Q2 2024 Viant Technology Inc Earnings Call
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Antibody: Hello, everyone and welcome to violent technologies second quarter 2024 earnings Conference call. My name is antibody and I will be your operator today.
Before I hand, the call over to the buy out leadership team I'd like to go over just a few housekeeping notes for the program as.
Antibody: As a reminder, this call is being recorded.
Antibody: After the Speakers' remarks, there will be a question and answer session. If you plan to ask a question. Please ensure you have set your zoom named to display your full name and firm if.
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Antibody: If you would like to ask a question. During this time of please use the raise hand function located at the bottom of your screen.
Antibody: Thank you for your attendance today and I will now turn the call over to Nicole Kuntzman from the Blue shirt group.
Nicole Kuntzman: Thank you and good afternoon, and welcome to buying technologies second quarter 2024 earnings conference call on the call today are Tim banner Hug co founder and Chief Executive Officer, Chris Senner Hug co founder and Chief operating Officer, and Larry Madden Chief Financial Officer.
Speaker Change: Make sure I remind you that we will make forward looking statements on our call today, including but not limited to our guidance for Q3 2020 for our platform development initiatives and industry trends that are based on assumptions and subject to future events risks and uncertainties that could cause actual results to differ materially from those projected these forward looking.
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Speaker Change: Statements speak only as of today and we undertake no obligation to update or revise these statements except as required by law.
Speaker Change: For more information about factors that may cause actual results to differ materially from forward looking statements and our entire safe Harbor statement. Please refer to the news release issued today as well as the risks and uncertainties described in our quarterly report on Form 10-Q for the quarter ended June 32024 under the heading risk factors and in our filing.
As with the SEC.
Speaker Change: During today's call. We will also present, both GAAP and non-GAAP financial measures additional disclosures regarding these non-GAAP measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release issued today and in our earnings presentation, which has been posted on the Investor Relations page of the company.
Speaker Change: [noise] website and in our filings with the SEC I would now like to turn the call over to Tim Banner Hook, Chief Executive Officer about Tim.
Speaker Change: Thanks, Nicole and thanks, everyone for joining US today, we saw continued momentum in the second quarter with record Advertiser spend on our platform a notable milestone that exceeded our seasonally strong Q4 of 2023 <unk>.
Speaker Change: <unk> revenue in Q2 grew 15% year over year, while contribution ex Tac grew 23% our ongoing focus on improving efficiency and disciplined expense management continues to drive outperformance in adjusted EBITDA, which increased 41% year over year to nine.
Speaker Change: One 6 million in the quarter.
Speaker Change: I am pleased with our team's ongoing commitment to innovation and execution, which drove our consistency and strong results.
Speaker Change: We remain laser focused on building on our differentiated position as one of only a couple of independent self service buy side platforms in the market.
Speaker Change: As advertisers look for alternatives to the largest legacy players in the industry via is capitalizing on the shifting sentiment and committed to growing our market share across the programmatic advertising market.
Speaker Change: Discussions across the ecosystem such as the department of Justice's antitrust lawsuit against Google demonstrated that advertisers are unhappy with the dominating behavior of a handful of players in the industry.
Speaker Change: Many AD Tech partners are frustrated with the centralized power exerted over the ecosystem our ability to capitalize on this changing sentiment is reflected in our results and the growing number of partnerships and integrations we are building.
Speaker Change: Major content owners data companies agencies, and advertisers are coming to us for an alternative solution to the largest D. S piece in the market.
Speaker Change: We believe we are uniquely positioned to capitalize on this changing sentiment.
Speaker Change: A key area of differentiation for US is our vision brought autonomous advertising supported by our award winning and ever evolving suite of AI products and features.
Speaker Change: Today, I am thrilled to announce a significant milestone in our journey.
Speaker Change: Given the amount of AI related initiatives and development, we are ready to properly brand. Our AI suite. So today, we are announcing the rebranding of our AI suite under the name via AI.
Via an AI is designed to revolutionize digital AD campaigns by seamlessly crafting high impact multichannel AD experiences that reach the right audience at the right time with precision.
Speaker Change: We are rebranding our suite of AI products previously announced his bid optimizer chat with data and AI recommendations under via AI.
Speaker Change: Via an AI is focused on developing AI agents that deliver automation for the four key components of programmatic advertising planning buying and measurement and optimization.
Speaker Change: Under planning our latest innovation is a large language model or L. L M.
Speaker Change: <unk> already launched internally it delivers comprehensive omnichannel media plans in seconds.
Speaker Change: This L. O M has been heavily train on thousands of AD campaigns encompassing years' worth of historical AD spend enabling us to create high impact media plans that are designed to achieve the goals of any advertiser.
Speaker Change: This includes selecting high quality CTV apps mobile apps websites and digital out of home locations. It makes recommendations of campaign budgets across channels like display CTV streaming audio and digital out of home.
Speaker Change: We are showcasing this to clients now and are receiving tremendous feedback.
Speaker Change: Under buying we released version two of our bid optimizer in Q2, the improvements achieved with version two our substantial and Chris will talk more about this in a bit.
Chris: For measurement, we previously announced chat with data, which is continuing to be tested internally with live customer data. We have made great strides and expect this product to be out in Q4.
Chris: Our final phase towards full autonomy is the application of autonomous optimization, which we expect to release in 2025.
Chris: This will be an AI driven agent that dynamically adjust campaigns in real time, employing advanced AD strategies like channel allocation publisher selection day partying and audience discovery.
Chris: Investing in buying AI is investing in the future of advertising. We are excited about the transformative impact that will have and we'll look forward to sharing more updates as we progress.
Speaker Change: Our vision is resonating with customers, who are continuing to scale with us as evidenced by the expansion. We are seeing with our largest customer cohort are top 100 customers, where we have grown contribution ex Tac, 29% on a trailing 12 month basis.
Speaker Change: We are scaling well with our agency partners and continue to add new advertisers within these agencies, which we believe is a testament to the superior service and results we are driving for them.
Speaker Change: We expect to continue to capitalize on the market tailwind in our favor and drive more spend from existing customers.
Speaker Change: We also have had great success this year, attracting new customers to our platform, which Larry will talk more about shortly.
Larry: Our pipeline of large customers continues to grow and we feel very good about our ability to win more of these advertisers over the long term.
Larry: Our success with customers is also driven by our focus and investments into the fastest growing channels and programmatic.
Larry: Notably CTV and streaming audio.
Larry: We continued to see particularly strong momentum in these channels with both reaching record spend levels in the quarter.
The growth in CTV spend on our platform continues to outpace the market growing more than 40% year over year in the quarter, while streaming audio almost doubled year over year.
Together these channels represented more than 50% of spend on our platform in the quarter.
Larry: We expect them to continue to see outsized growth relative to other programmatic channels as they provide access to some of the most premium content in the market at scale.
Larry: While also allowing for advanced targeting and measurement capabilities. Despite E absence of cookies.
Larry: We are continuing to make investments in our direct access program, which gives our customers more seamless access to these channels and Chris will touch on this in a bit more.
Chris: In addition, our patented household <unk> technology continues to be a differentiator for us in the market, enabling customers to plan buy and measure campaigns across all channels, regardless of the presence of cookies.
Speaker Change: Before turning things over to Chris I wanted to share some thoughts on Google's recent announcement to reverse course on cookie deprecation.
We touched on this briefly last quarter, but this news doesn't change our overall vision of making programmatic advertising easier more efficient and more effective for our customers with leading measurement and targeting capabilities across all ad formats.
Chris: CTV as a core driving force across the AD industry as a whole beyond even linear television and social channels and the only way to plan execute and measure Omnichannel campaigns to include CTV is with alternative at identifiers, such as our household I D.
Chris: As we noted last quarter less than 10% of spend across our platform Leverages third party cookies and we see this number continuing to shrink over time, given the industry's increasing focus on cookie free channels like CTV.
If anything we believe this announcement from Google is helpful for the industry as it eliminates the uncertainty overhang that has been complicating the landscape for the last few years.
Chris: Our long term strategy and focus remain unchanged and we look forward to continuing to drive growth and capture share in this very large and growing market for programmatic advertising with that I'll turn it over to Chris.
Chris: Thanks, Tim.
Chris: I wanted to spend a few minutes today on our recent product updates and dig deeper on some of the positive business dynamics that we are saying.
Chris: We were excited to officially rollout bid optimizer 2.0 in June.
Chris: It is driving significant savings over what we saw in version one point out as a reminder, bid optimizer is an AI AI agent bidding solution, which enables marketers to achieve better bid price discovery real time data processing and predictive AD performance saving customers time and money by achieving.
Chris: Lower CPM and driving higher return on Ad spend.
Our upgraded solution is powered by a deep learning neural network trained on bias entire midstream and is capable of processing millions of requests per second.
Bid Optimizer also now running on over 65% of the impressions on our platform up from 50% under version, one Plano, which notably expands the number of impressions and potential cost savings that we can pass along to our customers.
Chris: A powerful example of customer savings with bit Optimizer has been juice media, who began using the product in Q3 2023.
Speaker Change: They share that they have seen significant savings in media costs and for one client in particular, they tripled their performance with the help of bit optimizer.
Speaker Change: This feedback shows that our customers are benefiting from our cost savings and better performance, which is driven more spend to our platform since its rollout.
Speaker Change: One an offline activity, which is becoming increasingly important for customers.
Speaker Change: We're excited about the early adoption, we're seeing and we expect to continue to build on that optimize the two point L drive incremental savings for our customers.
Speaker Change: We have seen that the marketers are willing to pay for advanced reporting because they are losing signal in certain channels and are having a hard time figuring out what is really driving campaign performance.
Speaker Change: Next we are seeing continuing increased demand for our advanced reporting solutions, which are becoming a meaningful driver of contribution ex Tac.
Speaker Change: Within walled gardens advertisers get data on attribution and last click behavior.
Speaker Change: These solutions provide advertisers with closed loop return on AD spend as well as lift and incrementally reported integrating both online and offline activity, which is becoming increasingly important for customers.
Speaker Change: But clients are getting smarter and are really looking for reliable data that shows what's driving incremental contribution or incremental sales.
Speaker Change: Customers value the capabilities and completeness of the advanced reporting solutions, we offer and we expect these products will continue to drive revenue and contribution ex Tac in the coming quarters.
Speaker Change: We have seen that marketers are willing to pay for advanced reporting because they are losing signal in certain channels and are having a hard time figuring out what is really driving campaign performance.
Speaker Change: Another dynamic at play in the industry is the acceleration of screaming in the growing dissatisfaction with walled gardens, which is driving more dollars to CTV.
Speaker Change: Within walled gardens advertisers get data on attribution and last click behavior, but clients, we're getting smarter and are really looking for reliable data that shows what's driving incremental contribution or incremental sales.
Speaker Change: Analytics prove out that CTV drives incremental impact and outcomes, where the walled gardens merely show ads to people who are already going to make purchase. This is why so many consumers continue to see ads for products and companies that they already byproduct.
Speaker Change: Customers value the capabilities and completeness of the advanced reporting solutions, we offer and we expect these products will continue to drive revenue and contribution ex Tac in the coming quarters.
Speaker Change: The data is clear that CTV is the most impactful channel for creating new demand.
Speaker Change: Another dynamic at play in the industry is the acceleration of screaming in the growing dissatisfaction with walled gardens, which is driving more dollars to CTV.
Speaker Change: We show clients all the time that if you want to grow your revenue allocate more dollars to CTV.
Speaker Change: Analytics prove out that CTV drives incremental impact and outcomes, where the walled gardens merely show ads to people who are already going to make purchase. This is why so many consumers continue to see ads for products and companies that they already byproduct.
Speaker Change: Our direct access offering in CTV is a significant differentiator for us and a major reason why advertisers are increasingly choosing the <unk> DSP.
Speaker Change: There are a number of benefits and direct access that are driving customer adoption.
Speaker Change: The first is that we are targeting logged in users of premium CTV content owners, which enables the same address ability as walled gardens.
Speaker Change: The data is clear that CTV is the most impactful channel for creating new demand.
Speaker Change: We show clients all the time that if you want to grow your revenue allocate more dollars to CTV.
Speaker Change: Second is that we are bringing the world's most premium content directly to advertisers and eliminating non value added middlemen.
Our direct access offering in CTV is a significant differentiator for us and a major reason why advertisers are increasingly choosing the via D. S. P.
Speaker Change: This lowers the price of premium CTV NR platform because clients know they are buying directly from the source.
Speaker Change: There are a number of benefits and direct access that are driving customer adoption.
Speaker Change: The quality and scale of the content partners, who have joined direct access is an incredible list now includes Disney Paramount Warner Brothers Discovery, NBC, Universal Roku, Samsung Vizio, and many other premium content owners and platforms.
Speaker Change: The first is that we are targeting logged in users of premium CTV content owners, which enables the same addressable witty as walled gardens.
Speaker Change: Second is that we are bringing the world's most premium content directly to advertisers and eliminating non value added the middleman.
Speaker Change: Advertisers today much prefer structuring campaigns around premium publisher content over user generated content on social channels.
Speaker Change: This lowers the price of premium CTV and our platform because clients know they are buying directly from the source book.
Speaker Change: And third we are experiencing a new paradigm with the accelerating rise of streaming and the growing dissatisfaction with the walled gardens.
Speaker Change: The quality and scale of the content partners, who have joined direct access is an incredible list. The now includes Disney Paramount Warner Brothers Discovery, NBC, Universal Roku, Samsung Vizio, and many other premium content owners and platforms.
Speaker Change: With the larger players trying to set the rules for AD Tech.
Speaker Change: As we continue to scale, our direct access program, we provide improved address ability and industry, leading measurement to deliver real contribution for advertisers.
Speaker Change: Advertisers today must prefer structuring campaigns around premium publisher content over user generated content on social channels.
Speaker Change: Our direct access program continues to resonate with advertisers and in Q2, well over half of our CTV spend came through direct access more than twice the amount of spend versus the prior year period.
Speaker Change: And third we are experiencing a new paradigm with the accelerating rise of streaming and the growing dissatisfaction with the walled gardens.
Speaker Change: With the larger players trying to set the rules for AD Tech as.
Speaker Change: We expect this trend to continue moving forward given the superior performance that our clients are experiencing due to the content quality address ability transparency and efficiency offered by direct access.
Speaker Change: As we continue to scale, our direct access program, we provide improved addressable <unk> and industry, leading measurement to deliver real contribution for advertisers.
Speaker Change: And finally, I want to add to what Tim touched on in terms of our differentiation in the market regardless of the presence of cookies across the ecosystem.
Speaker Change: Our direct access program continues to resonate with advertisers and a Q2 well over half of our CTV spend came through direct access more than twice the amount of spend versus the prior year period.
Speaker Change: We recently conducted conducted a market test in conjunction with Havas Media network, one of the largest media holding companies in the world to measure the effectiveness of our household IV versus cookies.
We expect this trend to continue moving forward given the superior performance that our clients are experiencing due to the content quality addressable 80, transparency and efficiency offered by direct access.
Speaker Change: The test was run for a client in the health care space to compare the success rates of two campaigns, one conducted using cookies and the other using the household IV.
Speaker Change: And finally, I want to add to what Tim touched on in terms of our differentiation in the market regardless of the presence of cookies across the ecosystem.
Speaker Change: The cookie less approach, which leverages, our household <unk> technology achieved 100% scale and a 93% unique reach across premium publishers, demonstrating how our platform delivers a scalable identity solution for their clients.
Speaker Change: We recently conducted conducted a market test in conjunction with Havas Media network, one of the largest media holding companies in the world to measure the effectiveness of our household IV versus cookies.
Speaker Change: Other cookie less tests have been done with other platforms that have had underwhelmed results as they have stalled out and theyre scaling and scaling their alternative IV solutions compared to cookies, where the Avaya household IV is scaled across approximately 80% of all AD opportunities competitive alternate ivs are avail.
Speaker Change: The test was run for a client in the health care space to compare the success rates of two campaigns, one conducted using cookies and the other using the via household Eddie the cookie less approach, which Leverages. Our household I lead technology achieved 100% scale and a 93% unique reach across premium publishers demonstrating.
Speaker Change: Less than 15% of the time. This is a great example of our leadership in this area.
Speaker Change: How our platform delivers a scalable identity solution for their clients.
Speaker Change: And with that I'll turn the call over to Larry to provide more detail on our financial performance Larry.
Speaker Change: Other cookie less tests have been done with other platforms that have had underwhelmed results as they have stalled out and they're scaling in scaling their alternative IV solutions compared to cookies, where the via household IV is scaled across approximately 80% of all AD opportunities competitive alternate ivs are available.
Larry: Thank you Chris before I begin I would like to remind everyone that we've posted a presentation to our investor Relations website that includes supplemental financial information to accompany today's call.
As Tim discussed we continued our strong momentum in the second quarter, where we achieved record spend on our platform and 23% growth in contribution ex Tac.
Speaker Change: Less than 15% of the time. This is a great example of our leadership in this area.
Speaker Change: And with that I'll turn the call over to Larry to provide more detail on our financial performance Larry.
Revenue and contribution ex Tac or both towards the high end of our guidance ranges and we once again outperformed on adjusted EBITDA.
Larry: Before I begin I'd like to remind everyone that we've posted a presentation to our investor Relations website that includes supplemental financial information to accompany today's call.
Larry: Our success in CTV and streaming audio continued to be a big driver of performance in the quarter with record spend across both channels.
Larry: As Tim discussed we continued our strong momentum in the second quarter, where we achieved record spend on our platform and 23% growth in contribution ex Tac.
Larry: On a combined basis CTV and streaming audio spend grew nearly 50% year over year in Q2 and represented over 50% of total spend on our platform for the quarter.
Tim: Revenue and contribution ex Tac were both towards the high end of our guidance ranges.
Tim: We once again outperformed on adjusted EBITDA.
Larry: We also continued to benefit from increased customer adoption across our AI product suite, which drove meaningful incremental revenue and contribution ex Tac in the quarter.
Speaker Change: Our success in CTV and streaming audio continued to be a big driver of performance in the quarter with record spanned across both channels.
Larry: As Tim discussed there is a shifting sentiment in the market, where advertisers and partners are looking for alternatives outside of the larger legacy players in the industry.
Speaker Change: On a combined basis see TV and streaming audio spend grew nearly 50% year over year in Q2.
Speaker Change: This dynamic is further.
Speaker Change: Represented over 50% of total spend on our platform for the quarter.
Tim: Enabling us to continue scaling our existing customers, while also adding new larger mid market customers to our platform.
Speaker Change: We also continued to benefit from increased customer adoption across our AI product suite, which drove meaningful incremental revenue and contribution ex Tac in the quarter.
Speaker Change: And as one of the few independent self serve buy side platforms in the market, we expect that trend to continue moving forward.
Speaker Change: As Steve discussed there is a shifting sentiment in the market, where advertisers and partners are looking for alternatives outside of the larger legacy players in the industry.
Speaker Change: In terms of existing customers on a trailing 12 month basis through Q2, the number of percent of spend customers generating over $500000 of contribution ex Tac increased nearly 30% and the number of percentage of spend customers generating over $1 million of contribution ex Tac increased by nearly four.
Steve: This dynamic is further enabled enabling us to continue scaling our existing customers, while also adding new larger mid market customers to our platform.
Speaker Change: And as one of the few independent self serve buy side platforms in the market, we expect that trend to continue moving forward.
Speaker Change: 40% on a year over year basis.
Speaker Change: We're also really pleased with the rapid scaling of new customers as the top 20 customers added in the past year generated on average nearly 300000 of contribution ex Tac during the period.
In terms of existing customers on a trailing 12 month basis through Q2, the number of percent of spend customers generating over $500000 of contribution ex Tac increased nearly 30% and the number of percent of spend customers generating over a million of contribution ex Tac increased by nearly.
Speaker Change: These positive customer trends.
Speaker Change: Abled us to continue outpacing overall market growth.
Speaker Change: With that I'll now turn to our results for the second quarter.
Speaker Change: <unk>, 40% on a year over year basis.
Speaker Change: Revenue for the quarter was $65 9 million, an increase of 15% versus the prior year period and in the upper half of our guidance range on a quarter over quarter basis revenue increased 23% from Q1.
Speaker Change: We were also really pleased with the rapid scaling of new customers as the top 20 customers added in the past year generated on average nearly 300000 of contribution ex Tac during the period.
Speaker Change: Contribution ex tax for the quarter was $41 6 million, an increase of 23% versus the prior quarter. Our prior year period and also in the upper half of our guidance range.
Speaker Change: These positive customer trends have enabled us to continue outpacing overall market growth.
Speaker Change: With that I'll now turn to our results for the second quarter.
Speaker Change: Revenue for the quarter was $65 9 million, an increase of 15% versus the prior year period and in the upper half of our guidance range on.
Speaker Change: On a quarter over quarter basis contribution ex Tac increased 22% from Q1.
Speaker Change: In terms of customer verticals.
Speaker Change: On a quarter over quarter basis revenue increased 23% from Q1.
Healthcare consumer goods travel public services and automotive were the biggest drivers of growth in the quarter.
Speaker Change: Contribution ex Tac for the quarter was 41.6 million, an increase of 23% versus the prior quarter beat by a prior year period and also in the upper half of our guidance range.
Speaker Change: In terms of channels.
Speaker Change: TV and streaming audio are increasing and strategic value for customers and continue to drive meaningful growth on our platform.
Speaker Change: CTV achieved record spend levels in the quarter growing over 40% on a year over year basis, and representing more than 40% of total spend on the platform.
Speaker Change: On a quarter over quarter basis contribution ex Tac increased 22% from Q1.
In terms of customer verticals.
Speaker Change: Health care consumer goods travel public services and automotive were the biggest drivers of growth in the quarter.
Speaker Change: Streaming audio also achieved record spend levels in the quarter nearly doubling on a year over year basis, and representing almost 10% of total spend on the platform.
Speaker Change: In terms of channels CTV is streaming audio are increasing and strategic value for customers and continue to drive meaningful growth on our platform.
Speaker Change: Customers are leveraging our household IV technology to execute their omnichannel campaigns across these high engagement <unk> channels.
Speaker Change: CTV achieved record spend levels in the quarter growing over 40% on a year over year basis, and representing more than 40% of total spend on the platform.
Speaker Change: Direct access also king continues to be a differentiator for us providing customers with higher return on AD spend versus other platforms.
Speaker Change: Dreamy audio also achieved record spend levels in the quarter nearly doubling on a year over year basis, and representing almost 10% of total spend on the platform.
Speaker Change: In terms of formats video, which includes CTV continues to represent over 60% of total spend on our platform in the quarter.
Speaker Change: Customers are leveraging our household IV technology to execute their omnichannel campaigns across these higher engagement cookie less channels.
Speaker Change: And video and audio on a combined basis represented over 70% of total spend in the quarter.
Speaker Change: Turning now to operating expenses for the quarter.
Speaker Change: Direct access also king continues to be a differentiator for us providing customers with higher return on AD spend versus other platforms.
Speaker Change: Our non-GAAP operating expenses totaled $32 million in Q2, representing an increase of 3% over Q1 and 19% over the prior year period, we remained.
Speaker Change: In terms of formats video, which includes CTV continues to represent over 60% of total spend on our platform in the quarter.
Speaker Change: Focused on making strategic investments in our business, specifically around our technology and AI initiatives to best position ourselves for long term market share gains and increasing profitability.
Speaker Change: In video and audio on a combined basis represented over 70% of total spend in the quarter.
Speaker Change: Turning now to operating expenses for the quarter.
Speaker Change: As we invest we also remain hyper focused on driving efficiencies internally and to that end, we have been able to increase contribution ex tac per employee by over 20% over the last 12 months.
Speaker Change: Our non-GAAP operating expenses totaled $32 million in Q2, representing an increase of 3% over Q1 and 19% over the prior year period.
Speaker Change: We remain focused on making strategic investments in our business, specifically around our technology and AI initiatives to best position ourselves for long term market share gains and increasing profitability.
For the second quarter, we generated adjusted EBITDA of $9 6 million above the high end of our guidance and representing an increase of over 41% over the prior year period, and an increase of over of more than 200% over the prior quarter.
Speaker Change: As we invest we also remain hyper focused on driving efficiencies internally and to that end, we have been able to increase contribution ex tac per employee by over 20% over the last 12 months.
Speaker Change: Adjusted EBITDA margin as a percentage of contribution ex Tac was 23% for the quarter an improvement of three percentage points from the prior year period, and 14 percentage points from the prior quarter.
Speaker Change: For the second quarter, we generated adjusted EBITDA of $9 6 million above the high end of our guidance and representing an increase of over 41% over the prior year period, and an increase of over of more than 200% over the prior quarter.
Speaker Change: For the second quarter GAAP net income totaled $1 5 million, which compares to a GAAP net loss of $3 2 million in the prior year period.
Speaker Change: GAAP earnings per class a share were breakeven in the second quarter, which compares to a GAAP loss per ship per class a share or seven in the prior year period.
Speaker Change: Adjusted EBITDA margin as a percentage of contribution ex Tac was 23% for the quarter an improvement of three percentage points from the prior year period, and 14 percentage points from the prior quarter.
non-GAAP net income, which excludes stock based compensation and other items totaled $7 2 million for the quarter, which compares to non-GAAP net income in the prior period of $5 1 million, representing an impressive 41% year over year improvement.
Speaker Change: For the second quarter GAAP net income totaled $1 5 million, which compares to a GAAP net loss of $3 2 million in the prior year period.
Speaker Change: GAAP earnings per per class a share were breakeven in the second quarter, which compares to a GAAP loss per ship per class a share or seven cents in the prior year period.
Speaker Change: non-GAAP earnings per class a share totaled eight <unk> in the quarter, which compares to 6% in the prior year period.
Speaker Change: In terms of share count we ended the quarter with $63 4 million shares outstanding consisting of $16 4 million class a shares and 47 million class B shares.
Speaker Change: non-GAAP net income, which excludes stock based compensation and other items totaled 7.2 million for the quarter, which compares to non-GAAP net income in the prior period, a $5.1 million, representing an impressive 41% year over year improvement.
Speaker Change: We also ended the quarter with $210 million in cash and cash equivalents, and we had $227 million of working capital and no debt at quarter end and we continue to have access to a $75 million Undrawn Undrawn credit facility.
Speaker Change: non-GAAP earnings per class a share totaled eight cents in the quarter, which compares to 6% in the prior year period.
Speaker Change: In terms of share count we ended the quarter with $63 4 million shares outstanding consisting of 16.4 million class a shares and 47 million class B shares.
Speaker Change: In Q2, we also generated $14 million of cash flow from operations and $10 million of free cash flow.
Speaker Change: Yeah.
Speaker Change: Since the inception of our share repurchase program in early May 2024, we repurchased a total of 809000 shares of class a common stock for approximately $8 million in cash through August 19, 2024.
Speaker Change: We also ended the quarter with $210 million in cash and cash equivalents, and we had $227 million of working capital and no debt at quarter end and we continue to have access to a $75 million on drawing undrawn credit facility.
Speaker Change: Accordingly, we have $42 million remaining on our $50 million authorized repurchase program.
Speaker Change: In Q2, we also generated $14 million of cash flow from operations and $10 million of free cash flow.
Speaker Change: Turning now to our outlook for the third quarter of 2024, we currently expect revenue in the range of $67 5 million to $70 5 million representing a year over.
Speaker Change: <unk>.
Speaker Change: Since the inception of our share repurchase program in early May 'twenty 'twenty four we repurchased a total of 809000 shares of class a common stock for approximately $8 million in cash through August 19, 2024.
Speaker Change: Year over year increase of 16% and a quarter over quarter increase of 5% at the midpoint.
Speaker Change: Accordingly, we are $42 million remaining on our $50 million authorized repurchase program.
Speaker Change: Contribution ex Tac is expected to be in the range of $44 million to $46 million, representing year over year growth of 15% and quarter over quarter growth of 8% at the midpoint.
Speaker Change: Turning now to our outlook for the third quarter of 2024, we currently expect revenue in the range of $67 5 million to $70 5 million, representing a year over year.
Speaker Change: non-GAAP operating expenses are expected to be between 33 and $34 million in Q3, representing a year over year increase of 14% and a quarter over quarter increase of 5% at the midpoint.
Speaker Change: Year over year increase of 16% and a quarter over quarter increase of 5% at the midpoint.
Speaker Change: Contribution ex Tac is expected to be in the range of $44 million to $46 million, representing year over year growth of 15% and quarter over quarter growth of 8% at the midpoint.
Speaker Change: We expect adjusted EBITDA to be in the range of $11 million to $12 million, which represents a year over year increase of 19% and a quarter over quarter increase of 20% at the midpoint.
Speaker Change: non-GAAP operating expenses are expected to be between 33 and $34 million in Q3, representing a year over year increase of 14% and a quarter over quarter increase of 5% at the midpoint.
Speaker Change: And finally, we expect an adjusted EBITDA margin as a percentage of contribution ex Tac of 26% at the midpoint.
Speaker Change: In closing.
Speaker Change: We are excited by the momentum we're seeing across our business our existing customers are increasing spend on our platform and we are adding new scalable customers to the mix.
Speaker Change: We expect adjusted EBITDA to be in the range of $11 million to $12 million, which represents a year over year increase of 19% and a quarter over quarter increase of 20% at the midpoint.
Our leadership position across CTV and streaming audio driven in part by the value of our household IV and direct access program continues to play a pivotal part in our overall growth and market share gains.
Speaker Change: And finally, we expect an adjusted EBITDA margin as a percentage of contribution ex Tac of 26% at the midpoint.
Speaker Change: And the increasing adoption across our expanding AI products suite is driving performance for our customers and incremental growth for the business we.
Speaker Change: In closing.
Speaker Change: We are excited by the momentum we're seeing across our business our existing customers are increasing spend on our platform and we are adding new scalable customers to the mix.
Speaker Change: We remain ultra focused on building on this momentum in the quarters ahead.
Our leadership position across CTV and streaming audio driven in part by the value of our household IV and direct access program continues to play a pivotal part in our overall growth and market share gains.
Speaker Change: And with that I will now turn it back over to the operator to open the line for questions operator.
Speaker Change: Thank you for that.
Speaker Change: The increasing adoption across our expanding AI products suite is driving performance for our customers and incremental growth for the business.
Speaker Change: And the first question comes from Andrew Merrick at Raymond James Your line is open.
We remain ultra focused on building on this momentum in the quarters ahead.
Andrew Merrick: Hello, Thank you for taking my questions and congrats on the results.
Speaker Change: And with that I will now turn it back over to the operator to open the line for questions operator.
Andrew Merrick: Wanted to talk a little bit about the size of the opportunity remaining obviously very early days on the AI side, but hearing the tailwind that it is providing to the entry to the business is interesting I guess can you just give a sense of the penetration rates youre seeing with these AI enabled services among your clients right now and is it just kind of.
Speaker Change: Thank you for that.
Speaker Change: The first question comes from Andrew Merrick at Raymond James Your line is open.
Speaker Change: A solution by solution approach or is it sort of a.
Speaker Change: You get one you get them all.
Andrew Merrick: Hello, Thank you for taking my questions and congrats on the results wanted to talk a little bit about the size of the opportunity remaining obviously very early days on the AI side, but hearing the tailwind that is providing to the entry to the business is interesting I guess can you just give a sense of the penetration rates youre seeing.
Speaker Change: Hi, Andrew it's Tim and thanks for the comments on the quarter, it's good to see you.
Speaker Change: Overall long term, we do see it as a suite of solutions that work together and that's again going against our goal towards autonomous advertising and we tried to outline the four pillars, where we're automating all of those functions.
Speaker Change: With these AI enabled services among your clients right now and is it just kind of a solution by solution approach or is it sort of a you know you get one you get them all.
Speaker Change: In some of our prepared remarks. So currently it has been solution by solution, we talked about the second generation of bit optimizer now up to 65% of all impressions and we've seen tremendous adoption. There I think when we complete the autonomous side at some point in 2025 the ideas out there.
Speaker Change: Hi, Andrew it's Tim and thanks for the comments on the quarter. It's good to see you yeah. It overall long term, we do see it as a suite of solutions that work together and that's again going against our goal towards autonomous advertising and we tried to outline the four pillars, where we're automating all of those functions.
Speaker Change: We're all working together.
Speaker Change: Okay, great. Thank you for that and then maybe a quick one on direct access so an impressive list of publisher partners. Her there, but maybe one that was Ah can.
And in some of our prepared remarks. So currently it has been solution by solution, we talked about the second generation of bit optimizer now up to 65% of all impressions and we've seen tremendous adoption. There I think when we complete the autonomous side at some point in 2025 the IDE.
Speaker Change: Conspicuous in <unk> was Netflix.
Speaker Change: As they're kind of building out their AD tech stack and the.
Kind of future of their ads business, one how do you see that playing out into how do you see your role potentially in that thank you.
Speaker Change: Is that Theyre all working together.
Speaker Change: Thanks for that too so all of that.
Speaker Change: Okay, great. Thank you for that and then maybe a quick one on direct access so an impressive list of of publisher partners are there, but maybe one that was a conspicuous in thousands was Netflix.
Speaker Change: Net flix.
Speaker Change: We're going to remain on the on the buy side and we have.
Speaker Change: There was a list of partners announced their magnet being one of them and.
Speaker Change: And so we will have access to that.
Speaker Change: As they're kind of building out their AD tech stack and the.
Speaker Change: We think in the U S. It's a we don't think it's a very scaled.
Speaker Change: <unk> base at this point Amit is another of our other markets.
Speaker Change: Future of their ads business, one how do you see that playing out into how do you see your role potentially in that thank you.
Speaker Change: We operate in the U S. So.
Speaker Change: Haven't been a big area for demand from our customers, yet, but I think as they get more scale on that certainly will pick up.
Speaker Change: Great. Thanks for that Jay so on Netflix.
Speaker Change: We're going to remain on the on the buy side and we have.
Speaker Change: And then there was a list of partners and out there a magnet being one of them and so we will have access to that we think in the U S. It's a we don't think it's a very scaled.
Speaker Change: Your next question comes from Craig Hallum.
Jason <unk> from Craig Hallum.
Speaker Change: Your line is now open.
Speaker Change: Yeah.
Speaker Change: Consumer base at this point Amit is another of our other markets and we operate in the U S. So hasn't been a big area for demand from our customers, yet, but I think as they get more scale on that certainly will pick up.
Speaker Change: Can you guys hear me, Okay, Yes, hi, Jason Hey.
Speaker Change: Hey, guys nice quarter here <unk>.
Speaker Change: <unk> had the AI or the autonomous solutions in the market for a few quarters. Just curious any pushback you get from advertisers anybody hesitant to adopt these solutions are maybe waiting for more proof points before they jump in.
Speaker Change: Your next question comes from Craig Hallum.
Speaker Change: Yes, I think the number one thing that we look to get there is always a trust factor you've got to get to all with clients and the number one thing that we always focus on is we need to show the customer value right upfront. So marketers all will come in and they'll they'll opt entities.
Tracing heyer: Tracing heyer from Craig Hallum.
Speaker Change: Your line is now open.
Tracing heyer: You guys hear me, Okay, Yes, hi, Jason.
Craig Hallum: Hey, guys, a nice quarter here.
Speaker Change: You've had the the AI or the autonomous solutions in the market for a few quarters. Just curious any pushback you get from advertisers anybody hesitant to adopt these solutions are maybe waiting for more proof points before they jump in.
Speaker Change: These features are products and they are like that optimizer, they instantly see the savings.
Speaker Change: Virtual one point <unk> was about 35% savings and we are seeing a significant increase over that two point of sale and Thats. Why you saw the adoption rate get up to around 65% in version two point al coming off a wildfire Ralph I know was just about 50%. So when you prove out the customer value then they really trusted.
Speaker Change: Yeah, I think the number one thing that we look to get there is a there is always a trust factor you've got to get to a with clients and the number one thing that we always focus on is we need to show the customer value right upfront. So marketers all will come in and they'll they'll opt entities entities features or products and they are like that optimizer. They instantly soon.
Speaker Change: They're opting into those so.
Speaker Change: That's just a big area of focus that we really we're really trying to hammer home before we release anything.
Speaker Change: Savings.
Speaker Change: <unk> one point <unk> was about 35% savings and we're seeing a significant increase over that of two point L. Hence that's why you saw the adoption rate get up to around 65% in version two point L coming off a wildfire one fine I was just about 50%. So when you prove out the customer value then they they really trusted in there.
Speaker Change: Yeah, and I would just say in terms of customer pushback no. They just want to make sure. It's accurate so bit optimizer proves that out chat with data, which is taking someone's spoken language and converting it to sequel query and getting into the database theres, probably higher areas of concern there to make sure that the sequel is correct and the numbers that we're looking at.
Speaker Change: We're opting into those so that's that's just a big area of focus that we really that we're really trying to hammer home before we release any of them.
Speaker Change: Our accurate so I wouldn't call it pushback, but I'd certainly say it.
Speaker Change: It's looked at under a bigger microscope.
Speaker Change: And I would say too with all of these products.
Speaker Change: Yeah, and I would just say in terms of customer pushback no. They just want to make sure. It's accurate so bit optimizer proves that out chat with data, which is taking someone's spoken language and converting it to sequel query and getting into the database theres, probably higher areas of concern there to make sure that the sequel is correct and the numbers Theyre looking at.
Speaker Change: Youre really trying to elevate the human traders on the platform, we're trying to elevate their performance and we really see it eases. These are like these are assistance to them that are really helping supercharged our efforts.
Speaker Change: Our machine can given insight, but it's really the human that drives it to a strategic insight. So we see that really playing really well customers as we roll out new products.
Speaker Change: Our accurate so I wouldn't call it pushback, but I'd certainly say, it's looked at under a bigger microscope.
Speaker Change: That's helpful to hear what advertisers are looking for one follow up you made the point that large marketers are looking for alternatives to kind of the biggest industry participants maybe how does that.
Speaker Change: I would say too with all these products.
Speaker Change: Youre really trying to elevate the human traders in the platform, we're trying to elevate their performance and we really see it eases. These are like these are assistance to them that are really helping supercharge their efforts.
Speaker Change: In the conversations you're having with these marketers how does that.
Speaker Change: All machine can given insight, but it's really the human that drives it to her strategic insight. So we see that really playing really well with customers as we roll out new products.
Increase the opportunity for volume or what are you hearing from them that will evolve your role going forward.
Speaker Change: Yes, I think it's that.
Speaker Change: That's helpful to hear what advertisers are looking for one follow up you made the point that you know large marketers are looking for alternatives to kind of the biggest industry participants maybe how does that you know in the conversations you're having with these marketers how does that incur.
Speaker Change: What are they looking for they're looking for tools that help automate a lot of what they're doing we've talked about this so many times before but there's just simply too many choices and programmatic advertising. So just like youre seeing the productivity across our own on a revenue or contribution ex Tac for employee Theyre looking to replicate those results are pretty similar.
Speaker Change: <unk> the opportunity for volume or what are you hearing from them that will evolve your role going forward.
Speaker Change: Early what else would you add I'll I'll say, one is cost savings, which immediately translates into better advertising and business performance for clients I.
Speaker Change: Yeah, I think it's Oh, what are they looking for they're looking for tools that help automate a lot of what they're doing with we've talked about this so many times before but there's just simply too many choices and programmatic advertising. So just like youre seeing the productivity across our own on a revenue or contribution ex Tac for employee they're looking to <unk>.
Speaker Change: I think we've hammered we've been hammering that draw them pretty hard marketers know that especially.
Speaker Change: Okay.
Speaker Change: Replicate those results are pretty similarly, what else would you add I'll I'll say one is in our cost savings, which immediately translates into better advertising and business performance for the clients.
Speaker Change: Really doing this not.
He is not forcing us into products that some competitors my Bill I think we're getting we're a great option, there and I would say the other one is.
Speaker Change: I think we've hammered we've been hammering that draw them pretty hard marketers know that especially if youre buying premium AD formats that are good at creating new demand.
Speaker Change: Just around our model of around focusing on the mid market and even though we're moving upmarket within the mid market or larger larger clients.
They want to be able to do that as efficiently as possible. So everything we're doing from direct access to bit optimizer. Those are the things where marketers are saying hey, we need an alternative that's really doing this not just racking up fees not forcing us into products that some competitors my bills I think we're getting we're a great option.
They really like that because we serve we service them they.
Speaker Change: They like the support and we know that they need to be successful on the platform. So.
Speaker Change: So being a good partner to them really helps.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Laura Martin Needham Your line is open.
Aaron I would say the other one is.
Speaker Change: Just around our model of around focusing on the mid market and even though we're moving upmarket within the mid market lot of larger larger clients there.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: My first one is.
Your second sentence says, we're seeing a market share shift for advertisers increasingly look for alternatives to the largest negative players in the industry that implies you're including trade desk, because youre doing more than Google I understand why global clients are living today in cases, where someone chooses bias over trade desk why.
Speaker Change: They really like that because we serve we service them.
Speaker Change: They like the support and we know that they need to be successful on the platform. So.
Speaker Change: So being a good partner to them really helps.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Laura Martin Needham Your line is open.
Speaker Change: I would I wouldn't say it's.
Speaker Change: Not a single down I would say that there's there's other scale players in the market.
Great.
Speaker Change: My first one is.
Speaker Change: <unk> put the walled gardens in there as well.
Speaker Change: Your second sentence says, we're seeing a market share shift for advertisers increasingly look for alternatives to the largest negative players in the industry that implies you're including trade desk, because youre doing more than Google I understand why Google clients are living today in cases, where someone chooses bias over trade desk why.
Speaker Change: They're really looking at again I'll talk about our mid market focus.
Speaker Change: Good white space area for us they want something it's not.
Speaker Change: One size fits all for only the biggest multinational marketers in the world. Our clients are extremely data driven and the advertising needs to perform.
Speaker Change: What I would I wouldn't say it's a.
Speaker Change: So I think the products that we build really helps them drive efficiency. So that's a big area for a need for alternatives in the end this boils down to campaign performance.
Speaker Change: We had all been out a single down I would say the others. There's other scale players in the market.
Speaker Change: To put the walled gardens in there as well.
Speaker Change: They are really looking at again I'll talk about our Midmarket bogus.
Speaker Change: So and I think that the.
Speaker Change: We live and breathe that every day and that's why you. That's why you win clients and why you keep them, but I would just add to that it's the scale of the household IV rather.
Speaker Change: Good white space area for Us state they want something it's not.
Speaker Change: One size fits all for only the biggest multinational marketers in the world. Our clients are extremely data driven and the advertising needs to perform and.
Speaker Change: Versus other DSP as all other DSP is out there as an alternative identifier that works holistically.
Speaker Change: So I think the products that we build really helps them drive efficiency. So that's a big area for a need for all alternatives in the end this boils down to campaign performance.
Speaker Change: That continues to be a point that we're driving home and the productivity of using our software to buy media versus a different software.
Speaker Change: I think we're starting to show market differences and we've got new products in the pipeline that I think can expand that leadership there than we have today okay.
Speaker Change: So and I think that the we live and breathe that every day and that's why you. That's why you win clients and why you keep them, but I would just add to that it's the scale of the household I D. Rather that versus other D. S. P. As all other DSP is out there as an alternative identifier that works holistically.
Speaker Change: Okay and then my follow up question is on connected TV. So I'm interested if you're seeing downward pressure on CPM and whether if you are whether you think that's one of the things that drove your 40% CTV revenue growth in the quarter.
Speaker Change: That continues to be a point that we're driving home and the productivity of using our software to buy media versus a different software I think I think we're starting to show market differences and we've got new products in the pipeline that I think can expand that leadership position we have today.
Speaker Change: I haven't I didn't look at the exact numbers prior to the call but I.
Nothing noticeable in terms of downward pressure on CPM I think the premium CTV owners get premium CPM.
Speaker Change: Okay and then my follow up question is on connected TV show I'm interested if you're seeing downward pressure on CPM and whether if you are whether you think that's one of the things that drove your 40% CTV revenue growth in the quarter.
Speaker Change: If youre looking at open exchange or or other ones. There there might be some pressure there, but there was already kind of two different CPM prices between those two so I would say both had been pretty consistent.
Speaker Change: And I wouldn't say a factor of our growth no I will say, though if you just look at the upfront market I think it was and I think there was some pressure, possibly on some of the premium guys. I think Netflix is nothing it's recently been reported that they'd come down on the CMS.
Speaker Change: I haven't I didn't look at the exact numbers prior to the call but.
Speaker Change: Nothing noticeable in terms of downward pressure on CPM I think the premium CTV owners get premium CPM, if youre looking at the open exchange or or other ones. There there might be some pressure there, but there was already kind of two different CPM prices between those two so I would say both had been.
Speaker Change: I think that that happens with some because of some of the fast channels that are out there, possibly but nonetheless in our in our software by the time a client moves their upfront plan into the DSP.
Speaker Change: Pretty consistent.
Speaker Change: At least for the premium guys a lot of those rates.
Speaker Change: And I wouldn't say a factor of our growth no I will say, though if you just look at the upfront market I think it was.
Speaker Change: Maybe already set from their upfront buys but in the spot market, we really haven't seen much of that.
Speaker Change: There was some pressure, possibly on some of the premium guys. I think Netflix is building. It's recently been reported that they had come down on those Atms.
Speaker Change: Thank you great numbers guys. Thank you.
Maria Reps: Your next question comes from Maria reps at Canaccord your.
Speaker Change: I think that that happens with some because of some of the fast channels that are out there, possibly but nonetheless in our in our software by the time a client lose their upfront plans into the DSP.
Speaker Change: Your line is open.
Maria Reps: Great. Thanks for taking my questions first can you maybe talk about some of the conversations that you may have had with prospective clients who had been moving further down the sales pipeline in anticipation of Google deleting cookies sort of I used to expecting to acquire those customers and have you seen any changes to yourself.
Speaker Change: At least for the premium guys a lot of those rates, maybe already set from their upfront buys but in the spot market, where we're really haven't seen much of that.
Speaker Change: Thank you great numbers guys. Thank you.
Speaker Change: Pipeline since our since Google's announcement.
Maria Reps: Your next question comes from Maria reps at Canaccord.
Speaker Change: Yes.
Speaker Change: No the pipeline was pretty robust leading into it I think everyone.
Speaker Change: Your line is open.
Speaker Change: Other they believed Google was going to do it or not do it ever almost already of the mindset that the time is now to start looking for alternatives. So I think a lot of those are directly in the pipeline and built in there I do see when cookie disruption does happen certainly what youll see is a bug.
Maria Reps: Great. Thanks for taking my questions first can you maybe talk about some of the conversations that you may have had with prospective clients who had been moving further down the sales pipeline in anticipation of Google leading treaty cookies sort of I used to expecting to acquire those customers and have you seen any changes to your sales.
Speaker Change: Shifts from current Cookie based players into the non cookie or alternative ideas and I think that's where that final leg of the stool will kick in but it's hard to us because 10% or less of our media spend is on cookies. It's hard to know how big that opportunity is transacting in.
Speaker Change: Pipeline since our since Google's announcement.
Speaker Change: No the pipeline was pretty robust leading into it I think everyone whether they believed Google was going to do it or not do it ever almost already of the mindset that the time is now to start looking for alternatives. So I think a lot of those are directly in the pipeline and built in there I do see a win.
Speaker Change: In Cookie based Esp's I think the other thing too.
Speaker Change: Key disruption does happen certainly what youll see is a budget shifts from current cookie based players into the non cookie or alternative ideas and I think that's where that final leg of the stool will kick in but it is hard to us because 10% or less of our media.
Speaker Change: Point out to is what we where we see a shift certainly is when we talked about in prepared remarks.
Speaker Change: Is away from the measurement of Cookie based systems and marketers are starting to understand that Oh.
Speaker Change: Just because somebody clicks on a search link I don't assign all of the credit for that I may have shown them a TV AD. They may have had of streaming audio spot. They may have had a billboard on the starting to understand that so we actually see I haven't I have not had one conversation with an agency or a marketer.
Speaker Change: Spend is on cookies, it's hard to know how big that opportunity is transacting in cookie based Esp's I think the other thing to point out to is what we use where we see a shift certainly is when we talked about in prepared remarks is away from the measurement of cookie based systems and marketers are starting to understand that Oh.
Speaker Change: Since Google's recent announcement, where they were just going back all under cookies. The fact as of today is if you look at the midstream, it's around 30% or less and it continues to decrease.
Speaker Change: Just because somebody clicks on a search link I don't assign all of the credit for that matter may have shown them. The TV out of them is how to streaming audio spot. They may have had a billboard on the.
Speaker Change: Every quarter and I think with Google's announcement at the end of the day, if they move to a user.
Speaker Change: Opt out or opt in on cookies I still we still believe that that.
We're starting to understand that so we actually see I haven't I have not had one conversation with an agency or a marketer.
Speaker Change: Tuck ins are still going to continue to decrease so marketers are certainly looking they're looking at I want to start measuring advertising based on whats, creating demand versus giving credit to whatever the last add that was shown to a person that was probably already going to bias personalize.
Speaker Change: Since Google's recent announcement, where they were just going back all under cookies. The fact is that today as you know if you look at the midstream, it's around 30% or less and it continues to decrease.
Speaker Change: Got it Thats very helpful. And then how should we think about the potential benefit from political advertising both embedded in your Q3 guide and maybe any thoughts for Q4, especially now that you are you'll grow in exposure to sort of streaming audio is increasing.
Speaker Change: Every quarter and I think with Google's announcement at the end of the day, if they move to a user.
Speaker Change: Opt out or opt in on cookies I still we still believe that that.
Speaker Change: These are still going to continue to lead to a decrease so marketers are certainly looking they're looking at how I want to start measuring advertising based on what's creating demand versus giving credit to whatever the last add that was shown to a person that was probably already going to buy in the first place.
Speaker Change: I'll, let Larry talk about it in the guide but.
Larry: We do okay in and political advertising I think we have some good products there.
Larry: And the last two years ago I think we were in the kind of mid single digits I only think its going to kind of remain there. We haven't we haven't really projected in our numbers a big upside there yeah, I think one of the hardest parts for us in political advertising is a lack of awareness amongst two those.
Speaker Change: Got it that's very helpful. And then how should we think about the potential benefit from political advertising both embedded in your Q3 guide and maybe any thoughts for Q4, especially now that you are you'll grow and exposure to a set of streaming audio is increasing.
Larry: Controllers of those dollars are just like.
Speaker Change: Larry talked about it in the guide but.
Larry: Some of the other areas.
Speaker Change: We do okay in and political advertising I think we have some good products there.
Larry: Driving growth I think specifically within.
Larry: Politics, we have a lack of awareness that we're trying to change, but I don't know if we'll catch it this cycle, but Larry.
Speaker Change: And the last two years ago, I think we're in the kind of mid single digits.
Larry: Yes, it would be a little bit more specifics so in cycles, such as the midterms and obviously presidential cycles, we tend to do about 2% to 3%.
Speaker Change: The only thing that's going to kind of remain there we haven't we haven't really projected in our numbers a big upside there yeah, I think one of the hardest parts for us in political advertising is a lack of awareness amongst two those.
Speaker Change: Whatever the second half spend is.
Speaker Change: Controllers of those dollars are just like.
Speaker Change: Typically see most of that coming in the second half.
Speaker Change: Some of the other areas.
Speaker Change: Driving growth I think specifically within.
Speaker Change: So we haven't assumed that we'll do more than that in our Q3 guide obviously, there will be some more political in Q4. So we'll have a better sense as we move through Q3, what that might look like but.
Larry: Politics, we have a lack of awareness that we're trying to change, but I don't know if we'll catch it in this cycle, but Larry.
Larry: Yes, it would be a little bit more specific so in cycles, such as the mid terms and obviously presidential cycles, we tend to do about 2% to 3% of whatever the second half spend is.
Speaker Change: We're assuming that it's kind of business as usual will.
Speaker Change: We're obviously growing so we're by keeping it at two 3% we are taking in more money.
Speaker Change: But we're not assuming it pops this the cycle.
Speaker Change: <unk> typically see most of that coming in the second half.
Speaker Change: Got it. Thank you so much for the color.
Speaker Change: So we haven't assumed that we'll do more than that in our Q3 guide obviously, there will be some more political in Q4. So we'll have a better sense as we move through Q3, what that might look like but.
Matt <unk>: Your next question comes from Matt <unk> with JMP.
Speaker Change: Your line is open.
Matt <unk>: Thank you for taking my question I just wanted to ask one on the data clean rooms are the main data platform I think as you guys integrate with Google clouds Big query the clean rooms in the quarter and then also youre launching show data in <unk> can you just talk about how the buying data plan.
Speaker Change: We're assuming that it's kind of business as usual we will we're obviously growing so we're by keeping it a two 3% were taking in more money but.
Speaker Change: But we're not assuming it pops this the cycle.
Speaker Change: Got it. Thank you so much for the color.
Speaker Change: Form and greater adoption there impacts the P&L.
Matt <unk>: Your next question comes from Matt <unk> with JMP.
Speaker Change: Yes definitely.
Speaker Change: I mean clean room matching is effectively replacing a process called cookie syncs and so it's an identical process to the way the industry became interoperable historically through this concept of cookie sync tables and cleaner matching is doing a very similar.
Speaker Change: Your line is open.
Matt <unk>: Thank you for taking my question I just wanted to ask one on the data clean rooms, or the wind data platform activities, you guys integrators, Google Big query the clean rooms in the quarter and then also youre launching chat with data in <unk> can you just talk about how the buying data plan.
Speaker Change: Process, but just with different types of identifiers, there and for US our focus is interoperability. So we did do the Google cloud platform announcement in GB queue that you've noticed we're integrated with Snowflake, we're working with AWS on it the whole goal here is to make it interoperable so that anyone any data company.
Speaker Change: Form and greater adoption there impacts the P&L.
Speaker Change: Yeah definitely.
Speaker Change: I mean clean room matching is effectively replacing a process called cookie syncs and so it's an identical process to the way the industry became interoperable historically through this concept of cookie sync tables and cleaner matching is doing a very similar.
Speaker Change: Any supply source or any advertiser that has their advertiser or excuse me their first party data in those platforms can easily with a single click access drive connectivity to our platform and that data.
Speaker Change: Process, but just with different types of identifiers, there and for US our focus is interoperability. So we did do the Google cloud platform announcement in GB queue that you've noticed we're integrated with Snowflake, we're working with AWS on it the whole goal here is to make it interoperable so that anyone any data company any.
Speaker Change: In terms of.
Speaker Change: What does it mean to the financials of the business.
I think a lot of it comes from measurement and us basically providing better measurement to these advertisers and we have seen measurement revenue, which is included under the buy and data platform revenue.
Speaker Change: Fly source or any advertiser that has their advertiser or excuse me their first party data in those platforms can easily with a single click access drive connectivity to our platform and that data.
Speaker Change: Has ticked up our contribution ex Tac. So it has an expanding if you look at our financial profile. It will increase contribution ex Tac overtime with adoption and we think the interoperability going back to that real quick when you're integrated with all of these other platforms. It just speeds up customer adoption. The main thing <expletive>.
Speaker Change: In terms of.
Speaker Change: What does it mean to the to the financials of the business.
I think a lot of it comes from measurement and us basically providing better measurement to these advertisers and we've seen measurement revenue, which is included under the buy and data platform revenue.
Speaker Change: Clients want to do is be able to use their first party data and advertising so when you're already integrated with the largest company in the house.
Speaker Change: CRM data or any of our clients. It just makes a seamless approach of moving their first party data into their DSP and them being able to use it for targeting and measurement.
Speaker Change: Has ticked up our contribution ex Tac. So it has an expanding if you look at our financial profile. It will increase contribution ex Tac overtime with adoption and we think the interoperability going back to that real quick when you're integrated with all of these other platforms. It just speeds up customer adoption the main thing to climb.
That's super helpful. And then maybe just a follow up Larry you've done a good job of driving profitability here just as we think about 2025 and understood you are not giving any formal guidance around 2025, what are the key investment areas and we should should we see anything different as far as any additional engineering, our sales force investments in 2020.
Speaker Change: I wanted to do is be able to use their first party data and advertising so when you're already integrated with the largest company in the house.
Speaker Change: CRM data or any of our clients. It just makes a seamless approach of moving their first party data into their DSP and them being able to use it for targeting and measurement.
Speaker Change: I think youll see trends similar to 'twenty four I mean, clearly we're not going to invest.
Speaker Change: Our growth in overhead is going to be slower than our growth in <unk>.
Speaker Change: That's super helpful. And then maybe just a follow up Larry you've done a good job of driving profitability here just as we think about 2025 and understood you you're not giving any formal guidance around 2025, what are the key investment areas and we should should we see anything different as far as any additional engineering or sales force investments in 2025.
Speaker Change: The investments, we will make will be primarily around engineering and product and sales.
Speaker Change: And certainly around all of the innovation around AI.
Speaker Change: But you would I would expect kind of.
Speaker Change: Low.
Larry: I think youll see trends similar to 'twenty four I mean, clearly we're not going to invest.
Speaker Change: Double digits low teens growth in terms of investment for 25.
Our growth in overhead is going to be slower than our growth in CX C.
Speaker Change: Consistent with kind of what we've been doing this year.
Speaker Change: Great. Thank you so much.
Speaker Change: The investments, we will make will be primarily around engineering and product and sales.
Your next question comes from Chris <unk>. Your line is now open.
Speaker Change: And certainly around all of the innovation around AI.
Speaker Change: But.
Speaker Change: You would ask I would expect kind of.
Speaker Change: Low.
Chris: Hi, Thanks for taking my question.
Speaker Change: Double digits low teens growth in terms of investment for 25.
Maybe a first one on direct access.
Speaker Change: Be curious to hear how you think about what inning, you're in as it relates to ramping your partners and how you think about balancing the <unk>.
Speaker Change: Consistent with kind of what we've been doing this year.
Speaker Change: Great. Thank you so much.
Speaker Change: Quality of the inventory within the direct access program versus continuing to grow it and then Larry maybe just double click on the <unk>.
Speaker Change: Your next question comes from Chris <unk>. Your line is now open.
Larry: Expense question that was just asked is it still right to be thinking about low teens growth for expense growth here in 'twenty four.
Chris: Thanks for taking my question.
Chris: Maybe a first one on direct access be curious to hear how you think about what inning you're in as it relates to ramping your partners and how you think about balancing the <unk>.
Speaker Change: Yeah, I'll take the first part of that Chris. Thanks for the question kind of what inning ran well at <unk>.
Speaker Change: Represents I think over half of all I think we had said on CTV spend is running through direct access. So I don't know for planned professional baseball or in the fourth or fifth inning, I guess or for things to learn there.
Larry: Quality of the inventory within the direct access program versus continuing to grow it and then Larry maybe just double click on the expense question that was just asked is it still right to be thinking about low teens growth for expense growth here in 'twenty four.
Speaker Change: I would say however on the program, what's really interesting about it is the first part was just doing a direct integration, helping marketers save on fees.
Speaker Change: They are not paying mill men's or they're buying direct from the source that LG Chem, a first kind of.
Yeah, I'll take the first part of that Chris. Thanks for the question kind of what inning Oran well.
Speaker Change: The growth of that the next is really around the data matches here, where they are integrated they're matching their subscriber data to our household IV and this drives great address ability for marketers. So at the same address ability that they're used to getting from the walled gardens like social however, their own the world's most premium content, it's an incredible advertising.
It represents I think over half of of our I think we had said on CTV spend is running through direct access. So I don't know if we're playing professional baseball or in the fourth or fifth inning, I guess for fourth inning somewhere in there.
Speaker Change: I would say however on the program, what's really interesting about it is the first part was just doing a direct integration, helping marketers save on fees they're.
Speaker Change: Execution, so I think that the next although that half of our CTV spending has gone through there I think that's going to continue to drive our our CTV spending on the platform.
Speaker Change: They're not paying mill men's or they're buying direct from the source that LG Chem, a first kind of.
Speaker Change: Phase of growth of that the next is really around the data matches here, where they are integrated they're matching their subscriber data to our household IV and this drives great address ability for marketers is the same address ability that they're used to getting from the walled gardens like social however, there on the world's most premium content, it's an incredible advertising.
Speaker Change: It's just a great differentiator for us the similar offerings out there.
Speaker Change: We don't charge for it we're not trying to be on the sell side. So right there I'm getting a laurus against and I'm not charging for our clients love that so I think it's going to continue to drive.
Larry: More and more CTV spending for the company and just just to add to that before Larry takes and I think one thing that's a differentiator of buying versus other alternative ideas out. There. So you know Disney may have a logged in user and it might be Tim who has logged into Hulu, that's going through but they get a lot of value in doing these day.
Speaker Change: Execution, so I think that the next although the half of our CTV spending has gone through there I think it's going to continue to drive our our CTV spending on the platform.
Speaker Change: It's just a great differentiator for us the similar offerings out there.
Speaker Change: But we don't charge for it we're not trying to be on the sell side. So right there I'm getting a laurus against and I'm not charging for clients love that so I think it's going to continue to drive.
Larry: Matches as well we know other email addresses that are part of that household. So if Tim is the logged in user but.
Larry: More and more CTV spending for the company and just just to add to that before Larry kicks in I think one thing that's a differentiator of buying versus other alternative ideas out. There. So you know Disney may have a logged in user and it might be Tim who has logged into Hulu that that's going through but they get a lot of value in doing these day.
Laura: Laura buys the product or service, we're able to properly attribute and measure the response to the advertising to that household where I think other identifiers fail.
Laura: Pretty aggressively in that so there's a lot of value add both ways or the big media companies and other quality content providers that joined the program as well.
Speaker Change: Matches as well we know other email addresses that are part of that household. So if Tim is the logged in user, but Laura buys the product or service, we're able to properly attribute and measure the response to the advertising to that household where I think other identifiers fail.
Laura: Larry did you want to take the other guy.
Larry: In terms of overhead for 'twenty four it will be in the low teens with what we've been saying all along.
Speaker Change: You can see the guide in Q3, where we guide overhead Q4 overhead will be kind of low single digit percentages above Q3.
Speaker Change: That all up and Youre still in the low teens.
Speaker Change: You know pretty aggressively in that so there's a lot of value add both ways or the big media companies and other quality content providers that joined the program as well.
Speaker Change: Got it thank you everyone.
Speaker Change: Yeah.
Speaker Change: That concludes today's webinar you may now disconnect.
Speaker Change: Larry did you want to take the other.
Larry: In terms of overhead for 'twenty four it will be in the low teens with what we've been saying all along.
Speaker Change: Thank you everyone.
Speaker Change: Yeah.
Speaker Change: See the guide in Q3, where we guide overhead Q4 overhead will be kind of low single digit percentages above Q3.
Larry: Yeah that all up and Youre still in the low teens.
Speaker Change: Got it thank you everyone.
Speaker Change: That concludes today's webinar you may now disconnect. Thank.
Speaker Change: Thank you everyone.
Speaker Change: Yeah.