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spk00: Hello. Thank you. Oh. Thank you. Music. Thank you. Thank you. We'll be right back. Thank you. Hello, everyone, and welcome to the Vertical Scope Holdings Incorporated Q4 and full year 2021 earnings call. My name is Emily, and I'll be coordinating the call today. During the presentation, you'll have the opportunity to ask a question by pressing star and then one on your telephone keypads. I will now hand the call over to our host, Diane Yu, Chief Legal Officer of Vertical Scope Holdings. Please go ahead.
spk01: Thank you, Emily. Good morning, everyone, and welcome to Vertical Scope Holdings' fourth quarter and full year 2021 earnings call. I'm joined by Rob Laidlaw, our Founder and Chief Executive Officer, Vince Bellissimo, our Chief Financial Officer, and Chris Goodbridge, our President and Chief Operating Officer. We'll begin with commentary on the quarter before opening the floor to questions. Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. A more complete discussion of the risks and uncertainties facing the company appear in the company's management discussion and analysis for the three- and 12-month period ended December 31, 2021, which are available under the company's profile on CDAR as well as on the company's website. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. The company disclaims any intention or obligation, except to the extent required by law to update and revise any forward-looking statements as a result of new information, future events, or for any other reason. Our discussion today will include references to adjusted financial measures, including adjusted EBITDA and free cash flow, which are non-IFRS measures. All references to currency in this presentation shall recur to USD unless otherwise specified. Now I will turn the call over to Rob Leyva, founder and CEO of Vertical Scope Holding. Rob?
spk07: Thanks, Diane. Good morning, everyone. 2021 was an important year for Vertical Scope as we completed our initial public offering and continued to build on our mission to give enthusiasts and hobbyists safe communities to share knowledge and geek out on their passions. Our employees have worked tirelessly to deliver the strong results we are sharing with you today. And for that, I say thank you to all of them. We wouldn't be here without you. Vertical Scope is uniquely positioned in the market as we have a growing, EBITDA-positive, high free cash flow business that is driven by our user-generated communities that are on our 4L platform. We believe that we can continue to profitably grow our business both organically and through highly accretive acquisitions. In fact, with two of our larger acquisitions that we completed in mid-Q4 2021, the Streamable and Home Talk, we believe they are well positioned to contribute between 10 and 14 million of adjusted EBITDA to our business in 2022. Meanwhile, with Threadloom, we are off to a great start, building dedicated experiences to help people discover and buy the products they love in hyper-targeted enthusiast categories. With these three transactions, we have added communities that are growing revenue even faster than our own, amazing people and teams that are fitting in very well at Vertical Scope, and some incredible technology that advances and de-risks our 4L platform build. Turning to our Q4 and full year 2021 results, our business is growing very nicely and in line with our expectations and goals. We faced a variety of challenges in 2021 head-on, as the unwinding of the pandemic-induced shopping trend challenged our commerce business, and supply chain issues and semiconductor shortages continue to drag on many of our consumer categories, including automotive and power sports. Q4 was a record-breaking quarter, as we grew revenue by 6% year-over-year to 21.4 million, led by an increase of 35% in our digital advertising business and offset by a 30% decrease in our e-commerce revenue. For the full year 2021, that brought revenue growth to 16% for the year, including a 37% increase from digital advertising and a 12% decline in e-commerce revenue. We think that our e-commerce revenue will reverse its decline in Q2 2022 as we finish lapping the COVID-induced gains in the prior year in late Q1 and then look to grow on a year-over-year basis for the rest of the year. We believe that supply chain issues and chip shortages are affecting both advertising and e-commerce revenues, and that these headwinds will persist through the rest of 2022 as automotive manufacturer supply remains short and new supply chain challenges present themselves due to the war in Ukraine and sanctions on Russia. We remain in touch with all of our clients where we continue to be a valued partner, awaiting inventory issues to resolve in order to once again, step up spending. Turning to our adjusted EBITDA for the full year, we recorded $29 million of adjusted EBITDA, a 9% gain versus the prior year. This gain jumps to 18% if we exclude incremental public company costs, ethics impacts, and benefits from government subsidies. In Q4 specifically, we reported $9.4 million of adjusted EBITDA, down 16% versus last year, as we experienced higher costs due to increased headcount, incremental public company costs, and less favorable FX. While we are not immune to some of the inflationary pressures and technology staff wage increases being experienced more broadly, we have confidence that we can continue to grow our adjusted EBITDA like double digits in 2022 with some organic gains and more importantly, contributions from the new acquisitions we made in mid to late Q4. Our financial performance was driven by a record Q4 as we attracted 105.8 million monthly active users to our platform, up 18% versus 89.7 million in the prior year. During the month of December, we finished the year strong with 113.5 million active users. Our record MAUs were driven by a combination of 4% organic growth and the rest coming from acquired properties. For the full year 2021, we averaged 99 million monthly active users, an increase of 10% over the year prior. We do expect Q1 of 2022 to be more challenging for our organic MAU growth, as we see increased competition for user attention from the war in Ukraine and some unwinding of pandemic-induced traffic patterns that drove impressive numbers last year. We expect organic MAUs to be in the range of negative 4% for the first quarter, before returning to positive growth in Q2 onwards. But overall MAU growth in Q1 is expected to remain strong at between 10% and 15%. We concluded the year with 86% of our forum community MAUs on the FORA platform. This number will fluctuate going forward based on our acquisition activity and how quickly we are able to migrate those acquired communities over to FORA. On the product side, we are making some great strides forward. We have rolled out our small business subscription packages and introduced new marketplace experiences onto Fora. We expect to launch our Fora mobile app in the next few months to increase user engagement and drive more cross-community usage. The Threadloom team is already integrating well with our business and is far ahead of schedule on experimenting with some new strategies to better organize Forum products content and make product content more accessible to our users. 2022 is set to be an impressive year for the continued growth and evolution of our 4.0 platform, driven by our talented technology team. Now, I will turn it over to Vince to discuss the financial details, the financials in further detail.
spk02: Thanks, Rob, and welcome to everyone who has joined. I'm excited to walk you through our Q4 and fiscal year 2021 financial results. We had a very strong year end with record-breaking results for both MAU and revenue. Q4 revenue was up 6% year-over-year, and as indicated by Rob, was the highest-grossing quarter on record at $21.4 million. Growth in the quarter was driven by an 18% increase in overall MAU, a 14.7% increase in digital advertising ARCU, and contributions from acquisitions. Fiscal year 2021 revenue was up 16% year-over-year and finished at 65.8%. Growth in the year was driven by a 10% increase in overall MAU, a 25% increase in digital advertising ARPU, and contributions from acquisitions. The exciting trends in digital advertising have continued, with the channel posting its fourth consecutive quarter of double-digit growth. Digital advertising finished up 35% in quarter at $15.1 million and up 37% for the year at $44 million, with 57% of the full-year revenue coming from programmatic channels and the remaining contribution coming from direct advertising. Programmatic revenue experienced strong gains in both the quarter and year, led by the growth in MAU and increased performance from advertising units on the 4R software platform when compared to legacy foreign platforms. Programmatic revenue grew by 40% in the quarter and 41% in the year, contributing $8.5 million and $25.2 million, respectively. Overall, we feel the channel's organic growth opportunities will be accelerated by the new partnerships, strategies, and technology from the Q4 acquisitions of ProBoards and HomeTalk. Direct Advertising rebounded nicely from a difficult 2020, led by renewing an incremental spend from national retailers and brands looking to reach our niche audiences. Direct has posted four consecutive quarters of double-digit growth, with Q4 up 30% at $6.5 million and a year up 33% at $18.8 million. Growth in the channel was slowed by the impacts of chip shortages and supply chain issues across categories like automotive and power sports, which is indicated by Rob. We expect to continue into 2022. Our acquisition strategy will continue to expand and diversify our audiences across multiple categories and will drive organic growth in the channel as our experienced sales team introduces new brands and advertisers to these sites. Turning to e-commerce revenue, the decline in e-commerce ARPU of 30% in the quarter and 20% in the year was a key driver of year-over-year results when compared to the surge in online shopping in 2020, offset by the increase in overall MAU and contributions from acquisitions. The channel's revenue was down 30% in the quarter and 12% in the year, recognizing $6.3 million and $21.8 million respectively. Supply chain issues also had an impact on the channel, with the rise in out-of-stock statuses across major retailers and marketplaces resulting in a lower level of attribution from the traffic we drove to those sites. Despite the pullback in activity compared to 2020, the channel did grow by 18% when compared to 2019 and is positioned to return to growth in 2022. Overall, we are really excited about the future organic growth opportunities in the channel, which we feel now have been accelerated by the talents and technologies added from our Q4 acquisitions of the Streamable and Threadloom. Operating expenses increased by 88% in the year, finishing at $73.2 million. Notable incremental costs recognized in the year include $5.7 million in general admin expenses associated with the IPO and operating as a public company, and 2.6 million in wages and consulting expenses associated with FX movement, M&A, and market-based incentives. Excluding these items and non-cash operating expenses, cash operating expenses were up 16% year-over-year, primarily driven by growth in headcount. Our global headcount as of December 31st was 304 employees, up 29% compared to last year, with 52 employees added from Q4 acquisitions. Further to Rob's comments on adjusted EBITDA, we continue to generate profitable results and positive free cash flow that will be reinvested in our business and M&A. Free cash flow generated in the year was $23.6 million, up 8%, and resulting in a free cash flow conversion of over 80%. Total comprehensive loss for the year was $12.4 million, less favorable by $10.9 million compared to last year. The loss was primarily driven by $15.9 million in incremental costs relating to the IPO, the amendment of the credit agreement, acquisition expenses, and market-based incentives. Our overall efforts in 2021 have strengthened our balance sheet and left us in a much stronger financial position to drive accelerated future growth. We raised $110 million in net proceeds from the IPO, and we added over $100 million in assets through acquisitions, while lowering our debt by $22 million in the year. to renegotiate our credit agreement and strengthen our liquidity position by adding a $75 million revolving credit facility, of which $45 million remains undrawn and will be used towards M&A. And we ended the year with $20.5 million in unrestricted cash on the balance sheet. And now I will pass you over to Chris for an update on M&A. Chris?
spk06: Thanks, Vince. As Rob mentioned in his opening remarks, our M&A activities had a very strong finish to the year. In total, we completed 21 acquisitions in 2021, with 13 of those transactions closing in Q4 alone. We deployed over $95 million of capital, excluding earnouts in the year, and it far exceeded our IPO guidance back in June that we would deploy the proceeds within one year. Over 90% of the capital we deployed occurred from mid-November onwards, and so the full impact of these acquisitions will surface in our 2022 results. In November, we announced three major acquisitions in HomeTalk, the Streamable, and Threadlink. The integration work for each of these acquisitions has gone very well, and each has performed in line with our expectations to close out 2021 and thus far in 2022. But beyond these deals, we added a number of additional communities that will really benefit from the platform gains that Fora can offer. For example, advrider.com, one of the largest motorcycle communities in North America, and thumpertalk.com, the top site for ATV and dirt bike enthusiasts. Our 2021 acquisition activity will drive tremendous value and provide a number of benefits to Vertical Scope moving forward. We've acquired large, diverse, and engaged communities, which deepen our user base in categories like automotive and power sports, but also expand our universe of product-focused communities to cover topics as varied as outdoor activities, digital content streaming, home DIY activities, photography, coffee, gaming, and fashion. The common thread throughout is a focus on helping people make decisions about product purchases with the benefit of the expertise and trust that comes from these communities and marrying that with our four platforms to drive better experiences for our users and greater value for our customers. We've also added new technologies and capabilities to Vertical Scope. Threadloom's technology and team is organizing the product content that exists in our communities and using that product data to surface new commerce experiences that are relevant to our users. It's early days, but the rapid advances we are seeing to our commerce capabilities will be an important driver of growth. And with ProBoards, we've opened up an additional organic growth driver for our business with user-generated communities. And with HomeTalk, we've added great video and email technology and capabilities. And last but not least, as Rob alluded to earlier, these acquisitions will add a significant amount of EBITDA to our business in 2022 and beyond. Turning to our 2022 activity and pipeline, as Vince alluded to, we have the capacity from cash on hand, our credit facility, and the free cash flow that our business is generating to continue to execute our creative M&A playbook. We've signed four purchase agreements so far this year on smaller tuck-ins, and there's several more opportunities that we're actively pursuing. We'll continue to stay disciplined and value-focused, and we'll act decisively when the right opportunities surface at the right multiples. And with that, I'll pass things back to Rob to wrap things up.
spk07: Thanks, Chris, and thanks, everybody, for joining us today. As always, we appreciate your trust and support and look forward to accelerating our growth going forward. We'll now open it up for questions.
spk00: Thank you. If you would like to ask a question, please do so now by pressing star followed by 1 on your telephone keypad. If you change your mind and wish to withdraw your question from the queue, please press star followed by 2. And when preparing to ask your question, please ensure that your device is unmuted locally. Our first question today comes from Vince Valentini from TD Securities. Vince, your line is open.
spk08: Thanks very much. Good morning, guys. Can I ask about margins first? If we're looking at 2022, you shouldn't have any year-over-year impacts anymore from wage subsidy programs, and you've already lapped for most of the year the public company costs, and then you start to benefit from adding in these acquisitions that were done late in 2021. But package that all together, it would seem like there should be some positive impacts operating leverage and EBITDA margins for the full year should be able to increase, maybe as much as 100 or 200 basis points. But are there any other factors we should think about, given some of the factors you talked about of supply chain disruptions and new e-commerce platforms? Are there other costs that we should be aware of that may offset some of that margin gain that seems likely? Vince, do you want to take that one?
spk02: Yeah, sure. Hey, Vince. Yeah, cost to keep in mind, you're going to have the full year impact of those incremental heads that we had it from acquisition. But outside of that, you know, in any M&A costs, you will see a normalized position. So to your point, you likely will see an increase in margin north of the 44%, hopefully that we posted at the end of the year. But no subsidies or, you know, other sort of anomalies that we have sort of in view for 2022.
spk08: Okay. And the second one I'll throw in is on the acquisitions for Chris. Is there expected to be a bit of a pause now as you had a flurry of activity? since November, or is it still lots on your plate, and we could expect to see some more sizable deals in the next couple of months? And maybe I'll tag in on that. I know it seems premature because you just IPO'd, but with this wonky market and what the share price has done recently, would you consider maybe using a little bit of your excess cash for buybacks opportunistically, or is it purely acquisition still?
spk06: I'll let Rob tackle the question on buybacks, Vince, but just on the question with respect to the pipeline itself. So the deals we've done so far this quarter are small, sort of our typical community tuck-ins. And I don't see us doing anything as large this quarter as we did in Q4. That's for sure. We won't see that level of activity. But as we get out into Q2, we expect to see some, you know, potentially some larger opportunities come in. It's always obviously hard to predict when deals will land. But I'd expect that, you know, with Q1, you'll definitely see a lower level of activity and capital deployed compared to the prior quarter.
spk07: Yeah, and Vince, just on the buybacks question, We went public for a reason. We want to grow and get bigger. We think we've got a great M&A pipeline, and we think we'll be able to prove to the market that any fluctuations in the stock price are just very temporary. We're excited about where we think the business is going, so we're just going to kind of keep our nose down and work harder. And, uh, we think that, um, you know, I don't, I don't foresee there being buybacks and we're really focused on just growing the business.
spk08: Good stuff. I'll pass the line. Thank you.
spk00: Our next question comes from Aravinda Galapatiga from Calicor Genuity. Aravinda, your line is open.
spk04: Thank you. Good morning. Thanks for taking my questions. I have two questions for Rob and one for Vince or Chris. For Rob, I mean, when I look at the quality of the acquisitions that you made in November, in particular HomeTalk and Streamable, can you just talk to, as you kind of integrate those assets, sort of the revenue synergies that you see? I mean, you know, the Streamable I think as you've discussed, it looks like a really fantastic model with all these affiliate agreements. Routing more audience there suggests from the outside, it looks like there's significant upside over time. Can you maybe just talk to that? Then secondly, a quick clarification, Rob, I think in your prepared remarks you mentioned You know, you expect EBITDA growth in 2022. Were you referring to organic EBITDA growth, sort of excluding some of these acquisitions, or is it sort of a blend? I just wanted to kind of get your thoughts on that. And then, quickly, a question for Vince or Chris on the acquisition cost. Obviously, these were larger acquisitions, the ones you made in November, so there were some maybe slightly more lumpier cost items attached to it. I think it was $3 or $3.1 million, which I think you did add back to adjust it a bit. Is it fair to say that, you know, going forward, there won't be, you know, the kind of acquisition-related one-time items won't be as material? I know it's hard to predict, but I just wanted to get a sense of that. Thank you.
spk07: Great. Thanks, Arminda. Just talking on the first question there around, you know, the high-quality acquisitions that we've done with HomeTalk and the Streamable, definitely, you know, really impressed with both of those teams. We're seeing a lot of synergies, both just from an operating perspective, some of the talent that we've brought in there, some of the capabilities that they bring to our team, and looking to potentially leverage some of the technology that they've built, particularly around that HomeTalk platform, on how it could potentially fit in with some of our work and advance some of our communities as well. On the revenue synergy side, you're right. I mean, there's a lot of – you know, we own a lot of large communities in these types of spaces. AVS Forum is a big one that fits really nicely with the streamable. Home Talk, we've got a number of kind of DIY and contractor-type communities. So, you know, as we kind of build on some of those – ecosystems and do a little more integration work we do expect to see both traffic and revenue synergies um so we're pretty excited about those and again i have to give kudos to the teams there on both of those acquisitions it's just been fantastic and um really fitting in nicely so performing uh financially the expectation and in terms of just kind of the softer side fit and feel, just really doing a nice job fitting in a vertical scope culturally. With respect to the EBITDA growth, the second question, We expect to grow both on an organic basis and a blended basis. We've talked about, you know, those two acquisitions with the Streamable and HomeTalk delivering in 2022 kind of 10 to 14 million of adjusted EBITDA, and we feel very confident in that number and their ability to deliver. Threadloom was obviously a kind of a different kind of transaction. one that was not profitable and would provide some drag on EBITDA. I think we signaled a Q4 kind of view of where that could break even. Again, they're out of the gate really, really fast, so we think there may even be the opportunity to accelerate that schedule. But, yeah, I think overall MAU growth will kind of be reflected in organic growth, and we expect MAU growth to be positive for the year with just the kind of tough comparable and obviously the war in Ukraine causing some attention diversion in Q1. So Q1 will be a little bit tougher, and then the rest of the year we think you know, things really go back to normal with respect to kind of the period that we're laughing. So overall, organic and acquisition events are growth. And then I'll turn it over to Chris or Vince for the other questions.
spk06: Yeah. Hi, Irvin. It's Chris here. I can take the question quickly on, and Vince can elaborate if necessary, but We did have an extraordinary amount of acquisition activity happening at one time in Q4, and I think that contributed somewhat to the higher than normal acquisition-related expenses. So I don't think we would see that type of expense going forward kind of on a run rate basis.
spk04: Thank you. I'll pass the line.
spk00: Our next question comes from Drew McReynolds from RBC Capital Markets. Drew, please go ahead.
spk05: Yeah, thanks very much. And good morning. Maybe starting off here for you, Chris, just on the M&A environment, a lot going on with respect to just technology valuations in the public market and the Not a lot of volatility on that. I'm just wondering from your pipeline perspective, just how that M&A environment is evolving potentially into your favor. And then second question, just with respect to the state of the union on the digital ad market in the MDMA, you're obviously fairly clear, just reiterating a lot of the weakness in the automotive and power sports categories. Can you just kind of broaden that out to your portfolio of digital advertising and just add a little bit more granularity on perhaps other categories that are weaker or maybe others that are strong? And I'll leave it there. Thank you. Sure.
spk06: Thanks, Drew. I wouldn't say we've seen a material change yet with respect to kind of multiple expectations with sellers. you know, we're dealing with a lot of kind of individual owner operated type businesses that are, are a little less connected and less sensitive to the, to, you know, public market comparables and these sorts of things. And so to the extent there's any kind of bleed through to those, you know, those types of business owners I think it probably takes a bit more time for that, for that to play out. But having said that, you know, the, you know, the pressure on multiples overall definitely seems to have come off a little bit. But with the smaller deals, you know, it's really no change from the playbook that we run. And then with respect to the digital advertising market more broadly, so, yeah, we've pointed out, you know, as you mentioned – kind of continued weakness in our business with respect to automotive and power sports. But yet we've still been able to grow, you know, that advertising business both programmatically and through the direct channel by double digits. And there are a number of categories that are and have been relatively strong. So, you know, we look to our insurance category has been quite strong. You know, any aftermarket type, type partners, marketplace partners have been very strong. Retail has been quite strong for us, particularly in the outdoor part of the business. And so, you know, there are a number of different categories just generally that have performed quite well that haven't had the same direct impact that we've seen with the partners on the auto and power sports side of things.
spk05: Okay, super. And thanks for that, Chris. And one final one for me, just on the e-commerce side, and thanks, Rob, for just the update there on kind of, you know, expectations as we go through the year. You know, can you just maybe unpack it a little bit with respect to, you know, some of the capabilities that Red Loom are bringing and then presumably you're going to leverage versus just kind of the base business that was already there versus maybe some other product initiatives that you have underway. If you can just kind of unpack that outlook a little bit, that'd be great. Yeah, thanks, Drew.
spk07: One of the things that I think, you know, has affected the e-commerce revenue to a larger degree and, you know, unpacking it a bit is just the fitness space. We had an incredible kind of run there with some of the COVID-induced, you know, kind of fitness trends and particularly people buying fitness machines and Pelotons and these sorts of things for their homes. And obviously, as we've seen with some of those companies' earnings and, you know, that space has become much more challenged and there's a lot less activity. So that's where we really turn our minds to what Fred Moon can bring to the table. And what that does is really diversifies us significantly across all of our fora categories. So we become much less kind of focused on things like fitness and much more kind of spread across a wide swath of consumer categories. And what they do is, you know, when we look at our communities and kind of communities in general that are like ours and these kind of hyper-targeted and enthusiast niches, we see about one out of four posts is actually a post about a product. But many of these products really are not, you know, they're talked about in kind of general terms. They, you know, will reference, you know, this company's exhaust system, but they don't link it. They're not providing, you know, hey, here's a clear path to purchase it. And that's what Threadloom is really, really good at, is bringing those products to the forefront so that average kind of drive-by shopper, the guy that's just looking for, hey, what exhaust do I need for my Toyota Camry? is able to now kind of complete that purchase journey, doesn't need to kind of return back to Google and say, okay, now I know what I'm looking for. You know, Google connect me to Amazon and Amazon connect me to purchase, but rather brings that product, you know, kind of to the forefront and then provides them with respect to that product with all of the posts that are in the community about that particular product and, you know i think really makes it just a far better user experience as we connect you know these consumers with these kind of niche um highly um targeted kind of products that are kind of for their their passions so That's where we kind of see this shift and where we're really excited with the Playbook going forward. This really brings commerce to the forefront on fora, makes it a better user experience, so it's something that our users can appreciate, and we think really diversifies us away from, you know, kind of some of those hot topics where we're still very strong and we're still a market leader in places like fitness, but sales have tailed off post-COVID.
spk05: Yeah, that's really helpful, Rob. Thank you for that.
spk00: Our next question comes from David from Cormark Securities. David, please go ahead. Your line is open.
spk03: Oh, great. Thank you. A couple of questions. So just on e-commerce, when we think about the impact to the business from supply chains and so on, do you expect that the business would wouldn't be impacted by that beyond Q1, or is it just too uncertain to say right now? And then secondly, when I look at the leverage, it looks like you finished nearing around two times EBITDA, and given the fact that you expect to complete some more acquisitions in 2022, I was wondering if you could comment on your target leverage ratio, where you feel comfortable. Thanks.
spk07: Thanks, David. Just on the e-commerce question, so with respect to supply chain, you know, obviously, look, we're continuing to call out the supply chain. I kind of personally feel like this is just a new normal. We're pointing out, you know, we expect this to persist. throughout the rest of 2022. I think this is, you know, post-COVID, we've got a war in Russia, or a war in Ukraine, sanctions on Russia. I think we're going to just continue to see this, but we're also lapping some of those quarters, you know, as we get towards Q2, where the blockchain was already an issue in 2021. So I generally think You know, again, the COVID-induced shopping, it probably lapped in Q1, and then the supply chain starts to lap as we get towards Q2 results and Q3. So with respect to e-commerce, it's definitely affected by supply chain, and where we usually see that, it's just on out-of-stock popular products, people trying to buy them, but they're just out of stock. They're not able to purchase. So we have to do a lot more kind of work around trying to find that retailer that has it in stock. And that retailer that has the last few items in stock may have a lower commission rate for us. And obviously the last thing we want to do is send that consumer to a retailer that doesn't have it in stock because that often ends up, again, off of our platform and outside of our ability to earn affiliate fees or commissions. So moving to the leverage, you mentioned kind of two times EBITDA. And one of the things that we really kind of focus on with our credit agreement is pro forma EBITDA, getting some credit for the acquisitions that we've made to date. And from that perspective, we're quite comfortable with the leverage we're operating with. Again, we feel We're able to acquire at pretty accretive multiples. We certainly aim for kind of five to seven times EBITDA, but in some cases we're able to do even better than that. And we've got a high free cash flow business. So I think we're very comfortable at these levels and continuing to acquire at good multiples. I don't think at this point we're seeing any kind of constraints due to leverage.
spk03: Okay. And if I could just follow up, it looks like in Q4 there was a fairly large intangible span outside of acquisitions. And I was just wondering what you're about.
spk02: Hey, David. This is Ben. So Q4... There's three main buckets that went through that intangibles line. So that's the approximately 64 million that we see in business combinations, 18 million coming from just asset deals, so sort of those down the fairway acquisitions, and approximately 4.3 million coming from internally developed software.
spk03: Okay. So when you're talking about that $18 million, there were additional tokens that just weren't announced. Is that correct?
spk02: Yeah.
spk03: Correct.
spk02: That's part of the overall $82 million spent in the year. Yeah. Okay. Okay. Thanks a lot.
spk00: As a reminder, for any further questions, please register these now by pressing star four, go one on your telephone keypads. At this time, we have no further questions, so I'll hand back to the management team to conclude today's call. At this time we have no further questions, so this concludes our call. Thank you everyone for joining us today.
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