MNTN Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 5, 2025

Key Takeaways

  • Positive Sentiment: Q2 Performance TV revenue rose 35% YoY to $67.8M, with 77% gross margin and 92% adjusted EBITDA growth to $14.5M on a record cash position of $175M.
  • Positive Sentiment: Live customer count climbed 85% YoY, with 97% of 2025 customers advertising on TV for the first time, driven by Mountain’s platform targeting small and mid-sized businesses.
  • Positive Sentiment: Mountain’s Performance TV platform combines proprietary tech—MountainMatch targeting, Verified Visits attribution, and an AI-powered programmatic bidder—to democratize and measure TV ads like digital channels.
  • Positive Sentiment: For Q3, the company guided to $69.5M–$70.5M in revenue (≈22.5% YoY growth) and $13.5M–$14.5M in adjusted EBITDA, reflecting ongoing operational leverage.
  • Negative Sentiment: The GAAP net loss widened to $26.2M due to a one-time $26.4M expense for converting and extinguishing convertible notes in the IPO.
AI Generated. May Contain Errors.
Earnings Conference Call
MNTN Q2 2025
00:00 / 00:00

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Operator

Hello, and welcome to the Mountain Second Quarter twenty twenty five Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Brinley Johnson. You may begin.

Brinlea Johnson
Brinlea Johnson
Investor Relations at MNTN

Good afternoon. Thank you for joining us for Mountain's second quarter twenty twenty five earnings call. With me today is Mark Douglas, CEO Patrick Polin, CFO and Chris Innis, COO. 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 our future results, please see the Risk Factors section of our IPO prospectus filed with the SEC on 05/22/2025, which is also available on our website.

Brinlea Johnson
Brinlea Johnson
Investor Relations at MNTN

We will also discuss non GAAP financial measures on today's call. Reconciliations of these measures are available in our earnings material on our IR website. With that, I'll turn the call over to Mark. Please go ahead.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Good evening. So thanks. Thank you for joining us on Mountain's very first earnings call as a public company. Save marks a major milestone not just for Mountain, but for the thousands of brands we serve and for the future of TV advertising. We build Mountain around a bold mission to democratize TV.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Our goal is simple, to make Connected TV the most effective performance marketing channel and to give every brand from startups to household names the tools to succeed on television. On behalf of the entire team, I want to thank our investors, partners and shareholders for your belief in our mission. We are not only helping brands advertise better, we are helping them grow smarter. Let's get to the headline. We've delivered a strong Q2.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Second quarter performance TV revenue grew over 35% to $67,800,000 with total revenue of 68,500,000.0 driven by our unique value proposition as well as our ability to efficiently attract new customers to the platform and increase usage for existing customers. Gross margin improved to 77% and adjusted EBITDA grew 92% year over year and a record $14,500,000 We ended the quarter with 175,000,000 in cash and cash equivalents. But our quarterly results only part of the story. Our strength lies in how well our strategy is aligned with the state of the market and the needs of modern marketers. Marketers today are navigating a rapidly shifting landscape fueled by automation, rising customer acquisition costs, AI generated content, and the increasing pressure to do more with less.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

That's why performance TV is resonating. It's not just an evolution of connected TV. It's a new category altogether. One that combines the reach and storytelling power television with the precision speed and accountability of digital. And Mountain is leading the way.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Our platform is purpose built to close the gap between where audiences are spending their time and where ad dollars are still catching up. Nearly half of all TV time in The US is now streamed, yet only a third of TV ad budgets have followed. In the past twelve months, thousands of brands have run campaigns on mountain, many of them seeing TV drive revenue for the first time. In fact, the number of live customers on our app on our platform has increased 85% year over year, a majority of which are small and mid sized businesses. These aren't legacy advertising titans.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

They're growing challenger brands looking for the next engine of acceleration and finding it with Mountain. Since 02/2019, ads run through Mountain have generated over 27,000,000,000 in revenue for our customers, and notably, 97% of our customers that launched in 2025 had never advertised on TV before using Mountain. Mountain is turning television to a growth engine for the small to mid sized businesses that were once priced out or left out. While others chase the top 1% of advertisers, we've gone the other way making performance TV accessible, measurable, and effective for brands that never thought they could afford it, let alone scale with it. This is where Mountain shines.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Our performance TV platform is the most advanced software in connected TV. We build performance TV on a simple belief that TV advertising should be effective, measurable, and as easy to buy as search and social. This is TV advertising engineered for outcomes. Our platform combines the creative power television with the intelligence of performance marketing. Brands handle the rest, but but our platform handles the rest.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Targeting, optimization, attribution are all built in. This is what sets Mountain apart. Every campaign is optimized for for for performance. Three key proprietary technologies make this possible. MountainMatch is our proprietary AR targeting engine.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

It matches brands with the viewers most likely to convert based on real behavior, intense signal, and household data. Verified visits is our cross device attribution system. It connects a TV commercial to downstream action like a purchase or a site visit across more than 400,000,000 devices in The US with household level accuracy. Mountain's programmatic bidder is our AR powered proprietary bidding engine. It automates media buying, optimizes spend in real time, and processes hundreds of thousands of streaming TV ad requests per second, maximizing performance across trusted, professionally created premium streaming inventory.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

This is what transforms TV from a top of funnel awareness play into a direct response growth engine for challenger brands. Our competitive mode isn't just technology. It's also a years long lead in understanding how to make TV work like digital for everyone. As for the road ahead, we remain confident in our momentum, in our mission, and in our market opportunity. We're raising the bar in performance and making a TV a viable growth channel for brands of all sizes.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Thank you again to our investors, our shareholders, and our partners. Your belief in MOUN is helping us lead a major shift in one of advertising's most powerful medium, and we're just getting started. Now I'll hand it over to Patrick to walk you through our financial results in more detail and share our guidance for Q3.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Thank you, Mark. As Mark mentioned, we had a very strong second quarter, our first quarter as a public company. We delivered strong second quarter results with Performance TV revenue growth of 35% to $67,800,000 This performance reflects continued customer adoption of Performance TV, particularly among small and medium sized businesses. For a bit of clarity on revenues, on 04/01/2025, the company closed a transaction that transferred its interest in Maxim Effort to an affiliate of its original owner. Maxim Effort continues to play a key role in our brand and creative strategy just as a separate company.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Max Effort continues to be a big part of Mountain. Adjusted for this transaction, our total revenue grew 34% year over year to $68,500,000 in Q2. Without adjusting for this transaction, that is including Maxim effort in '24 and not in '25, total revenue grew 25% year over year. Turning to gross profit, our gross margin for Q2 was 77% compared to 70% in 2024, an increase of 700 basis points. Looking ahead to the second half, we are taking further steps to drive additional gross margin improvements, specifically reductions in hosting costs.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

On the OpEx side, total operating expenses for the quarter were $48,800,000 up 21% from Q2 of last year. This increase was primarily driven by two things. One, investment in technology and development and two, marketing to support customer growth as we move down the long tail. Sales and marketing spend was $24,300,000 We continue to invest in customer acquisition and brand visibility while maintaining efficient unit economics. Technology and development spend was $10,700,000 We remain committed to driving differentiated results for our customers through product innovation and improvements like Mountain Matched.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

GA totaled $13,100,000 for the quarter. On a GAAP basis, our net loss was $26,200,000 We concluded our initial public offering in the quarter and as part of our public offering, convertible notes were converted into cash and equity, which added $23,000,000 on a one time charge to net loss. A $26,400,000 expense was incurred on the extinguishment of the convertible notes which were paid off in the IPO. This was partially offset by $3,400,000 net gain related to fair value adjustments on warrants and on convertible notes. Adjusted EBITDA for the quarter was $14,500,000 up from $7,600,000 in 2024, an increase of 92%.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

The company's adjusted EBITDA margin was 21% compared to 14% in 2024. This improvement was driven by increased operating leverage throughout the business. We have a very strong balance sheet ending the quarter with $175,000,000 in cash and cash equivalents and no debt outstanding. We ended the quarter with 72,600,000.0 shares outstanding and looking ahead we're confident in our momentum and the underlying health of our business. For Q3, we expect revenue in the range of $69,500,000 to $70,500,000 representing a twenty two point five year over year growth at the midpoint.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

We expect adjusted EBITDA to be between $13,500,000 and $14,500,000 reflecting continued leverage as we scale the business while remaining disciplined in our investments. As a reminder, we will continue investing strategically in R and D and go to market capabilities to support our future growth. We remain focused though on delivering operating leverage over time. To wrap up, we're pleased with the results for this quarter versus a public company and we believe we're uniquely positioned in a massive and rapidly evolving market. Performance TV is unlocking new growth for advertisers and we're proud to be leading the way.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Our financial performance is strong, our market opportunity is expansive and we have the team technology platform and capital to execute. With that, we'll open the line up for questions.

Operator

Thank you. Your first question comes from Shyam Patil of Susquehanna. Your line is open.

Shyam Patil
Analyst at SIG

Hey, guys. Congrats on your first earnings call and strong results. I had a couple of questions. Mark, clearly, guys are seeing very strong trends. Can you just talk about the momentum you're seeing right now?

Shyam Patil
Analyst at SIG

Then kind of as you look out, maybe the two to three things that you're most excited about? And then second question for Patrick. You guys have solid margins in Free Cash Flow Dynamics already. But as you kind of look out from here, can you just talk about how you see margins trending and what the key levers are? Thank you.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I'll I'll start thanks for the question. I'll start with the first part of that. So I think the key thing we've started to see, and I can't completely give you a metric on this, is that marketers for our in our target segment, which is small and mid sized businesses, the SMB market, they've gone from being surprised that they can use television to now they're really assuming they can. So it's just kind of I think a lot of that is due to our marketing to our our company's marketing. And you're seeing, like, more content about how to do performance marketing on TV.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

And we're as the, you know, essentially the creators of the the first mover advantage creator created to the segment and market were really benefiting from that. And you can see it reflected in some of our stats, like 77% of Mountain's revenue now comes from inbound leads. And that percentage, you know, has gone up even since we did the IPO, the metrics we had for the for the IPO only two months ago. So we're just seeing all this forward momentum. In terms of what we're most excited about, I think it's the efficiency.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So all of these customers, 97% of our customers have never advertised on TV before. So we're obviously investing heavily in AI. So we're doing AI targeting to help those companies find their next customers, AI creative to help the yeah. We some things that we're working on there to help, lower the cost of building television commercials. 97% of our customers don't have a TV ad when we meet them, although they have a lot of videos.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So we can help them through tools and through a network of creators in Quick Frame, a part of Mountain, built have TV commercials at very efficient cost. And so and there are other areas we're applying AI to. I think if you look at our sales headcount, we haven't added headcount in sales in over three years and that's all due to gaining efficiencies and a lot of efficiencies are increasingly coming from our use of AI and the AI technology we're building. And I'll pass it to Patrick for the rest of the questions.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Yeah. So, Sean, first of all, for your kind words. So gross margin, our long term target is 75 to 80. And we have in advance of the Maxim Effort spin out, we had been doing some things, but the real value in the increase in gross margin starts with the MAX and Effort transaction. And we have a couple of things planned during the course.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

And so we're sitting at 77% for the quarter and that's a quarter in which we didn't have max effort and the creative costs. So that's a significant reduction. Data as you may recall is a fixed cog. So we're now looking at the other two. One is hosting costs which we are underway to reduce our hosting costs in a relatively significant manner and that should occur during Q3 and part of Q4.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

We then will turn our attention to media costs and we expect to generate additional gross margin improvements around media. So we're sort of sitting right now at the bottom end of the range and so we expect with those hosting and media to drive us up higher in that range. In terms of adjusted EBITDA, we're also on a journey there. That is a more balanced journey that is we want to be profitable, but not at the sake of driving revenue growth. And so right now we ended the quarter I think at 21 gross margin and that leads to about 18% for the first half of the year, which is a pretty significant improvement 92%.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

So 92% increase in adjusted EBITDA for Q2 and we'll end the year sort of in the I'm guessing approximately around the 20% gross margin, I'm sorry adjusted EBITDA with a long term target of 35% to 40%. In terms of components of OpEx, we've continued to drive sales and marketing down long term range of 20% to 25 That's directionally where the trajectory is. Gross G and A 10 to 15 same thing moving into that range. And then technology and development where we're going to spend additional money on engineers to improve, maintain the product, develop new products. We're sitting in that range already.

Shyam Patil
Analyst at SIG

Great. Thank you, guys.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

The next question? Thank you.

Operator

The next question comes from Mark Mahaney with Evercore ISI. Your line is open.

Mark Mahaney
Senior MD at Evercore ISI

Hey, I want to ask two questions please and congrats on the first quarter out of the gate. The one of the things that you've been doing is kind of lowering the minimum spend in order to bring on kind of reach out to more small, medium sized advertisers. Could you talk about the impact that's had on the business and where you are now in terms of that kind of minimum spend? And then secondly, Patrick, thanks for the disclosure on the reported versus the organic growth rate. Would that same sort of delta apply to your guidance for the September, roughly a 10 faster organic than reported growth rate? Thank you.

Chris Innes
Chris Innes
COO at MNTN

Yes. I'll start off that question just talking about the product minimum. So if we go back a couple of years ago, our minimums per campaign per month were 25,000. Those now sit at 500. And essentially, our improved targeting through Mountain Matched has allowed us to open the platform and product to more customers. Right now, we're not seeing big adjustments in our average budget.

Chris Innes
Chris Innes
COO at MNTN

We do anticipate that those will go down as we begin to scale with the 1,500,000, advertisers in this market. And the other thing I'll say on the budgets, remember, it's a bit of a choice for Mountain. We are go to market. We decide what customers we want to target, what size and so that does give us a lot of control.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

To the second part of your question, Mark. So at the midpoint of our guidance for revenue, we're at 23%. I think we'd expect high single digit increases both in the core business, PTB revenue and then if you just adjusted the comparison to remove Maxim Effort revenue from q three also in the single high digits.

Operator

The next question comes from Andrew Boone with Citizens. Your line is open.

Andrew Boone
Managing Director at Citizens JMP

Hi, guys. Thanks so much for taking the question. Congrats on the first public company quarter. Two, please, from me. One is I would love to touch on net revenue retention rates.

Andrew Boone
Managing Director at Citizens JMP

And I understood you guys may not want to quantify this quarter. But can you please speak to kind of what you guys are seeing with existing customers and the trends there? And then secondly, v o three is certainly changing the game in terms of text to video creation. Can you guys just speak to where you guys are with Quick Frame AI and what is going on in terms of content creation with generative AI? Thanks so much.

Chris Innes
Chris Innes
COO at MNTN

Yeah. I'll I'll cover the the first question just around net retention. So what net retention is not something we're revealing now, but it's very, very strong. And to piggyback onto the last question, we're seeing very, very strong performance from existing customers and especially small businesses. Among our small businesses, really the s in small and medium sized business, we see the strongest net retention number of any of our segments.

Chris Innes
Chris Innes
COO at MNTN

And so while we're moving down market, we're seeing very, very strong net retention and customer performance.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

And I'll take the AI, the QuickFrame AI. So Mountain, we have been working on generative AI tools for more than two years now. I made a comment about them on CNBC recently. So we generated over a thousand customer facing fully AI generated ad on a beta version of that platform in June, more than 18,000 in total in test, and we'll have some announcements in, coming up, about those tools and how they're being used and and, how they're helping our customers.

Operator

The next question comes from Andrew Maroc with Raymond James. Your line is open.

Andrew Marok
Andrew Marok
Director at Raymond James Financial

Hi, thanks for taking my questions. First, I wanted to talk about the ZoomInfo deal that was announced recently. Just trying to get a sense of how big you think the scale of the unlock can be from that deal and the timing. And just trying to get a sense of from a customer perspective, is b to b overrepresented or underrepresented as a percentage of the SMB market versus large enterprises? And then I have a housekeeping follow-up.

Chris Innes
Chris Innes
COO at MNTN

Yeah. So on the on the ZoomInfo, that's a partnership where Zoom, Info is essentially driving advertisers and customers to Mountain to use our software to grow their business. It's one of several types of those partnerships we have. I can't speak to what the numbers are gonna turn out, but it's, they're they're it's a a good customer base who has a good understanding of our features and product, and we're gonna continue to expand those type of relationships.

Andrew Marok
Andrew Marok
Director at Raymond James Financial

Alright. Great. Thank you.

Andrew Marok
Andrew Marok
Director at Raymond James Financial

And maybe one for Patrick just on the housekeeping side really quickly. Just wanna make sure. It sounded like, from a previous answer that the gross margin is kind of this is what to assume the trajectory going forward. But just want to make sure that, you know, in the context of your EBITDA guide for 3Q, it does assume these kind of higher gross margins than we've seen in the previous few quarters. Thanks.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

No. It assumes, Andrew, there's going be variability in the gross margin quarter over quarter. But it assumes a gross margin that is in at the bottom of the long term range in that general vicinity.

Operator

The next

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

question I'm gonna I'm gonna add just a little to what Patrick said. We there's a there's a interesting subtlety to our gross margin, which is as our revenue increases in quarters like q four, the the sum of our costs, like the cost to bid, like, people don't watch more television. So if we're getting 300,000 bid request in in the slowest quarter, q one, and then you get 300,000 bid request in your biggest quarter because people are watching the same amount of television, a 140,000,000 household in America. So Jeff's growth alone expands your gross margin, although we've been investing in other ways like reducing our hosting costs and others. But it's an interesting part of our business and you can see it reflected in last year's numbers where q four has the largest gross margin and q one has the smallest.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I don't know off the top of my head, but I believe this quarter is bigger than the largest quarter or close to. No. It is. It is. So q two of this year, which you would consider smaller, has a higher gross margin than our biggest quarter last year.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So it you know, that's something you can put in the spreadsheet and trend out.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Yeah. Yeah. So so we have a fixed component, which is data. So that's fixed and so higher revenue all by itself drives increasing gross margin. And then the soft line of the variables are all less than the revenue growth line.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Great. Thank you.

Operator

The next question comes from Rob Sanderson with Loop Capital Markets. Your line is open.

Rob Sanderson
MD - Senior Internet Analyst, US & China at Loop Capital Markets LLC

Hello. Good afternoon, everybody. Also, offer my congratulations on on on turning public. I've got a question for one of each of you, for Mark. Maybe, you know, could we talk a little more about the GenAI tools for creative, you know, feedback from beta?

Rob Sanderson
MD - Senior Internet Analyst, US & China at Loop Capital Markets LLC

And and, generally, like, how much cost, does creative add to PTV, campaigns? And and and and any thoughts on how much, more productive your your community can get with with these tools? Maybe it's too early to talk about this stuff as you maybe alluded to earlier, but I'd love to get any thoughts you could add. For Chris, you know, how has your go to market strategy been evolving? You know, any commentary on near term funnel dynamics and and maybe impact of the IPO?

Rob Sanderson
MD - Senior Internet Analyst, US & China at Loop Capital Markets LLC

And then is there a large opportunity for other partnerships like ZoomInfo? Is you Do you think partner channels can become a meaningful part of your customer acquisition, over the next, say, two or three years? And then for Patrick, just curious the impact of, Max's effort on, gross margin and operating margin. Obviously, we assume the PTV platform business is meaningfully higher. But is there a way to, like, dimensionalize, the apples to apple expansion exclusive of the of the transaction? Just how you're trending on a year over year basis?

Rob Sanderson
MD - Senior Internet Analyst, US & China at Loop Capital Markets LLC

If you could add any color there, that'd be great.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Cool. So I'll get started on the first question. And we're we're trying we're trying not to preannounce the software to be honest. But the with 97% of our customers never having advertised on TV before, we say feel compelled to help solve that problem. So our initial solution is we acquired Quick Frame in December 21.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Quick Frame is a network of thousands of independent creators who can build television creative. They also build creative for Instagram, TikTok, YouTube. So advertise ads for any of the platforms including Mountain, and we've kept it that way. And that was the initial solution. Now with AI tools, we think that that is an important component, but we think the independent creator can still play a big role.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Even if you lower the cost of creative, you can lower it to a point where, like, someone's choosing between spending their night, using AI tools to build an ad or they can pay someone, you know, hundreds of dollars to do it for them. And so we intend to keep both generative AI tool as of that that we haven't launched yet, but, you know, we've we've just spoke about, you know, we've been testing as well as our independent creator network and kind of combine them together. And by the way, we're totally open to partnerships also. At the end of the day, we're investing in it. There are other companies investing in Genove AI tools also.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

And we decide to invest because, you know, we didn't feel we could, delegate 97% of our customers needing TV ads when we meet them to other companies. But if they are using other companies, we are fully embrace that. And by and we also are fully embracing the partnership around the tools we're building. So we're not it was mentioned via we are working with Google, eleven Labs and others on the best use of their generative technologies and putting them into an environment purpose built for television ads and social ads.

Chris Innes
Chris Innes
COO at MNTN

Yes. And to jump in a go to market, and I'll piggyback Mark's comment, what are some changes or challenges we've seen in our go to market, it's become a lot faster since we went public. And so a part of that is the IPO, another part of that is the creative tools we have, those AI tools that allows the customer to go live much, much faster. Remember, our go to market is we take the e mail addresses of our future customers, we upload that to our platform which matches to their household, and we start serving TV commercials directly in their living room. If we wanna expand into a new vertical or a new part of the market, we just need those email addresses and we can grow from there.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

And, Rob, on, the question for me. So we kind of answered it, when we talked to, Andrew, and that is, and I haven't I haven't sliced it exactly the way you're asking, which is what if Max Eppard had stayed what would the gross margin be? But it would have ticked up for the reasons that Mark and I discussed which is there's a fixed component. So our revenue grew 25% year over year and the gross margin in the prior period was 70%. So we certainly and the 25% soft line is still much higher than the variable soft line.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

So gross margin would have gone up. I just can't tell you precisely where it went up. I have in the back of my head what I think Maxim Effort contributed, but I I don't wanna go out. I I I had a target for that reduction in in COGS and increase in gross margin, but I think it would have been a couple points.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I wanna add one more one thing to that. I just wanted to be very clear. Maximum effort, and and in particular, Ryan Reynolds and George Dewey are massive contributors to the the the Building the Mountain brand and ultimately the growth. And although, we that we all agreed to spin out MaximaFit because it doesn't really make sense to have, like, the world's most creative people and agency be dealing, you know, like like dealing dealing with quarters and lawyers and accounts and things like that. The the form of the partnership changed, but the function meaning, like, how tightly we work together, has not.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

And if anything, we've been we've been working even harder together, and we're excited to still have them as, to be I I can't even say still have them. We're excited that they let us in their door to work to have such an incredible partnership because we're always amazed at the the what they do. And they, I think, are always amazed that the technology we build and the sales organization and marketing organization that Innos has built for the company. So I just I just wanted to be be very clear on how tight that partnership continues to be and and how well we all work together.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Yeah. I mean, just just anecdotally, I have worked more with the Maxim Effort people since we've gone public than I did before. Yeah.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Awesome. Next question.

Operator

The next question comes from Laura Martin with Needham. Your line is open.

Laura Martin
Senior Analyst at Needham & Company

Hi, there. Great results. I'll ask two. Revenue you said you had 85% growth in active customers and you had 25% revenue growth, 600 basis points above our estimate. I would have guessed that pulling from Meta, Google search, and maybe YouTube.

Laura Martin
Senior Analyst at Needham & Company

But Meta grew 600 basis points faster in revenue at 22%, and both search and YouTube grew 13% well above consensus estimates. So my first question is, where are you getting your new customers from and your new spending if they are growing effectively? My second question is on mix. So you guys have brought performance to connected television, hugely differentiated, lots of pricing power, But Amazon is sitting in the area of performance called purchases. When you look at how your customers define performance, what percent of your advertisers define performance as an actual sale versus something else, a site visit, a website, a query, an email address?

Laura Martin
Senior Analyst at Needham & Company

Could you talk about your mix of how your customers define performance on your platform? Thank you.

Chris Innes
Chris Innes
COO at MNTN

Yes. And so remember, it's 35% year over year performance TV growth. And where are we getting those customers? It's just part of our normal go to market. And so, we we have a process to gather brands and email addresses of the brands we want to work with.

Chris Innes
Chris Innes
COO at MNTN

We upload those to our platform that matches to their household, and we start serving them TV commercials. The sales team will come in essentially on top over that. In in terms of the customer base and how they think about performance, most of our customers, more than 80%, are using return on ad spend as their key metric. So they have a tracking pixel live. They're essentially handing us that conversion data.

Chris Innes
Chris Innes
COO at MNTN

We see each sale and we're attributing it. We have b to b customers. We have b to b customers that make up a smaller fraction of that. You know, they're they're still measuring to some type of conversion. It's normally a cost per action.

Chris Innes
Chris Innes
COO at MNTN

And then some of our smaller brands, b to b and other brands may use a cost per visit to optimize toward. And on the the meta question, I

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

may have misunderstood that. So I I think about it in terms of share of wallet. What percentage of a brand's budget do we have versus meta? Mountain is in about the 15% range. And so we have 15% of, you know, a brand's overall marketing budget.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Meta is the highest in the industry sitting at about 22%, where Google is, at 18, and and they've been quickly declining. And and remember, Laura, that it's not a zero sum game. Our customers don't choose to use use Mountain or Meta. All of our customers are using paid search, paid social, email for retention marketing, mountain for performance TV. But definitely so all of our customers I I I I'm not sure we could find a customer that is like, no.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I don't advertise on Instagram. So the the and that and that just grows over time. Obviously, our goal is that eventually that I, you know, I, of course, advertise on on performance television with them. And then we get the second part of the question. Amazon.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Who's about Amazon? In terms of can you repeat your second part of your question, Laura? I'm sorry.

Laura Martin
Senior Analyst at Needham & Company

I was just interested in how much competitive exposure you have to Amazon because Amazon actually drives the purchase. And I'm wondering if you guys have a broader mix that doesn't always drive the purchase and therefore is more protected from big tech competition.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Yes. So the majority of our customers are direct to consumer brands. We talked earlier about how we're expanding in the B2B brands. But the vast majority of our business is direct to consumer brands and their goal is to drive outcomes, to drive purchases, or to drive, you know, the the some other con consumer action. And they and so they're looking and and again, they're gonna use mountain.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

They're doing search advertising on Amazon. They're doing streaming TV advertising on on Mountain. They're doing the the social on Instagram. So we we we think, you know, Amazon advertising business is, you know, obviously, really important sense. It it has grown tremendously, but it's not competing with Mountain's, business.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Their TV business is, at this stage, still entirely focused on their own brand advert brand advertisers and focused on their inventory. So, you know, to the exclusion large excluding, you know, the 199 other streaming networks in America.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

But the highest, our customers' highest, outcome as a percentage is sales, like, far and away Yeah. Sales.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Yeah. Rapid the revenue the platform is driving, and they're able to compare Mountain to these other platforms directly to the data we provide them as well as other third party tools that pretty much all of all performance advertisers use. Cool. Next question.

Operator

The next question comes from Ivan Sinseth with Tigris Financial Partners. Your line is open.

Ivan Feinseth
Chief Investment Officer at Tigress Financial Partners LLP

Hi. Congratulations on the great Q2 results and your first quarter as an IPO as well. Where are you seeing the biggest growth in new customers? Like what types of businesses or industries or products that they're

Chris Innes
Chris Innes
COO at MNTN

So we in in q four of last year, we began to open the top of the funnel to move to smaller brands. And so we've we picked up a lot of small franchises like Orangetheory, their 600 stores along with a lot of smaller local businesses. We launched the ability to do radius targeting late last year, which has helped fuel that. But, you know, these are mom and pop businesses all across The United States.

Ivan Feinseth
Chief Investment Officer at Tigress Financial Partners LLP

And then are you seeing a lot of new customers go through the self-service portal or they're using your Salesforce? And if they use the self-service portal portal, does that help contribute to the margin expansion?

Chris Innes
Chris Innes
COO at MNTN

Absolutely. And so we've, we we call that self sign up. We started expanding our self sign up efforts in q two of this year. We're, you know, still using humans on a portion of that just as we perfect our process and all of our metrics.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

The the other thing, Ivan, it's been interesting because we thought we needed to do the self sign up for smaller, budgeted customers. But it turns out the mid sized customers love self sign up too. Yep. So it's it's been an improvement across all type customer types.

Operator

The next comes from Ron Josey of Citi.

Ron Josey
Ron Josey
Managing Director at Citi

Great to see the results. I wanted to ask maybe bigger picture, Mark. In the past, you've just talked about TV has greater engagement in scale and scale than other platforms online like search and social, and yet it's still under monetized. Just talk to us about one that unlocks the bigger picture of this greater engagement and scale online. So talk to us about the opportunity around CTV and CTV overall.

Ron Josey
Ron Josey
Managing Director at Citi

And then, Patrick on the sales and marketing side, would love to hear your thoughts on brand building awareness and the investments that the team is making in the advertising front given I think I heard headcount for sales is about flat. Thanks for the time.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Sure. So, the first part of the question, it primarily has to do with data. So, the what makes what there are two things that help to monetize TV better. One is bring in small, mid sized businesses. This is a medium that has been predominantly it's been dominated by large brand advertisers focused on reach and frequency.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

You know, the ultimate ad is the Super Bowl ad or the ads during the Olympics or the, you know, those kinds of of moments. And but for so small and size businesses were largely excluded. I think that when Mountain the first campaign was launched on Mountain, it was the first it was the first time, certainly at scale. We'll say first time at scale that you could advertise on TV without having to, you know, have months of meetings and, like, find people to help you just like go to mountain.com, create an account, and you are live on every streaming now live on every pretty much every streaming TV in America. So then the question is, well, the growth of this medium is going to come from small and mid sized businesses.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I like to say just like the year in a job market, all the growth in jobs comes to small and mid sized businesses. In the advertising market, all the growth in TV advertising is also going to come from small and mid sized businesses. Remember, 97¢ of every dollar spent through mountain is net new revenue into this industry because these customers have not advertised on TV before. So then it just comes down to what makes us cost effective? What makes us measurable?

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

What makes us fine for a small business? Not you know, a T Mobile, every person in America can become a customer. I'm talking a business looking for the next 500 customers. What makes this work? It's data applied with, you know, machine learning algorithm and AI tech and at this stage now, AI technology.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So that's the heaviest investment in, our engineering effort is in finding that right target consumer. When you find the consumer, you put that brand on 65 inch television on the wall, it's got versus a six inch screen in your hand is going to perform. Thirty seconds of time uninterrupted. So it's all it's all about the data, the the the the machine learning AI algorithms, and then applying that to the SMB market. Patrick? Yep.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

So on sales and marketing, Ennis continues to hold the line on headcount increases. But, you know, there was a condition precedent to going down to the small, the long tail, and that was mountain matched. The other thing we did just for a bad pun is the match that we used to get to the small businesses was additional ads ran to those targeted customers. And we did that in Q1 and we continued it in q two. So it's driving more brand recognition in the small medium sized businesses and more leads into the company from that cohort of customers. So the increase is not headcount, it's actually marketing.

Operator

The next question comes from Matthew Cost with Morgan Stanley. Your line is open.

Matthew Cost
Matthew Cost
Executive Director - Equity Research at Morgan Stanley

Hi, everybody. Thanks for taking the questions. Just on the 85% customer growth, if you could just break down, how much of that is coming from kind of your core midsized customer base that's made up, obviously, most of your customers historically versus kind of cracking into these smaller customers, you know, and how much of that growth is coming from them? And then I just wanna maybe close the loop on a couple of comments you've made, you know, over the course of the q and a. Is it is it fair to assume that you're actually getting more efficient even as you move down scale from a customer perspective just because of the adoption of, of of self serve and the efficiency with which you're acquiring them?

Matthew Cost
Matthew Cost
Executive Director - Equity Research at Morgan Stanley

So, like, is your cost to acquire and serve customers improving even as you capture these smaller ones? Thank you.

Chris Innes
Chris Innes
COO at MNTN

Yes, absolutely. And as we begin to acquire smaller advertisers, as you look at that 85%, it's the small advertiser makes up more of the account than the revenue. Our the majority of our revenue still comes from mid sized brands. Over time, as we continue to open the top of the funnel towards smaller brands, I'm sure that will change. And what was the second part of the question?

Matthew Cost
Matthew Cost
Executive Director - Equity Research at Morgan Stanley

Off to acquire and service.

Chris Innes
Chris Innes
COO at MNTN

Yeah. Off to acquire. It's we've become very, very efficient and effective with that. And Ali leads our marketing team, is doing a great job there. We're using a lot of AI to improve our content, our messaging, our strategy, and more.

Chris Innes
Chris Innes
COO at MNTN

And as our own product gets more efficient with Mountain Matched, that makes our customer acquisition cost even better.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Yeah. So I I think the answer to your question is we have gotten much more efficient. We we did it primarily for the small customer, but it runs now through the whole business. So we are getting great operating leverage in sales and marketing

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

across all customer types. Yeah. Every like, a number of businesses, they increase headcount just as kind of like a function of the way the business if we're gonna increase our revenue goal, we're gonna increase, sales headcount. At at this point in Mountain, literally every new hire is a strategic hire. Like, you can name what they're gonna contribute strategically to the business, And you're there's no increased headcount.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

That's just kind of a function of the revenue plan. So and and so and and one thing that's happening also, you you can't really tell in our numbers, but a third of the company's headcount we started a third of our headcount is in engineering. Over 40. We're at now over 40% that's headed over 50%. So one out of every two people working at Mount is in engineering where and and, again, strategic hires.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

And then throughout the sales organization, the marketing organization, everything, every single person that that joins the company has a specific reason to be here. They are not part of like just a spreadsheet that, you know, if sales revenue increases, then this headcount will have to increase also. So I and and that again gives us operating leverage as part of continuing to increase our EBITDA margin.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

Yeah. But both both OpEx increases, Matthew, are targeted to drive revenue. Yeah. So the engineering headcount is to maintain the product, improve the product, add functionality, add features, and develop new products. All that drives revenue, and the same is true with the marketing expense.

Patrick Pohlen
Patrick Pohlen
CFO at MNTN

So the the OpEx things we're doing are headcount related as it relates to engineering to drive revenue and then marketing focused on the on the sales and marketing side.

Operator

This concludes the question and answer session. I will turn the call to CEO, Mark Douglas, for closing remarks.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So this is my first set of closing remarks, and it's actually surprisingly hard to decide what to say. So I'll just speak from the heart. So one of the things I think a few of you know is, I grew up in New York City. I went to aviation high school here in the city, like in the city, not just in New York, in New York City. And I actually ABH, I wanted to be a pilot.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

I wound up going to tech industry. I love what I do in tech. I love learning code learning the code and then coding throughout my career. But I also learned love flying and, so I'm a jet pilot also. And, one of the things you about flying that you really love is tailwinds.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

Like, you it's free speed. You know, you so I said all that to say, I think I think now we have a lot of tailwinds in the business right now. So we have customers that or prospects that increasingly recognize their ability to leverage streaming TV as a performance advertising medium and are coming to us to help them do that. We have in terms of all the efficiencies that we mentioned, sales and marketing. We have products that we continue to improve and continue to work on and release.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

So I just honestly feel and it's my mission to have the company just fire on all cylinders. I spend a majority of my time on engineering and focus on that. And so we just see it and to finish up the remarks is that, performance marketers increasingly are learning about Connected TV. Mountain is the conduit for that. We created that story.

Mark Douglas
Mark Douglas
Founder, President, CEO & Director at MNTN

We told that story, and we continue to put we plan to continue to lead and most importantly win in making that happen for ourselves, for our customers and obviously our team and our partners. So I'll leave it there. I thank you for all the time and all the questions and for those listening, listening in on earnings call with it. Sincerely thank you for your time.

Operator

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

Executives
    • Brinlea Johnson
      Brinlea Johnson
      Investor Relations
    • Mark Douglas
      Mark Douglas
      Founder, President, CEO & Director
    • Patrick Pohlen
      Patrick Pohlen
      CFO
    • Chris Innes
      Chris Innes
      COO
Analysts
    • Shyam Patil
      Analyst at SIG
    • Mark Mahaney
      Senior MD at Evercore ISI
    • Andrew Boone
      Managing Director at Citizens JMP
    • Andrew Marok
      Director at Raymond James Financial
    • Rob Sanderson
      MD - Senior Internet Analyst, US & China at Loop Capital Markets LLC
    • Laura Martin
      Senior Analyst at Needham & Company
    • Ivan Feinseth
      Chief Investment Officer at Tigress Financial Partners LLP
    • Ron Josey
      Managing Director at Citi
    • Matthew Cost
      Executive Director - Equity Research at Morgan Stanley
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