Q3 2023 DoubleVerify Holdings Inc Earnings Call
Greetings and welcome to the double verify third quarter 2023 financial results Conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host occasional Aikman senior Vice President Investor Relations. Thank you you may begin.
Good afternoon, and welcome to double certify third quarter 'twenty two 'twenty three earnings conference call with US today are Mark <unk> CEO of Nikola life CFO.
Today's press release and this call may contain forward looking statements that are subject to inherent risks and uncertainties and changes in respect to encourage expectations and information currently available to us.
This also could differ materially for more information. Please refer to the risk factors in our recent SEC filings, including our Form 10-Q.
Annual report our Form 10-K. In addition, our discussion stable references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at IR jumped up a verified dotcom.
Also during the call, we'll be referring to the slide deck personal website with that alternative benchmark.
Thanks, David and thank you all for joining us today.
Before we dig into our exceptional progress last quarter I'd like to acknowledge the recent horrific terrorist attacks in Israel and heartbreaking humanitarian crisis, not no impact millions of people in the region.
D. D has an incredibly talented team until he has been remarkably strong and resilient. During this undoubtedly challenging time, we continue to support them in all of our global teams affected by the conflict are actively investing in humanitarian charities focused on helping those in need in the impacted area.
Now turning to our results we delivered an outstanding third quarter supported by a matrix of growth drivers across key digital media environments. So.
<unk> programmatic retail media and CTV and across all leading global markets as our investments in industry, leading solutions helped us create greater value for our existing clients and win a large roster of new clients.
Our growth remains resilient outpacing the market and our competitors and we are confident that this will continue to be the case in the quarters ahead as the macro stabilizes.
We drove 28% revenue growth and achieved 32% adjusted EBITDA margins in the third quarter, a marked acceleration from Q2 and above the top end of our guidance today.
Today, we are raising the midpoint of our full year 2023 guidance range to reflect the revenue growth of 27%, which again meaningfully outpaces that of our competitors and the industry.
Our customer wins and expansion momentum continues to accelerate.
In the third quarter, we won several large new enterprise logos, including Ulta Beauty General Motors total energy.
F L Rolex Neely Meyer retail media, P&G, Turkey, Miscast, Saudi coffee company and rack bank.
We also significantly expanded our business with current clients, including Uber and Alexis who implemented E. D. S abroad in the U S.
Santander, who activate a DB authentic attention in Brazil, and monitor lease Colgate and Pfizer, who expanded their use of DBS social purification solutions across multiple geographies.
Our year to date win rate across all opportunities remained above 80% with 67% of our third quarter wins being greenfield, which we define as wins, where the advertiser wasn't using third party tools for the business at TV one.
Winning business with new and existing advertisers fueled our successful land and expand strategy.
We grew the total number of advertiser customers generating more than $200000 over the last 12 months to 272 in the third quarter.
11% compared to last year.
The opportunity to land and expand through product upsell remains vast as over half of our top 700 customers use less than four M. D. DS seven core products and that does not include decided.
Our products span of activation and measurement and our complementary providing compounding benefits when used together as realized by the fact that over half of our top 50 customers use six or more of our seven core products.
D V continues to grow significantly faster than the industry and is gaining market share due to three core differentiators.
Our increasing platform scale and market coverage.
Our focus our market defining innovation and the deep level of trust that we've built with our customers as an unbiased independent partner.
Beginning with expanding coverage scale, we continue to grow the breadth of our measurement across key social platforms with a focus on short form video.
Today, we classify over 130% more content on social platforms than we did a year ago.
In the third quarter, we launched view ability and invalid traffic measurement across Youtube shorts inventory to help advertisers ensure that their ads are viewable and safe from fraud.
Thereby providing measurement across a greater volume of AD impressions on Youtube.
We also expanded tick tock brand safety and suitability measurement across the most important markets in Latin America, and Europe and plan to widen our tick tock APAC market coverage, even further in the fourth quarter.
By year end, we expect to support brand safety and suitability and markets that cover 85% of global digital AD spend ex China and India.
This ongoing product development activity and international expansion investment bolstered D V social revenue, which grew 56% year over year in Q3 up.
From a 32% growth rate in Q2.
Short form video was a key driver of our third quarter, social revenue growth and existing users of Dv social solutions leveraged Tv's new short form video verification tools across global campaigns on meta Reals Youtube shorts and Tic Toc.
We expect social to be an important driver of measurement growth over the near medium and long term as we expand coverage across formats and geographies and enhance our product capabilities to include brand safety and suitability measurement.
To that end, we are excited to announce that double verify is currently working with meta to develop our brand suitability verification solution.
To verify a measure brand suitability on Facebook and Instagram feeds in Reals.
We plan to begin testing in Q4.
With this planned expansion Dd's global advertisers will have transparency into adjacent content across Facebook and Instagram feed in real resulting in even greater clarity and confidence in their investments on these iconic platforms.
When we move our meadows solution to G. A in 2020 for a large part of the long term growth opportunity is cross selling dv's meta measurement solution to existing DB customers, who are not currently implementing our solutions omnichannel.
While <unk> is the largest contributor to BD social revenue over 50% of our current social advertisers still have yet to activate our measurement solutions on that.
Of this opportunity set of hundreds of advertisers approximately 95% of them actively D V. On Youtube, we've had significantly greater brand safety and suitability coverage for a number of years.
This customer cohort of Gd users on Youtube also advertisers.
And we believe that the value created by Dd's brand safety and suitability reporting on feed in Reals will spur their adoption of TV measurement on meta.
In addition to social we are continue to scale across retail media networks, which generated 75% year over year revenue growth year to date with revenue contribution across all three business lines.
Our measurement tags are accepted on over 60 of the leading retail media networks and sites globally, including 14 of the top retail media platforms and over 45 major retailers.
Today, we are thrilled to announce that we've expanded our measurement capabilities by being the first third party verification solution for advertisers using Amazon custom audiences and Amazon's D. S. P.
D. D is the first third party verification platform to offer brand suitability view ability attention fraud and invalid traffic protection.
Amazon custom audiences, our custom built segments to help brands reach and Reengage with shoppers most likely to take action.
Finally, we continue to expand our platform coverage via a new partnership with instant card ads. This solution will help advertisers verify their media spend and maximize their campaign performance across north America's leading grocery technology platform.
In programmatic, we continue to ensure that our advertiser customers have access to all of our prepaid verification solutions.
Where are they buy media by scaling our activation solutions across emerging demand side platforms in.
In the quarter, we launched a new DSP integration with live me and expanded pre bid solutions on data global deep intent basis, Comcast Beeswax <unk> Commerce Max D. S. P S.
[noise] widening the distribution of our industry, leading activation solutions.
Our scale in CTV continues to grow faster than the industry, where didi covers the platforms that received nearly all CTV ad spend.
D. These industry, leading solutions spanning all aspects of CTV AD buy from pre bid avoidance to postpaid blocking and monitoring and have spurred CTD measurement growth of 29% in the third quarter doubling the 14 per cent sector growth estimated by Magna global.
A great example of the value of Tvs video verification tools to advertisers was demonstrated in our recent study, which revealed that the big six leading media agencies leveraged Tvs MRC accredited video filtering solution to prevent their advertisers from paying approximately $75 million for non op.
Then it could potentially impressions since the beginning of 2022.
Thus, enabling reallocation of spend to higher value spots.
T V solutions, not only protect AD spend but help it perform as well, we expect measurement and verification on CTV to continue to increase with platforms, such as Disney plus with Didi is helping advertisers reach audiences effectively and at scale.
And finally, our international business expansion delivered 62 per cent measurement revenue growth in the third quarter with 75% revenue growth in EMEA and 46% revenue growth in APAC.
Since the beginning of 2021 we've more than doubled our international sales marketing and client services head count, including appointing new country leaders to cultivate local business and we remain very excited about our growth prospects outside of North America in the years to come.
Turning to our innovation leadership I'd like to focus on recent developments with three of our market defining products.
I think attention.
Cyber is AI.
And brand suitability, which is a key differentiator for D D on the programmatic as well as social fronts.
Beginning with authentic attention our MRC accredited engagement and exposure measurement solution. We've measured nearly 26 billion of attention impressions year to date and now beginning to see momentum in advertiser adoption with a 57% sequential increase in the number of advertisers who have activated DD authentic attention and.
Q3.
As our biggest competitors do not have a scaled viable attention solution authentic attention is increasingly playing a role in our global client win ratio, meaning the product impact on D V growth goes well beyond its direct revenue contribution.
We continue to lead in connecting our verification solutions to outcomes by partnering with attain a leading data platform that analyzes consumer purchase data in real time.
Our pioneering solution will enable advertisers to directly connect D V attention data to real time sales, providing an in depth look the consumer's path from engagement and exposure to purchase.
The attained partnership along with the recently launched the ability to use D vs attention measurement data inside this AI through the D V algorithmic optimizer and our Premier partnership with TV to expand attention metrics to see television.
A great example of the groundbreaking work that we're doing to action and expand the use of attention measurement data, which we believe will be core to the future of digital AD verification performance as cookies become challenged.
Now, let's dive into another recent innovation investment sides AI, we acquired the business on August 14th and are now in the process of integrating our organizations systems and processes.
Theres meaningful customer interest and the D V sided the AI powered optimization platform, which clearly differentiates T v's value proposition to enterprise brands as well as tomorrow, Dr focused mid market advertisers.
Besides team continues to close new business based on driving tangible outcomes in ROI improvement. Most recently exemplified by D V sideways client, Iceland Air who realized a 70% decrease in cost per flight booking.
And in our ROI.
Of 10 X relevant relative to the benchmark after using cited that additionally.
Additionally, beside this AI solution has already provided an edge in several enterprise verification rfps.
And as we expand its global footprint this competitive advantage will only grow.
D. These innovations advancing our brand suitability solutions continue to be a market differentiator. We recently launched an industry first made for advertising or MFA solution in September to enable our advertisers to avoid MFA content, which has exploded since the launch of easily accessible generative.
With AI tools.
Dd's proprietary MFA solution is the only solution in market today, which can be enabled to directly by our customer and their brand safety and suitability profile measurement and an a b S for previous avoidance.
It has already been adopted by some of our largest CPG and retail advertisers with interest from many more.
And speaking of a B S. It remains one of Tv's most successful innovation and a great example of how our competitive differentiators continue to deliver dividends.
Last quarter, we grew a b S revenue by 40% year over year, largely driven by existing users expanding their use of the product two more lines of business across more geographies.
Even though a b S. It's been in the market for five years, we expect expanded usage by existing ABS users to continue to drive strong EPS growth going forward.
We continue to drive first time activations of the product from new customers as well as existing customers.
We grew ABS penetration among our top 500 customers by approximately 10 percentage points year over year, and we have significant room for growth given nearly 40% of our top 500 advertisers have yet to activate the product.
Sticking with the theme of innovation and brand suitability I'd like to underscore that D. These advanced brand suitability products Act as a key differentiator across our social platform implementations.
He has the most comprehensive set of suitability categories and provides advertisers grew.
Greatest granularity and customization.
The robust policy based classification engine that makes a b is so successful is what powers, our suitability solutions on social as well.
Brand suitability drives D. These programmatic leadership and will establish us as the breakaway leader and social for three key reasons.
One.
<unk> has the most number of categories beyond the 12 categories covered by Garmin floor guidelines.
TD is unique and that we provide nearly 50 safety and suitability categories on some social platforms, enabling advertisers to avoid critical categories, such as made for kids and gambling content and to create customers' suitability categories and unique video exclusion lists.
Two D. D is the first and only verification provider to offer pre campaign suitability solutions that complement post campaign measurement on social to drive the learning optimization and better outcomes for advertisers.
And three.
D. D provides the most advanced AI based video classification technology in the industry with the highest accuracy rate and our superior ability to use objects logos action detection to analyze and classify videos based on context and sentiment.
I would like to conclude my comments as always on the differentiated pillar of trust.
D D is unique and upholding its core values, providing unbiased objective third party measurement is independent of the media transaction.
Trust along with successful innovation helps us win new clients. It's also the glue that makes our client relationships sticky keeping churn and check.
Our gross revenue retention rate has consistently remained above 95% and it did so again in the third quarter.
Customer Trust is also read it in platform stability data privacy and security all areas in which we are clear leaders.
D. He sets itself apart and having achieved ISO 27001 sock to type two new training and certifications as well as APAC C. B P R and APAC, PRP and EU U K and Swiss data privacy framework registrations among its more.
Many other privacy and security audits and certifications.
To summarize D V continues to win because of our market leading coverage scale product innovation that creates differentiation and client value and deep level of trust and security that is woven into the fabric of our platforms and our ecosystem relationships we.
We are pleased with the progress we've made year to date and remain focused on growing and realizing our solid pipeline of new and expansionary deals that will further drive our market share and create an even stronger long term growth trajectory with that let me hand, the call over to Nicola.
Thank you Mark and good afternoon, everyone. We delivered strong revenue growth profitability and cash flow from operations in the third quarter, we outperformed our revenue growth expectation, primarily due to greater worldwide adoption of our recently expanded social measurement solutions, which now cover all key short term.
Home video platforms, including materials, Youtube shorts, and Tic toc across a growing number of geographies Adil.
Additionally, a few large clients that were using <unk> solutions on media math in the second quarter transition two other programmatic DSP is earlier than expected further benefiting revenue growth in Q3.
As a result, we delivered total revenue of $144 million in the third quarter, representing 28% growth year over year up from 22% revenue growth in Q2 and above the top end of our guidance range.
We achieved 26% revenue growth year to date and are raising our 2023 revenue guidance to represent 27% year over year growth at the midpoint.
Total revenue growth in Q3 was driven by 32% growth in advertiser revenue, which comprises activation and measurement.
Yeah.
Volumes or MTM grew 27%, while fixed fees, our MTS increased by 2% year over year, excluding revenue contribution from <unk>, which performed broadly in line with expectations.
MTM growth continues to significantly outpace global digital advertising spend growth, excluding search of 8% in 2023 as forecasted by Magna Global.
MTF Rose in Q3 was primarily driven by improved premium product mix.
Followed by the impact of the Avs price bifurcation, which was implemented this year.
Activation growth continues to be led by ABS are premium priced programmatic product, which delivered 40% year over year revenue increase in Q3.
Demand for this market, leading solution remains solid with ABS volumes up 32% year over year.
MTF for Avs grew 6% year over year as we completed the rollout of the display and video price bifurcation across all major DSP in the third quarter.
Approximately two thirds of MBS is a year over year revenue growth came from existing MBS users expanding their usage to more brands into more markets. While a third of the growth came from new advertisers activating the solution.
In addition revenue growth from our core programmatic solutions accelerated from Q2 to Q3 and as I mentioned earlier <unk> performed in line with our expectations.
Turning to measurement revenue grew 32% driven by social revenue growth of 56%.
Social comprised 45% of our total measurement revenue with pick tops third quarter revenue contributing nearly double the revenue generated in all of 2022.
Non social measurement revenue growth accelerated on a sequential basis as new customers that we signed in the second order lamps business in Q3.
International measurement revenue grew 62% driven by existing customer expansion across those social and non social measurement and comprised 29% of the measurement revenue in Q3 23 as compared to 23% in Q3 in 'twenty two.
On the supply side.
Which represented 8% of total Q3, 'twenty three revenue platform revenue declined due to industry consolidation.
Specifically to existing supply side platform clients merge and consolidate their contracts with didi or the third platform was acquired.
Moving to expenses cost of revenue increased 37%, primarily driven by an increase in revenue share costs with programmatic partners as activation revenue grew to nearly 57% of total revenue in the third quarter from 55% a year ago.
We delivered 82% revenue less cost of sales in Q3 up from 80% in the first half of the year as we eliminated some duplicative data center costs.
Going forward, we expect revenue less cost of sales to range between 80% to 82% as we balanced data center cost savings with continued investments in cloud optimization and in scaling our infrastructure.
Total non-GAAP operating expenses, which excludes stock based compensation and other items for comparability grew 22% compared to 28% revenue growth, reflecting the efficiency of our operating model as we scale.
non-GAAP product development costs grew 29% due to our ongoing investments in AI and machine learning resources, while non-GAAP sales marketing customer support grew 23% and G&A expenses grew 12% year over year.
We achieved third quarter, adjusted EBITDA of $46 million and adjusted EBITDA margins of 32% and generated $13 million of net income, which was up nearly 30% year over year.
And the first nine months of 2023, we deliver net cash from operations of approximately $68 million compared to approximately $58 million in the same period in the prior year.
Capital expenditures were $12 million compared to approximately $28 million in the first nine months of 2022, which included the expansion of our global headquarters.
We ended the third quarter were approximately $259 million of cash on hand, after using $67 million of cash consideration to acquire Saab is.
Double verify continues to have significant capacity for investment with available cash on hand, and zero long term debt an important advantage in the current higher for longer interest rate environment.
Now turning to guidance, we expect fourth quarter revenue in the range of $170 million to $174 million, which implies industry, leading year over year growth of 29% at the midpoint and 19% growth on a sequential basis, which is similar to what we delivered last.
Year.
We expect activation measurement and supply side to deliver similar year over year percentage changes in Q4 as they did in Q3.
We expect fourth quarter adjusted EBITDA in the range of $57 million to $61 million, which represents an adjusted EBITDA margin of 34% at the midpoint.
For the fourth quarter, we expect stock based compensation to range between 16, and $18 million and weighted average diluted shares outstanding to range between 174 and 176 million shares.
We are raising full year revenue guidance to range from $5 $70 million to $574 million.
Which implies year over year growth of 27% at the midpoint as compared to 25% growth in our prior guidance.
We're also raising full year adjusted EBITDA guidance to range from $179 million to $183 million, which represents an adjusted EBITDA margin of 32% at the midpoint as compared to 31% in our prior guidance.
While we're not providing 2024 guidance today, we expect revenue growth next year to be driven by the continued success of the same core products and markets that have driven our growth to date in 2023.
And we expect quarterly share of full year 2024 revenues, followed a pattern similar to prior years with Q1, 'twenty forward presenting slightly less than 21% of full year 2024 months.
To close we delivered strong third quarter and year to date revenue growth and profitability and have made great progress across our business. So far this year.
We're excited to build on this work this quarter and in 2024 and invest in areas that we expect will drive continued industry, leading growth or do you need.
And with that we will open the line for questions.
Operator, Please go ahead.
Thank you and.
And ladies and gentlemen at this time, well conduct a question and answer session.
I would like to ask a question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Matt Sweeten with RBC capital markets. Please state your question.
Yeah. Thank you so much for taking my questions and congratulations on the quarter, Mark if I could kind of double click on some of the comments you were making around coverage and think about how you're investing in kind of a land versus expand motion. Obviously Atlanta is continuing to be really impressive, especially in a 67% Greenfield a mismatch.
But on the expand side it sounds like you have some good expansion in existing customers, bringing you into new international markets.
And then also you know some of the commentary we talked about before between Facebook and Youtube like how how do you focus on either expanding deeper by geo with customers or deeper from a format perspective.
Yeah. Thanks, Thanks for the question, Matt I mean I think.
Every customer opportunity is is one in which we look to do both of those things that you noted right, which is drive international pick up of our core products, but also get them to buy into additional solutions and I think <unk>.
That sounds right it really depends it depends how they come into some of them come with international.
Broad, but not deep perspective, where we want to take a couple of solutions across multiple markets.
And some come with a deep not broad perspective, where they may work with us in one or two markets, but drive the use of multiple different products across those markets too. So it really depends the nice part is.
As we noted we've got options right and when we talk to I started the call with talking about the matrix of growth drivers and I think that's the one real unique thing about D V versus anybody else in the AD Tech space, which is we have open internet, we've got social we've got programmatic.
We've got the ability to look at Geos for growth, we've got new client growth I mean, all of these things give us a lot of different levers to pull if one area looks soft one geography look soft or one platform is performing and I think that's the real takeaway for us which is having optionality with a large.
Basket of goods in many markets and covering many platforms puts us in a really unique position.
And then if I could maybe follow up on one of your newer levers through side I know when the acquisition happened we talked about this being able to expand into direct response and kind of deliver against core Kpis that Iceland Air example, it's great.
But I guess in terms of what Youre hearing from conversations acknowledging it's early how aside that's being used maybe compared to your expectations.
Yeah, you know, it's it's a great.
Perspective, when you bring which which is this opens up a whole level of kind of performance type advertisers who may have.
<unk> not been as focused on the brand.
Brand attributes of our solutions right brand suitability may not be as important as just driving a sale and since <unk> is super kpis, driven they optimize against outputs using different data levers.
It has opened up many of those advertisers to us.
Many who don't want to work with US today, and we started having dialogue with and even some of those who may work with lighter or more competitive solutions were looking for a way to optimize against different datasets. So it has opened up new dialogue with lots of folks I think we're going to start to see the real benefits of cross selling.
You know as we go into 2024, we've already started putting teams together and we put to our sales team into theirs.
So I think we're just starting to see the beginning of cross sell and one of the things I noted in the earnings call was that.
It's becoming a differentiated lever for us as well now you.
When you take that and attention in our basket of goods when we're pitching enterprise clients.
The number of things that we have on that scale between us and our competitors starts getting starts keeping that scale and size is just one more arrow in that clever.
Thank you.
Yeah.
Our next question comes from Justin Patterson with Keybanc. Please state your question.
Great. Thank you and good afternoon to if I can.
Mark I just want to try a big picture one on short form video, obviously theres a lot of engagement, there and user generated contents, certainly works well with brand safety.
So curious how youre thinking about the opportunity there as we head into next year.
And did you benefit from just having more exposure with.
More of these different providers and then for Nicola with what they can you just talk about the financial framework I know youre not guiding to 2024 here, but as we think about side beds coming into the business just operating toward that 30% margin framework is that how we should still be thinking about the business. Thank you.
Yeah. So I'll take the first one when we look at short form video, we couldnt be more excited about the opportunity there its a big driver of our social growth.
You know as we get geared up to get on the newsfeed meta arguably the largest growth driver in social is short form video and whether that's you know Youtube shorts of reels or tick tock and theyre all firing in all cylinders.
We look at kicked off Q3 revenues I mean, there there are nearly two acts.
What they were at the same period last year for Q3, so that business is booming and.
And growing at a nice pace and we don't even have brand safety and suitability live yet unreal. So that's you know that's upcoming which can be a growth driver.
Just seeing the volumes continue to increase across all of those so.
56% growth across social which was pretty extraordinary it's an acceleration for us and you know I think that is being driven in large part due to short form video. So we like it it's something that we do really well our tools lend themselves to that.
Some of the work we've done on classification around brand suitability of video.
AI tools that we're using to classify that content or just nailing it and the advertisers like what we've been able to deliver them.
<unk> dollars are going there and we're taking advantage of it.
Yes, Justin on your question for the financial framework.
What we've always said is that we look to balance growth with profitability and the growth that we've achieved strong industry, leading we're guiding to a 29% growth in the fourth quarter.
There are many ongoing investment that we are going to continue to do that we believe will help us continue to achieve industry, leading revenue growth and that will be an infrastructure AI machine learning all the all the drivers that we discussed the innovation day in prior calls.
<unk> is an additional investment as we try to figure out their proposition combining funded with our current product offering so.
Those are the reasons why I think we would expect to continue to invest into that that level of framework, but again, it does achieve industry, leading revenue growth and gained market share.
Thank you Paul.
And our next question comes from Mark Kelley with Stifel. Please state your question.
Great. Thank you very much two quick ones just.
More macro related I guess, you know, we're kind of picking up that maybe people will have a little bit more visibility into 24 budgets are earlier than they actually get it before 'twenty three is over versus.
Versus last year, I don't know, if thats, something that youre, saying, well, we'd love to get your thoughts there and then just a quick housekeeping one.
Anyway to quantify the media math impact that you saw in Q3.
That'll be helpful. Thank you.
Yeah.
Sure argon.
On the macro look.
We've kind of talked about this story previously where we're we came into 2023 with really big question Mark of what the year was going to look like the end of last year kind of.
Sputtered out and you knew that perspective, beginning of this year was not great. I mean that has improved throughout the year to the point, where I think we've said.
Things have stabilized and we noted in the script that we see a pretty stable.
Rest of the year ahead of us and I think we have not had the privilege of having a big AD growth tailwind yet we continue to grow at a pretty extraordinary rates as far as we're concerned.
Look I think we're going to have a good Q4, we're guiding to a solid Q4, I think we feel a lot more confident.
You know at the end of this year than we did probably at the same time last year. So we don't have a.
Really.
We don't have a crystal ball about 24, but I can say as we look today towards the end of this year, we feel definitely better now than we did at the same time last year.
Yeah and on the on the <unk> question.
The impact is small.
Medium up with not one of our major platform, but it did have a few large clients on it.
We had some caution around how long it would take for those customers who switched to the platform and as we kind of expected, but we're planning to just be a little bit of cost and it didn't take long for them too.
Start using another platform and continue to use the duty services, but the overall impact of that was.
Okay Alright, thank you both I appreciate it.
For sure.
Our next question comes from Brian Fitzgerald with Wells Fargo. Please state your question.
Thanks, guys.
Congrats on the quarter again, but wanted to ask.
For a view on the underlying health of the programmatic advertising market right now we're seeing some mixed signals from some other companies, but what you imagine you have a pretty holistic view across your clients is it may be moving spend across DSP and SSP. So could you could you talk a little bit about that and maybe maybe a little bit about.
Some of the convergence is between what used to be siloed on and off ramps or bolt on ramps, but now we're getting stitched together complete solutions.
Okay.
Yeah. Thanks, Thanks, Brian Yeah, I think we.
We like to take a pretty broad perspective, both on programmatic, but even broader on our opportunity. So we'll have we work with over a dozen dsp's.
Lots of regional Dsp's. So we don't have a heavy concentration in one platform or another and if dollars moved from DSP. The DSP again, we're agnostic.
But more importantly, when we look at the programmatic sector.
I have to get back to that kind of matrix of growth two key things one the matrix of growth drivers that we have you know we're on the open internet where in social where in CTV.
If dollars move from the open Internet to social that's fine because we're working with meta we're working with Youtube, we're working with snap and Pinterest and all of the major social platform. So.
We are not say totally insulated from dollar movement on our footprint in that broad footprint. You know gives us a really good opportunity to kind of ride the wave of dollars moving from one place to the other that's number one I think the second thing to consider is the fact that a lot of the programmatic players out there are working off of Rev.
Sure or a percentage of media. So if you start seeing softness on CPM in one sector or another it's going to hurt your right and we are a fixed fee volume based model. So as long as volumes continue to stay pretty steady and we can continue to expand business on a programmatic platform, we're going to do okay. So I think.
Obviously, the biggest driver of of our insulation against some of that programmatic fluctuation is the fact that programmatic is not our only channel and a $1 move around where we're insulated.
And the second is the fact that our business model doesn't feel that pain when cpm's go down because we're not taking a rev share.
Got it thanks, Mark I appreciate it.
Yeah.
Our next question comes from Nicholas <unk> with Stephens. Please state your question.
Oh, Hey, guys. This is dean on for Nick Thanks for taking our questions going into next year. How are you thinking about overall CTV volumes and maybe the influence from your measurement partners growing their AD supported tears and second question is there any window for you to potentially attract.
Net new advertisers, who are buying against that CTV inventory that you're measuring.
Yeah. So you know look at CTV is an interesting segment for US It continues to grow at a really nice clip.
Still relatively small versus all the other type of platforms that we cover mainly due to the fact that the AD load there was pretty light right. You know if you look at the CPM is they are very high but the AD loads are very low.
Based on the model that we have which is based on volumes.
We get considerably more bang for the Buck from things like short form video social even open internet buys.
<unk> CTD exposure is a nice opportunity for us to grow because a lot of those dollars are coming from linear where we have no opportunity.
But it's but it's you know it's still relatively small in our overall picture.
That being said, we do work with the top 10 AD supported platforms out there and as you noted.
Folks like Disney plus which I think added 5 million AD supported subscribers they announced yesterday on Netflix added a couple of million more I mean theyre continuing to grow that's all good it's all gravy for us and we think that you know.
As the AD supported CTV business grows the number of impressions will there grow there as well and it will become a stronger driver of our business over time so.
Definitely opportunities there I think.
With regards to getting new advertisers based on our CTV coverage.
I don't think it's a real it's a real growth driver for us the bigger growth driver is.
Our current 1000 of the biggest brands in the world.
Working with US and just also training as dawn in CTV. So generally you know if we're going to work with an enterprise client and if their advertising on CTV. They almost always advertising also on Facebook or advertising and programmatic or some other channel as well. So I don't think it's a unique opportunity for us to get new advertisers. It's just in.
Another channel that gives us more to measure.
Thank you.
And our next question comes from Mark Murphy with Jpmorgan. Please state your question.
Thank you and I'll add my congrats.
Can you try to quantify the tailwind you're seeing out of our G&A I just from the standpoint that it it's creating you know a large amount of content that might result in more fraud, it might be more clickbaity content, there might be more disinformation out there and and as a consequence start to kind of push more business.
Your way I know you you alluded to it a bit in the in the prepared remarks, but I'm just wondering how material that might be coming and then I have a quick follow up.
Yes, Mark you make a really great observation, which is the level of confidence and the you know the acceleration in kind of questionable content has never been higher.
We see a lot of generative AI based content, which.
Very often gets flagged discipline call MFA are made for advertising content.
Which obviously creates an incentive for advertisers to work with US we launched an MFA tool, which is adds an attachment to ABS, which is obviously a prepaid brand suitability tool for us that allows advertisers to both filter out.
MFA and then measure them afterwards, if if theyre active ended up on MFA. So it is a certainly a driver of volume.
Because as we're measuring more stuff that's going to places that isn't great. It gives us more impressions, but it is also.
It just.
That helps us justify that story that you need to be watching what youre doing so clients, maybe who who even our performance clients they've been sitting on our science to saying, Hey brand suitability doesn't really matter to me.
But if MFA content out there and it's it's you know, it's AI generated and doesn't really work and is redundant.
I don't want to be there. So it does open up some new advertiser opportunities. It has driven some volume a bit as far as quantifying. It I think it's too early to do that Mark we haven't really looked at that yet and maybe something we look at going ahead.
But we know that our MFA tool has been picked up by.
Some of our larger CPG customers and.
And a couple of retailers as well and those are folks, particularly on the retail side that are looking at ROI.
And they want to be in the right places to drive that so.
No. It's a long answer to you cant.
Can't quantify it for you today, but it is definitely we're seeing pickup of the tool, we're seeing volumes being driven by it and I think it's it's still in the first round of advertisers being concerned about this stuff.
Yeah, that's great. It seems like another driver in the early stages for you and then Nicola I wanted to ask onside bids we understand that closed very late.
In the quarter I'm, assuming their contribution therefore was de Minimis can you confirm if you know where we were estimating it was something like sub $1 million in revenue for Q3 or are we in the right zone there.
Davidson.
Demand.
Thank you.
Our next question comes from Raimo <unk> with Barclays. Please state your question.
Hey, Thanks, Congrats from me as well.
Just quickly.
Marcus so much innovation coming out of new.
And I see you're still having a lot of greenfield.
<unk> out there what are you seeing in the on those customers that are just not with you yet or not.
You can kind of pick the proper solution I would almost assume with so.
So much more social out there so many more platforms. So many more fracs that there should be a change in behavior or kind of doing more like what's your conversation what are your conversations like thank you.
Yeah, Yeah, you make a good point, which is the.
The customers that are working with us.
In many cases.
We're the way we attract them is through this broader basket of goods right and the bigger that basket of goods is the more hoops, we have to bring them in and when we talk about greenfield wins those are for customers that haven't used the product that we've sold through to them. So some of those may be current clients that just don't use that solution. So.
It's totally brand new and some of them, maybe absolutely brand new customers. We don't do anything that the thing that's common between both is that ensuring that we have lots of innovation and a big basket of goods you have draws them into us where we can do that land and expand.
A great example is the MFA solution, which I just mentioned, which we just launched which you know start to attract some folks.
<unk>, which.
Performance based advertisers are getting interested in attention you know Paul.
Those folks and so the more touch points that we can have to bring in a greenfield customer and then expand with them over time.
I think is is essential we use that stat, a lot of time, which is.
More than 50% of our customers use less in four of our key products. Our core products right that means we've got a lot of expansion to do with current customers to sell in those additional solutions.
And we know that once we hook somebody whether we hope them through attention or we hope them through aside bids relationship are hooked them through an MFA solution.
We have the ability to continue to up sell them more things over time and when we look at it like for example, our top 50 clients.
More than 50% of use six or more products. So we know like we can upsell. These customers and we can make them bigger over time and having that basket of goods is key and that's why we talk so much about innovation right. Our core does great and we continue to grow off of it but the more touch points, we have more little solutions, we can bring in there.
That brings them in because they become no longer become greenfield customers, they become enterprise customers and upsell them overtime.
Thank you.
And our next question comes from Michael Graham with Canaccord Genuity. Please state your question.
Hi, Thank you.
Related question I, just wanted to get your.
Latest thoughts on the competitive landscape.
You all had a great quarter and it seemed like you know.
Some other players in the market segment did as well and I'm. Just wondering you referenced a great 80% win rate in your slide deck.
Are you seeing any changes to the competitive landscape in.
When it when it does get down to selection like just maybe talk about the relative importance of product breadth versus maybe pricing as a potential differentiator just would love to get your thoughts on how all that's evolving.
Yeah. Thanks, Thanks, Michael I mean, I think it's it's a great perspective, which is we still are in a in a in a relatively competitive market.
But when you look at some of our peers there.
We are growing faster on every line item that matters on a much bigger base, which means that you know.
We're beating them on the product front, we're taking market share and we're doing it out of it are you now at a very profitable clip. So the last thing I. Just said there is really relevant with regards to is pricing playing a big role here or is it product and I have to say.
We're winning deals based on products right.
We've been able to keep MTF relatively stable and that's our goal to do that.
And I think you know in some cases sure or is it a head to head where we've got to get aggressive of course, but we feel that.
<unk> investment in innovation.
Is essential.
And when we win those deals because we have this broader basket of good because our goods because our we got solutions that are you know others in the field they'll have.
That's our driver like that that's what we're looking to do and I think if.
If I would say a majority of the deals that we win or because of that because.
Anyone can just go into a price war, but overtime.
The advertisers want to be with somebody who has the best solution. That's driving the best outcomes and has the most flexibility to grow with them in the future. So I think that's where we still lean.
We're still winning we're still grew.
Growing share, we're investing more in R&D than our competitors and I think we.
We see that being as a key a key advantage moving forward.
Okay. Thank you Mark.
Sure.
Our next question comes from our Zoom Bahtiyar with William Blair. Please state your question.
Yeah perfect. Thank you.
Mark maybe.
One for you to start.
You said, you're expecting to start testing with meta in the newsfeed in Q4 can you just walk us through what that process might entail and what do you expect to learn.
During the testing period, and what the timeline might look like.
Yeah.
We're knee deep in that process right now development is going well and according to pace. So you know.
There's a very small group of partners that that's a meta has decided to work with and we're all kind of on par working through the same phases together.
We're looking at in early <unk>.
<unk> thousand 24 launch.
Into G E and I think you know.
We've noted before the scaling of that launch will really start with current customers.
That are using us to measure across.
The news feed and then we'll expand to your current customers that aren't using us for for example view ability and fraud on the news feed and then expand few customers that are totally brand new.
So we've got kind of these three levers of growth that we expect to start rolling out.
G a which will be early in 2024.
Alright.
Got it and then just when we're thinking about.
ABS in programmatic growth I guess, how should we think about the pace at which avs can continue to grow going forward and we did see a little bit of that.
Step down, but it doesn't seem like you're anywhere near being penetrated.
Within your existing base. So how do you think about the opportunity that's still left okay.
Going forward.
Yeah. So.
The the the wonderful thing about ABS is not only is continued growth but.
When we look at two thirds of that growth coming from current users right and that means that our customers love. This thing so much that they moved to a new market they put more campaigns into it.
And to me, that's a great indication of not only the product working really well.
But that it's got continued legs as long as those clients.
We continue to grow and grow with us we're going to do well there I think that.
When you look at the fact that we still have over.
You know a third of our top 500 customers, who have not used ABS that can turn it on and it shows that theres new client growth there.
We've got current client growth to come out of it and then we've got.
Totally new.
Folks coming into into Dv as well. So I think we've got strong growth drivers there I mean, 40% growth year over year for a product that's over five years old I think is pretty extraordinary.
And we've said you know look at some point ABS.
The legs will warehouse, but right now they're still pretty fresh we still got lots of customers coming in we've got lots of core customer growth still still getting out there and there's still some penetrations do within our current base. So.
We've got legs.
Alright wonderful, thank you and nice job on the quarter.
Thank you. Our next question comes from Andrew Boone with JMP Securities. Please state your question.
Good afternoon, and thanks for taking my question I wanted to ask two quick ones or maybe not quick but simple ones.
National growth accelerated but can you just unpack that and let us know if anything.
That's going on there as well as how sustainable that is and then a competitor talked about growth within the mid market. What are you guys seeing there and what's the opportunity for the mid market. Thanks, so much.
Sure, Let me talk a little bit about first of all no questions are simple I'm going to start with that they are all complex. If you dig him. So I appreciate that Andrew.
On the international growth we.
We saw 75% growth across EMEA up 46% growth across APAC.
Some variation there, but still strong growth across all the sectors. You know that we have out there if you look at what <unk>.
Driving growth in both of those regions outside yes, it's very similar to what we've seen in the U S, which is social social.
Is driving growth short form video is driving social.
So all those things together, we think are helping continue to drive.
The expansion that we're seeing in EMEA and APAC now to be fair. We saw last year was not a great year.
Internationally, so we've got slightly easier comps at two to deal with.
However.
If you remember we talked about our pipeline last year in Q4, and how strong it looked outside the U S and how that started paying off I think we have a similarly strong pipeline. This year outside the U S and that was based on if you remember a while ago and we made some significant investments in sales and marketing resources outside of the U S.
They're paying off I think they finally have hit their stride, we continued to invest in resources outside the U S. And you know, we just hired some new country managers in APAC.
And the nice part is too we're starting to win.
Local deals in market. So you heard some of them like you know Aaron co and you know.
Uh huh.
LDS and.
Some of the local clients and some of these local markets Saudi coffee right. Now. These are these are the local clients I think that's a good sign because it's not just the unilever's of the world is demanding Lisa the world's spreading to these markets. We're closing local deals. So I think to me that shows the investments we made in those markets will have legs.
And that you know when we look at what's driving that growth its social and social and short form or you know show no signs of slowing down.
Okay.
I can add one one stat there so international was 29% of our measurement, which is still on.
It lags a percentage spend that's happening out there.
That's right. So I think we're catching up to the opportunity.
With the investments that Mark mentioned, we've made a few years ago. So I think the upside is still there for us.
And then on the second half of your question kind of mid market advertisers.
I think we have a couple of plays there and look we are still focused on the enterprise. We've got so much room to go on the top advertisers around the globe still underpenetrated.
Underpenetrated outside the U S still lots of folks we haven't talked to you on the enterprise level. So.
We look at that that is still our main.
Driver of growth, but when you look at mid market I think theres opportunities there Sai bids as we've noted.
Works with some mid market folks who aren't very Dr focused.
So I think that opens up an opportunity.
Our work on the programmatic front.
Always brings new dollars in from mid market partners thinking about about 20% of our programmatic revenue comes from.
Advertisers that we don't have a measurement relationship with right. We're just a little bit too small so we have channels to reach mid market advertisers, we continue to grow there but.
But I think.
Ultimately enterprise players are still our biggest play and there's lots of room to grow there.
Alright, thank you.
Absolutely.
Thank you there are no further questions at this time I'll hand, the floor back to management for closing remarks.
Thank you all for joining us on this busy evening, we're excited about dd's multitude of growth opportunities as we expand across digital media channels and geographies launching upsell innovative products and win business across existing and new customers. We look forward to seeing many of you at upcoming conferences and events have a great evening everyone.
Thank you. This concludes today's call all parties may disconnect.