The Trade Desk, Inc. (NASDAQ:TTD) Q3 2023 Earnings Call Transcript

The Trade Desk, Inc. (NASDAQ:TTD) Q3 2023 Earnings Call Transcript November 9, 2023

Operator: Greetings. Welcome to The Trade Desk Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Chris Toth. You may begin.

Chris Toth: Thank you, operator. Hello and good afternoon to everyone. Welcome to The Trade Desk third quarter 2023 earnings conference call. On the call today are Founder and CEO, Jeff Green; and Chief Financial Officer, Laura Schenkein. A copy of our earnings press release can be found on our website at thetradedesk.com in the Investor Relations section. Before we begin, I would like to remind you that except for historical information, some of the discussion and our responses in Q&A may contain forward-looking statements which are dependent upon certain risks and uncertainties. These forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. Actual results may vary significantly and we expressly assume no obligations to update any of our forward-looking statements.

Should any of our beliefs or assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. I encourage you to refer to the risk factors referenced in our press release and included in our most recent SEC filings. In addition to reporting our GAAP financial results, we present supplemental non-GAAP financial data. A reconciliation of the GAAP to non-GAAP measures can be found in our earnings press release. We believe that providing non-GAAP measures, combined with our GAAP results, provides a more meaningful representation of the company’s operational performance. With that, I’ll now turn the call over to Founder and CEO, Jeff Green. Jeff?

Jeffrey Green: Thanks, Chris and thank you all for joining us today. As you’ve seen from our press release, we posted very strong growth in the third quarter. We reported revenue of $493 million, growing 25% compared with last year. Our third quarter again accelerated over the second quarter as we continued to significantly outperform the digital advertising industry. We’re growing our revenues and maintaining profitability and a strong balance sheet and making large investments and, most importantly, we’re gaining market share as we’re outperforming our advertising peers, both big and small. From a global view, our industry is nearing the $1 trillion TAM we predicted when we launched as a public company 7 years ago. Inflation, a global pandemic, the streaming wars and retail media have all accelerated the expansion of that global TAM but it’s especially accelerated the speed of the pace setter, the U.S. market.

Magna Global estimates that the overall U.S. advertising industry is growing at 5% this year and digital spend or the digital ad market pie is expected to grow by 10%. Clearly, we are significantly outperforming the rest of the advertising market. This builds on our market share gains from last year when we grew 20%-plus each quarter and our competitors were posting negative to low single-digit growth. So even with a bit more uncertainty than a usual Q4, we continue to gain significant share and we are set up exceptionally well for times of relative stability. As I often share with the teams at TTD, we got here by aligning our interest with agencies and brands, the buy side. We align our interests with them and then we obsessively innovate for them.

We create more value than we extract and we operate our business with a philosophy that is people-first. Our bias is to find win-win situations in all of our partnerships and our strong alignment with our customers is the foundation of our success and that foundation has created the opportunity for us to be a leader and innovator for the open Internet. 2023 has already been the biggest year of innovation in the history of The Trade Desk. And I’d like to share 6 or 7 major categories of innovation and investment. The first innovation I want to highlight today is a relatively new format for partnership. Our unmatched growth rate is fueled by signing joint business plans with major brands and agencies. JVPs represent joint innovation partnerships with our clients.

Agencies and brands work closely with us to pioneer new ways of thinking about data-driven advertising and they are locking in that commitment as part of these JVPs. Our largest JVP signed this year represent future annual spend of over $1 billion per partnership. Yes, multiple partnerships have multiyear partnership agreements with omnichannel plans to spend $1 billion-plus in each of them. Our strong relationships and share gains, coupled with durable EBITDA and cash generation, means we can invest in innovation in service of our clients while also maintaining strong profitability. Our innovations in 2018 and ’19 and 2020 helped us gain share during 2020 and 2021. And that’s why I expect we will continue to gain share in Q4 of this year and 2024 and beyond.

As a global company, in tough economic environments, we grab market share and in vibrant economic environments, we aim to lead in absolute growth. The second area of innovation I want to highlight is in AI. We’ve approached AI the same way we approached building the initial buying platform 14 years ago. While everyone else was on stage talking about building, we were back at the office actually building. AI has immense promise. It will change the world again. But not everyone talking about AI is delivering something real or impactful. We have been going through every part of our platform and making investments and/or plans to inject AI in the places where data sets are rich, big and high quality. Large language models, the basis of ChatGPT, aren’t the highest priority places for us to make investments in AI right now.

Deep learning models pointed at bidding, pricing, value and ad relevance are perfect places for us to concentrate our investment in AI. All 4 categories have private betas and some of the best engineers on the world pointed at these opportunities. We’ve expanded Koa, our brand for AI products that we launched in 2018 and I believe this will unlock performance budgets on our platform in the years to come. We will begin to see the impact of these 2023 AI investments in 2024. When I first mentioned the massive wave of opportunity in 2019 and 2020, one of the major factors in the size of that wave was the rapidly emerging world of CTV. As we all know, the pandemic accelerated the shift to CTV from a viewer perspective. And now we’re at a point where more viewers are watching streaming services than traditional linear television.

The global changes of 2020 and 2021 ushered in a period of innovation in CTV. As an industry and as a company, we crammed more advances into 2 years than might otherwise have been played out over a much longer period of time. Where once the industry was taking a wait-and-see approach to the emergence of streaming, suddenly everyone was innovating fast. Fortunately, we had a history of innovating ahead. With that same foresight, I believe the Walled Garden strategy will not work for most companies, if any, at end state. Competition, innovation and the benefits of globally integrated markets outweigh the benefits of draconian Walled Gardens. The surest way to prove the value of the open Internet is to continue to innovate in the third and fourth and fifth innovations that I want to talk about today: CTV, identity and retail media.

Our innovations in CTV have fueled our outsized growth and made us a better partner for all of the content companies. The last few years, consumers and media companies have been in the new golden age of TV. Content companies have been competing for streaming subscriber growth which seemingly has provided the scoreboard determining winners and losers in the new digital era. That competition to win subscribers has ratcheted up content costs. Higher content costs mean raising prices or finding some way to raise revenue per user if media companies were going to continue to feed their content engines with a similar rate as before. Every premium video content company from Disney to Paramount to NBCU and Sky to Netflix have changed pricing and embraced advertising.

Not all of them have yet embraced or centered around programmatic advertising but we predict they will. In order to get incremental subscribers, they can’t simply keep raising prices. Some consumers would rather spend a few extra minutes, considering ads they watch than pay more for subscriptions. High-priced subscriptions alone will not provide the incremental subscribers media companies need to continue growing. As recently reported by Hollywood Reporter and I quote, “Executives at every major streaming giant with both an ad-supported and an ad-free tier, including Disney, Netflix, Paramount, Warner Bros. Discovery and NBCU say that the total revenue per user is higher on the ad-supported plan than it is on the ad-free plan.” Not only do media companies generate more revenue per user within an ad-supported option but the potential for growth is much greater.

Ultimately, there’s a limit to how much viewers will spend on subscriptions. Economic pressures on the consumer right now are increasing the appeal of a free or low-cost option that is supported by ads. However, this model is only sustainable if the ad load is significantly lower than traditional linear television. And the only way we get there is if the ads are relevant to the viewer so that the advertisers are willing to pay more for each of them. It’s why we work closely with the world’s largest streaming services to fully realize the value of that exchange. This includes freeing up competitive biddable inventory, advancing new approaches to identity, unleashing the power of first- and third-party data and, of course, the technology infrastructure to transact and measure.

In CTV, we have innovated by constructing a more efficient supply chain by creating a new product, OpenPath. It celebrated its first birthday this year and has already become a gold standard of transparency and auction integrity. We’ve also advanced TV measurement with the launch of TV QI, the TV Quality Index, to showcase the value of premium TV content over UGC platforms like YouTube that advertise on more questionable content for brands. We believe the ads we show in CTV in 2023 are more relevant in CTV than they’ve ever been before in TV or premium video. As the value of these innovations has proven out in the CTV advertising market day after day, we continue to see more premium inventory flow into our platform. Disney, for example, just opened Disney+ inventory for us across Europe.

More and more live sports inventory, perhaps the crown jewel for most streaming providers, is opening up for programmatic buying on our platform, with billions of avails every single week. For the first few weeks of the football season, for example, we are averaging more than 300 advertisers activating on the NBC Sunday Night Football live stream. A great example of an advertiser pioneering new approaches to TV advertising with a focus on live sports is Old Navy. They have been a long-time participant in the upfront process. With their agency, PhD, Old Navy wanted to embrace CTV as more of their target audience has shifted to streaming. At first, they moved part of their spend from insertion order to programmatic guaranteed and consolidated spend on our platform.

In doing so, they were able to mitigate audience overlap across TV providers and hold each provider more accountable for performance. But as Old Navy quickly found out, programmatic guaranteed has limitations. Programmatic guaranteed, or PG, does not allow Old Navy to get the full value of programmatic such as frequency management, audience targeting and the ability to layer on their first-party data. So they took the next step in the form of decision biddable buying within the private marketplace and focused on live sports inventory. CTV live sports advertising was appealing because it offered an opportunity to expose their brand against very high premium content that might be more restrictive and expensive in a traditional linear environment.

They were able to use Koa, The Trade Desk’s AI, to optimize pacing and frequency management across the highest-performing inventory. As a result, they saw a 70% reduction in the cost to reach each unique household versus their programmatic guaranteed performance. And we’re just scratching the surface. As recently reported in The Current, NBCUniversal has teamed up with the Walmart DSP which partners with The Trade Desk so brands can now deliver targeted ads on Peacock live sports inventory using Walmart shopper data. Brands can then measure and provide attribution on the results of those ads in terms of impact and in-store and online sales. So now, North America which includes brands such as Danone, Silk and Activia, reported a 30%-plus increase in new-to-brand buyers from their CTV campaign earlier this year.

The next phase of innovation in CTV is the development of a forward market product on our platform. We are investing significant resources to build this product which is akin to a futures market but for premium CTV inventory. Here, we bring the best of the traditional upfront guarantee and combine it with the power of data-driven decisioning or programmatic advertising. Advertisers commit to certain levels of spend on specific audiences in a decision programmatic forward market. We are already active in live beta with a number of CTV providers and advertisers and expect the testing to steadily increase throughout 2024. We’re excited to provide more details on our forward market innovations at our Forward ’24 event in the first half of next year.

The advances in CTV in 2023 for The Trade Desk have been accelerated by the fourth category of innovation I want to discuss today, identity. With Google’s latest disclosure that they plan to deprecate cookies in 2024, the industry has been more focused than ever on coalescing around a better alternative. Nearly all of the major streaming companies in the U.S. have embraced UID2. They understand that if advertisers only advertise on users likely to be interested in their products, then advertisers will pay meaningfully more for those impressions. With UID2, content owners don’t have to share data. Instead, advertisers can use their own data and to do so, they’re willing to pay more. One leading streaming platform recently implemented UID2 and the results have been remarkable.

Their average daily revenue from The Trade Desk has increased 150%. Their average daily revenue when those impressions are open and biddable, has increased 222% and all because they are able to offer advertisers a much clearer sense of relevance and addressability. Again, because of rising cost of content and less appetite from consumers to pay for more subscriptions, every global content company in the world is now rolling out a programmatic advertising strategy and plan. As a result, more and more publishers and advertisers are now deploying UID2. Over the last couple of years, a who’s who of major publishers, advertisers and data partners have announced their commitment to UID2 and now we’re seeing the positive impact of adoption on our platform.

Luxury Escapes is a high-end travel agency with more than 7 million customers worldwide. They activated their first-party data on our platform and then used UID2 to help find potential new customers who shared characteristics with the most loyal customers they already had. In this way, their first-party data acted as a seed to grow their potential customer base. And the results were very impressive. In the U.S. alone, their conversion rate with UID2 was more than 400% higher than with cookies. Their return on asset was 900% higher and their cost per acquisition was 83% lower. For the first time ever, in 2024, we expect the majority of CTV and premium video impressions to be bought on our platform using either EUID or UID2. The fifth innovation I wanted to highlight today is the rapid innovating we’re doing in retail media and retail data partnerships.

The fusion of retail and programmatic advertising has accelerated in the wake of the pandemic. Our partnerships with Walmart, Target, Albertsons, Instacart and many, many more have fueled the expansions of our TAM in the United States. Schwartz and Ocado have been notable catalysts in the EU. Incidentally, the EU programmatic advertising ecosystem is showing signs of improvement, in part brought on by the appeal of retail partnership. And lastly, BigBasket and Tokopedia are examples of growing synergies between programmatic advertising and retail media in some of the largest APAC markets. Just as stay-at-home directives encouraged many of us to shift our viewing habits to binge streaming, they also forced many of us to shift our shopping habits to e-commerce.

According to the U.S. Census Bureau, e-commerce sales boomed 43% in 2020 alone and it has continued to grow every year since. As a result, advertising on e-commerce destinations has become more attractive and the value of data collected about purchase behaviors has become much more valuable. All major retailers are working on activating that data for advertisers, so brands can understand how their advertising dollars impact actual sales, whether online or in-store and most of them are partnering with us. The significance of this shift should not go unstated. All advertisers are focused at their core on driving sales growth. But until very recently, especially in the consumer space, advertisers have been missing the link between their advertising dollars and the real-world sales growth.

Instead, they have had to use proxy metrics to showcase the ROI of their campaigns. How many click-throughs did their ads strive for example. But now we can measure with much more precision whether the ad dollars actually led to a consumer purchase. We can attribute value to all parts of the funnel, not just the last touch. We can understand the relevance of every ad impression more clearly and we can better prioritize the right channel at the right time for the right audience. The open Internet is proving to be increasingly preferred by big brands as retail media makes the efficacy of the open Internet continue to improve and scale. Rossman, a major European drugstore chain, came to us when they wanted to drive first sales for their organic food brand.

They knew that if consumers tried their product, there’s a 95% chance of them becoming repeat customers. The challenge was getting them to make that first purchase. Working with us, they were able to deploy their first-party data and then find where their target audience groups might be across the open Internet. With data-driven precision, they were able to determine that 99% of their ad spend was hitting their specific target audience. And more major retail organizations continue to partner with us as the most effective way to enable advertisers to benefit from their data. Just last month, Instacart, one of the world’s largest retail technology companies representing more than 1,400 retail labels, announced that it will make its retail media data available to advertisers on The Trade Desk.

At the same time, we continue to innovate in the retail space. As a part of Kokai, we have launched the Retail Sales Index which allows advertisers to understand the performance of the retail campaigns across the open Internet. It radically simplifies the measurement and attribution process in a rapidly evolving market and we are just scratching the surface. As one of the few independent players at scale in our industry, we are in the pole position to continue partnering with leading retailers, standardize their data on our platform and drive value for our clients. Let me conclude by making a few comments about the current environment and then connect the dots of innovation and our optimism for the future. We represent the vast majority of the Ad Age top 200 advertisers, the largest advertisers in the world.

Starting in the second week of October, we have seen some transitory cautiousness across some of those advertisers. These include, for example, industries that have been impacted by recent strikes such as the U.S. auto industry. Through the first week of November, we have seen spend stabilize and we are optimistic for the remainder of the year and for 2024. Both CTV and retail media continued to drive our business and we continue to win share. In terms of innovation, I am so excited to showcase the strength of this company over the next few years as we’ve innovated and built more this year than in any year in our history, while at the same time, preserving and leaving room to expand our operating leverage. The many innovations I’ve discussed today are embedded in our newest version of the platform, Kokai.

We’ve been launching Kokai innovations throughout the year but many of the biggest innovations, including our new UX, are in alphas or private betas today and will roll out to all of our customers in the first half of next year. As we exit 2023 and look forward to 2024, I want to highlight several specific areas that make me extremely positive about our future prospects. So let me sum up. First, agencies and brands are more deliberate with advertising budgets. They are shifting ad budgets to where they can be more flexible, agile and data-driven in everything they do, especially in times of uncertainty and this is driving them to sign JVPs with us at a record pace. Second is the innovation coming from AI and the many, many opportunities we have ahead of us to find places to inject AI into what may be the most rich and underappreciated data asset on the Internet which we have here at The Trade Desk.

Third, Connected TV continues to be the fastest-growing channel of our business and a key driver of overall omnichannel growth and it’s not just here in the U.S. CTV continues to grow rapidly, both in EMEA and across Asia. The industry is evolving fast as providers shift inventory into biddable marketplaces to maximize ad revenue and as advertisers look to bring more precision and addressability to their TV campaigns. Fourth, retail media has become one of the fastest-growing areas of our business and we expect this to continue in 2024. Retail media is revolutionizing the way many advertisers in the CPG space think about measurement and attribution and our innovation is at the center of this. Fifth, global expansion. We have made significant investments outside the U.S. over the last several years in our go-to-market strategy in CTV and in retail media.

We believe we are in a position to continue to accelerate our international growth in many of the markets we serve. Sixth is the rapid adoption of UID2 and EUID as the currency for relevant ads and personalized content that has been adopted by the infrastructure of the Internet and nearly all of the biggest content companies in the world. Seventh is the upcoming U.S. political election. Since 2016, The Trade Desk has been a vital platform for leading political advertisers. In 2024, we expect to gain more share in this segment and we believe that spend will increase as the year progresses. And finally, we continue to be one of the few high-growth technology companies that consistently generate strong adjusted EBITDA and free cash flow that has steadily increased over the years.

As a result, we have been able to invest in innovation and generate strong profitability. I believe The Trade Desk has been successful because we have always focused on delivering premium value to advertisers and agencies. Everything we do, including our latest Kokai innovations, are pointed at helping brands and advertisers get the maximum being for every advertising dollar. I could not be more confident or excited about how we are positioned for 2024 and beyond because of the many growth drivers that we’ve discussed today. We will continue to innovate to lead the market and I’m confident that the world’s leading advertisers will continue to default to our platform as they seek to drive their own business growth via advertising. And with that, I’ll hand the call over to Laura, who will give you more color on the quarter.

Laura Schenkein: Thank you, Jeff and good afternoon. As you have seen in our Q3 results, we have continued to execute extremely well. During the quarter, we continued to grab share and outpace our peers. We delivered accelerating year-over-year revenue growth, managed our expenses efficiently and delivered strong adjusted EBITDA and cash flow. Our results are a reflection of the premium advertisers are placing on precision, agility and transparency as they continue to shift away from linear media and walled gardens. Revenue in Q3 was $493 million, representing growth of 25% year-over-year, an acceleration from the prior quarter. Excluding U.S. political election spend which represented a low single-digit percent of spend in Q3 2022, our revenue growth rate in Q3 of this year was about 27% on a year-over-year basis.

We continue to win spend as marketers increasingly focus their investment on platforms that deliver value, particularly in premium video like CTV. This is a dynamic we’ve seen many times over the years. When the macro environment presents challenges, brands shift to platforms and channels that offer flexibility and measurable results. During the third quarter, CTV led our growth from a scaled channel perspective once again. We saw strong momentum in retail media as we won incremental shopper marketing budgets and brought the Retail Sales Index to market. International spend growth accelerated off a strong Q2 with notably strong performance in CTV. With the strong top line performance in Q3, we generated approximately $200 million in adjusted EBITDA or about 40% of revenue.

This led to free cash flow of $184 million in Q3, marking over $600 million of free cash flow on a trailing 12-month basis. I’m proud of our ability to generate strong profitability while continuing to invest in our business as that will help fund our future growth. Because of our fortunate position within an incredibly large addressable market, one of our greatest responsibilities is ensuring that we are growing sustainably while also generating sufficient profitability and cash flow. Our team has done a remarkable job achieving this as we balance short-term opportunities with our long-term financial vision. From a scale channel perspective, CTV, by a wide margin, led our growth again during the quarter. In Q3, video which includes CTV, represented a mid-40s percentage share of our business and continues to grow as a percentage of our mix.

Mobile represented a mid-30s percentage share of spend during the quarter. Display continued to represent a low double-digit percent share of our business and audio represented around 5%. Geographically, North America represents about 87% of our business in Q3 and international represented about 13%. We are very pleased that international growth slightly outpaced North America for the third quarter in a row. CTV across EMEA and North Asia was very strong during the quarter, growing over 100% year-over-year in each region. In terms of the verticals that represent at least 1% of our spend, we continued to see strong performance in food and drink, travel and automotive. Health and fitness and business were below the average. Turning now to expenses.

Excluding stock-based compensation, operating expenses in Q3 were $316 million, up 29% year-over-year. During the third quarter, we continued to invest in our team, our platform and our infrastructure to support sustained growth. Income tax expense was $18 million for the third quarter, driven primarily by our pre-tax profitability and non-deductible stock-based compensation. Adjusted net income was $167 million or $0.33 per fully diluted share. Net cash provided by operating activities was $192 million for Q3 and free cash flow was $184 million. DSOs exiting the quarter were 91 days, down about 1 day from a year ago. DPOs were 75 days, up about 1 day from a year ago. In Q3, via our share repurchase program, we repurchased and retired 1.2 million shares for an aggregate repurchase amount of $90 million.

We exited the third quarter with a strong cash and liquidity position. Cash, cash equivalents and short-term investments ended the quarter at $1.5 billion. We have no debt on the balance sheet. Turning to our outlook for the fourth quarter. First, we continue to see strong spend in our key areas such as CTV and retail media. That said, we have seen more macroeconomic uncertainty at the start of Q4. We estimate Q4 revenue to be at least $580 million which would represent growth of 18% on a year-over-year basis. Excluding U.S. political election spend which represented a mid-single-digit percent of spend in Q4 2022, our estimated revenue growth rate in Q4 of this year would be about 22% on a year-over-year basis. We estimate adjusted EBITDA to be approximately $270 million in Q4.

In closing, we are extremely pleased with our strong performance in the third quarter and we are cautiously optimistic for Q4. We continue to demonstrate our ability to drive momentum across our company priorities, achieve profitable growth and drive significant share gains. Regardless of what the macro brings, we believe we have never been in a better position than we are in today. With large growth drivers, including the ongoing secular shift to CTV, upgrading measurement with retail data, our biggest product release ever with Kokai, growth in international markets, an identity framework that has never been stronger, the U.S. presidential election cycle, amongst others, we remain optimistic for the remainder of Q4 and into 2024. That concludes our prepared remarks.

And with that, operator, let’s open up the call for questions.

Operator: [Operator Instructions] The first question comes from Shyam Patil with Susquehanna.

See also Top 20 Gold Mining Companies in the World and 15 Best Gins Under $50.

Q&A Session

Shyam Patil: Congrats on the strong 3Q across the board. I think the big thing on everyone’s mind right now is the 4Q outlook which I think caught a lot of people by surprise. Maybe we can start there. Jeff, I know you talked a little bit about this in your prepared remarks but can you talk a little bit more about what you’re seeing in 4Q? And just what gives you confidence that it is all macro and not competitive or anything else?

Jeffrey Green: You bet. And I’m really glad you’re asking this question, Shyam. So I have a lot to say on it, so I appreciate the kind words and the question. So first, just looking back, we had a very strong Q3, growing 25%, once again beating the market. And please don’t forget and this is really important, that we are coming off of a 30%-plus growth year from last year, where many of our competitors were shrinking or barely growing. This year and last year were years where we’re gaining market share at a higher rate than we have previously. This year, I think we signed more long-term JVPs with major brand advertisers and agencies than ever before with bigger amounts and longer time horizons than we’ve ever had before, too.

So once again, this year, CTV and retail media have been leading the way and in general, we have amazing momentum going into Q4. Another reminder, we represent the Ad Age top 200 advertisers and of course, the majority of the S&P 500, something that I’ve pointed out many times before. These are, of course, the largest advertisers in the world. And of course, that means that we represent nearly every major sector of the economy as well. So that said, starting about the second week of October, we began to see some transitory cautiousness around certain advertisers. For example, we saw some reduction in brand spend in verticals such as automotive and consumer electronics, for instance, specifically around cell phones and media and entertainment.

Some of these industries have been recently impacted by strikes such as the U.S. auto industry. So the first week in November, we have seen spend stabilize and we’re very confident that we will continue to outpace our industry and gain market share. Excluding election spend in Q4 of 2022, we’re guiding to about 22% year-over-year growth which is significantly faster than the industry and illustrates the long-term strength of our business model, especially when you consider those comps. I’m very proud of our team and what they’ve done in the first 3 quarters and the market wins that they’re putting on the board right now. The team really is firing on all cylinders. Our company is extremely healthy with great operating leverage and a strong balance sheet.

All of those things are the strongest they’ve ever been. Given our strength in the fastest-growing channels of digital advertising, growing long-term relationships in the world’s largest brands and agencies, the technology innovations that we outlined in our prepared remarks, including Kokai and the AI investments that we’re making, we are very confident that we will continue to outpace the industry and gain share and I’m very optimistic heading into 2024. Thanks, Shyam, for the question.

Operator: The next question comes from Vasily Karasyov with Cannon Globe Research [ph].

Vasily Karasyov: Obviously following up on the point of interest here, Jeff, wanted to ask you to talk in a little more detail about what you saw this quarter, specifically the linearity that we’ve seen in the first 5 weeks so far. And probably wanted to ask about if you could provide more color on where you have seen cautiousness on the part of advertisers. So any additional color you can give us on what’s going on this quarter would be appreciated.

Jeffrey Green: Okay. Laura, I know you have some comments on this. Why don’t you go first, then I’ll go second? I’ll add to it.

Laura Schenkein: Absolutely. Thanks, Vasily, for the question. So the way I view this is that coming off of a strong Q3, we continued to see that strength going into the first week of Q4. Starting in the second week is when we saw some advertisers become more cautious in their spend. And we saw this cautiousness across a few verticals that Jeff mentioned, such as automotive, consumer electronics and handsets and media and entertainment. And of course, some of the caution is transitory due to what we mentioned, the strikes in auto and in media and in entertainment. We continue, at the same time, to see strong spend in our largest drivers such as CTV and retail media. And through today which is a weekend change into November, we’ve seen spend stabilize so we’re cautiously optimistic for the remainder of Q4. Jeff, is there anything you’d add to that?

Jeffrey Green: Yes. So first, a couple of things to just keep in mind. We had very strong and healthy growth every quarter for the last couple of years. We have significantly outpaced the industry and gained share. During that same time, some of our largest competitors are coming off low or negative growth from a year ago, where we’re coming off of over 20% growth, then an over 20% growth again. Our unparalleled growth is because we’ve never been closer to many of the largest brands and agencies in the world that all use our platform. We’re striking more and more long-term commitments in JVPs and we’re innovating to bring new value across all their omnichannel advertising campaigns. That includes in the biggest release that we’ve ever made in Kokai which of course, includes AI and performance enhancements that we’ve never seen before.

Our business is largely based on the world’s largest brands. So if there is a little caution due to macro uncertainty facing everyone, we, of course, won’t be immune from that in the short term. But we’re convinced that the macro pressures today represent land grab opportunities now that will show fruit or pay off over and over again in the years to come. The fundamentals of our long-term business are as solid as they’ve ever been and we are poised to continue to outpace the industry and gain share in Q4 and we’re really positioned well to go into 2024. Thanks for the question, Vasily.