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spk04: 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.
spk00: 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.
spk01: 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.
spk02: Thank you, Ofer. We were excited to see another record third quarter of revenue and profitability and strong business momentum and are pleased to see similar trends as we progress through the second quarter. Today, I will review highlights of our Q1 2022 performance, as well as some of the key financial and operational drivers for the quarter. Tremor International achieved an outstanding quarter in Q1, with revenue and adjusted EBITDA propelled by continued impressive organic revenue growth and our efficient operating model. Q1 2022 net revenue increased 13% to $71 million compared to $63 million in Q1 2021, all of which was driven through strong organic growth. This growth was particularly impressive given the fact that Q1 tends to be the seasonally weakest quarter for ETEC, and amid well-known macro pressure associated with supply chain constraints, inflation, and the ongoing war in Ukraine. CTV spent on our platform grew 21% in Q1 2022 versus Q1 2021, and we are well-positioned to continue this growth as more business is increasingly being transacted through programmatic platforms, and we expect performance budgets to continue to move towards CTV and programmatic in the future. During the same period, our video net revenue grew 9% year-over-year. We also continue to generate very strong adjusted EBITDA and margin while investing in the critical areas of our business that can drive future growth. For Q1 2022, we generated adjusted EBITDA of $33.6 million, which reflected 22% growth from Q1 2021. an adjusted EBITDA margin of 42% out of reported revenue and 47% out of net revenue. We believe our end-to-end platform gives us a competitive advantage versus point solutions. We have developed a highly profitable business model with high efficiency around operating costs, leading to operating leverage and economies of scale. Tremor can achieve significant profitability due to our ability to split costs across both sides of our end-to-end platform while maximizing revenue opportunities. We also achieve cost efficiency as we own and operate our global server infrastructure, which results in significantly lower costs than if we were to operate exclusively on third-party cloud services. As mentioned previously, we believe we have best-in-class industry margins and operational profitability, and Q1 2022 generated an adjusted EBITDA margin of 47% out of net revenue. Turning to our cash flow, we generated net cash from operating activities of $16.1 million for Q1 2022. As of March 31st, we had $370.8 million cash and cash equivalents, with no debt. We also experienced 100% free cash flow conversion during the quarter. Non-IFRS diluted earnings per ordinary share is 15 cents for Q1 2022 versus 12 cents in Q1 2021, an increase of 20% year over year. Finally, I will now turn to our outlook. For the second quarter of 2022, we expect net revenue to be in the range of 75% to $80 million and Q2 2022 adjusted EBITDA of approximately $40 million. We also expect our Q2 2022 adjusted EBITDA margin as a percentage of contribution X-PAC to be approximately 50%. Particularly during periods of economic uncertainty, we find prudent investors focus more on companies that can achieve significant and consistent profitability to remain well capitalized and able to take advantage of future growth opportunities. Tremor's efficient end-to-end operating model enables strong fundamentals, and we will continue to maintain an emphasis on generating robust profitability. This gives us confidence that we can remain able to meet our adjusted EBITDA targets and generate best-in-class industry adjusted EBITDA margins in the future, even amid a challenging growth environment. This guidance underscores that our model, focused on CTV, is helping us maintain growth and continue excellent profitability. The forecast also factors in current macro-related headwinds, such as inflation, supply chain constraints, rising interest rates, the ongoing Ukraine war, and potential recessionary economic indicators. We believe our growth profile and efficient and durable end-to-end model enables continued strong profitability, investments for growth, significant operating leverage, and a healthy balance sheet, while positioning Tremor well to continue taking advantage of a rapidly growing digital advertising and CTV market, both in the U.S. and internationally. With my remarks completed, I'll turn the call back to Ofer.
spk01: Thank you, Sagi. Tremor was able to achieve great success during the first quarter, which we believe positions us well for the industry and Tremor-specific catalysts expected in the second half of 2022. We continue to see evidence that our data-driven, CTV and video-focused end-to-end technology platform reflects the best model for advertisers, media partners, Tremor, and its shareholders. Our ability to generate significant cash and profitability fuels our ability to invest in technology, sales, and marketing to grow our business organically, continue to evaluate M&A opportunities at rewarding valuation, and continue buying back shares. Our conviction in the model is stronger than ever for these reasons, and because we are seeing others in the industry attempt to replicate a model that we have been capitalizing for years. We also continue to fulfill our promise to enhance and expand our CTV data and video capabilities, which now accounts for approximately 80% of our net revenue and 93% of our programmatic net revenues. We are excited to be in a position to start monetizing our Spiral Ed acquisition, as well as our unique global ACR data partnership and media relationship with VIDA. Over the seasonally stronger second half of 2022 for EdTech, which we expect to be boosted by the U.S. midterm election cycle and the soccer World Cup, which iSense is an official sponsor of. We believe we have built a strong technology and resilient end-to-end business model to serve our customers' holistic needs and that we are in the right industry at the right time with strong global partners. I have now been in the edtech industry for 25 years. and can honestly say that I'm truly excited for what the future can bring for Tremor International. Operator, we will now open the call for investors' questions.
spk04: Thank you. We will now begin the question and answer session. If you do have a question, press 0 and 1 on your touch-tone phone. If you wish to be removed from the queue, that's 0 and 2. If you're using a headset, you may need to pick up the handset first before pressing the numbers. Once again, if you do have a question, press 01 on your touchtone phone. And please stand by. All right. Our first question is from Matt Swanson from RBC Capital Markets.
spk06: All right. Thank you guys so much for taking my questions. So, Guy, maybe picking up kind of where you left off, the durability of leverage in the model really shined in the quarter, being able to beat the adjusted EBITDA guidance despite those top-line headwinds. And it seems like there's a similar dynamic in guidance for Q2. Could you talk a little bit more, though, about the back half of the year? Specifically, are there going to be incremental investments needed to be made around the SPIRAD to drive that second-half revenue? Or are those kind of the investments we're seeing you make right now?
spk02: Thanks, Matt, for the question. Yes, I think that our end-to-end business model is what's allowing us to have this magnificent profitability margin. As we said, I think in Q4 earnings, we are investing more in our R&D department, product, and sales and marketing, of course, to keep the organic growth, although the very challenging macro environment. Again, per your question, I think that Spirit is already fully integrated into Unruly, and it became the ad server of Vida slash iSense. So I think all the things you mentioned and Ofer went will, of course, enable us to have an amazing H2. Of course, everything is according to what the macro will throw at us.
spk06: Thank you. And then, Ofer, the one positive thing, maybe from a Q1 sentiment standpoint, is there's really a lot of good news around CTB, especially that Netflix news. So thinking about this a couple of different ways, One, could you maybe talk about what the impact on the overall CTV environment is from this amount of inventory potentially being added to the market between Netflix and Disney, HBO Max and Apple? And then kind of more from a sentiment standpoint, what you think it says that the largest subscription streaming service feels the need to add ad support and maybe what that says about the long-term health of Avon?
spk01: So sure, thank you, Matt, for the question. So first of all, in previous conversation, we spoke about it and I said that basically when you look at this market of CTV, it will follow what's happening in display or desktop and after that in mobile, meaning the people who are willing to pay with their time in order to see more ads, in order to get subscriptions or content for less or for free. And this will extend also, of course, to CTV and we see this phenomena really happening now also with this declaration and conversation about moving this big SBIRD into become partly ABIRD. And I think that it's a good statement because it shows for us that the addressable market for us is growing. And I think that with our set of products that is really the first line in products of targeting, the first line of content targeting and targeting with ACR and our TV intelligence product and TV library and so on, I think that it will give much more opportunities for advertisers to buy more media, taking into account that all this effort will open their market also to the open web, basically. And I think that the amount of demand that is coming for CTVs It's really great, and it can serve all these needs from all these companies that are basically joining this model. And I think that it will just increase the size of our business and will give us more opportunities in the market. So we are really excited about it, and we feel that it even came before we thought that it will come because we felt that it will maybe happen in the next two or three years, and now I think that it will happen probably faster.
spk06: All right. Thank you.
spk01: Thanks. And the last point is that it will probably enhance the movement from linear to CTV, which is also welcome for us because it basically serves our purpose and interest that more budgets will move to digital.
spk04: And we'll go to our next question. This is from Mark Kelly from Stiefel.
spk08: Great. Good morning. Thanks very much. I want to get your thoughts on just with the upfronts this week. Curious how much visibility you tend to get, you know, for the end of this year and the start of next year after this week is over or perhaps during the week. And second, just on CTV, obviously you have some healthy growth in the first quarter. It did decelerate a bit from the fourth quarter. Just would love to get the moving pieces as to what caused the deceleration. Thank you.
spk01: Mark, just to ask, can you sharpen the question about what is the acceleration that you're asking about CTV? What product or what is basically bringing this upside in the CTV front?
spk08: No, I guess in Q1, the CTV growth was 21%, and in Q4, it was in the high 40s. Just curious to get the delta. Still healthy growth, no matter how you slice it, but just would love to get a sense for why the deceleration from the Q4 exit rate?
spk01: Okay, so first of all, CTD is our main focus already for a long time, and we, most of, as also indicated by Sagi, a lot of our, basically, product development and R&D efforts are on the front of the CTD, because we believe that this is the future, and it's coming along with other things that we are basically developing all the time, which is And I think that when you look at that, I think that we build like a very strong portfolio of products that basically serve our clients. And today when they look for CTV for targeting and so on, they're coming to us. We have to remember that also the ACR data that will basically be available in a very meaningful manner from the second half of this year will basically support us and will differentiate us in the market because when you look at that in the open web, There is not anyone else that basically got this amount and this size of a database, the data of ACR. The potential, yesterday, occasionally, there was a Comscore article that was talking about that in the U.S., there is 10% already of the CTV world that belongs to using iCents and Toshiba. Toshiba is part of iCents, basically, and this is our reachable market from ACR data now. from next, in a couple of months from now, and I think that will accelerate even more the, it will accelerate even more the potential and the growth of our CTV in the future because we have like a very interesting and unique offering in the market, which is ACL data, which is not part of the world garden. Regarding the upfront in the CTV, we, We feel the growth and we see the potential and we see booking, as we said, that are coming in in the next thing, already this quarter and the coming quarter. So we feel confident that CTV is something that is growing. And there is a strange situation now that from one side we feel that booking and T&P setting and so on is growing, but there is a movement in the market that basically we're taking into account when we are looking at the quarter, but we still believe that in the overall of the year, we will be able to basically deliver growth that we expected in the beginning of the year.
spk08: All right. Thank you very much.
spk04: Our next question is from Michael Hill from FinCap.
spk03: Great. Thank you. Could I just check if there's any detail that you can give on the percent of your ad spend that's from autos and also if there's any sectors that say over 15 or 20% of the ad spend or is it really quite a diverse mix of sectors that you have on the platform?
spk01: Again, I couldn't understand what you said.
spk02: I will take that question. Okay. Michael, hey, thanks for the question. I think that... Out of CPG, that is more than 10%. All of our verticals are less than that, so we are quite diversified on that front. Automotive, of course, because of the supply chain constraint, is a little bit lower than it was in the past. I think that today it's something around 3%. In the past, it was like 5% to 6%. And other than that, of course, we are seeing a growing trend within travel and hospitality like post-pandemic environment. So I think that I answered your question.
spk03: Yeah, that's brilliant. Thanks very much.
spk02: Thank you.
spk04: Our next question is from Andrew from Raymond James.
spk07: Hi, thanks for taking my questions. I wanted to dig in a little bit on the programmatic versus non-programmatic revenue breakout. This was kind of the third consecutive quarter in a row of like 40% plus growth in the performance side of the business. Was wondering any of the drivers behind that, and does that change your thinking in the strategic importance of that side of the business? And then second, on the M&A outlook, with valuations coming in, I know that you spoke about it briefly on the prepared remarks earlier, But has the coming in evaluations changed your thinking around what's available from an M&A perspective and what could be on the shopping list? Thank you.
spk01: I will start with an M&A. We are always looking to grow in both ways organically and also through an M&A. And we have the cash and we have the capabilities of doing that, not just cash, but also the knowledge and the experience of how to basically choose our companies that we want to acquire, and more importantly, how we integrate them fully into our business. Just to indicate that, for example, last year in October, we acquired Spirit, and it's already fully integrated in the end of the first quarter into Unruly. So of course, I think that the market is moving to our direction, basically, because last year, everybody looked at the public company's evaluations and asked for even more on the private side. And I think that now things are moving back to something more reasonable that will make sense for us to make an acquisition and to bring value to our shareholders from that. And we are looking and examining these opportunities all the time in parallel to the growth that we are generating on the organic growth. On the second question, The second question that you asked us about performance. So performance is growing because I think that the people in our performance team are doing a great job around that and they are growing basically the offerings and the business with the partners that we bring along and so on. And I think that we said it, I said it, and we said it in the past, but I feel that in the future also CTV will We feel that there will be more and more connectivity to performance, and it will serve us for that. I think that our knowledge, our basically the ability to bring also DNA from performance behavior and marketing into the CTB can help us to open new channels that we will be able to benefit together with our partners around that, and this is something that we are putting attention in in the next 12 to 18 months.
spk03: Thank you.
spk02: Yes, and just to add to what Ofer said, I think we have clients that are using both channels, i.e. they're using the programmatic platform and the performance channel, and sometimes they're putting their focus on the performance side, and some quarters are putting their effort on the programmatic front. So it's nourishing both sides of the one arm that we have, And it's clearly helping us because we are bringing clients on one end and then we are executing sometimes on the other end and vice versa.
spk01: Hope that we answered your question.
spk07: Yes, thank you.
spk04: And our next question is from Andrew Boone from JMP Securities.
spk05: Hi, good morning. Thanks for taking my questions. The press release talked about an acceleration in the back half of 22, understood the contribution from political as well as the World Cup. But is there anything you can help us to better understand those comments? And then secondly, as we think about just capital allocation, this may just kind of extend to Andrew's last question. But as you think about capital allocation and the $75 million buyback, it looks like you guys executed $10 million in the quarter. You know, shares are trading at kind of three times EBITDA. And just given the market downturn, how do you guys thinking about capital allocation in terms of M&A versus that? And then what's the possibility to accelerate the buyback and do something more meaningful, just getting more shares of trading? Thank you so much.
spk01: So I will answer the question about M&A. I will give like more context. I agree with you that we are, when you look at the peers and so on, and I think that we have, We have cash and we have the ability to acquire and it makes sense. We are trying to bring value to our shareholders in different manners, like share buyback that Sagi can elaborate more about also extending and accelerating the reach around that. Basically, it's managed by PowerMOMAD. And when you are in a block deal, you cannot basically change it. But when we'll have the chance to do that, we can consider that, of course. Regarding the M&A, we just mentioned it, and I will mention it again. I think that we are in a great position now because when you look at the market, I think that with our cash and our cash generation that we keep bringing in, even in challenging periods of time or basically lower, like softer quarters, like usually Q1 is softer, but we still generate this amount of EBITDA and cash. I think it's giving us the ability to do these moves and to basically accelerate or grow the buyback and on parallel to that, to do an M&A deal that can be meaningful for the company. And this is what we are looking to do and searching in the market for the right target in order to to get into into our company basically and to grow also through acquisition and not just organically last year basically we grow 60 64 it's lost in transition in translation basically because we gave our message on february 24 when when russia basically invaded ukraine so it's like there was a lot of noise around that and the market changed after that and so on so But we grew 64% last year organically. And this year, when we look at that, we keep growing organically, even though we made a very big jump last year. And we feel that now is the right time also to do an M&A because the company is ready for that. And I think that, again, we have the means, the knowledge, and the experience to make a good acquisition. And we are looking for the right opportunity in order to do this. So again, I want to elaborate more on the buyback.
spk02: Yeah, so per the question, we did, you know, $12.7 million of repurchase only through Merge because we started the program on first of Merge. So till today, we almost triple it. Of course, when looking, you know, outside and looking on the valuation of Tremor, it may make economically sense to keep buying our shares. But if we are thinking about the long-term value to our shareholders, I think as Ofer mentioned, and as you asked, there is or there are a lot of opportunities out there in a lower valuation than we saw before. And in order to scale the business and to enjoy all the synergies and to grow our business, I think that an M&A makes sense even at current tremor valuation. But of course, if we will not manage to conclude an M&A, we may enhance or increase the repurchase plan.
spk04: I'd now like to turn the call back over to Ofer Druker for closing remarks.
spk01: Thank you, everyone. Thank you for participation, and thank you for your questions. I think that we demonstrate again that the end-to-end solution that we built, the platform that we built, is a very strong one. It's generating great results from return of investment to our shareholders, from growth and from profitability. And this profitability is extremely important to this period of time of uncertainty when you look at the market. And we are able to keep growing our EBITDA, keep growing our profitability and cash flow. I think that this is very important in this market condition. And it will enable us to do much more things in the near future in order to grow our position and in the market and to keep our leadership position in these important steps of CTV data and CTV data and video. And we believe that all the changes that we're mentioning on the call of movement of people from S-vote to A-vote is basically enhancing our ability to be a bigger player in the market with the video data and CTV. And this is why we are here. And we are looking at the second half of the year with anticipation because we are about to launch our partnership with VIDA, which is very meaningful for us. We have to look at that as one of the biggest OEM companies that basically provide us exclusivity on all the ACR data that enable targeting and measurement. And we are talking here about a company that already now is about 10% of the U.S. OEMs. And with their plans and their growth paths, and also with the international markets that they are very active in. We believe that we can, it will help us to grow our business even more and to be a dominant player in the CTV business and to provide a lot of capabilities to the open web as we talk about it. Because when you look at that, as I mentioned, until now, the ACR data is basically the property of small group of companies that are the world garden. And now, basically with us, we will be able to open it to to more partners, to more media partners, and to enable more people to enjoy from this data, for targeting and measurement from the demand side, but also from the supply side. So we are very excited on the position that we are in. I feel that we are in a very good spot from a strategic point of view, and we are looking ahead to the future to grow our success. So thank you, everyone.
spk04: Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. and you may now disconnect.
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