Integral Ad Science Holding Corp.

Good day, and thank you for standing by. Welcome to the IAS second quarter 2021 financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Jonathan Schaefer. Please go ahead.

Thank you. Good afternoon, and welcome to the IAS 2021 Second Quarter Financial Results Conference Call. I am joined on today's call by Lisa Utschneider, CEO, and Joe Pergola, CFO. Before we begin, please note that today's call contains forward-looking statements. We refer you to the company's IPO prospectus filed on July 1st and any subsequent reports filed with the SEC for more detail about important risks that could cause actual results to differ materially from our expectations. On today's call, we will also refer to non-GAAP measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on the company's IR site, investors.integralads.com. So, with these formalities out of the way, I'd now like to turn the call over to Lisa Utschneider Lisa, you may begin.

Thank you, Jonathan, and thank you to everyone for joining us. I'm delighted to speak with you today on IAS's first earnings call as a public company. I'll start my comments with a few highlights of our Q2 financial performance. I'll then provide a brief overview of IAS and how we believe we are uniquely positioned as the global benchmark for trust and transparency in digital media quality. I'll talk about our four growth drivers and our Q2 progress in each of these areas, including a discussion of our acquisition of Publica, a leading connected TV or CTV advertising platform. Finally, Joe will review our financials and outlook in detail before opening it up for questions. IES delivered an outstanding second quarter. We generated revenue growth of 55% year over year to 75.1 million compared to last year's COVID impacted quarter. Our revenue was fueled by the continued strength of our advertiser direct channel and acceleration of our programmatic business highlighted by the strong contribution from our contextual targeting offering. We also achieved strong profitability with gross margins of 83% and adjusted EBITDA of 25.7 million at a 34% margin. Our second quarter results reflect IAS's continued dedication to our customers and commitment to making every impression count. The world's leading advertisers, publishers, and platforms trust us to create accountability within the increasingly complex digital advertising ecosystem. Our global customer base is loyal and diverse, composed of over 2,000 marketers and publishers with an average tenure of over 6.7 years among our top 100 marketers. IES offers cookie-free solutions that address ad fraud, viewability, brand safety, and suitability. We are deeply embedded in the advertising ecosystem, providing solutions for both the buy side and sell side across open web, social platforms, and in every major demand side platform or DSP. Our solutions are always on, measuring all impressions on behalf of our advertisers. Prior to IAS, I spent 20 years in leadership roles at global tech platforms like Microsoft and Amazon and was always field-based in order to be close to customers. When I joined IAS in January 2019, my first priority was to listen to the customer, and learn how IES could deliver better outcomes for marketers. I met with dozens of marketing and publisher customers. This customer-first obsession is reflected in how we go to market with new products to meet our customers' needs. Our product pipeline is based on offerings that are global, scalable, and repeatable in multiple markets. Our deep partner integrations are one way in which we lead the market with innovative solutions. Google automated tag is a great example of a first-to-market technology we created in partnership with Google. Let's now discuss our growth strategy and our recent progress. An acceleration of digital-first consumer lifestyles due to COVID-19 means marketers are permanently shifting ad dollars out of linear TV budgets and following consumers onto digital platforms for better engagement and increased ROI. This fundamental shift in the digital ecosystem is driving increased demand for our solutions in four key segments, international, programmatic, CTV, and social platforms. Let's take a look at each of these growth areas, starting with our global footprint. International revenue grew 58% in the second quarter. Currently, approximately 40% of our revenue comes from markets outside of the Americas, which we believe is considerably higher than any other competitor. We began implementing our global strategy over eight years ago, And today, we have a well-established global infrastructure that is generating revenue in 111 countries and in over 40 languages. We have successfully signed international brands such as Disney, GSK, Nestle, and Adidas to multi-year contracts and serve as their trusted partner in every region across the globe. EMEA and APAC revenue grew 61% and 51% respectively in the second quarter. Growth was driven by both new contracts with local brands as well as continued upsell and renewals of large existing customers. IES's position as the premier verification partner in these regions allows us to develop long-term relationships with marketers such as Volkswagen, Bayer, Sanofi and Shishido, who then trust IES to be their partner as they activate new territories. For example, we signed an advertiser direct deal out of India this quarter with Samsung, who also partners with IES in the US, Germany, and the UK, among other locations. We see this trend in other emerging markets like LATAM as well. We partner with Coca-Cola in many regions across the globe, and because of the success of our partnership, Coca-Cola has activated in new markets across LATAM. We believe that Latin America and APAC regions represent substantial growth opportunities, and we are investing in developing our business in these markets by way of expanded in-market customer service investments. and by leveraging our global relationships. Turning to programmatic, as programmatic buying becomes a larger part of the advertising ecosystem, marketers are increasingly focused on maximizing the impact of their digital ad spend and verifying the quality of digital media. Privacy legislation, third-party cookie deprecation, and other audience ID changes, including Apple's identifier for advertisers, are increasing demand for targeting tools that do not rely on gathering audience-based data. To address this, IAS launched our market-leading contextual targeting solution, Context Control, with the Trade Desk in March of 2020. Context Control classifies content on a page level and analyzes it using our proprietary semantic technology. By the end of 2020, we had integrated with all major DSPs, including Google DV360, and we've seen strong market adoption with context control, representing over 30% of programmatic revenue in Q2. Context control has been a major driver of our programmatic growth overall. This quarter, programmatic revenue reached 42% of total revenue, up from 34% last year, and we believe on track to reach 50% in 2023. In Q1, we also acquired Amino Payments, which is branded as our total visibility offering within Programmatic. Total visibility provides transparency into supply path optimization of DV360. For example, a brand such as State Farm is able to gain transparency into both supply path costs for ad inventory as well as clear understanding of the corresponding ad inventory quality. They can then dial up and down their allocated spend accordingly. Next, I'd like to highlight the opportunity in CTV for IES. According to eMarketer, the average amount of time spent with smart TVs and other OTT devices among U.S. consumers rose 34% year-over-year in 2020 to reach an average of 77 minutes daily. And our own IAS research suggests more than 9 out of 10 CTV users in the U.S. say they watch some form of ad-supported streaming video content. For marketers, this represents a tremendous opportunity based on consumer adoption and engagement with streaming content. But as ad dollars shift, fraudsters follow. IAS was the first to bring ad verification to CTV with the world's first fraud and view completion solution in June 2019. This week, we are enhancing our leadership position in this space with our acquisition of Publica. As I mentioned earlier, Publica is a leading CTV advertising platform. Publica delivers true TV-like experiences to streaming audiences by connecting supply-side platforms or SSPs to unique CTV inventory. Its ad server and unified auction for CTV inventory help publishers to obtain the highest field. Publica can also measure the frequency and placement of ads in CTV environments, helping to solve a significant challenge for publishers. Publica reports that it delivers over 3 billion ads on CTV every month with publisher partners such as Samsung, ViacomCBS, and Fox. Publica reports that publishers using its platform have seen on average a 30% lift in yield for their CTV inventory. We see both sell-side and buy-side synergies that will advance IAS's position in the CTV market. Through this acquisition, we are gaining valuable access to content and first-party data that enables us to accelerate our CTV product roadmap. We believe that combined IES's capabilities will enhance Publika's publisher solutions and IES's reach. International presence and current market position will enable us to further address large CTV publishers' needs at scale. In the future, we expect that IES will be able to help advertisers with a trusted way to invest more budgets in CTV and measure the results by providing protection against ad fraud along with brand safety and suitability controls when buying CTV inventory. IES has a long-standing relationship with Publica dating back to 2019, and we could not be more excited to welcome the Publica team to IES. It's early innings in CTV for all verification providers, But Publica really enhances our standing in the market. According to eMarketer, CTV in the U.S. is approximately $13 billion out of $455 billion overall market ad verification opportunity today. But we're very bullish on the product roadmap. Our CTV revenue has grown 404% versus second quarter 2020, off of a small base. We are expecting a more meaningful contribution starting in late 22 into 23. Finally, we're focused on bringing our ad verification and brand safety solutions to social platforms, which are trying to keep pace with increased consumer engagement and the proliferation of user-generated content. Social engagement is translating into an incredible share of the global digital advertising spend shifting to social platforms. As ad budgets move to social, marketers are calling for third-party solutions like ours that bring speed, transparency, and precision to their social campaigns. We believe innovation in social live feeds will create durable and sustainable revenue growth in this segment. In Q2, social already makes up 37% of our advertiser direct revenue, and we expect this number to reach to 45% by 2023. We are currently developing our own in-house solutions to detect and protect marketers from undesirable content in live news feeds. By relying on our own proprietary technology, We create the opportunity to scale our solutions to multiple platforms once opportunities become available. IES has recently partnered with TikTok to provide a brand safe experience in the live feed. I'm excited to share that IES and TikTok have launched an international brand safety beta. providing advertisers with industry-leading controls aligned with the Global Alliance for Responsible Media standards for in-feed video. Our new global solution utilizes proprietary frame-by-frame video, audio, text classification technology specifically designed for social environments, allowing advertisers to confidently promote their brand on TikTok. We look forward to sharing more news on our exciting partnership as we progress throughout the year. Other notable social updates this quarter include IES's differentiated platform-wide integration with the LinkedIn Audience Network. IES is the first and only platform-wide provider for LinkedIn Audience Network. Thank you again for your interest in IES. As you know, our common stock began trading on NASDAQ on June 30th. We're excited to be speaking with you today as a newly public company with a tremendous opportunity ahead of us. We believe we have the right team, talent, technology, and partners to extend our leadership in the market. We'll look forward to reporting to you on our progress. And with that, I'll turn it over to Joe to review the financials.