Earnings call transcript Q1 2023

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Operator

Greetings. Welcome to the Innovid Q1 2023 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, John Williams.

You may begin.

John Williams

operator. you, Thank

also today. I'll environment forward-looking begin, forward-looking those in made that call actual landscape, differ Relations today's earnings in to call. Before business, results other our and remind by factors that expressed statements contain competitive page Investor our statements available or statement from to the may the this release Changes regulatory we technological on you pertains and safe materially today's cause harbor could

Our not can performance. no and accuracy are law. to historical as assurance And by forward-looking required obligation our the future results update of indicative necessarily as them, to such, statements give we no of except assume as

non-GAAP useful results. appropriate, for managing they addition measures found Reconciliations our and where believe and addition, filings measures, considered of for should as GAAP measures in earnings information business a in financial with corresponding In include on may these GAAP non-GAAP today's the the provide call presentation our release investors. and and not in non-GAAP can SEC. be website These our to substitute measures available our earnings to use be the measures. We the in their

call Innovid's Zvika CEO; Q&A will who today's Chalozin, Co-Founder Co-Founder CTO, Tanya Innovid's CFO; and Hosting is Netter, Andreev-Kaspin, and Tal our and participate session. in

Zvika to begin. call to now over the I'll turn

Zvika Netter

with some and the thank all updates call about you I'll for thoughts and John, begin quarter the Thanks, recent and joining first highlights. business some today.

guidance details Our CFO, by QX followed Andreev-Kaspin, Q&A. on performance our updated provide will Tanya and

share on of new progress team are ago results preliminary results today. I'm execution. remaining and to winning even update We a our share our QX were more for and on to thrilled full weeks focused and our business our proud few excited

be and back last about where would bit in a hoped we talk guidance when consensus it and we environment. spoke both the let's current quarter our tracking start, to ahead are We beat and our So of February.

remain grew on that revenue growth, year-over-year on that our we EBITDA and QX very executing focused year-over-year, XX% and demonstrate posted adjusted We profitable we're results plan. our improvement Our guidance. our exceeded QX

a for our a can benefits because secular linear we our customers. to still This market what of in and for down story. of of trends is a Even advertising, our the Innovid grow crucial CTV shift we in critical nature CTV. provide favorable part

We deal to of customers. adding great have a success new continue

basis Our core growth year-over-year. on client a forma exceeded XX% pro

we back, a the back We clear, multiplier expect runs that bounces products when relationships off. pay customer as and they activate effect can base market up, ad deepen and growth we'll is market be see still cross-sell challenged. our To our larger the as advertising efforts our overall more

saw some existing some is have spending back of our indications to ad due in our pulled While of limited, QX, visibility modest we and concerns. still firming macro customers

Specifically, looking consumer in and and tech, at verticals, financial and weakness we've seen auto, insurance strength in electronics. telecom, and CPG

Importantly, tend cyclical advertising in to fashion. verticals move

trend slower the to growth up expect improved. macro we a as So pick areas

a highlights. for Now quarter additional few

and expansions see logos PadSquad, to platforms. include new continue in recent wins We our success [indiscernible]. to adding Exciting

announced partnerships, Walmart notably also We with several most DSP. new

partnership the through measurement. with Looking InnovidXP upside. focused adding that DCO and expanded renewed report and on rest ahead of continuing thrilled our I'm for cross-selling to we're Verizon, additional we our and video XXXX, relationship ad-serving, with

for others our Disney adopting on across recently We're Disney and XX with and strategies. enhance expanded relationship than travel, telco relationship advertisers that and also multiyear their We addressable more excited measurement solutions streaming are [indiscernible] further measurement Innovid Hulu our to to e-commerce footprint. including enhance Disney, building

standardization. environment than of measurement a platform strategy. need capabilities help complex navigate is More key measurement component its our a For them and to lack a this Innovid, scaling up advertisers further of brand in long-term centralized and

what fantastic. with in is how measurement to core our customers this clients shows and continued value table. aligned our just bring It us, much growth across value personalization. For we proposition And ad-serving, the is

experienced In QX summary, TV key but we a had technology of still a firming. the and in and remain in some expansions about confident clear position advertising client bit as cautious remainder infrastructure the exited CTV. our We XXXX. industry and ad including quarter, solid are the some more specifically leader wins optimistic for We critical the future of building

quarter first guidance. the updated hand now Tanya? CFO, to Tanya discuss over call to Andreev-Kaspin, I'll results our our and

Tanya Andreev-Kaspin

Zvika, morning, and everyone. good you, Thank

our positive XX% by year-over-year grew results pleased guide X% of and QX or are million of total range XX% revenue to beat the X% and our Measurement top and were year-over-year in a pro on QX. are represented X% and We initial a report personalization XX% EBITDA. basis basis happy and delivered forma on QX. on $XX.X adjusted total services basis. to of Ad-serving forma represented X% up revenue pro the revenue QX with outperformance. grew We revenue a reported in

video and XX% ad-serving by QX ad video grew volume XX% closely personalization while XX% all revenue XX% decreased X% of by our impressions. of platform. video volume with of represented served from volume up the Mobile impressions, and represented XXXX. in XX% Innovid and and impressions, all desktop volume quarter impressions through all decreased of was CTV year-over-year XX% relates first

first the generated challenging acceptable to and in backdrop desktop while growth, demonstrated the mobile, declined CTV most quarter. resilience macro and

revenue. expect share continue compared revenue XX% represented last QX, the grew of to our In We and revenue the X% impressions. revenue year-over-year growth the to quarterly in breakdown. on grew channels, video to CTV XX% and On outpace year. XX% of gaining basis a total U.S. of geographic more of total even XX% QX International to reported other represented business

mainly revenues impacted increased by again, XX% from $X.X on cost in is the of compensation. by revenues increase stock-based Cost Revenue in year-over-year attributed moving revenue TVSquared. XX% and was of of to The acquisition Now TVSquared expenses. QX. QX, million QX of to primarily less in XXXX, down

margin operate We close our TVSquared expect the to pre-acquisition business eventually legacy to level. at or

and stock-based TVSquared in the were $X.X expenses, of the we acquisition, million, increase million count at expenses amortization, onetime X% primarily $XX.X expenses, is offset quarter Most million and depreciation IPO-related increase to Employee the year. a particularly the in incurred compensation reduction by QX in positive reduction last first up due and year-over-year. margin on QX share X.X% $X.XX. was force $X.X EBITDA after of acquisition forma QX was end to excluding of year last operating year. per loss $X.X or quarter basis. net a XXX, positive million, compared a pro adjusted in a adjusted the loss versus XX% negative representing previous XX% QX $X.X was a million decrease EBITDA QX or in the

cash capital and to on allocation. Now

common our support and comfortable expect XXXX to with ended are overall position. We $XX modest on with liquidity already $XX We in Quarter-end our burn and in additional revolver. profitable and XXX.X our growth million cash cash liquidity our an our outstanding quarter the million position cash and cash focus equivalents million with shares. available $XX was debt and on in reduce stock million

would our outlook. like discuss to Finally, I

We for and a are our QX performance are outlook encouraged by projecting the year. modestly full improved

range second representing quarter year-over-year revenue to X% in the X% $XX of negative the million expect $XX growth. we to total million, of For XXXX,

X of reminders. QX the expect range million. We EBITDA positive Two to in adjusted $X additional

our benefit XX% the full headcount in outlook completed reduction recent QX. of expense our includes First,

acquisition. out reported a letting beginning we TVSquared as as versus will full pro Second, be since forma QX, in be longer the we year breaking will no

Full year outlook.

increasing to for than guidance our flat our We higher year-over-year. slightly the year-over-year are guidance previous revenue full of versus year

believe by We expect have encouraged full the factored could profitability we current of at improvement and economic versus year we guidance. already we momentum previous EBITDA guidance. We're a our year the in full into adjusted margin our an the least expectations improves, exceed X%, environment business

quarter remain and financially customers TV on session. growth. In Zvika, to the value to advertising of Innovid for are answer is Q&A profitable and positioned we strategically Operator, future you the questions. critical infrastructure driving conclusion, again joining driving please continue for results pleased Tal call. well our and are begin with and ready shareholders. Thank for the building now the focused I technology and your our first

Operator

from line comes Laura Instructions] first [Operator Martin of you. with the Needham. Thank Our question

Laura Martin

I couple. guess interested, guess AI. I'm in I I most generative have a Zvika,

the your years? but generative how terms raise a think side, think also revenue right I'm several now. you interested affects cost how all growth -- the it of think in in next I you investments AI business the that's and very over productivity

Zvika Netter

Data into all before What's question. was AI the for York Stock about where already range, how data, it's the AI Innovid, on Thanks remember, and November, I also fits attended improving back, already patterns, AI results. AI, in we platform Laura. our as in inputs you production think presented actually where operates -- investor generative Generative Day unique outputs. right? and I believe, Sure, you Exchange New our Investor

creative can we how then, deliver we server, and ad importantly, the it. as the we ads of And serve what creative see we households the because at the optimization measurement, creative, course, through most outcome. basically, So frequency reach and all will CTV change many of

when is optimize you targeting, something can with the part, three is can frequency. customers' the by of optimizing is the pieces the which brand creative, medium going what's but actually That connect the based on and the see optimizing a exciting system that not and goals, What's on reach performance. just

our generating the [indiscernible]. is generative creative in generation So creative, seeing both now something next obviously, of system, already that's we're that this and versioning, with images in help text terms the -- for the AI can creative

And that looking the we're ideas side, insights. measurement exciting some on now right at

So further push make much going of the more and thing job overall, us excellent it's efficient. an customers to that's our

Laura Martin

of I What measurement. on talk bring from are kinds you you the in terms go-to-market to like? change? us in on then heard Disney about about things solution? do up go do they just to are Can What you learning measurement And your Could and on have need? they to integrating -- you're your of tell you what strategy? measurements that went measurements into companies Verizon of about now the What learning and adopting where us Fantastic. date terms get comments talk here measurement you what

Zvika Netter

Sure.

they And looking really with a went the the for generate and Verizon is are drove Insight, out told our least migrate what that from to XX there, working insights can largest basically, months years. they we they the few here linear back X, wanted and TVSquared ads CTV was brands see portion, of broadcast our at to television cross-platform, largest XX, after TV data we CTV example. definitely what they see customers, because love So And public, of people to a is both years is around ad what acquisition another as linear great lot the while a together stay then server our CTV. us

than more view big that's Since combined was is and what both that integrated the more a TV. So product teams, frequency grow. reach the then single ago. connected a of integrated of in frequency, linear reach year and And households the the view how we to can and television point outcome the acquisition. see, is you launched they and InnovidXP, what drove course, see wanted the what the the important which a that platform you that is outcome, many It

refocus and example. and introducing Verizon time the TV direct-to-consumer smaller-type it's then Innovid, of in fully customers. good and promise some what So was if company exactly that's -- and and what this That focusing is advertisers out largest is a the testing again the the production. in And Verizon on product recall, with TVSquared came in a of now on that terms -- was we there InnovidXP you took is more

would there the was see and Grail. Holy we're ad is, from ago, in Verizon. kind of conviction the adding our customers. but is our Verizon component arising of that the And the that and and also So love not and deals is with promise DCO, This just server directly, using measurement years we by to it delivering what all way, now this

example side. great on Disney is another the sales

a but actually -- very unique. iconic very because and there same always outcome. very, owners Innovid to first-party see long the perspective, like the publisher, we looking still connected is It's large integration the media it's and throughout a are data to largest is that of of on this more Cross-platform world, Disney from thing. the they're I a these do both one deals, would expect say, the unique the to it's year. pause And a plus because So in very

Operator

from the Andrew of Boone JMP Our next comes Securities. with question line

Matthew Dorrian

about thinking philosophy see calling taking first, to long you can also in on Maybe the talk about positive step EBITDA Andrew. your guide margins guys to remainder XQ. just you're Matt, talk And of just about adjusted the back, how and then for year? us you for just expanding cost controls pricing? a investments Can in term around guys XQ great for

Zvika Netter

would we further our for the is different server, feel that ad to on of started, there pricing can history standard we actually pricing, possible. at many unique price it's fixed room definitely this almost and the ago where years is So set and a from by explore was that Google us on say, the the of the -- very, as level lowest currently I many, rigid expand kind

from we're cash and a flow mindset flexible in some that pricing But committed market and of structure bigger more a Definitely as we in margins, started as you present and minimum all the feel investing annual like cases, then rewarding CTV as -- we're mentioned commitments, more stuff. share. deals and we there the and innovation So in the becomes free also things gain we can part definitely the that. DCO now of company in measurement, we more

large our of that we with introduce are in that with the agency. is millions, we and as brands come somewhat a models that directly, that software are the enterprise are more than we as can So multimillions different brands media believe entering the models become from there year more -- world companies with more believe transact deals the we with

pricing. the on that's So

get years. On the within mean EBITDA, we goal that have this. long-term we we are to said a very to of proud of a couple EBITDA XX% XX%, I always

we'll there on in QX, flow. throughout down clear cash our and to acquisition in expect QX, constantly cost made free happy see and year and challenging EBITDA, and the the -- our is see to it it was Obviously, controlling giving more progress on expect the in how of KPIs see very in to improvement EBITDA last the market year we're focus and very we terms we both the

top of go is the way you to line growth a is the all EBITDA. and lot that ideally, see the bottom line should to what While grows, going that improve

to about And what -- of the acquisitions We're the making market, made to like we thing mentioned, cost. existing XX% is a customers year. upsell is X are control in headcount reduction and right We anyway. Tanya the opposed it's As This do more earlier in existing. were in so we're to products. control on focusing both already continues in They that and them have production. Disney Verizon, sure

but on us allow ideally grow line. to top definitely growth maintain bottom will things the these the line of All the

Operator

of Evercore. next Our question Shweta with comes line from Khajuria the

Unidentified Analyst

the Shweta is hearing the Could you of Khajuria. year? elaborate more are asking And you [indiscernible] did little then advertisers This as question bit for the from how a a about you on quarter? demand trend advertisers think what through rest

Zvika Netter

Can couldn't that Is the question? quarter, I advertiser the something repeat you hear. through

Unidentified Analyst

trend. demand Advertiser

Zvika Netter

and You question? second mentioned the the quarter through

Unidentified Analyst

year? hearing And when rest advertisers I'm just expectation? about wondering from you what the of you think the What's your are

Zvika Netter

we're other optimistic from we're I what as the months see we and than that environment, more economical and and -- is time, into quarter, challenging see the can same is throughout that we this definitely ago. improvement a companies seeing -- seeing in we're we're the mean now going definitely that of couple QX. So seeing economical improvement an especially at in also you we're were results, Innovid and

it's going So normal. definitely to back not

we're that's with based our because what we're slightly can feeling more why more on we're So -- cautious definitely optimistic situation change. being seeing. guidance a But

actual The products demand just never customer on -- has stopped. specifically for The is is spend. so this this demand, our

the existing CTV. you us. overall, ad spend more we more new people heard, server UPS from and on like As buy products customers closed other And customers on

it's of than than now QX. the company. media environment, overall more it's in is difficult of growth -- And even that for the more spend CTV first half the XX% grew because So of while time, in this shrinking

the all XX% the we QX ads in on were half CTV. delivered of So

to So grow. CTV to from us. continues or Customers servers products additional continue buy ad

and spending I from other great very -- see question that's are would like So to believe and actually any a diligently return, they where about advertising we for optimistic. thing that and people in perspective, very platform. our companies we're cautious general, your are adopting a business, say are

Operator

Our Patil from line comes the Susquehanna. next Shyam with of question

Jared Pomerantz

for for for question. for the on Thanks taking the Jared profitability Shyam. the color base. thinking managing Thanks how all is year the about you're and on cost This

trade-off remarks, Towards potential How expansion. in growth are in you acceleration of margin the Tanya, see that EBITDA we half an that second to the there prepared we a end potential the of mentioned you expense and to the to flowing back through could lean see might do areas you environment. improving thinking between areas up margin the want into through expansion stepped investment extent that

Tanya Andreev-Kaspin

question. the for you Great question. Thank

what financial XXXX, to growth. we set situation year prepared So experiencing to seeing. profitable we the an sales clear very we in on are for in for we and can all And our a In on are we most when to our that's as R&D, those we investments, focus control. efficient it we right believe what economical our uncertain plan growth need And in the now, have in way. investments are focused goal the be make we macro marketing, but the investments

that's see in distracted downturn now. QX, at staying right technology. substantially We profitable, we is invest R&D quite focused margin. will absolutely the year, still to you we want and such. think for which by adjusted we're already And that P&L, as and don't be to what's on in profitability EBITDA for us. what be the delivered our that improving indicated our new market X% And least that, We economical and delivering important the we We could

Jared Pomerantz

thinking recently to thinking broadly announced else ad-serving about point? may. this one the you various Great. then and Walmart that dig the how might out partnership, I on bit anything you're through from personalization that a you that just elements retail could And I call are if in was at then opportunity hoping media we more, guys And how there? further

Zvika Netter

Tal, take front. I'll progress We're have that CTO, that. great Tal? Sure. our seeing on really definitely

Tal Chalozin

Jared. Thanks, Sure.

we retail media So a definitely see as yes, opportunity. massive

the main Television role I other personalization, which with portfolio media massive have we play using media media ways to to everywhere ad-serving space, think second consumer and the leverage can opportunity. in you that creative really the and along in the specific around of of that advertisers data focus retail if industry, the and type buy packaged one do. I'm and across or think follow to that a multiple all couple media and products retail goods a optimize And in lot is marketers Connected main places a sure users. there's you driver a message general, data. allowing plays talk growth tremendous to We you creative is as leverage align the and when the networks their retail as

We're -- us very So the massive put so a this now, right general, creative seen industry personalization. we've targeting, a excited this of and on progress Walmart messaging partnership in around that again, but in media we DSP quarter. media retail that networks around for next to is we the And with -- where capitalize that that see think said, on. is a we is announced opportunity a lot is efforts would of we think our that for lot lot and think retail about and generation far, media we the industry our as I retail we

Operator

Stanley. line our with Cost And of the Matthew from comes question Morgan next

Matthew Cost

would kind you the look driver outperformed were macro? firming your that but into situation mentioned quarter, firming quarter rest that of a first of was Is there's out call as the up at kind real line of that the top macro some uncertainty in year. the of some -- and function When up, still of the beat. we guidance beat, versus the outperformance first the the there the wins or you products key Or just

guidance. year imply thinking does just And some year the share year seeding competitive as secondly, -- about this guidance think year of When you landscape, your the the out rest market or then share? gaining to for the and we maintaining do you growth see the share, maybe full

Zvika Netter

Sure.

it's and it the brought softness the to it's driving what's of of -- definitely in performance basically more. the kind adding the is, KPIs So we're terms But what the the definitely the market. of level outperformance, of company, in

KPIs about the part think are a just high-level I'll desktop you and overview, So kind the of CTV right? right, part all and a bigger company's -- and If that of CTV-related it, a is smaller that of like drive almost the into business the it's video. you are our give company mobile up

more ad watching -- have are there there's content. are ad-based out there -- more We based. is that People more content

are brands on while out supply, overall, they increasing. in more spend Brands cases, cutting there the constantly spend are money because people. So more impressions overall the CTV budgets more many

in factors. CTV. two other increasing one calling have you but So One down, that maybe is the fast is

So the CTV grow that's causing to XX%.

was a Innovid of time. see this And CTV, happen growth. all will over you'll faster XXX% much So

top added, it, On as of were we share. gaining we we today, added

So X direction. especially share of that out of and not usually last one around in gained the Google. of out the share. platform ad server gained Google where we It the for Manager Campaign all it's constantly we mostly gain goes Google Overall, change. We years from share did

don't So there's our reason trend. future to the dramatic foreseeable that we perspective, change in expect in a see no from

our more one about customers and that that product more are every So and quarter Innovid. more platform join expect to customers in more you more and than should hear using

fixed the in model this based. is all So volume

this should environment the that all line. So spend. What's create a faster growth calling and on macroeconomic overall top much joy the is

growth the that's on on control. we that looking we because -- all are thing to investing flow line. them, what once line for the we're factors, one top and keep Our the cost to and the we them. bottom there not the is market control The is will recover, much bullish We other on starts don't steeper very

we're basically what that's So looking for.

products continues more expansion of But not grow. selling change customers, in did and more that and to share to terms

I'm can I here, not the In you terms full question? it landscape, the competitive but repeat sure of the question. wrote got I

Matthew Cost

it on [indiscernible] of was -- question Yes. perspective. you answered really kind Yes. The

Zvika Netter

Yes. Yes.

a In try reason are you're question way, don't you platform in what from to they asked on We're when why Technology -- change AI. we a $XXX to environments if in the it, I'm and of constantly like just and brands that's look this, every So perspective, look at spend see will a difficult we to customers, it. trend. optimize And encourage actually connected see a dollar a AI, the great many technology. and to Generative what spending getting way lower using action understand created a type million what about television? outcomes, How household frequency, is it optimize. campaign

So this, in spend, we is less good for It's absolutely product. in an of actually like new good is temporary business environment all terms this and but that closing new a overall thing. know

will it dramatically. go up So

Operator

of it [Operator end like participation. and looks you And you Thank the this session. the have time. this lines your also today's your at Instructions] conference, we for disconnect question-and-answer concludes may And reached

Innovid (CTV) 9 May 232023 Q1 Earnings call transcript