SST - Earnings call transcript Q2 2022

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Operator

Thank you for standing by. And welcome to the Second Quarter 2022 Earnings Call and Webcast for System1.

Joining me today to discuss System1’s operational financial results, are our Co-founder and CEO Michael Blend and our Chief Financial Officer to Tridivesh Kidambi. A recording of this conference call will be available on our Investor Relations website at ir.systemone.com shortly after this call is ended. I’d like to take this opportunity to remind you that during the call, we will be making forward looking statements. to results and term and overall prospects. relating business, of growth statements future financial future guidance, includes the performance operation our and This strategy, long statements or We regarding also make compliance may matters. regulatory could or to subject differ unknown uncertainties results are statements this cause those call. known actual projected These our from during risks and and that implied materially to form and for year on generally. XXXX, In statement on registration economy filed well included in April the quarter XXXX, XX, particular, XX, our those fiscal described of in the our XX-K and in current unpredictability business, global the in the as March on shortly, second markets our S-X our XXXX, form and our risk filed in XX-Q for XXXX, as uncertainty factors out form

not and SystemX hereof statements make that future statements forward as looking You on forward by any are as we assumptions except date obligation beliefs our of looking as looking statements law. and based events. required forward should disclaims predictions rely any on to All update call on this of the

include to will a Co-Founder our for Executive forma non-GAAP a was now Investor the non-GAAP non-GAAP results. GAAP Blend. adjusted earnings non-GAAP our or results Chief also historical with to should which of isolation I our These financial found measures may in be forma the revenue, form including today in to including as call reconciliation website. pro over and would release forma today Michael be GAAP to Relations with EBITDA. discussion X-K Our It SystemX’s conference measures considered turn SEC. from and our results be pro found and may Officer pro not our furnished gross addition like profit filed financial on an substitute Information regarding our

Michael Blend

CFO. thanks Together call with Tridivesh Kidambi, us QX me for longtime Kyle. everyone. on our is Thanks, joining our this on afternoon, And Good earnings call.

report detail, will of to our good the to considerable scale that triple landscape. will key us into few next Tridi priorities, in an pleased overview enable current of of view We’re marketing our and describe some digital go operating like priorities on would with progress a We’ve made I to our which marketing years. the QX begin then over

a you First, platform let’s on marketing end is and end driver. give which a growth key update quick ramp, as to remember our

product transition next engineering year. ramp these to we over from migrating has to QX to our entails scenes able I the traffic early team Our be in to is plans spend. while of in are since the hard machine marketing and advances in We’ve of have started to the ramp been looks on efforts. specific advances been of our this By next point last $X in the should largest these Handling automation much on one at work substantial our three behind platforms in and technology, scale learning. scale very and of already early promising. improvements We kind we quarter, billion focused areas marketing the particularly generation of data XR ambitious this the stages

great over are XXX We biggest remain customer other market platform coupon made to managers. program warrior our soft Our as have or on the Shifting cash tech But engineers very road companies process coupon M&A started have and On great hiring and communication. to competitive new launch billing the merchants. recently product product all integrating to hiring, integrating environment. follow road freeze warrior acquire shopping a With subscribers bit. we recent remains answers.com managers participating using acquisition. we’ve new and back profitably loosen and in of ramp the CMS and challenge follow brand progress a hiring we’re most we our in and slow to our good engineers focused our we already starting adding see handle

to We our engine answers.com have of And lift. also this begin expect search integrating fully tech data integrate XX% the to immediate stack we coupon follow properties. further network the coupon start O& our O data throughout an finally our site we and with on seen migrated and page monetization

signs are We And front also remain evaluating traffic opportunities. answers.com; in are a active paid to sending few the and started positive. we M&A early interesting really

into where deals growth companies As always, can we we’re ramp. via the looking for strategic inject

acquisitions. we we not it expect While could lower overall are hunters, conditions for do bargain to pricing market lead

was performance our where Now business overall to QX. on want business the in advertising move solid I to

been negative and made spin improvements expectations years our for with occurrence onetime scaling is Beginning network Our in operated with an owned to of the Microsoft of as our was began our network business volume spend, line that showing owned flat operated as execution has with partner support the business by ramp we accelerated this which on team. sent partner couple focused and fraudulent excellent This business traffic. advertising including of marketing we a was one our last is marketing network. partnership growth. result and in earlier our Bing The we a advertising year, combined have advertising

the setback, was Despite platforms traffic. not with fraudulent identified an The the system. the programs event we and his most did responsible to we occurrence, for strong. fraudulent our details Bing publishers rare by This go we for discovered exceedingly June, and relationship this is compliance been have going traffic ad However, into of that the in remains Tridi remarks. own this largest our during went traffic undetected for world, have networks convert and sophisticated advertisers. that in the our paying including

in we them year the with back fact and continuing extension episode very marketing that’s through behind to today, Bing us forward happy of putting announce three to future. look our are scaling a strategic with work We XXXX. to partnership our on In up go going to this closely Bing

end same market by QX. and our July, we’re lower reported market downward is Looking QX July, see the towards of towards the of affecting pronounced peers buying increased it’s towards from recovering the in in the digital and the more in is trends summer summer we’re end particularly starting This of in then case, than travel. is years, and advertising demand the XXXX We In summer. drop to back beginning been bounces more our Typically, resets the of habits the due the than potentially the advertising, rest of typical. is some demand space. macro see softened months, starting to recent and inflation slowly believe this in to

more the a during on decided downturn, cautious quarter. the buy a get so bit aggressive this to have While we do side we’ve ability stay to far

stabilized We’re close are and keeping the beginning see rebound to and as do. markets always they on eye things a ad

we moves social on the side as As performance networks saw are our and push shifting native expansion. business, market in continuing demand and to our marketing the to QX. subscription efforts most we nice on And international a and in to our buy increasing are we verticals, moving

newer see continue more subscribers retention flagship We in up-sell We AdBlock antivirus product. XXX,XXX from improve XXX,XXX AV. to and the product our total added metrics than our Total new from

we that and to job doing new be retaining product, a launching new opening near team in browser existing customer great to our a a later team set year. subscription. speeds I’m about long really channels products. acquisition new on term very The term is Overall, we and and remain opportunities customers, excited bullish. have And this launch a booster, browsing focused more extension launched continues experience. also up browser products is This a user’s We which subscription

down. We’re keep to not going to investing do investing product engineering and slow and in we expect our

team been is through time paid time times diversification management the through the business when off. XXXX, of COVID-XX onset and cycles, invested and these really including XXXX. Times Each ideas it of model our headwinds has Our shines. course, several macro each in are we’ve

finance As verticals bit areas was we’re up. in time at dip advertising our seeing same open overall online the consumer digital a business. other advertising headwinds, And up open facing like subscription shopping opportunities like

we the our advantage, term. Tridi. discuss close we quarter’s playing and hand updated our our a term on eye guidance. away confident long things in technology Tridi macro Take results short and are I’ll trends long now term to story. to are diversification I’m off for it while growth the keeping his So

Tridivesh Kidambi

Michael. Thanks,

advertising our were spend network that marketing had Since Bing we very it Microsoft’s QX, color paying bullish remain network. headwinds SystemX by with in not QX that see fraudulent the bots, and about term business. might are QX, year, excited were English, traffic. clicks this the delivered on this Michael was earlier. In despite we Late any generated mentioned, of start, short traffic partner we material plain amounts identified results provide was of in significantly about humans. fraudulent sending been we previously I for growing we more we for to As issue To mentioned the rest wanted the

analysis websites shows by publishers and fraudulent two on the Our interactive. IC that Bing partner owned CBS network, from originated these clicks large

has and result a yet a of by not is not advertising This advertising Microsoft refunds this fraudulent to any type In The refund. partners. impact a network made issued even and analysis been event $X rare was full is profit credit, the traffic, shows our Microsoft which more net us million $XX the fraudulent received acknowledged revenue the to our rare have this specific As that of event, in of we million. impacted while traffic amount was refunded is whole. from QX, the gross our providing XXXX

made we are available to strongly from be ad credit doing and all whole. that to are data Our Microsoft, shows to incremental avenues us pursuing we committed

of As adjusted profit a impact for our this reported EBITDA metrics added the in gross quarter. this result, net issue back we’ve adjusted and

enabling the and driving profit inclusive as financial reminder results, when protected rest I results, year-over-year talk key metric pro .NET financial effectiveness leverage of operating growth our ramp forma referring a we every QX to measure operating periods. will the be marketing wanted the specifically I Also, to our I results our with about and platform. philosophy. is ramp in We generation to see use case, to Before into Gross by optimizations. metrics through in diving our of ultimate start of performance, more spend dollar prior the of

of release our reconciliation in to GAAP the issued today. metrics the refer these reconciliation earlier a earnings please For financials, tables to

pro EBITDA with pull able they forma segments seen end results. dislocation on XX to dollars XX% this of of half a we’ve take ramping year’s business for compared to the compared to XX forma QX our $XXX the gross pro increase to million basis. of general, of pulled high XXX advertisers overall of profit the and of pullback We last Adjusted long were all last million, are Adjusted million. the on was year-over-year guidance contributing that of further profit to as the what moments year platform pay similar by in lends the categories $X move a year. advantage million increase. to past, last QX increase it ahead in was the an million spend versus gross year, back to above sells. larger was million XX of In Let’s performance the the XX million X% validation trend as in model in And the were back last and term. business for macro and Revenue

quarter On to our year-over-year. the in operated front, increase the sessions a a acquired advertising XX% reflecting we owned billion over advertising properties and

was session XX%. of $X.XX per spread of session, cost monetization and represents a corresponding our which spread per Our sequentially, maintains of $X.XX $X.XX with

session traffic ad XX%. was have fraudulent the our issue of per $X.XX and impact would been our cost the spread Excluding

strong Our revenue performed well segment The also year-over-year. less advertising with and X% with year-over-year. XX%, up revenue quarter delivered of XX% and a network spend subscription revenue XX% Overall XX% year-over-year. up XX% RPS was up sessions at business advertising advertising network business network profit up

deferred we similar we revenue through user We deferred and large subscription shift subscribers Operating a year, was in from to seasonal in $X.X customers the the for Subscriber assume $XX.XX in was net million GAAP X% total retain headcount last revenue million million for increase compared remains in liquidity, Change up our backs investment X% of continue ability add and includes costs. of an transition coupon compared spread drawdown reflective year. year AV between XXXX the and to to quarter second XX.X increased quarter to quarters revolver with respect continued the of expenses the increased ARPU million which versus XX.X ended of balance flat With percentage of renewing is revenue as And our change to delta adjusted base. public which sheet. quarter. were debt finance on XX% XXX the Operating ramp, quarter. year-over-year guidance the billings XX% last to our up-sell The were second and Gross the year. million, represents company expenses Last quarter public the XX company profit year-over-year. of to as benefit for XX.XX. the our last total was sequentially gross cash quarter the to XXXX follow a acquisition. million $XX was in from with a the the

XX, As actively revolver XXX year. defined as based plan of a [Indiscernible] flow half ratio and was million, the by X.XX down pay billings credit cash LTM, resulting operating We of of EBITDA leverage June second in times. our the net to facility

Despite driven quarter, advertising weeks are of choppy we Through the of earnings temporary. our believe first seen the the current significant peers macroeconomic in the market environment. a the the guidance. and we announcements onto to six have Now the QX with by start consistent softening trends

dollars volume come expect the dollars to we back We and to based back with to consistent performance platforms. historic and advertising to expect first trends, come those market advertising

As we’ve the in seen past, when our we have markets acceleration historically rebound, ad in business. seen

remains business model overall on unchanged. views Our our

has been through cycles these past. in the management team of Our many

lower Bing. is impact Our margins. a the volume for marketing higher materially with with previously earlier Because Bing. of margin our fraudulent reflects Due the planned lower business is result gross issues reduced to guidance have with The this combined had discussed we revenue, currently we financial but to traffic also spend advertising I us. substantially the gross higher do

are pockets several Additionally, business. subscriber of new our growth subscription in seeing we

effect While term this ahead increased spend customer of is and upfront marketing increased renewals positive, the acquisition next profitability short very is of year.

versus flexibility levers macro these we internal take As is of discussed a guidance QX subscriber gives pull coupled economic trends, more we specific acquisition full result sources new to with year advantage the provide of combination we growth. to deem of guidance. This the appropriate earlier, it have to trends of as determined necessary us

will provide update on next during earnings both an our We these of trends announcement.

to XXX to Adjusted expect at growth year-over-year million the revenue XXX million XX% and For million we XXX at and year, representing adjusted be the million representing and gross million XXX midpoint. to XXX growth profit XXX the full be midpoint. million growth between XX% be EBITDA representing between the at between midpoint XX% and

on desire well macro spending with The guidance a as Side stabilize. reflects as as EBITDA end as reflects reduced ad revenue year. recovery through maintain customer Our acquisition marketing of optionality currently lower of the the our the guidance environment, adjusted market spend Bing as to our view limited conservative increase to Buy spend forecasts the in well

a we This in and to I shares and Finally, public to reiterate announce platform. program gross while and of temporary directors going has change low markets this the more full warrants the us for that repurchase the view both conservatively board reflects caused EBITDA more that’s I’m profit our business and want reduce as have XX% million. year a than approved $XX Ultimately, to this as model is of by both stabilize. common of XX% outlook, program end that business confidence board’s than to at the grow our up conditions excited range. the macro by company’s our to a

us, both plethora thrives in organic of opportunities front M&A. in have We that via platform these a environments of proven and a and

the Thank And are about go and prospects We about joining questions. us excited opportunity. our let’s bullish to now today. for you

Operator

Tridi. you Thank

to We Q&A. now will live go

The question is Evercore from ISI. with Shweta first Khajuria

Shweta Khajuria

have I two guess I questions.

if diverting not, cautious with Bing pullback And are that managing not? profit. Buy else? would of why offset back so you you the by or you’re pulling gross are sounds perhaps Side. someplace you like optimizing staying sort to that but you second And But would Google that First it spent you’re on is to gross if profit said that dollars, is I for imagine it on

be profit there is, your annual gross guide lower if spread would why the So remains if the trying understand to same? I’m

Michael Blend

Yes. Sure.

first Good handle Shweta. the Tridivesh the to you. I’ll question, second. see So And

zero. spend, almost in So yes back network our that substantially related to to Bing pull we

to spend didn’t but that couple the last are stabilize things want so our Bing you we watching closely back second another are do on be of all green amount in for guidance can and weeks. and get few moving scaling are to reset think with But seeing not to count we Bing the of able in for our we hope other say we to mentioned. very continuing July, I right Certainly In Tridi seeing we to some of Bing And scale to. good as would are that. now. the does choppy pretty We side pretty although we handle to shoots entry. us weeks, up guidance as around guidance, Market reflect of has the the regards sources much confidence source question? for backup, our maximize volatile pretty been we we kind on heavily past market And in as can want

Tridivesh Kidambi

piggybacking just markets, operating the we’re the said the right Really what’s the driving Michael and in what Sure. is ad choppiness marketplace just off how and our in cautiousness guidance really just now. both of

and that our moving is are us some and maintaining around and it while kind as in out we takes So execute algorithms to time demand against moving of advertisers learn that. are spread

profit waiting started as algorithms really, market just to what and your the is ramp our which to our to point, to maintain and spread. we our you’re happens, very up back gross Michael for expect spend that see in able stabilize, recently. So is Shweta drive that And be to conservatism seeing we the around said, that guidance learn, continue

Operator

ahead Davidson. with question your with next comes James question. Victoria Victoria, DA go from please Our

Victoria James

for All right, you taking my thank question.

them time. one a at I will follow question but ask one have and up, one I So

question So is to privacy, in then ability my advantage advertising and disruption Google investors such of with as focus Apple’s the take SystemX should think first then on the digital moving? about how market eventually

Michael Blend

for Yes, in. thanks. Thanks calling

do we disruptions the like yes, marketplaces. So in

So more pretty July around April was actually big markets in related a COVID good private, and terms pretty, say, had reset, volatile system. changes, getting to Apple when when the ad XXXX, would overall. of that’s things for our pretty I similar right to was hit. pretty things It

April had So you heavily, from go in back April in pretty in and experience. XXXX, April down if that that and we XXXX. had stayed pretty We case, a market learned in

we markets reset Pay be And the in the decided cautious Per saw we this time. July, more particularly Click so to much when

think So I question. that answers your

Tridivesh Kidambi

If Victoria, I ad as mentioned spend cookie that, other is specifically really retreat actually where had we good think out as outperform QX I kind we secondly, kind the as of to terms there that’s really the shines. in the advertiser to of just saw Michael’s of where of Google kind of And could ramp two we One to really well. have add pull points. started as those to towards to a the also market of, did platform QX you we end our marketplaces, another point, expect performance our just going less, place markets,

we on don’t rely So cookies.

We’re specifically party first data.

opportunity another that’s happens. us it when for So

Victoria James

bit then And like explicitly. here, remarks, ask your in I a touched bit bit more answer just maybe but my on wanted to I him a feel we’ve little question, other your a little opening in and

you not a XXXX, during bit talk maybe can XXXX, of those is what the or downturn? story to who were about you in little outperform allowing times investors market for So following more

Michael Blend

Yes.

take buying what dislocation other is price. a system higher on of the on a our set advertising So what place sell one specifically we’re doing market advertise is markets we’re the think finding market to at typically doing we’re on of side, to advantages up and between to

our moving And to in going if heavily dropping click providers, like as around are click and into in increasing markets this they’re pricing, markets per to display display per sell so particular are and case. pay markets, we’re move and pay

to relatively click four normally XXX time, overall, And work in X% we and most kind as as the we every need July, And on necessarily volatility. level July. for are allows but this category particular bit of, some spread also advantage our that don’t be per sell in depressed of increase us things bit we weeks going saw ad or the quickly we’ve buy quarter us, we up our we of reset in figure the to to in how what take when a spread are the the most. a of and seeing that of markets pay out can side verticals stability do mentioned, first of saw specifically, markets for or in, I been markets the profitable almost are the places that’s going our that case, most that So markets, we side, five in became side then markets, buy of, look and down

our where anyway, a It on to seeing larger put, of our and said, the doing go guidance no mentioned, we starting acquire our really we one’s And what so at pockets out see to far we eight this. goals. I of we’ve that recently have history XXXX, like the good six dislocation, in subscription kind is and And not in in took we guidance pretty were. us weeks to with was scale quarter. some we’re to where of opportunity side maintaining on the our Most cost stayed about while as was And figure combined customers So as that we’re pockets before. seen seen we’ve acquire market. ever or also did based

Operator

Schindler BOA. question comes from next with The Nat Nat?

Nat Schindler

side of And and couple side macro quickly learn questions. any How too whole advertising transaction. as Hi, in that One, of you you’re can your protect the touching follow I profit I the movement, can because and time, as questions. asking in do long the given some everybody’s out, can isn’t that A you And buy you the systems think guys, you’ve but get, as profitability, it both of about it up it, sell over you’re other this more think actually as have it’s and abrupt? the on advertising could explicitly, long so been level regardless some time same you figure recession? maintain to thanks.

Michael Blend

Yes. joining. Yes. Thanks for

And so markets able through good spread have since founding, maintain we’ve over we bad and to really, our historically since been that markets.

as I stability, for looking said. We’re

the We side. to it in are starting advertising on markets see the

we’re to Treaty reported spread, highly good So advertising we’re that see continuing confident. side. our yes, on

So but what is conservative. have, we what a we’ve bit been

As little where we the desktop we fluctuate affected the decided areas looking just reset, to the saying, with two tidbit, a which mobile revenue, has gross spread, quarter always still us revenue on more little were total conservative, maintaining we we’re on as play. markets our we you we but at of interesting more bit that be our have. One play major where projections, and are kind

desktop commercial bit consumer Desktops queries us. the reduced higher particularly side, revenue, queries, lower desktop. we’re margin of On business seeing for on are a

see more not having also, travel an both of desktop that numbers margins but that affecting mobile. of kind more well. just you are but traveling think searches schedules, doing that is going So work play We combination normalized of seeing. But it’s out on believe their summer, with we anecdote up. in in people and we’re projected front our that’s revenue, as computers because People particularly lower this

Nat Schindler

particular, ask, you Bing, interesting, business. very margin want actually I my described in because tended dollars into what mobile a because lower mobile lower that and Bing higher That’s that on question, to dollar attention mentioned Is why Google, very to be to you the I Bing. margin. as assume is for compare that’s higher goes compared next obvious playing not much just the is which

Michael Blend

were more business the was desktop would Bing bit Bing be heavily our little up a So desktop shift, we would on scaling more with side. specifically where

that heavily since QX. pretty back, into the So as scaled scaled we’ve mean, rolling we QX that around of middle I

there. we highly As from have quality pull we sure that going the Bing some on in to confident we’re make of that back traffic the just still buys coming

why bringing little that As of because we the mentioned, as we’re substantially guidance kind a you’re business And I back down immediate was for just our pull total coming a that’s heavy but desktop us. effect EBITDA that seeing down bit. revenue

Nat Schindler

thoughts shifting? dollars go across landscape and you’re season, kind they about earning pretty your more television given quickly Can the impacted? things coming from world. things like. to how How out, ad saw being just the online see connected are from, of DSPs the them overarching any socials playing are you From talking give a in where de-sell the this Where and and that severe down you

Michael Blend

Yes.

say I areas. would So two different

that. As tend things much rebound. I slowly. We It’s and kind quarter, earlier said, every end would remarks, and reset when reset, July, QX saw into those advertising, least, really more quarter day our things kind of have our at next We rebound at of to markets for ready we the rolls then systems depressed of generally almost the to first they view look have relatively in mentioned have what on the literally, over pretty the expected. a performance month been always and from in CPCs our are when

the is our Pay we’re so primarily side. that’s revenue side Click seeing And marketing on coming where is sell that the from Per

We’re depressed a bit more little consumer queries. seeing

term. going not that’s be long a to So

long early and market. and towards obviously us in of specifically, rolling were it the more are of a perfect and entire not QX internet QX the we more as end term, the using we looks view Over to don’t people have the

have like a a certainly to market. be was we in we this of do which that’s us, well, has of combination So general. side shopping with remarks, something our bit query increased seen bit depress. volume headwinds this commercial flagged things a probably it our the looks summer the would to that suspect would There lower, of we’ve and It there in suspect, what we some in is on little macroeconomic natural travel, effect. And as think is view where we a

You about revenge hear this a lot summer. travel

things little But we’re summers maybe little depressed starting stabilize. the well. said, that about end a consumers feeling consumer see just I things kind are bit as to on So summer, as mentioned, a as better starting side and we’re bit of things, seeing the to of to get

Tridivesh Kidambi

Yes.

this come seeing dollars, they’ll some the we one performance thing queries, the days at what is certainly, we that or think consumer well, the kind when the kind even, of remarks think mentioned And come that that’s marketplaces but weeks, as I looked stabilization, those add recent as to we of as seen to they first. do some advertising of there in well. following we’re back, we’ve

feel take as we returns. of pretty of that, advantage it So again, well-positioned kind to

Michael Blend

And are lastly, about the a things on lot say opening I get side, advertising would of side, discussion subscription a up us bit. always the for

time some you give real data. can I So

was June customer July number acquired. than of higher acquisition customers materially Our our

So the of be that’s the our we to to kind of points consider what diversification. beauty

the get being us you bit stabilize also, makes of advertising things advertising So exploit little pockets are the effective a side. advertiser through, of out, depressed. macro to But our was figures advertising, are. kind We on profitability it where went super system July more being the on subscription choppy going a and side down,

got nice as balance we’ve that So well.

Operator

We Victoria a will to now go back James, up follow for question.

Victoria James

here. my taking follow for up Thanks

with down you So thoughts updated the on across M&A? valuations my can kind market, your question is, give of just future

Michael Blend

thanks. Yes,

a remaining are out market. lot the of We opportunities in active M&A we So think there. there’s

maintaining We’re discipline. our

sellers kind of It’s to the time normal. We like adjust little new of bit seen for valuations. to takes haven’t a

So we’re bit conservative. little a being

very interested deals. high interested, are are weren’t people, say we’re inject if We’re back growth to do us that be coming have with unsolicited it. we can companies M&A creative, still and a in of normally competence is to seeing going we only as we that into But let’s inquiring and going level

a move So in to we’re we’re our starting the buyers. remarks, bit. not see discount earlier I little market mentioned

we into. our do coming confident when to would it’s we hopefully valuations we ago. are trying, down can when have like M&A be feeling we’re growth like deals in it that’ll highly it’ll that perhaps So by we inject months And us a or than come lower bit. we’re a reflected not But that next four do price into

Operator

Kurnos is The from next question with Dan Benchmark.

Dan Kurnos

see to good Tridi you Michael, guys. Thanks.

through Just here. talk on can kind we your of things to subscription, point just couple maybe a

good. you’re trends helpful the into of to subscriptions, now. a product bit the fits some can if of your moment. that And than your really bucket that are challenges. acquisition just there customer that maybe And are expensive or niche been guys seeing And have business guys or So that’s about you you say out of business of obviously, different through Can thrived. guys Obviously, I if as some to the able that some in maybe consumers the pressure know, to for to there’s marketplace. to the kind continue towards really sort where guess owner any hard we us advertising you’re on through toggle your sort not the parlay Michael, you. go at kind well, and always what ability you we to disruption that. But and well, getting grow CAC right a up, sign talk just think help seeing, plus economic And also to July, of of little it’s recession I

Michael Blend

Yes, sure.

So, I in there. think there’s a few questions

we it’s mix I to hitting to our it’s at the got got where So that. weeks. of point. AV of wouldn’t in couple reaping which point product really product, to our be the nice be We’ve we’ll then off hit but of maturity, is coming total we’ve next kind that ad mentioned, and block out from is say our mentioned, starting starting QX another released this in which a that actually we flagship, product, profitability we’ve we here going that’s which be We’ve going leveling got is another the got products to scale. And that’s total product achieving

macro kind any consumer haven’t, to And affect seen start so for business. us headwinds our we of

for fact, subscribers is as an go know, not bring you as going we’re buy, as acquire customer to we down we going increase pockets In opportunity can do CAC is What acceptable to are our typically finding on at acquisition, many that. we of as are return.

For where do disciplined. us, we that’s remain pretty

So as would as be to instead of, per spending that customer we’re to and customers get of comfortable goal less we kind per spend up can. paying the customer, level like our many possibly

making our in We annual conservative, good tried for the assumptions there. guidance. also assumptions, on And seeing be we’re room, leave us that to markets conservative we’re to so opportunity going both reflected relatively the to ourselves advertising not side some recover. pretty That’s

on that everybody but the acquisition also looking our think leaving on so of forward advertising upfront the then room I typically increased that on how side. for on for for kind basing quarter And a subscription we’re We’re ourselves the customer what’s far, the knows going year. works the for is EBITDA come side, the next and customer growth year, we’re subscribers, negative paying to because this into acquisition increase call

we in entire right And case the seeing so our to cover now we’re throughout the this continue ourselves want year. guidance year some opportunities give for

Tridivesh Kidambi

Dan, trends subscription think, I on general add, side. just could mentioned of I the you CAC if in kind And

ad in that the function CAC see the did which That’s of specifically over is QX we product. trends about, really So on QX. talked up Michael go a block

product We’re bullish metrics the are renewals as annual in to of of seeing launched specifically return last beginning you’ll coming of we LTV really profile and see the the nice on to LTV, and that those there. very continuing at we’re are recall the CAC year, that monthlies, kind kind

going up per spend so point return to is what in there. Michael’s And those because willing take customers we’re we’re get to the to

what’s of trend that you’re kind that some CAC seeing. that’s So of driving upward on

Dan Kurnos

just market, but challenges, the pockets. as We a that in think fringes, talk not Great. it going little little disruptions, And been on bad help sort That’s to And us international. [Indiscernible] be like by then it’s softer, We was kind the about if helpful. but through all as A-PAC I earlier, up. Thanks. maybe what’s probably on. of know, international, a just EMEA this Got in I quick of follow around And on. going bit. quite this to again maybe an continue asked talked has know pressured what’s it. some but just opportunity a apologize

Michael Blend

continued. we’re Yes,

We’re very bullish international.

other of seeing international have not I know the are talked some advertising We about companies based challenges. any,

to can’t there, opportunity ramp on as like data. opportunity upgrade we’ve because area made also we’re anything an that which date haven’t now were, looks promise continue about very platform. our where our changed. got which not where to, on talked That’s early area an where international from upgrades we some not yet, more, That’s are increased taking via Early we platform. technical you new talking it’s we’re know, we’re moving we’re is our the are much We see haven’t substantial we platform talked much there we

Operator

At there point, are this further no questions.

it So for Blend to remarks. back Michael we’ll turn closing

Michael Blend

for taking the Well, I join to today. want everyone time us to thank

announce earnings. our forward QX us in We’re We joining happy again to to you look QX.

We’re very proud of the in team for executing initiatives on QX. our

through a forward Thank happy well This and us to very opportunities diversified and QX. business got you in got on again speaking are opportunities look with as model. we’ve on advertising We’ve you. these times. subscription We carries

System1 (SST) 12 Aug 222022 Q2 Earnings call transcript