- Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Austin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Digital Media Solutions Third Quarter Financial Results 2022 Conference Call. [Operator Instructions] Now I would like to pass the call over to Tony Saldana, DMS General Counsel.

Tony Saldana

Thank you for joining us to discuss financial results for DMS for the third quarter of 2022. call our Marinucci, CFO. the and and on Rodick, Rick me are Co-Founder Joe CEO; With Relations We in and Investor the our press posted earnings release also announcement on this afternoon website. our access. now, should By everyone have

forward-looking to begin, contents risk safe provision results factors cause our statements. press that we attention our safe of The results statements harbor I call may for to Before your differ like harbor the to release. in our forward-looking materially from financial would provision actual identifies

detailed be other results of at more reported risk discussed filings. that to and for release, our a found results Reconciliations press management's posted the tables For website. Relations description refer and we GAAP website measures. on Investor on factors call Relations also in financial call, SEC financial between may financial measures of our please information the commentary which and additional results, to our be our non-GAAP financial have will found Also this to affect press our during can our our be Investor include this financial release The results investors.digitalmediasolutions.com. can non-GAAP

to over our call turn like to Marinucci, Joe I'd Now the CEO.

Joe Marinucci

to and our Tony, everyone. quarter good you, call. afternoon, XXXX earnings Thank third Welcome

here year quarter later complex the numbers QX guidance over more specific XX% to approximately in EBITDA as million. was third Rick down saw performance challenges growth million in saw QX, In third growth set XXXX. insurance gross revenue add into the into QX and business, guidance auto came continue In and We a still quarter, third our XXXX QX. up throughout while our quarter of for and Our generated details $XX.X results Marketplace call. segment. we dig in and in our are of agent was variable million, or deeper $XX of million $XX.X areas for the marketplace of quarter, million, underpinned our our This key linear million growth go margin margin we in is $XX follows: insurance and this in margin of which full we up quarter growth $XX.X XX%. X%. net million and believe at the XX% this growth fourth to and then Regardless, in expansion. inside beat the a faced $X.X marketing quarter. auto year-over-year, and QX of initiative our $XX.X Adjusted will focused consecutive in by delivered the minute. from on strategic More a on revenue we

verticals complex create this, noted, uncertainty that it mainly performing the that and even their arrive serve. As Digital I'd are challenged advertising is issues more like of faced the this finding performance during the quarter, marketing, like to best our to insurance through primary we proprietary reevaluate this, able and volatility focused budgets solution Those creates high periods of media marketers accountable to with because for clients of a spend our expansive to technology the and for reach. and our between our connection accountability asset, ROI expect resilient. this be DMS, linear ROI, use first-party clients we we and when mention issues. during Because the partnered data advertising methods. on and We're

focus we right delivering KPIs ads on Rs: mentioned call, achieving consumers relevant serving and committed plan strong value time, place, DMS I our before, is with said to our maintaining on our right person, right right we've marketing providing spend. ROI On offer, their advertisers' delivering focus last As like the X to while base update that on read that captive growing delivered in to on QX. touch a agent now but I I'd our initiatives provide to strategic and some on initiatives progress extensive want in how first our and people, to those process technology which opportunities and executing on impact. I've more real led our already this investments against by progress.

growth quarter insurance saw agents inside captive had platform. insurance of of insurance we third growth our of DMS we captive driven In marketplaces. noted, by As is agents X,XXX on leveraging That platform. XXXX, our consecutive the QX our

growth an During lot end scale us QX, agents, our translated of total at in we strategy deliver be million of $XX QX into growth for to in This revenue. we XXX revenue were million the continues with X,XXX exciting in to QX. $XX.X growth and opportunity from agent able a on of QX new to $X.X the added very active million our for in and area count to is to period. our bringing This X.X% agents us

continue to diversification our we and allows media made which leverage data-first investments verticals our approach, inclusive We to for technology-driven and business, the mix. channels. of and QX, In our partners diversify media channel of activate

stronger a insurance across diversified foundation performance was in our built business to ad marketplaces. This drive scalable the quarter-on-quarter demand. in our the revenue seen result, more of a inside and growth As Marketplace

deliver top clients, customers. for which led advertising has to top to to continue our We rates our strong retention

reengagement successful growth see XX acquisition to elevated revenue of integrated integration consumers power to our of continued create the data asset increases of top successfully of we engagement activation, reduce signals continue first-party XX% into DMS Traverse signals costs take DMS And In the expenses. QX, data our we a connect advertisers. commercialized clients the and the program and and have ecosystem. to business omnichannel, to out to Our audience quarter-on-quarter. platform finally, operating DMS The enabling Traverse high-intent by

During due collections. million improved SG&A to decrease the in $X.X and saw synergies of quarter, cost a we

therefore will EBITDA. expect increase our continue well XXXX We this into and

period is our our Going agent contribution. process supporting onboarding specifically continuing and people, initiative, strategy scaling invest to technology the revenue growth improving QX our our agent for our forward, in commitment per-agent by and new

As noted, captive now on platform. DMS we agents active have X,XXX the

$XX believe end through driving goal doing XXXX. execution the revenue achieved. million in our once $XX we the annualized XX,XXX number and Delivering efficiency to incremental in expenses. enrollment by this million on and By annual holiday in between reduction health is is to of during business this, the goal operating Our add will insurance grow for this consolidation period and e-commerce seasonal and this

refer quarter. in Additionally, growth we update, our of is for in doubt earnings release. please there's our QX inside the the economy unpredictable a our and there And were little strategic disclosure weather is operating few just The press volatile on the third faced to a review macro our events during business finally, challenges although optimism market. business,

our do control. with what teams inside we of out pleased on While of the our talented were these control, I'm factors proactive executed action

focus to of we are where we see areas QX execute holiday key of teams e-commerce our that now building key open the growth our initiatives business. periods. are is of the aware strategic Our benefit into enrollment the the period acutely we Their QX on to inside have capitalize momentum and on

turning on Now to our results. the pleasure Rick, financial over have I the provide more of call details who will

Rick Rodick

for good XX% XXXX. followed life I'll Thanks, otherwise The contributed conclude X% the within at with begin discussing results home was to XX% decline unless of insurance of open XX%. year ahead Joe, enrollment of health XX%. fourth the auto third segment total down lockup revenue revenue noted. our insurance the market in basis, follows: by are with approximately which period health property year-over-year by spend was for million, at for Breakdown in auto continued lower-than-expected and and Brand-Direct down and comparisons accounted a for On insurance financial our XX%, Insurance, a third in was in to was full business of along our attributed QX, insurance, on the the as our $XX.X total Marketplace was casualty revenue Net quarter All quarter. overall up positive everyone. and afternoon guidance quarter X%. consecutive and note, is insurance QX. volatile

total trend diversified business. this to We down year-over-year. XX%. we and a captive XX% approximately revenue QX, are be revenue Consumer performance our education, XX% flat sustainable growth and total digital advertising was X%. down insurance of was finance for DMS on is which Career base. total as was deliver it and was represented continues of continue of XX% E-commerce our encouraged revenue in to accounted our believe and of the agent by

quarter, $XX XX% QX For driven margin XX% auto by margin continued to within margin was in XX% versus both The marketing and equating profit third margin a a million, compression decline across to XX% was in the insurance XXXX. gross percentage was XXXX. QX Variable compared health. margin

segment now to Moving results. our

Solutions margin compared margin Solutions XX% Brand-Direct QX to XXXX. XX% was QX gross was XX% Excluding was revenue, XX% gross Solutions QX compared Technology XXXX. margin in QX Marketplace in to XX%. intercompany QX

Now looking at expenses. operating

expenses. driving mentioned, through efficiency of to business we operating reduction continue As on consolidation in focused Joe and our stay

We down continued headcount to amounted cost expenses SG&A year-over-year, the with the ended down million corporate XXXX. quarter at from and XXX our million, QX QX, collection. synergy FTEs, XXX by $X.X of During end $XX.X driven strong of

Let's discuss profitability.

EBITDA by primarily and $X adjusted a lower quarter was revenue the year, X%, driven compared $X.X the Our down margin million generating of quarter million, same for last mix. to

to versus loss loss quarter QX $X.XX $X per quarter was $X.XX the share of the share income net a for Our compared million was in earnings XXXX. net for same of last $XX Earnings million positive per year.

was At was $XXX sheet our XX, balance in shifting flat quarter million We revolving end, $XX which cash and our ended and equivalents, the million. And our with December as Now total quarter $XX undrawn. quarter end, remains focus facility liquidity. XXXX. debt million the to cash of with

ratio XX, our was Xx of EBITDA. to leverage September net As debt

includes mindful economic of believe of a facility, facility our reminder, our sufficient have As We given Xx. a under our liquidity covenant remain volatilities. credit obligations, leverage we current

Turning outlook. now our to

of between be and we expect expect million to and fourth EBITDA in $XXX revenue adjusted quarter million. to net million $XX be million, range to $XX the $X We

net to guidance and be million. EBITDA between expect be $XX adjusted year revenue million to $XXX in of full the full range $XXX We and million year $XX to million

margin of current the see the ahead and our the we marketing margin. challenges of recovery environment variable Given auto gross guidance the complexities we insurance, on are revising and with

face range In on for quarters on challenges both to I'm consumer summary, margin unsettled XX% we further agile people, initiatives. and we in is DMS, in year the processes to we're in the down new to we and for interest progress with as on can Joe noted, labor with along technology focused place variable and margin we have chain With headwinds QX I'll successfully and heads we we market, XX% Still, gross are making that, trends. for insurance will guidance positive shortages, and times your and right remain with our strategic is control, in we shifts and headwinds, the supply an pleased associated the behavior. XX% XXXX. these we Our Despite full the coming and inflation, range growth to continue marketing XX% be confident Q&A. the operator are items through volatile feel you believe over growth our initiatives. execute turn our to these company and navigate call thank These

Operator

[Operator is Instructions] Maria Our first from question Canaccord. Ripps with

Maria Ripps

Great.

QX? the what Sort on sort of sort seeing macro around uncertainty First, are the you with all recovery? based And then implies about so revenue your conversations talk from the number maybe some embedded Can have in your of standpoint? declines of outlook seen may start you in guidance in when just we understand here what's do verticals. think your you to QX continued and you so advertisers, far of

Joe Marinucci

Good Joe call. the have speaking. to you on Maria,

casualty. insurance, guidance the specifically takes into of inside QX that current we and account the So with property trends see

I agents the the Although in in of the in the to will as don't recovery early substantive the still QX, property after marketplaces. carriers starting year. on recovery and growth insurance are We and holiday auto slightly, revenue at casualty QX open are and expect looking on QX periods good adding enrollment of e-commerce inside of with with the being drivers really of the encouraging. rerating, increase captive our generally we more able highlight we trends agent Asian see right sometime think to XXXX, and early-stage Generally, in marketplace any And inside the first and making see progress the until being we're insurance we although period, over overall performance anticipate growth insurance did drive call during revenue slow growth initiatives. period, in

It be We're which a seeing. in to auto, of opinions insurance on there's when going the trends trends QX degree regard into what into to known takes operating the broad-based insurance, So there's recovery With here. on more the is encouraged going is some of majority forward, a of our account see current we guidance account takes current within expenses. varying by what also the specifically we're business.

For on is request And shopping. by to go expected be up they of quote consumers instance, those quote more. to increase And that money they more auto as QX open like in the period, indicative things we which increased is price up, -- saw wallets costs a XX%, spend when their shop insurance. volume

We see I carriers seen the they've be next the year. loss substantive until off ad to spend rerated which ratios, think of not sometime in generally, pressure will and a recovery have though their expected come some that's successfully of

trend So and generally when we're shopping insurance. loss because normalized and year, and and to inflection that we'll return control that that in a are and that rerated automotive you'll we're recovery casualty under after more, by point ratios encouraged levels, first successfully see more broad-based the of which happens, an advertising get are hopeful spend feel can property this consumers the and price carriers are the

Maria Ripps

budgets? of how very sort about your your back and in And ask media thinking wanted margins? on the sort costs. about a perhaps you given deploying to framework then And deploy how at Got for versus talk it. of spend I secondly, spend this you Can about That's to margin pulling costs then are lower continuing you prioritizing environment, media maybe helpful. just increase impact

Joe Marinucci

Right.

on or the create So I line. finite consumer the mean, looking middle VMM, and margin, the sides. the business marketing generally, margin we're of on on We're not line and the managing in variable sitting margin advertiser we're gross the to the value to both numbers

the in complex the our environments the both right ability of the one reflective have and margin of down at we're current we're moving of retain now, guidance And and the play could that seeing. is business. levels our if finite we're managing on like because line margin, we're navigating line And the impact ad deliver to on that gross as trends is variable for share So it comes a with there. market margin, into negative to demand advertiser part

potentially did take trend. we until which little we change. going current range guide a a see the the next although this bit, year, change guidance could reflective that down So of probably is we're to And

not really the anything managing ranges thus than the the advertiser us of and expectations and of So moving indicative down other it's consumer slightly. the

Operator

Your is question Singular with Research. Marsh next David from

David Marsh

with regard Tony, expense to you did nice a job G&A in to particular. with regard control

continue pretty forward, and to to of type going going margin terms expect versus see expense? of is we sales you a rebound? that margin indicative terms In that guys Or we're G&A in able should of a be of to significant maintain just quarter soft to

Joe Marinucci

is David, this speaking. Joe

questions sounds it line and one gross there's So net the really at the line. then like at X there. One

that's that, we of ads, efficiency. drives behave XXXX. be we which margin to are said of with look take the back I data-first consumers, conversion intent. off reduction, to to They and range, margin, we're I'll looking to With the especially margin. consumers engaging been continues media the with efficiencies, SG&A how that at directly trend preferably more the I which we able the ties generally approach and Maria, rates we've generally our and a look and relevant mean, the historically, at these generally marketing regard variable So do which as into and this higher tie top it gross media to generally, the as ranges and variable in marketing give towards range, first, the back accordingly

environment, of control Rick the inside control of plenty expenses. but So the DMS, items. in look items and we at don't are certainly we control things our expenses of we specifically and I, we those There's one macro

meaningfully that's trend have a continues. And period. we on we noted as SG&A that, successfully the during that believe the So reduced call,

we're an you million. look XXXX approximately and look $XX at to track $X think of XXXX, you reduction expenses then if at So on operating we have overall in to million

So more business. trend net a gives we're operating us and that hopeful at that it is the this leverage continues of line the

David Marsh

I like SG&A just of running, a level you guess, guess the is so, revenues? I the next at higher support you're quarter? meaningfully question follow how of that my much up. And higher third out level of can reduced coming -- really, to great. That's question the if

Joe Marinucci

efficiency So in a efficiencies ago, to which we an initiative first the technology about create year business. started designed was

We integrating. to we'd years. don't over the a of drive have that acquisitions it's the We efficiency. And integrate integrate and like done appropriate we of number sake say for when to integrate we

taken some opportunities to with where these opportunity sense So to efficiencies headwinds look that see it the to some as of in were business, management in in has at to business. there the more a the continued of integrations create an have deeper persist holistic

costs taken do business we've to technology, meaning reductions business that these these has that permanent. of the not And use people, at can we are that of feel and so through process have levels, sustained costs out efficiencies now created we So the be the cost the add back.

with recovers, as business time, should over the in So remain the that we see. costs currently trend line

if at we line should the to EBITDA our business benefit. get leverage So recovers,

by broad-based encouraged that we your answer see margin the to that. here. through not we more for EBITDA. from having and business -- add need pull expansion obviously, to to But load grow we pretty do to cost But back specifically generally, growth, we're a So a question, meaningful do to to not anticipate revenue recovery

Operator

today's conference There at are call. time, that this no further questions so concludes

You disconnect. may now

Digital Media Solutions (DMSLQ) 12 Nov 222022 Q3 Earnings call transcript