AdTheorent Holding Company, Inc. (NASDAQ:ADTH) Q4 2022 Earnings Call Transcript

Andrew Boone: That’s a great answer. And then Patrick, you bring some M&A experience to the table. You clearly have a great resume behind you. Can you talk about where your focus is going to be as you get a little bit more comfortable in the seat?

Patrick Elliott: Yes. Thanks, Andrew, for the question. I’m thrilled to be here. I’ve been here for 5 weeks now, and I’m still learning a ton every day, and we’ll continue to. What I’ve noticed is we have a great team and we have impressive technology. So, I’m not looking to make big changes. I had many conversations with Jim and the Board prior to joining. I’m aligned with the vision and the strategic priorities of the company. I’m here to drive those strategic and operational priorities. And ultimately, I’m here to drive value for our shareholders. So, I’m excited to be here. Yes, I definitely have had a varied career. And like you mentioned, was some M&A sprinkled in. At this point, we think our best investment is going after the large market opportunity that we see ahead of us.

We’re going to invest in our products, in our talent, in our technology in a disciplined way, still with an eye on our generating free cash flow. But really to be in a position to go after this large market opportunity that we think we’re best suited to play in, given our technology and product advantages.

James Lawson: And one thing I would add to that is at our current depressed stock price, which we believe is unhinged from the reality of the value that we represent. It’s tough to think about using that stock currency as a tool in M&A. I think it’s a process. We keep our finger on the pulse of the industry, and we understand where the opportunities are from an M&A perspective. And I think as our stock becomes more aligned with the value that the company represents that M&A and using that stock currency is a more attractive option. I think at this point, we will put our heads down and we will pursue commercial strategics, and we will certainly explore and I’m so happy that factor CRE brings so much to the table. And even in 5 weeks, I’ve seen so much value.

And I think we’re going to get a lot of incremental strategic vision from him being here. So, I think M&A is a part of our future, but it’s probably not going to be a part of our future when we have a stock that is $1.50.

Operator: We’ll take our next question from John Roy with Water Tower Research.

John Roy: Great. So, James, you were talking a little bit about direct access. I wanted to drill down maybe a little bit more on that. I mean bigger customers, bigger budgets. Does that mean longer sales cycles? And are these going to be more profitable projects for you guys? I mean what’s kind of the profitability look like? And the last kind of element of this was with all your differentiation, are they going to be able to actually get that out of direct access and you’re going to have to help them make sure they use it right.

James Lawson: Yes. Thank you so much for the question. The short answer on the first point is, yes, the sales cycles are a little bit longer. We have to be patient there. And especially in a softer macro, I think it’s a little tougher to get the requisite meetings and evaluations to get a new integration into a tech stack. So, I think it’s a little bit of a longer effort. That goes without saying, and we’re willing to do that work, and we are doing that work. Over time, the Direct Access line of business does represent a more profitable line of business for us. It’s a lower touch, lower OpEx intensive line of business. So, we’re very excited about that. We also think that through direct access, all of the innovations that we’ve been talking about will be very accessible.