Integral Ad Science Holding Corp. (NASDAQ:IAS) Q3 2023 Earnings Call Transcript

Integral Ad Science Holding Corp. (NASDAQ:IAS) Q3 2023 Earnings Call Transcript November 4, 2023

Operator: Thank you for joining the IAS Q3 2023 Earnings Conference Call. Please note that this call will be recorded. Now I’ll hand it over to Mr. Jonathan Schaffer, SVP of Investor Relations.

Jonathan Schaffer: Good afternoon and welcome to the IAS 2023 Third Quarter Financial Results Conference Call. Today, we have Lisa Utzschneider, CEO, and Tania Secor, CFO, joining us. Before we begin, please be aware that forward-looking statements will be made during this call. We encourage you to review our filings with the SEC for more information on the risks and uncertainties associated with these statements. We will also be discussing non-GAAP measures. You can find a reconciliation of these measures in today’s earnings release on our Investor Relations site. Now, I’ll hand it over to Lisa Utzschneider, our CEO. Lisa, take it away.

Lisa Utzschneider: Thank you, Jonathan, and welcome everyone to our 2023 third quarter call. We are pleased to report that we have exceeded our expectations for the quarter, with revenue reaching $120.3 million, a 19% increase, and adjusted EBITDA at $40.6 million, with a 34% margin. Based on our strong performance in Q3 and the positive business momentum, we have raised our financial outlook for the full year. Tania will provide more details on our financial results and increased outlook. But first, let me highlight some key wins and expansions that demonstrate the value of our AI-backed products, platform integrations, and superior service.

We are thrilled to announce that BMW has chosen IAS as its global verification partner. This partnership is a testament to our technology, innovation, vertical expertise in the auto sector, and extensive international footprint. Another exciting development is our exclusive measurement and optimization partnership with Ferrero, a global sweet-packaged food company. This reinforces our reputation as a trusted partner in the industry. Additionally, we have renewed and expanded our partnership with Mars, which includes IAS’s leading market measurement and optimization offerings. This demonstrates our commitment to delivering high-quality service and expanding our relationship with strategic partners.

Our social media revenue has seen significant growth, with a 41% year-over-year increase in Q3, outpacing the growth in Q2. This growth is a result of our investments in technology and integrations with major social platforms. Our TMQ product, which identifies higher-quality media, has been a key driver of this growth. It is AI-backed, providing accurate data and improving value over time. We see great potential in the social media space, especially in live feeds and short-form videos.

We have made significant progress in expanding our Total Media Quality for YouTube product suite. Impressions and active accounts have doubled, and we have seen strong client adoption, including major brands like Dyson, Volvo, and Kimberly-Clark. Our brand safety YouTube product suite has also expanded to Google Video Partners, offering viewability and invalid traffic measurement. The integration with Google Campaign Manager 360 has also been enhanced, providing advertisers with greater efficiency and reduced campaign creation time.

On TikTok, we have seen a doubling of active measurement campaigns and quadrupled impressions year-to-date. We are expanding our TMQ brand safety and suitability measurement product to advertisers in more markets. We are also excited to announce our partnership with X, which will provide pre-bid brand safety and suitability for video across the social platform.

Looking beyond social media, we are prioritizing ease of activation and transparency for mid-tier performance-based marketers. Our total visibility product allows marketers to optimize campaign spend by providing insights into quality, supply path, cost, and marketing outcomes. We are expanding our total visibility offering with a new performance dashboard, offering more metrics for analysis. We are also increasing the number of contextual segments for better targeting customization.

Finally, within our retail media network, we have partnered with Instacart to provide viewability and IVT measurement for Instacart Ads. We have also launched a partnership with Criteo’s Commerce Media Platform, allowing brands and agencies to measure viewability and IVT across retail sites.

In summary, we are pleased with our strong Q3 results and the continued momentum in our business. We remain committed to delivering innovative solutions, expanding our partnerships, and driving customer adoption of our products. Thank you for joining us today. I will now hand it over to Tania to provide a detailed review of our financial results and increased outlook for the full year.

Tania Secor: Thank you, Lisa. I’m pleased to provide an overview of our financial performance for the third quarter and our updated outlook for the full year. We are thrilled to report that we have exceeded our expectations in Q3, with revenue reaching $120.3 million, a 19% increase compared to the prior year period. Our adjusted EBITDA was $40.6 million, with a 34% margin. These results reflect the strong demand for our AI-backed products, platform integrations, and superior service.

Based on our positive third quarter performance and the momentum we are seeing in our business, we are raising our financial outlook for the full year. We now expect revenue to be in the range of $470 million to $475 million, representing a growth of approximately 17% to 18% year-over-year. We anticipate adjusted EBITDA margin to be around 33% for the full year.

In conclusion, our strong Q3 results and increased outlook reflect the success of our strategies, the value proposition of our AI-backed products, and the strong partnerships we have developed. We remain focused on driving growth, expanding our market presence, and delivering superior value to our customers. Thank you for your continued support. Now, I will turn the call back to the operator for the question-and-answer session. Operator?

Operator: Thank you, presenters. At this time, we will begin the question-and-answer session. [Operator Instructions]

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