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spk09: First quarter ended March 31st, 2023 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. I will now hand it over to Billy Eckert, Vice President of Investor Relations, for introductions and the reading of the Safe Harbor Statement. Please go ahead.
spk06: Thank you, Operator. Good morning, everyone, and welcome to Tremor International's first quarter-ended March 31st, 2023 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 limitations, statements and projections regarding our anticipated future financial performance, market opportunity, growth prospects, strategy, and financial outlook, and forward-looking views on macroeconomic and industry conditions, as well as any 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 or unexpected changes in macroeconomic or industry conditions. 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. Trello does not intend to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures of financial information 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 Trevor International. Ofer, please go ahead.
spk05: Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview on the progress of our key initiatives, as well as on our results and strategy. Then we'll end the call over to our CFO, Sagi Neri, to discuss our financials. We will then open the call for questions. As a reminder, Q1 2023 results reflect the combined performance of Tremor International and Amobi, while Q1 2022 figures do not include results from Amobi. During the first quarter, we made excellent progress executing on our strategic vision to combine Tremor International and Amobi to create an horizontally integrated CTV and video-focused edtech platform. fueled by unique and exclusive data that offers a unified comprehensive solution for advertisers and agencies, as well as publishers and broadcasters. We believe once the integration is completed, our platform will feature some of the most robust, effective, and differentiated capabilities for both sides of the ecosystem. As you may recall, shortly after closing the acquisition, we quickly executed an initial efficiency plan over Q3 and Q4 2022 to consolidate our team into one, achieving roughly $50 million in annualized operating cost savings. In Q1, after evaluating both the Tremor Video and Amopi DSPs, we made a strategic decision to move Tremor Video CTV and video algorithm and capabilities to the Amopi DSP given its stronger enterprise self-service capabilities and will sunset the Tremor Video DSP. We also successfully moved the majority of the managed business over to the Amobi DSP during Q1, giving us enhanced confidence that our plan to largely conclude the technology integration of Amobi by the end of H1 2023 remains on track. We continue to expect total annualized operating cost synergies of approximately $65 million related to the integration, including the previous $50 million we achieved. And we'll continue to seek additional saving opportunities to drive further efficiency. In Q1, we also invested significant and necessary resources and management efforts, making the material progress on the combination, integration, and enhancement of our combined sales team. Along those lines, we successfully unified our sales processes and sales platforms into one and provided advanced training to our combined team, which we believe better prepares the company for its next phase of growth and its accelerated CTV market share gains. As we mentioned in our call, combining the sales team and processes took longer than initially anticipated. However, We now feel confident in our positioning with customers and prospects following this investment. Amovi customers have recently begun demonstrating increased interest in the company's CTV and video solution and are increasingly leveraging Unruly for Inventory to realize the data and cost advantages of transacting end-to-end. We have also recognized some notable recent improvements in the advertising environment since early Q1 and anticipate continued momentum in advertising demand for the remainder of 2023, particularly in the second half. We feel that we successfully achieved much of the integration heavy lifting, mainly over Q4 and Q1, which requires significant management team focus. Now, with the sales team and processes unified and the advertising markets showing signals of ongoing recovery, We're encouraged by the early signs of momentum. We also believe the advanced tech platform we have created through the acquisition and integration, as well as our recent investment in innovation, strongly prepare us to take a leadership position in the new era of CTV. We believe the CTV advertising ecosystem is poised for a massive boost and accelerated growth and linear TV advertisers increasingly seek to significantly expand their reach into the streaming ecosystem to reach engaged and expanding audiences. We feel from both technology and operational perspective that we are well situated to work with these advertisers and that our recently released growth planning tool can enable better incremental reach than most going practices and offering available in the market. Our progress achieving our technology strategy was recently further underpinned by the launch of our first two-market cross-platform planning solution, which we are incredibly excited about, as it is a solution the industry has been seeking for years. The technology enables linear advertisers to expand into streaming and CTV, reduce deduplication that occurs when presenting ads across platforms and further enhance our CTV growth opportunity. This capability strongly positioned the company as advertisers and agencies take solutions that enable them to optimize returns on ad spend and more effectively and efficiently plan and deploy spend across linear TV and CTV to reach desired incremental audiences. We believe our ability to now offer customers linear planning and cross-planning capabilities significantly expands our total addressable market. According to eMarketer, advertisers in the next few years will spend nearly $100 billion annually advertising in the US on linear TV and CTV. With our new solution, we feel that we are optimally positioned to capitalize on this enlarged opportunity as we will be able to help customers better navigate the continued expansion of combined linear TV and CTV advertising, with solutions equipped to assist them as two platforms converge. Many major broadcasters and agencies are involved in extensive testing of this product, and we are encouraged by early signs that this tool can drive larger deals, increase product adoption, and higher levels of CTV-related activity on our platform. While we are encouraged that the integration of our mobile technology and sales team will help accelerate our future CTV growth, which we have already seen evidence of so far in Q2, we are also pleased to have achieved strong CTV growth during Q1 ahead of this initiative bearing fruit. CTV, one of our primary focuses as a business, delivered strong performance during Q1 2023, as we were able to generate CTV revenues of $21.3 million, reflecting EVO VRE growth of 34%. Our continued growth and market share gains within CTV are a byproduct of the intentional strategic investments we have made to enhance our product capabilities over the past several years. for the benefit of our customers and partners. We continue to feel very strongly that we are well positioned for leadership within the industry, particularly to achieve further growth and share gains within CTV for several reasons. We believe advertisers will continue flocking to CTV and increasingly leverage programmatic solutions amidst expectation for continued growth in the ad-supported content particularly as broadcasters and advertisers further expand into CTV. This represents trends that we are heavily indexed to and have been increasing our footprint in. For example, CTV revenue reflects 34% of our programmatic revenue in Q1 2023 versus 27% in Q1 2022. while programmatic revenue reflects 87% of revenue during Q1 2023 compared to 73% in Q1 2022. Additionally, we continue to believe that customers will increasingly partner with horizontal end-to-end platforms because of their proven ability to better optimize supply paths and provide strong cost and data advantages for customers. As the lines between DSPs and SSPs continue to blur, we feel that we have strong comparative operational advantage versus peers moving towards end-to-end that have operated as one-sided businesses for several years. We have deeply rooted and rapidly expanding relationship on both sides of the ecosystem and also believe we have attack advantages as our scaled platform is operated horizontally for several years. We also believe the added capabilities and larger market opportunities gained through Amobi, coupled with the expected benefits from our VIDA investment, will further enhance our CTV growth opportunity. In the first quarter, we generated contribution XTAC of $66.9 million, reflecting a decrease of 6% year-over-year. While contribution XTAC declined in Q1, Programmatic revenues was $62.5 million during Q1, which reflects 6% year-over-year growth, serving as a strong underlying indicator for our progress. As expected, Q1 was challenging as advertisers, particularly early in the quarter, reduced spending amidst continued market pressures. January was a very weak month for advertising. While February and early March were slightly better, and late March showed signs of improvement. I'm pleased to report that we have observed significant growth in advertiser activity on our platform to this point in Q2 compared to Q1, and as a result, except sequential, quarterly, and year-to-year growth in contribution XTAC and CTV revenues during Q2. We believe this growth will be driven by improved advertising conditions. Our recent Salesforce enhancements greater anticipated level of CTV-related cross-selling, and increased interest in our combined platform suite of technology, planning, and data solutions. As a result of the historically weak contribution XTAC generated during U1, we generated adjusted EBITDA of $8.9 million, resulting in an adjusted EBITDA margin of 12% as a percentage of revenue and 13% as a percentage of contribution XTAC. As Sagi will touch on later, our end-to-end infrastructure enable high degree of operating leverage, so when the advertising environment is weak, shocks to our contribution extract can have outside impact on our profitability. While these margins were historically weak for us, our ability to achieve some degree of profitability amid challenging market conditions in Q1 highlighted the efficiency, durability, and resiliency of our model and a core reason we intentionally choose to operate horizontally. With that said, we are cautiously optimistic we will achieve significant sequential quarterly growth in profitability and adjusted EBITDA margin expansion during Q2 2023 compared to Q1 2023. and meets the expectation of higher contribution expectations. We are importantly continuing to expand our relationship in CTV, while our partners at VIDA and iSENSE further increase their scale, offering, and reach. For example, we recently announced a partnership with TCL S Falcon. The partnership grants advertising leveraging MOBI direct access to TCL S Falcon innovative ad units on premium CTV inventory in the TCL channel through Annuli, providing the opportunity to deliver impactful and relevant ads to audiences across the U.S., Europe, and APAC. In addition, SVDA, a CTV operating system and streaming platform in which we invested $25 million, continues to grow its distribution, our global exclusive ACL data agreements, enabled by our investment, is expected to increasingly benefit Remo. Later this year, we expect VIDA's reach to grow to a significant enough level of smart TVs in the market that we will be able to generate revenues from advertisers seeking to leverage this critical and fast-scaling global ACR dataset for CTV targeting and measurement. This, coupled with our ad monetization exclusivity, in the US, UK, Canada, and Australia on video media give us optimism for strong future CTV-related revenues opportunities as VIDA continues to onboard more ad-supported content and as its offerings, such as VIDA Free, continue to scale. VIDA parent company, iSense, which ranked number two globally for TV shipments in 2022, also announced it will make NBA League Pass accessible on iSense TVs in North America, beginning with 2023-2024 season. Sport-related CTV advertising opportunities are amongst the most desired by advertisers, given significant and consistent fans' viewership. Through our relationship with VIDA and iSense, we anticipate potential additional revenue opportunities related to this development, as well as future CTV-related sport advertising opportunities. In Q1, we completed our $20 million ordinary share repurchase program, repurchasing approximately 2.5 million ordinary shares, which reflected an investment of 7.3 million pounds, or $8.8 million. From March 1, 2022 to March 31, 2023, between our two completed programs, we repurchased roughly 19.4 million ordinary shares, or approximately 13% of shares outstanding, reflecting a total investment of approximately 77.3 million pounds, or $95 billion. We will continue to evaluate initiating a new repurchase program to sales remains as discounted valuation, as well as other capital allocation strategies. During Q1, the company added 45 new actively spending first-time advertiser customers across travel, real estate, and financial services verticals, as well as others. And Woolley added 62 new supply partners, including 49 in the U.S. during Q1, and MediaApp, and award-winning media agency, also selected on Wooly as a preferred SSP. Finally, as a key milestone in our progress combining and integrating Amobian, Tremors companies and tech platforms, we will announce our new unified brand name by the end of this quarter. When we rebrand, we will consolidate all of our brands under one name, as we believe this will enhance our commercial focus and best convey the value proposition of our unified horizontal platform. With that, it's my pleasure to turn the call over to Sagi.
spk03: Thank you, Ofer.
spk04: Today, I will review highlights and key financial and operational drivers of our Q1 2023 performance, and we'll also discuss our forward-looking guidance. As a reminder, Q1 results reflect the combined performance of Amobi Infirmary International, while Q1 2022 results do not include results from a model. For the three months ended March 31st, 2023, we generated contribution extract of $66.9 million compared to $71 million in Q1 2022, alongside Q1 adjusted EBITDA of $8.9 million compared to $38.7 million in Q1 2022. As a result, we generated an adjusted EBITDA margin of 12% on a revenue basis and 13% on a contribution exact basis during Q1 2023, which compared to an adjusted EBITDA margin of 48% on a revenue basis and 54% on a contribution exact basis during Q1 2022. We observed significant weakness in the advertising environment during Q1, with the most severe weakness occurring in January and February. This weakness was driven by well-known challenging market conditions that drove uncertainty in advertising demand, with particular softness observed in the food, business, personal finance, and entertainment verticals, and performance-related activities as expected, as well as in mobile advertising. However, since early March, advertisers have been more active on our platform, particularly in CTV, and we've seen encouraging signs of stability, better visibility, and momentum as April was stronger than March and as May has been stronger than April. We are also cautiously optimistic that momentum will continue into the second half of 2023 based on our current visibility. During the first quarter, adjusted EBITDA and adjusted EBITDA margins were significantly lower than historical levels, which was driven by the weak environment early in the quarter, our ongoing integration of Amobi, and the nature of our end-to-end infrastructure. Once we nearly complete the integration of Amobi by the end of Q2, we expect to realize positive effects on our sales organization, cost structure, and profitability compared to Q1, and believe we will save on tech fees by consolidating the two DSPs into one enhanced platform. Additionally, our enhanced horizontal infrastructure will enable high degree of operating leverage. However, during times of constraint, advertising budget and lower overall spending on advertising, maintaining a high fixed cost infrastructure like we encountered in Q1, can result in significantly lower profitability. With that said, the great benefit of operating a business with strong operating leverage, particularly on that is very liquid and cash-generated, such as ours, is that when advertisers are more actively leveraging the platform and the company is generating higher levels of revenue, most of that added revenue flows through to profitability. enabling us to quickly grow profitability, expand margins, and generate robust cash flows. As I mentioned, we have cautious optimism for Q2 based on the higher level of advertiser activity we've seen across our platform to this point in the quarter, and believe we will be able to generate increased adjusted EBITDA and expand adjusted EBITDA margins in Q2 2023 compared to Q1 2023. Despite the weakness in contribution exact during the first quarter, we generated record Q1 programmatic revenue of $62.5 million, which reflected 6% year-over-year growth from $59.1 million generated Q1 2022. Programmatic revenue as a percentage of revenue increased to 87% in Q1 2023, compared to 73% in Q1 2022. These results were boosted by our ongoing focus on programmatic activities, as well as by the expanded programmatic footprint we gained through a model. We believe our increased programmatic footprint will be an ongoing norm as we continue to expect to experience growth in programmatic revenue and declines in revenue associated with our performance business for the remainder of 2023. CTV, as Ofer mentioned, continued to be a bright spot as we gained favor market share and achieved strong year-over-year growth. In Q1 2023, we generated CTV revenue of $21.3 million, reflecting a Q1 record and 34% growth compared to $15.8 million in Q1 2023. Video revenue continued to account for a majority of our Q1 2023 programmatic revenue at 75%, which was down from 93% in Q1 2022. This reduction is a byproduct of the ongoing integration of Amobi. When we acquired Amobi, it didn't have as large of a footprint in video and CTV as Tremor International did. However, we encourage by initial signs of our ability to cross-sell Amobi customers to leverage our robust CTV and video capabilities, including positive signals that several Amobi customers have begun to leverage unruly or inventory due to the end-to-end platform benefits, as opposed to other SSPs. We expect video revenue will increase as a percentage of programmatic revenue beginning later in 2023, once we complete the integration of Amobi, and as the company's sales team continues to execute on cross-selling its video capabilities to Amobi customers and attract new customers. Our robust suite of CTV and video solutions depreciated offering and strong partnerships, coupled with streaming services continuing to launch new ad-supported tiers, and advertisers increasingly seeking programmatic solutions, particularly within CTV, give us high confidence in our future growth prospects. We also anticipate continued improvement in the advertising environment during the second half of this year. While having added scale as a company, more customers with strong cross-selling opportunities, a significantly expanded addressable market, and the ability to service customers holistically and across their entire workflow. Turning to our cash flow, We used $7.9 million in net cash from operating activities during Q1 2023 after generating net cash from operating activities of $16.1 million during Q1 2022. This reduction was largely a byproduct of the weak advertising demand environment earlier in Q1. During the first quarter, we also incurred approximately $5.1 million in one-time severance and retention bonus-related costs associated with the reorganization of Amobi employees into the Tremor International base, as the company continues to focus on efficiency and optimizing its combined cost structure. As of March 31st, we had $89.1 million net cash, as well as $80 million undrawn on our revolving credit facilities, providing comfortable liquidity for the ongoing needs of the business. We also generated a non-IFRS diluted loss per ordinary share of 3 cents for Q1 2023 versus non-IFRS diluted earning per ordinary share of 17 cents in Q1 2022. Finally, I will now turn to our outlook. We continue to expect challenging market conditions to weigh on advertising budgets for the near future, at least through the end of age 1, 2023, but anticipate improved results throughout the remainder of 2023 compared to 2022 and the early part of 2023. Thus, far in Q2 2023, Tremor has experienced stronger advertising demand compared to late 2022 and early 2023. We are cautiously optimistic that the higher levels advertiser activity we've observed on our platform so far in Q2 will result in sequential quarterly and year-over-year growth in contribution XTAC and CTV revenue, as well as sequential quarterly growth in adjusted EBITDA in adjusted EBITDA margin expansion in Q2 versus Q1. Based on current visibility, we expect contribution XTAC, CTV revenue, adjusted EBITDA, and adjusted EBITDA margins will experience both sequential and year-over-year increase from age 1, 2023 to age 2, 2023, as well as from age 2, 2022 to age 2, 2023. Additionally, we also believe we will experience significant active in sequential quarterly growth in Q4, 2023 versus Q3, 2023, as well as a significant year-over-year growth in Q4, 2023 versus Q4 2022 in contribution extract, PTV revenue, and adjusted EBITDA, as well as adjusted EBITDA margin expansion over those two periods. While we acknowledge that challenging market conditions may persist and weigh on advertisers' willingness to spend over the near term, we are confident that we can continue to drive growth and expand profitability for the remainder of 2023 due to several factors. First, we believe that our sales team has made important and necessary changes to unify the team and consolidated processes to focus on driving larger enterprise deals and an increased number of end-to-end platform customers. We also anticipate that the integration of Somobi will essentially be completed by the end of Q2 and that our investment in Vida will begin generating revenue later this year. These accomplishments, when combined with the expectation for enhanced visibility, increased stability, and improvement in the advertising demand environment during the second half of 2023, are expected to bode well for Tremor and its shareholders. As such, we are pleased to reiterate our previous guidance for full year 2023, contribution extract of approximately $400 million, and and full-year 2023 adjusted EBITDA of 140 through 145 million dollars. Additionally, for full-year 2023, we expect programmatic revenue to reflect approximately 90% of full-year 2023 revenue. With my remarks completed, I'll turn the call back to Oxford.
spk05: Thank you, Sagi. While 2023 has not been without challenges, It has been an exciting year for us so far, and we are pleased to have continued growing our CTV market share during Q1, while positioning ourselves for continued expansion within CTV for the remainder of the year and beyond. We are also thrilled to see early signs of advertisers increasingly expanding again and have cautious optimism this momentum will continue during the back half of 2023. The investments we made to enhance our CTV capabilities and sales organization we believe have already begun paying off since the end of Q1. We also believe our cross-platform planner is a game-changing technology that will continue to gain further traction with major broadcasters and agencies. Having this unique ability to plan linear and cross-platform campaigns put us at the center of a major conversion in the US TV advertising market. We believe we are now better able to capitalize on these conversions with enhanced skills and depreciated planning capabilities that benefit our customers. We also believe that operating horizontal platform put us at the center of the buy and sell side of the ecosystem with the significant data that provides advantages for customers seeking data-driven solutions that optimize returns on ad spending and help them reach desired audiences. As we finalize the integration of Amobi, we are also excited to launch our new unified brand and for Vida and iSense to continue growing their footprint and distribution all at the time when the advertising market is building renewed momentum. This combination of factors give us optimism. We are well positioned to become leaders in the new era of CTV and continue growing CTV market share, accelerating contribution exit growth and achieving strong profitability for the remainder of 2023. I want to thank our shareholders for their continued support and our employees for their hard work. I look forward to continue working together to realize the company's growth prospects. Operator, we will now take questions.
spk09: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from the line of Brad Swanson from RBC Capital Markets. Your line is open.
spk10: Yeah, thanks, guys. So, I mean, congratulations, I guess, first on the integration of Amobee. Could you maybe touch on what's left to do from the integration standpoint in Q2 and maybe what the costs associated with it are, you know, roughly on a completion percentage? And it was also really good to hear the initial kind of cross-sell success of seeing Amobee customers start to, you know, move more towards video. Could you just maybe elaborate a little too on, you know, what gives you the confidence that that continues in the second half of the year?
spk05: Sure, I will take this one. So from the integration perspective, we basically, as we said, we choose already to use the Amobi DSP because of its depth of details around enterprise solutions, which is very important, of course, for our future. And what we've done until now, we basically moved a lot of the algorithm or all the algorithms that were involved in our DSP and all the capabilities that were related to CTV and video from our DSP to the Amobi DSP in order to sunset the Tremor DSP, in order to have one DSP that is very powerful and basically enjoy from all the capabilities around CTV and video, but also enjoy from all the capabilities around the enterprise solution that Amobi worked so hard in order to build over so many years. So now we believe that we have a very strong and capable omni-channel of DSP that we are able to use which is also, of course, enterprise solution. What is left until the end of the quarter is, as we said in the PR and in our message, we basically moved already most of our managed activity, and now we are in the activity of moving the rest of the activity, which is basically the third-party clients that are using our DSP to the new DSP, and this will end by the end of this quarter. and then we'll be able to sunset, basically, the Tremel DSP. Apart from that, this is the massive liftoff that we did over the last few months. The next thing is also to integrate our DMPs that will happen until the end of the year, but this is a minor compared to the DSP that we already integrated. The second point that you asked us about, basically, this cross-platform. So I think it's a great question, and I'll explain our... strategy around that. So basically what we believe that is happening in the market right now is that more and more advertisers that are basically used to buy or buying linear TV, they're also predicting how to expand and to reach also customers or potential customers in the linear, in the streaming and CTV area. And this is a growing force from data that we see. The percentage of the reach from CTV and streaming is growing compared to linear, so people are really open to do that. In the past, and for many, many years, people were talking about the extension of linear advertisers into CTV and streaming, basically, but I think that now the time is right. After a few years where customers basically moved their habits in order to use and to consume content on CTV and streaming, The second thing is there is a lot more content now that is available on streaming and CTV. And the last point is also the technology that enables them to do that now. So what we are basically offering them is the ability to plan their linear TV spending, but also to make sure through our technology of cross-platform that if they are buying or they are interested in buying also streaming and CTV, which most likely they will like to do, they can do only with incremental usage and avoid duplication, which is very meaningful, of course, because as we know, people don't want to pay twice for the same user. So basically, they have the ability to reduce the deduplication and run and engage incremental users on the streaming and the CTV. And we see already a reaction from big broadcasters, brands, and agencies that are interested in testing and in already advanced testing mode of this technology with good success, and we believe that this is the future, which will enable us to enjoy because what we will be able to offer them is not just to provide this tool, but also to provide a user extension management on our basically SFP, which includes a lot of the reach of CTV. As we can see, CTV is already growing very rapidly on our platforms.
spk03: I hope that answers
spk10: Yeah, that was a great answer. It's super helpful. One other thing you mentioned, and obviously we're all kind of seeing, while not full stack, there's certainly more momentum towards companies. I think you kind of used the word, the gray area between the DSP and the SSP is blurring with people creating more end-to-end solutions. Does this market momentum, do you think that makes it easier for you to explain your value proposition to new customers, just with it being a little bit more prevalent across the ad tech space?
spk05: Of course. So we started this process already in 2019. We believe that to have an end-to-end solution which includes from end-to-end all the solutions that the advertisers, the brands, and the publishers basically need, meaning the DSP, the DMP, meaning the data elements and segments that they can create, and also the SSP, which will enable them to reach their right audiences, is very important. not just for the clients on both sides, but also for us, of course, in order to keep healthy margins that will enable us to keep investing in technology and innovation. So what we see lately, after many, many years of people basically saying that they like to specialize in their demand side or supply side, which of course we respect, we see now people that are basically moving and crossing the line and enabling their clients and publishers to do both like we do. The big advantage that we got is that we are doing it already for almost more than four years. And the second thing is that basically from what we saw in the market until now, most of the solutions that are being offered from the SSP solution are not fully functional DSPs like ours. So I think that from technology perspective, we have an advantage. And from from the fact that we are basically using this solution for so many years, already incorporated all the technologies all together, I think that it's bringing us a lot of advantages in the market. The next step that we've done is what you touched before. We added these tools of planning tools that are very important because better planning, better results, which is massive, especially in this field that you want to get your money into play in a big manner, you want to plan well, to get the best results out of your dollars and we are enabling it as part of the horizontal integration that we offer. And the second thing, may I call it the glue of everything, is unique and exclusive data that we gain through the agreement with VIDA, which is giving us access to ACR data globally on an exclusive basis for the next couple of years. And as we see, VIDA is growing, is becoming like a leader in CTV and smart TVs in the world, and it's giving us access to a lot of data that we are able to use in order to do targeting and measurement, which is really helpful for all these pieces. So I think that our ecosystem, the platform that we created, is getting more recognition. The business model that we choose is getting more recognition from the market, from the players, from the peers, from the colleagues in this business. And I feel that, as I said, we have an advantage that we are doing it for four years. We have an advantage that we have technology is across the board and we have on top of that these tools that we just acquired through their mobile position and the data that we got from VEDA through the investment and the partnership that we built with them.
spk03: Thank you.
spk09: And your next question comes from a line of Laura Martin from Needham. Your line is open.
spk07: Good morning, you guys. I've got a couple. So let's just build on the last point about data, Ofer. I love the data deal, but my question to you is, how do you think about what data you use to make your ad products and ad units more valuable? And then how do you think about selling your data to others in like a package so you have a data revenue stream? How do you balance those two uses of the exclusive data rights you have with Hisense and Vita?
spk03: Okay.
spk05: So first of all, as we know, ACR data is one of the most effective data sets in order to target users. It's giving you another layer of knowledge, another layer of information about your potential audiences that you want to reach. And the fact that we are the only basically open web partners that has an agreement like that is, of course, enabling us to do a lot, will enable us to do a lot in the coming years. meaning most of the other teams that are out there, most of the other smart TVs like LG and Samsung, of course, that are in the market, are more like World Garden. We are acting like more open web in this matter of data. So it gives us, I think, like uniqueness and, of course, ability to do a lot of interesting things on our platform. The second question that you ask about utilizing the data on other platforms, we are able to do that. We will be able to provide the data in order to provide measurements and even targeting, but we will tie it in some way to our platform. Meaning, if we are providing it to other DSP, we will welcome them to basically buy media on our SSP or use our other tools in order to make it interesting also for us from commercial perspective. And if we are offering measurements, of course, it's the same. So I think that what we are building here, it's an ecosystem that enables people to use the data, but also to engage with our platform. And I think that this is very meaningful in this essence, because as I said, I think that our peers are doing an amazing job with ICR data, meaning Samsung and LG and other people that are basically able to to use their data in order to target and measure, and we want to join these capabilities and enable targeting and measurement also on our platforms.
spk07: Okay, that's super helpful. I didn't realize it was going to tie back to your platform. And then I wanted to talk about cash usage. So you have round numbers, $90 million of cash. You lost round numbers, around $8 million, and you bought in a bunch of shares. My question is, why buy shares at a time when you're also losing money? Why not hoard cash until you're sure that you're back to free cash flow positives?
spk05: First of all, Sergei, if you want to comment on that, but we stopped with the buying of shares.
spk03: Yeah, I'll take that question.
spk04: Thanks, Laura. First of all, we issued like $95 million of repurchase plan back in 2022, we concluded it through Q1. So it's ended now, and we are not investing any money in repurchasing our shares anymore. And as you said, we are considering that going forward, but we will do so when we will be cash generative again very soon. And, of course, if we will find some other users for the money, we will consider that as well. So for now, it's ended, and we are keeping our cash. And soon in Q2, we will be cash-generated again.
spk03: Thanks very much, guys. Thank you. And you're next.
spk09: And your next question comes from a line of Mark Kelly from Stiefel. Your line is open.
spk03: Great. Thank you very much.
spk02: Can you help us bridge the gap a little bit on the programmatic segment just a little bit more? How do we get from the 6% growth you just put up in Q1 to get to 38% growth for the full year, I guess? you've got a tougher comp in Q4 given that, you know, Moby was baked in there. I guess any help in terms of how the programmatic line should play out would be helpful. Thank you.
spk03: Okay.
spk04: Thanks, Mark. I'm not sure exactly what is the 38% you are referring to. What we said is that in Q1 our programmatic revenue went up by 6%. It was unfortunately upset by a performance decline. We are assuming that until the end of the year, around 90% of our revenues will be generated through programmatic activities, which we disclosed a long time ago that this is our main focus. This is where we are putting our main effort. That's it, the 38%. I'm not sure exactly what you are referring to.
spk02: Sorry, sorry, 31%. If I'm going to use your, so 360 million for the year for programmatic for net revenue, that would be like 31% growth. I misheard you. I thought it was 95% of net revenue would be programmatic.
spk04: Yeah, 90%. Out of the 400, yeah, 360 will be programmatic, 90%, exactly.
spk02: Okay, then I guess, how do we get from 6% growth in Q1 to 31% for the year on the programmatic side?
spk04: Again, you know, as we are maintaining our guidance at $400 million of net revenue in 140 to 145 adjusted EBITDA, we are a company that uses a lot of economy of scale, so we are expecting that the next quarter's revenue generation will be much higher. And from that revenue generation, most of it will come through programmatic activities. So this is the way we are reaching this gap of increasing our programmatic revenues to 90%. Okay.
spk02: All right. Got it. Thank you. And then just quickly, you know, you talked about better visibility, and I know a lot of that comes from your conversations with advertisers and agencies. But I'm just curious about, you know, you've made some changes. You've got the linear planning tool in-house now. You've got the sales reorder you did. I guess, are there other changes that you made that are maybe also helping you gain more visibility than you had in the past?
spk05: I think that a mobile programmatic process moving more activity into in-house Basically, also when we are looking at connecting all the platforms all together, all the infrastructure of the sales, as we mentioned also in the PR and on the RMS that we issued, was a very heavy lifting effort in order to connect the both sales teams, all the processes, procedures, and to move all the activity to one platform. So we feel that now we have a better understanding and a better control, the first thing. The second thing is, of course, After moving the attention of management from all disintegration to growth now, and the improvement that we feel in the market is giving us a better understanding of where we are standing and what we are going for. And we feel, as we say in the PR, that basically we are going to eat our numbers that we mentioned, that we gave to the market.
spk03: Okay. Thanks very much.
spk09: And your next question comes from a line of Andrew Boone from JMP Securities. Your line is open.
spk08: Good morning, and thanks for taking my questions. I wanted to start just on the operating leverage that, Sagi, you mentioned in your prepared remarks on the business. If I go back to pre-COVID, you guys were more or less in kind of the mid-30s in terms of EBITDA margins. That clearly accelerated through COVID, and now we're probably troughing here. Can you just talk about maybe in a more normalized macro environment where we should expect EBITDA margins to kind of pencil out? Understood the business is bigger with a MOBI, but how do we think about a more normalized kind of EBITDA margin environment as we get through this cycle?
spk03: Great question, Andrew.
spk04: So, you know, we have like 13%. adjusted EBITDA margin in Q1. And of course, as you said, everything within Tremor in other companies is economy of scale. So we are anticipating adjusted EBITDA margin to increase dramatically through Q2, through Q4. And of course, it's supposed to reach in Q4 somewhere around the 50% adjusted EBITDA margin where we were in the past. Of course, we need to take into consideration that the new cost structure with Amobi is a little bit different, and we need to reach a level of revenue in order to get back to that on an yearly basis. So if I'm looking on our guidance, we are somewhere around the 35% adjusted EBITDA margin on an yearly basis. And if I need to go forward, probably in 2024, we can reach somewhere around the 40%. To go back on an yearly basis to 50% will take us more time. But at the end, we will get there. And of course, we are refining our cost structure all the time. We disclosed the $65 million of efficiencies and synergies that we did with the acquisition of Camobi, which we already completed around 90%. And of course, on top of that, we are refining our core structure all the time. So these are the numbers.
spk08: And then I wanted to ask something that I guess is more of an industry question. As we think about ID offerings that are in the marketplace, and as we think about Google deprecating cookies in the back half of next year, understood that doesn't relate to CTV and kind of video more broadly. But can you just talk about how you guys view cross-platform measurement? What IDs are you guys adopting, and how do you think about the measurement attribution side as you think about connecting users across platforms? Thanks so much.
spk05: No problem. I will take this one, Sagi. So basically we build a platform on our DMP that is enabled to, to use and connect to all the identity tools that are basically developing the markets is the moment that Google announced that they are going to remove the cookie basically. And we are working very closely with all the market leaders on that front. So I think that on that front, we, from, We are very advanced in this, our solution, and we are enabled to basically use and extend our reach to all these providers and companies that develop solution and so on. The second inherited advantage that we get is that we have a full end-to-end solution. So basically we can use our end-to-end solution in order to bypass the usage of cookies when we are running some of the campaigns. So the effect of this move, if it will happen, will be very minimal compared to the market, and that's basically how we build the platform and the setting of our technology, which enable us. So if I need to summarize, first of all, we build a platform that is integrated and working and consume all the data from all the leading platforms in the market. The second one is the end-to-end solution, which is basically lowering the need in cookie because we are end-to-end solution and we are sitting on both sides.
spk03: All right. Thank you.
spk09: And your next question comes from a line of Andrew Merrick from Raymond James. Your line is open.
spk01: Thank you for taking my question on the MOB cross-selling tool. You talked about getting traction with buyers that tend to be more on the linear side, but is there an education process or maybe like a longer quote unquote sales cycle that you have to embark on with these more traditional linear buyers that makes the ramp up process longer for them as they start to get into CTV?
spk05: So great question. I think that the, uh, First of all, there is education process that we need to make to conduct and we are already in this process for several months. The other issue is that this unit, it's not coming in order to out of nowhere. I think that All the broadcasters, all the companies that are basically dealing with what we call linear advertisers, they are already aware of the need to expand their campaigns into what we call streaming and CTV. So it's a need that is coming from both sides. It's coming from us trying to develop this solution, but also from the actual broadcasters and brands and other service providers that understand that they need this solution in order to to provide better solution and better service to their clients. So I think that the process of educating the client, the providers, the companies, the broadcasters will be shorter than expected because we are not trying to basically deliver a new technology that is coming out of nowhere, but it's coming out to cover a very rational and existing need of all these brands, agencies, Broadcasters and other providers that understand that they need a tool that will enable them to extend into streaming and CTV and reduce duplication of exposure to the same user. I think that, of course, it needs education. It's longer to work with this type of companies, which are broadcasters, which have longer cycles of initiating and getting into new technologies, usually because of the heavy-duty platforms and so on. It's taking a little bit longer than programmatic, but we feel that we are in the right point, that people are looking for this solution, and the education is minimal. It's more about integration and about... how to create mutual work processes in order to take advantage of these tools.
spk03: Thank you. I appreciate the call.
spk09: And your next question comes from a line of Eric Martinuzzi from Lake Street. Your line is open.
spk11: Yeah, I know you didn't give direct guidance on Q2, but I wanted to dive into that. Right now we've got a consensus number of 92.4 million on the Contribution X-TAC and adjusted EBITDA number of 27.6 million. Understanding that you expect to be up sequentially in Q2, are those numbers realistic or are you trying to tell us that, you know, maybe given the macroeconomic conditions that we are going to be, that those would be more of a stretch?
spk04: Yes, so as you said, we are not giving guidance or didn't give guidance to Q2. And yes, the analyst consensus is around $92 million in contribution exact. Again, it's an aggregation of different numbers that different analysts are assuming that we will achieve. I think that's what we said in the earning call itself and answering the question. We are seeing, you know, good momentum. We are seeing some bounce back from advertisers and clients. And we think or we assume that we will do much better numbers than we did in Q1.
spk11: Okay. Let me ask it another way. The loading of the year, I think historically, or at least for 2023, you talked about a 40%, 60%. Are you stepping away from that front half, back half?
spk04: No, I think we are in the line of those numbers. I think that historically, you know, it was somewhere between 55 to 60 and 40 to 45 between the different apps. No, we are not stepping down from here. I think we took into consideration that Q1 will be a little bit lower because of the long integration and consolidation, mainly on the sales team. you know, unifying our offering, unify the product, taking care of all the marketing material, et cetera. So I think we are in a good place. We managed to end this process, and we are ready to work and roll, and we are seeing the first signs of the fruits of all of that hard work in the last six months.
spk11: Okay, and then Ofer, on the branding effort, do we have any clarity? I know you don't have anything to announce today, but have we narrowed it down to whether it will be creation of a new brand or doubling down on one of your existing brands?
spk05: It's a nice question. We are going to announce a new brand until the end of the quarter. I think that it will help us in three levels. One of them is internally to create like more connection between all the teams that will feel that they are creating and part of something bigger that we created now. The second thing, which is very important, of course, is to the market that it will be easier for the people to understand what we are offering and how we are offering that. And the third one is also, of course, to the financial markets to better understand what we are doing and how we are basically connecting all these acquisitions and innovation that we created in the past few years.
spk11: Okay, but does that involve the creation of a new corporate entity, a new stock ticker?
spk05: It's too early to talk about it, and of course, when we will announce it, you will know.
spk11: Okay, thanks for taking my questions.
spk05: Of course.
spk09: And there are no further questions at this time. I will now turn the call back over to CEO Ofer Drukha for some final closing remarks.
spk05: Thank you, everyone, for your questions. I think that your question basically covered all the points that I wanted to maybe to sharpen and so on. And I think that what we see here is a growth of CTV in our activity across the board. We feel very solid about our solution, our position in the market. We feel very good about the things that we basically created and worked on in the past more than one and a half years, like the agreement with VIDA, the last acquisition of Amobi that basically enabled us to integrate also this cross-platform planning tool that we believe that will drive more activity to our CTV ecosystem. And we believe that the future, is in the horizontal integration, the end-to-end solution, like we see that is coming also from our peers, and we feel recognition to our strategy that we launched in 2019. So we are very glad about it because usually a lot of the questions were around why you choose, why you guys choose to work end-to-end, and now we see that all the industry or majority of the meaningful industry is moving to this direction which is giving us of course the cognition to our strategy and we feel that we have advantage around that because we already practice like that for several years and our technology is set is built and is is a is fully functional for all these capabilities around end-to-end solution and horizontal integration so It's a challenging year from a lot of aspects of integration, macroeconomics, and so on. But as you can see, I think that we made a lot of achievements in the past few months, and we are really glad for all the action that we've done and for the direction that we choose, and we feel excited for the future. So thank you very much, everyone.
spk09: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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