Digital Media Solutions, Inc.

ladies and gentlemen this is your operator today's conference is scheduled to begin momentarily until that time your line will again be placed on music hold thank you for your patience THE END THE END Ladies and gentlemen, thank you for standing by, and welcome to Digital Media Solutions' fourth quarter and full year 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that today's call is being recorded. I would now like to turn the conference over to Thomas Bach, Executive Vice President of Investor Relations. Please go ahead.

Thank you for joining us to discuss DMS's financial results for the fourth quarter and full year of 2020. With me on the call are Joe Marinucci, co-founder and CEO, and Randy Kuback, CFO. We posted our earnings announcement this morning in a press release and also on our investor relations website. By now, everyone should have access. Before we begin, I would like to call your attention to our safe harbor provision for forward-looking statements in our financial results press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the contents of our forward-looking statements. For a more detailed description of the risk factors that may affect our results, including disclosure about the effects of the coronavirus outbreak, please refer to our financial results press release and our SEC filings. Also, during this call, management's commentary will include non-GAAP financial measures. Reconciliations between GAAP and non-GAAP financial measures for our reported results can be found in the tables of our financial results press release, which we have posted to our investor relations website at investors.digitalmediasolutions.com. The additional financial and other information to be discussed on this call can be found on our investor relations website. Now, I'd like to turn the call over to Joe Marinucci, our CEO.

Thank you, Tom, and good morning to everyone joining the call today. We are excited to share the results of another very strong quarter for DMS, which closed out our 2020 fiscal year. 2020 was a uniquely challenging year for us all. Here at DMS, we are extremely proud of our team and their execution against our strategic priorities, which resulted in record results for the quarter and the full year. We are also excited about our recent growth and for the long-term outlook of digital performance advertising as the digital transformation of ad spend continues, which is an overall secular trend that benefits DMS. In Q4, we achieved record adjusted revenue of $104.7 million, record gross profit of $28.4 million, and record adjusted EBITDA of $15.4 million. Our Q4 revenue growth was an impressive 56.5% year over year. And for the full year 2020, we achieved record adjusted revenue of $341.2 million ahead of our guidance. Record gross profit of $98.8 million and record adjusted EBITDA of $54.6 million, which is in line with our guidance. Both our Q4 and our full year performance benefited from continued momentum and growth inside of our largest key vertical, which is insurance. As many of you know, DMS is a leading provider of technology-enabled digital performance advertising solutions. Our uniquely differentiated business model is driven by our proprietary first-party data asset, proprietary technology and expansive media reach. We leverage these assets across our entire business to efficiently and effectively connect consumers and advertisers. Here at DMS, we always talk about the power of people, process, and technology. During 2020, prioritizing what we call PPT was as important as ever. And for that reason, we continually invested in these three areas throughout the year. As a result, 2020 was a year of record revenue growth for us. We have strong contributions from both major segments we report. brand direct revenues reported a record of 197.5 million, an increase of 13% from 2019 marketplace solutions also came in at a record with 156.5 million in revenue, an increase of 113.2% from 2019. In addition, 2020 was a year of significant transformation across all vertical segments, resulting in healthy EBITDA margins and growth rates. We're pleased with our results and believe we demonstrated agility and flexibility during a period of unprecedented uncertainty that has occurred as a result of the pandemic. We are also confident that our agility and the investments we made in 2020 have set us up for continued improvements in growth during 2021 and beyond. In 2020, we invested to accelerate the key drivers of revenue growth. These investments are letting us take advantage of the long-term transition from traditional to digital advertising across key verticals. According to eMarketer data, digital advertising spend is expected to increase from $142 billion in 2020 to $171 billion this year and to $243 billion in 2024. Our investments, which follow our people, process, and technology priorities, included the following. For people, we made key strategic hires throughout the organization, including three that I want to highlight today. First, in early January, Tony Saldana joined our team as General Counsel and Executive Vice President of Legal and Compliance. Joining us from Skadden, one of the world's leading international law firms, Tony adds significant experience in the areas of mergers and acquisitions, corporate finance, corporate governance, and general counsel and securities matters. Second, also in January, Thomas Bach joined us as our new Executive Vice President of Corporate Strategy and Investor Relations. Tom has significant experience advising both corporate and private equity-backed clients with transactions, and he has knowledge spanning mergers and acquisitions, debt origination and refinancing, and equity and corporate advisory. Earlier in his career, Tom was a sell-side research analyst covering the Internet sector on ranked teams both in the U.S. and Europe. Lastly, we are welcoming our new CFO, Basundra Sirenivas, on March 13th. Basundra's expertise includes strategic direction, GAAP and IFRS accounting, SEC reporting, and M&A, and financial operations, which she gained in part from a long career at Boeing, where she held numerous positions, including the CFO of Boeing Australia and Boeing Defense Australia, senior roles in corporate finance transformation and enterprise finance. And from 2017 through 2020, she was the CFO of Boeing Capital Corporation, a large wholly owned subsidiary of Boeing. After two years on the team, Randy Kubek, our current CFO, is leaving after March 12th to pursue other opportunities. Our company has grown tremendously since 2018, and we are sincerely grateful for all of Randy's hard work and contributions, and we wish him well in the next stage of his career. Continuing with our PPP investments, for process, we focused on leveraging ways to better connect our people and our technology. This is especially important for our now fully remote workforce to drive results inside of our business for our advertiser clients and for our media partners. The process investments we made in 2020 are allowing for more standardization and they are creating efficiencies across the business, enhancing the consumer experience and driving more scale and measurable ROI for our advertiser clients. For technology, We made investments to advance the efficacy of our proprietary technology, including the upgrading of our AI and BI capabilities. It is this technology that connects our data asset to our expansive media reach, which competitively differentiates our service offering. And lastly, we also made one strategic acquisition which allowed us to bring in valuable people, process, and technology to facilitate growth in the DMS ecosystem. We are confident these investments will continue to provide accelerated growth in 2021 and drive our point of differentiation. DMS has the people, process, and technology to continue to provide value for both consumers and advertisers as the digital transformation of ad spend continues to accelerate. There are a number of key highlights from 2020 that I want to share today before passing the call to Randy to discuss our financials. In March, when the COVID threat first emerged, we prioritized our people, acting quickly and decisively to ensure the safety of our DMS family. We canceled corporate travel, moved to remote working, launched a series of initiatives to keep employees connected, accelerated training programs, and ensured consistent employee communication. As a result of putting our people first, our teams responded by working hard during such tumultuous times. We are grateful to everyone at DMS and their families that support them. Throughout the year, we saw accelerated growth in our insurance vertical, which now accounts for almost half of our revenues. In total, for the year 2020, insurance revenue was $164 million, up 43.9% from 2019. Inside of the insurance vertical, DMS works with advertisers across the following lines, auto, health, life, and home. In total, we have now successfully connected 15 million consumers with auto insurance providers and more than 2.5 million consumers with health insurance providers. In Q4 alone, during the open enrollment period, or OEP, under 65 health insurance revenue was up 38%. An annual election period, or AEP, over 65 Medicare revenue was up 272% versus the prior year. The insurance industry, which includes some of the most advertised brands in the U.S., dramatically shifted media dollars from offline to digital channels during 2020, and DMS benefited from this transition. We also experienced growth across our other verticals, most specifically as it relates to Q4 within e-commerce. In fact, our brand direct business was up 53% in Q4 2020 versus 2019. Lastly, in 2020, our online stable of marketplace brands expanded. Calling out one marketplace specifically, Protect.com will become the flagship marketplace for DMS, helping consumers shop for insurance and many other verticals we support. In December, we soft-launched Protect.com as an auto insurance marketplace, and we've already driven more than half a million unique visitors to Protect.com, which has generated $2.5 million of revenue. As we continue to expand Protect.com in 2021, this marketplace will enable DMS to continue to expand our media reach into emerging channels like connected TVs. In summary, 2020 was a very strong year for us, a year of continued improvement and a year of growth, resulting in record numbers both on the top and bottom lines with strong growth in margins. During 2020, advertiser clients spent more of their media dollars with us. And as a result of that increased media spend, our data asset grew. As our data asset grows, The audience targeting of our AI and BI technology has more inputs and is continually improved. Our sophisticated targeting capabilities allow us to serve relevant ads, which means putting the right offer in front of the right person in the right place and at the right time. These relevant ads reduce friction from the advertising ecosystem and, as previously mentioned, create value for both consumers and our advertiser clients. It is these targeting improvements that result in consistent improved conversion rates and course that leads to higher ROI for our advertiser clients, which is our point of differentiation versus traditional media agencies and many other digital advertising competitors. In terms of measuring our scale and efficacy, unlike the standard impression measurement used by many in the industry, We measure the targeted reach of high intent consumers and our ability to successfully engage them. To publicly quantify our growing scale in this matter, we developed the DMS Consumer Engagement Score, or the CES. Our CES significantly increased from Q1 to Q4 from 47% to 69%, quantifiably proving what we know is true. As more media dollars are spent within the DMS ecosystem, our targeting capabilities are continually improved and our ability to engage consumers at scale is continually enhanced. It is this engagement that results in the ROI for our advertiser clients getting stronger. We'll be releasing more details about the DMS consumer engagement score in our investor deck, including a measurement of the score, how it has trended over time, quarter by quarter in 2020. One last time, I'll turn it over to Randy to briefly run through some of our key financials, and I do encourage you to read our earnings release for additional information. Over to you, Randy.