Integral Ad Science Holding Corp.

Hello, and welcome to the IAS 2022 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker 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. If you require any further assistance, please press star 0. It is now my pleasure to introduce Jonathan Schaefer, Head of Investor Relations at IAS.

Thank you. Good afternoon, and welcome to the IAS 2022 First Quarter Financial Results Conference Call. I'm joined today by Lisa Utschneider, CEO, and Joe Pergola, CFO. Before we begin, please note that today's call contains forward-looking statements. We will refer you to the company's filings with the SEC for more details about important risks and uncertainties 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 our CEO, Lisa Utschneider. Lisa, you may begin.

Lisa Utschneider Thanks, Jonathan, and welcome to everyone joining today's call. Our first quarter results exceeded our expectations for the period. And despite the global macroeconomic and geopolitical climate, we are providing positive financial guidance for the rest of the year. We are executing on our growth strategy, investing in differentiated technology, and accelerating our product roadmap and time to market with targeted acquisitions. We're also creating value for our customers through our focus on customer obsession and innovation, which is fueling our growth. Our solutions have never been more relevant. Marketers rely on IAS to protect and amplify their brands across a digital media landscape that is rapidly evolving and increasingly difficult to navigate. As the massive digital advertising market continues to grow at double-digit rates, IAS ensures that our customers' advertising creative is viewable, by a human, in brand-safe, brand-suitable environments, and in the desired geographies. Increasingly, marketers are also looking to IAS for contextual targeting and campaign optimization. According to eMarketer, today's global digital advertising market, excluding search, has grown to over $300 billion. As a leading digital media quality company, we offer ROI solutions to help marketers invest in high-quality media and drive greater returns and efficiencies on their digital advertising spend. We empower marketers with first-to-market, high-quality, differentiated products. We bring deep integrations with major platform partners that drive innovation and and we are leading the way in promising channels like social media and CTV. During the first quarter, we realized growth across our business, highlighted by a 53% increase in programmatic revenue. Total revenue for the quarter grew 33% to $89.2 million. Adjusted EBITDA reached $24.8 million at a 28% margin. We also achieved net income profitability for the period of $1.2 million, or one cent per share. Overall demand trends remain positive despite macroeconomic uncertainty, as reflected in our outlook for the second quarter and full year. We have a high degree of visibility into customer demand for IAS's products based on where we operate within the ecosystem. Our global sales team has closed impressive customer wins in recent weeks with marquee brands including Progressive, JPMorgan Chase, and Activision Blizzard, to name a few. Before I dive into the quarter in more detail, I want to share with you two organizational changes. As you saw in today's earnings release, Joe will be leaving IAS to pursue new opportunities. He will remain as CFO through the reporting of our second quarter results and the filing of our 10Q in August to ensure a smooth transition of his responsibilities. We have begun a search for a new CFO and have engaged an executive search firm to assist with our efforts. Joe has been a valued member of our senior leadership team since joining IAS in 2019. He brought financial structure and discipline to IAS as we transformed the company. He then led the finance team through our IPO and first year as a public company. On behalf of the board, management, and the entire IAS team, I'd like to personally thank Joe for his leadership, counsel, and commitment to ensuring the company's success. We have a strong finance team with a deep bench that gives us a great foundation to support our future growth. In addition, I'm excited to announce today that Yanni Dosios has joined IAS this week in the newly created role of Chief Commercial Officer. Yanni will be responsible for leading our sales and marketing efforts. Yanni brings extensive operational experience both in startups and large tech companies, including Twitter and Yahoo. He has a proven track record of driving growth by closely aligning sales, marketing, and product teams. He approaches businesses through a customer and commercial lens. Having worked with Yanni for nearly three years at Yahoo, I've personally seen his ability to accelerate businesses, particularly in the programmatic space. We are thrilled to have Yanni join the team. Turning now to our recent business performance in more detail, I'd like to provide an update on our four growth pillars, including programmatic, social media, CTV, and international. Let's start with programmatic, which for the first time represented more than 50% of our advertising revenue in the period. During the quarter, we generated strong demand for our context control solutions. Context control represented 41% of programmatic revenue, up from 38% in the fourth quarter of 2021. Context control includes both avoidance and targeting solutions. We currently have over 400 contextual avoidance and targeting segments of highly relevant content. Our contextual avoidance solution represents the vast majority of context control revenue to date. Our avoidance solution enables marketers to identify content unsafe and unsuitable for their brands as defined by GARM, the Global Alliance for Responsible Media. In March alone, we had 64 net new contextual avoidance activations. 80 of our top 100 accounts now use context control for avoidance, up from 76 of our top 100 accounts last quarter. Beyond the top 100, we are also seeing increased customer penetration and adoption, which represents a significant opportunity for future expansions. The increased adoption of context control for avoidance uniquely positions IAS in the contextual targeting arena as well. Marketers value a single integrated solution which reduces complexity. We are introducing new ROI tools within contextual targeting to enable marketers to better plan their campaigns and seamlessly optimize and activate targeting segments. These tools calculate reach, simplify activations within DSPs, and track segment performance. Lastly, within programmatic, we made enhancements to total visibility or quality path optimization or QPO solution, which helps marketers optimize media spend and drive campaign outcomes. We introduced a dashboard in our Signal user interface to provide marketers with a unified view of their global campaigns. The free version of the total visibility dashboard within Signal offers insight into how much spend was wasted on unviewable, unsafe, and fraudulent impressions. It also provides quality CPM or QCPM, which helps marketers understand both the quality of media they are buying and the cost efficiency at which it is being purchased. Marketers can then access premium services to optimize campaigns based on supply path view and quality financial metrics. As an example, we conducted a study with Visa EMEA to demonstrate the value of our QPO solutions. Visa wanted to develop a strategy to reduce waste and increase spend in working media by determining the most efficient buying path. IS monitors spend in over 18 European markets. Through IS quality path optimization, including redirection of spend away from low-performing SSPs and demands, and comparing private marketplaces to open market buys, Visa significantly improved efficiency and increased campaign ROI. In social media, we are driving technology innovation for a growing number of platforms. Following the consumer shift to a digital first lifestyle, user adoption of social media has reached unprecedented levels. In our social media ad receptivity report from February, We found that social media ad spend is projected to reach $82 billion in the U.S. by 2023, and 96% of consumers currently use at least one social media platform. We're very pleased to expand our partnership with TikTok into new markets and products. Our pre-bid in-fee brand safety targeting solution for TikTok classifies TikTok video, image, audio, and text in the live feed of TikTok consistent with GARM categories. Previously, we launched our TikTok pre-bid brand safety solution in the U.S., Germany, and France. TikTok and IAS are also expanding pre-bid brand safety to additional markets, including Australia and the U.K., In addition, we are thrilled to announce earlier this week the launch of the Global GA for Measurement of TikTok Viewability and Invalid Traffic, or IVT. This will allow marketers to understand the performance of their ads within the TikTok platform. By partnering with IAS, marketers have access to an increasingly comprehensive set of solutions to manage their campaigns on TikTok. Marketers go where the users are. At a recent investor event, Ron Amron, Senior Director of Global Media at Mars, the home of countless and beloved consumer brands, and a highly valued IAS customer said, TikTok is a fast-growing platform at massive scale already. They're highly engaging, their advertising inventory works, and there's a strong targeting measurement capability. The technology we built in-house for TikTok is scalable and portable to other platforms by promoting open industry standards for measurement and accessing content in mobile apps, a first-of-its-kind integration at this scale. In the next few months, we will launch in beta our post-Bib brand safety measurement solution for Twitter. This product addresses the need for marketers to better understand the user-generated content or tweets displayed adjacent to their ads in Twitter feeds, further demonstrating IAS's strengths in classifying multimedia content prevalent on social platforms. On our last earnings call, we discussed our acquisition of AI video platform Contacts. Contacts accelerates our existing multimedia classification capabilities. Their technology enables us to go beyond standard frameworks, especially in video-rich environments, such as social platforms and CTV. Our first integration using the combined platform will become available in the coming months. Moving to CTV, where we remain at the forefront of innovation. We acquired Publica nine months ago and are very excited about our progress today. Publica added video, publisher, and SSP integrations, a unified ad auction, ad stitcher, and an ad server to our toolkit. The combination of IAS's buy-side data and Publica's access to vast amounts of CTV data on the supply side has enabled us to innovate faster and provide unprecedented transparency into the CTV market. That's a win for marketers, publishers, and viewers. We are delivering greater transparency in CTV so that marketers are comfortable shifting spend from traditional linear TV. In the first quarter, we began offering insights to marketers on where CTV ads run based on the device, app, channel, and content, including genre, category, and ratings. We continue to add more publishers who are partnering with us to share this data and bring transparency. IAS is the first to release show-level CTV brand safety based on GARM guidelines, providing marketers with critical insights. We are also helping CTV publishers better optimize and monetize their inventory. Publica has closed several exciting wins recently. DirecTV is using Publica's unified ad auction to help capture more budgets that have shifted to programmatic channels. Publica announced an agreement with Hearst Television to provide server-side ad insertion, or SSAI, and unified auction services. In addition, featured today, the leader in ad-supported streaming and Molotov TV, the leading over-the-top platform in France, are live with Publica for SSAI. During the quarter, we integrated our CTV pre-bid fraud solution within Yahoo DSP. Marketers who access CTV inventory via Yahoo DSP will have protection against fraudulent traffic with access to fraud-filtering pre-bid segments. Yahoo represents the third major DSP to date, to integrate our CTV pre-bid fraud solution. Additionally, IAS was selected as an NBC Universal Certified Measurement Partner. IAS is now certified for audience verification, enabling us to provide marketers granular media quality measurement across NBC Universal's platform. We continue to invest in building our CTV capabilities for long-term success. In April, we announced the appointment of Sean Galligan as Chief Revenue Officer at Publica. Sean brings extensive publisher and advertising technology experience that will be instrumental as we extend Publica's leading market position globally. International represents our fourth growth pillar and is a key point of differentiation for IES. The trend with marketers has been to partner with one verification provider globally to across multiple markets, channels, and products. International revenue represented 32% of revenue in the first quarter. In EMEA, where we maintain a market-leading presence, the tragic war in Ukraine led some marketers to pull back initially on their campaigns as they reallocated spend and adjusted creative. However, we saw demand return in EMEA and has since stabilized. We have no full-time employees in Ukraine or Russia and do not recognize revenue in either country. We stand with all people who have been impacted by this conflict, including our IAS colleagues with loved ones in Ukraine. The prolonged global supply chain delays and resulting chip shortage impacted campaign spending Q1 for a handful of customers, particularly in EMEA, in the tech telco and automotive verticals, where IES is the dominant provider. We expect any future impact from supply chain delays to be limited to these select customers, which has been factored into our outlook for the year. We have taken steps to extend our leading presence in key international markets, including EMEA, with investments in senior management and talent. Earlier this year, we welcomed Chava Savo as our new head of EMEA, and over 15% of our new hires in Q1 were in EMEA. Under Chava's leadership, we are accelerating our expansion in European markets, including Denmark and Norway. We're also expanding our international presence in new and existing markets in APAC, including India, Indonesia, South Korea, Taiwan, and Vietnam. where first-mover advantage is key. These are markets reliant on demand primarily from global marketers as well as from local brands. We are investing in resources to serve these markets. We've made 13 new hires in APAC since the beginning of the year, including a new head of the South Korean market who joined us in April. Additionally, our investments in agency partnerships at the local level have enabled us to expand customer relationships into new countries in Europe, such as Latvia and Estonia. Beyond our four growth pillars, we are extending our media quality solutions into emerging formats, such as audio. Last month, we launched a measurement beta for audio ad measurement and IVT for post-bit verification that works with all OMSDK-compliant platforms. The OMSCK is an open standard framework initially developed by IAS and now implemented widely across the industry for measurement applications. At IAS, we pride ourselves on being customer obsessed. We incorporate customer feedback into the latest reporting enhancements to our IAS signal reporting platform. We now offer a much-desired first-to-market unified view of a marketer's global campaigns and signal. By aggregating campaigns at a global, regional, national, or local level, marketers can evaluate campaign performance based on custom filters and optimize outcomes tailored to their most important KPIs. And with that, I'll turn it over to Joe to review the financials.