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spk01: Welcome to Tremor International's second quarter and six months ending June 30th, 2022 conference call. At this time, 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 hand over to Billy Eckert, Senior Director of Investor Relations. For introductions and the reading of the Safe Harbor Statement, please go ahead.
spk07: Thank you, Operator. Good morning, everyone, and welcome to Tremor International's second quarter and six-month end of June 30th, 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 and reliance on forward-looking statements. These statements include, without limitation, statements and projections about our future anticipated financial results, including discussions about our revenue, margin, expenses, and guidance for full year 2022 and full year 2023 and future business, anticipated benefits of TREMOR's current and future potential strategic transactions, product launches, and commercial partnerships, Management's belief that Tremor is well-positioned to benefit from future anticipated industry growth trends and company-specific catalysts, 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, the potential negative impact of inflationary pressures, rising interest rates, geopolitical and macroeconomic uncertainties, recession concerns, and widespread global supply chain issues, 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 most recent annual report on Form 20F. 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, CEO of Tremor International. Ofer, please go ahead.
spk06: Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview of our results and strategy, followed by our Chief Financial Officer, Sagi Niri, who will review our Q2 and H1 2022 financials. We will then open the call up for questions. During the second quarter, Tremor experienced increased customer seduction and delivered record profitability, alongside achieving an impressive industry-leading adjusted EBITDA margins of 55%, as a percentage of net revenues. Our durable data-driven end-to-end technology and business platform has continued to drive strong and resilient results, fueling our ability to execute on our long-term strategic vision. Looking at the market environment, the advertising industry faced several global headwinds in Q2 that we are continuing to see drive microeconomics uncertainty and recession concerns in Q3, which could remain for the duration of the year. Challenges associated with inflation, rising interest rates, supply chain constraints in certain sectors, such as automotive, due to continued cheap shortages, and the ongoing war in Ukraine have been well publicized and are factored into our planning for the remainder of 2022. On a positive note, however, we are seeing additional signs of recovery in sectors that have been historically strong for trend, such as entertainment and CPG, and continue to believe we will see benefits from the FIFA World Cup and U.S. midterm elections later this year. We remain confident that our highly diversified customers and revenue base, coupled with our robust operating model, position us well to successfully navigate these market challenges while continuing to invest to future scale, differentiate, enhance, and expand our platforms. Since the beginning of 2022, we achieved several important milestones to drive long-term value for our customers and shareholders and reinforce our position in the market over the coming years. First, we increased our CTV and video reach and significantly strengthened and expanded our platform capabilities through several initiatives, including the completed integration of our CTV ad server stream. Through our strategic investment in video, we further strengthened our CTV assets by extending our exclusive global ACR data agreements while gaining head monetization exclusivity in key markets such as the U.S., U.K., Canada, and Australia. In addition to deepening our partnership through an investment in what we believe to be a rapidly growing global operating system, we also build strong relationships with ISA, with our parent companies. Our pre-existing and recently enhanced strength is within CTV. and strong strategic partnership with Vida and iSense enable powerful additional capabilities and high-quality content opportunities, particularly around exclusive content for our customers. For example, iSense is an official sponsor of this year's FIFA World Cup, and we'll also sponsor an exclusive daily show throughout the tournament. It was also recently announced that FIFA Plus, FIFA's digital app, we launched on iSense and Toshiba Vita-enabled smart TVs. This is the first major example of how having an exclusive data, ad monetization, and CTV media partnership with an operating system and strong relationship with the major global OEMs can benefit Tremel as brand and agencies we look to leverage on Woolley to advertise on this highly desirable sports content. Furthermore, we took steps to dramatically scale the business and further diversify our offering and ability to serve customers through our pending acquisition of Amobi. The acquisition is expected to significantly grow our global market share, extend our self-service, data, technology, and performance capabilities, and add critical new linear PV capabilities. These new linear PV capabilities allow us to better serve broadcasters, which needs you to be important as we continue to see a convergence within the linear and digital worlds. The acquisition will also enable us to offer our specialized CTV product, such as TV intelligence across a significantly wider customer base, creating additional revenue opportunities. Following the anticipated closing and integration of the proposed acquisition of Amobi, we expect to generate a contribution aspect of approximately $500 million, and adjusted EBITDA of approximately $200 billion on a combined pro forma basis for the full year of 2022. We believe our proven track record of successfully and efficiently integrating acquisitions will enable us to smoothly integrate our model and create a strong combined business. Finally, we were also able to repurchase under our previously announced share repurchase program a sizable number of shares at attractive prices. Our ability to achieve these milestones while generating strong results in a challenging operating environment has solidified the conviction that we have in our long-term prospects and stems directly from the benefits derived from operating in Zooms. Our model provides several advantages, including simplicity for customers, beneficial positioning for changes in data privacy regulation, better installation against challenging market conditions, and the ability to maximize revenue streams and profitability. Our ability to service across all screens, regardless of service level requirements, enable us to maximize revenues opportunities and build deep relationships, stickiness, and trust with our customers. Our operating model allows us to generate extremely attractive margins and profits while enabling customers to achieve data and return benefits particularly when they leverage our platform into it. Our platform also contains a significant and growing footprint of first- and third-party data, with minimal exposure to cookies, and our BFD and SSP share the same audience graph to eliminate data loss during cookie sync, which better ensure we remain well-insulated against privacy changes. Our decision to intentionally build and scale end-to-end platform was the correct one, as we continue to see competitors attempt to replicate elements of our well-established model. As our competitors of newly operating end-to-end platforms focus on learning and nuances of engaging with both sides of the ecosystem, Tremor has well-established expertise, as well as relationships with brands, agencies, media partners, and data providers, and is focusing on its next leg of growth and differentiations. On July 26, we entered into a definitive agreement to acquire Mobi for a total consideration of $239 million, subject to certain customer adjustments. We intend to satisfy the purchase price using a combination of existing cash resources and new debt facilities we expect to obtain prior to closing the transaction. The acquisition, which we expect to close later in the third quarter, is expected to significantly increase our global market share and create one of the most compelling in-scale CPG and video end-to-end platform in the market. The acquisition also significantly enhanced our technology and business footprint across self-service, DSP, performance, CPV, and data, while adding new insight tools and linear TV capabilities. The transaction also greatly expands Remo U.S. and international talent footprints, market presence, and customer switch. Amobi's 500-plus global customers include Fortune 500 brands and multinational aid agencies, and the company maintains strong relationships with some of the world's leading media partners. For the 12 months ended in June 30, 2022, Amobi generated preliminary unaudited contribution assets of approximately $150 million, which will therefore meaningful impact on Tremor financial scale. We also expect to benefit post-integration from significant operating cost synergies. We initially expect to achieve annual run-rate operating cost synergies of approximately $50 million on a combined pro forma basis post-closing and following the completion of the integration. Following the anticipated closing and integration of the proposed acquisition of Amobi, we expect to generate contribution excess of approximately $500 million and adjusted EBITDA of approximately $200 million for full year 2023 on a combined performer basis. Amobi represents our largest acquisition to date and delivered on our commitment to execute meaningful and strategic M&A in a market where valuations have decreased. We remain confident that we have the expertise necessary to quickly integrate the company into our business and generate significant benefits for our customers and shareholders. In June, we also deepened our relationship with DITA through a strategic agreement to invest $25 million in DITA. The investment offered several key advantages to Tremont. The investment extended for multiple years the exclusive agreement to share VIDAS global ACL data for global measurement and targeting purposes across our end-to-end platform. It also allows us to offer additional data sets and advertising opportunities to our customers. As VIDAS leveraged the investment to support its plan to increase distribution across additional OEMs, we also expect the data set to become even more desirable and for Tremor to benefit further through this increased reach as well. Additionally, after initially being designated as VIDA's preferred global monetization platform in January, VIDA has granted Anwuli and Spirit exclusivity for monetization in the U.S., U.K., Canada, and Australia. This unique combination of exclusivity to share global ACR data and the exclusive ability to enable ad monetization in several key markets could have powerful future growth implications for Trevor. for which VITA serves as the operating system, is an official sponsor of the FIFA World Cup, set to take place in Qatar in November and December this year. In addition to expecting iSense to achieve a substantial increase in global awareness during the event, FIFA Plus will also launch on iSense VITA-enabled devices. iSense is also the lead sponsor for an exclusive daily show throughout the World Cup. featuring highlights for the merchants, style guests, and live reactions. As Vida's exclusive monetization platform in key markets, brands, and agencies, we look to utilize and willing to advertise on this desirable and exclusive content, which provides strong potential revenues, benefits, and leverage for Tremor. As iSense and Vida pursue future sports sponsorships and exclusive content opportunities, Tremor is well-positioned to significantly benefits from its recent investments. Outside of our company-specific catalyst, Tremor remains well-positioned to capitalize on expected industry tailwinds as well. CTV and video continue to grow at the fastest rates within digital advertising, and a vast majority of our platform's contribution extract is derived from this format. Additionally, we continue to expect meaningful growth within Evers over the next several years. as evidenced by several streaming services currently launching head-supported channels and tiers, and others showing interest to do so. This further reinforced the viability and long-term health of the CTV market, and we believe our strong footholds in the fast-growing sub-segment of digital advertising position us well for future growth and market share gains. We believe the fourth quarter will be further enhanced by the CIFI World Cup and that Tremor will experience added benefit through Iceland's efficient tournament sponsorship. We also expect industry tailwinds later this year from the U.S. midterm election circuit, which typically brings heightened levels of CTD and video ad spending from candidates leading into the election. Since our last Earning Call, we have continued to generate further business momentum alongside increased industry recognition. Our SST and Woolley added 63 new supply partners during Q2 2022, including 35 in the U.S., and 116 new supply partners, including 71 in the U.S. during H1 2022. Across critical growth verticals in sports, youth, entertainment, and lifestyles, including OGP apps from leading broadcast businesses. We also continue to generate strong adoption within our self-service platform for publishers, Unruly Control, which experienced a 560% increase in PAP spend during Q2 2022 versus Q2 2021, and 750% increase in H1 2022 versus H1 2021. Additionally, Tremor Video added 60 new advertisers signed during Q2 2022, and 135 new advertisers signed during H1 2022 across Travel, CPG, and retail verticals as well as others. Truly, our in-house creative studio continues to impress and create over 13 times more unique video ads in Q2 2022 than in Q2 2021, and over 15 times more unique video ads in H1 2022 than in H1 2021. We are continuing to see strong customer adoption across our data-driven creative products, robust international growth, and significant increase in demand for our creative services across travel and retail verticals. Finally, during the second quarter of 2022, we repurchased 5,716,960 ordinary shares at an average price of 452.6 pence for a total Q2 repurchase investment of approximately 25.9 million pounds, or $32.5 million. From March 1, 2022, when we launched the repurchase program through June 30, 2022, we repurchased 7,401,470 ordinary shares at an average price of 479.98 pence. Reflecting a total investment of approximately 35.6 million pounds, or $45.3 million, our ability to have repurchased shares at what we believe are discounted levels to drive long-term shareholders' value, in addition to our other ongoing growth initiatives, is a statement to our continuous balance sheet strengths and cash-generating abilities. It is now my pleasure to turn the call to Sagi to review the financial results.
spk05: Thank you, Ofer. We were excited to see another record second quarter in H1 of profitability, expanded margin, resilient revenue, and excellent business momentum. Today, I will review highlights of our Q2 and H1 2022 performance, as well as some of key financial and operational drivers for the quarter and first half. For the three months ended June 30, 2022, we generated contribution extract of $70.8 million compared to $73.7 million in Q2 2021. Alongside record Q2 adjusted EBITDA of $39.1 million compared to $37.3 million in Q2 2021, which reflected 5% year-over-year growth. This performance was particularly impressive given the well-known macro pressure that challenged advertisers' spending during the quarter and first half. We believe CTV and video remain core future growth drivers for Tremor, and CTV's spend on our platform was $64.7 million during Q2 2022, compared to $49.8 million during Q2 2021, which represented a record for Q2 and strong year-over-year growth of 30%. We believe we are well positioned to achieve future growth in this segment as more business is increasingly being transacted through programmatic platforms as we expect performance budgets to continue to move towards CCV and programmatic in the future. We also believe the pending acquisition of Hamobi, the agreement to strategically invest in Vida, and the recent integration of Spirit will help accelerate our growth and footprint within CTV. During Q2 2022, and for Age 1 2022 as well, video, including CTV, continued to reflect an overwhelming majority of our total contribution exact at approximately 80%. We also generated a record Q2 adjusted EBITDA margin of 52% on a reported revenue basis and 55% on a net revenue basis, which we believe further expanded our margin lead within the industry. Our continued ability to achieve such strong profitability highlights the durability, efficiency, and sustainability of our end-to-end models. We were able to generate this expanded margin while continuing to invest in critical initiatives to drive future growth, pay, and depreciation within our platform. For the six months ended June 30, 2022, we generated contribution extract of $141.8 million compared to $136.7 million over the same prior year period. Over the same period, CTV spend was $110.9 million compared to $88 million during Age 1 2021, which reflected an Age 1 record and a 26% year-over-year increase. During Age 1 2022, CTV spend reflected 36% of total spend and 41% of programmatic spend. We also generated record adjusted EBITDA of $72.7 million during Age 1 2022, which represented 12% growth from the $64.8 million adjusted EBITDA we generated in the same prior year period. We generated a record Age 1 adjusted EBITDA margin of 46% on a reported revenue basis and 51% on a net revenue basis over the first six months of 2022. which we believe represented best-in-class across ethics. Turning to our cash flow, we generated net cash from operating activities of $30.4 million for Q2 2022 versus $57.5 million in Q2 2021. For the six months ended June 30, 2022, we generated net cash from operating activities of $46.5 million versus $76.8 million in the six months ended June 30, 2021. As of June 30, we had $361.4 million cash and cash equivalent with no debt. However, we expect to obtain new 150 million debt facilities comprised of a secure term loan and a revolving credit facility, to partially fund our acquisition of Amobi and to support future strategic investment and initiatives alongside our existing surplus cash resources. We also experienced 98% free cash flow conversion during Q2 2022 and 99% free cash flow conversion for H1 2022. Non-IFRS diluted earnings per ordinary share was $0.16 for Q2 2022 versus $0.23 in Q2 2021, and $0.31 for the six months ended June 30, 2022 versus $0.35 for the six months ended June 30, 2021. Finally, I'll turn now to our outlook. For full year 2022, we expect contribution extracts of approximately $290 million, and full-year 2022 adjusted EBITDA of approximately $155 million, excluding any impact from our pending acquisition of Amobi, which we expect to close later in Q3. This guidance considers challenging market conditions that limited advertiser activity in Q2, including inflationary pressures, rising interest rates, geopolitical and macroeconomics uncertainty, recession concerns, and global supply chain issues, with the expectation that these challenges could continue to impact the advertising demand environment for the remainder of 2022 and beyond. For Q3, we feel various macroeconomics headwinds will continue to impact our contribution extracts. However, we believe our recent achievements such as our pending acquisition of Amobi and our proposed investment in Vida, which we expect to achieve further benefits around the upcoming FIFA World Cup, will begin to positively impact the business and our results during the fourth quarter and beyond. Tremor's efficient end-to-end operating model enables strong fundamentals, and our continued focus and emphasis on generating strong profitability gives us confidence that we can continue to generate high profitability, and adjusted EBITDA margin for the remainder of the year, even amid the challenge growth environment. We believe this critical emphasis on generating strong profitability is even more important in the current market environment as it drives our ability to continue innovating and growing the business organically while having the necessary capital to evaluate value-added future potential acquisition and investment opportunities. Looking ahead, we will also be working hard to quickly integrate Amobi upon the close of the acquisition to enhance and expand our platform's capabilities for customers and expand our reach and scale while seeking to achieve meaningful operating cost synergies for Tremor and its shareholders. We initially expect to achieve annual run-rate operating cost synergies of approximately $50 million on a combined pro forma basis post-closing and following completion of the integration. Following the anticipated closing and integration of the proposed acquisition of Amobi, we expect to generate contribution extract of approximately $500 million and adjusted EBITDA of approximately $200 million on a combined pro forma basis for full year 2023. We believe the strength and efficiency of our model, the recent investment we've made to enhance, depreciate, and scale the business, Our focus on CTV video and data and our continued and consistent ability to generate high levels of cash and profitability positions us well to both take advantage of future growth catalysts and succeed in current market conditions. With my remark completed, I'll turn the call back to Ofer.
spk06: Thank you, Sagi. Our team has done an exceptional job managing the business through current conditions while continuing to execute on our long-term strategic vision. Since the beginning of 2022, we took several important steps to enhance and expand the reach and capabilities of our platform to position ourselves strongly for the future. Our end-to-end model continues to allow us to best serve our customers' holistic needs. It has also provided the necessary capital to drive significant scale in our business our pending acquisition of Amobi, and significantly depreciate our offering through our strategic investment in Vila. We believe the increased scale and added capabilities that Amobi will provide position us well to continue increasing our global market share and presence in the digital advertising space and open the doors to access new customers as well as gross selling and partnership opportunities. Our strategic investment in VEDA and relationship with ISEN is a potential game changer that could be significantly impactful for our business. Being mutually aligned with a rapidly growing global partner expanding its share in the streaming operating system and smart TV OEMs ecosystem is a powerful differentiator in itself. However, when you couple that with our exclusive global access to data to share across our platform, exclusivity in key markets to monetize advertising on exclusive content, including sports content, and strong relationships with major global OEMs, we feel that this is a very special potential growth opportunity. Tremor company-specific and industry-related companies, end-to-end technology and business model, robust profitability, best-in-class margins and strong liquidity position the company well to succeed in the current environment and for future growth and market share expansion. We continue to remain excited about our growth prospects and positioning within the industry and to drive continued value for our customers and shareholders. Operator, we will now open the call to investors' questions.
spk01: As a reminder, To ask a question, press star 1 on your telephone keypad. If you'd like to remove yourself from the queue, press star 1 again. Your first question is from the line of Laura Martin with Needham.
spk08: Good morning. Yeah, I have a couple questions. The first one I'm very interested in is, so your results in Q2 were pretty much in line with other DSPs, other than, of course, Trade Desk. which was much higher. My question is, excluding acquisition, what do you think the long-term secular growth rate is of your top line, excluding acquisition?
spk06: Do you want to take this one? Hi, Laura.
spk05: Hi. Hey, Laura. Thanks for the question. Yes, I will take it. So I think that it really depends, you know, on when the macroeconomics and the environment will go. We've proven in the past that we know how to grow our business very fast and in large scale while macroeconomics parameters are in place. Having said that and anticipating anything going forward with all the macroeconomics parameters, I think that it will be double figure and it will be somewhere between, I don't know, 12% to 16%. This is what we are anticipating on a regular macroeconomics environment.
spk08: Okay, so 12% to 16% top-line growth, excluding acquisitions and in a normalized environment. And that 50% EBITDA rate is your normalized... Okay, that's super helpful for trying to value this company. The other thing is... One of the things that you said is that you added a lot of sell-side capacity in this particular period. And I'm just curious as to if demand is soft right now, how is adding sell-side capacity, doesn't that just hurt the price in the auction if we're adding a lot of sell-side capacity but demand is soft? Doesn't that actually put more pressure on the market?
spk06: I didn't understand what you asked for, what we added. Can you repeat it? Maybe the line is not good.
spk08: Yeah, I thought you said you added a lot of sell-side capacity in the quarter.
spk09: Yeah, yeah.
spk08: So doesn't that hurt your auctions more because you have soft demand because of macro? So if you add a lot of sell-side, that adds a lot of units available for sale. So doesn't that put even more pressure downward on your average price?
spk06: No.
spk08: Or no?
spk06: No, because I will explain. First of all, what we are usually doing, we are enhancing and growing our media side all the time because the advertisers, our partners, are looking every time for different audiences. That's the capability that we can offer them through the data and usage of our platform. And we are not offering any commitment to this publishing. It's connected to our platform, and we are enabling our clients to basically reach bigger audiences and more diverse audiences through this growth of our sales side partners, basically, that are connected to our platform. But it's not putting pressure on pricing, and it's not putting more pressure on ourselves, of course. I hope that that was clear.
spk08: Yeah, perfectly. That's great. Okay. Thanks very much, guys. Thank you.
spk06: Thank you.
spk01: Thank you. Your next question is from the line of Matt Swanson, RBC Capital Markets.
spk04: Yeah, thanks. Morning, guys. Sagi, maybe picking up where you left off on your prepared remarks and thinking about guidance, you know, you noted all the headwinds that we see, you know, pretty much in the news on a daily basis. But you also have the company-specific tailwinds in the second half with VIDA and SPIRAD, World Cup, political. Could you just give us a little more color on maybe how you're thinking about balancing the tailwinds and headwinds and then where you're maybe building in some conservatism into that guidance for the second half?
spk05: I think it's a great question. Ofer, do you want to take it?
spk06: Again, I didn't understand the question, so I would love to hear it again.
spk04: Yeah, I was just saying that there's obviously a lot of macro headwinds, right, in the second half of the year, but there's company-specific tailwinds that we've been talking about for a while with BIDA and SPIRAD, World Cup, political. Just kind of how you're thinking about balancing those two things and then maybe just giving us a sense of the level of conservatism that you guys are building and giving that macro uncertainty.
spk06: Of course. Thank you. Thank you for repeating the question. So we worked very hard in the past, say, even... close to here now on all these initiatives, like the VIDA, which is the ACL data that's supposed to be effective in the second half of the year. And we took it even further and we enhanced the capabilities that we are offering to the market by cooperating even deeply with VIDA and iSense around about content that is unique and high quality, like the FISO Plus that is going to be distributed in exclusivity on VIDA and iSense TVs, basically. And we feel, and also the Vida show that they basically created that will give like more color on the games and so on. And as we know, FIFA and the World Cup in soccer is a major thing in this, in this, in the sport event. And people really, of course, there are billions of fans that are waiting for these games to start. And that's why basically we believe that with all these headwinds that are in the market, we have also very strong tailwinds, which is the, acr data the fifa and the basically the content opportunities that we built and we are also encouraged by the fact that with the first proof of concept that we got we got basically a partnership and and around the partnership with the vida around the fifa plus and the world cup which is of course a very major event and will give us like a very strong opportunity to generate additional revenues in the fourth quarter but We are trying to, and we also didn't include it that we have high confidence that this deal will be closed in the third quarter. We tried to give a full picture about the standalone to the market in order to remove uncertainty and to give more clarity about it. We are conservative in this. in general, because we feel that there is a lot of uncertainty and headwinds in the market, and we need to be aware of them, and we take them into consideration. And as we mentioned also in our PR, we believe that this headwinds and this macroeconomics will not end in the end of the third quarter, but will end probably the end of the year, or even will move to 2023, basically. So I hope that I answered your question, but I think that in general, We see a lot of fail-wins that can be supported by our hard work that we've done, and I think that basically we are trying to balance it with the headwinds that we are feeling in the market, and we gave a focus for the full year for this reason, in order to be transparent and to show what we feel is the status of the business until the end of the year.
spk04: Yeah, thank you. That's really helpful. And then flipping to maybe a more positive macro note, you mentioned all the companies that are switching to AVOD right now. And maybe thinking about what your expectations are in the next year or two as this kind of flood of premium content comes to CTV and what you think the impact is on the market, you know, advertisers, publishers, when all of a sudden, you know, we see a two, three X times the amount of content coming to streaming.
spk06: okay i think that uh i think that it's just show that the ctv is here to stay and it's growing and it's becoming like a main channel for for online advertisers and for advertisers that wants to reach your audiences no matter you know on which platform right now but i think that it just showed that the center that this ctv is taking in in the market and we are as you can see also by our results we are growing our capabilities We have very quality products that we are basically pushing in the market. We are offering in the market. And we add to that also this content that we are now testing. And as I mentioned, we are glad that the first test and the POCs with FIFA Plus, basically our ability to work together with Vita and iSense in order to monetize this opportunity. I believe that all these opportunities that are openly available will creates more curiosity and more activity among advertisers to test CTV, to run their campaigns on CTV also in order to reach their clients and potential clients. And I think that it will grow the market and will make it more advanced and more efficient in the future. So I look at that in a positive manner. In the short term, when you have so much supply coming to the market, it's also connected to to what we see in the market is, of course, it can affect pricing and it can affect the ability of publishers to sell all their media and so on. But I think that what we see in the market right now is just the beginning of more and more companies choosing to work with Aboard and believe in this model, which is great for a company like us. Of course, that's what we are selling and that's what we are offering in the market.
spk04: All right. Thank you.
spk01: Appreciate the time. Your next question is from the line of Mark Kelly with Stifle.
spk03: Hey, great. Thanks very much. I want to ask you about the 23 guide that you put out there. Should we assume that a MOBI revenue is roughly $150 million? I know you in the past had said that that was, you know, flattish year over year. Is that the right way to think about it for 23? And if so, that would imply the core tremor business excluding Amobi would be growing a little over 20%. Is that the right way to think about it or is the right way to think about it basically using that 12 to 16% growth that you talked about? What's the right way to think about Amobi's impact in 23?
spk06: Thank you. I would take this question. First of all, when we are requiring a company, we are moving very quickly in order to integrate the company into our business. We are not keeping silos and we are not keeping different business units. We are creating one company. And I think that we also, this is part of our promise and the way that we are working basically is to create a, one company with the acquisition that we are making, and that's what we did in the past, and that's what we are planning to do, of course, with Amobi. So after the closing, we will basically mix and connect the things, and we will not keep it as a silos. But in general, when you look at that, we said approximately 500 million because, as we mentioned, we said that we will grow between 12% to 16%. We said that Amobi last year was about 150%. And I think that we kept it conservative, basically, when we gave these numbers, which are very impressive as they are, because to reach $500 million in net revenues and $200 million in EBITDA, it's a major event, and it's a very big statement in this industry of edtech right now.
spk03: Okay, thank you. And structurally, should the Amobi business also grow in line with that, you know, call it low teams, low to mid teams, that you suggested for the core entrepreneur business?
spk06: We are not talking about different units. And, again, what we are going to do after closing is to connect the businesses. So, basically, we will create, like, business units that are part of the full company, but they are connected. So we will not be able to measure it. We did it in the past with Unruly. We did it with FreedomOne, and we are planning to do this, basically, with Amobis. Okay, great, thank you.
spk05: Yes, and just to add to that, Mark, I think that Amob is a less profitable company than Tremor. So first of all, as Ofer mentioned, we are moving fast. It will take us some time in the first 12 months in order to get them to the right place. Secondly, they are only one-sided, so we will do our best in order to make them part of our ecosystem and enjoy the end-to-end solution. And as Ofer mentioned, we will not measure any more Amobi, Solo, and Tremor storage. It will be one ecosystem and one reporting.
spk03: Okay. Makes sense. And then maybe just one quick one on where you're seeing the softness. You did a nice job talking about the macro stuff. But I guess in terms of your products in particular, are you seeing... more softness on the supply side versus the demand side? I guess when people are using your tech, is there any one type of customer softer than the others?
spk06: So, of course, everything starts with the demand. So I think that in general, the demand, if you're looking at sell and buy, we're looking at the demand side that is weakened, and it's weakening the ecosystem, but it's across the system, meaning that when the demand is low, of course, it's affecting all the revenues that the business is generating.
spk03: Okay. Makes sense. Thanks very much.
spk01: Thank you. Your next question is from the line of Andrew Morick with Raymond James.
spk02: Thanks for taking my questions. I wanted to drill down a little bit more quantitatively on that second half guidance and try to get a sense on the scale of your assumptions for contributions from the inorganic events like the World Cup and political advertising in the back half of the year, and then have a follow-up after.
spk05: So I'm not sure, you know, we'll do it. exactly what will be the FIFA or the World Cup revenue generating, because we are not measuring it as that, and you are calling it non-organic, but it will become non-organic almost every year. There's a major tournament, and iCent slash Vida are very heavily invested in exclusive sport content, which we will monetize in the future as well. I think that That's the answer. Unless, Ofer, you want to add something.
spk06: No, I think that it's part of the business that we are doing, and this is, of course, it's an organic growth. We worked on that so hard in order to build it with the investment and partnership that we created with Vida and iSense, and we are proud of that. And it's the first time that we are launching an event like that or a able to sell and monetize this type of content in the market and we're waiting to see but we of course believe that it will be very meaningful because we believe that the opportunity is really interesting for for advertising advertisers and we see the first impression first response of advertisers it's very positive so we are now continuing to build the offering and to go out to the advertisers and basically start to to get these signs
spk02: Okay, thank you. And then in the second quarter, can you point to anything specific as to why EBITDA margins were higher than kind of trend, higher than expected? Was there anything in any of those specific expense lines that was worth calling out? Thank you.
spk06: I think that in general, you would take it, sorry.
spk05: Yes, I think, you know, it's a combination of different initiative that we took during at the end of Q1 already when we saw the headwinds on the macroeconomic situation. So of course we closed some open positions, some indirect costs that are revenue related of course went down. We went and made extra efficiency on our data and hosting coastline. We did some renegotiation with some of our vendors. And, of course, we put, like, a hold on T&E and professional services and others. So I think all of that contributed to this, like, extraordinary EBITDA margin in Q2.
spk02: Okay. Thank you.
spk01: Your final question comes from the line of Andrew Boone from JMP Securities.
spk00: Good morning, and thanks for taking my questions. Can we start with just helping to better understand 3Q? Is there a way that you can help us understand kind of the first half of what you've seen, so July and August to date, as we think about kind of this quarter?
spk06: When we are giving, like, we are assessing and we are providing, like, And numbers that are below consensus, of course, it's not according to our plans. If it was according to our plans, we didn't give this assessment and we didn't get this number. So we feel the weakness in the market that is coming from across the board from a lot of advertisers and partners that we have. And that's why we basically adjusted our forecast.
spk00: Okay, thanks. And then kind of playing off of the last question you just got asked, can you talk about the impact of FX on the model? Were there any top line kind of headwinds that you guys can call out that are understood it's mostly a U.S. business? But then additionally on the cost side, is there also a benefit from FX that you guys are seeing on the cost side of the business?
spk05: The vast majority of our revenues are coming from the U.S., so we don't see any FX. effect over there, no benefit and no loss. On the cost side, yes. As the dollar went up and strengthened through the last month worldwide, we see some cost savings due to FX. It's not like material or changing the needle, but we did see some cost savings regarding FX effect.
spk00: Okay. Thanks, Hagi. And then just my last question is one of the key differentiation pieces in our view is certainly the creative side of the business with Truly. Can you just talk about the drivers of increased use of Truly for video ads and then just help us understand what that brings to the rest of the model, right? Understood more engagement is just good, but kind of put that, help us understand that as we relate this back to Excel. Thanks so much.
spk06: Thank you. I will take it, Sagi. I think that when we are talking about creative, we have to understand that there is a few elements to the importance of the creative. First of all, as you indicated, it's to increase the engagement, but apart from that, it's to increase the efficiency when you are connecting between creative and data. This is something that we were able to grow a lot, the efficiency and the engagement in the last one and a half years or close to two years since we basically started that because truly it's basically after we acquired and we released this product and it did a very good job and we see the growth about it. And I think that advertisers like it because it's basically serving two of their goals. First of all is to reach the right audiences with the right message and the second one is to basically increase the engagement with them. We see that as a catalyst also to sales when we are offering these capabilities to advertisers when compared to other companies that are less doing that. I think that we are gaining more attention, we are getting more budgets, and we are getting more response from advertisers. And it's a tool that we really enjoy using in the market, and it's bringing a lot of great results to us and, of course, to our clients that are using them.
spk04: Thank you.
spk01: Thank you. I'll now hand today's call back over to Osa for any closing remarks.
spk06: Thank you, everyone. I think that as we said, we are, we build a very strong foundation for the company and we look at it and we see that we have a lot coming in, in the, in the months to come, but also in the years to come through the, through the deals and the investment and the acquisition that we are, It is still pending, but we are feeling confident that it will be closed in the third quarter. And I think that when we are looking at the future, we are still excited. We know that there is headwinds in the market, but you are not building a company for the next quarter. You are building a company for the years to come, and we feel that we build the right foundations with the right power, and we have the talent that is needed in order to grow our business and to move forward in full power. So I'm really excited about it, and I think that we proved in the past year that we are able to fulfill our strategy, meaning increase our CTV hold through the agreement with VIDA, getting exclusivity in major markets like US, UK, Canada, and Australia, and on the CTV data, which is the ACR, to get like a global multi-agreement with one of the biggest and most powerful operating system and OEMs in the market. The second thing is also to move through this agreement to drive also quality content that can be an interesting business model, an interesting thing for our clients to be associated with events like FIFA and others that will come, which is really powerful. And the acquisition that we've done that is fulfilling our strategy that we basically indicated after the dual listing that we've done last June, that we are going to keep using our profits and our cash in order to make acquisitions that will grow our demand side. And we looked at Amobi as a great opportunity for that with the right size, capability, talent, technology capability, more than 500 clients and tools and technology capabilities that are in line of what we are doing, including Linear TV, that we look at it as a great opportunity in the future because we see that the linear TV and the CTD are getting closer together through data, usage of data. So we are excited. We are confident about our moves and our strategy, and we are working hard in order to accelerate our capabilities in the coming years and so on. So thank you very much for joining us today, and thank you.
spk01: This concludes today's call. Thank you for joining. You may now disconnect.
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