Q3 2025 Applovin Corp Earnings Call

<unk> founder CEO and chair person, Matt Stumpf, our CFO.

Please note our SEC filings to date as well as our financial update and press release discussing our third quarter performance are available at investors that Apple have in dot com.

During today's call, we will be making forward looking statements, including but not limited to the future development and reach of our platform, including the expected timing of product launches our share repurchase program the efficiency of our operations the expected future financial performance of the company and other future events.

These statements are based on our current assumptions and beliefs, and we assume no obligation to update them, except as required by law.

Our actual results may differ materially from the results predicted.

We encourage you to review the risk factors in our most recently filed Form 10-Q for the second quarter ended June 32025.

Adam Foroughi: I'm particularly proud of our team because even while executing a strong quarter, we also delivered our major 1 October launch of our self-service platform and referral form. We did so without any significant hiccups, no major bugs, and effective filtering out of low-quality ad accounts, something I was personally monitoring closely. This speaks volumes about our ability to automate and execute. I know everyone wants stats on how self-service is going, and instead of something specific around accounts or ramp-up, since we're still very early, I'd like to point out a stat which I watch very closely. While it takes a while for new customers to get going, to integrate, to learn how to use our system, and to ramp spend, we're already seeing spend from these self-service advertisers grow around roughly 50% week over week.

Additional information May also be found in our quarterly report on Form 10-Q for the fiscal quarter ended September 32025, which will be filed today.

We will also be discussing non-GAAP financial measures. These non-GAAP measures are not intended to be superior to or a substitute for our GAAP results.

Please be sure review the GAAP results and the reconciliations of our GAAP and non-GAAP financial measures in our earnings release and financial update available on our Investor Relations site.

This conference call is being recorded and a replay will be available for a period of time on our IR website.

Now I'll turn it over to Adam and Matt for some opening remarks, then we'll have the moderator take us through Q&A.

Thank you all for joining us today first I'd like to recognize our inclusion in the S&P 500, a huge milestone for our company and a strong acknowledgement of what we built it's a privilege we do not take lightly. It also means we now.

Adam Foroughi: It's too soon to be significant, but this type of early growth gives us even more confidence that our platform will excel at being an open platform to any type of advertiser. Our focus for Q4 and 2026 will be the following, with priority always given to improving our models for all advertisers. We'll continue tuning our onboarding flows, and ramping more AI agents into the workflow to support a seamless experience for new advertisers. Once we're satisfied with the quality and experience, we'll open the platform broadly, beyond referral basis. We'll be testing generative AI-based ad creatives. Over time, if we can move to mostly automated creative generation, we believe user response rates to more customized ads on our platform will materially improve. We are actively testing paid marketing to promote the AXON Ads platform to new customers.

Now carry the expectations of a much broader set of investors and we must push even harder to continue delivering.

Turning to our business Q3 was another very good quarter. Our performance was strong with gaming advertising continuing on a solid trajectory.

Our teams delivered multiple incremental lifts in our core models this quarter and our Max supply side platform. One of the best indicators of our end market growth continues to grow at very healthy rates.

We also open up international traffic for advertisers promoting websites our shops in Q3 ahead of schedule.

I'm, particularly proud of our team because even while executing a strong quarter. We also delivered our major October 1st launch of our self service platform and referral form.

We did so without any significant hiccups no major bugs and effective filtering out of low quality AD accounts, something I was personally monitoring closely.

Adam Foroughi: We'll continue tuning this acquisition method so that when we launch the platform beyond referral in 2026, we can scale advertiser count without a reliance on a large sales force. If we maintain execution discipline, we are well positioned to acquire a large volume of new advertisers in the coming years. We believe that giving our powerful recommendation engine a more diverse set of advertisers to recommend will dramatically improve conversion rates, paving the way for elevated growth rates for years to come. It's worth noting the backdrop. The market is recognizing our platform, our scalability, and the reach we offer our partners, and the institutional dynamics that come with the S&P 500 inclusion are already in motion. At the same time, we continue to operate in an environment of heightened scrutiny around data, privacy, and ad tech practices. We remain committed to strict compliance, transparency, and execution excellence.

This speaks volumes about our ability to automate and execute.

I know everyone wants stats on how self service is going and instead of something specific around accounts or ramp up since we are still very early I would like to point out a start which I watch very closely.

While it takes a while for new customers to get going to integrate to learn how to use our system and to ramp spend we're already seeing spend from the self service advertisers grow around roughly 50% week over week.

It's too soon to be significant with this type of early growth gives us even more confidence that our platform will excel at being an open platform to any type of advertiser.

Our focus for Q4 and 2026 will be the following.

With priority always given to improving our models for all advertisers.

Adam Foroughi: To conclude, we delivered a very strong Q3. We are executing on our strategic priorities, and we are confident that our best days are ahead as we broaden access to our self-service platform and scale globally. With that, I'll turn it over to Matt for a deeper dive into the numbers.

We will continue tuning our onboarding flows and ramping more AI agents into the workflow to support a seamless experience for new advertisers.

Once were satisfied with the quality and experience we will open the platform broadly beyond referral basis.

We'll be testing generative AI based AD creative overtime, if we can move to mostly automated creative generation. We believe user response rates to more customized ads on our platform will materially improve.

Matt Stumpf: Thanks, Adam, and thanks everyone for joining us today. Q3 was another exceptional quarter. Revenue was approximately $1,405 million, up 68% year over year due to model updates in the core gaming business, while adjusted EBITDA was $1,158 million, up 79% at an 82% margin, up 1% quarter over quarter from operating leverage and a modest reduction in operational FX. Quarter over quarter flow through to adjusted EBITDA was 95%, slightly above Q2. Free cash flow was $1,049 million, up 92% year over year. Free cash flow margin improved sequentially given no semiannual cash interest paid on our debt this quarter, as those payments occur in Q2 and Q4 of each year. We ended the quarter with $1.7 billion in cash and cash equivalents. During the quarter, we repurchased and withheld approximately 1.3 million shares for $571 million funded by free cash flow.

We are actively testing paid marketing to promote the axon AD platform to new customers we.

We will continue tuning this acquisition method so that when we launched the platform beyond referral in 2026, we can scale advertiser count without our reliance on a large sales force.

Once we're satisfied with the quality and experience, we'll open the platform. Broadly Beyond referral basis.

If we maintain execution discipline, we are well positioned to acquire a large volume of new advertisers in the coming years.

We believe that giving our powerful recommendation engine a more diverse set of advertisers to recommend will dramatically improve conversion rates paving the way for elevated growth rates for years to come.

We'll be testing generative AI based ad creatives over time. If we can move to mostly automated creative generation, We Believe user response rates to more customized ads on our platform will materially improve.

It's worth noting the backdrop the market is recognizing our platform our scalability and the reach we offer our partners and the institutional dynamics that come with the S&P 500 inclusion are already in motion.

We are actively testing paid marketing to promote the axon ads platform to new customers.

We'll continue tuning this acquisition method. So that when we launched the platform Beyond referral in 2026, we can scale Advertiser account without a Reliance on a large sales force.

At the same time, we continue to operate in an environment of heightened scrutiny around data privacy and AD Tech practices, we remain committed to strict compliance transparency and execution excellence.

Matt Stumpf: Over the last three quarters, we have reduced our weighted average diluted common shares outstanding from $346 million in Q4 of last year to $341 million this quarter. During the quarter, our board of directors increased our share repurchase authorization by an incremental $3.2 billion. Finally, turning to our financial outlook for next quarter, in the fourth quarter of 2025, we anticipate revenue between $1,570 million and $1,600 million, reflecting between 12% and 14% sequential growth, with adjusted EBITDA between $1,290 and $1,320 million, targeting an adjusted EBITDA margin of 82% to 83%. Now with that, let's move to Q&A.

If we maintain execution discipline, we are, well, positioned to acquire a large volume of new advertisers in the coming years.

To conclude we delivered a very strong Q3.

We are executing on our strategic priorities and we are confident that our best days are ahead as we broadened access to our self service platform and scale globally with that I'll turn it over to Matt for a deeper dive into the numbers.

We believe that giving our powerful recommendation engine, a more diverse set of advertisers to recommend. Will dramatically improve conversion rates, Paving the way for elevated, growth rates for years to come.

Thanks, Adam and thanks, everyone for joining US today Q3 was another exceptional quarter revenue was approximately $1.405 billion up 68% year over year due to model updates in the core gaming business.

It's worth noting. The backdrop, the market is recognizing our platform, our scalability and the reach, we offer our partners and the institutional dynamics that come with the S&P 500 inclusion are already in motion.

At the same time, we continue to operate in an environment of heightened scrutiny around data privacy and adtech practices. We remain committed to strict compliance transparency and execution excellence.

While adjusted EBITDA was $1 billion $158 million up 79% at an 82% margin up 1% quarter over quarter from operating leverage and a modest reduction in operational FX.

To conclude we delivered a very strong Q3.

Operator: We'll now begin our question and answer session. Please be sure to unmute and turn on your video before asking your question. We will take as many questions as time permits, and since we have many questions today, please be patient as we move through the list. Our first question will come from James Heaney.

Quarter over quarter flow through to adjusted EBITDA was 95% slightly above Q2.

We are executing on our strategic priorities and we are confident that our best days are ahead. As we broaden access to our self-service platform in scale, globally, with that. I'll turn it over to Matt for a deeper dive into the numbers.

Free cash flow was $1 billion $49 million.

Thanks Adam. And thanks everyone for joining us today.

Up 92% year over year.

James Heaney: Yeah, great. Thank you, guys, for taking the questions. Could you just start off talking about the characteristics of the advertisers that you've onboarded since 1 October? Would you say the GMV of the advertisers are smaller than the initial 600 that you had in the pilot, or are you going more down market? Just any help there would be great.

Free cash flow margin improved sequentially, given no semiannual cash interest paid on our debt this quarter as those payments occur in Q2, and Q4 of each year.

Q3 was another exceptional quarter. Revenue was approximately $1 billion, $45 million, up 68% year-over-year, due to model updates in the core gaming business.

We ended the quarter with $1 $7 billion in cash and cash equivalents.

During the quarter, we repurchased and withheld approximately one 3 million shares for $571 million funded by free cash flow.

Adam Foroughi: Yeah, sure, James. They're obviously a filtered set of advertisers when we curated the list last year. That was filtered by our team, and this year it's filtered through referrals. These aren't like your local dry cleaner trying to come onto the platform yet. They are predominantly shops. They're not going to be as large as they were in the cohort last year, but they're not going to be materially smaller either. Think of them as comparable in mix, and then it's a broad set of categories. There's no limitation when you're open the way we are through a referral to the type of customer that comes in. Broad set of shopping categories being represented.

While adjusted Evita was 1 billion 158 million up 79% at an 82% margin up. 1% quarter of a quarter from operating leverage and a modest reduction in operational FX.

Over the last three quarters, we have reduced our weighted average diluted common shares outstanding from $346 million in Q4 of last year to $341 million this quarter.

Quarter of a quarter flow through to adjusted. Evita was 95% slightly above Q2.

Free cash flow was 1 billion. 49 million up 92% year-over-year.

During the quarter, our board of directors increased our share repurchase authorization by an incremental $3 2 billion.

And improved sequentially given no semiannual cash interest paid on our debt this quarter as those payments occur in Q2 and Q4 of each year.

Finally, turning to our financial outlook for next quarter.

we ended the quarter with 1.7 billion dollars in cash and cash, equivalents

In the fourth quarter of 2025, we anticipate revenue between $1 billion $570 million and $1.600 billion.

During the quarter, we repurchased and withheld approximately 1.3 million shares for $571 million funded by free cash flow.

James Heaney: Great. Just one for Matt. Could you just talk about guidance philosophy for Q4? Just curious how you've used e-comm seasonality from last Q4 as a proxy for this year, and just interested to hear kind of what's being assumed from sort of the current customers versus new customers on the e-comm side. Thanks.

Reflecting between 12 and 14% sequential growth.

With adjusted EBITDA between $1 billion, 290, and $1 billion and $320 million.

Over the last 3 quarters, we have reduced our weighted, average diluted common shares outstanding from 346 million in Q4 of last year to 341 million this quarter.

Targeting an adjusted EBITDA margin of 82% to 83%.

Matt Stumpf: Yeah, sure. It's not the best comp, obviously. Last year, we had an entirely new e-commerce business that was ramping, and this quarter, right, we had an existing base. It's not the best comparison year over year. Within the guidance, we took an approach where it reflects a combination of different factors that we have going on at the company. Obviously, the optimism around the e-commerce referral program, continued model enhancements, the updates that we talked about previously within the Q3 period, and also kind of normal holiday seasonality. The combination of those factors led to the larger guidance that we're projecting quarter over quarter.

Now with that let's move to Q&A.

During the quarter, our board of directors increased, our share repurchase authorization by an incremental 3.2 billion.

We will now begin our question and answer session. Please be sure to Aneel and turn on your video before asking your question, we will take as many questions as time permits and since we have many questions today, please be patient as we move through the list.

Finally turning to our financial outlook for next quarter in the fourth quarter of 2025, we anticipate revenue between 1 billion, 57070 million and 1 billion, 600 million.

Our first question will come from Sam Feeney.

Reflecting between 12 and 14% sequential growth.

Yeah, great. Thank you guys for taking the questions could you just start off talking about the characteristic characteristics of the advertisers that you've on boarded since October one would you say the GMB the advertisers are smaller than national 600.

With adjusted Eva between 1 billion, 290 and 1 billion and 1320 million.

Targeting and adjusted e, but to margin of 82 to 83%.

Now with that, let's move to Q&A.

You had in the pilot or are you going down more downmarket, just just any help there would be great.

James Heaney: Great. Thank you, guys.

Matt Stumpf: Welcome.

Operator: Your next question will come from Omar Dessouky with Bank of America.

Yes sure James.

They're obviously filtered set of advertisers when we curated the list last year that was filtered by our team and then this year. It's filtered through referrals. So is these arent like your local dry cleaner and trying to come onto the platform yet they are predominantly shops, they're not going to be as large as they were in the cohort last year, but they're not going to be materially smaller.

Omar Dessouky: Hi, thanks for taking my question. Adam, I wanted to get back to your comments about substantially higher conversion rates. Am I to read that as that a significant growth in impressions would not be required to absorb a significant increase in e-commerce advertisers in 2026?

Question and answer session, please be sure to unmute and turn on your video before asking your question. We will take as many questions as time permits. And since we have many questions today, please be patient as we move through the list,

Our first question will come from James, heiny?

Walter either so think of them as comparable.

And mix and then it's a broad set of categories. There's no limitation. When you open the way we are through a referral to the type of customer that comes in so broad set of shopping categories being represented.

Adam Foroughi: Yeah, I mean, look, we've always said we serve a lot of impressions to a lot of users today, over a billion users today. We're in a world today where the biggest lever for growth on our business, given we report on a net revenue basis, is increasing the conversion rate. That happens from a couple of things. You've got the model enhancements, which we always talk about. Those are super impactful in increasing conversion rate. That's a continuous effort. We are in the very, very beginnings of understanding how to work with neural nets and these AI technologies. I mean, if you think about this industry and the core AI industry, it's only a few years old of engineers really being able to extract this kind of value out of these tools and technologies across a broad range of industries.

Great and then just one for Matt could you just talk about guidance philosophy for Q4, just curious how you view seasonality from last Q4 as a proxy for this year and just interested to hear kind of what's being assumed from sort of.

Yeah, great. Thank you guys for taking the questions. Um, could you just start off talking about the characteristic, uh, characteristics of the advertisers that Ivon boarded since October 1, uh, would you say the gmv of the advertisers are smaller than the initial 600, um, that you had in the pilot? Or are you going down, more down Market? Just just any help there would be great.

The current customers versus new customers on E Com Todd. Thanks, Yes, sure it's not the best comp obviously last year, we had an entirely new ecommerce business that was that was ramping and then this quarter right. We had an existing base, it's not best comparison year over year. So within the guidance. We took an approach where it reflects a combination of different factors that we have going on.

The company, obviously, the optimism around the E Commerce referral program.

Adam Foroughi: As this goes forward, we're going to have consistent incremental improvements, sometimes large, sometimes small, but additive to high impact on driving up conversion rate from technology lifts. You're also going to get advertiser density expanding, paired with our recommendation system, giving the model a chance to personalize the advertising to the user better. If we have fewer advertisers in fewer categories, we just have less to show, so you can't get a diverse set of content to the customer to maximize that conversion rate. Both those things are just going to naturally happen as we go forward. The third piece that I touched on to your phrase you repeated is that generative AI-based creative. Today, in our advertising system, the advertiser can do almost no targeting.

Yeah, sure James. Um, there are obviously filtered set of advertisers when we curated the list last year, that was filtered by our team. And then this year, it's filtered through referrals. So these aren't like your local dry cleaner. Trying to come onto the platform yet, they are predominately shops. They're not going to be as large as they were that that in the cohort last year, but they're not going to be materially smaller either, so think of them as comparable um, in in mix and then it's a broad set of categories. There's no limitation when you're open the way, we are through a referral to the type of customer that comes in. So broad set of shopping categories being represented

<unk> model enhancements the updates that we and we've talked about previously within the Q3 period and then also kind of normal holiday seasonality. So the combination of those factors led to the to the larger guidance that we're predicting quarter over quarter.

Great. Thank you guys.

Welcome.

Your next question will come from Omar <unk> with Bofa.

Hi, Thanks for taking my question Adam.

Adam I wanted to I wanted to get back to your comments about substantially higher conversion rates.

So am I to read that as.

That is significant growth in impressions.

Adam Foroughi: They can pick their country, they can put in their economic goals, they can put in a budget, and off they go. The one manual lever is creative. In particular, in the shopping category or in this website advertising business, a lot of the customers come on board, and they don't have a creative that's adapted for our platform. The average viewership of our ads is roughly 35 seconds. The average viewership of an ad on social is roughly 7 seconds. A lot of these customers are coming in and just porting a short ad and trying to replicate what they have on social on our platform, and it's mismatched. It diminishes their possible conversion rate. What does that mean?

I would not be required to absorb a significant increase in e-commerce advertisers in 2026.

Yeah, I mean look we've always said we serve a lot of impressions to a lot of users that are over 1 billion users. So we're in a world today, where the biggest lever for growth on our business. Given we report on a net revenue basis is increasing the conversion rate and that happens from a couple of things you got the model enhancements, which we always talk about those are super <unk>.

Great. And then, um, just 1 for Matt. Um, could you just talk about guidance Philosophy for Q4? Just curious how you've used Ecom seasonality from last Q4, is a proxy for this year, and just interested to hear kind of what's being assumed from, uh, sort of the current customers versus new customers on Ecom side. Thanks. Yeah, sure. It's not the best comp. Obviously, last year, we had an entirely new e-commerce business. That was that was ramping and then this quarter, right? We had an existing base, so it's not best comparison year over year. So, within the guidance we took an approach where, you know, it reflects a combination of different factors that we have going on with the company. Obviously, the optimism around the e-commerce, referral program, uh, continued modeling enhancements, the updates that we we talked about previously within the Q3 period and then also kind of normal holiday seasonality, so the combination of those factors led to the to the larger guidance, uh, that we're projecting quarter over quarter.

Great. Thank you guys.

Welcome.

Your next question will come from Omar duki with BFA.

Tactful and increasing conversion rate that's a continuous effort. We are in the very very beginnings of understanding how to work with neural nets and these AI technologies. So I mean, if you think about this industry and the Cory I industry. It's only a few years old of engineers really being able to extract this kind of value out of these tools and technologies.

Hi, thanks for taking my question. Uh, Adam I wanted I wanted to get back to your comments about um, substantially higher conversion rates.

so you know, am I to read that as um

Adam Foroughi: Well, when we get into a world where we can use generative AI tools to automatically create ad creatives on behalf of these customers, they're going to get to a point where they can actually expand their conversion rate with doing nothing more other than just expanding the count of creatives into our system, and ensuring that the types of creatives in our system follow best practices on our platform, and doing that at no cost. We're really excited about where the tools in the marketplace are going. That's something we're going to be testing in short order here.

That a significant growth in impressions.

Uh, would not be required to absorb a significant increase in e-commerce advertisers in 2026.

Across the broad range of industries. So as this goes forward, we're going to have consistent incremental improvements and sometimes large sometimes small but additive to high impact on driving up conversion rate from technology less than you're also gonna get advertiser density expanding paired with a recommendation system given the model the chance to personal.

Omar Dessouky: If I could just follow up, you've addressed the conversion rate question I had very clearly. I did want to touch on how you're thinking about supply, even though obviously you've clearly said that the conversion rate is a big driver. In the past, you've talked about double-digit growth in publisher revenue and MAX over the past few years. I'm wondering if you expect that to accelerate as e-commerce ramps. Do you see supply driven primarily by higher ad load as dictated by publishers, higher engagement with mobile games overall, or improvements to MAX like those you shipped in 2024? Which of those factors would be most important to you?

Why is the advertising to the user better if we have less advertisers unless categories. We just have less to show. So you can't get a diverse set of content to the customer to maximize that conversion rate. Both of those things are just going to naturally happen as we go forward and the third piece that I touched on tier tier phrase you repeated.

Is that generative AI based creative today in our advertising system. The advertiser can do almost no targeting they can pick their country. They can put in their economic goals. They can put in a budget now if they go the one manual lever is creative and in particular in the shopping category or there's like website advertising business.

Yeah, I mean, look, we've always said we serve a lot of impressions to a lot of users today, over a billion users a day. So we're in a world today where the biggest lever for growth in our business, given we report on a net revenue basis, is increasing the conversion rate. That happens from a couple of things. You've got the model enhancements, which we always talk about. Those are super impactful in increasing conversion rate; that's a continuous effort. We are in the very, very beginning of understanding how to work with neural nets and these AI technologies. I mean, if you think about this industry, the core AI industry is only a few years old in terms of engineers really being able to extract this kind of value out of these tools and technologies across a broad range of industries. So as this goes forward, we're going to have consistent incremental improvements, and sometimes large, sometimes small, but additive to high impact on driving up the conversion rate from technology lifts. Then you're also going to get advertiser density expanding, paired with our recommendation system, giving.

A lot of the customers come on board and they don't have accretive that's adopted for our platform. The average viewership of our Ards is roughly 35 seconds. The average viewership of an add on social has roughly seven seconds. So a lot of these customers are coming in and supporting a short AD and trying to replicate what they have on social on our platform and its.

Adam Foroughi: Yeah. I mean, it's a combination of all of the above. The MAX platform ecosystem is growing really quickly. It happens from a couple of different factors. One is as the ads become higher quality, and we look at e-commerce shopping and just demand density, it's higher quality because the user stops seeing game, game, game, game, game when they're stuck to a game that they actually like. If you bring more diversity of content, you'd expect retention to go up, and ad supply to expand. That's going to be a natural tailwind inside this ecosystem that will unlock as we get more demand outside of just core advertisers that we have today.

Mismatched it diminishes there possible conversion rate so what does that mean, well when we get into a world where we can use generative AI tools to automatically create AD creatives on behalf of these customers, they're going to get to a point, where they can actually expand their conversion rate. We're doing nothing more other than just expanding the counter creatives into our <unk>.

Adam Foroughi: second part of that is what we've talked about in past calls, which is the unlock of getting these publishers who are in-app purchasing predominantly, who do not tend to run ads or run ads at a very, very small percentage. If you're monetizing a high LTV game and most of the gaming customers are residing in these deep games, you do not want to run ads for your competition. Well, they did not have a way to monetize as well as gaming ads in the past. If we can unlock this material demand shift, then we are going to be able to bring more supply into the ecosystem. That is very advantageous for supply as well. There is a combination of those two things.

System and ensuring that the types of accretive in our system, followed best practices on our platform and doing that at no cost and so we're really excited about where the tools in the marketplace are going that's something we're going to be testing in short order here.

And if I could just follow up so you've addressed.

The model gives the chance to personalize advertising to the user better. If we have fewer advertisers and fewer categories, we just have less to show. So you can't get a diverse set of content to the customer to maximize that conversion rate. Both those things are just going to naturally happen. As we move forward, the third piece that I touched on to your phrase you repeated, is that generative AI-based creative today in our advertising system means the advertiser can do almost no targeting. They can pick their country, they can put in their economic goals, they can put in a budget, and off they go. The one manual lever is creative, and in particular in the shopping category and website advertising business, a lot of the customers come on board and they don't have a creative that's adapted for our platform. The average viewership of our ads is roughly 35 seconds. The average viewership of an ad on social media is roughly 7 seconds. So, a lot of these customers are coming in and just porting a short ad and trying to replicate what they have on social on our platform.

The conversion rate question I had very clearly.

But I did want to touch on how youre thinking about supply even though obviously, you've clearly you said that the conversion rate is a big driver.

So in the past you've talked about double digit growth in publisher revenue and Max over the past few years and I'm wondering if you expect that to accelerate as E. Commerce ramps do you see supply driven primarily by higher ad load.

Adam Foroughi: Of course, you've got, as our models improve, the same customer, that publisher, can buy more users that are retained in their game, so they can create more growth in audience, and they'll get better tools as well to better monetize that audience.

As dictated by publishers higher engagement with mobile games overall were improvements to Max like those you shipped in 2020 for like which of those factors would be yes.

Omar Dessouky: Thank you.

Operator: Next, we'll go to Jason Bazinet with Citi.

I mean, it's a combination of all of the above the Max platform ecosystem is growing really quickly happens from a couple of different factors. One is as the odds become higher quality and we look at E. Commerce shopping and just demand density is higher quality because of user stop seeing game game game game game, when they're stuck to game that they actually like.

Adam Foroughi: We can't hear you. Jason, you're on mute.

Jason Bazinet: Thank you. Quick question. I appreciate that 50% growth in week-over-week spend from these e-commerce customers. Is there any sort of context you can give us of when you looked at that same metric during the pilot phase? What was it? How do you know that that's a good number or a bad number? I mean, it sounds great.

So if you bring more diversity of content you would expect retention to go up and add supply to expand so that's going to be a natural tailwind inside this ecosystem that will unlock as we get more demand outside of just core advertisers that we have today second part of that is what we've talked about in past calls is the unlock of getting these.

Adam Foroughi: I mean, look, one of the simpler mathematical functions is extrapolation, right? We're starting pretty early here. It's a month in, and it does take a while for these customers to ramp up. Ours is not a plug-and-play solution. They got to come in, they have to integrate pixels, they've got to go live. All of that takes time. Just to get to a point of go live is a week plus usually. Some can do it very quickly, but it's not common to be able to do it in a day. You have a period of lag time from 1 October to even a cohort going live. This cohort is not as big as what the absolute numbers were that we reported, I think we disclosed in Q1 this year, of how big that cohort last year swelled to.

When we get into a world where we can use generative, AI tools to automatically create ad creatives on behalf of these customers. They're, they're going to get to a point where they can actually expand their conversion rate with doing nothing more other than just expanding the counter creatives into our system and ensuring that the types of creatives in our system. Follow best practices on our platform and doing that at no cost. And so, we're we're really excited about where the tools in the marketplace are going. That's something we're going to be testing, in short order here. And if I could just follow up, so you've addressed, the, uh, conversion rate question, I had very clearly, um, but I did want to touch on, you know, how you're thinking about Supply, even though, obviously, you've clearly uh, you said that, um, the conversion rate is a Big Driver. Um so in the past you've talked about double digit growth uh in Publisher revenue and Max over the past few years and I'm wondering if you expect that to accelerate as e-commerce ramps. Do you see Supply driven primarily by

Publishers, who are in App purchasing predominantly don't tend to run ads or run ads at a very very small percentage, if youre monetizing a high LTV game and most of the gaming customers are residing in these deep games you.

You don't want to run ads for your competition well they didn't have a way to monetize as well as gaming.

Higher ad load, you know, as dictated by Publishers higher engagement with mobile games, overall or improvements to Max like those, you shift in 2024 like which of those factors uh would be most important to me too. Yeah, I mean it's a combination of all of the above, the max platform. Ecosystem is growing, really quickly happens from a couple different factors. 1 is as the ads become higher quality and we look at e-commerce shopping and just demand density is higher quality because the user stops seeing game game game game.

In the past so if we can unlock this material demand shift.

Adam Foroughi: Given the ramp-up, the ramp-up is really swift. We're excited that if this continues to compound at the rate it is, and you keep adding new customers, this thing is going to then snowball on itself. The true value for us right now is not, okay, how do we extrapolate this out to when customers in this category become a bigger and bigger part of our business? It's more, are we actually building a tool that we have confidence is going to succeed in converting a lot of customers over time? That breaks down into a few things we look at. Of course, I get excited by seeing scaling spend, but I'm more excited about the fact that we didn't introduce a ton of bugs, we didn't have a bunch of customer complaints, and we didn't bring in low-quality advertisers.

And then we're going to be able to bring more supply into the ecosystem, that's very advantageous for supply as well.

So it's a combination of those two things and then of course, you've got as our model is improve the same customer that publisher can buy more users that are retained in their game. So they can create more growth in audience and they'll get better tools as well as to better monetize that audience.

Yeah.

Thank you.

Hum.

Next we'll go to Jason Bazinet with Citi.

Game game. When they're stuck to a game that they actually like. So if you bring more diversity of content, you'd expect retention to go up and add Supply to expand. So, that's going to be a natural Tailwind inside. This ecosystem that will unlock as we get more demand outside of just core advertisers that we have today. Second part of that is what we've talked about in past calls is the unlock of getting these Publishers who are in-app purchasing predominantly don't tend to run ads or run ads at a very, very small percentage. If you're monetizing a high, LTV game and most of the gaming customers are residing in these deep games.

Yeah.

We can jayson you're on mute.

Thank you.

Yes.

So quick question I appreciate that 50% growth in week over week spend from these.

Adam Foroughi: Anything that was low quality was automatically kicked off the platform. The team enabled a whole bunch of tools to get a product released that was not immaterial into market in a seamless manner. Now we're in a point of optimization. One point of optimization that's key is when a customer signs up, is it easy for them to understand the value proposition and get through integration to the point of go live? That's something we're really focused on optimizing because, as we mentioned, we do want to eventually promote the AXON platform to future customers. If we want to do that, just like any advertiser in the world, we've got to optimize our conversion funnel.

Commerce customers is there any sort of context, you can give us of like when you look at that same metric during the pilot phase what was it or how do you know that that's a good number or a bad number I mean it sounds.

You don't want to run ads for your competition. Well, they didn't have a way to monetize as well as gaming ads in the past. So if we can unlock this material demand shift then, we're going to bring be able to bring more Supply into the ecosystem. That's very advantageous for Supply as well.

Great.

One of the simpler mathematical functions as extrapolation right. So like we're starting pretty early here. Its a month end and it does take a while for these customers around but ours is not a plug and play solutions they've got to come in they have to integrate pixels. They've gotta go live all of that takes time, so just to get to a point of go lives.

Does the combination of those 2 things? And then of course, you've got as our models improve the same customer that publisher can buy more users that are retained in their game, so they can create more growth and audience and they'll get better tools as well to better monetize that audience.

Thank you.

Next, we'll go to Jason bazine with City.

Thank you. Yeah. Um,

As a week plus usually some can do a very quickly, but it's not common to be able to do it in a day. So you have a period of lag time from October 1st Steven a cohort going live and then this cohort is not <unk>.

Adam Foroughi: The other piece that's important is our teams are constantly working on embedding tools into the interface, large language model-powered tools that allow the customer to get support without interfacing with us. We're not seeing a huge influx of customer support tickets. We're seeing these customers go live, be able to manage themselves, get best practices extracted out of the tools we've enabled in the dash, and that's fantastic to see. What I look at when I see this ramp-up is not I'm extrapolating to how this is going to become billions and billions of dollars.

Big as what the absolute numbers were that we reported I think we disclosed in Q1 this year of how big that cohort last year's swell too, but given the ramp up the ramp up is really swift. So we're excited that if this continues to compound at the rate. It is and then you keep adding new customers. This thing is going to then snowball on itself and the true <unk>.

<unk> for US right now is not go okay. How do we extrapolate this out to win customers in this category become a bigger and bigger part of our business, it's more or we actually building a tool that we have confidence is going to succeed in converting a lot of customers over time and that breaks down into a few things. We look out of course I get excited.

Adam Foroughi: It's more that the fact that it's working already a month in, we're not getting bombarded with customer complaints, and we're not seeing a ton of issues, implies that we're on the right track to eventually get open in 2026 and really be able to bring in a ton of advertisers over the following quarters and years.

Jason Bazinet: Thank you.

Adam Foroughi: Yep.

By seeing scaling spend but I'm more excited about the fact that we didn't introduce a ton of bugs. We didn't have a bunch of customer complaints, we didn't bring in low quality advertisers anything that was low quality was automatically kicked off the platform. So the team enabled a whole bunch of tools to get our product release, though was not immaterial into market in a seamless.

Operator: Next, we'll go to Clark Lampen with Barclays.

So quick question, I appreciate that 50% uh, growth in week over week, spend from these um, e-commerce customers. Is there any sort of context you can give us of like when you look at that same metric during the pilot phase? What was it? Or how do you know that? That's a good number or a bad number? I mean, it sounds, it sounds sounds great. I mean, I mean like, like, like the 1 of the simpler mathematical functions is extrapolation, right? So, like, we're starting pretty early here. It's a month in and it, it, it does take a while for these customers to ramp up. Our ours is not a plug-and-play solution. They got to come in, they have to integrate pixels. They've got to go live, all of that takes time. So just to get to a point of go live is a week Plus usually, some can do a very quickly but it's not common to be able to do it in a day. So, you have a period of lag time from October 1st to even a cohort going live. And then this cohort is not as big as what the absolute numbers were that, we reported, I think, we disclosed in q1 this year of how big that cohort last year swelled to, but

Clark Lampen: Thanks very much. Sorry, I had like four mute buttons right there that I had to take out.

Omar Dessouky: It's a block setup over there, Clark.

Clark Lampen: Yeah, right. It's a little too complicated. Okay. As we're thinking about, I guess, the growth of what has the potential to be a really big business for you guys over time, billions of incremental, as you just sort of talked about, I'm curious how you think about balancing growth, chasing sort of new pockets of potential supply, and building up demand to go after that with displacement for your core gaming customer because you are introducing a new bidder with potentially higher transaction value or consumer LTV. Is that something that model improvements and a faster pace of model enhancement will sort of take care of along the way? How do you, if any, think about gating the growth of this business if you have to for managing the core, for the purposes of managing the core?

Manner and now we're in a point of optimization one point of optimization. That's key is when a customer signs up is it easy for them to understand the value proposition and get through integration to the point of go live that's something we're really focused on optimizing because as we mentioned we do want to eventually promote the axon platform to future customers and if we <unk>.

To do that just like any advertiser in the world, We've got to optimize our conversion funnel. The other piece. That's important is our teams are constantly working on embedding tools into the interface. So large language model powered tools that allow the customer to get support without interfacing with us we're not seeing a huge influx of customer support.

We're seeing these customers go live be able to manage themselves get best practices extracted out of the tools. We've been able then the dash and that's fantastic to see so what I look at when I see this ramp up is that I'm extrapolating to houses is going to become billions and billions of dollars. It's more that the fact that it's working already a month in.

Adam Foroughi: Yeah. I mean, look, one, we don't try to gate growth. It's sort of look at a platform as it's going to develop and evolve as it does. Understanding these models gives me confidence that as we get more density of advertisers, we're actually going to have expanded spend for gaming customers, not diminished spend. This is a bit counterintuitive, but here's why. The model today, if you go back a year prior to us getting into e-commerce and shops, you ended up having 1,000 impressions to show a user, and you bombarded them with games. Well, that's not a great offering. It's as if you had a social network that was showing short-form video and said, I'm only going to show golf videos. Everyone who's on in the golf videos at that moment would churn. Well, in our case, the customers aren't churning.

And we're not getting bombarded with customer complaints. So we're not seeing a ton of issues implies that we're on the right track to eventually get opened in 'twenty, six and really be able to bring in a ton of advertisers over the following quarters and years. Thank you.

Yes.

Next we'll go to Clark <unk> with B E.

Thanks, very much sorry, I'd like for mute button right now that I have to take out.

Adam Foroughi: They're playing games, but they're not going to convert, and our conversion rates are really low. There are moments when the model knows a user is going to be in the game. When those moments happen, the CPM for a game advertiser is phenomenal. It's really, really high. Our average conversion rate is that 1% that we'd given a year plus ago. Maybe it's higher now, but just for this example, let's use 1%. We're driving 10 game installs over 1,000 impressions, but we're probably wasting 80% to 90% of those impressions because the model knows in a tight percentage of impressions, games are going to convert, this user is ready for something new, and the CPM there will beat anything else that comes along. You go and bring in demand density. What happens? Now the model can better use all that excess impression.

Okay.

Right, it's a little complicated.

Okay. So as we're thinking about I guess the growth what has the potential to be like a really big business for you guys over time billions of Incrementals. If you just sort of talk about I'm curious, how you think about balancing growth chasing sort of new pockets of potential supply and building up demand to go after that with displacement.

Easy for them to understand the value proposition and get through integration to the point of go live. That's something we're really focused on optimizing. Because as we mentioned, we do want to eventually promote the axon platform to Future customers. And if we want to do that, just like any Advertiser in the world, we've got to optimize our conversion funnel. The other piece, that's important, is our teams are constantly working on embedding tools into the interface. So large language model powered tools that allow the customer to get support without interfacing with us. We're not seeing a huge influx of customer support tickets. We're seeing these customers go live, be able to manage themselves. Get best practices extracted out of the tools. We've been able in the dash and and that's fantastic to see. So what I look at, when I see this ramp up is that I'm extrapolating to? How's this going to become billions? And billions of dollars, it's more that the fact that it's working already a month in and we're not getting bombarded with customer complaints and we're not seeing a ton of issues implying

Implies that we're on the right, track to eventually get open in 26 and really be able to bring in a ton of advertisers over the following quarters and yours. Thank you.

Yep.

Your core gaming customer because you are introducing a new better with potentially higher transaction value or consumer LTV is that something that model improvements and faster pay model enhancement will sort of take care of along the way or how do you if any think about gating the growth.

Next, we'll go to Clark lampan with bcig.

Thanks very much, sorry, I had like 4 M buttons.

Adam Foroughi: If it does, what's going to happen is your gaming customer is not going to diminish. It's just going to be more targeted. Maybe impressions go down, CPM goes up for them, but everything is priced to revenue for our customers, so they get the same revenue out. These new customers better monetize the user and give them more diversity of content, which hopefully will train them to better engage with their ads. You take it to the next level, which is now all of a sudden, we're getting data from way more types of customers. We now know, let's say tomorrow, someone buys a $5,000 handbag on a website. That's the data point we didn't have a year ago. That data point, my simple mind can probably tell you that's a good user for Candy Crush if they haven't played Candy Crush.

If you're asking for managing the core for the purposes of managing the corner, Yes, I mean look one we don't try to get growth. So it's sort of look at our platform as it's going to develop and evolve as it does but understanding. These models gives me confidence that as we get more density of advertisers, we're actually gonna have expanded spend for.

Gaming customers not diminished spend and this is a big counterintuitive, but here's why the model today. If you go back a year prior to us getting into e-commerce and shops.

You ended up having a thousand impressions to show user and you're bombarded them with games well.

It's not a great offering it's as if you had a social network theyre showing short form video.

Adam Foroughi: The neural net's going to tell you a lot more than that based on its correlations. You're building up a data set that doesn't just limit itself to the shopping category or the website advertising category. It helps enable better advertising for the gaming customers as well. You put all those pieces together, and I'm really confident that we're not going to squeeze anyone in our platform. We're probably going to have expansion across the board as we add more demand density and get more data into the system.

Instead, I'm only going to show golf videos, everyone who's on the golf videos of that moment with churn.

To take out a black setup over there Clark. Right. It's a little too complicated. Um okay. So as we're thinking about I guess the growth of what has the potential to be like a really big business for you guys over time. You know, billions of incremental, if you just sort of talked about, I'm curious how you think about balancing growth, chasing, sort of new pockets of potential Supply and building up demand to go after that, with displacement for your core gaming. Customer because you are introducing a new bidder with potentially higher transaction value or consumer. LTV is that something that model improvements and a faster pace of model? Enhancement, will sort of take care of along the way. Or how do you, you know, if any think about gating the growth of this business, if you have to for, you know, managing the core for the purposes of managing the

So in our case the customers aren't churning theyre, playing games, but theyre not going to convert and our conversion rates are really low.

There are moments when the model knows of users going to be in the game when those moments happen.

The CPM for our game Advertiser is phenomenal, it's really really high our average conversion rate is that 1% that we had given a year plus ago. So maybe it's higher now just for this example, it's use 1% we're driving 10 game installs over 1000 impressions, but we're probably wasting 80, 90% of those impressions.

Yeah, I mean look 1 we don't try to gate growth so it's sort of look at a platform as it's going to develop and evolve as it does. But understanding these models gives me confidence that as we get more density of advertisers, we're actually going to have expanded spend for gaming customers, not diminished spend, and this is a bit counterintuitive, but here's why the model today. If you go back a year prior to us getting into e-commerce,

Commerce and shops.

Clark Lampen: That's helpful. Maybe just as a very quick follow-up, you guys highlighted tuning the onboarding flows and generative AI creative. How far away are you or at what sort of rate are we making progress to getting one of those tools live? Would either of those things, I guess, be a gating factor to launching or introducing GA at this point? Are they vital to going to a broader customer base?

You ended up having a thousand Impressions to show user and you bombarded them with games. Well,

Because the model knows in a tight percentage of impressions games are going to convert these users ready for something new and the CPM there will be anything else that comes along so you go and bring in demand density what happens now the mall can better use all of that access impression and so if it does what's going to happen is your gaming customers talking to diminish.

that's not a great offering. It's as if you had a social network that was showing short form video.

You said I'm only going to show golf videos, everyone who's on in the golf videos at that. Moment would turn.

Well, in our case, the customers aren't turning. They're playing games, but they're not going to convert, and our conversion rates are really low.

Adam Foroughi: The AXON ad site is a prompt at this point. Part of the logic of doing that was to get inputs into that prompt so we can tune a bot that's external-facing and then bring it internal. We're in the midst of doing that, and that's not far off. We'll have different implementations of bots inside the site. I mean, as you know, and we've talked about last quarter, when a customer uploads ads or uploads a website to promote, we're not manually checking it. There's a bot there that's automatically checking for our quality and ensuring that the quality meets the standard that we need on the platform, both for the creative and for the website being promoted or the application. We already have various points of bots into the tool, and we'll have more.

There are moments when the model knows a user. Is going to be in the game when those moments happen.

Just going to be more targeted so maybe impressions go down CPM goes up for them, but everything is priced to revenue for our customers. So they get the same revenue out and then these new customers better monetize the user and give them more diversity of content, which hopefully will train them to better engage with their ads and then you take it to the next level, which is <unk>.

Now all of a sudden we're getting data from way more types of customers. We now know, let's say tomorrow someone buys a $5000 handbag on a website. That's the data point, we didn't have a year ago that data point my simple mind can probably tell you. That's a good user for candy crush if they haven't played candy crush the neural nets going to tell you a lot more than that.

Adam Foroughi: It's just going to get better as we get more data in, and we can tune it so that it's actually accurate across the board. The generative AI-based ad creatives don't depend entirely on us, but Sora 2 came out this past quarter. That was another step forward. VO3 keeps getting better. You can assume these tools are getting pretty close. We're probably far away from the point where the model itself can recursively just go and create more content and just bring more ads into the system, but we're probably not very far away. I'm hoping in a matter of weeks or months to be able to test generative AI-based creative that we create with a little help, some tooling on top of the large language models, and then submit to the advertisers for approval.

On its correlations and so you're building up a dataset that doesn't just limit itself to the shopping category or the website advertising category and helps enable better advertising for the gaming customers as well. So you put all those pieces together and I'm really confident that we're going to squeeze anyone on our platform, we're probably going to have.

The CPM for a game Advertiser is phenomenal. It's really really high. Our average conversion rate is that 1% that we'd given a year plus ago, so maybe it's higher now. But just for, for this example, it's used 1%, we're driving 10 game, installs over a thousand Impressions, but we're probably wasting 80, 90% of those Impressions, because the model knows in a tight percentage of Impressions games are going to convert this user's ready for something new and the CPM there will be anything else that comes along so you go and bring in demand density, what happens now, the model can better use all that excess impression. And so if it does what's going to happen is your gaming customer is not going to diminish, it's just going to be more targeted. So maybe Impressions go down CPM, goes up for them, but everything is priced to revenue for our customers, so they get the same Revenue out. And then these new customers, better monetize the user, and give them more diversity of content, which hopefully will train them to better engage with their ads. And then you take it to the next.

Expansion across the board as we add more demand density and get more data into the system.

That's helpful.

Maybe just a very quick follow up you guys highlighted tuning the onboarding flows and generative AI created.

How far away are you are kind of at what rate are we making progress sort of getting one of them too alive with either of those things I guess sort of be a gating factor to launching or introducing at this point.

Adam Foroughi: That in itself can really explode the count of ads on the platform, and that's not far off. On your last question of are these gating to general release, I don't think so. I think the main thing that we care about there is how we tune the flows. Is the conversion funnel appropriate? Are customers getting confused, or are they getting a good experience from onboarding to ramping? If they're getting a seamless experience, and we're not getting overwhelmed with inbound complaints, or concerns, or need for support, then we're ready to go open.

Are they sort of vital to going after a broader customer base.

So the axon add site is a prompt at this point and part of the logic of doing that was to get inputs into that problem. So we can tune a bot that's external facing and then bring in internal so we're in the midst of doing that and that's not far off so we'll have different implementations abbotts inside the site I mean, as you know and we've talked about last quarter when it.

Data into the system.

Or uploads adds or upload the website to promote we're not manually checking theres a bought there that's automatically checking for our quality and ensuring that the quality meets the standard that we need on the platform both for the creative and for the website being promoted or the application. So we already have various points of bots into the tool and we'll have more.

Operator: Our next question will come from Alec Brondolo with Wells Fargo.

Jason Bazinet: Yeah, hey, thanks so much for the question. I appreciate it. I think as we've kind of spoken about direct payments and this transition from kind of paying the App Store and the Play Store 30% to going to an O&O payment product, we've kind of talked about this, I think, historically as more of a medium to long-term tailwind. Do you think that might be manifesting sooner than expected, and did it contribute to third-quarter results?

It's just going to get better as we get more data in and we can tune. It so that it's actually accurate across the board. The generative AI based AD creatives don't depend entirely on us, but sort of two came out this past quarter that was another step forward via three keeps getting better. So you can assume these tools are getting pretty close.

Adam Foroughi: I don't think it's contributing much at all yet. I think it is going to be over the quarters that it's going to take impact. I don't think it's realistic that 30% tax goes to low single digits. Let's just take the midpoint, 15%. That's a material lift in LTV for a lot of these in-app purchasing games, roughly 20%. Some portion of that's going to go into development of more content, which is great. They're going to make better games. Some portion of that, they'll bank into the bottom line. Some portion of that will go to marketing companies. I mean, I'll say the one thing about our business always is we don't try to think about what's happening outside of us. This is something that's outside of our control. It's up to the platforms, regulators, and then the content creators. It's not up to us.

We're probably far away from the point, where the model itself can recur simply just go and create more content and just bring more ads into the system, but were probably not very far away.

I'm, hoping in matter of weeks or months to be able to test generative AI based creative that we create with a little help some tooling on top of the large language models and then submit to the advertisers for approval that in itself can really explode the count of ads on the platform and so that's how far off so on your last question number.

That's helpful. Um, maybe just as a very quick follow-up. You guys, highlighted tuning, the onboarding flows and generative, AI creative. Um, how far away are you or, or sort of, at what, you know, sort of rate? Are we making progress to sort of getting 1 of those tools live would either of those things? I guess, sort of be a gating factor to launching or introducing GA at this point or are they sort of vital to going you know, to a broader customer base. Thanks a lot. So so the axon ads site is a prompt at this point and part of the logic of doing that was to get inputs into that prompt so we can tune a bot that's external facing and then bring it in internal. So we're in the midst of doing that and and that's not far off. So we'll have different implementations of bots inside the site. I mean, as you know, and we've talked about last quarter, when a customer uploads ads or uploads a website to promote, we're not manually. Checking it, there's a bot there that's automatically checking for our quality and ensuring that the quality meets the standard that we need on the platform but

These gating to general release, I don't think so I think the main thing that we care about there is how do we tune. The flows is the conversion funnel appropriate our customers getting confused or are they getting a good experience from onboarding to ramping if they're getting a seamless experience. So we're not getting overly overwhelmed with inbound complaint.

Adam Foroughi: What's up to us and inside our control is how good our tools are. Q3 was driven by what we said on the earnings script. The models continue to get better, iterative improvements in the template, more advertisements on the platform, more advertisers on the platform. All of that's compounding to really quick growth rate, even in the core category. We're still believing very confidently that in this 20% to 30% long-term growth rate in our core category, but even in the core, we're beating that. Now you're layering on top of that all this opportunity with the self-service platform. We're really excited about where we are, focused on what we have underneath our control.

both for the creative and for the website being promoted or the application. So we already have various points of bots into the tool. And we'll have more, it'll it's just going to get better as we get more data in and we can tune it so that it's actually accurate across the board. The generative AI based ad creatives, don't depend entirely on us, but sort of 2 came out this past quarter that was another step forward. Vo3 keeps getting better, so you can assume these tools are getting pretty close.

Or concerns or need for support then we're ready to go open.

Our next question will come from Alexander <unk> with Wells Fargo.

Hey, Thanks, so much for the question I appreciate it I think as we've kind of spoken about direct payments in this transition from kind of paying the app store and the play store, 30% going to an <unk> payment product, we've kind of talked about this I think historically as more of a medium to long term tailwind do you think that might be manifesting sooner than expected.

Jason Bazinet: Perfect. Maybe if I could ask a follow-up, I think there's always been this talk about eventually extending the reach of supply. Right now, most of the ads are placed in mobile games, and then the idea is perhaps over time, we could go to other surfaces. It seems like some combination of edX and Google Ads Manager might come up for sale as a function of the Google Ad Tech antitrust trial. Would you be interested in those assets if they were made available?

And did it contribute to our third quarter results now I don't think it's contributing much at all yet I think it is going to be over the quarters that it's going to take impact I don't think it's realistic that 30% tax goes to low single digits. So, let's let's just take the midpoint, 15% that's a material lift in LTV for a lot of these in our purchasing games roughly 20.

We're not, we're probably far away from the point where the model itself can recursively. Just go and create more content and just bring more ads into the system, but we're probably not very far away. Uh, and and I'm hoping in matter of weeks or months to be able to test generative AI based creative that we create With a Little Help, some tooling on top of the large language models, and then submit to the advertisers, for approval, that in itself can really explode the count of ads on the platform and so that's not far off. So on your last question, number these gating to General release, I don't think so. I think the, the main thing that we care about their is have we tuned. The flows is the conversion, funnel appropriate, our customers, getting confused, or are they getting a good experience from onboarding to ramping if they're getting a seamless experience? And we're not getting overly overwhelmed with inbound complaints or concerns or need for support, then we're ready to go open.

Adam Foroughi: I mean. Without commenting on what else is out there, like commenting about our business, the reality with our business is we think about providing the best solution to our partners. For the advertisers, we believe we're on the track to really give them a good way to access a really large audience playing games. For the game publisher, and then expanding publishers as we get to more publishers on our platform, we've built them very good tools to monetize and promote their products, and grow their businesses. As we think about going broader than that, the open web publishers and other app publishers that currently can't access our tools the same way could use better monetization. We all know that category is pretty slow growth. We've talked about CTV in the past too.

Our next question will come from Alec rondileau with Wells, Fargo.

Percent some portion of that is going to go into the development of more content was great. They're gonna make better games. Some portion of that they'll bank into the bottom line. Some portion of that will go to marketing companies.

I will say the one thing about our business always is we don't try to think about what's happening outside of US. This is something that's outside of our control it's up to the platform's regulators and then the content creators startup to us what what's up to us and inside our control is how good our tools. Our Q3 was driven by what we said on the earnings.

Hey, hey, thanks so much for the question. I appreciate it. I think you know, as we've kind of spoken about direct payments and this transition from kind of paying the App Store and the Play Store 30% to going to an Ono payment product, we've kind of talked about this, I think historically is more of a medium to long term Tailwind. Do you think that might be manifesting sooner than expected and did it contribute to us?

The model has continued to get better iterative improvements in the tablet more advertisements on our platform more advertisers on the platform all of that is compounding to really quick growth rate even in the core category, we're still believing very confidently in this 20% to 30% long term growth rate in our core category.

Adam Foroughi: Everywhere else is struggling to monetize, except in the walled gardens and except on games, predominantly because of the success of our platforms. If that's the case, we look at that as our potential prospect clients as well. We should be able to extend our product offering over time to those folks. We need more demand. We're not supply constrained today, we're demand constrained. If we do our job right and bring on a lot of advertisers, it serves us well because it serves them well to be able to extend our offering out to more publishers.

Even in the core we're beating that and then now youre layering on top of that all of this opportunity with the self service platform. So we're really excited about where we are focused on what we have underneath our control.

Perfect and maybe if I could ask a follow up.

Jason Bazinet: Perfect. Thank you so much.

I think there's always been this talk about it eventually extending the reach of supply like right now most of the ads are placed mobile games and then the idea is perhaps overtime that could go to other surfaces.

Operator: Our next question will come from Vasily Karasev with Cannonball.

Matt Stumpf: Hi, good afternoon. Adam, wanted to follow up on what you said earlier about LTV calculations that you think your advertisers do. Given the variance and growth rates in in-app purchases market and in-app advertising market, right? Can you comment on what you see, if your advertisers' LTV calculations are evolving, let's say compared to a year ago, compared to now? I would think that the advertising component would be much higher now, right? Yes. It's going and how you, what it means for you. Thank you.

Seems like some combination of annex <unk> clients manager may come up for sale as a function. That's a Google AD Tech antitrust trial would you be interested in those assets.

Third quarter results. Now, I don't think it's contributing much at all yet. I think it is going to be over a quarter, um, that it's going to take impact. I don't think it's realistic that 30% tax goes to low single digits. So, let's, let's just take the midpoint 15%. That's a material lift in LTV for a lot of these in-app purchasing games, roughly 20%. Some portion of that is going to go into development of more content, which is great. They're going to make better games, some portion of that, they'll Bank into the bottom line, some portion of that will go to marketing companies. I mean, I'll say the 1 thing about our business always is we don't try to think about what's happening outside of us. This is something that's outside of our control. It's up to the the platforms regulators and then the content creators, it's not up to us. What, what's up to us. And inside our control is how good our tools are, Q3 was driven by what we said. On the earnings script, the models continue to get better. Iterative improvements in the template, more advertisements on a platform where advertisers on the platform. All of that's compounding.

Paul.

Yeah I mean.

Without commenting on what else is out there like commenting about our business the reality with our businesses, we think about providing the best solution to our partners for the advertisers and we believe we're on the track to really give them a good way to access a really large audience playing games for the game publisher and then expanding publishers as we get to more publishers on our platform.

To really quick growth rate, even in the core category, we're still believing uh very confidently that in this 20 to 30% long-term growth rate in our core category. But even in the core we're we're beating that. And then now you're layering on on top of that all this opportunity with the self-service platform. So we're really excited about where we are focused on what we have underneath our control.

We've built them very good tools to monetize and promote their products and grow their businesses.

As we think about going broader than that the open web publishers and other publishers that currently can't access our tools. The same way could use better monetization. We all know that category is pretty slow growth.

Adam Foroughi: Look, generally as a whole, the in-app purchasing market is more mature than the in-app advertising market. We're seeing much faster growth rates on the MAX platform. We've said multiples faster than the in-app purchasing market grows because those publishers, both the older publishers in that category, are getting better tools, both for growth and monetization. Then newer publishers see these other publishers scaling, so they integrate more ads. You're seeing more supply come online, and existing supply monetize better. The in-app purchasing market isn't really creating that many more monetization tools. It requires for growth this tax to go down. If the 30% goes to 15%, that creates a really big tailwind, and it creates better monetization mechanics. That's really hard in that category. It's up to the game developers, but it's not uniform across the platform. It requires more IAP games.

Perfect. And maybe, if I could ask a follow-up, um, you know, I think there's always been this talk about it eventually, extending the reach of Supply. Like right now, most of the ads are placed in mobile games, and then the idea is perhaps over time, we could go to other services. Um, you know, it seems like some combination of adex and Google ads manager might come up for sale as a function of the Google, you know, adtech antitrust. Trial would you be interested in in those assets if they were available?

We've talked about CTV and the pass to everywhere else is struggling to monetize <unk>.

Except in the walled gardens and accept on games predominantly because of the success of our platforms and so if that's the case, we look at that as a potential prospect clients as well, we should be able to extend our product offering over time to those folks we need more demand we're not demand we're not supply constrained today, we're demand constrained.

We believe we're on the track to really give them a good way to assess a really large audience playing games for the game publisher, and then expanding Publishers. As we get to more Publishers on our platform. We've built them, very good tools to monetize and promote their products and grow their businesses.

But if we do our job right and bring on a lot of advertisers. It serves us well because it serves them well to be able to extend our offering out to more publishers.

Perfect. Thank you so much.

Our next question will come from Vasily <unk> with Cannonball.

Hi, good afternoon.

As we think about going broader than that, the open web Publishers and other app Publishers, they currently can't access our tools the same way. Could use better modernization. We all know that category is pretty slow growth and then we talked about CP in the past too. Everywhere else is struggling to monetize.

Adam Foroughi: There's a really big set of games that are just mature in that category that frankly don't really have much of a way to grow anymore. There are newer ones that constantly come live. Look in the top 10 to 20 in-app purchasing, top grossing games. There's a huge mix of games that have launched in the last two years that are now in the top 20. There are new ones that go live that help grow there. For us, what we're focused on is where we can drive an impact. We can help the in-app purchasing ones promote themselves. The in-app advertising ones are really exciting for us because they power our true market. The true market is the supply side on MAX. As we give them better monetization tools and better growth tools, we see that supply expanding.

And then wanted to follow up on what you said earlier.

Bob LTE vehicle installations that you think your advertisers do so given the variance there.

Except in the walled Gardens and accept on games predominately because of the success of our platforms. And so

Variance in growth rates in.

In App purchases market.

Advertising market right. So.

Can you comment on what you see.

If your advertisers LTV calculations, they evolving, let's say compared to a year ago compared to now I would think that the advertising component would be would be much higher and now right.

If that's the case, we look at that as our potential prospect clients as well. We should be able to extend our product offering over time to those folks. We need more demand. We're not supply constrained today; we're demand constrained. But if we do our job right and bring on a lot of advertisers, it serves us well because it serves them well to be able to extend our offering out to more publishers.

Perfect, thank you so much.

Our next question will come from Vasily with Cannonball?

Is it going and how do you what it means for you.

Hi, good afternoon. Um,

Adam Foroughi: That supply expanding, the growth rate there is the direct market that helps us grow. Hopefully, we can grow on top of that even more because of improvements in all the other parts of our business.

So look generally as a whole the in app purchasing market is more mature than the in app advertising market. So we're seeing much faster growth rates on the Max platform, we've said multiples faster than the in App purchasing market growth because those publishers. Both the older publishers in that category were getting better tools, both for growth and monetization.

Matt Stumpf: All right. Thank you. Very helpful.

Adam wanted to follow up with on what you said earlier about LTV calculations that you you think you are advertisers do. So, if given the various, um, the variance and growth rates uh in in-app purchases market, and in-app advertising market, right? So,

Operator: One moment while we confirm the queue. Our next question will come from Matthew Cost with Morgan Stanley.

Can you comment on what you see? Um,

And then newer publisher see these other publishers scaling so they integrate more ads so youre.

Are you seeing more supply come online and existing supply monetize better in our purchasing market isn't really creating that many more monetization tools it requires for.

For growth this tax to go down at the 30% goes to 15.

Adam Foroughi: Awesome. Hi, everyone. Thanks for taking the questions. Thank you for the 50% week-on-week growth metric, that is really interesting. Is that the metric that you're managing to? Try to find the point at which you're going to go general availability? If not, what are you looking at? What will be the things that you need to knock down for that to happen? All these things take time to build. I don't like spend. Obviously, if spend wasn't going up a lot, I'd be a lot more concerned when you got a business in any scale growing 50% week over week. There's reason to be excited. What I care more about is that we have time to optimize the funnel. We need to make sure the conversion funnel's optimized. This is just like launching a B2C property.

That creates a really big tailwind and it creates better monetization mechanics.

That's really hard in our category, it's up to the game developers, but it's not uniform across the platform.

Then it requires more IAP games, there is a really big set of games that are just mature in that category.

And frankly don't really have much of a way to grow anymore. And then there are newer ones that constantly come live you'll get in the top 10 to 20 in our purchasing.

If, if the, your advertisers LTV, calculations are evolving with, let's say compared to a year ago, compared to now, I would think that the advertising component would be would be much higher now, right? Uh, and yes, it's going. And how do you what it means for you? Thank you. So, so look, generally as a whole, the in-app purchasing Market is more mature than the in-app advertising market. So we're seeing much faster growth rates on the max platform we've said multiple is faster than the in-app purchasing market growth because those Publishers both, the older Publishers in that category are getting better tools both for growth and monetization and then newer Publishers, see these other Publishers scaling so they integrate more ads. So

Top grossing games, there's a huge mix of games that are launched in the last two years that are now in the top 20. So there's new ones that go lives that helped grow there but for US what we're focused on is where we can drive an impact we can help them in our purchasing ones promote themselves they're not advertising ones are really exciting for us because they power are true market.

You see more Supply come online and existing Supply monetized better in our purchasing Market isn't really creating that many more modernization tools. It requires

For growth, this tax is set to go down from 30% to 15%.

Adam Foroughi: Your first funnel is not going to be your best funnel. We've already optimized it once. What's today on the site is better than what was on the site four weeks ago, but there's room for improvement there. Your communications with the clients, the emails that the potential clients get after they sign up, we can improve that. We can improve the tooling inside the dashboard, all the AI bots that we've talked about. There are different aspects of this that we just need time to get to a place where we go, this meets our quality standard. Then we're ready to open up. If we open up today, we may be okay. We may not. We may get inundated with user concerns as you shrink the size of the advertiser.

That creates a really big tailwind and it creates better monetization mechanics.

The true market is the supply side on Max and as we give them better monetization tools and better growth tools, we see that supply expanding that supply expanding the growth rate. There is the direct market that helps us grow and then hopefully we can grow on top of that even more because of improvements in all the other parts of our business.

That's really hard in our category, it's up to the game developers but it's not uniform across the platform and then it requires more IAP games. There's a really big set of games that are just mature in that category.

Then frankly don't really have much of a way to grow anymore and then there are newer ones that constantly come live. If you look in the top 10 to 20 in-app purchasing

Alright, Thank you very helpful.

Yeah.

One moment, while we confirm the Q.

Adam Foroughi: One day, I'd like to make sure that that local laundromat that signs up gets a great experience promoting themselves to this gamer audience on our platform. If we're not ready yet today, we're going to take our time to get there. We don't think it's a long time away. I think I'd said on our prior earnings call, for sure, 2026. This isn't a very long time away. We're just going to take our time to ensure that we've got the product at the level that we want. Great. On the paid marketing front, I think you talked last quarter and maybe even mentioned in passing this quarter the opportunity to do more of that. It looks like, based on your sales and marketing budget in the third quarter, that it wasn't something that you started to lean into.

Our next question will come from Matthew cost with Morgan Stanley.

Awesome Hi, everyone. Thanks for taking the questions.

Thank you for the 50% we can weak growth metric that is really interesting is that the metric that you're managing to.

Um, top grossing games. There's a huge mix of games that have launched in the last 2 years that are now on the top 20. So there's new ones that go live that help grow their but for us what we're focused on is where we can drive an impact, we can help the in-app purchasing ones promote themselves. They not, advertising ones are really exciting for us because they power our true market. The true market is the supply side on Mac, and as we give them better, monetization tools, and better growth tools. We see that Supply expanding that Supply. Expanding the growth rate. There is the direct Market that helps us grow. And then hopefully, we can grow on top of that even more because of improvements in all the other parts of our business,

All right. Thank you very helpful.

To try to find the point at which Youre going to go general they'll be availability and if not what are you looking at like what will be a thing that you need to knock down for that to happen.

1 moment while we confirm the key.

All these things take time to build so I don't like spend obviously, a spend wasn't going up a lot I'd be a lot more concerned when you got a business in any scale growing 50% week over week. The reason to be excited but what I care more about is that we have time to optimize the funnel we need to make sure the conversion funnels optimize its just like launching a b to C.

Adam Foroughi: How should we think about the timing and potential magnitude of doing more marketing? Yeah. We're testing right now. Actively. Testing budget is going to be not large. Even if we ever scale this, the scale of our business is quite large. Some of the largest advertisers in the world can only spend a couple hundred million dollars a year. If you think about the scale of our business, it's never going to be a very large line item against the revenue potential. Because our LTV is so high and we're optimizing our conversion rate and we think we can get that to be really compelling and the brand isn't known, the setup is really good for promoting our product to potential end customers.

Our next question will come from Matthew cost with Morgan Stanley.

Property. Your first funnel is not going to be your best funnel that we've already optimized at once so what what's today on the site is better than what it was on the site for weeks ago, but there's room for improvement there your communications with the clients. The E mails that the potential clients get after they sign up we can improve that we can improve the tooling inside that.

Awesome. Hi everyone. Thanks for taking the questions. Um, thank you for the the 50% week on week growth metrics. That is really interesting is, is that the metric that you're managing to

To try to find the point at which you're going to go general availability, what does that look like, and if not, what are you looking at? Like, what will be the things that you need to knock down for that to happen?

Dash forward all the AI bots that we've talked about and so there's different aspects of this that we just need time to get to a place where we go. This meets our quality standards. Then we're ready to open up because it'll be opened up today. We may be okay. We may not we may get inundated with with user concerns as you shrink the size of the advertise.

Adam Foroughi: If that's the case and we know we have a great LTV to cost of user acquisition, we'll spend, we'll break it out. As it scales, we'll show the unit economics so people can understand what we're doing. We're really good performance marketers, I think we can all agree at this point. We're not going to waste money on this. We're not brand marketers. The dollars will be much greater than the dollars we spend on user acquisition. For me, it's the full-blown automation of a sales force. We'll need some salespeople, but we can keep a very lean sales team in line with our traditional culture if we can automate onboarding through advertising all the way to point of go live. Great. Thank you.

So one day I would like to make sure that that local laundromat that signs up gets a great experience promoting themselves to those gamer audience on our platform and if we're not ready yet today, we are going to take our time to get there. We don't think it's a long time away I think I've said on our prior earnings call. <unk> 26. So this isn't a very long time away or we're just going to take our time.

To ensure that we've got the product at the level that we want.

Operator: Our next question will come from Benjamin Black with Deutsche Bank.

Great and then on the paid marketing front I think you've talked last quarter and maybe even mentioned in passing this quarter the opportunity to do more of that it looks like based on your sales and marketing budget in the third quarter that wasn't something that you started to lean into so how should we think about the timing and potential magnitude of doing more marketing.

Matt Stumpf: Great. Thanks for taking my question. Is there any reason to think that the pay grade or revenue margin from your e-com spend should be any different to that of the core gaming businesses? Any structural differences, I guess, to the advertising credits you're offering folks early on, perhaps lower the conversion temporarily, but longer term, are there any differences to be aware of?

Yes, we're so we're testing right now actively testing budget is gonna be not large even if we ever scale. This and scale of our business is quite large so like some of the largest advertisers in the world can only spend a couple of hundred million dollars a year. So do you think about the scale of our business is never going to be.

Adam Foroughi: No, I mean, look, the advertising credits we offer are such a tiny fraction to the overall value of a new customer. It is no different than a cost of user acquisition if we got the customer through paid marketing. It is just really low. Consider that immaterial. The business is not built to say web advertising or shops is treated differently than games. It is one unified auction. We are a single platform. When we get a higher conversion rate, whether that comes from gaming or shops or any category, it is going to have a constant take rate across the board. It just implies that more density equals better conversion rate, possibly higher take.

We've already optimized it once. So, what what's today on the site is better than what was on the site 4 weeks ago. But there's room for improvement there, your Communications with the clients, the emails that the potential clients. Get after they sign up, we can improve that we can improve the tooling inside the dashboard, all the AI Bots that we've talked about. And so there there's different aspects of this that we just need time to get to a place, where we go, this meets our quality standard, then we're ready to open up, because if we open up today, we may be okay. We may not we may get inundated with with user concerns as you shrink the size of the advertiser. So 1 day, I'd like to make sure that that local laundromat, that signs up gets a great experience. Promoting themselves to this gamer audience on our platform. And if we're not ready yet, today we're going to take our time to get there. We don't think it's a long time away. I think I'd said on our prior earnings, call for sure 26. So this isn't a very long time away. We're just going to take our time to ensure that we've got the product at the level.

A very large line item against the revenue potential, but because our LTV is so high and we're optimizing our conversion rate and we think we can get that to be really compelling and the brand isn't known the setup is really good for promoting our products to potential end customers and so if that's the case and we know we have a great LTV to cost of user acquisition.

That we want.

<unk>, we'll spend we'll break it out.

Great. And then on the paid marketing front, I think, you talked, last quarter and and maybe even mentioned in passing this quarter the opportunity to do more of that. Um it looks like based on your self and marketing budget in the third quarter. That it wasn't something that you started to lean into. So how should we think about the timing and potential magnitude of doing more marketing?

As it scales will show the unit economics, so people can understand what we're doing but we're really good performance marketers I think we can all agree at this point, so we're not going to waste money on this we're not brand marketers the dollars will be much greater than the dollars we spend on user acquisition and it's for me. It's the full blown automation of our sales force will need some sale.

Matt Stumpf: All right. Great. Second question will be sort of, you're clearly growing your ambitions within AI automation more broadly. Maybe talk to us about your investment priorities as we sort of look ahead to the next year. I'd imagine your compute capacity requirements are likely scaling, so how does that play into sort of your expense outlook as we look ahead to the next year?

Those people, but we can keep a very lean sales team in line with our traditional culture. If we can automate onboarding through advertising all the way to point of go live.

Adam Foroughi: Yeah, we're pay-as-you-go. I mean, we try to project and buy, in particular, GPUs, that being the more lead-time dependent part of the stack. We try to buy those a year in advance. If you've looked at the financials, you'll see spikes in infrastructure investment, but it runs through the P&L. It's not capitalized. We do plan it really effectively. We don't try to really over-invest ahead of revenue. We want to make sure we're really disciplined. That's completely aligned with our culture, where we want to be cost-disciplined in every aspect of the business.

Great. Thank you.

Our next question will come from Benjamin Black with Deutsche Bank.

Yeah, we're so we're testing right now. Um, actively testing budget's going to be not large, even if we ever scale this the scale of our business is quite large. So like some of the largest advertisers in the world can only spend a couple hundred million dollars a year. So if you think about the scale of our business, it's never going to be a very large line, item against the revenue potential. But because our LTV is so high and we're optimizing our conversion rate and we think we can get that to be really compelling and the brand isn't known. The setup is really good for promoting our product to potential and customers. And so if that's the case, then we know, we have a great LTV to to cost a user acquisition. We'll spend we'll break it out.

Great.

Thanks for taking my question.

And is there any reason to think that the take rate our revenue margin from here.

Tom said, it should be and different to that.

<unk> businesses are any structural differences I guess so.

The advertising credits off the books are beyond perhaps lower the conversion temporarily but longer term are there any differences to be aware.

No I mean look the advertising credits, we offer such a tiny fraction to overall value of a new customer so its no different than like a cost of user acquisition. If we got the customer through paid marketing. So it's just really loves so consider that immaterial. The business is not built to say web advertising their shops.

Matt Stumpf: Great. Thank you very much.

As it scales, we'll show the unity economics. So people can understand what we're doing. But we're really good performance marketers. I think we can all agree at this point so we're not going to waste money on this, we're not brand marketers, the dollars will be much greater than the dollars we spend on user acquisition. And it's for me, it's the full-blown automation of a sales force. We'll need some sales people, but we can keep a very lean sales team in line with our traditional culture. If we can automate onboarding through advertising all the way to point of go life.

Operator: Next, we'll go to Chris Kuntarich with UBS. Chris, please dial star six on your keypad to unmute.

Great. Thank you.

Our next question will come from Benjamin black with Deutsche Bank.

James Heaney: Thanks for taking the question. Hopefully, you can hear me. Just wanted to ask on web-based becoming available to EU advertisers, any update there? Matt, just a quick follow-up. Are you making any assumptions about advertisers that aren't currently onboarded in the four-key guide? Thanks.

Is treated differently than games, it's one unified auction, where a single platform so well.

When we get a higher conversion rate whether that comes from gaming or shops.

Or any category, it's going to have a constant take rate across.

Across the board it just implies that more density equals better conversion rate, possibly higher intake.

Alright, great and then.

Second question would be.

Adam Foroughi: Yeah. On the EU side, we can work with EU advertisers today. We just don't open up our inventory for website or shop advertisers in the EU region of our audience. Just a clarification bullet. EU tends to be somewhere in the low teens percentage of our business, if I remember off the top of my head. It's not a huge priority versus expanding out the business. GDPR rules are more restrictive and require a build-out for us. We'll get to it in due time. It's not a priority against getting to general release of our platform, and building out the rest of these tools we've talked about.

You're clearly growing your ambitions within.

Automation more broadly so maybe maybe talk to us a box. So your investment priorities as we sort of look ahead to the next year I would imagine your compute capacity requirements are likely scaling system, how does that play into sort of your expense.

Great. Um thank you for taking my question. Um um is is there any reason to think that the pay grade or or Revenue margin from your ekong expend should be any different to that of the core gaming businesses or any structural differences? I guess. So the advertising credits, you're offering folks early on perhaps lower the conversion temporarily, but longer term are, are there any differences to be aware of? No. I mean like the advertising credits, we offer are such a tiny fraction to overall value of a new customer. So it's no different than, like a cost to use your acquisition. If we got the customer through paid marketing. So, it's just really low. So, so consider that immaterial the, the business is not built to say, web, advertising or shops.

Outlook.

Sure.

Our pay as you go so like I mean, we try to project and by in particular Gpus that being the more more lead time dependent part of the stack, we try to buy those a year in advance so that if you've looked at the financials, you'll see spikes in infrastructure investment, but it runs through the P&L, it's not capitalized.

Is treated differently than games. It's 1 to auction. We're a single platform. So we get a higher conversion rate whether that comes from gaming or shops.

Or any category, it's going to have a constant take rate.

Across the board. It just implies that more density. Equals better conversion rate possibly higher. Take

All right, great. And then

Omar Dessouky: Again, in terms of guidance, I think we've done pretty consistent to our approach thus far. We've communicated before that we guide to kind of where we feel very comfortable that we could potentially land. We guide to what we know. We don't guide to try to estimate for something that's unpredictable. In this case, we can't predict the number or the volume of new advertisers coming on to the system through the referral program and how that potential ramp and spend could happen through the quarter. There is no incremental assumption built into the guide for onboarding of incremental customers.

And we do plan it really effectively and we don't try to to really over invest ahead of revenue we want to make sure. We're really disciplined and that's completely aligned with our culture, where we want to be cost discipline in every aspect of the business.

Okay.

Yes.

Next we'll go to Chris <unk> with UBS, Chris Please dial star six on your keypad UN mute.

Yeah.

Hi.

Thanks for taking the question hopefully you can hear me.

Adam Foroughi: Very helpful. Thank you, Beth.

Omar Dessouky: You're welcome.

Just wanted to ask on a web based becoming available to EU advertisers any update there and then Matt just a quick follow up are you, making any assumptions about advertisers that aren't currently on boarded in the four key got thanks.

Operator: Next, we'll hear from Rob Sanderson with Loop Capital.

Jason Bazinet: Yeah. Good afternoon, everybody. Thanks for taking the questions. I have two. In terms of kind of understanding more of the sort of the current points of friction to bringing people on, it sounds like you're doing a lot of work to tune the onboarding flow. What other points of friction are necessary to address to just further optimize? You've also said that you're not seeing a ton of complaints, but I'm sure you are getting asks for features and things. Maybe, what are some common sort of asks for feature add to AXON Ads Manager?

Yeah on the east side. So we can work with EU advertisers today, we just don't open up our inventory for website, our shop advertisers in the EU region of our audience. So just a clarification bullets its EU tends to be somewhere in the low teens percent.

Second question will be sort of, you know, you're clearly growing your Ambitions within, you know, AI automation more broadly. So maybe maybe talk to us about so your investment priorities, as we sort of, look ahead to the next year. I'd imagine you're sort of compute capacity, requirements. I'd like to scaling to certain part of that plan to sort of your expense Outlook as as we look at to the next year. Yeah, we're pay as you go. So like I mean we try to project and buy um in particular gpus that being the more more uh lead time dependent part of the the stack we try to buy those a year in advance. So if you've looked at the financials, you'll see spikes in infrastructure investment but it runs through the p&l, it's not capitalized. And we do plan it, really effectively, and we don't try to to Really Over invest ahead of Revenue. We want to make sure we're really disciplined and that's completely aligned with our culture where we want to be cost disciplined at every aspect of the business.

Thank you so much.

Next, we'll go to Chris compar with UBS.

Thank you for taking the question. Hopefully, you can hear me.

<unk> of our business if I remember off the top of my head. So it's not a huge priority versus expanding out the business G. D. P. R rules are more restrictive and require a build out for us. So we'll get to it in due time is not our priority against going getting to general release of our platform and building out the rest of these tools we've talked about.

Um,

Adam Foroughi: Yeah. The first question, I mean, you've got two points of this funnel pre-getting to us. Eventually, we've got to get the brand out there. We've got to be able to market the platform. We're constrained by how many referral codes we gave out. Just advertisers coming to the AXON platform and signing up. Let's set that aside because we purposefully constrained that. After the sign-up, we want to make sure we have as little drop-off as possible. Of course, with any product, when you get a sign-up, not every sign-up is going to be qualified, but we think a lot of these are qualified. We're optimizing to as high a rate as we can from sign-up to go live. In terms of feature requests, surprisingly, not a whole lot.

just wanted to ask on, uh, web-based becoming available to EU advertisers any update there and then Matt, just a quick follow-up. Are you making any assumptions about advertisers that aren't currently on boarded in the 4q guide? Thanks.

And in terms of in terms of the guidance I think we've done pretty consistent our approach. Thus far we've communicated before that we guide to kind of where we feel very comfortable that we could potentially land. So you know we guide to what we know we don't guide to try to estimate for something that is unpredictable and in this case, we can't predict the number.

The volume of new advertisers coming on to the system through the referral program and how that potential ramp in spend could happen through the quarter. So there is no incremental assumption built into the guide for onboarding of incremental customers.

Adam Foroughi: I would say, hard to guarantee that it'll be that going forward because we're only a month in. You got to remember, if there's a lag time to integration and ramp up and we're seeing the swift growth, you don't have time for these customers to really understand the platform yet. That may change, but we get more feature requests from our current cohort of customers, the ones that went live a year ago, much more so than what we brought on in the last month.

Very helpful. Thank you Beth.

Yeah, on the, the ease I so we can work with EU advertisers today, we just don't open up our inventory for website or shop advertisers in the EU region of our audience. So, um, just a clarification bullet. It it's EU tends to be somewhere in the low teens percentage of our business. If I remember off the top of my head so it's not a huge priority versus expanding out the business. Gdpr rules are more restrictive and require a buildout for us so we'll get to it in due time. It it's not our priority against going getting to General release of our platform and building out the rest of these tools. We've talked about

Next we'll hear from Rob Sanderson with loop capital.

Yes, good afternoon, everybody. Thanks for taking the questions I have two.

Just in terms of kind of understanding more of the sort of the current points of friction to bringing people on looks sounds like youre doing a lot of work to tune the onboarding flow.

Jason Bazinet: If I could ask on international, you mentioned that you launched a little early. It sounds like no EU. Maybe where are you available? Anything surprising or different about the behavior from this cohort? Anything you can share on next steps to expanding? I mean, you probably have some language optimization to do, I'm sure, and channel development work, but kind of what are some of the next steps to make international a much bigger component?

But.

And in terms of, in terms of guidance, I think we've done pretty consistent to our approach. Thus far, we've communicated before that. We got to kind of where we feel very comfortable um that we could potentially land. So you know, we got to what we know. We don't guide to try to estimate you know for something that's unpredictable. And in this case you know we can't predict the number or the volume of new advertisers coming on.

Sort of what other points of friction that are necessary to address to just further optimize and then you've also said that youre not seeing youre kind of complaints, but I'm sure. You are getting asks for features and things so maybe what.

To the system through the referral program and how that potential ramp and spend Could Happen through the quarter. So there is no incremental assumption in in built into the guide for onboarding of of incremental customers

Very helpful. Thank you Beth.

What are some common sort of asks for feature add to excellent as manager.

You're welcome.

Next, we'll hear from Rob Sanderson with loop capital.

Adam Foroughi: Yeah. First off, it's everywhere in the world except for EU traffic for web shops and web advertisers. App advertisers are everywhere in the world. We don't operate inside China, but the rest of the world is there. In our business, the customers that we have today are mostly Western shops, and those Western shops aren't likely to go into Japan or Korea, Japan being our second biggest market, and promote themselves. They're just not going to have a localized product offering. The countries that have really been successful for this current customer base are the obvious ones: Canada, Australia, New Zealand, etc., so English-speaking, similar makeup to the US. As we go open up the platform, that's when we'll try to get local presentation inside Japan, Korea, and other markets that are more closed off, but very large markets for us.

Yes.

The first question I mean look like you've got two points of this funnel pre getting to us. So eventually we got to get the brand out there we got to be able to market. The platform. We've got what we're constrained by how many referral codes. We gave out so I just advertisers coming to the axon platform and signing up so let's set that aside because we purposely constrained that after this.

Sign up we want to make sure we have as little drop off as possible of course with any product when you get a sign up not every sign up is going to be qualified but we think a lot of these are qualified.

So we're optimizing to as higher rate as we can.

From sign up to go live in terms of feature requests surprisingly not a whole lot.

Uh, yeah, good afternoon everybody. Thanks for uh, taking the questions. I have uh, 2 um uh, like just in terms of kind of understanding more of the, uh, sort of, the current points of friction to Bringing people on. Looks like you're doing a lot of work to do in the onboarding, uh, flow. Um, but um, you know, sort of, you know what, what other points of friction are are are necessary to address to just, you know, for further optimize and then, um, you've also said that you, you're not seeing a ton of complaints, but, um, I'm sure you are getting asked for for features and and, and things. So maybe you know um what are some common sort of um, asks for for feature, add to X1 as manager.

And this is like I would say hard to guarantee that it will be that going forward, because we're only a month and so like.

I remember like if there's a lag time to integration and ramp up and we're seeing the swift growth.

Adam Foroughi: In the Western markets, we already have a presence, so it'll be faster to get going. I think over time, localization is fortunately not a challenge anymore with LLMs. Language is pretty easy to solve, so we're fairly solved over there. It's just much more built around getting the system to be workable the way we're talking about for the West goes global, right? All users around the world that we see playing games, the human beings behave similarly. They might buy a shot from different shops because there's local merchants in each one of these markets, but humans aren't behaving much differently in Japan, Korea, Canada, or Australia to the US. The model translates all human behavior to math. Math is universal.

You don't have time for these customers to really understand the platform yet.

That may change, but we got more free feature requests.

From our current cohort of customers the ones that went live a year ago much more so than what we brought on in the last month.

Yeah, so the the first question I mean, like, like you've got 2 points of of this funnel pre getting to us. So eventually, we've got to get the brand out there. We got to be able to market the platform. We've got to what we're constrained by how many referral codes we gave out. So like just advertisers coming to the axon platform and signing up. So let's set that aside because we we purposefully constrained that after the sign up, we want to make sure we have as little drop off as possible. Of course, with any product, when you get a sign up, not every sign up is going to be qualified.

If I could ask on international you mentioned that you'd lost it a little early and.

Qualified, but we think a lot of these are qualified.

So we're optimizing to higher rate as we can.

It sounds like no EU, so maybe where are you available anything surprising or different about the behavior from this cohort and then just anything you can share on next steps to expanding I mean, you probably have some language optimization to do I'm sure in your channel development work, but kind of what are sort of what are some of the next steps to me.

From sign-up to go live, in terms of feature requests, surprisingly, not a whole lot.

This is like, I would say hard to guarantee that. It'll be that going forward because we're only a month in. So like, yeah, I remember like this. If there's a lag time to integration and ramp up and we're seeing the Swift growth,

International much bigger component, yes, so first off it's everywhere in the world, except for EU traffic for web shops, and web advertisers App advertisers are everywhere in the world we.

You don't have time for these customers to really understand the platform yet.

Adam Foroughi: As we launch and broaden out the platform, we don't think there's going to be some big lift to really see a lot of success internationally. We haven't seen that as we've opened up these markets and had these same customers expand out.

We don't operate inside China, so, but the rest of the world is there in our business.

Jason Bazinet: Thanks, Adam.

Adam Foroughi: Yep.

The customers that we have today are mostly western shops, and so those western jobs arent likely to go into Japan, or Korea, Japan, being our second biggest market and promote themselves. So it is not gonna have a localized product offerings. So the countries that have really been successful for this current customer base are the obvious ones, Canada, Australia, New Zealand et cetera, So English speaking.

Operator: Our next question will come from Martin Yang with Oppenheimer.

Clark Lampen: Hi. Thank you for taking my question. Sort of related to the last question, can you maybe talk a bit more about your current cohort, how they have been performed in Q3? For example, are they more actively spending, giving your improvement tools, having more features, etc.? Thank you.

<unk> similar makeup to the U S. As we go open up the platform. That's when we'll go try to get local presentation inside or in Japan and Korea.

Adam Foroughi: Yeah. Look, over the last year, I mean, it's been a year since we've had this product, right? The team's continuously improving the product, so the return on ad spend for the customers have gotten better. The tooling has gotten better. We went from the old dashboard to the AXON Ads Manager. The tools that they have at their disposal have gotten better. The customers' understanding of our platform has gotten better. Just that nuance on ad creative that ours are 35 seconds on average, whereas social is 7 seconds. It took months with a lot of customers to explain that fine detail and that if you're not building a 45-second ad, you're going to lose to your competitor. All these things just compound.

In other markets that are more closed off but very large markets for us and in the western markets. We already have a presence so it'll be faster to get going I think overtime localization Fortunately not a challenge anymore with L. EMS language is pretty easy to solve so so we're fairly solved over there is just much more.

So that may change, but we get more free feature requests from our current cohort of customers. The ones that went live a year ago, much more so than than what we brought on in the last month, if I could ask on International, uh, you mentioned that you launched a little early and um, um, it sounds like no EU. So maybe, you know, where are you available? Uh, anything surprising or or or different about the behavior from from this cohort and then just anything you can share on next steps to to to expanding. I mean you probably have some language optimization to do. I'm sure and and you know Channel development work but kind of what are sort of what are some some of the next steps to to make international much bigger component. Yeah. So so first off, it's everywhere in the world except for EU traffic for web Shops and and web advertisers app, advertisers are everywhere in the world. Um, we don't operate inside China. So but the rest of the world is there in our business um the customers that we have today are mostly Western shops and so those Western

Built around getting the system to be workable the way, we're talking about for the West goes global REIT like all users around the world that we see playing games the human beings behaves similarly, they might buy a shot from different shops, because theres local merchants in each one of these markets, but humans aren't behaving much differently.

Adam Foroughi: We're one year into a product in a very large advertising market, competing with other companies that are years or decade-plus into that same market. As you build better tooling and as you get a better understanding of your tools, you see the effects compounding, the knowledge compounding, the usage compounding. We're seeing trends that are positive, but this thing's going to take time to build at the level that we want to build. We've been in the gaming business for 13 years. We're clearly the best channel for the gaming customers at this point. We think we can replicate that success across all these other categories. As we build to the scale that we're accustomed to operating at, you'd expect a lot of compounding success over time across knowledge, usage, and tooling.

Japan, or Korea, or Canada, or Australia to the U S. So the model translates all human behavior to math math is universal and so as we launch and broaden out the platform. We don't think theres going to be some big left to really see a lot of success internationally and we haven't seen that as we've opened up these markets and had the same customer.

It has expand out.

Thanks, Adam.

Our next question will come from Martin Yang with Opco.

Alright. Thank you for taking my question sort of related to the last question can you maybe talk a bit more about your current call hard how they have been performed in <unk> for.

Clark Lampen: Got it. I have a quick follow-up on the PSU issued in October. That's for engineering employees. Can you maybe give us more context? Is it for a small handful, single recruiting, retention? Any additional details would be helpful. Thank you.

For example, our de Moura can be spending given your improvement tools, having more features et cetera. Thank you yeah look over the last year I mean.

It's been a year since we've had this product right. So the team's continuously improving the products or the return on AD spend for the customers have gotten better the tooling has gotten better we went from the old dashboard to the axon ads manager. So the tools that they have at their disposal has gotten better the customers' understanding of our platform has gotten better just that nuance.

Omar Dessouky: Yeah. It's a pool, Martin, for a group of engineers, but it's also a future tool that we can use for recruiting as well for new hires into the engineering team.

And other markets that are more closed off, but very large markets for us and in the western markets we already have a presence so it'll be faster to get going. I think over time localizations. Fortunately not a challenge anymore, with LMS language is pretty easy to solve so so we're fairly solved over there. It's just much more built around getting the system to be workable. The way we're talking about for the West goes Global, right? Like all users around the world that we see playing games, the human beings behave. Similarly, they might buy a shot from different shops because there's local merchants in each 1 of these markets, but humans aren't behaving much differently in Japan or Korea or Canada or Australia to the US. So the model translates all human behavior to math math is universal. And so as we launch and broaden out the platform, we don't think there's going to be some big lift to really see a lot of success internationally. And we haven't seen that as we've opened up these markets and how

have these same customers expand up.

Thanks Adam.

Yeah.

Clark Lampen: Thanks, Matt. That's it for me.

Omar Dessouky: You're welcome.

Our next question will come from Martin Yang with opco.

Operator: Next, we'll go to Jim Callahan with Piper Sandler.

On AD creative that ours are 35 seconds on average, whereas social seven seconds.

Alec Brondolo: Hey, thanks for taking the question. I just had a follow-up on the referral codes. I guess, are all the codes so far given out, or is this something we can expect the partners to sort of continue doing through early 2026?

It took months with a lot of customers to explain that fine detail and if you're not building a 45 second add you're going to lose to a competitor.

So all these things just compound.

Adam Foroughi: Yeah. Generally, if there's a partner that we gave X codes to and they run through X and they deliver quality leads, we give them more. We can measure back to every referral partner's success of the customers they bring. We don't want to constrain good referral partners. The gate is solely to slow it down, so that we have time to build the tool the way I've been talking about. If someone's bringing us good leads, we're going to take good leads. We're going to be dynamic in the codes that we issue across the board if we see success coming in.

We're one year into a product.

And a very large advertising market competing with other companies that are years or decade, plus into that same market. So as you build better tooling and as you get a better understanding of your tools you see the effect compounding the knowledge compounding the usage compounding and so we're seeing trends that are positive, but this things that take time to build.

At the level that we want to build we've been in the gaming business for 13 years.

Hi, thank you for taking a question. Um sort of related to the last question. Can you maybe talk a bit more about your current cohort? How they have been performed in 3Q? For example, are they and more actively spending giving your improvement tools having more features Etc? Thank you. Yeah. Look over the last year. I mean, it it's it's been a year since we've had this product, right? So the teams continuously improving the products. So the return on ad spend, for the customers have gotten better, the tooling has gotten better, we went from the old dashboard to the axon ads manager. So, the tools that they have at their disposal has gotten better. The customers understanding of our platform has gotten better, just that Nuance on ad creative that ours are 35 seconds on average, whereas social is 7 Seconds.

We're clearly the best channel for the gaming customers at this point, we think we can replicate that success across all of these other categories and as we build to the scale that we're accustomed to operating up you would expect a lot of compounding success overtime across knowledge usage and tool.

Alec Brondolo: Got it. That's helpful. I guess just a follow-up on you talked about low quality and making sure you're selective and having the right kind of advertisers. I guess, what would you define as low quality or an advertiser that wouldn't work sort of with the platform?

It took months with a lot of customers to explain that fine detail and that, if you're not building a 45 second ad, you're going to lose to your competitor.

So, all these things, just compound, we're, we're 1 year into a product.

Adam Foroughi: Yeah. I mean, over time, you broaden out the type of advertisers you have to basically everything because you have a lot of density, and a customer is never going to see 200 impressions of the same thing. Where we are today, we do not have a lot of density. In certain categories, a customer may see 200 impressions of the same thing. The bar we set right now is if our team is willing to buy that product or not. If they think it is a good product, they are willing to buy it, great. We want to run it on our platform. That does not mean we are going to maintain the same standard forever. Most of the companies that today we call low quality or we are not letting on the platform are running ads on social. They are running ads on search. These are real businesses.

Got it.

Quick follow up on the PSU issued in October.

That's for engineering employees can you maybe give us more context is it for a small handful single recruiting retention.

Any additional details would be helpful. Thank you, yes, so it's a pool Martin for a group of engineers, but it's also a future tool that we can use for recruiting as well for new hires into the engineering team.

In a very large advertising Market competing with other companies that are years or decade plus into that same market. So, as you build better tooling, and as you get a better understanding of your tools, you, you see the effects compounding, the knowledge compounding, the usage compounding. And so we're seeing trends that are positive, but this thing's going to take time to build at the level that we want to build. We've been in the gaming business for 13 years. We're clearly the the best channel for the gaming customer.

Thanks, Matt that's it for me.

Yeah.

Next we'll go to Jim Callaghan with Piper Sandler.

Hey, Thanks for taking the question I just had a follow up on the.

Customers at this point we think we can replicate that success across all these other categories. And as we build to the scale that we're accustomed to operating at, you'd expect a lot of compounding success over time across knowledge, usage and tooling

Adam Foroughi: They're substantial businesses in many cases. We just want to make sure that we think about our audience as a very consistent, large audience, and we want to train them that our ads are really high quality. In the absence of that competition, if they're getting bombarded with single offers, we want to make sure each one of those is really, really high value for that customer.

Referral codes I guess are all the codes so far given out or is this something we can expect the partners to sort of continue doing through early 2026.

Yes, generally if there's a partner that we gave ex COVID-19 too and they run through action they deliver call. It quality leads we'd give them more or we can measure back to every referral partner success of their customers. They bring so we don't want to constrain good referral partners.

Alec Brondolo: Got it. That's helpful. Thank you.

Operator: We'll take our last question from Matt Schindler with Scotiabank.

Got it. Uh, I have a quick follow-up on the PSU issued in October, um, that's for engineering. Uh, employees can maybe give us more contacts, is it for a small? Handful single recruiting retention. Um, any of the additional details will be helpful. Thank you. Yeah. It's a, it's a pool Martin for a group of Engineers. But it's also, uh, a future tool that we can use for our recruiting as well for new hires into the engineering team.

<unk> is solely to slow it down.

Thanks, man. That's it for me. You're welcome.

So that we have time to build the tool the way I've been talking about but if someone's bringing us. Good leads we're going to take the lead so what we're gonna be dynamic and the codes that we issue across the board if we see success coming.

Matt Schindler: Yep. Hi, guys. Thanks a lot for taking the question. I'm going to go really high level and touch back on an earlier question someone asked about whether or not you were interested in some of those Google assets if they ever came up. You're growing at, obviously, absurd rates, and you're doing it. It sounds like you're going to continue in your core market in gaming, and you're adding, obviously, e-commerce, which is an enormous opportunity. I assume a lot of this is your conversion rates keep improving. You guys have been great at that over time. Some of it has to do with inventory itself. At some point, conversion rates can improve too much, and if e-commerce is a lower converting area than gaming, when do you run out of inventory on your core gamer market?

Next, we'll go to Jim Callahan with Piper Sandler.

Got it that's helpful. And then I guess just a follow up on you talked about low quality and like making sure you're selective and having the right kind of advertisers I guess, what would you define as low quality or an advertiser that wouldn't work sort of with the play I mean, so over time, you broaden out the type of advertisers you have to basically everything because you are.

Hey, thanks for, uh, taking the question. I just had a follow-up on the, uh, referral codes. Um, I guess are all the codes so far given out, or is this something we can expect Partners to sort of continue doing through early 2026?

A lot of density and our customers that we're going to see 200 impressions of the same thing where we are today. We don't have a lot of density so in certain categories because of our Macy's 200 impressions of the same thing.

Yeah, generally if there's a partner that we gave X codes to and they run through acts and they deliver Quality quality leads, we'd give them more. We can measure back to every referral partner success of the customers. They bring. So we don't want to constrain good referral Partners. The gate is solely to slow it down.

The bar, we set right now is if our team is willing to buy that product or not.

If they think it's a good product they're willing to buy it.

So that we have time to build the tool the way I've been talking about. But if someone's bringing us good leads, we're going to take good leads. So we're we're we're going to be dynamic and the the codes that we issue across the board. If we see success coming in,

Adam Foroughi: Yeah. I mean, we don't know is the simple answer. There's a long way to go, we think, just because we have so little advertiser density today. There's never been any company that's been set up like ours in the advertising space in history. What we reported, I think it was in Q1, was $11 billion plus of ad spend. The disclosures we've given you across web advertisers and gaming advertisers puts it in the low thousands. You have such a high amount of spend for such a low amount of advertisers across over a billion daily active users. Well, what happens when we get more density? You get more data, you get more density, you get more time to improve your models. That conversion rate's going to go up. If you think about social, it's not like there's more users on social.

We want to run it on a platform that doesn't mean, we're going to maintain the same standard forever.

Most of the companies that today, we call low quality or we're not letting on the platform, they're running ads on social Theyre running ads on search. These are real businesses. There are substantial businesses in many cases, but we just want to make sure that we do we think about our audience is a very consistent large audience and we want to train them that our ads are really high quality, but in the <unk>.

Absence of that competition, if they're getting bombarded with single offers we want to make sure. Each one of those is really really high value for that customer.

Got it, that's helpful. And then I guess just to follow up on, you know, you talked about low quality and like making sure you're selective and having the right kind of advertisers. I guess what would you define as low quality, or an advertiser that wouldn't work sort of with the platform? Yeah, I mean, so over time you broaden out the type of advertisers you have to basically everything because you have a lot of density, and a customer is never going to see 200 impressions of the same thing. Where we are today, we don't have a lot of density. So in certain categories, the customer may see 200 impressions of the same thing.

Well, the bar we set right now is if our team is willing to buy that product or not.

Got it that's helpful. Thank you.

A good product, they're willing to buy it.

We'll take our last question from Nat Schindler with Scotiabank.

Great. We want to run it on our platform; that doesn't mean we're going to maintain the same standard forever.

Yes, hi, guys. Thanks, a lot for taking the question I'm going to go really high level and put back on the earlier question someone asked about whether or not you were interested in some of those Google assets, if they ever came up.

Adam Foroughi: The growth in social has consistently come from the last few years, more customers getting a higher conversion rate because just the technologies are getting more powerful. We think we're going to see the same thing, but we're going to be able to pair it with this advertiser recruitment. We're starting from such a low point. There's going to be quarters, possibly many years of growth in conversion rate to come before we start worrying about supply. That said, we've talked about it is interesting to us to go help the broader set of publishers, both in the open web and connected TV, to better monetize. We get pinged all the time. It's no secret that we're really good at performance advertising at this point. At some point, we would like to broaden out the supply base as well, because why not?

You're doing that I'll be accrued.

Third rates.

Doing it.

It sounds like Youre going to continue on your core market.

In gaming and you're adding obviously e-commerce, which is the norm.

Uh huh.

I assume a lot of this is your conversion rates keep recruiting you guys have been great is that over time.

Most of the companies that today we call low quality or we're not letting on the platform. They're running ads on social, they're running ads on search, so these are real businesses, they're substantial businesses in many cases, but we just want to make sure that we we think about our audience as a very consistent large audience and we want to train them that are ads are really high quality. But in the absence of that competition, if they're getting bombarded with, single offers we want to make sure each 1 of those is really, really high value for that customer.

Got it. That's helpful. Thank you.

But some of it has to do with inventory itself.

We'll take our last question from Matt Chandler with Scotia Bank.

So at some point conversion rates tantalum.

For two months in the E Commerce is a lower converting.

Adam Foroughi: That builds a really good growth catalyst into the future. Today, we're really heads down focused on the demand side of the platform because there's so much work to do there. At some point, you'll see us talking about both sides.

Area than gaming.

When you run out of inventory on your core Gamer.

Yeah, hi guys. Thanks a lot for taking the question. I'm going to go really high level and touch back on an earlier question. Someone asked about whether or not you were interested in some of those Google assets. If they ever came up.

um,

you're growing that obviously.

Yeah, I mean, we don't know is the simple answer there is a long way to go we think just because we have so little advertiser density today, there's never been any company that's been set up like ours in the advertising space in history.

Matt Schindler: Thanks, guys. Thank you.

Adam Foroughi: Yep, thanks, Adam.

Operator: That concludes the question and answer session for this quarter. We thank you all for joining us today. Have a good afternoon.

Absurd rates and you're doing it again. Is it sounds like you're going to continue in your core Market uh in gaming and you're adding obviously e-commerce which is an enormous opportunity.

Adam Foroughi: Thanks, everyone. Thank you.

We're what we reported I think it was in Q1 was $11 billion plus of AD spend and then the disclosures we've given you across web advertisers and gaming advertisers puts it in the low thousands so you've got such a high amount of spend for such a low amount of advertisers a crossover 1 billion daily active users well what happens when we get more.

Uh, I assume a lot of this is your conversion rates. Keep improving. You guys have been great at that over time.

But some of it has to do with inventory itself.

so at some point, conversion rates can improve too much and if e-commerce is a lower converting uh, area then gaming,

Density you have more data you get more density you have more time to improve your models that conversion rate is going to go up if you think about social it's not like there's more users on social the growth in social has consistently come from the last few years more customers getting a higher conversion rate because just the technologies that are getting more powerful and so.

When do you run out of inventory on your core gamer Market?

We think we're going to see the same thing, but we're going to be able to pair it with this advertiser recruitment and we're starting from such a low point theres going to be quarters, possibly many years of growth and conversion rate to come before we start worrying about supply now that said we've talked about it is interesting to us to go help the broader set of publishers both in the open web and connected.

T V to better monetize we get pinged all the time, it's no secret that we're really get our performance advertising at this point.

So at some point, we would like to broaden out the supply base as well.

Why not that builds a really good growth catalyst in the future, but today, we're really heads down focused on the demand side of the platform because there's so much work to do there at some point, you'll see us talking about both sides.

Yeah, I mean like we don't know. Is this a simple answer? There's a long way to go. We think just because we have so little Advertiser density. Today, there's never been any company that that's been set up like ours in the advertising space in history, we're we're what we reported. I think it was in q1 was 11 billion plus of AD spend and then the disclosures we've given you across web, advertisers and gaming, advertisers puts it in the low thousands. So, you've got such a high amount of spend for such a low amount of advertisers across over a billion daily active users. Well, what happens when we get more density, you get more data, you get more density, you get more time to improve your models that conversion rate's going to go up. If you think about social it's not like there's more users on social. The growth in Social is consistently come from the last few years. More customers getting a higher conversion rate because just the Technologies are getting more powerful. And so we think we're going to see the same thing, but we're going to be able to pair it with

Okay. Thank you thanks, Dan.

And that concludes the question and answer session for this quarter. We thank you all for joining us today have a good afternoon.

Thanks, everyone thinking.

But this Advertiser Recruitment and we're starting from such a low Point, there's going to be quarters possibly many years of growth and conversion rate to come before we start worrying about Supply. Now that said we've talked about, it is interesting to us to go help the broader set of Publishers, both in the open web and connected TV. To better monetize, we get pinged all the time. It's no secret that we're really good at performance advertising at this point. So at some point we would like to broaden out the supply base, as well.

Because why not? That builds. A really good growth Catalyst into the future. But today we're really heads down focused on the demand side of the platform because there's so much work to do there. At some point, you'll see us talking about both sides,

Like that. Thank you.

Yep. Thanks.

And that concludes the question and answer session for the

quarter. We thank