NYSE:CTV Innovid Q1 2024 Earnings Report $3.14 0.00 (0.00%) As of 02/21/2025 Earnings HistoryForecast Innovid EPS ResultsActual EPS-$0.04Consensus EPS -$0.02Beat/MissMissed by -$0.02One Year Ago EPS-$0.06Innovid Revenue ResultsActual Revenue$36.74 millionExpected Revenue$35.99 millionBeat/MissBeat by +$750.00 thousandYoY Revenue GrowthN/AInnovid Announcement DetailsQuarterQ1 2024Date5/7/2024TimeBefore Market OpensConference Call DateTuesday, May 7, 2024Conference Call Time8:30AM ETUpcoming EarningsInnovid's Q1 2025 earnings is scheduled for Tuesday, June 10, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Innovid Q1 2024 Earnings Call TranscriptProvided by QuartrMay 7, 2024 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the Innovid First Quarter 2024 Earnings Call. Our host for today's call is Brenly Johnson. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host, Brinley Johnson. Operator00:00:19You may begin. Speaker 100:00:22Thank you, operator. Before we begin, I would like to remind you that today's call may contain forward looking statements and that the forward looking statement disclaimer included in today's earnings release available on our Investor Relations page also pertains to this call. These forward looking statements may include, without limitation, predictions, expectations, targets or estimates regarding our anticipated financial performance, business plans and objectives, future events and developments. Changes in our business, competitive landscape, technological or regulatory environment and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today. Our historical results are not necessarily indicative of future performance and as such, we can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them except as required by law. Speaker 100:01:11In addition, today's call will include non GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margins and free cash flow. We use these non GAAP measures in managing the business and believe they provide useful information for our investors. These measures should be considered in addition to and not as a substitute for our GAAP results. Reconciliations of the non GAAP measures to their corresponding GAAP measures, where appropriate, can be found in our earnings release available on our website and in our filings with the SEC. Hosting today's call are Zika Netter, Innovid's Co Founder and CEO as well as Anthony Collini, Innovid's CFO, both of whom will participate in our Q and A session. Speaker 100:01:48And now, I'll turn the call over to Zika to begin. Go ahead. Speaker 200:01:53Thanks, Brittany, and thank you all for joining the call today. We had a strong start to 2024 as Q1 revenue grew over 20% and adjusted EBITDA significantly improved compared to Q1 last year. Most recently, we launched our Harmony initiative and related product suite to optimize the CTV advertising ecosystem as we seek to keep TV open for everyone and controlled by no one. Today, our review of first quarter results provide several exciting business updates, unpack the Harmony initiative and share some thoughts on the rest of the year. I'll then turn it over to our Chief Financial Officer, Tony Cali, who will provide further details on our Q1 financials, updates on the financial guidance and we'll finish with Q and A. Speaker 200:02:43I am pleased to report 1st quarter revenue of $36,700,000 reflecting 21% growth over the last year. Adjusted EBITDA improved from effectively breakeven last Q1 to $4,400,000 in the Q1 of 2024, reflecting an adjusted EBITDA margin of 12% as operation profitability continues to improve. We also delivered another quarter of positive free cash flow at $2,000,000 a $4,800,000 improvement over Q1 of last year. In the Q1, we signed new client wins, product expansion and renewals with leading brands such as Eli Lilly, Hellion, Homes.com and Verizon, as well as publishers like the Tennis Channel owned by Sinclair. Our financial results and client wins of our team's hard work and the power of our platform. Speaker 200:03:43Another important part of what makes Innovate unique is our focus on innovation. We push the boundaries of what's possible in the fast growing CTV industry. And today, I'll share a few highlights of what we accomplished in Q1. In February, we launched a series of first two market interactive ads in partnership with Paramount Plus. During Super Bowl 58, the most streamed Super Bowl ever, the ads engage consumers with a new add to watch list units to promote Permian Plus content. Speaker 200:04:15We also developed interactive ads for Pfizer, which drove viewers to their Let's Outdo Cancer website. As live sports and other high value content continues to shift the streaming platform, we believe this will further accelerate the increase in CTV viewership and advertising spend. More recently, we were recognized as the best measurement tool by Digiday in their 2024 Digiday Video and TV Awards, which highlights the company's campaigns and technologies modernizing video and TV. This recognition exemplifies the power of our platform and the value our measurement solution provides to brands and publishers. We do not only help measure the efficiency and effectiveness of CTV advertising, but we also empower them to act on that intelligence to optimize their investments. Speaker 200:05:07Next, I'm very excited to share more about our new strategic initiative at Innovate. A few weeks ago, we were joined by clients and industry partners, including ANA, the 4A's and the IV at the New York Stock Exchange and via global webcast as we launch our Harmony initiative and product suite. Our Harmony initiative was created to address some of the biggest challenges facing CTV advertising today. By optimizing CTV advertising at the infrastructure level, we believe we can improve efficiency, enhance transparency and control, reduce carbon emissions and increase ROI to ultimately provide better viewing experience that will benefit advertisers, publishers, ad tech platforms and of course, CTV viewers. Every day, our ad serving capabilities, our award winning creative technology and our measurement capabilities help us deliver exceptional value to our clients. Speaker 200:06:05Now with Harmony, we're adding an activation and optimization layer powered by our CTV data set and our unique position in the ecosystem. On the data front, we deliver 1,300,000,000 TV ads a day and see trillions of data points giving us an unrivaled view of the ecosystem that covers programmatic and direct buys, the open web and walled gardens. This means we sit in the unique position to be able to deliver and as a result see and understand 100% of what our clients run-in CTV. In addition, since we don't buy, bid on or sell media, we're a media agnostic and unbiased, which puts us in the best position together with our partners to solve the biggest challenges in CTV. We are releasing a series of product innovation throughout 2024 under the Harmony product suite umbrella to openly share our unique data driven CTV intelligence with the industry. Speaker 200:07:07We believe this will help make the entire CTV advertising ecosystem better for the benefit of all advertisers, publishers, DSPs and SSPs, and of course, the viewers at home. One of the first product innovations to be released as part of the initiative is Harmony Direct, which connects the Innovate buy side ad server directly to the publisher ad server for the delivery of guaranteed non beatable CTV ad impressions. This streamlines the workflow for these types of campaigns to its purest floor, removing all friction points, including technology hops, fees and energy waste. With fewer hops and less budget going to intermediates, advertisers can drive better outcomes from the same investment because more is going to actual working media. Harmony Direct also aims to lower the risk of latency and fraud, provide a greener supply path and improve fill rates for publishers. Speaker 200:08:06Agency and publisher partners, including Assembly, CMI Media Group, PMG, RPA and Roku are among the first to use Harmony Direct. In line with our commitment to stay an unbiased true partner to our customers and publisher partners, we are offering an impression based software pricing model for our Harmony product suite rather than a percentage of media model. For Harmony Direct, in particular, having a flat fee per impression model versus a take rate is increasing the amount of working media dollars that actually make their way from the advertiser to the publisher. This is a true win win. Brands will have more ad dollars for working media and publishers will have more revenue opportunities from the exact same budget. Speaker 200:08:53As I mentioned earlier, we have a roadmap of Harmony products that will continue to be released throughout 2024. We believe Harmony will better balance the value creation in CTV, in CTV, which will accelerate budget shifting from linear TV to CTV. While still in early days, we expect the Harmony strategy to help drive revenue growth over the long term by enhancing our cross sell opportunities and strengthening our strategic positioning. Our products are becoming more and more connected and integrated, increasing the overall stickiness of the Innovate platform. However, since this initiative and product are still new, any commercial impact is not yet reflected in our 2024 guidance. Speaker 200:09:36In summary, we had a great start to 2024 and are excited about the opportunities ahead of us. We continue to innovate and release exciting new optimization capabilities to support and further drive the shift from linear to CTV. Financially, we are trending towards our long term financial goals of over 20% sustained growth and 30% adjusted EBITDA margins. We believe we are well positioned to become the essential technology infrastructure for the future of TV advertising and to experience outsized growth when ad spend returns to its historic level. We remain committed to innovation and value creation for our customers and shareholders. Speaker 200:10:19With that, I'll ask Tony to take us through the numbers and provide some insight into Q2 and full year expectations. Tony? Speaker 300:10:30Thank you, Zveika, and good morning, everyone. It was another strong quarter of profitable growth and an encouraging start to 2024. We're pleased to report our 2nd consecutive quarter of double digit growth, our 7th straight quarter of year over year adjusted EBITDA margin expansion and 3rd consecutive quarter of positive free cash flow, all contributing to continued business momentum entering 2024. Now let me dig a little more into the numbers. First quarter revenue grew 21% year over year to $36,700,000 Breaking that down further, ad serving and personalization revenues were up 23% year over year, while measurement revenue grew 11%. Speaker 300:11:16As a percentage of revenue, ad serving and personalization made up 79%, while measurement accounted for 21%. The growth in ad serving and personalization reflects the emerging stabilization of advertising spend and continued shift to CTV. In fact, CTV revenue from ad serving and personalization grew 22% over last Q1. As a reminder, Innovid's ad serving and personalization revenue closely correlates with ad impression volume served through our platform. Within this category, CTV impression volume increased 21% as more impressions continue to transition to CTV and represented 52% of all video impressions. Speaker 300:12:04Mobile video volume grew by 38% and represented 37% of all video impressions, while desktop volume increased by 12% and reflected 11% of all video impressions. Both mobile and desktop have been inconsistent throughout 2023, but demonstrated meaningful growth in the Q4, and we are pleased to see that trend continue into the Q1 of 2024. All three of these devices represent consumers watching streaming applications. So it's also helpful to look at total video impressions, which grew 25% overall in the Q1 as compared to the Q1 of 2023. The double digit growth in measurement revenues reflects the continued enhancement of our measurement capabilities to take generated from the ad serving side of the business. Speaker 300:12:59While the measurement business model is more subscription oriented than ad serving, there is some seasonality with an anticipated step down from Q4 to Q1. As Vika mentioned, we expect our unique ability to combine creative, delivery and measurement solutions to provide differentiated client value and be a catalyst for continued revenue growth. It should be noted, however, that while we are pleased with this quarter's revenue growth, ad spend in Q1 2023 was materially impacted by a challenging macro environment. While we experienced the meaningful year over year improvement in the Q1, we don't expect a continued sequential improvement in quarterly growth going forward as the quarterly comps continue to improve. Now moving on to costs and expenses. Speaker 300:13:51Revenue less cost of revenue calculated out to 76% of revenue, improving from 73% in Q1 last year. Our margins continue to improve as the business scales, reflecting the operating leverage embedded in our business model. Q1 total operating expenses, excluding depreciation, amortization and impairment, totaled $37,200,000 an increase of 1% from $6,700,000 last year, but supporting 21% more revenue than in 2023. Employee count at the end of March was 472 as compared with 465 at the end of Q1 2023. We remain committed to managing our cost base while making strategic investments in high growth areas to drive improved profitability Speaker 200:14:46and generate long term value creation Operator00:14:46for our shareholders. Speaker 300:14:49Q1 net loss was $6,200,000 or a per share loss of $0.04 This compares with a net loss of $8,600,000 and per share loss of $0.06 in Q1 2023. The outstanding common share count at quarter close was 143,900,000 shares. Adjusted EBITDA in the first quarter was $4,400,000 representing a 12% adjusted EBITDA margin, a $4,300,000 improvement as compared to adjusted EBITDA of just $100,000 or 0.1 percent adjusted EBITDA margin in Q1 last year. You may remember that adjusted EBITDA margin each quarter in 2023 was an improvement over its equivalent quarter in 2022, and we have continued that trend in the Q1 of 2024. These improvements reflect the impact of sustained revenue growth, lower cost of revenues as a percentage of revenue and operating costs that grew nominally over the prior year, demonstrating the leverage inherent in the operating model. Speaker 300:16:02Turning to the balance sheet and cash flow. We ended Q1 in a strong financial position with $31,600,000 in cash and cash equivalents with no outstanding balance on our revolving debt facility. As a reminder, we have $50,000,000 available on that debt facility. On a net cash basis, or to say it another way, cash and cash equivalents less outstanding revolver balance, the $31,600,000 on hand at the end of Q1 2024 is an improvement compared to the $29,600,000 on hand at the end of 2023 $25,000,000 at the end of Q1 2023. During the quarter, operating cash flow was $4,700,000 and free cash flow was 2 $8,000,000 over the $2,800,000 of free cash flow used in Q1 2023. Speaker 300:16:57If we look at free cash flow on a trailing 12 month basis, we have seen an improvement of $22,100,000 as compared to the same 12 month period ended March 31, 2023. Finally, let me touch on our outlook for the Q2 and an update for the full year 2024. We are encouraged by both the strong finish to 2023 and continued momentum into 2024 and remain committed to our long term financial target of 20 plus percent annual revenue growth and 30 plus percent adjusted EBITDA margin. We are confident in the underlying strength of our business, opportunities for disruption in the market and our ability to grow revenue in a profitable way. We see 2024 as a meaningful step towards achieving our long term targets. Speaker 300:17:48In the Q2 of 2024, we expect total revenue in a range of $37,500,000 $1,000,000 to $39,500,000 representing 9% to 14% year over year growth. We expect Q2 adjusted EBITDA in a range of $5,000,000 to $6,000,000 as compared to $4,500,000 in the Q2 of last year. For the full year, we expect revenue of $157,000,000 to $163,000,000 reflecting 12% to 17% annual growth and adjusted EBITDA between $24,000,000 $29,000,000 We had a strong start to the New Year with continued revenue growth, margin expansion and free cash flow generation. With exciting new product offerings like Harmony added to our existing capabilities, we believe we can continue to bring more value to our clients and reimagine what's possible in the industry. We are proud of our accomplishments and look forward to taking a leading role in improving the ecosystem for everyone. Speaker 300:18:54As Zika mentioned, we remain committed to continued execution, innovation and value creation for our customers and our shareholders. This concludes our prepared remarks. Zika and I are now happy to take some questions. Operator, please begin the Q and A session. Operator00:19:29Our first question comes from Matt Condon with Citizens JMP. Your line is open. Speaker 400:19:36Thank you guys for taking my question. My first one is just on demand throughout the quarter. Can you just give us an update just on the health of the overall market and maybe trends that seeing into 2Q? And then stepping back, maybe with the reorganization of the sales force in 2023 and with the product initiatives around Harmony Direct, can you just well, just the Harmony initiative more broadly and Harmony Direct and instant optimization, can you just talk about how your conversations with advertisers are coming and maybe any sort of adoption that you're seeing of these newer initiatives taking off? Thank you so much. Speaker 200:20:10Sure. Hey, Matt. On macro perspective, we're seeing something similar to kind of the second half of twenty twenty three. We see a stable environment. Still it's less than a normal environment. Speaker 200:20:25And we see sort of stable below normal, but something that's more predictable. I would say at the same time, we need to remember that the second half of this year. We see this trend moving into the Q2 also. But the second part of the year, we also have we have a combination of election and Olympics and that can affect the industry dynamics when it comes to advertising. But overall, we're definitely seeing an improvement year over year and we believe that will continue for of the year. Speaker 200:20:57Would definitely to keep an eye on the second half. In terms of the products around Harmony, I assume we'll have more questions and follow ups in the future also in that as an initiative, very excited about it in terms of initial customer response. You could even see on the launch, we have the video on our website of the launch event. We had there not just customers and partners, we also had 3 industry, very strong industry groups that represent the buyers, the advertisers, the agencies and the publishers and platforms, that's the ANA, 4As and IAB, all on stage with us. So Harmony is hitting on absolutely the top critical challenges within CTV. Speaker 200:21:48So as expected, we definitely have a strong interest, I would say, 1st and foremost from advertisers, brands and agencies and of course publishers. At the same time, these are early days, right. So we engage in conversations immediately. These are very important topics for everybody in the industry. At the same time, in terms of revenue, we just launched it. Speaker 200:22:10So these things usually take time. So we don't while the investment is clearly included in the operating plan, we don't expect or in our guidance, we don't include revenue from Harmony just yet. Speaker 400:22:26Very helpful. Thank you. Speaker 200:22:28Thank you. Operator00:22:32Your next question comes from shayim Patel with Susquehanna. Your line is open. Speaker 500:22:39Good morning. This is Jason on for Sean. Thanks for taking our question. On the Harmony platform, you mentioned it works with DSPs on that. Can you elaborate more on how that works? Speaker 500:22:49And can you provide any examples for it? Thank you. Speaker 200:22:53Thank you, Jason. Can you repeat the question, the first part of the question, Mathieu? I heard you clearly? Speaker 500:23:00Yes. On the Harmony platform, you mentioned that it works with DSPs. Can you elaborate on how that works? And can you provide any examples for that? Speaker 200:23:09Of course. So Harmony is working not just with DSPs, basically maybe with a very quick overview of what it is. Harmony is designed to work with everybody in the industry. So that's advertisers, agencies, the tech platforms and programmatic tech platforms, that's DSPs, SSPs and publishers from a tech perspective, sell side ad servers. So the concept is to balance the entire CTV industry in a way that will tackle challenges that we're seeing today, which are they come with the territory when you're switching from linear broadcast television to a digital environment. Speaker 200:23:50It kind of brings with it things like transparency, frequency management, measurement, fraud, all the things that come with digital. The goal of Harmony is before CTV becomes as big to all of us work together, programmatic platforms, ad servers, buyers, sellers to create a better industry for everybody. So the DSPs definitely have a critical component programmatic basically have a critical component of this because based it allows the programmatic environment allows to make decisions in real time. If you want to manage things like frequency, extended reach, optimize against outcome, this is something that the programmatic media buying platforms and selling platforms allowed us to do. Now Innovate is an ad server on the buy side. Speaker 200:24:44We have no desire to be a DSP. So we are partnering with them and the way to do it is by sending signals. We see 100% of the media plan. We see 100% of the campaign, which is nobody else in the industry except other ad service like Google, campaign manager actually get to see everything. So what we're doing with Harmony was saying instead of keeping this information just in our system, allowing our customers to allow this information to go into something like a DSP, SSP and a publisher, so they can optimize with the 100% view that we have. Speaker 200:25:19They usually have 10% to 30% view, we see everything. So the goal with the Harmony is for us to share that with them and they can optimize against that. And in this case, everybody wins. But clearly, this is a very big initiative that can take an entire hour or 3 to share and that's on our website on the homepage. Speaker 500:25:41Great. Thank you. Operator00:25:49Your next question comes from Matthew Cost with Morgan Stanley. Your line is open. Speaker 600:25:56Thanks for taking the question. So I think your commentary about what you're seeing in the overall market, it sounds constructive. You're talking about seeing some real improvement, especially given the easier comp in 1Q and stabilization. But it does sound like there's areas of strength and weakness. Most of what we're hearing from Chex and from others in the ad industry year to date is pretty positive commentary, broadly speaking, in terms of just volume of ad spend and even impressions at the market level. Speaker 600:26:26So I guess, what are the areas of a particular strength and then weakness that you would call out that you're seeing year to date? Thank you. Speaker 300:26:36Yes, great. Thanks, Matt. I think we're really encouraged by the just the amount of impressions that have carried over from the Q4 of 2023 into 2024. So just a strong start to the year and even with a bit of an easier comp in Q1, we're pleased to see some of the verticals that were strong before continue to be strong and some that had struggled last year, maybe take a bit of a step forward. I mean, that said, there's still some inconsistency between verticals. Speaker 300:27:12And then as we look out over the rest of the year, what we've seen is there's potential headwinds and tailwinds for sure. And on the headwind side, just the overall shift to connected television continues to happen. Things like live sports, things like more ad supported content. And for us, those are all real positives. And what we don't know is when it's going Speaker 200:27:37to take Speaker 300:27:38effect and the amount that it will take effect when it does. On the potential headwind sides for us, we have the election cycle that's coming, which granted it drives more volume and the rising tide lifts all boats. But as you know, we support brands. And so it could have a bit of a cooling to brands in the second half of the year. And the other part, as you can mentioned, is the Olympics. Speaker 300:28:04And again, that's great for the kind of brand awareness in general, but a lot of times what the brands will do is look for more sponsorships than actual advertising. So there's just this there's some uncertainty and we've baked that into our forecast. We feel pretty confident around that. And I think we're pleased that we were able to raise the guidance overall and actually tighten the range from what we had disclosed before. So I think it's kind of a combination of those things. Speaker 300:28:39But in general, with the industry, we're seeing a stabilization and again kind of the same trends in the verticals that continue to do well and some that and I'll call tech out is one that has gotten a bit improved from last year. So that's kind of how I would summarize how we're seeing things. Speaker 200:29:01Thank you. Operator00:29:11Your next question comes from Laura Martin with Needham. Your line is open. Speaker 700:29:18Hi, there. So the first thing, I think you mentioned that impressions for CTV grew about 21% and impressions for video grew about 35%. So I'm curious as to why you think non CTV is growing 50% faster than CTV. What's the trend you're seeing in the marketplace there with your brand clients? Yes. Speaker 700:29:41I mean, I Speaker 300:29:42think it's for the different categories, and we had this same effect last quarter, where the mobile in particular was had a higher growth rate than CTV in the Q4. And it really in these two quarters in particular comes down to some comparables and really the comparables in the prior year. I think we're pleased that overall streaming transactions are up significantly year over year and that's the trend. So the mix between mobile and CTV, while it's interesting, it's hard to at 1 quarter individually Operator00:30:19and draw Speaker 300:30:19a lot of conclusions from that. But again, the broader trend is that streaming impressions overall are up and CTV has grown over 20%. So I think those are all real positive for us. Speaker 700:30:35Okay. And then Speaker 200:30:36And what I wanted to add is that if remember, since COVID started, what's interesting 4 years ago is when we see we saw a lot of volatility CTV never at least from our not shared numbers in terms of impression went down year over year or quarter like it was always kept going up. Well, definitely what we call video mobile desktop digital video absolutely saw quarters where it had a minus when it was shrinking. So from that perspective, and CTV always went up. So in terms of improved economy, you may see spikes in year over year growth, but in absolute numbers, it's not material. So that's on that. Speaker 200:31:19But you wanted to ask the question, so. Speaker 700:31:21Yes, I just wanted to ask. So one of the things that on your Analyst Day you focus on was that you wanted to bundle, you wanted to more successfully bundle like the core product with like your TV Squared product. Now we're adding the Harmony product. Is the Harmony product part of the bundle? Does it make does it continue with this sort of bundled strategy of putting your products together? Speaker 700:31:45And how does the pricing relate compare to your core product pricing, which used to be $0.32 round numbers. Is it a similar price point? Could you talk about that, the bundling and the price point? Speaker 200:31:59Sure, Sure. Absolutely. And thanks for referring. And I think that was back in September or November of last year, 2 years ago. Yes, back then we already started talking about we presented the notion of optimization. Speaker 200:32:13We could not at that point uncover our entire roadmap and strategy around Harmony. So we refer to at that time as optimization, which basically to your point absolutely, that's if you bundle, let's say, 3 products, which is the creative technology, the delivery technology, which is our ad server and then with measurement, what you refer to TV Square, it's an acquisition from 2 years ago, it's our measurement product. So we had these 3 components that already work together beautifully. The ad server feeds the measurement on 1,300,000,000 actually it's several 1,000,000,000 data, 1,300,000,000 TV impressions a day. So that already works together. Speaker 200:32:55What really ties into kind of wrapping everything together is the optimization, which now we gave it a name, it's Harmony, and it's an entire industry initiative. And that's absolutely basically what it's looking to do is to optimize any component of the entire CTV industry, and that's the creative, the delivery, but also the media component, things like reach, frequency, audiences, outcomes. So that is a major kind of bundle and wrapper around all these things, because what it wraps is not just the technologies we provide, which is the creative delivery measurement, but also the media side by integrating with DSPs, SSPs and publishers, it is looking to optimize all components of CTV the CTV advertising industry. So from that perspective, it's something that connects everything better together in the entire industry and that's where the name Harmony came from. And that's the reason we had the ANA, the Flores and AIB with us because it's really bringing kind of the connecting creating a better connect tissue for the entire industry. Speaker 200:34:02And as to the pricing, it's connected to that because today I mentioned things that I never mentioned before, things like media and DSPs and SSPs in terms of us affecting and touching and getting ourselves involved on that side of the industry. And the way we're doing it and making sure that we're staying unbiased and kind of staying away from the kind part of this is the pricing model. So the fixed pricing model that says no matter what technology and what efficiency we're bringing to the industry and what outcome, we're staying with fixed CPM, like you mentioned, like ad serving, which guarantee that we're not there's no take rate. We're not part of the food chain. We're enabling the food chain. Speaker 200:34:46We're enabling better results. We're not we did not share publicly specific pricing, but the pricing model is the same as an answer in terms of it's a fixed number multiplied by volume and that would generate the Harmony related revenue. We just didn't share publicly the exact rate card as we are now starting to close our initial deals in the market. Okay. Speaker 700:35:15And is this going to be meaningful in 'twenty four? Or do you think it becomes meaningful in 'twenty five? What's the timing of when Harmony becomes a meaningful contributor to revenue, do you think? Speaker 200:35:25Tony, do you want to take that? Speaker 300:35:27Yes. No, I think it's still pretty early. I mean, this is a big industry. Brands are going to move at their own pace. It's so it's hard to say at this point, which is why we haven't included it in guidance. Speaker 300:35:41Certainly, for 2025, we think it will have effect. And it's probably a little bit of a to be determined for 2024. And we'll as we see what the adoption is like, we'll certainly keep everyone updated and incorporate it as appropriate into future guidance. But certainly, for going into 2025, we think it will have a meaningful impact. Speaker 700:36:02Great. Thank you, guys. Speaker 200:36:05Great. Thank you. Thanks. Operator00:36:08At this time, there are no further questions. I'd like to turn the call back to management for any closing remarks. Speaker 200:36:15Yes. I want to thank everybody for joining us today, the analysts, shareholders, even some of our partners and of course employees. I'm extremely pleased with our Q1 results, the momentum that we started the year, extending expectations across top line, bottom line, free cash flow. And as you heard, I'm also incredibly excited about the initiative, the Harmony initiative and the products that we launched and share that we're going to continue to launch throughout the year and our ability to continue to innovate, while keeping this financial kind of strict financial framework both at the same time, invest in areas that as we just discussed are going to generate further momentum and grow for years to come. I look forward to keep updating you every quarter on our progress. Speaker 200:37:04There is more content also on the website on this Harmony initiative. Have a great day. Thank you so very much. Bye bye. Operator00:37:13This concludes today's Innovid Q1 2024 earnings call. Thank you for attending and have a great day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallInnovid Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Innovid Earnings HeadlinesInnovid’s 2025 CTV Benchmarks Reveal Big Opportunities in Reach, Frequency & Interactive EngagementApril 23 at 11:04 AM | finance.yahoo.comInnovid’s Feature Beat: New Tools to Make CTV Ads Even More Engaging, Shoppable, & ScalableApril 9, 2025 | finance.yahoo.comThe Man I Turn to In Times Like ThisA storm is brewing in the markets: new tariffs, recession warnings, and panic in the headlines. That’s when publisher Brett Aitken turns to Whitney Tilson—a man CNBC once dubbed “The Prophet.” Tilson just released a new prediction that runs counter to what mainstream finance is telling you.April 24, 2025 | Stansberry Research (Ad)Mediaocean Unveils Innovid as Unified Brand for Global Ad Tech BusinessMarch 17, 2025 | businesswire.comBasis Technologies Integrates with IRIS.TV for Contextual Targeting on Programmatic CTV AdvertisingMarch 6, 2025 | markets.businessinsider.comMediaocean Completes Acquisition of Innovid – Creating the Premier Global Independent, Omnichannel Ad Tech PlatformFebruary 13, 2025 | businesswire.comSee More Innovid Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Innovid? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Innovid and other key companies, straight to your email. Email Address About InnovidInnovid (NYSE:CTV) operates an independent software platform that provides ad serving, measurement, and creative services. It offers advertising services for the creation, delivery, and measurement of TV ads across connected TV, mobile TV, and desktop TV environments to advertisers, publishers, and media agencies. The company serves consumer packaged goods, pharmaceutical and healthcare, retail, financial services, and automotive and technology industries; third party agencies; and publishers in the United States, Canada, Europe, the Middle East, Africa, Latin America, and the Asia Pacific. Innovid Corp. was incorporated in 2007 and is headquartered in New York, New York.View Innovid ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock? Upcoming Earnings AbbVie (4/25/2025)AON (4/25/2025)Colgate-Palmolive (4/25/2025)HCA Healthcare (4/25/2025)NatWest Group (4/25/2025)Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 8 speakers on the call. Operator00:00:00Good day, ladies and gentlemen, and welcome to the Innovid First Quarter 2024 Earnings Call. Our host for today's call is Brenly Johnson. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host, Brinley Johnson. Operator00:00:19You may begin. Speaker 100:00:22Thank you, operator. Before we begin, I would like to remind you that today's call may contain forward looking statements and that the forward looking statement disclaimer included in today's earnings release available on our Investor Relations page also pertains to this call. These forward looking statements may include, without limitation, predictions, expectations, targets or estimates regarding our anticipated financial performance, business plans and objectives, future events and developments. Changes in our business, competitive landscape, technological or regulatory environment and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today. Our historical results are not necessarily indicative of future performance and as such, we can give no assurance as to the accuracy of our forward looking statements and assume no obligation to update them except as required by law. Speaker 100:01:11In addition, today's call will include non GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margins and free cash flow. We use these non GAAP measures in managing the business and believe they provide useful information for our investors. These measures should be considered in addition to and not as a substitute for our GAAP results. Reconciliations of the non GAAP measures to their corresponding GAAP measures, where appropriate, can be found in our earnings release available on our website and in our filings with the SEC. Hosting today's call are Zika Netter, Innovid's Co Founder and CEO as well as Anthony Collini, Innovid's CFO, both of whom will participate in our Q and A session. Speaker 100:01:48And now, I'll turn the call over to Zika to begin. Go ahead. Speaker 200:01:53Thanks, Brittany, and thank you all for joining the call today. We had a strong start to 2024 as Q1 revenue grew over 20% and adjusted EBITDA significantly improved compared to Q1 last year. Most recently, we launched our Harmony initiative and related product suite to optimize the CTV advertising ecosystem as we seek to keep TV open for everyone and controlled by no one. Today, our review of first quarter results provide several exciting business updates, unpack the Harmony initiative and share some thoughts on the rest of the year. I'll then turn it over to our Chief Financial Officer, Tony Cali, who will provide further details on our Q1 financials, updates on the financial guidance and we'll finish with Q and A. Speaker 200:02:43I am pleased to report 1st quarter revenue of $36,700,000 reflecting 21% growth over the last year. Adjusted EBITDA improved from effectively breakeven last Q1 to $4,400,000 in the Q1 of 2024, reflecting an adjusted EBITDA margin of 12% as operation profitability continues to improve. We also delivered another quarter of positive free cash flow at $2,000,000 a $4,800,000 improvement over Q1 of last year. In the Q1, we signed new client wins, product expansion and renewals with leading brands such as Eli Lilly, Hellion, Homes.com and Verizon, as well as publishers like the Tennis Channel owned by Sinclair. Our financial results and client wins of our team's hard work and the power of our platform. Speaker 200:03:43Another important part of what makes Innovate unique is our focus on innovation. We push the boundaries of what's possible in the fast growing CTV industry. And today, I'll share a few highlights of what we accomplished in Q1. In February, we launched a series of first two market interactive ads in partnership with Paramount Plus. During Super Bowl 58, the most streamed Super Bowl ever, the ads engage consumers with a new add to watch list units to promote Permian Plus content. Speaker 200:04:15We also developed interactive ads for Pfizer, which drove viewers to their Let's Outdo Cancer website. As live sports and other high value content continues to shift the streaming platform, we believe this will further accelerate the increase in CTV viewership and advertising spend. More recently, we were recognized as the best measurement tool by Digiday in their 2024 Digiday Video and TV Awards, which highlights the company's campaigns and technologies modernizing video and TV. This recognition exemplifies the power of our platform and the value our measurement solution provides to brands and publishers. We do not only help measure the efficiency and effectiveness of CTV advertising, but we also empower them to act on that intelligence to optimize their investments. Speaker 200:05:07Next, I'm very excited to share more about our new strategic initiative at Innovate. A few weeks ago, we were joined by clients and industry partners, including ANA, the 4A's and the IV at the New York Stock Exchange and via global webcast as we launch our Harmony initiative and product suite. Our Harmony initiative was created to address some of the biggest challenges facing CTV advertising today. By optimizing CTV advertising at the infrastructure level, we believe we can improve efficiency, enhance transparency and control, reduce carbon emissions and increase ROI to ultimately provide better viewing experience that will benefit advertisers, publishers, ad tech platforms and of course, CTV viewers. Every day, our ad serving capabilities, our award winning creative technology and our measurement capabilities help us deliver exceptional value to our clients. Speaker 200:06:05Now with Harmony, we're adding an activation and optimization layer powered by our CTV data set and our unique position in the ecosystem. On the data front, we deliver 1,300,000,000 TV ads a day and see trillions of data points giving us an unrivaled view of the ecosystem that covers programmatic and direct buys, the open web and walled gardens. This means we sit in the unique position to be able to deliver and as a result see and understand 100% of what our clients run-in CTV. In addition, since we don't buy, bid on or sell media, we're a media agnostic and unbiased, which puts us in the best position together with our partners to solve the biggest challenges in CTV. We are releasing a series of product innovation throughout 2024 under the Harmony product suite umbrella to openly share our unique data driven CTV intelligence with the industry. Speaker 200:07:07We believe this will help make the entire CTV advertising ecosystem better for the benefit of all advertisers, publishers, DSPs and SSPs, and of course, the viewers at home. One of the first product innovations to be released as part of the initiative is Harmony Direct, which connects the Innovate buy side ad server directly to the publisher ad server for the delivery of guaranteed non beatable CTV ad impressions. This streamlines the workflow for these types of campaigns to its purest floor, removing all friction points, including technology hops, fees and energy waste. With fewer hops and less budget going to intermediates, advertisers can drive better outcomes from the same investment because more is going to actual working media. Harmony Direct also aims to lower the risk of latency and fraud, provide a greener supply path and improve fill rates for publishers. Speaker 200:08:06Agency and publisher partners, including Assembly, CMI Media Group, PMG, RPA and Roku are among the first to use Harmony Direct. In line with our commitment to stay an unbiased true partner to our customers and publisher partners, we are offering an impression based software pricing model for our Harmony product suite rather than a percentage of media model. For Harmony Direct, in particular, having a flat fee per impression model versus a take rate is increasing the amount of working media dollars that actually make their way from the advertiser to the publisher. This is a true win win. Brands will have more ad dollars for working media and publishers will have more revenue opportunities from the exact same budget. Speaker 200:08:53As I mentioned earlier, we have a roadmap of Harmony products that will continue to be released throughout 2024. We believe Harmony will better balance the value creation in CTV, in CTV, which will accelerate budget shifting from linear TV to CTV. While still in early days, we expect the Harmony strategy to help drive revenue growth over the long term by enhancing our cross sell opportunities and strengthening our strategic positioning. Our products are becoming more and more connected and integrated, increasing the overall stickiness of the Innovate platform. However, since this initiative and product are still new, any commercial impact is not yet reflected in our 2024 guidance. Speaker 200:09:36In summary, we had a great start to 2024 and are excited about the opportunities ahead of us. We continue to innovate and release exciting new optimization capabilities to support and further drive the shift from linear to CTV. Financially, we are trending towards our long term financial goals of over 20% sustained growth and 30% adjusted EBITDA margins. We believe we are well positioned to become the essential technology infrastructure for the future of TV advertising and to experience outsized growth when ad spend returns to its historic level. We remain committed to innovation and value creation for our customers and shareholders. Speaker 200:10:19With that, I'll ask Tony to take us through the numbers and provide some insight into Q2 and full year expectations. Tony? Speaker 300:10:30Thank you, Zveika, and good morning, everyone. It was another strong quarter of profitable growth and an encouraging start to 2024. We're pleased to report our 2nd consecutive quarter of double digit growth, our 7th straight quarter of year over year adjusted EBITDA margin expansion and 3rd consecutive quarter of positive free cash flow, all contributing to continued business momentum entering 2024. Now let me dig a little more into the numbers. First quarter revenue grew 21% year over year to $36,700,000 Breaking that down further, ad serving and personalization revenues were up 23% year over year, while measurement revenue grew 11%. Speaker 300:11:16As a percentage of revenue, ad serving and personalization made up 79%, while measurement accounted for 21%. The growth in ad serving and personalization reflects the emerging stabilization of advertising spend and continued shift to CTV. In fact, CTV revenue from ad serving and personalization grew 22% over last Q1. As a reminder, Innovid's ad serving and personalization revenue closely correlates with ad impression volume served through our platform. Within this category, CTV impression volume increased 21% as more impressions continue to transition to CTV and represented 52% of all video impressions. Speaker 300:12:04Mobile video volume grew by 38% and represented 37% of all video impressions, while desktop volume increased by 12% and reflected 11% of all video impressions. Both mobile and desktop have been inconsistent throughout 2023, but demonstrated meaningful growth in the Q4, and we are pleased to see that trend continue into the Q1 of 2024. All three of these devices represent consumers watching streaming applications. So it's also helpful to look at total video impressions, which grew 25% overall in the Q1 as compared to the Q1 of 2023. The double digit growth in measurement revenues reflects the continued enhancement of our measurement capabilities to take generated from the ad serving side of the business. Speaker 300:12:59While the measurement business model is more subscription oriented than ad serving, there is some seasonality with an anticipated step down from Q4 to Q1. As Vika mentioned, we expect our unique ability to combine creative, delivery and measurement solutions to provide differentiated client value and be a catalyst for continued revenue growth. It should be noted, however, that while we are pleased with this quarter's revenue growth, ad spend in Q1 2023 was materially impacted by a challenging macro environment. While we experienced the meaningful year over year improvement in the Q1, we don't expect a continued sequential improvement in quarterly growth going forward as the quarterly comps continue to improve. Now moving on to costs and expenses. Speaker 300:13:51Revenue less cost of revenue calculated out to 76% of revenue, improving from 73% in Q1 last year. Our margins continue to improve as the business scales, reflecting the operating leverage embedded in our business model. Q1 total operating expenses, excluding depreciation, amortization and impairment, totaled $37,200,000 an increase of 1% from $6,700,000 last year, but supporting 21% more revenue than in 2023. Employee count at the end of March was 472 as compared with 465 at the end of Q1 2023. We remain committed to managing our cost base while making strategic investments in high growth areas to drive improved profitability Speaker 200:14:46and generate long term value creation Operator00:14:46for our shareholders. Speaker 300:14:49Q1 net loss was $6,200,000 or a per share loss of $0.04 This compares with a net loss of $8,600,000 and per share loss of $0.06 in Q1 2023. The outstanding common share count at quarter close was 143,900,000 shares. Adjusted EBITDA in the first quarter was $4,400,000 representing a 12% adjusted EBITDA margin, a $4,300,000 improvement as compared to adjusted EBITDA of just $100,000 or 0.1 percent adjusted EBITDA margin in Q1 last year. You may remember that adjusted EBITDA margin each quarter in 2023 was an improvement over its equivalent quarter in 2022, and we have continued that trend in the Q1 of 2024. These improvements reflect the impact of sustained revenue growth, lower cost of revenues as a percentage of revenue and operating costs that grew nominally over the prior year, demonstrating the leverage inherent in the operating model. Speaker 300:16:02Turning to the balance sheet and cash flow. We ended Q1 in a strong financial position with $31,600,000 in cash and cash equivalents with no outstanding balance on our revolving debt facility. As a reminder, we have $50,000,000 available on that debt facility. On a net cash basis, or to say it another way, cash and cash equivalents less outstanding revolver balance, the $31,600,000 on hand at the end of Q1 2024 is an improvement compared to the $29,600,000 on hand at the end of 2023 $25,000,000 at the end of Q1 2023. During the quarter, operating cash flow was $4,700,000 and free cash flow was 2 $8,000,000 over the $2,800,000 of free cash flow used in Q1 2023. Speaker 300:16:57If we look at free cash flow on a trailing 12 month basis, we have seen an improvement of $22,100,000 as compared to the same 12 month period ended March 31, 2023. Finally, let me touch on our outlook for the Q2 and an update for the full year 2024. We are encouraged by both the strong finish to 2023 and continued momentum into 2024 and remain committed to our long term financial target of 20 plus percent annual revenue growth and 30 plus percent adjusted EBITDA margin. We are confident in the underlying strength of our business, opportunities for disruption in the market and our ability to grow revenue in a profitable way. We see 2024 as a meaningful step towards achieving our long term targets. Speaker 300:17:48In the Q2 of 2024, we expect total revenue in a range of $37,500,000 $1,000,000 to $39,500,000 representing 9% to 14% year over year growth. We expect Q2 adjusted EBITDA in a range of $5,000,000 to $6,000,000 as compared to $4,500,000 in the Q2 of last year. For the full year, we expect revenue of $157,000,000 to $163,000,000 reflecting 12% to 17% annual growth and adjusted EBITDA between $24,000,000 $29,000,000 We had a strong start to the New Year with continued revenue growth, margin expansion and free cash flow generation. With exciting new product offerings like Harmony added to our existing capabilities, we believe we can continue to bring more value to our clients and reimagine what's possible in the industry. We are proud of our accomplishments and look forward to taking a leading role in improving the ecosystem for everyone. Speaker 300:18:54As Zika mentioned, we remain committed to continued execution, innovation and value creation for our customers and our shareholders. This concludes our prepared remarks. Zika and I are now happy to take some questions. Operator, please begin the Q and A session. Operator00:19:29Our first question comes from Matt Condon with Citizens JMP. Your line is open. Speaker 400:19:36Thank you guys for taking my question. My first one is just on demand throughout the quarter. Can you just give us an update just on the health of the overall market and maybe trends that seeing into 2Q? And then stepping back, maybe with the reorganization of the sales force in 2023 and with the product initiatives around Harmony Direct, can you just well, just the Harmony initiative more broadly and Harmony Direct and instant optimization, can you just talk about how your conversations with advertisers are coming and maybe any sort of adoption that you're seeing of these newer initiatives taking off? Thank you so much. Speaker 200:20:10Sure. Hey, Matt. On macro perspective, we're seeing something similar to kind of the second half of twenty twenty three. We see a stable environment. Still it's less than a normal environment. Speaker 200:20:25And we see sort of stable below normal, but something that's more predictable. I would say at the same time, we need to remember that the second half of this year. We see this trend moving into the Q2 also. But the second part of the year, we also have we have a combination of election and Olympics and that can affect the industry dynamics when it comes to advertising. But overall, we're definitely seeing an improvement year over year and we believe that will continue for of the year. Speaker 200:20:57Would definitely to keep an eye on the second half. In terms of the products around Harmony, I assume we'll have more questions and follow ups in the future also in that as an initiative, very excited about it in terms of initial customer response. You could even see on the launch, we have the video on our website of the launch event. We had there not just customers and partners, we also had 3 industry, very strong industry groups that represent the buyers, the advertisers, the agencies and the publishers and platforms, that's the ANA, 4As and IAB, all on stage with us. So Harmony is hitting on absolutely the top critical challenges within CTV. Speaker 200:21:48So as expected, we definitely have a strong interest, I would say, 1st and foremost from advertisers, brands and agencies and of course publishers. At the same time, these are early days, right. So we engage in conversations immediately. These are very important topics for everybody in the industry. At the same time, in terms of revenue, we just launched it. Speaker 200:22:10So these things usually take time. So we don't while the investment is clearly included in the operating plan, we don't expect or in our guidance, we don't include revenue from Harmony just yet. Speaker 400:22:26Very helpful. Thank you. Speaker 200:22:28Thank you. Operator00:22:32Your next question comes from shayim Patel with Susquehanna. Your line is open. Speaker 500:22:39Good morning. This is Jason on for Sean. Thanks for taking our question. On the Harmony platform, you mentioned it works with DSPs on that. Can you elaborate more on how that works? Speaker 500:22:49And can you provide any examples for it? Thank you. Speaker 200:22:53Thank you, Jason. Can you repeat the question, the first part of the question, Mathieu? I heard you clearly? Speaker 500:23:00Yes. On the Harmony platform, you mentioned that it works with DSPs. Can you elaborate on how that works? And can you provide any examples for that? Speaker 200:23:09Of course. So Harmony is working not just with DSPs, basically maybe with a very quick overview of what it is. Harmony is designed to work with everybody in the industry. So that's advertisers, agencies, the tech platforms and programmatic tech platforms, that's DSPs, SSPs and publishers from a tech perspective, sell side ad servers. So the concept is to balance the entire CTV industry in a way that will tackle challenges that we're seeing today, which are they come with the territory when you're switching from linear broadcast television to a digital environment. Speaker 200:23:50It kind of brings with it things like transparency, frequency management, measurement, fraud, all the things that come with digital. The goal of Harmony is before CTV becomes as big to all of us work together, programmatic platforms, ad servers, buyers, sellers to create a better industry for everybody. So the DSPs definitely have a critical component programmatic basically have a critical component of this because based it allows the programmatic environment allows to make decisions in real time. If you want to manage things like frequency, extended reach, optimize against outcome, this is something that the programmatic media buying platforms and selling platforms allowed us to do. Now Innovate is an ad server on the buy side. Speaker 200:24:44We have no desire to be a DSP. So we are partnering with them and the way to do it is by sending signals. We see 100% of the media plan. We see 100% of the campaign, which is nobody else in the industry except other ad service like Google, campaign manager actually get to see everything. So what we're doing with Harmony was saying instead of keeping this information just in our system, allowing our customers to allow this information to go into something like a DSP, SSP and a publisher, so they can optimize with the 100% view that we have. Speaker 200:25:19They usually have 10% to 30% view, we see everything. So the goal with the Harmony is for us to share that with them and they can optimize against that. And in this case, everybody wins. But clearly, this is a very big initiative that can take an entire hour or 3 to share and that's on our website on the homepage. Speaker 500:25:41Great. Thank you. Operator00:25:49Your next question comes from Matthew Cost with Morgan Stanley. Your line is open. Speaker 600:25:56Thanks for taking the question. So I think your commentary about what you're seeing in the overall market, it sounds constructive. You're talking about seeing some real improvement, especially given the easier comp in 1Q and stabilization. But it does sound like there's areas of strength and weakness. Most of what we're hearing from Chex and from others in the ad industry year to date is pretty positive commentary, broadly speaking, in terms of just volume of ad spend and even impressions at the market level. Speaker 600:26:26So I guess, what are the areas of a particular strength and then weakness that you would call out that you're seeing year to date? Thank you. Speaker 300:26:36Yes, great. Thanks, Matt. I think we're really encouraged by the just the amount of impressions that have carried over from the Q4 of 2023 into 2024. So just a strong start to the year and even with a bit of an easier comp in Q1, we're pleased to see some of the verticals that were strong before continue to be strong and some that had struggled last year, maybe take a bit of a step forward. I mean, that said, there's still some inconsistency between verticals. Speaker 300:27:12And then as we look out over the rest of the year, what we've seen is there's potential headwinds and tailwinds for sure. And on the headwind side, just the overall shift to connected television continues to happen. Things like live sports, things like more ad supported content. And for us, those are all real positives. And what we don't know is when it's going Speaker 200:27:37to take Speaker 300:27:38effect and the amount that it will take effect when it does. On the potential headwind sides for us, we have the election cycle that's coming, which granted it drives more volume and the rising tide lifts all boats. But as you know, we support brands. And so it could have a bit of a cooling to brands in the second half of the year. And the other part, as you can mentioned, is the Olympics. Speaker 300:28:04And again, that's great for the kind of brand awareness in general, but a lot of times what the brands will do is look for more sponsorships than actual advertising. So there's just this there's some uncertainty and we've baked that into our forecast. We feel pretty confident around that. And I think we're pleased that we were able to raise the guidance overall and actually tighten the range from what we had disclosed before. So I think it's kind of a combination of those things. Speaker 300:28:39But in general, with the industry, we're seeing a stabilization and again kind of the same trends in the verticals that continue to do well and some that and I'll call tech out is one that has gotten a bit improved from last year. So that's kind of how I would summarize how we're seeing things. Speaker 200:29:01Thank you. Operator00:29:11Your next question comes from Laura Martin with Needham. Your line is open. Speaker 700:29:18Hi, there. So the first thing, I think you mentioned that impressions for CTV grew about 21% and impressions for video grew about 35%. So I'm curious as to why you think non CTV is growing 50% faster than CTV. What's the trend you're seeing in the marketplace there with your brand clients? Yes. Speaker 700:29:41I mean, I Speaker 300:29:42think it's for the different categories, and we had this same effect last quarter, where the mobile in particular was had a higher growth rate than CTV in the Q4. And it really in these two quarters in particular comes down to some comparables and really the comparables in the prior year. I think we're pleased that overall streaming transactions are up significantly year over year and that's the trend. So the mix between mobile and CTV, while it's interesting, it's hard to at 1 quarter individually Operator00:30:19and draw Speaker 300:30:19a lot of conclusions from that. But again, the broader trend is that streaming impressions overall are up and CTV has grown over 20%. So I think those are all real positive for us. Speaker 700:30:35Okay. And then Speaker 200:30:36And what I wanted to add is that if remember, since COVID started, what's interesting 4 years ago is when we see we saw a lot of volatility CTV never at least from our not shared numbers in terms of impression went down year over year or quarter like it was always kept going up. Well, definitely what we call video mobile desktop digital video absolutely saw quarters where it had a minus when it was shrinking. So from that perspective, and CTV always went up. So in terms of improved economy, you may see spikes in year over year growth, but in absolute numbers, it's not material. So that's on that. Speaker 200:31:19But you wanted to ask the question, so. Speaker 700:31:21Yes, I just wanted to ask. So one of the things that on your Analyst Day you focus on was that you wanted to bundle, you wanted to more successfully bundle like the core product with like your TV Squared product. Now we're adding the Harmony product. Is the Harmony product part of the bundle? Does it make does it continue with this sort of bundled strategy of putting your products together? Speaker 700:31:45And how does the pricing relate compare to your core product pricing, which used to be $0.32 round numbers. Is it a similar price point? Could you talk about that, the bundling and the price point? Speaker 200:31:59Sure, Sure. Absolutely. And thanks for referring. And I think that was back in September or November of last year, 2 years ago. Yes, back then we already started talking about we presented the notion of optimization. Speaker 200:32:13We could not at that point uncover our entire roadmap and strategy around Harmony. So we refer to at that time as optimization, which basically to your point absolutely, that's if you bundle, let's say, 3 products, which is the creative technology, the delivery technology, which is our ad server and then with measurement, what you refer to TV Square, it's an acquisition from 2 years ago, it's our measurement product. So we had these 3 components that already work together beautifully. The ad server feeds the measurement on 1,300,000,000 actually it's several 1,000,000,000 data, 1,300,000,000 TV impressions a day. So that already works together. Speaker 200:32:55What really ties into kind of wrapping everything together is the optimization, which now we gave it a name, it's Harmony, and it's an entire industry initiative. And that's absolutely basically what it's looking to do is to optimize any component of the entire CTV industry, and that's the creative, the delivery, but also the media component, things like reach, frequency, audiences, outcomes. So that is a major kind of bundle and wrapper around all these things, because what it wraps is not just the technologies we provide, which is the creative delivery measurement, but also the media side by integrating with DSPs, SSPs and publishers, it is looking to optimize all components of CTV the CTV advertising industry. So from that perspective, it's something that connects everything better together in the entire industry and that's where the name Harmony came from. And that's the reason we had the ANA, the Flores and AIB with us because it's really bringing kind of the connecting creating a better connect tissue for the entire industry. Speaker 200:34:02And as to the pricing, it's connected to that because today I mentioned things that I never mentioned before, things like media and DSPs and SSPs in terms of us affecting and touching and getting ourselves involved on that side of the industry. And the way we're doing it and making sure that we're staying unbiased and kind of staying away from the kind part of this is the pricing model. So the fixed pricing model that says no matter what technology and what efficiency we're bringing to the industry and what outcome, we're staying with fixed CPM, like you mentioned, like ad serving, which guarantee that we're not there's no take rate. We're not part of the food chain. We're enabling the food chain. Speaker 200:34:46We're enabling better results. We're not we did not share publicly specific pricing, but the pricing model is the same as an answer in terms of it's a fixed number multiplied by volume and that would generate the Harmony related revenue. We just didn't share publicly the exact rate card as we are now starting to close our initial deals in the market. Okay. Speaker 700:35:15And is this going to be meaningful in 'twenty four? Or do you think it becomes meaningful in 'twenty five? What's the timing of when Harmony becomes a meaningful contributor to revenue, do you think? Speaker 200:35:25Tony, do you want to take that? Speaker 300:35:27Yes. No, I think it's still pretty early. I mean, this is a big industry. Brands are going to move at their own pace. It's so it's hard to say at this point, which is why we haven't included it in guidance. Speaker 300:35:41Certainly, for 2025, we think it will have effect. And it's probably a little bit of a to be determined for 2024. And we'll as we see what the adoption is like, we'll certainly keep everyone updated and incorporate it as appropriate into future guidance. But certainly, for going into 2025, we think it will have a meaningful impact. Speaker 700:36:02Great. Thank you, guys. Speaker 200:36:05Great. Thank you. Thanks. Operator00:36:08At this time, there are no further questions. I'd like to turn the call back to management for any closing remarks. Speaker 200:36:15Yes. I want to thank everybody for joining us today, the analysts, shareholders, even some of our partners and of course employees. I'm extremely pleased with our Q1 results, the momentum that we started the year, extending expectations across top line, bottom line, free cash flow. And as you heard, I'm also incredibly excited about the initiative, the Harmony initiative and the products that we launched and share that we're going to continue to launch throughout the year and our ability to continue to innovate, while keeping this financial kind of strict financial framework both at the same time, invest in areas that as we just discussed are going to generate further momentum and grow for years to come. I look forward to keep updating you every quarter on our progress. Speaker 200:37:04There is more content also on the website on this Harmony initiative. Have a great day. Thank you so very much. Bye bye. Operator00:37:13This concludes today's Innovid Q1 2024 earnings call. Thank you for attending and have a great day.Read morePowered by