Integral Ad Science Holding Corp.

Thank you for standing by and welcome to IAS fourth quarter and four-year 2022 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 1-1 on your telephone. I would now like to hand the call over to Jonathan Schaffer, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to the IAS 2022 fourth quarter and full year financial results conference call. I'm joined today by Lisa Utschneider, CEO, and Tanya Secor, CFO. Before we begin, please note that today's call and prepared remarks contain forward-looking statements. We refer you to the company's filings with the SEC, posted on our investor relations site at investors.integralads.com for more details about important risks and uncertainties that could cause actual results to differ materially from our expectations. We will also refer to non-GAAP measures on today's call. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our investor relations site. All financial comparisons, unless noted otherwise, are based on the prior year period. 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.

Thanks, Jonathan, and welcome everyone to our 2022 fourth quarter and full year call. We reported a strong fourth quarter with revenue growth of 15% at a 34% adjusted EBITDA margin. Revenue of $117.4 million exceeded our forecast of $111 to $113 million. For the full year, revenue grew 26% to $408.3 million at a 31% adjusted EBITDA margin. Today's results demonstrate our ability to deliver profitable growth at greater scale. I am proud of the entire IAS team for what we accomplished together in 2022. By prioritizing technology and product innovation, superior customer service, and deep partner integration, we ended the year with positive business momentum heading into 2023. Let me start with a few highlights from 2022. We invested in our platform partnerships and product expansion in programmatic, social, and connected TV. We signed 12 new global partnerships, broadening our measurement capabilities and reach to benefit our marketers. In 2022, we won several large multi-year deals, including JPMorgan Chase, LinkedIn, Progressive, and Kimberly Clark. Today, we are excited to announce several new competitive wins, that reinforce our standing in the market as a leading provider and formidable competitor. Ford, Hershey, Bell, and Caring selected IAS after extensive tech and product due diligence versus other competitors. As these are major global wins with marquee brands, we'd like to walk you through why they chose to partner with IAS. Ford selected IES as their global app verification partner. We expect to expand our coverage with Ford from 17 to over 50 markets, including the U.S., which has been serviced by an incumbent provider. We are proud that our robust brand safety technology continues to attract new customers. Hershey chose IES based on our differentiated CTV technology, campaign automation, and high standard of service. Bell, a world leader in branded cheese, including Baby Bell, and a major player in the healthy snacking segment, awarded IES with a global deal. Bell was impressed by IES's measurement capabilities, our integrations with the leading tech partners, and our superior customer service. Caring, a major worldwide luxury group with notable brands such as Gucci and Yves Saint Laurent, signed a global deal with IAS in the first quarter of 2023. We clinched this win as a result of our leadership in the luxury vertical, superior technology, integrations with Google, and exceptional client support. Our enhanced go-to-market strategy under our new chief commercial officer is yielding returns as highlighted by these global brand wins. We are leading global provider of digital media quality with the largest international footprint. In 2022, we expanded our global presence in markets including India, Indonesia, South Korea, Taiwan, Vietnam, Denmark, and Norway. We recently opened a new office in Dublin, Ireland, focused on engineering and technical services. Lastly, we enhanced our senior leadership team with key appointments, including Tanya Secor as CFO, who joins us today. We increased our employee count to 835, up 10% year over year. At the same time, we realigned our resources to drive greater efficiencies. Now let's review some of the key growth drivers of our business, including programmatic, social, and CTV. In programmatic, contextual and non-contextual revenue increased in the quarter. Context control contributed approximately $86 million to total revenue in 2022. Marketers value our solutions to avoid inappropriate content and target high-performing content. to maximize engagement with consumers. They are also prioritizing efficiency and automation in the current environment. As a result, marketers are shifting budgets to programmatic and relying on IAS to drive higher return on their ad spend. Our quality sync pre-bid product, which is integrated with large DSPs, including the trade desk, enables partners to leverage our contextual tools in an efficient way. In addition, total visibility, our quality path optimization solution, helps customers increase efficiency and improve ROI in their programmatic ad spend. Our attention metrics help marketers optimize their buying decisions based on placement and media partner at the campaign level. Our research conducted in 2022 demonstrates that there is a 180% lift in return on ad spend for in-view ads versus not in-view. In addition, we found that there's a 171% increase in conversions for impressions with time in view greater than 15 seconds. In social media, we are accelerating growth based on our advanced multimedia classification, or MMC, technology and platform expansions. As a reminder, our MMC technology powers content-level brand safety solutions at scale. It maps frame-by-frame, video-level data to the Global Alliance for Responsible Media, or GARM, brand safety categories. Our TikTok offering includes a full end-to-end measurement suite in TikTok for you feed. We're driving customer adoption of our TikTok offering with active post-big campaigns up 54% the fourth quarter compared to the third quarter. In 2023, we aim to scale marketer demand for our TikTok solutions and expand availability into over 20 additional markets. IAS is excited to join the TikTok Marketing Partners Program as a badge measurement partner for their new brand safety and suitability specialty. IAS was chosen thanks to our record of wins on TikTok and meeting their highest standard of measurement solutions. As a badge partner, IAS brings marketers a comprehensive set of media quality solutions to manage their advertising campaigns on TikTok With Meta, we're excited to continue our partnership and value their commitment to implementing suitability controls and verification for fees. With Twitter, we announced our expansion into third-party brand safety and suitability measurement in the U.S. With tweet-level analysis, advertisers can better understand the content that appears adjacent to their ads on Twitter's feed. This significant advancement now provides Twitter advertisers with reporting that is aligned with GARM brand safety and suitability risk levels. For broader analytics, advertisers can access campaign level reporting for overall metrics. In CTV, we are leading with innovation and scale. We ensure trust, performance, and control to both buyers and sellers. We were delighted to announce that Netflix selected IAS as a transparency partner for their ad-supported plan. We look forward to partnering with Netflix to provide viewability and invalid traffic verification of Netflix inventory. By the end of 2023, 78% of CTV video ad spending in the US is expected to be bought programmatically according to eMarketer. IES is enabling marketers to increase their programmatic buying in CTV without sacrificing media quality. For CTV publishers, Publica provides yield through unified auctions, inventory management, and ad stitching that enables CTV content and ads to be delivered in a seamless stream. Publica was recently named Best Video Ad Server in the AdWeek Reader's Choice Awards. Publica is now making it possible for publishers to access IAS insights within the Publica UI. This enables streaming publishers to optimize their inventory around the trusted IAS metrics the buy side uses to inform their ad buying practices. This feedback loop of IAS data facilitates the buying and selling of CTV inventory at scale. For marketers, we offer a single platform to verify, optimize, and measure addressable TV. IAS has created private marketplaces with over 90 publishers in 2022 to ensure greater transparency and access to higher quality CTV media. Marketers and publishers depend on our solutions to ensure their digital media quality needs are met. Retail media is an exciting opportunity for marketers and represent over $44 billion in total ad spend in the U.S. in 2022, according to eMarketer. We provide measurement solutions in retail media across nine out of the top 10 largest networks. Measurement represents a starting point for IES in retail media. We look forward to helping marketers fully realize the ROI potential in this high-growth medium. In emerging channels, we continue to make progress with Spotify and audio, launching the industry's first third-party brand safety and suitability reporting tool for podcasts. In gaming, IES announced its first to market partnership with Gatsby, a premium in-game advertising platform. IES will verify Gadsmeet's ad inventory globally and provide marketers with third-party viewability and invalid traffic reporting. Our products have never been more relevant as marketers lean into our differentiated solutions. IES enables safe content to thrive, which results in greater efficiency and return on ad spend for marketers and increased deals and optimization for publishers. Our model is highly differentiated as our pricing is independent of the media rate and negotiated eCPMs directly with marketers. We're a volume-based model and not immune to volatility in ad spend. However, the essential nature of our solutions provides us with some level of insulation. Building on our accomplishments in 2022, we plan to continue to innovate further on behalf of our customers with data as the foundation. Under the leadership of our new CTO, we are enhancing our tech stack for greater scale and the ability to access, process, and analyze data to fuel superior results for marketers. This will enable us to support future growth and innovation in high growth areas. In conclusion, we made tremendous strides in 2022 to position IAS for long-term success. We strengthened our leadership team, invested in high growth areas, and solidified our partnerships. We are thrilled to extend our market presence with recent logo wins, which highlights the success of our new go-to-market strategy. I am excited to unleash the potential of IAS in 2023 and beyond. We are geared up and ready to go. Thanks to everyone on today's call for your ongoing support. I'll now turn it over to Tanya. We are thrilled to have her on the team, and she is making a tremendous impact already. Tanya?