DoubleVerify(US:DV)2024-07-30 23:09Financial Data and Key Metrics Changes - Total revenue grew by 17% year-over-year to $156 million, achieving the high end of revenue guidance and significantly exceeding profitability and cash flow expectations [9][28][53] - Adjusted EBITDA reached $47 million, representing a 30% adjusted EBITDA margin, with net cash from operating activities growing to $36 million from $11 million in Q2 2023 [35][57] - Revenue less cost of sales reached 83%, exceeding expectations of 80% to 82% [31][76] Business Line Data and Key Metrics Changes - Activation revenue increased by 12% year-over-year, with ABS contributing 53% of activation revenue, which grew 7% year-over-year [28][74] - Measurement revenue increased by 22% year-over-year, driven by social media growth, with social revenue up 44% year-over-year [56][41] - Supply side revenue grew by 26% year-over-year, with retail media supply side solutions delivering over 50% revenue growth [3][23] Market Data and Key Metrics Changes - International measurement revenue increased by 29% year-over-year, representing 29% of total measurement revenue [3] - CTV measurement impression volumes grew by 55% year-over-year, indicating strong demand in the CTV market [20] - The company measured more video impressions than display impressions for the first time, highlighting a shift in advertising trends [10] Company Strategy and Development Direction - The company is focused on expanding its Verify Everywhere strategy, which aims to verify every digital ad impression across all channels and geographies [10][52] - There is a strong emphasis on leveraging AI and automation to enhance media quality and performance solutions [15][36] - The company aims to capitalize on the growing digital ad spend outside the U.S., which is growing at nearly double the rate of domestic growth [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing a strong enterprise deal pipeline and numerous RFPs won in the first half of the year [34][37] - The anticipated revenue growth for the second half of the year is expected to accelerate to 18%, driven by sustained social revenue growth and successful conversion of high-confidence pipeline opportunities [60][61] - Management noted that the impact of new clients and upselling opportunities will significantly contribute to revenue in 2025 and beyond [40][61] Other Important Information - The company repurchased 1.4 million shares for $25 million in Q2 and an additional 1.3 million shares for another $25 million after the quarter [58] - Capital expenditures were approximately $7 million, with total cash and short-term investments at $339 million [77][81] Q&A Session Summary Question: Can you talk about the level of adoption of brand safety and suitability within the Meta news feed? - Management reported good traction with over 30 new advertisers testing brand safety solutions on Meta, with significant revenue potential expected to scale in 2025 [64][65][66] Question: How much of the business from Moat is still up for grabs? - Management indicated that many discussions with former Moat clients were already in progress, and the exit of Moat has accelerated these discussions [84][148] Question: What is the growth rate for social activation? - Social activation grew about 30%, with prescreen solutions contributing significantly to this growth [88][89] Question: How has the competitive landscape changed with Moat's exit? - The exit of Moat has created opportunities for the company to attract former Moat clients, with ongoing RFPs and discussions with potential customers [148][149] Question: What is the outlook for CPG and retail customers? - Management confirmed that the performance of a cohort of six large retail and CPG advertisers has been in line with expectations, and no adjustments to guidance were made [150][151]