The Trade Desk, Inc.

Greetings. Welcome to the Trade Desk Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Chris Toth. You may begin.

Thank you, Operator. Hello and good day to everyone. Welcome to the Trade Desk fourth quarter 2022 earnings conference call. On the call today are both founder and CEO Jeff Green and Chief Financial Officer Blake Grayson. A copy of our earnings press release can be found on our website at thetradedesk.com in the investor relations section. Before we begin, I would like to remind you that except for historical information, some of the discussion and our responses in Q&A may contain forward-looking statements. which are dependent upon certain risks and uncertainties. These forward-looking statements represent our belief and assumptions only as of the date such statements are made. Actual results could vary significantly, and we expressly assume no obligations to update any of our forward-looking statements. Should any of our beliefs or assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found on our earnings press release. We believe that providing non-GAAP measures combined with our GAAP results provides a more meaningful representation of the company's operational performance. With that, I'll now turn the call over to founder and CEO, Jeff Green. Jeff?

Thanks, Chris, and thanks, everyone, for joining us today. Let me start by highlighting the numbers. The spend on our platform in 2022 was nearly $7.8 billion, a record for us. Fourth quarter revenue alone was $491 million, also a record. CTV continued to be our strongest growth driver as more content owners from around the world are moving beyond ad-free subscription models and offering ad-supported options for viewers. And once again, despite all the uncertainty of the year, we delivered strong profitability, highlighting the operating leverage we have in our business. Our results are often benchmarked against the rule of 40 and compared to other high growth companies. In that benchmark, The health of a technology company is expressed as the sum of a company's growth rate and EBITDA margin. In 2022, we finished well over that benchmark again. For the sixth year in a row, we were over 50%, all while we continue to invest to drive future value and growth. In times of market uncertainty, perhaps it's most useful to look at how we are performing compared to the broader industry. According to estimates by Dentsu, Total global ad spend increased 8% last year. Spend on our platform grew more than three times that. With uncertain macro conditions where most marketers are under pressure to do more with less, we continue to outperform and gain share. I'd like to focus on why we're winning market share during this time of uncertainty as I think it gives a sense of the dynamics in our industry right now, which I expect to be in place for the foreseeable future. Specifically in the last six months of 2022, the trade desk started to separate from much of the digital advertising market in terms of relative outperformance. In the third quarter, we reported 31% growth while our competitors were either in retreat or posting single-digit growth. That same trend continued into the fourth quarter as we grew 24%. And most of our large competitors were posting between negative nine and negative 2% growth. I don't think we've ever had the level of industry outperformance in our six years or so as a public company, as we did in 2022. And it means that we can be very confident that we're gaining share and that our platform continues to gain traction with advertisers. I remain convinced that in times of uncertainty, as marketers look to do more with less, they are continuing to prioritize decision media on the open Internet. With the Trade Desk and the open Internet, marketers can measure ROI and value with more objectivity. And that means they'll prioritize us over the limitations of Walt Gardens. With that in mind, Insider Intelligence reported a couple weeks ago that 2022 represented the first year in a decade that Meta and Google did not account for more than half of the digital advertising market between them. That shift comes as the digital advertising market continues to expand. Before the pandemic, digital advertising accounted for around half of total market spend. Last year, it represented more than two-thirds of the market, according to GroupM. What's driving these two trends? Well, as I've said many times before, CTV is changing everything in advertising. Not only is the shift from linear to CTV driving significant growth in digital spend as advertisers shift dollars from linear TV to connected TV, but more spend is happening outside the wall of gardens as advertisers shift spend from user-generated content to premium streaming content. I'd like to expand on this in a couple dimensions because I think it will give you a sense of why I'm so optimistic about our potential to grow this year and beyond. First, I'd like to touch on UID2 because so much has happened around identity in recent months that points to how the industry is evolving. Second, I believe we are starting to see advertisers challenge the wild garden business model more systematically than ever. And it's because they have premium alternatives at scale in fast-growing markets such as CTV and retail media. And last, I'd like to touch on what all of this means for us in 2023. So let's start with UID2. First, as a reminder of what UID2 is, a few years ago, we created, in collaboration with other open internet companies, an identity currency for the open internet based on either an email address or a phone number. UID2 is anchored on those two consumer data points so that consumers can own and manage their identity around the Internet, rather than managing privacy settings for each device or ecosystem like Apple or Google's. Our goal was to create a personalization technology that was more privacy safe than cookies and better at empowering consumers than any alternative in the market. Once UID2 was built, the technology was open sourced, and we welcomed the partnership of Internet governing bodies, as well as the broader digital advertising ecosystem, including agencies, brands, content providers, ad tech companies, and data partners. We have always believed a critical mass of adoption would lay the foundation of a massively upgraded Internet, one that incents more competition and improves privacy standards. And that's exactly what we are starting to see. If you had told me at this time last year how much progress the industry would have made on UID2 in 2022, I don't think I would have believed you. At the beginning of our fourth quarter last year, around 15% of the third-party data ecosystem was activating on UID2. This is essentially a very large sample of the entire data ecosystem of the entire internet. By the first half of this year, we expect we will be in the 75% range. Levels of activation that high mean we will have effectively solved the identity matching challenge of the entire open internet on a scale well beyond anything cookies have ever accomplished. And all while providing consumers with much greater control over their privacy. To be clear, I'm talking about companies adopting UID2, such as AWS, Snowflake, Salesforce, and Adobe. We always said this change to the Internet required adoption of the infrastructure players of the Internet, not knocking on 2 million publisher or content owners' doors. By upgrading the data infrastructure of the Internet, there is now a significant mathematical incentive for every reputable player involved in digital advertising to lean in to UID2. This is already happening with thousands of publishers in all channels of the open internet. UID2 adoption by publishers is creating the richest, most privacy-centric identity environment we've ever seen for advertisers. And it also means an advertiser's first-party data becomes exponentially more valuable. In fact, I would say again that it becomes about 10 times more valuable than with cookies, simply because UID2 solves the needle in the haystack problem that came with cookies. because advertisers can now match their customer data with accuracy across the open internet more effectively than ever before. They can make much better decisions in every aspect of campaign optimization, including attribution and measurement. And they can do so without ever compromising the consumer trust they have spent years, sometimes decades, establishing. To help advertisers take advantage of this new value at CES, we announced Galileo, a new service that helps advertisers easily onboard and activate their first-party data. Galileo is only possible because of all those integrations we worked on last year across the data ecosystem. Galileo starts with advertisers activating their first-party data. UID2 can then be applied to ensure that data can be used in a privacy-safe way. Of course, it's not just on the data side that we're seeing critical mass of UID2 adoption. UID2 is starting to change the value of the inventory on the internet. Because CTV is almost 100% authenticated, CTV is being upgraded while non-personalized ads on the web, mobile, and UGC sites are being downgraded. As a result, increasingly the world's leading publishers are embracing UID2. With CTV, we've talked previously about how Disney is applying UID2 across its media portfolio. Just a few weeks ago, Paramount announced their integration with UID2 across their IQ inventory, which includes Paramount+, Pluto TV, BET, CBS News, CBS Sports Network, Comedy Central, MTV, Paramount Network, VH1, and many others. I shared the stage at CES with Paramount advertising president John Haley. He talked about the importance of unified identity in helping agencies and brands tie together campaigns in a fragmented, omnichannel environment. And I couldn't agree more with his sentiment. UID2 will continue to grow as cookies become less important. And CTV will continue to lead the charge here. Because right now, there is economic pressure on everyone in the advertising ecosystem. There is pressure on consumers who increasingly want ad supported lower cost options because of the strain on their wallets. There is pressure on content providers who need high CPMs to fund their premium content in the arms race for new subscribers. And there's pressure on advertisers, many of whom need to do more with less. All of that creates opportunity for CTVs. At a moment when advertisers need to prove value and ROI, there is more opportunity than ever to advertise via CTV in a more data-driven way. Pioneer advertisers are already taking action. For example, leading advertisers running campaigns on Disney, leveraging UID2, have been 12 times more effective in reaching their target audience than without UID2. That's astonishing progress. and it's just the beginning. Much more will be said this year about the impact UID2 is having on the biggest brands and media companies in the world. CTV is the kingpin for the open Internet, and I believe its size, its efficacy, and its value will be transformational in showcasing the power of the open Internet to advertisers. Eventually, it will force many walled gardens to lower their barriers. This will happen in part because CTV is perfectly fragmented, but collectively huge. It's not so fragmented that you need millions of parties to coordinate, but it's fragmented enough that no one has enough power to be draconian and go it alone. As a result, everyone is rational enough to make the right decisions for the ecosystem that optimize the experience for viewers, advertisers, and of course, media companies. Because of these dynamics, I also believe that 2023 will be the year that everything in TV changes. We now have premium CTV inventory at scale, almost all of which is authenticated. And we'll see more of a premium attached to inventory that incorporates new identifiers such as UID2. But in order to get the best out of data-driven TV advertising, you cannot use a forward market that was invented in 1962. By the way, that's the same year the cassette tape was introduced. The cassette tape has evolved. In fact, the way we consume music has evolved many, many times over the last 60 years. But the upfronts have not. The market needs an upfront that is always on, but also leverages data so that content owners sell fewer, more relevant ads at higher CPMs and advertisers get more efficacy. To adjust for high CPMs in CTV today, advertisers are asking us for a new forward market where they can leverage data on an everyday, always-on basis. Advertisers have to make their ads more effective to justify higher ad prices. It takes a long time to unwind the culture of multibillion-dollar commitments signed during a few days each spring and bring the process into today's digital environment. But this is already starting to happen as media companies can no longer justify the CPMs required to power today's content arms race without a contemporary forward market where advertisers leverage data. We will talk more about our CTV forward market strategy at an event that we will host in early March in advance of the upfront season. This is the first time we're hosting this kind of event where our streaming inventory partners will be able to showcase their value and innovation to our top clients. And what's interesting about this event is that I don't think there's any company in the industry that can convene this level of media and advertising leadership to have this discussion. I believe this event marks an inflection point for the Trade Desk. But I think it will also underscore the pivotal role that CTV is playing in the broad transformation of digital advertising. It will showcase the emergence of premium CTV inventory at enough scale to provide a compelling alternative to the limitations of walled gardens and user generated content. And it's not just here in the United States. CTV and premium video is the fastest growing digital advertising channel worldwide. In Indonesia, we recently ran a premium video campaign for Mondelez, the global food giant. Using our platform, Mondelez was able to target specific audiences on premium video content from media companies such as Video, WeTV, and iFlix. For this campaign, Mondelez shifted spend from popular user-generated content platforms, and the results were very positive. Ad completion rates were eight times higher than what they've been achieving against user generated content, and the click-through rate was 15 times higher. In addition to CTV, one of the rapidly emerging areas of digital advertising is shopper marketing. Shopper marketing, of course, has several components to it. Probably the most interesting part is the retail media segment. Interestingly, the dynamics of the market are not dissimilar to CTV. Retailers realize that they cannot maximize the value of their shopper data by building walls around it. They stand to drive much greater growth by opening their data up to advertisers in a privacy safe way. Advertisers can then understand much more clearly how their campaigns are driving actual online and in-store sales, meaning that they can optimize and measure in ways that simply weren't possible a few years ago. The Current recently published a story about how Coca-Cola, one of the world's largest advertisers, is thinking about shopper marketing. They are activating campaigns across more than 25 retail media networks, including Kroger, Target, Walmart, Amazon, DoorDash, and Instacart. Since Coke started building out its retail media strategy a few years ago, It has seen a major uptick in return on ad spend and incremental reach, as well as its ability to determine overlapping audiences across more than 130 million households in the United States. This approach has helped the company better pinpoint audiences in targeted channels like programmatic display, connected TV, and social media. I'd like to quote Katie Neal, the connected commerce lead for Coke in North America. Retail media networks know so intimately the behaviors of these consumers that their predictive models, their data, really help us identify what are those right touch points when we are able to say, this is a great time to remind you that there's a Coca-Cola product for you. Retail media networks are another proof point that advertisers win when they can apply data to their campaigns. And because of this, like CTV, retail will also prove to everyone in the advertising ecosystem that building walls around data and inventory is ultimately a flawed strategy. As I said last quarter, We now provide access on our platform to about 80% of the leading retailers in the United States, and we're growing our international footprint every month. For example, we recently announced partnerships with Tesco, one of the largest grocery groups in Europe, and Fairprice, the largest grocery chain in Singapore. As a result of these integrations, measurement from impressions all the way to the point of sale can be connected to drive better reporting, analytics, and attribution across the open internet. This provides our advertising clients with new measurement capabilities that don't exist pretty much anywhere else on the digital ad landscape, including inside of walled gardens. Once again, we are pioneering better data-driven strategies. Now the tens of thousands of brands that sell in retail environments have better, more objective, data-driven alternatives to walled gardens and unfair, opaque marketplaces. So what does all this mean for us in 2023? From an industry perspective, we have a lot of tailwinds. The shift from linear TV to CTV continues to accelerate. And I predict that at some point in the near future, we will reach a precipitous tipping point. It won't be a long, gradual shift to CTV. It will be an acceleration and then a full-on shift. One of the things I am preparing for as a CEO is making sure that we have the resources and scale in place to help our clients through that shift. Retail media networks will continue to grow in influence, in part because they offer something revolutionary in terms of measurement that advertisers have been craving for years. that direct relationship between spend and action. But partly as a result of those trends, I also believe we will see a couple of additional important shifts in our industry in 2023, particularly when it comes to how marketers think about programmatic. First, as advertisers have more opportunity to deploy data more fully in their omnichannel campaigns, their focus will continue to shift from price to value. They will always want to make sure that they are buying impressions at the right price, but that won't be the leading indicator anymore. It never should have been. They will continue to put much more priority on whether those ad impressions delivered the right outcome for that price. In other words, value. Second, in the pursuit of value, advertisers' decisioning will shift from inventory to audience. Instead of focusing on buying a certain show or a certain piece of inventory, advertisers will put much more priority on audience precision, regardless of channel, because data enables them to do that. This is especially important as the industry moves from a once a year upfront to an always on forward market. As we make progress on these initiatives and as advertisers embrace the value of the open internet, I also predict that more walled gardens will begin to take down some of their barriers. They will see that incremental demand and higher CPMs that companies like the Trade Desk can generate with a focus on advertiser goals, data, and the open internet. I'll close by highlighting that while we have those industry tailwinds, we are not immune to the general economic headwinds. I've met with dozens of CMOs through the first few weeks of 2023, and there is some level of uncertainty. They all are under pressure to do more with less. And precisely because of those pressures, CMOs are gravitating to places where they can be more deliberate and where they can apply data and decisioning. And in fast-growing channels like CTV, they're finding data-driven advertising opportunities at massive scale. CMOs also understand that while the current macro environment may be uncertain, we will emerge from it. and they are all preparing to be in a position of strength as that happens. Most of them are getting ready. Some are grabbing land now. But nearly all of them are getting a better grasp on their first-party data. They are working with new identity solutions. They are leveraging more direct paths to premium inventory, such as OpenPath. And the world's leading media companies are integrating with us so they are best positioned to access demand from advertisers. They are integrating UID2 as well as new innovations such as OpenPass, which creates simple authentication for their consumers as the Internet shifts away from cookies to a more logged-in consent-based model. Everyone is taking this moment to prepare for a more data-driven, decision-advertising environment. This also means that the walled garden strategy is breaking down. Everyone needs more demand. Advertisers want more objectivity and value. It's becoming increasingly difficult for other players to be draconian, especially now that advertisers have premium options at scale on the open internet. Right now, the biggest threat to the walled gardens is an open internet centered around CTV and retail media. The disparity in what advertisers get from the open Internet in terms of measurement and performance compared to Walt's Gardens is growing every day. You see it especially in TV, and increasingly you see it in retail. Of course, I would be remiss to not mention the recent Department of Justice lawsuit against Google. It's a comprehensive look at how Google operates, including many of the draconian measures they have implemented to tilt the market in their favor. The Trade Desk has not been as impacted as much as others in the ecosystem. And I believe that's because our mission has always been to provide an open, objective, and transparent alternative to the walled gardens. We focus on objectively serving the buy side. And with that objectivity, we will win no matter what. To be clear, this is not us versus Google. It's the value and opportunity of the open internet versus the limitations of walled gardens. We have been winning for years in an unfair market with some systemic obstructions working against us. Imagine what we can do as the market becomes more fair, which we predict it will one way or another. I could not be more excited about the direction we are heading in and the value that our advertising clients are realizing on the open Internet because of all the progress we've talked about today. Our focus on profitability ensures that we will remain at the cutting edge of our industry. Compared to many others in our industry over the last three years, we did not overextend ourselves in terms of hiring. We have been deliberate and prudent, keeping a laser focus on the long-term opportunities in front of us. As a result, we are one of a few high-growth technology companies that consistently generates strong adjusted EBITDA and free cash flows. As you may have seen in our press release, our strong profitability and cash flow enables us to return capital to shareholders with a $700 million share repurchase program. While I generally don't like to comment on competitors' performance, it is worth noting, again, that in an environment where many of our competitors contracted, our revenue grew 24% in the fourth quarter. I believe that level of relative outperformance which was evident throughout 2022, is indicative of the value we are delivering to our clients, even in a challenging environment. We continue to sign JVPs with brands and their agencies at a very strong pace, with billions of dollars transacted through these agreements last year. I believe 2023 will be a tipping point year in many ways, and I expect that advertisers will emerge more empowered than ever to drive data-driven precision. As a result, we will continue to gain share. Let me wrap this up by borrowing a phrase from one of our closest and largest agency partners. I have a strong sense of hesitant optimism about what 2023 holds for our industry. And with that, I'll hand it over to Blake to cover the financials.

Thank you, Jeff, and good morning, everyone. As you already heard from Jeff, we had a strong 2022. demonstrating another year of continued execution and growth for the Trade Desk, despite economic headwinds around the world. Q4 revenue was $491 million, a 24% increase year over year. Once again, in Q4, we continue to grab share and significantly outpace our peers on the top line, delivering growth well into the double digits. I am also particularly proud of the $245 million of adjusted EBITDA we generated during the quarter, representing a margin of 50% that helped drive trailing 12-month free cash flow of over $450 million. Our results in both Q4 and for the full year 2022 were testament to our ability to grow our top line efficiently while generating substantial adjusted EBITDA and cash flow. For 2022, we ended the year with nearly $7.8 billion in spend on our platform and about $1.6 billion in revenues. representing 32% revenue growth. During the year, we produced adjusted EBITDA of $668 million, or 42% of revenue, as we continue to generate very strong profitability rates despite macro challenges. Our results reflect the ongoing strength of programmatic advertising and the increasing value that the Trade Desk provides thousands of agencies and brands as they connect with their customers across our platform every day. As expected, For the ninth year in a row, our take rate remained within a very consistent historical range, while over the same timeframe, the value that our platform provides for our customers has increased dramatically. More than ever, advertisers are embracing the use of data and value-added services to increase their advertising efficacy. Deliberately choosing to leverage more data and value-added services is a win-win for advertisers in terms of higher ROIs, content partners in terms of higher CPMs, and the trade desk in terms of our business model. We remain focused on our proven strategy of being the default DSP for the open Internet, only representing the buy side and avoiding conflicts too often prevalent in our industry as we continue our progression towards a total addressable market that is on track to reach $1 trillion. The shift of advertising dollars from linear to connected television continues to be a core driver of our business. In Q4, CTV again represented our fastest-growing channel of scale around the world, and year-over-year growth for CTV stayed consistent versus Q3, despite the level of uncertainty in the global economy. Our shopper marketing business also continued to progress nicely, as more and more advertisers deploy retail data in their campaigns. And we continue to see positive results in utilization in our data marketplace. as the enhancements that we've made throughout the year are helping deliver better outcomes for advertisers. From a scale channel perspective in Q4, video, which includes CTV, represented a mid-40s percentage share of our business and continues to grow rapidly as a percentage of our mix. Mobile represented a high 30s percentage share of spend, and its growth was again solid across in-app and mobile video. Display represented a low double-digit percent share of our business, and audio represented around 5%. Geographically, North America represented about 90% of spend, and international represented about 10% of spend for the fourth quarter. Growth in North America was resilient, with our New York office leading the way in Q4. It's worth noting, CTV growth in EMEA and South Asia were very strong once again this quarter. We are encouraged to see our teams in these regions executing on this key growth driver. In terms of the verticals that represent at least 1% of our spend, travel nearly tripled in spend in Q4 compared with a year ago, as the sector continues to recover from the impacts related to the pandemic. Automotive was also among our strongest verticals, accelerating to its highest year-over-year quarterly growth rate in 2022 as a result of winning new business and the easing of supply chain challenges across the industry. Additionally, as expected, Political elections spend about doubled quarter over quarter, representing a low single-digit percent of spend in Q4. We continue to believe there is still potential for us to gain share within most of our verticals. Turning now to expenses, Q4 operating expenses, excluding stock-based compensation, were $263 million, up 22% from a year ago. During the quarter, we continued to prudently make investments in our team, particularly in areas like technology and development. as we scale and position the organization for long-term growth. Excluding stock-based compensation, the year-over-year growth in Q4 operating expenses was lower than our year-over-year headcount growth, primarily due to lower costs such as variable compensation, the timing of fixed marketing investments, and employer taxes. Unlike some ad-funded peers in many technology companies, however, we have responsibly managed our headcount and operating expenses over the past few years. as our demonstrated revenue growth since 2019 is higher than both headcount and operating expense growth, excluding stock-based compensation, over the same period. Because of that continued focus on generating profitable growth, we entered 2023 in a very strong position to take share and win spend while still generating meaningful adjusted EBITDA. Income tax was $41 million in the quarter, mainly due to lower tax benefits associated with employee stock-based awards when compared to the prior year, the timing of which can be variable. Adjusted net income for the quarter was $190 million, or 38 cents per fully diluted share. Net cash provided by operating activities was $173 million, and free cash flow was $123 million in Q4. CapEx during the quarter was driven primarily by data center and infrastructure investments, that while higher than the previous year due to timing, was in line with our expectations for the full year. I would like to remind you that the timing of cash collections and payments can significantly impact cash from operating activities and free cash flow results on a quarterly basis. DSOs exiting Q4 were 104 days, down three days from a year ago. DPOs were 86 days, down five days from a year ago. We ended the year with a strong cash and liquidity position. Our balance sheet had $1.4 billion in cash, cash equivalents, and short-term investments at the end of the quarter. We have no debt on the balance sheet. And finally, as you have seen in our press release, we announced a $700 million share repurchase program this morning. Our strong balance sheet, coupled with the strength of our business model that produces significant cash flow, led to a review of our capital allocation strategy. Our review addressed investments in our business, including managing our working capital, the potential for acquisitions, and options for returning excess capital to our shareholders. Starting in the first quarter of this year, we plan to opportunistically repurchase shares, including helping to offset dilution from employee stock issuances. Turning now to our outlook, we have started the year with good momentum. For the first six weeks of the quarter, spend growth has increased on a year-over-year basis each week, demonstrating consistent acceleration off a bit slower than normal month of December. While macro conditions continue to remain uncertain, we are cautiously optimistic and estimate Q1 revenue to be at least $363 million, which would represent growth of 15% on a year-over-year basis. We estimate adjusted EBITDA to be approximately $78 million in Q1. Turning to our operating expenses, in 2023, excluding stock-based compensation, we expect our operating expenses to increase on a year-over-year basis. We plan to continue to invest in our business and grow headcount. However, our current operating plan is to grow our team at around half the rate we did in 2022. Considering our unique ability to generate both strong top-line growth and profitability, we continue to manage with a balanced perspective that allows us to prudently invest in our business to capture the immense opportunity in areas such as CTV or shopper marketing, while retaining flexibility in light of the macro environment. We're also happy to say that most of our teams around the world are now back to working in person in our hybrid operating model, and we have resumed live team events, travel, and other related activities. With that in mind, our operating expense structure of the company is significantly better than it was prior to the pandemic. We are proud that the TradeDisk is one of the few high-growth technology companies consistently able to generate growth, profits, and cash. We expect 2023 capital expenditures and capitalized software investments to be around 80 million. We expect data center and infrastructure costs to drive the majority of our CapEx investment in 2023 as it did in 2022. In closing, I'm very pleased with our performance in 2022 and our setup into 2023. We're executing to capture key secular growth drivers like CTV and shopper marketing, We're amassing industry support and partnerships for UID2 and OpenPath, and we're adding more value for our customers with continuous innovation of our platform. We enter 2023 in a strong position to grow and gain more share, continue to focus on both growth and profitability, and remain highly optimistic about the prospects for our business this year and in the years to come. That concludes our prepared remarks. And with that, operator, let's open up the call for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to be removed from the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Your first question for today is coming from Sean Patil at SIG.

Thank you. Hey guys, congrats on the continued strong performance. I had a couple of questions. Jeff, can you talk a little bit more about just what you're seeing and how you're thinking about the macro this year? And then just as a quick follow-up, Blake, can you provide a bit more color on the One-Q Guide and anything in terms of linearity that's worth noting? Thank you.

First of all, Sean, thanks. I appreciate the question and the kind words. So first, let me just say that we're incredibly proud of our performance in 2022 and the start to 2023, of course, especially on a relative basis. So far, of course, relative to all other scale ad platforms and companies, public or private, we feel like our relative outperformance is greater than it's ever been during both 2022 as well as so far in 2023. From a macro standpoint, in early January, we saw a little bit of a late start due to the calendar year. We also saw the... The way that both brands and agencies were planning was a little bit delayed, but then we've seen things start to unlock and we saw instead of there being delays or instead of there being cancer, there was just delays and then those have become unpaused and unlocked since then. As a result, we've seen more JVPs and we've seen a lot more activity so far in 2023 than we've seen at any time to this point in any year previously. So overall, we're very encouraged by the trend in 2023 so far and extremely optimistic, especially as we continue to grab land relative to all of our competitors.

And hey, Sean, this is Blake. I'll try to answer your second question. Just to go back a bit on Q4 real quick. Fundamentally, you know, great quarter despite the macro uncertainty out there. I'm really happy with the 24%. year-over-year growth. It's a standout versus our peers, many of which seem to have shrunk in Q4. CTV, again, leads the way for us. We're grabbing land now. It lays the foundation for us when times are better. In the prepared remarks you heard me say, data adoption is really encouraging as it spins our customers' flywheels. With regards to the linearity question, just a lay a little bit more like what Jeff talked about. A bit larger deceleration in December than normal from what we saw in October and November, but we've accelerated off that pretty consistently so far here in Q1, which is really nice to see. So I'm cautiously optimistic for the quarter. Some places are more challenged because of that uncertainty, but we see strong growth, especially in CTV and relative to the rest of the industry. We're growing significantly faster than than I think so many of our peers who are signaling declining or negative growth. And we're growing into the double digits, which to me just confirms that we're taking a share. And so even though there is uncertainty out there, I think we could be in a better position now than we were coming out of COVID as advertisers are prioritizing programmatic spend more. The only other thing I'd maybe add about the Q1 guide, just from a comp perspective is, If you exclude the political election spend that we had in Q4 of 22, that low single digit percent share of spend, our quarter over quarter seasonality is trending just slightly better than we've seen on average. So I feel really good about Q1, you know, so far, and I'm optimistic about the quarter.

Thanks, Sean.

Next question, Holly.

Your next question for today is coming from Matt Swanson at RBC Capital Markets.

Yeah, thank you. I'll add my congratulations on the execution as well. Jeff, I want to ask you on all the Google developments we've seen in the quarter. I think a lot of us have read your thought pieces on the subject, which have been really insightful. But could you elaborate a little bit on what you think the near and long-term impact on the market is of the antitrust suit? And I think especially the comment you made about the market will become more fair one way or another. And then if I could add a quick follow-up, You know, there was a beta launch of the privacy sandbox for Android last night. Does this change any thoughts around maybe the potential cookie deprecation timeline or how likely it is to happen?

Thanks a lot, Matt, for the kind words as well as the question. So let me first just talk about the Department of Justice lawsuit against Google. So, let me just give the sort of punchline first, which is that I believe we will win regardless of the outcome. So, no matter what happens, I think we're going to win. We have been winning in an unfair market. So, of course, if the market becomes more fair, which we think it will as a result of this, like I said, one way or another. then, of course, that signifies significantly better environment for us to perform in. The Department of Justice has clearly done their homework on this, which I'm extremely encouraged by. I know there's some at Google who have tried to suggest that, oh, we've been through this three or four times before. I do believe that this is fundamentally different. And part of that is just because of how detailed I think the case is outlined. I do believe there are many possible outcomes here. There's lots of people that are talking about breaking it up. There's lots of other potential outcomes. But I do believe that in any case, this will slow down Google. There is 100% chance of that. And so with them slowed down, with the market moving towards just better competition and more fairness, I believe there's no way that this isn't good for us. I do want to acknowledge that as there's some pressure to just break up assets, I don't believe that that alone is enough and that if that's all that's done, I think technology could be replaced and some of the same practices that got us here could happen again. So to me, the most important thing that happens here is that any settlement or any conclusion to the case ends with more fairness, and restrictions to make certain that the market stays fair, especially when leveraging assets that are extremely nearing monopoly, if you will. So, as it relates to privacy sandbox, there's been a lot that has been discussed about privacy sandbox in the past. It's often, I think, wrongly compared to the world of cookies and doesn't necessarily acknowledge the importance of relevance in order to create a free and open Internet that can subsidize the content that currently exists on the open Internet. So I don't actually think that that has much to do with the antitrust case or the deprecation of cookies or UID2, but certainly something to watch.

Thanks, Matt. Next question, Holly.

Your next question is coming from Yusuf Squally at Truist Securities.

Great. Thank you very much, guys, and congrats again on the really strong execution, all things considered. So I have two questions, one for Jeff and one for Blade. Jeff, can you maybe just share with us, based on the commentary you've made about walled gardens, et cetera, what signals are you looking for as an indication that these walled gardens will begin to take down their barriers. And what will that look like for you guys? And then, Blake, can you maybe talk about your OPEX or just your margin expectations? Your Q1 margin implies basically you're back to pre-COVID levels. You have to go back to like 18, 19 to get down to those low 20s margins. Is that kind of the right way of thinking about the cadence throughout the year, and then do you expect margin improvement this year relative to last year? Thank you.

I'll have Blake go first, and then I'll follow on with the question about wall targets.

Thank you, Joseph. So let me just step back a second, and then I'll try to get to all the details of the questions that you asked. Just want to remind everyone about the power of this business model. I'm a huge fan of it. You know, high top line growth generates solid adjusted EBITDA with strong margins, you know, generate consistent free cash flow generation. I'm really proud of how we've stayed disciplined with our investments the past few years. It's really paid off for us. You know, unlike many companies, either in the app funded space or the technology space, We've been pretty responsible managing our headcount and operating expense growth since 2019. We didn't get ahead of ourselves the last couple years. So, you know, while many companies are pulling back or making some very tough decisions about their resourcing, we're able to say the course, grab share, you know, combine that with us actually growing into the double digits while others contracting. I think it sets us up really well. As we think about our operating expenses next year, you know, they will increase year over year. That's a combination of a couple things. It's a combination of the 2022 hiring flow through that we've got. It's also a combination of return to office expenses, including travel and live events. But again, we're going to be deliberate about our investments in hiring and you heard on the prepared remarks, we're going to grow our headcount in 2023, but You know, as of right now, we're thinking roughly at half the rate of 2022. We still see significant opportunities to invest in areas like CTV and shopper marketing and be ready to capture those. The other thing I would say about Q1 is also just the seasonality of live events. There were live events that occurred in Q2 of 2022, and those will happen in Q1 of 2023. So the seasonality is important to pay a little bit of attention to. But overall, the way I would just say it is we're comfortable with where things stand. You know, I'm cautiously optimistic about our growth at the start of the year. Should we see a significant change? We have levers available to us to make those changes if we need to. You saw us do that in 2020, you know, with regards to COVID. And I believe the operating expense structure of the company actually is better than prior to the pandemic when you deal with that kind of seasonality issue that I was talking about. We're in a great position to drive more long-term scale and efficiency as well as free cash flow. So I feel pretty good about that.

No, good job to the 1st part of the question as it relates to walled garden. So 1st, let me just remind everybody what walled garden is and just 1 of the definitions, which is that this is a destination that is essentially a must have on a, on a media plan. So that the owner of that destination, whether it's a social network or a video. Platform or any other walled garden, the owner that can afford to be draconian and set their own rules. What's happening in part because of CTD, because as I mentioned in the prepared remarks, the CTD is perfectly fragmented. And what it does is it makes it so that there are enough players that no one can afford to be draconian, and no one has enough market share to do that. But it's also concentrated enough that you have very large, sophisticated players that are making decisions, and so they're all hyper-competitive and actually hyper-rational. So what I think that does is it puts a lot of pressure on walled gardens because of the fact that there is this alternative that is super competitive and super efficient. When you add to that that CTV is driven by nearly 100% authentication, it lends itself to just highly personalized content in a way that no other channel has to deal with, whether we're talking about in the mobile environment where IDs are under pressure in part because of Google and Apple or in the browsing web for the same reason. In CTV, we have authentication nearly all the time. Additionally, because of those, we also have the opportunity for retail to do exceptionally well and all of that puts pressure on walled gardens. In that the open Internet now poses as a very viable alternative. So whether we're talking about CTV, whether we're talking about retail, whether we're talking about the economic environment and the pressure that that puts on walled gardens to want to welcome incremental demand, all of that points towards an ecosystem where more and more of them are considering bringing down the walls, even the largest of them, so that they can welcome incremental demand. And certainly in environments like this is where you're most likely to see some of those changes. So there's lots of activity considering that sort of stuff. And I do believe you'll see announcements in 2023 suggesting more and more walls coming down. Thanks for the question.

Thank you. Thank you, Seth. Next question, Holly.

Your next question for today is coming from Vasily Karasiov at Cannonball Research.

Good morning. Jeff, can you please talk in more detail about the Forward Always On Connected TV event you mentioned in your prepared remarks? And then connected to that, can you talk more about your Forward Market product that you mentioned today? And also, I think you spoke about it a couple of quarters ago. That seems like a very interesting product. And of course, Jeff, fighting the upfront market is a pretty gargantuan task that you're undertaking here.

Yeah. First, I really appreciate the question. You are right. The upfront market is huge. But I see that as an opportunity. One, because it, of course, adds to the TAM. But also because, as we pointed out in prepared remarks, the upfront market hasn't changed since 1962 much. And really, really, it's a shame that it hasn't changed because the way the upfronts work today is that you can't really bring data to the table. And so CTP is in a very interesting position right now, which is that it has been getting a premium largely because there's scarcity. So consumers have moved into CTV, into on-demand, over the internet content. But as they've moved, the number of ads available for advertisers to put in front of those consumers hasn't gone up nearly as quickly as consumers have moved over. So that's created a scarcity premium for all the ads. But we're seeing more and more inventory come online. And so some of the biggest content owners in the world are having to find ways to make the efficacy justify those prices instead of scarcity. And that's part of the reason we talked about that amazing case study with Disney where they talked about 12X more effective as a result of using UIDQ than alternative means of personalization. That 12X is absolutely required to bridge that gap between what was coming from scarcity and now being provided via efficacy. So, of course, CTV is getting more effective. But if you don't bring that same level of data to the upfronts, then you're going to miss out on almost half of television. So what we have designed is an always-on forward market, which is essentially just a new version of the upfronts. But in this case, we're using technology to make it so that you can bring data to the table. And because of the fact that we've already integrated with most of the largest content owners, at least in North America, and many of the leading CTV countries around the world, we think, as we pointed out, we're one of the unique companies to be able to host an event like that. as well as to build the market that makes it possible for forward contracts to be established on an always on basis. And when I say always on, the upfronts is done once a year, You think about commodities and equities markets, those markets are on all the time. It doesn't really make sense to only do it one week a year. And there's an opportunity for advertisers and content owners to constantly be evaluating the value of entering a commitment so that you can either get a discount or be assured that you're going to sell all of your inventory. I believe that's going to be an important role in TV, or in CTV, the same way that it was in traditional television. But we need a product that brings data to the table. Otherwise, it cannot justify the high CPMs that everyone has become accustomed to in CTV. And of course, advertisers aren't going to pay high CPMs if the efficacy isn't there. There is no way to bring all the best parts of digital to the table, leveraging the upfronts the way that they've existed to date. So we're very excited about it. We don't think that we have to compete with anything other than a 1962 product. And because that bar is super low, I think we're in a really phenomenal position.

Thank you, Billy. Next question.

Your next question is coming from Jason Helfstein at Oppenheimer.

thanks um jeff can you talk about the opportunity to go direct to publishers with open path and just broadly the benefits to the publisher the advertiser and then trade desk as you think about measurement targeting and economics so kind of this broad question on basically the pitch to everybody about open path thanks yeah so uh thanks i really appreciate the question because i don't know that uh most understand what open path is and i just so i appreciate the opportunity to just clarify

So from the very beginning of the company, we've been pretty obsessed with improving the supply chain. And, you know, as I've mentioned in other forums, I often look at the biggest technology companies in the world and try to study them for what they've done successfully. And I find a lot of inspiration from Amazon in this, which is, I think as a company, one way to define their success is just they obsess over supply chains. How do we make it more effective for the end consumer? And that's exactly the same thing that we have been doing with the ad tech ecosystem. There are a lot of steps between advertiser and publisher that are unnecessary at times and that are in some cases unfair or that people are taking more in fees than they are adding in value. Ultimately, that is to the detriment of us and the advertisers and agencies that we represent. Often also, on the sell side and in the exchanges, there can be an auction that is unfair. To some extent, that is exactly what the Department of Justice is filing suit against Google for, is alleging an unfair auction dynamic. So what we have been trying to do is to create a supply chain that is fair and transparent and competitive. We found in our discussions with publishers and content owners that often they're as frustrated as we are with the supply chain and saying, why can't we just integrate correctly? So we made very clear to the market, especially to SSPs, that we're not interested in competing with SSPs. We are not interested in doing the yield management for publishers. But when a publisher wants to do their own yield management, we're happy to integrate with them directly so that together we can ensure that the option is fair and that the pipes are clean. And as a result, we also think that not only will we clean up the supply chain and make certain that fees aren't extracted where they shouldn't be, but we'll also have greater transparency and that will actually create better CPMs because efficacy will go up. So this is especially important when we're talking about connected television in part because so many of the content owners have purchased SSPs. So most of them own it. So they've already made the decision to get in the business of yield management. So we're extremely excited to be integrating with some of the largest, you know, we've talked a lot about our partnership with Disney and that's in part because Disney, I think represents the largest amount of CTV ads. anywhere on the internet currently, meaning owned by one company. And with their commitment to both UID2, but as well as to integrating with us directly, we think that that sets the tone and the pattern for what will happen to everyone else. Of course, we announced our partnerships on UID2 with CVS and Paramount Plus and Disney and so many others. But that lays groundwork for us to then continue to do the same on Open Path. There's a long queue of publishers, not just in CTV, but in other channels that have also signed up with Open Path. And we think that represents the start of a much cleaner supply chain in the open internet. Thanks for the question.

Thanks, Jason. Next question, please.

Your next question is coming from Brian Fitzgerald at Wells Fargo.

Thanks. Jeff, we saw a recent piece from the head of media at Amherst Bush talking about her preferences for P&P deals within CTV versus programmatic guaranteed. She said, because it helps me manage reach and freak across CTV destinations better, i.e., decisioning. But what trends are you seeing there? Are marketers shifting from programmatic guaranteed and saying we need reach and frequency control. Once a marketer kind of makes that step down the decisioning path, do they tend to use more of what you offer in terms of expressiveness and personalization and getting into kind of open auction environments?

First of all, thanks for the question. Second of all, super impressed with how well you understand the business that's just implicit in the question and just a deep understanding of what's going on in the space. You're spot on. The premise of your question is spot on, which is that Inside a programmatic guarantee, you don't have the same amount of decision as an advertiser. And so it means that you're often giving up your choices in terms of what you buy, and you're giving up your ability to control reach and frequency and just other things. To me, it doesn't make a lot of sense. In equities markets, you wouldn't necessarily just hand over all decisioning. If you're a portfolio manager, you want to make your own decisions. You want to decide what you're going to buy. And that's exactly the people that we're appealing to. Those are the people you're talking about at Anheuser-Busch. They're people who want to make decisions about what they're buying and selling. And especially because if you're going to pay a premium, you want to make certain that you're controlling the reach and frequency And in fact, the math just doesn't work. If you're not controlling reaching frequency, then the premium that you're paying to be in is no longer justifiable. And so the math is pushing people towards using and leveraging more decisioning. But also just people wanting to be more effective. That's the way that they have the most amount of control. And we're seeing more and more to move towards PMPs and just anything that is fully decisioned. So PMVs represent the most common way that that happens in CTV, and whether those PMVs are initiated by us or others really doesn't matter. What is most important is that the advertisers themselves and or their agency representing them have full decisioning in where they decide to put the ads. And when they have that, that's where CTV is at its best. That's where digital is at its best.

Got it. Thanks. Appreciate it.

Thanks, Brian. Next question.

Your next question for today is coming from Mark Zagukowitz at the Benchmark Group.

Good morning, guys. Jeff, just curious, how much of your 4Q revenue you would attribute to UID2, and what do you expect that number to look like for the year? And then how many of the large pub UIDs that you're talking about are activated in your auction. And then separately, curious what you expect Apple will do with private relay this year and what Google will do with its ID over the next, call it 24 months, and how that may impact ROAS on your data graph. Thanks.

The first part of the question is pretty hard to answer in terms of how much of it came from UID2. And that's in part because, of course, we use UID2. That then leverages a graph. And in that graph, it's still cookies and lots of other identifiers that we lean on for now that in some cases won't be there in the future. But we, of course, could deduce the same thing with just slightly lower statistical confidence and still have lots of room to provide personalization across the Internet. And so you don't really know how it's impacting it until it's not there, but UID2 continues to grow at rapid pace, and it often is the connective tissue between all of those other things. And then when you couple the fact that in Q4, only about 15% of our data, our third-party data, had UIDs associated with it, and we expect that to be over 70% in the first half of this year. There will be dramatic upticks in what's happening with UID2, and it gets rid of much of the matching problem, but we did see large upticks in the use of data in the second half of the year, largely because of UID2. So it's hard to quantify in terms of the total revenue impact, but in terms of impressions and data that are leveraging that, it's just substantial. It's a substantial part of our business today. So this is a huge driver for our business now, and every day that goes by, it's becoming more and more the case. Publisher IDs are being leveraged more and more as time goes on. And in fact, our Open Path initiatives, as well as our initiatives to just get closer to publishers and SSPs in 2023, the global placement IDs are being adopted around the internet. As it relates to Google's ID, You know, there's a bunch of different Google IDs. Of course, there's the single sign-on. Of course, there's the Android ID, which there's lots of discussions about in the future. And then, of course, there's cookies. All of those are largely in the control of Google. One thing I think Google has done well on most of these is that they've given announcements and said, we're going to do this years from now. And some of those dates are end of 2024. So we're talking about two years from now. I think it's reasonable to expect that part of the reason why Google is putting timelines out like that is so that they can see what happens with things like the Department of Justice litigation. They want to see how the dust settles. And they're kind of between a rock and a hard place as it relates to protecting privacy, but also guarding against antitrust pressure. So I actually don't think it's in Google's best interest to make those all go away. What I love about some of the things that they've said publicly on this specific issue is that they have to consider the impact on the Internet, really on the open Internet, and all the publishers that they support, and especially with the amount of scrutiny that they have right now on the antitrust side. I'm not sure that it's ever in their interest to see those go away from the open Internet. I think another way to look at it is that Google's hoping that things like UID2 go really, really well, and it takes some pressure off of them. So it sort of goes back to the one way or another, things are going to get better. And I think with the pressure that Google is facing right now, I think that's more true than ever.

Thanks, Mark. Next question, Holly.

Your next question is coming from Laura Martin at Needham.

Hey there, Jeff. Tactically on the DOJ, so it's 150 pages of how Google has been abusing their clients. My question is, have all the smart clients that could leave Google already come to the trade desk, or do you feel that in 2023 you are going to be getting incoming calls now that their clients have read this 150-page really draconian treatment of clients So do you benefit from that in the near term? And then secondly, UGC. So I agree with you on the walled gardens. We've been writing that a long time, that walled gardens are losing share to the open Internet. UGC, it's the first time I've heard you talk about that. And I guess I hadn't thought about it because I was thinking TikTok was taking share from the two big guys, meaning YouTube and Meta. But could you go more into why you think UGC is losing share to premium? Because I don't really understand that one.

Sure, so on the first part of the question related to the Department of Justice and their litigation against Google and will that benefit the trade desk and our clients coming to us as a result? I definitely think that that will continue. As you know, we have great relationships with most of the largest advertisers in the world. So I wouldn't say that there are that many that are extremely large that would move over that hadn't already done something with us. But there are some that are changing the coefficients, if you will. So, meaning they're doing less with Google and doing more with us. So, I do think that there's an opportunity for that to be positive for us, but pretty early to tell. As it relates to the UGC side and why I think there's a change happening with UGC and more moving to premium, let me just explain a little bit what I think is happening with the economics. And a lot of this comes back to UID2. So because of the pressures that are being put on identity across the internet, there's even more premium that is heading towards connected television because it's nearly 100% authenticated. So because of that 100% authentication, that does enable personalization that is not likely to be changed or controlled by any one company. There's enough fragmentation whether you're looking across operating systems or whether you're looking across content owners. And of course, you have to log in with an email address almost every time to watch content. So that enables a level of personalization and pushes people toward the open Internet. While at the same time, UGC is having more supply than ever. And with With less personalization and less control coming from advertisers, there's a more stark contrast between what's available in CTV and what's available in UGC. Said another way, there's finally a viable scaled alternative to massive UGC platforms that now make it so it's not quite, it doesn't give quite the same luxury to be draconian in those UGC platforms as you could be elsewhere.

Thanks, and Holly, we have time for one more question.

The next question is coming from Dan Salmon at New Street Research.

Hey, good morning, everyone. Just one quick one for me. The take rate stayed in that consistent 20% range once again. It ticked down a little bit the last couple of years, ticked back up again. You've talked about the balance of large and small clients driving that uh in the past uh is there anything different going on there and i'd be interested to hear just a little bit more about how your jbps your joint business plans compare on a take great business and if that's a important variable as well thanks guys i'll maybe i'll take a stab justin if you want to pile on for free so uh right you know 2022 marked i think the ninth the year where we've had really consistent take rate trends

If you look at our take rate data from 2014 to 2022, over that eight year period, I think we went up four years and then went down four years. So it's really been very consistently right around that 20% figure. Some years it goes up a little bit, some years it goes down a little bit. But the real important thing to note about the take rate is that while it's been really steady, and i said this i think on the in the prepared remarks you know we've made massive improvements for our platform right we're shipping new products we're adding new features we're innovating for customers And we're effectively passing that surplus to them so they can create value and then grow spend with us and then spin our flywheel. You know, and I don't think there's any reason why that historical range changes for the near future. And, you know, we continue to expect that we'll make further improvements to the platform and the data marketplace. And the focus is always about grabbing share and thinking about margin dollars, you know, not just margin percentage. And with respect on the, you know, on the JVP side, there's just a lot of facets that go into that. It's not just like a rate conversation, you know, have you. So we're incentivizing data usage. We're incentivizing the omnichannel benefit that we have as a company. And so it's really not any type of a, you know, a drag because you look at our JVP as a percentage of our spend and it's been, you know, growing pretty nicely. And we went through a little bit of that in our investor day presentation in late last year.

I guess the only thing that I'll add is I just want to underline a couple of really important points here. First, our take rate has gone up three in the last six years and it's gone down three in the last six years. Stayed pretty much the same the entire time we're a publicly traded company. Important to note that during that time, of course, we've shipped a lot of software. And what I've always been focused on, and we talked about this during the IPO Roadshow, We wanted to make certain that we were always adding to consumer surplus and by consumer surplus, we mean our users so that we're giving them more and yet the price is essentially staying the same. I think we've done that over time and that's partly why our client retention rate has been so high and the satisfaction of our clients has been so high. We expect to continue to add to that consumer surplus. that we want to make certain that our clients want to stay. We believe that that is the definition of economic sustainability, to provide more value than you extract, and we've been doing that over time. There's always a desire to try to figure out what are all the drivers of the take rate, what makes it go up and down. There's a lot of complex things, whether it's about channel mix, whether it's about geographical mix, whether it's about size of clients. There's a whole bunch of things. Also, the use of data. I think the single biggest contributor in 2022 to any change in take rate was largely just the way the data marketplace changed. And I expect changes in 2023 to continue to affect that. But we're always going to be looking for ways to keep that take rate essentially the same and increase the consumer surplus so that we spin the flywheel because at the end of the day, we're trying to grab land.

Great. Very helpful. Thank you, guys.

Holly, you can close the call.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.