The record paid views we had in Q4 will yield in better financial performance once we ramped those deals also up and we see potentially some improvement in CPC. In terms of the sort of our strategy around getting more, I mean we have a big business today with enterprise brand already in many of the European countries, most of our businesses, agencies and brands, but what what we've seen that there's a huge opportunity when these brands are...

shifting to desire and request more accountability, real measurements, real outcomes. That is where we excel. I mean, our company is based on the ability to predict engagement. Those brands today are looking for very clear attention metrics, engagement metrics. And we believe we can drive those better than many others. And we need to create a unique selling proposition, which goes back to why we're focused on the premium supply. I mean, these brands want to be on premium supplies. So if you look at in the most, most of the large geography, we have controlling market share among the top five or top 10 publishers, which are the names that these entities have to be on.

So what we need to do, I mean, we're doing certain product improvement around that. We're getting more share in a hand-abiding and made article, which is very important. We're behind the hundreds. I mean, we've been doing this, by the way, for a long time. I mean, when we appeal, we talk about the acquisition of the mentor and the bidding technology that we've, uh, in continuously improved over the years and served as well both on our large partner Microsoft, which we've been working for a long time on this bidding. And we then and in hundreds of other properties. So.

that is helping us in terms of ability to be very competitive on made article. The VI acquisition falls perfectly into that with the in-stream video that is more of awareness type campaign format that advertisers are looking at. So it's all coming together. You know, you'll hear more about it in 23 in a bigger way, but we're very excited about that direction. And it works with and we are very focused. I mean, this premium supply, premium quality demand, better user experience, that's where we are in the market.

Thanks. I think they're all so sick of you on the next one. You mentioned the DOJ in Google and obviously it's been a big topic, especially this earnings from OpenWeb, OpenWeb advertisers companies. Maybe you want to get your extended thoughts on what that means. What you think it might mean for Google and...

So this is more specific to how it impacts operating and the benefits that that will drive. Thank you. Yeah, how do you go? You're from here. I'll take that one. The Google lawsuit, you know, doesn't have any direct impact on us currently, but I think obviously one of the most meaningful things happening to the whole industry, Google need to save the most dominant player and online advertising and compete with everyone off included, so I'm on the on the publisher supply side and the demand side. The DOJ is I think pretty clear wanting to reduce Google's monoplystic hope on online advertising.

to really run faster on product and partnerships in space.

to really run faster on product and partnerships in space.

on product and partnerships in space. Thanks, guys.

Thank you. Our next question is from Laura Martin with Needleman Cull. Please proceed with your question. Good morning. My first one is on guarantees. I think Jason, you guys used to give us the percent of the tax that was guaranteed. I'm interested in that number as well as when you're signing these new deals that unprecedented level of supply. What was your, how much percent of those are guarantees? That's my first question. So, yeah, we've shared, I think, the percentage of revenue that's subject to guarantees, which we've set in the past was around 20%.

million dollars of new business two times more than you lost. So the way I heard those words it meant that you lost 50 million dollars with the business and I didn't understand whether does that mean you lost 50 million to a competitor or just the spending was lower or delayed. Could you clarify that please?

I'm sorry. I'm sorry. Hi. So we were talking about the, again, the winds of market sure. So we did win well not over 100 million. I need to be cautious, but it was well not over 100 million of new business. And we did move away from about half of that last year.

And I'm just asking you to expand on that. You moved away from it. What does that mean? That means that we lost some way to compare it to other solutions. Okay. And that's a little higher than normal, right?

I wouldn't say so. I mean, I think the general shift you've seen. I mean, we reported new business of $46 million for Q4 that's much higher than we've had. You know, it's 30% higher than competition. So we feel good about those market share positions, again, especially focusing on the premium high end of the market, which is where we focused on so we...

beginning those anchor deals done and you know we feel that you know relative market I mean in market share gains I think this is a very strong deal. Thank you. Thank you. There are no further questions at this time. I'd like to hand the call back over to your own Kalai, Bernie Fuz and Colin. Thanks operator and thank you all for joining us today for our 2022 year earnings. Before we wrap up I want to take this opportunity to welcome MIPIA DOS to the operating board of directors. MIPIA brings significant industry expertise at the top executive at APNXS among the pioneers of program advertising and OLO. We're very excited to have a depth of experience on our board. Last year was a challenging one for us given the significant macro headwinds but whether macro is challenging.