Integral Ad Science Holding Corp.

Good day, and thank you for standing by. Welcome to the IAS fourth quarter and full year 2023 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Jonathan Shaffer, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to the IAS 2023 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. 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 2023 fourth quarter and year-end call. We delivered strong fourth quarter performance ahead of expectations. Revenue grew 14% to $134.3 million at a 35% adjusted EBITDA margin. Full-year 2023 revenue increased 16% to $474.4 million at a 34% adjusted EBITDA margin. Throughout the year, we advanced our commitment to providing the industry's most actionable data and driving superior results for our customers. Our teams focused on maximizing ROI with AI-driven measurement and optimization solutions for our customers with industry-leading products. Brands trust IAS to safeguard and scale their businesses across all digital channels. We drove media performance through AI, ML, and data transparency to ensure our customers realize lasting value for their businesses while anticipating rapid changes in the industry. Before we look ahead to 2024, I'd like to share a few highlights from 2023 that position IAS for long-term durable growth. In 2023, IAS signed over 20 global partnerships with major tech providers, including TikTok, Meta, YouTube, X, Criteo, Instacart, Uber, Netflix, Samsung, and Vizio. Our products are built on a foundation of data science and AI. In 2023, we expanded availability of our Total Media Quality, or TMQ, product to meet the explosive growth of social media, including short-form video. We launched new products like Quality Attention and Made for Advertising. We also enhanced our total visibility offering for improved optimization of marketer spend. IES's global presence is a key differentiator. In 2023, we expand our international coverage with 40% of our new hires outside of the Americas and open operations in four key APAC markets, Hong Kong, Taiwan, Thailand, and Vietnam. We recently announced partnerships with Moj and ShareChat, an Indian social networking platform, to deploy measurement solutions for advertisers on the platforms. Our international presence helped clinch several new global customer wins and renewals in 2023, including Caring, Canva, BT, Singapore Airlines, Panasonic, L'Oreal, LG Electronics, Singtel, Maruti Suzuki, BMW, Ferrero, and Mars. In the fourth quarter, we secured additional wins and major renewals that reinforce IAS's standing as a leader in the market. We won the following three deals from an incumbent provider. Airbnb switched to IAS as its global verification partner. Airbnb chose IAS based on our robust technological innovation, commitment to customer service, including precision billing, distinct product advantages, and superior platform integrations. A major telecom provider selected IAS as their verification and brand safety partner across all digital investment channels in the U.S. They chose IAS based on our tech, innovation, and service. IAS is a leader in the telecom vertical, working with the top three telecom providers in the U.S. A large insurance carrier switched to IAS for measurement and optimization exclusively based on our innovative solutions and trusted support teams. We also secured two exclusive global partnership expansions. Volkswagen Group renewed and expanded its exclusive global partnership with IAS across all of its brands for both measurement and optimization solutions. The renewal agreement has been expanded to include additional products, including total visibility, sustainability measurement, and advanced CTV measurement. IAS expanded its partnership with Shiseido, the Japanese multinational cosmetics company, as its exclusive global verification provider. IAS built on its partnership with Shiseido and EMEA and APAC to include the U.S., which has been serviced by an incumbent provider. In 2023, we made several senior hires with specialized experience to further IAS's growth and optimization in data science. In November, Kumaris Singh joined IAS from Meta as Senior Vice President of Data Science to build highly scalable software systems. We plan to grow our data science team to represent 30% of R&D headcount by year-end. We achieved several MRC accreditations in 2023, including the industry's first MRC accreditation for CTV viewability. Recently, IIS received continuing accreditation from the MRC for Meta, including impressions and two-second video viewability data for Facebook feed and Instagram feed and stories. In the fourth quarter, IAS released its first corporate responsibility report outlining the tangible progress the company is making to strengthen its environmental, social, and governance initiatives. The report highlights our commitment to innovation and ethical practices, exceptional customer service, and ensuring IAS is a great place to work for our employees. Turning to 2024, I'd like to review our product roadmap priorities. First, we are investing to capture the explosive growth of social media, including short-form video and the live feed. Second, we are evolving our products to support marketing outcomes. Third, we are innovating to make our products easier to activate to drive campaign usage and diversify our customer mix. Lastly, AI is an essential part of our product vision, and we are investing in data science. Let's review these priorities in more detail. As an unbiased, independent, third-party provider, we are delivering solutions to help marketers measure and optimize performance in dynamic, user-generated social environments. We are expanding availability and increasing adoption of our highly differentiated TMQ product to reach social media users globally. TMQ is activated in the live feeds of the four major social platforms today to meet high marketer demand. With Meta, we were delighted to announce earlier this month the availability of our AI-driven TMQ brand safety and suitability measurement product across Facebook and Instagram feed and reels. IAS's new post-bid brand safety and suitability expansion with Meta gives advertisers increased transparency into whether their campaigns are appearing next to safe and suitable content. We expect to ramp adoption throughout 2024 and into 2025. We've seen healthy adoption of our TMQ product in TikTok. In 2023, the number of active post-big campaigns increased over 350%, and the number of tracked ads increased over 550%. In November, IAS expanded its TMQ product for TikTok to 21 new countries for a total of over 50 markets. In December, IAS expanded our YouTube TMQ product capabilities. IAS now offers our brand safety and suitability measurement product to advertisers for YouTube Shorts inventory as part of its existing total media quality for YouTube product suite. On February 1st, IAS expanded its partnership with X for all U.S. advertisers. IAS classifies all vertical video ad adjacencies for brand safety and suitability aligned to the GARM framework, giving advertisers maximum control over where their ads appear on the X vertical video feed. Additionally, we are expanding our post-bid brand safety and suitability measurement solution currently in GA in the U.S. to other countries in Q1. We are also continuing to evolve TMQ to offer marketers more choice into how content is classified with more categories, including misinformation ahead of this year's U.S. elections. Regarding outcomes, we are focused on driving superior results for marketers with products only IAS offers, including total visibility, MFA, and attention. IES's unique total visibility product enables customers to connect performance metrics such as conversions and sales lift, supply path, and cost of media to IES's media quality metrics, including viewability, context, attention, and brand suitability. Total visibility is now integrated with Yahoo's DSP, expanding our coverage and providing greater insights into the total supply path. In the fourth quarter, IAS announced its new Made for Advertising, or MFA, site detection and avoidance solution backed by AI. Our differentiated approach to MFA considers both the quality of the ad environment and characteristics of the traffic source, meeting the specific preferences of each marketer. In January, IAS announced that our quality attention solution is now available in GA. Our differentiated attention product is the only solution available that uses advanced machine learning, actionable data from Lumen Research's eye-tracking technology, and a variety of signals obtained as part of IAS's core technology to weigh into a single attention score. Publica by IAS continues to be recognized as the market-leading CTV ad server. In 2023, the team won five awards, including being named by Digiday as the best video ad server. Univision, Foxtel, and Hallmark are the latest streaming publishers to implement Publica by IAS to help them grow their advertising revenue and improve their viewers' streaming experiences. Publica by IAS also announced support of OpenPath from the Trade Desk. Along with the direct DSP integrations carried out in 2023 from platforms such as Yahoo, Publica now empowers publishers to curate their optimal demand paths to maximize programmatic CTV advertising revenue. Our business today is weighted towards a loyal base of large advertising customers with an average tenure of over eight years for our top 100 marketers. At the end of the fourth quarter, we had 222 large advertising customers with an annual spend of at least $200,000 per year. Revenue from these large advertising customers represented 87% of our total advertising revenue for the trailing 12-month period. We are seeing more competitive pricing and measurement on a select group of large contract renewals in exchange for increased volume commitments and multi-year exclusive agreements. We have factored this dynamic into our growth outlook for 2024. We continue to diversify our customer mix and grow our presence with mid-tier performance-based marketers. On the product side, we are enabling adoption and activation through new capabilities. Since integrated quality sync into major DSPs, including the trade desk, we've seen the number of quality sync impressions increase threefold since the beginning of 2023. We have also implemented an enhanced go-to-market strategy for mid-tier clients. We have partnered with independent agencies and vertical-specific DSPs and launched new contextual segments. We have also hired several new programmatic sales specialists. In January, Parker Boland joined IAS from Amazon is Senior Vice President Global Optimization Sales. In 2024, we believe generative AI will accelerate product development and drive greater efficiencies. We are leveraging AI to help marketers identify higher quality media with greater transparency into their advertising buys. AI already powers our TMQ, attention, and MFA offerings. We are moving towards the launch of a real-time data platform in the first half of 2024, as discussed on our Analyst and Investor Day last year. We also expect that cookie deprecation will increase demand for our solutions. Our technology is focused on the what and the where of the media event rather than on the who. As marketers lose the ability to measure and target campaigns with third-party cookies, We believe IES can fill those gaps using more context and introducing new metrics like attention. Our full-year 2024 revenue outlook calls for double-digit top-line growth and solid profitability. We expect to benefit from increased product availability of TMQ and QualitySync and the launch of new products, including Quality Attention and MFA. as well as emerging opportunities such as retail media. As a result of these new products, new logo wins, expanding wallet share with existing clients, and second half events, including the Olympics and the U.S. elections, we expect to ramp performance as we move through the year. We're coming off a strong fourth quarter and positive full year 2023 performance. highlighted by 16% revenue growth and a 34% adjusted EBITDA margin. As we look to the future, we are investing to capture an exciting opportunity across several fast-growing channels. We value the trust marketers place in IAS to protect, measure, inform, and optimize their brand campaigns. By leveraging our differentiated data to ensure that our insights power outcomes we elevate the quality of digital media across the digital ecosystem. We are ensuring access to higher quality media and driving higher ROI for our brand and publisher partners, which is at the heart of the IAS value proposition. I'd like to thank all of our customers, partners, employees, and shareholders for their commitment and support and look forward to updating you on our progress. And with that, I'll turn the call over to Tanya to review the financials, and then we'll take your questions.