Q4 2024 DoubleVerify Holdings Inc Earnings Call
Speaker Change: Greetings and welcome to the Double Verify fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode.
Speaker Change: A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host, Tejal Engman, Senior Vice President, Investor Relations. Thank you.
Tejal Engman: Thank you, operator. Good afternoon and welcome to Double Verify's fourth quarter and full year 2024 earnings conference call.
Tejal Engman: With us today are Mark Zagorski, CEO, and Nicola Allais, CFO.
Tejal Engman: Today's press release and this call may contain forward-looking statements that are subject to inherent risks, uncertainties, and changes, and reflect our current expectations and information currently available to us and our actual results could differ materially.
Tejal Engman: For more information, please refer to the risk factors in our recent SEC filings, including our annual report of Form 10-K. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not to substitute for our GAAP results.
Tejal Engman: Reconciliation is the most comparable gap measures available in today's earnings press release, which is available on our investor relations website at ir.doubleverify.com. Also during the call today, we'll be referring to the slide deck posted on our website. With that, I'll turn it over to Mark.
Mark Zagorski: Thanks, Tejal, and good afternoon, everyone. 2024 was a year of meaningful progress in the face of significant business and market challenges.
Mark Zagorski: We grew total revenue by 15% year-over-year to $657 million, powered by double-digit growth across all three revenue lines.
Mark Zagorski: We measured a record 8.3 trillion billable media transactions, a 19% increase year-over-year, demonstrating DVD's unmatched scale across every digital media environment, format, and device.
Mark Zagorski: We won an unprecedented number of large global enterprise customers in 2024, further cementing our position as the trusted partner for the world's biggest brands.
Mark Zagorski: Our 2024 win rate remains above 80% across all opportunities, with greenfield deals where advertisers weren't previously using third-party tools, accounting for 64% of full-year wins.
majoring in partnerships with P&G, Microsoft, Google, Kellogg's, Kenview.
Mark Zagorski: DISH, National Bank of Canada, Bosch, and Vet MGM highlight DV's continued industry leadership and reinforce the accelerating adoption of our solutions worldwide.
Moreover, our growth extended beyond advertisers.
Mark Zagorski: Supply-side revenue grew 25% year-over-year, fueled by rising demand from retail media platforms and a record influx of platform and publisher customers.
Mark Zagorski: This momentum helped our business remain strong and profitable, delivering a 33% adjusted EBITDA margin and $160 million in net cash from operating activities in 2024, up 33% from last year.
Mark Zagorski: to leverage our unique data assets and client engagements and evolve DoubleVerify for a partner that ensures media spend is protected to one that also measures performance and optimizes the effectiveness of that spend.
Despite our successes, 2024 also tested our resilience and adaptability.
Mark Zagorski: Throughout the year, we navigated some isolated headwinds, including scaled-back ad spend from six large customers.
Mark Zagorski: And, in Q4, one of our largest customers, facing billions of dollars of sharply escalating commodity costs, dramatically reduced its spend with TV as part of a sweeping cost reduction initiative that also impacted their other advertising and marketing partners.
Mark Zagorski: Although this customer has maintained limited engagement with DB while temporarily shifting to standard native tools within each tech platform, we have completely excluded them from our 2025 guidance to provide a realistic outlook for the year ahead.
Mark Zagorski: These factors, combined with the absence of a post-election rebound in ad spend, resulted in a disappointing Q4 that fell short of our expectations.
Mark Zagorski: Beyond these isolated customer challenges, we also saw the continued shift of ad dollars from open web programmatic to proprietary platforms like social, where most of our activation solutions were unavailable until early this year.
Mark Zagorski: and Spending in Private Marketplaces, PMPs, and Direct Programmatic Guarantee Deals, or PG, also started to accelerate, temporarily limiting advertisers' ability to attach DV solutions to every transaction.
Mark Zagorski: But let's be clear, these challenges do not define DV's long-term future. In fact, they have sharpened our strategy and fueled our drive for diversified growth and product innovation.
Mark Zagorski: We've taken decisive action to address these market shifts and will continue to do so.
Mark Zagorski: Our investment in pre-bid solutions across Meta and TikTok will position us for future social growth as dollars shift into proprietary platforms.
Mark Zagorski: Our recent launch of cell-side curation and decisioning solutions on major SSPs will drive higher attach rates of db data to PMP and PG deals, aligning with the evolution of the protomatic ecosystem.
Mark Zagorski: And, with strategic acquisitions like DV-SciBiz and the newly acquired Rockerbox, we're expanding further into performance measurement and optimization, unlocking an entirely new TAM of mid-market customers and lower funnel of direct response ad budgets.
Mark Zagorski: At the same time, we're accelerating revenue diversification, but continue to add large new customers.
Mark Zagorski: In 2024, we grew the number of customers generating over $200,000 of revenue to 331, up from 290 in 2023.
Mark Zagorski: We are executing with focus, adapting with speed, and positioning DB for long-term success.
Mark Zagorski: With these actions in motion, and with less macro variability than we saw around the elections late in 2024, we are entering the year with confidence, ready to drive continued growth.
Mark Zagorski: These tactical moves are part of a larger strategic evolution to leverage DV's unmatched data scale, relentless innovation, and extensive client engagement to turn challenges into catalysts for future growth.
Mark Zagorski: Our vision is simple but powerful, to unify media quality, optimization, and performance measurement into a single platform to help advertisers maximize the effectiveness of every ad dollar.
Speaker Change: In a market increasingly driven by demands for efficiency and accountability, GE delivers the tools advertisers need to make every impression more impactful.
Media quality has always been foundational to performance.
Speaker Change: It separates inventory with the potential to perform from inventory that never will. With our unique scale core data asset of essential signals like fraud prevention, brand suitability, viewability, attention, and context, DV gives advertisers the critical insights they need to invest with confidence.
Speaker Change: With the addition of SciBiz AI, we take campaign optimization to the next level, leveraging these and other data signals to drive advertiser KPIs more effectively than standard bidding algorithms can.
Speaker Change: Like the Cybib acquisition, the pending acquisition of Rockerbox, a leader in marketing attribution and performance measurement, marks another important step forward for DD.
Speaker Change: By integrating Rockerbox advanced attribution capabilities with TV's media quality data and Sybiz AI optimization, we're giving advertisers a comprehensive, real-time view of media performance, enabling cross-platform adjustments for smarter spending and stronger outcomes.
Speaker Change: and it continues DV's legacy of powering media performance while remaining agnostic and independent to media channel and media investment.
Speaker Change: Expanding DV's capabilities to deliver a comprehensive end-to-end performance measurement solution meaningfully expands DV's total addressable market, unlocking access to mid-sized performance advertisers and direct response budgets.
Speaker Change: While Rockerbox's current client roster, which includes household names like Staples, Lowe's Hotels, and Weight Watchers, has minimal overlap with DV's existing customers, around 200 of their target customers already partner with DV.
Speaker Change: This alignment opens the door for meaningful cross-sell opportunities and long-term revenue synergies, further enhancing the value we deliver to our customers.
Speaker Change: Driving media ROI is critical and performance measurement is essential for all advertisers.
Speaker Change: By integrating Rockerbox cross-channel attribution, DV's media quality analytics inside this AI-driven optimization were transforming fragmented marketing data into a unified, actionable intelligence platform.
Speaker Change: We've already seen a great example of this dynamic in action, with a direct-to-consumer brand that was using several of DiDi's media quality solutions, and then also employed Rockerbox to track media spend performance.
Speaker Change: Their key conversion KPI was the cost of customer sign-ups for membership, and their goal was clear, reduce CPA.
Speaker Change: With dbSciBiz optimization, the brand was able to optimize their bidding strategies leveraging the CPA data measured in Rockerbox, integrating these real-time performance insights to dynamically adjust their bidding algorithms.
Speaker Change: The results were immediate, a nearly 40% reduction in CPA within the first 8 weeks, followed by an additional 20% decrease in weeks 9 through 12.
Speaker Change: This is the power of a fully integrated performance measurement and optimization engine, delivering measurable business results at scale.
Speaker Change: The success highlights a larger shift in the industry. Advertisers need a unified, data-driven approach to navigate an increasingly complex digital landscape.
Together, we will provide advertisers with a single, integrated solution.
Speaker Change: to measure, optimize, and drive real business outcomes with greater efficiency in an increasingly complex digital landscape.
Speaker Change: To explore the future of measurement and data-driven innovation at DV and to highlight the role of Rokobox cross-platform performance and measurement capabilities,
Speaker Change: DB's executive team, along with industry experts, will host an in-person Innovation Day for the investment community on Wednesday, June 11, from 1 p.m. to 4 p.m. at the New York Stock Exchange in New York City.
The event will also be broadcast live.
Speaker Change: Now, let's take a few minutes to dive into how we're evolving DV's strategic vision to drive long-term growth across social media, the open web, and CTV.
Speaker Change: Social media accounts for over 60% of digital ad spend excluding search. Yet today, DV measures only about 5% of all U.S. social impressions, highlighting a massive growth opportunity.
Speaker Change: In 2024, we grew our social media measurement revenue by 27%, making it a nearly $110 million business for DV.
Speaker Change: That's more than double the $45 million it generated just three years ago in 2021. A testament to our relentless focus on expanding social media product and language coverage.
Speaker Change: A key part of ensuring continued future growth in social is expanding DV's value proposition from solely post-bid measurement to pre-bid activation, helping advertisers optimize their media investments before they are made.
Speaker Change: I'm thrilled to announce the launch of our content-level avoidance solution for Meta's Facebook and Instagram feeds and reels, powered by Divi's Universal Content Intelligence AI.
Speaker Change: This game-changing innovation ensures advertisers can proactively avoid unsuitable content while continuing to drive superior media performance.
Speaker Change: In partnership with Metta, we're delivering this solution at an incredible scale. What's more, by seamlessly integrating our content-level avoidance controls with post-bid measurement tools, we've created a closed-loop system that ensures every ad delivers maximum impact.
Speaker Change: In addition, we've rolled out 30 new content-level avoidance categories, giving advertisers unprecedented control and precision in their campaigns across Facebook and Instagram feeds and reels.
Speaker Change: Similarly, we've launched TikTok's video exclusion list solution, powered by DV, in expanded alpha testing.
Speaker Change: Empowering advertisers to proactively exclude videos flagged as unsuitable through our reporting. Further strengthening our pre-bid coverage across social media.
Speaker Change: We've seen solid initial interest in both activation solutions, with nearly 200 customers in our meta-pipeline, and several already launched and live in the weeks since the solution has been made available.
Speaker Change: Rockerbox will also play a role as we continue to grow our overall value proposition in social. By linking social performance and conversion data from Rockerbox with DV media quality data and optimizing against both via Sybiz, advertisers will be able to eliminate waste, drive better engagement, and higher ROI, all while ensuring their ads appear in safe, high-quality environments.
Speaker Change: As we redefine how advertisers drive performance in social media, we remain as committed as ever to expanding our measurement coverage across key social media platforms with enhanced viewability and invalid traffic detection for display ads on Facebook Reels.
Speaker Change: On TikTok, we extended our brand safety solutions to 18 new international markets and introduced advanced vertical sensitivities tailored to local market needs.
Speaker Change: Now, turning to the open web, the largest driver of DB's revenue across both activation and measurement, our performance solutions are already delivering strong results even as they scale from a relatively small base.
Speaker Change: In activation, DV-PsiBibs revenue grew over 50% year-over-year, surpassing the top end of our expectations.
Speaker Change: Since acquiring SciBids in August of 2023, we've successfully upsold the solution to 79 DV customers and 40 of our top 100 clients have started to use SciBids AI to optimize their campaigns.
Speaker Change: On the measurement front, DV Authentic Attention continued its strong momentum, growing nearly 190% year-over-year.
Speaker Change: As I mentioned earlier, as advertisers increasingly shift their open web spend to PMPs and programmatic direct deals, we're leaning into this opportunity by deploying DBs activation solutions across numerous cell-side platforms.
Speaker Change: eMarketer projects U.S. programmatic display ad spending to grow just 4% for the open exchange but over 30% for PMPs and programmatic direct deals between 2024 and 2026.
Speaker Change: We always drive to ensure DV data can be employed wherever and however advertisers focus their spend. So as advertisers increasingly prioritize curated inventory, they're turning to DV to help them achieve greater control, transparency, and performance.
Speaker Change: By leveraging our trusted brand safety, contextual viewability, and fraud data, DB delivers optimized inventory that powers smarter, more effective media investments through curated deals on the advertiser's preferred platforms.
Speaker Change: To that end, I'm excited to share that we've launched an integration with Google Ad Manager, allowing programmatic buyers to seamlessly access DB's media quality data through curated inventory packages.
Speaker Change: This integration allows advertisers to source inventory that meets critical benchmarks for context, brand safety, and viewability, all while driving better performance at scale.
Speaker Change: By connecting directly with Google Ad Manager, we're making it easier than ever for advertisers to ensure their campaigns are optimized for safety and effectiveness, empowering them to achieve stronger results across the programmatic ecosystem.
Speaker Change: This is in addition to other cell-side integrations we recently announced, including new solutions with Index Exchange and Criteo.
Speaker Change: Turning to CTV, our strategic vision is helping fill one of the most exciting growth opportunities in digital media.
Speaker Change: In 2024, we delivered impressive results in CTV, with measurement impression volumes growing 66% for the full year and 95% in the fourth quarter alone. This momentum drove a significant milestone.
Speaker Change: CTV accounted for 11% of DV's total measurement impression volume in 2024, more than doubling its 5% share in 2023.
Speaker Change: Our growing CTB base creates a significant future monetization opportunity for DBEs as we develop deeper content-level contextual insights and stronger connectivity to outcomes data that drive performance.
Speaker Change: Turning to retail media networks, our supply-side retail media solution grew 36% year-over-year in 2024, contributing to our overall supply-side growth rate of 25% year-over-year.
Speaker Change: Led by our partnerships with the leading retail media platforms, our global reach and connectivity in retail media continues to expand.
Speaker Change: DV's measurement tags are now accepted on 124 key global retail media networks and sites, including 16 top retail media platforms and 108 major retailers, with close to half supporting DV measurement on their owned and operated properties.
Speaker Change: More broadly, on the supply side, we secured over a dozen new platform and publisher deals in Q4, including names like Newsweek and Ozone, underscoring the continued opportunity for DVD to support leading open web publishers.
Speaker Change: As we wrap up, it's clear Double Verify continues to make meaningful progress to address our challenges while we lay the foundation for future growth.
Speaker Change: Looking ahead, our opportunity remains vast. We already work with nearly half of the world's top 1,000 advertisers, yet our revenue contribution represents less than half a percent of their total media spend.
Speaker Change: demonstrating the significant runway for growth with our existing customer base.
Speaker Change: Beyond that, we continue to expand and diversify our reach, evolving our solution set to power performance measurement, outcomes optimization, and attribution, while strengthening our presence with mid-market and direct response advertisers.
Speaker Change: With a strong and profitable core, an expanded customer base, and an unmatched commitment to quality innovation, DD is well positioned to capture the opportunities ahead. With that, let me turn the call over to Nicola.
Nicola Allais: Thank you, Mark, and good afternoon, everyone. In the fourth quarter, we successfully ramped our new customer wins, highlighting our ability to swiftly onboard large global enterprise clients.
Nicola Allais: However, as Mark mentioned, Q4 revenue fell short of expectations as the slowdown in spend from existing customers that began in October due to political ad spend crowding out brand advertising persisted throughout the quarter.
Nicola Allais: This was exacerbated by a sharp reduction in spend from one of our largest customers later in the quarter, driven by rising commodity costs.
Nicola Allais: As part of a broader cost-cutting initiative affecting multiple advertising and marketing partners, this customer suspending its business with DV in early February 2025.
Nicola Allais: This customer contributed over $20 million of revenue in fiscal year 2024, with nearly half of this revenue attributable to social measurement, and almost a third generated through ABS. As a result, we have removed this customer from our 2025 guidance.
Nicola Allais: For the fourth quarter of 2024, total revenue of $191 million grew 11%, driven by 10% growth in activation, 7% growth in measurement, and 34% growth in supply side.
Nicola Allais: Our activation and measurement businesses, which are driven by advertisers, comprise 91% of our total fourth quarter revenue.
Nicola Allais: Advertiser revenue grew 9% in the fourth quarter, driven by 14% growth in volume, or MTM, and a 5% decrease in pricing, or MTF, excluding the impact of an introductory 6B deal for one large customer that we onboarded from Moot.
Nicola Allais: ABS which represented 53% of our activation revenue in the fourth quarter grew 6% year-over-year driven by new logo activations and upsells to existing customers.
Nicola Allais: Adoption of this premium product continues to expand with 70% of our top 500 customers activating ABS in Q4, up from 68% in Q3. Our core programmatic solutions and Sybiz AI also delivered solid year-over-year growth.
Nicola Allais: Fourth quarter measurement revenue grew 7%, driven by 9% growth in social revenue.
Nicola Allais: Social revenue growth was impacted by the slowdown in spend by large brand advertisers that persisted after the election and by the same customer that significantly reduced its spend with us due to a sharp increase in commodity costs.
Nicola Allais: International measurement revenue grew 11% in the quarter and comprised 30% of measurement revenue, up from 29% in the fourth quarter of 2023.
Nicola Allais: Supply-side revenue grew 34%, driven by growth in existing platforms, including retail media, as well as several new platform integrations, including with former mode clients.
Thank you for watching!
Nicola Allais: Full year 2024 revenue grew 15%, driven by 13% growth in activation and 15% growth in measurement.
Nicola Allais: Social measurement revenue grew 27% for the full year as compared to 47% growth in the first half of 2024.
Nicola Allais: As mentioned in prior calls, the adoption of our measurement solutions on META progressed at a more gradual pace than we anticipated in 2024, as some advertisers waited for the rollout of social activation solutions to test both measurement and activation together.
Nicola Allais: The social activation solution is now in market as of mid-February.
Nicola Allais: Social measurement revenue represented 48% of measurement revenue in 2024 up from 43% in 2023. Supply-side revenue growth of 25% was driven by increased platform revenue.
Nicola Allais: Advertiser revenue growth for the full year was primarily volume driven, with 8.3 trillion billable transactions measured, a 19% year-over-year increase in MTM, while MTF decreased by 4% to $0.072.
Nicola Allais: In 2025, we expect volumes to remain the primary driver of growth as we continue to verify more digital ad impressions through new product launches and channel and geographic expansion.
Nicola Allais: We expect NTF to continue to decline in 2025, reflecting the impact of competitive rates for major new global brand wins, in particular, Oracle accounts, and the greater shift towards measurement and international impressions.
Nicola Allais: For full year 2024, we achieved a net revenue retention rate of 112%, while gross revenue retention remained above 95% for the fifth consecutive year.
Nicola Allais: We grew average revenue from our top 100 customers by 14% year-over-year to $4.2 million.
Nicola Allais: We grew the number of advertisers generating more than 200,000 of annual revenue by 14% year-over-year to 331.
Nicola Allais: And our long-term customer relationships remain strong, with top 75, top 50, and top 105 customers working with us for approximately 8 years.
Nicola Allais: Moving to expenses. In the fourth quarter, cost of revenue increased 14%, primarily driven by an increasing revenue sharing arrangement cost with programmatic partners, driven by activation revenue growth, as well as higher hosting and bandwidth costs.
We delivered 82% revenue less cost of sales.
Nicola Allais: Total non-GAAP operating expenses, which exclude stock-based compensation and other items for comparability, grew 7% as compared to 11% revenue growth, reflecting the efficiency of our operating model.
Nicola Allais: Finally, we delivered $74 million of adjusted EBITDA, or a record 39% margin, and $23 million of net income.
Nicola Allais: For full year 2024, cost of revenue increased by 9% and we delivered 82% revenue less cost of sales.
Nicola Allais: Total non-GAAP operating expenses grew 15% and represented 49% of total revenue, the same as in 2023.
Nicola Allais: We delivered four-year adjusted EBITDA of $219 million, representing a 33% adjusted EBITDA margin to combine revenue growth with solid profitability.
Nicola Allais: We ended 2024 with 1,197 employees, up from 1,101 at the end of 2023. Over 40% of our headcount growth in 2024 was in R&D investments for engineering and product resources.
Nicola Allais: In 2025, we expect hiring to slow as we continue to invest in product innovation while we reallocate resources towards growth initiatives and actively optimize the organization.
Nicola Allais: Net income for full year 2024 was $56 million, or a 9% margin as compared to a 12% net income margin in full year 2023, primarily driven by slower year-on-year revenue growth and higher year-over-year stock-based compensation expenses.
Nicola Allais: Stock-based compensation through 2024 reflects the impact of our inaugural annual equity award program introduced in 2021 when we're in public. Looking ahead and excluding the potential impact of future M&A, we expect the annual growth in stock-based compensation expenses to stabilize into high teens.
Nicola Allais: In terms of share buybacks, we repurchased in the fourth quarter 4.2 million shares of DV Common Stock for $78 million, bringing total share repurchases for full year 2024 to 6.8 million shares for $128 million.
Nicola Allais: In January 2025, we repurchased an additional 1.1 million shares for $22 million. As of February 27, 2025, $200 million remains available and authorized under the new repurchase program for utilization throughout 2025.
Nicola Allais: Moving to cash flow, we generated approximately $160 million of net cash from operating activities in 2024.
Nicola Allais: This represented an operating cash flow to adjusted EBITDA ratio of 73%, highlighting a strong cash flow generation and EBITDA conversion.
Capital expenditures were approximately $27 million in 2024.
Nicola Allais: Finally, we ended the year with $311 million of cash on hand in short-term investments and zero long-term debt.
Nicola Allais: Turning to Rockerbox, we have agreed to acquire this leading platform measurement for $85 million in cash.
Nicola Allais: The transaction is subject to customary closing condition and adjustments and is expected to close in the second quarter.
Nicola Allais: We expect Rockerbox to contribute approximately $8 million to DV's total revenue in 2025 within our measurement revenue line, and this partial year contribution has already been included in our 2025 guidance.
Nicola Allais: Currently near break-even, Rokobox offers scalable growth across our customer base. We plan to accelerate this growth through strategic investments in talent, technology, and integrated data systems across both companies.
Now turning to 2025 guidance.
Nicola Allais: For the first quarter of 2025, we expect revenue to range between $151 and $155 million, representing a year-over-year increase of 9% at the midpoint, and adjusted EBITDA to range between $37 to $41 million, representing a 25% adjusted EBITDA margin at the midpoint.
Nicola Allais: For full year 2025, we expect revenue growth of approximately 10 percent.
Nicola Allais: Our guidance reflects the business transition that we are navigating in 2025 with the impact of two specific headwinds related to clients and a measured take on the impact of three large opportunities that we expect will contribute meaningfully beyond this year.
Nicola Allais: On Headwinds, our guidance accounts for the suspension of service for one of our largest customers and a limited anticipated year-over-year growth from the core of six advertisers that waited on 2024 results.
Nicola Allais: In terms of opportunities, our guidance accounts for moderate growth in youth social revenue, factoring in time for clients to test and onboard a new non-social activation solution.
Nicola Allais: in a one- to three-year period to upsell our premium solutions to the Moat clients that we onboard in Q4 2024.
Nicola Allais: and a measured in-year revenue upside from Rockenbach as we prioritize the integration of product and operations in 2025.
Nicola Allais: We expect the weighting of our full-year revenue between the first half and the second half of the year to mirror 2024.
Nicola Allais: We expect full year 2025 adjusted EBITDA margins of 32% to account for the acquisition of Rockerbox, which is near break-even today, and year one investments to integrate the acquisition.
Nicola Allais: We expect full-year revenue, less cost of sales, to remain above 80%.
Nicola Allais: For the first quarter of 2025, we expect stock-based compensation expenses to range between $22 and $25 million.
Nicola Allais: For full year 2025, we expect stock-based compensation expenses to range between $105 million and $110 million.
Nicola Allais: We expect weighted average fully diluted shares outstanding for the first quarter of 2025 to range between $168 and $170 million.
Nicola Allais: We anticipate 2025 capital expenditures including capitalized software of approximately $36 million to invest in new product innovation and product infrastructure growth.
Nicola Allais: With zero debt and $311 million of cash on hand and short-term investments, we're well positioned to drive business expansion and long-term growth in 2025.
Nicola Allais: In closing, in 2024 we maintain strong margins and grew revenue despite shifting ad spend trends and a slowdown from key customers, while returning capital to shareholders through our Share Repurchase Program.
Nicola Allais: As we mentioned on a previous call, we recognize 2025 as a transition year.
We're taking decisive action to navigate an evolving advertising environment.
Nicola Allais: and we remain committed to investing in innovation, operational efficiencies, and scalable growth to drive long-term value for our shareholders.
And with that, we will open the line for questions.
Operator, please go ahead.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: The first question is from Matt Swanson from RBC. Please go ahead.
Great. Thank you guys for taking my question.
Mark Zagorski: Mark on Rockerbox, it's an intriguing acquisition given the focus on attribution performance measurement obviously differing from kind of the core verification business.
Mark Zagorski: And as you mentioned, this has always been part of the long-term strategic idea of expanding wallet share and getting up from that half percent of media spend you talked about. So can you talk about or elaborate on kind of the strategic rationale and specifically how this is going to enhance the customer value proposition and fits in with the existing solutions?
Speaker Change: Yeah, thanks for the question, Matt. And, you know, this is something, as you know, that we've been talking about for a while here, is this evolution of DD to leverage our relationships and core data sets.
Speaker Change: to not only ensure that media spend is protected, but that it starts to perform as well. And I think SciBiz was one of the first steps we took there. Our investments in metrics like attention were other steps.
Speaker Change: And I think this kind of starts to round out the picture where we can verify, optimize, and then measure performance, you know, in one platform. And I think what's really cool about Rockerbox is, you know, similar to Thybids,
Speaker Change: It fits that narrative but also creates a real competitive differentiator for us.
We won numerous deals last year, enterprise deals.
Speaker Change: based on the fact that we had differentiated products that an attention inside it's played a big part of that.
Speaker Change: Rockerbox does the same thing. So number one, it plays out our evolutionary story of, you know, being an end-to-end measurement solution that also addresses performance and outcomes.
Speaker Change: Number two, it creates a differentiator for us that helps us win business and catalyze growth. As you know, none of these acquisitions have in themselves had a ton of revenue when we bought them.
Speaker Change: But as we saw with Cybids last year, it grew over 50%. Rockerbox is small, but we're going to look at leveraging that as a differentiator to grow other business and continue to invest in that property so that we can increase that value prop. And as you noted,
Speaker Change: It's not just about wallet share for advertisers, but it's about making it easier for them to understand what their spend is doing, where it's going, and how it's performing. And if we can do that,
Speaker Change: That's a huge win, not just for our customers, but it's a win for us too. So, you know, we're excited about the acquisition. As always, it will take time to integrate and scale, but we've had a really good track record and we're going to use the playbook that we used with SciBiz to extend that with Lockerbox as well.
Speaker Change: I appreciate that. And then, Nicola, thank you for kind of going through all the moving parts, the 2025 guide, highlighting some of those headwinds and tailwinds. But when we're thinking about some of the other things that we're excited about for this year in the story, or for Double Verify in general, between, you know, CYBITS, moat displacement, CTV, new social solutions,
Speaker Change: How are you thinking about those ramping throughout the year, and I guess the other way to put it would be the things that you said were headwinds feel like they might be confined to 25 and the tailwinds seem like they're just getting started in 25, so is it reasonable to think about the model accelerating in 26?
Speaker Change: Yeah, man, I think the the way we're the way you're describing is how we're seeing it, right? So we have we have headwinds that are client specific
Speaker Change: And then we have opportunities that are, in the long term, we believe will be very large for us. We're taking a measured approach in 25 for those opportunities, but the size of them, it doesn't take away from the size that we think those are. So the three that we specifically mentioned in the guidance section are social activation. We're just a week into the product having been launched.
Speaker Change: And we believe it will be a large opportunity for us in the longer term. In 2025, we're going to account for time for clients to test and activate the solution. That's one. The second part is Moat. We were very successful in winning these clients in Q4 of 2024, but they were coming from a platform that had basic services. And so we won those clients on a basic service, like-for-like.
Speaker Change: And now we are going through the motions of upselling those clients to solutions that are more sophisticated and we just didn't have time to present during the RFP process for the mode clients.
Speaker Change: And you know, as we've shown many times, you know, the opportunities for us to upsell for premium products, you know, could
Speaker Change: could expand the opportunity two to three times once you have the client on the basic product. So that's the second one. And then the third one is Rockerbox. So, you know, as Mark said, it's a very interesting acquisition. It expands what we can provide to our customers. It also expands our opportunity to SMBs.
Speaker Change: First year is going to be about integrating the acquisition. There's a small amount of revenue in 2025. Rockebox has an existing business and will be for a partial year, but really the opportunity there is in 2026.
Thank you.
Speaker Change: The next question is from Eric Sheridan from Goldman Sachs. Please go ahead.
Speaker Change: Thank you so much for taking the question. Maybe two if I could. Mark, you know, there's been a lot of discussion about the opportunities and the challenges that AI is going to create for the advertising ecosystem. Maybe you could refresh on your worldview and how you're aligning the company for what you expect to be the impact broadly from AI across the advertising ecosystem as we look out over the next 12 to 18 months. And then maybe following up on that question with respect to 2025,
Thank you so much.
Speaker Change: Thanks for the questions, Eric. So on the AI front, you know, we obviously are leaning really heavily into AI as part of our core value prop and what we do for our customers and how we do it for them.
Thank you.
Speaker Change: Our universal content intelligence tool in which we analyze video and images on social is powered by AI. It's helped us scale very rapidly on the measurement side on social networks.
Speaker Change: moving to new languages and new markets. So I think it's a core part of our investment in growing our social business.
Speaker Change: Also, Sybiz, which is basically an AI-first business, which looks at how do we use algorithms to compress bids to find more efficient media based on certain KPIs, is first and foremost leveraging AI to drive value for customers.
Speaker Change: So like our products that continues to grow based on that and I think it's important
Speaker Change: Finally, the aspect of using AI in our own operations, as Nicola noted in the call, we're going to look at relatively limited investments in human capital this year, and a lot of that's not because we're not growing, it's because we're being more efficient. Our engineers are leveraging it to write code, our teams are leveraging it to engage with customers and find solutions for them, so across the board, I think it's part of what we do.
Speaker Change: And the ecosystem itself, I mean, you can't deny the fact that it's changing some of the nature of advertising from dynamic creative to bidding algos like we're talking about, to even how it's impacted search and publisher page views.
Speaker Change: I think you're going to see a greater impact on the sell side than on the buy side with regard to what AI is doing to site traffic and web traffic, etc.
Speaker Change: It is having a pretty significant impact. I think the key for us as a company is making sure we harness it, we leverage it to our benefit, and we don't get caught in areas where AI is eating up opportunities, but we're creating opportunities.
Speaker Change: And on the margin side, Eric, a few points I'll say.
Speaker Change: The historical patterns of the business is that margins grow as the year progresses, and part of that is because the
Speaker Change: We are guiding to a 32% margin for the year, that is to account for the fact that we are acquiring Rockebox and we will have year one investments.
Speaker Change: So, it's a little lower than where we ended the year at 33% in 2024, but we did end at 39% in the fourth quarter of 2024. So, we have capacity to expand the margins. We're planning for the investments for the year one acquisition, and the trajectory over the course of the year will follow very much the patterns that we saw in prior years with higher margins in the second half of the year.
Great, thank you.
Speaker Change: The next question is from Yusuf Scully from Truist Securities. Please go ahead.
Yusuf Scully: Great, thank you for taking the question so I have two as well. Mark, so if I look at the performance of the business over the last several quarters it seems like
Yusuf Scully: It's been, your growth has been pretty clouded by a number of one...
time items like the six customers
Yusuf Scully: that popped up this quarter and is causing you to lower, maybe,
Speaker Change: Any of this gives you pause in terms of either the TAM or in terms of the sustainability of this.
segment of the market continuing to grow in excess.
Speaker Change: of Digital Advertising, which I guess is somewhere in the low teens, at least based on some numbers we've seen. And then Nicola, can you maybe just parse out the puts and takes in, or your MTF comment about that being down this year? I know it's been down for the last several quarters, but...
Speaker Change: How much of that is pure just product mix versus maybe other things that we need to be aware of as we look to maybe model this beyond 2025. Thank you.
Speaker Change: Yeah, I'll start off Yusef. Thanks for the questions. You know, I just, you know, you kind of nailed it in one aspect is, you know, right when we think we got our arms around, you know, what the, you know, isolated challenges have been, we've had another one pop up. And I think.
Speaker Change: We've done a good job trying to manage a lot of that variability during the period. And I think rolling into 25, some of the comments we made is that I think we've addressed them both in our guidance and in our confidence in the year going forward.
Speaker Change: That being said, questions around the health of the ecosystem really have to do with not is advertising or digital advertising healthy, but where those dollars are going and who can take advantage of that shift.
Speaker Change: We've noted over the last few calls that we continue to see dollars moving into proprietary platforms.
Speaker Change: and that, you know, our solutions are playing a bit of catch-up there to have the same kind of efficacy and scale as we had in the open web.
Speaker Change: I think we're in a good position now with the launch of our meta, you know,
Speaker Change: tools on prescreen and, you know, the alpha release of our TikTok tools in the same place on activation.
Speaker Change: So, you know, I think ultimately we can, you know, start taking advantage of where those dollars are shifting, and some of that variability that we saw in Q4 and other companies mentioned around political,
Speaker Change: I think have been cleaned up a bit. So, you know, we are confident that, you know, our long-term growth prospects remain strong. Due to the fact that the investments that we've made over the last several quarters in following where dollars are going,
Nicola Allais: are going to pay off. And as Nicola noted, we've been measured in those expectations in 25.
Nicola Allais: but the addition of new customers who can leverage those tools from the dissolution of most and the the initial pipeline and initial scaling that we've seen I think give us
Speaker Change: I have no doubt, and no doubt at all, that we have done the right things, we are in a great position to take advantage of it. Dollar shifting to those platforms is going to be a win for us, not a drag for us.
Speaker Change: Yeah and on the question for MTF, so we've been consistent on the drivers of what impacts MTF, right, which is
Speaker Change: There's a continued mixed shift towards international and social, which is at a lower price point at this point, and we've also been consistent with the idea that as we launch new premium price products, we're able to offset what would otherwise be a declining MTF.
Speaker Change: What's new in the story since the middle of last year are these Moat deals that we won at competitive rates. These are very large clients, and we won them for basically a basic solution that mirrors what they had with Moat, and now we'll be able to upsell them to our product.
Speaker Change: That's a new factor in MTM-MTF. The overall story for 2025 is that we do expect overall the MTF to go down because of these large deals as we onboard them and as we start to upsell the premium price product.
Speaker Change: So we do expect the MTF to continue to decline in 2025.
Speaker Change: We are launching new products. We talked about social activation, which is going to be something that is
Speaker Change: very interesting for us in terms of getting more dollars into the ecosystem for us.
Speaker Change: Twenty-five will be a decline in NTF, but it doesn't mean that overall it will continue to decline. It's on us to launch premium-priced products that will allow us to upsell to better solutions.
Speaker Change: If I can add one thing too is that, you know, even though we've seen, you know, declining MTF based on the factors that Nicola noted, you know, we're able to maintain a really strong, you know, gross margin, right, which is still about 80%. It shows that the leverage we have in the model, the resiliency in our cost structure, and still dropping, you know, strong EBITDA numbers as well. You know, even in Q4, you know, we dropped to 39% EBITDA margin. So, you know, we still are
Speaker Change: running a very profitable business, even if, you know, our cost or revenue per impression is impacted, it's still driving, you know, real results and bottom line results.
That's helpful. Thank you both.
Speaker Change: The next question is from Maria Ripps from Canaccord Genuity. Please go ahead.
Great, thanks so much for taking my questions.
Maria Ripps: First, can you maybe share a little bit more color on the advertiser that impacted your Q4 results and outlook?
Maria Ripps: Again, I guess, did that advertiser sort of scale back at them more broadly or was it sort of more so for adjacent services? And anything you can share kind of in terms of the vertical exposure for this advertiser, just given that it sounds like it's macro-related or commodity prices related?
Maria Ripps: Could we see sort of other advertisers in that vertical pulling back as well?
Maria Ripps: Yeah, so I can start, Maria. So just to repeat what we said, this is an advertiser, we experience a sharp reduction in spend from this advertiser and it is driven by rising commodity costs.
Maria Ripps: This reduction is not just for our services, it's part of a broad cost-cutting initiative across multiple advertising and marketing partners, and as a result the customer has suspended its business with us.
Maria Ripps: This is a CPG customer, this is very much specific to a commodity pricing variability that we haven't seen impact our other CPG customers, as a matter of fact our CPG vertical is growing and we've signed several deals that we've mentioned in the past.
Maria Ripps: within CPG. It is a large category for us and we don't see this as a contagion on other CPG clients. We have not seen that and so it's very specific to this one client.
Speaker Change: That's very helpful. And then I wanted to ask about sort of new social media and I know you said growth there will likely be sort of moderate here but maybe more broadly can you talk about your expectations for the cadence of ramp in activation sort of relative to what you saw with measurement on meta and are you factoring in any expectations that kind of launching activation also should help accelerate measurement adoption
Nicola Allais: Yeah, it's a great question. So, you know, as Nicola noted in the guide, we've been pretty tempered in, you know, how we're looking at social activation's impact on the budget, or on our guide for the year. We do know that it, you know, it takes time for advertisers to scale and implement a launch.
Nicola Allais: The good news there is that we had a pretty nice testbed of customers.
Nicola Allais: and we've got a really nice pipeline of customers that we'll start to see impact from. We've launched several already and they're scaling well.
Nicola Allais: So, you know, I think the impact will, you know, will be certainly greater next year than this year, but we'll see some dollars come in this year as well.
Nicola Allais: With regard to growing measurement, at least for one of the solutions, for example, for meta, you need to be a measurement customer for activation to be employed.
Nicola Allais: So we do think that there's going to be a flywheel effect too, so if advertisers want to use an activation solution, they're going to have to be in measurement. To help prime that pump, we did do some promotions at the end of Q4 to get new customers to at least try measurement, to build a test bed for potential activation in the future, and it was really successful.
Nicola Allais: So, net-net, you know, those two solutions go together, we do think that there's a potential fly-we-effect. We've got a really strong pipeline, you know, the handful of customers who've launched over the last, you know, three or four years. We've got a really strong pipeline, you know, the handful of customers who've launched over
Nicola Allais: week or so are showing, you know, nice volume growth. And again, we're going to be measured in that rollout, but, you know, we're optimistic about its impact on the business moving forward.
Great, thank you so much.
Speaker Change: The next question is from Andrew Boone from Citizens. Please go ahead.
Thanks so much for taking my questions.
Speaker Change: I wanted to start off in terms of Rockabox and moving more into a smaller advertiser. As we do think about DV's ability to go into maybe not the mid-market, but certainly the larger end of kind of
Speaker Change: Mid-tier advertisers, how do their needs change in terms of the solutions that DV provides? And how do you guys think about solving those problems? And then, Mark, just something that's a little bit more philosophical. If we do think about growth slowing,
Speaker Change: EBITDA margins are coming down in terms of 25. Can you just talk to us about the cost structure and how maybe the top line and EBITDA margins connect in your mind in terms of whether you have ability to invest or whether there is some sort of threshold that you want to hold in terms of kind of a margin profile? Thanks so much.
Thank you for having me.
Speaker Change: So on the first one, you know, I think the mid, I would look at this, at Rockerbox, as
Speaker Change: Yes, a mid-market opportunity, but also really a performance advertiser opportunity. And we've talked about this in previous calls, which is, you know, an area that's relatively untapped for our solutions because we work with a lot of big brands.
Speaker Change: Now, there is a crossover, which is pretty cool, that we start to see with brands like Unilever, for example. Unilever works with Rockerbox because Unilever has some DTC brands.
Speaker Change: That creates the perfect storm for us, or the perfect storm opportunity for us, to work with Unilever on both branding solutions and on performance-based solutions that some of their GTC brands use.
Speaker Change: So I think that, you know, there are lots of other folks out there that are brand customers of ours that either have DTC applications or have been really performance driven and that we haven't been able to provide them with
Speaker Change: a solution that is directly tied to their performance until we really launched SciBits a little bit over a year ago.
That's where we saw such a good, you know,
Speaker Change: a good penetration of our top 100 customers we've cited since then and I think we can see a similar opportunity with Rockerbox down the road.
Speaker Change: The other aspect of this, you know, you mentioned what are the needs, the difference. I mean, look, advertisers are looking for clear data, which we've always provided, that is relevant in every market in a granular fashion, which we've always provided. And in this case, you know, they want to be able to apply it. And I think, you know, again, the combination of our verification measurement, our outcomes data that we're getting from Rockerbox, and then SIDES' ability to activate it, you know, brings all of those things together. So I think that creates a unique opportunity.
Thank you for this opportunity.
Aww yeah!
Mark Zagorski: On the philosophical growth measure, one thing to note, as Nicola said in his comments, our EBITDA margin actually, with the exception of just absorbing Rockerbox, would have held this year at the same rate we had last year.
Mark Zagorski: and still do so in a way that really is still quite profitable but positions us for future growth. And I think that's always been our philosophy, which is you have to innovate.
Mark Zagorski: or you will die, right? And if you don't spend money on innovation, you end up like some of our competitors have.
Mark Zagorski: not being around, right? So we think there's an opportunity for us to continue to invest in growth.
Mark Zagorski: This is a transition year. We know where we're heading. We have a clear path.
Mark Zagorski: to do so. We've laid out the tactics of where we're heading with investments in social, investments in sell-side solutions, investments in outcomes and attribution products.
Mark Zagorski: And I think that positions us for future growth. So we're doing that, we're still delivering great margins by still delivering cash to the bottom line and setting ourselves up for a much stronger future than many companies in the space.
Thank you.
Thank you for watching!
Speaker Change: The next question is from Brian Pitts from BMO Capital Markets. Please go ahead.
Brian Pitts: Thanks. Two questions, please. Last quarter, you mentioned Oracle clients are mostly using the basic product.
Brian Pitts: Any comments on the onboarding, and are you seeing Oracle clients starting to incorporate new products and or transition to more sophisticated offerings? And then secondly, maybe a follow-up to Maria's question, any specific details or updates on the CPG category, which was obviously more problematic for you last quarter? Has it gotten better or is it about the same? Thanks.
Brian Pitts: Thanks, Brian. So on the first one, you know, I think it's still relatively early days for some of those new acquisitions that we made in the last quarter.
Brian Pitts: But we are seeing uptake. We've got a handful of those customers now that are starting to look at
Brian Pitts: pre-bid solutions that they hadn't used previously. We've launched side bids with a couple of them as well. So it's slow, but we're getting there, right? These were guys who kind of got whipsawed pretty quickly and needed to just get something up and live. But our teams have done a great job of upselling and growing those customers over the last, you know,
Brian Pitts: A couple months really, if you think about it, since the beginning of the year.
Brian Pitts: Brian, your question about CPG. So CPG is about 27% of our revenue, not by design, it's because large brands are in CPG and they want our services.
Brian Pitts: We do believe that the item that we discussed about this one specific customer is specific to that customer. The overall category is good. We find large customers in the CPG category.
Brian Pitts: Last year and they're growing and they're adopting more and more of our services You know if the question is around tariffs, you know, that could hurt every customer CPG or others
Brian Pitts: I will say, you know, our move into performance and SMBs and mid-markets
clients with the acquisition of Rockabox.
Brian Pitts: is part of our strategy to kind of broaden the scope of the clients that we work with because we do need to diversify, right, so that we're able to offset other surprises by a specific client. But it is – the CPG category is 30 percent of our revenue is growing. It grew last year. And we did find large customers from that category last year that will grow for us in 2025.
Thanks for the call.
Thank you for watching!
Speaker Change: The next question is from Laura Martin from Needham and Company. Please go ahead.
Laura Martin: Hi. So philosophically, I'm wondering, one of the things we're hearing from a lot of ad agencies is they want to work with fewer providers.
Laura Martin: And so my guess is, and I understand you've added SciBiz, which is great, and you've added now Rockerbox, which is great, so you're sort of branching out. The question is, is your product set?
Laura Martin: too narrow, even after you add these two acquisitions, or do you need to keep extending it to become more of a one-stop shop for services for your clients, please?
Mark Zagorski: Thanks for the question, Laura. You know, I think, you know, it's definitely a fair take, but if you look at the kind of landscape of measurement and attribution, you know, I think we're starting to cover quite a few of the bases that the agencies and the advertisers are really concerned about.
They want to measure outcome.
Mark Zagorski: They want to optimize performance and they want to make sure that their spend is safe, right? And I think, you know, bringing all those together does check a lot of the boxes.
Mark Zagorski: Now, you know, we've always said, we said in the script, you know, we want to be agnostic to media. We want to be agnostic to channel.
Mark Zagorski: You know, we don't want to be part of the media, you know, transaction itself.
Mark Zagorski: I think, you know, we're doing a pretty good job of covering a lot of the bases.
Mark Zagorski: that advertisers and marketers want when it comes to independent analysis of what's working, what's not working, how to make it work better, and ensuring that the quality is there. So, I agree, and this is part of our thesis too, which is
Advertisers want simple.
Mark Zagorski: And agencies want simple, and they want to work with less. So everything from SPO to consolidation to platforms is our trends we're hearing from. And I think we're in a good position to take advantage of. We always use that data around how many solutions our customers are using out of our total solution set. It continues to grow.
Mark Zagorski: And I think, you know, the opportunity to make that basket bigger, while making it simpler and more efficient and using one currency and one data set across multiple platforms, I think is a key advantage of where Deedee sits in that kind of ecosystem.
Okay, and then my last question is about pricing.
Speaker Change: I think you've been talking for a long time about increasing prices on the CTV measurement because there's so much more value you're contributing there. And I can't find it in my notes, but I think you said that impressions from CTV doubled from 5% to 11%. So in this transition year,
Speaker Change: Wouldn't this be the right time to increase the fixed cost of measuring fraud in the CTV ecosystem where the CPMs are sort of 10x the social CPMs?
Speaker Change: Yeah, you got the numbers right. We just about doubled the volume of impressions that, I'm sorry, the percentage of our measurement impressions that CCD makes up. So it is of scale, and it is of kind of importance to both us and our customers. So look, I think we've always said that there needs to be a commensurate value prop with our advertisers. As you know, Laura…
PZD
Speaker Change: You know, there used to be a murmur of discontent with the level of transparency in CTV. I think that's now becoming a, you know, a loud roar, which is saying transparency needs to be greater on CTV.
Speaker Change: I think we're right on the edge of getting more transparent program-level data, and I think that
Speaker Change: coinciding with the amount of inventory that's being pushed into the market, kind of combines to an opportunity for us to provide greater transparency on a granular level and then look at that as an opportunity for us over time to increase our
Speaker Change: The things are starting to come together, obviously we're not going to commit to that on any day of the week or date this year, but I think the opportunity is getting closer for us.
Thank you very much.
Sure.
Speaker Change: The next question is from Arjun Bhatia from William Blarin Company. Please go ahead.
Arjun Bhatia: Perfect, thank you. Mark, one for you, if I can just follow up on something that you said in the prepared remarks around...
Arjun Bhatia: DMP and programmatic direct deal deals. Can you just clarify how that's...
Speaker Change: impacting DV? Is that just more related to increased spend going in social? Are there other areas there that, you know, maybe I'm missing? And what are you doing to sort of counteract that? I'm sure you still, you know, have a kind of a...
growing market to go after.
Speaker Change: Yeah, so, you know, we've been talking about P&G and P&P, or PG and P&P for the last, you know, couple calls, and really in reference to Connected Television, right? So that was the first
Speaker Change: kind of play where a lot of CTD impressions were bought and sold that way. So the attach rate, particularly against P&G, P&G, was pretty light for DD solution.
Speaker Change: We've seen that grow and expand further into display solutions and display impressions. So I think it's had somewhat of a drag on the ability for us to attach data into those applications.
Speaker Change: What we're doing about it, you know, we announced part of that today, which is you know, working more on the cell side with both curation platforms like Google Curate and other platforms like Index Exchange and Criteo who are looking at moving data into the cell side and actually packaging it into the PMPs that get pushed out. So that creates an opportunity for us and, you know, as we've always said, we want our data to be employed anywhere in the ecosystem where it matters.
Speaker Change: I think what is a short-term, somewhat dragged, is going to be a long-term opportunity based on the technology and the investments that we've made in that space.
Speaker Change: Okay, perfect. Thank you. And then the next question, just going back to Meta.
for a sec. Obviously, you're having
You're making progress there, right? The pre-bid activation capabilities are...
Speaker Change: are live and up and running. I'm curious what you make of Meta's decision to end third-party fact-checking. And is there any read-through of what that means for their focus on brand safety and what it means for DV? Are those?
Maybe two kind of separate issues at META here.
Uh, you know, the...
Speaker Change: They seem like they would be linked, but I think they're a bit more disparate than you would think because fact-checking really has to do with content and what content makes it to a customer's feed. And from an advertiser perspective, the advertisers always have the ability to avoid content that they were not comfortable with.
independent work.
Speaker Change: at what's going on on META are complementary to what META's tools have done in the past, but I don't think it creates...
Speaker Change: a new opportunity. The content is the content. The advertisers have had the tools to, you know, and will have the tools with us now to do it from an independent angle to, you know, be around content and context that makes sense for them. For sure, there's definitely more noise in the market and more noise and uncertainty usually drives advertisers to safety and suitability and comfort.
Speaker Change: And that's never a bad thing for our business, but ultimately I think the advertiser has choice. There's always that choice, and I think our role in that is now just as an outside party that can complement what SwapNet is doing.
All right, wonderful. Thank you, Mark.
Sure.
Speaker Change: The next question is from Andrew Murrock from Raymond James. Please go ahead.
Andrew Murrock: Hi, thanks for taking my question. Maybe one if I could on the announcement of the expansion of the URL level reporting that you announced earlier this week. Just kind of how should we be thinking about that in terms of the potential lift that it can provide to metrics like retention, spend per customer, outcome lifts, and things like that. Thank you.
Andrew Murrock: Yeah, it's a great question. So, we announced the, you know, extension of log level or URL level
Andrew Murrock: Transparency to our customers. It was something that we've always provided, more or less on demand. Now we're making it more broadly available and we'll make it available in our UI and then further available in a third-party system.
Andrew Murrock: I think it's more of a transparency initiative than an actual revenue or growth driver. It kind of shows our commitment to driving greater transparency in the ecosystem.
Andrew Murrock: to giving our advertisers comfort and confidence in where and how they're buying. So, you know, we do not look at this and don't look at it as a kind of a business accelerator. We look at it as a, you know, part of our responsibility in driving trust.
Andrew Murrock: in the ecosystem. And that's what people do. They trust DV with their sense. So I think this is part of that story and an important part of that story.
Speaker Change: Thank you. Our next question comes from the line of Raimondo Leshchow with Barclays. Please proceed with your question.
Speaker Change: This is Frank on Forima. Thanks for taking the question. I just want to check in and ask what trends you guys saw out of the existing Cohort of Six and Q4. You know, what specifically are you assuming from those customers in the 25 guide relative to their performance in 24? Thank you.
Speaker Change: Yeah, so we exited 2024 with a fairly stable performance from the Cohort of Six. So, if you recall, at the beginning of the year, it was a very uneven pattern of spend across the various months.
Speaker Change: guided by specific issues that each of these six advertisers were having. In Q4, you know, as a cohort, it was more predictable.
Speaker Change: and in 2025, we're assuming a muted growth, right? So this is weighing on the overall growth of the company, but it has become more predictable. We do anticipate this cohort to be something that materially moves the way it did in 2024 month on month.
Mark Murphy: Thank you. Our next question comes from line of Mark Murphy with J.P. Morgan. Please proceed with your question.
Speaker Change: Hi, this is already on for Mark Murphy. Thanks for taking the question. I know you guys noted some challenges from a lack of rebound in ad spend post election. Beyond that, would you call out any other macro demand factors you saw change over the last few months? And I assume some of that impact from the post-election was kind of focused in the U.S.?
Speaker Change: Yeah, I think the post-election impact was really that, which was an impact in November and December, and the trends worsened based on what we were seeing in October. We called it out in the prior call saying, you know, there's still uncertainty, and the facts are that it actually worsened in November and December. It did feel very specific to Q4. We're entering 2025 with a more stable outlook.
Speaker Change: and the Unstable Environment from an at-spend perspective. It was tied to political. So we're entering 2025 with a more stable view for the year. 2024 was just very unpredictable.
Speaker Change: Very helpful, thank you. And then you guys also noted some, you know, pretty notable wins with Home Depot and Dollar General. Can you talk about what you led with in those deals and whether social solutions were a part of those conversations? Thanks.
Speaker Change: Yeah, you know, I think this is, you know, those were great examples of our continued focus on land and expand, right, where I'm getting with the basic solution usually around measurement and then look for opportunities around activation.
pressing in on things like SIDES.
where
Speaker Change: It's an optimization and differentiation play, which once folks get addicted to side bits, they...
Speaker Change: They love it because it continues to lower their costs. So, yeah, that's a big part of, as we move into these...
Speaker Change: and other areas like outcomes measurement and optimization. The real ROI is what the hook is and what keeps them sticky with us.
Speaker Change: Those customers, you know, and the others we drew with are great examples of the land that expand and, you know, moving into solutions that actually drive outcomes in ROI that keep them attached to us.
Great, thank you.
Speaker Change: Thank you. Our next question comes from Alex Brondeau with Wells Fargo. Please proceed with your question.
Speaker Change: Hey, thank you so much. You know, I wanted to ask a question on Rockerbox. I think there's kind of a lot of these nascent measurement platforms out there, you know, Northbeam, Triple Whale. And so what were kind of the specific capabilities that Rockerbox had or the points of product synergy with your vision that led you to kind of pursue a transaction with that platform specifically? Thanks.
Speaker Change: Yeah, it's a great question. You know, one of the things that we've found is there's kind of market diligence where you go out and just look at a bunch of companies, which is one thing, but then there's actually working with the company. And in the case of Rockerbox,
We actually...
did projects with them. We worked together with customers.
similar to how we work with Cybids.
Speaker Change: and we definitely dated before we got married. And I think that was...
Speaker Change: The features and functions of the tools, the breadth of not only looking at things like MTA, but also market-mixed modeling and the granular data that they had in there, the scope and scale of their integrations.
Speaker Change: which was something that was really complimentary to us. So, again, plugging into all the different social platforms, to CTV platforms, to mobile web and app platforms. That breadth versus other platforms I think was unmatched.
Speaker Change: And, you know, but ultimately it came down to, you know, how well did they work together with our team? How well did the solutions work together? Were we able to actually drive results for customers? Because at the end of the day, it's can we deliver value to customers? And what we found with Rockerbox is that, you know, the short answer was yes.
Speaker Change: So, you know, although relatively small acquisition, it's one, again, where I think.
Speaker Change: There's great scaling opportunities. They had underinvested in sales and BDE, and I think that's something that we've proven to be really good at.
Speaker Change: And I think, you know, there's just strong opportunities down the road for both companies together.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of Omar Dezovsky with Bank of America. Please proceed with your question.
Hey, thanks for taking the question.
So your
Supply-side business has been on fire the last three quarters.
Speaker Change: You know, you printed 34% growth this quarter. And, you know, I just wanted to know what you think a normalized, you know, kind of growth rate for that would be, you know, kind of longer term, you know, or if we should expect these kinds of growth rates, you know, beyond calendar 25 and into 26 and onwards.
Speaker Change: Yeah, Omar, I think, so, yes, we've had success on the supply side, and as a reminder, the way these deals work are, you know, platform deals, where once you secure the deal, you have sort of volume, you have minimums on a monthly basis, and then upside if certain volumes are met.
Speaker Change: And so it's kind of a step-up cut process, which is once you win a customer, you have them, and then as volume grows, you get more revenue.
Speaker Change: All this to say that in the last three quarters, the success that we've seen in that line was tied to us signing a lot of new deals. Part of it was...
from Moat.
Speaker Change: We were very successful in terms of our win rate formula, and so we basically reached a new level that we're going to stay at until we find the next platform. Within supply side, there's also the success that we're having in the retail media networks. Part of the retail media network opportunity that we see is precisely with those types of platforms. Overall, it is about 9% to 10% of our revenue. It is highly profitable and growing very well.
Speaker Change: I don't anticipate this to be much, much larger than 10% of our revenue mix, but it is obviously contributing very well to the top line and the bottom line, and we'll continue to find new platforms to go after, especially around retail media networks.
Okie doke. That answers my question. Thanks a lot.
There are no further questions at this time.
Speaker Change: Turn the floor back over to Mr. Grzegorski for closing comments.
Thank you for your comments.
Speaker Change: All right, thank you all for joining us this evening. We're excited about the future and the investments we've made to take advantage of the opportunities that lie ahead. We look forward to seeing many of you at our upcoming investor conferences and encourage all of you to join us at our Innovation Day on June 11th at the New York Stock Exchange in New York City, where we'll dig into our ongoing evolution. Have a great evening.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Goodbye
Home of the Steel Lamp
Speaker Change: A film by J.R.R. Tolstoy Directed by J.R.R. Tolstoy Written by J.R.R. Tolstoy Directed by J.R.R. Tolstoy Director of Photography Edited by J.R.R. Tolstoy