Q3 2024 Integral Ad Science Holding Corp Earnings Call
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Speaker Change: I would now like to hand, the conference over to your first speaker today, Jonathan Schaffer SVP of Investor Relations. Please go ahead.
Jonathan Schaffer: Thank you good afternoon, and welcome to the Ias 2024 third quarter financial results Conference call I'm joined today by Lisa Snyder CEO Antonio C Corps CFO before we begin please note that today's call and prepared remarks contain forward looking statements.
Jonathan Schaffer: We refer you to the company's filings with the SEC posted on our Investor Relations site.
Jonathan Schaffer: Investors dot integral adds dot com for more details about important risks and uncertainties that could cause actual results to differ materially from our expectations. We will also refer to non-GAAP measures on today's call. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release.
Jonathan Schaffer: <unk> on our Investor Relations site.
Jonathan Schaffer: Financial comparisons unless noted otherwise are based on the prior year period.
Lisa Schneider: So with these formalities out of the way I'd now like to turn the call over to our CEO at Liza One Schneider Lisa you may begin.
Lisa Schneider: Thank you Jonathan and welcome everyone to our 'twenty 'twenty four third quarter call, we reported a double digit increase in total revenue for the quarter with growth across our optimization measurement and publisher businesses. We also advanced our technology and product innovation expanded platform partnerships.
<unk>, our first to market matter optimization solution.
Lisa Schneider: One new customers, including from Oracle and announced strategic senior level hires.
Lisa Schneider: While we made significant progress towards positioning I asked for long term sustainable performance, our third quarter revenue growth of 11% was limited by a slowdown in volume growth in the near term, most notably in CPG and retail.
Lisa Schneider: As a result, we are taking a prudent approach to our fourth quarter and full year outlook and expect fourth quarter revenue growth of 11% consistent with the third quarter. The fourth quarter is expected to represent approximately 28% of full year 'twenty 'twenty four revenue on par with last year's fourth.
Lisa Schneider: Quarter contribution.
Lisa Schneider: We exceeded our adjusted EBITDA expectations for the third quarter by diligently managing our costs, we reported a record third quarter adjusted EBITDA margin of 38%, which we expect to maintain in the fourth quarter.
Lisa Schneider: Yes, as the market leader based on our differentiated technology, including our suite of AI backed products and our ability to deliver greater ROI and efficiency two brands in their advertising spend in recent months, we've enhanced our executive leadership platform partnerships and product offerings to drive long term growth.
Lisa Schneider: In September we welcome Mark Graboski to I S as Chief operating officer, and Sristi Gupta as Chief product Officer. The addition of Mark and Sristi to our leadership team strengthens our customer first approach and advances our product development to meet the future needs of our customers and partners Mark.
Lisa Schneider: <unk> visionary leadership further I guess its commitment to customer obsession and superior product development.
Lisa Schneider: Mark brings extensive global leadership experience across the demand and supply sides of the advertising industry spanning both enterprise and mid market. He joined I asked from Oracle advertising, where he led their global commercial organization for Oracle's advertising products, including boat data logics Blue Kai.
Lisa Schneider: Great shot. He also brings senior level leadership experience at <unk> personnel and Yahoo is C. O L. Mark leads our commercial organization encompassing global revenue customer success the marketing.
Speaker Change: <unk> has a proven track record of launching AD measurement and optimization products at global scale at Amazon Sristi spearheaded the creation of cross channel measurement and optimization product. She also brings additional measurement experience from her tenure with IRI now store kinda, where she built products from that.
Speaker Change: Round up most recently she served as chief product officer at Rock and E Commerce Technology company, where she ensured a highly relevant experience across billions of e-commerce transactions and I asked Shriti leads our global product team go to market initiatives product marketing and research and insights market.
Speaker Change: We see them hit the ground running spending time with our customers identifying opportunities to advance our go to market capabilities and positioning us for success in 2025.
Speaker Change: We continue to maintain a strong pace of new business momentum, including Greenfield opportunities with major global brands as well as signed partnerships with advertisers publishers and platforms previously with Oracle, we won more than 75, new Oracle customers since June representing a 72%.
Speaker Change: Win rate on Oracle opportunities in which we participate we have hired over 30, former Oracle employees, which we believe gives us an advantage in securing an onboarding oracle customers.
Speaker Change: New Oracle wins include brands, such as Peacock Heineken and Emirates platforms, such as the trade desk Quantcast next door cargo and Pandora and publishers, such as Dow Jones, Bloomberg NASCAR, Condi nuts, and Triple up let me provide some additional color on some of these.
Speaker Change: Recent wins.
<unk> switched from Oracle moat to Ias as part of the moat deprecation, taking advantage of the seamless integration with auto tagging and our CTV offerings Heinekens selected Ias as their exclusive global strategic partner, replacing Oracle moat I asked was awarded the opportunity based on our robust total.
Speaker Change: Visibility solution, which delivers transparency into media quality and costs across the programmatic supply chain, along with our full suite of core measurement solutions, including quality attention and sustainability.
Speaker Change: Emirates, the global airline based in Dubai chose <unk> as their global measurement and optimization provider. Following a competitive process I asked one of the Emirates opportunity based on our superior coverage industry, leading CTV offerings, the strength of our product roadmap commitment to technology innovation at <unk>.
Speaker Change: Personnel in market service.
Speaker Change: In addition, we expanded our relationships with existing customers as part of several recent contract renewals.
Speaker Change: Although cars renew and expand its global relationship with I, Yes. The expanded partnership includes postpaid total media quality or team Q across social platforms total visibility and made for advertising reporting as well as pre bid brand safety invalid traffic and contextual avoidance.
Speaker Change: Oh Pallor previously Sanofi C. H C. A multinational health care company renewed and expanded global agreement with I, Yes, our agreement with old palette now includes T M Q attention and sustainability measurement.
Speaker Change: Verizon recently expanded its relationship with Ias to include contextual avoidance across its business lines in the U S.
Speaker Change: That's just context control's suite helps protect the Verizon brand across its programmatic channels horizon has been a valued ias customers since 2016 and was most recently an early adopter of our total media quality products and major social platforms.
Speaker Change: I guess as a trusted partner to brands as they embrace the omnichannel marketing strategy team to our AI driven multi media classification technology for social live feeds continues to drive measurement performance.
Speaker Change: We have extended our TMT capabilities on both new and existing platforms with meta we are now supporting six additional languages for brand safety and suitability measurement for a total of 34 languages in over 100 countries. We recently expanded our T. M. Two offering on Chick talk to include.
Speaker Change: View ability invalid traffic and brand safety and suitability measurement across several new AD placements. These include tick tox profile feet. Following feed search feed and Tic Toc like we are also expanding TMT for tictoc vertical sensitivity and category exclusion controls cover.
Speaker Change: It's 275 plus markets by the end of 2024. In addition, we are alive with T. M. Q on new platforms, including first to market with snap Pinterest and read it scheduled to launch by the end of this year.
Speaker Change: And I as we lead with customer obsession the voice of the customer informs everything we do we build products based on customers needs in areas that can drive accelerated revenue growth.
Speaker Change: Heading into this year's U S elections, marketers asked us to enhance our TMT measurement offering to include misinformation detection and social media feeds previously available only on the open web we launched our misinformation detection capabilities and Tic Toc and meta in April in advance of the general.
Speaker Change: The election and several months ahead of our nearest competitor in September we announced the launch of brand safety and suitability reporting for misinformation on Youtube.
Speaker Change: Pre bid optimization and social media is another emerging area, where we are meeting customer demand with industry, leading innovation using our pre bid social products brands can now optimize their AD placements customize their suitability settings eliminate waste and increase rois.
<unk> solutions are integrated within our full optimization suite, so customers can apply their open web preferences seamlessly within social environments or.
Speaker Change: Our differentiated classification technology has accelerated the rollout of our pre bid optimization offering across the major social platforms. We were delighted that method selected I asses their initial partner for the testing of our pre bid optimization solutions on matter or third party content block listing solution.
Speaker Change: For ads on Facebook and Instagram feed in Reals offers global advertisers the ability to automatically avoid placing ads next to unsuitable content for their brands as aligned to industry standards. This launch closes the loop from pre bid optimization to postpaid measurement on meta.
Speaker Change: The launch of pre bid optimization on meta in October follows earlier pre built integrations with Tic Toc Linkedin and X last month, we announced that we are currently in alpha testing in partnership with Tic Toc for our new video level exclusion list solution as we extend the reach of our prepaid offerings on the plot.
Speaker Change: Form.
Speaker Change: Pre bid optimization more than doubles, the size of our social opportunity and builds on our postpaid social media measurement revenue, which accounted for 22% of total revenue in the third quarter and over $100 million in annual revenue.
Speaker Change: Last week, we announced the launch of Ias curation on Google AD manager with Ias curation advertisers can now consolidate bidding on high quality inventory and precisely target contextually relevant content to drive efficiency for their AD buys. This launch is the latest expansion of Ias has longstanding.
Speaker Change: Partnership with Google.
Speaker Change: <unk> is currently the only verification providers supporting Googles generation launch.
Speaker Change: Last month, we announced the expansion of our quality attention postpaid measurement product publishers and sell side platforms, leveraging our ml back models quality attention ways metrics into an actionable attention score, which publishers and that's S piece can use to take advantage of their best performing inventory.
Speaker Change: In CTV, we are investing in all layers of the stack, including device publisher and delivery with the goal of unlocking a projected 40 billion AD spend market by 2027, According to E marketer.
Speaker Change: Our core customers are accessing the full suite of our public of products, which allows us to drive even greater optimization across to me and sources. We've introduced new product features to increase bidding competition in that auction Publica recently won the prestigious video week Award for best CTV App innovate.
Speaker Change: <unk> showcasing our superior technology and the commitment of our global team.
Speaker Change: Throughout 2024, we have also pursued strategic partnership discussions with prominent data providers aiming to enrich our first party media quality signals. We expect these collaborations will allow us to measure campaign outcomes at a deeper level, while expanding ias as monetization potential.
Our goal is to enable advertisers to leverage ias's data with trusted third party datasets and optimize their campaigns to meet key performance objectives.
Speaker Change: This initiative underscores our commitment to providing measurable value and high quality insights and we look forward to building on our progress in 2025.
Speaker Change: To conclude we delivered growth and profitability well above the rule of 40, and we're taking steps to improve business performance. We have strengthened our senior leadership team with recent C level appointments and we are winning new revenue opportunities, including oracle's former advertising customers as highlighted.
Our first to market pre bid optimization solution I'm meta we are leading with product innovation informed by the voice of the customer we expect to benefit from these initiatives with a focus on delivering double digit revenue growth in 2025, and with that I'll turn the call over to Tania to review the.
Speaker Change: <unk> and then we'll take your questions.
Tania: Thanks, Lisa and welcome everyone. We've.
We reported 11% revenue growth for the third quarter with gains across our optimization measurement and publish our businesses. In addition, we reported record profitability with an adjusted EBITDA margin of 38%.
Tania: As Lisa noted advertiser revenue growth for the quarter was limited by a slowdown in volume growth in the near term, most notably in CPG and retail.
Tania: We attribute this to budget cuts and delays in digital media spending in these verticals in the second half of the quarter.
Tania: In addition, while we're seeing healthy adoption of several new products launched this year, we experienced lower than anticipated monetization in the period.
Tania: Total revenue in the third quarter increased 11% to $133 $5 million.
Tania: Optimization revenue grew 7% to $61 $1 million in the third quarter.
Tania: Optimization revenue growth in the period reflects increased adoption of our context control avoidance offerings, including quality zinc and made for advertising.
Tania: Measurement revenue increased 11% to $52 $9 million in the third quarter.
Tania: Measurement growth was driven primarily by increased adoption of our premium T M Q offering across the global social platform.
Tania: Social media revenue grew 21% and represented 55% of measurement revenue up from 53% in the second quarter of 2024.
Tania: Social media revenue represented 22% of total revenue in the third quarter.
Tania: Open web revenue, which represented 45% of measurement revenue was consistent with the prior year period.
Tania: Video grew 15% in the third quarter as a result of the growth of social media and accounted for 56% of measurement revenue.
Tania: Total revenue from advertisers, which includes both optimization and measurement represented 85% of total revenue in the third quarter.
Publisher revenue increased 26% to $19 $5 million ahead of our growth expectations for the third quarter.
Tania: We scaled new products in public that particularly with our large OEM partners and saw some benefit from political spend.
Tania: <unk> CTD Ias publisher revenue also increased in the period.
Tania: Publisher revenue represented 15% of total third quarter revenue.
Tania: We believe our extensive global footprint continues to be a competitive differentiator.
Our national growth of 11% benefited from adoption of our social media products, including <unk> Q as well as the contribution from new logos.
Tania: 31% of our total revenue in the third quarter were $41 million came from outside of the Americas.
Tania: In addition, 44% of measurement revenue was from outside of the Americas.
Tania: Gross profit margin for the third quarter was 80% up from 79% in the prior year period.
Tania: Gross margin performance reflects improved optimization of our hosting costs.
Tania: Sales and marketing technology, and development and general and administrative expenses combined increased 4% year over year.
Tania: We continue to make strategic hires including new Oracle talent, while closely managing costs.
Tania: Stock based compensation expense for the period was $16 $4 million in line with our prior outlook of 16% to $17 million.
Tania: Adjusted EBITDA for the third quarter, which excludes stock based compensation and one time items was $56 million above our prior outlook of $48 million to $50 million.
Tania: Adjusted EBITDA margin increased to 38% from 34% last year.
Tania: Higher gross profit margin increased capitalization of internally developed software and greater operating expense efficiencies contributed to our strong adjusted EBITDA margin in the third quarter.
Tania: Net income for the third quarter was $16 $1 million or <unk> 10 per share compared to a $13 $7 million loss in the third quarter of 2023.
Tania: The net loss in the prior year period was driven by the timing of our income tax provision related to stock based compensation from the return target options expense in the second quarter of 2023.
Tania: Moving to our performance metrics.
Tania: Our third quarter net revenue retention or NRI was 108%, which reflects the trend of our overall advertising revenue growth rate for the trailing 12 months period.
Tania: The total number of large advertising customers, which includes both mid tier and top tier clients with annual revenue over $200000 grew to 232 compared to 219 last year.
Tania: Revenue from large advertising customers with 85% of total advertising revenue on a trailing 12 month basis.
Tania: We continue to generate strong cash flows and maintain a healthy balance sheet with cash and cash equivalents at the end of the third quarter of $57 million.
Tania: During the quarter, we reduced our long term debt by $30 million to $65 million.
Tania: As a result, our net debt at the end of the third quarter was $8 million.
Tania: Turning to guidance.
Tania: For the fourth quarter ending December 31, 2024, we expect total revenue in the range of $148 million to $150 million or 11% year over year growth at the midpoint.
Tania: Our fourth quarter revenue outlook assumes the continuation of lower volume growth in the near term, most notably in CPG and retail.
Tania: We have also factored in lower than anticipated monetization of new products in the fourth quarter.
Tania: In addition at the start of the quarter, we were impacted by softening brand spend leading up to the U S elections.
Tania: Our fourth quarter outlook includes the anticipated contribution of the new Oracle wins discussed earlier.
Tania: Adjusted EBITDA for the fourth quarter is expected in the range of $55 million to $57 million or 38% margin at the midpoint.
Tania: For the full year 2024, we are updating our revenue outlook to $525 million to $527 million or 11% year over year growth at the midpoint.
Tania: We are increasing our full year, adjusted EBITDA outlook to $185 million to $187 million or a 35% margin at the midpoint.
Tania: A few additional modeling point.
Tania: As a result of our strong gross margin performance, we now expect to achieve the upper end of our full year gross margin target of 77% to 79%.
Tania: Fourth quarter stock based compensation expense is expected in the range of $15 million to $16 million and $62 million to $63 million for the full year.
Tania: We expect weighted average shares outstanding for the fourth quarter in the range of 162 to 163 million shares.
Tania: 165 to 161 5 million shares for the full year.
Tania: As we move into 2025, we will continue to focus on profitable growth.
Well, we are not providing 2025 guidance today, we are planning for double digit revenue growth in 2025, and we are expecting moderate growth in Q1 with a ramp through the year.
Tania: We expect to benefit from the scaling of products launched in 2024 as well as the adoption of pre bid optimization and social media along with the full year contribution from recently won Oracle business.
Tania: We will continue to invest in differentiated products in 2025, while managing our costs and maintaining strong profitability.
Tania: We are targeting full year adjusted EBITDA margin in 2025, similar to the forecasted margin of our 2024 outlook, which will keep us well above the rule of 40 for the fifth consecutive year since IPO.
And with that Lisa and I are now ready to take your questions operator.
Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw.
Speaker Change: Your question. Please press star one one again, please standby will be compile the Q&A roster.
Our first question comes from Matt Farrell of Piper Sandler Your line is now open.
Thanks for letting me ask a question my first one would just be I would love to hear any additional color you can provide regarding the dynamics in the third and fourth quarter that impacted the outlook was the retail and CPG dynamics broad based or was it isolated to a few customers.
Speaker Change: Would love to hear a little bit more as well about the slower than expected ramp of new products was that an internal drew.
Speaker Change: Driver was at a customer specific driver or anything you could add would be helpful. Thanks.
Speaker Change: Sure.
Speaker Change: Happy to take that so as we move through third quarter, we did see a slowdown in volume growth, particularly in CPG and retail verticals, we attribute the slowdown to a few things budget cuts.
Speaker Change: Ladies and digital media spend in these verticals and also slower than expected ramp of new products adoption.
Speaker Change: One highlight that I do want to call out for the quarter is our publisher growth of 26%.
Speaker Change: It performed as we scaled new public as CTV products with large OEM product.
Speaker Change: And in terms of the slower than expected ramp of the new product adoption.
Speaker Change: Basically as you might remember we had a robust product roadmap, we had many new products that we've launched in 2020 for some have seen tremendous adoption TMT was a great example of that.
Speaker Change: We launched a meta in first quarter with some of the other products. The brands are absolutely leaning in and adopting the products. They're just the ramp and the rate of adoption is taking a little longer than we had anticipated, but we're pleased with the fact that we're delivering value to the.
Speaker Change: Advertisers.
Speaker Change: Yes.
Speaker Change: And then as a follow up question would just love to hear.
Speaker Change: What's the key learnings to date are with the early integration of Oracle customers. How are those ramping as we move through 2024, and how should we be thinking about the contribution to.
Speaker Change: To that double digit revenue growth next year. Thank you.
Speaker Change: Sure.
Speaker Change: Happy to talk about Oracle as you might remember as the summer of Oracle I'm really proud of the efforts of our sales team.
I know that we just shared our win rate, but we saw a 72% win rate on the Oracle opportunities and the team put 75, new Oracle customers on the board since Oracle announced that they were exiting the advertising business.
Speaker Change: What really helped both with bringing these customers onboard, but I'd say more importantly, with the integration the activation getting these customers live by October 1st given that Oracle announced September 30th.
Speaker Change: Exit date, what we've found is listening very closely to the new customer needs getting our focused and dedicated team in place to ensure that we were properly integrating onboarding the customers.
Getting them live and up and running in fourth quarter.
Speaker Change: In terms of the ramp not the revenue contribution from Oracle is factored into our fourth quarter guidance.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Andrew Merrick of Raymond James Your line is now open.
Andrew Merrick: Thank you for taking my questions as well.
Andrew Merrick: So we know that the Oracle shutdown went through on September 30th but are there a significant volume of advertisers still outstanding that might still be evaluating their go forward plans.
Speaker Change: Yeah. So we are very focused with the current onboarding integration activation of this 75 plus customers that I, just had mentioned and I should call out these customers range from brands publishers and platforms.
Speaker Change: But there is still runway to win more business and the team again, they are very focused on activating the oracle business on focusing on cross sell and upsell, especially given the fact that Oracle did not have a robust brand safety and suitability solution. So the team is focused.
Speaker Change: On that upsell cross sell but we're also going after.
Speaker Change: More business to win.
Great and then maybe one more if I could we've seen some press reports over the last couple of weeks at Ias may have been raising prices on some of their solutions.
Speaker Change: I Wonder if you could comment on that specifically that would be great, but just kind of a holistic overall, where you feel that your prices stand currently.
Speaker Change: With respect to the value that you're providing for your clients and how thats contemplated into your twenty-five commentary. Thank you.
Sure. So we lead with value, we leave with demonstrating value of our differentiated products, we never lead with price first it is a competitive marketplace as we had just mentioned the.
Speaker Change: The Oracle jump all summer that's been happening over the last few months.
Speaker Change: But what's so important, especially with the products, where we command a higher premium price like a total media quality that we're offering across all of the social platforms that we are quantifying the value that we are offering to our customers we are demonstrating to them how our.
Speaker Change: <unk> provide greater transparency that we're helping them run their ads adjacent to higher quality media tick tock alone we're already proving out that we are.
Speaker Change: Ensuring that ads are running adjacent to three X higher quality media that lead to higher ROI.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question comes from Jason Jason <unk> of Oppenheimer. Your line is now open.
Hi, This is Steve home and on the line for Jason.
Speaker Change: So just one quick one from US. So you mentioned that some advertisers started to leading up to the U S election began moderating the spend just wonder I know you gave <unk> guidance, but just wondering how those advertisers are now.
Speaker Change: Whether they are spending have increased their spend back to normal levels post U S election.
Speaker Change: Yes.
Speaker Change: So we did see a slowdown in advertising spend at the start of the fourth quarter, leading up to the U S elections.
Speaker Change: We have not it's too early to tell if there's any bounce back yet, but as we developed our fourth quarter guide we were prudent in our approach and taking in to consideration all of the factors that we reflected and discuss like this.
Speaker Change: Start to October.
Speaker Change: As well as the moderating our adoption of our new product offerings as well as.
Speaker Change: Pay.
Speaker Change: Pacing that we're seeing with our volume overall, particularly in CPG and retail.
Speaker Change: Great. Thanks.
Speaker Change: Thank you. Our next question comes from James <unk> of Jefferies. Your line is now open.
Speaker Change: Great. Thanks for taking the questions could.
Speaker Change: Could you just talk a little bit more about I realize it's not formal guidance, but the preliminary 2025 outlook of double digit growth and what gives you. The confidence that you can sustain that into next year just hearing about some of the the.
Speaker Change: The product momentum that you have and what you expect to drive that growth. Thank you.
Speaker Change: Sure James So a couple of things about 2024 guidance, while we're not providing 2020 forward guidance today, we are planning for double digit revenue growth in 2025.
Speaker Change: And we are expecting a moderate growth in Q1 with a ramp through the year. A couple of factors why we expect to benefit with this double digit growth. The first is the scaling activation adoption of products that we launched in 2024.
Speaker Change: These are both products that we launched earlier in the year like TMT, one matter and some of these newer products we rolled out.
Speaker Change: In the back half of the year adoption of our pre bid optimization and social media I know, we just spoke to that the fact that meta had selected Ias to launch the highly demanded pre bid social optimization products.
Speaker Change: Already run that product through beta with a handful of advertisers and we're live in GTA in fourth quarter, and we're really pleased with the results and engagement that we're seeing and then also another factor to 2025 guidance is the full year contribution of recently won Oracle businesses.
Speaker Change: And further Oracle wins.
Speaker Change: One other point to make is that we are targeting full year adjusted EBITDA margin in 2025, similar to the forecasted margin of our 2024 outlook, which does keep us well above the rule of 40 for the fifth consecutive year.
Speaker Change: Year since IPO.
Great. Thank you.
Speaker Change: Thank you. Our next question comes from Omar <unk> of Bank of America. Your line is now open.
Speaker Change: Hi, Thanks very much.
Speaker Change: Just wanted to backtrack, a little bit on the third quarter.
Speaker Change: And ask.
Speaker Change: As the quarter progressed.
Speaker Change: When did you start to see this.
Speaker Change: And advertiser spending I assume that.
Speaker Change: The effect that you saw in the month of October leading up to the election.
Speaker Change: Was preceded by some kind of effect in September and possibly August.
Speaker Change: Was it something that changed abruptly or was it more of like kind of consistent downward trend through July August and September.
Speaker Change: Yes.
Speaker Change: The shift that we saw in volume growth started in the middle of the third quarter. So August was particularly soft softer than usual this was.
Speaker Change: Primarily in with CPG and retail clients as we saw reductions in their their budgets and delays in their digital media spending September is typically a strong seasonal months and we are expecting an uptick in September which did not materialize.
Speaker Change: And then as we saw as we mentioned earlier as we kicked off at the beginning of the fourth quarter, we did see still softness and brand spending leading up to the elections.
Speaker Change: And would you be able to give us a sense of what the growth was in the first half of that quarter or is that too granular of a question.
Speaker Change: Yeah.
Speaker Change: Just wanted to give you the talking points around what we saw from a growth perspective.
Speaker Change: Alright.
Speaker Change: Yeah, Yeah, we can't give specific numbers.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Jason Prayer of Craig Hallum Capital Group. Your line is now open.
Speaker Change: Great. Thank you this is Kyle on for Jason.
Speaker Change: So first question sorry, if this has been addressed already but just what sort of feedback have you received from advertisers that have started testing them better optimization and how are you looking at that opportunity and optimization versus your existing poster tools.
Speaker Change: Yeah.
Sure.
So it's early days with the pre bid optimization product as I mentioned before we ran.
Speaker Change: Beta with a handful of advertisers we received very positive feedback and just given what high demand. This product has been I mean, we are currently running pre bid with tic toc with Linkedin, but the advertisers have been paid.
Speaker Change: We are waiting for the launch with meta.
Speaker Change: The feedback has been quite positive both from the beta advertisers and now the advertisers who are in gea and the teams very focused on ensuring that these.
Speaker Change: These advertisers who are currently running the product they see the value of the product that we continue to activate and get more advertisers live and the one other thing to call out in terms of the pre bid after opportunity is that pre bid social we estimate its two acts.
Speaker Change: Opportunity from a revenue perspective versus postpaid measurement and you might remember prior to any of these pre bid products that I was referring to everything that we've been running on <unk> up to this stage has been postpaid measurement, so well just continue to.
Speaker Change: Work with the brands get the activation continuing to accelerate with pre bid social optimization on meta and ensure we kick off 2025.
Speaker Change: With that activation continuing to increase.
Speaker Change: Great Alright, and then just last one could you just expand on the launch of the <unk>.
Speaker Change: Curation within Gam whats the.
Speaker Change: Do you see within creation curation, given the data assets that you have and could this be extended with similar integrations across our sell side partners.
Speaker Change: Yeah sure we were thrilled to announce first to market launch of Ias deterioration with Google AD manager and the way to think about that is leveraging Ias is contextual data and then setting it in Google AD manager to ensure.
Speaker Change: Brands are able to consolidate their bidding on higher quality inventory and target contextually relevant.
Speaker Change: Content in a more precise way. This one two it's early days, but it's it is a demonstration of one.
Speaker Change: One standing partnership with Google and where.
Speaker Change: We're thrilled we're continue to innovate with Google.
Speaker Change: Perfect. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Brian Pitz of BMO. Your line is now open.
Speaker Change: Thanks for the question I know you discussed previously that advertisers continued to see transparency and efficiency in that broader shifts from insurance to performance over the long run can you give us an update on the discussion and feedback during your sales processes is this something that most accounts early a handful are really discussing you're asking.
Speaker Change: For right now.
Speaker Change: Then I know, it's early but maybe just a quick update on integration into video gaming platforms, notably robotics.
Speaker Change: That going any any feedback there. Thanks.
Speaker Change: Sure happy to answer that one.
Speaker Change: So the advertisers are absolutely there.
Speaker Change: Very focused on all things related to efficiency and ROI and this is more at a macro digital advertising perspective.
Speaker Change: Every single dollar that an advertiser invest in digital advertising they want to get the best Bang for their Buck so with that the fact that I guess is providing transparency providing solutions that help the brands reach higher quality media offering pre bid products.
Speaker Change: That drive that efficiency and drive higher ROI. The brands are very focused on that I would also say at a macro level heading into fourth quarter efficiency is the word that we repeatedly here from the brands when it comes to advertising their expectation.
Speaker Change: <unk> is around advertising. So this shift from insurance, ensuring that we protect brand equity brand reputation for the fortune 500 brands that we're protecting that brand equity, but equally if not more important is that we're also helping the brands drive higher.
Speaker Change: ROI through this.
Speaker Change: <unk> and products that we're offering so it's definitely top of mind for the brands in terms of feedback on gaming gaming continues to be an important emerging channel for the brands are roadblocks partnership is a reflection of that I would say.
Speaker Change: From a channel perspective, and how the brands prioritize the various channels and solutions, especially when it comes to Ias products I would say it is social optimization retail media audio and then gaming.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Matt cost of Morgan Stanley. Your line is now open.
Speaker Change: Great. Thanks for taking the question I just wanted to ask about publisher revenue. It was a pretty meaningful acceleration this quarter and it's actually followed I think over a year of accelerating growth on the publisher side of the business. So I guess anything that you would call out that's changing their areas of strength or new adoption. Thank you.
Sure so public and in particular within our publish our business continued to post very strong growth in the third quarter accelerating from the 20 plus percent growth we disclosed in the second quarter.
Speaker Change: Really pleased with this performance as we continue to expand our partnerships.
Speaker Change: And we also public I did have a modest benefit from political advertising in the third quarter. The also the other call out on our publisher business is that we did see growth in our non CTV publisher business.
Speaker Change: Due to due to some strength in that business is a reflection of some of the historical investments we've been making as we move into the fourth quarter, we expect to publish our revenue growth to moderate a bit given the third quarter did have a modest benefit from political but we are expecting a mid teen growth overall in our publisher.
Speaker Change: In the fourth quarter, and bringing the full year to a mid teen growth.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. Our next question comes from Robert Cool Breath of Evercore ISI. Your line is now open.
Speaker Change: Great. Thank you for taking my questions I wanted to ask on the pre bid social tools has there been any customers who haven't used social measurement, but we think the pre bid optimization tools could be unlocked to activate demand and then a couple of quick ones on Oracle.
Speaker Change: Anything you could tell us about the mix of anticipated <unk> revenue between advertising and publishing revenue.
Speaker Change: And was there any contribution from anyone who moved over before end of life in Q3. Thank you.
Speaker Change: Okay.
Speaker Change: So the first question around pre bid social.
Speaker Change: Do we anticipate any advertisers have yet to use postpaid through social to adapt.
Speaker Change: It's early days for pre bid social optimization ideally, we want all brands to use both pre bid and postpaid.
Speaker Change: The ones that have currently engaged in pre bid in the both the beta and the <unk> are the larger fortune 500 brands.
Speaker Change: But I would say that in terms of a type of advertiser, who would lean into pre bid and has yet to activate post bid would be mid market. So mid market being more performance based marketers and again the team is out there pitching the product hard both.
Speaker Change: To those big advertisers and the mid market advertisers and yes, and we'll just continue to drive the activation.
Speaker Change: In terms of the mix of Oracle revenue in the short term, we do expect to see an impact across.
Speaker Change: Across our publisher business also across our advertising business, particularly in measurement as we scale over time, we do expect that next this shift.
Speaker Change: As the optimization opportunity becomes larger over time, and we continue to upsell and cross sell our offerings.
Speaker Change: Great and can I ask a quick follow up is there a way maybe to pitch. This to some of those mid market or performance oriented advertisers.
Speaker Change: Sort of a performance based solution around pre bid or they are.
Speaker Change: Performance implications from from utilizing the pre bid optimization or benefits there. Thank you.
Speaker Change: Yes, Great question I would say that since we're in basically the first pitch of the first inning around pre bid social optimization in meta.
Speaker Change: We would need to activate some of these pre bid mid.
Speaker Change: Mid market accounts in pre bid social so.
Speaker Change: In 2025, once we have more data in terms of the performance and results we're happy to provide more color.
Speaker Change: Got it thank you thank.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Thank you. Our next question comes from Youssef Squali of Truth Securities. Your line is now open.
Youssef Squali: Thank you very much Tonya can you just unpack the Q4 guide a little bit on the top line or kind of what are you guys. Assuming in terms of the turn in optimization and measurement and our measurement in particular on the back of several of these wins that you got from Oracle was very.
Youssef Squali: Pressure on pricing that maybe is also part of the.
Speaker Change: The pressure that you've talked to that.
Speaker Change: Sure. So I'll cover the first two Lisa do you want to handle the third or fourth quarter guide just really kind of unpacking, where we are from a revenue perspective, the outlook assumes the continuation of.
Lisa Schneider: The lower volume growth that we saw in the near term, particularly in CPG and retail are just being thoughtful and prudent.
And adjusting our fourth quarter guidance to reflect that we've also factored in the lower than expected monetization of the products. We launched earlier this year and as Lisa talked about we did have a very robust product roadmap and we're still seeing really nice adoption for example, T M Q on meta.
Lisa Schneider: Accelerating growth in 2024 versus 2023, but not as large as we expected given some of the current market dynamics.
Lisa Schneider: And then finally, we did see the softer than expected timeframe.
Lisa Schneider: Timeframe, leading up to the election. So we've factored this all in we also factored in the impact from the new Oracle wins.
Lisa Schneider: And.
Lisa Schneider: Overall, one metric that we also wanted to make sure. We highlight with you is that the fourth quarter revenue contribution to the full year and our guide is about 28%, which is consistent with this period last year.
Lisa Schneider: It's also worth calling out we were really pleased to exceed our guidance on EBITDA, because some of the strength, particularly around our gross margin.
Lisa Schneider: Improving year over year from the third quarter of this year versus last year.
Lisa Schneider: And raising our EBITDA guidance for the fourth quarter.
Speaker Change: In terms of your sorry.
Oh, you should have in terms of your question around.
Speaker Change: Any pricing pressure with the Oracle wins.
Speaker Change: A couple of notes there, yes, it was a competitive jump ball process throughout the summer Ah.
Speaker Change: Oracle offered a more basic level of product and service we offered the customers that we won competitive rates with the opportunity to both upsell and cross sell our premium offerings and as I mentioned before we always.
Speaker Change: Focus first on value. So we engaged with these prospects demonstrated the differentiation of our technology and product demonstrated the value we're offering.
Speaker Change: Yes, we offered competitive rates.
Speaker Change: One more thing yes to answer your second question, specifically around the trend in measurement and optimization, we are expecting a slight uptick in the fourth quarter of the growth rate in our advertising revenue both measurement and optimization.
As I mentioned Pablo share growth rate moderating so.
Speaker Change: Midpoint of our guide is 11% in the fourth quarter also 11% in the third quarter, but is there that dynamic with a slight uptick in advertising is as publishers expected to moderate.
Speaker Change: Alright Thats helpful. Thank you both.
Speaker Change: <unk>.
Speaker Change: Thank you.
Speaker Change: Our next question comes from young Kim of Loop capital markets. Your line is now open great. Thank you following up on last question can you just talk about the overall pricing environment out there.
Speaker Change: In regard to the price increase are you able to get better pricing leverage when a customer adopts certain products like pre bid optimization versus the <unk>.
Speaker Change: It's just a measurement customer thanks.
Speaker Change: Sure. So during the third quarter, our change in our average CPM was as expected and measurement. It was down 6%, which is slightly better than the first two quarters. This year, our CPM and optimization were consistent with the prior year.
Speaker Change: And we do Ah ha charge up.
Speaker Change: Material premium on optimization offerings versus measurement.
Speaker Change: Given the value of the tech and as we're rolling out pre bid social given the.
Speaker Change: The higher rates, we charged for optimization, we do see a significant opportunity to cross sell and upsell and charge more for our pre bid social optimization.
Speaker Change: Okay, Great and Tania also full year double digit revenue growth guide for next year.
Speaker Change: What are you expecting in terms of the optimization segment do you expect that to grow double digits as well.
Speaker Change: Especially with the launch of all these new pre bid.
Speaker Change: Optimization products.
Speaker Change: So in 2025.
Speaker Change: We have shared today, some guardrails of how to think about 2025 in terms of the.
Speaker Change: The growth drivers.
Yeah, as we talked about.
Speaker Change: To scale, our 2024 product launches lots of T. M. Q are continuing to scale that in 2025 that'll benefit measurement.
Speaker Change: And in terms of optimization, we do see.
Speaker Change: An opportunity to ramp our revenue from <unk>, social which will be included in our optimization numbers next year.
Speaker Change: And then Oracle as I mentioned the contribution for Oracle will be across all of our offerings.
Speaker Change: Alright, great. Thank you so much.
Speaker Change: Yes.
Speaker Change: This does conclude the question answer session I would now like to turn it back to Lisa Snyder.
Lisa Snyder: For closing remarks.
Lisa Snyder: Thanks to everyone for joining today's call are investments in leading market technology are yielding results with first to market products and partnerships as well as new business momentum, including Oracle wins, we still have more work to do but with an enhanced leadership team in place. We are focused on driving results for our.
Lisa Snyder: <unk> and shareholders have a great night.
Lisa Snyder: Yeah.
Lisa Snyder: This does conclude the program you may now disconnect.
Lisa Snyder: Okay.
Lisa Snyder: [music].
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Yeah.
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Lisa Snyder: Okay.
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Lisa Snyder: Sure.
Lisa Snyder: Yes.
Lisa Snyder: [music].
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Lisa Snyder: Okay.