Integral Ad Science Q1 2023 Earnings Call Transcript

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Provided by Quartr
May 4, 2023

Key Takeaways

  • Revenue rose 19% year-over-year to $106.1 million, with adjusted EBITDA at a 32% margin, and the company raised its full-year 2023 guidance for both revenue and EBITDA.
  • The Total Media Quality solution launched across major platforms in over 90 languages, and the TikTok partnership expanded from 7 markets to 30 markets ahead of schedule, driving 33% more active posting campaigns.
  • Key strategic alliances were secured, including Samsung’s exclusive CTV ad server deal for Samsung TV Plus, a partnership with UK’s Lumen Research for eye-tracking attention metrics, and integration with Amazon Publisher Services for streamlined publisher onboarding.
  • Programmatic revenue grew 26% year-over-year, fueled by context control and the integration of the QualitySync prebid product into major DSPs, while new attention metrics are in development.
  • Gross profit margin held at about 80% despite higher data infrastructure and hosting costs, net revenue retention was 118%, and net debt was reduced to $121 million, underlining a strong balance sheet.
AI Generated. May Contain Errors.
Earnings Conference Call
Integral Ad Science Q1 2023
00:00 / 00:00

There are 11 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the IIS 2023 First Quarter Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jonathan Schafer, VP of Investor Relations with IAS.

Operator

Please go ahead.

Speaker 1

Thank you. Good afternoon, and welcome to the IAS 2023 First Quarter Financial Results Conference Call. I'm joined today by Lisa Uchtschneider, CEO and Tanya Secor, CFO. Before we begin, please note that today's call and prepared remarks contain forward looking statements. We refer you to the company's filings with the SEC posted on our Investor Relations site at investors.

Speaker 1

Integralads.com. For more details about important risks and uncertainties that could cause actual results to differ materially from our expectations. We will also refer to non GAAP measures on today's call. A reconciliation of non GAAP measures to the most directly comparable GAAP measures is contained in today's earnings release available on our Investor Relations site. All financial comparisons, unless noted otherwise, are based on the prior year period.

Speaker 1

So with these formalities out of the way, I'd now like to turn the call over to our CEO, Lisa Uchtschneider. Lisa, you may begin.

Speaker 2

Thanks, Jonathan, and welcome, everyone, to our 2023 Q1 earnings call. We accelerated our business momentum in the Q1 as demand for our mission critical products increased. Results exceeded our prior guidance for both revenue and adjusted EBITDA. In addition, we are raising our financial outlook for the full year. Revenue increased 19 percent to $106,100,000 in the 1st quarter, Ahead of our forecast of $102,000,000 to $104,000,000 we benefited from Strong seasonal demand from marketer campaigns in support of March Madness, tax preparation and new content releases across our streaming partners.

Speaker 2

In addition, recent new business wins contributed to performance In the period, adjusted EBITDA reached $34,100,000 at a 32% margin. We also achieved net income profitability for the 5th straight quarter. IES is a customer obsessed Global Technology Company. We are launching innovative and scalable products at high velocity, and we continue to invest in engineering and data science talent. Science is in our name, And we are leading with the most advanced AI and ML technologies.

Speaker 2

Everything we build is global, scalable and repeatable. A great example of this is the rollout of our total media quality TMQ solution, which delivers comprehensive analysis of Content across major platforms in over 90 languages. Our partnership with TikTok ramped up in the Q1, driven by marketer adoption of our end to end measurement solutions. Active posting campaigns were up 33% in the 1st quarter compared to the Q4 of 2022. We currently operate in 7 markets and 3 languages with TikTok.

Speaker 2

We are expanding rapidly into over 30 new markets over the next several weeks, well ahead of our prior expectation of an additional 20 markets by year end. Earlier this week, IES announced that its Brand safety and suitability reporting on YouTube will now be aligned to the Global Alliance For Responsible Media or GARM framework. As a result, IES will offer more granular reporting for campaigns on YouTube. With Meta, We're excited to continue our partnership and value their commitment to implementing suitability controls and verification for feed. We look forward to the expansion of fee verification to all badge partners later this year.

Speaker 2

Last quarter, we announced our expansion into 3rd party brand safety and suitability measurement in Twitter's live feed in the U. S. We look forward to expanding our capabilities with Twitter globally into new markets, including Australia, The U. K. And Canada.

Speaker 2

We are investing in ease of use and activation of our programmatic solutions. We are enhancing the customer experience via superior user interface, increased functionality and expanded reporting capabilities. During the Q1, we integrated our QualitySync prebid product into DSPs, including Yahoo! And Media Map, joining other major DSPs. Quality sync helps marketers optimize media spend and campaign outcomes by reaching higher quality impressions.

Speaker 2

In addition, strong adoption of context control continues to fuel our programmatic growth. We're also developing attention metrics to help marketers better optimize their media spend and achieve targeted outcomes, while building a framework of strategic partners whose unique strengths will further enhance our product offerings. This week, IES announced a strategic partnership with U. K. Based Lummi Research, a global attention technology company specializing in cutting edge eye tracking solutions.

Speaker 2

By combining IES' attention capabilities and to track which impressions have captured attention and are likely to drive the business results. We are also actively Stating in the IAB working groups and with the Media Rating Council or MRC on the ongoing development of expanded standards in this In our recent white paper taking action on attention, we analyzed millions of advertising data signals refined by machine learning models. The report concluded that comprehensive media quality measurement and Optimization Solutions that leverage visibility, the surrounding ad environment and ad interaction signals Our quarter driving attention. IES currently provides a custom report in our signal UI that helps marketers understand these three components across their programmatic media spend. We are building on our leadership in ad verification in CTV.

Speaker 2

We believe we have the most robust and forward thinking product portfolio as well as global breadth and depth across all the major CTV ad supported platforms. By combining IAS and Publica Data, we provide marketers with transparency on where their ads are running in programmatic CTV. Publica was recently named Best Video App Platform in DigiDAY's Video and TV Awards. In March, IES launched viewability and invalid traffic verification for Netflix ad supported plan. IES is ensuring that advertising campaigns running on Netflix are delivered fraud free and are seen by real viewers.

Speaker 2

Verification on Netflix is now available in 12 markets globally and across all platforms. We're also excited to announce that Publica renewed its exclusive partnership with Samsung to be their primary CTV ad server, helping them to power their ad break decisioning across Samsung TV Plus globally. Our pre bid Solutions are now live with Xandr Invest DSP. These offerings ensure marketers' ads stop playing when the TV screen is off and provide metadata to better understand programmatic CTV spend. Beyond CTV, We're pleased to announce that Mail Metro Media, the U.

Speaker 2

K.-based global news publisher, is now using IES context control as well as our publisher verification and optimization products. IES is ensuring that ads running on Mail Metro's digital platforms can Our leading edge technology along with our energized sales effort is driving increased customer adoption and higher conversion of multi year, multimillion dollar new business opportunities. On last quarter's call, I highlighted several major global brand wins, including Ford, Hershey, Kering and Bell. We are winning these deals after sensitive head to head product and tech due diligence. We're also focused on activating these wins faster, which is reflected in our Q1 results.

Speaker 2

Most recently, Canva has selected IES Based on our actionable attention data, ability to drive greater efficiencies across programmatic buying and enhance CTV offerings as Canvas shifts more budgets to the space. In addition, we won several new accounts Outside the U. S, in Europe, BT selected IES based on our differentiated product innovation. In APAC, we're delighted to welcome Singapore Airlines and Panasonic. Our global presence stands as a key differentiator for IES Expanding on our existing relationship with Amazon, we announced recently that IAS is the 1st verification vendor whose By leveraging their existing APS connection, publishers can easily discover and onboard new tech solutions with a streamlined and more efficient adoption and integration process.

Speaker 2

In March, The MRC granted continued accreditation of IES' core digital ad verification service. Since appointing Kevin Elvero as Chief Compliance Officer, we've intensified our efforts to grow our MRC accreditations. Kevin is a widely renowned industry authority who was at Nielsen for 20 years prior to joining IAS. We look forward to continuing to work closely with the MRC. Finally, IAS went live with our previously announced Partnership with GoodLoop.

Speaker 2

We are working with GoodLoop to enable marketers to measure the carbon emissions of their digital ad campaigns. We're off to a strong start in 2023 with 1st quarter results ahead of our prior expectations. We are delivering superior products to our customers and we are investing in our technology to support future growth initiatives with data as We have a robust new business pipeline and we are benefiting from our enhanced go to market strategy. We are excited to host our 1st Analyst and Investor Day on June 13. We encourage you to join us in person at the NASDAQ Market Site in New York City.

Speaker 2

The event will be a great opportunity to meet and hear from several members of the IES Senior leadership team on our strategy and vision. We'll feature product demos that highlight our robust technology. We will also host an expert panel to provide insights into IIS and the broader digital media industry. I'd like to thank everyone on today's call for your ongoing support. I'll now hand it over to Tanya to review our financial results in detail.

Speaker 3

Thanks, Lisa, and welcome, everyone. We exceeded our expectations in the Q1, highlighted by accelerated year over year revenue growth of 19% and adjusted EBITDA margin expansion to 32%. As a result of our positive business momentum, we are raising our financial outlook for the full year. Total revenue in the Q1 increased to $106,100,000 Our revenue growth rate of 19% for the period accelerated from the 15% growth rate in the Q4 of 2022. We generated increased marketer demand across our product offerings in social media, video and open web with a strong contribution from seasonal campaigns in the period.

Speaker 3

In addition, recent new business wins added to our results. CPG, auto and finance verticals performed well in the period. Programmatic revenue for the Q1 grew 26% year over year to $51,000,000 Primarily attributable to Context Control, Context Control represented a similar percentage of programmatic revenue as in the Q4 of 2022. Non contextual programmatic revenue increased at a double digit rate in the Q1. Programmatic revenue reached 50 6% of total revenue from advertisers in the Q1 versus 54% in the prior year period.

Speaker 3

We see opportunity for expansion of our context control business beyond the top 100 accounts, particularly in the mid market, both in the U. S. And internationally. We are also further developing other areas within programmatic, including our total visibility offering. Advertiser Direct revenue, which includes social media platforms and open web, increased 18% year over year to $40,700,000 Social media revenue grew 25% and represented 43% of advertiser direct revenue in the first quarter, up from 42% in the Q4 of 2022.

Speaker 3

Year over year growth was driven by customer adoption of our Video, which commands a pricing premium to display, grew 25% in the quarter. Video accounted for 47% of Advertisers, including programmatic and advertiser direct revenue, represented 86% of total first quarter revenue. Supply side revenue from publishers increased 2% to $14,400,000 in the period. Gains in Publica were partially offset by the performance of our non CTV supply side businesses. Total supply side revenue represented 14% of total first quarter revenue.

Speaker 3

Revenue grew in all three regions in the Q1. Revenue growth in the Americas accelerated to 23%, ahead of 19% growth in the Q4 of 2022, driven by gains in Context Control, TikTok and Publica. International revenue growth, excluding the Americas, accelerated to 11%, outpacing growth of 6% in the Q4 of 2022, fueled by new business wins, adoption of our offerings and investments in emerging markets. Gross profit margin for the Q1 was 80% compared to 81% in the prior year period. Gross profit margin performance in the Q1 reflects investment in our data infrastructure and increased hosting costs.

Speaker 3

Gross profit margin was in line with our prior outlook of 78% to 80%, which we continue to forecast throughout 2023. We expect to optimize the gross profit margin of our offerings as we scale over time. Sales and marketing, Technology and Development and general and administrative expenses combined increased 10% in the Q1 compared to the prior year period. Slower expense growth reflects our streamlined operations resulting from our recent restructuring efforts. We continue Prioritize our hiring as we focus on profitable growth.

Speaker 3

Higher stock based compensation also drove the year over year increase. Stock based compensation expense for the period was $11,300,000 in line with our prior expectation of $11,000,000 to $13,000,000 Adjusted EBITDA for the Q1, which excludes stock based compensation and one time items, increased 37% year over year to $34,100,000 Adjusted EBITDA margin was 32% and exceeded expectations. Higher than expected revenue for the period as well as increased operating efficiencies contributed to our strong adjusted EBITDA margin in the Q1. In addition, long term investments in our technology and improved productivity of our engineering team resulted in increased capitalized expenses, which contributed to margin performance. Net income for the Q1 was $3,100,000 or $0.02 per share.

Speaker 3

This marks our 5th consecutive quarter of net income profitability. Turning to our performance metrics. 1st quarter net revenue retention or NRR was 118%, reflecting our ability to grow with our customers. Total advertising customers was 2,100, essentially unchanged from the prior year period. The total number of large advertising customers with annual revenue over $200,000 increased to 204 compared to 184 last year and up sequentially from 199 in the Q4 of 2022.

Speaker 3

We maintain a healthy balance sheet with strong cash flow conversion that provides us with financial flexibility to invest in the long term growth of the business. Cash and cash equivalents at the end of the Q1 were $94,400,000 During the quarter, we reduced Our long term debt by $10,000,000 to $215,000,000 resulting in net debt of $121,000,000 We are increasing our revenue and adjusted EBITDA outlook for the full year to reflect our Q1 outperformance and positive business momentum. For the Q2 ending June 30, 2023, we expect total revenue in the range of $111,000,000 to $113,000,000 or 12% year over year growth at the midpoint of the range. Adjusted EBITDA for the 2nd quarter is in the range of $35,000,000 to $37,000,000 For the full year of 2023, we now expect total revenue in the range of $457,000,000 to $465,000,000 or 13% year over year growth at the midpoint of the range, up from our prior guidance of $453,000,000 to $463,000,000 Adjusted EBITDA for 2023 is expected in the range of $147,000,000 to $153,000,000 up from our prior guidance of $141,000,000 to $149,000,000 which reflects a slight improvement in adjusted EBITDA margin compared to our prior outlook. Our updated adjusted EBITDA guidance reflects our increased revenue outlook, Financial discipline driving organizational efficiencies and an increase in the level of capitalized technology and development expense as a result of investments in our technology platform.

Speaker 3

We are reinvesting some of these benefits into strategic initiatives to support our long term growth. A few additional points. We expect 2nd quarter year over year revenue growth of 12% at the mid compared to higher Q1 growth, which benefited from seasonal campaigns as discussed. Advertiser direct revenue in the 2nd quarter is expected to benefit from the ongoing ramp and adoption of our leading social media products as well as demand for our open web products from new advertiser customers. Balancing this, programmatic revenue growth in the 2nd quarter is expected to reflect moderating context control growth as the business increases scale.

Speaker 3

As mentioned, we expect gross profit margin in the range of 78% to 80% throughout the year. 2nd quarter stock based compensation expense is expected in the range of $15,500,000 to $17,500,000 Full year stock based compensation expense is expected in the range of $61,000,000 to $64,000,000 lower than our previous guidance of

Speaker 4

of $62,000,000 to

Speaker 3

$66,000,000 We expect weighted average shares outstanding for the 2nd quarter in the range of 155 156,000,000 shares and 155,000,000 to 157,000,000 shares for the full year. To conclude, we are pleased with our Q1 performance, which sets the stage for profitable growth in 2023. We are generating positive business momentum highlighted by major wins that are already contributing to our results. We are excited to advance our partnerships with the major platforms, which expand our addressable market opportunities. And we are realizing operating efficiencies, while reinvesting in the business for long term sustainable growth to benefit our customers and shareholders.

Speaker 3

Lisa and I are now ready to take your questions. Operator?

Operator

Thank you. At this time, we will conduct the question and answer session. Our first question is from James Heaney with Jefferies. Your line is now open.

Speaker 5

Thanks for taking my questions. I have 2. Tanya, just looking at your Q2 guide, it implies a bit of a softer sequential growth compared to prior second quarters. Is there anything driving that, just anything on the macro? And then one for Lisa, could you just talk about the opportunity to expand Context control to mid market accounts.

Speaker 5

We heard Tanya mentioned it on the call, so just be great to hear about the traction that you're seeing there. Thank you.

Speaker 6

Sure. Hey, Jane. We were very pleased with our Q1 results, driven by stronger than expected revenue from seasonal campaigns. This and so we are and so we're expecting some deceleration from the higher than expected seasonal campaigns in Q1. And this trend is consistent with our prior expectation of higher Q1 growth versus the full year.

Speaker 6

And in the Q2, our guidance reflects we're pleased to continue to guide double digit revenue growth as you mentioned 12% and strong profitability in the Q2, based on strong continued demand for our products.

Speaker 2

Sure. Happy to take the second question about expanding context control to mid market. We are seeing a nice uptick with Mid market adoption of context control, contextual avoidance in particular both in the U. S. And EMEA.

Speaker 2

We're also starting to see nice uptick for context control in international. Mid market in particular, we define mid market north of Top 100 accounts and where we're really getting traction is with the independent agencies outside of the top 6 holdcos.

Operator

Our next question comes from Matt Coster with Morgan Stanley. Your line is now open.

Speaker 1

Hi, everybody. Thanks for taking the question. I guess just on the Amazon Publisher Services partnership, I think it was mentioned in the release. How needle moving do you think this can be for your go to market? And how long will it take you to assess whether you're seeing more onboarding through that channel?

Speaker 1

Thanks.

Speaker 2

Great question, Matt. Yes, we were thrilled to announce that IES was the first verification vendor Discover and onboard new tech solutions. In terms of onboarding and timing, I would say the back half of this year We'll be a steady onboarding, a steady ramp, and then we expect fuller adoption in 2024.

Speaker 4

Great. Thank you.

Speaker 2

Thank you.

Operator

Please standby for our next question. Our next question comes from Jason Helfstein with Oppenheimer. Your line is now open.

Speaker 7

Thanks. Kind of a 2 part question around Connected TV. So first just on the Samsung partnership, It is the primary benefit is the main benefit to them choosing you to be their primary ad server that you can Tell if the TV is actually on versus alternative ways to basically measure or kind of do what you do with connected TV. And then, just talk about I guess, we're kind of going to get to the point maybe in a few more quarters where The growth of kind of public and CTV should offset some of the declines on the legacy supply side. So just kind of talk broadly how That product and you ultimately see Connected TV kind of growing the supply side line of the model.

Speaker 7

Thank you.

Speaker 2

Sure. Thanks for the questions, Jason. So yes, we were thrilled that we renewed our exclusive partnership With Samsung as their primary CTV ad server, to address your question about onoff, I mean, we have such an extensive strategic partnership with Samsung. In addition to serving their ads, we're doing lots of other things To help Samsung better optimize and drive higher yields for their CTV ad inventory. And then in terms of our publisher revenue, we continue to see impressive growth From Publica, it represents a little more than half of our publisher business and the Publica growth, it was partially offset by our traditional non CTV publisher offerings.

Speaker 2

So we're feeling really bullish about the future of CTV, we are winning in CTV everywhere and Publica absolutely is accelerating our growth with CTV and we're just seeing

Operator

Please standby for our next question. Our next question comes from Brian Fitzgerald with Wells Fargo. Your line is now open. Thanks, guys.

Speaker 8

You had really nice acceleration in the advertiser direct segment this quarter and really notable uptick in the impression growth to 29%. You called out client growth in 10 Q, but wondering if you could also talk through the impact from emerging channels there? And maybe also What you saw from the overall volume dynamics on the market right now?

Speaker 2

Sure. Happy to take that, Fitz. So We were very pleased with the uptick in advertiser direct revenue in Q1. That was fueled by the team putting a lot of new wins on the business. A couple of reasons why we did see that strong growth with Ad Direct.

Speaker 2

The first is just strong performance in social, notably TikTok and a few other of the social media platforms, as well as seasonal campaigns. So think of Q1 seasonal events like cold, flu, March Madness, And that also generated nice wins with advertising direct.

Speaker 8

Got it. Thanks, Lisa.

Speaker 2

Yes. Thank you.

Operator

Please standby for our next question. Our next question comes from Mark Kelly with Stifel, your line is now open.

Speaker 8

Hey, great. Thank you very much. I wanted to get your thoughts on this attention partnership with Lumin, which is nice to see. That approach is a little bit different than your main competitor, Which doesn't use eye tracking and things like that. I guess, what are the puts and takes between your methodology and some of the other ones that are Out in the market.

Speaker 8

And then second, some of the categories

Speaker 4

that you called out as

Speaker 8

a bit stronger for you like autos and financials We're weaker for some other folks in digital advertising. Curious if that's a read through to newer wins that maybe you didn't have last year? Thank you.

Speaker 2

Great. Thanks, Mark. So happy to talk about attention. And yes, we were thrilled to announce Our partnership earlier this week with UK based Lumen Research, as it sounds like you read about it, Lumen is a global attention company that specializes in eye tracking and the beauty of the partnership is we're combining our attention technology with Lumin's eye tracking capability. And what's great is it's what marketers are asking for that they want that combination of Our attention data with Lumen's focused data on eye tracking and what we're Finding the results so far, they look really strong that in view ads, they're amounting to 64 times higher attention Then those were not in view.

Speaker 2

I don't really want to speak to our competitors' offerings because we're just so focused on innovating on behalf of our advertisers. But again, we're thrilled about the partnership and we're thrilled to offer a differentiated attention solution to our customer base. In terms of the verticals, Tanya, you want to take some questions? Sure.

Speaker 6

Yes, Mark. In terms of auto and finance, We were really pleased to see the strong results in those two verticals. I would say there's a couple of things underlying that, and, Fitz called this out earlier. We were really pleased on the Ad Direct side to see 29% volume increases in Q1 and that was a combination of a few things. 1, the volume from social media.

Speaker 6

Number 2, our new wins are already starting to have an impact that we saw in Q1. And thirdly, particularly on the finance side, some of the advertisers on the finance side were more seasonally driven in terms of Q1. But we were across the board with the areas I just highlighted, we're really pleased with the strong growth on the Ad Direct side.

Speaker 8

Really helpful. Thank you both.

Operator

Please standby for our next question. Our next question comes from Andrew Muehrer with Raymond James. Your line is now open.

Speaker 1

Great. Thanks for taking my questions. One more on APS, if I I guess, can you talk a little bit more about that partnership? I guess, kind of what brought that about and what kind of walled garden or platform partnerships can that open up As like a demonstration of capabilities or a proof of concept. And then second on attention, you mentioned in the answer to the last question That you have marketers that are kind of clamoring for this type of attention data.

Speaker 1

Are there any commonalities in the types of advertisers or clients that you're working with right now We're kind of seeking out that attention data maybe more than others. Thank you.

Speaker 2

Sure. So happy To answer the first question around APS, so the way to think about the APS integration and announcement, I mean, we have a deep Strategic partnership with Amazon across multiple businesses of Amazon. In addition to our advertiser base of Customers, we also have a deep publisher customer base and this is something that our customers Our publisher customers have been asking for is just a broader and wider scale and distribution play To connect into APS and enabling publishers, so they can easily onboard New tech solutions with a streamlined and more efficient adoption and integration process. So we're really excited to be the 1st verification vendor to announce our APS integration. And then in terms of Our investments in attention, another thing that we rolled out recently is a white paper all around attention and Think of it as a thought leadership piece and we're getting such strong feedback from our advertisers about this white paper.

Speaker 2

And the way we're thinking about the attention Shamal, it's fit into 3 categories and those categories include visibility, situation and interaction. And we are able to measure the attention in each of these areas. And again, combining up Our overall attention data and marrying that with Lumen's eye tracking data, the way to think about attention to its Early days, it's one really important part of outcomes and especially during these macroeconomic times as advertisers are leaning in to understand ROI, efficiency, Get closer to the ROI, ensure that every dollar that they invest, they're understanding the ROI, investments in things like intention And overall performance and outcomes, it's a core part of our strategy at IIS both this year and in future years.

Speaker 4

Great. Thank you.

Speaker 2

Yes. Thank you.

Operator

Please standby for our next question. Our next question comes from Justin Patterson with KeyBanc. Your line is now open.

Speaker 9

Great. Thank you very much. I wanted to touch a little bit on just the tech investments you're making for the year. I know that's been a big strategic priority for you. How are you just with that transition and starting to see the pace of product and feature velocity improve?

Speaker 9

Thank you.

Speaker 2

Yes, great question, Justin. So in terms of tech investments, we're definitely firing on all cylinders. And A good example of that and I know we spoke to it during the earlier call is Total Media Quality. And Total Media Quality, we've launched it in the social platforms, both TikTok, we announced earlier this week with YouTube. And the beauty of total media quality is we're offering brand safety and brand suitability, And the adoption rate has been phenomenal.

Speaker 2

I'll just take the example of TikTok. We're actually ahead of our product roadmap schedule. We were scheduled to launch in 20 markets in Q2. We are already at 30 new markets. We'll be there over the next few weeks and ultimately with our total media quality product supporting 90 Languages within these social platforms, we're able to move at that velocity and that scale, both by leveraging our AI and ML technologies, but also tapping into OpenAI and that's Something you keep hearing about from all the tech companies in their quarterly earnings calls this quarter is just the power of AI.

Speaker 2

And we'll make Sure that we are leveraging both our deep tech, but also OpenAI and other open technologies so that we can Drive at speed and scale.

Speaker 6

And if I could add on to that, Lisa, as well. Justin, one thing I'm very pleased to see from a finance perspective is that we are continuing to hire in technology. We're also driving more productivity across the organization And that's contributing to our profitable growth across the quarter and also on a full year basis.

Speaker 8

Thank you.

Operator

Our next question comes from Raimo Lenschow with Barclays. Your line is now open.

Speaker 4

Perfect. Thank you and congrats from me as well. First question for Tania. If you look at the guidance, You pushed through the Q1 outperformance on revenue and EBITDA, you did kind of push up a little bit more. What gives you that extra confidence there?

Speaker 4

And can you talk a little bit maybe about some of the initiatives there? And I have one follow-up.

Speaker 6

In terms of specifically on profitability, Raimo?

Speaker 4

Yes.

Speaker 6

Yes. So we're really pleased with Q1 coming in at 32%, which was up from 28% last year. We saw in the quarter greater than expected productivity and efficiencies following the restructuring that we did in December. And like I said, we are continuing to invest in the business, but we were really pleased to see that Prove out in Q1, which gave us the confidence to up margin at the midpoint of our guide.

Speaker 4

Okay, perfect. Yes. And then Lisa, more a bigger picture question around that everyone in software that keeps asking more on the Internet Well, I guess around OpenAI, can you just talk a little bit about for your industry, What that means like because it's kind of everyone keeps asking for all segments, but it's How do you think about it for your industry and the implications for you guys? Thank you.

Speaker 2

Yes. Great question, Maimo. So again, as I had mentioned before, we're AIML based Company science is in the name of integral ad science. So we're built off of technology and just leverage incredibly Deep data insights, but in terms of the power of AI and OpenAI, the way we look at it is Leveraging OpenAI when it is additive to our existing technology and products specs and Ensuring that when we do leverage it, it's the right thing to do for our customers. It is additive from a product functionality And also it helps us like with that TikTok example that speed to market matters and being able to launch product like Total Media Quality and accelerate the roadmap and accelerate the ability To launch that product and get it to a place where we're over 90 languages available, that is incredibly powerful For our advertising customers, it's incredibly powerful for the platforms that we partner with and I see it as a win win win across the board.

Speaker 2

That's how we're thinking about OpenAI is just leveraging it when it's additive to our existing technology.

Speaker 4

Okay, perfect. Thank you. Congrats on me as well.

Operator

Thank you.

Speaker 2

Thank you.

Operator

Please standby for the next question. Our last question comes from Jason Kreyer with Craig Hallum. Your line is now open.

Speaker 10

Thank you. On the TikTok relationship, can you just talk more about where you're expanding that? And then yesterday, they announced a new publisher poll Curious if there's a bigger fundamental opportunity for you guys there?

Speaker 2

Yes, great question. So With TikTok, we're seeing incredible adoption both with our pre bid and post bid products. You might remember when we Initially rolled it out, it was just in 3 markets, 3 languages, got it up to 7 markets. We're now on path to hit 30 markets in the back half of this year. That Scale that global scale will be reaching even more markets.

Speaker 2

We're hearing strong feedback both from Global marketing clients, who are adopting TikTok and also local clients in local markets, Who are adopting the product. And again, I can't emphasize enough the importance that we can roll out Languages quickly because that will drive up the adoption rate for our global marketers who want our Scalable global solutions to be wherever they're running their advertising and they just want to ensure that Where they're running their ads, it's brand safe and brand suitable. So I'm incredibly proud of our team. I'm Proud of the fact that we are ahead of our Q2 product roadmap, especially when it comes to TikTok, I'm really looking forward to working with the other social platforms And expanding TMQ or when the social platforms open up their live feeds.

Speaker 10

One follow-up on context control. We've heard some pushback from publishers that there's a conflict of interest as contextual data is used for Targeting or resold to advertisers. I'm just curious from your perspective, how you manage that relationships between the advertisers and the publishers with that contextual data?

Speaker 2

Yes. Great question, Jason. So that was actually something that I remember it was an issue, I mean, we've had context control for 3 years now. So in the early days of context control, I would hear some feedback from the publishers that they perceived it potentially as a conflict of interest. But The reality of these is the publishers are our customers too and we see we play a critical role with the publisher Ecosystem to help publishers optimize their inventory, drive higher yield for their inventory, So that their publishing sites are sticky.

Speaker 2

So it's something that we don't really hear much from publishers Recently about conflict of interest with Connex Control.

Speaker 10

Perfect. Thank you.

Speaker 2

Thank you.

Operator

At this time, I would now like to turn it back to Lisa Uchneider, CEO, for closing remarks.

Speaker 2

Thanks everyone for joining us on today's call. We're off to a great start in 2023 with business momentum heading into the 2nd quarter. We are driving growth across our product portfolio with advanced technology and actionable data insights for our customers. We're also excited to see our new business wins contributing to our performance. We look forward to

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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