DoubleVerify(DV) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total revenue of $144 million in Q3 2023, representing a 28% year-over-year growth, up from 22% in Q2 2023 [46] - Adjusted EBITDA was$ 46 million with margins of 32%, and net income increased nearly 30% year-over-year to $13 million [54] - The company raised its full-year 2023 revenue guidance to a range of$ 570 million to $574 million, implying a year-over-year growth of 27% at the midpoint [58] Business Line Data and Key Metrics Changes - Advertiser revenue grew by 32%, with volumes (MTMs) increasing by 27% and fixed fees (MTFs) rising by 2% year-over-year [47] - Activation revenue, particularly from the ABS product, saw a 40% year-over-year increase, with ABS volumes up 32% [48] - Measurement revenue grew by 32%, driven by a 56% increase in social revenue, which comprised 45% of total Measurement revenue [49] Market Data and Key Metrics Changes - International Measurement revenue grew by 62%, contributing to 29% of Measurement revenue in Q3 2023, compared to 23% in Q3 2022 [49] - The company noted that TikTok's Q3 revenue nearly doubled compared to the same period last year, indicating strong growth in the short-form video segment [78] Company Strategy and Development Direction - The company is focused on expanding its product offerings and enhancing its measurement capabilities across key social platforms, particularly in short-form video [12][13] - The strategy includes a "land and expand" approach, winning new clients while increasing the usage of existing products among current clients [10][17] - The company aims to leverage its innovations, such as the MFA solution and Scibids AI, to attract new advertisers and enhance existing client relationships [36][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth, citing a stable macro environment and a strong pipeline of new and expansionary deals [16][42] - The company anticipates that the ongoing investments in AI and machine learning will support future growth while maintaining profitability [79] - Management highlighted the importance of brand safety and suitability in the current advertising landscape, particularly with the rise of generative AI content [100] Other Important Information - The company ended Q3 2023 with approximately$ 259 million in cash and no long-term debt, providing significant capacity for investment [55] - The company expects Q4 2023 revenue to be in the range of $170 million to$ 174 million, indicating a year-over-year growth of 29% at the midpoint [56] Q&A Session Summary Question: Insights on coverage and expansion strategy - Management emphasized the importance of both international expansion and deeper product adoption among existing clients, leveraging a broad range of solutions to attract new business [63][70] Question: Short-form video opportunity - Management expressed excitement about the growth potential in short-form video, noting significant revenue increases from platforms like TikTok and the upcoming brand safety solutions for Meta [75][78] Question: Programmatic advertising market health - Management indicated a stable outlook for Q4 and noted that their business model is insulated from fluctuations in CPMs due to a fixed fee structure [90][92] Question: Impact of generative AI on business - Management acknowledged the increase in questionable content due to generative AI, which has driven demand for their MFA tool among advertisers concerned about brand safety [99][100] Question: Competitive landscape and product differentiation - Management highlighted that product breadth and innovation are key differentiators in winning new business, rather than engaging in price wars [118][119]