- Earnings call transcript Q3 2022

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Operator

Thank you for standing by, and welcome to the Third Quarter 2022 Conference Call and Webcast for System1.

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

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

adjusted Our including results non-GAAP to or over Officer, Relations I call to would website. should and financial our our historical results. to be Investor not considered addition will our the the Blend. GAAP Co-Founder reconciliation conference gross Michael EBITDA. non-GAAP include including our of non-GAAP financial Information be Chief in may now a measures and on to non-GAAP found results SystemX’s turn Executive like an measures substitute a isolation discussion for as and These profit from today regarding adjusted GAAP –

Michael Blend

me Tridi earnings for joining call. Kidambi, thank SystemX’s Thanks, Kyle. Together for us you CFO. Good our afternoon, longtime and QX is with everyone,

much public our the wanted our joined was EBIT high a with our start market business of We forces advertising markets into recap the to subscription at an excellent exceeding year our the we January, to dive off decline got team our expected. protected of and we already started give entry time the exciting SystemX. a I into we expectations. first as the and the for Before year-to-date. were In half quick performance, of businesses technology

June year conditions another macroeconomic In is probably in Our particular, guarded. a NASDAQ SystemX. us life saying technology bit markets went are that XX% hindsight, and digital the to growth the conditions as should ignore These made longer-term. the playing a our XXXX. we banner rough the also through expected but gave Since heads XXXX difficult our the January, bumpier we be in for to focused when down team in. than is that have affecting going a early easy than It’s advertising not seen we on public was for down operate have performance noise, and been confidence some stocks public. business have had more We’ve company more we they the outside – hoped

are market. the disappointed XXXX we half a the difficult is in but with weather also of looking, storm We back how of

So update. onto let’s quarterly our get

priorities that our platform, enable subscription products, new years. and new pushing scale we launching the few acquisitions, progress On on over areas. will into considerable next to RAMP the QX, integrating our to continue we may front, upgrading us operating recent focus significantly marketing In

on subscription our particular short-term of we new financials. scale efforts, negative products as Some a had these marketing increased effect

time. will multiples we off pay shorter-term over many investments the However, confident are

RAMP talk about our So let’s investment specifically. in

performance better, platform engineering of on Increased and advanced next of to quarter, headcount, more our performance expansion the overall faster significant our accelerates the mentioned began during platform to been in adding our we is learning and generation keep QX. our teams automation international in product significant progress efficient. We scaling our platform. of our working will of have upwards platform. and without last RAMP migrating our year particular, As We for over enable new improves most us faster, new XX% business machine made

As legacy to head-to-head direct we a our traffic platform advertising keep comparison. we on maintain some traffic, migrate also

material we Our well percentages. some faster lift in two from shows lift cases are monetization data seeing certain in primary monetization a better The double-digit areas, areas, and speed comes over algorithms.

XXXX expect more continued see particularly right very during to so and engineering a difficult our the of decision product a we longer-term As have in platform public. believe we move optimize we on But to we efforts the a It made went much to was traffic further decision. improvements. algorithms, our focus initiative, year which and we

We RoadWarrior, shopping and program owned our on coupon merchants back our to recent across have launched cash across Answers.com and CouponFollow we integrating continued our also participating work CouponFollow integrating to of new continue properties. and make acquisitions. all data good network operated officially progress

growth we on focused delivering by increasing and traffic For Answers.com, on from RoadWarrior efforts. thesis marketing are increasing significantly paid acquisition our and

show at time are approaching revenue to particular and on promise – from both acquisition. the the million and zero efforts starting is almost our rate, in $XX up Our properties that’s of a run Answers.com

So our subscription of moving we cities. on positive two to our business, In have financials. report. QX was a news tale to

on another mid-$XX quarter, new to product subscriber QX XXX,XXX the plus have And we in way increase the flagship subscription newer more added in earnings provided discussed million an being to across owned translates our opportunity an third our its subscribers products. is us. additional average product new TotalAdBlock to than suite. headwinds for subscribers product. added new in growth operated This advertising and to for current X we As At for at our in our TotalAdBlock during XXX,XXX the consecutive subscribers new range. an overall subscribers We CTA QX call, digital acquire market rates

plan bullish estimated a mobile opportunities in Clean QX, we launching when we’re add comes We also cadence, August. reported utility new products quarter acquisition continue marketing our million was to expenses, these new launched on of of a Speedy QX our in also versus consistent regular on subscribers. million with to application, increased accelerated in With our spend marketing numbers new $XX an customer $XX meaningful

so hit Well, also marketing renewing our increase expect this, EBITDA our are and our new have reported understand. channels, than we QX. the into per about translate side. in be able scale dynamic continued monetization in this an opportunities to these trend products, accelerated last excited We often quarter-over-quarter. impacting ability we rates to with near-term will by and to points business, base. is RAMP side thought spend. to we we remain the important economic to combination we saw turnaround I When cases We some macroeconomic The a up Unfortunately, where will a Each lowering a focused headwinds anticipated acquire we to launching to for our our customers. cycles. QX pressure do on margin as a XXXX our XX% a session will This to in this The in result negatively rosy. due future ability in investors time on were trends the more long-term customer putting you note, investor opportunity spread our our to In marketing is should our advertising on These This increasing our ability subscribers maintain advertising increased earnings This On retention team into increased our on increase traffic our to consumer sell quarters our renew. continues since acquisition we story corresponding that EBITDA is impacted subscription has expect continue glimmers last from call. and not on in of and into be communicated XXXX demand performance. and August, EBITDA positive spend near-term buy that activating new continued XX% reduction trends EBITDA in to of customer across in the segment. uneven quarter. fall. heading to last acquire to

our we lower This operated is overall our as able put advertising the overall the substantially to budget. in well to and revenue generate as each amount demand of owned down we a QX However, decrease of has work been been session. and consumer QX business, in from driven by have spend, amount

spend, gross coming in driven under marketing profit gross our budget. advertising profit is substantially largely is As by our advertising our

network model is different businesses. revenue going Tridi by lower we a the not downturn invest these highly forecasted momentum remain impacted opportunities on spend the profitable trends slowed specifics long-term been through walk see has strategy SystemX procession. on also Overall, saw our to partner and you somewhat. growth same QX across remains changed. and our bullish we our to the during and has this has lower we Our business economic segment advertising our exiting of and

the of focused our business underperformance me disappointed year. be we macro the choppy this our very recognize we We and on structure clear, the of back efficiencies. environment let very are in are that operating remains and in Now half cost advertising

expect SystemX in is remain and our in investments has we your our push We in come expansion XX% with performance OpEx net to pain scaling shareholders. We the over of shares worth our recent from We realizing our going subscription our minimal continuing our growth to increases advertising technology, products. is international current markets, expanding XXXX and of own not public met as SystemX public and aligned new expectations our shareholders. of our much highly Management our stock. know

to XXXX growth show expected, our resilience. that have is we the Now, its while business continuing not we had

are navigate substantial these and market knows generating conditions, through We economic to cash difficult and team our flow headwinds. how management

also in this we platform watching past, customer history very will expenses itself. we While repeat confident are closely, our is invest paid and to our In continue off RAMP acquisition and the initiatives. are strategy will we

confident price I we in next can’t and month. success, where control can’t predict environment our next be the are we share Now long-term or macro will week our

buyer off stock As these now buyback, I’ll said Tridi. announced last we discuss Take to Tridi our and corporate this quarter, guidance. updated personally results levels. our stock begun a to it hand be things and of plan quarter’s our away have we to I at

Tridivesh Kidambi

Michael. Thanks,

saw impacted mentioned, hoped, significantly than we previously headwinds longer our versus has results had we QX early in guidance. have persisted As the which

have to One the for the rebound. an given migration, advertising our made the a when thus made comparison talk for year, in we to far year-over-year periods results provide grow results. significantly results RAMP and the we’ve apples-to-apples are quick the markets of SystemX we feel of combining progress strong and Protected XXXX with our we will investments as However, about be I position prior note, I

in adjusted million, to $XX an Let’s owned X% move and million was was Revenue operated results. year’s million. gross gross for advertising $XXX the year-over-year The partially the increase grew $XXX approximately subscription profit by on advertising advertising spending compared year, increase revenue lower a subscription XX%, operated profit X% revenue an Revenue the of approximately network partner segment In owned and forecasted to during an the and for increase XX% profit XX%, network in of our offset than last down of we expected XX%. adjusted Adjusted operated for owned compared of the quarter. by $XX was and advertising less had segment. driven was X% and segment were Revenue last which for advertising, spend XX% decrease previous million QX and million decrease. in guidance, as $XXX segments. to year-over-year

acquisition line a of us session environment, $X.XX properties year-over-year. overall still increase, of Year-over-year, in advertising from available $X.XX only We over reduced and the and the and quarter-over-quarter, XXX demand, to same session quarter-over-quarter sessions was of our period. at advertising saw quarter-over-quarter platform, cost Revenue million down by revenue saw $X.XX, with revenue and billion revenue network per well for in our in XX% the we with in owned partner XX%. Reflective partner X% on year-over-year. our we acquired our and our X down network specifically to down $X.XX user sessions trends $X.XX consumer quarter, up adjusted increase demand These owned owned up this gross by performed partners our $X.XX monetization softness $X.XX RAMP as also down was However, reflecting business lower less network down and advertising operated key business. our Similarly, per network and year-over-year. sequentially Even per Conversely, up down XX% profit our sessions an deployed over in million headwinds was operated session identified are was reported and result in spend. we their Google, session revenue but sequentially with operated impacted sessions advertising cost subscription saw advertising one XX% $XXX and per same monetization advertising business were both the and business. across and a acquire, XX% to businesses of $X.XX.

are approximately Total forecast advertiser about to close our upsell the to advertising million $X macro increase were subscribers versus marketing spend subscription shift quarter in total We as as environment to $XX.XX X% the forecasted acquisition subscribers on The of year-over-year. to gave cost we million, retain was attractive a benefit in an us Total customers XXXX more acquired AV periods. we ability metrics. represented subscribers flat saw in pandemic challenged peak customer and a which and deploy spend Subscriber million anniversary guidance spent and user year-over-year. than our cents at QX large acquire to $XX of XXXX, last continue and marketing $XX opportunity total churn versus ARPU were during to renewing base. from We renewal quarter year. $XX.XX terms for which quarter-over-quarter the increased

U.S. the have quarter adjusted to expenses including of cash LTV OpEx year, said, profitable public RAMP, we year-over-year in FX we in $XXX,XXX changes expect side our last FX CAC make to year. business, increased acquired via our in our short-term EBITDA. headcount of of or less payback highly That add from being costs in acquire quarter, ratio trajectory. as in subscription Operating and leverage some to generate the profit for increases primarily from rate net for do the than attractive result other adjusted we With XX operating businesses. exposure currency. forward, we profit off is a expect a the reflective have not current flows do increase exchange and assumed Xx, of investment continued XX to renewals. primarily transaction As and on of company Instead, overall past, The around customer over costs operating and given exposure, material as see of expenses going in XXXX and our headcount third million sheet. Gross opportunities. the respect gross $XX to $XXX CouponFollow the characteristics future the million of million international backs customers our we With we growth invest to cash Adjusted on while margin we impact was versus FX In subscribers quarter generally resources the a build trade with the align revolver business to discussed existing to were dollars, our negative a was around year, which last our gross one acquisition. will third XXXX gross as compared respect local profit. $XX XX% includes on we million finance biggest ended EBITDA million $XX million, representing liquidity, million was $XX of the balance to balance debt the advertising

As net based billings credit of in defined as our September XX, resulting LTM, million, by was leverage EBITDA of X.XX times. $XXX ratio facility

QX onto guidance. Now

which impact our continue to spend. advertising continue the will scale Our environment to current that ability QX, throughout will guidance assumes macro negatively

is but from marketing to believe conditions, given expect some our it with we be conservative projections. prudent current tailwinds We seasonality,

seeing new subscriber that we several business are will pursue. continue our in we pockets to Additionally, growth of subscription

we view positively, of spend current period While profit. effect adjusted QX short-term very in gross increased the this marketing impacts the

We the $XXX X% are in an at to midpoint. $XXX million, decline between revenue representing come sequential and estimating million QX

basically be we the expect year, to flat revenue For full year-over-year.

million midpoint. We and adjusted X% from gross to between at come $XX.X are a QX profit decline in estimating QX representing $XX.X million, the

gross For expect to year-over-year. we the grow profit XX% year, adjusted

at representing $XX.X million come to We midpoint. adjusted $XX.X EBITDA sequential are million, an X% in and decline estimating the QX between

flat EBITDA For year-over-year. XXXX, expect be to we

of a XX%, we our deploy our will higher owned QX. advertising are saw we in to we to what $XXX spend approximately approximately sites million traffic of part As operated and of spread acquire at assuming that guidance, than slightly

assuming are in sessions For a our network session with monetization million advertising with at we network XXX $X.XX business, line approximately QX.

operated for of we’ve shares owned to on us Directors our approved of authorization. to leaves of Along XXX,XXX as expecting also continue an which on our $XX at million, million. the are To down X,XXX the paying use we on for capital with sales both initial $X.X evaluate that of will subscription announced up and $XX we of of remaining cost million in Last average customer public user. year. $XX.X warrants daily quarter, to resulting date, a to shares acquisition purchased an repurchase Board the $XX million the with the program products, average and repurchase for CTA We spend program of revolver, approximately a the balance

a with performance been resources In most continue structure have market model and While short-term, streamline business we we through our compelling will in has to of our investing negatively the the record impacted deploying against proven volatility. cost while financial by opportunities. our conditions, recent track performing our

prudent We to delivering Thank go adjusted cash continue let’s historically, of for expect and today, joining we future compromising capital success. now the stewards and to have in you EBITDA, our short-term, been flow questions. and we without us expansion margin operating be to and able

Operator

Tridi. you, Thank

We now Q&A. go will live to

question first D.A. Davidson. with Tom ahead from go is with Tom, your The Forte question.

Tom Forte

Great.

question. So for to start details. the I like with a is I thanks lining what think all probably silver type want

about So, potential strategic attractively that there’s how today. think M&A thing a done of would the historically, you well. you’ve priced I has about been Can M&A? lot imagine landscape strategic very opportunities you one talk for

Michael Blend

joining Yes. Sure, Tom. Yes. Tom. for Thanks

out and anything We we’re to things. now. So the a have market don’t we’re continuing interesting opportunities at of in seeing there be lot looking report to

and disciplined be M&A as little in always have we’re bit we really market. pricing for also a to adjust waiting We’re to trying the very

yet. We haven’t seen that just

to It’ll going haven’t they to a for in. and digital that been think we have advertising more little play looking companies that as system market. months five acquire, around reasonable we’re out to three pricing yet a in last bit come shock the to Tom. the markets And is we the happen, and think the I of this

Tom Forte

I my of realized digital rebounded think significantly. All from to – the digital negative, about then holding when right. when like reasonably but the went advertising in how very advertising economy follow-up, we And XXXX, April a pandemic up well, first lot started then was

we monitoring how and performance? the and it for digital will that quickly hit your rebound when things how looking think you’re then advertising So should about rebound

Michael Blend

Yes, sure.

that to say, we you if digital advertising, the adjusted go almost happened – we would shift system And saw I back So was last down. overnight. in – COVID probably our big

XX the than is holiday season. which be moves quickly but we back happen you’re QX in – as a then Same just bit cost pricing off really operation. where I hitting to things couple is system then, markets typically So of saw a as holiday if that particularly down. as the little haven’t years rebounded, we the thing kicking I would leveling that actually start quickly, revenue We the and the back leveled uptake snapped years, will pretty QX, per in essentially bound seen ripping quickly. that lower in expect goes have per pretty we know more X.X see quickly in will we’ve years bit session been COVID. digital we and this in to as buying and Right things seen an things are point is, don’t pretty say, And little we’ve can would’ve expected snapped The a more hope and time. seeing expected we’re more here we really what off in shopping strongly yet. well. out XXXX, our markets advertising around then the it people go haven’t for This upwards now, then Thanksgiving, past into sustained, we sure a started At would seen ago

Tom Forte

you. interesting anything then is, last wanted a basis. if happening to And I on know category Thank my question there was

What not might very with that. category on being So categories are going strong. on yes, and diversified, it your helping anything basis? be financial are you? services things overdependent more there like But difficult seems interesting like models mortgages been so travel of in the in has well hurting beauty categories you’re is particular what The

Michael Blend

sure. for Yes,

larger of in general And negatively flat like substantially some health slightly for So has us, impacted. finance, you’re are I the numbers. that up. categories auto seeing marketing is pretty show think like year-over-year, a been little some up profitable categories the bit Those is up of jobs, have category, our travel other that as those

negatively So impacted been. we way the categories haven’t really auto that of other the seen have some

we So just should categories area would more see performing than of the revenue typically bit where when we and fast – around, forward it QX. our bit lower Thanksgiving a happens be see it’s now. but would then is of little see those now, say, rolls couple have the shopping, right right to system’s categories a bit moving to lower little around, a been finding a would’ve we categories more an in, balance been typically weeks, expected a we of of we little a accelerate a slower some we the I a bump, Again, in might see

Tom Forte

Thanks questions, taking Great. Michael. for my

Michael Blend

Thanks, it. Tom, Appreciate

Operator

Khajuria The Shweta Evercore comes Shweta? from ISI. next question with

Shweta Khajuria

Tridi, you’re you. for Thank talk a you. how thinking next about growth you level thinking expense margins? guardrails could Thank and and just management to about year you’re how at high please

Tridivesh Kidambi

question, Thanks for Shweta, joining. Sure. thanks the for

prepared acquired we’ve audit on this from to the acquired just lot respect has year with comments seen driven in also growth of then again, also the OpEx company been the everything the and RoadWarrior, et OpEx kind fees, of expenses, echo year CouponFollow, to we public by remarks, legal, RAMP. first headcount, businesses So investment a that insurance, around cetera, that from

of off current going As we and in forward expect rate. beyond, planning our for think don’t are increases and in XXXX real about not any significant run we OpEx

a So public well as in RAMP company ups, lot the of both investment are time of terms one costs. those as believe step in we

going a margin So and high to EBITDA perspective a to we’d down perspective, EBITDA gross profit just forward. expect degree to an directly from float

advertising inevitable we we rebound markets. Specifically, what in the as is hope think kind of about

a certainly time about guardrails thinking gross that’s of profit we spend margins around towards. and of planning specifically something lot In terms

to we RPS actually our O&O up to and in testament even if real think past XX%. and that actually the saw just I out going the the on a little expansion that the go quarter, bit business maintaining $X.XX CPS you we this still an and RAMP decimals side built, to spread spread between

are model QX at And still flow things at EBITDA also gross a really why as renewal that It’s market. in constantly helping saw again, to think terms we’re admin to think really even looking we’re RAMP, be the through has past. those maintain we kind been margins us about able macro subscription we’re profit the margin in same subscribers we the about the the in in from revenue to we high So side. in able of the time, And how harvest as side, continuing operating perspective. with on that on we’ve of what we’re XX% acquired

Operator

go Thanks, Shweta. with Kurnos from Dan, The Dan come Benchmark. next question ahead. will

Dan Kurnos

sorry. go, we There

listening guys your sort brands kind to your search CouponFollow, dollars. bunch all a starting Google of get love kind eBay there’s there thing Group Amazon hear shifting right I’d not And maybe perspective the perspective, money been and both intermediaries digital are say – the point and media in to M direct of to as a networks. sort it’s having the now retail weakness provide from dollars you there’s of I’d native of of of funny to now, for around they a organic we next but the out is spending it’s sexy greatest thing sort in to because focal Michael, view versus too. narrative should the like ownership – of be So love saw obviously there. biggest It’s to the the

of view spend just do paying kind categories? some Is out. Obviously, in to monetizable of the shift a So ecosystem are queries spend? how you there those

dollar when seen you budgets from that ecosystem the like any screen, of do we’ve things back, your And a kind change that you the think out anticipate do as back? there? acting So there’s ability to coming those to shift come continue

Michael Blend

Yes.

that’s So question. I guess really two-part a

advertisers the much digital as wouldn’t we doing as very profitably So we on but will marketing. ever spend money in Google continuing best to machine – can anticipate anything, It’s And people stay continue to invented. advertising Google. think possibly they strong will

your retailers as we on though yes. come Yes, think can and demand CouponFollow. answer also and as that want much having they own. we getting The advertiser on definitely question spend really site addresses CouponFollow we’re direct are to to the I shopping advertisers is

bit really substantially would just shopping we’re supply side, issue so from little we as of of be hasn’t it here would kicked shoppers here stronger the that with site. one the work to so in have seen. is in as yet. QX, to Again, us we demand ton like a thought is to send verticals and The we seeing haven’t seen there. And directly getting advertisers in a that shopping we’re their direct QX want that the directly People to consumer

guess, if you fast So I absolutely. forward,

in. for bit buy consumers going consumers there, typically market and normalizes we’re they more the to to demand As more have things want the direct waiting a come advertiser do, to

Dan Kurnos

your about next year. sounds past. of But And Pretty think has then like strength just in market it. we the you Got funny, seeing a much of huge kind towards benefiting It going and kind shift performance. everyone of disruptions. the have into said as I that brand about platform talked – away this just we’re it’s from from

guys incredibly obviously strong have performance. been You in

downward seeing buckets categories. on pressure a kind industries little and bit of ad pricing or or across We’re verticals several of

out there’s bit guys a maybe just think and washed where love opportunity. enough not some kind of to share. hear kind market little I area ability of particular take is love some your reach hear so thoughts. in And I’m to CTV if sure just kind of you there yet, to but any are

Michael Blend

We Yes. what’s change. our platform it. been the works shift I market and is mean, way this look, always really conditions interesting, pretty is so with

the it’s where the can the market to been digital in half and pricing come not down, as having maintain advertising – we’ve even is go it’s – – we able So back profitability. best has find XXXX. categories And of

actually counts at good session here in our Tridi pretty As QX mentioned, looking QX. and

consumer we’re of lower able verticals So is are of verticals where the paying, the we what there Right – been have verticals. those lower find some now and the pockets demand. is we’re revenue to seeing some

So like. marketing while we putting to can we’re maintain use, put our margin, as just dollars as that use the we’d actual we dollars many not to can

is we’ve obviously, they as – you And will so overall, advertising the digital on well, revert, bit And see marketing remember up subscription it. seems as which and a particularly both goes marketing the the through as and press one the one look economy is when and reverse buy it this – you always sell is along to the market side. not well, ripping do as digital that doing reverts got with be little we great cycles, the thing which at a quite happening, business and then

bit, because down our about little think is allowed making session a move to changed. we’re business So a coming prices actually a hasn’t a the are in auction way little our make bit we’re subscription less it amount and we’re revenue on subscription traffic, that’s when when of to ad the selling buying the traffic up we business into

more able we’re down, marketing subscription. – more pricing dollars get actually as So than – on buy to comes

advertising one that the particular And of given it. that market a taken in the lot slack up has has so

new as the And and so digital subscriber materially is depressed. up go advertising we’re market seeing growth subscriber acquisitions

Dan Kurnos

guys. Super helpful. Thanks it. Got

Michael Blend

Dan. Thanks, joining. Thanks Yes. for

Tridivesh Kidambi

you. Thank

Operator

D.A. with back question, Tom. Tom going The Davidson. Forte we’re Go ahead, go next to to

Tom Forte

for Great. Three me. more

about margins, RAMP but So probably not higher is X.X you right call benefits, I’m we’ll the both? it X.X. RAMP that talked the versus number, potential X.X Can better sales, quantify you sure and

Michael Blend

we’ve buy the our the So sell and sell on upgrades more done on the on of have that focused it’s the platform side. Most been work really and side.

better enormous get we’re we and on what per of of seeing out our monetization is don’t so essentially that. And have platform. We our session, all new leverage traffic

price. traffic We’re buy trying of be we you’ll move to it, starting And what more the can and over. see and measured we for to is it but same very about are more

So the that not materially our traffic. every It’s We more on. segment that same. cases costs some make across in we’re on traffic are

Japan or and the if seeing optimization well, or procession different, we’re and money to the that but U.S. revenue algorithms of – go we’re so – verticals France And as it’s all our line. are all in bottom it’s different algorithms up, as drops different

have pretty hopes. so actually we And high

more as increases substantially. money sell side get we’re that can more making algorithms and the And buy so sessions side, getting more more we’re optimization working better, our then actually more the traffic door. on pricing the As in moving on margin increase we and and procession,

want should add allow will combination anything nicely ad ad ripping of us that be And start you as Tridi, there? out normalizing, markets as normalize. So markets do to we pretty particularly

Tridivesh Kidambi

to on optimized No, I speed. impact big is the a thing way well. international, platform sell I that’s specifically the the new as that I right. that other really a also there’s think big around has in on is side mainly Michael’s think RAMP mean, point, of advantage terms And really the

Michael Blend

Yes. Yes, that’s right.

side. our Some of faster, making literally whole operate the efficiencies Tom, just simple buy sell to see platform direct correlation and we’re in the things, getting we’ll a

literally to quite centers we where servers closer are traffic our that, so that have And like major that helping that, bit. things a are things done putting

Tom Forte

All right.

– Tridi to question. next my must Tridi, sort of solve So then

international expansion, it on subscription And of dollar? couple talk business Is prepared I you then impact about times the to on there talked ads your a strong impact about as remarks. it I your on know business. So that? you strong like touched any the Can pertains from feel dollar you a your in

Tridivesh Kidambi

Sure.

So let me take in those order.

up percentage year. XX% revenue over that’s of of this revenue, on QX QX year, our QX XX% international of So XX% as a in was in and last platform, advertising in

slowed down So little strong bit. still a growing

I that all macro of remains of terms again, a strong international us. should very percentage. just that With Again, had headwinds – the think side. velocity not XX% while on impact grow. in the of And to respect our we the initiative seen be we little with entire continues pie the international for of still think FX, to XX% in very what to business, along advertising

dollars side. on Google the that Google partners buy denominated the then on monetization large platforms the buy And So monetize throughout. side and primarily are primarily we and in on other

for So traffic though itself little exposure selling even there or little and dollars we in are is exposure so us. buying very the international,

Tom Forte

what’s question, about networking phrase this. All the environment think with perfect when going I’m to The way trying kind right. of to you is individual Then think and companies. social the unique, now right last on of

starting going are is but you now social to early leverage to networking TikTok TikTok, social it make in difficult given more networking what’s and in traffic on identifying on for or You now? right easier money right

Michael Blend

terms traffic. We haven’t seen our buy shift to of a in effectively ability big

bit the on or our been up last think or have it’s look month Facebook I spend Facebook. a at two, go to

focused, is seen networks, haven’t much. the are a of things lot shift really And around ones them. of that particularly mobile more all which we really social remember So

privacy We’re adversely not that the rolled are by the in of super by the kind changes out. some of that Apple – advertisers affected

So based advantage have – we’re more we intent is which advertiser, there. and search an

So think been system. we scale go have TikTok. there TikTok seen don’t up we is in have learning and What huge big experimenting seen their – kind on or We’ve anything of haven’t we really down. on

on our get advertising We the really some are some marketing of but out on TikTok pretty based recently the are advertisements, over is of bit about to starting advertisements is, those starting substantial interesting business, figure are some little what’s interesting creating video a TikTok. the video other to subscription based, the to transportable more business techniques side scale of you’re sme platforms. And actually which

all use as bit to create across that optimistic that going platforms. to various we’re based video ad So formats one a ad get able be little those you standardized, can more you’re the

Tom Forte

both taking Thanks for so question. Great. sets my of much

Michael Blend

Yes. Thanks, Tom.

Tridivesh Kidambi

you joining. I appreciate

Operator

further no questions. are there time, this At

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

Michael Blend

earnings Okay. Well, call. earning joining – thanks, for QX our everybody

what bit people. technology advertising a marketing the macro heads overall and through our a environment in of right has our to our digital been our looks diversification weaker. digital little our we’re somewhat – invest in reflects say continuing performance and macro are the but down We like I happy as now difficult that environment to powering way I’m we’re business.

glad that able of to weaker environment. to We’re to take have advantage business really subscription be this

next shareholders conditions lot eye our for rewarding for close on cost XXXX. year growth a with of next keeping in are intend we We a year, market but no on matter the

some for upcoming meeting you next of our So with couple conferences you sticking I months. us. Thank very investor to the and at thanks for forward much. Thanks look in joining,

System1 (SST) 11 Nov 222022 Q3 Earnings call transcript