MNTN Q3 2025 Earnings Report

MNTN EPS Results

• Actual EPS: $0.08
• Consensus EPS: $0.04
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

MNTN Revenue Results

• Actual Revenue: $70.00 million
• Expected Revenue: $70.11 million
• Beat/Miss: Missed by -$108.00 thousand
• YoY Revenue Growth: +22.60%

MNTN Announcement Details

• Quarter: Q3 2025
• Date: 11/4/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, November 4, 2025
• Conference Call Time: 4:30PM ET

MNTN (NYSE:MNTN), Inc. is an advertising technology company that provides a software platform for buying, managing and measuring connected television (CTV) advertising. Its platform is designed to help brands use television advertising to drive measurable business outcomes, including customer acquisition, website visits and sales.

MNTN’s services include campaign planning, audience targeting, automated media buying, creative support, attribution and performance reporting. The company combines access to streaming television inventory with tools intended to make television advertising more accessible to growth-focused businesses and advertising agencies. Its offerings are primarily delivered through a cloud-based, self-service platform.

The company was previously known as SteelHouse and adopted the MNTN name as its business evolved toward performance-based CTV advertising. MNTN serves advertisers across the United States and works with brands and agencies in a range of industries. Mark Douglas serves as chief executive officer.

MNTN Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Company delivered strong Q3 results with $70M revenue (31% YoY ex-divestiture), GAAP net income $6.4M (first GAAP profitability in four years), Adjusted EBITDA $16M (up ~53%), and $179M cash / no debt.
• Positive Sentiment: Management guided Q4 revenue to $85.5M–$86.5M (≈34% normalized YoY) and adjusted EBITDA $25M–$26M, implying continued margin leverage and full‑year 2025 revenue of ~$288.5M–$289.5M.
• Positive Sentiment: Product and go‑to‑market momentum—MNTN’s self‑serve Performance TV platform is scaling (97% of customers new to TV) and the public beta of QuickFrame AI should materially shorten creative time/costs and increase creative testing and onboarding velocity.
• Positive Sentiment: Customer metrics show strong adoption and engagement with 3,316 active PTV customers (TTM, +67% YoY), an expansion rate >115%, and a Q3 ARPU of $20,904 reflecting increased SMB mix that is driving volume growth.
• Neutral Sentiment: The April divestiture of Maximum Effort affects comparability—it contributed ~300 bps of the 720 bp gross margin improvement to 79% and produces different reported vs. normalized growth rates (reported GAAP growth lower than normalized figures).

Presentation

[Operator]

Hello and Welcome to the MNTN Q3 2025 Results Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I would now like to turn the call over to Brinlea Johnson. Please go ahead.

[Brinlea Johnson, Managing Partner at Blueshirt Group]

Good afternoon. Thank you for joining us for MNTN Q3 2025 Earnings Call. With me today is Mark Douglas, CEO, and Patrick Pohlen, CFO. Just to remind everyone, today's call includes forward-looking statements that are subject to risks and uncertainties, and actual results could materially differ from those anticipated in these forward-looking statements. For the risks and uncertainties that may affect future results, please see our most recently filed periodic report, which is also available on our website. We will discuss non-GAAP financial measures on today's call. Reconciliations of these measures are available in our earnings material on our website. With that, I'll turn the call over to Mark. Please go ahead.

[Mark Douglas, CEO at MNTN]

Thank you for joining us today. We had another strong quarter with revenue and Adjusted EBITDA growth, as well as positive net income. But before we get into the numbers, I want to take a step back and talk about what makes MNTN different, why this moment in time is so exciting, and where our next stage of growth is coming from. Because understanding MNTN is key to understanding our results, and this quarter's success is a direct reflection of our strategy and technology. I founded MNTN with the mission to democratize television advertising. For decades, the industry has been dominated by the 200 biggest advertisers, big brands with big budgets and big agencies to support them. We built MNTN for everyone else. MNTN is focused on the millions of other small and medium-sized businesses that never thought they could afford to advertise on television.

[Mark Douglas, CEO at MNTN]

One thing I've said before, but you'll hear me say over and over. 97% of MNTN customers have never run a TV ad before coming onto MNTN. This means we're bringing new people to TV advertising and creating our own category. For years, these small and medium-sized businesses have served as the real growth engine of digital advertising because they are focused on one thing: performance marketing. They expect their advertising investments and platforms to be measurable, targetable, and as ROI-driven as search and social. TV could never be bought or measured the way digital could, and that kept a lot of businesses shut out of one of the biggest opportunities in marketing. That changed when we built MNTN Performance TV, a self-serve platform that makes connected TV measurable, accessible, and performance-driven.

[Mark Douglas, CEO at MNTN]

Today, MNTN advertisers can launch campaigns across more than 200 premium streaming networks like CNN, Paramount+, Bravo, ESPN, and more. They can target audiences using real intent data powered by AI and measure actual business outcomes like site visits, conversions, and return on ad spend. That's a monumental shift for television advertising, transforming TV from a branding medium to a true performance channel. Let's not forget, television is still the most powerful medium in the world. Every day, more than 5.5 billion people watch TV for an average of three and a half hours, more than the nearly four billion who use social media and more than any other form of entertainment. It's what people talk about at dinner, not the video they scroll past on social media, but the season premiere of Landman, the finale of White Lotus, or that last game of the World Series.

[Mark Douglas, CEO at MNTN]

And the way we watch TV has fundamentally changed. Connected TV is now the fastest-growing segment in all of advertising, and it's not slowing down. Yet, despite that growth, CTV remains undermonetized because most of the spend still comes from a small number of large brands. TV had never traditionally been considered a performance channel, only brand. We're changing that. MNTN is bringing the small business revolution to television, just as Meta did for social and Google did for search. More than 80% of digital ad spend on these platforms still comes from small and mid-sized businesses, but TV has historically been out of reach for them. We're opening that door and unlocking the next wave of growth for connected TV. Streaming TV captures the attention of consumers with professionally produced content that costs millions to make.

[Mark Douglas, CEO at MNTN]

And now, with MNTN, every business can reach their next customer alongside that same premium content. It resonates in a way that other media just can't. That's the magic of television. And now, with MNTN, every brand can be part of it. Our Performance TV platform is the most advanced software in connected TV, and it makes getting an ad on TV simple. Advertisers can launch, manage, and optimize campaigns entirely on their own in a self-serve environment that delivers real-time results. Everything is automated, from targeting to optimization, bringing the precision and accountability of digital performance marketing to television. Performance TV gives advertisers of every size the ability to run measurable, performance-driven campaigns across the best and biggest streaming networks in the world. And we didn't stop there. We've also removed one of the biggest barriers to TV advertising: creative.

[Mark Douglas, CEO at MNTN]

While creative might seem like a commodity, for our customers, it's an on-ramp, a critical enabler that helps them get started quickly and stay engaged within our ecosystem. So we built a complete suite of creative tools to meet every brand where they are. It started with our acquisition of QuickFrame, which connects brands with a marketplace of over 5,000 vetted video professionals quickly and affordably. It expanded through our continued partnership with Ryan Reynolds, George Dewey, and the Maximum Effort team. Then, last week, we took that even further by launching the public beta of QuickFrame AI, a new platform powered by the best generative AI models out there that lets advertisers create complete TV spots in minutes. We've lowered the barrier to creating an ad, a huge enabler that accelerates how quickly businesses can launch on MNTN and bring their stories to TV.

[Mark Douglas, CEO at MNTN]

It's simply helping more customers say yes to television. As we scale, our buying power and optimization technology drives lower cost per view and therefore stronger returns for our clients. The more advertisers that join MNTN, the more efficient the platform becomes. Our buying power drives down costs. Our optimization technology improves performance. And as our customers see stronger return on ad spend, they invest more. That creates a virtuous cycle. Scale drives efficiency, and efficiency drives growth. And because our model scales with efficiency, not headcount, every new advertiser strengthens our unit economics and improves performance across the entire network. The true definition of a flywheel effect. And as a result, our Performance TV business has averaged 39% year-over-year growth for the past six quarters, and our customers are seeing great results. Take Zazzle, a fast-growing e-commerce brand that sells personalized apparel and home goods.

[Mark Douglas, CEO at MNTN]

They started testing MNTN last summer. What began as a small trial quickly became a core performance channel, which spent more than doubling year-over-year, verified visits up over 120%, and a return on ad spend consistently above 20x. Zazzle is a great example of how performance-driven marketers can start small, see measurable results, and quickly scale into television at meaningful levels of investments. Then there's Guesty, a hospitality software brand that never thought TV could reach their niche target audience of property managers and vacation owners. With MNTN, they found it could. They started small, tripled their investment, and now drive tens of thousands of site visits each quarter with strong efficiency. Both brands also rely on QuickFrame for their creative, showing how our ecosystem gives small teams the speed and scale to compete and win like big advertisers.

[Mark Douglas, CEO at MNTN]

There are three key pillars that define our business and form our competitive moat. First, MNTN is purpose-built for small and medium-sized businesses. Ad tech can be incredibly complex. Just look at those LumaScape charts full of logos. Our customers never see that complexity. Everything they need, targeting, measurement, and campaign setup, is built right into one simple platform. And when a company sees themselves on TV for the first time and sees the incremental revenue it can generate, it's a magical moment made by MNTN Performance TV. Second, we built direct connections to more than 200 premium streaming networks. Because 97% of our advertisers are new to TV, we're bringing incremental revenue to the largest media companies and delivering the best premium content to our customers. And then, have I mentioned 97% of MNTN customers are new to TV?

[Mark Douglas, CEO at MNTN]

Nearly every customer who joins MNTN needs their first TV commercial. We built the resources to make professional creative accessible to everyone. Together, these three pillars make MNTN unique, built to drive real performance for SMBs, connected to the most premium content, and powered by best-in-class creative solutions. Because of these, we're leading the category, transforming television to the next great performance marketing channel. Every new MNTN advertiser, every new TV campaign, every new creative made through QuickFrame AI reinforces the same belief we started with: that great ideas and measurable performance shouldn't be reserved for the biggest brands. We're executing against a massive opportunity, transforming the largest and most influential medium into a measurable, performance-driven channel. With strong customer growth, expanding margins, and continued innovation across our platform, MNTN is well-positioned for sustained, profitable growth. We're successfully building the next generation of performance marketing on TV.And I'm very proud to do it. Now I'll turn it over to Patrick to discuss our third-quarter results in more detail.

[Patrick Pohlen, CFO at MNTN]

Thank you, Mark. We reported strong third-quarter results, delivering on our prior revenue guidance and exceeding our previous Adjusted EBITDA guidance. Our solid performance reflects continued customer adoption of Performance TV, particularly by small and mid-sized companies that had not previously advertised on television. Our third-quarter revenue increased to $70 million, up 31% year-over-year after adjusting for the divestiture of Maximum Effort on April 1, 2025. Please note we included a table in our press release and in our investor presentation that breaks out our growth over the past several quarters, both including and excluding the prior year's contribution from Maximum Effort. On a GAAP basis, which includes the prior year's contribution from Maximum Effort, total third-quarter revenue grew 23% year-over-year.

[Patrick Pohlen, CFO at MNTN]

Gross margin for Q3 increased to 79%, compared to 72% in Q3 of 2024, an increase of 720 basis points. We continue to drive additional gross margin improvements across our core business and believe we have a number of levers that we can use to maintain and grow our gross margin on a year-over-year basis. The table we included in the press release and in our investor presentation also breaks out the gross margin contribution from Maximum Effort. You can see that of the 720 basis point year-over-year improvement in our reported gross margins, our core PTV business improved over 400 basis points, with the balance coming from the impact of the Maximum Effort divestiture. As you can see from the table in our earnings release, at the end of Q3, we had 3,316 active PTV customers when measured over the trailing 12 months.

[Patrick Pohlen, CFO at MNTN]

On a year-over-year basis, this represents growth of 67%. Recently, we have made inroads moving down market into the SMB market opportunity, which we believe is a testament to the strength of our platform and to its applicability across companies of all sizes with performance marketing budgets. This initiative has helped support the strong growth of our customer base. Accordingly, our calculated Q3 ARPU, which reflects this increased mix of smaller customers on our base, was $20,904 in line with our expectations. Our expansion rate, which measures the spend of our current customers as compared to those same customers' spend a year ago, is quite healthy and remains well north of 115%, demonstrating that when our customers achieve their desired returns on advertising spend, they continue to increase their budgets with us. Total operating expenses for the third quarter were $47.7 million.

[Patrick Pohlen, CFO at MNTN]

We achieved positive net income of $6.4 million for a GAAP EPS of $0.09 a share. Of note, this was the company's first quarter of GAAP profitability in the last four years. Adjusted EBITDA was $16 million, up from $10.5 million in Q3 of 2024, an increase of 52.9%. The company's adjusted EBITDA margin grew to 22.8% compared to 18.3% in Q3 of 2024. This improvement was driven by increased revenue and gross margin expansion and demonstrates the leverage inherent in our model. We will continue to invest strategically in sales and marketing and R&D to support future revenue growth while remaining focused on delivering operating leverage. Our balance sheet remains strong, and we ended the quarter with $179 million in cash and cash equivalents, with no debt outstanding. We ended the quarter with 73.2 million shares outstanding.

[Patrick Pohlen, CFO at MNTN]

Looking ahead, we remain confident in our momentum and the underlying health of our business. For Q4, which is typically a seasonally strong quarter for us, we expect revenue in the range of $85.5 million to $86.5 million, representing a 34% year-over-year growth rate at the midpoint of $86 million, when normalizing for the effect of the divestiture of Maximum Effort. This translates into a reported GAAP growth rate, which includes Maximum Effort and the year-ago comparison, of 23.2% at the midpoint. We expect adjusted EBITDA to be between $25 million and $26 million, reflecting continued leverage as we scale the business while continuing to remain disciplined in our investments. Our Q4 guidance implies full-year 2025 revenue between $288.5 million and $289.5 million. Representing 35.5% year-over-year growth at the midpoint when normalizing for the effect of the Maximum Effort divestiture and 28.1% year-over-year growth on a GAAP basis.

[Patrick Pohlen, CFO at MNTN]

2025 adjusted EBITDA would be between $64.9 million and $65.9 million for an EBITDA margin of 22.6% at the midpoint. To wrap up, we delivered another solid quarter and believe MNTN will continue to gain market share in the massive performance TV market. We are confident that our future growth initiatives and the strength of our operating model will position MNTN to drive continued growth and profitability. With that, we will open the line for questions.

[Operator]

We will now begin the Q&A session. We ask that you limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star nine on your telephone keypad to raise your hand and star six to unmute your line. Please stand by while we compile the Q&A roster.

[Operator]

Your first question comes from the line of Shyam Patil with Susquehanna. Please go ahead.

[Shyam Patil, Senior Analyst at Susquehanna]

Hey, guys. Good evening. Mark, you mentioned that you guys are averaging almost 40% year-over-year growth over the past six quarters, you know which, when you look at the overall market that you're in, you know it's by far the highest growth rate in CTV. Can you just talk about what's driving that and then how you think about the runway ahead of you from here? Thank you.

[Mark Douglas, CEO at MNTN]

Sure. Thanks for the question, Shyam. So there are a number of growth drivers in place for the business. And so I'll start with the business ones first. You're seeing accelerating new customer growth. So that's as a result of our continued investment in marketing and sales, as well as our expansion in the small business.

[Mark Douglas, CEO at MNTN]

Our expansion rate is well north of 115%, meaning new customers are spending more over time. And we have a really efficient go-to-market motion. So. Approximately three years ago, 2% of our leads were inbound. Now that percentage is north of 75% inbound. That's a direct result of our marketing investment. But there's also technology, so improved targeting via MountMatch, which is our AI targeting system. We have partnerships with over 200 premium streaming networks, so we have the right content. And now I think QuickFrame AI is really critical. You can get true 30-second professional-quality videos using AI technology. And we have a number of partnerships for that. So all of that combined is driving the growth, and it's going to continue to drive the growth. And we're really early, by the way.

[Mark Douglas, CEO at MNTN]

I mean, this market is huge, and we're really just at the early stages of really monetizing this market to the levels of search and social. So we're pretty excited about that. Great.

[Shyam Patil, Senior Analyst at Susquehanna]

Thanks, Mark.

[Mark Douglas, CEO at MNTN]

Sure.

[Operator]

Your next question comes from the line of Robert Kohlberg with Evercore ISI. Please go ahead.

[Operator]

Great. Thank you so much for taking our questions and congratulations on the solid results. I wanted to ask about your expectations for the QuickFrame AI launch. How do you think that could impact your close rate, your time to get customers up and running, and then also maybe the rate of creative refresh for your existing customers as well? And then secondly, just wanted to ask about the sales and marketing expense in Q3. It looked like that ticked down a little bit sequentially.

[Operator]

Just curious if that was increased efficiency or maybe a timing difference around the QuickFrame AI launch. Anything else you could tell us about that? Thank you very much.

[Mark Douglas, CEO at MNTN]

All right. Thanks for the question. So the way to think about QuickFrame AI is 97% of MNTN's customers have never advertised on TV before. So they don't have TV commercials when we meet them. And so we've always addressed that problem. We wanted to do even more. So the way we see it is QuickFrame AI is an accelerant, so basically an enabler for our customers doing a few things. One, it's going to shorten the time to go live. So meaning customer gets creative faster, they can go live faster. It lowers the cost of the creative, like an order of magnitude or more. And because it's lowering the cost, we don't think that they'll save the money.

[Mark Douglas, CEO at MNTN]

What we think they'll do is they'll create a lot more creative. And so more creative equals more return on ad spend because now they can A/B test their way to the best messaging and do that very cost-efficiently. So this is really a critical part of our business. It's always been in terms of creative, and now with QuickFrame AI, we're really excited about it. By the way, I encourage everyone to go to quickframe.com to see QuickFrame AI. It's honestly a pretty amazing tool. So we're pretty excited about it. We literally launched it late last week. So we're very excited about it.

[Patrick Pohlen, CFO at MNTN]

On your second question, Rob, yeah, the. Sales and marketing expense dipped down a little bit. I think it was 30.5% as a percentage of revenue. I don't think that in the long-term target is 25% to 30%. So we're kind of just outside the range. But we are going to strategically invest in sales and marketing. We're probably going to add some headcount. It'll be the first time in three years that we add headcount. And we also might do our own marketing. Again, as Mark mentioned, we're already north of 75% inbounds from using our own product to drive inbound leads. So we will do that, though, strategically and smartly.

[Patrick Pohlen, CFO at MNTN]

Great. Thank you.

[Operator]

Your next question comes from the line of Andrew Boone with Citizens. Please go ahead.

[Andrew Boone, Senior Equity Analyst at Citizens]

Thanks so much for taking the question. I would love to talk about just the Q4 revenue guide and the acceleration that's built in there. Patrick, is there anything to call out as we think about the drivers of that? And then, Mark, you talked about just the efficiency of go-to-market. And Patrick, it sounds like there may be a slight increase in terms of sales and marketing as we think about kind of Q4. Can you just talk about the efficiency of go-to-market and how we think about that net ad number going forward? Thanks so much.

[Patrick Pohlen, CFO at MNTN]

Sure. So the guide is $85.5 million to $86.5 million. So we're keeping a pretty narrow range. Midpoint is $86 million, Andrew. That would be 34%. Giving effect to the Maximum Effort divestiture. We're also guiding $25.5 million at the midpoint for adjusted EBITDA. That's 29.7% adjusted EBITDA margin. It is our strong quarter seasonally. And we just see a lot of opportunity in the quarter and, frankly, in the business as a whole.

[Mark Douglas, CEO at MNTN]

Yeah. And I'll add to that also. So because of how strong the marketing is on our go-to-market motion. We look at our marketing expenses there on essentially a monthly basis and make small adjustments. Either for new product or because we want to bring in maybe additional small business. So it's something that generally is trending the way we want, but we will adjust up and make small adjustments up and down quarter-to-quarter while still hitting the adjusted EBITDA targets that we're setting for the business.

[Patrick Pohlen, CFO at MNTN]

Did we answer your second question, Andrew?

[Andrew Boone, Senior Equity Analyst at Citizens]

Just anything in terms of the onboarding of customers, anything around self-service or any other kind of change in terms of how you guys are kind of growing the net ad number and then how do we think about that going forward?

[Patrick Pohlen, CFO at MNTN]

So, Andrew, I'm going to correct you again. Not self-service. The platform's always been self-service, self-sign-up.

[Mark Douglas, CEO at MNTN]

Yeah. So, yeah. So the platform, like Patrick said, self-service has always been a part of the platform from day one. What you're seeing is as we go a bit more down market on small business, that's all self-sign-up. And so meaning that new customer doesn't in any way interact with our sales team. Just like they might go to Google and create an AdWords account, they just go to MNTN and create a MNTN Performance TV account. And so all of that revenue, as well as an increasing portion of our mid-market revenue, comes from that investment in marketing, where we're over 75% in terms of the percentage of revenue that comes from inbound leads.

[Andrew Boone, Senior Equity Analyst at Citizens]

Thank you.

[Patrick Pohlen, CFO at MNTN]

We still are getting great efficiency from our sales team, even with the heads we're planning to add.

[Mark Douglas, CEO at MNTN]

Yeah.

[Operator]

Your next question comes from the line of Andrew Murrock with Raymond James. Please go ahead.

[Operator]

Hi. Thanks for taking my questions too, if I could. So maybe building onto that last point a little bit. So on the PTV customer growth, obviously, we have the emphasis on the S in SMB. Have there been any surprises relative to expectations in terms of the ability to onboard customers or their behavior once they've gotten onto the platform? And then separately, can you expand a little bit on your success in the agency business that you called out in the press release? Is there anything you've done there that specifically made agencies take note, or is it more just like a general scaling of awareness in MNTN and the maturity of the offering? Thank you.

[Mark Douglas, CEO at MNTN]

Yeah. So I'll start with the small business. So small business was approximately 6% of our revenue in Q4 of last year. It's now 15%. Three quarters later and still growing. The mid-size market is also still growing. So the core of our business has always been mid-size. We're layering in more small business, and that's happening even faster. And as we just said in answering the previous question, that the efficiency in doing that continues to grow. We'll also just anecdotally, well, not anecdotally, we're measuring it, that mid-market is also just doing self-sign-up. And what we're seeing in those cohort of customers is that spend is pretty strong. We expected the small business, once a customer comes live, to spend to grow at a slower rate than potentially a customer that came in talking to our sales team. But we're not seeing that. They're actually coming on board, spending well.

[Mark Douglas, CEO at MNTN]

And we're seeing that as a sign that the market, which is so nascent in the size and the growth of the performance TV market, we see as a sign, plus some other things, that the market is moving from the early stage to a stage where kind of you reach what I kind of refer to as escape velocity, where people just know they need to be on performance TV. So we're pretty excited about that. And overall, we are really happy with the results we're getting in that sector. And we have a team dedicated to it also in terms of just the success of self-sign-up and that cohort of customers. And can you repeat your second question, Andrew? I apologize for that.

[Mark Douglas, CEO at MNTN]

Yeah. No worries. Thank you for the answer on the first one. It was on the agency business. Anything there that you've specifically done to appeal to agencies, or is that kind of building on that theme of just greater awareness and escape velocity?

[Mark Douglas, CEO at MNTN]

Yeah. So we created a dedicated team. So agencies kind of grew for us organically. We were traditionally pretty much 100% direct-to-brand, which is unusual. I mean, I think we possibly were the only company that was 100% direct-to-brand for television because previously, you always had an agency involved. Some of our customers, though, did have agencies. And we just kind of organically grew those relationships and realized this is a really healthy opportunity. Put a dedicated team on it. And the results we announced earlier in the quarter is kind of the results of creating that dedicated team. We have product coming that we think is particularly appealing to that cohort of customers.

[Mark Douglas, CEO at MNTN]

And these are independent agencies that are traditionally strong in performance marketing. So these are the agencies that built their business on paid search, built their business on paid social, and now are signing agreements with MNTN using MNTN as a dedicated platform for performance TV. So we think that sector is going to continue to grow. And we have some product announcements in the future, I think, that are going to be pretty interesting to everyone. That is almost a direct result of some of the conversations we've had with those agency customers.

[Mark Douglas, CEO at MNTN]

Got it. Thank you.

[Mark Douglas, CEO at MNTN]

Sure.

[Operator]

Your next question comes from the line of Rob Sanderson with Loop Capital. Please go ahead.

[Rob Sanderson, Managing Director at Loop Capital]

Yeah. Hello. Good evening, everyone. Thank you for taking my questions. I've got two as well. Maybe we could stay on agencies for a moment. You recently disclosed that the agency channel-led accounts, rather, are up like 4X. Now, is that an effort to move more up market and bring in larger brands? I know, Mark, you just described that this is sort of growing organically because there's opportunity here. But you didn't really mention agencies in response to earlier question about demand drivers. So just want to get any color as to what you should expect or investors should expect from these new agency efforts as a driver of incremental demand in 2026 and 2027 and beyond.

[Mark Douglas, CEO at MNTN]

Sure. So the way to think about this is traditionally, what I think most people think about when they think agency, they think big ad agency holding company like WPP, OMD, those kind of firms. They are big partners with other companies in the space because they're focused on big companies, big global brands, essentially, and the budgets of those big global brands. The agencies we're referring to are independent agencies. There's literally thousands of them. 500 of the thousands probably account for more than half the market. And again, they are focused on the needs of performance marketers. So businesses that are mid-market businesses, generally, that are basically trying to be very successful with search, social, now AI, and also now performance TV. They're seeing performance TV as an opportunity to grow their business. And what we've done is we put a dedicated effort to making that successful, supporting them in that effort. We're supporting their marketing, their ability to explain performance TV to their customers. And other types, we're giving them creative credits that they can use to help customers initially get live.

[Mark Douglas, CEO at MNTN]

And so this is a kind of expanding channel for it. But the customers in the channel are still the exact same customer. They are mid-market brands, performance brands, in some cases, small business brands. So the profile of our customer is not changing. Just we're getting access to another way to reach those new customers. And so it doesn't fundamentally in any way change the model, but it definitely somewhat accelerates the growth in terms of those mid-market businesses, especially the growth in their budgets.

[Rob Sanderson, Managing Director at Loop Capital]

Yeah. Makes sense. If I could have a follow-up. Several weeks back, you announced a partnership with PubMatic. So I wanted to ask kind of where does partnering with SSPs sort of fit in? You've got direct relationships with 200 publishers, pretty comprehensive supply. But do SSPs kind of fill in gaps here or augment these supply relationships? Or what other benefits do these types of partnerships bring to MNTN?

[Mark Douglas, CEO at MNTN]

Yeah. So we've always had partnerships with various SSPs. I think we announced a partnership with obviously with PubMatic, the one you're referencing. We also announced a partnership with Magnite early in the quarter. They did a press release in terms of certain premium content, what's called pause ads, that they had brought into the market. So the way those SSP relationships work, I think that's important to understand. Every streaming network, when we do a direct relationship with that network, they are still running an auction. And the SSP is the auctioneer. They are the Sotheby's of that auction in this example.

[Mark Douglas, CEO at MNTN]

So even when we say, "Oh, we have a direct relationship with, for example, Paramount," Paramount is using one of these SSPs as the connection between their inventory and MNTN, even though we've negotiated terms and pricing directly with Paramount. So the SSPs have always been in place. Now, what we announced with PubMatic is we're very focused on premium and what we call super premium content. It performs really well, and our customers love it, meaning they're on the most premium television content. These shows cost millions of dollars an episode to create often. And so we want to get more and more of that supply. You're seeing live sports come online, pause ads. And so we're expanding our relationships across the board, not only with kind of all our content as premium and continuing that, but also specific opportunities to get even more premium content.

[Mark Douglas, CEO at MNTN]

We did that with Paramount+, and I think you'll see us continue to do that both directly with the streaming networks as well as with the SSPs, who are the conduits between us and the streaming networks in terms of the actual movement of the ad impressions between, for example, in my example, Paramount and MNTN to bid on it and buy it.

[Rob Sanderson, Managing Director at Loop Capital]

Thanks, Mark.

[Mark Douglas, CEO at MNTN]

Sure.

[Operator]

Your next question comes from the line of Matthew Cost with Morgan Stanley. Please go ahead.

[Matthew Cost, Executive Director in Equity Research at Morgan Stanley]

Hi, everybody. Thanks for taking the questions. Two, if I could. Just one on. The pace of customer adds. Is there any seasonality that we should be aware of in terms of just gross number of or net number of new customers coming out of the platform? Because the guide would imply, I think, very strong customer growth in the fourth quarter. So I guess, how should we think about contribution of user growth, and should we expect a seasonal pickup there in the fourth quarter or customer growth, I should say? And then the second question is just on the gross margin front. It seems like around 79% gross margins, give or take this quarter, you're really kind of getting towards the upper end of the 75% to 80% range that you've talked about historically. I guess. Patrick, you talked about in the prepared remarks the potential for further gross margin improvements. I guess, where are we in that journey? Thank you.

[Mark Douglas, CEO at MNTN]

So I'll take the first part of the question. So in terms of the pace of customer adds, we are continuing to invest strongly in sales and marketing. And I think you're also seeing just, again, the market. Like more companies just assuming that they should be looking at performance TV.

[Mark Douglas, CEO at MNTN]

When we first launched kind of the. Essentially launched the market, the concept of performance TV. A lot of our sales and marketing effort was just convincing people they could be on television. They just thought of it as something that was very expensive, very time-consuming, creative. They were going to have to roll 18-wheelers to shoot creative. And it was something that was out of reach for small- and mid-sized sector. Now, increasingly, that's not the case. They are aware this is doable, and they are seeking us out. Our sales cycles. One of the metrics are sales cycles have steadily gone down. So I think the pace at which we're bringing our customers is both a combination of our investment in making it happen as well as a shortening of our sales cycle. And increasingly, now with QuickFrame AI, a shortening of the go-live process.

[Mark Douglas, CEO at MNTN]

Creative used to take 40 days on average. We had a customer, yes, they built creative in two hours and really compelling creative through the partnerships we have on the generative models. So that's what's happening there, and we are excited about that. I think you're going to continue to see that. And then I'll hand the gross margin question over to Patrick.

[Patrick Pohlen, CFO at MNTN]

So we did have nice gross margin expansion in Q3. Matthew, 720 basis points. 400 plus of that was attributable to MNTN. That's increased revenue. And then 300 plus basis points were attributable to the Maximum Effort divestiture. The latter is a structural permanent change. And as we enter Q4, we've talked about it's the highest quarter from a revenue perspective. And so that will drive further gross margin improvements during the quarter.

[Patrick Pohlen, CFO at MNTN]

We also, as I mentioned, I believe on the last call, we have switched our hosting provider to GCP. And that, if the hosting environment remained constant, which it likely won't, that is also a significant reduction in that COGS portion of in that COGS item. So it's a long-winded way of saying that we expect there to be levers for us to pull on a go-forward basis. We are in the range currently of 75% to 80% long-term gross margin.

[Matthew Cost, Executive Director in Equity Research at Morgan Stanley]

Great. Thank you.

[Operator]

A reminder, if you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine on your telephone keypad to raise your hand. There are no further questions at this time. I will now hand it back to Mark Douglas for closing remarks.

[Mark Douglas, CEO at MNTN]

I just want to say thanks, everyone, for attending the call. We're very excited about the results for the quarter and honestly, even more excited for Q4 and beyond. So we'll see you on future earnings calls. Thank you.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Mark Douglas, CEO
• Patrick Pohlen, CFO

Analysts

• Matthew Cost, Executive Director in Equity Research at Morgan Stanley
• Rob Sanderson, Managing Director at Loop Capital
• Company Representative at Raymond James
• Shyam Patil, Senior Analyst at Susquehanna
• Company Representative at Evercore ISI
• Brinlea Johnson, Managing Partner at Blueshirt Group
• Andrew Boone, Senior Equity Analyst at Citizens