Q3 2023 Tremor International Ltd Earnings Call
Welcome to Tremor Internationals conference call for the three and nine months ended September 30th 20 twenty-three.
Speaker 1: Welcome to Tremor International's conference call for the three and nine months ended September 30, 2023.
Speaker 1: At this time, participants are in a listen-only mode, with a question-and-answer session to follow at the end of the presentation.
At this time participants are in a listen only mode with a question and answer session to follow at the end of the presentation.
Speaker 1: This conference call is being recorded and a replay of today's call will be made available on the investor relations section of Tremor's website.
This conference call is being recorded and a replay of today's call will be made available on the Investor Relations section of tremors website.
Speaker 1: I will now hand the call over to Billy Eckert, Vice President of Investor Relations, for introductions and the reading of the Safe Harbor Statement. Billy, please go ahead.
I will now hand, the call over to Billy Eckert, Vice President of Investor Relations for introductions and the reading of the Safe Harbor statement Kelly. Please go ahead.
Speaker 2: Thank you, operator. Good morning everyone and welcome to Tremor International's financial and operating results call for the three and nine months ended September 30th, 2020.
Thank you operator, good morning, everyone and welcome to <unk> International's financial and operating results call for the three and nine months ended September 30 of 2023.
Speaker 2: With us on today's call are Oper Duker, Tremor's Chief Executive Officer, and Fagioni Rhe, the company's Chief Financial Officer.
With us on today's call are <unk>, <unk>, Chief Executive Officer, and beginning the company's Chief Financial Officer.
This morning, we issued a press release, which you can access on our IR website at investors that travel international Dot com.
Speaker 2: This morning we issued a press release, which you can access on our website at investors.tremorinternational.com.
During today's call we will make forward looking statements all statements other than statements of historical facts to be deemed as forward looking we.
Speaker 2: All statements other than statements of historical fact could be deemed dispowered looking. We advise caution and reliance.
We must caution and reliance on forward looking statements.
These statements include without limitation statements and projections regarding our anticipated future financial and operating performance market opportunity growth prospects strategy financial outlook partnerships and anticipated benefits related to those partnerships that forward looking view of the macroeconomic and industry conditions as well as any other statements concerning the expected development performance.
Market share or competitive performance relating to our pilots or services.
All forward looking statements are based on information available to us as of the date of this call.
Speaker 2: All forward-looking statements are based on information available to us as of the date of this call.
Speaker 2: These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business or unexpected changes in macroeconomic or industry.
These statements involve known and unknown risks uncertainties and other factors that may cause our actual results to differ materially from those implied by these forward looking statements, including unexpected changes in our business or unexpected changes in macroeconomic or industry conditions.
Speaker 2: More detailed information about these risk factors and additional risk factors are set forth in our filings with the US Securities and Exchange Commission, including, but not limited to those risks and uncertainties listed in the section entitled risk factors. In our most recent annual report on forms one.
More detailed information about these risk factors and additional risk factors are set forth in our filings with the U S Securities and exchange Commission, including but not limited to those risks and uncertainties listed in the section entitled Risk factors in our most recent annual report on form 20-F for.
Speaker 2: Does not intend to update or alter its probably looking, whether it's a result of new information, future events or otherwise except as required.
Some of them.
Update or alter its forward looking statements.
Whether it's a result of new information future events or otherwise, except as required by law.
Additionally, the company's press release the management statements. During this conference call will include discussions of certain measures and financial information.
Speaker 2: Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in IFRS and non-IFRS terms.
And not all FRS terms.
Speaker 2: We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS.
We refer you to the company's press release for additional details, including definitions of non <unk> items and reconciliations of the.
<unk> results.
Speaker 2: At this time, it is my pleasure to introduce Ofer Duker, CEO of Trevor International. Ofer, please go ahead.
At this time it is my pleasure to introduce <unk> CEO of.
Travel International over please go ahead.
Thank you Billy and welcome to everyone. Joining us today I will begin by providing an overview of our results and strategic initiatives, then we'll turn the call over to our CFO.
Speaker 3: Thank you Billy and welcome to everyone joining us today. I will begin by providing an overview of our results and strategic initiatives, then we'll end the call over to our CFO , Sagi Niri, to discuss our financials. We will then
To discuss our financials.
We will then open the call for questions. Please.
Speaker 3: Please note, results for the three and nine months ended September 30, 2023, reflect the combined performance of Tremor International and AMOBI, while results from the same prior year periods include AMOBI contribution from September 12, 2022 through September 30, 2021.
No we've gone for the three and nine months ended September 32023 reflects the combined performance of February finished drilling a multi well.
He is also the same Brian over to you.
Those include a mobile contribution for September 32002 through September 30.
Speaker 3: I would like to start today's call by thanking everyone who has reached out and extended their thoughts, prayers, and sympathies following the October 7th Tell with the Text on YouTube.
I would like to start today's call by thanking everyone, who have reached out and extended their dose group and <unk>.
Following the October seven Theyre always protect users.
We're always companies headquarter and where many of our employees and their families causal.
Speaker 3: where our company is headquartered and where many of our employees and their families go.
Speaker 3: Your support means a lot to us and we greatly appreciate it.
You also call it means a lot to us and is greatly appreciated.
Speaker 3: While Tremor International is a global ad tech company, we generate the vast majority of our contribution assets, over 85% in the US.
Furthermore, International is the global AD Tech company, we generate the vast majority of our contribution Xx <unk> AC.
85% in the U S.
Speaker 3: which is also where the overwhelmingly largest base of our employees
Which is also where the overwhelmingly largest base of ours.
<unk>.
Speaker 3: Despite the conflict weighing heavy on our thoughts and despite certain Israel-based team members being called to active duty, we are doing our best to keep our business activities and operations relatively unaffected by the situation.
Despite the cold feet weighed heavy on our toes.
Certainly.
Female being called to active duty.
We're doing our best to keep our business activities exploration relatively unaffected by the situation.
We commend the theory.
Speaker 3: We commend the bravery of our active duty employees in service to their country and intend to honor them by working out to continue providing best-in-class service and solutions to our customers and partners in their
Three of our active duty employees and service to their country and intend to only have them by working to continue providing best in class service and solutions to our customers and partners.
And.
Speaker 3: and supporting them and their families in every way we can.
And supporting them and their families.
The way we can.
Speaker 3: With the holistic integration of Amobi, which emphasized bringing its valuable employees, customers and technology into our company, and the initial return to next-gen behind us, in Q3 we focused primarily on scaling mid to long-term revenue-generating initiatives and increasing engagement and awareness with advertisers and publishers, particularly through a demonstration of our new and recently enhanced capabilities.
Integration of <unk>, which emphasize.
Valuable employees customers and technology into our company and that you should know that we've been with Nexen behind us in Q3, we focused primarily on serving mid long term revenue generating and he should be increasing.
The engagement and awareness.
By the partnership.
Hillary through a demonstration of our new and recently enhanced capability.
Speaker 3: During the quarter, we deepen the relationship with existing customers and emphasize introducing our capabilities and solutions to new potential partners.
During the quarter, we deepened relationships with existing customers and emphasize introducing our capabilities of a solution to new potential partners and bolstering our sales and marketing team to position us for accelerated growth.
Speaker 3: and bolstering our sales and marketing teams to position us for accelerated growth within our core strategic drivers.
A core strategic drivers.
Ptv video and data.
Speaker 3: The rebrand to Nextend, while still in early stages, has improved our positioning by simplifying our story and valuable proposition for customers and growth.
The rebrand so next and we're still in early stages has improved our position by simplifying our story and value proposition for customers.
Enabling our sales teams to seamlessly package federal solutions and create a pathway to extend the sustained revenue per head count growth to increase cross selling opportunity.
Speaker 3: enabling ourselves to seamlessly package several solutions and create a pathway to expanded sustained revenue per account growth to a crisscross selling opportunity.
We also believe we are further amplified.
Speaker 3: We also believe we have further amplified the power of our rebrand by recently installing a new Chief Marketing Officer with a strong product marketing background who will join us for one of our closest edtech series.
Paul.
But recently installing a new chief marketing officer, with a strong product marketing background.
Joining us for one of our closest peers.
Speaker 3: We feel the experience and expertise in product marketing it brings to our organization is a perfect fit and comes at the right time to expand on our groundwork initially delayed by doing
We feel the experience and expertise in product marketing the brand.
Thanks to all of the organization is a perfect fit and comps lifetime to expand on our groundwork.
Really delayed by the OEM brands.
Speaker 3: We believe we have built one of the most comprehensive platforms in all of EdTech for our customers across the ecosystem.
We believe we are still one of the most comprehensive platform all of ethics for hours.
Customers across the ecosystem.
Speaker 3: which include major advertisers, agencies, and media partners.
Which include major advertisers agencies and media partners.
Speaker 3: And now, we feel our marketing efforts need to generate further momentum with customers and prospects to complement and better highlight the strength of our technology and data products suite.
And now we feel our marketing effort need to generate further momentum with customers and prospects to complement and better highlight the strength of our technology and data products suite.
Speaker 3: While it's definitely a work in progress, we believe we are now in a better position to highlight the meaningful holistic value of our unified platform.
There is definitely a work in progress we believe we are now better positioned.
I liked the meaningful realistic value of our unified platform.
Speaker 3: Our main goal now is to showcase how partners can leverage our platforms, multiply offering to simplify activation reports to advance data-driven targeting and measurement solution, and achieve their goals to a media platform that enable them to maximize the value of their first-party data, all while realizing significant cost benefits only possible through partnering with a holistic platform like ours.
Our main goal now is to showcase our partners can leverage our platform would.
Would you fly offerings to simplified activation report two advanced data driven targeting and measurement solution.
She will go through our media platform that enables them to maximize the value of their first party data all while realizing significant cost benefits only possible through partnering with a holistic platform like ours.
Speaker 3: The next step in enhancing our market position through our rebrand is to change the name of the parent company from Tremor International to Nexon.
The next step in enhancing our market position through our rebrand is to change the name of the parent company from traveling internationally and excellent initiatives.
Speaker 3: which shareholders will vote on our AGM in December .
<unk> shareholders will vote on our AGM in December.
Speaker 3: Assuming the vote passes, our intent is to trade under the new company name shortly thereafter and to change the stock ticker in both markets from TRMR to MEXN.
Assuming they're both passes our intent is to create a new company name shortly thereafter.
Chairs the stock ticker <unk>.
In both markets.
<unk> two.
<unk> E X.
We do not currently anticipate any changes.
Speaker 3: We do not currently anticipate any changes to our ordinary share or ADR structure in connection with the name or ticker change.
Sure.
Our structure in connection with their name or bigger changes.
Speaker 3: In addition to recently enhancing our marketing efforts and sales positioning, the successful integration of Amobi has significantly boosted our tech and data capabilities, particularly through enhanced DSP and TV planning features, and enabled the creation and addition of powerful solutions we believe are pivotal for driving enhanced relevancy, efficiency, and better returns for our customers.
In addition to recently enhancing our marketing efforts in first position the successful integration of our bogey.
Can you forgive me boosted our tech and data capabilities.
Still early through enhanced DSP MTV planning features and enable the creation and addition of powerful solutions. We believe are pivotal for driving events relevant efficiency and better returns for our customers.
Speaker 3: We believe AMOBI has already added a tremendous amount of value on this front and uniquely differentiated us while positioning us strongly for success in the future of TV advertising.
We believe it won't be as already added a tremendous amount of value on this front are uniquely differentiated us while positioning us strongly for success in the future.
Ecosystem.
Speaker 3: Over the past few months, we have seen dramatic increase in the level and frequency of conversation about linear shifting thought and conversion with digital.
Over the past few months, we have seen dramatic increases the level and frequency of conversation about linear shifting towards and conversion with digital.
It is clear to us.
Speaker 3: that the major players in the advertiser industry understand this is an important rapidly evolving trend and reality they need to address.
But the major players give the advertiser industry understand this is an important rapidly evolving trends in reality they need to address.
We believe capable technology partners like us with robust growth platform capabilities are best positioned to help them achieve continued success converting <unk> budget is digital.
It's a long adoption process. However, we believe we are unique products that fulfill the need of the major players.
Speaker 3: It's a long adoption process. However, we believe we have unique products that fulfill the needs of the major players that advertise across linear TV and that already currently utilize CTV or plan to do so in the next.
Across linear TV, and that's already going to utilize CTV or plan to do so in the near future.
Now, it's time to market the product and create a solid base of partnerships that will fuel our future CTV growth.
As we become more active in assisting with the conversion between linear and digital.
We believe next then is a critical advantage on this front and is well positioned for this development.
Speaker 3: We believe in excellence as a critical advantage on this front and is well-positioned for this development, specifically through the first-to-market cross-platform planner we launched in.
Really through the first two market growth platform, we launched in equities.
Speaker 3: The cross-platform planner creation was made possible by the linear planning tools we gained through a mobic that was developed for years prior to the equilibration.
The growth platform planner creation was made possible by the email planning tools, we gained through our mobile app that will develop for us prior to the acquisition.
Speaker 3: The solution enables customers to realistically plan campaigns across linear and CTV and also allocate budgets between formats within the push of a budget.
This solution enables customers to logistically planned campaigns across linear and CTV.
Allocate budgets between formats within the push of a button.
The planner has already driven early adoption by major industry partners, including A&E networks.
Speaker 3: The planner has already driven early adoption by major industry partners including A&E Network, Fox and Televista Univision.
So let me start unit visit.
Speaker 3: And we expect others to follow suit of the...
And we expect others to follow suit over time.
The solution is providing us a strong foundation for opening significant partnership discussion and we believe we experienced strong growth related to this deal over the intermediate and long term.
Speaker 3: We will continue to work tirelessly on further integration of this solution into new and current partnerships as we are confident it reflects a strong potential future growth driver for the business that can deliver significant value by attracting new customers and enticing existing customers to increase spending on our customers.
We will continue to work tirelessly on further integration this solution into new and growing partnership as we are confident it reflects a strong potential future growth driver for the business that can deliver significant value by attracting new customers and enticing existing customers.
Spending on our platform.
For our customers success is often a byproduct of efficiently and effectively ensuring their messaging, which is the widest and most likely to buy audience on the right students as a lifestyle.
Speaker 3: For our customers, success is often a by-product of efficiently and effectively ensuring their messaging reaches the widest and most likely to buy audience on the right screens and the low highs.
Speaker 3: However, before a campaign is activated through a listing, success begins with customers finding and understanding their audience by having a grasp on what content their targets are consuming. This is a strong indicator of trends they are following, interests they have, and future purchasing behavior.
However, before I compare these activated through a DSD, but certainly dealing with customers responding and understanding the audience by ebbing a graph.
What content. They are targets are consuming as this is a strong indicator of trends they are following interest.
And future purchasing behavior.
Speaker 3: Next time discovering, our data field BI tool also gained through the AMOBE acquisition...
Nexsan discovery or is that a few of the IPO also gained through the <unk> acquisition.
Speaker 3: optimized these efforts by enhancing audience insights and has been generating immense interest with prospective customers and partners in essentially every demo and across a wide range of use.
Optimize this therefore financing audience insights and has been generating immense interest with prospective customers and partners.
Essentially every demo and across a wide range of use cases.
Speaker 3: Customers leveraging the solution are able to integrate powerful audience consumption data and trends from across web, social media, and TV into their planning efforts to then activate in campaigns through our DSP, providing a seamless and frictionless experience.
Customer leveraging the solution are able to integrate powerful audience consumption data and transform across web social media and TV due to their planning vessels to then activate in campaigns.
Through our DSP, providing a seamless.
Frictionless experience.
Speaker 3: Customers that previously asked to leverage several partners for audience discovery, cross-screen planning, activation and measurement are finding that working with a single partner that can do in all, including offering TV data, are available anywhere else.
Customers that previously at two levels settle partners for audience Discovery Cross screen planning activation and measurement.
Finding that working with a single partner that can do.
Including offering Tvs that are unavailable anywhere else.
Speaker 3: reflects an obvious value proposition for the simplicity, efficiency and increased returns if in a
Reflects an obvious value proposition for the simplicity efficiency and increase returns.
Yeah.
Speaker 3: We also believe Nexon Discovery will be instrumental and provide significant value for customers seeking solutions in its bank source and around the 2024 US election cycle, thanks to its segmentation capabilities and volubles audience insight, which can provide unique feedback for partners that choose to live.
We also believe nexon discovery will be instrumental and provide significant value for customers seeking solution an eventful.
Overall, the 2020 for U S election cycle.
The segmentation capabilities.
<unk> audience insights, which can provide unique feedback for partners to choose deleveraging.
The addition of tools like next one discovery into our platform also highlight a notable and growing opportunity.
Speaker 3: The addition of tools like Nexon Discovery into our platform also highlights a notable and growing opportunity for us to deepen relationships and expand revenue footprint with customers.
As to deepen relationship and expand our revenue footprint with customers.
Speaker 3: H&L is a great example for this as the agency choose to adapt more solutions with us, including Nexon Discovery, Vida ACR data, and our cross-channel planning technology after their successful collaboration with Nexon DL.
This is a great example for that.
If the agency choose to adopt mobile solution with us, including Nexen discovery with ICL data and our cross channel planning technology. After a very successful collaboration with Maxim DSP.
It's always recently added product rebrand and enhanced marketing efforts continue to gain traction we anticipate generating similar success story.
Speaker 3: As our recently added product, rebrands and enhanced marketing efforts continue to gain traction. We anticipate generating similar success stories.
Speaker 3: We have partially extended adoption behind a single product to take greater advantage of our broader equity.
First extend the adoption behind a single product to take greater advantage of our broader ecosystem.
Speaker 3: Overall, the AMOBE acquisition had a declaratory and highly synergistic approach to the
All of our mobile acquisition added a claimant Barry and highly synergistic feature.
Speaker 3: features that we believe when combined with our pre-existing capabilities has resulted in one of the most comprehensive and data-rich platforms in all of edtech. Purpose built to help customers meet and exceed their video and ctv advertising.
This shows that we believe when combined with our pre existing capabilities.
All good and one of the most comprehensive and data rich platform in all of <unk>.
<unk> built to help customers meet and exceed their video and CTV advertising growth.
We feel we are now unmatched in our ability to assist customers on both sides of the ecosystem.
Speaker 3: We feel we are now unmatched in our ability to assist customers on both sides of the ecosystem across their entire workflow, from audience discovery through measurement and cross-format, including linear and CTV, to one unified platform with endless possibilities.
The entire workflow.
Well, there is discovery through measurement across formats, including linear and CTV to one unified platform with endless possibilities.
Speaker 3: We are also incredibly excited to share that we have recently begun the process of accelerating monetization related to our exclusive global access to VIDA-ACR data, gained through our.
We are also incredibly excited to share that we have recently begun the process of accelerating monetization related to our exclusive global access to Vida ACR. Therefore.
Turning to our investment in data.
Speaker 3: As a reminder, VIDA is a fast-growing CTV operating system and subsidiary of.
Reminder, vida is a fast growing CTV operating system and subsidiary of Ics.
Speaker 3: We have already been monetizing VDAS, HCR data and US for CT retargeting and measurement. However, we very recently also launched the data offering in the UK.
We have already been monetizing pre does ACI was outside the U S for CPG targeting and measurement.
We very recently, we also launched the Delta operating in the UK.
Speaker 3: which we believe is unique and offers a significant value proposition for customers in the market given the size and scale of the growing audience reach we have.
Which we believe is unique and offers a significant value proposition for customers in the market.
Given the size and scale of the growing audience reach.
The operating loss in the U K is expected to start generating revenues in the current quarter. However, we believe revenue related to the UK launch will scale significantly in 2024, and the offering will continue to generate revenues through the remainder of our exclusivity period over the next several years.
We intend to launch the ACO that offer in the next in Australia during Q1 2024.
We're excited for the benefit that we can enable for our customers there.
We also have a significant audience reach in that region.
We believe the impending lodge in Australia can also generate strong revenues of opportunity for us in 2024 and beyond.
It is clear to us that these are global ACO that is becoming extremely attractive to advertisers agencies and targeting and measurement.
In major markets.
Our sales team has done a great job already generating interest within the industry for this scale and growing ACR data footprint.
And we believe these key differentiator, bringing truly significant revenue to the company over time.
Both new and existing customers.
With our rapid growth is being fueled by the ongoing expansion of expiring company license.
Which continued to grow in CTV shipment volume.
Plus the strength in Q2.
According to our media Iceland continued to ranked second globally for PV shipment volume, although we are roughly 14% global shipment volume so.
While shipments increased.
19, 3% year over year.
Tier two iPhone expanded global market share by one 6%.
It is also reflecting the fastest expansion rates.
Any TV brand globally.
<unk> connected TV.
<unk> biodiesel operating system continues to grow driven by consumers' desire for high quality low cost small CD options, we believe our company and its customers will increasingly benefit from our strategic investments in Brazil.
The trend of expanding our advertisers a supply partner base, while retaining major customers continued in Q3.
It was driven by demand for our newly launched <unk> product as well.
<unk> brands and sales and marketing fee equivalent.
Q3, 2023, the company added 115, new actively spending first time advertisers customers.
Retail travel partners the CPG vertical.
Well as others.
This also included the addition of 11, new Enterprise sales service Advertiser customers highlighted by some of the world's largest and most recognizable technology companies and apparel brands over the first nine months of 2023. The company added 223, new actively spending first.
<unk> customers.
Next one studio, formerly truly continue to generate impressive growth amongst enterprise clients leveraging the company creative services highlighted by 58 and 79% increase in demand for the three and nine months ended September 32023, respectively.
We also added 109, new supplier partners, including 100 in the U S. During Q3.
Of course, several vertical stand formats, including CTV broadcast TV and mobile with notable recent momentum amongst mobile gaming publishers.
For the first nine months of 2023, we added 283.
New supply partners of which 249 with a U S thing.
Our ability to expand revenues relationship and product adoption with customers attract new partners and generate continued momentum through our rebrand talent enhancements.
<unk> suite of Tech.
Our solutions contribute to notable <unk> growth in Q3.
Despite challenging market conditions driving continue.
Smith in the air.
Advertising spending environment, particularly in managed services, we generous contribution ex Tac of $76 $6 million in Q3, 2023, which reflects.
<unk> growth of 18% compared to $64 $9 million in Q3, 2022.
For the nine months ended September 32023, we generated composition excess of $223 7 million, which.
<unk>, 8% <unk> growth compared to $206 7 million.
In defence Brio is period.
Contribution ex that growth was largely attributable.
The significant growth in programmatic revenue is our core business benefited from increased demand for our programmatic solution as well.
The integration of our hobbies, which featured strong programmatic footprint.
During Q3, we generated programmatic revenues of $74 2 million, which reflects 23% growth from $60 1 million in Q.
Q3 2022.
For the nine months ended September 32023, we generated programmatic revenues of $230 million.
Which reflects 18% growth for $179 9 million in the same prior year period.
We believe the industry will further embrace programmatic advertising overtime to automate the purchase of video and CTV inventory and that we are still in the early innings of this long term trend.
We are heavily indexed to and we are strategically purposeful.
We also continue to further strengthen our impressive talent base across all major focus area of the company.
As I mentioned earlier, we hired a new chief marketing Officer, Ben Kaplan.
We are very excited about and will bring significant and direct FX product marketing experience to our organization.
Ben has led teams across major tech and media companies, such as Meredith Glitter and most recently, a Marty and is already clear that this product marketing expertise.
We are strongly complements our rebrand and be a great asset to our going forward.
Additionally, as we scale our enterprise customer base. Following a recent DSP announcement, we were excited to add on the LDS.
As our new VP of enterprise sales, who comes to us from Amazon.
We're also seeing several of other sales bankruptcy hiring experienced sales veteran to enhance and expand our will fill in key metro areas like New York and Los Angeles.
We believe we now have the right structure and team members in place to best showcase the value proposition of our comprehensive suite of offerings and that we are well positioned to accelerate long term growth and share gains through the combined strength of our people and platform.
Finally, I am pleased to report that our board intends to approve the launch of the new $20 million ordinary shares repurchase program pending approval for <unk>, which is expected in the near term.
We obtain court approval the new potential program.
Be finance through existing cash resources and with follow two previous programs.
Which we invested a combined $95 million.
In our ordinary share repurchases roughly 13% of shares outstanding.
Looking ahead, we believe investing in our business to drive growth as well as repurchasing our shares represent the first.
Near term capital allocation priorities to generate long term shareholder value.
Two chairs remained a discount valuation levels.
The company remains cash generated in the future. The board also indicated it will consider pursuing additional future share repurchase program. After completing the pending potential 20 million ordinary share repurchase program and is willing to seek future.
Future approval from the Israeli court as required.
The board has high confidence in the company future growth prospects and believe repurchasing.
At current level reflects the strong long term investment opportunity for the company and its shareholders.
As always we will also continue to evaluate acquisition opportunities over the intermediate and long term given our historical success integrating them to create value for our customers businesses and shareholders.
However for now we are confident in the strategic competitive positioning.
The breadth of our platform offerings.
With that it's my pleasure to turn the call to <unk>.
Thank you Ofer today, I will review the highlights and key financial and operational drivers of our performance over the three and nine months ended September 32023.
And we will also discuss our forward looking guidance.
As they refine their results for the three and nine months ended September 32023 reflect the combined performance of tremor International and MLB drive results for the three and nine months ended September 32022 include a multi contribution only from September 12 2022.
Through September 32022.
For the three months ended September 32023, we generated contribution ex Tac of $76 $6 million, reflecting 18% growth from $64 9 million in Q3 2022.
For the nine months ended September 32023, we generated contribution ex Tac of $223 7 million, reflecting an increase of 8% compared to $206 7 million in.
In the same prior year period.
Contribution ex Tac growth over both periods was driven largely by a significant increase in programmatic revenue.
We experienced strength in shopping and food vertical during Q3 2023, as well as in mobile desktop display and Pnp.
Conversely softness was observed within our CPG vertical and we've in CTV as challenging market conditions drove reduced advertising demand and softness in managed service, particularly in July causing customers to temporarily shift spend.
Pending from CTV into lower cost option, such as desktop and mobile as well as display.
While we believe conditions in the CTV advertising market has stabilized compared to July we expect ongoing market uncertainty and managed service toughness to constrained advertising badges and drive customers to continue to more so leverage our lower cost solution.
So at least the end of 2023.
Programmatic revenue for the three months ended September 32023 was $74 2 million.
Which reflected a significant 23% increase compared to $60 1 million in Q3 2022.
For the nine months ended September 32023, we generated programmatic revenue of $213 million, which reflected an 18% increase from $179 9 million in the same prior year period.
Programmatic revenue as a percentage of revenue increased dramatically to 93% in Q3, 2023 and 90% for the nine months ended September 32023, compared to 85% in Q3, 2022, and 79% for the nine months.
The September 32022.
The increase was driven by our strategic shift of sales resources and focus into this core business as well as the added programmatic footprint gained through our model.
CTV revenue for Q3, 2023 was $19 6 million, which reflected a decrease of 21% from $24 7 million in Q3 2022.
As I mentioned the year over year decrease in <unk> revenue was largely driven by weakness earlier in Q3, particularly in July as macro uncertainty drove managed service softness, causing customers to temporarily shift pending from higher cost options like CTV into lower.
Cost options like mobile and desktop as well as display.
To highlight this point contribution ex Tac from mobile increased 20% year over year contribution ex Tac from this they increased 138% year over year and contribution ex Tac from desktop increased 38% year over year in Q3.
While we are seeing our customers focus near term spending lower cost option.
While we are still able to provide value added solutions to our system. We continue to expect CTV remain a key center of investment and long term growth driver for the company.
We expect our recently enhanced suite of premium CTV solution will continue to drive increased long term future industry demand, particularly as macro headwinds and uncertainty inevitably is over time, an AD budget and pending extent for.
For the nine months ended September 32023, we generated CTV revenue of $65 6 million.
Which reflected a 2% increase from $64 1 million in the same prior year period.
Video revenue continued to account for a majority of our programmatic revenue at 66% in Q3, 2023 and 70% for the nine months ended September 32023.
Video revenue as a percentage of programmatic revenue was 93% for the three and nine months ended September 32022.
Year over year decreases in Q3 were attributable to the addition of Amobi, which had a correctly stronger display revenue base.
Year over year decline in CTV revenue, driven by challenging market conditions and significant year over year increases in programmatic revenue.
Despite the short term customer spending focus on lower cost option outside of CTV, which we expect to shift over time as demand for our CTV solution increases and as market conditions improve.
Our impressive ability to increase contribution ex Tac in Q3 and over the first nine months of 2023, despite a lack of significant growth in CTV.
Highlights the strength and durability Howard diversified revenue model provides.
It also further support our belief that as market conditions improve and customers shift more aggressively into CTV advertising in the future that we are very well positioned for outsized long term market share gains.
Given our vast capabilities and footprint and how heavily index we are to CTV.
The new customer base added through our model, which has historically largely leveraged display solution provide a significant long term growth runway to cross sell our video and CTV capabilities and grow our overall video revenue footprint.
We strongly believe that our pre existing and newly launched solution will enable us to expand the base of customers gained through their mobile acquisition that leverage us for multiple video centric solutions in the future and also attract new video customers to our platform over time.
During the three and nine months ended September 32023, we generated $21 3 million and $51 2 million of adjusted EBITDA, respectively, which compares to $31 million and $108 million in the same.
Prior year period.
The year over year decrease in adjusted EBITDA were driven by the acquisition and integration of Amobi, which while generating significant losses. When we first acquired the company as well as a weaker comparative advertising demand environment earlier in 2023.
We will continue to work towards further optimizing our cost structure and improving efficiencies to improve profitability.
We believe as we generate higher level of contribution ex Tac that the majority of increased contribution ex Tac will flow through to adjusted EBITDA given the strength of our operating model, which provides strong an increasing degree of operating leverage.
For Q3, 2023, we generated an adjusted EBITDA margin of 27% on a revenue basis, and 28% on a contribution ex tac basis, which compared to 43% and 46% respectively. During Q3 2022.
For the nine months ended September 32023, we generated an adjusted EBITDA margin of 22% on a revenue basis and 23% on a contribution ex Tac basis, which compares to 47% and 52% respectively. In the same prior year.
Period.
Turning to our cash flow, we generated $13 1 million in net cash from operating activities. During Q3, 2023, and $17 1 million for the <unk>.
Nine months ended September 32023, after generating net cash from operating activities of $12 6 million during Q3, 2022, and $59 1 million.
For the nine months ended September 32022.
During the nine months ended September 32023, we incurred approximately $6 million in severance and retention bonus related costs associated with the reorganization of our mobile employees into the tremor International base.
As of September 30, we had $98 9 million in net cash as well as $80 million undrawn on our revolving credit facility.
We intend to leverage our considerable cash reserves for the ongoing needs of the business investments in internal growth initiatives and future potential share repurchase program in the near to intermediate term and to support our future potential intermediate and long term strategic.
Investment initiatives and acquisition.
Okay.
We also generated non <unk> diluted earnings per ordinary share of <unk> 90.
In Q3, 2023, and 12 for the nine months ended September 32023 versus non <unk> diluted earnings per ordinary share of 11 in Q3, 2022 and 44 for the nine months ended September 32022.
Finally, I'll now turn to our outlook.
We've seen evidence of Ed market stabilization, particularly since July we are also seeing signs that the recovery, we remain uneven and that ongoing macroeconomic headwinds and uncertainty will lead advertising demand in budget drive continued managed service softness and caused our customers to come.
<unk> to focus near term spending on our lower cost solution such as display through at least the remainder of 2023.
As a result for full year 2023, we now expect contribution ex Tac in the range of approximately $310 million to $315 million and adjusted EBITDA in a range of approximately 80 million to $85 million and continue.
To anticipate the programmatic revenue will reflect approximately 90% of our full year 2023 revenue.
We continue to believe that the combination of our durable business model and diversified revenue stream.
Focus on core strategic growth drivers.
Hence the ability to drive multi solution enterprise deal.
Greater stability following the completed integration of Amobi.
And growing demand for our programmatic solution and recently added product.
We will strongly position the company for outside future market share gains.
Contribution ex Tac growth and improved profitability.
Particularly as CTV advertising demand conditions improve and as our rebrand and recently strengthened sales and marketing team continued to gain further traction.
With my remarks completed I'll turn the call back to offer.
Thank you.
With our mobile team members the technology successfully integrated into our business. We believe we are developed and now boasts one of the most comprehensive television and video focused platforms in the market differentiated by unmatched data power solution that enable better outcomes and greater efficiency for <unk>.
Customers across the entire advertising value chain.
The integration of our more be further accelerated our product innovation leadership role and enable us to launch both after a desperately needed solutions.
We believe we will deepen our relationship with customers attract new customers and further position us as a trusted industry partners and leaders in the combined future CTV and television advertising ecosystem.
Moving forward. The go focus will now be two deals on the initial success and momentum generated through our rebrand by ensuring our marketing and sales therefore strongly complements and best emphasize the strength of our platform.
We have confidence we made important steps on this front this will better position us for 2024 and beyond.
We believe the combination of our rebrand alongside our strengthened sales and marketing organization positions us much more strongly.
<unk>, our current and future customers can best leverage one that a few platforms to meet and exceed the advertising growth in KPN.
We also believe we will be able to achieve outsized future share gains grow contribution ex Tac and improved profitability over time, particularly as market conditions improve and as customers continue to embrace and growth spending within our data driven suite of programmatic CTV NV.
Your solution.
We have many reasons to be excited and look forward to continuing to provide best in class service and solution to our customers and partners.
I would like to thank all of our employees and shareholders for their continued support and operator, we will now take questions.
Thank you at this time, we will open the line for questions.
As a reminder, if you would like to ask a question. Please press star one.
Our first question comes from Matt Swanson with RBC capital markets. Please go ahead.
Yes, thank you for taking the questions.
Of course, I'd like to extend my thoughts and prayers to you and your employees impacted by the war in Israel.
But maybe starting with you siggi and kind of where you left off on the on the comments looking at the <unk>.
Guidance did you give up the macro environment, you're seeing in October and November to date can you just kind of help us think about what your guidance implies for the end of November December and basically like are you thinking of the macro getting better stabilized and kind of like you've seen or getting worse within that context.
Thank you Matt.
Yes, I think as I said, we are seeing like in October November December.
Already coming we are seeing.
Elevation in the macro of course, it's not as it's been before.
Before the macro challenges and headwinds.
All of us.
I think you know the guidance that we gave is like cautious and conservative we have a lot of <unk>.
Different deals that are being <unk>.
As we are talking but since we are not sure everything is going to eat.
Our revenues by the end of the year and maybe some will move into 2024.
We are trying to be cautious as we can.
Yes, that's helpful color and then maybe this is for Ofer and Siggi the strategic gains we've been talking about but especially the cross platform planner and then Nexen discovery sounds exciting and bringing some more traction from the ACR data.
Obviously kind of getting offset a little bit by the macro currently so could you just maybe give us a little more color on the CTV market, specifically about what's kind of giving you confidence that you are making a strategic gains even though the macro kind of impacting some of the topline results from that.
Of course, thank you, Matt and thank you also for your support.
Yeah.
Uh huh.
When we're looking at the CTV market in general.
We are in this business for all in already for five years and.
We invested two years ago in data in order to create the ACR now its operation in the U S.
Also in U K next quarter, we're going to push it also to Australia, and then we will probably announce more markets that we are going to to launch our ACL some ACI solution.
And I think this is this is like a <unk>.
Of course, all our initiatives, including the cross platform is being shed a little bit by the macroeconomic situation because people are spending less on CTV, which is more expensive format.
As <unk> indicated people are moving more of their attention to more performance oriented formats like display mobile and so on.
But in general when you look at the ecosystem and you know we have some luck that we are the last that are basically reporting. So we can do to the rest of the peers talking about it but many people spoke about the conversion between.
Linea <unk>.
Digital CTV basically and.
We are I think the most ready around that why because basically through the acquisition of a morbid that we made a year ago, a little bit more than a year ago.
We basically acquired with geology that they had like a very strong linear planning tools, one of a kind in the industry and we added to their the cross platform solution that we basically launched in April was already integrated and used by a few of the biggest broadcasters and now we are moving their attention also to the demand.
Syed.
And I think Thats <unk>.
Many of our advertisers and the in general the I understand that in order to reach the audience. They need to also to expand and to reach digital into TV in order to reach the audiences because linear shrink basically.
We will continue to shrink probably in the next.
Couple of sales so they need to do that.
The only platform that is ready as a cross platform platform.
In the market.
And I believe that when the macroeconomics would change.
Option of this platform the usage of the plot of the platform, we grow together with our readiness.
Early next year to offer it to demand side partners that we'll be able basically to use it and also to use basically.
CTV marketplaces in order to use to create the user extension as they need it so.
I totally agree with you I think that macroeconomic conditions are not great for the flourishing of CTV basically, but I think that when youre looking at mid term and long term, we build our capabilities around targeting and measurement to the ACO that we got we got the cross planning.
Solution and we are all with all the tools that we've developed before that.
In general I think that we are able to offer a very comprehensive comprehensive solution to people that are using CTV or linear.
That wants to expand or need to extend to CTV I think that we are there and hopefully.
When the market conditions will be better.
We will be able to see that improve scale, our capabilities and we will enjoy from the growth that is associated with it.
I hope that answers your question.
Yes, no that was great. Thank you.
Thank you.
Our next question comes from Laura Martin with Needham. Please go ahead.
Hi can you hear me, Okay, you guys always high level right now.
Yeah.
Okay.
I want to focus on partnerships you brought up partnerships a couple of times ofer, but I noticed your conditioning Israeli courts to buy and another $20 million of shares and you just finished by $95 million a share. So typically partnership spring money with them, which obviously you don't need or you wouldn't be buying share steps can you talk about what youre looking for.
From the partnership's Youre talking about.
So.
I don't think that we are talking about partnerships as opposed to bring us. The money. We are looking at partnership that can give us capabilities of which to market and stuff like that we are of course cash generating company and we have cash net cash of close to one other thing and also we are not looking for partnership that will give us whether.
We are not looking for investments and we are generating cash and we are cash positive.
We are buying shares because for two reasons first of all we already fulfill a lot of our ambitions around acquisitions in the past few years.
The acquisition was last year that we acquire them will be a massive company with lots of capabilities that are added into our stack now and all the companies basically integrated into its all company.
A huge effort and it came off the additional two acquisitions that we've done in the last.
Fully and so we're not looking now for <unk>.
<unk> acquisition in the future in general and when you have cash like we do in regenerate cash we think that according to the.
Share price that we are witnessing now it makes sense for us to repurchase our shares in order to basically support the shareholders.
Potential in vessels that will come to the company and this is the best usage of cash as we see them right now yes.
It was the best investments we are seeing outside now.
Okay. That's the capabilities, you're looking for and partnerships are more new products or add on platforms or like what you did with data.
So its typically where they are.
The partnership is a wide definition, but we are for example, the partnership with data gave us the ACO that gave us media on CTV, giving us a lot of access to it.
So that that that we need in several in different markets and so on but we have a lot of partnership that we are holding with measurement companies with target with data companies with media companies.
It's a very wide definition, usually we are doing that in order to create win win situations with partnerships with us.
Being on complementary to our capability.
They can use our technology in order to gain their targets.
In general we.
We always look for good partners that could grow together or businesses.
Okay Super helpful. And then can you I think Google is finally going to deprecate cookies. After pushing about four times can you remind us how much of your AD targeting comes from Cookie.
You guys are positioned over our 2021 is Google finally starts to application such as starting in Q1 of 'twenty four.
44.
So.
We have of course, our graph we have of course. The fact that you are end to end solution is reducing.
Reducing the hour.
It depends.
Dependency.
Tendency on their usage of <unk> is of course, the fact that we are heavy on CTV also reduces cookie.
Dependency so I think that in general we are getting ready for that and I think that in general. The fact that we are going into our solution will give us even advantage if it will happen because of the.
The fact that we have we are sitting on both sides and we can basically create the match even without equity in most cases. So I think that we are in a very good position on that on that front.
Okay.
<unk>.
And Youre, calling five IMAX question earlier Youre fine for a dramatic acceleration in Q4, and we're already sitting here six weeks into the quarter and your ex Tac revenue has been accelerating in every quarter to date.
Really nice growth in the third quarter, so congratulations on that.
Showing negative year over year growth in your guidance for Q4, So I just wanted to push on that a little bit and.
And find out what you've seen in the last six six sorry, the first six weeks of this of.
This quarter than it so decelerated like what vertical specifically of cell decelerated from that wonderful Q3, 18% revenue growth rate.
Yes.
So I think that the lower again.
The fact that we are coming late with our notice is helping us to look at other people and what they are seeing and thinking I think there is a lot of instability in the market. So people are.
Selling the people the advertisers are more cautious about their spending.
Sometimes they create.
Creating orders and then delaying them well for minimizing them and so on so I think that the.
The macro is still affecting us and we want to be on the conservative side on that matter. The second thing we have a local.
Partnership and agreements that we are doing with companies as supposed to use our services that we feel that we are taking the opportunity. We are taking into account the opportunities it could slip into Q1 instead of opening this quarter.
So we are trying to be cautious around the around our guidance, but I think that the major thing is the microeconomic that is.
It's a little bit better than the beginning of the middle of the year, but it's still not great in Q4, and you'll see the accident of the of the advertisers and.
And the cautiousness about <unk>.
Investing the money right now in advertising messaging.
Okay. Thank you very much.
Thank you.
Our next question comes from Andrew <unk> with Raymond James. Please go ahead.
Great. Thanks for taking my questions I wanted to dig in a little bit on your recent leadership hires in the sales and marketing organization just any color you can provide there.
And any potential changes in strategy, how your incoming leadership tends to think about the overall sales and marketing strategy that differs from from what you have now.
Of course, thank you for the question.
So I will start with marketing because our minds so.
When we're looking at what we when we are looking at what we did in the past year or so we basically took.
A very big company like Adobe and we integrated it into treble just Paul to give you a little bit of a sale Amobi was one enough times in size than travel in general with a lot of technology.
That was developed and acquired over like 10 years or so.
So when we connected everything together, we took the best of every solution and we sunset some of our solutions and sold and we had the local brands that we were using like we were using treadmill unruly and <unk> and so on so we basically rebranded but it's not enough to rebrand.
We need to do a lot of work about your offering in the market to make it more simple to the salespeople into the market to understand what you're offering so we look forward.
CMO that we live with very strong product marketing experience that we'd be able to help us to connect the dots explain it in a meaningful manner to the market. So it will not.
<unk> simple and also for the salespeople to to compare and understand it.
Easier and to be offering without confusing the clients of scale using so many moves like we used before.
That's a massive change that we've done the rebrand Irene this.
CMO Ben that is done with a lot of experience in product marketing.
Because I think that the rest of the marketing, we're doing very well, but on the product and sales enablement side. We wanted to bring some of it can take us to the next level and I think that we found the right person to do that and we are we of course is trust into lead us to dispatch.
On the sales side when you are looking at the sales side.
Yeah.
One of the reasons that we acquired Amobi was the strong enterprise solution that was there.
They develop that over many many years.
And to build an enterprise solution sounds easy it's not because you have a lot of layers to that which is also coming.
So with a lot of it.
Professional people that knows how to support the clients how to explain to them how to use it to guide them to <unk>.
Threatening to give them a local.
Echo ecosystem around the DSP itself in order to support his day to day work.
And basically to offer this enterprise solution is a different sale than to sell managed solution and.
We wanted to take this and we took basically the DSP for mobile integrated as our main DSP with our fit with our capabilities, but we wanted to keep the enterprise solutions of course.
Live and kicking and we are hiring now people that we'll be able to sell it in the market. That's why we're bringing new people also to the enterprise side that will be able to offer these two new clients to agencies to independent agencies too.
Brands that are looking for a solution like that and I feel that is important because the sale of an enterprise solution, it's a little bit different from selling basically managed solution of A&P and so on it's a longer process. It's a different you are talking to different people in the organization.
People that as an experienced and believe that this is exactly what we're doing now.
Got it thank you for that and then.
One more on the on the macro I'm afraid.
So in terms of customers seeking kind of lower priced formats. I think one thing that we've heard kind of across the space. This quarter or is that CPM is on.
Non CTV video are coming down and so if there is a flight to like discounted inventory or lower price inventory I may have expected non CTV video to be a little bit stronger for you guys is there anything else at play there or is it really just you know customers are seeking.
Lowest CPM on an absolute basis, which is driving more strengthen in mobile and desktop. Thank you.
I think it's a combination of two things first of all it.
What you said, it's Dubai cheaper CPM basically, but the second thing is also performance metrics and I think that still.
We spoke about it in several of our earning calls in the past that we believe that the CTV.
CTV will become a performance also.
We entered platform oriented format, but it will take some time, so I think thats right. Paul when people are looking for performance in this macroeconomic situation that'll basically looking for mostly for different.
Solution in different formats, CTV, which is it.
Therefore approval track record of proving that Jen with performance, which is display OLED mobile and so on unless the lessee TV, but we feel that of course, when the microeconomics will will improve again I think that people will shift again their attention to CTV that's one.
And I think that this is important also to remember that some of the key key verticals.
Vertical that we're dealing.
With the CTV like automotive entertainment and so we're not in great shape in the last six months some of them with strikes.
And slowdown so we feel that it also influences a little bit the market of the CTV in general even for the people that are willing to pay ICP and in order to reach their target audiences.
Thank you.
Thank you.
Our next question comes from Andrew Boone with JMP Securities. Please go ahead.
Good morning, and thanks, so much for taking my question.
Also like to just say hey, we're thinking about your guidance.
Israel complex continues to progress.
Going back to kind of laws question on thinking through the for Q3 guide.
Run rate now implies something extremely negative into 2021 is there any way you can help us understand organic growth maybe for <unk> or any thoughts on 2024 as we begin to.
Really fine tune our estimates for next year.
Yes, Andrew Thanks.
So we are not guiding the market regarding like giving the full amount of guidance regarding 2024, I think that when as the aforementioned we're seeing all the opportunities.
That's our.
Laying in front of us the different capabilities that different.
We can enable different players within the within the industry and the deals that we are now.
In trying to facilitate through Q4 and maybe Q1.
I think that to say that we will be in the lower double digit growth is something that we we can stand behind.
That's very helpful.
Suddenly another one for you.
In your prepared comments, you said camera will work towards further optimizing our cost structure can you talk about what's left in the business to optimize where may be areas, but there can be additional efficiencies from that.
Yes, I think we did a lot in during 2024, and 2023, sorry, and we optimize our cost structure.
All over the year, we are doing it you know from time to time on or on an ongoing basis, regardless of any acquisition or any restructuring.
I think that we are seeing some of the products. The three inherent through the <unk> acquisition and some other acquisitions that we can optimize the.
The structure of the R&D teams over there because now we are more familiar with the tool then we tweak them. So we can be more efficient over there of course some of it is part of.
Implementing different AI solution in order to make our work better faster and cheaper.
Other than that I think sales and marketing we will continue to invest in.
The average supporting departments, we are optimizing as we are moving so most of the of the optimization will come from R&D probably.
Taking our resources and taking more out of that we've probably lower stuff.
And then the last one for me is Ofer historically <unk> has been kind of felt by M&A.
<unk> is now fully integrated how do you think about M&A going forward as you guys have kind of a new streamlined run rate business.
So we just finished the integration of <unk> I think that we mentioned it in the previous calls that was also slow us down a little bit because we needed to work very hard on the integration.
I think that we need to give the company some space now too to get together like we do and to start performing on the assets that we got when we are looking at our technology content sets I think that we are.
We have all everything that we need we can always enhance something but I think that we have everything that we need we have a very strong DSP that is it is.
These are basically the result of a lot of DSP that we integrated into one technology and we believe best best of breed.
Apology around the DSP, where the DMT, we have in SSD, we have a net favorable for CTV. We are planning tools, we have a discovery tools with all the technology that we can really dream around I think that if you will make an additional acquisition.
As always we are looking at it we call it.
Full capabilities for clients.
For additional territories.
All geographies that we want to include in our.
The growth, but I think that in the as we say in the near future is less of an issue and I think that like we indicated the best investment that we see now to repurchase for now our shares whenever we can in order to.
To support our growth and the value value return for our shareholders.
Thank you.
Thank you.
Our next question comes from Eric <unk> with Lake Street. Please go ahead.
Hey, I wanted to better understand the Q4 guide your contribution ex Tac is based on the outlook do you expect it to be up about 15% quarter on quarter.
I'm wondering how you would compare that normal seasonality.
Yes, so I can't tell you the numbers that you extracted from our guidance of course are the right number.
I think that we as we said we had a lot of deals going on in Q4, which all of us understand.
Macro or not macro are supposed to be.
<unk> this quarter within the year.
And seasonality is eating over there.
Pink that we.
We wanted or we assume that we are going to do better in Q4, but when because.
We have now a lot of new revenue stream, which are as aforementioned.
The sales cycles over there are much longer than it.
It needs to take more time for us to educate the clients about exactly what we are buying and how we're operating it. So some of the deals that we assume that will happen in Q4.
We'll go and sign in Q1, and again I think as aforementioned as well the macro is putting a little bit of shade over here companies does not want to.
To sign a new contract for a new.
Product tool in Q4, and we prefer to do it at the beginning of a new year. So this is like the color behind why we are growing 15% and of course Q4 is the strongest.
Yes.
Okay, and then a layer deeper on CTV CTV revenue declined from Q2 to Q3 essentially went from.
In round numbers $25 million in Q2 'twenty.
$20 million in Q3.
As implied in our Q4 outlook to CTV increase and if so what's the.
Jason.
I think that there are a few reasons for two of pressure on the CTV as we indicated I think that if we didn't started this quarter subject a little bit earlier earlier.
We're talking about macroeconomics, whereas we mentioned people are looking for lower CPM pressure on CPM. So even if they are buying they are buying on lower CPM and they'll basically serving some of the costs. So it's less revenues for companies like us in the search.
Second thing is also royalty costs that in the last year. There are few that were like very strong on the CTV like infotainment and automotive.
Software from Intel and issue for them of the of the royalty costs that basically affected also the they are buying metrics and affected the size of the industry and as we said shifting of budget basically from Citi visa performance. So even if people are willing to buy CTV and because of the macroeconomic and because of.
They then being cautious there.
To go some of them the newcomers into the <unk>.
More familiar with and they are moving their spend too.
Areas like display mobile and OLED, which is online video instead of <unk>, which is much more lucrative expensive but.
Okay.
Let's say less performance driven at this stage. So I think that all of that together showing weakness in CTV like we see across the board.
With us, but I think that we have the tools as I mentioned like the ACO that we are in.
Now expanding into new territories with success and the growth platform that we are.
Initiated to the to the publisher side and we're moving now.
Now to the demand side over the next year. This will be elements that will help us to grow the demands of citigroup.
Something unique in the market.
This is able to capture the.
The attention of advertisers and serve their needs.
But do you expect it to grow sequentially.
We expect it to growth, but you know.
We don't know.
We believe that in general if the market is good macroeconomic will improve we will see.
Much bigger opportunity for us what is the macroeconomic with Fukushima marker down which will be more limited, but in general we believe that it will of course will keep growing.
Thank you.
Thank you.
Our last question comes from Mark Kelley with Stifel. Please go ahead.
Great. Thank you.
Two quick ones, sorry to go back to the macro but I guess, how would you frame.
The visibility into next year at this point.
And I know obviously.
Last year budgets really didn't come to fruition.
Our people Didnt really have visibility till February or March.
Is it better this year I guess, that's the first thing and then the second thing just back on CTV.
With more inventory coming online.
CPM and CTV have come down as well.
So I guess.
Whats the bigger factor in your eyes in terms of the cautiousness on CTV is at the absolute CPM.
The inventory that.
<unk> is out there or is it the services component.
CTV and folks are just not willing to pay.
The markets for your career services I guess, how would you kind of parse those two dynamics out. Thank you.
Okay.
Start with focusing that you mentioned about next year.
<unk> [laughter].
There's really only in the middle of Q.
Before you start seeing.
We see that already in there, but the push for for next year and starting in the second half of Q4 basically people are shifting gears and basically starting to look into the next year 2024, it's too early to say of course as we mentioned last year only in February or March people were able to give a better picture about the year.
That especially when you have like a.
Situation in microeconomic situation like we are experiencing now very altruistic to to basically predict what will happen in the end of 2024, but in general we have like two streams of revenue one of them, which is more infrastructure and selling platform and saw that we can we see the interest in revenue.
Platforms that we are sharing with the market that's a market like the ACI cross platform like the <unk>.
Discovery tools that we see that as we said that to happen in the next six to maybe slipping a little bit into Q1, but will serve us next year and the second thing is basically booking of business.
That is coming and we believe that in the next six weeks, we will start seeing like an acceleration of that and we will be able to know more.
In the areas of times that you mentioned, which is the diesel Q1, usually you could get like a better feeling on the planning on the size of the budget of advertiser for that for the full next year.
I think it's too early now but.
We are.
Since we are much more much more products much more capabilities.
We feel that we will be able to to get more traction on this path to grow our revenues around that next year.
The second question's about Citi visa to us.
So I think that is.
As always in life, it's not one metrics and it's not just one thing that is basically influencing something I think it's a mix and everything is like.
They are different from each other but in general there are a few factors that are pushing the CTV down as we mentioned I can I can repeat it it's like moving more to performance because of microeconomics lower CPM because of microeconomic.
Some internal issues in some of the royalty cost.
Usually supporting the growth in CTV and so on that are being affected and in general cautious about about the market that is slowing down the industry. So it's very hard to put a weight on what is the and also the point that you mentioned like a lot of inventory in this period of time with microeconomics.
And you don't have a lot of demand to cover that is of course, lowering the CPM slowing the traction and so on but <unk>.
In general when you look at that is to put the finger on one element that caused this.
Slowdown I think that the CTV for sure is something that is here to stay it's the most engaging and interesting format in the market people, believing that the.
The growth will come also not just from digital advertisers at foundries.
From this format and using it in full extent, but also from newly advertisers.
And before they need it in order to reach their target audience in different markets.
And they will use <unk> in order to do that which will drive a lot of budget into CTV and there is to come. So I strongly believe in that I think that we are on the right direction with their choosing CTV and investing in that but in this period of time, it's a little bit more down because of all the effects that we just said.
But it doesn't lower from this importance for the center and four from the future of this format. This I'm sure. There's also with the rest of the of the field talking about that this is the main effect in the years to come and we are very strongly invested in that we believe in that that we have the capabilities to serve clients and publisher.
And while CTV.
Understood Thanks very much.
Thank you.
There are no further questions at this time I will now turn the call back to Oh, sorry for any closing remarks.
Thank you.
How will.
I have a short summary.
I would like to share with you today.
People are asking us about the situation in Israel, all the time and I will be affected.
<unk> to say that well every every human being should be affected when <unk> entered into a civilian cities or villages must carry torturing kidnapping teeth women older people and full family.
And all the civilized world should be affected by that for sure. We are doing our best to keep our duties that lives on the line and I want to use this opportunity to thank our employees in Israel and all over the world for the extra effort.
The people that we're keeping up with retail in peso.
We wouldn't it will recover and I gave my condolences to the families that lost their loved one.
I want to make a few comments about what we discussed about the macro so we all are developed from our peers also.
Yeah.
There is the pressure from macroeconomics of the performance of the advertising industry for sure. We believe that after the acquisition of the domestic acquisition of <unk>. We built our teams and we are ready for the future and hopefully with better economy that will encourage goals you will see the results of what we created and built in there.
Last few years.
About CTV.
I think that there are two points that I would like to indicate to you first of all linear to CTV. So.
When we win we iron out all the discussions.
Recession that are happening in the industry lately about this conversion between linear and CTV I think that as I mentioned also in these calls we got the technology and which is according to what we see as the best in the market now for <unk>.
Platform linear advertisers need additional reach in order to reach their audience and we can basically offer them that and confidence and with much lower the duplication in order for them to save money in order to reach the audiences and this is a massive <unk> that will happen in the industry. The next three to five years and we are ready for that variant.
Also to understand for the second thing, which is the CTV in general there is all.
All the questions, that's almost about the weakness or softness of CTV.
We all I think.
Agree in the industry. The <unk> as I mentioned is something that is very.
Very big very important.
You know very effective in general because when youre looking at people that wants to advertisers to move the attempt to create attention and engagement they need to use the system in order to do that and I think that after five years that we have.
Putting all these in order.
To create the best technology to collaborate collaborate a lot of our technologies in order to serve the best CTV building partnership like.
The partnership with visa and investing in a way that in order to to be able to offer ACR for targeting and also in the future to partners with for measurement.
I think that we are ready for that we believe in that and the acquisition of what we just added to our stool that enable us to to lead this market and to be one of the innovators and the first to offer technologies and services that are needed in order for people at work.
To achieve basically the targets and kpis.
I think that we are well situated.
You know we are ramping up now our capabilities with the acquisition of <unk> and we are ready for 2024.
So thank you very much.
This concludes today's conference call. Thank you for joining US you may now disconnect.
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