Tremor International Ltd.

Welcome to Tremor International's fourth quarter and year-ended 2021 conference call. At this time, all participants are in a listen-only mode with a question-and-answer session to follow at the end of the presentation. This conference call is being recorded, and a replay of today's call will be made available on the Investor Relations section of Tremor's website and will remain posted there for the next 30 days. I will now turn the call over to Billy Eckert, Senior Director of Investor Relations. for introductions and the reading of the Safe Harbor Statement. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Tremor International's fourth quarter and full year ended December 31st, 2021 earnings call. With us on today's call are Ofer Druker, Tremor's Chief Executive Officer, and Sagi Miri, the company's Chief Financial Officer. This morning, we issued a press release, which you can access on our website at investors.tremorinternational.com. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution and reliance on forward-looking statements. These statements include, without limitation, projections about our future financial results and future business, and statements concerning the expected development, performance, and market share or competitive performance relating to products or services. All forward-looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business. More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled Risk Factors in our registration statement on Form F-1. Tremor does not intend to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, Chief Executive Officer of Tremor International. Ofer, please go ahead.

Thank you, Billy, and welcome to everyone joining us today. Let me start off by saying that I'm extremely pleased with our results for both the fourth quarter and full year. 2021 represented the strongest year of growth and profitability in the company's history. During the fourth quarter and full year, we continue to validate our strategy of being an end-to-end tech and business platform with a focus on CTV, video, and data, and continue to experience strong market adoption of our products. We remain encouraged by the results we are generating. We believe that our strong balance sheet, profitability, and cash flow will enable us to maintain continued growth both organically and through potential M&A while adding value for our shareholder through the $75 million share buyback we announced today. I will begin by giving an overview of our results and strategy, followed by our chief financial officer, Sagi Neri, who will review the highlights of our Q4 and full year 2021 financials. We will then open the call up for questions. For the three months ended December 31, 2021, we generated contribution aspect of $88.6 million compared to $74 million in Q4 2020, representing 20% organic growth and adjusted EBITDA of $54 million compared to $39.1 million in Q4, which reflect 1.4 times growth. These results were highlighted by continued growth in advertiser spend on CTB, which increased 47% during Q4 2021 compared to Q4 2020, and greater adoption of our self-service and various tech-enabled programmatic offerings. The greater adoption of this technology solution supported our ability to generate strong profitability. The efficiency of our platform, our end-to-end strategy, and the growth we achieved in this segment drove a 53% adjusted EBITDA margin in Q4 2021 on a reported revenue basis and a 61% margin on a net revenue basis. We believe this margin represents the best in class for our industry. For the 12th month, end of December 31, 2021, we generated contribution XTEC of $302 million, compared to 184.3 million during the full year 2020, reflecting organic growth of 64% and adjusted EBITDA of 161.2 million compared to 60.5 million during the same period last year, reflecting 2.7 times growth. These record results reflected the best year in travel history and serve as an indicator that customers prefer our offering, which provides simplicity and enhanced data through our differentiated end-to-end technology and business platform. Full year growth for Tremor in 2021 was also driven by increased CTV spend across our platform, which increased 108% compared to 2020. While we also continue to see the necessity of our managed service offering, we are currently seeing and expect to continue observing co-growth driven primarily by our self-service solutions and programmatic offerings. We believe the key to our continued growth and success in our depreciated end-to-end technology and business platform, which is comprised of a demand-side platform, data management platform, supply-side platform, and most recently, a CTV ad server. Our strong focus on product development and every acquisition we have successfully integrated over the last few years has driven us towards creating the platform we have today with the ability to service a wide variety of customers across all screens. We believe end-to-end is the most efficient model in the industry as customers desire simplicity, better data to enhance their returns and targeting efforts, and to move towards supply pet optimization. Because we maintain relationship with both advertisers and publishers, we are able to connect with them directly in the most efficient way while providing better insulation against future privacy changes. Customers leveraging us for their end-to-end buying needs also enjoy strong pricing advantages because we consolidate all transaction fee within one ecosystem to maximize advertiser budget going to the publishers. Our end-to-end model also has enabled us to generate strong 2021 customer net retention rate of 150.3%. We believe these strong retention rates offer evidence that our model is working well and fulfilling our customer holistic needs. Furthermore, we believe this model is better for Tremor and its shareholders as it enables maximum revenue opportunities and profitability through the cost efficiencies we achieve from splitting costs across both sides of our platform, while owning our global server infrastructure. CTV and video remain key growth drivers for Tremo, as we saw 27% and 80% of our contribution extracts, respectively, generated in this segment as of the end of 2021. as revenues grew 118% and 69% respectively during the year. According to eMarketers, U.S. advertising spend on CTV is projected to grow at approximately 24% CAGR through 2025, while U.S. ad spend on video and CTV combined is projected to grow at roughly 17% CAGR through 2025. We believe our footprint in this fast-growing segment should result in strong continued growth for Tremor. We have also taken steps to enhance and differentiate our offering within CTV, as evidenced by the recent acquisition of Spirit, our exclusive global ACR data partnership with Vida, the launch of Programmatic TV Marketplace, and the launch of our content-level targeting solutions. Tremor is also well-positioned for challenges within the industry due to its robust data footprint, end-to-end technology and business platform, and focus on CTV. Privacy changes has been a significant theme in our industry, particularly around IDFA changes and cookie depreciation. In addition, last week, Google announced a multi-year initiative to build the Privacy Sandbox, which will limit sharing of user data with third parties and operate without cross-app identifiers. Tremor is well-positioned to address all of these changes due to our end-to-end operating model, as our DSP and SSP share the same audience graph, which eliminates data loss when syncing platforms. Our exposure to cookies from a revenue standpoint is also relatively low. which allowed Tremor and its customers to remain well-positioned for privacy changes compared to other industry peers with higher levels of third-party cookie exposure. We are confident that this combination of factors ensures we remain able to meet our customers' needs. Regarding challenges associated with supply chain constraints and inflation, we saw evidence of lower advertising spend during Q4 2021, which have continued to this point in Q1 2022. In certain sectors, such as automotive, due to cheap shortages. However, these issues have been offset by increased demand in other segments, such as TPG. Our highly diversified customer base across our end-to-end platform has helped offset any significant adverse impacts to our business. We achieved a lot during Q4 2021 that helped us to strengthen our offering within CTV. In October 2021, we strengthened our CTV and data capability through a unique and meaningful partnership with VIDA, a subsidiary of ISEN, which provides us exclusive global access to ACR data starting later this year. The partnership is expected to accelerate our U.S. and international growth and we anticipate this growth will mainly start in the second half of 2022 in key markets such as Canada, Australia, the UK, and Germany. This powerful data partnership, which we will utilize for targeting purposes, provides access to VIDA's distribution. We believe VIDA currently reaches approximately 20 million smart TVs worldwide, and we expect this reach to grow to more than 40 million TVs in the coming years. VIDA is the operating system for major OEMs that include iSense, Toshiba, and others. This partnership makes Tremor the only end-to-end technology platform with this type of exclusive data outside of the World Garden. VIDA has also proven that its relationship with Tremor extends deeper than data. In January, Vida selected on Wooly as its strategic SSP to enable global access to all its video and native display media, while also integrating our newly acquired CTV ad server, Spirit, to enable better control over the CTV ad delivery with granular ad port control and targeting. In October 2021, we acquired Spirit, which provides Tremor with a global CTV ad server and other Vida featuring a robust user interface with advanced tools for ad and pod monetization. We anticipate that the addition of the Spirit technology will allow us to capture a large segment of global CTV inventory through both current and future media partners, while providing added benefits to help those partners better control their inventory and maximize revenue opportunities. Like the video partnership, we anticipate the addition of Spirit will open greater opportunities internationally, and we have already seen adoption of the technology by partners such as Vida. We focus that the main contribution from this acquisition will start during the second half of 2022. In October, we increased our investment in CTV by announcing the launch of our programmatic TV marketplace, which is a centralized platform for planning TV campaigns. The launch enabled advertisers to gain access to a diversified marketplace that featured premium TV-centric supply and curated P&P packages. Advertisers also gained the ability to leverage an efficient planning process to help improve and streamline cost, inventory, and reach, while gaining greater transparency into what inventory is included in each package. In December, we introduced in our SSP Unruly a content-level targeting solution which provides a new contextual solution for buyers amidst growing privacy regulations. Content-level targeting allows buyers to tap into traditional linear TV buying tactics with granular targeting options like genre, rating, and show title within digital CCTV and over-the-top environments. We believe this solution successfully positions Tremor and its customers for future changes in privacy. 2021 was an amazing year for Tremor from a business win perspective, and I will go over the major wins and highlights from both the fourth quarter and full year. As we mentioned, in the fourth quarter, we significantly enhanced our offering and innovation within CTV Through our partnership with VIDA, the acquisition of experience and the launches of programmatic TV marketplace and content-level targeting. Our SSP on Hudi significantly increased its reach and added 42 new U.S. supply partners during Q4 2021 across critical growth verticals in sports, entertainment, and lifestyle, as well as OEM and multicast video on-demand businesses. This come after Unruly added 35 new US supply partners during Q3 2021. Our Unruly control offering has received amazing feedback from premium partners in the CTV arena. During Q4 2021, P&P revenue from this self-service platform for publishers saw an increase of 184% compared to Q3 2021. Truly, our in-house creative studio was heavily involved in many deals we promoted with customers and empowered campaigns while enhancing engagement in a meaningful manner. During 2021, creative requests through Truly increased 74%. Truly generated about 21,000 unique video creatives and created stickier relationships and spending trends with our customers. Truly is a differentiator for us as not many DSPs or SSPs have a creative studio in-house. This power-out drives higher levels of campaign spend to our platform. For example, new and existing clients who hadn't yet booked a campaign in 2021 spent an average of 301% more on their first campaign when leveraged Truly creative solution. Our data-driven creative studio has experienced strong and growing adoption and combines two of our greatest advantages, our robust data footprint and our ability to provide all-screen creative solutions to better support our advertisers' needs in connecting with consumers. Last year, we also recognized that large video advertisers were looking for complementary omni-channel solutions to their video campaigns. which drove us to launch the ability to run display and audio campaigns in our DSP. Additionally, we launched our TV intelligence solution, enabling in-house TV retargeting and measurement solutions that provide advertisers the ability to reach and engage TV viewing audiences at scale with data-driven video creatives. This solution received a further boost with our Vida data partnerships, the launch of programmatic TV marketplace, and the launch of our content-level targeting solution, which also enhanced targeting capabilities for customers. Finally, we successfully executed a dual listing on the NASDAQ in June. We generated $134.6 million in cash proceeds, net of issuance costs, and enabled strong exposure to U.S. markets greater access to capital, and increased access to broader investor base. Today, we are also very pleased to announce a $75 million share buyback program, which allows us to retain significant value to shareholders and take advantage of the opportunity amidst macro pressure that many companies within edtech have been under recently. We increased our cash balance by $270.3 million to $367.7 million as of the end of 2021. Our strong balance sheet and cash-generated business enable us to implement this buyback while we also continue to evaluate opportunities to acquire companies and continue to invest in technology, sales, and marketing. Finally, since our last earning course, we have delivered on our promise to engage more proactively with the U.S. and international investment communities. In November, we presented a Q3 update for U.K. investors and participated in RPC Global Tech Conferences. In December, we participated in Raymond James Tech Conference, and in January, we participated in NIDA Annual Growth Conference. We also conducted a significant number of institutional investors' meetings and participate in NDRs with numerous banking and IR partners. Finally, we recently launched our inaugural quarterly IR newsletter, which we intend to update each quarter to make investors more aware of main developments at Tremor. Please subscribe on the Investors Relations tab on our website. It is now my pleasure to turn the call over to Sagi to review our financial results.