This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk10: Welcome to Tramer International's third quarter and nine months ended September 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 Tramer's website and will remain posted there for the next 30 days. I will now hand it over to Billy Eckert, Senior Director of Investor Relations, for introductions and the reading of the Safe Harbor Statement.
spk04: Thank you, operator.
spk08: Good morning, everyone, and welcome to Tremor International's third quarter and nine months ended September 30th, 2022 earnings call. With us on today's call are Oprah Drucker, 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 anticipated future financial results, including discussions about our revenue, margins, expenses, and guidance for full year 2022 and full year 2023, as well as future business. anticipated benefits of Tremor's strategic transactions and commercial partnerships, anticipated features and benefits of Tremor's products and service offerings, Tremor's positioning for future growth in both the U.S. and international markets in the fourth quarter of 2022 and beyond, Tremor's implementation of a substantial share repurchase program while also continuing to evaluate strategic opportunities to acquire companies and invest in technology, product sales, and marketing to further expand its platform, Tremor's medium to long-term prospects, Management's belief that Tremor is well-positioned to benefit from anticipated future industry growth trends and company-specific catalysts. The potential negative impact of inflationary pressures, rising interest rates, geopolitical and macroeconomic uncertainty, recession concerns, and the widespread global supply chain issues that have limited advertising activity, and the anticipation that these challenges could continue to have an impact for the remainder of 2022 and beyond. The anticipated impact of the FIFA World Cup on Tremor's anticipated performance. The anticipated benefits from the company's investment in Vita and its enhanced strategic relationship with Hisense. the anticipated benefits and synergies from the Amobi acquisition and ability of Tremor to continue to recognize those synergies, Tremor's ability to continue to execute on cross-selling opportunities and its introduction of new technology products to a significantly larger customer base and addressable market, the timing to complete the technology integration of Amobi, 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, Chief Executive Officer of Tremor International. Ofer, please go ahead.
spk07: Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview of our results, recent achievements, and strategy. Then we'll end the call to our Chief Financial Officer, Sagi Nuri, to discuss our financials. We will then open the call for investor questions. was one of the most strategically important quarters in the history of our company. We accomplished several goals we have been working towards since late 2021 that further enhance our strength within CTV and data. We also gained new strategic linear TV capabilities, which we believe will enable several growth opportunities across the large addressable market while positioning us strongly for the future as CTV and Linear continue to converge. First, we closed our acquisition of Amobi, which was the largest in our history. I am pleased to report that we successfully fulfilled significant cost-cutting measures and already realized the entire $50 million in total annualized operating cost synergies we initially expected. Within the first 18 days of closing the acquisition, we were able to generate a positive adjusted EBITDA from Amobi. This is a major testament to our ability to successfully integrate companies and quickly realize benefits for our shareholders as Amobi was a loss-making business when we acquired it. The acquisition significantly expands our financial scale, reach, customer base, and talent footprint and enables strong cross-selling opportunities. Tremor has a robust footprint in CTV and video, while Amobi's DSP has a strong omnichannel position, including a cross-display mobile and performance. We believe the complementary nature of the two DSPs will enable Amobi customers to allocate more of their overall advertising budget to CTV and video, and offer Tremor customers Hinen's self-service DSP tools and the added omni-channel and data capabilities. Additionally, a very minimal amount of advertising dollars spent across Amobis DSP were purchasing ad inventory from the unruly SSP prior to the transition. Over time, we will work together with Amobis customers to enable them to realize the data advantages of our platform and cost benefit of transacting end-to-end. which we believe can also drive added revenues and profitability to travel. Amobi also enhance our technology footprint across enterprise self-serve DSP, performance media buying, CTV, and advanced data for different stages of planning, while adding very important new linear TV capabilities. As CTV and Linear continue to converge, this new capability strongly and uniquely position us for future success within the industry, as I will elaborate on. A mobile advanced TV planner, or ATV, give us a new ability to work and cooperate with traditional TV broadcasters. ATV assists broadcasters by providing a planning technology that they can offer to advertising partners to better understand how to optimally run campaigns on the inventory in order to reach their target audience. Our pre-existing strengths in CTV and having an in-house SSP enables strategic cross-planning capabilities between digital and linear. We believe this capability will open several new opportunities and capabilities for Tremor and its partners. because we can now work with them to utilize rich and blend campaigns across both media platforms. In August, we also closed our $25 million investment in VIDA, a smart TV operating system and subsidiary of iSense. We believe iSense is now one of the leading innovative growth brands in the CTV manufacturing market. And they also acquired Toshiba TV subsidiary several years ago. which further expanded their reach. Our investment in VIDA extended for multiple years the exclusive global agreement to share VIDA's ACR data for global targeting and measurement across our platform. VIDA also granted ad monetization exclusivity in the U.S., U.K., Canada, and Australia to our Unruly SSP and Spirit ad server for the next couple of years. The ACR agreement enabled us to offer additional data sets and advertising opportunities to our customers and is expected to enhance our TV intelligence solutions. We also believe that data exclusivity creates new potential revenue opportunities for Tremor, SPs, advertisers, and streaming providers are seeking this data for targeting and measurement. ACR, or Automatic Content Recognition Data, is viewership data collected from the Smart TV, which enabled those with access to understand what content and commercial consumers were exposed to. With the effort expected to continue growing, our ACR agreement with VIDA positioned us to take advantage of increased customer data for targeting and measurement purposes, which is critical within CTV. The data is also quite unique in the ecosystem, as many other major smart TV OEMs monetize ACR data in-house, similar to a walled garden. Trendle now, through the agreement, has become a major enabler of smart TV ACR data to the open Internet, a key differentiator and potential growth driver. According to Comscore, earlier in 2022, ISIN and Toshiba already accounted for approximately 10% of the U.S. Smart TV OEM market. Market Research Agency, or MIDEA, also reported that for the first time, iSense in Q2 2022 ranked second in the worldwide volume share of shipments. As iSense worked towards further penetrating the U.S. and global Smart TV market, Tremor should further benefit from its investment in VIDA. As VIDA and iSense continue to expand share This anticipated increased TV distribution will make the ACR data even more desirable to advertisers and those seeking targeting and measurement capabilities. Tremor is also utilizing its end-to-end platform and leveraging its close relationship with VIDA and its partners to exclusively monetize ad inventory shown within the FIFA Plus app across connected TVs. VIDA's partners will also distribute the FIFA Plus app globally across their smart TV devices as well. Between the combined reach of VIDA and its partners, we believe Tremor will have ad monetization exclusivity on the FIFA Plus across more than 100 million smart TVs globally during the FIFA World Cup. As part of this exciting large-scale project, FIFA also granted Tremor the global right to monetize ads on its FIFA Plus website and mobile inventory during the tournament. This project and combined reach reflects a sizable revenue opportunity for us. We also anticipate additional sports-related opportunities in the future, as iSense has made sports sponsorship and exclusive sports content opportunities a key part of its growth and marketing strategy. In addition to all these milestones, we achieved in Q3, which positioned us strongly for the future, we also continue to expand our market share within CTV. CTV spent across our platform during Q3 was $73 million, which reflects an increase of 45% compared to Q3 2021. This $73 million also includes 18 days of results from Amobi. CTV is the fastest growing segment within digital advertising and we are incredibly pleased with our progress in growing and expanding our capabilities on this front. We also generated continued margin strength, achieving an adjusted EBITDA margin of 46% as a percentage of contribution XTAC during Q3, which also includes 18 days of results from Amobi. This highlights the efficiency and the resiliency of our technology platform and business model which enable us to generate robust profitability and cash flow despite a continued challenging microeconomic environment. Spending by advertiser in June Q3 remained constrained by rising inflation, rising interest rates, supply chain constraints, the ongoing war in Ukraine, macro and economic uncertainty, and recession concerns. We continue to expect these headwinds to persist for at least a reminder of 2022 and likely into 2023. July and August were particularly challenging months for advertising demand. That said, we saw results improve throughout the quarter and ended Q3 with a strong September. We have also seen some initial evidence of advertising demand from our customers increasing as a result of the U.S. midterm election cycle and fourth quarter seasonality. This has been encouraging, as we also believe we will experience added benefit related to several upcoming catalysts, which can help offset some of this expected negative market . During the quarter, we also completed our previous $75 million share repurchase program and announced an additional 20 million share repurchase program that began on October 1st. In the quarter, we purchased approximately 6.4 million ordinary shares for a total investment of approximately 24.9 billion pounds, or $29.7 million. For the entire program, we repurchased around 13.8 million ordinary shares, which reflects roughly 9% of share outstanding. Our ability to have repurchased a sizable amount of shares at what we believe are discounted levels while making a significant strategic acquisition and investment is a testament to our model's cash-generating ability and profitability. Finally, we continue to generate robust momentum across Tremor Video and Unruly, adding a significant number of supply-side partners and new advertiser customers. During Q3, unruly added 82 new supply partners including 33 in the u.s for the first nine months of 2022 unruly added 232 new supply partners including 104 in the u.s supply partners were added across sport news and entertainment verticals and several formats including online video mobile, TTV, and over-the-top apps from leading broadcasters and virtual multi-channel video programming distributor businesses. Tremor Video, during Q3, added 56 new advertised customers and 191 for the nine months ended September 30, 2022, across retail, automotive, and political verticals, as well as others. Despite the challenging macro backdrop, we continue to generate strong results and adaptions across our technology ecosystem and reinforce our strategic positioning within the industry, which we believe positions us well for future growth. It's now my pleasure to turn the call over to Sagi to review our financial results.
spk01: Thank you, Ofer. Today, I will review highlights and key financials and operational drivers of our Q3 and first nine months of 2022 performance, which include 18 days of results from our completed acquisition of Amobi. For the three months ended September 30, 2022, we generated contribution extract of $64.9 million compared to $76.7 million in Q3 2021. alongside Q3 adjusted EBITDA of $30.1 million compared to $42.3 million in Q3 2021. Our Q3 2022 figures include 18 days of results from our completed acquisition of Amobi. During July and August, we experienced pressure on our contribution extracts due to a variety of macroeconomic challenges which impacted advertising demand across several verticals and formats. However, we are encouraged by the results we generated in September and have seen initial evidence of potential recovering advertiser demand across our customer base to this point in the fourth quarter. We also continue to expand our share within CTV as CTV stands on our platform, including 18 days of results from Amobi, was $73 million during Q3 2022, which was a record for us and reflected year-over-year growth of 45%, compared to CTV spend of $50.4 million during Q3 2021. We believe we are well positioned for future growth within CTV and video as programmatic transactions continue to increase in popularity across the advertising ecosystem as AVOD continues to grow and as we expect performance budgets to move towards CTV and programmatic in the future. Amobi also creates more CTV advertising cross-selling opportunities within a newly acquired customer base and we expect the integration of Spirit as well as our investment in VIDA to provide us ample opportunities to continue growing share within CTV and video. Including Amobi, video, including CTV, continue to reflect the overwhelming majority of total Q3 and nine-month 2022 contribution extract at approximately 87% and 81%, respectively. Our profitability remained strong as we generated a Q3 2022 adjusted EBITDA margin of 43% on a reported revenue basis and 46% on a net revenue basis, which includes 18 days of results from Amobi. For the nine months ended September 30, 2022, we generated contribution X-back of $206.7 million, including 18 days of results from Amobi, compared to $213.4 million over the same prior year period. Over the same period, CTV spend, including 18 days of results from Amobi, was $183.9 million, compared to $138.4 million during the first nine months of 2021, which reflected a record for us and a 33% year-over-year increase. During the first nine months of 2022, CTV spent, including 18 days of results from Amobi, reflected 39% of total spend and 44% of programmatic spend. We also generated adjusted EBITDA of $102.9 million during the first nine months of 2022, including 18 days of results from Amobi, compared to $107.2 million adjusted EBITDA in the same prior year period. We generated an adjusted EBITDA margin of 45% on a reported revenue basis and 50% on a net revenue basis over the first nine months of 2022, including 18 days of results from Amobi. Turning to our cash flow, we generated net cash from operating activities of $12.6 million for Q3 2022 versus $44.6 million in Q3 2021. For the September 12 through September 30 period, Amobi contributed negative $13.8 million in net cash from operating activities to Tremors Q3 2022 results. For the nine months ended September 30, 2022, we generated net cash from operating activities of $59.1 million, including 18 days of results from Amobi versus $121.4 million in the nine months ended September 30th, 2021. As of September 30th, we add 109.1 million net cash following the closing of our VIDA investment and AMOBI acquisition, as well as the completion of our $75 million share repurchase program. As we mentioned in the past, we secured a new 180 million credit facility in relation to the Amobi acquisition, under which we utilized $100 million, in addition to existing cash resources, to satisfy the purchase price. Within the new credit facility, we drew at closing $90 million from a secure term loan A, as well as $10 million from a revolving credit facility. The remaining $80 million on the revolving credit facility, alongside our existing cash resources, provide us ample liquidity for future potential strategic investment and initiatives. We experienced 99% free cash flow conversion for both the three and nine months ended September 30, 2022, including 18 days of results from Amobi. Non-IFRS diluted earnings per ordinary share was 11 cents for Q3 2022, including 18 days of results from Amobi. versus $0.21 in Q3 2021, and $0.42 for the nine months ended September 30, 2022, including 18 days of results from Amobi, versus $0.56 for the nine months ended September 30, 2021. As Ofer mentioned, we're very pleased to report that the Amobi integration is ahead of schedule and that we've already realized our initially anticipated $50 million in total annualized operating cost synergies on a combined pro forma basis. We fulfilled significant cost-cutting measures, successfully generating positive adjusted EBITDA from Amobi within the first 18 days of closing the acquisition. Most of the synergies to this point have come from the consolidation of human capital into one combined team, and we've reorganized Amobi employee base to focus efforts on the highest growth opportunities. We focused on retaining key talent from Amobi in sales, marketing, product, and technology to enhance our product and fuel our future growth. Employee efficiency is a pivotal part of our operating model's long-term strategy, as well as our integration strategy. This efficiency has also been a key enabler of our historically strong profitability and highlights our proficiency at managing the business, maximizing return on assets, and maximizing return on invested capital. We expect this efficiency will continue to be a strong future growth driver for us while also positioning us well during challenging advertising demand environments. Laura Martin at Nidam recently released a report stating that from Q4 2020 through Q2 2022, Tremor improved its trailing 12 months revenue per employee by approximately $297,000. which was the largest increase of any company within our AirTag coverage universe over that time period. According to Laura, our Q2 2022 productivity of around $623,000 per employee was second only to the trade at around $642,000 within our AirTag coverage universe and well above the mode value of $300,000 to $400,000. In our opinion, this proves that the largest companies in the space aren't necessarily the most productive in maximizing and improving employee utilization and maximizing their asset efficiency for their business and shareholders. We believe it also demonstrates that end-to-end solution with proficient management teams and operators tend to drive better results around efficiency. We also believe our historically strong employee utilization serves as a strong barometer for the success we expect to achieve with our newly integrated AMOBI team members. In addition, we've also made progress in consolidating duplicate spend on vendor contracts and technology fees and services. As we work towards fully completing the integration, we believe we've identified an additional approximately $15 million in operating cost synergies, and now believe we will realize approximately $65 million in total analyzed operating cost synergies on a combined pro forma basis upon the completion of the integration. We also believe the integration will now be fully completed by the end of 2023, with the vast majority expected to be completed by the end of Q2 2023. Going forward, our sales teams will continue to focus on introducing and demonstrating Tremor Videos platform capabilities to newly acquired Amobi customers towards capturing additional CTV and video budget, while also introducing Tremor Video customers to our new Amoobi DSP to offer opportunities to boost self-service spend across our ecosystem, as well as additional omnichannel capabilities. We will also introduce the end-to-end benefits of leveraging Unruly to advertisers running campaigns through Amoobi. Very minimal amounts of advertisers' dollar spend on Amobi DSP have purchased ad inventory through Unruly in the past. But as we work towards migrating some of this spend to Unruly, we believe we have the ability to capture take rates and profitability on both the DSP and SSP side, while providing efficiency as well as data and cost advantages for customers. We will also be working to extend our relationship and revenue footprint with linear TV broadcasters through our newly acquired ATV technology and position ourselves even more strongly as budgets are deployed across both linear and CTV. The new data-driven tools we gained through the acquisition also enable us to provide desirable added benefits for current customers to expand the revenue relationship with us while offering us opportunities to also introduce these benefits to land and expand within a newly acquired customer base. They also further expand our technology ecosystem and product offering for advertisers, linear TV broadcasters, and CTV media customers, where we can now assist them even more with planning and executing campaigns across CTV and linear TV, eliminating the need to leverage several partners or technology solutions to accomplish this goal. Finally, I'll now turn to our outlook. For full year 2022, we now expect contribution XTAC of approximately $310 million and adjusted EBITDA of approximately $140 million, including results from Amobi. This lowered guidance factors in continued challenging market conditions, which cited that have impacted advertisers' demand. We continue to believe these challenges will impact results for the remainder of 2022 and into 2023 as well. We believe, however, that we will experience positive tailwinds in the fourth quarter related to anticipated increased advertiser spend associated with the FIFA World Cup, where we have a number of catalysts and important exclusivities. For full year 2023, we now expect combined contribution XTAC of approximately $460 million and combined adjusted EBITDA of approximately $180 million, including results from Amobi. Despite ongoing market headwinds, the efficiency and benefits of our end-to-end operating model, continued focus on CTV, video and data, strong fundamentals, powerful partnerships and depreciators, and recent milestones position us incredibly well to capitalize on future growth opportunities while continuing to generate high level of cash and profitability. Our newly enhanced suite of product solution allows us to holistically serve advertisers and media customers across linear and CTV in ways we believe no other single technology company can. I'm very excited for Tremor International near and long term future and positioning within the industry. With my remarks completed, I'll turn the call back to Ofer.
spk07: Thank you, Sagi. Over the last several months, despite ongoing challenging market conditions, we managed to execute on our long-term strategy, which we believe will help further enhance our position in video and data and further boost our already robust strength within the CTV and TV ecosystem. We believe our efficient end-to-end operating model and continued focus on generating strong profitability, high margin, a significant level of cash flow, enable critical flexibility for our business. This flexibility is even more important and a tremendous advantage during uncertain economic periods and uncertain advertising demand environments. We expect all of these recent wins alongside the pre-existing strength of our end-to-end model to create a strong flywheel effect that will empower our future growth through expanded relationship with both current and new customers. We are excited to continue executing on our long-term strategic vision and remain accurately focused on generating value for our customers and shareholders.
spk06: Operator, we will now open the call to investors' questions.
spk10: At this time, we will begin our question and answer session. If you would like to ask a question, press star 1 on your telephone keypad. Your first question comes from the line of Matt Swanson from RBC Capital Markets. Your line is open.
spk02: All right. Good morning. Thank you so much for taking my question. And thanks for giving that data point from Laura. You know, I think it really highlights the efficient way that you've been able to grow this company. And so to that point, could you just talk a little bit more about the early cost synergies from Amobi and any updates around thoughts around the integration that you've made or discovered in the last couple of months? And then any updates or comments on what you've seen from early customer reaction on both sides from Tremor seeing the Amobi DSP or Amobi customers thinking full stack. That'd be great.
spk07: Thank you, Matt. I will start by, first of all, overlooking at what Amobi provides us as we see it and why we made this acquisition because I think that it's important also in this discussion. So first of all, I think that the ATV platform, which is the Amobi TV planning tool, it's a very useful tool in this period of time. And when we're looking at that, CTV and linear TV are coming more and more together. People are trying to now to advertise or to plan their advertising budgets on both of these platforms side by side, basically. And with the increase of when we see Netflix and other guys that are coming into this world of supporting advertising video and streaming, we understand that also the advertisers will respond to that and will increase their spend also across CTV and streaming solutions. So they will have to take into account their linear TV and also to spend when they are spending in cross-platforms from digital. So this is a very important element for us and basically Amobi in their ears, they couldn't provide this CTV engagement because they didn't have an SSP like us. When we got our SSP basically we can integrate it side by side with the linear TV and we can provide advertisers a much better view on their planning and also activation capabilities. So for that, we are already seeing a very good positive response from the partners of Amobi in the past and our partners that are showing interest in that. And they are going to adapt our tools in order to move forward with that. The second thing is their enterprise DSP, which Amobi basically built over many, many years and they created very strong partnership. We believe that it will help us basically to integrate these two activities of us and them into one when they are bringing us more capabilities around omnichannel and performance, which are needed in the market. And we feel that there is a demand for that already when we are talking about cross-selling between the teams, while we can give them much more concrete product capabilities around CTV. The third element is the managed sales. which both of the companies are strong teams that we are basically integrating now together. And I think that the offering, again, as I mentioned, about CTV on one side, the second side is performance and omnichannel, will bring us a lot of value. And the last point regarding that, from our view, is moving more and more budgets or working with advertisers and partners of Amobi to educate them and to teach them and to partner with them in order to explain to them what are the values if they are going to move basically into end-to-end solution that we are offering and what price advantages they can get from that and other advantages which are technology-wise and moving more and more budgets from Amobi to basically a new platform that can increase our revenues and net revenues and profit in the future. So this is everything that I just said is already underway. And we feel that the market is accepting it very well. And I think that the Amobi platform is like adding to us a lot of credibility A lot of clients, about 500 clients worldwide, which are now integrating into our platforms and work. And I think that we moved relatively fast in order to integrate it. And the idea is to basically finalize the integration of the technology element until the end of 2023. But the major stuff will be in the end of the second quarter of 2023, when we will basically integrate the DSPs and the platform to be one platform. I hope that I answered your question.
spk02: Yeah, no, that was everything I was looking for and more. I guess as a second, and this is for Sagi, thinking about the macro, I mean, the headwinds are all pretty apparent that we've seen from you and from peers, this being a challenging environment. But you also have some secular tailwinds, I think particularly around CTV. And you kind of mentioned there are some catalysts amongst this, you know, more challenging macro pictures. So how are you kind of balancing those two things when you're thinking about guidance, especially for next year?
spk01: Thanks, Matt. I think, you know, we are trying to be conservative on our guidance. Since, you know, the macroeconomic, geopolitical issues are out there, we are trying to be cautious. And, of course, we're surprised for the good and not the other way. As you said, we are experiencing a very nice grow on our CTV market share, which we're sure that we will continue on that. But on the other hand, we have, as Ofer mentioned, some CPD clients which are seeing, because of inflation and recession, some headwinds to their business, and of course it's affecting their ability or their advertising budget that they are taking into the market. So I think we are taking, you know, all of the different parameters that we anticipate in front of us, and we are trying to give, you know, the conservative and cautious guidance that we think that we can handle through Q4 2022 and into 2023.
spk13: I appreciate the time. I look forward to seeing you guys at the conference tomorrow.
spk04: Thank you.
spk13: Thank you, Matt.
spk10: Your next question comes from the line of Laura Martin from Needham and Company. Your line is open.
spk09: Morning. A couple questions. So why don't I start with the one? Our revenue, IFRS reported revenue, went from down 7% to down 19%, even though we had 18 days of Moby in that quarter. And now you're projecting for the fourth quarter 18% growth. So if I strip out of Moby, what is the organic growth? And where I'm going is, why are you comfortable with this huge deceleration in revenue that you can actually report positive growth in the fourth quarter on an organic basis?
spk01: I think the guidance that we gave for Q4 and, of course, for full year 2023 is with Amobi on a consolidated basis. We are not seeing a huge organic growth with our solo business, but as we said in the past, the minute we completed the acquisition of Amobi, we are looking at us as one company, one platform. Everything has been consolidate into one sales team, one marketing team, one product and research and development team. So we are not looking at it on a solo basis. We are looking on it in a group. And in a group level, this is the guidance that we gave. And we will not, by the way, in the future, like we'll give an Amobi number or Tremor International number.
spk09: So you're saying all of the growth in Q4 is because of Amobi. You are projecting negative same-store growth in Q4. That's what you're saying?
spk01: I'm not saying that strictly forward, but yes, we are not seeing a huge organic growth on our solo basis. But having said that, yes, we are not giving organic. In our eyes, everything is becoming organic the minute we are consolidating the two companies into one. Okay.
spk09: And then my other question was, you said in the press release that in the first eight weeks, because it's only been eight weeks since you've opened Mobi, you achieved all 50 million of projected synergies. It was supposed to take 12 months, and then you're now projecting 65 million of synergies. Great. How exactly do you do that? How exactly, what did you do to achieve 50 million of synergies in the first eight weeks of owning this company?
spk07: So it's a few things, of course, that are being done. First of all, analyzing what synergies, where we can basically, when we are organizing the company and restructuring it. And by the way, in the management also, we integrate managers from Amobi into the management team of Tremor. And we are building in advance the teams that we want to move forward with. And we are moving fast after this closing in order to release or or to basically conduct the changes because we don't want the people to be like in the air for a long time, not to feel safety about their positions and so on. So when we build this three org and we build this structure that we want to keep, we basically conducted the change. And it's going from management across the teams until the bottom because first of all, we have experience in that. The second point is that we have experience in that and doing these moves and taking the decisions quickly. And the third element is also coming to the point that you mentioned a few weeks ago, Laura, which is we want to keep and stay effective and be an efficient company. So we are doing that very quickly because if not, you are getting into a situation that you are bleeding and you are in a situation that people are in uncertainty and you are not controlling the waste. So I think that, again, it's RE-ORG building the teams in advance, moving fast after the closing, and with a very clear vision about what we want to build. And as I answered Matt, I think that we have a very good, clear and good vision about what we want to do with our moving assets into a TREMO and how it can be combined to a very interesting and powerful company that can provide very unique services and solutions to partners in the US and globally. So I think that it's a mix of all these things that we've done, and I feel really reassured about this acquisition and the outcome of the reorganization that we've done very quickly. It was a major effort in Q3, but we've done it because we believe that When we looked at that 2022, it's basically here that we wanted to conduct this strategic investment. Just for you to know, we also, in a few months before, we looked at other opportunities in the market, and then we switched to Amobi because we wanted to acquire another demand-side platform and to connect it to our, basically, hub of operation and platform. And that's what we've done. And in parallel to that, as you know, we concluded the investment in VIDA. Management and the teams worked very, very hard in order to conduct all these acquisitions. And, of course, after signing, signing is not a major event. After signing, to conduct all this hard work in order to connect the platform, to connect the teams, to build a mutual vision, and to move forward as one company like Sagi just mentioned.
spk01: Yes, and by the way, Lara, just to make sure, it all happened in less than three weeks. Because we just closed on September 12th.
spk09: Okay. And so we should expect to see a write-off. If you're laying off people, maybe I missed it in this press release because I sort of perused it. So we should expect to see a write-off from the hiring the people through the income statement, right?
spk01: Yeah, we'll see it as a restructuring line.
spk04: Okay. All right, great. Thanks, guys. Thank you.
spk10: Your next question comes from the line of Mark Kelly from Stiefel. Your line is open. Mr. Mark Kelly, your line is open.
spk12: Would help if I took myself off mute. Thank you, and good morning, everybody. I was hoping you could talk about Amobee a little bit more, just in terms of how much of having Amobee in-house and being able to look under the hood a bit more has impacted your outlook for 2023. I totally get the macro stuff, but it also sounds like after July and August, maybe things have stabilized and maybe even started to improve there. So just more color on the Amobi side would be great. And the second, can you talk about how much visibility you get into the World Cup spend? Is that something that you have visibility to up front, or is it more scatter and programmatically bought stuff? Thank you.
spk07: So maybe I will start with FIFA, and then I will move to Amobi. So with the FIFA, I think that we have... A very unique opportunity that in a regular year or regular period of time, not under this pressure of the microeconomics, inflation, and so on, we can expect to generate much more revenues because we are talking here about being distributed on more than 100 million TVs globally, which I think is a very unique achievement. And this is the first time that an event in this size and this importance globally is taking place also on CTV. So I think that it's a major success of us connecting all the points of bringing the FIFA, bringing basically partnering with Vida, bringing FIFA, bringing other partners to distribute the app basically globally and getting the rights to exclusively monetize this app globally. We have, of course, People that already place orders into the book to buy advertising around it. And we believe that a lot will come also programmatically. Because in the end of the day, when we are talking here about more than 100 million TVs, we believe that the adoption of the FIFA Plus will be very high. And people will engage with the application because people like to consume this content and it's important to them. I'm not from the U.S. for us as a As foreigners, we believe, we like FIFA, and I'm following these games from 72, basically. And I know that when you're looking at the U.S., it's just now growing and becoming more and more interesting and more efficient and more something that people are getting their traction and looking at. So I believe that also in the U.S., we have nice adoption. And one of the major issues that are like a cloud above it is the microeconomic situation. And also the fact that is being done in Qatar that is basically raised some issues to some people and some companies. and also the timing of the games. But in general, we really believe in this content that we are doing, content distribution that we are doing that is unique, is exclusive, and it's very powerful. And we believe in the power, of course, of the CTV. And we think that we are doing very unique stuff. But as Sagi said, we were conservative in our assessments of how much revenues it will bring us in the fourth quarter. And we are waiting for the games to start exactly in less than a week from now. So on day 19, of November, the game is supposed to start in Qatar. Hopefully, there will be like a nice buzz, nice games, good couple of games that will basically bring a lot of attention to this tournament. Regarding Amobi, when we're looking at Amobi, and I will maybe repeat it myself a little bit, but after looking at many companies in the industry, we looked at Amobi and we feel that it can really support us all the way from all the funnels from advertising planning, discovery, discovery planning, activation, which is very important for us. And it's also adding to us additional capabilities around basically working with broadcasters that are running on Linear and growing their streaming business. And I think that this is something which is opening to us a lot of opportunities new markets that we were not being able to address in the past when we were just Tremor. So I think that when we look at that, we look at Amobi as a promise to get into working very closely with broadcasters, major broadcasters that are already engaged with Amobi, by the way, globally. And we can add to them, as I mentioned, the activation and the digital side of the business and the planning, which is very meaningful. And I think that it will bring us a lot of success in the future. In general, I think that also when we are looking at Amobi 500 clients globally, a very good reputation over the years that was built, very strong technology, investment in technology, and acquisition that they made over the years in order to strengthen it. And I think that they created a very good team of talented people that are working on this platform. And the combination with us will be able to basically provide us a lot of unique capabilities that we didn't have before and to strengthen our coin capabilities that we have already around CTV. And our promise is basically to be able to do cross-selling like we did in the past with when we acquired Unwoody, for example, and when we acquired RhythmOne is to basically introduce the new capabilities to the customers of the company that we acquire and engage with them and move much more budgets basically to us in the future. It's a lot of effort that was done in Q3, and we believe that it will give us the benefit in the mid- to long-term. And we are a long-term runner. We are not looking just on the other corner of the next few weeks. We are looking for the next year and so on. And we believe that this acquisition gives us a very strong position in the world of CTV, in the work of CTV around broadcasters combined with linear TV, and will enable us to use our strengths with data, CTV and so on, in order to attract their advertisers to buy and move and shift their budgets of CTV to us basically in the future to Unruly. And when they are moving their budgets to Unruly, we of course can grow our business, grow our net revenues and profit, and this was basically the target of this acquisition, and we achieved it. And it's coming together with VIDA that will also basically give us The ACR data, that is a great match also for basically introducing to clients, enabling them to buy targeting and to conduct measurement on our platform together with iSense slash Vida data, which is very meaningful because as all of us know, ACR data is very unique in the market. It's a very rare commodity because most of the companies that got this data are using it as part of their wall gardens. And we can basically be one of the people that are serving the open web. And this is basically our target and our goal and our vision.
spk12: Great. Thank you very much.
spk10: Your next question comes from the line of Andrew Boone from JMP Securities. Your line is open.
spk11: Good morning, and thanks for taking my questions. I want to talk about two smaller line items that you guys have, but clearly are getting impacted by macro. Can you help us understand the difference in terms of performance, gross revenue, and the kind of 41% downturn that we saw in 3.2? And then also just thinking about non-video programmatic revenue. I'm trying to back into the number, and it looks like display or whatever is inclusive in that category is also down about 40%. And so is there anything just to highlight there across those two categories? And then lastly, just turning to World Cup, frequently when media rights like this are purchased and there's exclusivity, is there anything to note just in terms of CAC or required payment that you guys have, just given the softness within the macro environment that we should be thinking about for 4Q? I'll leave it there. Thanks so much.
spk01: Okay. Hey, Andrew. I'll answer the first one. I'm not sure I got it like 100% right, but I tried to answer you. I think that, you know, our performance activity is not something that we are trying to be focused on. Of course, it's helping us, and we can help customers, advertisers, and agencies like cross-activity, so they can do whatever we want on the programmatic side of the business, and they can even benefit from our performance arm. I think that in the first month of 2022, performance activity did well or as well as it did in 2021. In Q3, we show a little bit softness on the performance side as well. And again, it's relating to our DTC clients, which lowered their advertising budget due to inflation and recession. On your video question, so again, we are heavily invested and we are focused on video format, which is the most growing and the most engaging. Having said that, and as Ofer mentioned, Amobi has a much robust omnichannel DSP, which most of the advertising budgets over there are being executed on display. So this gives us a lot of opportunity taking the display abilities and Amobi features into our clients and CrossAlice and vice versa to take all the CTV and video capabilities and knowledge that we have and allow them or cater them to Amobi clients. So I hope that this answer your question. Regarding the second question, I'm not sure you asked if we have like guaranteed payment to FIFA with the deal.
spk11: Yeah, I think so. Yeah, just as we think about your access to FIFA World Cup inventory, and especially considering just the softness within what I'm assuming is CPMs, are there any guarantees that we should be thinking about as we think about 4Q?
spk01: Okay, so just one thing to note or to understand. The investment in VIDA gave us an amazing relationship with this company, which is the operating system of iSense. iSense is heavily invested into sport exclusive sponsorship. And as part of that, VIDA is benefiting to have some exclusive content. And from that, we are benefiting of being a VIDA exclusive partner on ACR data and major countries their inventory and monetization partner we are enjoying that so per your question we are not invested you know in dollars in in that we are not we don't have any minimum guarantee and we didn't it didn't cost us anything we are just benefiting from this amazing relationship so it's only you know an upside for us great thank you so much thank you
spk10: Your next question comes from the line of Andrew Merrick from Draven James. Your line is open.
spk03: Thanks for taking my questions. One more on Amobi, if I could. I guess to the extent that you have seen so far in the first 18 days, can you comment on the sensitivity of Amobi versus the core tremor business to some of these macro trends? And then looking forward into 2023, what Can you just give us a little bit more color around your assumptions for macro and the shape of the recovery? Thank you.
spk07: Regarding a mobile risk, I think that there are, or sensitivity, as you said, we are basically running on the same, not sometimes, the overlap of the clients is very minimal, as we indicated in the past, but we are talking about the same type of audience, basically a tape sum of clients, but sometimes different names, different businesses, so I think that it's relatively the same. Regarding the microeconomic forecast and so on, I think that it's a very big question that I wish that I knew the answer to that, basically, but what we, I think, feel that we need to do as management, we need to be cautious and we need to take into account macroeconomic turnovers and changes will continue at least until the end of the second quarter of next year. It's very hard for us as a company to basically predict and know what will be the macroeconomic situation in this world. I think that many people in this call will feel the same, but I think that what we are trying to do is be committed to being conservative and not to provide and not to ignore it and not to provide wishful thinking, but to be conservative in the way that we are looking at things and so on. Having said that, you know, it's like as we indicated, we saw some uptick in the fourth quarter, which is usually happening. We feel that also the midterm elections contribute some revenues, additional revenues to us, and we are looking forward to see what FIFA will bring, as I just mentioned, and hopefully it will be meaningful, but it's very hard to predict right now, and we need to be careful about the future and take our steps step by step in order to understand what's going on in this market. And as we see also from the stock exchange and what's going on in general in the world, every day is a new day and things are changing and moving to different directions. So we need to be very careful about how we build our company and how we invest our resources and how we're sharing results or forecast with the market, basically.
spk00: Okay. Thank you.
spk07: Thank you.
spk10: Your final question comes from the line of Daniel Kane from Tosca Funds. Your line is open.
spk00: Hi. You've asserted on many occasions, and including today, the strength of your business model. But if we look at the evidence of Q2 and Q3 in terms of net revenue, we see negative friends at Tremor and much better performance coming from your US-listed peers. I was wondering if you could give me some perspective around that. What do you think is happening at your peers compared with your own business?
spk07: Daniel, hi. First of all, I think that you know our numbers also from the last year, so you know that last year we grew 64% compared to 2020. Between 2021 to 2020, we grew 64% organically, which was a massive number, basically reaching the best growth in the industry in any manner that you looked at. And we were also recognized as the company that grew the fastest in 2021. I think that it's about the mix of advertisers that you've got, which is putting sometimes pressure on results. We are putting a lot of emphasis of keeping our margins, keeping our profitability, as you know. I think that when you look at that, if you are getting it from D2C, like we mentioned in the PR, it's something that we cannot basically replace or exchange very quickly. Now we believe that with Amobi, basically the dependency on these verticals will go lower because of the total revenues and clients that we got, but in general, D2C was suffering from Q2 to Q3 from a lot of pressure in the market, and we felt it, and we basically acknowledged that to the market. So I think that it's a Everything is relative in life, and we need to look at it in a perspective. And I think that in 2021, when we grew 64%, we created a very high bar. But I think that the company is still generating profits, and we committed and we've done two very important strategic events in the last quarter that will help us in the future. And I think that we are long-term runners. We are not just looking around the corner. And we know that basically the investment that we've done and the integration that we are going to do and the quick response to our mobile integration, cutting costs, and basically tending them to be part of us very quickly will help us in the future. So again, I'm explaining that we grew the fastest last year. We suffer from a vertical that has affected us, which is D2C. mainly that basically went down because of the microeconomic recession and inflation that basically infected these clients to lower their spend in general and with us, and we felt that's the major reason.
spk00: Okay.
spk06: Thank you, guys. Thank you.
spk10: There are no further questions at this time. Mr. Ofer-Drufer, I turn the call back over to you.
spk07: Thank you, everyone. Again, I want to say a few sentences just to conclude and summarize this call. I think that it's a very, very challenging days now because of what's going on in the market that we are not controlling, which is microeconomic powers and forces that basically change and move the market and, of course, infecting our clients and infecting us in general. We are looking at 2022, and we looked at the last two quarters. And from the beginning of the year, we worked very hard in order to fulfill our long-term strategy, because I think that at the end of the day, companies are being judged and measured around the years, not just from quarter to quarter. We are trying to build it. We are trying to build our company for the long term. And I think that we achieved two major successes in the last quarter, which is the acquisition of Amobi in a very attractive price that basically can be integrated into our business, already integrated our business and we conducted the changes that were needed, and the Vida investment that is very massive, creating for us a lot of interesting opportunities, including the FIFA Plus monetization opportunity, but more than that, ACR data, exclusivity on CTV media in the US, Canada, Australia, and UK for the next couple of years on one of the most growing CTV partners in the world. So I think that when we look at that, we are proud and we believe in our way going forward, and this is what's important. And in this period of time, we need to do our best, of course, keep generating profit, keep strengthening our position in the market, and that is exactly what we are doing. So thank you for your ongoing support, and thank you very much for this call.
spk10: This concludes today's conference call. You may now disconnect.
Disclaimer