Tremor International Ltd.

Welcome to Tremor International's first quarter 2022 conference call. At this time, participants are in 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 for the next 30 days. I will now hand it over to Billy Eckhart, 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 first quarter ended March 31st, 2022 earnings call. With us on today's call are Ofer Druker, Tremor's chief executive officer, and Sagi Neri, 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 in reliance on forward-looking statements. These statements include, without limitation, statements and projections about our anticipated future financial results, including discussions about our revenue, margins, expenses, and guidance for Q2 2022 and future business, anticipated benefits of Tremor's current and future potential strategic transactions, product launches, and commercial partnerships, anticipated continued and accelerated future growth in both U.S. and international markets, expected strengthening of Tremor's products and reach, expected ability to continue repurchasing shares, investing in technology, sales, and marketing, and evaluating strategic opportunities to acquire companies, forward-looking industry and economic statements and outlooks, and other statements concerning the expected development, performance, and market share or competitive performance relating to our 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 20F. Trevor 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 of 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, CEO of Tremor International. Ofer, please go ahead.

Thank you, Billy, and welcome to everyone joining us today. I will begin by giving an overview of our results and strategy, followed by our Chief Financial Officer, Sagi Niri, who will review the highlights of our Q1 2022 financials. We will then open the call up for questions. The first quarter followed an incredible 2021 for Tremont, which was the strongest year of growth and profitability in the company's history and represent what we believe to be best in class performance across the EdTech industry. During the quarter, our end-to-end technology and data-driven business platform focused on CTV and video expanded. and enhance its capabilities while continuing to generate strong customers' adoption. Despite challenging market conditions that impacted advertiser spending, such as supply chain constraints, inflation, rising interest rates, and the war in Ukraine that began on February 24th, when we last announced earnings, Tremor was able to achieve strong year-to-year revenue growth, free cash flow, conversion, and profitability. We were also able to continue maintaining industry-leading adjusted EBITDA margin, which is critically important during periods of economic uncertainty and serves as a testament to the strength and durability of our end-to-end business model. We will continue to maintain a strong focus on generating robust profitability as we believe these positions are well for the current environment as well as future growth opportunities. Tremor operating model enable it to be opportunistic and continue investing in technology, sales, and marketing to drive organic growth, continue re-purchasing shares, and have the means to engage in meaningful M&A in the market where valuation premiums have decreased to drive long-term shareholder value. Our ability to achieve these strong fundamentals and our success in Q1 was largely driven by the strategic path we intentionally chose in 2019 to become an end-to-end platform. Our belief in this model is stronger than ever due, in part, to the growth and profitability we are able to continue achieving. For the three months ended in March 31, 2022, we generated contribution hextech of $71 million, compared to $63 million in Q1 2021, representing 30% organic growth. An adjusted EBITDA of 33.6 million compared to 27.5 million in Q1 2021, which represents 1.2 times growth. We continue to experience growth and strength within our CTV and video offering. Greater adoption of our self-serve offering and the diversity of our revenue streams and customer base help us successfully navigate a complex industry environment. Our efficient data-driven end-to-end strategy drove a 42% adjusted EBITDA margin in Q1 2022 on a reported basis and 47% margin on net revenue basis. We believe these margins continue to represent the industry's best-in-class. The strong profitability of the business position us to weather current macro-related headwinds as well as future potential deterioration in the market environment, and more importantly, take advantage of future growth opportunities. We also have strong conviction in our end-to-end technology and business platform, as we are seeing others in the industry begin to realize that this type of operating model and platforms connect advertisers and publishers in the most efficient way. It provides simplicity, better installation against changes to data privacy regulation, strong access to data, reduced audience loss, key pricing advantages, and it's supportive of the industry trend towards supply-paid optimization. In recent commentary, certain SSPs have indicated that they are seeking to expand their direct relationship with brands and agencies. On the DST side, we have heard companies indicate that they are expanding their media relationship and capabilities and allowing advertisers and brands to plug directly into inventory. Make no mistake, whether these companies are saying it directly or not, they are demonstrating that they believe operating end-to-end, at least to some extent, is beneficial for their business and their customers. We view this very positively as we have built fully integrated and scaled completely end-to-end technology platform and because we have robust experience operating this way for more than three years. As others in the industry are just recently realizing the benefit of this model for customers, shareholders, and their companies, Tremoro has anticipated this trend and has held relationships with brands, agencies, media partners, and data providers for years. This relationship across the EdTech ecosystem are contributing to our ability to achieve strong growth and profitability while effectively positioning us to take advantage of both industry and Tremor-specific growth catalysts expected in the second half of the year. Specific to Tremor, we expect to monetize our exclusive and unique global ACR data partnership and media relationship with VIDA and fully integrate CTV as server spirit. Within the industry, we believe the seasonally strong fourth quarter will be further boosted by advertiser spend associated with the Soccer World Cup, as well as the U.S. midterms election. Our platform is now comprised of a fully integrated demand-side platform, data management platform, supply-side platform, CTV ad server, and award-winning in-house creative studios. Across these components, we provide self and managed services offering. PMP programmatic offering and performance offering across all screens for customers regardless of their service level requirements. CTV and video continue to remain key growth driver for Tremor as we saw CTV spend grew 21% in Q1 2022 to 46.2 million compared to 38.2 million in Q1 2021. Video revenues, including CTV, also continue to represent the overwhelming majority of our total contribution extract at approximately 80%. As many of our build platforms invest budgets and attention in evolving their offering and marketplaces from display focus to video, we believe our long-standing and substantial footprint, capabilities, and partnerships in these fast-growing segments will result in strong continued growth for Tremor. We also believe EvoD will become more meaningful and experience growth over the next several years as several major streaming services has expressed interest in potentially supporting advertising or have already launched its supported channels and tiers. This platform evolution show long-term health and viability to the CTV advertising market and reflect the steady consumer preferences for saving money on subscription and willingness to view ads across the valuable content. At the industry level, Tremor remains well positioned for changes in the privacy landscape that can adversely impact ad tech companies. Our end-to-end technology platform contains a significant and growing footprint of first-party and third-party data, and our DSP and SSP share the same audience graph, which eliminates data loss during cookie sync. We also believe we are minimally exposed to cookies. We support major universal ID solution in the market, and we are developing our own Tremor universal ID solution. Contextual solutions, such as the content-level targeting solution announced in December, also better insulate us against privacy changes. This unique combination of factors give us confidence that we will remain able to continue meeting our customers' needs despite these privacy changes. As we mentioned, during Q1, we saw continued evidence of lower advertising spend due to combination of factors, including inflation, rising interest rates, supply chain constraints, in certain sectors such as automotive due to continued ship shortage and the war in Ukraine. While we are seeing increased growth in bookings as well as programmatic activity so far in Q2 compared to Q1, and we are also seeing challenged sectors such as automotive and travel show initial signs of recovery, recent macroeconomics and market pressure could continue to challenge advertiser spend in the near term. We believe, however, that our highly diversified customer and revenue base will continue to position us well to offset any substantial adverse impact on our overall business, further underscoring the durability of our tech platform and business model. During Q1 and this point in Q2, we have achieved significant progress that has helped enhance and expand our platform and believe we are well positioned for positive industry and tremor-specific catalysts expected in the second half of 2022. We are very excited for our exclusive and unique global ACR data partnership with VIDA, a subsidiary of iSense, which is expected to accelerate our U.S. and international growth over the second half of 2022 and beyond. in key markets such as Canada, Australia, the UK, and Germany. iSense is currently one of the largest OEMs in terms of global market share and is ambitious to continue significantly expanding its reach, sell, and customer recognition over the next several years in the U.S. and internationally. VIDA is the operating system for major OEMs, including iSense, Toshiba, and others, and we intend to use this meaningful ACR data partnership for segmentation, measurement, and targeting purposes. The availability of ACR data on the open internet give advertisers choice in their media mix, so they can leverage the data to run holistic, strategic campaigns that reach consumers with everyday viewing content. While we have been leveraging ACR data for several years, our partnership with VIDA is exclusive and broad-based across data and media, and enable us to offer unique and desirable capabilities, data sets, and advertising opportunities for our customers. In edtech, it's rare to have access to ACR data outside of the walled gardens that is accessible on the open Internet. This data will be available in our TV intelligence solution, which already reached 44 million U.S. households and will enable us to offer customers differentiated campaign strategies and optimization, as well as exclusive blended and customized SADA sets that support their marketing KPIs. We believe VIDA currently reaches approximately 20 million smart TVs worldwide, and we believe this reach will grow substantially in the coming years. VIDA expands its relationship with Remo beyond data in general. Selecting Unruly as its strategic SSP while also adopting Spirit to enhance control over its CTV and delivery. Brands and agencies will now have to leverage Unruly to advertise on the exclusive content of TVs for which VIDA serves as the operating system. Tremor is also specifically poised to capitalize on positive industry growth catalysts expected in the second half of the year, such as the Soccer World Cup and the US midterm election cycle. iSense is an official sponsor of the FIFA World Cup, which is set to take place in Qatar during November and December. As an official sponsor, iSense is expected to achieve substantial increase in global awareness during this event. We believe this will expand the benefits of our relationship with iSense TV operating system, VIDA. As iSense and Vida continue to pursue additional future sponsorship and exclusive content opportunities, we believe Tremor will be a major beneficiary of this advertising monetization, and we expect that customers will increasingly seek to advertise on this unique and exclusive content and leverage this differentiated data. We also believe we will see industry tailwinds from the U.S. midterm election cycle, which generally brings heightened level of video ad spending from candidates during the second half of the year so far in 2022 we expanded upon our business win momentum from 2021. in february we announced new partnerships that expand the reach of our data-driven tv intelligence solution to 44 million u.s households tv intelligence sets ramo apart by providing global advertisers with access to blended TV data for targeting and measurement. To make it easier for marketeers to run TV-like campaigns with precision on CTV and off-screen video. Activating and blended data sets across the open internet represent an incredibly important mechanism for advertisers to have the freedom to curate a media mix that meets their campaign's objectives. We expect to continue to increase this scale and reach through various partnerships, including our exclusive global ACR data partnership with VIDA. We also secure the partnership with Comscore in early April, which better enhance installation against changes in the data privacy regulation for our customers. The agreement makes available Comscore cookie-free predictive audience for activation across our platform, and allows Tremor customers to leverage cookie-free pre-bid audience targeting to reach granular behavioral audience based on video-level contextual signals within CTV. Our SSP unruly added 87 new supply partners during Q1 2022, including 36 in the US across critical growth verticals in sport, news, entertainment, and lifestyle, including OTP apps from leading broadcast and multi-channel video programming distributors' businesses. We also continue to generate strong adoption of our self-service platform for publishers, Unruly CTRL, which experienced a 128% increase in PMP spent during Q1 2022 compared to Q1 2021. Additionally, Tremor Video added over 75 new advertisers' logo during Q1 2022 across critical growth verticals in travel, CPG, and healthcare, which reflected one of the most significant quarterly logo increase in company history. Truly, our in-house creative studio continues to impress, garnering recognition and award across major platforms such as Digiday, Business Insider, The Drum, and Media Post, and serve as a key differentiator for Tremor. It enhances customer engagement in a meaningful manner, creates a stickier relationship, and adds revenues and profitability to each campaign it touches. Truly experienced a 21% year-over-year increase in creative requests during Q1 2022, and we were particularly excited to see international spend of Truly Creative products grew 225% year-over-year compared to Q1 2021. Truly custom QR code for CTV ads remains its most popular feature in Q1 and was included on 34% of all creative campaigns. Additionally, in Q1 2022 alone, Truly executed 20% more custom data-driven video campaigns than it did in all 2021. And it's continued to see strength so far in Q2. We are also extremely proud for truly to have recently been awarded the Digiday 2022 Content Marketing Award for best use of data for a campaign produced for Pure Michigan, the state of Michigan tourism brand. Finally, on our last quarterly hearing call, we were pleased to announce a $75 million share buyback program. The buyback program launched on March 1, And during the first quarter, we repurchased 1,684,510 ordinary shares at the average price of 572.89 pence for a total Q1 repurchase spend of approximately 9.7 million pounds, or $12.7 million. The strength of our balance sheet, as well as our profitability and strong cash generating abilities enable us to continue buying back shares at what we believe are discounted levels. Should we not uncover acquisition opportunities that benefit Tremor and its investors in the near to intermediate term, we would consider extending and increasing the buyback program and also evaluate additional opportunities to return value to shareholders. It is now my pleasure to turn the call over to Sagi to review our financial results.