Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Outbrain's Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to the management team. ahead. go Please

Imelda Lee

thank call and joining on us Good discuss you Outbrain's conference to results. second today's morning for quarter XXXX

on we today, Yaron Kostman; the Co-Founder CFO, me and Co-CEO, David Galai; have Kiviat. Jason and Co-CEO, Joining Outbrain's call

filed management are our this statements results statements reports in based assumptions. for to to cause forward-looking actual risks risk XXXX, with and discussed differ in subsequent Commission. detail Exchange December our Form make on XX-K reports and During year will are XX, the factors forward-looking from as Form expectations statements. current our These ended call, and may XX-Q and materially conference subject filed These in updated uncertainties Securities and that the other in

only original do call's speak statements date, to any the of undertake not such as we update statements. duty any and Forward-looking

non-GAAP also includes references presentation Today's measures. to financial

You of comparable should earnings information definitional quarter the for information in measures second company's non-GAAP contained the refer financial measures. to and to reconciliations release GAAP the

release earnings News our IR found can on under Events. and website, investors.outbrain.com, be Our

turn call With me the let over to that, David.

David Kostman

the Also, Thank progress across we for Thank you and I'm are technology. a AI us. to we are with as great fronts. you Imelda. at you will financial multiple other innovating results joining strategic share making our leveraging and you, excited all significant hear, pace

high report ex-TAC to second end the guidance, we high quarterly quarter of adjusted our solid $X.X pleased the a representing gross and guidance. our profit, million, and in are X% $XX.X of We end in reaching million of growth which achieved exceeding EBITDA sequential

growing our focus to, side addressable and performance market cost publisher on better driving macro advertiser is and strategy. maintaining strategic still what the both an In while marketplace and growth stable investments, technology-led and but making relatively B, on a current side controls; through tight our environment, product continue we A, uncertain within

platform milestone driving focused with rich for by core for an Onyx. video is platform launch high-impact from Last premium our company attention quarter the brand offer Onyx, one we Onyx to the advertisers all full-funnel exciting brands. awareness on very at of Onyx high marked capabilities consideration, ads few be with performance enterprise brand-building that the With our Outbrain. of proud want to start with platforms are to and display advertising and I new a and launch web, true on open scale acquisition. customer a of building from now can the way to the global

outside carrying to more is lot CPM, us Onyx which high value to expect campaigns will This with brand through means be traditional to deliver feed. a expected premium do incremental launch delivered of we our breaks estimated and brand an according It marketing, budget that total increases This consideration, our building existing customers. down factor Gartner addressable new performance, data by of two is to loyalty. between allocation and times. market

is enterprise campaigns. it and makes to What platform unique? a agencies. strong video Onyx So, is building what high-impact built is brands Onyx? and deliver from display It growth brand for

been Onyx which goes drive focused of step to viewability and attention, one market user the on completed views, While most proven ad impact. further is has advertising maximize video business to

our capabilities units We focusing powerful allow over Onyx attention as to success capture measurement time ROAS, opportunities to every real Adelaide, and prediction momentum a marketers attention more partnered With in much for predictive for customer moments we on gaining on leader years. and leverage is and KPI the find more smarter a attention elaborate advertisers. Yaron will AI and to developed to technology how use outcome maximize in attention XX with and campaign. later

a and XX committed brands testing. than already live mid-June, We we're Onyx off to start or more in great to launched with

We Ford. tested The results was we UK experience. attention expectations into that for than Onyx ad ad the the the combines interactive used both score Adelaide campaign exceeded first of One customers' assets and called campaigns benchmark. an video partnership XX% higher Xaxis display custom our the hybrid experience in with with putting

stronger other brand performance powerful the U.S., to France, launched and enterprise continue is markets attention advertisers. campaigns. result, impact Onyx in and, Onyx higher on later Adelaide how be benchmark for user experience for is Italy, is This for now this the will testimony in agencies as winning our driving than We successfully a and Germany, brands and year. Onyx available a UK,

these others. We've Opel Alfa campaigns in iHeartRadio, premium mixed Mattel, Porsche, Visa, run for all Romeo, markets like and brands

of expect we and building, HX in millions year. this revenue is from to double-digit of generate pipeline dollars Our of Onyx already

more a as extremely been brand publisher in revenue strategic for publishers, for user us is advertisers, one great our experience, while has also comment, winning elevate premium with relationship partners. Just quality it our deliver side key which helps our even and Onyx differentiators ultimately, deals to helping factors it is and and of supply

marketplace advertising general the to results. Moving

revenue in in QX. the On the stronger growth over of quarter start vertical year-over-year a From sequential with perspective, last weeks and positive and of in are signs the health, we stabilization market the growth of course in side, auto, we few and seeing retail. saw growth the QX

interesting advertisers. we our in innovations of adoption core bid In progress was addition conversion to increased of for QX one the area make the by Zemanta continued strategy,

traditional share our it campaigns this to entire the with advertising. and many performance a that trend major marketers Zemanta performance most If DSP. As SSPs, basis, is increased we web. connected on lead of expect CPM display across performance-based on DSPs our run continues, video with buying is a Unlike this native advertising Zemanta in-house to allows streamlining open for wallet reminder, and to to focus media Zemanta

into publisher several new TMZ, Messenger, we including exclusive Moving entered Times, to side partnerships QX, others. the and long-term in where The Washington

Disqus, or devices we our device started through platform, with side, Update in commenting On placement a established up with platform and partnership ramping the partnership a [ph]. Samsung our

renewals our with deals Post renewing CCM Germany, New and France, success in in with business highlight partnerships want of to the multiyear long-term to York U.S., our I [indiscernible] in [indiscernible] partners, existing in Italy. secure With recent Benchmark the growth

the platform, all excited will launch for full-funnel our in of further we Onyx, and very about So, overall, types our open premium open strengthen partner web partner position quality advertisers. of branding for publishers strategic the the that the believe as web we're

We're encouraged profitability gross both with adjusted the ex-TAC rates X% sequential and expect quarters, in acceleration our ex-TAC and growth coming growth in profit and in QX profit EBITDA. in significant in the gross

to over it hand now I'll Yaron.

Yaron Galai

an I'll and update David. cover Today relates it three on on as more Thanks, attention. Onyx detail on AI update doing and what to we're Keystone areas,

various launches. had call, Keystone among earnings Group's strong CNN, We Keystone. Sankei through as Keystone Since new publishers we are Japan, such e-commerce, from live Axel with last went a First, quarter These our subscriptions, technology BILD, the on Arena Springer's publisher retail, and KPIs advancing and others. of TheStreet, newsletters.

team. this integrating publishers. been our publisher of an launching barrier upgrade with to R&D been code main has and for product One the the it with interested quickly growth important from Deploying Keystone drivers systems has a

we position So, for which solution unique in built we code on no-code with a and new publishers. page have launched QX, Keystone, already the leverages

loving show, launches the new have As been this. publishers

AI. My second topic is

several then At Amplify. we built This last that in-house generator quarterly time our ago. long That product of I of built were AI follows into terms. using months XX% mentioned automated last decades automated is we've from that updated call, in that ChatGPT AI called ago, a the AI years was originating advertisers the headlines were On the advertiser call, ChatGPT headline I an about our integration. which our three that

are of be then launch and now since integration advertisers XXX% coming now to suggest we to product, ChatGPT. has successful which the our grown from headlines that Our automated within

addition yielding, leads X.X% we're the advertisers for the click-through seeing manually on in their advertising dollars efficiencies average, campaigns. by a our increase resulting In higher Better and rate AI that generative than with are speed, also headlines they've ROAS these an ChatGPT to advertisers adopted cost to spent us. headlines typically scalability, created from within capabilities,

AI initial was the Our language. limited gen integration to English

update in advertiser and offerings quarter, product, to generative their AI support audiences. AI into to better French, now also and I'm last ChatGPT we've Portuguese, the advertiser allowing Keystone, parallel integrated quickly these In to product, upgrades Japanese, happy scale for the personalize own that Over business various within publishers to added, capabilities gen Spanish, their our to we've headlines our Dutch. Italian,

also our business busy into and operations. AI deploying R&D We've capabilities been

As for on and relating based and assistant examples, AI built we've within we've across deployed coding compliance privacy an automatic is bot the Microsoft's security engineering code of GitHub flagging use Copilot, which our our issues and own to AI teams, of ChatGPT code. our reviews for

been from ad-serving our generative algorithms AI-based for years. AI Moving which to have several

testing. improvement During AI internal resulted algorithms, the months potential deployed based in A/B our improved of we've new first which have far so year, on X.X% the in CTR six a and

is at brand Switching brand eras. world evolved that across and the new see, I our capabilities products, advertising the can teams deploy algorithms, build web of of on three and that AI you believe as gears to the in Onyx So, ensure racing forefront our our main product and the are our revolution. and engineering our these has to operations to AI attention.

The first was the reach era.

advertising impressions period, of To mostly TV During turned were as buying ads off. focused an brands advertisers whether where for TV their or regardless those use the and analogy, was paying this happened. were on how ad set on impressions ad

the The era. was second viewability

a smarter ads to and that never past as this wanted brands viewable during by started major Now, were for advertising human being. they They so, the shown, to got the metric even set jump decade viewability demanding them. the doesn't bought that or back no to pay anyone paying against. ensures TV it actually viewability when attention but is is advertising ads that analogy, To on ensure are TV the longer

still viewable the beer full So, ad pays during XXX% bathroom runs and cost. count as the for advertiser will break or

the come months, on that at being theoretically rather and the the dollars attention. that very web, sure the space. them. but So, hearing advertising make third want the paying by companies many of is to we're of in human a coming brand in often era Therefore, to just we're attention the attention era the is Brand now advertisers going all now word of to be that aren't up beginning their viewable, big

in explain Most ad an advertising why they attention viewable to is binary best want not. or Outbrain, companies newsfeeds at heritage way typically in or placement attention viewability. whether attention. differentiated I are for of online ad position its the it's and such world's or did powering the way looking with era this thinking XX-year of has placement whether strong that are a a of and not Now, in deciding They high about publishers,

huge individual each They're feeds power understanding we to what ads the not and is exclusively serve placement-based will we basis, of likely graphs, predict, interest user-based understand a can the each generate technology page, our people systems. attention. the users' the code links billion users' with engaging Through we understands this roughly that on ads systems to news interests we user. advantage X Outbrain's Through deep are and deeply month. specific be most user-by-user which on of

shift be biggest winners can generate make which the the each to we audience. user-by-user attention binary significant The be among predictions by on that rather highest budgets of will attention brand and likely that placement strongly space. level, all But to a those the players of that ad levels in believe will decisions brand won't user those make but as

Our with this introducing era timing so Onyx. we're the and the users' to combined attention, XX-year of understanding the head shift is of in personalization, with start excited reason interest industry

to to cover with And our financials. hand I'll Jason that, over it

Jason Kiviat

Thanks, Yaron.

where our QX to we stronger a David perspective, see gross the of adjusted range end demand and to high for QX As ex-TAC we with From beat guidance for we a performance start a softer relative profit. achieved guidance the EBITDA June the started back mentioned, QX days in the of outlook early Geographically, back June, the half the half shown the year-over-year of has optimistic U.S. revenue continued in growth the of recovery we're portion year. trend of demand this and of Europe cautiously has from month. about than The signals stronger for experienced

year. XXX in over XX% decrease million, of was a year Revenue approximately QX

around traffic being heightened Ukraine, having we retention over year impressions partners million supply contributed XX bid media driving well lapping into quarter strong our for Net $XX revenue points, in New on as in of several selective we an as of the reflecting of effective approximately XX%, and of the optimizing as revenue the our focus the percentage period premium, period driven publishers was prior prior advertisers year. level growth, in the cost. in high-quality the or supply, by including and results war the best more serving factors, ad

environment Additionally, we of a headwind the yields. continue to from impact the see demand on

just contributed and standards, our by over four net approximately revenue QX. year our churns headwind low three remains churn largest retention total Our year of points in

retention that all around XX% at another for logo $XX,XXX. partners remained As least generated our data point,

of driven performance was on decline. gross result A revenue ex-TAC primarily a Ex-TAC which largely by year-over-year better of in profit an in compared led X% decline decrease million, is XX.X the slightly with offsetting revenue gross certain impacts profit revenue mix partners, and the improvement media of to year-over-year, margin. lower changes as

and revenue have growth a on for do not gross impact currency the both year-over-year fluctuations For rates ex-TAC profit, quarter. material

XX%. to reduction Moving May the to essentially flat in factors support exercise flat million To of were costs approximately our adjust company's the increasing to the offsetting growth this initiative. There in efficiencies, we expenses and as continued quarter operating severance cost-reduction driving we macroeconomic remained $X.X of QX's spending. to strategic cost. and expenses. related to year $XX.X year, are expenses several a operating Operating million over of at discipline additional profitability continue create Included slightly around the uncertainty, workforce objectives, announced end the in related and year-over-year

Absent costs $X.X this, headcount million personnel-related and FX year-over-year capability. reduction driven declined by

For by a million particularly customer was space. over $X in year in which programmatic saw several driven expense advertising an bankruptcies, the we bad non-comp, of about debt increase year,

mitigate the losses. We closely are to of monitoring risk further

a As EBITDA million approximately in QX. was adjusted $X.X result,

driven we The of Moving software the the of $X operating to costs, activities cash of in was use flow, a cash and working was cash use cash a from net timing as less quarter, capital. define by which, net liquidity. plus reminder, million. Free approximately small CapEx capitalized as

principal approximately the $XX.X principal As noted of for repurchased aggregate April, of approximately we of the including amount notes. convertible XX% quarter, cash, amount in $XXX million accrued interest, repurchased in notes a last the million to discount representing

with be of a of remaining opportunities to that at strength cash shareholder We our the the given that the discount drive can invest to a in sheet, retained portion value. the chance view the considerable debt repurchase to balance further opportunistic balance optionality

As we on securities the the a a company's equivalents, million long-term marketable XXXX. cash, with million the authorized sheet convertible and balance December, share In quarter ended Board $XX repurchase debt. executed to cash the and $XX of result, in million Directors $XXX program $XXX million investments, program and fully of of incremental

June million the began purchasing new to date executing XXth. We for $X.X program year X.X shares million through about

conditions. value attractive to shareholder We is way believe enhance it continue an to under market current

in of Now QX, year, turning guidance, the we to In see the assume to our finish we seen growth have typically our trends and Onyx spend a have into we visibility in a weeks have continuation outlook. first the cost ad we of earlier additional following the this with on level With seasonal advertising increases to bringing context, guidance. lower from budgets, of plan to taken that our year. we've based visibility that market. the Despite EBITDA we provided incremental actions

million. of are for ex-TAC profit million. gross to profit guidance ex-TAC of $XX of $X.X full-year gross previous of full-year million maintain increasing at million EBITDA We expect and adjusted EBITDA we million QX, expect $X.X $XX.X previous we at $XXX and XXXX our least least adjusted guidance $XX.X to to For million, our

it Now to back I'll the for operator turn Q&A.

Operator

question-and-answer now [Operator Please ahead. first with will begin comes We instructions] from Shweta question Evercore the session. ISI. The Khajuria go

Shweta Khajuria

taking Thanks question. my for

contribution revenue Onyx, that's dollars Let how mentioned me You please try please. explain great. could in the in works? product $XXX half, back With million you two, the

higher the in what are be terms they would good that higher product, And high? the you're what where a CPMs? of so a you ads do great. placed? driving of TAM expanding the into be terms In getting Why they of mechanics are Why example -o attract are would

was had then, the other Jason. for I And question

of with are terms And you headcount you the Thank you you. are for -- are what headcount you good thinking today? year? In the the have of reduction, remainder

David Kostman

It's Shweta. your Hey, question. David. Thanks for

of terms do to second in in of million XX expect the Onyx, So, between million to year. it we the financials, half XX

it be brands, enterprise voice. could placements a product consideration or XXX% share mid-article awareness It from product in either a the mentioned. targeted brand display, placed video, we end-of-article two a basically example experience, The or combination and and be it's could could is of be at high-impact an in of and

a where we digits that fourth these for On was In the display, hybrid video. awareness brand are double are it example, CPMs hybrid combine ad normally campaigns. -- those

in So, very that's We're expected to excited drive higher network. about the CPMs it.

And or It really partner we grows many them a around awareness performance. others us brand our for full-funnel offering campaigns. We're to existing with that Disney, for have to use brand leveraging dialogue example, a relationships brands. have like also customers now, we that with

strategic holding us us brand it's consideration. have enterprise work but that, interested really and because more before dialogues big brands for mostly opens to the and were big agencies, the also didn't in awareness with leveraging we're they much So building the that companies, door with

very financial So, product strategy potential it, about a both excited from and impact.

Jason Kiviat

second Hey, Shweta, I'll the one. take

So, to was on it in cost this the felt we going headcount we and have our structure reduction, exercise past, the around improve costs, obviously, you as discipline forward. prudent know, in environment

what know, on teams, You course. XX% was of like our focusing on Onyx, efficiencies workforce a we and announced really having the priority about and growth focused around automation, reduction areas

million cost we with effectively what about to $XX reduced $XX is we our million. annualized did So, that by

half in year benefit full from 'XX. expect And this that, we year so, about to of

headcount our XXX brings people. now that And about to

now, Onyx priority as are We and are are some obviously positions positions hiring right now. obviously, the our some of strategic hiring for critical of in

we following the back as like reduction. we're usual So, feel to business

Shweta Khajuria

Jason. Thanks, David. Thanks,

Operator

Laura Martin Needham. Thank with go Please ahead. you. The comes question next from

Laura Martin

morning. Good

let's start Jason. debt So, number, with the bad

I about MediaMath. be you think debt talk might exposure additional Could was So the assume, to it what exposure, $X you number? million, bad

Jason Kiviat

bad as higher a debt so well. in Yes, did expense see Sure. we QX

about year. respect talk first the the with of I'll full to maybe it So half

for number, us, was debt million this a which expense and $X first exceptionally high half so basically year. bad is $X full-year of the total in million, between Our

really know, a You drivers. few

the And the companies, a half MediaMath exposure. know, Obviously, accounted too of debts of a first did half main first kind there. on few programmatic see you few pressure many amounts, of an alone debt and is programmatic half. so the the our large expense the there's of we quarter Of in bad of for the close Synacor, And and and driving $X the of in macro two or there's the ones. advertising think the remaining to million don't in highly in Obviously, driver that the businesses we year. publicized bad big bankruptcies big those

chunk we know, just aging, is Actually, is -- that think the that collecting of aging big a a of good just really you is slower part it of their chunk might of even slow And, payers. from the they good it who agency are holdcos brands. and be

And with our very in expense so, aging. formulaic bad -- our obviously we're with the debt

year. And reverse so, this the think, some we yeah, see But higher-than-normal opportunity in expense. that of second I should half the expect to have expense debt of in environment, we a to bad

Laura Martin

or deeper suppliers. these you independently of interested guys Do products? guys side great. complementary, deepen both go do capabilities? a supply, the Okay, or one supply then, totally I are or sort these both interested of same side two they And products? in do they products, relationship. they -- attack Are are they is they finding is the relationship with your Keystone supply know different supply other after work and together more full-funnel Onyx, or Thanks. side the different versus in One

David Kostman

Laura. Hi,

Okay…

Yaron Galai

take it. Okay, David,

David Kostman

markets a solution platform our they XX. publishers. separate totally mobile products, very mean, full-funnel is publisher-focused is totally the business a new its for optimization One advertiser which Yes, is on that product side, are supply with increases complementary. for focused TAM this Onyx advertisers, us Keystone they're for by is that I

And, different products. two anything So, else? Yaron,

Yaron Galai

R&D well both work -- Just synergies come from shop. how And together benefit of they and same for obviously, we that the at they the obviously look they publishers. can

Laura Martin

Thank you.

David Kostman

We're the I looking publishers and is marketplace. side becoming elevating on a have mean, broader Generally the much Keystone new. strategic a them partner. of the advertiser two are strategic side, we more for relationship very revenues maybe comment. tool one existing to the strong on of diversify both

looking are to with work think I companies less partner. generally

pretty of two two on This provide in a positions unique the sides. us market the to on position which offering in is the being strategic able broader a sides much

Operator

The Thank next you. Sandler ahead. Please go Barclays. with from question is Ross

Ross Sandler

Hey, guys.

million, questions. geos, to you the bump like rates the Can XX about incremental as Just strength? categories a And guess if low for start XQ. Sounds incremental, guess Onyx. I is at million before it's we environment? it ramp to good into you a a are What growth see beginning more budget, truly 'XX would would than look driving -- of said -- be couple I started incremental talk which the would to revenue. you that if But what is single-digit that just of positive XX

So, scaling the you 'XX? about ex-TAC for up into years. back last first the do two margin the we how think And GP finally question, then, get as product that turned time in

lot. So, through that? of margin? a the of are Are around and thinking how kind Thanks headwinds macro the we worst we guarantees ex-TAC about

Jason Kiviat

I'll trends of Ross. in QX is saw with Yes, we was improvement in the brief. QX Thanks, so sequential be mixed. each and the quarter much terms of month start I'll while more demand, obviously demand what

July May, to relative You to is was softer June. in mixed, QX a better-than-expected June. start stronger know, off April and

into you So, we we see in yes, pound euro strengthening stronger the year versus QX, particularly has they're helped dollar and year can there. there. CPC, QX. know, lap Europe in inversion trends, the easier an versus over still Obviously, comps obviously, down relatively US. as the But

see improvement QX. QX And sequentially anecdotally, we maybe, an just versus did yields in

we're Verticals So reasons know, optimism concentrated. going not you wise, diversified, positive and forward. not trends We're overly diverse. again, really and overly pretty we're for

Finance in us. stronger. verticals weakened has for were -- health, remains been other than weaker auto, So, and retail

David Kostman

versus maybe so I improvement XX of think the And an points I start year. points about, and margin. also QX basis versus XXX Yeah, with basis saw so, we about last

So, we are encouraged by that.

back get go -- to and not yields We that not the expect, to down know, it prior will you hope go the further will levels. margin

get it overall, be it will levels, of but market think recovery, historical of year. excited and to about second to dependent through the the some high on sort we definitely trend very this I think are half I

to of great off that of many more We're we're and relationships not So, mean, QX, develop magnitude growth years know, dollars order of And of now forecast test we hit strategic a I is into expectation these mean, 'XX. it start. of we we're a with if a years. you these next the many then, year, we're in but business again, a getting 'XX, for campaigns? significant million looking brands. giving is definitely the holding brand next HX, so Onyx, few I dollar our which really but what hundred right are And you're we few going Regarding budgets. a expectation and of that becomes, companies budgets expect for coming is into into different numbers over significant, that our

Operator

go Thank you. JMP with Andrew Please The Boone from Securities. next question ahead. comes

Andrew Boone

so guys there? think been XXX, it's to just stabilizes? is, levels as of think quantifying get those of that about thinking back key you questions. my 'XX up I to you to ask thanks And recover Thanks as that then, yield. much. How Do of you in drivers back in retention, guys to we about taking there the on level. can key tools about half secondly, that macro Is this net yield? guys publisher and kind path a year as improve and for historically, drivers wanted to are morning that XXX Good can step I get kind

Yaron Galai

take the yield I'll around Maybe question here.

we algorithms, the obviously starts end So, result is of investing yield in and It's of specifically. -- the everything. technology keep technology, with the kind and the it

first comments updates in -- As X% we've in the mentioned over the potential done a of of just algorithm in seen we've the in the year, rate. we've increase I earlier, half click-through

top those And deployed ad on network and of time. level The of the level so, compound obviously data that's that, of next quality base. the changes that. is wide it's over and And

that to advertisers go the into One part that getting and selling of So, do is has few that. the a with just things. yield

excited we're obviously, So, there.

And campaigns. great Onyx, a advertisers new new with think, has types leg selling I of and

run The other the an products, more example side with into built capabilities they've that that our is has, results the gave was the of better food AI I the [indiscernible] the And algorithm the what algorithm take advertiser we've which of kind are. campaign. us,

So, take the when advertiser what than and through variety yield. a new X% accepted in once we've those, translates advertiser a more AI, which, we've variations sold has seen campaign, the of headlines it, click-through recommend which is they improvement they to and rate

the is kind activities result, algorithm-wise. of business, technology, I'd do yield of So, all we result the say, and operationally, the

Jason Kiviat

Andrew. the retention, on I'll that one, take And

couple ad impressions to we said year headwind X% on yeah, these about time the a headwind of that just despite remains noted were, to So, I thing we the that in QX over year, just mean, call this obviously, we've sequentially last and of from ex-TAC did QX kind revenue quarters was headwind. in just continuing yields, been to see QX. the demand headwinds. biggest had grow The And one note,

You in difference know, material several churn. no factors,

war we've But and changes to high optimize QX just continue a in and make our us. driving have we year levels we're made ROAS, because was in pretty a for from there impressions. profitability low supply quality and And was think, changes might we ad and on for Europe, pretty views costs. in higher, of that to Ukraine, negative that ex-TAC impact bidding also marketer we've revenue and it. and serving And headwind. the feel The particularly we in Still, last page lapping QX -- of

between in half normal and comps NRR around XXX split goal. think, so, little retention new, And bit, get as and even in I a ease expect And, much the the a growth. ex-TAC that's more X, higher we'll to be to expect to QX

the HX. for plan So, that's

Andrew Boone

you. Thank

Operator

you. Thank next ahead. [indiscernible] Please question Yigal is with Citi. go The from

Unidentified Analyst

good guys, Hey, morning.

on Yigal. Max have for You

bought As would back. be my the first question converts you on

still for the the how about what's on sheet forward? more generally, balance wondering plan converts of the Just the just think and going allocation rest we capital

then, And second AI. on would generative one be my

gen could more the how thinking a advertising but where next integration the gave you nice it should on guys? about think do you the it how ChatGPT of you the AI more impact think You integrations And over just for road, think couple years, impact? from here, space down could update we

David Kostman

Thanks, right. Max. David. It's All

dry capital convert, the at so this April year. continuing we buy had We're now, very of did intend announce attractive that did continue powder in place to We to We at $XX allocation high at think some the still on of significant repurchase a regarding look shares, so So, there, we back very not earlier in notes to opportunity we buyback good of right that convert. saw a I opportunity. million have the we year. this half levels. price, a the new in But to and

expect it We for to to for that to we private want make side. on be think attractive return side a we the little is capital still and we do acquisitions is us, hand the have sure becoming also in but cash enough environment price both So, on better moderate. public an acquisitions. share The

So, we enough also for make that. cash we definitely want to have sure

moderate we're, good buybacks at amounts. with right balance I So, at think a now,

Yaron Galai

Hey, the Yaron I'll gen take question. AI here.

incorporate or every is publisher in going to assistants. of So, obviously, tools general have specifically. and bunch to talking impact advertising looking I to we're think generative a AI Iin generative is AI media, on media

gen Some are AI. with going talking extreme content generating about more obviously are publicly and

which I like. And think editors, these really that's others media looking side. at are on human the to I assistants approach is

with using to things of creating draft generative see in think kind efficiencies we're going like AI much as and more that. starters assistance I So, content

spend is take creation AI want advertising we're obviously. seed the headline better they in think and to anything, automatically, mentioned, get are recommended them the them, on approving the very the positive rate to they looking again, can by advertisers for interesting, that and advertiser, generative when they're I makes or be to impact variations. looking haven't think big but that suggestion. on using AI, seeing as provided at we us generate And deploy And which is the is and adopting advertising playing side, XXX message within AI, which keenly create to out. reviewing teams them. I with they those return and that released get at our efficient to which variations, those about, piece, lab gen them, not But click-through can Last ad going with going generative different But then, we those into On with we're systems that. direct we're

think has creatives, side, to yet are creatives of this the way, AI. comfortable generative hallucinations to impact, industry, with think, larger come lot in I you're I everything with On that going that a happening have space. We're the a to do that advertising not is in that through, going image and the

think, I to launched going tinkering with generative -- still over AI creatives we're But obviously, is and but the So, going and to as side yet. time, that on be interesting haven't well. image anything be is

David Kostman

and to I comment add Brand related Onyx Studio. just to to want Yaron's

our point around his is So, create repurpose Studio, unique in-house Brand generate to creative. to studio, and ability them, work which important. attention last creative create a with use is mean creatives, we I high-impact existing displays, with

generate better to these faster intensively improve and So, processes in to those that to how creatives we're return on looking use iteration. AI area, quite

So, where to Brand we're experimenting Studio around -- an area is for AI with Onyx. Brand AI Studio having

Unidentified Analyst

Super Okay. helpful. Thanks, guys.

Operator

Securities. Day Riley comes question Dan from next B. go ahead. Please with The

Dan Day

Yes, good taking appreciate the you questions. morning, guys. I

or clarify something partner traditional could need maybe that like to into? is only just be is it core partners, to to SSP a open of regardless something you the Are publisher not? on opt content a of So, serve these publisher impressions or publisher is the itself whether across extended able partners kind web that your on recommendation Onyx, more it

David Kostman

Hey, Dan, David.

acquire need in. not a on mid-article code placements waterfall We're do to continue to opt it's we they have or to to or So, it which a page bidding. and in whether have using

And end-of-article we don't one that placements and So, are to have we opt in. them have is then, area. need ones this

supply a and experience. So, the is in of about yield. user totally improve It's publishers the lot higher offering. does It quality our control, and better excited are

Dan Day

on thanks. the then, Keystone appreciate in quarter. the And Great, wins new the commentary

that pricing pretty You or need your right becoming you tough in as for it's then line some mentioned you product, out revenues point? from you discount product as could now. environment at the drive talk a it a publishers in the that prove been you far first in days increase the this has like price down of about and publishers pricing adoption And you prices as to as couple feel can concern Do large not a as the material just then, expected? to recurring there, whether

Yaron Galai

So, this for is the question. Yaron here. Thanks

publishers, pricing side, them On with the with large very we we're these capacity in work working and obviously at business. a our existing

other tremendous And to both Keystone don't business, the they're value Keystone, with of driving create us confident of out great from way to their from we're retention business We to there's everyone value way is the they're KPIs that plenty business but so, we a Keystone have. to and help for know the best ensure growth, that of really to seeing the long-term publishers. that revenue is rest with break

very help getting NRR. and not all involved strategic us It with with us improve them. just the we expect their native for it'll business It's objectives, advertising starts also

to into definitely us So, the don't those help and are when streams, but also who any really to should see diversify you technology great new baked it will those looking publishers support results efforts. have their revenue

David Kostman

And, Dan, previous the about incrementality. add I want to the to answer just

the is two on Onyx the sides of So, the marketplace. incremental

the on these the which these increased significantly advertiser access very and of the never time outside really side, that had publisher budgets to, feed. side, incremental on we our are So, are

in high-impact end-of-article, or the they're These not mid-article So, voice, that placements are videos. of share of feed. XXX% are either display

RPM it's going impact incremental. So, a itself, on but article it's the generating. could, end theoretically, The only feed they some be are high of when served to have

Dan Day

Great. the answers, I appreciate guys. Thanks.

Operator

session. question-and-answer our any the would over for concludes closing the conference team like This I to management remarks. you. Thank turn to back

Yaron Galai

we to to results disciplined have happy QX, strong for and focus We're execution. delivered continue operator. Thanks, on

operations. you with across and very in advertisers recent excited on to on And the forward capabilities for quarter. attention. next forefront our heard, We launch look you for opportunities innovation We're Thanks time. As your again brand updating AI focused also developments implementing excited Onyx, of were we're that our revolution of AI the staying by introduced. have the this algorithms, with products,

Operator

today's The conference Thank you. has attending how presentation. concluded. Thank you for

now may You disconnect.

Outbrain (OB) 8 Aug 232023 Q2 Earnings call transcript