Tremor International Q1 2023 IR Newsletter
Hello Everyone,
We are pleased to bring you the latest edition of the Tremor International IR Newsletter which highlights recent Company press releases, news stories and interviews we’ve been featured in, industry news we’re following, events at which we participated, and product updates. Please note, all financial information related to Tremor International in this newsletter refers to results generated and disclosed through our latest Q4 2022 earnings release. Q4 2022 results include contributions from Amobee, while full year 2022 results include contributions from Amobee for the September 12, 2022 through December 31, 2022 period.
During Q1, we reported record Q4 and full year 2022 results, highlighted by significant market share expansion within Connected TV (“CTV”), building off record organic growth achieved during 2021. In our latest earnings release on March 7ᵗʰ, we disclosed that CTV spend on our platform grew to a record of $99.6 million in Q4 2022, and a record of $283.6 million for full year 2022, reflecting 59% and 41% year-over-year growth, respectively. Video and CTV continue to represent some of digital advertising’s fastest-growing subsegments and, during 2022, approximately 79% of our Contribution ex-TAC was generated in video, inclusive of CTV. We believe our significant emphasis on CTV-related product development over the last several years, as well as our ongoing focus on expanding and enhancing our capabilities within CTV, provides our customers with significant advantages that better enable them to achieve their goals and KPIs, while strongly positioning the Company for future growth and market share gains.
Despite continued well-known market headwinds that have challenged advertiser budgets and the advertising demand environment, we displayed significant resiliency and generated record Contribution ex-TAC of $103.0 million during Q4 2022, and record Contribution ex-TAC of $309.7 million for full year 2022. We believe we were able to achieve these record results due, in large part, to the strength of our end-to-end technology platform and operating model. We believe customers are increasingly shifting towards end-to-end solutions for the added cost and data advantages compared to one-sided platforms, and because of the proven ability of end-to-end platforms to better optimize the supply path, as several other ad tech companies have recently cited.
In addition to generating record Contribution ex-TAC and CTV spend, we maintained our focus on achieving strong profitability and robust cash flow generation, which we find to be critical during periods of advertiser and macroeconomic uncertainty, and a tremendous strength and differentiator for the Company. During Q4 2022, we generated $36.9 million of Adjusted EBITDA and for full year 2022, we generated $144.9 million of Adjusted EBITDA, while also achieving 96% free cash flow conversion during 2022. We believe our Q4 2022 Adjusted EBITDA margin of 43%, and full year 2022 Adjusted EBITDA margin of 47% (as percentages of Contribution ex-TAC) were amongst the highest in the industry and position us well to continue investing in our platform to drive future growth. Even while executing the largest acquisition in our history (Amobee), investing $25 million in VIDAA, and repurchasing ~16.9 million (~11% of outstanding shares) Ordinary shares during 2022 (and investing approximately $95 million across two share repurchase programs between March 2022 and March 2023), the Company was able to maintain a high net cash balance of $115.5 million as of December 31, 2022, leaving ample liquidity to fuel the ongoing needs of the business and for future potential strategic investments and initiatives.
Over the past several months, our partners at VIDAA (a CTV operating system and streaming platform, and subsidiary of Hisense), in whom we invested $25 million in 2022, have significantly grown their global market share and increased adoption by several new smart TV brands and major CTV partners. We believe this growth positions Tremor to generate meaningful revenues from its investment beginning in late-2023. VIDAA also announced the launch of VIDAA Free, its streaming hub offering free video-on-demand, live linear, FAST, and ad-supported content, which will be available on millions of VIDAA-powered smart TVs from Hisense. VIDAA Free is currently live in the United States with plans to expand globally later this year. As VIDAA Free (which is essentially VIDAA’s equivalent to the Roku Channel) continues to scale, and as VIDAA onboards additional ad-supported content in the future, we expect increasing benefits from the ad monetization exclusivity in the US, UK, Canada, and Australia gained through our investment. We also anticipate future potential highly desirable CTV-related sports content opportunities through our partnership with VIDAA and Hisense, similar to the 2022 FIFA World Cup, where we worked alongside Hisense, VIDAA, and Google to enable ad monetization on the FIFA+ CTV app across millions of VIDAA- and Google-powered smart TVs.
VIDAA’s parent company, Hisense, also achieved major milestones recently in growing its global smart TV distribution, which further positions us to generate meaningful revenue beginning in late-2023 from our investment in VIDAA. According to AVC Revo, Hisense rose to number one in the world for monthly global smart TV shipments for the first time during December 2022 and was number two globally in smart TV shipments during full year 2022, after growing its global market share to roughly 12%. As Hisense continues to grow share in the global smart TV market, our exclusive right to distribute VIDAA’s global ACR data, gained through our VIDAA investment, is expected to provide increasing benefits, and become even more desirable to those seeking this dataset for CTV targeting and measurement. While other ad tech companies in the open internet may have limited access to ACR data, we don’t believe any of our peers have global exclusivity like we do with one of the fastest-growing global CTV brands, creating a significant differentiator for the Company.
During Q1 2023, we also continued to integrate Amobee into the broader Tremor International business and suite of technology solutions and remain encouraged by the initial success and response we’ve already seen in the market. The addition of Amobee significantly increased our global customer base, financial scale, demand-side presence, and technology, data, and enterprise self-service DSP capabilities. Importantly, it also added critical new linear TV planning capabilities, enabling the Company to access a significantly larger addressable market, while laying the foundation to create a first-of-its kind ability to holistically and simultaneously cross-plan campaigns across linear TV and CTV. These new planning capabilities have already generated commercial traction in enterprise partnership discussions with some of the world’s leading broadcasters and agencies, and we expect this traction to translate into the Company capturing higher levels of spend from customers, as well as larger shares of overall advertising budgets, over time.
On the Amobee integration front, we have already consolidated the management, sales, marketing, product, and R&D teams, improving efficiency in the overall business while achieving roughly $50 million in annualized operating cost synergies. We continue to expect to achieve $65 million in total annualized operating cost synergies (including the $50 million already achieved) and to largely finalize the technology integration by the end of H1 2023. Once the integration is completed, and our two DSPs are consolidated into one significantly enhanced platform, we believe we will have one of the most comprehensive, efficient, differentiated, and scaled end-to-end omnichannel advertising technology solutions, with a specialization in CTV and video.
The successes and milestones achieved during 2021, 2022, and most recently in Q1 2023, have furthered our conviction in our data-driven end-to-end technology and business model as well as our continued strategic focus on CTV and video. We believe that as advertiser customers continue to face challenges associated with ongoing macroeconomic uncertainty, and as they remain more data-driven in how they plan campaigns and deploy spend to achieve KPIs, that our holistic suite of technology, data, and planning capabilities create solutions for customers that can assist them across their entire workflow in ways no other single technology platform can. As customers increasingly seek to optimize supply paths and consolidate spend with fewer trusted dynamic platform partners, we feel we are incredibly well-positioned within the industry to capitalize on these trends, build deeper relationships with customers, and gain market share. We remain excited to continue serving our customers through best-in-class innovative technology and customer support, continuing to engage with the investment community, and executing on our long-term strategic vision to further our leadership position within the linear TV and CTV advertising ecosystem.
We hope you find this newsletter to be helpful and, as always, if you have any questions, any feedback, or if you’re interested in connecting with the investor relations team or management, please reach out to ir@tremorinternational.com. Please also feel free to sign up for email alerts regarding important Tremor International news, filings, or upcoming events Here.
This newsletter can also be accessed on our investor relations website at https://investors.tremorinternational.com
Thank you!
Tremor International Investor Relations
Tremor International Fourth Quarter 2022 Earnings Webcast
Tremor Participates in Needham’s 2023 Growth Conference
Tremor International Reports Results for the Fourth Quarter and Year Ended December 31, 2022
Tremor International 2022 Annual Report (Form 20-F)
Mediahub Selects Unruly as a Preferred SSP
Future Today Sees Three Consecutive Years of 100% YoY Revenue Growth with Unruly
Upwave Announces Strategic Partnership With Tremor Video To Efficiently Measure And Maximize Brand Advertising
No Material Exposure to Silicon Valley Bank
Google, Pepsi, and PopCorners Make Big Impressions with 2023 Super Bowl Ads
Solving for Challenges in CTV Ad Serving – Part 1
Solving for Challenges in CTV Ad Serving – Part 2
Solving for Challenges in CTV Ad Serving – Part 3
Solving for Challenges in CTV Ad Serving – Part 4
Solving for Challenges in CTV Ad Serving – Part 5
Increase the Value of Your Inventory through Unruly’s CTRL Platform with Audience Targeting
What the Heck is OpenRTB 2.6?
In Support of the People of Turkey and Syria
In Q1 2023, we made several DSP platform enhancements to improve our reporting, targeting, and workflow capabilities including:
- App Name Targeting and Reporting (Global) - Simplifies targeting and bolsters campaign reporting capabilities for DSP users by providing a mapping standardization for apps.
- Custom Reporting Additional Metrics (Global) - Enhances our custom reporting capabilities in the DSP to now include Skipped Events, Video Placement, Skippable Video, Device Manufacturer, and Exchange Publisher Name.
- Bulk Edit Hard Goals (Global) – Streamlines campaign set-up and optimization for individual line items and allows DSP users to add secondary goals to Automated Bidding line items.
- County Targeting and Reporting (US) – DSP users can enhance the performance of their US geo-targeted campaigns by tapping into our new county targeting and reporting capabilities.
Additionally, we made cosmetic changes to improve readability and overall user experience in our DSP such as changing the background color from black to white, reducing the space of the top and side navigation bars, and increasing the size and spacing of data tables.
Our Q1 2023 supply-side platform global enhancements focused on improving publisher usability and enhancing deals capabilities in our self-service platform including:
- Unruly - Launch of OpenRTB 2.6 –Unruly updated to the most current IAB standards.
- CTRL – External Homepage Update - This included breakout of top supply, top demand, top deals and trends, and important delivery metrics in different time intervals including live data for minute-level granularity. Week and month trends were also updated, and the update also included additional data visualizations and sorting functionality providing deeper insights for publishers.
- CTRL Programmatic Guaranteed Deals - Users can apply a daily frequency cap to a deal allowing CTRL to support true Programmatic Guaranteed Deals.
- CTRL Alert System - Publishers can subscribe to email alerts including deals with 0 bids, deals with 0 requests, and deals started bidding.
- Content Controls - Publishers now have more control over content object and post-auction information. They can choose to share content information with Unruly for targeting, but not share it with buyers downstream. This will allow them to provide more inventory for targeting at the SSP level.
AdExchanger - Why This Streaming Platform Decided To Work With Fewer Tech Partners
AdExchanger - Supply-Path Optimization Is Guiding Video SSP Strategy
Equinix - Streaming to the Extreme: How an Ad Tech Company Analyzes 10 Million Events Per Second
NextTV - Future Today Doubles Revenue Working With Unruly Ad Platform
VIDAA Takes Aim at U.S. Market
VIDAA Announces Launch of Streaming Service, ‘VIDAA Free’
Another Record High: Hisense TV Shipments Reached No. 1 in December 2022 in the Global Market
Advanced Television - Upwave Partners with Tremor
Media Post - Publishers See Higher Revenue and Decline In Unattributable Ad Spend: UK Study
Ad Week - Publishers and Buyers Want More Premium SSPs, Not More Demand
Next TV - Buying Agency Mediahub Taps Unruly as a Preferred Supply-Side Platform
Business Insider - Meet 10 Adtech Companies Fighting to Save Digital Advertising as Privacy Restrictions Threaten to Crush the Industry
This IR Newsletter contains forward-looking statements, including forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities and Exchange Act of 1934, as amended. Forward-looking statements are identified by words such as “anticipates,” “believes,” “expects,” “intends,” “may,” “can,” “will,” “estimates,” and other similar expressions. However, these words are not the only way Tremor identifies forward-looking statements. All statements contained in this IR newsletter that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding anticipated financial results for full year 2023 and beyond; anticipated benefits of Tremor’s strategic transactions and commercial partnerships; anticipated features and benefits of Tremor’s products and service offerings; Tremor’s positioning for continued future growth in both the US and international markets in 2023 and beyond; Tremor’s implementation of a substantial share repurchase while also continuing to evaluate strategic opportunities to acquire companies and invest in technology, products, sales and marketing to further expand its platform; Tremor’s medium- to long-term prospects; management’s belief that Tremor is well-positioned to benefit from anticipated future industry growth trends and Company-specific catalysts; the potential negative impact of inflationary pressures, rising interest rates, geopolitical and macroeconomic uncertainty, recession concerns, and widespread global supply chain issues that have limited advertising activity and the anticipation that these challenges could continue to have an impact for the remainder of 2023 and beyond; the anticipated benefits from the Company’s investment in VIDAA and its enhanced strategic relationship with Hisense; the anticipated benefits and synergies from the Amobee acquisition and ability of Tremor to continue to recognize those synergies; Tremor’s ability to continue to execute on cross-selling opportunities and its introduction of new technology products to a significantly larger customer base and addressable market; the timing to complete the technology integration of Amobee, as well as any other statements related to Tremor’s future financial results and operating performance. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors that may cause Tremor's actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including, but not limited to, the following: negative global economic conditions, potential negative developments in the COVID-19 pandemic and how those developments may adversely impact Tremor’s business, customers and the markets in which Tremor competes, changes in industry trends, the risk that Tremor will not realize the anticipated benefits of its acquisition of Amobee and strategic investment in VIDAA, including as a result of an inability to integrate Amobee’s business effectively and efficiently into Tremor, and other negative developments in Tremor's business or unfavourable legislative or regulatory developments. Tremor cautions you not to place undue reliance on these forward-looking statements. For a more detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties should review the risk factors listed in Tremor’s most recent Annual Report on Form 20-F, which was filed with the U.S. Securities and Exchange Commission (www.sec.gov) on March 7, 2023. Any forward-looking statements made by Tremor in this IR Newsletter speak only as of the date of this IR Newsletter, and Tremor does not intend to update these forward-looking statements after the date of this IR Newsletter, except as required by law.
Tremor, and the Tremor logo are trademarks of Tremor International Ltd. in the United States and other countries. All other trademarks are the property of their respective owners. The use of the word “partner” or “partnership” in this press release does not mean a legal partner or legal partnership.