Integral Ad Science Holding Corp.

Good day, and thank you for standing by. Welcome to the IAS Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please, the advice of today's conference may be recorded. If you require any further assistance, please press star, then 0. I would now like to hand the conference over to your host today, Jonathan Harkins. Schaefer, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to the IAS 2021 Third Quarter Financial Results Conference Call. I am joined today 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 filings 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. With these formalities out of the way, I'd now like to turn the call over to our CEO, Lisa Utschneider. Lisa, you may begin.

Thanks, Jonathan. I'd like to welcome everyone joining today's call. I'm delighted to be here to discuss our strong third quarter results. Based on our performance to date, combined with solid business momentum, we are raising our outlook for the full year. We have a lot to share in our progress as we advance our global leadership in digital media quality. As a reminder, IAS enables marketers to improve ROI by protecting and amplifying their brands, eliminating fraud, reducing media waste, and driving better engagement and outcomes. Our solutions are global, scalable, and available across all devices and channels, including all major demand-side platforms, or DSPs, and proprietary platforms. This allows for a seamless global customer experience. IAS's end-to-end approach to digital media quality is based on verification, contextual targeting, and optimization. We provide verification services according to our proprietary media rating council or MRC-accredited quality impression metrics. We ensure our marketers' ads are seen by real people in brand-safe, brand-suitable environments and in the right geographies. We offer contextual targeting to marketers and publishers, which extends our media quality capabilities beyond verification. Our customers are able to avoid undesirable context and target content that drives better outcomes for their businesses. We do this with a granularity and precision that is unmatched in the industry. We also deliver campaign optimization via our total visibility solution, which we believe is one of a kind. Total visibility provides an understanding of both the quality of programmatic media and the supply path cost for ad impressions in Google DV360. As a result, marketers can find the highest quality ad placements at the most efficient price within programmatic environments. The voice of the customer informs everything we do. Our brand and agency customers continue to stress the importance of effectively communicating their company values and identifying the best environments for their digital campaigns. Leading-edge marketers understand that quality impressions drive better outcomes. Recently, IAS hosted two live panel discussions at Advertising Week in New York City with senior executives from GroupM, Mars, and Samsung. The themes of quality, trust, and transparency, all of which are essential to our mission, were reinforced in these panels. Turning to a few highlights from the third quarter, we exceeded our guidance for revenue and EBITDA in the period. Revenue grew 32% year-over-year to $79 million. Growth was across all products and segments, with demand extending well beyond our core verification services into the new, rapidly growing products we've introduced in the last year. We also generated strong profitability with gross margins of 82%. Adjusted EBITDA reached 25.4 million at a 32% margin. We achieved these financial results while accelerating our business momentum in several key areas, including driving customer adoption of our contextual targeting solutions in programmatic across brands, industry verticals and geographies, acquiring Publica, which transforms our connected TV or CTV capabilities and establishes IES as a clear leader in the space, and scaling our infrastructure for long-term success by welcoming over 100 new employees to IES in the period, which doubled our hiring in the second quarter. Now let's discuss how we're going to grow. On last quarter's call, I outlined four key growth pillars for IES, programmatic, social, CTV, and international. I'd like to review each of these areas and discuss our recent progress. Our first growth pillar is our programmatic business, which achieved record performance in the quarter. We experienced incredible customer adoption of context control, our contextual targeting solution, in the third quarter, which resulted in 49% growth in our programmatic business. Launched in 2020, context control helps marketers avoid undesirable content and increasingly target content that is suitable for their campaigns and better aligns with their brand values. Context control uses our natural language processing and machine learning knowledge graph to classify content across over 300 contextual segments based on the semantics and emotion of a page. Recent IAS research confirms that when ads run next to contextually relevant content, 73% of consumers find the ads more appealing. HBO Max is a great example of the power of context control for brands. They understand that not all contexts are equal for driving advertising outcomes. The flexibility of a solution like context control provides HBO Max and others the ability to balance the values of their brand while simultaneously finding those contexts where their ads resonate most. In the last 18 months, we integrated context control with all major DSPs, including Google DB360, the Trade Desk, and Zander. Recently, we enhanced discoverability of context control for programmatic within our DB360 integration. Context control is now available in more than 50 countries in more than 30 languages to meet increased global demand for our solutions that drive outcomes not reliant on consumer data or third-party cookies. Last month, we launched IAS Signal, our new unified reporting platform that delivers the data and insights advertisers and publishers need to easily manage their digital campaigns. IAS Signal is our latest product innovation incorporating several feature updates into one powerful platform, while setting a strong foundation for further enhancements coming soon. Additionally, we are forging deeper relationships with programmatic marketers through total visibility, our optimization solution. As more budgets shift to programmatic, marketers require greater media quality and transparency, Total Visibility provides marketers with actionable insights to optimize their campaign spend and drive higher yield by focusing on the most efficient and cost-effective pathways. Available currently in Google DV360 with plans to extend to additional DSP partners, Total Visibility has provided added value for marketers within programmatic, increasing both customer engagement and stickiness. It is also yet another example of our strategic partnership with Google that includes channel signs for YouTube and automated tag, the only automated tagging solution available in Google Campaign Manager. The growth of social platforms is another important growth pillar for IIS. On our last call, we discussed our beta program with TikTok to provide a pre-bid brand safety solution for in-feed video ads. Our technology provides precise scoring for content in TikTok's live feed, including frame-by-frame video, text, and audio, and offers controls consistent with Global Alliance for Responsible Media, or GARM, categories. Since then, we've launched our brand safety solution available to all marketers on TikTok in Germany, France, and the U.S., with more markets expected soon. This is game-changing for the industry because we're delivering unique technology that marketers need to protect their brand reputations while keeping up with TikTok's dynamic platform. I'm so proud of the IAS team as it's an excellent demonstration of our ability to lead the industry, innovate on behalf of our customers, and launch differentiated products. We look forward to continuing to innovate with TikTok, providing a safe and targeted ad experience for marketers in the live feed. We're also energized by future opportunities to apply this brand safety technology to which we developed internally to other social media platforms. Last year, our research found that just 17% of industry experts believe social platforms provide enough transparency around issues such as brand risk and viewability. As more social platforms open up to third-party measurement, IES is well positioned to remove the black box for marketers and ensure they have visibility into their ad campaigns on social platforms. Last week, we announced that we achieved MRC accreditation for integrated third-party measurement on Facebook. This milestone underscores how customers rely on our advanced technology to drive transparency and greater outcomes for their campaigns across the largest digital platforms, including Facebook. The MRC accreditation includes impression and viewability measurement and reporting of display and video ads across both Facebook and Instagram. CTV, our third growth pillar, represents a fundamental shift in TV viewing and ad-supported content. That's why we're taking a unique approach to building products that address the needs of CTV advertisers and publishers to power the user experience. There are four key advantages to CTV over linear TV, including flexibility, optimization, data and insights, and targeting and control, which includes consumer addressability. We call this TV 2.0 as our role evolves from ad verification to ad intelligence. We're very pleased with the initial onboarding of Publica acquired during the third quarter. As a reminder, Publica is a leading video ad platform for CTV that delivers the quality of linear TV advertising across programmatic CTV environments. Independent of demand relationships, Publica helps CTV publishers improve yield and monetization by unifying their direct campaigns and programmatic demand. Where IAS has historically been weighted towards marketers on the buy side, Publica has deep-rooted supply-side partnerships with leading global CTV publishers like ViacomCBS, Samsung, and Philo, along with integrations with over 30 of the largest supply-side platforms, or SSPs. Publica is demand-agnostic and completely independent of media execution. This is one of the many reasons so many publishers have adopted their technology. They are free to service the sell side without any bias towards demand. Publica also brings an ad server and unified ad auction that gives us the ability to move further upstream into CTV programmatic for both publishers and marketers. Since acquiring Publica, we've been heads down on our long-term integration plans. We're excited to leverage assets from both companies to build the most innovative and relevant products for the CTV ecosystem. At the same time, we will maintain IES's neutrality and standing as an independent third-party verification provider. The trust of our partners is paramount and will remain so. Our current CTV offerings with Publica include CTV fraud detection covering general invalid traffic, or GIVT, as well as the ability to measure video rendered, video viewable, and video viewable completion rates currently available in a beta version. In addition, we have CTV app level transparency live in reporting. And with our innovative integration, we now have CTV and mobile in-app measurement capabilities. We just released app-level monitoring and blocking in video for CTV that includes brand safety monitoring and video filtering. We also plan to introduce new features that provide greater visibility for marketers. In the fourth quarter, we expect to launch new solutions that offer granular insights into where CTV ad impressions have played, including on which channel and even on which show. This level of supply transparency is unheard of in the CTV universe and represents a major competitive differentiator for IAS in CTV. Lastly, I'd like to highlight international growth which represents our fourth growth pillar. Our revenue mix of Americas versus rest of world was 64-36 for the third quarter, including Publica, which primarily serves U.S. publishers today. International revenue growth continues to outpace growth in the Americas as we increase our strong footholds in EMEA and APAC while investing in LATAM in Southeast Asia. As mentioned, everything we built is designed to be global, scalable, and repeatable. That includes context control, which is seeing tremendous adoption across all regions. During the period, for example, we secured a global mandate for context control with Jaguar Land Rover. As our digital media quality solutions have expanded in scope and become more strategic, More global marketers are looking to IES to meet their needs at scale across all channels and markets. Our combination of innovative solutions and global reach uniquely positions IES in the market. During the quarter, we expanded our agreement with Pernod Ricard as their exclusive media quality partner and now activate in their largest global markets, including the U.S. and the U.K. Our international growth is also being driven at the local level through integrations with global and region specific platforms. In addition, we continue to build relationships with local brands and their agencies in all markets. Our new customer, Alibaba, is a great example from the quarter that was developed through our exclusive partnership with Omnicom Group in France. Moving forward, we will continue to invest in these growth pillars and wherever we see potential to extend our position in the market. Emerging categories like audio and gaming, for example, may offer additional opportunities to expand our portfolio and drive customer engagement. Podcasts, music streaming, and gaming platforms represent potential new formats where our technology may help ensure fraud-free, brand safe, and targeted environments for marketers. At IES, we are focused on innovation and profitable growth. That requires having the right team, which is why we prioritize talent acquisition and retention. During the third quarter, we added over 100 new employees. That's more employees than in any quarter in the last two years. Our recent hires have been across functional areas, including sales, engineering, and customer success, with 51 new employees in Europe and APAC. We have focused on adding expertise in video programmatic. We have also prioritized senior level leaders with track records of driving scaled growth including the appointment of a new SVP of product engineering and a new VP of data engineering during the period. There's always more to do, and we continue to focus on building our team, but we are excited by our recent progress. And finally, we are customer obsessed. In October, we held our first Customer Advisory Council meetings. These meetings will be held quarterly with just an incredible roster of council members from iconic Fortune 500 brands representing key verticals including CPG, financial services, automotive, technology, and healthcare. I was so impressed at our first meeting by the commitment of the council members to brand safety and suitability and to tackling issues for the broader industry. I was also honored by their partnership with IES, which we greatly appreciate. Thank you for your ongoing support and interest in IES. We're very pleased with our recent performance, excited about our prospects as we move into the busiest period of the year, and committed to delivering results for all of our stakeholders. And with that, I'll turn it over to Joe to review the financials.