Q4 2024 Outbrain Inc Earnings Call
Thanks for watching! www.veikko.tv
Speaker Change: Good day and welcome to Outbrain Incorporated fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. Question and answer session will follow the formal presentation.
Speaker Change: Forward looking statements speak only as the call's original date, and we do not undertake any duty to update any such statements.
Speaker Change: Today's presentation also includes references to non-GAAP financial measures you should refer to the information contained in the company's fourth quarter earnings release for definitional information and reconciliations of non-GAAP measures to the comparable GAAP financial measures our earnings release.
David: Can be found on our IR website investors dot outbreak dot com under news and events with that let me turn the call over to David.
David: Thank you Mick.
David: Good morning, and thank you for joining us today.
David: On February 3rd we closed our acquisition of seats.
David: This merger brings together two open internet category leaders.
David: Binding the extensive expertise of our operating performance and often can be doing branding into a single solution for omnichannel outcomes across the marketing funnel.
David: This new and expanded company will operate under the 19th.
David: It's a huge opportunity to take advertising on the open internet to the next level.
David: Today's open internet platforms focus on scale and efficiency.
David: Marketers have shown us they expect more from the advertising they need a partner that can surface the meaningful moments in the consumers' buying journey using.
David: Using a deep understanding of audience engagement and behavior to identify when theyre ready to discover new products or services and evaluate purchase decisions.
David: Our unique data set.
David: AI driven prediction technology better positions us to provide these solutions the new team will better serve enterprise brands and agencies as well as mid market advertisers and direct response advertisers by delivering innovative outcomes on branding to performance objectives.
David: This foundation will enable us to derive new incremental value from the open Internet is a true brand performance solution.
David: Now, let me provide an update on our Standalone Q4, and full year results.
David: For Q4, I'm pleased to report that I'll bring deliberate both extra gross profit and adjusted EBITDA within our guidance range.
David: We also generated record free cash flow.
David: This is part of our continued trajectory for several quarters.
David: Q4 results were driven by strength in the same key pillars, we presented to you over the last couple of years. These.
David: These will continue to be important drivers of our business.
David: The first pillar <unk>.
David: Expanding our share of wallet from advertisers.
David: It is important to clarify that we serve enterprise brands and their agencies, both for branding and performance needs as well as the segment of small and medium enterprises and direct response advertisers and Theyre looking primarily for performance and raws.
David: So with brands and agencies, we've seen continued momentum in our performance solutions.
David: Our direct response advertisers have embraced the use of our outgoing DSP, which saw growth of 45% in advertiser spend in 2024.
David: Due to the continued delivery of superior performance both on the album publisher base and third party properties across different formats, such as maybe display and video.
David: As a reminder, we have been doing this for several years leveraging the performance. The speed we acquired in 2017, which also provides a valuable bidding at Jane and DSD capabilities, expanding our platform's reach.
David: The second pillar expanding beyond our traditional feeds.
David: Revenue generated from supply beyond our traditional feed.
David: Approximately 70% of our revenue in Q4 2024 versus 26% in Q4 'twenty.
David: Sure.
David: We have continued to grow this metric quarterly for the last two years, demonstrating our focus on expanding our inventory diversity beyond our exclusive publisher base and expanding the reach for our advertisers to OEM apps and other platforms.
David: One of the more exciting developments here was the launch as a beta in September of moments, our vertical video experience that brings social media experiences to the open internet.
David: To date, we have more than 40 media owners using moments, including New York, Kohl's News, Australia, RPM and Rolling Stone.
David: Initial user engagement results are strong.
David: Swipe, that's growing from about three videos on average to seven two and the percentage of people engaging with the experience growing from about 35% to over 47.
David: In addition, we're encouraged by the interest that legacy piece that but that just have expressed enrollments as it provides powerful b do experiences with premium brands.
David: Another example of how this combination will provide meaningful synergy.
David: And the third pillar is deepening our premium media on our partnerships in Q4, we successfully renewed agreements with some of our important publishing partners, including <unk> begun in Germany in Mis Agero in Italy and grape in Japan.
David: We also secured new business partnerships from competitors and launched new partners, including pets can be gained the U S and prints that you'd very thin.
David: We believe this again demonstrate the significant value proposition, we offer when it comes to strategic relationships with premium publishers globally.
On the technology front over 70% of our customer base has used our AI based creative automation suite.
As a reminder, the creative automation suite uses our algorithms and predictive insights to fuel the product can never commit generative AI.
David: Delivering more relevant highly targeted creative optimized for consumer engagement.
David: The strong foundation, we built with the a I creative automation suite informs how we think about some of the highest potential applications of AI at the new teams.
David: We plan to leverage AI to create a greater continuity of experience across the consumer journey, leveraging the exclusive inventory environment beyond from CTV home screens to premium publishers as well as in our in house creative studio that utilizes data and interactivity to deliver video in view.
David: Able display assets that deliver on advertisers kpis.
David: The new team is one of the largest platforms on the open internet.
David: Meaningful audience moments across screens for mobile and CTV to apps and beyond.
David: Believe that the combination of our unique core asset positions us extremely well to capture more and more share of wallet away from other platforms.
David: First.
David: The new team to combine best in class capabilities from our winning performance to deliver outcomes and superior boss.
David: He brings extensive expertise in branding and creative capabilities across screens.
David: Advertisers are looking for Kpis way beyond just reach they want results.
David: So evident that the combined performance plus branding strategy can increase the return on investment for advertisers.
David: With an independent study estimating a total revenue impact increased by 90%.
David: That's why in the future brand performance is a huge opportunity.
David: Second the new T has the most direct exclusive bypass on the open internet across the digital landscape.
David: As you've heard over the last couple of years, including for many of our peers. This is becoming increasingly important as advertisers are looking for Raven Puma environment to limit the risk of open exchange buys on DSP.
And we believe that also CTV is becoming a core part of the performing market performance marketing mix.
David: Our CTV presence from the <unk> side combined with the leadership with performance marketers that legacy Alpine brings to the table positions us well for growth in this area, which is an important element of our combined product strategy.
David: And third we had exceptional global reach with more than 2 billion unique users and proprietary data signals to our exclusive Kannan page with the most premium media properties.
David: I want to underscore that needs already has more than 50 joint business partnerships with the leading premium brands of the world, including Apple These that we'd be torn Mcdonald's Nissan and many others.
David: These partnerships generated an average of $5 billion per year and upwards of $20 million a year.
David: It's important to note that even before the combination without brain teams had a significant amount of performance budgets from these advertisers.
David: These types of relationships and the privilege of only the largest players in the digital advertising space.
David: <unk> has been growing these direct relationships with advertisers and their agencies for many years, having developed the winning multi touch strategy or working directly with advertisers and their agencies, which are primarily the largest agency holding companies.
David: The response from these advertisers to the new team's value proposition of branding and performance has been overwhelmingly positive.
David: Which bodes well for our cross sell synergy plan.
David: If you combine these joint business partnerships with a strong focus on small and medium enterprises of the legacy outbreak. We believe we have the great coverage of the market.
David: I want to spend a minute talking about the status of the post merger integration.
David: As Jason will discuss we are also well underway in the realization of the synergies of $65 million to $75 million, we presented to you.
David: We had the opportunity to plan the post merger integration in detail for the six months and as a result first executing on the head count reductions in our plan in the first week, which we expect to result in approximately $35 million. So just the compensation savings on an annualized basis.
David: Second we affected the reorganization and combination of the two organizations in the first two weeks, meaning that the merch new company structure with clear leaders in roles and responsibilities in place.
David: Third we already implemented certain synergies by connecting the demand and supply of the two platforms where feasible.
David: And fourth our global sales teams are working on the cross selling opportunities as one team with aligned incentives and books of business already testing the water and actually have already sold the first campaigns with key elements of our combined performance and branding value proposition.
David: We've seen strong enthusiasm and confidence in our new combined team since closing the deal with many already seizing the new business opportunities. This merger has unlocked.
David: We expect these to begin positively impacting our Q2 results.
David: All core thing operating as we saved internally as one team and one dream is underway.
David: Which I believe will ensure we are ready to capture the large opportunity had despite some short term increase disruptions, which are natural consequences of such quick and decisive moves when merging two same sized companies to.
David: To sum it up.
David: The momentum is energizing and we're just getting started.
David: Now I'll turn it over to Jason for a more detailed financial update.
Jason: Thanks, David.
Jason: As David mentioned, we achieved our Q4 guidance for X that gross profit and adjusted EBITDA generating significant free cash flow in the quarter and for the year as.
Jason: As we saw solid profitability and cash generation as.
Jason: As we see continued benefits from the changes we've been making to our revenue mix and cost structure as noted on prior calls.
Revenue in Q4 was approximately $235 million, reflecting a decrease of 5% year over year.
Jason: Total AD spend was materially flat year over year during the quarter and increased year over year on a full year basis.
Jason: Media partners in the quarter contributed nine percentage points or approximately $21 million of revenue growth year over year.
Jason: Net revenue retention of our publisher with 86%, which reflects downward pressure of AD impressions, particularly from one key supplier partner as noted in prior quarters.
Jason: Our retention remains high finishing for the full year at 98%.
Jason: We saw 50 fees remained stable to positive netting to a slight increase year over year for the quarter for the second quarter in a row. This along with continued improvements in click through rates drove further growth in rpms, which have improved in each quarter of 2024.
Jason: Gross profit was $68 3 million, an increase of 7% year over year, continuing the trend of acceleration and outpacing revenue for the seventh quarter in a row driven primarily by net favorable change in our revenue mix and improved performance from certain deals.
Jason: While I expect gross profit continued year over year growth in Q4 on the strength of our growth areas and positive momentum of rpms.
Jason: As noted in prior quarters, one of our key partners transition to new bidding technology and we completed the transition in early May 2024.
Jason: This volatility continues to impact our overall growth in Q4 by a high single digit percentage overall Q4, ex Tac or profit would have grown in the mid teens percentage year over year. Excluding this one isolated headwind.
Jason: We remain focused on scaling and optimizing the supply.
Jason: Operating expenses increased year over year predominantly driven by one time costs of $5 5 million related towards transaction with us and as a result, we grew our adjusted EBITDA, 21% year over year to 17 million, which reflects another consecutive quarter of margin improvement.
Jason: Moving to liquidity free cash flow, which as a reminder, we define as cash from operating activities less capex and capitalized software costs were approximately $38 million in the fourth quarter and $51 million for the year.
Jason: Tremendous outcome. It comes as a result of gas profitability strong working capital performance and timing benefits.
Jason: As a result, we ended the quarter with $166 million of cash cash equivalents and investments in marketable securities on the balance sheet and no debt.
Jason: While we maintain an authorized amount of $6 6 million under our existing share repurchase program. There were no share repurchases in Q4, given the finalized the acquisition of TS. We currently do not intend to repurchase shares in the near term as we have previously stated in August when we announced the <unk> acquisition.
Jason: We announced that we completed the acquisition of teeth in February and subsequently completed a private offering of 637 and a half million in aggregate principal amount of 10% senior secured notes due in 2030.
As I mentioned when we close the transaction we are very excited about the combined company's transformative financial profile, including a significant expected impact of synergies on our top and bottom lines.
Jason: We estimate 65 million to $75 million of an annual impact on adjusted EBITDA, including 60 million from cost can be realized fully in 2026.
Speaker Change: As David covered about half of the goal we set for ourselves in annual run rate we've already secured in the first couple of weeks post closing.
Speaker Change: Initially on cost related synergies.
Speaker Change: Naturally that will have a significantly greater impact on our bottom line as the year progresses.
Speaker Change: Now turning to our outlook.
Speaker Change: Given the short time elapsed since we closed the transaction and the fact that the transaction closed almost mid quarter.
Speaker Change: Our focus on integration and synergy capture.
Speaker Change: While we are sharing our outlook for both X that gross profit and adjusted EBITDA for Q1, you're currently only sharing our full year outlook for adjusted EBITDA.
Speaker Change: Also I will provide some points of additional context to help frame, how we see this year playing out.
Speaker Change: We will plan to update more on our progress and outlook on upcoming calls.
Speaker Change: In our guidance we factor in the closing date of the merger of February 3rd.
Speaker Change: Note that the company's accounting is subject to further policy alignment analysis.
Speaker Change: With that context, we have provided the following guidance for.
Speaker Change: For Q1, we expect ex tech gross profit of $100 million to $105 million and we expect adjusted EBITDA of $8 million $12 million.
Speaker Change: For full year 2025, we expect adjusted EBITDA of at least $180 million.
Speaker Change: Now a few points of additional contact.
Speaker Change: On a pro forma basis, while we are still expecting an overall year over year decline in ex Tac gross profit in Q1, we have seen improvement in the year over year performance of legacy <unk> in the first few months of the year relative to Q4 of last year on.
Speaker Change: On a pro forma basis, we expect to see improvement in year over year growth rates over the course of 2025 H to seeing single digit positive growth year over year.
Speaker Change: And note to provide continued transparency, we have provided legacy teeth 2024 quarterly ex Tac and adjusted EBITDA in our Q4 earnings release.
Speaker Change: Note that these are his legacy teams presented them on a non I FRS basis, and are reconciled to <unk> measures and potentially subject to further U S GAAP and policy alignment.
Speaker Change: With respect to expenses, we anticipate the synergy realization to increase over the course of 2025.
Speaker Change: $2 million in Q1 up to Q4, reflecting the run rate of our 2026 estimated synergy amount.
Speaker Change: Lastly on a personal note I'm very excited about the future. The combined company's financial profile is very attractive and the combined team's excitement has never been higher.
Speaker Change: We look forward to keeping you updated while we continue along this exciting new chapter.
Speaker Change: Now I'll turn it back to the operator for Q&A.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star and one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Ladies and gentlemen, we would wait for a moment, while we poll for questions.
Speaker Change: Our first question comes from Andrew Boone with citizens JMP. Please go ahead.
Speaker Change: Yes.
Andrew Boone: Good morning, and thanks, so much for taking my question I wanted to ask about the transition of publishers and advertisers on show what is the combined platform.
Andrew Boone: Can you guys help us understand where we are in that transition whether there is any concern around dis synergies from maybe potential leakage.
Andrew Boone: Anything else that you guys are seeing as we understand that one or 225 guidance and then a little bit of a bigger picture yesterday, you had a competitor talk about potential issues with the Tam of native advertising to here would be great. If you can just address that what are you guys seeing.
Andrew Boone: Round demand for native advertising in that format more broadly how do you guys think about the opportunity. Thanks, so much.
Speaker Change: Thanks, Andrew So I'll take that so first of all on the transition our focus right now was to sort of unified the teams start cross selling we have a very clear roadmap around the integration of the platforms and the strategic roadmap that is focused both on the traditional publisher side then.
Speaker Change: Particularly on CTV and the ability to deliver performance on CTV. So that we've had six months of planning to do so we have that in place eventually would be plan to do is we need to deliver a lot of the performance capabilities from our brain into peds AD manager, which is the platform will be going to be serving primarily brand and agents.
Speaker Change: He's in Smes and we're going to continue to invest in our DSP business for direct response advertisers the tech transition and integration will will take time, but our teams already sort of our cross selling with the back office supporting that we already had I think two we actually cross selling opportunities that we are answering we choose.
Speaker Change: Super exciting.
Speaker Change: In terms of the sort of core.
Speaker Change: And that does the market I think we've been talking for the last two three years about three core growth drivers that actually Andrew I'll repeat it today, one is expanding beyond the feed so we have already embarked on that journey.
Speaker Change: A couple of years ago today, it's about 30% of our businesses beyond the traditional feed we sort of saw the need to deliver to performance advertisers at larger scale around the whole open internet. So we did that the second is we may shifting a lot of the performance buyers. The direct response bias into into the outbreak.
Speaker Change: <unk>, formerly known as the Manto. So that has been another growth driver, we saw 45% growth in.
Speaker Change: In the revenue spanning the AD spend on the platform and thirdly, if you look at our numbers, which we sort of deliver the organic numbers, we've been continuously growing our extra gross profit and accelerating it. So it's still single digit but growing nicely towards the higher single digits and then.
Speaker Change: We will continue to invest in these growth drivers.
Speaker Change: Thank you.
Speaker Change: Thank you.
James: Next question comes from James <unk> with Jefferies LLC. Please go ahead.
James: Great. Thanks, guys for the question in your prepared remarks. He mentioned the impressive growth that you saw in our brain DSP can you just talk about some of the drivers of that growth and how we should think about the strategy for <unk>.
James: The outbreak DSP going forward under the combined company and then I just had another one thanks.
James: Thank you hi, so so generally I mean, we've been we bought demand.
James: Seven years ago, and we use the bidding technology and the ability to broaden the the ability to get more share of wallet from performance advertisers by broadening the ability to beat not only on our bring inventory traditional alban inventory that's connected to amplify which is all exclusive publisher base, but to be outside of.
James: Of that inventory to the navy into display and video. So we've been doing that and that has been a growth driver. We identified I mean traditionally we used to sell it when we bought the business as they so the mid market performance DSP competing with other DSP thing, we identified certain segments of buyers where the.
James: Performance is so superior to sort of our direct connection which allowed us to significantly grow the show a wallet with performance advertisers and I think again, we will continue as I said earlier, we will continue to invest in that we think it's a.
James: Great Great platform for performance and that will serve the Mt. The segmental direct response advertisers, we will consolidate and many of the capabilities of performance that we have from their platform into pizza, Ed managers with our brand and agency segment. Vanessa means we will also be able to enjoy the ability to.
James: Sort of launch campaigns and so it will be in the future I talked about Brian formats, I mean, that's sort of a little bit futuristic, but the ability the unique ability to connect in sort of the same in since the launch of a campaign for branding and performance I mean, it has been proven many times that those two sort of release.
James: Both each other and we've seen a lot of research also talk about growth in revenue. When you combine these two and we will have the unique capability to really link a branding campaign with a performance complained but today, our focus is to sell branding and performance and bring a lot of the capabilities that legacy Alban has into the teens.
James: Ed manager.
James: That's great.
James: One.
James: Yes, sorry go ahead.
James: Maybe one quick point, we've talked with the last couple of quarters, but for clarity. So when a when a customer is spending on the DSP the accounting for it as a net revenue recognition as opposed to gross revenue recognition on our on our core demand platform.
James: That's the biggest driver of the disparity between when I say gross revenue for as reported on our P&L is down a few points year over year, but our total AD spend is up year over year. That's the big difference in that we've actually been growing AD spend overall it might not reflect on the face of the P&L and the biggest reason why is is this.
James: Shifting to the DSP business.
Speaker Change: Okay. Yeah. That's helpful. And then just another another one on the you mentioned that traditional supply outside of your traditional feed now 30% of revenue versus 26 last year, how do you envision that progressing over the next few years under the combined company.
James: Is that does it does it ever got to the majority or how do we think about that.
James: I think when we when we report this number it sort of just over legacy Olive branch soils.
James: So as a percentage of the combined company, it's going to get much lower but we continue to to invest we will continue to invest in that we think it's a great capability for performance buyers that are looking at buying sort of into display into into other formats. So we think that is a growth driver that will continue to see.
James: Our overall growth.
James: Great. Thank you both.
James: Thank you.
James: Our next question comes from the line of.
Iranian: Why again Iranian with Citi. Please go ahead.
Speaker Change: Hey, good morning, guys.
Iranian: Maybe just on <unk>.
Iranian: On the TS sales force factor, Missouri transitioning out.
Iranian: And that impact.
Iranian: And <unk> you talked about better performance in February just how is that trending in <unk>.
Iranian: We.
Iranian: Look at the full year EBITDA guidance.
Iranian: Maybe relative to the initial outlook you had one.
Iranian: You propose the merger.
Iranian: Or what are the factors there is it.
The slower rollout of the cost synergies are there revenue synergies in 2025 at all.
Iranian: Can you just help us kind of bridge bridge through the integration over the course of the year and into next year.
Iranian: Sure. So maybe maybe I can take it.
Speaker Change: Both of those are David certainly feel free to add so as far as what we've seen with the legacy <unk> business and maybe just quickly a disclaimer that the closing date of February 3rd.
Speaker Change: So our guidance forward on our reporting obviously in the future what will be effective as of that day.
Speaker Change: For transparency as I said on the call we did share in the earnings release, the legacy 2024 results by quarter just for transparency, because we do plan.
Speaker Change: Forward to talk about the combined business. So obviously right now just based on the fact that we're so so recent closing I'll give a little color on the two legacy businesses separately.
For Q1 and for how we see the year playing out to answer your two questions. So in terms of the.
Speaker Change: The Q4 legacy tube business, we talked about that.
Speaker Change: Clothing about the idiosyncratic drivers of French political instability and as you pointed out the sales force decline and just the merger kind of pending merger impact distraction overall that that that the U S and global team.
Speaker Change: So it is a headwind we've seen both of those really turnaround.
Speaker Change: In the last couple of months.
Speaker Change: Arent extent, so with respect to France, we saw the recovery very quickly in January returning to year over year growth.
Speaker Change: Which really proves that that was really a one time thing that's quickly snap back in terms of the distraction the global.
Speaker Change: Global revenue ex tax that we're seeing from the legacy piece of this has improved in January versus Q4 on a relative year over year basis in February versus January on a relative year over year basis, and we feel good about obviously the AR.
Speaker Change: March pipeline based on where we are now entering March so we've seen we've seen positives are bringing the team together.
Speaker Change: Pretty quickly.
Speaker Change: And energizing the combined team has been has been.
Speaker Change: Already showing up in our results.
Speaker Change: The good thing here.
Speaker Change: What that nets too is we do expect a year over year decline in Q1 from the ex Tac.
Speaker Change: So the legacy <unk> business, but to a lesser extent than we saw in Q4.
Speaker Change: It's improved over the course of the quarter as well and that's despite actually an incremental FX headwind that we see in Q1 relative to Q4 as well so net net positives Mitsubishi good trends and we.
Speaker Change: Obviously project.
Speaker Change: Project that forward.
Speaker Change: As far as your question on the year, we do expect.
Speaker Change: Operating kicking the legacy outbreak side to continue.
Speaker Change: The acceleration.
Speaker Change: Of growth that we've seen over the course of this past year through continuous growth with yields and contributions from the areas that we just talked about to James's question, the DFT and supply outside of fields. So we entered the year with that momentum.
Speaker Change: And then on the tube side like I said, you have seen the trends turning positive over over the last couple of months, obviously, we're pretty we're pretty early days still here.
Speaker Change: And to your question have we gotten the <unk>.
Speaker Change: Gotten pipes connected on the cross selling and on the synergy capture on the topline, but we expect that to play out more over the course of the year and we do expect to return to overall pro forma growth by the second half of the year.
Speaker Change: Maybe just a color on a couple of other things with respect to the year.
Speaker Change: Seasonality, obviously, our seasonality changes as a combined company maybe.
Speaker Change: Maybe a couple of data points that could be helpful for modeling.
Speaker Change: We do expect the ex Tac and the EBITDA to be a little bit different pacing than what you might be used to with legacy outbreak.
Speaker Change: If you look at the last few years, the average ex Tac by quarter.
Speaker Change: 21% in Q1, 23% to 24% in Q2, Q3, and 32% in Q4, while expenses are much more much more flat over the course of the year and what that means is the EBITDA of two thirds of the EBITDA is typically recognized in the second half of the year, so between that and the synergy.
Speaker Change: <unk> ramping up I said on the call.
Speaker Change: We do expect a few million dollars of synergy realization in Q1, but just based on the timing of close and the actions. We've taken we do expect it to ramp up over the course of the year and finished the year at that 2026.
Speaker Change: Run rate that we've estimated for 2026.
Speaker Change: It's early days, we're obviously focused on the integration we plan to keep you updated on our progress as we move forward.
Speaker Change: I just want to add there.
Speaker Change: Couple of points, one is immediate as excitement on the sales teams around the cross selling and we've seen already some actually materializing and I haven't seen many customers and the feedback is excellent. So I think that's not something that sort of baking into what you see here and I will talk about CTV.
Speaker Change: He also has been a it's a business that our last year of <unk>.
Speaker Change: Close to tripled it was 10% of Q4, and it's going to be potentially a higher percentage than in Q1. So we see a lot of opportunity around their business too and when the CTV growth. It also helps teens, particularly because of the omnichannel capabilities. So that will also have a positive impact.
Speaker Change: The online video business, which we I think talked about when we announced the deal and what we see when EDA advertiser spend bolt on CTV and on online video routine sawmill at 50% the highest total spend than when you just spend on one of the platform. So the growth of CTV will also we believe continued.
Speaker Change: To support our growth in the online video.
Speaker Change: Okay. That's really helpful. Thank you and then just a follow up on on the CTV opportunity, particularly given the strength that you're seeing there.
Speaker Change: And just kind of I think what youre, implying that shifts from where CTV has been historically more upper funnel brand and there seems to be growing focus on earth.
Speaker Change: <unk> performance.
Speaker Change: Is that is that a learning change for advertisers or are they kind of.
Speaker Change: Knocking on doors.
Speaker Change: Be a little bit more more performance and maybe just what's that.
Speaker Change: Whether it is competitive.
Speaker Change: Your conversations with advertisers.
Speaker Change: What's the what's that like maybe kind of broadly.
Speaker Change: That's helpful. Thank you.
Speaker Change: So I would take that so I think we're very excited about CTV and the progress that <unk> made over the last couple of years, which has been mostly focused around branding and so they're really leveraging the joint business partnerships that details with more than 50 of the most premium brands of the world that are sort of doing omnichannel.
Speaker Change: We deal with them, we believe that the performance. It's a huge huge opportunity. We've had many of our SME buyers ask us for video and ability to deliver on CTV. We think it's the early days I think CTV is the medium that will sort of drive a lot of value for fall.
Speaker Change: Performance Boastful brands I mean, when you're talking about enterprise Brendan on a drive not just brand awareness, but eventually one that control the sale and for small and medium enterprises that today video production.
Speaker Change: With AI is a different level than it was before so you can generate those creative assets a.
Speaker Change: Part of the strength of Tvs, the sort of studio, which is helping advertisers to take those assets and make them sort of more interactive and trigger more sort of either attention or performance. So we believe that the combination of <unk> capabilities. The exclusive placements that each has on CTV. These shoes.
Speaker Change: <unk> client base customer base that Albion has on the performance side. The combination of those is going to be something that is pretty unique in the market and it's a significant part of our strategic product roadmap investments.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, a reminder to all the participants if you would like to ask a question. Please press star and one on your telephone keypad.
Speaker Change: Our next question comes from the line of Laura Martin with Needham and company. Please go ahead.
Laura Martin: Hi, there so I appreciate the synergies. They go up every time, we talk so at the high end at that $60 million to $75 million of synergies how much of that is cost and how much of that is revenue synergies at this point.
Laura Martin: Sure. So I can give some color to that Laura thanks for the question.
So yeah, we estimated for 2026 and annual number in 2026 achieved of $65 million to $75 million.
Laura Martin: Of that 66 euro is costs.
Laura Martin: Break that down further and then the remaining five to 15 is the EBIT the impact of revenue synergies. So we're keeping that revenue synergies number fairly conservative for the first couple of years here. It is.
Laura Martin: The biggest long term opportunity for sure and what makes US all very excited between the various various drivers there cross selling in geographies in just the data combined data impact. So that one is big but we're keeping it pretty small for our estimates right now the 60 to 60 of costs that we expect to achieve by.
Laura Martin: By next year that is three.
Speaker Change: Three quarters about a $45 million is personnel related and as David said, we've actually we've actually the majority about 70 plus percent of this already.
Speaker Change: So this will this this is already secured we have a limited impact in Q1, just based on the timing.
Speaker Change: But it should it should play out over the next couple of quarters.
Speaker Change: And get there by year end up pretty confidently.
Speaker Change: The other 15 million of those are about 60 of cost is a combination of non compensation.
Speaker Change: Which is things like head count related item software licenses.
Speaker Change: Combining offices.
Speaker Change: Et cetera discretionary spend on marketing and then of course, you know professional fees and things that you just don't need to have anymore. So that one will play out a little bit kind of in time some of them are right away some of them.
Speaker Change: Time until you are.
Speaker Change: Your insurance policy or to your marketing events et cetera, but we have pretty high confidence in that number as well.
Speaker Change: There's some upside and then the third area. There is traffic acquisition costs, which as you know is the largest it's fast here. This is the most exciting one.
Speaker Change: For me personally.
Speaker Change: There's just there's just always a lot of room to optimize how we put our demand on supply to optimize our margins are from a tax perspective.
Speaker Change: We've already connected the pipes of supply to demand in both directions, and we already have items flowing at a small scale right now, but we do believe that we're able to capture several.
Speaker Change: Several million dollar opportunity in the next couple of years from just better optimization of putting demand on supply where it makes more sense.
Speaker Change: Just any context on the top line synergies I mean, we're talking here on what we sort of giving in these numbers.
Speaker Change: Less than 2% in total so we believe there's significant upside there.
Speaker Change: Okay.
Speaker Change: Second in the press release, you said that your go to market is gonna be team does that imply with chancellor from around the company, where it falls on the ticker symbol <unk>.
Speaker Change: Can you expand on.
Speaker Change: This comment in the press release that your client their private.
Speaker Change: The team going forward.
Speaker Change: Yes, Laura so when we announced the deal and when we announced the closing we said, yes, we're going to move forward then operate under the name <unk>. The name we made a decision to take that name. It's we call. It the duty them and if you look at the old team in logo and positioning it as a totally refreshed.
Speaker Change: In defence, it's combining performance capabilities with brand new capabilities. Many more format. So we refreshed the whole branding and positioning of the company and are we going to be calling the peds and that will be a name change and over time also ticker change. So we were very excited.
Speaker Change: About this.
Speaker Change: This sort of change I think the market say in sort of our industry has been very well received I think T. Brian denes associated with sort of quality premium brands in video, which are the areas, where we're going with <unk>. So we felt that this is the right decision and I think everyone also.
Speaker Change: At legacy Albani's, he's very excited about it.
Speaker Change: Okay I'll stay with you David My last question is about more so.
Speaker Change: The drumbeat.
Speaker Change: He was talking about we need some time ago.
Speaker Change: It's really getting louder and my question is do you see money coming back for more.
Speaker Change: Or do we still have.
Speaker Change: Yeah.
Speaker Change: Tire agent.
Speaker Change: I know Knowles, regardless of whether it's political or was there any money coming back in or a new genre. So it works for them.
Speaker Change: So I would say low a our mix so inventory is way beyond news, but I do I do see some positive trends I think it's early days and I think you and I talked about it I mean, we're here at CES, there's a lot of effort going on between sort of the industry talking to see him oleds into the agencies about sort of.
Speaker Change: The value actually and the fact that having brand advertising needs to news has a positive impact. So I think it's it's happening I think it's it's a you know smaller steps in the right direction.
Speaker Change: Alright, thanks, very much crystal.
Crystal: Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen that brings us to the end of the question and answer session. As there are no further questions I would now like to hand, the conference over to the management for closing comments.
Speaker Change: So thank you all for joining guys as you can I hope you can see how excited we are about this combination the new journey, we embarking on I think we are very excited about sort of the legacy <unk> business and the growth drivers and we can see the benefits of the combination of already materializing.
Speaker Change: And we look forward to continuing to update you on the progress. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Patients.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].