DoubleVerify Holdings, Inc. (NYSE:DV) Q1 2024 Earnings Call Transcript

DoubleVerify Holdings, Inc. (NYSE:DV) Q1 2024 Earnings Call Transcript May 7, 2024

DoubleVerify Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to the DoubleVerify First Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tejal Engman, Senior Vice President, Investor Relations. Thank you. You may begin.

Tejal Engman: Good afternoon, and welcome to DoubleVerify’s first quarter 2024 earnings conference call. With us today are Mark Zagorski, CEO, and Nicola Allais, CFO. Today’s press release and this call may contain forward-looking statements that are subject to inherent risks, uncertainties, and changes, and reflect our current expectations and information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and our annual report or Form 10-K. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to, and not as a substitute for, our GAAP results.

Reconciliations to the most comparable GAAP measures are available in today’s earnings press release, which is available on our investor relations website at ir.doubleverify.com. Also, during the call today, we’ll be referring to the slide deck posted on our website. With that, I’ll turn it over to Mark.

Mark Zagorski: Thanks, Tejal, and thank you all for joining us today. I am excited to discuss our solid first-quarter performance and to share the substantial product and business development progress we’ve achieved so far this year, setting a robust foundation for our future growth and success. From scaling our independently accredited core verification solutions across leading Social and CTV environments to increasing customer adoption of our key performance solutions, Scibids and Authentic Attention, DV is excelling across multiple growth vectors. And in the process, we are evolving our core value proposition to include protection and performance of media spend, solidifying our market leadership, and driving sustained business growth.

In the first quarter, we exceeded the top end of our guidance ranges on revenue and adjusted EBITDA, achieving solid revenue growth, profitability, and cash flow. We grew first quarter revenue by 15% year-over-year to $141 million with double-digit revenue growth across both activation and measurement. We delivered $38 million of adjusted EBITDA, representing a 27% margin, and grew net cash from operating activities by nearly 50% year-over-year to $32 million. I’d like to begin my comments today by highlighting an evolving trend that has become increasingly prominent in recent months; the role that digital video is playing in driving ad impression growth. More specifically, we’re seeing ad spend increase in social video and CTV, which are two of DV’s fastest growing media environments.

Advertisers, particularly DV’s large brand advertisers, value these environments for their audience addressability, expansive scale across the purchase funnel, and measurable performance outcomes. We’re at a pivotal point where the ongoing increase in digital video has emerged as a key catalyst for digital advertising growth. As reported by Magna Global, although global programmatic ad spend grew 10% in 2023, this growth rate would have been 5% if you excluded CTV. Similarly, the Magna data highlights that video comprised nearly 70% of social content in 2023, and the IAB expects social video to grow by 20% year-over-year, faster than any other type of media. DV is primed to capitalize on this trend in social media, where video comprised 81% of our social measurement impression volumes in Q1.

Our AI-powered Universal Content Intelligence technology excels in measuring video content with unmatched efficiency and accuracy and underpins our strong growth trajectory across all video environments. Today, social media is the leading driver of DV’s impression volume and revenue growth. Our newly launched brand safety and suitability measurement capabilities on platforms like Meta, YouTube, and TikTok are accelerating this growth trajectory, particularly in international markets where our brand suitability language footprint continues to grow. We grew our social measurement revenue by 51% year-over-year in the first quarter, following 48% growth in full year 2023. Most of our social media revenue growth was driven by existing DV advertisers who increased their usage of our social measurement solutions.

In addition, we increased the number of Top 100 customers leveraging our solutions across Meta, YouTube, TikTok, Pinterest, and Snap compared to last year. We’re especially enthusiastic about the increase in ad spend on social media platforms, given DV’s strong competitive advantage in this media environment. In contrast to the open web, social platforms have limited partnerships with verification and measurement companies. In addition, the technical integrations required by social platforms are complex and demand substantial infrastructure and expertise to handle efficiently. DV distinguishes itself by providing the most comprehensive, independently accredited solutions across social platforms while simultaneously supporting the largest scale across the entire internet, spanning both social media platforms and the open web.

We see multiple layers of growth in our social media business, starting with measurement and increasingly extending to activation. In measurement, there is ample opportunity to grow our social revenue by expanding our verification and performance products across new geographies and driving existing customer adoption. Let me take a moment to outline some recent developments in social measurement. On Meta, we currently have over 40 DV advertisers testing our recently expanded brand safety and suitability measurement solutions, including nine of DV’s top 100 customers who have never activated us on Meta. Our Meta volumes have expanded across large advertisers as we grow our scale and enhance our measurement capabilities across the platform. We launched DV’s brand safety and suitability measurement on Facebook and Instagram Feeds and Reels in seven languages in January, and expanded to 18 more languages later in the quarter.

Together, these 25 languages cover markets representing over 90% of global digital ad spend ex-China. Furthermore, we expanded our viewability and fraud measurement coverage to include Explore on Instagram, an area within the Instagram app that is dedicated to content discovery. We offer media quality measurement across key areas on Facebook and Instagram and are continually improving our coverage across some of the most engaging user-generated content environments in the world. On TikTok, where nearly half of our first quarter revenue came from EMEA and APAC markets, we’re scaling our solutions across the platform by expanding our brand safety and suitability measurement capabilities to additional languages and markets. This year, we’ve already introduced brand safety and suitability measurement in key TikTok markets like Japan and Brazil and broadened our Spanish coverage to include four Central American countries where TikTok has launched.

As a result, we now provide brand safety and suitability solutions on TikTok in 36 markets, representing over 90% of total digital ad spend ex-China and India. Moreover, we’ve introduced 16 new brand safety and suitability categories to complement TikTok’s latest inventory filters, Vertical Sensitivity and Category Exclusion. With our expanded coverage and solutions on TikTok, advertisers can confidently verify and protect their ad spend allocation across all regions. While our social media revenue is currently driven by measurement, the progress we’ve made in extending our industry-leading pre-screen activation and optimization solutions across social platforms points to a substantial opportunity to monetize social impression volumes further.

This trajectory mirrors DV’s business evolution on the open web 15 years ago, where we started enabling measurement solutions and progressively introduced premium-priced activation solutions. Measurement data feeds our activation solutions, enabling advertisers to optimize media spend effectively. We are excited to continue to build upon our robust social media measurement data foundation, which, when coupled with our activation capabilities, will establish closed-loop verification and optimization that’s tailored for the expansive social media market. Shifting focus to CTV, the IAB predicts CTV advertising to grow by 12% in 2024 to $22.7 billion, outpacing total media growth by 32%. DV’s CTV measurement growth continues to outperform the market, with CTV impression volumes growing by 45% year-over-year in the first quarter.

In activation, we see a significant portion of programmatic spend growth being driven by CTV and online video. However, our attachment rate to CTV activation impression volumes has room to grow because this premium-priced inventory is largely acquired through private marketplaces or within programmatic guarantees and programmatic direct deals, where DV’s solutions are implemented more selectively. To take advantage of this dynamic, DV is focused on increasing the attachment rate of our solutions to programmatic CTV impressions at scale and maximizing their monetization potential. We have been working on enhancing our value proposition for CTV by driving greater transparency for key DV data sets namely brand safety, suitability, viewability, and fraud at the show level.

Show-level transparency has been limited in programmatic CTV purchases, both in direct deals and, to a greater extent, in programmatic auctions, until now. Driven by advertiser demands, streaming publishers are warming up to selectively providing the more granular data and transparency needed to satisfy advertisers and significantly amplify DV’s value in this premium-priced media landscape. As we mentioned on our last call, we have partnered with a leading streaming network to introduce a pioneering program-level measurement solution for advertisers on OTT devices, including CTV. This groundbreaking development in streaming verification will empower advertisers to measure and optimize for brand safety and suitability, as well as content performance at the granular program level.

This is a win-win for all involved. Advertisers gain invaluable transparency and insights, DV’s CTV and OTT solutions see broader attachment rates, and the streaming companies receive increased, more premium budget allocations. As major streaming companies adopt this level of transparency, it will catalyze others to follow suit swiftly. We believe that achieving content transparency at scale will not only drive widespread adoption of brand suitability measurement on CTV and the broader OTT market, which spans all devices but will also fuel our CTV and OTT activation volumes in the future. Ultimately, this progress will also enable DV to better align our fees for CTV activation and measurement with the higher value of CTV ad impressions. Today, DV leads the market with its premier CTV activation and measurement solutions.

We’ve achieved MRC accreditation for video viewability in CTV and broadened accreditations for our CTV pre-bid data segments to include property-level brand suitability, contextual and fully on-screen segments. Moreover, DV has the widest CTV coverage, including media quality authentication on Amazon’s owned and operated ad-supported OTT and CTV inventory. Brands can leverage DV’s fraud detection, in-geo measurement, and app-level suitability across devices, including desktop, mobile, and CTV. Additionally, DV enables marketers to gauge viewability and attention on Amazon’s owned and operated ad-supported CTV inventory. Finally, we continue to innovate rapidly in CTV, where attention measurement is gaining traction. Recognizing its value, platforms are leveraging attention data as a selling point, similar to how ratings are used to sell TV inventory.

With DV’s Authentic Attention metrics, platforms can emphasize not only impression-level verification and attention data but also exposure and engagement across CTV content. This approach highlights high-attention shows, maximizing the efficacy of TV inventory. Recently, DV partnered with Netflix to deliver a CTV Attention Measurement Report, using DV’s CTV Authentic Attention to compare Netflix to other AVOD apps and FAST channels. This exciting development is just the beginning of DV Authentic Attention’s pioneering advancements from CTV, which fueled a tripling of attention revenue and advertiser adoption in the first quarter compared to Q1 last year. We are gaining solid momentum with this differentiated measurement offering and look forward to updating you on our ongoing progress.

We see significant potential for unlocking value with DV’s solutions in the CTV space. By expanding our solutions at the show level, we expect higher attach rates and a more rewarding value prop for DV in an underpenetrated segment that accounts for a large share of programmatic revenue growth. Moving on to the topic of accelerating customer wins, we won numerous RFPs in the first quarter and have a robust new customer acquisition pipeline. DV boasts an impressive list of blue-chip clients, working with nearly half of the top 1000 advertisers in the world. In addition to our previously announced first quarter wins, which included the global advertising business of Pepsi and Haleon, we closed additional new logos in the first quarter, including McAfee, Mars, Heineken, Levi Strauss, and Dolce & Gabana in the United States, Carlsberg in Europe and Softbank, New Balance, and Aeon Financial in Japan.

We have also signed meaningful expansions with existing clients, including Vodafone, Audible by Amazon, Pepsi, and Bacardi adopting ABS across multiple global markets, as well as Sanofi and Beiersdorf scaling our social solutions. Our win rate across all opportunities remains above 80%, with 62% of our first quarter wins being ‘greenfield,’ which we define as wins where the advertiser wasn’t using third-party tools for the business that DV won. New client wins play into our successful ‘land and expand’ strategy through which we grew the number of advertiser customers generating more than $200,000 over the last 12 months by 12% in the first quarter. With nearly 60% of our top 700 customers using less than half of our seven core products, the opportunity to expand within our existing customer base remains significant.

Having covered social and CTV, let’s move to the open web and touch upon retail media and Scibids AI. Our global scale and connectivity across retail media environments continues to expand. DV’s measurement tags are now accepted on 82 of the key global retail media networks and sites, including 15 of the top retail media platforms and 67 major retailers. Approximately half support DV measurement on their owned and operated sites, while two-thirds support DV measurement on their offsite networks. As a result, we grew our first-quarter retail media measurement revenue by more than 45% year over year. Finally, on Scibids AI, we’re at an exciting inflection point where the adoption of custom bidding solutions to drive scalability and performance in optimizing programmatic advertising campaigns is gaining significant traction.

Since acquiring ScibidsAI, we have successfully sold the solution to 19 DV customers, of which eight are among DV’s Top 100 advertisers. Moreover, we’ve engaged numerous large advertisers who, until now, weren’t DV customers. Currently, we are in discussions with most DV customers and global prospects, leveraging our global sales team to cross-sell this powerful solution that can utilize DV core verification assets. This early success is rooted in DV Scibids AI’s capability to consistently deliver strong advertising returns with an average return on investment of $4 for every $1 invested in Scibids. Moreover, it delivers an average media cost savings of nearly 40%. It’s also worth noting that marketers currently spend nearly 1/4 of their time manually optimizing campaigns, a task that Scibids AI can significantly streamline and improve, thereby enhancing overall marketing efficiency and effectiveness.

Like authentic attention, DV Scibids represents another important step in DV’s evolution to expand our client engagement to not only protect their media spend, to help it to perform as well. To conclude, we are witnessing strong growth in digital video, including CTV, social video and online video. We see this growth characterized by increasing ad spend on social video and CTV which is primarily acquired through private marketplace for programmatic guaranteed and direct deals. For advertisers, this is meant navigating through more closed ecosystem, leading to greater fragmentation, complexity and challenges in implementing scalable strategies, interpreting data, evaluating performance and establishing trust across various networks. Strong, independent verification of closed ecosystem is essential to maintaining accountability and sustaining buyer confidence.

DV has extensive experience in harnessing the power of AI, machine learning and data science, as well as building trusted, scalable solutions integrated across all platforms, whether open or closed. We measure data that correlates with the business outcomes advertisers aim to achieve, and we can activate that measurement data to help advertisers drive better outcomes. All of this leaves DV well positioned to play a pivotal role in shaping the evolving future of digital advertising. Our growth drivers of product upsell, channel expansion, customer acquisition and growth and international expansion remain intact, and we continue to see a large growing business opportunity for our expanding set of verification and performance solutions across new markets, platforms and customers.

With that, let me hand the call over to Nicola.

Nicola Allais: Thanks, Mark, and good afternoon, everyone. Our first quarter results exceeded the top end of our revenue and adjusted EBITDA guidance ranges, driven by all three of our revenue lines, activation, measurement and supply side gaining momentum in March. Total revenue grew 15% in the first quarter to $141 million, primarily driven by 16% advertiser revenue growth, which continues to be volume led. In the first quarter, media transactions measured, or MTM, increased 18% year-over-year. Measured transaction fees, or MTF, declined 2% year-over-year, primarily due to product mix as activation revenue, which is premium priced to measurement, represented a smaller share of total revenue relative to the prior year period.

We anticipated this mix shift given the strength in social and international revenue and the impact of reduced programmatic spending by a handful of large retail and CPG advertisers we referenced last quarter. While we expect MTS on a per product basis to remain stable, we expect total MTS to continue to reflect the impact of the mix shift towards measurement relative to more premium price activation. Activation revenue increased 13% compared to the prior year, and ABS, which represented 55% of activation revenue in the quarter increased 12% year-over-year. 85% of ABS’ growth in the quarter was driven by new advertiser spend and by upselling ABS to existing DV customers. ABS is activated by over 90% of our top 100 advertisers, and by over 60% of our top 500 advertisers.

Moving forward, we’re focused on new advertiser spend and an upselling ABS to existing DV customers as the primary driver of ABS’ growth. Scibids continues to build momentum with existing customers and prospects and continues to meet our performance expectations. Turning to measurement. Revenue increased 19% versus the prior year, primarily driven by existing customer expansion on social. Social revenue increased 51% year-over-year and represented 49% of measurement revenue in the quarter. Social measurement growth continued to be led by Meta and YouTube which, together, accounted for 80% of our first quarter social measurement revenue with TikTok being a distant third. As Mark mentioned, nearly half of our first quarter TikTok revenue was sourced from EMEA and APAC markets.

Growth in social drove international measurement revenue, which increased 40% compared to the prior year and now represents 31% of total measurement revenue, up from 26% in the first quarter of 2023. Finally, supply side revenue grew 8% in the first quarter, driven by the early signing of new platform deals. Shifting to expenses. Cost of revenue increased by approximately $3 million, primarily due to an increase in cloud services costs as we further invest in scaling the infrastructure required to support our growth, followed by an increase in cost from revenue-sharing arrangements with programmatic partners tied to higher programmatic revenue. Revenue, less cost of sales of 81% in Q1 2024, was in line with our expectations. Research and development expenses increased due to investments in AI and machine learning engineering resources.

Sales and marketing expenses increased as we invested in additional resources to promote and sell our most recent product launches, including Scibids, around the globe. G&A expenses remained relatively stable year-over-year as our growing scale drives leverage on this operating expense line. Adjusted EBITDA of $38 million in the first quarter represented a 27% margin and was ahead of plan, primarily due to higher revenues. We delivered net cash from operations of approximately $32 million compared to $21 million in the same period in the prior year. Capital expenses were approximately $6 million compared to approximately $4 million in the first quarter of 2023. We ended the quarter with $302 million in cash on hand. And in addition, we invested in the quarter approximately $32 million in treasury bills and maturities over three months to capitalize on favorable interest rates.

This short-term investment is reflected as a use of cash and including the investing activities in the cash flow statement. Including this investment, cash and short-term investments were $334 million at quarter end. Turning to guidance. We are lowering our full year guidance, primarily due to uneven spending patterns by the select large retail and CPG advertisers that we mentioned last quarter. These customers are heavy users of our activation solutions, including ABS. And our lower revenue expectation from this cohort accounts for most of the change in our full year guidance. Additionally, we expect more of our existing and new customers’ ad spend to be allocated to social and CTV. While we earn a lower fee in social media measurement today, we see a significant opportunity to upsell our social activation and optimization capabilities going forward.

As for CTV, Mark mentioned that we have been working on enhancing our solutions by providing show-level transparency, which will increase the attach rate to CTV impression. We expect second quarter revenue in the range of $152 million to $156 million, which implies year-over-year growth of 15% at the midpoint. We expect second quarter adjusted EBITDA in the range of $41 million to $45 million, which represents a 28% margin at the midpoint. For the second quarter, we expect stock-based compensation to range between $23 million and $26 million and weighted average diluted shares outstanding to range between 175 million and 177 million shares. For full year 2024 guidance, we expect revenue in the range of $663 million to $675 million, which implies a year-over-year growth of 17% at the midpoint.

We expect adjusted EBITDA in the range of $199 million to $211 million, which represents a 31% margin at the midpoint. Our full year guidance reflects the following key assumptions; first, we anticipate more moderate growth throughout the year from the select retail and CPG advertisers we identified as slow starting at the beginning of the year. While we saw an improvement in March, April’s performance showed slower pacing. And as a result of this variability, we assume these select advertisers will spend unevenly for the rest of the year. Second, we expect a moderation in overall growth as we see current and new customers allocating more of their budgets to social and CTV. Third, the newly onboarded large global advertisers we mentioned last quarter are now performing in line with our expectations.

We expect their continued ramp up in the second half of the year to contribute to a sequential acceleration of our year-over-year growth in the second half of the year. Overall, we expect the second half of the year to contribute approximately 56% of our total revenue, broadly in line with last year. Finally, as in prior years, we expect the fourth quarter to deliver the highest quarterly share of total revenue, ranging between 30% and 32%. We remain measured in our full year revenue expectations for the following opportunities; adoption by existing advertisers of our measurement solutions on Meta, which now includes brand safety; accelerated revenue growth from the extension of TikTok into non-English speaking markets; and accelerated revenue growth from Scibids, authentic attention, and on CTV.

In conclusion, we delivered a solid first quarter with double-digit revenue growth, robust profits, and substantial cash flow, ending the quarter with zero debt and $302 million of cash on hand. Our focus remains on driving execution to build growth momentum throughout the remainder of the year. And with that, we will open the line for questions. Operator, please go ahead.

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Q&A Session

Operator: Thank you. And ladies and gentlemen, at this time, we’ll be conducting a question-and-answer session. [Operator Instructions] And our first question comes from Matt Swanson with RBC Capital Markets. Please state your question.

Q – Matt Swanson: Yes. Thank you so much for taking my question We have a lot of good metrics in the quarter, right? Attention, triple; social 51;CTV 45; Retail Media 45; International, 40. Could you just maybe go a little bit more into the parts of the business that didn’t perform as well? Because obviously, those numbers are all quite a bit higher than overall revenue growth. So maybe drilling down a little deeper beyond those handful of CPG and retail companies.

Mark Zagorski: Yes. Matt, thanks for the question. In addition to that, we also saw great growth outside of the US that was a positive. And so we do see some bright spots. Now obviously, where we saw some challenges is where our activation business, which has been such a powerhouse over the last several quarters. And I think a lot of that was driven by those core customers who are heavily leaned into our activation solutions, including ADS. So I think there is definitely some drag on the activation side of our business, as we noted, considering this is the first quarter that I can remember in which activation actually grew slower than measurement. And I think that’s obviously, very large part due to those customers who we saw the drag in Q1.

We’re projecting them to remain relatively even through the year is the first part. And the second is obviously a good amount of spend is starting to head towards social, in which we got a lower attach rate at this stage for some of our previous solutions although we’re seeing a pretty big measurement upswing. So the bright spots continue to be social, international and some of the areas on that side of the business. Where we saw drag was pretty early in activation, which, again, those core customers who did slow down and we expect them to be uneven for the year, have a high concentration of spend [indiscernible]

Q – Matt Swanson: Yes, that’s really helpful. And then I think it might just be helpful to kind of go over two of the things that were investor focus is coming out last quarter. And one, it didn’t show up at all, obviously, in measurement. But just any commentary around the pricing environment competitively. And then maybe on the second, like you said the same companies as before, but just that there hasn’t been any contagion of spreading out beyond kind of those retail CPG customers we identified.

Mark Zagorski: Yes. I’ll take that one. So I’ll start with the second one. The answer to that is no, it is the same cohort of advertisers where we’re seeing just uneven pattern of spend. They actually really saw nothing in March but seen in April. And so we feel it’s the right thing to do to take our numbers down for the year assuming they will remain fairly uneven for the year as a cohort. So this is not a growing number of advertisers. On the first question for MTF, what we saw this quarter is an overall decline on MTF because the mix has shifted towards measurement. And as we’ve always said, activations command higher premium priced products. And so as more volume is shifting to measurement, you will feel on the MTF, the impact of lower price points on social, lower price points or international in general.

The third product, pricing, has remained stable. And that’s really the part that we can follow the MTF mix shift to sort of a byproduct of where the advertisers are spending.

Operator: Thank you. And our next question comes from Andrew Boone with JMP Securities. Please state your question.

Q – Andrew Boone: Thanks so much for taking my questions. Mark, can you talk about the early learnings from Meta brand safety and what advertiser conversations are like currently in terms of adoption and demand for the product?

Mark Zagorski: Yes. Thanks, Andrew. We’ve got — we’re engaged with just about every one of our top customers on the Meta brand safety solution. I think last — in the last call, we’ve talked to something like 40 to 45 folks are testing it. The good is, we’re starting to wrap those tests now and activate some of those clients. So we’ve got a handful of folks, who are now running. A bunch of them are new. And the feedback has been really positive. They like the fact now that, we’ve got the full suite across all the solutions. As we noted in the call, we’ve now even extended some new aspects of Instagram as well. So I think it’s pacing as we expected. We talked about starting to really pick up on the second half of this year. As Nicola noted in his guidance comments, we still are planning for a moderated impact on the business based on that.

But net-net, good traction. It’s exactly what we wanted to do and expected to do and Meta as a partner, has really leaned into it as represented by the fact we started the year and launched with a handful of languages, and we expanded to over 20 languages by the end of the quarter, which is a great sign that they think this is important, and they want to continue to work with us on this front.

Q – Andrew Boone: And then, Mark, just as a follow-up for that to help us maybe try to quantify the qualification of strong demand on Meta. Is there anything you guys are seeing in terms of violation rates or anything else, again, that you can discuss maybe in broad strokes that suggest that, hey, advertisers need to be implementing a brand safety tool within social media UGC environment?

Mark Zagorski: I can’t speak to Meta specifically, but we know that all social environments have a sense of brand safety and suitability challenges that we ensure that they can — these tools are made for, right? And I think that the interest in demand around them is based on the fact that the reality is that there’s lots of growth in dollars flowing into social networks as we’ve seen, and advertisers want to have comfort in those environments. So net-net, I think the solutions are doing what they need to do, which is provide greater transparency, not just on brand safety and suitability but on viewability, on ensuring there’s not invalid traffic, et cetera. And I think they’re playing that role. And as exemplified is the growth that we saw in the quarter of over 50% growth in social, and I think there’s still going to be people who lean on those.

Andrew Boone: Thank you.

Operator: Our next question comes from Arjun Bhatia with William Blair. Please state your question.

Arjun Bhatia: Yes. Thank you. Maybe for Mark to start. It seems like, obviously, social is a little bit of a headwind here. But when you think about getting more attached with pre-bid, I guess, how is product parity for DV solution and what you have in social from a pre-bid perspective versus what you have with ABS and programmatic? And then just help us understand maybe what tools you have at your disposal to actually increase those attach rates on the social side. And maybe chop away at some of these headwinds that I see impacting you?

Mark Zagorski: Yeah, it’s a great question, Arjun. So we — in the slides we showed, our some level of prescreen controls across a handful of social network. So certainly not as broad across activation as we have across measurement. And the depths and types of those tools are different. So prescreening, social heavily leaned on YouTube and TikTok right now is the main drivers of application. I think there is opportunity for us to expand on both of those platforms, and we are as well as look at growing out some of the things we’re doing on optimization and activation. So we’ve got some work to do. Right now, most of that work is around selling, not on product development. Less than 20% of our top 700 customers are using us on social prescreen. So I think we’ve got an opportunity to upsell there. We also have some product and coverage work to do, but I do think we have an opportunity to continue to grow that.

Arjun Bhatia: Okay. And then maybe sticking on that theme. Certainly, I think we see it across the advertising landscape that more and more spend is getting allocated to media, whether it’s social or CTV. And I think you have implemented some price — some premium price on some video solutions. But as you look ahead, I think those — when you look at advertising if you, there’s a pretty wide discrepancy. So like how do you think about price as a lever on some of those more premium impressions because I think there’s still quite a bit of a gap there with the ad systems and what you see on those?

Mark Zagorski: Yeah. We’ve talked about this in prior calls, and it’s a great point. I think we are still leaving money on the table based on the pricing structure that we have on video. And I think it becomes a bigger factor as more dollars move there. So I think we’ve got an opportunity to drive pricing at the level our value is that we’re not taking advantage of. But I do think there’s an opportunity for us to do that. We’ve done it a bit, as we said, in some of our activation solutions when we bifurcated between displaying video on some of the platforms. I think we have an opportunity as well to look at both activation and measurement pricing as those CPMs in video become higher and the demand for video becomes greater, pushing them up.

Arjun Bhatia: Okay. Appreciate it. Thank you.

Operator: Thank you. And our next question comes from Raimo Lenschow with Barclays. Please state your question.

Unidentified Analyst: Hi. This is Frank on for Raimo. Thanks for taking the question. Despite the trim guidance, it still implies a step-up in the growth rate throughout the year. With that, what’s giving you the most confidence there? And within this, how much does Meta ramping factor in, especially relative to your Q4 view?

Nicola Allais: Yeah, I’ll take that question, Frank. So if you just step back and look at what we’re expecting in the second half versus the first half of the year, we expect the second half to contribute about 56% of total revenue, which is in line with what we saw last year. So there is always more revenue in the second half of the year as there is in the first half. So that’s one way to look at the numbers. We have assumed the continued ramp-up in the second half. Part of that is based on the ramping that we’re seeing from the new large global advertisers that we had already mentioned last quarter. They are now performing in line with our expectations that they’re a slow start. So that is one of the parts of the equation.

The other part I would say related to that is additional new advertisers are large global enterprise advertisers that are likely to take our premium-priced products, which will have an impact on activation off of what we saw in the first quarter. Those are the two large ones. I think if you think about the question the other way, we felt it was the right thing to do to take down the contribution from the cohort of advertisers just to be on the safe side based on the volatility of their spend. What is not yet in the second half, and we spoke about this on the prepared remarks, we have not assumed a meaningful contribution from the meta brand safety solution. That has not changed. It’s always been our view that it will take time for that to provide meaningful contributions to our numbers, but that could go faster than we expected based on the stats that Mark shared in terms of the pickup on that solution.

TikTok is also now available in a lot of non-English languages. It is providing some growth, but again, it could go faster than we have expected. And in fact, it is performing to expectation, that is proven to be very successful in terms of testing. So there are factors that are not included in what we’ve shown in the second half guidance. But overall, it’s 56% of the full-year revenue, which is similar to what we did last year.

Unidentified Analyst: Okay. Thank you.

Operator: Our next question comes from Tim Nollen with Macquarie. Please state your question.

Tim Nollen: Hi. Thanks very much. Mark, I’d like to pick up on your comments on the opportunity in CTV. I thought it was very interesting discussing how a majority of CTV deals are still done on insertion orders, not through private marketplaces, but that that is changing. And actually, the role that DV can play in helping bring about that change to CTV. I just wonder if you could expand a bit more on that. Is this comments and efforts you’re getting from your advertiser base to move toward that, that you can offer more attribution tools that can help move that market to be more biddable, programmatically driven? I just think it’s a very interesting concept. I’d love to hear some more color on that, please.

Mark Zagorski: Yeah. Thanks for the question. I think this is something I’ve been personally banging the drum on for a while, which is the lack of transparency in CTV buying, which has led towards basically an old-school way of purchasing, which is private PG, programmatic guaranteed buys, which are not very innovative, don’t apply any data. And don’t really take advantage of the programmatic pipes and the elegance of the programmatic pipes that people like Trade Desk and others have. I think where we see an opportunity there is to provide the same level of granular transparency and safety and suitability performance applications that we see on a page level on the open Internet. I think we’ve started to be able to crack that with some partners out there on the publisher side to be able to get what we call show-level data, so that we can provide measurement and granular measurement for advertisers so they have a greater sense of transparency and a greater sense of opportunity to buy in more elegant ways.

And I think that we’re just at the start of that. Like if I say, we are the first to kind of get into that space in a real way. It provides an opportunity down the road for us and the granular aspect of the data I think is going to open that up a bit. And the nice part is, we’re not blowing our own horn when we think this is good for everybody. It’s good for the publishers because it allows for better, safer buying at a more premium level. It’s good for the platforms because, they want to use the tools that they have to enhance those buys. And obviously it helps us too as we get a higher attach rate. The one other aspect that I’d say beyond that which is really interesting and we mentioned in the script is, the opportunity for attention in CTV.