Digital Media Solutions, Inc.

Welcome to the Digital Media Solutions fourth quarter and full year financial results. My name is Bruno and I'll be the operator of today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, please press star followed by one on your telephone keypad. If you'd like to withdraw the question, press star followed by two. I'd like to pass the call over to Cliff Levy, DMS EVP, Strategy and Business Development.

Thank you for joining us to discuss financial results for DMS for the fourth quarter and full year of 2022. With me on the call are Joe Maranucci, co-founder and CEO, and Rick Roddick, our 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'd 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, 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. Reconciliation between GAAP and non-GAAP financial measures for our recorded results can be found in the tables of our financial results press release, which we have posted on our investor relations website at investors.digitalmediasolution.com. The additional financial and other information to be discussed on this call can also be found on our investor relations website. Now I'd like to turn the call over to Joe Marinucci, our CEO.

Thank you, Cliff, and good morning, everyone. Welcome to our fourth quarter and full year 2022 earnings call. Our fourth quarter results are as follows. Fourth quarter net revenue was $101 million, which, while down 15% year over year, was within our guidance of $97 to $102 million. Gross margin and variable marketing margin came in at 24.8% and 30.6% respectively. Adjusted EBITDA came in at $7.1 million, or a margin of approximately 7%, also within our guidance. Our full year 2022 results were full year net revenue of $391 million, above our guidance of $385 to $390 million, gross margin of 26.4%, and variable marketing margin, or VMM, of 32.7%. We generated adjusted EBITDA of $25.7 million. Rick will add more details and dig deeper into the numbers and go over our guidance for the first and second quarters of 2023 later in the call. During 2022, and now here in 2023, we continue to focus on how the DMS business is diversified. It is our diversification that allows us to remain agile and move as needed to adapt to market trends that results in shifts in ad spend. This is true for both our brand-directed marketplace solutions, and our diversification can also be seen with the verticals we serve. Property and casualty insurance, inclusive of auto and home. health insurance, including Medicare and Affordable Care Act marketing spend, career and education, e-commerce, and finally consumer finance. These verticals encompass our enterprise customers, which we closely monitor, along with our SMBs, which include the insurance agents we serve, which further highlights the diversity of our business. For 2022, we closed with a significant enterprise customer count of 285. this is a new measurement we are introducing which represents customers spending in excess of a hundred thousand dollars annually with dms for 2022 arpu per significant enterprise customer was 1.3 million for 2022 smbs on the dms platform totaled 7 712 active insurance agents up from 7,619 agents in Q3 and 6,693 agents in 2021. The breakout by vertical of revenue for Q4 is as follows. Property and casualty insurance, 39 million in Q4 revenue, which was 38% of total revenue for the quarter. E-commerce, 23 million in Q4 revenue, which was 22% of total revenue for the quarter. Health insurance, 16 million in Q4 revenue, which was 15% of total revenue for the quarter. Career and education, 14 million in Q4 revenue, which was 13% of total revenue for the quarter. And consumer finance, 13 million in Q4 revenue, which was 12% of total revenue for the quarter. This diversity in our customer mix and verticals is part of what differentiates DMS. And I'd also like to say that continuing to invest in our technology, data, and media capabilities is how we innovate and create solutions that provide value for consumers and advertisers alike. In 2023, we plan to continue to focus on developing these data-first solutions, which are agnostic, to power growth across our customers in these different verticals. Although the macro this year is expected to be choppy, we believe that digital performance marketing, the primary DMF solution, will win as it is a pure play for ROI performance, thus de-risking customer ad spend. Again, growth will come from focusing on leveraging our robust tool set, including our proprietary data, to serve our customer base, which is diversified across those verticals we serve. To this point, earlier this quarter, we took a step to further position DMS as a diversified digital performance advertising business by acquiring the HomeQuote.io home services marketplace and ClickDealer international ad network. The acquisition demonstrates our commitment to executing our key strategic growth initiatives by investing and expanding our marketplace solutions into home services in the U.S. market while also strengthening our brand direct business through international expansions. Home services is one of the largest addressable markets, and we're excited to work with the ClickDealer and HomeQuote teams on leveraging DMS assets to capture growth in this market. In addition, DMS will now have access to diversified international media distribution and advertisers that will expand the current brand direct business that DMS operates domestically into over a dozen countries worldwide. This will allow DMS to serve international advertisers in verticals like e-commerce, cybersecurity, retail, consumer finance, and gaming. We expect the acquisition to add over $60 million in revenue over the balance of 2023 and be accretive to DMS 2023 earnings. In March, we also announced the implementation of a restructuring plan designed to create efficiency, save costs, and strategically target areas with growth potential. With the business consolidation into DMS core service offerings, the restructuring resulted in a 14% reduction of the DMS workforce, the financial benefits of which will accrue in future periods. Having completed these foundational changes, we look forward to reigniting our growth engine and focusing on executing our strategic initiatives and opportunities. We expect total annual savings from this restructuring to be between $7 and $8 million on an annual basis. Also, as previously announced, during the quarter, we closed our strategic review process, which started in August of 2021. After closing strategic review, we successfully raised a new equity financing to strengthen the company balance sheet. This financing includes participation by DMS co-founders along with strategic investors and will better position us to execute on our growth initiatives here in 2023 and beyond. To summarize for 2023, our focus is to drive growth in our business by growing the number of our existing significant enterprise customers along with average spend per customer by helping them acquire, grow, and retain their customers. continuing to add SMBs to our platform, investing in our technology, data, and media capabilities, managing costs, and finally focusing on the integration of the recently closed acquisition to further diversify our customer base and vertical served while strengthening our brand direct and marketplace solutions. Now I have the pleasure of turning the call over to Rick, who will provide more details on our financial results.