Q3 2023 Outbrain Inc Earnings Call
[music].
Speaker 1: Good day.
Good day.
Speaker 2: And welcome to Outbrain Incorporated, third quarter 2023, earnings conference call. This time all participants are in listen-only mode. But your answers will follow.
And welcome to all brand appropriate at third quarter of 2023 earnings Conference call.
All participants will slowly mode.
Just a follow up formal presentation.
Speaker 2: As a reminder, this conference is being recorded. I'd like to turn the call over to Al Bain. investor relations, please go ahead.
This conference is being recorded.
On the call.
The relations. Please go ahead.
Speaker 3: Good morning, and thank you for joining us on today's conference call to discuss Outbrain's third quarter 2023 results.
Good morning, and thank you for joining us on today's conference call to discuss our third quarter 2023 result.
Speaker 3: Joining me on the call today, we have Outrange co-founder and co-CEO, Jerome Goliath, co-CEO, David Costin, and CFO , Jason Kibbeot.
Joining me on the call today, we have outbreak co founder and co CEO your own Galah Costar.
Co CEO, David Kaufman and CFO Jason.
Speaker 3: During this conference call, management will make forward-looking statements based on current expectations and assumptions.
During this conference call management will make forward looking statements based on current expectations and assumptions.
Speaker 3: These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking states.
These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward looking statements.
Speaker 3: These risk factors are discussed in detail in our Form 10-K filed for the year ended December 31, 2022, as updated in our Form 10-2, and in subsequent reports filed with the Securities and Exchange Commission.
These risk factors are discussed in detail in our Form 10-K filed for the year ended December 31, 2022 as updated in our Form 10-Q, and subsequent reports filed with the Securities and Exchange Commission.
Speaker 3: Forward-looking statements speak only as of the call's original date, and we do not undertake any duty to update any such statement.
Forward looking statements speak only as of the calls the original date and we do not undertake any duty to update any such statements.
Speaker 3: Today's presentation also includes references to non-GAAP financial measures.
Today's presentation also includes references to non-GAAP financial measures.
Speaker 3: You should refer to the information contained in the company's third quarter earnings release for our definitional information and reconciliation of non- GAAP measures to the comparable GAAP financial measure.
You should refer to the information contained in the company's third quarter earnings release for definitional information and reconciliations of non-GAAP measures.
Comparable GAAP financial measure.
Speaker 3: Our earnings release can be found on our Investor Relations website, investors.outbrain.com, under news and events. With that, let me turn the call over to David. Thanks.
Our earnings release can be found on our Investor Relations website, investor Dot outbreak dot com under news and events.
With that let me turn the call over to Dave.
Thank you Brian.
First I wanted to ask on the situation in the Middle East.
Speaker 4: At Outbrain, we stand with the people of Israel who have been affected by the recent events.
Brain you stand with that.
Israel.
Thank you.
You bet.
Speaker 4: Our hearts go to all the people that are impacted by the horrific situation.
Our Hearts go out to all the people that are impacted.
Duration.
Speaker 4: We all know people that have suffered and we pray and hope for better, peaceful days in the region.
We all know people that have suffered and BK and hope for a better piece of data.
Speaker 4: I want to take this opportunity to thank so many of you, first and foremost our employees in Israel and around the globe, for your unwavering commitment. Our business partners and our investors and analysts for the outpouring expressions of support. This means a lot to us.
I wanted to take this opportunity to thank so many of you first and foremost our employees in Israel and around the globe.
Well your unwavering commitment.
Our business partners, and our investors and analysts for the outpouring to especially get support.
Means a lot to us.
Speaker 4: From an operational perspective, we have approximately 380 employees in Israel. About 30 have been called to reserve duty. Our offices are located in Netanya, north of Tel Aviv, in the center of Israel.
From an operational perspective.
Approximately 380 employees in Israel.
Hey, Bob Doody had been closed.
Oh, often says I'm a crazy Tanya.
In the center.
Speaker 4: the safety and well-being of our employees and their families with our top priorities.
The safety and well being by Boeing.
Our top priority.
Speaker 4: Since October 7th, we have continued to execute on our business priorities and deliver on our commitments for our customers. We do have business continuity plans in place to the situation further escalate.
They have continued to execute on our business priorities and deliver on our commitments.
We do have business continuity.
Should the situation further.
Thanks.
Speaker 4: Now I will turn to our financial results and business trends.
Now I will turn to our financial results and business trends.
Speaker 4: We are pleased with the resumption of year-over-year growth in Q3.
We are pleased with the resumption of year over year growth.
Speaker 4: We grew ex-tank gross profit by 8% to $56.8 million within the range of our guidance.
We grew ex Tac gross profit by 8%.
$6 $8 million.
The range of volume guidance.
Speaker 4: Our adjusted EBDOW of $10.3 billion exceeded significantly the high end of our guidance and can be attributed to the top-end growth and to our cost discipline. We also saw improvements in our X-TAC margin.
Adjusted EBITDA was $10 $3 million exceeded significantly the high end of our guidance and can get attributed to the top line growth.
So our call.
We also saw improvements in all ex Tac margin.
In terms of current trends.
Speaker 4: The macro environment, which remains volatile, combined with the ongoing situation in the Middle East...
The macro environment, which remains volatile.
With the ongoing situation in the middle East.
Speaker 4: lead us to a more cautious outlook for revenues and ex-tax gross profit in Q4, as you will hear from Jason.
These tests to a more cautious outlook for revenues and expect gross profit in Q4 as you will hear from Jason.
Speaker 4: In early October , we've seen a spike in war-related news pages, which are generally more difficult to monetize, as certain brands have brand safety concerns around these types of pages.
<unk> seen a spike in war related use pages.
Generally being more difficult to monetize.
Bryan Bryan safety concerns around these types of patients.
Speaker 4: We have also experienced some brand budget cuts and delays in launching campaigns, resulting in slower than normal seasonal Q4 updates.
We have also experienced some brand budget cuts and delays in launching campaign.
I don't think it's slower than normal seasonal Q4 uptick.
Speaker 4: Despite these near-term headwinds going into 2024, we are excited with our differentiated position in the market, which focuses on the premium side of publishers and advertisers.
Despite these near term headwinds going into 'twenty to 'twenty four we're excited with differentiated position in the market.
Focus on the premium side probably shows.
Speaker 4: Our platform offers full funnel results for advertisers at scale on the open web and enables total publisher revenue and audience growth. All leveraging our AI-driven prediction engine.
One platform offers.
Our results for advertisers at scale on the open web.
It enables total probably show revenue and audience growth.
One leveraging our AI Goodman prediction engine.
Speaker 4: We believe this provides us with a strong foundation for further growth in 2024 and beyond.
We believe this provides us with a strong foundation for further growth in 'twenty 'twenty four and beyond.
Let me turn to the advertising side of all business.
Speaker 4: Albuen has traditionally been and continues to be across the click native advertising custom acquisition platform that uses AI to deliver strong performance on TPA Gold across the open web.
Although it has traditionally been and continues to be a cost per click native advertising custom acquisition platform that uses AI.
To deliver strong performance on CPA gold across the open web.
Speaker 4: Their own will catch on Q3 notable investment in AI and automation capabilities in our core buying platforms, such as the growth in our corenet conversion features for self-serve advertising.
Yeah, Ron will touch on Q3, notably investment in AI and automation capabilities in our core bank backbone.
The growth in our quoting that conversion feature both helps us advertise debate.
Speaker 4: We continue to innovate to drive return on edge and then scale for diverse batch of performance adverts.
We continue to innovate to drive return on that and then scale diverse that performance.
Speaker 4: We are seeing growing adoption of our performance BSP, the Manta, with traditional amplified clients moving budgets to buy more effectively cross open web SSPs, and not only in the out-brain marketplace. As a reminder, the Manta operates on a percent of spend to the platform, and we have seen record levels of spend grow on the Manta in 2023.
We're seeing growing adoption of our performance.
Got it.
Traditional anthracyclines will be budget by more effectively across the open web I should be.
Not only in the marketplace.
As a reminder, the mentor.
Spend through the platform.
And we have seen record levels of spend well.
The main thing in 'twenty to 'twenty three.
On the branding and awareness from the start of Q3, we launched on Nick.
Speaker 4: On the branding and awareness front, at the start of Q3, we launched Onyx, our new brand building platform that runs video, high impact display and rich media ads leveraging our brand's AI to maximize user attention.
Our new brand building platform like run video high impact display and rich media and leveraging our brain AI to maximize user retention.
Speaker 4: Since the launch, we have worked with more than 100 burner advertisers.
Since the launch we have worked with more than 100 Brendan.
Speaker 4: These advertisers include Sephora, Paramount, L'Oréal, Lancôme, Nestlé and many others.
These advertisers included Sephora, Paramount no real call, Mexico, and many of them.
Speaker 4: For many of these advertisers, we are demonstrating that we can outperform incumbent vendors through a unique combination of better creative, running on high attention placement and utilizing smarter technology to drive attention.
For many of these advertisers we are demonstrating that we can outperform incumbent vendors for a unique combination of creative.
Running on high attention placement and utilizing technology.
Technology to drive attention.
Speaker 4: We continue to consistently deliver a barbed bench mark without in terms of an inch.
We continue to consistently deliver above benchmark resolve concerns of attention.
Speaker 4: For example, with our high impact display as a mobile, we see an average 58% higher attention rate goes with the Adderlight benchmarks.
For example.
Our high impact display ads on mobile we see an image.
And higher pension rate, they're supposed to be out there like benchmark.
Speaker 4: Also in our video business, which is a core component of our Onyx offering, we switched our focus from out-stream videos to in-stream pre-roll, leveraging our video intelligence acquisition. This shift is starting to pay off with higher margins for the feedback.
Also you know your business, which is a core component of all along is offering.
Switched our focus from our dream video too extreme pre roll leveraging that we'll be doing intelligent acquisition.
It's starting to pay off with higher margins.
Mike.
Speaker 4: We expect video to be even more strategic for our future growth.
We expect to be doing to be even more strategic for our future growth.
And now that would be very interested element of offering is the ability to provide both performing and awareness for Brian.
Speaker 4: Another different sheeted element of our offering is the ability to drive both performance and awareness for brands.
Speaker 4: This makes that one of the very few companies beyond the world garden that can deliver advertisers affected across the full funnel consumer journey.
This makes us one of the very few companies beyond the lawn and garden at Kinder, neither advertised low back pain.
Across the full funnel consumer journey.
Speaker 4: As an example, for many years, AARP has been leveraging our amplified performance platform to drive objective black audience develop.
As an example.
Many is a L. P has been leveraging our antique by performance platform to drive objective like audience development.
Speaker 4: Now, we have expanded the relationships on compact branding objectives, where ONIX will help them build brand awareness with potential new members.
Now they have expanded their relationship to encompass branding objectives with Onyx will help them build brand awareness.
Mentioned new member.
Speaker 4: These titles of engagement with advertisers get as excited about their strategy to address a larger segment of advertising budget from both new and existing clients.
These types of engagements with advertisers get excited about their strategy to address our largest segment.
Great.
On both new and existing clients.
Speaker 4: Despite some of the slowdown in brand advertising business that I referred to, we still expect to close the year as we said before, we tend to $20 million of our next business.
Despite some of the slowdown in brand advertising business as I referred to.
We didnt expect to close the year as we said before.
$10 million to $20 million of all makes business.
Moving to the publisher side.
Speaker 4: We continue to focus on improving the performance of our premium publisher win over the last 12 to 18 months.
We continue to focus on improving the performance of our premium publisher way over the last 12 weeks.
Speaker 4: Among our renewals of long-term partnerships in Q3, I want to highlight the keep in France, the Elena Felag and Zeit in Germany, as well as boxing the U.S. The apartment we have been working with exclusively for close to a decade.
Among them are renewals of long term partnerships and choose me.
I want to highlight the key big trends, the leanest of log insight in Germany.
It's one of the boxes in the U S. The partner, we have been working with exclusively for close to a decade.
We are currently engaged in several discussions with large publishers globally and feel strong momentum there.
Speaker 4: We are currently engaging several discussions with large publishers globally and few strong momentum driven by several elements of differentiation.
And by several elements of differentiation.
Speaker 4: One, our focus on having a balanced portfolio of premium global publishers, with no single publishers taking up outside demand. Second, the on-experiment demand, and third, keystone capabilities and product vision.
One our focus on having a balanced portfolio premium global publishers, we don't single publisher thinking up outsize demand second B, all mixed opinion demand and third Keystone capabilities and product innovation.
Just tell me back.
Speaker 4: Considering the current macro environment and the situation in the Middle East, we are more cautious about our short-term revenue outlook, but we continue to leverage our cost discipline to drive profitability and cash flow generation.
Considering the current macro environment and the situation in the Middle East we are more cautious about the short term revenue outlook, but you continue to leverage our cost discipline to drive profitability and cash flow generation.
Speaker 4: We are pleased with the resumption of the over-year growth in Q3 and expect further acceleration in 2024, leveraging our strategic investment. With that, I will...
We are pleased with the resumption of year over year growth in Q3 and.
Expect further acceleration in 'twenty 'twenty, four leveraging our strategic investments.
With that I will turn it over to you wrong.
Speaker 4: Thanks, David. I want to join David's comments and clearly say, expand with the people of Israel and together with our colleagues there, we are committed to overcoming and to continuing the great level of service and product that all African customers and partners have come to expect.
Thanks, David I wanted joined David's comment, let's say standard people, Israel and together with our colleagues. There we are committed to overcoming two continuing the great level of service and product. It all out for end customers and partners have come to expect.
Speaker 5: We've had several new keystone partners. We are both the new republic, punch and war magazine, publisher desk and others.
Since our last call. We've added several new Keystone Partners, New York Post the New Republic entrepreneur magazine publisher desk and others.
Speaker 5: During the last quarter, we've started experimenting with an added business model for Keystone, where it's cost is covered through revenue sharing on publishers at SLA.
During this last quarter, we started to experimenting with an advertising model for Keystone, where its cost is covered through revenue sharing publisher's ad slots.
Speaker 5: We believe that this edition will help us further accelerate keystone with more help shirts.
We believe that this addition will help us further accelerate keystone with more cultures.
Speaker 5: two updates on the AI front, one algorithm AI and one generative AI.
To update you on the AI front one algorithm okay.
<unk> generally do that.
Speaker 5: First, one of our core AI algorithm has been conversion bid strategy for CVS, which automates for advertisers the optimization of their ad campaign.
First one of our core AI algorithm.
Conversion bid strategy, where CBS, which automates for advertisers the optimization of their AD campaign.
Speaker 5: When using Outbrain's CBS , an advertiser can automatically maximize their conversions or their return on ad spend, which is also known as ROAS.
When using airfreight in GBS and advertiser automatically maximize third person.
Or is the return on AD spend which is also known as ROE at <unk>.
Speaker 5: And PBS is based on our homegrown AI algorithm and the majority of our current advertisers and campaigns are running on PBS technology.
GBS is based on our homegrown AI algorithms and the majority of our current advertiser changed.
On T X technology.
Technology.
Speaker 5: This last quarter we deployed a new technology that upgrades CPS with co-discapability.
This last quarter, we've deployed a new technology upgrades TPS with.
Bill.
Speaker 5: Using this co-blast layer, marketers on our range can now significantly accelerate the pace of deploying new conversion events and further improve their row.
Using this coldness layer marketers an outbreak now significantly accelerate the pace of new conversion to further improve the ROA.
Speaker 5: This technology marks a significant stride in our dedication to marketing automation combined with shelter functionality. And it will be a foundational layer for more automation capabilities where finding to build upon the new layer and coming.
This technology marks a significant stride in our dedication to marketing automation combined with self serve functionality.
The foundational layer for more automation capabilities were planning to build a new layer.
Speaker 5: Check-in on Genre de laille. One of the most exciting from Pierce Bros with Genre de laille is the automation of ad variety.
Okay, and generally that they are one.
One of the most exciting from tiers for us with generative is the.
Automation of add variety.
Speaker 5: And variety is like algorithm. And the more variety we have in our add-in, that the better our algorithms match each individual add to each individual person.
And varieties like algorithm.
And but more variety we have at our AD index, the better our algorithms match each individual.
Each individual person.
Speaker 5: So ad variety results in better ad matching, which ultimately leads to higher click-to-rates, also known as CPR, and higher RPM.
So ed variety of results and better at matching which ultimately lead to higher click through rates also known as C. P. R.
Higher RPM.
Speaker 5: One of the earliest AI capabilities we built almost two years ago was for automated image cropping in our app. So for example, our technology will auto-cropping image to better focus on spaces or the areas of interest of an image. This has been a TTR driver.
When is the earliest AI capabilities, we've built almost 10 years ago looks for automated image cropping in RF.
For example, our technology will auto cropping image to better focus on places where the areas of interest.
This has been a C T R driver for us for many years.
Speaker 5: Now we're experimenting in the lab with generative AI capabilities that will also enable the reverse upscaling images and growing them while throwing the new in-ex spaces with automatically generated content.
Now we're experimenting in the lab with generative AI capabilities are often unable to reverse upscale images and rolling them well go into new spaces automatically generated content.
Speaker 5: Another generative AI capability we're experimenting with in the R&D lab is the automatic creation of face variation.
Another centered of AI capability, we're experimenting with in the R&D lab, the automatic creation of variation.
Speaker 5: Now for an advertiser, my upload an ad with the go to one model, and then art technology can automatically offer the identical product image with a variety of, say, 20 different AI-generated model case.
Now for an advertiser uploaded.
One model and then our technology can automatically offer the identical product finished with a variety of say 20 different AI generated model basically.
Speaker 5: Those these capabilities are still in R&D lab mode with early testers. We expect these types of capabilities to significantly boost our ad variety, which will improve the appeal of app range ads to more people and ultimately help continue driving our quick rates.
Both of these capabilities are still in R&D lab mode with early testers.
East, Texas capabilities to significantly boost our adversity, which will improve the appeal of that brings out to more people and ultimately help continue driving our quick right.
Speaker 5: And it's totally following all of our recent investment in algorithmic and generative AI, our advertising CPR the past couple of months has been among three year record highs.
Anecdotally falling all of our recent investments in algorithm that considered that AI, our advertising C. T. R. The past couple of months, it's been among three year record high.
Speaker 5: This is especially encouraging in light of the weaker demand environment.
This is especially encouraging in light of the weaker demand environment.
Speaker 5: As a reminder, our yield is a result of at-pressing time click-through rate.
As a reminder, our yields as a result of AD pricing.
Right.
Speaker 5: And with that, I'll hand it over to Bayesian for our financial results.
And with that I'll hand, it over to patient.
Financial result.
Thank you Ron.
Speaker 5: Thanks, Eroam. As David mentioned, they sent our group and cost discipline to exceed our Q3 guidance for adjusted EBITDA and achieved our X-PEC group's profit guidance.
As David mentioned based on our growth and cost discipline, we exceeded our Q3 guidance for adjusted EBITDA and achieved our ex that gross profit guidance.
Speaker 4: From a demand perspective, the quarter started off relatively strong and denied the fear of your growth. All by weakening demand trends in August before partial recovery in the last speaks of the quarter.
From a demand perspective, the quarter started off relatively strong in July with year over year growth followed by weakening demand trends in August before a partial recovery in the last weeks of the quarter.
Speaker 6: The early portion of Q4 has shown a flatter pattern than the seasonal lip we historically see this time of year. It's driven largely by softer demand to start the quarter. As macro and geopolitical uncertainties weigh on ad budgets, as well as the impact of the news cycle on certain advertisers budget usage at David Mitch.
Early portion of Q4 has shown a flatter pattern and the seasonal lift we historically see this time of year, which is driven largely by softer demand to start the quarter.
Macro and geopolitical uncertainties play on that budget.
As well as the impact of the new cycle uncertain advertisers' budget usage as David mentioned.
Speaker 6: Revenue in Q3 is approximately 230 million, something a slight increase gear on here.
Revenue in Q3 was approximately $230 million something a slight increase year on year.
Speaker 6: new media partners in the quarter contributed five percentage points or approximately $11 million of revenue growth year over year.
New media partners in the quarter contributed five percentage points or approximately $11 million of revenue growth year over year.
Speaker 6: Net revenue retention of our publishers was 95%, which, while up meaningfully from the last several quarters, reflects the continued headwind and the impact of the demand and environment on pricing and yields, which is the primary factor driving retention to be below 100%.
Net revenue retention of our publishers was 95%, which are up meaningfully from the last several quarters reflects continued headwinds and the impact of the demand environment on pricing and yield which is the primary factor driving more attention to be below 100%.
Speaker 6: But no, it is in the last few quarters. Sharon has remained low by our standards. It's low-go retention of 96% for all partners that generated at least $10,000.
No. It did in the last few quarters churn has remained low by our standards. It's logo retention of 96% for all partners that generated over $10000.
Speaker 6: and our five largest churns amounted to only three combined points of year-over-your-headwind in Q3.
And our five largest churns amounted to only three combined point of year over year headwind in Q3.
Speaker 6: XPAC Rose Profit was 56.8 million, an increase of 8% in year-over-year outpacing revenue growth, driven primarily by improved yield performance on a certain media partners, and the net impact of revenue.
Gross profit was $56 8 million, an increase of 8% year over year outpacing revenue growth.
Driven primarily by improved performance on certain of your partners and the net impact of revenue mix.
Speaker 6: As noted, our ongoing focus will continue to be at optimizing the overall performance.
As noted our ongoing focus will continue to be optimizing deal performance.
Moving to expenses.
Speaker 6: Operating expenses decreased approximately 11% year over year, the 43.8 million in the quarter, as we continue to exercise discipline around spending.
Operating expenses decreased approximately 11% year over year to $43 8 million in the quarter as we continue to exercise discipline around spending.
Speaker 6: The largest component of this is compensation related expenses, which were down approximately $5 million or 14% year over year as we focused on driving efficiencies in our operations.
The largest component of this as compensation related expenses, which were down approximately $5 million or 14% year over year, because we are focused on driving efficiencies in our operations.
Speaker 6: Non-copic fences were down slightly year over year as we could need to exercise protein.
Non comp expenses were down slightly year over year as we continue to exercise prudence.
Speaker 6: Notably, that debt expense that are down from H1 for means of elevated levels as compared with our history at the higher number of customers are facing cash flow pressures in this environment.
Notably bad debt expense go down from H, one remains at elevated levels.
Paired with our history, that's a higher number of customers are facing cash flow pressures in this environment.
Speaker 6: As a result of our cost management and growth of X-Specros profit, just playing the leverage in our model, Jeff and Yvot. With approximately 10.3 million in Q3, growing meaningfully year over year and exceeding the high end of the guidance ring.
As a result of our cost management and grocery bags that gross profit displaying the leverage in our model. Adjusted EBITDA was approximately $10 3 million in Q3 growing meaningfully year over year and exceeding the high end of the guidance range. We believe there continues to be meaningful room for operating leverage in the future.
Speaker 6: We believe there continues to be meaningful room for operating levers in the future, particularly as we drive more and higher yielding demand for new product electronics and our expansion of video and assuming we return to more favorable macro environment in the future.
Particularly as we drive more and higher yielding demand through new products like Onyx, our expansion of video and assuming a return to a more favorable macro environment in the future.
Moving to liquidity.
Speaker 6: Re-cash-low, which other reminder, redefine as cash from operating activity less cat-dex than capitalized software costs in approximately two million in the quarter.
Free cash flow, which as a reminder, we define as cash from operating activities less capex and capitalized software costs was approximately $2 million in the quarter.
Speaker 6: While we are pleased to return to positive recast low in the quarter, we still see pressures on working capital, particularly around collections with elevated DSO levels remaining from Q2 and Q3.
While we were pleased to return to positive free cash flow in the quarter, we still see pressures on working capital, particularly around collections with elevated DSO levels remaining from Q2 into Q3.
Speaker 6: As a result, we ended the quarter with $214 million of cash, cash equivalent, and definite remarkable securities on the balance sheet, $188 million of long-term convertible debt.
As a result, we ended the quarter with $214 billion of cash cash equivalents and investments in marketable securities on the balance sheet.
$18 million of long term convertible debt.
Speaker 6: In December , the company's board of directors authorized a $30 million share repurchase program, incremental to the $30 million program fully executed in 2022.
In December the company's board of directors authorized a $30 million share repurchase program incremental to the $30 million program fully executed in 2022.
Speaker 6: year to date through September 30th, you purchase approximately 2.5 million shares for $12.7 million.
Year to date through September 30th.
Purchase approximately $2 5 million shares for $12 $7 million.
Speaker 6: He used to believe it had a attractive way to an inch shareholder value under current market conditions.
To believe is an attractive way to enhance shareholder value under current market conditions.
Now turning to our outlook.
Speaker 6: And the certainty from macro and geopolitical events and the typical back half weighted nature of Q4 seasonal uplift are considerations in our decision to present a wider than typical range of guidance for the quarter.
Uncertainty from macro and geopolitical events and the typical back half weighted nature of Q4 seasonal uplift.
Iterations and our.
Susan to present, a wider than typical range of guidance for the quarter.
Speaker 6: In our guidance, we assume the continuation of the software demand trends we have seen in the first week to queue for, and assume that the seasonal increase of the mass and will occur at levels below what we've seen in store.
In our guidance, we assume a continuation of the softer demand trends we've seen in the first weeks of Q4 and assume that seasonal increases in AD spend will occur at levels below what we've seen historically.
Speaker 6: With that context, we have provided the following guidance for Q4. We expect X-PECRAF profit of $59 million to $64 million, and we expect adjusted EBITDA with $13 million to $17 million. Now, I'll turn it back to the operator for Q&A.
With that context, we have provided the following guidance for Q4.
We expect ex Pat gross profit of $59 million to $64 million and we expect adjusted EBITDA of $13 million to $17 billion.
Now I'll turn it back to the operator for Q&A.
Thank you now begin the question answer session.
Speaker 2: Ask the question they press are the one on your touchtone phone. Here's a speaker phone please stick up your handset before pressing the keys. So draw your question please press star then two. This time will pause one with heralydo stumbled along.
Ask the question you May Press Star then one on your Touchtone phone.
So the speakerphone, please pick up your handset before pressing the keys.
Your question. Please press Star then two at this time, we'll pause mom apparently the assembled along.
Speaker 2: First question, we from Slythera. Can you worry of Evercore ISR? Please go ahead.
First question from Andrew.
We're hiring all of Evercore ISI. Please go ahead.
Speaker 7: Thank you for taking my questions. Jason, I have a couple for you, please. On the last point that you talked about on the outlook for the fourth quarter, could you please provide a little bit more color on the, on quantifying the magnitude of the headwind that you are baking in the guidance from macro and Israel? And then if you are also, I believe David said you are also account still expecting 10.
Thank you for taking my questions, Jason I have a couple for you. Please on the last point that you are.
You talked about on the outlook for it.
The fourth quarter could you please provide a little bit more color on the on quantifying the magnitude of the headwind that you are.
Baking into guidance from macro in Israel.
And then if you are also.
David said, either ultra accounts still expecting $10 million to $20 million from on it. So how should we think about the deal wins had headwinds that are accounted for in the fourth quarter guidance and then I'll end there.
Speaker 7: on it. So how should we think about the dealings and headwinds that are?
Speaker 7: and then for 2024 without any official guidance, how should we at a high level think about acceleration in growth rate for 24?
For 2024 without any official guidance, how should we be at a high level think about acceleration and growth rate for 'twenty four.
Given the exit rate. Thank you.
Speaker 6: Hey, SwissJSON, thanks for the question. So yes, maybe I'll just give you a little more color on the guidance and what's driving it. So we're using our normal forecasting process, which is a seasonality based model. And it takes down to date trends, what we're seeing in our PMs, and page use and running it out.
He used with his Jason Thanks for the question.
Yeah. So maybe I'll just give you a little more color on the on the guidance and what's driving it. So you know we're using our normal forecasting process, which is a seasonality based model and it takes you know down to date trends what were seeing in RPM and page use and running it out and supply for us is fairly straightforward locked in as long term not not.
Very many meaningful changes demand remains the harder thing to forecast, especially you know now with advertisers maybe reacting to the macro and geopolitical uncertainties still so we're considering the trends that we've seen in the first part of Q4, where we saw an impact of a step down in demand.
Speaker 6: may be reacting to the macro and geopolitical uncertainty still. So we're considering the trends that we've seen in the first part of Q4, where we saw an impact will step down in demand and applying that forward. We project a saucer than typical seasonal lifts in Q4.
Applying that forward, we project a softer than typical seasonal dip in Q4.
Speaker 6: and that does also have an impact on the tech margins. So maybe just to give you color to kind of what we saw. So...
That does also have an impact on our spec margins. So maybe just give me a call or just kind of what we saw so.
Speaker 6: And we did see the last time we spoke, you know, here three months ago, we saw positive demand trends, you know, a couple months in around June and July , building strength of demand in yields.
No. We didn't see last time, we spoke you know here three months ago and saw positive demand trends you know a couple of months in a row in June and July are building strength of demand and yields are which along with a typical Q4 seasonal uplift was the basis of our prior forecast and guidance provided last time.
Speaker 6: along with a typical Q4 seasonal uplift with the basis of our prior forecast and guidance provided last time.
Speaker 6: And obviously we've now factored in what we've seen in October , which is you know, personally thought softening of demand.
Obviously, we've now factored in what we've seen in October which is.
First we saw a softening of demand trends.
Speaker 6: you know, in August versus those July levels, with some recovery in September , but then October started off weaker than expected from a demand perspective relative to what we expected coming out of September . And we saw that something has increased over the course of the month, really correlating with the onset of the war.
And in August versus July levels, with some recovery in September, but then October started off weaker than expected from the demand perspective relative to what we expected coming out of September and we saw that softness increase over the course of the month really correlating with the onset of the war.
Speaker 6: maybe a data point that would help would be, you know, we thought, October , Revenue, grow 1% sequentially from September , which is, which is very low. You know, we typically see 6% or more, you know, the last, you know, many years, 6% I think the last two years and more even before that based on our history.
A data point that would help would be we saw October revenue grow 1% sequentially from September which is which is very low.
Typically it's a 6% or more.
As you know many years, a six person I think the last two years and more even before that based on our history.
So several drivers.
Speaker 6: It's hard to attribute specific amounts to specific things, but maybe just, you know, we do see certain budgets pause or delays due to the macro and geopolitical uncertainties.
Hard to attribute specific amounts to sneak things, but maybe just you know we do see certain budgets paused or delayed due to the macro and geopolitical uncertainties.
Speaker 6: It's hard to know if that slow start we saw, you know, even before October 7th and the attacks was just delays in advertiser-setting budgets, which is something we did see a lot of months this year, was that, you know, the first week might have been slow, but then the month kind of comes together. Or if it was, you know,
Hard to know what that slow start we saw you know even before October 7th.
And the attacks was was just the lease and and advertisers setting budgets, which is something we did see a lot of months. This year was that you know the first week might've been slow, but then the month kind of comes together or if it was you know the macro pressures reducing budgets right. So her her hard to know exactly we also see just headwinds from demand.
Speaker 6: the macro pressures reducing budgets, right? So hard to know exactly. We also see just headwinds from demand mix as a negative driver. Some of the higher yielding segments are being more impacted. Examples, you know, affiliates, outstream video.
Mix is a negative driver so some of the higher yielding segments are being more impacted examples you know affiliates are upstream video.
Speaker 6: For us, and a couple of our two largest geographies are seem to be taking a softer trend, US and Germany than some of the other ones.
For Us and you know a couple of our of our two largest geographies are seem to be taking a softer trend in the U S and Germany than some of the other ones.
Speaker 6: And, you know, as David mentioned, you know, certain brands blocking pages with content related to the war at a friend safety concerns. It is meaningful, you know, as it's a significant percentage of our really most valuable pages.
And you know as David mentioned, you know certain brands Boston pages with content related to the war at a Brent and safety concerns.
Meaningful are you know as it's a significant percentage of our ore really are our most valuable pages are.
Speaker 6: this last month or so and maybe just a stat on that would be, you know, if you look at our top 20 publishers, 25% of their page use related to war related content following the tax and it remains around 15% still.
Just last month or so.
A stat on that would be you know if you look at our top 20 publishers, 25% of their paid us related to war related content following the attacks and it remains around 15% still.
Speaker 6: either not, we're talking about US and European base.
You are not you know, we're talking about U S and European basis, typically higher yielding pages, so not all of our supply of new space, but it is a meaningful portion.
Speaker 6: Typically higher yielding pages. So not all of our supply is use-based But it is a meaningful portion and obviously the lower RPMs do affect take rates as well. So Hopefully that gives you a little bit more color.
The lower rpms do affect take rates as well so hopefully that gives you a little bit more color.
Speaker 4: And then I think you also asked about the on X yet we do so expect the comics. Yeah, I'll I'll click on it. And so I think you heard from Jake. I think.
And then I think you also asked about the the honest yeah, we do still expect.
Sure Oh I'll take on the.
So I think you heard from Jason I think if I could.
Speaker 4: I could tell you from living at my career, I mean it's a huge level of volatility and uncertainty in that I haven't seen before, this generally which is impacting one Jason said.
I said before I'm looking at my career, I mean, it's a huge level of volatility and uncertainty.
I haven't seen before and just generally which is I think one thing I'm, saying.
Speaker 4: On our next specifically, we launched it in Cannes, we had great feedback, we launched more than 100 campaigns at this point. We're seeing both a newer advertisers and advertising, we see cross-sells to existing performance margins that are.
Yeah on Onyx, specifically, we had you know we launched it in Con we had great feedback we launched more than 100.
Some things at this point, we're seeing both in U N, but back with advertising, we see cross sell to existing performance smartphones at all.
Speaker 4: leveraging on X to also drive awareness. So we're very excited about it. We see the numbers growing significantly in month of a month. I mean, we talked about relatively small numbers. So it's exciting. So we stand behind the number even for this year. And looking into 24, generally, we see on X and video.
Leveraging gardening tools to drive the awareness. So we're very excited about did you see that number growing significantly month over month, I mean, we talked about but I think it'd be small numbers. So it's exciting so we stand behind and I'll, even pool for this year and looking into 'twenty four generally we see on <unk>.
And to be doing.
Speaker 4: significant growth drivers as far as the company to move to become a full final partner on the open web has been a big move this year so we see the fruits of that effort You know these efforts will be fruit and Result in growth next year AI that everyone mentioned also received significant potential from that
Significant growth driver for us as a company to move to become a full funnel partner on the open web has been a big move this year. So we see the fruits of that effort.
These efforts will bear fruit in resulting in growth next year.
The AI that someone mentioned also we see significant potential on that.
Speaker 4: On our performance business, the growth of shelf-waller that we see through moving some of our segments and large customers to the mentor is also an important growth driver for next year.
On a performance business the growth of share of wallet that we see to moving samples.
Our segment and large customers Tuesday mentor.
And an important growth driver for next year, and they're just growing our publisher relationships.
Speaker 4: And just growing our publisher relationships with innovation, and building the strategic value with Keystone. So these are the growth drivers. We haven't given any guidance for 24, but overall when we look at all the reports out there, I think the general growth and...
Base and broadening the strategic value with Keystone and so you said the growth drivers and we haven't given any guidance for 'twenty four but overall when we look at all the reports out there I think the general sort of growth in the.
Speaker 4: but of EBITDA margin levels that we've seen, I think we still believe that we can achieve those.
EBITDA margin at levels that we've seen I think we still you know.
That means that we can achieve those.
Jason anything else.
Yeah.
No.
Okay. Thank you. Thank you David Thanks, Jason.
Speaker 2: Thank you. Our next question will be ran for boom. JMP securities, please go ahead.
Thank you. Our next question have we ran for boom JMP Securities. Please go ahead.
Speaker 8: Thanks so much for taking my questions. I wanted to touch on new publisher revenue. It's slowed to $11 million. I think that's the lowest number you guys have reported as a public company. How are you guys approaching new publisher deals going forward and how do we think about that, and the process of adding more content?
Thanks, So much for taking my questions I wanted to touch on new publisher revenue it slowed to a $11 million I think that's the lowest number you guys have reported as a public company. How are you guys approaching new publisher deals going forward and how do we think about that.
The process of adding more content.
Sure I can take that starts.
Speaker 6: You know, obviously we had pretty, pretty big numbers for the last, you know, four or five quarters and double digits and was 12, 12 percent growth from a new publisher last quarter.
Obviously, we had pretty pretty big numbers for the last four or five quarters in double digits and was 12, 12% growth from mountain New publishers last quarter. There were a lot of large wins I know, we talked about them last year in 2022, we're obviously focused on the premium side of the market.
Speaker 6: There were a lot of large wins. You know, we talked about them last year in 2022. We're obviously focused on the premium, five of the market, premium publishers and full funnel advertisers.
Publishers.
Full funnel fulfill advertisers' before before the 12% and so on for a few quarters, 7% was really our average for a long time, it's not a linear thing no. Obviously you know some partners are larger than others, and it's really not something we expected to stay at that level going in.
Speaker 6: Before the 12% and so on for a few quarters, 7% was really our average for a long time. It's not a linear thing though. Obviously, some partners are larger than others.
Speaker 6: And it's really not something we expected to stay at that level going into H2. You know, as we really focus on calibrating supply and demand, improving the performance of on current deals in this demand environment.
It's H two is as we really focus on calibrating supply and demand.
Moving to performance on current deals in this demand environment.
Speaker 6: I think 7% is probably a good average over time to continue to think about that under.
I think 7% is probably a good or bad.
A good average over over time.
You need to think about that Andrew.
Speaker 4: And we feel pretty good about sort of competitive position there. I mean, also these deals, they're not linear sometimes in certain quarters. We have many of these potential new deals.
And we feel pretty good about sort of competitive position dam and also these deals are they're not linear like sometimes in certain quarters. You have many of these potential new deals.
Speaker 4: Now there's a radio message from HAS
I mentioned in my prepared remarks, we were excited about.
Speaker 4: In the pipeline, I think the differentiators are focusing on the human side of the market are helping us. Onnakes is exciting for publishers, keystone, the vision and the value that it brings also. So we should go about that. And I think that number will continue to fluctuate also depending on market situation. We look at, when we look at new deals, we look at sort of the total economic.
And the pipeline I think the differentiator so focusing on the premium side of the market are helping God.
On <unk>, it's exciting for publishers Keystone the vision and the value that he brings also so we feel real good about that then I think that number will continue to fluctuate also depending on the market situation.
We look at when we look at new deals, we look at sort of the total economics.
Speaker 4: often deal the impact advertisers, the margin, and but also the total dollars that is that we can generate. So we feel good about competitive position and I'll look for your business where it will fluctuate.
The deal the impact from advertising the mountain and but also the total dollar value that we can we can generate so we feel good about competitive position and how to run your business with it will fluctuate.
I also wanted to ask about MFS, there's just new concern in the industry that feels like it came up this last quarter in terms of made for advertising science.
Speaker 8: There's just new concern in the industry that feels like it came up this last quarter in terms of made for advertising sites. Um, is there any impact that you guys are seeing or how does that relate back to Alpren? Thanks so much.
Is there any impact that you guys are seeing or how does that relate back to outbreak. Thanks. So much.
Speaker 4: Well, I think that there's been a lot of coverage around this topic. I think the topic has been further clarified.
Well I think that so there's been a lot of coverage around this topic I think the public has been further clarified and close on the general statement, so difficult to classify what okay. Many.
Speaker 4: First, just on the general statement, it's very difficult to classify what is an MFA. Many publishers, sort of, their objective is to drive advertising. I think it's difficult to put all of them in one bucket, the different types of MFA. MFA is, I think, many of them generate real value for advertisers. Having real people go to content and advertisers reach audiences that they want to reach and then affective costs.
Many publishers, it's sort of the objective is to drive advertising and I think it's difficult to put all of them in one bucket that different types of MSA Msas I think many of them you know generate real value for advertisers, having real people go to quantum thing and and advertisers reach audiences.
To reach at an effective cost.
Speaker 4: So that's generally hard specifically. We said previously, it's happened 5% of our ex-tac revenues. So it's not that significant. It's also driving traffic to MFAs. I think you probably saw the Jones report. 80 to 90% of the traffic that's driven to them is generated by social and search. So.
So that's generally far specifically say, we said Dan D C check and 5% of all expect revenues. So it's not that significant in terms of driving traffic to and if anything I think you probably saw the jobs report, 80% to 90% of the traffic that's driven to them is generated by it.
Its social and search so.
Speaker 4: again, we as long as the middle street content guidelines and
Again, we as long as they meet the strict constant guidelines and then.
Speaker 4: And all the other request that came to the security and fraud etc. I think this great category of advertisers that we have. Just in order to focus as a company has been also on helping and supporting.
And then all the other.
Quite the time until the security and fraud et cetera.
Great.
But because of that we have.
Definitely our focus as a company has been also on helping.
Supporting.
Speaker 4: quality journalism, premium journalism around the world. So we provide vital revenues to them.
Quality journalism premium journalism around the world. So we provided by the revenues too bad so.
Speaker 4: against part of our overall business and combined that our premium publisher did.
I'm proud of our overall business and combine that with premium publisher business too.
Thank you.
Speaker 2: Thank you, and the next question will be from the day, be rally, SBR, please go ahead.
Thank you and the next question will be from Dan D. B Riley FBR. Please go ahead.
Speaker 9: Hey, morning guests. Interesting question. So I appreciate the update on the algorithm AI bidding strategies there. Just maybe if you have any data points or anything you could share just on the subset of advertisers that you think are using these kind of AI tools better than others.
Hey, good morning, guys. Thanks for taking the question. So I appreciate the update on the algorithm AI.
Bidding strategies there just maybe if you have any data points or anything you could share just on the <unk>.
Subset of advertisers that are using these kind of AI tools better than others.
Speaker 9: whether there's been an uplift in spending performance for them and then what you need to do to get those that aren't using them to kind of start using these AI tools. And maybe that helps increase spend per advertiser for those. Any thoughts?
Whether theres been an uplift in spend and performance for them and then what you need to do to get those that aren't using them to kind of start using these AI tools and maybe that helps our increased spend per advertiser for those.
Any thoughts there would be great. Thanks.
Speaker 5: Thanks, Daniel, for you're on here. So, AI, first, as I mentioned in the comments, splits for us into two big buckets. One is the algorithm AI, which we've been building in house for almost a decade now. And the other is the generative AI. The algorithm AI are technologies that we deploy across the board. So they apply to all publishers, all advertisers.
Thanks, Danny you round here.
First as I mentioned in my comments splits for us into two big buckets, one is the algorithmic AI.
We've been building in house for almost a decade now.
And the other is the generative.
The algorithmic AI are technologies that we deploy across the board and so they they apply to all publishers all advertisers.
Speaker 5: within our system. We don't update on the results there. But we did mention last quarter that for the first half, I think we've seen.
Within with our system, we don't update on the results there are a ton, but we did mention last quarter that for the first half I think we've seen a increase through with those algorithm changes potential click through rate.
Speaker 5: increase through the algorithm AI changes, cancel, click the rate.
Speaker 5: of 4%. And I did mention in this call that we've seen in the past couple months that we've been among the three-year record highs in terms of the CTRs. And that again is attributed a lot to all these other styl snag
A 4% and I did mentioned in this call that we'd seen in the past couple of months that had been among the.
Three year record highs in terms of the Ctr and that again is attributed a lot too all these oh. These AI changes the technologies that we've deployed.
Speaker 5: All these AI changes the technologies that we've deployed. On the couple that I mentioned on the call, those are in lab, are in remote. As I said, we are live with them on a few advertisers. What we're doing with gender debate, AI is really...
And the couple that I mentioned on the call. Those are in lab R&D mode. As I said, we are live with them on a few advertisers what we're doing with generative that AI is really try to attack at variety from all directions. So I mentioned this in a previous call.
Speaker 5: trying to attack ad variety from all directions. So I'm into this in a previous call, an advertiser might upload a campaign or even one ad.
And advertisers make upload a campaign or even one AD and through general debate for chat to T. A integrations will expand that and offer them 200, other variations, which they can decide whether to accept an absolutely campaign automatically or not so there those tools, we're embedding into <unk>.
Speaker 5: and through gender debate, I, through our chat to the team, integrations will expand that and offer them 200 other variations, which I can decide whether they accept and actually contain automatically or not. So, those tools were...
Speaker 5: embedding into the product itself, they are available to, ultimately to all advertisers, but it's really up to them to choose which ad varieties they want to implement and choose. Many of them have been doing it, especially as it relates to creative and headlines. The newer stuff of images, even just sizing and all that that is still available to limited number of testers.
The product itself they are available to us ultimately to all advertisers, but it's really up to them to choose which at varieties are they want to implement a choose many of them had been doing it, especially as it relates to creative and and headlines the newer stuff the image of its upsizing and all that that is still available.
There are a limited number of testers.
Speaker 9: Okay, great thanks. Just to turn it quickly to Grocer Revenue and take great, if we look beyond 2023, like another word.
Okay, great. Thanks, I'm, just didn't turn it quickly to.
Gross revenue in take rates, if we look beyond 2023 like I know there were some pressures from minimum guaranteed deals that you did on sort of the take rate year over year and 2023 as we looked at 'twenty four and put our model together like just to make it easy if we were to assume gross revenue is flat is there any.
Speaker 9: Some pressures from minimum guarantee deals that you did on sort of the take rate year over year in 2023.
Speaker 9: As we looked at 24 and put our model together, like just to make it easy, if we were to assume gross revenue is flat, is there any reason we'd think that take rate would expand just from, you know, whether it's minimum guarantees rolling off or anything other puts and takes there on take rate for 24 relative to...
Reason, we'd think that take rate would expand just problem.
Whether its minimum guarantees rolling off or or or anything other.
Puts and takes there on take rate for 24 relative to 'twenty three.
Speaker 6: Yes, so, you know, don't have a specific, you know, number for you or anything like that, you know, obviously kind of always when the take rates come up, I mentioned that we focused on next $10 and not really the take rate percentage, especially the total portfolio. But, you know, there's certainly, you know, obviously as the rates kind of come up, these last couple quarters, you know, we've been focused on some of the things we talked about actually when it was coming down, you know, in the quarters before that, which are.
Yeah. So you know don't have a specific number for you or anything like that you know, obviously kind of Oh always when when when they take rates come up I mentioned that we focus on ex Tac dollars and not really the take rate percentage, especially of the total portfolio.
But you know there's certainly you know obviously as the rates kind of come up with you. These last couple of quarters. You know we've been focused on some of the things we talked about actually when it was coming down.
And in the quarters before that which are you know are optimizing deal performance and scaling some of our new supply and an existing supplier to AR to drive higher rates and we've had a we've had some success. There. We continue to focus on that it's you know one of our one on one of the main things, we do both or manually.
Speaker 6: optimizing deal performance and scaling some of our new supply and existing supply to drive higher rates. And we've had some success there. We continue to focus on that. It's one of our one of the main things we do, both manually optimizing and our AI optimizing learning the audience of our partners and serving them better. So the kind of thing that we do feel gets better in time and it typically takes several quarters.
Optimizing our AI optimizing learning the audience of all of our partners and serving them better. So the kind of thing that we do feel it gets better in time and you know it typically takes.
Several quarters.
Speaker 6: But next is always a factor as well. It could be a positive or negative factor, to even a point in a given quarter. So it's hard to say obviously it depends also on the demand environment. And it's some of the things that we're doing with Onyx. And the expansion of video we see as margin listers going forward as well. So out of fear, goal is to drive it back up.
But mix is always a factor as well it could be it could be a positive or negative factor. So even a point any given any given quarter. So.
It's hard to say obviously it depends also on the on the demand environment.
And you know some of the things that we're doing now with an exciting expansion of video we see it as margin you know lifters going forward as well. So obviously our goal is to drive it back up.
Understood. Thanks, guys.
Speaker 2: Thank you. Again, if that's a good question, please press star them on.
Thank you again to ask a question. Please press Star then one.
Speaker 2: I'm not questioning the brief from my gal. I'll are in the city group. Please go ahead.
Our next question will be from my Gal are in all of Citigroup. Please go ahead.
Speaker 10: Hey, good morning guys. Hope you're all doing well. Families and employees back in the trial as well.
Hey, good morning, guys hope, you're all doing well that's from families.
Place back in the trial as well I'm just.
Speaker 10: Just maybe on Onyx, I could expand on that a little bit.
Just maybe on an onyx can expand on that a little bit it looks like ramping well.
Speaker 10: looks to be ramping well. And I know that one specifically is geared more towards brand budgets and with the impact you're seeing of brand fields of failure and not seeing it on Onyx but maybe it's doing better than expected. Just some of the puts and takes around as that launches and the current macro will be helpful.
And I know that that one specifically is geared more towards the brand brand budgets and what the impact of seeing a brand it sounds like maybe youre not seeing it on on X, but you know maybe it's doing better than expected just the some of the puts and takes around as that launches in the current macro would be helpful to understand.
Yeah.
Hey, you got to layer those things.
Thanks for your kind words.
So on the <unk> launch.
Communism.
The successful launch so it helps us position the company I was.
Brain in dialogues with the big six hold companies in a very different way, where we can broaden the value proposition and really offer a food fight a lot coming that we think is quite unique are indeed in the open web. So we work with brands from performing up to consideration.
Speaker 4: and awareness, the formats are dependent on our traditional native formats, so it's really focused on.
And the awareness of the full months are different than our traditional maybe four months we'd be focused on.
Speaker 4: primarily video and it ties to the acquisition of video intelligence and pushing us more into in-stream video that is more relevant for on next time contains. We have high impact display that relies a lot on our brand studio where we take existing creatives and help the brands work on them to create to generate better levels of attention and impact from those ads.
Primarily video and it ties to the acquisition will be the intended parents and pushing des Moines to in stream video that is more relevant for Onyx type campaigns, we have high impact display that relies a lot on our brains to deal where we take existing creative and help the brands work with them to create to generate.
Better levels of attention that need Punctiform homed those and.
Speaker 4: Numberwise, we're mainly took for, when we launched Q3, I mean, these budgets are normally determined sort of ahead of time. So we were relatively, what we think, conservative in our assumptions of the 10 to 20 minutes was a broad range, we still stand behind that. Feel very comfortable about what we're tracking is pipeline, month to month growth. It's very strong. Currently,
And number why then we might need to Q4, when we launched in Q3 I mean these budgets are normally determine sort of be ahead of time. So we were relatively me what do we think conservative assumptions with the 10 to 20 minutes with a broad range, we still stand behind that I feel very comfortable about that would be true.
It's pipeline month over month growth, it's very strong.
The environment is not very helpful. As Jason mentioned part of the impact we see generally on B.
Speaker 4: very helpful as Jason mentioned, part of the impact we see generally on the...
Speaker 4: On Q4 is the grand budget pulling back from, for example, use related pages and general macro environment is very volatile. So.
On Q4 is brand budgets pulling back from quick example used to be like the pages and general macro environment is very volatile. So we're taking that into account when we.
Speaker 4: We're taking that into account when, you know, we're talking about the guidance for Q4, but we're very excited about it. When we look at it strategically, we do change the whole value proposition for us to our advertisers, our positioning in the market. And it's for us a significant growth live on XVIDio that sort of goes together in 2024.
We were talking about the guidance for Q4, but we're very excited about this when we look at it strategically it really changes the whole value proposition to our advertisers our positioning in the market.
Plus a significant growth driver on makes a big deal that sort of go together in 2024.
Absolutely that's helpful in for Jason.
Speaker 10: Given the challenges in the macro, the outlook in terms of each gotten profitability essentially unchanged from what was last quarter. So feel like you're maybe tracking head there making a little bit more progress. Just give us an update on your thoughts around even though on free cash flows, we kind of work away through the rest of this year and yeah, higher expecting or even cost management for 2024. Thanks.
Given the.
The challenges in the macro the the outlook in terms of EBITA and profitability essentially unchanged from what it was last quarter. So feel like you're maybe tracking ahead, there, making a little bit more progress.
And just give us an update on on on your thoughts around EBITDA and free cash flows with kind of work our way through the rest of this year, Yeah, I expect to hear from you and cost management for 2024. Thank you.
Yeah.
Speaker 6: Yes, obviously we've been very focused this year on a lot of what we can control, which is operating more efficiently, more effectively.
Yes, no. Obviously, we we we've been <unk> been very focused this year on an on a lot of what we can control, which is you know operating more more efficiently more effectively.
Speaker 6: you know, having a team and just more automation and all of that. And so, you know, we've been improving over the course of the year, even our outlook and actual on the expenses, but with driving to...
Hunting of teams and just you know more automation and then all of that and so you know we've been a we've been improving over the course of the year, even though our outlook and actuals on on the expenses, but with with driving to a.
Speaker 6: to positive cash even in this environment as the goal.
Positive cash even in this environment that's the goal.
Speaker 6: You know, we did return to positive cash flow in the quarter and expect to stay positive and grow on an in Q4. Obviously the headwind on top line are limiting to
We we did return to positive cash flow in the quarter and expect to stay positive.
And grow you know on it in Q4, obviously, the headwinds on top line or or limiting to what's going to happen in the short term there, but we do expect to generate positive cash flow in Q4, and you know obviously, the as we get to 'twenty 'twenty four and nothing to share now, but that's still the mentality. We have as we are.
Speaker 6: of what's going to happen in the short term there, but we do expect to generate positive cash flow in Q4.
Speaker 6: Obviously, as we get to 2024, nothing to share now, but that's still the mentality we have as we make our plans for next year, which is generating cash.
As we make our plans for next year, which is generating.
Generating cash and honestly, you know continuing to run as efficient and effective this weekend.
Speaker 6: obviously continuing to run as efficient and effectively as we can.
Great. Thanks, a lot guys.
Speaker 2: Thank you. It concludes our question answer session. I'd like to turn the call back over to management for closing remarks.
Thank you. This concludes our question and answer session I would like to turn the call back over to management for closing remarks.
Speaker 5: Thanks, operator. We appreciate your time with us today and we look forward to updating you again in the next quarter. Until then, we wish our colleagues and friends in Israel a speedy end to the war, a return of the hostages, and peace to all people in the region. Thank you.
Thanks, Operator, we appreciate your time with US today, and we look forward to updating you again next quarter.
Until then we wish our colleagues and friends in Israel Speedy end to the war a return at the hospital and Pes to all people in the region. Thank you.
Speaker 2: Thank you, conference, not concluded. Thank you for attending today's presentation. You may not.
Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.