Q2 2023 Innovid Corp Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the innovative second quarter 'twenty to 'twenty three earnings call.
Our hosts for todays call is Brittney Johnson Investor Relations.
At this time all participants are in a listen only mode.
We will conduct a question and answer session.
I would like to now turn the call over to your host friendly the floor is yours.
Thank you operator before we begin I'll remind you that today's call may contain forward looking statements and that's a forward looking statement disclaimer included in today's earnings release available on the Investor Relations Page also pertains to this call. These forward looking statements may include without limitation predictions pretty spectation big targets, our estimates including regarding that anticipated.
Performance business plans and objectives future events and developments and changes in our business competitive landscape technological or regulatory environment and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today, our historical results are not necessarily indicative of future performance and as such we can give.
No assurance as to the accuracy of our forward looking statements and assume no obligation to update them, except as required by law. In addition, today's call will include non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. We use these non-GAAP measures and managing the business and believe they provide useful information for our investors. These measures should be considered in.
And to and not as a substitute for our GAAP results reconciliations of the non-GAAP measures to their corresponding GAAP measures where appropriate can be found in the earnings release available on our website and our filings with the SEC.
Hosting todays call is if he can better innovative co founder and CEO as well as Tonya on drive Caspian and if its CFO , who will participate in our Q&A session with that I'll turn the call everybody is eager to begin.
Thanks, Bruce and thank you all for joining the call today.
I'll begin with some thoughts about the second quarter and some recent business updates and highlights.
Our CFO to address Cassie will provide details on our Q2 performance and our updated guidance.
Hello, My Q&A.
I am pleased to report, we delivered strong second quarter positioning us for solid full year of 2023.
We exceeded our prior guidance for both revenue and adjusted EBITDA.
And are raising our full year guidance.
We are increasing our full year revenue guidance and are guiding to expected adjusted EBITDA margin of at least 10%.
Looking at the quarter, our Q2 revenue grew 4%.
And we posted adjusted EBITDA of $4 $5 million, representing 13% adjusted EBITDA margin.
Because we are progressing our plans to improve profitability.
Our Q2 results are evidence that we're executing on our plan.
We remained focused on profitable growth and improving the profitability profile of the company.
During recent quarters, we are focused on integrating the acquisition of television square realizing synergies in the business and making important operational cost improvements.
Now for the first time since the acquisition, we are benefiting from the full impact of the post merger integration and the full suite of our expanded product offerings.
Our measurement offering innovative XD helped fuel our growth this quarter with topline revenue growth of up to 10% year over year measurement with 23% of total revenue in the second quarter.
We are excited about the ramp up in Michigan and growth.
Some of the growth is attributed to the deals we reported earlier in the second quarter with NBC U and Disney.
Our partnership with NBC Universal.
Further solidifies our position as an advanced measurement solution built for the future of advertising and multi currency marketplace.
He can provide a unified cross platform view of local linear and CTV advertising alongside actionable metrics to meet advertiser and publisher needs across the ecosystem.
Another win we expanded on this quarter with Disney on the pad.
We are enabling the measurement of outcomes, such as App conversion and website visitation across Disney's addressable footprint, given both local and national advertisers the tools and insights they need to inform a continuously improve their campaign strategy.
We are also piloting measurement solutions with one of the largest publishers in the world, which we intend to launch in the second half.
Turning to our overall growth with.
We delivered continuous CTV growth with impressions up 11%.
The living benefits as linear television continues to shift to see this is a crucial part of our story.
Even in a challenged market for AD spend by specific verticals, we were able to deliver growth because of our favorable secular change in CTV and the critical nature of the technology, we provide for our customers. Our growth. This quarter was also fueled by new business flows new accounts and cross sell opportunities we're having.
A great deal of success.
New customers and focus on deepening our relationship as clients activates more products are.
Our new wins and expansions to include some of the largest auto brands such as most of the U S and American Honda.
And some of the largest global advertisers, including Microsoft which took a pharmaceutical U S include a PD.
We're also strengthening our sales leadership to fuel future growth this quarter, we announced the hire date P. S.
As Vice President agency partnerships and industry veteran with tenure at Google They will be responsible for driving strategic growth in our agency parts most.
Most recently, we also announced the hire of Jeff Austin.
As senior Vice President and his resume operation Jiff brings close to 20 years of experience in sales and revenue operations. Lastly, we are continuing our investment in new capabilities as part of the future of tellers.
Two areas, where we're seeing incredible potential as data, which business isn't the adoption of AI to help marketers discovered the value from insights creative optimization and measurement.
And in putting more media dollars to work to seek any specific supply path optimization.
Even if it is already leveraging the power of AI to optimize business outcomes for our customers.
Our capabilities help advertisers swarmed measurement insight into creative action and highlight where they should be investing future media dollars.
Based on numerous performance signals, where we see our platform is delivering the optimal created within a campaign.
All in real time without human intervention.
In Q3, we will continue to enhance our platform to allow customers to more effectively use generating of AI in the creative workflow as some of our customers already take advantage of the ability to drive dynamic messaging using generative AI.
Supply path optimization or S. P. O is expected to have a positive measurable impact on both media efficiency and our industry's carbon footprint.
Our largest clients and partners are asking for involvement to improve the CTV media supply bass.
And we are exploring how our platform can assist in the efforts to further optimize our customers' business objectives, while minimizing the impact on our planet.
This will benefit advertisers publishers and the viewers alike.
In summary, we delivered a solid quarter, including some key client wins and expansion and we are also encouraged by some signs of firming in the advertising market.
We are optimistic about our future growth and our ability to expand our moat is a leader in building critical technology for future of TV.
As our products are profitable at the core the surplus and revenue flows through to the bottom line evidenced by our strong adjusted EBITDA results. We will continue to focus on profitable growth in 2023, while making investments with a target of achieving at least 10% adjusted EBITDA margin this year.
And now I'll hand, the call over to our CFO , Daniel <unk>, Kathy to discuss our second quarter results and updated guidance Tanya.
Thank you Zika and good morning, everyone.
As you just heard from CCAR, our dedication to driving profitable growth has been paying off the beat the top range of the initial revenue guidance by 5% and then later at 13% adjusted EBITDA margin.
Our Q2 revenue grew 4% year over year to 34.5 Milan.
As we previously shared our focus this year is predominantly on the U S market, the leading global force in connected TV.
U S revenue grew 7% and represented 91% of the total ready yet.
International revenue declined by 15% year over year and represented 9% of quarterly revenue compared to 11% in Q2.
First here.
Speaking about our products segments measurement revenues grew 10% and represented 23% of total revenue in Q2.
And surfing and personalization combined revenues were up 3% year over year and represented 77% of total revenue.
As a reminder of innovative AD survey and personalization revenue closely correlates with AD impressions volume surged through our platform.
Can you to see Tv's share of all video impressions volume grew 11% year on year and represented 51% of all the impressions.
Lastly, it was 50%.
More of a volume grew by 1% and represented 36% of all video impressions.
While desktop volume grew by 17% and was 13% of all video impressions.
As we shared last scores for both mobile and desktop have declined in Q1, but this quarter's trend are there so, especially in desktop potentially signaling a possible stabilization in the advertising spend.
Despite transitory trends seasonal fluctuation and still lingering macro uncertainty, we expect CTV to continue gaining share of total video impressions.
Now moving on to expenses.
Q2, total operating expenses, excluding depreciation amortization and impairment, whereas 35.9, nealon, reflecting a reduction of 13% year over year from $41 3 million last year.
The overall improvement in operating efficiency was the result of these synergies implemented throughout the post merger integration process. Following the acquisition of <unk> as well as the reduction in force initiated last quarter.
Employee count at quarter's end was 450 at 24% reduction compared to the previous year.
The overall cost reduction was partially offset by an increase of $1 3 million in hosting and data costs associated with the expansion of our measurement solution and a 1.2 million increased installed base compensation.
While the cost of revenues increased by 1.2 million year over year in Q2.
Revenue less cost of revenues was 75% of revenues. This is an improvement from 73% in the previous quarter and.
And down from 78% last year.
Our margins are constantly improving and as business scales. We believe we will eventually operate at our pre acquisition margin level.
Savings in Opex also benefited from a reduction of 900000 in one time acquisition and IPO related expenses been incurred a year ago.
We prioritize our operational efficiency, while also continuing to invest in the research and development and remain committed to driving innovation in the connected television space.
This quarter, who incurred and a one time noncash goodwill impairment charge of 14 and a half Miller.
This charge resulted from a decline in our share price and associated market capitalization compares to the book value of our equity as of quarter end.
I want to reiterate that the noncash goodwill impairment charge was used with generally accepted accounting principles given the current market capitalization and does not impact adjusted EBITDA results.
Q2, net loss was 19 million all per share loss of 14 cents.
Adjusted EBITDA was 4.5, millen, representing 13% positive adjusted EBITDA margin, there's just and negative 5% in Q2 last year.
Quarter end outstanding common share count was 138.7 million shares.
When it comes to cash and capital allocation, we're comfortable with our cash position and liquidity.
We ended the quarter with 43.4, nealon in cash and cash equivalents and Danny Miller in debt with an additional 30 million available on our revolver.
Finally, our outlook for the third quarter and the full year in Q3, we expect total revenue in the range of 33 to 35, nealon, representing 942, 1% year over year growth. We expect Q3 adjusted EBITDA in the range of three to 5 million.
We are raising our full year guidance and expect total revenue for the full year in a range of 132 to 136 million, reflecting 427% year over year growth on as reported basis.
We expect the full year adjusted EBITDA margin of at least 10% an improvement versus our previous full year guidance of at least 5%.
In conclusion, then courage they are our second quarter results I'm pleased to be raising our full year guidance. Our team is working towards building an essential technology infrastructure for the future of television advertising. So we remain committed to innovation and value creation for our customers and chefs.
Holders.
So he can I am now ready to answer your questions. Operator, please begin the Q&A session.
At this time, we will conduct the Q&A session. If you would like to ask a question. Please press Star then the number one on your telephone keypad now you will be placed in the queue in the order received.
Once again, if you have a question. Please press Star then the number one on your telephone keypad now.
Your first question comes from Sean Patel of Susquehanna. Your line is open.
Thanks, guys and congrats on the solid results. This is Jared on for Sean I had a couple for you if you don't mind.
Maybe for starters, Tom had you could just unpack the outlook for the third quarter and fourth quarter is a little bit further looking at the midpoint of the topline outlook factors in a bit of a deceleration actually a sequential decline suggest any particular factors that you would highlight there is that more conservatism.
And then stepping back to the wider ecosystem Roku spoke to an ongoing collaboration with shopify.
Stepping back from that how would you characterize commerce on CTV overall at this point and where do you think this is going over the longer run.
And thank you I will take the first question that perhaps they could can also speak about the second part.
It's like giving guidance I did want to mention that we're quite pleased with our first half of the year execution.
And we're providing guidance for Q3, considering still a certain uncertainties in the macro environment.
What we're still seeing some brands and artfully back to spent to their usual spend there are certain mix or in overall spending among different verticals. So that's what our our guide for Q3 particular takes into the account however, our woburn adult.
Considering the first half of the year result to raise overall guide for the full year to.
So the overall growth between 4% to 7% and even more importantly to raise guidance for the overall profitability.
We are guiding right now at least 10% in adjusted EBITDA margin, which is improvement from 5% last year.
T J you want to add on the second part please.
Yes for sure.
So we're very encouraged by you know thing a lot of innovation expand innovation in CTV that basically reinforces what innovate.
It's been innovating around and pushing for 15 years, now and that's a future where things all TV in the future.
Content and advertising will be delivered over IP there.
The concept of interactivity and personalization.
This is where we see the industry growing. So this is a natural step to allow and to educate people about the ability to interact with their with ads also and so the technology that we built already allows commerce on television and the unique part about it is that thinks Tvs.
Fragmented you know you have roku is a device, but you also have Samsung TV, Xbox and Apple TV Art technology allows the these type of capabilities across devices and across publishers.
For so for our customers the advertisers this allows us a scalable infrastructure.
Infrastructure to really take advantage of interactivity and in personalization and but it's definitely you know we're excited that some partners like Roku and Amazon and others are introducing this technology.
It's scaling basically executing educating the market and this is what will allow us to sell more of our tech.
That's very good news.
Yeah.
Great. Thank you Beth.
Okay.
Your next question comes from Andrew Boone with JMP Securities. Your line is open.
Hi, guys, Matt on for Andrew Congrats on a great quarter, two if I could please can you just talk about obviously your two key investment themes for the rest of the year in general.
And C T V S P O.
Actualize those investments that you're making obviously, it's great to see the adjusted EBIT Guide higher for 2023, but can you just give us a little bit more color specifically on what those investments are and just the magnitude of them and then also maybe backing off from the last question can you just size the personalization market within CTV for US today, and then what's preventing.
Further adoption.
Right now thank you.
Sure.
So first of all yes, I mean, we are very excited about the doubling the guidance for EBITDA for the the the total year from 5% from at least 5% at least 10% and this is you know based on our commitment.
To drive profitable growth this year and run a very efficient operation.
Yes, as you know shared by the <unk>.
Our results also in the second quarter with 13% EBITDA. So.
That does not mean that we're not investing heavily and continue investing heavily in product and innovation. That's our DNA that would be doing 15 years. So first actually that one of the significant investment that is not stopping as measurement actually.
<unk> grew 10% this quarter, which is great. This is a very large strategic acquisition and investment for the next many many years as we see a significant transformation into how T. V. Now CTV is being measured.
Each frequency outcomes. So this is a huge focus and I would say that is the significant part the largest part of our R&D in the product and innovation is actually around measurement, which also connects to our AI in spo, which I'll touch on in a minute. So that's a big investment what we're saying here our comments here that in the second half of the year.
We are also expanding into areas.
One is the official intelligence AI, which is not something you have to innovate.
As we presented I think more than a year ago, we have an AI engine with the machine learning that looks at the outcomes it looks at the measurement.
And the outcome and then optimize the creative version. So if you look at the you asked about personalization.
So it's not just personalization based on an audience data now with the use of AI, we can look at outcomes and optimize in real time, the right creative to the right audience based on what actually happens so that that loop that engine.
It's something that keeps improving and optimizing and this is where we want to invest more and the other you know we were definitely looking into generating very high like everybody else are and we've been really excited about some of the.
Some of the campaigns that our customers have been using our technology combined with generative I to do generative messaging and some some unique asset creation. So in that area on the generating value will be more workflows. So how do we better integrate these type of technologies into our workflow. So when our customers want to take advantage of this technology.
It's an easy they're already doing it but it'll be much easier to do it so that's very encouraging.
On the supply path optimization.
We because if you think about or delivery infrastructure at sebree, we sit in a very very unique place.
In the ecosystem and the stack, but we're basically delivering all impressions all CTV ads to programmatic and unproblematic open web walled gardens, we see everything right and there's a strong trend. These days about the marketers publishers that are looking to run a more efficient process, especially around CTV that has unique characteristics.
There are different than let's say display advertising.
So everybody is looking to run a more efficient process to put more money into actually working media and to dramatically dropped the carbon footprint.
So based on that based on our position and our relationship with our customers and our partners. We've been asked to see if there's ways that we can improve on those so we're very excited to do that.
And last question I believe was sizing of the personalization market, we're definitely seeing growth there and zooming out like the last three four years, we're definitely seeing the use of data are the understanding of data understanding of optimization of AI is pushing forward. The idea that you can run different creative version in two different audiences.
Concepts have been around forever, but we're seeing more and more usage of that to your question. What's delaying the growth I would say from a scale perspective, I would say well gosh, if anybody will say about like.
7% to 10% after the ads you see out there actually have a creative decisioning in them not just immediate decisioning, but a creative of Decisioning specifically from the same Brian .
Again, we think that you'd get to 100% the delays and that has a lot of the it's the work the workflow. So it's basically the creative agency, you're working with the media agency working with the data providers altogether and the real champion for that to actually see adoption and growth are there.
Brands not necessarily the agencies brands actually can tell can set the strategy and tell their partners. The media agency, the creative agency and whatever data infrastructure to using we would like from now on we would like to start experimenting we would like to execute our campaigns not just to buy media programmatically or based on audience, but actually tailor the creative to the right audience.
And that that is what's driving it so the more deals we will do we are doing with brands and more that this strategy.
Makes sense to marketers that the fact that this one was.
Thank you so much.
Yeah.
Once again to ask a question. Please press Star then the number one on your telephone keypad.
Our next question comes from Matthew cost with Morgan Stanley . Your line is open.
Hi, Thank you so much for taking our question. This is Kelly on for Matt.
To start around cloud cost I noticed you mentioned that an increase there and just curious how you're thinking about.
About those going forward as you continue to ramp through what youre getting on the generator that piece.
And then second.
With the supply path optimization, that's a really interesting piece of it how do you think and how do you see that product potentially scaling them into 'twenty, four and and what might be the potential upside on a monetization perspective.
For you if that takes off thank you.
Yeah.
Sonya do you want to take the first question.
Yeah.
I couldn't hear the first part of the question if he can repeat the first sentence.
Oh, Yeah, I'm, sorry, I'm just not on cloud costs, you mentioned in the prepared remarks that those have increased a little bit. This year end and just I'm curious you know how do you see that ramping potentially are or where the levers are you continue to use more generally they are in different.
All of these in your in your box.
Of course, it took I mentioned, we are using we are starting to use a generative eight crores the board to improve our efficiencies what is a really interesting when you look at our expenses overall threw out are you throughout the year answer.
The quarters, you are seeing improvement across the board in all departments.
R&D sales and marketing and G&A.
We implemented a certain synergies starting and the 30 of this year and part of it is really leveraging technology.
Really excited about that moving forward and we believe it will improve will be reflected in our margins are improving even saw that beyond what we have demonstrated so far.
And I would add to that and also there's the you know the measurement business and the cost of data and data processing for the measurement regardless of the amount of revenue. That's a that's a cost that's higher what's the nice thing about it the more you know scale.
We'll have more usage of measurement that costs would be fixed that part of the cost will be fixed. So the margin. That's that's how we expect our gross margin to continue to grow over time as we scale that part of the business. This is excellent point, our business have a significant operating leverage and then proven even quarter over quarter that.
You saw in our cost of revenues and are running at a cost of revenue less cost of France already improved 75% this quarter from 73, we.
He will be sad constantly improving moving forward specifically for the operating leverage of the overall business.
No I'm you know to your question about supply path optimization.
Hum.
Indeed, this is a very exciting part of the industry and the focus on the industry regardless of innovate.
A serious conversation and how things could be done in a more efficient way yeah. Both in terms of cost and also in terms of carbon footprint, which is a big initiative for the industry.
Because the way. This is this as you know it's unfolding is because that we are positioned in a very very very unique place in terms of the scaling CTV. It's basically Google in terms of Google campaign manager, which obviously there are deep in the media business and innovate who as a fully independent zero media business Nobody knows.
Selling but we have that the AD server actually sees everything so it's not just the programmatic. We also have indirect component of the deals with the publishers the programmatic side the walled gardens. The open web. So we see everything we have all the data. We also have measurement right. So and Decisioning engine. So we have all these components.
So what our customers are asking us is two since we have integrations with the DSP and SSP isn't all the publishers.
Because we're in that sort of we have to be everywhere.
You know we've been asked is are there things that we can do from a workflow perspective and work stream perspective that will minimize our the amount of processing power and an amount of hoops that an impression needs to jump in order to get to delivered to your home to your screen and this is ware.
We're exploring and that's you know of note here is that we're exploring that with our customers and partners.
Yeah.
If there are ways that we can participate and provide a better process Oh.
And in a better environment for all of US. So this is this is where we are now and if and when it will have an.
And impact on an R.
Our.
<unk> offerings, and our financial et cetera will make comments on that but it's definitely an area that.
We're excited about and our customers are awesome.
Yeah.
Your next question comes from Schwinn <unk> of Evercore ISI. Your line is open.
Okay. Thank you for taking my question I just have a high level question first speak up. Please how should we think about the volume grow them you know for the back half of this year, especially for the back half of this year and then in the near to midterm and you think about next year and so Oh understood on C. P M.
And that in fact are impacting your business, but volume does the work what are the biggest drivers do you see and and how are you thinking about that thank you.
Sure.
So basically were very excited and that's a constant a tailwind that we don't expect to change from a directional perspective, and that's the growth of CTV more and more people are consuming and watching content IP.
IP connections with the Internet no matter what device no matter what platform that.
That is growing the usage of our what's called the view you know like Eva or fast our AD based streaming TV is increasing also so the usage of applebee's as increases from that perspective, we're extremely encouraged and excited about and what's interesting that in spite of a relatively kind of cool.
<unk> environment from an economical perspective in AD spending perspective, CTV continues to grow this quarter I believe it was 10% in terms of impressions weed.
We believe in a normal kind of none of this is while the overall budgets are lower than than usual than a normal year. So clearly once once theres a positive change in the environment, we should absolutely see a significant acceleration in growth in terms of CTV volume, which.
B to topline growth and a significant expansion of our margin are actually I would say both gross you know the gross margin because of fixed cost and definitely definitely the ebitdas were already demonstrating.
In the current environment is as you know it depends on there are some verticals like CPG, that's still kind of pushing forward and growing nicely and the art of verticals like Tech financial services and I believe the other companies that are strong in the CTV space alluded that also that are lowering budgets, but from a sales perspective in terms of new logos up.
They'll make measurement Upselling you know.
Personalization all these strengths continue to be strong regardless of the overall volume. So we're again things were seeing a cooler environment than than a normal year and that's you know to your question on second half.
We're seeing you know definitely Q2 was better than we thought and it will be in Q1, we still wouldn't be very cautious in terms of the environment. We're in and some people expect a better second half we would like you know that based on what we're seeing is to provide the guidance based on what we're seeing right now and clearly.
You asked about next year, the second though there will be the recovery will start in the large advertisers.
Advertisers that are using our platform they're always on so it's just the second they start investing more and you'll see those numbers come out.
Up into the right both topline and bottom line also.
Thanks Victor.
Sure.
Yeah.
Your next question is a follow up from Sean Patel of Susquehanna. Your line is open.
Hey, guys. This is Jared on for Sean again, Thanks for taking my additional question now that you just touched a bit on verticals like CPG and tack in financial services, but was hoping that you could dig a bit further into what you saw in the vertical this quarter any specific pockets of either strength or relative weakness here and then.
The letter you highlighted some auto ends with the likes of Mazda you as American Honda.
Hoping that you could dig a bit further on what you're seeing with auto advertisers in particular at this point.
Sure.
I'll start with the latter in terms of definitely the auto when they think it's connected to the question that you asked what somebody else thinks about you know about the personalization dynamic creative and that kind of stuff. So I would say that the auto is it's definitely sta.
Strong innovators are there like Oh.
Classical iconic customer for innovate and we I would argue that we have in the auto vertical in the U S. We have more customers for technology, not surfing than than even Google AR from a market share from a footprint perspective, that's we mentioned now a mazda and Honda U S. But we also have GM, and Chrysler, Mercedes and and and and many.
Many others.
The reason for that is.
The concept of addressable city of local local dealership local availability local promotions. So from a from a usage perspective of using data to personalize and localized ad.
To the right ZIP code based on inventory, so data connection for infrastructure and personalization daily rendering of thousands of faithful H D. T V ads.
And you know showing the right model based on audience data. These concepts are very straightforward and make a lot of sense to auto manufacturers. So from that perspective, we're definitely seeing more and more logos closing with us in moving from Google to innovate and taking advantage of technology at the same time clean.
The economies in impacting large you know everybody in a way some verticals in a different way. So while you might see you may see increased adoption within a vertical of our technology over that's over and delivery platform.
Platform plus creative at the same time, you might even see for that specific vertical a decrease in volume and hence the decrease in revenue year over year are the key thing is that once there was a recovery in that advertiser continue it goes back to investing in television.
It's it's it's you you'll see a spike because they're already using the advanced technology and just it's a volume game right. So those type of without getting too specifically this vertical was up or down once this happened it is impacting our revenue and in.
And margin on the short term, but clearly you know the TV advertising industries being around for what 80 years.
These type of brands the auto or the pharma was the financial services CPG <unk> have built their business based on TV advertising, it's a $200 billion industry, that's not going anywhere.
Actually consumption is going up into the right on CTV AD based consumption right. So from a this is where kind of if I will summarize this where this year, we're focusing on profitable growth of them and make sure we're growing but we understand it's a challenging gear. So we wanted to demonstrate that even in this environment. We can produce a nice growing healthy EBITDA margins.
<unk>.
And prepare them and close more business and educate the market and innovate more cause it once the recovery comes in and I cannot guarantee when it that would be.
Well, we'll see a very different profile in terms of topline and bottom line.
Great. Thank you.
Yeah.
Once again to ask a question at this time. Please press Star then the number one on your telephone keypad.
Your next question comes from Laura Martin with Needham Your line is open.
Hey, Darren So these margins are really terrific. When you think about the role of generative AI and AI and driving margins do you see the role of generative and one side or on the downside on.
On the cost side in terms of when you think about how are you.
Yes.
Absolutely. Thanks, Laura absolutely on the upside I mean, this is a very exciting and what I like is really about it. It's a you know we're innovate as a technology company.
For innovation in video, we've been investing and just like advanced Tech in.
The core where a bunch of geeks right are they really are excited about leveraging new advanced technology. So none of these things are all are like.
Super New concept to us and we've been taking advantage of AI not specifically a generative AI already for years now to your question in terms of cost. So if there are two areas. One area is optimization right is using the very unique data set that we have is in the absolutely we were sitting on really phenomenal and unparalleled except.
Go view of what's going on in the world of CTV more than the DSP is more than specific publishers more than you know walled gardens, because we see 100% of what the specific Brian instead, it and I'm, saying like we see it for for that specific you know if you're an audio auto company, we see everything Youre doing everywhere in every household so the ability to use.
AI from that perspective on <unk>, and you're asking about our ROI is there. The alright is very very high because you can reduce waste and.
An improved performance based on outcomes. So that's a very positive ROI to implement AI and that's something we're investing even more so to your question in terms of generating Ive I for creative creative messaging and creative actually creative you know video and in and.
The images and.
That is definitely something that is a heavier cost and from that perspective, the way, we're expanding our platform in the second half is too loud too instead that to the workflow not replacing creative agencies, not giving somebody can click a button there isn't that we don't think that's realistic in the short term, but allowing the agents that that's actually I have to say surprised us that we are.
We saw that some brands are already using these tools combined with the art tools, but in some with Emmanuel perspective, what's going to happen in the second half, we're going to integrate that into our workflow. The cost will be buried by the customers not us they will have to use their accounts. They will have to generate whatever they want the way it will the data will flow into a generator.
I a P. I can come back into our platform that is what we're gonna automate. So we're not going to see we don't expect to see an increased cost indefinitely, we expect to have actually even more efficient.
Process for our customers and for us So and last comment I would say within our system.
Serving measurement. These are labor intensive on the agency side not on the universe that so clearly we see automation further automation of certain processes that will allow the process to be more efficient and have less kind of less hands on keyboards for that stuff. So that's the kind of the third area that we see and eventually all these things should absolutely increase our efficiency.
He and our bottom line margin.
Thank you that's a wonderful thing.
Sure.
Yeah.
At this time. It appears there are no further questions I'd like to turn the call back over to speak in that or for any closing remarks.
Sure. Thank you everybody thinks are very much again for joining us today. Thanks for the wonderful questions. You know I'm excited to see that there like lively question about more innovation more efficiency and the fact that we can somehow reduce.
The carbon footprint in our world. It's it's it's an added bonus.
We delivered a solid quarter, driven by CTV and measurement growth, which we expect to continue our we had some key client wins and expansion of existing customer has some really nice deals there. So a great momentum there I'm encouraged to some of the signs that we are seeing affirming in the advertising market.
Still somewhat volatile, but we are seeing a positive trend it quarter over quarter, we're seeing a better environment than we had at the beginning of the year. So that's good but you still you know would it be cautious and we will continue to focus on product innovation, we talked about that today scanning ourselves operation, adding more talent more efficiency.
That's how we run our marketing and sales organization and of course, our focus on profitable growth I look forward to continue this conversation and update you on our progress in all these fronts.
Great day, Thank you.
Okay.
Thank you everyone for attending today's <unk> second quarter earnings call. This concludes today's call have a great rest of your day.
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