Tremor International .(US:TRMR)2022-03-15 20:17Market Overview - The global digital advertising market is approximately $492 billion and is expected to grow at a CAGR of 12% through 2025[268]. - The advertising ecosystem is evolving, with the company positioned to benefit from trends such as digital media consumption and programmatic advertising[362]. Revenue Growth - Revenue increased by $130 million, or 61.4%, to $341.9 million for the year ended December 31, 2021, from $211.9 million for the year ended December 31, 2020[300]. - Programmatic revenue grew by 65% for the year ended December 31, 2021, driven by the growth in Video and CTV revenue[274]. - Programmatic revenue increased to $266.6 million for the year ended December 31, 2021, compared to $161.6 million in 2020, reflecting a strong growth in digital advertising[324]. - CTV revenue increased by $43.5 million or 118% to $80.3 million for the year ended December 31, 2021, driven by increased utilization of the platform[325]. - Video revenue increased by $99.3 million or 69% to $242.7 million for the year ended December 31, 2021, attributed to increased spending on the DSP platform[328]. Profitability and Income - Total comprehensive income for the year ended December 31, 2021, was $70.6 million, representing a 1,319% year-over-year increase from $5.0 million in 2020[275]. - Profit for the year increased by $71.1 million or 3,323.2% to $73.2 million for the year ended December 31, 2021, driven by a revenue increase of $130 million[314]. - Net profit margin increased to 20.6% for the year ended December 31, 2021, from 2.3% in 2020, resulting from a 61.4% revenue increase compared to a 19.8% increase in cost of revenues[317]. Expenses and Costs - Cost of revenues (exclusive of depreciation and amortization) increased by $11.8 million, or 19.8%, to $71.6 million for the year ended December 31, 2021, from $59.8 million for the year ended December 31, 2020[303]. - Research and development expenses increased by $5.2 million, or 38.9%, to $18.4 million for the year ended December 31, 2021, from $13.3 million for the year ended December 31, 2020[304]. - Selling and marketing expenses increased by $5.8 million, or 8.5%, to $74.6 million for the year ended December 31, 2021, from $68.8 million for the year ended December 31, 2020[305]. - General and administrative expenses increased by $33.8 million, or 114.0%, to $63.5 million for the year ended December 31, 2021, from $29.7 million for the year ended December 31, 2020[308]. - Depreciation and amortization expenses decreased by $4.9 million, or 10.9%, to $40.3 million for the year ended December 31, 2021, from $45.2 million for the year ended December 31, 2020[309]. Customer Metrics - The company had approximately 800 active customers and 1,600 active publishers as of December 31, 2021, serving advertisements to around 2 billion unique users[271]. - Active customers decreased from 889 in 2020 to 764 in 2021, while gross profit per active customer increased from $149, in 2020, to $332 in 2021[341]. - Contribution ex-TAC per active customer increased from $207 thousand in 2020 to $395 thousand in 2021, despite a decrease in the overall number of active customers[280]. Cash Flow and Financial Position - As of December 31, 2021, the company had cash of $367.7 million and working capital of $331.3 million, deemed sufficient for current requirements[342]. - Net cash provided by operating activities was $170.1 million for the year ended December 31, 2021, up from $35.2 million in 2020[345]. Future Outlook and Investments - The company plans to invest in long-term growth by focusing on digital video advertising, which accounted for 91% of Programmatic revenue in 2021[282]. - The company anticipates that operating expenses will increase in the foreseeable future due to investments in platform operations and technology[282]. Tax and Financial Management - The company has tax loss carry forwards from the US amounting to $79.4 million and from other international jurisdictions amounting to $16.6 million as of December 31, 2021[298]. - Tax benefit decreased by $8.6 million or 90.1% to $0.9 million for the year ended December 31, 2021, attributed to increased profitability and utilization of carried forward losses[313]. Economic Impact - Advertising demand on the platform decreased in the first half of 2020 due to the COVID-19 pandemic, with recovery observed in the second half of 2020 and 2021, although some verticals remain impacted[363]. - The economic uncertainty caused by the pandemic has led to decreased advertising spending in sectors such as travel, retail, and automotive, negatively impacting revenue[363].