Integral Ad Science Holding Corp.

Good day and thank you for standing by. Welcome to the IAS Q1 2024 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, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jonathan Schaefer. Senior Vice President, Investor Relations.

Thank you. Good afternoon, and welcome to the IAS 2024 First Quarter 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 O. Schneider. Lisa, you may begin.

Thank you, Jonathan. Welcome, everyone, to our 2024 first quarter call. Revenue in adjusted EBITDA for the first quarter exceeded our prior expectations. Revenue grew 8% to $114.5 million last year. ahead of our prior outlook of $111 to $113 million. Adjusted EBITDA was $33.1 million at a 29% adjusted EBITDA margin. As we moved through the first quarter, we benefited from increased advertiser demand for our industry-leading products, particularly in social media. Our first quarter performance includes the previously discussed factors within measurement and optimization that we anticipated. We expect favorable demand trends for our products in the second quarter, and we are increasing our full-year outlook. On today's call, I'll address the importance of data integrity and our trusted AI-backed technology, the strong momentum in social media cross-platforms, our robust product pipeline in both measurement and optimization, and several high-growth opportunities that we continue to prioritize. Marketers trust IES to protect, measure, inform, and optimize their brand campaigns. Their trust is based on the accuracy and reliability of our data. Data integrity is critical and inherent in all the reporting and insights we provide in every aspect of our business. Data science is at the heart of our business strategy. Our AI systems enable models that deliver classifications and analytics at greater speed that are scalable with extremely high precision. This, in turn, helps deliver the most actionable data to our clients. In a recent IAF study, our AI technology delivered up to 74% more accurate brand suitability measurement across social media platforms when compared to other providers' solutions. While IAS is focused on harnessing the power of AI, we are committed to doing it responsibly. We are investing in explainable AI, which ensures that our customers can trust our models. The accuracy, reliability, and integrity of our data is anchored in our AI innovation, as well as in our critical role as an independent third-party provider. This allows us to maximize the value we offer, all while maintaining and growing the trust customers have in IAS. A few weeks ago, I presented a TikTok second annual Beyond Brand Safety Summit, along with TikTok's Head of Global Ad Tech Partnerships and Brand Innovation Product Lead. TikTok selected IAS as the only third-party measurement partner to speak at the event, highlighting the essential role IAS plays in supporting TikTok's advertisers. Our leading partnership with TikTok, as well as our recently announced exclusive first-to-market partnerships with Axe and Snap, demonstrate the trust major platforms place in IAS, which fuels our innovation. At IAS, we lead with customer obsession. Putting the customer first and ensuring we're at the forefront of innovation has resulted in a highly sticky customer base with an average tenure of eight plus years for our top 100 marketers. We have increased wallet share with our large customers as a result of organic volume growth, upsell, cross-sell of new products, expansion into new global markets and channels, as well as land expand within existing customer brand portfolios. Since 2019, we've seen a 55% increase in average annual spend in year two of new contracts based on our advertiser customer data. We're pleased to have secured several recent wins in renewal expansions across industry verticals, including CPG, telecommunications, automotive, and financial services. We have also proven our ability to grow with our customers as they shift advertising budgets to capture the explosive growth of social media, including short form video. Social media measurement revenue represented 21% of total revenue and grew 40% in the first quarter due to the rapid adoption of our total media quality TMQ product suite. IES is leading in social media with integrations across the major social platforms, including Meta, YouTube, and TikTok. IAS has also established industry-first partnerships with X and Snap, further validating the superiority of our social media offerings. With Meta, we've achieved strong adoption of our AI-driven TMQ brand safety and suitability measurement product across Facebook and Instagram feed and reels. Total volume of impressions on META increased more than 50% in the first quarter since brand safety and suitability measurement launched on February 5th. We're delighted to announce that we've expanded availability of our brand safety and suitability measurement on META to include 21 new languages for a total of 28 supported languages. In April, we've also expanded to include our GARM-aligned misinformation measurement to meet growing advertiser demand ahead of the upcoming U.S. elections. With TikTok, we expanded our global industry-leading brand safety and suitability measurement to 12 GARM categories and 15 vertical sensitivity category exclusion segments in April. We added 11 countries for total coverage of over 60 countries. We also expanded our measurement ease of activation with automated suitability profiles and enhance reporting capabilities, validating that our customers' ads are appearing in brand-suitable environments. With YouTube, we earned MRC accreditation in March for our integrated third-party calculation and reporting of YouTube video viewability for desktop and mobile, including web and app, using Google's Ads Data Hub for measurement partners. In February, IES launched its exclusive pre-bid product with X, providing the opportunity for U.S. advertisers to opt in to activate pre-bid IAS optimization for X on the vertical video product. IAS classifies 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. Our relationship with X is based on trust and transparency. with a foundation built on the accuracy of our data. In March, IES announced a first-to-market partnership on Snap to provide AI-driven brand safety and suitability measurement for advertisers. By integrating our TMQ product suite, advertisers on Snap will have access to increased transparency across their Snapchat campaigns. We're currently in development and expect to go live later this year. This announcement expands our partnership with Snap, which dates back to 2018 in which IES launched viewability and IVT measurement. We are prioritizing offerings in measurement and optimization that drive superior results in ROI for our customers in an increasingly cookie-free world. We are expanding the reach of our quality sync product to new DSPs, which simplifies activation for our pre-bid optimization products. QSP revenue more than tripled year over year in the first quarter. In the first quarter, we increased adoption of our total visibility product. Total visibility enables customers to connect performance metrics such as conversions and sales lift, supply path, and cost of media to IAS's media quality metrics. In April, IAS expanded our MFA AI-driven solution to GA after an extensive beta that spanned over 100 campaigns. Our MFA solution is the first to measure and optimize against both MFA and ad clutter sites to drive maximum efficacy across the programmatic buying process. Our quality attention solution went live in early January, and has experienced significant growth in active customers since launch. Our differentiated approach unifies media quality and eye tracking with machine learning to deliver proven results for advertisers. Higher attention drives better sales performance. In a recent study in partnership with NC Solutions on behalf of a major CPG client, we found that impressions with higher attention scores drove an increase of 157% in incremental sales versus impressions with lower attention scores. Ahead of this year's U.S. elections, IAS is helping protect brands by enabling them to identify and avoid misinformation using a combination of AI-backed technology and human detection. IAS has been combating misinformation on the open web since 2021 in partnership with the Global Disinformation Index, or GDI, and aligned with GARM standards. We've significantly enhanced our misinformation offering to include TMQ in leading social platforms. During the quarter, we realized double-digit revenue growth with our mid-tier clients. We have established new partnerships with mid-tier DSPs, including two in the important pharmaceutical sector. We also signed five mid-tier agencies as their preferred or exclusive partners. Lastly, we continue to invest in high-growth opportunities, including CTV, retail media, and gaming. During the quarter, Publica by IES partnered with CNN and Turner Sports and EMEA. Both publisher partners used Publica by IES' unified ad auction solution to increase yield and guarantee the best viewing experience for users. We are delighted to announce that Cam Milley will be joining IAS as Chief Revenue Officer at Publica. With over 12 years in sales leadership roles at Freewheel and OpenX, Cam possesses deep knowledge of the CTV and publisher landscapes. We look forward to welcoming Cam to the team. In April, IAS received accreditation for filtration of sophisticated invalid traffic in CTV environments as applied to video impressions. viewable impressions, and viewability-related metrics. Our latest MRC accreditations demonstrate our continuing commitment to transparency and to the MRC process. In the last 12 months, we've achieved 10 third-party certifications accreditations, including four from the MRC. In April, IAS was one of the first companies to receive TrustArc's Trustee Responsible AI Certification demonstrating our commitment and alignment with the highest standards of AI governance. The certification validates our practices for the development and deployment of AI systems are secure, fair, and transparent. In retail media, IAS is a leader in independent verification with coverage for viewability, IVT, and brand safety with the top retail media networks. In the first quarter, volume from retail media networks grew 88%. Last week, IES announced a first-to-market integration with Roblox to provide 3D in-game viewability and invalid traffic measurement in the immersive environment. Advertisers can access best-in-class third-party measurement to verify that their immersive in-game advertisements on Roblox are driving engagement with real users. To conclude, first quarter results exceeded our prior outlook, and we expect accelerated growth in the second quarter. As previously discussed, we expect the measurement contract renewals to be net revenue positive in 2024. In addition, new products and recent customer wins, along with other contributing factors, reinforce our confidence in our increased full-year outlook. And with that, I'll turn the call over to Tanya to review the financials, and then we'll take your questions.