Q4 2023 Innovid Corp Earnings Call

Operator: Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid Greetings and welcome to the Innovid Q4 2023 Earnings Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to what would be a no bid.

Q4, 2023 earnings call at this time, all participants are in a listen only mode.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brinlea Johnson, Director of Investor Relations. Thank you, Ms. Johnson.

Brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

A reminder, this conference is being recorded it is now my pleasure to introduce your host Brinley Johnson Investor relations. Thank.

Thank you Mr. Johnson you may begin.

Brinlea Johnson: You may begin. Thank you, Operator. Before we begin, I'll remind you that today's call may contain forward-looking statements, and that the forward-looking statement disclaimer included in today's earnings release, available on our Investor Relations page, also applies to this call. These forward-looking statements may include, without limitation, predictions, expectations, targets, or estimates regarding our anticipated financial performance, business plans and objectives, future events, and developments. Changes in the competitive landscape of our business, the technological or regulatory environment, and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance, and as such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them, except as required by law.

Thank you operator before we begin I'll remind you that today's call may contain forward looking statements and that the forward looking statement disclaimer included in today's earnings release available on our Investor Relations page also pertains to this call. These forward looking statements may include without limitation predictions expectations targets, our estimates regarding our answer.

Dissipated financial performance business plans and objectives future events and developments changes in our business competitive landscape technological or regulatory environment and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today, our historical results are not necessarily indicative of future performance and as such.

We can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them, except as required by law.

Brinlea Johnson: In addition, today's call will include non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margins, and free cash flow. We use these non-GAAP measures in managing the business and believe they provide useful information to our investors. These measures should be considered in addition to and not as a substitute for our GAAP results.

In addition, today's call will include non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin and free cash flow. We use these non-GAAP measures and managing the business and believe they provide useful information to our investors.

These measures should be considered in addition to and not as a substitute for our GAAP results reconciliations of the non-GAAP measures to their corresponding GAAP measures, where appropriate and can be found in our earnings release available on our website and our filings with the SEC.

Zvika Netter: Reconciliations of the non-GAAP measures to their corresponding GAAP measures, where appropriate, can be found in our earnings release available on our website and our filings with the SEC. Hosting today's call are Zvika Netter, Innovid's co-founder and CEO, as well as Anthony Collini, Innovid's CFO, both of whom will participate in our Q&A session. I'll now turn the call over to Zvika to begin. Zvika, please go ahead.

Hosting todays call are Zika matter and if its co founder and CEO as well as Anthony Coline innovative CFO, both two more pictures bet in our Q&A session I'll now turn the call over to speak up to begin speaker. Please go ahead.

Zvika Netter: Thanks, Brinlea, and thank you all for joining the call today. I'm excited to share the progress Innovid has made in the past... We have provided critical technology infrastructure for many of the world's largest brands, agencies, and publishers. We empower them to create, deliver, and measure ad-supported TV experiences that people love across connected TV, linear TV, and other digital channels. And we continue to push the boundaries of what's possible in the fast-growing CTV industry through constant innovation on our enterprise software platform. We're very proud to close out a transformational year with a strong fourth quarter, bidding our guidance for both revenue and adjusted EBIT, evidence of what we expect to achieve in 2024 and beyond. Today, a review of fourth-quarter results and full year highlights, provide some recent business updates, and share some thoughts on the year ahead.

Thanks, Brendon and thank you all for joining the call today I'm excited to share the progress <unk> made in the past year, we provided critical technology infrastructure for many of the world's largest brands agencies and publishers, we empower them to create deliver and measure AD supported TV experiences that people love.

Across connected TV linear TV and other digital channels.

And we continue to push the boundaries of what's possible in the fast growing CTV industry through constant innovation on our enterprise software platform.

We're very proud to close out a transformational year with a strong fourth quarter, beating our guidance for both revenue and adjusted EBITDA.

Evidence of what we expect to achieve in 'twenty 'twenty four and beyond.

Today, I'll review, our fourth quarter results and full year highlights provide some recent business updates and share some thoughts on the year ahead.

Zvika Netter: I'll then turn it over to our Chief Financial Officer, Tony Kalini, who will provide further details on our Q4 and full-year financials, in addition to our 2024 guidance followed by a Q&A. I am pleased to report fourth-quarter revenue of approximately $39 million, reflecting 15% annual growth and adjusted EBITDA of $8.3 million, which more than doubled year over year, resulting in a 21% adjusted EBITDA margin. Our operational profitability continues to increase as we generated $2.2 million in positive free cash flow this quarter. For the full year, we reported revenue of $140 million, reflecting as reported 10% growth and adjusted EBITDA of $19.4 million. 14% Adjusted EBITDA Margin. We also generated 1.4 million dollars in positive free cash flow over the full year.

I'll, then turn it over to our Chief Financial Officer, Tony Clini, who will provide further details on our Q4 and full year financials. In addition to our 'twenty 'twenty four guidance followed by Q&A.

I am pleased to report fourth quarter revenue of approximately $39 million, reflecting 15% plus.

Annual growth and adjusted EBITDA of $8 $3 million, which more than doubled year over year.

Silting in a 21% adjusted EBITDA margin.

Our operation profitability continues to increase as we generated $2.2 million in positive free cash flow this quarter.

For the full year, we reported revenue of $140 million, reflecting as reported 10% growth in adjusted EBITDA of $19 $4 million or 14% adjusted EBITDA margin.

We also generated $1 $4 million in positive free cash flow over the full year, a $23 million improvement from 'twenty to 'twenty two.

Zvika Netter: A 23 million dollar improvement from 2022. We are proud of our financial performance in 2023. We improved revenue and adjusted EBITDA, which exceeded guidance each quarter throughout the year. 2023 was an important year, not only from a financial standpoint but also from an organizational perspective. Given our strong conviction in the business, we strengthened the executive team with the best possible talent to drive and accelerate our growth and market position. We hired Dave Helmrich as Chief Commercial Officer and Tony Kellini as Chief Financial Officer.

We're proud of our financial performance in 2023, with improved revenue and adjusted EBITDA, which exceeded guidance each quarter throughout the year.

2023 was an important year not only from a financial standpoint, but also from an organizational perspective.

Given our strong conviction in the business, we strengthened the executive team with the best possible talent to drive and accelerate our growth and market position.

We hired David Helmerich, as Chief commercial Officer, and Tony Colonias, Chief Financial Officer. We also promoted you Volt-ampere to Chief Technology Officer, and Ken Mark as Chief operating Officer.

Zvika Netter: We also promoted Yuval Pemper to Chief Technology Officer and Ken Marcus to Chief Operations Officer. Most recently, we welcomed Danny Cushion to the team as Chief Marketing Officer. Danny brings a wealth of experience leading marketing organizations in both public and private technology growth. We are really excited about the new additions to our team who are already making an impact.

Most recently, we welcomed Danny cushion to the team as Chief Marketing Officer, Dan. He brings a wealth of experience in leading marketing organizations in both public and private technology growth company. We are really excited about the new additions to our team who are already making any effect.

Zvika Netter: Additionally, we reorganized the sales organization to drive accelerated growth in 2025. The commercial team has been focused on increasing wallet share from existing clients, adding new logos, and deepening our relationship with our most strategic clients. In the fourth quarter, we acquired new customers such as Philips for dynamic creative optimization and ad serving, Rain, the Growth Agency for ad serving across their client portfolio, and Nexstar Media for measurement. We also expanded existing customer relationships this quarter.

Additionally, we reorganized the sales organization to drive accelerated growth in 2020 for.

The commercial team has been focused on increasing wallet share from existing clients, adding new logos and deepening our relationships with our most strategic clients.

In the fourth quarter, we won new customers such as Philips for dynamic creative optimization and AD serving rain. The gross agency for AD serving across their client portfolio and Nexstar media for measurement.

We also expanded existing customer relationships. This quarter for example, petsmart and AD serving client added our measurement solution. In Q4. In addition to these recent fourth quarter wins, we had a number of top global brands joined us as clients throughout 2023.

Zvika Netter: For example, PetSmart, an ad-serving client, added our measurement solution in Q4. In addition to these recent fourth-quarter wins, we had a number of top global brands join us as clients throughout 2023, including Mazda US, Microsoft, Revlon, and Verizon, to name a few. As a result of our focused execution... We reported accelerating revenue growth and improved operation profitability in 2023 compared to last year. More specifically, Innovid's CTV revenue from ad serving and personalization in the fourth quarter grew 14% year-over-year.

<unk> must be U S. Microsoft Revlon, and Verizon to name a few as a result of our focused execution, we reported accelerating revenue growth and improve operational profitability in 2023 compared to last year.

More specifically innovate CTV revenue from AD, serving and personalization in the fourth quarter grew 14% year over year.

Zvika Netter: XP, our measurement offering, grew 14% in the fourth quarter and represented 22% of revenue. We are pleased with the ramp-up in measurement as we continue to extend usage, and we are optimistic about our growth prospects as we go to market with measurement as a critical piece of our comprehensive ad technology process. I am very proud of all the team accomplished this year.

Even if it XP our measurement offering grew 14% in the fourth quarter and represented 22% of revenue.

We are pleased with the ramp up in measurement as we continue to extend usage and we are optimistic about our growth prospects as we go to market with measurement is a critical piece of our comprehensive AD technology product.

I am very proud of all the team accomplished this year.

Zvika Netter: Despite macro and geopolitical challenges, we made significant operational, strategic, and financial improvements to our business. Looking ahead to 2024, we see two key trends which are meaningful accelerators for CTV adoption and ad spend migration. First, more and more streaming platforms are implementing ad-supported offers, a subscription only model has proven unsustainable. Just this past month, Amazon Prime Video introduced ads following other streaming giants such as Netflix, HBO, and Disney+. Second, Lifesports is also increasingly part of CTV programs. The recent news by ESPN, FOX, and Warner Bros. to launch a sports streaming platform in the fall is another step forward on the journey to 100% digital TV, and it's a huge step because sports is one of the last linear TV menses.

Despite the macro and geopolitical challenges.

We made significant operational strategic and financial improvements to our business.

Looking ahead to 'twenty 'twenty four we see two key trends, which are meaningful accelerators for CTV adoption and AD spend migration.

First more and more streaming platforms are implementing AD supported offerings a subscription only models have proven unsustainable.

Just this past month Amazon Prime video introduced ads following other streaming giants, such as Netflix H, B O and Disney plus.

Second.

Life Sports are also increasingly part of CTV programming. The recent news by ESPN Fox and Warner Brothers to launch a sports streaming platform in the fall is another step forward on the journey to 100% digital TV and it's a huge step because sports is one of the last linear TV mainstays.

Zvika Netter: While ad spending has been suppressed in the past few quarters, we believe that ad spend re-acceleration on CTV is inevitable. As viewership continues to shift to CTV, ad dollars will follow to reach and engage consumers where they are. And as the TV market becomes more digital and more fragmented, we believe the need for our technology also expands. These market dynamics, technology capabilities, and unique partnerships will continue to drive growth in 2024 and beyond. Next, I'm happy to share updates related to the Innovid platform and our focus on innovation. From the early days when we founded Innovid, we've used our technology to push the boundaries of what's possible.

Well that spending has been suppressed in the past few quarters, we believe that AD spend reacceleration on CTV is inevitable.

As viewership continues to shift to CTV AD dollars will follow to reach and engage consumers, where they are and that the TV market becomes more digital and more fragmented we believe the need for our technology also expense.

These market dynamics technology capabilities and unique partnerships will continue to drive growth in 'twenty 'twenty four and beyond.

Next I'm happy to share updates related to the innovative platform and our focus on innovation.

From the early days when we founded innovate we've used our technology to push the boundaries of what's possible.

Zvika Netter: We've always been focused on setting the bar for what the future of TV should look like, and we continue to work closely with our clients to understand the issues they face, both big and small. Where are we, folks? And we're actively solving for some of the biggest challenges facing CTV today. Executing on our multi-year plan, we have continued to integrate our solutions on one powerful platform, with creative delivery and measurement capabilities working together to provide exceptional client value, and it is a data-rich business with a unique CTV-first glass platform data. We have the opportunity to provide even further value through the use of AI with a focus on optimization across our full suite of products and solutions. An exciting example of how we're helping clients optimize was on display at Disney's Global Tech and Data Showcase event at CES last year. Powered by Innovid Technology, Disney Advertising introduced the Dashboard for real-time creative optimization. The Dashboard helps Disney's advertisers use real-time consumer insight, such as web or app conversion data, to find which of the creatives are most effective. This allows them to automatically shift more investment to the winning creatives, improving performance in real time. Well, this is just one example.

He's always been focused on setting the bar for what the future of television should look like and.

And we continue to work closely with our clients to understand the issues they face.

Both big and small.

This insight influence, where we focus and we're actively solving for some of the biggest challenges facing CTD today.

Executing on our multiyear plan, we have continued to integrate our solutions on one powerful platforms with creative delivery and measurement capabilities working together to provide exceptional client value.

And as a data rich business with a unique CTD first class platform dataset, we have the opportunity to provide even further value through the use of AI with a focus on optimization across our full suite of products and solutions.

An exciting point of how we're helping clients optimize was on display at <unk>.

Disney's Global Tech and data showcase event at CES last month.

Powered by innovate technology Disney advertising introduced a dashboard for real time creative optimization.

That's what helps Disney's advertisers use real time consumer insights such as web or App conversion data to find which of the creative are most affected.

This allows them to automatically shifts more investment to the winning creative improving performance in real time.

Well. This is just one example in 'twenty 'twenty four will continue to invest in and released exciting new optimization capabilities, which we believe will solve challenges in the CTV ecosystem.

Zvika Netter: In 2024, we'll continue to invest in and release exciting new optimization capabilities, which we believe will solve challenges in the CTVX. We are currently engaging closely with several major brands, agencies, and publishers to test these new solutions and believe that what we offer will vastly improve efficiency, enhance transparency and control, and maximize ROI for our customers and partners. From day one at Innovid, we have focused on innovation.

We are currently engaging closely with several major brands agencies and publishers to test these new solutions and believe that what we offer with vastly improve efficiency enhance transparency and control and maximize our ROI for our customers and partners.

From day, one we have focus on innovation and.

Zvika Netter: And we will continue to invest to bring new solutions to the market that provide meaningful value to brands, publishers, TV viewers, and the ecosystem as a whole. In summary, we remain committed to expanding our margins and positioning ourselves for accelerated growth, as I reflect on where we were when we entered 2023. Our team's hard work and dedication in navigating this uncertain macro environment is commendable.

And we will continue to invest to bring new solutions to the market that provide meaningful value to brands publishers television viewers in the ecosystem as a whole.

In summary.

We remain committed to expanding our margins and positioning ourselves for accelerated growth.

As I reflect on where we were when we entered 2023 R.

Our team's hard work and dedication in navigating this uncertain macro environment is commendable.

Zvika Netter: We have made consistent progress each quarter in strengthening operational execution and improving financial performance, operational profitability, and cash flow. I'm excited about our ability to make a meaningful difference in this industry and to generate value for our shareholders. With that, I'll ask Tony to take us through the numbers and provide some insights into 2024 expectations.

We have made consistent progress each quarter in strengthening operational execution, and improving financial performance operational profitability and cash flow.

I'm excited about our ability to make a meaningful difference in this industry and to generate value for our shareholders.

With that I'll ask Tony to take us through the numbers and provide some insights into 'twenty 'twenty four expectations.

Tony.

Tony Kalini: Thank you, Zvika, and good morning, everyone. As you just heard, our focus on driving profitable growth is evident in both the fourth quarter and full year results. We're pleased to report record revenues in both Q4 and 2023, double-digit growth, our third straight quarter of adjusted EBITDA margin expansion, and positive free cash flow for both the second consecutive quarter and full year. It's been a year of hard work and transformation, and it's exciting to exit 2023 and enter 2024 with the kind of momentum that we demonstrated over the last few quarters. Now, let me dig a little more into the numbers. Q4 revenue grew 15% year over year to $38.6 million.

Thank you speaker and good morning, everyone. As you just heard our focus on driving profitable growth is evident in both the fourth quarter and full year results.

We're pleased to report record revenues in both Q4, and 'twenty twenty-three double digit growth, our third straight quarter of adjusted EBITDA margin expansion and positive free cash flow for both the second consecutive quarter and full year.

It's been a year of hard work and transformation and it's exciting to exit 'twenty twenty-three and enter 'twenty 'twenty four with the kind of momentum that we demonstrated over the last few quarters.

Now, let me dig a little more into the numbers Q.

Q4 revenue grew 15% year over year to $38 6 million, if we break that down further AD, serving and personalization revenues were up 15% year over year, while measurement revenue grew 14%.

Tony Kalini: If we break that down further, ad serving and personalization revenues were up 15% year over year, while measurement revenue grew 14%. As a percentage of revenue, in Q4, ad serving and personalization made up 78%, while measurement accounted for 22%. The growth in ad serving and personalization reflects the emerging stabilization of advertising spend and continued shift to CTV. In fact, CTV revenue from ad serving and personalization grew 14% over last Q4. While it's too early to tell if we are completely back to sustained traditional spend levels, we certainly experienced a meaningful year-over-year improvement. As a reminder, Innovid's ad serving and personalization revenue closely correlates with ad impression volume served through our platform. Within this category, CTV impression volume increased 16% as more impressions continued to transition to connected television, and it represented 52% of all video impressions.

As a percentage of revenue in Q4 AD, serving and personalization made up 78% while measurement accounted for 22%.

The growth in AD, serving and personalization reflects the emerging stabilization of advertising spend and continued shift to CTV in fact, CTV revenue from AD, serving and personalization grew 14% over last Q4.

While it's too early to tell if we are completely back to sustained traditional spend levels, we certainly experienced a meaningful year over year improvement.

As a reminder, innovative AD, serving and personalization revenue closely correlates with AD impression volume served through our platform.

Within this category C. T V impression volume increased 16% as more impressions continue to transition to connected TV and represented 52% of all video impressions.

Tony Kalini: Mobile video volume grew by 21% and represented 36% of all video impressions, while desktop volume increased by 5% and reflected 12% of all video impressions. Both mobile and desktop have been inconsistent in the first three quarters of 2023, and we were pleased to see healthy growth within mobile and a return to more modest growth in desktop. All three of these devices represent consumers watching streaming applications.

Mobile video volume grew by 21% and represented 36% of all video impressions, while desktop volume increased by 5% and reflected 12% of all video impressions, both mobile and desktop had been inconsistent in the first three quarters of 2023 and we were pleased to see healthy growth with.

In mobile and returned to more modest growth in desktop.

All three of these devices represent consumers watching streaming applications. So it's also helpful to look at the total video impressions, which grew 16% overall in the fourth quarter Bruce.

Tony Kalini: So it's also helpful to look at total video impressions, which grew 16% overall in the fourth quarter. Growth in measurement revenue reflects the continued enhancement of our measurement capabilities to take full advantage of the valuable data set generated from the ad-serving side of the business and the continued strength of the Innovid XP platform in the market. As Vika mentioned, we expect our unique ability to combine creative, delivery, and measurement solutions to provide differentiated client value and be a catalyst for continued revenue growth. Now, moving on to costs and expenses. Revenue, less cost of revenue, calculated out to 78% of revenue, improving from 75% in Q4 last year. These margins will continue to improve as the business scales, reflecting the operating leverage embedded in our business model.

Ruth and measurement revenue reflects the continued enhancement of our measurement capabilities to take full advantage of the valuable data set generated from the AD serving side of the business and the continued strength of the innovative X P platform in the market as Vicki mentioned, we expect our unique ability to combine creative.

Delivery and measurement solutions to provide differentiated client value and be a catalyst for continued revenue growth.

Now moving on to costs and expenses revenue less cost of revenue calculated out to 78% of revenue improving from 75% in Q4 of last year.

These margins continue to improve as the business scales, reflecting the operating leverage embedded in our business model Q.

Tony Kalini: Q4 total operating expenses, excluding depreciation, amortization, and impairment, totaled $37 million, an increase of 3% from $35.8 million last year, but supporting 15% more revenue than in 2022. The employee count at the end of December was 466, which was 12% lower than where we finished in 2022. We remain committed to managing our cost base while protecting investments in high-growth areas to drive improved profitability and long-term value creation for our shareholders. Our Q4 net loss was $1.7 million, or a per share loss of one cent. The outstanding common share count at the end of the year was 141.2 million shares.

Q4, total operating expenses, excluding depreciation amortization and impairment totaled $37 million, an increase of 3% from 35.8 million last year.

But supporting 15% more revenue than in 2022.

Employee count at the end of December was 466, which was 12% lower than where we finished in 'twenty 'twenty. Two we remain committed to managing our cost base, while protecting investments in high growth areas to drive improved profitability and long term value creation for our shareholders.

Q4, net loss was 1.7 million or a per share loss of one cent.

The outstanding common share count at the end of the year was 141.2 million shares.

Tony Kalini: Adjusted EBITDA in the fourth quarter was $8.3 million, representing a 21% adjusted EBITDA margin, as compared to just 9% in Q4 last year and 18% in Q3. In fact, each quarter in 2023 was an improvement over its equivalent quarter in 2022, and adjusted EBITDA margin grew sequentially throughout 2023. These improvements reflect the impact of sustained revenue growth, lower costs of revenues as a percentage of revenue, and operating costs that grew nominally over the period, demonstrating the leverage inherent in the operating model. For the full year 2023, we reported revenue of $140 million, a 10% increase over 2022 on an as-reported basis and a 6.5% increase on a pro forma basis, including the results of TV2 for all of 2022. Because our target clients are the largest global brands, ad agencies, and publisher platforms, one of the metrics we talk about on an annual basis is core clients, which we define as an advertiser or publisher that generates at least $100,000 of revenue over the course of a year. As you can imagine, there can be active clients who may be over or under that $100,000 line in any given year, so we feel it's important to look at each year's group as its During 2023, 177 clients met this definition as compared with 174 during 2022.

Adjusted EBITDA in the fourth quarter was $8 3 million, representing a 21% adjusted EBITDA margin as compared to just 9% in Q4 last year and 18% in Q3 in fact, each quarter and 'twenty twenty-three was an improvement over its equivalent quarter in 2022.

And adjusted EBITDA margin grew sequentially throughout 2023.

These improvements reflect the impact of sustained revenue growth lower cost of revenues as a percentage of revenue and operating costs that grew nominally over the period demonstrating the leverage inherent in the operating model.

For the full year 2023 we reported revenue of $140 million, a 10% increase over 2022 on an as reported basis and a 6.5% increase on a pro forma basis, including the results of T V squared for all of 'twenty two.

Because our target clients are the largest global brands AD agencies and publisher platforms. One of the metrics. We talk about on an annual basis is core clients, which we define as an advertiser or publisher that generates at least $100000 of revenue over the course of the year.

As you can imagine there can be active clients, who may be over or under that 100000 dollar line in any given year. So we feel it's important to look at each year's group as its own cohort.

During 'twenty twenty-three 177 clients met this definition as compared with 174 during 2022.

Tony Kalini: With the macro pullback in ad spend during 2023, we experienced the number of core clients who dropped just below the $100,000 line but remain active and valuable clients. On a revenue basis, net revenue retention in 2023 from that 2022 cohort was 101%, and client retention improved to 91% this year. Full-year revenue, less cost of revenue, calculated out to 76% of revenue, consistent with 2022. Total operating expenses, excluding depreciation, amortization, and impairment, totaled $145.3 million, a decrease of 4% from $150.7 million last year.

With the macro pullback in AD spend during 'twenty twenty-three, we experienced a number of core clients, who dropped just below the 100000 dollar line, but remain active and valuable clients.

On a revenue basis net revenue retention in 'twenty twenty-three from that 2022 cohort was 101% and client retention improved to 91% this year full.

Full year revenue less cost of revenue calculated out to 76% of revenue consistent with 2022.

Total operating expenses, excluding depreciation amortization and impairment totaled a 145.3 million a decrease of 4% from 150.7 million last year.

This reduction is a result of efficiency efforts throughout 'twenty twenty-three and the completion of the T V squared integration.

Tony Kalini: This reduction is a result of efficiency efforts throughout 2023 and the completion of the TV squared integration. The 2023 net loss was $31.9 million, or a per share loss of 23 cents. Approximately half of this loss was related to a non-cash, intangible asset impairment recorded in Q2.

2023, net loss was 31.9 million or a per share loss of 23 cents a.

Approximately half of this loss was related to a noncash intangible asset impairment recorded in Q2.

If you look at the two halves of 'twenty twenty-three, we recorded a net loss of $27 5 million in the first half of the year as compared to 4.4 million in the second half of the year.

Tony Kalini: If we look at the two halves of 2023, we recorded a net loss of $27.5 million in the first half of the year, as compared to $4.4 million in the second half. Adjusted EBITDA for the full year 2023 was $19.4 million, representing an improvement of $18.2 million as compared to the $1.2 million of adjusted EBITDA we reported in 2022. As a percentage of revenue, adjusted EBITDA margin was 14% this year as compared to just 1% in 2022 and 6% in 2021. While we acknowledge that there is still work to do, we are proud to have delivered both double-digit adjusted EBITDA growth and double-digit adjusted EBITDA margin in 2020. Turning to the Balance Sheet in Cashflow. We ended the year in a strong financial position, with $50 million in cash and cash equivalents and $20 million drawn on a revolving debt facility, with an additional $30 million available on that line. During the quarter, operating cash flow was $4.3 million, and free cash flow was $2.2 million, an improvement of $6.9 million over the $4.7 million of free cash flow used in Q4 2022.

Adjusted EBITDA for the full year 'twenty twenty-three was 19.4 million, representing an improvement of 18.2 million as compared to the 1.2 million of adjusted EBITDA, We reported in 2022.

As a percentage of revenue adjusted EBITDA margin was 14% this year as compared to just 1% in 2022 and 6% in 2020 one.

While we acknowledge that there is still work to do we are proud to have delivered both double digit adjusted EBITDA growth and double digit adjusted EBITDA margin in 2023.

Turning to the balance sheet and cash flow.

We ended the year in a strong financial position with $50 million in cash and cash equivalents and $20 million drawn on our revolving debt facility with an additional $30 million available on that line.

During the quarter operating cash flow was 4.3 million and free cash flow was 2.2 million an improvement of 6.9 million over the 4.7 million of free cash flow used in Q4 2022.

For the full year operating cash flow was $12 4 million and free cash flow was 1.4 million as compared to a use of cash of 22 million of free cash flow in 2022 an improvement of $23.4 million.

Finally, let me touch on our outlook for the first quarter and the first look at the full year 'twenty 'twenty four.

We are encouraged by the strong finish to 2023 and remain committed to our long term financial target of 20 plus percent annual revenue growth and 30 plus percent adjusted EBITDA margin.

Tony Kalini: For the full year, operating cash flow was $12.4 million, and free cash flow was $1.4 million as compared to a use of $22 million of free cash flow in 2022, an improvement of $23.4 million. Finally, let me touch on our outlook for the first quarter and our first look at the full year 2024. We are encouraged by the strong finish to 2023 and remain committed to our long-term financial targets of 20-plus percent annual revenue growth and 30-plus percent adjusted EBITDA margins. We are confident in the underlying strength of our business, opportunities for disruption in the market, and our ability to grow revenue in a profitable way, and see 2024 as a meaningful step toward those longer-term targets. In the first quarter of 2024, we expect total revenue in a range of $34 to $36 million, representing 11% to 18% year-over-year growth. We expect Q1 adjusted EBITDA in a range of $3 to $4 million as compared to $0.1 million in the first quarter of last year.

We are confident in the underlying strength of our business opportunities for disruption in the market and our ability to grow revenue in a profitable way and see 'twenty 'twenty four is a meaningful step towards those longer term targets.

In the first quarter of 'twenty 'twenty four we expect total revenue in a range of $34 million to $36 million, representing 11% to 18% year over year growth.

We expect Q1 adjusted EBITDA in a range of $3 million to $4 million as compared to point 1 million in the first quarter last year.

For the full year, we expect revenue of $154 million to $162 million, reflecting 10% to 16% annual growth and adjusted EBITDA between 22 and $28 million.

We are proud of our accomplishments this year and exit 'twenty twenty-three with strategic operational and financial momentum. The team is focused on the significant opportunity in front of us to accelerate growth and continue to further expand our profitability margins in 'twenty 'twenty four.

We believe we are well positioned to become the essential technology infrastructure for the future of TV advertising.

Operator: For the full year, we expect revenue of $154 to $162 million, reflecting 10% to 16% annual growth and adjusted EBITDA between $22 and $28 million. We are proud of our accomplishments this year and will exit 2023 with strategic, operational, and financial momentum. The team is focused on the significant opportunity in front of us to accelerate growth and continue to further expand our profitability margins in 2024. We believe we are well positioned to become the essential technology infrastructure for the future of TV advertising and to experience outsized growth as ad spend returns to more historic levels. We remain committed to innovation and value creation for our customers and our shareholders. This concludes our prepared remarks. Vika and I are now happy to take some questions.

And to experience outsized growth as AD spend returns to more historic levels.

We remain committed to innovation and value creation for our customers and our shareholders.

This concludes our prepared remarks, Zika and I are now happy to take some questions. Operator, please begin the Q&A session.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

For participants using speaker equipment may be necessary to pick up your handset before pressing the starches.

One moment, please while we poll for questions.

Okay.

Our first question comes from Sweater Korea from Evercore ISI. Please proceed.

Thank you for taking my questions Tony could you. Please comment on your full year guidance that puts and takes what's driving your.

Operator: Operator, please begin the Q&A session. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

In terms of your visibility right now contribution from potentially upsell cross sell all of that is baked into guidance and what you see in terms of the AD environment that I'm, giving you the confidence with the 10% to 16% growth and what would drive upside to this guidance that's question one.

Shweta Khajuria: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we poll for questions. Our first question comes from Shweta Khajuria from Evercore ISI. Please proceed. Thank you for taking my questions. Tony, could you please comment on your full year guidance, the puts and takes, what's driving your... Davika, Tony, and Shweta. So, what is the guidance in terms of your visibility right now, contributions from potentially upsell and cross-sell that is baked in the guidance, and what you see in terms of the ad environment that's giving you the confidence of the 10 to 16% growth, and what would drive upside to this guidance That's question number one.

And then the second question is this zika or Tony could talk about the new optimization solutions that Zika was referencing you're testing some new solutions or any additional color you could provide on what they are and how that could impact your P&L that'd be great. Thanks, a lot.

Thank you.

I'll try to take the first one.

We can certainly add some color on the optimization so.

Yeah, as we think about 2024, I think theres a number of factors.

Uh huh.

Kind of play into our guidance and we finished the year well, we feel pretty strong.

With the double digit growth and 15% growth in Q4.

Tony Kalini: And then the second question is if Davika or Tony could talk about the new optimization solutions that Davika was referencing. You're testing some new solutions; any additional color you could provide on what they are and how that could impact your P&L would be great. Thanks a lot.

And I think if you look at the Q1 guidance.

Youre seeing that carry over from 2023 into 2024. So we are seeing a lift in maybe a return to some stabilization in the any ad spend.

Certainly that's not consistent across all verticals and I don't know if we were ready to say everything is completely back to normal yet, but we're certainly seeing a strengthening from from the prior year. So you have that just general lift from for more spending and then the continued transition to connected TV.

Tony Kalini: And we can certainly add some color to the optimization. So, you know, as we think about 2024, I think there's a number of factors that kind of play into our guidance. And we finished the year, well, we feel pretty strong with double-digit growth and 15% growth in Q4. And, and, you know, I think as you look at the Q1 guidance, you're seeing that carryover from 2023 into 2024. So we are seeing a lift and maybe a return to some stabilization in ad spend. You know, certainly that's not consistent across all verticals.

Yes that really drove revenue performance. This year, there's there's three pieces of it at least it was C cheesy volume.

Measurement, which grew.

Grew nicely double digits in the fourth quarter.

And then we were a little bit surprised with mobile was that was a pleasant surprise for us, albeit kind of like a softer comp in Q4 for for mobile.

But yeah those are the things that we're seeing carry over.

Tony Kalini: And I don't know if we're ready to say everything is completely back to normal yet, but we certainly see a strengthening from the prior year. So you know, you have that just general lift for more spending. And then you have to continue the transition to connect to television.

We've talked a lot about the investments that we've made in our sales team and a lot of that was done in the second half of last year.

So you are certainly baking some of that into into the guidance going forward for this year although.

Is it.

Pertains to new logo acquisition, sometimes those are longer sales cycles will be let's see.

Tony Kalini: And if you look at the things that really drove revenue performance this year, there are three pieces of it. It was CTV volume, it was measurement, which measurement, you know, grew nicely double digits in the fourth quarter. And then, you know, we were a little bit surprised with mobile. It was a pleasant surprise for us. I'll be a kind of a softer comp in Q4 for mobile.

That building throughout the year.

<unk>.

Macro macro conditions like live sports I think the transition to live sports and more of that on streaming is certainly.

Great tailwind for us.

Yeah more AD supported video on demand. These are all the challenges.

Tony Kalini: But you know, those are the things that we're seeing carry over. We've talked a lot about the investments that we've made in the sales team, and a lot of that was done in the second half of last year. So we're certainly baking some of that into the guidance going forward for this year, although, as regards new logo acquisitions, sometimes those are longer sales cycles.

We're looking to take advantage of it and then it's kind of a we look at.

Potentially from some things to be mindful of that create some amount of uncertainty.

You know what the election in the second half of the year that that that is.

It's something that can have an impact on on brand spend over that period. So we're mindful of that so there's there's certainly a number of puts and takes I would say if you break it down into.

Tony Kalini: So we see that building throughout the year. Macro conditions like live sports. I think the transition to live sports and more of that on streaming is certainly a great tailwind for us. More ad-supported video on demand, these are all the tailwinds that I think we're looking to take advantage of. And then, as we look at potentially some things to be mindful of that create some amount of uncertainty with the election in the second half of the year, that is something that can have an impact on brand spend over that period. So we're mindful of that. So there's certainly a number of puts and takes, I would say, if you break it down into thinking about the specific things of spend, cross-sell, up-sell, pricing, all of those play a part.

Thinking about the specific things of spend cross sell upsell pricing.

All of those play a part you know we've certainly seen that.

Low to mid digit uplift from pricing that we would expect for the year.

Cross sell is an opportunity that I think will build throughout the year and I would say the strongest feature thats built into our guidance. It's just a general uplift in spending in some of the the stronger macros macro challenge.

Yes.

Turn it over to speak with you.

That was helpful. Thank you.

Thanks, Tony and in haste with that good morning. Thanks for joining the optimization you know thanks for asking it's definitely something we're extremely excited about so beyond accelerated growth free cash flow and profitability from our product and company strategy 'twenty 'twenty four is absolutely going to be the year of optimization.

Tony Kalini: We've certainly seen a low to mid-digit uplift from pricing that we'd expect for the year. Cross-sell is an opportunity that I think we'll build throughout the year. And I would say the strongest feature that's built into our guidance is just the general uplift in spending and some of the stronger macro tailwinds, and Dvika. I don't know if I answered everything.

And data driven algorithmic optimization across the board as we shared in our Investor day. It is something we already started investing.

Zvika Netter: I'll turn it over to Dvika for the afternoon. Yes, that was helpful. Thank you. Thanks, Tony, and hey, Shweta, good morning. Thanks for joining us. On the optimization, thanks for asking.

In 2020 three and we you know the market you definitely expect releases throughout the year. Our wood optimization related features there's wonder we released the end of last year and actually Disney shared that on stage at sea yes.

Zvika Netter: It's definitely something we're extremely excited about. So beyond accelerated growth, re-cash flow, and profitability from a product and company strategy, 2024 is absolutely going to be the year of optimization, data-driven algorithmic optimization across the board. As we shared in our investor day, it is something we have already started investing in 2023. And we, you know, the market should definitely expect releases throughout the year with optimization-related features. There's one that we released at the end of last year, and actually, Disney shared that on stage at CES.

This is real time optimization of their creative.

For a specific Disney campaigns. This is Disney selling this technology and enabling their dashboards to the media bias because it is also our customers Hey, Brad. This is this is a publisher as a seller. It is something that is available indoor dashboards that are advertisers that run their creative can upload multiple creatives into the Disney platform.

And optimize based on real time data that is connected to outcomes.

And what's very unique on all of this and this is Oh, we're very excited.

Zvika Netter: This is real-time optimization of their creative for specific Disney campaigns. This is Disney selling this technology and enabling it in their dashboard to the media buyers because Disney is also a customer as a brand. Disney is a publisher, and it is a seller.

Cited about the partnership because Disney is very excited about it in terms of sharing this with their customers.

Is that can it can use.

Publisher data first party data. So this is data that the seller doesn't want to go outside of their platform.

Zvika Netter: It's something that is available in their dashboards that advertisers that run their creatives can upload multiple creatives into the Disney platform and optimize based on real-time data that is connected to outcomes. And what's very unique about this, and we're very excited about the partnership because Disney is very excited about it in terms of sharing this with their customers, is that it can use publisher data, first-party data. So this is data that the seller doesn't want to go outside of their platform, but they can trust a partner like Innovid because there's no friction or competition because we're not in the media business to optimize against those data points to reach the end customer, to get the advertiser better performance, and to prove the performance on the Disney platform. So that's something that's already launched in live and is generating revenue. And those are already in the guidance in the plans for those types of creative optimization. They keep getting smarter and smarter. It still falls under the creative category.

They can trust the partner that they like innovate because there's no friction or competition, because we're not in the media business to optimize against those data points to get at the end customer to get the advertise a better performance and to prove the performance on the Disney platform. So that's something that's already launched and live in January when your revenue and and those are already in the guidance.

And the plans for like those type of creative optimization, they keep getting smarter and smarter it still falls under the creative we believe that there's still a lot of opportunities in terms of.

Frequency you reach workflow supply path optimization, there's plenty of opportunity.

To deploy this type of.

Our data driven optimization and other areas of the industry. So based on the our customers' pain points. So we definitely are committed to release those in the year. So from an investment perspective, it's already in the P&L from an upside perspective, it's not something that we're counting on this year because these will be initial launches.

And sometimes some of them will be and I'll find data. So we don't want to rely on them for for the the revenue, but we're absolutely committed to you know to release them into the market. So we should definitely see I I would definitely want to see significant revenue from these products next year sure.

Zvika Netter: We believe that there are still a lot of opportunities in terms of Frequency of Reach, Workflow, and Supply Path Optimization. There's plenty of opportunity to deploy this type of data-driven optimization in other areas of the industry, so based on our customers' pain points. So, we definitely are committed to releasing those this year, so from an investment perspective, it's already in the P&L. From an upside perspective, it's not something that we're counting on this year because these will be initial launches and some of them will be in alpha and beta, so we don't want to rely on them for revenue, but we're absolutely committed to releasing them into the market, so we should definitely see, I Thank you, Zvika. Thanks, Tony.

Thank you Luca Thanks, Ronny Thank you Kim.

Yeah.

Our next question comes from Shyam Patil from Susquehanna. Please proceed.

Good morning. This is Aaron on for Tom Congratulations on the strong results and thanks for taking our question.

Maybe for starters.

Is there any additional color you can share on how January and February had looked from an advertiser demand environment, maybe compared to the fourth quarter any color additional color on quarter to date trends and then we've got a follow up.

Zvika Netter: Thank you. Thank you. Our next question comes from Shyam Patil from Susquehanna. Please proceed. Good morning. This is Aaron on behalf of Tom.

Yeah.

I can take that one so.

So I think what we're seeing is certainly a continuation of some of the improved activity that we saw in Q4 carrying over into Q1 and I think that's reflected in the guidance that we gave.

Operator: Congratulations on the strong results and thanks for taking our question. Maybe for starters, Is there any additional color you can share on how January and February have looked from an advertiser demand perspective, maybe compared to the fourth quarter? Any additional color on quarter-to-date trends? And then we've got a follow-up. Yeah, I can take that one.

For the first first quarter from a growth perspective, I think that first quarter growth was a C.

The 11% to 18%.

Year over year so.

Clinicians.

Tony Kalini: So, I think what we're seeing is certainly a continuation of some of the improved activity that we saw in Q4 carrying over into Q1, and I think that's reflected in the guidance that we gave for the first quarter from a growth perspective. I think that first quarter growth was, you know, say 11% to 18% year-over-year. So, you know, mid-point-ish. 15%.

15%.

Growth, which was which is why we ended up growing in the fourth quarter. So I think you know that.

Yeah, I would say that the benefit of the timing of this call of the year.

And call it being a little later in the quarter as you just have more data points right. When when we meet with you all and when we share guidance. So I think we're seeing things stabilize.

Mentioned before as you look at the vertical it's there's still it's still there's still some unevenness right entity.

Look at things like <unk> like CPG.

Tony Kalini: Thank you. Thank you. Dan Salmon, Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid Dan Salmon, Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid. You know, maybe optimism or, not certainly not certainty, but we feel better about it.

Pharma those are performing well, we really havent seen a bounce back in finance.

<unk> insurance those sorts of things. So just think about the broader economic market and and how those companies are performing and where we're seeing the same thing there. So I think theres continued.

Yeah, maybe optimism or.

Not certainly not certainty, but we feel better about it but I still think theres some room for the market to bounce back altogether.

Tony Kalini: But, you know, I still think there's some, you know, some room for the market to bounce back altogether. And we're just trying to balance all those conditions as we think about our guidance.

Trying to balance all of those conditions as we think about our guidance.

Zvika Netter: Thank you, Tony. And then I just want to follow up here. Obviously, one of the big focuses for the year in digital ads is Google Chrome cookie deprecation. How are you thinking about any potential impact on Innovid's business from cookies being deprecated and maybe signal loss sort of more broadly in the digital ads ecosystem? Sure. The nice thing about CTV and now, you know, connected TV is more than 50% of our activity and revenue. All of it is video, all of it is TV. But on CTV, cookies never existed.

Got it. Thank you Tony and then just a follow up here obviously one of the big focuses for the year and digital ads is Google Chrome Cookie deprecation.

How are you thinking about any potential impact on and if its business from cookies being deprecated and maybe signal off sort of more broadly in the digital ecosystem.

Sure the the nice thing about CTV and now you know connected Tvs, it's more than 50% of our activity in revenue all of it is video all of these T V, but on CTV cookies never existed.

Zvika Netter: What's nice about it, and it's good for Innovid because it increases the need for a platform, a new platform like Innovid, is the fact that it's very fragmented. In a way, there's no standard. There's nothing; the industry didn't come together and say, let's drop a cookie. And it's almost a collection; you could think of it as a collection of wall gardens where Roku has their own operating system and hardware and Samsung has theirs, and some apps like Hulu and Netflix and Disney, they all have their own technologies, and they're not looking to share, something like cookies that will go across devices and cross. So there's a it's a fragmented environment with close to no standards and a collection of wall gardens.

What's nice about it and it's good for any of it because it increases the need for our platform neutral platform like innovate.

Is the fact that it's a very fragmented in a way there's no standard there's nothing the industry didn't come together and say, let's drop a cookie.

And it's almost a collection you could think of it as a collection of walled gardens were roku have their own operating system and hardware and Samsung have there isn't some apps like Hulu and Netflix and Disney They all have their own technologies and theyre not looking to share.

Something like cookies that will go across devices and cross so there's a it's a fragmented environment with close to no standards and a collection of walled gardens. So it cannot be just you know a Google owning a lot of stuff like they do and where they can have value. While you know picking up the cookies to retract valley.

Zvika Netter: So it cannot be just, you know, Google owning a lot of stuff like they do and where they can have value while, you know, taking out the cookies to retract value maybe to others that does not exist in CTV. So basically, nothing's going away. And we've been at this for many, many years. So the fact that we're the ad server and we actually physically stream the ads, so the creative of the ad, let's say GM is a customer. So when you see a GM ad in the U.S. on CTV, we're physically streaming it into your Samsung TV, Roku device, inside the Hulu app.

Maybe two other players that does not exist in CTV. So basically so nothing's going away and we've been at this for many many years. So the fact that we're the AD server and we actually physically streamed yet so the creative of that that's a G M. As a customer so when you see a G. M AD in the U S. On a C T V where.

Physically streaming into your Samsung TV Roku device inside Hulu App. So we have a direct connection to your household.

Zvika Netter: So we have a direct connection to your household. In terms of, we have a front seat, let's put it this way, whatever data is available to have access to this data and store it to build our own household graph, which is called Innovid. We have our own identity solution, we partner with other identity providers, but there's nothing that's going away from the CTV ecosystem that's gonna change anything dramatically during this. So that's not an exposure for us, and I would say it's actually an advantage that Innovid has in the CTV market. Very helpful. Thank you, Tzvika.

In terms of Oh in terms of our we have a front seat, let's put it this way whatever data is available to have access to this data and start to build our own household graph, which is called <unk>. So we have our own identity solution and we partner with other identity he providers, but theres nothing thats going away from the CTV.

System, that's going to change anything dramatically. During this so that's not an exposure for us and I would say it was actually an advantage is that even if he would have in the CTV market.

Very helpful. Thank you tamika. Thank.

Operator: Thank you. Our next question comes from Laura Martin from Needham & Company. Please proceed. Good morning, you guys. Good morning. Good morning. Good morning. Sasika?

Thank you Erin.

Yeah.

Our next question comes from Laura Martin from Needham <unk> Company. Please proceed.

Good morning.

Good morning.

Okay.

Laura Martin: Hi, Sasika, for you, I'd like to drill down into the competition. So I know your primary competitor is Google, and I'm wondering if, with all of their focus on Gen AI right now and the pressure they're under to sort of catch up with chat, GPT, and open AI, if that helps you take more clients, or if the rise of Gen AI, which even you guys are integrating more and more AI into your product, tilts the competitive landscape over the next three years back towards them, because they are in So can you talk about the competitive landscape vis-a-vis your primary competitor, Google?

Cause bigger for you I'd like to drill down into carpet cushion. So I know your primary competitor Google.

And I'm wondering with all of their focus on Jenny I don't know all the pressures.

Ketchup with cat.

Who am I hope and I am wondering if that helps you.

More clients or with the rise of Generali, keeping you guys are great at one one.

I want your product.

The competitive landscape over the next three years back towards them because they are in the past that thank god, there's so much happening.

Yeah, which means everyone knows all the clients know that they are sort of Oh I. Later. So you can you talk about the competitive landscape.

Comparable football Tony for you I wanted to better understand them.

Laura Martin: And then, Tony, for you, I wanted to better understand, you sort of talked twice about this Disney thing with creative at CES, and so my question is, how do you get paid for that? Is that an upsell to your ad insertion, or is it free with your ad insertion, or is it added on to the linear measurement? Like, how do you get paid for that extra creative piece, or is it just something that you give away for free, and it's like a marketing hook for somebody to pay you, you know, 30 cents for ad serving per thousand? Thanks, guys. Thanks, Laura.

You started talking twice on this whole thing with creator of it yeah.

So my question is how do you get paid for that is that an upsell to your AD insertion or is it really with your AD insertion or is it added onto the linear measurement like how do you get paid for that extra.

Creative alright.

Or is it just something.

You get free and it's kind of like a marketable hawk has set for somebody to call where well.

30 cents for AD serving her bathroom. Thanks, Bob.

Thanks, Laura and thank you for the question always an exciting topic.

Zvika Netter: And thank you for the AI question. Always an exciting topic. I wonder if we said AI in the entire script.

I Wonder, if we said hey, I and the entire script I'm not sure because we're being pretty careful not to over use it because these days everything is AI, but clearly you know you are talking about big Tech so anywhere between Amazon and Google you know and of course, Microsoft and and.

Zvika Netter: I'm not sure because we're being pretty careful not to overuse it because, these days, everything is AI. But clearly, you know, you're talking about big tech. So anywhere between Amazon and Google, you know, and of course, Microsoft and Facebook, there's almost like an arms race for having the most advanced AI, which I have to say, as a citizen of the world, is rather scary at those levels because they're pushing the frontiers of AI not just to do better ad-serving or better ad-trafficking or even optimization. It's to a much, much, much higher level.

And and and Facebook you know there I thought there was almost like an arms race four you know having the most advanced AI, which I have to say as a citizen of the world is rather rather scary on those levels right because they're there they're pushing the frontier of AI not to do better at serving or better that trafficking or even <unk>.

Optimization right, it's it's too much much much higher levels, so in our modest world.

Zvika Netter: So in our modest world, the fact that a lot of energy is going towards that, and I can only repeat, you know, it's public information that in terms of... some of these organizations, definitely Google, had layoffs, another wave of layoffs, and you could see where they're investing and where they're investing less. So actually, in terms of sales and marketing efforts around some of their tech infrastructure, I think they had some de-investment, or let's put it this way, they invested less. That is absolutely great news for us. I feel it's kind of a symbol of the fact that the market is kind of saturated from a Google perspective, in terms of the ROI, and they are absolutely losing shares on different fronts. We're on the ad-serve part; they have the ESP front; they have several fronts. So from us, from our perspective, it's good news.

The fact that a lot of energy is going towards that and I can only repeat you know it's public information that that in terms of.

Some of these organization that Google had had.

Lay offs another wave of layoffs, and you could see it where they're investing in the word they're investing less so I'm actually in terms of sales and marketing efforts around some of their tech infrastructure I think they had some D investment that's what did they they invest less that is absolutely great for us.

I feel it's gonna have a symbol at the fact that as the market is kind of saturated from a Google perspective in terms of the ROI and they are absolutely losing shares in different fronts. You know we're on the other part you have DSP front. They have several fronts. So from us from our perspective, it's it's good news.

Zvika Netter: And the fact that, though I would say we're not day-to-day, head-to-head with them, yes, we're taking customers off that platform, the decision to move to Innovid is beyond sales and relationships and marketing. It's a really strategic decision in terms of where you want your data to be and how you want to align yourself with a partner.

And the fact that though I would say, we're not day to day head to head with them, Yes, we're taking customers of their platform their decision to move to innovate is beyond sales and relationship in marketing. It's a really strategic decision in terms of where you want your data to be what you know how do you want to align yourself with a partner.

Zvika Netter: In an interesting way, it's connected to AI because data is the fuel for AI. So let's say you're the largest auto manufacturer, the largest CPG manufacturer; you have a lot of data. You really want to own this data, how comfortable are you that all your data, all your advertising and marketing data will be in the hands of one of the big tech companies that, God forbid, might be used for other things? So that concept is reviving our increase in market share in the last eight years. So I think that will accelerate it.

In an interesting way, it's connected to AI because data is the fuel to it I. So let's say you're the largest auto manufacturer less largest CPG manufacturer has a lot of data or a big publisher.

Do you really want to you know you want to own. This data how comfortable you are that all your data. These are all your advertising and marketing data will be in the hands of one of the Big Tech that you know Oh God forbid might be used for other things. So that concept is we can bobbing art increase of market share in the last eight years. So I think that will have.

Zvika Netter: The antitrust, that seems to be something behind us. It's not that focus on neutrality and the need to separate platform and acting and manipulating the platform is still a huge deal for advertisers. So we're very optimistic on that front, and we see no reason for this to reverse. And in terms of our usage, back to Shweta's question, in terms of, I'll call it, optimization, and some of it is driven by AI. We already shared some exciting things on Investor Day in kind of alpha demo mode. Some of these things are now in beta and in market live, and I cannot wait to share with you and the rest of the audience some of those, once they go into general availability, to show where we're actually moving the needle for our customers and helping them reduce waste, reduce carbon footprint, and achieve better outcomes with a smaller investment. I believe the market will be excited about this and looking forward to sharing it throughout the year. And, Tony, I think you had another question about this. Yeah, I can certainly take that.

Certainly the antitrust that seems to be something behind us it's not a focus on the neutrality and they need to do you know separate platform and acting and manipulating the platform is still a huge deal for advertisers. So we're very optimistic on that front and we see no reason for this to reverse it.

Our usage you know back to push wettest question in terms of.

I'll call. It optimization are and some of it is driven with a I, we already shared some exciting things in investor day, and kind of alpha demand. Some of these things are now in beta in market live.

And I cannot wait to share with you and and and and the rest of the audience that some of those once they'll go into general availability to show, where we actually moving the needle for our customers and helping them reduce waste reduce carbon footprint and achieve better outcomes with less you know with a smaller investment so.

I think I believe the market would be excited about this.

And I'm looking forward to share throughout the year and Tony I think you had the other question about this.

Yeah, I can I can certainly take that yes.

Tony Kalini: Yeah, thanks, Laura. This is pretty exciting for us, and this concept of real-time measurement, we think it can really make a difference. And so the way those arrangements work, it is a measurement arrangement, as we talked about before. There's a component of measurement that's like a SAS model where it's fixed, and there's also a provision for upside based on usage.

Yeah. Thanks, Thanks, Laura.

Yeah. This is pretty exciting for us and this concept of a real time measurement, we think can really make a difference and so yeah. The way those arrangements works. It isn't measurement arrangement is as we've talked about before there's a component of measurement, it's like a SaaS model, where it's fixed and there's also a provision for upside.

Based on usage, so wherever wherever you see this making a difference for US is is.

Tony Kalini: So where we see this making a difference for us is this functionality, we think, will drive more usage just because of its utility and its value for our customers of, again, the real-time measurement and information that's going back to them. So that's kind of how the economics work around it. Again, there's a fixed piece, which is like a SAS model, and then some usage-based... around the actual measurement, and there is some real-time creative in there as well.

This functionality, we think will drive more you said just because of its utility and its value for our customers.

Again, the real time measurement and information that's going back when we so that's kind of how the economics work around again theres, a fixed piece, which is like a SaaS model and then some some usage are usage based.

Around the around the actual measurement and there is some real time creative in there as well so it's kind of checks all that.

Tony Kalini: So this kind of checks all the main boxes of what we're doing from the ad serving, the measurement, and then the DCO or creative. Thanks very much, guys. Thank you. Our final question comes from Matt Condon from JMP Securities. Please proceed.

The main boxes of what we're doing from the AD serving.

The measurement and then the D C O or creative side.

Thanks very much.

Thank you.

Our final question comes from Matt Condon from JMP Securities. Please proceed.

Operator: Thank you for taking my question. Two, if I could, maybe just on the measurement side, revenue-accelerated NYSE. Let's talk about the drivers there. Thank you for your time. Bye.

Thanks for taking my question two if I could maybe just on the measurement side revenue accelerated nicely in the quarter can you just talk about the drivers there and what was it can expect heading into 2024 and then also last week you announced the launch of a self service feature with senior C. T V. Composer just stepping back can you talk about what needs to happen in order for more SMB.

Tony Kalini: And also, last week you announced the launch of self-service. Just stepping back, can you talk about what needs to happen? Yeah, sure. I can take the first part of that about measurement.

The budgets to shift or shift over time to see television. Thanks.

Yeah sure I can I can take the first part of that.

Tony Kalini: Yeah, we had a nice quarter for measurement in Q4. And as I just mentioned to Laura, that model is a blend of SAS, so a license fee, if you will, or a software usage fee that's fixed, and then some upside on top of that. So I think what we're seeing is kind of both of those increasing, where as our base grows, the SAS model typically builds on itself over time as you add more customers and you get that concept of recurring revenue, and then you have effectively the kicker on top of that, which is the usage base. So I think for us, measurement's been a big area of focus. With the changes we made in the go-to-market organization, I think we're having successful conversations with our customers around more of a holistic approach for them, including serving in measurement.

Yeah, we had a nice quarter for measurement.

In Q4, and as I, just mentioned to Laura I mean that that model is there's a it's a blend of <unk>.

Faisel are used to a license fee, if you will or a.

Software usage fee.

That's fixed and then some upside on top of that so I think what we're seeing is kind of both of those increasing where their base grows.

The SaaS model you know typically builds on itself over time.

Add more customers and you get that concept it.

Recurring revenue and then.

Actually the kicker on top of that which is the usage base. So I think for US measurement has been a big area of focus.

With the changes we made me go to market organization grabbing successful conversations with our customers around more of a holistic approach for them, including your AD serving and measurement. So we would expect that base to continue to grow and and things like you know again, what the what the conversation we just had it almost a real time measurement.

Tony Kalini: So we would expect that base to continue to grow. And things like, again, with the conversation we just had about real-time measurement, the more that we can connect these capabilities together, we see usage going up. So I would expect both of those parts of it to continue to increase over the course of the year. Maybe I'll turn the second half of the question over to you. Yeah, absolutely. I was on mute, so I was already halfway there.

You know the more that we can connect these capabilities together, we see usage going up so I would expect kind of both of those parts of it you to continue to increase over that of course.

Jacob maybe I'll turn to the second half of the question over and over to you.

Yeah absolutely.

I was on mute, so I was a bit way already and the so thanks for the question. So we are specifically on CTV composer. It's it's a it's a critical I Wanna say critical it's a very unique part of piece of technology that if it happens it's definitely critical to the future are you know you asked about that.

Zvika Netter: So thanks for the question. So we are specifically on CTV Composer. It's a critical, I don't want to say critical, it's a very unique part of a piece of technology that Innovid has.

Zvika Netter: It's definitely critical to the future. You know, when you ask me about the Dash and FSMB, I would say I still feel we're in the early days of really advanced CTV advertising. We released this, the core offering, several years ago, and I would say to this day that we're the only company in the world that offers you a tool that you can create interactive CTV ads, actually engage with the remote, and everything, at scale that can run across self-service, that can run across multiple devices and platforms. What is standard these days in HTML is that you can take any document or design tool and save it as HTML, then publish it on the web.

And that's M. B I would say I still feel where the early days of really advanced CTV advertising.

We released this the core offering several years ago, and we say to this day I believe we're the only company in the World that offers you a tool that you can create interactive CTV ads actually engage with every month of everything.

Scale that can run across to self service that can run across multiple devices and platforms. What is standard. These days and HTML you can take any document or design tool and save as H T. M N in publishing on the web.

Zvika Netter: In CTV, there is no such thing as HTML, on purpose. As I said earlier in response to one of the questions about cookies, CTV is still... kind of a multi-wall garden, everybody wants to get a bigger share, so they're building walls around their technology, their audience, depending on what they're selling. If you're selling a device like Roku or Samsung or Vizio, or you sell content like Disney or Netflix, audiences, etc., there are no standards, so we have the only tool that can actually create an interactive ad that will work on Amazon Fire, on Apple TV, or on Roku with the different remotes, etc.

CTV, there's no such thing as H T mail on purpose as I said earlier to one of the questions on cookies.

CTV is still.

Kind of a multi walled garden and everybody wants to get a bigger share. So they are building walls around their technology their audience, depending what they're selling if you're selling a device like roku or Samsung or a vizio or are you still content like Disney or Netflix audiences etcetera, So everybody's trying to so theres no standards.

So we have the only tool that can actually carry at an interactive AD that will work on our Amazon fire on Apple TV or a roku with a different reports et cetera. So it's very very diverse technology. It has an SDK. That's it's actually on the device and the App and in authoring tool. So in general regardless if the.

Zvika Netter: So it's very, very advanced technology; it has an SDK that sits on the device and the app, and authoring. So in general, regardless if the advertiser is a huge CPG or an SMB, it's a very unique piece of technology. So I believe... And by the way, it was used, we don't, you know, we'll see it later on, maybe in the press release, but this technology was used in the largest sports event in the US that was recently aired, if I can be within the boundaries of what we can say, with some of the large advertisers that ran there.

The the advertiser is huge CPG or or S. M. B, it's a very piece unique piece of technology. So I believe.

And by the way was used we don't you know you'll see it later on it maybe in the press release, but this technology was used in the largest sports events in the U S that was recently, Eric if I can be within.

The the the boundaries of what we can say, which some of the large advertisers that render so this is alive and production at massive scale I still feel it's the early days even for the large advertisers to use like click to buy moved to card one of them watch more send me a coupon there's plenty of things you could do I'm using this tool.

Zvika Netter: So this is live in production at massive scale. I still feel it's early days, even for the large advertisers to use, like click to buy, move to cart, want to watch more, send me a coupon. There are plenty of things you could do using this tool.

Zvika Netter: I still think we're at a very small percentage of users, so there's a huge upside there, even with the largest advertisers. As it goes to SMBs, I feel the platforms like, you know, YouTube, and DSPs are the ones who will gain early adoption by SMBs because you don't need massive scale; you can go into a single platform. Where Innovit really shines is when you need to run across multiple walled gardens. Let's call it this way.

I still think we're at a very small percentage of use it. So there's a huge upside there even with the largest advertisers as it goes to Smbs I feel that the platforms like you know Youtube. The dsp's are the ones, who will gain you know early.

The adoption with the Smbs because you don't need massive scale you can go into a single platform, where innovate really shines is when you need to run across multiple walled gardens, let's call. It this way.

Zvika Netter: And in that case, that's where our unique proposition comes in. I absolutely see a world where we'll have those smaller advertisers use these types of technologies. But just to give you a sense, you take the top 200 TV advertisers in the US, they represent about 75% to 80% of the spend. So the actual amount of dollars that SMBs, even medium ones, are really marginal.

And in that case, that's where our unique proposition I, absolutely see a world where we'll have those you know smaller advertiser use these type of technologies, but just to give you a sense you take the top 200 TV advertisers in the U S. They represent about 75% to 80% of the spend so the actual amount of dollars.

F N B's medium is really marginal the real big needle movers are the guys who are in the sorry. The brands, who spent you know billions of dollars on TV and that'll be large cpg's large auto pharma telco and half is with the top 200 are already innovate customers.

Zvika Netter: The real big needle movers are the brands who spend billions of dollars on television, and that'll be large CPGs, large auto, pharma, and telco. And half of the top 200 are already Innovid customers. Our focus, first and foremost, is to get the other half, because then we can get to a point that we have more than 50% market share and will actually be bigger than Google. Hard to believe, but we're actually on a journey to achieve that, and that's where we're laser-focused, not on the mid and long term. It's very helpful. Thank you. This concludes our question and answer session. I would like to turn the floor back over to Zvika for closing comments.

Our focus first and foremost is to get the other half because then well you know we can get to a point that we have more than 50% market share and will be actually bigger than Google, which hard to believe but we're actually on a on a journey to achieve that and that's where we're laser focused not on the mid and long tail.

Very helpful. Thank you.

Thank you.

This concludes our question and answer session I would like to turn the floor back over to the speaker for closing comments.

Zvika Netter: Thank you, Operator, and thank you, everybody, for joining us, as you heard. And thanks to those who congratulated us on the quarter and the year. Definitely, 2023 was, you know, started as a challenging year.

Thank you operator, and thank you everybody for joining as as you heard Doug and thanks for those who congratulated us on the quarter and the year definitely 2023 it was started as a challenging gear I'm extremely proud of the team and with our you know where we.

Zvika Netter: I'm extremely proud of the team. And with our, you know, we added more than half of our executive team, our executives who joined us this year. They got on board, some of them three months ago, some of them like 26 months ago, and some of them, like the chief commercial officer, a year ago. The beauty of it is, in 2023, 2024, everybody's on board, everybody's fully aligned. The goal of everybody joining us was not to deliver Q4. The goal was to deliver 2024-2025, really accelerated growth, double-digit growth, pushing the company towards the Rule of 40 and above, positive free cash flow, and at the same time, as we just spoke about, continue our commitment to innovation, keep releasing products that the market needs that will basically create a better ecosystem for the advertisers, of course, the agencies, the brands, the publishers, and the So very proud, very excited about what's to come, and thank you for being here and listening and following the company, which you all know. Beautiful 2024 and a great day. Thank you very much. This concludes today's teleconference; you may disconnect your lines at this time.

Added more than half of our executive team are executives that joined US. This year they've got on boarded some of them three months ago somebody was like 26 months ago and some of them like the chief commercial officer, a year ago. The beauty of it in 2020 free the 'twenty 'twenty four everybody's on board everybody's fully aligned the goal of everybody Joy.

This was not.

To deliver Q4, the goal was to deliver 'twenty 'twenty four 'twenty twenty-five really accelerated growth double digit growth pushing the companies Suez rule of 40 and above positive free cash flow at the same time as we just spoke about continuing our commitment to innovation keep releasing products that the market needs that will basically.

Right, a better ecosystem for the advertisers the of course the agencies the brands the publishers and the viewers himself because their their time is dedicated to making this industry. So.

So successful so a very proud very excited about what's to come in.

You for being here and listening in following the company and which you all know a beautiful 'twenty 'twenty four and a great day. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: Thank you for your participation, and Shweta Khajuria. Thank you. Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid, Dan Salmon, Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovidid, Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid, Shweta Khajuria, Dan Salmon, John Williams, Shyam Patil, Brinlea Johnson, Innovid and Shweta Khajuria. Thank you. Thank you.

[music].

Hum.

Hum.

Hum.

Yeah.

Yeah.

Yeah.

Okay.

Yeah.

Yeah.