Q2 2023 Integral Ad Science Holding Corp Earnings Call
Yeah.
Good day and thank you for standing by welcome to the Ias Q2 2023 earnings call at.
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I'd now like to hand, the conference over to your Speaker today, Jonathan Schaffer head of Investor Relations at Ies.
Thank you good afternoon, and welcome to the <unk> 2023 second quarter financial results Conference call I'm joined today by Schneider, CEO and Todd <unk> CFO .
Before we begin please note that today's call and prepared remarks contain forward looking statements. We refer you to the company's filings with the SEC posted on our Investor Relations site at investors not integral as dot com for more details about important risks and uncertainties that could cause actual results to differ materially from our expectations.
We will also refer to non-GAAP measures on today's call a reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our Investor Relations site.
All financial comparisons unless noted otherwise are based on the prior year period.
So with these formalities out of the way I'd now like to turn the call over to our CEO Lisa Schneider Lisa you may begin.
Thanks, Jonathan and welcome everyone to our 2023 second quarter results call. We reported positive second quarter performance with revenue of $113 7 million exceeding our prior outlook of $111 million to $113 million.
Adjusted EBITDA increased to $37 4 million ahead of our prior outlook of 35% to $37 million at a 33% margin.
We expect continued revenue growth and strong profitability in the second half of the year and we are raising the midpoint of our full year revenue outlook to $462 million.
In June we were delighted to host our first analyst and Investor day. The event highlighted our talented leadership team and showcased our differentiated technology through product demos of our total media quality and CTV solution.
They also feature partners, including Tictoc mindshare and highly on.
Yes, we're thrilled to have these close partners participate as they affirmed our critical role in the digital media ecosystem.
Our partnership with Halle on formally GSK consumer healthcare is a great example of how marketers placed their trust in <unk>.
<unk> selected us as their global verification provider going from four partners to one Halcyon Leverages Ias has global scale and best in class technology for an end to end view of their portfolio of over 100 brands and 92 markets.
We also unveiled the refreshed brand strategy at the Investor day, our new branding reinforces ias's standing as a leading global media measurement and optimization platform. Our mission is to provide global advertisers and publishers. The most actionable data to drive superior results.
As part of the rebranding when speaking about our business, we will refer to measurement optimization and publisher solutions, which replace advertiser direct programmatic and supply side respectively.
Holding on our new business momentum from prior quarters, we continue to win major global client opportunities often following head to head product and tech due diligence against other providers.
We're excited to share the news of loyal selection by us as their global strategic partner for AD verification, expanding our reach to encompass over 45 markets worldwide.
Yes, we will be leveraged for Youtube, but also to bolster brand safety measures across various other channels, including tick tock and Amazon.
Laurie ill choice of Ias reflects our robust product roadmaps effectiveness, especially within connected television and social media platforms.
During the quarter, we drove momentum in the APAC region with recent wins, including LG electronics, a global innovator in technology and consumer electronics sing Tel the largest telecommunications company in Singapore, and Maruti Suzuki Indias largest automotive Manny.
Factor.
We continue to see results as we focus on the right areas in social media, we are laying the groundwork for accelerated revenue growth globally as tick Tock meta and Youtube launched short form video based products that are generating unprecedented user growth we are providing critical solutions.
For their platforms, we are investing in differentiated technology that is getting smarter and creating a flywheel effect of accelerated growth and increased market or demand.
We are realizing strong adoption of our total media quality or <unk> product for social media platforms, as we expand availability into new markets.
<unk> uses AI and ml to provide insights into video content in the social media live feeds through frame level analysis of image audio and text marketers have the ability to monitor the quality of their media buys and social media live feeds and ensure their ads are appearing next to content that is brand safe.
And suitable by leveraging AI, we now support over 90 languages globally up from just four languages earlier. This year in terms of other recent highlights during the quarter Ias announced a significant expansion with tic Toc of our TMT brand safety and suitable.
Alrighty measurement product.
<unk> is now available to advertisers and more than 30 markets postpaid Tictoc campaigns were up 78% in the second quarter from the first quarter of 2023 in June Ias rolled out view ability measurement tools for Facebook and Instagram real.
<unk> will now provide view ability and invalid traffic measurement, our IV <unk> for med is rapidly growing meals video feed inventory advertisers can verify that their ads are seen by real users separately. We look forward to the expansion of brand suitability verification on feed to all brand safety and.
Suitability partners later this year.
We continue to expand our Youtube measurement products to provide advertisers with greater insight into the type of content. Their ads are shown we've expanded our TMT solution capabilities to Youtube shorts, and Google video partners there GBP.
<unk> is now providing view ability and IGT measurement for Youtube shorts as inventory.
This first to market, providing garmin line brand safety and suitability measurement on GBP inventory our solution with GBP enables advertisers to share video ads on publisher websites and mobile apps beyond Youtube with confidence.
Retail media advertising is one of the fastest growing channels and has become a valuable medium for marketers.
<unk> provides coverage across nine out of the top 10 retail media networks, and we are actively expanding our measurement capabilities and innovating in this space for marketers. We are excited to partner with Ubers advertising division to help validate performance and effectiveness of journey AD campaigns on Uber.
Advertising.
Yes, we will verify view ability fraud and brand safety to enable further transparency to ubers brand clients.
In addition, we announced our first to market partnership with <unk>.
<unk> will enable onsite view ability and IGT measurement across <unk> network of retail media partners. So that marketers can reach real users and maximized engagement across this critical channel.
And optimization, we welcome Sam Cox to Ias as SVP of product management, Sam overseas global product strategy and execution for Ias's programmatic and optimization solutions.
He brings deep experience in advertising technology and exchange based trading and joins US most recently from Amazon and Google.
We continue to develop our attention metrics to help marketers optimize their media spend and achieve targeted outcomes.
May we announced a strategic partnership with lumen research to combine Ias as attention capabilities and actionable data with Lumens eye tracking expertise.
In June we launched our quality attention postpaid measurement product quality attention is focused on driving quality impressions boosting higher engagement rates without scale issues and driving higher conversion.
And CTV the industry continues to grow as more consumers adopt AD supported platforms on the measurement side. Ias has received the industry's first accreditation for CTV Viewable impressions from the media rating council or MRC.
<unk> is the only company to date to have earned this accreditation as well is also receiving MRC accreditation for CTV rendered impressions.
<unk> partnered with Iris TV to launch <unk> for CTV brand safety and suitability. The industry's first video level brand suitability measurement for CTV Ias will provide marketers with reporting on CTV buys aligned to the guidance framework.
We partner with Roku to help advertisers accelerate their shifts to TV streaming with confidence.
<unk> integrated its IV pre bid filters on Roku is one view DSP. In addition, Ias supports roku advertising watermark to combat device spoofing on CTV.
By leveraging our unique public of assets, including an AD server unified AD auction and Thats lets say is stitching capabilities, we are helping our publisher customers optimize yields on their inventory by providing consumers a familiar TV like AD break experience. We are excited that <unk>.
<unk> is one of the first to be certified as part of the Amazon publisher services AD server certification program for streaming TV.
<unk> recently announced the launch of draft Kings Network and has selected publica as their primary CTV AD server as they launch into the streaming landscape.
<unk> the worlds, leading music video network has selected publica to help them power their programmatic AD break decisioning globally.
Turning to other areas of the business.
<unk> strengthened our partnership with <unk> to provide the industry's first measurement solution for <unk> in game advertising Ias will help marketers monitor and improve their campaign performance by authenticating view ability and three the environment.
Sustainability is a priority for Ias recently, Ias and scope III partner to provide transparency into sustainability reporting with Ias marketers can collect and leverage their carbon emissions data to reduce their own carbon footprint and optimize campaigns spend to <unk>.
<unk> emissions.
In addition, publica in partnership with the trade desk and Index exchange release research findings powered by scope III data. The results highlighted the benefits of adopting open our TV two six to support sustainability and programmatic CTV advertising, indicating an 84%.
Decrease in AD selection carbon emissions for those participating in this study.
We also joined add net zero advertising's not for profit coalition that is working to reduce the carbon footprint for the advertising industry.
This partnership Ias will work alongside the biggest platforms and advertising agencies to drive change and help the advertising industry to reduce the carbon impact to net zero.
In today's environment marketers are placing even greater scrutiny on media quality and ROI with increased efficiency on every invested AD dollar. We heard this repeatedly a can line in June with tremendous excitement around how we are leveraging AI and ml to increase accuracy and efficacy.
See.
Our goal is to meet our customers' evolving needs with a broad product portfolio based on increasingly actionable data the major media platforms in fast growing channels like social media and CTV are innovating to create greater engagement for consumers, particularly in video.
We are accelerating our product roadmap with these platforms to drive adoption of our offerings.
We believe that this may translate into even greater opportunity for Ias at massive scale over time.
To conclude we exceed our expectations for the second quarter and look forward to delivering profitable revenue growth in the second half of the year and with that I'll turn the call over to Tania to review the financials.
Thanks, Lisa and welcome everyone, we're coming off another solid quarter of profitable growth ahead of our prior outlook.
During the second quarter, we generated double digit revenue growth and 140 basis point improvement year over year, and adjusted EBITDA margin to 33%.
Total revenue in the second quarter increased 13% to $113 $7 million.
We realized growth across optimization and measurement revenue in the second quarter revenue mix for the second quarter reflects increased market demand for our measurement products, most notably with the adoption of our social media products outpacing industry growth trends.
Optimization revenue, formerly known as programmatic revenue grew 10% year over year in the second quarter to $52 $8 million up.
Optimization revenue growth in the period reflect maturing context controlled growth in line with our prior expectations. The contribution from new logo wins and strength in the CPG vertical partially offset by slower demand from tech telco clients.
We are investing in optimization to drive continued adoption of our offerings, we are enhancing both our product capabilities and go to market engine.
Measurement revenue, formerly known as Advertiser direct revenue growth to $44 9 million or 23% year over year increase and an acceleration from growth of 18% in the first quarter of 2023.
The impressive growth in measurement revenue was attributable to ongoing adoption of our social media products the contribution from new and large existing advertisers higher CTV volumes as marketers to increase spend and open web growth.
Social media revenue grew 33% and represented 47% of measurement revenue in the second quarter up from 43% in the first quarter of 2023.
Year over year growth was driven by our measurement solutions, our tic Tac as well as double digit revenue growth and meta and Youtube.
Social media revenue represented 18% of total revenue in the second quarter up from 16% in the first quarter of 2023.
Video, which commands a pricing premium to display grew 31% in the second quarter video accounted for 50% of measurement revenue in the second quarter up from 47% in the first quarter of 2023.
On a combined basis total revenue from advertisers, including optimization and measurement revenue represented 86% of second quarter revenue.
Publisher revenue, formerly known as supply side revenue increased to $15 $9 million in the second quarter.
Public our revenue growth was offset by the performance of our non CTV supply side businesses.
Publisher revenue represented 14% of total second quarter revenue.
International revenue, excluding the Americas grew 10% year over year as a result of new business with adoption of our offering and investments in emerging markets.
Europe in particular performed well fueling a 12% increase in EMEA revenue in the period.
The second quarter global wins that Lisa referenced earlier, including L'oreal LG electronics, Thanks, Hal and Maruti Suzuki reflect the strength of our international presence.
Gross profit margin for the second quarter was 79% keeping us on track to realize our full year expectation of 78% to 80% and reflecting investment in our data infrastructure and increased hosting costs.
We expect to optimize the gross profit margin of our offerings as we scale over time.
During the quarter, we recognized $23 5 million of stock based compensation expense related to the return target stock options our RTL.
The expense was triggered by the filing of a shelf registration statement on form S. Three and may changing the implied performance of the RTL to be probable.
The Rts are fully expensed in the second quarter and no archaeas vested or were exercised during the period.
Excluding the $23 5 million dollar expense.
Based compensation for the period was in line with our prior expectation.
Sales and marketing technology, and development and general and administrative expenses combined increased to $95 $2 million, including the $23 5 million RTL expense in the second quarter.
Adjusted EBITDA for the second quarter, which excludes stock based compensation and one time items increased 18% year over year to $37 $4 million adjusted.
Adjusted EBITDA margin was 33% ahead of the midpoint of our prior outlook.
Net income for the second quarter was $7 7 million or <unk> per share, which includes the $23 5 million dollar RTL expense as well as a tax benefit of $29 $1 million in the period.
Turning to our performance metrics.
Second quarter net revenue retention, our NRI was 115%, reflecting our ability to grow with our customers.
The total number of large advertising customers with annual revenue over $200000 increased to 208 compared to 173 last year and up sequentially from 204 in the first quarter of 2023.
Revenue from large advertising customers was 84% of total advertising revenue at the end of the period.
Unchanged from March 31, and up from 80% at the end of the second quarter of 2022.
We maintain a healthy balance sheet with strong cash flow conversion that provides us with financial flexibility to invest in the long term growth of the business, while lowering our debt.
Cash and cash equivalents at the end of the second quarter were $99 million.
During the quarter, we reduced our long term debt by $20 million to $195 million.
Resulting in net debt of $96 million.
Turning to guidance for the third quarter ending September 32023, we expect total revenue in the range of $112 million to $114 million.
12% year over year growth rate at the midpoint.
Adjusted EBITDA for the third quarter is expected in the range of 35% to $37 million or 32% margin at the midpoint of the range.
For the full year 2023, we are increasing the midpoint of our revenue and adjusted EBITDA ranges.
We now expect total revenue in the range of $459 million to $465 million or 13% year over year growth at the midpoint of the range we expect.
Adjusted EBITDA for the full year 2023 of $149 million to $153 million or a 33% adjusted EBITDA margin at the midpoint of the range.
A few additional points.
We continue to expect gross profit margin in the range of 78% to 80% for the full year.
Third quarter stock based compensation expense is expected in the range of $13 million to $14 million fully.
Full year stock based compensation expense, which includes the RTL expense is now expected in the range of $80 million to $82 million.
We expect weighted average shares outstanding for the third quarter in the range of 157 to 158 million shares and 155 to 157 million shares for the full year.
We're pleased to have exceeded our outlook for the second quarter with double digit revenue growth and expanded adjusted EBITDA margin.
We're excited to build on our partnerships in the back half of the year and we've increased the midpoint of our full year revenue outlook to reflect continued momentum in our business.
We continue to invest in long term sustainable growth.
Recently, managing our cost structure and strengthening our financial condition.
Lisa and I are now ready to take your questions operator.
Yeah.
Thank you.
We will now conduct a question and answer session.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one one again.
Please stand by while we compile the Q&A roster.
And our first question comes from Jason <unk> with Oppenheimer.
Thanks, everybody, Lisa you've launched a ton of products an expanded relationship with almost all the major platforms.
Just help us understand when you think about your largest clients who had been on the platform for you know I don't know.
Two years or something like what inning are they with kind.
Kind of coverage.
Their spend and then maybe help us how does the cadence works. So do they turn on as soon as you like offer new capability did they turn it on because it's happened upon budget renewables like once a year just kind of help us understand like how this evolves with clients. Thank you.
Sure. Thanks, Jason Great question, So the way to think about that.
Evolution, especially with our Fortune 500 global account is.
Typically when they launch with us they usually launch measurement first and optimization after that and when you take a look at I completely agree with you on our product roadmap, we're investing in innovation high velocity.
We're very focused on prioritizing our bets in the right areas and where we're prioritizing our with the large tech platforms. The large tech platforms, where the users are spending their time, especially in areas like social media. So a lot of the products.
You hear about right now whether its meta reels Youtube shorts total media quality with Tic Toc and Youtube those the largest platforms in the digital ecosystem. So we're doubling down, especially in measurement and social platforms in particular.
That has been a major tailwind for our business in Q2, and our marketers when you take a look at the adoption rates.
We shared a few of the numbers.
On the earnings call before that that is where they are doubling down in those platforms and that's where we're innovating.
Thank you.
Thanks.
Okay.
One moment for our next question and our next question comes from Brian Fitzgerald with Wells Fargo.
Hi, Thanks, I wanted to ask about the pricing volume and the optimization segment wondering if you could discuss what you saw with the CPM trends.
And the influence of any factors like regional mix or anything else to call out there.
And then maybe as a follow up.
Jason's question.
With Google video partners solution.
You've rolled out obviously very timely so that's something that you had been working on for a while or was that something you were able to spin up very fairly quickly.
Given the fundamental work you've done on your platform and your innovations around video classification over the past couple of years.
Hi.
Thanks for the question, yes in the second quarter, we were really pleased to see optimization volumes continuing at Q1 levels of 14%. We did see a slight decline in the average CPM for the period and it is an average and that will reflect averages will reflect shifts in our product mix.
And our customers.
And that can fluctuate from quarter to quarter, and we do not expect.
That trend to continue on optimization, but turning over to measurement. We were pleased for the measurement average CPM for the quarter.
<unk>, which was a reversal of what we saw in the first quarter of down.
<unk>, 6% and that reflects the increase in video.
We reached the 50% of our.
Measurement revenue was video related and as you. All know video is a premium to display and Thats what drove up the CPM.
In the second quarter the measurement pad.
And then I'll take the second question fits Google continues to be a strategic partner of ours, and we're innovating across the platform and when it comes to GBP or Google video partners, we've actually offered view ability and invalid traffic.
On GBP for years.
And we were thrilled to be able to announce this past quarter first to market big differentiator for us offering brand safety and suitability on GBP. In addition to GBP. We also launched this past quarter.
<unk> ability IGT and total media quality and Youtube short so again, Google is a great partner.
Leaning in with them and we will continue to innovate on behalf of our joint customers.
Thanks, Tanya Thanks, Lisa.
Thanks.
One moment for our next question.
And our next question comes from James Heaney with Jefferies.
Thanks, guys for taking my questions could you just talk about the roadmap for the matter of real product rollout, how should we be thinking about revenue contribution over the next few quarters and 24.
And then my second question is just around the macro environment that Youre seeing in Q2 and are you saw in Q2, and so far in Q3, any particular markets that stand out as being stronger or weak and then similarly on AD vertical weakness or strength to call out. Thanks.
Yeah sure sure James Happy to answer those questions. So with met a real as I mentioned before.
We rolled out view ability and invalid traffic in June for meta Reals, both on Facebook and Instagram, It's just incredible to see the explosive adoption of Reals I know <unk> talked about it on their earnings call.
Last week sharing numbers like it exceeded 200 billion plays per day across Facebook and Instagram, So just love that growth and that opportunity.
From a revenue contribution perspective, I think it's too early to tell because we just launched the product. So I would look at the back half of 2023 as ramp in adoption and then 2024 is when we would see the revenue.
Contribution and in terms of macro and what we're hearing in the market.
Im happy to give high level, and then Tonya feel free to chime in I spend a lot of time with marketers and where marketers are sharing about just macro overall macroeconomic conditions few things ongoing scrutiny on ROI.
123 is the year of efficiency marketers, they're being much more disciplined and deliberate in spend and they're doubling down and investing in the areas that are yielding returns for their business and then also the economic conditions that continue to be fluid.
And we are overly.
Cautiously optimistic about the back half of the year Tanya anything else you'd like to add chart I think on your first question James just to build on what Lisa was saying Wow.
<unk> met our Reals.
It's early stages, we did factor the impact of that into our guide the second thing I wanted to highlight meta overall.
Does a contributor as well as take Todd.
Two our social growth rate overall in the first and the second quarter, our social growth rate accelerated from 25% in the first quarter to 33% in the second quarter. So we really are pleased about the partnership.
Going going forward the momentum to date the contribution from Tictoc meta and Youtube in terms of our overall social growth in the second quarter.
Thank you thanks.
Thanks James.
Yes.
Okay.
Thank you good morning.
Yes.
Yes.
We will take next question please.
Yes.
Our next question comes from Matt cost with Morgan Stanley .
Great Hi, everyone. Thanks for taking my question.
So it seems like over the past couple of quarters.
Every quarter, a whole bunch of announcements of new partnerships and new platform integrations for Ias.
And there's quite a few impressive wins this quarter, but if I look at where guidance is for topline were more or less just a little bit above the mid point now where we were at the start of the year I guess, when we think about the incremental would be from a revenue perspective.
Partnership.
Talk to us about the roadmap to onboard them and set them up and when you expect to see them start to drive.
The revision.
The revenue path going forward. Thank you.
Sure I'm happy to take that Matt.
So I agree that.
We've upped our velocity in terms of both product roadmap deliverables launching innovative products for our customers and also the partnerships that we've announced and one thing I do want to call out and I'm very proud of the team that four of the partnerships that we announced on today's call are first to market.
But when you take a look at revenue both product adoption, leading to revenue the way I'd think about it is the following.
So with some of those big Tech partners.
Being tictoc. So you take a look at Tic Toc, we spoke to tick tock last quarter that we were ahead of the roadmap schedule rolled out in 30 markets on track for 40 markets yearend.
That tictoc is a tailwind for our measurement revenue and we're seeing nice both product adoption and revenue growth in the second quarter and the back half of the year Youtube. So we had launched Youtube shorts for example, total media quality we announce.
That product launched last quarter, and 30 languages I would say for you to back half of the year is adoption with 2024 revenue some of the newer product lines like meta meta reals everyone knows meta has an opened up their live feed yes, we are.
Anticipating that to happen by the end of this year that revenue that is product adoption back half of the year.
Leading with revenue following in 2024, so again it depends on both the scale of the platform how fast the products or adoption adopting but also I'd say, how fast we're able to rollout in multiple international markets and offer language translation.
Great. Thank you.
Thanks, Matt.
Yes.
<unk>.
One more for our next question.
And our next question comes from Andrew Morocco, with Raymond James.
Hi, Thanks for taking my question one on context control. If I can you mentioned on the call that context controlled growth had slowed coming off some strong performance recently.
<unk> said, maybe as avoidance adoption reached high levels of targeting would come in as another leg. So I guess can you give us an update on where we are im targeting adoption and how the sales staff refining selling that solution into customers and cannot reaccelerate optimization.
Sure. Thanks, Andrew for the question. So a couple of things I'll call out first is optimization represents over 50% of our revenue from advertising from advertisers and we saw maturing with context controlled growth as expected with double digit growth in the period.
Over 90 of our top 100 customers adopted our context control products and in terms of verticals, where we see lots of adoption is the CPG vertical in particular, new logos in CPG that was partially offset by slower demand.
From Tech and telco clients in the period and when you take a look at our optimization growth in the back half of the year. We anticipate it will be along the same lines of what we saw in second quarter with possible upside and with everything I just walk you through the majority of our revenue.
<unk> is contextual avoidance and for the overall context controlled products, that's where we see the majority of the adoption and demand is the contextual avoidance of context control, we are still seeing demand for contextual targeting but its more contextual avoidance.
Alright. Thank you and then another really quick one if I could we've seen the media math bankruptcy kind of caused some disruptions around the AD tech space any impact of Ias <unk> and to the extent that there was would there be any lingering impact beyond Q2.
Andrew There is no impact to us no material impact to us from the media math bankruptcy.
Yes.
Thank you.
Yeah.
Thanks, Andrew one moment for our next question.
And our next question comes from Mark Kelley with Stifel.
Great. Thanks very much.
Wanted to ask you about retail media and I'll lump ore into this but.
You had the nice announcement with cardio and first to market. There I just wanted to get a sense for how material you think.
Retail media and I guess really all all of the channels that you're exposed to.
It can be over time, what should we expect.
Our mix of channels to kind of mirror, the overall digital ad market or.
Or do you think you play too.
Two.
Different channels.
No.
Better fashion relative to the market. Thank you.
Sure. Thanks, Mark So a few things on retail media as we all know retail media advertising one of the fastest growing channels via and we continue to see high adoption from the marketers.
We've mentioned in the past that ISR coverage is across nine of the top 10 retail media networks and we continue to expand our measurement capabilities. We were really excited to announce both the partnerships.
With Uber, where we'll be offering view ability fraud and brand safety within the Uber App and then also <unk>, where we're offering view ability and invalid traffic measurement across <unk> network of retail media partners.
In terms of revenue sizing similar to some of the other plot.
Platforms and products I spoke to before this is a ramp right. So we've we're seeing nice growth. We are feeling good about our nine out of 10 integrations with the retail media networks.
But I would say, it's a steady growth for the back half of this year and into 2024.
And the one other thing I will call out is in addition to being encouraged with the strong adoption of the retail media partners. We are seeing very strong volume growth across the partners.
Okay perfect.
One follow up on the retail media stuff, you're doing both on site and.
And also is that correct. So like other retailers, let's say and then also using first party data.
Find people off of the retail it looks like I just want to make sure that I've got that correct. That's correct, it's both inventory and third party inventory correct.
Okay, alright, great. Thanks, very much thanks.
Thanks Mark.
While enrollment for our next question.
And our next question comes from Justin Patterson with Keybanc.
Great. Thanks, Good afternoon, I wanted to ask a bit about AI, obviously, there was a big Aqua hire in this space This week.
Do you think about just.
Usage within your product suite today is that something you can really develop yourself through existing resources or do you need to look toward some tuck ins kind of further further augment the product suite today. Thank you.
Yes, great question Justin so.
AI and ml, it's in the DNA of Ias It fuels everything that we do from attack and an innovation perspective.
A good example of how we leverage AI and ml.
With our total media quality products so.
I think youre familiar with that product that we're able to classify real time in the live feed for example of Tictoc classify image audio and tax real time to determine what type of live content is brand safe and what is not brand safe, but whats.
Really powerful is leveraging our AI technology with open AI and the example, I gave in the last quarterly earnings our ability to unlock language translation from foreign languages to over 90 languages with total media quality overnight that happened by.
<unk> open AI, so you'll hear a lot more about how we use AI with our innovation in our core technology, but I think equally if not more important is how we're leveraging open AI to unleash and unlock our products at scale.
Thank you.
And one moment for our next question.
Our next question comes from Jason Prior with Craig Hallum Capital Group.
Hey, This is Cal Bard is all on here for Jason.
First question I, just wanted to kind of circle back to this mid market initiatives you guys have just see kind of what progress you've seen in trying to penetrate into the mid market.
Sure Kyle I'm happy to speak to mid market. So we are seeing a nice uptick with mid market penetration, we define mid market as north of the top 100 accounts one area in particular is context control, where when you take a look at the Q2 revenue of context.
Control for mid market clients is growing faster than overall growth of mid market, but the other thing I'll say about mid market is we're seeing nice adoption not just in the U S, but internationally and when you take a look at some of the data both in EMEA.
In APAC, we're seeing that the bets, we're placing in emerging markets. So emerging markets like South Korea, Thailand investments, both in the independent agencies investment and putting boots on the ground in the markets, that's lighting up our mid market activation and.
Revenue. So we'll continue to invest in the mid market channel, but also continue to invest in.
In emerging markets as they.
Bring on more and more of the local brands in the local markets to beef up our mid market category.
Perfect and then last one from me we've seen numerous headlines lately around things like made for advertising side. So.
So just wondering if maybe you saw any potential impact.
Furthering.
The desire for our solutions with those headlines kind of permeating across the industry.
Yes sure. So great question. So we are definitely developing our MFA solutions to help detect mfa's sites.
And we will look forward to share an update on our progress in that area in our next earnings call.
Thank you so much.
Thank you.
One of them for next question.
Our next question comes from Robert Zeller with <unk> Securities.
Hi, This is Robert on for Youssef Squali. Thanks for taking the questions I'm just curious on short form video how much of a real insurance opening up their inventory versus tick tock and are you able to give us an idea of how much available to talk how much available inventory.
There is an picked out how much they are opening their platform can be measured.
And then just one bigger bigger picture question.
Over the next few years I'm curious if you see increased spend from large advertisers or newsprint, new spend from new customers like mid market.
Being a bigger driver of growth. Thanks.
Yeah sure happy to take the first question. So when you look at.
These large platforms again, it's early days with meta <unk> and Youtube shorts we.
We just rolled out our view ability and invalid traffic with met a real but the one data point that I will share that Matt talked about in their earnings call last week is more than three quarters of med as advertisers are running ads on <unk>. So when you think.
About that sizable AD inventory and again, it's early days, but also as I mentioned before just the overall adoption of <unk>. We are really excited to be partnered with meta unmet are real and that we rolled out our offerings same thing with Youtube shored some.
The staff they were saving in their earnings call last week I believe it was 2 billion users.
Using Youtube shorts, just incredible scale and again, it's very early days, because we just rolled out both with Youtube shorts and materials and then with Tic Toc. So with Tic Toc is in terms of baseball analogy, it's probably more like second inning third inning.
From a product perspective, but the international rollout, we just launched it last quarter right and so we got ahead of our roadmap from 20 to 30 markets line of sight to 40 markets by year end running the total media quality products and 90 languages and the inventory.
<unk> is quite sizable on tick tock. So we're just focused on.
Scaling all of the products all of the adoptions and again doubling down on these large global tech platforms, because that's where the users are and the marketers want to be where the users are Tom you want to take the second question sure. So Rob as you probably saw we introduced a new metric and that.
Really gets at your question around spend from large advertisers.
And as we look out in the future, we really see growth from both incremental spend from our large advertisers, but also new logos and thats, even just look at where we are today at the end of the second quarter. When you do the math with 84% of our advertising revenue coming from large advertisers who spend more than $200000 in the period with us and.
Do you measure that where we were last year at the end of the second quarter. Our revenue growth is up 26% from those large advertisers. The other thing I'd want to highlight in both the first quarter and accelerating into the second quarter is the revenue we've ascertained from new logos, both on the private optimization side and also on the med.
Measurement side, and we're seeing our new logos and accounts that we're winning and Lisa talked about a lot of these on our last earnings call in the earnings call before they're spending with us faster and sooner than they had in the past.
And we're seeing the benefits of that.
Across our across our revenue and we expect that to continue in the future.
Okay. Thank you.
One moment for our next question.
And our next question comes from Mark <unk> with the benchmark company.
Thank you Tonya, maybe just a tail on that your last point I do see that.
2% growth in terms of large customer advertising revenue.
When I'm looking at.
Revenue per large advertiser that grew it about by my calculations here about 4%.
Year over year and that compares to 16% in the March quarter.
So just trying to understand that dynamic a bit and then I have a follow up thanks.
Sure, Yes, no we have seen an expansion of our revenues from large advertisers.
For the for the second quarter, Yes, when you do the math I can verify the amount you you calculated I mean, I would say overall, we're expanding the number of large advertisers. It was 173 last year and at this quarter and it's up to 208, which was also a 20 <unk>.
An increase in the number of large advertisers. So we're excited to see the higher spend and also the incremental number of large advertisers.
Okay.
And Lisa just.
A follow up to a prior question about.
All the partnerships that you've been signing in the revenue there you've obviously been.
Clearly busy.
Last quarter or so.
And maybe to frame that.
Revenue.
In terms of 24, given there's there's certainly a leg to recognizing that revenue.
Or some of these.
Partnerships ramping is there some way you can quantify that in terms of 24, just loosely sort of incremental.
That revenue could be to your 24 revenue. Thanks.
Yeah, I would say.
Hey.
At a high level.
In terms of 2024, we're so focused on with all of these new partnerships that we rolled out.
Driving the adoption the product adoption market rollout language translation and we've shared our 2023 guides we've shared expectations for the back half of the year and when we're ready to share 2024 Guide Walter.
Okay fair enough. Thank you.
Okay.
Yeah.
I am showing no further questions at this time I would now like to turn the conference back to Lisa <unk> for closing remarks.
Thanks, everyone for joining today's call. We're pleased to have exceeded expectations for the second quarter and look forward to continuing our business momentum in the back half of the year. We recently announced four first to market partnerships that underscore our role as a trusted independent provider, we'll look forward.
To updating you on our progress thank you.
And this concludes today's conference call. Thank you for participating you may now disconnect.
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