Nexxen International Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 30, 2023

Key Takeaways

  • Positive Sentiment: Tremor and Amobee DSPs are being consolidated, targeting roughly $65 million in annualized operating cost synergies by end of H1 2023 after already capturing $50 million.
  • Positive Sentiment: The firm launched a first-to-market cross-platform linear-to-CTV planning solution that reduces audience deduplication and drives incremental reach, with major broadcasters and agencies in testing.
  • Positive Sentiment: Q1 2023 CTV revenues rose 34% year over year to $21.3 million, with CTV now representing 34% of programmatic revenues versus 27% a year ago.
  • Negative Sentiment: Contribution ex-TAC fell 6% year over year to $66.9 million and adjusted EBITDA margin dipped to 12% in Q1 due to weak early-quarter ad demand, though ad activity has rebounded in Q2.
  • Positive Sentiment: Management reiterated full-year 2023 guidance of about $400 million in contribution ex-TAC and €140–145 million in adjusted EBITDA, expecting sequential growth and margin expansion in H2 2023.
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Earnings Conference Call
Nexxen International Q1 2023
00:00 / 00:00

There are 10 speakers on the call.

Operator

Welcome to Tremor International's First Quarter Ended March 31, 2023 Conference Call. At this time, participants are in a listen only mode with a question and answer session to follow at the end of the presentation. This conference call is being recorded and a replay of today's call will be made available on the Investor Relations section of Tremor's website. I will now hand it over to Bill Eckert, Vice President of Investor Relations, for introductions and the reading of the Safe Harbor statement. Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and welcome to Tremor International's Q1 ended March 31, 2023 earnings call. With us on today's call are Ofer Druker, Tremor's Chief Executive Officer and Sajid Niri, the Company's Chief Financial Officer. This morning, we issued a press release, which you can access on our website at investors. Tremorinternational.com.

Speaker 1

During today's conference call, we will make forward looking statements. All statements other than statements of historical fact We advise caution and reliance on forward looking statements. These statements include, without limitations, Statements and projections regarding our anticipated future financial performance, market opportunity, growth prospects, strategy and financial outlook and forward looking views on macroeconomic and industry conditions as well as any other statements concerning the expected development, performance and market share or competitive performance relating to our products or services. All forward looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those implied by these forward looking statements, including unexpected changes in our business or unexpected changes in macroeconomic or industry conditions.

Speaker 1

More detailed information about these risk factors and additional risk factors are set forth in our filings with the U. S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled Risk Factors In our most recent Annual Report on Form 20 F, Tremor does not intend to update or alter its forward looking statements whether as a result of new information, future events or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information, IFRS and non IFRS terms. We refer you to the company's press release for additional details, including definitions of non IFRS items And reconciliations of IFRS to non IFRS results.

Speaker 1

At this time, it is my pleasure to introduce Ofer Druker, CEO of Trevor International. Ofer, Please go ahead.

Speaker 2

Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview The progress of our key initiatives as well as on our results and strategy, then we'll end the call Over to our CFO, Sagin Iri, to discuss our financials. We will then open the call for questions. As a reminder, Q1 2023 results reflect the combined performance of Tremor International and Amobee, While Q1 2022 figures do not include results from Amobee. During the Q1, We made excellent progress executing on our strategic vision to combine Tremor International and Amobee to create an organically Integrated CTV and video focused ad tech platform, fueled by unique and exclusive data that offers a unified comprehensive solution Advertisers and Agencies, as well as publishers and broadcasters.

Speaker 2

We believe once the integration is completed, Our platform will feature some of the most robust, effective and differentiated capabilities for both sides of the ecosystem. As you may recall, shortly after closing the acquisition, we quickly executed an initial efficiency plan Over Q3 and Q4 2022 to consolidate our team into 1, achieving roughly $50,000,000 in annualized Operating cost savings. In Q1, after evaluating both the Tremovideo and Amovi DSPs, We made a strategic decision to move Tremor Video CTV and video algorithm and capabilities to the Amopi DSP. Given its stronger enterprise self-service capabilities and wheel, sunset and Tremovidio DSP. We also successfully moved the majority of the managed business over to the Amobi DSP during Q1, Giving us enhanced confidence that our plan to largely conclude the technology integration of Amobee by the end of H1 2023 Remains on track.

Speaker 2

We continue to expect total annualized operating cost synergies Of approximately $65,000,000 related to the integration, including the previous $50,000,000 we achieved, and we'll continue to seek additional saving opportunities to drive further efficiency. In Q1, we also invested Significant and necessary resources and management efforts making the material progress on the combination, integration and enhancement of our combined sales team. Along those lines, we successfully unified our sales processes and sales platforms into 1 and provided advanced training to our combined team, Which we believe better prepares the company for its next phase of growth and its accelerated CTV market share gains. As we mentioned in our call, combining the sales team and processes took longer than initially anticipated. However, we now feel confident in our positioning with customers and prospects following these investments.

Speaker 2

Amovi customers have recently begun demonstrating increased interest in the company's CTV and video solution and are increasingly leveraging Unruly for inventory to realize the data and cost advantages of transacting end to end. We have also recognized some notable recent improvement in the advertising environment since early Q1 and anticipate continued momentum in advertising demand for the remainder of 2023, particularly in the second half. We feel that we successfully achieved much of the integration heavy lifting mainly over Q4 and Q1, which requires significant management team focus. Now with the sales team and processes unified and the advertising markets Showing signals of ongoing recovery, we're encouraged by the early signs of momentum. We also believe The advanced tech platform we have created through the acquisition and integration as well as our recent investment in innovation Strongly prepare us to take a leadership position in the new era of CTV.

Speaker 2

We believe the CTV advertising ecosystem is poised For a massive boost and accelerated growth and linear TV advertisers increasingly seek to significantly expand their reach into the streaming ecosystem to reach engaged and expanding audiences. We feel from both technology and operational perspective That we are well situated to work with these advertisers and that our recently released growth planning tool can enable better incremental reach The most common practices and offering available in the market. Our progress achieving our technology strategy was We are further underpinned by the launch of our first to market cross platform planning solution, which we are incredibly excited about, As it is a solution the industry has been seeking for years. The technology enables linear advertisers To expand into streaming and CPV, reduce deduplication that occurs when presenting ads across platforms and further enhance our CTV growth opportunity. This capability strongly positioned the company as advertisers and agencies Six solutions that enable them to optimize returns on ad spend and more effectively and efficiently We believe our ability to now offer customers linear planning and cross planning capabilities Significantly expands our total addressable market.

Speaker 2

According to eMarketer, advertisers in the next We spend nearly $100,000,000,000 annually advertising in the U. S. On linear TV and CTV. With our new solution, we feel that we are optimally positioned to capitalize on this large opportunity As we will be able to help customers better navigate the continued expansion of combined linear TV and CTV advertising With solutions equipped to a system as 2 platforms converge. Many major broadcasters and agencies Are involved in extensive testing of this product and we are encouraged by early signs that this tool can drive larger deals, increase product adoption and higher levels of CTV related activity on our platform.

Speaker 2

While we are encouraged that the integration of our mobile technology And sales team will help accelerate our future CTV growth, which we have already seen evidence of so far in Q2. We are also pleased to have achieved strong CTV growth during Q1, ahead of this initiative bearing fruit. CTV, one of our primary focuses as a business, delivered strong performance during Q1 2023, As we've been able to generate CTV revenues of $21,300,000 reflecting EVOVG growth of 34%. Our continued growth and market share gains within CTV are a byproduct of the intentional strategic investments We have made to enhance our product capabilities over the past several years for the benefit of our customers and partners. We continue to feel very strongly that we are well positioned for leadership within the industry, particularly to achieve further growth And share gains within CTV for several reasons.

Speaker 2

We believe advertisers will continue flocking to CTV and increasingly leverage programmatic solution Amidst expectation for continued growth in the ad supported content, particularly as broadcasters and advertisers Further expense into CTV. This represents trends that we are heavily indexed to and have been increasing our footprint in. For example, CTB revenue reflect 34% of our programmatic revenues In Q1 2023 versus 27% in Q1 2022, while programmatic revenue reflect 87% of revenue during Q1 2023 compared to 73% in Q1 2022. Additionally, we continue to believe that customers will increasingly partner with horizontal end to end platform Because of their proven ability to better optimize supply paths and provide strong cost and data advantages for customers. As the lines between DSPs and SSPs continue to blur, we feel that we have strong comparative Operational advantage versus peers moving towards end to end that have operated as one-sided businesses for several years.

Speaker 2

We have deeply rooted and rapidly expanding relationship on both sides of the ecosystem and also believe we have tech advantages As our scaled platform has operated horizontally for several years. We also believe the added capabilities and larger market This is Gantru Amobi, coupled with the expected benefit from our VIDA investment will further enhance our CTV growth opportunity. In the Q1, we generated contribution ex TAC of $66,900,000 reflecting a decrease of 6% year over year. While contribution ex TAC declined in Q1, programmatic revenues was $62,500,000 during Q1, which reflects 6% year over year growth, serving as a strong underlying indicator for our progress. As expected, Q1 was challenging as advertisers, particularly early in the quarter, Reduce spending amidst continued market pressures.

Speaker 2

January was a very weak month for advertising, While February early March were slightly better and late March showed signs of improvements. I'm pleased to report that we have observed significant growth In advertise activity on our platform to this point in Q2 compared to Q1 and ever result except sequential, quarterly and year to year growth in contribution ex tech and CTV revenues during Q2. We believe this growth will be driven by improved advertising condition, Our recent sales force enhancement, greater anticipated level of CTV related gross selling and increased interest in our combined platform As a result of the historically weak contribution ex TAC generated during Q1, We generated adjusted EBITDA of $8,900,000 resulting in an adjusted EBITDA margin of 12% as a percentage of revenue and 13% as a percentage of contribution ex TAC. As Taghi will touch on later, Our end to end infrastructure enable high degree of operating leverage. So when the advertising environment is weak, Shocks to our contribution ex DAC can have outsized impact on our profitability.

Speaker 2

While these margins were historically weak for us, Our ability to achieve some degree of profitability amid challenging market condition in Q1 highlighted The efficiency, durability and resiliency of our model and a core reason we intentionally choose to operate horizontally. With that said, we are cautiously optimistic we will achieve significant sequential quarterly growth in profitability And adjusted EBITDA margin expansion during Q2 2023 compared to Q1 2023, amidst the expectation of higher contribution ex tax. We are importantly continued to expand our relationship with CTV, Well, our partners at VIDA and iSense further increase their scale, offering and reach. For example, we recently announced The partnership with TCL FALCON. The partnership grants advertisers leveraging Amobee direct access to TCL FALCON Innovative ad units on premium CTV inventory in the TCL channel through Unruly, providing In addition, Esvida, a CTV operating system and streaming platform in which we invested $25,000,000 Continue to grow its distribution, our global exclusive ACR data agreement enabled by our investment Is expected to increasingly benefit Tremont.

Speaker 2

Later this year, we expect VIDA's reach to grow To a significant enough level of smart TVs in the market that we will be able to generate revenues from advertisers Looking to leverage this critical and fast scaling global ACR dataset for CTV targeting and measurements. This coupled with our ad monetization exclusivity in the U. S, U. K, Canada and Australia on video media Give us optimism for strong future CTV related revenues opportunities as VIDA continue to onboard More ad supported content and as its offerings such as VIDA free continue to scale. VIDA parent company, iSense, which ranked number 2 globally for TV shipments in 2022, also announced it will make NBA league pass accessible on iSense TVs in North America beginning with 2023 2024 season.

Speaker 2

Stock related CTV advertising opportunities are amongst the most desired by advertisers, given significant and consistent fans viewership. Through our relationship with Vida iSense, we anticipate potential additional revenues opportunities related to this development as well as future As well as future CTV related sports advertising opportunities. In Q1, We completed our $20,000,000 ordinary share repurchase program, repurchasing approximately 2,500,000 ordinary share, Which reflected an investment of £7,300,000 or $8,800,000 From March 1, 2022 through March 31, 2023, between our 2 completed programs, We repurchased roughly 19,400,000 ordinary shares or approximately 13% of shares outstanding, Reflecting a total investment of approximately £77,300,000 or $95,000,000 We will continue to evaluate initiating a new repurchase program to sales remains at discounted valuation as well as other capital allocation strategies. During Q1, the company added 40 5 new actively spending first time advertiser customers across travel, real estate and financial services verticals as well as others. Arunruly added 62 new supply partners, including 49 in the U.

Speaker 2

S. During Q1 And Mediahub, an award winning media agency also selected Anwuli as a preferred SSP. Finally, as a key milestone in our progress combining and integrating Amobium Tremors Companies And tech platform, we will announce our new unified brand name by the end of this quarter. When we rebrand, we will consolidate all of our brands under one name as we believe this will enhance our commercial focus and best convey The value proposition of our unified horizontal platform. With that, it's my pleasure to turn the call over to Saghi.

Speaker 3

Thank you, Ofer. Today, I will review highlights and key financial and operational drivers of our Q1 2023 performance and we'll also discuss our forward looking guidance. As a reminder, Q1 results reflect the combined performance of Amobi and Tremor International, while Q1 2022 Results do not include results from Amobi. For the 3 months ended March 31, 2023, we generated contribution ex TAC of $66,900,000 compared to $71,000,000 in Q1 2022, Alongside, Q1 adjusted EBITDA of $8,900,000 compared to $38,700,000 in Q1 2022. As a result, we generated an adjusted EBITDA margin of 12% on a revenue basis and 13% on a contribution ex TAC basis During Q1 2023, which compared to an adjusted EBITDA margin of 48% on a revenue basis and 54% on a contribution ex TAC basis during Q1 2022.

Speaker 3

We observed significant weakness in the advertising environment during Q1, with the most severe weakness occurring in January February. This weakness was driven by well known challenging market conditions that drove uncertainty in advertising demand, With particular softness observed in the food, business, personal finance and entertainment verticals and performance related activities as expected, as well as in mobile advertising. However, since early March, advertisers have been more active on our platform, Particularly in CTG and we've seen encouraging signs of stability, better visibility and momentum as April was stronger than March And as May has been stronger than April, we are also cautiously optimistic that momentum will continue into the second half of twenty twenty three based on our current visibility. During the Q1, adjusted EBITDA and adjusted EBITDA margins were significantly lower than historical levels, which was driven by the weak environment early in the quarter, our ongoing integration of Amobee and the nature of our end to end infrastructure. Once we nearly complete the integration of Amobit by the end of Q2, we expect to realize positive effect on our sales organization, Call structure and profitability compared to Q1 and believe we will stay on taxes by consolidating the 2 DSPs into 1 enhanced platform.

Speaker 3

Additionally, our enhanced horizontal infrastructure will enable high degree of operating leverage. However, during times of constraint, advertising budget and lower overall spending on advertising, Maintaining a high fixed cost infrastructure like we encountered in Q1 can result in significantly lower profitability. With that said, the great benefit of operating a business with strong operating leverage, particularly On that is very liquid and cash generated such as ours is that when advertisers are more actively leveraging the platform And the company is generating higher levels of revenue, most of that added revenue flows through to profitability, enabling us to quickly grow profitability, Expand margins and generate robust cash flow. As I mentioned, we have cautious optimism for Q2 based on the higher level advertiser activity we've seen across our platform to this point in the quarter and believe we will be able to generate increased adjusted EBITDA and expand adjusted EBITDA margin in Q2 2023 compared to Q1 2023. Despite the weakness in contribution ex TAC during the Q1, we generated record Q1 programmatic revenue of $62,500,000 which reflected 6% year over year growth from $59,100,000 generated in Q1 2022.

Speaker 3

Programmatic revenue as a percentage of revenue increased to 87% in Q1 2023 compared to 73% in Q1 2022. These results were boosted by our ongoing focus on programmatic activities as well as by the expanded programmatic footprint we gained through Amobis. We believe our increased programmatic footprint Will be an ongoing norm as we continue to expect to experience growth in programmatic revenue and declines in revenue associated with our performance business for the remainder of 2023. CTV, as Ofer mentioned, Continue to be a bright spot as we gained further market share and achieved strong year over year growth. In Q1 2023, we generated CTV revenue of $21,300,000 reflecting a Q1 record And 34% growth compared to $15,800,000 in Q1 2022.

Speaker 3

Video revenue continued to account for a majority of our Q1 2023 programmatic revenue at 75%, Which was down from 93% in Q1 2022. This reduction is a byproduct of the ongoing integration of Amobie. When we acquired Amobi, it didn't have as large of a footprint in video and CTV as Tremend International did. However, we are encouraged by initial signs of our ability to cross sell Amobee customers to leverage our robust CTV and video capability, Including positive signals that several Amobee customers have begun to leverage Unruly for inventory due to the end to end platform benefits as opposed to other SSDs. We expect video revenue will increase as a percentage of programmatic Revenue beginning later in 2023, once we complete the integration of Amobee and as the company Sales team continues to execute on cross selling its video capabilities to a mobile customer and attract new customers.

Speaker 3

Our robust suite of CTV and video solution, differentiated offering and strong partnerships, Coupled with streaming services continuing to launch new ad supported tiers and advertisers increasingly seeking We also anticipate continued improvement in the advertising environment during the second half of this year. Well, having added scale as a company, more customers with strong cross selling opportunities, a significantly And the addressable market and the ability to service customers holistically and across their entire workflow. Turning to our cash flow. We used $7,900,000 in net cash from operating activities during Q1 2023 After generating net cash from operating activities of $16,100,000 during Q1 2022. This reduction was largely a byproduct of the weak advertising demand environment earlier in Q1.

Speaker 3

During the Q1, we also incurred approximately $5,100,000 in one time severance And retention bonus related costs associated with the reorganization of Amobee employees into the Framer International base As the company continues to focus on efficiency and optimizing its combined cost structure. As of March 31, we had $89,100,000 net cash as well as $80,000,000 undrawn on our revolving credit Providing comfortable liquidity for the ongoing needs of the business. We also generated a non IFRS diluted loss per ordinary share of $0.03 for Q1 2023 versus non IFRS diluted earnings per ordinary share of $0.17 in Q1 2022. Finally, I will now turn to our outlook. We continue to expect challenging market conditions to weigh on advertising budgets for the near future, At least through the end of H1 2023, but anticipate improved results throughout the remainder of 2023 stronger advertising demand compared to late 2022 early 2023.

Speaker 3

We are cautiously optimistic that the higher level of advertiser activity we've observed on our platform so far in Q2 We will result in sequential quarterly and year over year growth in contribution ex TAC and CTV revenue As well as sequential quarterly growth in adjusted EBITDA and adjusted EBITDA margin expansion in Q2 versus Q1. Based on current visibility, we expect contribution ex TAC, CTV revenue, adjusted EBITDA and adjusted EBITDA margin We'll experience both sequential and year over year increase from H1 2023 to H2 2023 as well as from H2 2022 to H2 2023. Additionally, we also believe we will experience significant uptick In sequential quarterly growth in Q4 2023 versus Q3 2023, As well as a significant year over year growth in Q4 2023 versus Q4 2022 in contribution ex TAC, TTV revenue and adjusted EBITDA as well as adjusted EBITDA margin expansion over those two periods. While we acknowledge that challenging market conditions may persist and weigh on advertisers' willingness to spend over the near term, We are confident that we can continue to drive growth and expand profitability for the remainder of 2023 due to several factors. First, we believe that our sales team has made important and necessary changes to unify the team and consolidated Processes to focus on driving larger enterprise deals and an increased number of end to end platform customers.

Speaker 3

We also anticipate that the integration of Samovy will essentially be completed by the end of Q2 and that our investment in VIDA will begin generating revenue later this year. These accomplishments, When combined with the expectation for enhanced visibility, increased stability and improvement in the advertising demand environment during the second half of twenty twenty 3 are expected to bode well for Tremor and its shareholders. As such, we are pleased to reiterate Our previous guidance for full year 2023 contribution ex TAC of approximately $400,000,000 and full year 2023 adjusted EBITDA of €140,000,000 to €145,000,000 Additionally, for full year 2023, we expect programmatic revenue to reflect With my remarks completed, I'll turn the call back to Ofer.

Speaker 2

Thank you, Saghi. While 2023 has not been without challenges, it has been an exciting year for us so far We are pleased to have continued growing our CTV market share during Q1, while positioning ourselves for continued expansion Within CTV for the remainder of the year and beyond. We are also thrilled to see early signs of advertisers Increasingly expanding again and have cautious optimism, this momentum will continue during the back half of twenty twenty three. The investments we made to enhance our CTV capabilities and sales organization, we believe have already begun paying off since The end of Q1. We also believe our cross platform plan is a game changing technology That we'll continue to gain further traction with major broadcasters and agencies.

Speaker 2

Having this unique ability to plan linear and Gross platform campaigns put us at the center of a major convergence in the U. S. TV advertising market. We believe we are now better able to capitalize on this convergence with enhanced scales and differentiated planning capabilities that benefit our customers. We also believe that operating horizontal platform At the center of the buy and sell side of the ecosystem with a significant data that provide advantages for customers Thinking's data driven solution that optimize returns on ad spending and help them reach desired audiences.

Speaker 2

As we finalize the integration of Amobix, we are also excited to launch our new unified brands and for VIDA and ISN to continue growing their footprint And distribution all at a time when the advertising market is building renewed momentum. This combination of factors give us optimism. We are well positioned to become leaders in the new era of CTV And continue growing CTV market share, accelerating contribution exit growth and achieving strong profitability for the remainder of 2023. I want to thank our shareholders for their continued support and our employees for their hard work. I look forward to continue working together to realize the company's growth prospects.

Speaker 2

Operator, we will now take questions.

Operator

And your first question comes from the line of Brad Swanson from RBC Capital Markets. Your line is open.

Speaker 4

Yes. Thanks, guys. So congratulations, I guess, first on the integration of Amobi. Could you maybe Touch on what's left to do from an integration standpoint in Q2 and maybe what the costs associated with it are roughly on a completion percentage. And that was also really good to hear the initial kind of cross sell success of seeing a Mobi customer start to move more towards video.

Speaker 4

Could you just maybe elaborate a little too on, what gives you the confidence that that continues in the second half of the year?

Speaker 2

Sure. I will take this one. So from the integration perspective, we basically, as we said, We choose already to use the Amobee DSP because of its depth of details around enterprise solution, which is very important, Of course, for our future. And what we've done in TMR, we basically moved a lot of the algorithm or all the algorithm that were involved In our DSP and all the capabilities that were related to CTV and video from our DSP to the Amobi DSP In order to sunset the Tremor DSP, in order to have one DSP that is very powerful and basically enjoy From all the capabilities around CTV and video, but also enjoy from all the capabilities around the enterprise solution that Amobee Worked so hard in order to build over this so many years. So now, we believe that we have a very strong and capable Omnichannel of DSP that we are able to use, which is also of course Enterprise Solutions.

Speaker 2

What is left Until the end of the quarter, as we said in the PR and in our message, we basically moved already most of our managed activity. And now we are in the activity of moving the rest of the activity, which is basically the 3rd party clients Using our DSP to the new DSP and this will end by the end of this quarter and then we'll be able to sunset basically the Tremont DSP. Apart from that, this is a massive lift off that we did over the last few months. The next thing is To integrate our DMPs, that will happen until the end of the year, but this is a minor compared to the DSP that we already integrated. The second point that you asked us about basically the cross platform.

Speaker 2

So I think it's a great question and I'll explain our strategy around it. So basically what we believe that is happening in the market right now Is that more and more advertisers that are basically used to buy or buying linear TV, they have also Now to expand and to reach also customers or potential customers in the linear in the streaming and CTV area. And this is a growing force from data that we see the percentage of the reach from CTV and streaming is growing Compared to Linea, so people are really open to do that. In the past, and we for many, many years, people were talking about The extension of linear advertisers into CTV and streaming basically, but I think that now the time is right. After a few years where customers basically move their habits in order to use and to consume content on CTV and streaming.

Speaker 2

The second thing is there is a lot more content now that is available on streaming and CTV. And the last point is also the Technology that enabled them to do that now. So what we are basically offering them is the ability to plan their linear TV Pending, but also to make sure through our technology of cross platform that if they are buying or they are interested in buying also streaming and CTV, which Most likely, they will like to do. They can do only with incremental usage and avoid duplication, Which is very meaningful, of course, because as we know, people don't want to pay twice on the same user. So basically, they have the ability to reduce the deduplication and run and create incremental users On the streaming and the CTV, and we see already reaction from big broadcasters, brands and agencies that are interested In testing and in already advanced testing mode of this technology with good success, and we believe that this is the future, Which should enable us to enjoy because what we will be able to offer them is not just to provide them this tool, but also to provide a user extension management On our basically SSP, which include a lot of the reach of CTV.

Speaker 2

As we can see, CTV is already growing very rapidly On our platforms. Yes. I hope that answers.

Speaker 4

Yes. That was a great answer. It's super helpful. One other thing you mentioned and obviously we're all kind of seeing, while not full stack, there's certainly more momentum towards companies like I think you I used the word, the gray area between the DSP and the SSP is blurring with people creating more end to end solutions. Does this market momentum, do you think that makes it easier for you to explain your value proposition to new customers just with it being a little bit more prevalent across the ad tech space?

Speaker 2

Of course. So we are we started this process already in 2019. We believe that to have an end to end solution, which includes from end to end all the solution that the advertisers, The brands that the publishers basically means, meaning the DSP, the DMP, meaning the data elements and segments that they can create and also The SSP, which will enable them to reach their right audiences, is very important, not just for the clients on both sides, But also for us, of course, in order to keep healthy margins that will enable us to keep investing in technology and innovation. So what we see lately after many, many years of people basically saying that they like to specialize in their demand side or supply side, which of course we respect, We see now people that are basically moving and crossing the line and enabling their clients and publishers to do both like we do. The big advantage that we got is that we are doing it already for almost more than 4 years.

Speaker 2

And the second thing is that Basically, from what we saw in the market until now, most of the solutions that are being offered from the SSP solution Are not fully functional DSPs like ours. So I think that from a technology perspective, we have an advantage and From the fact that we are basically using this solution for so many years, already incorporated all the technologies altogether, I think that it's bringing us A lot of advantages in the market. The next step that we've done is what you touched before. We added these Tools of planning tools that are very important because better planning, better results, which is massive, especially in this year that you want to get your money into play In a big manner, you want to plan well to get the best results out of your dollars, and we are enabling it as part of the horizontal integration that we offer. And the second thing, may I call it the glue of everything is unique and exclusive data that we gained through the agreements with VIDA, Which is giving us access to ACR data globally on exclusive basis for the next couple of years.

Speaker 2

And as we see, VIDA is growing, is becoming like A leader in CTV and smart TVs in the world and is giving us access to a lot of data that we are able to use in order to do Targeting and measurement, which is really helpful for this business. So I think that our ecosystem, the platform that we created It's become it's getting more recognition. The business model that we choose is getting more recognition from the market, from the players, from the peers, from the colleagues in this business. And I feel that as I said, we have advantage that we are doing it for 4 years. We have advantage that we have Solid technology is across the board, and we have on top of that these tools that we just acquired through the Amobi acquisition And the data that we got from VIDA through the investment and the partnership that we built with us.

Speaker 2

Thank you.

Operator

And your next question comes from the line of Laura Martin from Needham. Your line is open.

Speaker 5

Good morning, you guys. I've got a couple. So let's just build on the last point about data, Ofer. I love the data deal, but my How do you think about what data you use to make your ad products and ad units More valuable. And then how do you think about selling your data to others in a like a package, so you have a data revenue How do you balance those two uses of the exclusive data rights you have with Hisense and Vida?

Speaker 2

Okay. So first of all, as we know, ACR data is one of the most effective data set in order to It's giving you another layer of knowledge, another layer of information about your potential audiences That you want to reach and the fact that we are the only basically open web partners that has an agreement like that is of course Enabling us to do a lot will enable us to do a lot in the coming years, meaning most of the other teams that are out there, most of the other smart TV like LG and Samsung, of course, that are in the market are more like WorldGuard and we are acting like more open web in this matter of data. So it gives us, I think, like uniqueness and, of course, ability to do a lot of interesting things on our platform. The second thing the second question that you asked about utilizing the data on other platforms, we are able to do that. We will be able to do to provide the data In order to provide measurements and even targeting, but we will try it in some way to our platform.

Speaker 2

Meaning, if we are providing it to other DSP, We will welcome them to basically buy media on our SSD or use our other tools in order to make it interesting also from us from commercial perspective. And if we are offering measurements, of course, it's the same. But I think that what we are building here, it's an ecosystem that enables people to use the data, But also to engage with our platform. And I think that this is very meaningful in this essence, because as I said, I think that our peers are doing an amazing job with ICR data, meaning Samsung, NLG and other people that are basically able To use their data in order to target and measure, and we want to join these capabilities and enable targeting and measurement also on our platforms.

Speaker 5

Okay. That's very helpful. I didn't realize it was going to tie back to your platform. And then I wanted to talk about cash usage. So you have round numbers, dollars 90,000,000 of cash.

Speaker 5

You lost round numbers, dollars around $8,000,000 and you bought in a bunch of shares. My question is why buy shares at a time when you're also losing money? Why not hoard cash until you're sure that you're back to free cash flow positive?

Speaker 2

First of all, Sergey, if you want to comment, but we stopped buying.

Speaker 3

Yes. I'll take that question. Thanks, Laura. First of all, we issued like $95,000,000 of repurchase plan back in 2022. We concluded it through Q1, so it's ended now, and we are not investing any money in repurchasing our shares anymore.

Speaker 3

And as you said, we are considering that going forward, but we will do so when we will be cash generative again very soon. And of course, if we will find some other uses for the money, we will consider that as well. So for now, it's ended And we are keeping our cash. And soon in Q2, we will be cash generated again.

Speaker 5

Thanks very much, guys. Thank you.

Operator

And your next question comes from the line of Mark Kelley from Stifel. Your line is open.

Speaker 6

Great. Thank you very much. Can you help us bridge the gap a little bit on the programmatic segment just a little bit more? How do we get from the 6% growth you just put up in Q1 to get to 38% growth for the full year? I guess You've got a tougher comp in Q4 given that Moby was baked in there.

Speaker 6

I guess, any help in just in terms of how the programmatic line

Speaker 3

Okay. Thanks, Mark. I'm not sure exactly what is the 38% you are referring to. What we said is that in Q1, our programmatic revenue Went up by 6%. It was unfortunately offset by a programmatic by a performance Decline.

Speaker 3

We are assuming that until the end of the year, around 90% of our revenues be generated through programmatic activities, which we disclosed a long time ago that this is our main focus. This is where we are putting our main effort. That's it. The 38%, I'm not sure exactly what you're referring to.

Speaker 6

Sorry, sorry, 31%, if I'm going to use your So $360,000,000 for the year for programmatic on the net for net revenue, that would be like 31% growth? I misheard you. I thought it was 95% of net revenue would be programmatic.

Speaker 3

Yes. 90% out of the 400, yes, 360 will be programmatic, 90% exactly.

Speaker 6

Okay. Then I guess, how do we get from 6% growth in Q1 to 31% for the year On the programmatic side?

Speaker 3

Again, as we are We're maintaining our guidance at $400,000,000 of net revenue and $140,000,000 to 1.45 Adjusted EBITDA, we are a company that uses a lot of economy of scale. So we are expecting that The next quarter's revenue generation will be much higher. And from that revenue generation, most of it will come through programmatic activities. So this is the way we are reaching this gap of increasing our programmatic revenues to 90%.

Speaker 1

Okay. All

Speaker 6

right, got it. Thank you. And then just quickly, you talked about better visibility and I know a lot of that comes from your conversations With advertisers and agencies, but I'm just curious about you've made some changes. You've got the linear planning tool in house now. You've got The sales we argue you did, I guess, are there other changes that you made that are maybe also helping you gain more visibility than you had in the past?

Speaker 2

I think that the Amobee programmatic cross sales moving more activity into in house Basically, also when we are looking at connecting all the platforms altogether, all the infrastructure of the sales, as we mentioned, also in the PR And on the RMS that we issued was a very heavy lifting effort in order to connect the boat sales teams, all the processes, procedures And to move all the activity to one platform, so we feel that now we have a better understanding and a better And a better control, that's first thing. The second thing is, of course, after moving the attention of management from all this integration to growth now And the improvement that we feel in the market is giving us a better understanding of where we are standing and what we are going for. And we feel, as we say In the EPR, basically, we are going to eat our numbers that we mentioned that we gave to the market.

Speaker 6

Okay. Thanks very much.

Operator

And your next question comes from the line of Andrew Boone from JMP Securities. Your line is open.

Speaker 7

Good morning and thanks for taking my questions. I wanted to start just on the Operating leverage that Savya you mentioned in your prepared remarks on the business. If I go back to pre COVID, you guys We're more or less in kind of the mid-30s in terms of EBITDA margins that clearly accelerated through COVID and now we're probably troughing here. Can you just talk about maybe in a more normalized macro environment where we should expect EBITDA margins to kind of pencil out? Understood the business is bigger with Amobi, but how do we think about a more normalized kind of EBITDA margin environment as we get through the cycle?

Speaker 3

Great question, Andrew. So we have like 13% Adjusted EBITDA margin in Q1 and of course, as you said, everything within Trim or in other companies is economy of scale. So We are anticipating adjusted EBITDA margin to increase dramatically through Q2 through Q4. And of course, it's supposed to reach in Q4 somewhere around 50% adjusted EBITDA margin where we were at the past. Of course, we need to take into consideration that the new cost structure with Amobee is a little bit different and we need to reach A level of revenue in order to get back to that on a yearly basis.

Speaker 3

So if I'm looking on our guidance, We are somewhere around the 35% adjusted EBITDA margin on an yearly basis. And if I need to go forward, Probably in 2024, we can reach somewhere around the 40%. To go back on an yearly basis to 50% will take us more time, But at the end, we will get there. And of course, we are refining our cost structure all the time. We disclose the $65,000,000 Of efficiencies and synergies that we did with the acquisition of Pamovi, which we already completed around 90%.

Speaker 3

And of course, on top of that, we are refining our cost structure all the time. So these are the numbers.

Speaker 2

And then I wanted

Speaker 7

to ask something that's I guess it's more of an industry question. As we think about ID offerings that are in the marketplace. And as we think about Google deprecating cookies in the back half of next year, Understood that doesn't relate to CTV and kind of video more broadly. But can you just talk about how you guys view kind of cross Platform measurement, what IDs are you guys adopting? And how do you think about the measurement attribution side as you think about connecting users across platforms?

Speaker 2

No problem. I will take this one, Saghi. So basically, we build a platform on our DMP that is enabled To use and connect to all the identity tools that are basically developed in the market since the moment that Google announced that they are going to Remove the cookie basically, and we are working very closely with all the market leaders on that front. So I think that On that front, we are very advanced in this our solution and we are enabled to basically use and Extend our reach to all these providers and companies that develop solution and so on. The second inherited advantage that we get is that we have a full End to end solution.

Speaker 2

So basically, we can use our end to end solution in order to bypass the usage of cookies When we are running some of the campaigns, so the effect of this move, if it will happen, will be very Minimal compared to the market, and that's basically how we build the platform and the setting So if I need to summarize, first of all, we build a platform that is integrated and working Consumer data from all the leading platforms in the market. The second one is the end to end solution, which basically lowering the need In cookie, because we are entering solution and we are sitting on both sides.

Speaker 3

All right. Thank you.

Operator

And your next question comes from the line of Andrew Marik from Raymond James. Your line is open.

Speaker 8

Thank you for taking my question. On the Emobi cross selling tool, you talked about getting traction with buyers that tend to be more On the linear side, but is there an education process or maybe like a longer sales cycle that you have to embark on With these more traditional linear buyers that makes the ramp up process longer for them as they start to get into CTV?

Speaker 2

So, great question. I think that, first of all, there is education process that we need to make to And we are already in this process for several months. The other issue is that this unit, it's not buying, it's not coming in order to out of nowhere. I think that all the broadcasters, all the companies that are basically dealing with what we call linear advertisers, They are already aware of the need to expand their campaigns into what we call streaming and CTV. So it's a need that is coming from both sides.

Speaker 2

It's coming from us trying to develop this solution, but also from the actual broadcasters and brands And other service providers that understand that they need this solution in order to provide better solution and better service to their clients. So I think that the process of educating the client, the providers, the companies, the broadcasters will be shorter than Because we are not trying to basically deliver in a new technology that is coming out of nowhere, but it's coming out to cover a very Rational and existing need of all these brands, agencies, Broadcasters and other providers that understand that they need a tool that will enable them to extend into Streaming and CTV and reduce duplication of exposure to the same user. So I think that it's a of course, it needs education. It's a longer to work with these type of companies, which are broadcasters, We have longer cycles of initiating and getting into new technologies usually because of the heavy duty platforms And so on, it's taking a little bit longer than programmatic, but we feel that we are in the right point that people are looking for this solution and education It's minimal. It's more about integration and about how to create mutual work processes order to take this advantage of these tools.

Speaker 9

Thank you. Appreciate the color.

Operator

And your next question comes from the line of Eric Martinuzzi from Lake Street. Your line is open.

Speaker 9

Yes. I know you didn't give direct guidance on Q2, but I wanted to dive into that. Right now, we've got a consensus number of $22,400,000 on the contribution ex TAC and adjusted EBITDA number of 27,600,000 Understanding that you expect to be up sequentially in Q2, are those numbers realistic? Or are you trying to tell us that maybe given Macroeconomic conditions that we are going to be that those would be more of a stretch.

Speaker 3

Yes. So as you said, we are not giving guidance or didn't give guidance to Q2. And yes, the analyst consensus is around $92,000,000 in contribution ex TAC. Again, it's an aggregation of Different numbers that different analysts are assuming that we will achieve. I think that's what we said in In the earnings call itself and answering the question, we are seeing good momentum.

Speaker 3

We are seeing some bounce back From advertisers and clients, and we think we assume that we will do much better numbers than we did in Q1.

Speaker 9

Okay. Let me ask it another way. The loading of the year, I think, is historically or least for 2023, you talked about a 40%, 60%. Are you stepping away from that Front half, back half?

Speaker 3

No. I think we are in the line Of those numbers, I think that historically, it was somewhere between $55,000,000 to $60,000,000 and $40,000,000 to $45,000,000 between the different Perhaps, no, we are not stepping down from here. I think we took into consideration that Q1 will be A little bit lower because of the long integration and consolidation, mainly on the sales team, unifying our Unify the product, taking care of all the marketing materials, etcetera. So I think we are in a good place. We managed To end this process, and we are ready to work and roll, and we are seeing the first signs of the fruits of all of that hard work in the last 6 months.

Speaker 9

Okay. And then, Ofer, on the branding effort, do we have any clarity? I know you don't have anything to announce But have we narrowed it down to whether it will be creation of a new brand or doubling down on one of your existing brands?

Speaker 2

So we are it's a nice question. We are going to announce the new brands until the end of the quarter. I think that it will help us in 3 levels. One of them is internally to create like more connection between all the teams that will feel that they are creating and part of Something bigger that we created now. The second thing, which is very important, of course, is to the market that It will be easier for the people to understand what we are offering and how we are offering that.

Speaker 2

And the third one is also, of course, to the Financial Markets to understand to better understand what we are doing and how we are basically connecting all these Acquisitions and innovation that we created in the past few years.

Speaker 9

Okay. But then would that involve the creation of A new corporate entity, a new stock ticker?

Speaker 2

It's too early to talk about it. And of course, When we will announce it, you will be in of course, you will know.

Speaker 9

Okay. Thanks for taking my questions. Of course.

Operator

And there are no further questions at this time. I will now turn the call back over to CEO, Overjukar, for some final closing remarks.

Speaker 2

Thank you, everyone, for your questions. I think that your question basically covered All the points that I wanted to maybe to sharpen and so on. And I think that what we see here is a growth of CTV In our activity across the board, we feel very solid about our solution, our position in the market. We feel very good about the things that we Basically created and worked on in the past more than one and a half years like the agreement with VIDA, The last acquisition of Fabmobi that basically enabled us to integrate also this planning growth platform planning tool that we believe that will drive More activity to our CTV ecosystem and we believe that the future is in the horizontal integration, the end to end solution Like we see, that is coming also from our peers, and we feel recognition to our strategy that we launched in 2019. So we are very glad about that because usually a lot of the questions were around why you choose, why you guys choose to We're again to end and now we see that all the industry or majority of the meaningful industry is moving to this direction, which is giving us, Recognition to our strategy and we feel that we have advantage around that because we already practice like that for several years and our technology is set, It's built and is fully functional for all these capabilities around end to end solution and horizontal integration.

Speaker 2

So It's a challenging year from a lot of aspects of integration, macroeconomics and so on. But as you can see, I think that we made a lot of achievements in the past few months, and we are really glad for All the actions that we've done and for the direction that we choose and we feel excited for the future. So thank you very much everyone.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.

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