Q1 2025 Viant Technology Inc Earnings Call
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Speaker Change: Hello, everyone and welcome to <unk> technologies first quarter 2025 earnings conference call.
Speaker Change: My name is an annual and I will be your operator today.
Speaker Change: Before I hand, the call over to the <unk> leadership team I'd like to go over a few housekeeping notes for the program.
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Speaker Change: Thank you for your attendance today I will now turn the call over to Nick Stangler VP of Investor Relations for <unk>.
Speaker Change: Okay.
Emmanuel: Thank you Emmanuel good morning, and welcome to buying technologies first quarter 2025 earnings conference call on the call today are Jim Banner Health <unk> co founder and Chief Executive Officer, Bruce Vanderhoof, Co founder and Chief operating Officer, and Larry <unk> Chief Financial Officer.
Emmanuel: I'd like to remind you that we will make forward looking statements on our call today, including but not limited to our guidance for two Q2 thousand 25, and other future financial results our platform development initiatives and industry trends that are based on assumptions and subject to future events risks and uncertainties that could cause actual results to differ materially from those.
Emmanuel: Rejected these forward looking statements speak only as of today and we undertake no obligation to update or revise these statements except as required by law for more information about factors that may cause actual results to differ materially from forward looking statements and our entire safe Harbor statement. Please refer to the news release issued today as well as the risks and uncertainties.
Emmanuel: As described in our quarterly report on Form 10-Q for the quarter ended March 31, 2025 under the heading risk factors and in other filings with the SEC. During today's call. We will also present, both GAAP and non-GAAP financial measures additional disclosures regarding these non-GAAP measures, including a reconciliation of non-GAAP.
Emmanuel: Financial measures to the most directly comparable GAAP financial measures are included in the news release issued today and in our earnings presentation, which have been posted on the Investor Relations page of the company's website and in our filings with the SEC I would now like to turn the call over to Tim Vanderhoof, Chief Executive Officer by it Tim.
Tim Vanderhoof: Thanks, Nick and thank you all for joining US today, we delivered record first quarter results across the board outperforming our guidance across all key financial metrics and positioning the business for continued strength in the second quarter.
Tim Vanderhoof: Revenue increased 32% year over year and contribution ex Tac increased 25% year over year strong topline growth was driven by continued CTV demand increased use of bias address ability solutions, including household IV and iris.
Tim Vanderhoof: D and further adoption of <unk> AI product suite.
Tim Vanderhoof: Notably this marks our seventh consecutive quarter of greater than 20% year over year growth and contribution ex Tac adjusted.
Tim Vanderhoof: Adjusted EBITDA increased 76% year over year to $5.4 million in Q1.
Tim Vanderhoof: This marks our ninth consecutive quarter of greater than 30% year over year growth in adjusted EBITDA.
Tim Vanderhoof: Before providing an update on our strategic priorities CTV address ability and via an AI I would like to first offer our insights and observations on the advertising environment in light of recent tariff announcements and explain why we believe <unk> is well positioned to navigate this period.
Tim Vanderhoof: <unk> of macroeconomic uncertainty.
Tim Vanderhoof: Year to date through April AD spend across our platform has been strong with little discernible impact from recent tariff announcements.
Tim Vanderhoof: Year over year growth rates for revenue and contribution ex Tac increased in each month throughout the first quarter with the strongest performance observed in March.
Tim Vanderhoof: Strong double digit growth trends persisted throughout April.
Tim Vanderhoof: Generally advertisers have thus far exhibited a heightened level of resilience to tariff related macroeconomic challenges.
Tim Vanderhoof: Having weathered the late 2022 advertising downturn caused by fears of a recession that ultimately never materialized.
Tim Vanderhoof: It is only very recently that we have seen a small number of advertisers adjust their plans.
Tim Vanderhoof: Redirecting AD spend from the second quarter into the latter part of the year.
Tim Vanderhoof: Should macroeconomic pressures intensify we believe we remain positioned to outperform the broader advertising industry and our peers, owing to a broad diversification of U S. Based advertisers limited exposure to those verticals most directly impacted by tariffs and.
Tim Vanderhoof: Strategic alignment to secular growth channels, including CTV and the ongoing adoption of differentiated product offerings in the industry.
Tim Vanderhoof: To further elaborate we serve a broad and diversified group of well over 1000 advertisers spanning all major industry verticals with no one advertiser representing more than 5% of the total AD spend on the platform.
Tim Vanderhoof: After conducting a thorough review of our Advertiser base, we anticipate recently imposed tariffs will only minimally impact our future performance as exposure to high risk verticals like automotive for example is limited.
Tim Vanderhoof: It is also worth emphasizing we believe our business is strategically positioned to foster the growth of proliferating digital channels, including CTV streaming audio and digital out of home.
Tim Vanderhoof: These are secular growth channels in the early stages of adoption, making them more resistant to economic cycles collectively.
Tim Vanderhoof: Collectively these three digital channels represented over 50% of our total AD spend on our platform in 2024.
Tim Vanderhoof: <unk> from 43% in 2023 and 40% in 2022.
Tim Vanderhoof: And based on historical precedence, we would actually expect an economic downturn to accelerate the ongoing shift of linear TV AD spend into CTV, where campaigns are addressable.
Tim Vanderhoof: More granularly, our winning strategy with advertisers hinges on our differentiated platform offerings tailored to support growth within proliferating digital channels.
Tim Vanderhoof: And CTV, our direct access program provides advertisers with a streamlined path to premium inventory, eliminating unnecessary intermediaries and delivering greater spend towards working media.
Tim Vanderhoof: Our addressable <unk> solutions household I D and Iris I E empower advertisers to deploy sophisticated AD campaigns and measure efficacy through the use of industry, leading audience and contextual identifiers and.
Tim Vanderhoof: And VI and AI, which we expect will prove to be a disruptive innovation is currently providing early adopters with meaningful workflow improvements operating structure efficiencies and meaningful media cost savings and ROE as enhancement.
Tim Vanderhoof: The continued uptake of these innovative solutions is creating powerful tailwind that support our long term secular growth strategy.
Tim Vanderhoof: Moving to our strategic priorities CTV addressable witty and via an AI.
Tim Vanderhoof: CTV was the strongest driver of topline growth in the quarter and leading in CTV is our highest priority.
Tim Vanderhoof: We are committed to being the Premier D. S. P for CTV advertising a position we believe we currently hold and intend to strengthen.
Tim Vanderhoof: This is evidenced by our recent performance and our product roadmap, which is strategically focused on CTV dominance.
Tim Vanderhoof: During the first quarter over 45% of total spend on our platform was allocated to CTV clearly demonstrating the dominance of our CTV offering.
Tim Vanderhoof: Over 55% of CTV spend is now running through our direct access premium publishers.
Tim Vanderhoof: Which uniquely connects advertisers directly to premium CTV inventory.
Tim Vanderhoof: When advertisers utilized direct access supply side fees are significantly reduced this means more of their budget goes directly towards working media, increasing impression when rates without the need to raise bid prices.
Tim Vanderhoof: We expect direct access will continue to attract incremental CTV spend to our platform, enabling volume to maintain market leading CTV growth.
Tim Vanderhoof: Fundamentally we believe the DSP that wins in CTV will win across all other open web digital channels and.
Tim Vanderhoof: In our view CTV will become the cornerstone of every advertisers' marketing strategy with other digital channels, serving complementary roles in.
Tim Vanderhoof: In fact, this re prioritization of CTV is currently underway.
Tim Vanderhoof: Advertisers are increasingly recognizing the fallacy of last touch attribution campaign strategies, where big Tex takes credit for outcomes by showing the last add before a purchase without truly providing any incremental value.
Tim Vanderhoof: Last touch attribution has trained advertisers to allocate spend the consumers that would have purchased their product anyway.
Tim Vanderhoof: This is not advertising this is simply attacks.
Tim Vanderhoof: Smart advertisers are shifting gears directing AD spend based on incremental lift where another dollar of AD spend drives new business growth through another incremental sale.
Tim Vanderhoof: And data shows CTV, trounces search and social and driving incremental lift.
Chris: Chris will elaborate further in a few minutes.
Chris: Moving to our leadership position in addressable city via household I D. Our patented audience targeting and measurement solution is experiencing unprecedented demand.
Chris: Household I D. Both availability across roughly 80% of Biddable AD inventory significantly exceeding other identifiers.
Chris: This quarter AD spend linked to household I D surged, 33% year over year as we continue to activate household IV matches with our premium direct access publishers, making them, both biddable and addressable.
Chris: We anticipate continued growth for household IV as an influx of data driven advertisers prioritize the CTV channel.
Chris: Direct to consumer e-commerce businesses performance advertisers and small to medium sized businesses, all pivoting budgets to CTV can leverage household I D to target highly responsive audiences and track campaign effectiveness.
Architectural targeting and measurement solution Iris I D is also gaining traction among both publishers and advertisers with.
Chris: With the addition of Paramount Lionsgate films, CNN and T C L. Among others as newly minted Iris enabled publishers the presence of Iris I D across all available CTV bid requests has more than doubled since acquiring iris in November 2024.
Chris: Sure.
Chris: Iris idea allows advertisers to target CTV AD inventory at the video level, enabling them to align their brand product or service with contextually relevant content.
Chris: As recently reported by up wave and independent measurement platform campaigns utilizing iris.
Chris: Demonstrated a five X lift in brand favorability, a three X lift in AD recall and a two X lift in brand awareness and consideration when measured against CTV control groups.
Chris: This performance has been a key driver in attracting new customers to <unk> in the quarter.
Chris: As Iris IV continues to win adoption among publishers advertisers gain the ability to deploy contextual campaigns at greater scale.
Chris: <unk> will lead to increased utilization over time.
Chris: Finally, I will provide an update on our via an AI product suite.
Chris: As a reminder, two phases have rolled out and we expect to complete the next two phases later this year.
Chris: The four phases consist of AI bidding AI planning AI measurement and analysis and AI Decisioning, all very briefly touch on all four.
Chris: Less than two years after launch AI bidding now automates, 85% of the AD spending on our platform up from 80% in Q4 2024.
Chris: With AI bidding advertisers enabled by its algorithms to find them by optimal AD placements across the open web aiming for the lowest cost while meeting their kpis.
Chris: With surging use contribution ex Tac generated from AI bidding is up 75% year over year.
Chris: AI bidding is a major success and we expect to see a similar adoption trajectory across our other AI products.
Chris: In the third quarter of 2024, we launched AI planning, which enables advertisers to create enterprise level AD campaigns in seconds.
Chris: Early agency adopters are reaping the benefits of an improved workflow as their capacity for new business pitches has accelerated great.
Chris: Greater operational efficiency as employees are redeployed to more strategic initiatives and improved return on AD spend as via an AI is now utilized to navigate the complexities of campaign construction to yield optimal results.
Chris: Launching later this quarter AI measurement and analysis is expected to revolutionize reporting with on demand insights.
Chris: Advertisers can simply ask via an AI for a specific data and receive answers in seconds, eliminating the need for a lengthy reports this streamlines productivity and empowers continuous campaign optimization.
Chris: And finally, we expect to launch AI Decisioning in the second half of 2025, enabling advertisers to grant via an AI the autonomy to manage their media plans.
Chris: And AI will actively adapt campaigns to market fluctuations aiming for the best possible outcomes.
Chris: And in contrast to Big Tech Black box services by an AI is fully transparent providing advertisers with detailed insights into their campaign data, including publisher allocation clearing prices return on AD spend metrics and so much more.
Chris: To summarize our business is growing quickly fueled by our investment in secular growth channels and our distinct innovative offerings.
Chris: Looking ahead, we expect CTV to emerge as the most effective digital channel addressable campaigns to become widespread and AI to usher in a new era of efficiency further improving return on AD spend for our customers.
Chris: Vine is well positioned for long term growth as these market dynamics evolve.
Speaker Change: Before turning it over to Chris I want to briefly address the recent district court ruling, which affirmed Google is a monopolist and AD Tech and marked a win for the AD tech industry at large.
Speaker Change: The Doj is pursuing remedies that could include a divestiture of both the doubleclick assets and Google AD X, which collectively include Google's SSP and AD server.
Speaker Change: If these assets are spun off into an independent entity. It is reasonable to expect this new supply side platform to seek out incremental demand through additional partnerships with third party dsp's beyond Google's DB $3 60.
Speaker Change: In time this could present, an opportunity to provide our clients with access to Youtube AD inventory through our buying platform. Additionally.
Speaker Change: Additionally, the removal of DB three sixties exclusive access to Youtube may level, the playing field among dsp's.
Speaker Change: Which provides via an opportunity to attract AD spend from advertisers looking to consolidate on our platform.
Speaker Change: Truly any regulatory action taken to limit google's illegal market dominance will improve <unk> competitive positioning and in our view an open market for Youtube is the most beneficial outcome.
Speaker Change: With that I'll now turn it over to Chris Thanks, Tim I would like to address three major industry topics head on these.
Chris: These topics have dominated the conversation with investors in recent meetings.
Chris: Our number one big Tech attribution misrepresentation, and a growing preference among advertisers to optimize for incremental lift measurement.
Chris: Number two the emerging opportunity to win incremental AD spend from data driven advertisers diverting spend from search and social and number three the investor misperception that Amazon as a material threat to open Internet DSP.
Chris: Beginning with attribution misrepresentation in our view big tax deceptive attribution practices are coming to an end.
Chris: For far too long search and social media had been wrongfully credited with outcomes originating from more impactful AD channels, particularly linear television and more specifically CTV.
Chris: By game of filing last touch attribution Big Tech is convinced advertisers that it is the very last exposure to their ads that drive the final consumer purchase decision.
Chris: But we believe this is a fallacy enhancements in CTV measurement reveal the true customer journey, CTV Sparks consumer demand and display search and social channels merely navigate the consumer to the point of purchase.
Chris: Advertisers have been misled and in some cases. This attribution misrepresentation has lead advertisers to shift budget away from highly effective channels like linear television and CTV to the detriment of their own brand.
Chris: Looked at a prominent sports apparel brand that we all know as a high profile example, just a few years back they slashed their TV budget and went all in on the lower funnel channels like display search and social the result, seemingly positive lower funnel kpis, but slumping topline sales why.
Chris: Yes.
Chris: They are dedicated to much of their budget targeting existing customers and failed to attract any new customers.
Chris: And this is the realisation many advertisers are waking up to.
Chris: They had been over allocating spend to search and social and in doing. So then been wasting budget marketing to consumers that were ready to buy their product anyway Google.
Chris: Google Meta Amazon they've all been winners of the gamification of last touch attribution.
Chris: Left unchecked, they will take credit for every outcome. However.
Chris: However, advertisers are shifting our strategy prioritizing the measurement of incremental lift which identifies the AD channels that bring in entirely new customers those who would not have made a purchase without the exposure to the highly impactful informative ads delivered via CTV.
Chris: Anchored by household IV violence measurement solutions offer advertisers the ability to measure incremental lift which is now the most requested measurement feature on our platform.
Chris: Demand for this feature has in part powered a 500% increase in household IV powered AD spending on a trailing 12 month basis over the last two years with a growing portion of that spend directed towards CTV.
Chris: The convergence of these trends presents a significant opportunity for biomass as advertisers increasingly turned incremental lift measurement. We believe our platform revealed ctv's superior impact driving significant AD spend growth across our platform.
Chris: Over the coming years, we believe search social and other forms of display advertising will come under pressure as advertisers prioritize more effective AD channels, like CTV, which proves to drive incremental sales.
Chris: This leads me to my next major industry topic.
Chris: There is a significant opportunity to win AD spend from data driven advertisers over invested in search and social this group comprising 10 million small businesses performance marketers and direct to consumer ecommerce companies is believed to represent over half of the 200 billion U S search and social AD market we.
Chris: This spend is poised for reallocation to more effective digital channels like CTV.
Chris: We believe <unk> has a compelling value proposition that effectively attract data driven advertisers and aligns with their current buying behaviors.
Chris: Through the use of our addressable solutions household IV and Iris I D data driven advertisers can precisely target niche consumer audiences and contextually relevant environments and gain insightful feedback, including incremental lift measurement to assess overall campaign effectiveness.
Chris: And unlike search and social walled gardens, our measurement solutions provide advertisers with transparent and objective attribution, helping them allocate AD spend to the channels that deliver the highest return on their investment.
Chris: We have built via AI to make the open internet accessible to data driven advertisers greatly simplifying the DSP interface.
We have stripped away the complexities of a traditional DSP removing the primary barrier, which has prohibited smaller data driven advertisers from accessing the open internet and.
Chris: In its current state via AI is building the detailed media plans and managers continuous bidding for advertisers. Our goal is to release a completely autonomous DSP by the end of the year offering dynamic campaign planning optimize execution and reporting.
Chris: We believe the displacement of search and social and prioritization of CTV as a cornerstone of AD campaign strategy, coupled with the simplicity of vine AI will draw data driven advertisers to via.
Speaker Change: Finally, I would like to address the misperception by some investors that Amazon has suddenly emerge as the new threat in the open web DSP space.
Speaker Change: Let's not forget we have already been competing within a legal monopoly for the entirety of our existence, one who and <unk> clients with a bundling of services price discounting free use of unique data and exclusive supply to Youtube. The world's largest video platform of course, I'm, referring to Google.
Speaker Change: And just like Google Amazon cannot convincingly claim to be an objective independent partner to advertisers Amazon as a seller of ads and purposely direct AD spend to its owned and operated inventory.
Speaker Change: Amazon sponsored ads and Amazon Prime video, where it extracts full margin.
Speaker Change: This creates a bias and by manipulating attribution, we believe Amazon can undermine the effectiveness of competing streaming services by directing spend to Amazon Prime video.
Speaker Change: At the opposite end of the midstream we believe publishers are reluctant to provide Amazon with addressable signals be it audience architectural identifiers as doing so could incidentally strengthen the Amazon identity graph and pulse spend away from the open internet and into Amazon's walled garden and.
Speaker Change: In our view Amazon's conflict of interest and lack of objectivity weakens its position with the open internet.
Speaker Change: And therefore presents little threats avaya rare.
Speaker Change: Rarely have we ever encountered Amazon DSP in an RFP process.
Speaker Change: Now where Amazon is succeeding is in retail media, which is displacing Google search spend.
Speaker Change: This is where Amazon is taking share not from open Internet dsp's.
Speaker Change: As Amazon E. Commerce presence has grown consumers have migrated search queries from Google to Amazon, which Amazon and monetize via sponsor listing ads on its e-commerce website and App.
Speaker Change: This makes up the overwhelming majority of Amazon's reported ad spend.
Speaker Change: Due to Amazon's ecommerce dominance investors are quick to point to the quality of Amazon's first party data as a potential threat.
Speaker Change: And while highly effective within Amazon's walled garden its usefulness is limited across the open internet.
Speaker Change: Signal goes both ways.
Speaker Change: Targeted AD campaign requires first party data from both the advertiser and publisher to construct the data match that permits for targeted ads to flow across the midstream.
Speaker Change: What signal are CTV publishers, like Netflix Disney and Paramount willing to provide to Amazon are competing streaming service.
Speaker Change: We believe Nunn.
Speaker Change: Conversely, both advertisers and publishers willing we provide <unk> with access to first party data to match audiences empower addressable campaigns.
Speaker Change: 80% of billable inventory is addressable with via and 95% of households are identifiable within our I'd graph empowering advertisers with the ability to target and measure at unmatched scale across the open internet.
Speaker Change: I will finish with this volume is arguably the only completely independent and objective enterprise level self service DSP that exists in the marketplace.
Speaker Change: We plan to continue to fend off big Tech behemoths, including Amazon through independents, and our focus on our three strategic priorities CTV addressable witty and via an AI.
Speaker Change: And CTV, we will direct advertisers to the CTV content that drives the highest return on spend period with absolutely no bias.
Speaker Change: Our addressable solutions provide unmatched scale as we are not limited to a walled garden audience, but rather the entirety of the open internet.
Speaker Change: And with via an AI, we aimed to surpass the level of simplicity offered by competing search and social AI products.
Speaker Change: While providing a level of transparency they are seemingly unwilling to match.
And with that I'll turn it over to Larry to provide more detail on our financial performance Larry.
Speaker Change: Thanks, Chris before I begin I would like to remind everyone that we have posted a presentation on our investor Relations website that includes supplemental financial information to accompany today's call.
Speaker Change: In terms of our results for the first quarter revenue for the quarter was 70.6 million, representing a 32% increase year over year and exceeding the high end of our guidance range by 4%.
Speaker Change: Contribution ex Tac totaled $42 7 million in Q1 up 25% compared to the prior year period and also above the high end of our guidance range. This represents our seventh consecutive quarter of 20 plus percent growth in contribution ex Tac. It also marks our strongest rate of growth in five quarters.
Speaker Change: Alluding the impact of seasonal political spending.
Speaker Change: We continue to see meaningful expansion in the number of customers generating significant levels of contribution ex Tac.
Speaker Change: On a trailing 12 month basis through Q1, we saw a 37% increase in the number of percent of sprint customers generating over $1 million in contribution ex Tac. Additionally contribution ex Tac across our top 100 customers grew by 24% year over year on a trailing 12 month basis.
Speaker Change: <unk>.
Speaker Change: New customer momentum also remained strong.
Speaker Change: Top 30, new customers added over the past year generated on average more than $780000 of contribution ex Tac during the period more than three times the level generated by new customers in the comparable period last year.
Speaker Change: This underscores our continued success in winning larger more strategic accounts.
Speaker Change: These trends fueled by growth from existing and new customers reinforce our strong competitive positioning and support our ability to continue outgrowing the broader programmatic market.
Speaker Change: We delivered strong performance across most customer verticals in Q1 with AD spend across three of our largest customer verticals health care consumer goods and business services, leading the way.
Speaker Change: CTV remains a core growth driver in Q1 accounting for over 45% of total platform spend our highest see TV mix on record. In addition, CTV spend reached an all time high for first quarter, reflecting continued momentum as advertisers increasingly prioritize premium.
Speaker Change: Addressable video to drive performance.
Speaker Change: Spend across all emerging digital channels, including CTV streaming audio and digital out of home collectively represented 54% of total platform spend in Q1, the highest combined share in our history.
Speaker Change: This milestone highlights the accelerating adoption of next generation media formats, underscoring our position as a leading partner for advertisers moving beyond traditional display.
Speaker Change: Video inclusive of CTV represented 62% of total platform spend in the quarter further reflecting the continued shift toward high impact measurable formats.
Speaker Change: non-GAAP operating expenses totaled $37 3 million for the quarter, reflecting a 20% year over year increase and flat sequentially. Notably these figures include incremental costs related to the recent acquisitions of Iris TV, which closed in November 2024, and locker, which closed in February 2025.
Speaker Change: Excluding the impact of these acquisitions organic non-GAAP operating expenses increased 14% year over year and declined 2% sequentially.
Speaker Change: While we remain committed to investing in AI and technology to fuel long term growth and market share gains we continue to prioritize operational discipline.
Speaker Change: Over the past 12 months, we increased contribution ex Tac per employee by 13%, reflecting improved efficiency across the organization.
Speaker Change: Adjusted EBITDA for Q1 was $5 4 million exceeding the high end of our guidance by more than 27% and growing 76% year over year.
Speaker Change: Adjusted EBITDA as a percent of contribution ex Tac was 13% for the quarter expanding by 360 basis points compared to the prior year.
Speaker Change: This margin improvement was achieved while continuing to invest in our <unk> product suite and integrating the iris TV and locker acquisitions, demonstrating our ability to scale efficiently while executing on strategic priorities non.
Speaker Change: non-GAAP net income, which excludes stock based compensation and other adjustments totaled $2 8 million for the quarter up 109% from $1 3 million in the prior year.
Speaker Change: non-GAAP basic earnings per class a share outstanding totaled four cents in the first quarter compared to <unk> in the prior year period.
Speaker Change: In terms of share count we ended the quarter with $53 1 million total shares outstanding consisting of $16 4 million class a shares and $46 7 million class B shares.
Speaker Change: We ended the quarter with $174 million in cash and cash equivalents and $199 million in positive working capital with no debt and access through $75 million Undrawn credit facility.
Speaker Change: For the quarter cash flow from operating activities before changes in operating assets and liabilities was $8 $2 million, representing a 30% year over year increase.
Speaker Change: In the quarter, we invested $12 6 million in operating assets and liabilities largely driven by seasonality and continued growth.
Speaker Change: Additionally, we used $22 7 million in cash for financing activities during the quarter, including $17 million for repurchases of our class a common stock and $3 $2 million for taxes related to the net settlement of equity awards.
Speaker Change: As a reflection of our confidence in our strategy and market positioning we capitalized on recent stock market volatility and aggressively repurchased Bryant class a common stock in the open market at a valuation discount.
Speaker Change: Since initiating our $50 million share repurchase program in May 2024, we've returned $46 $5 million to shareholders, including $17 million in Q1, and $24 $9 million year to date through may 2nd.
Speaker Change: This has resulted in the repurchase of $3 5 million shares at an average price of $13.12 since inception.
Speaker Change: As of May 2nd $3 $5 million remains available under the current authorization.
Speaker Change: Having nearly exhausted our existing $50 million share repurchase authorization today, we have announced the approval of a $50 million increase to our share repurchase authorization, which we expect to deploy strategically to support existing shareholders, particularly when our stock is undervalued.
Speaker Change: Our solid financial foundation, combined with disciplined execution and strategic capital allocation positions us exceptionally well to capture the significant market opportunity ahead.
Speaker Change: Turning now to our outlook, while we remain encouraged by the strength of quarter to date AD spend across our platform macroeconomic uncertainty specifically related to recently imposed tariffs have prompted a small number of advertisers to delayed campaign Activations originally planned for Q2.
Speaker Change: As a result, our Q2 guidance reflects the deferral of approximately 3% to 4% of expected Q2 revenue and contribution ex Tac. So the second half of 2021.
Speaker Change: We view these shifts is temporary and timing driven not indicative of reduced spend commitments are structural weakness in fact, the majority of the spend is expected to be realized in the second half of 2025.
Speaker Change: While this dynamic introduces some near term forecasting variability customer engagement remains strong and our long term growth outlook is unchanged.
Speaker Change: Given these factors our guidance for the second quarter of 2025 is as follows revenue of $77 million to $80 million, representing 19% year over year growth at the midpoint.
Speaker Change: Contribution ex Tac of 47, 5% to $49 $5 million, reflecting seven 3% year over year growth at the midpoint.
Speaker Change: non-GAAP operating expenses of $37 million to $38 million up 17% year over year and approximately flat sequentially at the midpoint.
Speaker Change: Adjusted EBITDA of 10, 5% to $11 5 million, representing 15% growth year over year at the midpoint.
Speaker Change: Our guide assumes record Q2 performance across all metrics spend revenue <unk> and adjusted EBITDA, Despite the macroeconomic headwinds.
In closing, we delivered another strong quarter executing against our strategic priorities advancing innovation across our platform and returning capital to shareholders through opportunistic share repurchases at compelling valuations. We believe we are well positioned to navigate near term macroeconomic headwinds.
Speaker Change: While continuing to capitalize on secular tailwind, including CTV address ability and <unk> AI and.
Speaker Change: And with that I'll turn the call back over to the operator for questions operator.
Speaker Change: Thank you Larry we will now proceed to the Q&A session. We.
Speaker Change: We will begin with Jason <unk> Craig Hallman.
Speaker Change: Your line is live you may begin.
Speaker Change: Okay, great. Thank you this is kal on for Jason.
Speaker Change: So maybe just first and if could just provide a little more color on kind of what youre hearing from your customers today.
Speaker Change: And then just in particular.
Speaker Change: CTV continues to become a larger portion of your spend base, how do you see that potentially insulating the fundamentals from any sort of downside risk from a spun side.
Speaker Change: Yes, I'll take the first one.
Speaker Change: Second question on CTV.
Speaker Change: We're just saying.
Speaker Change: Incredibly strong growth there are there secular tailwind that we wanted to align our software a few years back I think we are successfully doing that the the direct access program continues to be a great selling proposition and the fact that we do not take fees we're eliminating.
Speaker Change: A lot of middlemen fees in there so a marketer wants to buy CTV theyre going to do that through direct access because theyre going through less middleman, it's a great proposition and really the just the scale of our household I D. Just continues.
Speaker Change: To pay big dividends to marketers, because they want to be able to target and CTV and that ultimately that plays out in the measurement, where they see how impactful that is.
Speaker Change: Those are all the things combined that <unk> got that sort of share that it is today at 45%.
Jonathan: Jonathan this.
Speaker Change: And sorry, Cal what was your first your first one of your customers are saying I believe was the yes.
Jonathan: And are you specifically talking.
Speaker Change: Related to tariffs.
Speaker Change: Yeah, just just kind of the sentiment and kind of what youre hearing from customers Yeah, as we talked about pretty limited in terms of the numbers.
Speaker Change: Advertisers.
Speaker Change: The borrower to characterize that less than 10 advertisers.
Speaker Change: And those are predominantly in consumer goods and some retail they had pretty direct exposure to supply chains that were hit by the tariffs.
Speaker Change: So we saw some delayed spending out of them in the second quarter and they postpone some of those investments in the second half.
Speaker Change: So there is certainly as everybody as Youll hear on other calls there is some uncertainty out there, but we believe that that marketers have become much more resilient.
Speaker Change: Over the past.
Speaker Change: I think they've weathered a lot of storms, the kind of fake economic recession or worries of economic recession in late 'twenty two caused a little bit of a.
Speaker Change: Headwind to AD spend but it quickly came back in.
Speaker Change: In Q1 of 2023.
Speaker Change: I think COVID-19, there was certainly a lot of uncertainty and market and the market. Yes. There was there was a short pause, but marketers quickly responded and I think what's happening now is I think there's a lot of scenario planning happening.
Speaker Change: <unk> yeah.
Speaker Change: They're just.
Speaker Change: There is uncertainty of tariffs, where theyre going to land, who they affect how they're going to handle pricing.
Speaker Change: Other goods to consumers. So I know that there was a lot of scenario planning going and Thats actually good news.
Speaker Change: Because when their scenario planning, they're not sitting there you know.
With dazed and confused they're planning for multiple options and I think it is going to set up all things being equal at this point I think it's going to set up for a good second half of 'twenty five.
Speaker Change: Perfect and then maybe just a quick follow up can you just kind of walk through the process of convincing advertisers to shift spend away from search and social and just any key points that you're seeing resonate in the market to get these advertisers to more move more spend of your platform.
Speaker Change: Just a start it's about education on the consumer journeys and what's impacting what and analyzing each channel independently and then altogether and we do a lot of this education, but I would say so much is happening from even third party measurement companies, you've seen meta rollout incrementally models.
Speaker Change: For people to use I think more of the sophisticated advertisers set is definitely moving towards this move.
Speaker Change: Towards allocating spend based on Incrementals <unk>, but it's a big sea change from the enormous wall of money. That's been spent towards the last touch attribution. So I would characterize it is it's all about education now that streaming TV year CTV is here, we're able to connect the dots better on.
Speaker Change: The journey from TD AD exposure showed up on Google search bought the product on your website or through a retailer. So now that we're able to connect those dots. It's really just an education process, while the marketers understand that new path and I think.
Speaker Change: When when your platform, which ours is the is low it's becoming the default measurement.
Speaker Change: Experiment of choice with our clients over half of them are using increments holiday to decide where they're going to spend their money, so you're educating them upfront.
Speaker Change: On trying out a new form of measurement of what.
Speaker Change: Sometimes it's called conversion left or a sales lift but really is I spend another dollar in advertising what drove another sale they men marketers or heat seeking after that and that's why you see the share of spend on our platform being in the last quarter here reached 45% in CTV.
Speaker Change: That is much higher as a percentage of mix of AD spend on our platform versus other other ah versus.
Speaker Change: Versus competitors and the reason is is that their default plop in our measurement of choice is still lost touch attribution and it's because they have such high preponderance of display AD spending in their platform. So if you use last touch attribution. It always shows things like search outperforms because it was the last <unk>.
Speaker Change: Or purchase or display ads last seen because theres. So many more of them because of such cheaper, but when you look at incrementally it's completely turned around.
Speaker Change: The CTV on average with our and this is other data that's out there not just in ours, but on average has a 200% incremental lift compared to other other formats and channels. If you look at search social and much of display advertising that's in the the mirror.
Speaker Change: Mid mid single digits to low double digits of increments holiday, it's not even close.
Speaker Change: So yeah, we do some upfront education, but really the marketers, which is heat seeking when they see those results, they're moving the money to whats driving the largest incremental impact.
Speaker Change: Great. Thank you. Thanks.
Kyle: Thanks Kyle.
Kyle: Next Chris can toric UBS your line is live.
Chris: Hi, Chris how are you.
Emmanuel: Emmanuel maybe we'll come back to Chris.
Chris: Understood.
Chris: Okay.
Chris: Following we have.
Chris: Pat Condon.
Chris: Of JMP. Your line is live you May proceed.
Thank you so much for taking my questions. My first one is just on the advertisers that spent at the back half of the year can you just talk about your confidence in that spend actually coming through in the back half and what gives you that confidence that expense actually going to be there in the second half of the year and then my second one is Google launched something that appears to be akin.
Chris: Your household I D or at least they're they're they're implementing.
Chris: IP addresses into their into their DSP into DB 360 can you just talk about what's the differentiation of your household ideas compared to what they have on their platform.
Chris: So much yeah I'll take the first one hour confident and the money being moved to the back half those arent verbal those arent.
Chris: It wasn't.
Chris: That wasn't what we're characterizing it or in our platform think of it like an order entry system. They are taking money. They may be taking some investment out of the second quarter, but they are replacing it and so we already see that in platform and where its scheduled so we're.
Chris: We're highly confident in that.
Speaker Change: Yeah, and then just addressing Google kind of doing quite a sea change from where they've been over the last five years of what I would say is they would exclude and actually hide the IP addresses you mentioned Matt.
Speaker Change: Matt and so they've made a change to enable IP address for use across their products are household ideas of one thing thats important does not represent IP address IP addresses commonly used I would say amongst most industry ecosystem participants what household ideas focused on people based identifier is we're an IP.
Speaker Change: The address is a digital identifier that is out there with cookies. So what what is household I D simply put into your home address your postal address where we're then attaching other people based identifiers to that physical home address very different than what Google has enabled which is allowing the IP address to flow.
Speaker Change: Through Google Ad X.
Speaker Change: And their exchange their so they focus on a digital identifier similar that an IP address could represent a household but our data structure is actually based on physical address not IP address so similar but different yeah, and I think IP addresses although an interesting.
Speaker Change: Turn of of events for Google to now all of a sudden say IP addresses are good when they have had years and years of scaring the ecosystem that one these were privacy violations.
Speaker Change: And two that they should be eradicated, Google actually did eradicate IP addresses inadequate.
Speaker Change: Although they've come out and said that they are going to use them in their okay. Now they are not still not passing that theoretically so on one hand, its good and I do believe they made this move because of.
Speaker Change: A lot of the.
Speaker Change: Monopoly trials that are going on right now a lot of the investigations that are trying to.
Speaker Change: Our show there that there.
Speaker Change: Hanging a little nicer, but if you read through it a little bit more well again is <unk>.
Speaker Change: Privacy for the but not for me they are not passing that IP address through the attic.
Ecosystem. So you know I think that that's a little bit of a fault fly from them, but nonetheless IP addresses.
Speaker Change: In general are probably not the most useful a lot of times you get an IP address that comes across a server side IP. It may not be necessarily the household a lot of platforms like a roku run through a proxy. So you can't look at those so it's not a panacea by any means but.
Chris: Certainly is much different than our household Ids, but exactly as Chris said.
Speaker Change: The IP address Google has it on 100% and if you wanted as an industry participant you have to call every publisher that youre buying from and ask them to enable it. So it's always a baked proposition of we're open and playing ball, but they secretly changed the rules behind the scene word advantages to them.
Speaker Change: That's very helpful guys. Thank you so much thank you.
Speaker Change: Once again, Chris <unk> Your line is live.
Speaker Change: Guys hear me now, Yeah, Hi, Chris Alright, sorry about that.
Speaker Change: Just going back to the April comment.
Speaker Change: Any color you could share there Bruce the context of the 14% to 19% Rev. Ex Tac growth guide for <unk> and then just the second question would be around volume of new customer conversations and how is that trending right now versus the beginning of the year and how are you thinking about that contribution to Rev. Ex Tac growth at this point versus.
Speaker Change: How you were thinking about at the beginning of the year.
Chris: Yeah, Chris can you.
Chris: Re ask the first question I wasn't clear on what you're asking you had just said that April was strong persistent growth in just curious kind of versus the context of 14% to 19% was it within that range was it above that range and how should we be thinking about that strong persistent growth in April.
Chris: Okay.
Chris: Yes.
Chris: Was within that range, but typically what we see as we did in Q1, where we build month over month. So in Q1 February is bigger than January March is bigger than February so.
Chris: So we started out the quarter strong we were pacing to have nice quarter over quarter bumps more than expected.
Chris: May and June.
Chris: We did have this little the pause or the moving of some money from Q2 to the second half was muted that those may and June growth rates, a bit but it's trending in the direction. We typically see words each month is getting larger than the next.
Chris: But our overall growth rate were the impact of those handful of advertisers is about 4% to 5% lower growth rate as a result of that money is moving out of Q2.
Chris: Got it that's helpful. On your next question, Chris our volume of new advertisers.
Chris: As we said on our last call in our pipelines never been stronger.
We're getting much larger.
Chris: Larger looks at bigger piece of the business, meaning larger and larger advertisers.
Chris: We're pretty we feel very bullish on the on the back half in terms of new customer pipeline.
Chris: Those areas I would kind of put it in three buckets. One is just you know always get our CTV dominance when a marketer comes to us and they see they hear about the the preponderance of of CTV spend on our platform that they naturally ask why they understand what they are spending and other platforms.
Chris: And so as we go through the value proposition there in CTV with our scale of our household I D.
And then the recent addition of Iris I D.
Chris: Drawing a lot of interest and new business interest toward the.
Chris: Recently with Iris I D. We had it all.
Chris: A good handful and even in the first quarter of.
Chris: Pretty good size in a fortune 500 brands shifting spending and testing Iris I D and we see great results. There so pretty bullish on that and the last one I'll say will be in the second half that's going to contributed by an AI.
Chris: You know a lot of the organizations.
Chris: Agencies brand marketers, they see the value in AI.
Chris: But there is a there is a bit of they need to rework their organizations to be able to consume AI.
Chris: They all want the efficiencies that it offers and so we've seen a bit of that but it's been tremendous for new business wins.
Chris: We really see a strong pickup avaya and AI in the back half of the year, helping automate workflows moving work within agencies to more strategic work Thats out of the rote work of campaign planning and set up in bidding and buying.
Chris: So we're really excited about that.
Speaker Change: Got it very helpful. Maybe just one last one on the non-GAAP opex.
Chris: Expenses in 2025.
Chris: Nice nice one key cost controls here anything we should be thinking about specifically in the back half of the year that.
Chris: Would be driving this above where you were previously talking to who.
Chris: Yeah.
Chris: No I think it's with last week's smoke you know kind of the 16% to 17% range. It does including in the included in that is about 500 basis points relating to the acquisitions, so but overall I think for the year, you're talking 16, 17% growth.
Speaker Change: Got it thank you.
Maria your.
Speaker Change: Your line is live you May proceed.
Speaker Change: Great. Thanks, Thanks, so much for taking my questions.
Speaker Change: I just wanted to follow up on your macro commentary and just ask about three verticals. One is auto I think Larry you mentioned that it's not it's not that significant for you anymore. Maybe just comment on that then number two is that retail vertical I believe that's that's the sizable kind of vertical for you may be talk about temporary coma broadly and then three through <unk>.
Speaker Change: What are you seeing across your public sector article here more recently.
Speaker Change: Yes.
Speaker Change: On the on the the verticals so in automotive.
Speaker Change: We definitely under index in automotive and specifically with Oems we highly.
Speaker Change: Under index there. So we don't believe we have a lot of exposure there.
Speaker Change: Within retail as we said we saw some small impact.
Speaker Change: We do we don't believe that the most affected by tariffs or tariffs and the retail category, we believe where we're under indexed in that section as well we've done a large analysis on this.
Speaker Change: But and within public services, Larry you want to call. It on a public services has been consistent.
Speaker Change: It was a big really big growth driver for US a couple of quarters ago for a couple of consecutive quarters.
Speaker Change: But it's it's holding steady and growing nicely.
Speaker Change: Got it and then secondly, I just wanted to ask about your direct access program and you obviously have a pretty strong lineup of partners there.
Speaker Change: Are you looking to extend this functionality to add more content on more partners or more inventory and is there sort of any difference in the economics for you between direct access CTV and other CTV spend.
Speaker Change: While we don't we don't charge a fee for direct access.
Speaker Change: And so no we do not make more.
Speaker Change: We don't make more but by our clients' buying through direct access. However, we do see the second derivative there which.
Speaker Change: Is that they are buying more efficiently theyre going to in theory, they get better results and therefore, they spend more money so.
Speaker Change: That's why we've we've held our stance there that we don't need to charge for this it's a benefit to marketers when we can connect directly with content owners. So we want to maintain the savings there in terms of other partners.
Speaker Change: You know really what we're doing now is you've seen you'll continue to see and you have seen us doing press.
Speaker Change: With the likes of Disney and Paramount's.
Speaker Change: Not only putting them in direct access but them adopting our household I D.
Speaker Change: There are scores of those publishers, who have done that that continues to add to our scale and household I D.
Speaker Change: And also with Iris I D.
Speaker Change: The fact that they are now picking up we announced IRS Tcl CNN.
Speaker Change: Apparel and apparel or excuse me asset hours, but Paramount was the big one we've doubled we've doubled the presence of Iris I E. In the bid stream on CTV.
Speaker Change: Since the acquisition. So that's extremely positive as we continue to roll that out, but we're basically we're making and continuing to reinforce direct access program has a lot of benefits not just cost savings.
Speaker Change: Marketers and that's why they keep spending more throat.
Speaker Change: Got it thank you so much.
Speaker Change: Barton Crockett Rosenblatt. Your line is live you May proceed.
Speaker Change: Okay. Thank you for taking the question.
Speaker Change: I guess, a couple of things if I if I could one is.
Speaker Change: In terms of the <unk> the.
Speaker Change: The commentary around this broad transition.
Speaker Change: In increments Saudi.
Speaker Change: You guys, obviously, you point to your own experience your growth is kind of evidence of App.
Speaker Change: But it seems you know this is such a powerful idea that there should be broader evidence of it.
Speaker Change: The flip side argument could be maybe people just like your products and services. So what else can you point to that argues that this is really.
Big macro theme versus you guys selling a few products and services that people like.
Speaker Change: Great question very good question and.
Speaker Change: It's one that gets asked.
Speaker Change: Quite a lot actually.
Speaker Change: One of the reasons why I would tell you is one it is a it is a.
Speaker Change: It is an industry theme it is picking up steam, but I know I wrote I read a post on this on a linked in.
Speaker Change: That old habits die hard.
Speaker Change: 80% of the money. We believe that is in digital advertising is spent based on last touch attribution, meaning whoever showed the last AD right before a consumer purchase gets all the credit for it and the money flows that way.
Speaker Change: It's absolutely wild to think that that's where we are today that youre not that you're essentially going to de prioritize things like TV and streaming audio because those are not at the point of purchase ad products.
Speaker Change: But they do drive the data is clear of how much increments holidays that they drive.
Speaker Change: And I believe the entire marketing organizations are completely built around these these kpis and digital advertising I mentioned, the sports apparel brand I mean, it's a great case study around there theres. Many more Starbucks was another example of something.
Speaker Change: We're <unk>.
Speaker Change: Our organization are geared towards.
Speaker Change: Better and better and more and more efficient kpis in marketing, but at the same time or overtime, they have slumping sales or topline revenue.
Speaker Change: In it so I think it is a little bit of a reeducation to a degree.
Speaker Change: And part of this is really I think CMO is understand this they understand that TD drive's impact and media branded search term isn't responsible for incremental sales, but they keep buying it and you have to ask why I mean, I just think it's the over measurement of things and oftentimes. It's the presence of the CFO in the room of wanting more accountability for.
Speaker Change: Rising sea, although one thing may appear more accountable like Google search or display ads at the point of purchase.
Speaker Change: But we think that this is definitely changing it's not just us.
Speaker Change: But it is something that we have to continue to educate in the industry around in part of just one piece Barton is met I came out and open source their model for Incrementals east because so many advertisers are asking to measure incrementally versus the old traditional cost per customer acquisition. So.
Speaker Change: I think it's a you'll see more and more evidence come out yes from our org and I think youll see a litany of research coming out that shows that branded search doesn't provide as much value as initial thought social provides less value than initial thought and television really is the main stimulator of consumer demand okay.
Speaker Change: Thanks for that and then something on that.
Speaker Change: The guidance and the outlook.
Speaker Change: I can tell me if I'm wrong, but I think you guys might've been saying in the last earnings.
Speaker Change: That you expected your revenue.
Speaker Change: <unk> revenue to grow faster than your expenses in there to be some margin expansion of EBITDA as a percentage of contribution ex Tac.
Speaker Change: Is that something you still see at this point.
Speaker Change: Currently for the year, we expect that to be the case, it's our guidance is roughly equal in this in this quarter, primarily due to the some of that money moving out of Q2 into the second half, but we continue to.
Speaker Change: That's a big metric of ours that we're very focused on to ensure that we're increasing our EBITDA margins throughout the year. Okay, and then if I could just throw in one more.
Speaker Change: In terms of Google They have offered.
Speaker Change: To make some concessions sort of a breakup.
Speaker Change: In terms of.
Speaker Change: Not using first look last look.
Speaker Change: You know I think a couple of other things around the.
Speaker Change: The minimums, allowing publishers to differentiate.
Speaker Change: Giving publishers full view of what goes through.
Speaker Change: In your minds or those with us would be helpful. If you didn't get the breakup that you just got that would that would be helpful to you no no without a breakup Google as a machine and I think the hard part is the antitrust cases are attacking search or AD tech or Youtube or the or lets say significant parts of the machine.
Speaker Change: But they all work in lockstep to control the flow of Internet traffic, what consumers get exposed to and what they don't get exposed to I wrote a lengthy posts on how Google is the real reason for my spaces decline now Facebook being from the inside looking at the internal metrics what happens when you get taken off a page one of Google.
Speaker Change: You evaporate off the Internet is the answer and so Google controls traffic at the start of the Internet journey for most consumers and they pushed that traffic wherever they want usually to their owned and operated businesses that they've either acquired or control through their AD exchange. So.
Speaker Change: Short of a breakup there is no stopping that machine from.
Speaker Change: From going through if you want to use instead of search reach out via email, let's say well they control Gmail and they control. If you go in the junk filter as well and and I can't tell you how an organization that big worked perfectly in lock step to ensure all of these pieces were there, but they did they executed perfectly in it.
And it's shut out so many players so I personally my opinion is that short of a breakup. It would have absolutely no impact because they can continue to use the cash flow of business say to subsidized business be until the market participants are gone, which we saw over and over and over so the mantra that Google.
Speaker Change: Came out with an IPO or do not do no evil. There's certainly we're substantially past that I think the only solution for.
Speaker Change: For future monopolies from the government to do it.
Speaker Change: Is to break them up so theres actual repercussions for breaking the law.
Speaker Change: Thank you.
Brito Munoz: Brito Munoz Raymond James Your line is live.
Speaker Change: Thank you for taking my questions.
Speaker Change: Just wanted to follow up on the commentary about the modest demand being pushed out to the second half I apologize this was answered already.
Speaker Change: W with them.
Speaker Change: Calls, but Larry do you quantify the impact.
Speaker Change: Disadvantage in your second quarter guidance.
Speaker Change: Correct.
Speaker Change: We said it was essentially 3% to 4% of expected revenue and 60.
Speaker Change: Which equates to about a reduction on our growth rate that we would otherwise have had of a 4% to 5% across the X gene revenue.
Speaker Change: That's very helpful. Thank you so much and from a customer perspective was this driven.
Speaker Change: By your logic customers or the long tail of yours, more advertiser base, and what channels and formats where were the.
Speaker Change: Were most impacted by by the push out.
Speaker Change: Well I'll take the first bottler yeah. So it was it was it was about five customers.
Speaker Change: Not no like extra large customer not really super small ones kind of in the middle class customers.
Speaker Change: In terms of channels. It really was kind of typical of the mix that we normally see because the customers were all a little bit different in how they approach approach to advertising.
Speaker Change: So it didn't heavily impact one channel versus another it's kind of consistent generally consistent with what the mix we ordinarily see.
Speaker Change: Great. Thank you and then.
Speaker Change: Yeah. My question. This is on the competitive landscape.
Speaker Change: Greg you did touch on this in your prepared remarks, but I'm talking about the.
Speaker Change: Hmm.
Speaker Change: Perceive competitive threat from Amazon.
Speaker Change: So yeah, theres been a lot of attention or.
Speaker Change: On some of our intakes.
Speaker Change: Continue to suggest that Amazon is looking to expand share our price points.
Speaker Change: This is at the very high end of the advertising base. So it would be understanding that you are more on the main market I might not even see this.
Speaker Change:
Speaker Change: You can talk about the defensibility of Brian's if all those killed dsp's.
Speaker Change: Wanted to.
Speaker Change: Come down market and competing with you for model of the need to smaller advertising and agency opportunity.
Speaker Change: And then measure from Amazon or worsening of the macro macro backdrop, but if you can comment on that thank you.
Speaker Change: Yep.
Speaker Change: I would just classify Amazon as they compete with many many many verticals out there and then I think what the perception by investors around Amazon is around their data that they have this amazing dataset and of course within the retail product category of their dataset.
Speaker Change: It is very very strong probably second to none out there, but if you look at other verticals like automotive quick service restaurants travel and tourism. The dataset that Amazon possesses has no benefit to that vertical category and they have no position of strength. There. So certainly in retail of use.
Speaker Change: Well consumer goods, there are going to have a great data set for you as an advertiser I think secondarily, what's driving their revenue growth is the sale of merchandise through their store and and in turn they require people to spend in advertising based on <unk> as a percentage of those gross merchandise sales through.
Speaker Change: Through their retail store, so I think a lot of the growth is really due to the sale of merchandise to the end consumers as powering their AD platform for retail consumer goods businesses Amazon is going to be a really good partner for you and probably already is in critical to your success, but if you're in financial services automotive.
Speaker Change: Service restaurants, many many most other vertical categories that make up the advertising industry, even at the Fortune 500 level Murray T O. They're dataset has no value to your business overall so.
So I think overall, it's less just about a mid market versus big customer setup.
Speaker Change: And more about what proprietary data does Amazon have an where does that give them a competitive advantage. That's squarely for the most part in retail and in not so great and most other categories.
Speaker Change: And radio one other point to just the spell.
Speaker Change: Any misunderstanding in the Midmarket Google has been in the mid market trade desk has been in the mid market.
Speaker Change: And mid market customers do buy advertising from Amazon DSP, but as Tim had talked about most of that is sponsor listing ads.
Speaker Change: So we don't really see them in a true DSP self service arena much of what we see even right now is really Amazon going around trying because they've under delivered with our upfront commitments.
Because viewership was down in prime video outside of a few big franchises like Thursday night football, we're trying to place those ads somewhere which is why they're going to say, hey, I won't charge a fee for that.
Speaker Change: Which I think is the larger problem for them. So we've competed with large companies even in the mid market and we've been able to win share there.
Speaker Change: It really is we don't see them in the true self service space, They do get AD commitments as Tim saying, they they do get those predominantly in the retail media side and sponsored listings.
Speaker Change: Area.
Speaker Change: Helpful. Thank you.
Speaker Change: That's helpful for me.
Speaker Change: Thank you Mauricio.
Nat: Alright, Nat I see you on there we'll take your question, Yes, hi.
Hi, guys.
Nat: Just wondering I've been hearing a lot about advertisers and really large agencies beginning to balk a little at the.
Nat: The cost of the AD Tech stack.
Nat: And specifically relating to one particular competitor that has gotten pretty expensive how have you guys.
Nat: And you are now growing.
Nat: Solidly better than that competitor, mostly because of your CTV side, which is the growth area of the industry.
Nat: How well have you been how how are the conversations going with the large agencies and how much room is there to move up market in the current environment.
Thanks for that night.
Nat: Yeah, we are as we said in our last few quarters, we certainly are moving upmarket.
Nat: But we still want to call the mid market and our mid market advertisers spend between 50 million and up to $1 billion a year in advertising, but their U S based national advertisers, that's how I would characterize them. So we are getting bigger swings that larger accounts certainly one of the yes. There are there's always you know.
Nat: Drums of.
Nat: Anytime.
Nat: And if I look over the last 10 or 15 years, you hear where theres inefficient pricing customers may be getting charged too much that's always an opportunity for a challenger brand, but it's kind of in our ethos why we don't charge for things like direct access because I don't need to.
Nat: Why.
Nat: Why not pass value to the customer.
Nat: One why don't I give an easy win to our salespeople and I go out and compete against somebody who's charging for the exact same thing and we don't.
Nat: That's just a big way and we can win more customers a lot faster we want to do that.
Nat: We may offer other other we may have other pricing mechanisms that are fixed cost, but maybe are of value based pricing. So we only mega we only make our fear for providing value there.
Nat: So there are things that we do where we don't need to charge.
Nat: We are widely noted as being more efficient from a pricing standpoint.
Nat: Compared to larger DSP is.
Nat: That's always served us well and I think that's an area, where we can stay because from a beneficiary standpoint as a company we don't need to charge both things that we can still grow our EBITDA percentage, but not specifically around the competitor that you mentioned what.
Nat: Around the trade desk, what people are sick of is the incremental fees not so much. The platform P is the incremental fees that are getting charged and I believe with the rollout of Coke I, there were substantial increases and incremental fees and that's really what the chatter that you're hearing about as well as it automatically ops you into.
Nat: Purchase through their open path S. S P solution.
Nat: So I think those are the major issues amongst the competitor side, we really don't play that game, though I'm trying to go tit for tat on pricing we price. What we think is fair, we try and not charge as many incremental fees as the other customers of course have someone asked for third party something there are incremental costs.
Nat: But we just try and do our best job at negotiating the take rate straight across the board in providing as much transparency and visibility into what's driving value for them.
Nat: Thank you Nat.
Nat: Sorry.
Nat: There's follow up you.
Speaker Change: You guys talked a lot about Amazon here and following up on the specific pricing.
Speaker Change: Issue one of the things we've been hearing for advertisers and agencies.
Speaker Change: Is specifically there are lack of nickel and diming kind of as you brought up that has been a problem.
Speaker Change: Particularly at the large agency side.
Speaker Change: I know that.
Speaker Change: In the end, though what's going to matter is the total.
Speaker Change: The percentage of the dollars that are being taken by the AD Tech stack.
Speaker Change: How do you compare right now if I wanted to put you versus trade desk, where do you think you come out and price on on DSP plus of data.
Speaker Change: And I know it can vary.
Speaker Change: On a.
Speaker Change: For an advertiser and is it is there a significant difference.
Speaker Change: I'm sure every advertiser is somewhat different because I think the more scale and I think it all DSP is the more an advertiser spends the better the deal. They may end up getting but what we say is we get we get head to head all the time and it's pretty simple pickier.
Speaker Change: Pick whatever you want to by Mr. Marketer by whatever publisher you want what the CPM you don't have to do a lot of brand surgery walking you acquire that content for put an audience on it used the same audiences in both platforms, what do you see Ah.
Speaker Change: And we come out ahead on those all the time and really it's I would say, it's more indicative of our customer base as well we believe in the mid market that they are much more data driven than in the fortune 100, it's not that the fortune 100 doesn't you know that there is buying ads, but a lot of them don't.
Speaker Change: Have a heavy reliance on e-commerce, Theyre, not doing monthly and quarterly planning looking at incremental return on AD spend as much they're looking to move a million cases of toilet paper. So they may not be buying as much data in the market because.
Speaker Change: Everybody bye toilet paper, so our customers that we believe is largely difference and.
Speaker Change: Without a doubt there is a high scrutiny.
Speaker Change: As you say the AD tech tax, there's a very high scrutiny.
Speaker Change: And what I will say is if you're not delivering the returns and if your costs get out of whack and fees that you charge or too much their results will suffer and so it's obvious what happened they may move their spend to another platform.
Speaker Change: And I think there's just to add some color to that there is huge infrastructure costs that someone like the trade desk or Google has to carry to support the large holding companies, which has operations in 40 countries over 30 countries wherever that footprint is those international operations are all money losers absolute money.
Losers and so you have to have in the profitable business is actually in North America or the U S. Specifically, so what you end up with is inflated take rates to pay for this international infrastructure that never spits out anything but losses, and that's where I think the main frustration and stemming from as you do have an inflated take rate.
Speaker Change: But it's the these platforms are required to support that holding company in 40 countries and AD spend across those 39 other countries. Besides the U S doesn't support the staff that's required to be there and this is always why our strategic perspective was to stay on U S National Advertiser.
Speaker Change: Or is what we call the mid market and focus on there because we had operating leverage in our business model at substantially lower AD spend flowing through our platform than the trade desk did historically when they went public and were building their business. So we think we have a strategic advantage not having to support this enormous maam.
Speaker Change: The loser of international operations, and digital advertising because the our pool of AD spend there is just not supportive in those other countries.
Speaker Change: Makes sense thanks, guys.
Speaker Change: Okay.
Speaker Change: At this point there are no more raised hands in the queue.
Speaker Change: Alright, and with that we'll close the call. Thank you everyone for joining <unk> earnings call see you next quarter.
Speaker Change: Yes.