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spk03: Greetings. Welcome to InnoVid's second quarter 2022 earnings call. At this time, all participants are in listen-only mode. Any question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Brinley Johnson with Investor Relations. Brinley, you may now begin.
spk00: Thank you, Operator, and everyone for joining us today. Welcome to InnoVid's second quarter 2022 conference call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements. The safe harbor statement contained in today's earnings release also pertains to this call. If you've not received a copy of the release, please direct yourself to the investor relations section of the company's website. Changes in our business, competitive landscape, technological or regulatory environment, and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance. As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them except as required by law. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures which should be considered in addition to and not as a substitute for GAAP results. We use these non-GAAP measures in managing the business and believe they provide useful information for our investors. Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in our earnings presentation, available on our website, as well as our earnings release and our filings with the SEC. Today we are joined by Zika Netter, Innovid's co-founder and CEO, who will begin the call with a business update. Then he will turn the call over to Tanya Andreev-Caspin, Innovid's CFO, who will discuss the financials of the company. During the question and answer session, Tal Cholozin, co-founder and CTO, will also be joining. With that, I'd like to pass the call over to Zvika Nader. Zvika, please go ahead.
spk04: Thank you, Bruni, and thank you all for joining us today. Innovate delivered strong results in the second quarter of 2022. Despite a more challenging environment, we delivered revenue in line with our guidance and EBITDA at the higher end of our guidance, reflecting the strength of our business model. Revenue increased by 45% year-over-year to $33.1 million on an as-reported basis. TV Squared contributed $6.8 million, or 21% of reported revenue, reflecting a 31% year-over-year growth for the TV Squared's business, following the acquisition closing on February 28, 2022. Our net profit was $4.3 million, and adjusted EBITDA was negative $1.7 million. the high end of our expected range of negative 1.5 million to negative 3.5 million. We believe our ability to record a strong adjusted EBITDA bottom line even when facing challenges is a testament to the strength of our business model, strong margin profile, and our ability to control expenses. By far the most exciting development of the second quarter was the launch of InnovateXP. InnovateXP our newly expanded converged TV measurement offering was brought to life through the integration of Innovate's extensive CTV advertising dataset combined with TVSquare's robust linear TV dataset, creating a first-to-market global cross-platform TV measurement solution that has quickly gained traction. As a reminder, Innovate's focus and emphasis spans all forms of television. Whether the TV content is delivered via broadcast, also known as linear TV, or streamed across devices such as connected TV, mobile TV, or desktop TV. CTV contributed 47% of total revenue in the second quarter when excluding TV squared. As we continue to gain traction against our roadmap and vision to unify advertising delivery, personalization, and measurement for the converged TV landscape, we believe CTV will continue to be a driving force for the business. I'd now like to build on the update we provided in our last conference call and share more details on the current and future development of our overall business and the momentum that we've built around measurement and innovative XP. Specifically, I will provide these updates within the context of our four key growth drivers, which are volume growth, product upsell, geographic coverage, and client-based retention and expansion. Let's begin with volume growth. I'm pleased to share that CTV set a new record in the second quarter. For the first time ever, 50% of all TV ads delivered through our platforms were streamed to connected television. If you recall, Innovate was founded on the premise that one day the majority of TV content will be delivered through streaming channels. That prediction is coming to life and our volume outlook is further supported by the ongoing migration of TV viewership toward not just CTV, but ad-supported CTV, which is the foundation of Innovate's business. Introduction of ad-supported offerings from large global streaming publishers is a win for all. More affordable content for viewers and wider audience to reach for advertising. Netflix recently confirmed its plan to introduce a lower-cost ad-supported tier in early 2023. Disney Plus will introduce its ad-supported tier later this year and plans to expand internationally next year. And Warner Brothers Discovery just shared advertising is core to HBO and other networks' growth strategy. We believe a substantial share of streaming's future will be ad-supported. It's also important to note that Innovate derives revenue based on the volume growth of ads served through our platforms or measured by our platforms and not as a percentage of media spent or what's referred to as take rate. This means our business is typically less impacted by fluctuating media costs, In fact, we often benefit from the dynamics that increase pricing pressure and, assuming similar budgets, lower media costs equate to more volume. And therefore, more revenue to innovate. We remain optimistic about our volume growth outlook. As the CTV market matures, more and more TV media platforms are being added to the ecosystem on a regular basis, each fighting for their individual piece of the streaming pie. This reinforces the need for an independent, scalable platform like Innovit to integrate across all platforms and partners, enabling brands to tap into the opportunity for enhanced reach, engagement, and performance through CTV advertising. Our second growth engine is product upsell. Right now, the entire TV industry is undergoing a transformation, a quest for better metrics and measurement that brings linear TV and streaming TV together. Advertisers need a simple, scalable, independent, and actionable view of their investments. Whether they buy direct, programmatically, or both across all forms of TV, that's fundamental to the future of television. More than that, they need a unified solution that allows them to achieve timely analysis, to inform, test, invest, and optimize continuously throughout the campaign lifecycle. Last quarter, we share that Innovit has successfully completed the acquisition of leading independent global TV measurement and attribution platform, TVSquared. This quarter, the acquisition came to life through the launch of our unified measurement platform for converged TV, InnovitXP. InnovitXP is the first global unified cross-platform measurement solution directly integrated with ad-serving data and creative personalization. The InnovitXP name reflects the direction where Innovit and the industry are heading. a cross-platform TV marketplace requiring independent, consistent measurement and outcomes across platforms and screens, regardless of where, when, and how people watch. We have seen early success with upselling our existing ad serving clients to InnovateXP this past quarter, including several leading multinational and national restaurant chains, a worldwide employment platform. Additionally, we have won several new clients, including an international design platform further expanding our client base. We have also bolstered our measurement footprint through strategic partnerships spanning programmatic via Magnite's expanded measurement attribution program, forged a political TV advertising partnership with Ad Impact, and integrated with Freewheel by Comcast's newly launched international Audience Express offering. Overall, measurement grew to account for 22% of total revenue in Q2, and we predict measurement will be a driving force for our growth story moving forward. Why? We believe our foundation in ad serving gives us an edge in measurement. Think about it. Our platform already has the certification and scale to deliver ads everywhere, which means InnovateXP is an out-of-the-box solution for brands with no additional implementation requirements. It's automatic. And the best of all, through our unified platform, Your measurement is tied to AdServe, which is the way the digital ecosystem already transacts. The launch of InnovateXP comes just one quarter after the acquisition of TV Squared, demonstrating our commitment to measurement innovation. Beyond measurement, our advanced creative and personalization solutions continue to see significant growth in adoption. Revenue from creative solutions grew 39% year-over-year this quarter, driven by a greater emphasis on experiences and performance. Our third growth engine is geographic expansion. Our international revenue measures of ads delivered outside of the US grew 51% year over year in the second quarter. The launch of InnovateXP introduced a true global measurement platform to the market, supporting the needs of global, regional, and local advertisers through measurement across 75 markets outside of the US. We have several significant developments underway to expand InnovateXP's footprint and coverage internationally, and feel confident that our differentiated offering will unlock future opportunities in the international markets. And last, but definitely not least, expanding our client base. This past quarter, we secured numerous new advertiser clients for our ad delivery and personalization solution, including a multinational e-commerce company, a leading multinational restaurant chain, an international travel company, and one of the largest U.S. health insurance providers. And, as previously mentioned, we successfully grew our measurement advertiser client base. Earlier this year, prior to finalizing the 3D Squared acquisition, I shared that client-based diversification was one of the key areas the acquisition would advance. We believe expanding our purview and traction across both the buy side and the sell side of the advertising ecosystem is critical to fulfilling Innovit's mission to become preeminent measurement providers. While the buy side, which includes brands and their agency partners, is still a no-star for the company, we have taken significant strides to deepen our engagement with the sell side, which includes publishers and paid TV operators. To that end, I'm pleased to share we expanded our multi-year measurement partnerships with Tubi, Fox's streaming service. demonstrating the power of innovative speed for always-on incremental reach measurement across both Fox and Tubi. The continued growth of our strong and increasingly diverse customer base is a signal for the strength of our underlying business. Next, I'd like to address the macroeconomic factors that have impacted the advertising and technology landscape these past few months, and as a result, our guidance for the second half of the year. We, like all companies, are not immune to economic headwind However, our emphasis on CTV and its arguably stronger tailwinds make me optimistic about our future. Beyond large players moving to ad-supported models, we see huge upside for CTV at large and believe sports will be the catalyst for CTV's new wave of hypergrowth. Audiences are leaving linear TV for streaming, and live sports are critical content platforms for attracting audiences and revenue at scale. The NFL recently threw their hat in the streaming ring with the introduction of NFL Plus, a move they see as key to their long-term success. This comes on the tail of last year's move of Thursday Night Football to Amazon. And according to NFL Commissioner, a pending motion for NFL's Sunday ticket to move to the streamer post the 2022 season. These strong tailwinds have supported our growth despite the headwinds that have impacted the industry such as prolonged impact of COVID-related supply chain disruption, geopolitical uncertainties, and signs of softening consumer spending. We continue to take a pragmatic approach to ensure the realization of our long-term vision for the company. This includes our focus on maintaining margins and realizing what we anticipate to be several millions in measurement synergies related to TV squared acquisition in the second half of this year. To summarize the opportunity ahead, I'd like to share a quote from Andre Schulte, CFO of Procter & Gamble, one of the world's largest advertisers. In their last earning report, Andre spoke about the importance of measurement to enable transformation. Andre stated, and I quote, our ability to improve effective best of reach and quality of reach is allowing us to drive cost per effective reach down both in digital and in TV. We've shifted more and more spend into digital. Now, More than 50% of our advertising is in digital." We are thrilled to be in the advertising TV business right now and look forward to bringing new innovations to life in support of our growing measurement focus. We remain committed to our core 2022 strategies and will continue to make investment we believe are strategically important to capitalize on the streaming market and growing converged TV market. I'll now turn it over to Tanya, who will go into greater detail regarding the financial performance and guidance. Tanya?
spk01: Thank you, Svika, and good morning, everyone. I will start with a review of our second quarter results before discussing our full year outlook. Indovit is a leading independent software platform that provides technology infrastructure for creating, delivering, and measuring TV ads across CTV, mobile, and desktop. InnoVid's platform generates revenue from three key offerings, ad-serving solutions, creative personalization solutions, and measurement solutions, now known as InnoVid XP. In the second quarter of 2022, our revenue increased by 45% year over year to 33.1 million on as reported basis. The T2 business grew 31% year over year, contributing 6.8 million or 21% of total quarterly revenue following the acquisition completed in the first quarter of 2022. With the acquisition of TVSquared, an independent global measurement and attribution platform, measurement become a significant revenue driver for innovative, generating 22% of total quarterly revenue. ad serving and personalization services drove the remaining 78% of total quarterly revenue. We expect the growth in CTV ad serving and personalization as well as measurement to continue to be our primary revenue drivers. When excluding TV Squared, our Q2 revenue grew 15% year over year to 26.3 million. CTV contributed 47% of this revenue up from 45% in Q2 of 2021, growing 20% year-over-year when excluding TV2. Mobile contributed 38% and desktop 15% of revenue and grew respectively 13% and 7% year-over-year excluding TV2. Revenue from ad serving and personalization services grew 16% year-over-year, This revenue is generated by serving ad impressions through InnoVid's platform to various digital publishers across CTV, mobile, and desktop environments. Taking to video impressions composition, CTV accounted for 50% of all video impression volumes served in Q2, up from 46% in Q2 of 2021, and grew 23% year over year. Mobile increased 11% year-over-year and accounted for 38% of all video impressions volume. And desktop decreased by 3% and accounted for 12% of video impressions served by Innovit. In terms of geographical breakdown, the U.S. is the main contributor to our revenue, accounting for 89% of total revenue and growing 44% year-over-year on as-reported basis. Our total international revenue grew 51% year-over-year on as reported basis and increased its share to 11% of the total quarterly revenue, up from 10% in the second quarter of 2021. The majority of our clients are global advertisers and operate at a significant scale. Innovate serves customers globally through a delivery footprint covering over 70 countries. We plan to continue to grow our footprint in international markets in order to meet the needs of our global customer base. Moving to costs. Total operating expenses for the second quarter, including cost of revenues, were 42.3 million and grew 87% on as reported basis from 22.6 million in the second quarter of 2021. A number of factors contributed to the increase in operating expenses. First, nearly 50% of the increase 9.6 million or 23% of operating expenses were attributed to the inclusion of TV squared operating results in the second quarter of 2022. Second, approximately 26% of the year-over-year increase in operating expenses was driven by the increase in stock-based compensation, one-time acquisition-related and B-spec transaction-related expenses. Lastly, the remaining 25% of the increase was the result of organic expansion of the operations. Net profit in the second quarter was $4.3 million. or an EPS of 0.03. Net profit in Q2 benefited from finance income of 13.3 million, primarily derived from our warrants being revalued as a result of market volatility impacting the company's share price. Net loss attributable to TV Skirt in the second quarter was 2.3 million, inclusive of 0.7 million of intangible assets amortization. Adjusted EBITDA for the second quarter of 2022 was negative 1.7 million, representing a negative 5% adjusted EBITDA margin. A decrease in adjusted EBITDA from 1.9 million in the second quarter of 2021 was a result of increased cost of revenues, R&D, sales and marketing, and G&E expenses following the inclusion of TV Squared operating results in the Q2 financials. the first time for the full quarter, as well as the organic growth in the operating expenses as I've noted before. Starting in Q3, we expect the realization of certain post-acquisition synergies to positively impact the company's profitability in the second half of 2022 and beyond. Considering the current macroeconomic and geopolitical uncertainty, We believe that close monitoring of the macro trends and agility in expense management will allow us to adapt to any significant changes as quickly as necessary. Moving to our balance sheet. After the acquisition of TV Squared, our cash and cash equivalents ending balance on June 30, 2022 was 44 million. Given our margin profile, we believe that we are well capitalized at this time. The total common stock outstanding as of June 30, 2022 was 132.4 million. Finally, I would like to go over our guidance. In the second quarter of 2022, we delivered a solid quarter and we achieved results within guidance. While we're seeing strong growth momentum in our client base in the start of this third quarter, the broader advertising market outlook in the current macroeconomic environment remains uncertain. Our guidance for the second half of the year considers the potential impact of the current worldwide macroeconomic and geopolitical trends on the advertising industry and reflects a potential pullback in digital ad spending in the second half of the year. For the third quarter of 2022, we expect revenue to be in the range of $33 million to $35 million, reflecting 41% to 49% year-over-year growth on as-reported basis, and 12% to 19% year-over-year growth on the performer basis. We expect adjusted EBITDA in the range of minus $2 million to break even. For the full year of 2022, we expect revenue to be in the range of $127 million to $132 million, including TV squared revenue. This guide reflects 41% to 46% year-over-year growth on as-reported basis and 17% to 22% year-over-year growth on a performer basis. We have revised our prior outlook for the full year of 2022, assuming impact at comparable rates across all revenue streams. The change in full year guidance does not anticipate a disproportionate effect on any single line of business. Total annual adjusted EBITDA now following the TVSquared acquisition is expected to be negative 6 million or higher. We expect the adjusted EBITDA for the second half of the year to be nearly breakeven or positive compared to the total adjusted EBITDA in the first half of 2022 of negative 4.7 million. The significant operating leverage of our robust profitable core business and the realization of the post-acquisition synergies are the main drivers for the anticipated adjusted EBITDA improvement in the second half of the year. With that, I would like to hand the call back over to Tzvika to take your questions. Thank you.
spk04: Thank you, Tanya, and thank you all for joining us on this call. We'll now open the line for questions. Operator, please go ahead.
spk03: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you, and our first question is from the line of Shweta Khajuria with Evercore. Please proceed with your question.
spk08: Okay, thanks for taking my question. I guess, could you please help us understand how you monetize Innovit XP so what your go-to-market strategy is, and then how monetization is incorporated into the business. And then the second question is, could you please talk about vertical performance across the strong verticals, maybe shopping, travel, et cetera, versus maybe some of the weaker ones, including auto, and geographical performance as well? And the follow-up to that is, what do you think is the difference that's driving the performance versus Trade Desk, for example, that had a strong CTV revenue growth? So could you help us try and understand the differences and similarities there, too, please? Thank you.
spk04: Sure. Good morning, Swetha, and thanks for joining us. So I think three to four questions here. I'll take them quickly one at a time. The monetization of XP is still, obviously we're very excited that we integrated the platforms, the CTV and linear TV measurement into a single offering within three months. Obviously, you know, we had six months to prepare for this. So we're now in market with Innovate XP, a combined CTV and linear TV measurement solution. So there's three main, and I'm trying to make it short, three main areas of revenue growth there, the classical existing client base of TV Squared when we acquired, a lot of direct-to-consumer, smaller local advertisers. Then there's the sell side, which we're making a lot of progress, deals with publishers, et cetera. And the third one, which is the most exciting from our perspective, is the upsell to our large ad-serving client, large CPGs, audits, et cetera, And I have to say that we're positively encouraged by the level of interest. And actually, we were able to close already several deals upselling to our ad serving client. That was our main driver for the acquisition. It's actually happening. At this point, the monetization is based on an annual agreement that are a factor based on the media budget. So less on the impression level, but more on the media budget. on an annual contract. But I believe these are the early days and we may explore other ways to monetize it. So currently it's based on the size of the media spend, not a percentage, but the size of the budget of the customer and annual deal. Your second question was on vertical. And vertical, except what we saw in Q4, the drop in the auto, which was across the board, we're not seeing at this point a dramatic change in any of the vertical. Verticals, we're seeing more generic like spot decisions by certain brands that could be either strategic, not strategic, I would say, looking into the economical environment. And we are absolutely still seeing supply chain challenges that influence, you know, there's a large CPG that was, they were publicly in their earning call mentioning running short on supplies for two major product categories, lowering the media spend, and then increasing it again in Q3 when their supply came back. So we believe this is gonna continue for the foreseeable future, will be more about volatility rather than across the board, an entire vertical changing. Last, regarding the trade, this question, obviously, you know, we don't, We don't monitor in other companies in terms of earnings and how. I would say that the key difference between us and most of the media companies, definitely the media buying and selling platforms like the DSPs and the SSPs is the take rate. It's basically that doesn't exist at Innovate. So Innovate is a pure volume play. So things go up, we go up. When volume goes down, we go down, which behaves very differently than can behave differently from how a percentage of media takes, right? There's more flexibility, it's a bigger take rate, and it's more narrow. So we charge volume across the board, including the wall gardens, including the open internet, including everything, while the DSPs are obviously charging for what is only running on their platforms. It could be 15, 20% of the plan, and based on the inventory they're buying and how they price the media, So the actual revenue, because they don't report volume growth, the actual revenue can go up and down. And I would argue there's more control by the platform on that. On the short term, on the long-term perspective, I believe Innovate is more immune to price pressure, price compression, or margin compression, because it's a flashy for volume. And I believe, and thank you for asking this question, I believe this will continue as the markets continue to evolve. I believe this will be a point that we'll continue to discuss and for people to better understand the different dynamics between how the unique business models innovate versus the media platforms.
spk08: Okay. Thanks, Vika.
spk03: Sure. Thank you. The next question comes from the line of Laura Martin with Needham & Company. Pleased to see you with your questions.
spk07: Good morning. Great numbers, you guys. Congratulations. So, Zika, my first thing is you've got quite a wide spread of guidance for 3Q versus quite a narrow guidance range for 4Q. My question is we are hearing that visibility is falling as advertisers are pausing or delaying or just giving much shorter notice. Is your visibility on 3Q falling, which is why I have a 700 basis point guidance range in organic growth? but then I don't understand why it's tightening so much for a full year. So can you talk about visibility in your business, please, first?
spk04: Yes, and thanks, Laura, for joining. Good morning. So the dynamic is the volatility, right? So we have headwinds, like every company in the space, from Google to DSPs to social, obviously, advertising, Um, we believe we'll see some overall advertising. We'll see an impact, you know, because of the economical situation and, and you heard it on every call, right? The, the tailwinds are extremely strong and that's what's, uh, you know, the tailwinds that include, uh, the move for Netflix, that base model, other platform to add based model. We believe we're seeing that the consumption of CTV at the basic TV is, is growing and will continue to grow. So the inventory will be there. Um, and then. we believe some brands while decreasing their spend might actually be able to buy more inventory, aka more volume. So this dynamic is relatively new, and I think will be accelerating in the next three to six months, which can create, to your point, can widen the spread. I can even share, I think we shared it on the earning call, where we said we are seeing a strong beginning of the third quarter, stronger than the end of the second quarter, right? It's just that it's in this environment, somebody runs a product or somebody is concerned about something else, that can impact. So that is the reason. So we want to be of abundance of caution. You know, we don't want to provide guidance that we will miss. So that's the reason for what we're seeing and kind of, being more conservative on the fourth quarter and the overall year guidance.
spk07: Okay, cool. And on political, I really liked your partnership you announced on political. Do you think that could be a, like how big could political be in your 4Q this year as a revenue driver? What's your best guess?
spk04: Political historically and also even with the acquisition, so we are providing a measurement solution It's not a significant revenue. It was never historically significant revenue driver for Innovit since our focuses are the large, you know, CPGs and autos that consistently deliver what was in the past, you know, predictable revenue. It's still relatively predictable. So we're less focused on selling into and monetizing political campaigns. With the acquisition of TV Square, it definitely increased a little bit the exposure in a positive way for revenue through measurement. But strategically, it's not a major focus area for the company.
spk03: Right.
spk07: Fabulous. Thank you very much. Appreciate it.
spk03: Thank you. As a reminder, to ask a question today, you may press star 1 from your telephone keypad. The next question comes from the line of Andrew Broon with J&P Securities. Please receive your questions.
spk06: Good morning. Thanks for taking my questions. It's exciting to see measurement now reach 22% of revenue. Can you provide us an update on the impact of measurement pricing? Maybe where are we now in terms of CPMs?
spk04: Andrew? So at this point, what we're seeing, you know, since we're integrating measurement, the product is already integrated. We're now in market upselling to our existing client base. I believe we're going to evolve in terms of how we price it. into maybe a more advanced way in terms of towards the end of the year as we're exploring better pricing mechanisms. So we were cautious at this point not to, so technically if you take, you add that revenue since we don't price it on a volume base. It's more of an annual deals, a subscription annual deals. So if you take the overall revenue divided by impression report, you'll get a much higher effective CPM. uh kind of the per per ads delivered but we didn't want to share this number yet because we may may evolve the way we're pricing it and i think it will be more accurate to combine those numbers if the way we price it is similar so at this point um at this point we're not updating that that number overall if you put measurement aside it's the similar trend there's no we're not seeing any price pressure um on any of our products actually we're seeing you know great success on personalization that's going very fast. CTV is now 50%. And XP is being, you know, it's being adopted faster than we thought in terms of customer, like large customer interest. So the, I believe that maybe by next year, we'll be more, you know, we'll come to market and explain how we're combining all the numbers to show an effective CPM. Mechanically, it obviously went up now, but I don't think it would be the right presentation to provide to investors.
spk06: Fair enough. And then just as we think about the macro environment, can you talk about what that's doing in terms of existing versus new clients? Are you seeing an elongation in terms of bringing new clients onto the platform? Clearly, you've had success, right? We talked about GM last quarter. But then how does macro impact the maturation of kind of those cohorts versus new clients? Thanks so much.
spk04: And thanks for the question, actually. It's a great question because to make it very clear, You know, and Laura asked about the guidance. On all KPIs, in terms of, you know, beside volume, what we're seeing, you know, when a large CPG is running out of home care products, and as rightfully as they should in this environment, we do spending for a month and a half or two and then come back, all other KPIs are moving as planned up and to the right. So I would argue there's actually acceleration, positive acceleration of adoption. Because I believe at this point, especially, you know, the Netflix, you know, And now Smith made, you know, provide like shockwaves throughout the industry. If somebody was, was, was sleeping under a rock on the brand side, it's clear right now that in feature, all TV will be IP delivered. That most television will be monetized through, um, advertising based model and not like 25 subscriptions per family. So this is clear now where we're heading with this. So the brands also understand that this is the future. And you also understand the need for an independent platform, right? You know, it's rumored that Netflix was in conversation with, you know, some of the other platforms out there besides Microsoft, which all of them are in a way also competing with the Netflix business. So the fact that there are multiple, many wall gardens, you know, I believe Netflix will also be some sort of a wall garden together with Microsoft, the fact there will be so many of them. And for brands like P&G or Chrysler or GM, they need to be everywhere, including Netflix. So that would actually increase, it should increase and accelerate our market share, winning new logos, upselling to personalization, upselling to measurement. The environment we're in is forcing advertisers to get more for every dollar. So if they reduce the budget, let's say, from $100 million a year to $80 million a year, they will still kind of do more with less, right? They still want to gain more. The way to do it is do more personalization, to get better effectiveness and implement measurement, any measurement tool you can find to better optimize your plan and buy more of this inventory and less of this inventory. These are exactly the two products for upsell. So just to summarize on that, I believe and expect to see increase in the amount of customers, the percentage of upsell for personalization and the percentage of upsell into measurement. While the overall volume may fluctuate in the short term, On the long run, I'm extremely bullish on growth on all KPIs.
spk06: Thank you.
spk03: Thank you. Our next question will be coming from the line of Vasily Karazhov with Cannonball Research. Please proceed with your question.
spk05: Thank you. Good morning. Wanted to ask you a big picture question. Given the bifurcation and performance in connected TV names this earnings season, can you tell us what you see in terms of growth drivers, walled gardens versus open internet or open connected TV, whatever you want to call it? What do you see in terms of trends that are driving the diverging performance from different companies? but they used to look like they performed in the lockstep, but now that's not the case anymore. Thank you.
spk04: It's definitely very interesting dynamics. I would ask my co-founder and our CTO, Tal, who's working very closely. We both, World Gardens and what you refer to as the Open Internet, obviously we work with all of them. Tal, would you take that?
spk02: Sure. Thank you very much, Zecha, and thank you, Vasili. So first of all, just an important point about the World Garden versus open internet. I think that the future of television and the future of connected television is not going to be a winner takes all. So there's not one massive World Garden like we've seen in search or social. So there will be a lot of different companies. We see right now and we definitely think that that it will be a combination. It's not going to be just an open Internet with a lot of different small apps. Obviously, as attested by many big apps like YouTube, even Hulu has defined it somewhat of a walled garden. Amazon and many others, soon Netflix as well, all of those are very large walled gardens. And we think that the future will be a combination of all of them, not one site. To your question about... of bifurcation of performance this quarter i think that there's many many differences uh in in reasons to that uh obviously lapping lapping hard comps from from q2 2021 uh and also very different type of advertisers that fuel different platforms from smaller marketers to very large tv advertisers but uh but i think in the long term that that's really the the big important point is that the long term of television, all linear, will move into connected television. And it will be a mix of very large walled gardens and a long tail set of apps that allows users to just start and broadcast television. Thank you very much.
spk03: Thank you. At this time, we've reached the end of our question and answer session. I'll turn the floor back to management for closing remarks.
spk04: Thank you, operator, and thank you everybody for joining us today. I really appreciate the time. I know there's a lot of early calls today and the time and attention to innovate. Obviously, we're extremely excited about what's going on and how things are evolving for us. We had a very solid quarter and started the year with a strategic move into expanding into measurement space with the launch of InnovateXP. And as we heard in the question, despite the uncertain microdynamics, we have and we are delivering on our vision for the future of television. And we definitely plan to further leverage the very strong tailwinds, strategic tailwinds that are creating a huge upside for ad-supported CTV all over the industry. As always, I would like to thank our talented and dedicated employees all over the world, our loyal customer base, and of course, our shareholders. and investor. Thank you, everybody, and have a great day.
spk03: This concludes today's conference. We may disconnect your lines at this time. We thank you for your participation.
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