Innovid Corp (CTV) 2022 Q2 法說會逐字稿

Greetings. Welcome to Innovid's Second Quarter 202 Earnings Call. (Operator Instructions). Please note this conference is being recorded. At this time, I will turn the conference over to Brinlea Johnson with Investor Relations. Brinlea, you may now begin.

Thank you, operator, and everyone, for joining us today. Welcome to Innovid's Second Quarter 2022 Conference Call. Before I begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements. The safe harbor statement contained in today's earnings release also pertains to this call. If you have not received a copy of the release, please direct yourself to the Investor Relations section of the company's website. Changes in our business, competitive landscape, technological or regulatory environment, and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today.

Our historical results are not necessarily indicative of future performance. As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them, except as required by law. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for our GAAP results. We use these non-GAAP measures in managing the business and believe they provide useful information for our investors. Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in our earnings presentation available on our website as well as our earnings release and our filings with the SEC.

Today, we are joined by Zvika Netter, Innovid's Co-Founder and CEO, who will begin the call with a business update. Then he will turn the call over to Tanya Andreev-Kaspin, Innovid's CFO, who will discuss the financials of the company. During the question-and-answer session, Tal Chalozin, Co-Founder and CTO, will also be joining. With that, I would like to pass the call over to Zvika Netter. Zvika, please go ahead.

Thank you, Brinlea, and thank you all for joining us today. Innovid delivered strong results in the second quarter of 2022. Despite a more challenging environment, we delivered revenue in line with our guidance and EBITDA at the higher end of our guidance, reflecting the strength of our business model. Revenue increased by 45% year-over-year to $33.1 million on an as-reported basis. TVSquared contributed $6.8 million or 21% of reported revenue, reflecting a 31% year-over-year growth for the TVSquared business. Following the acquisition closing on February 28, 2022; our net profit was $4.3 million, and adjusted EBITDA was a negative $1.7 million, at the high end of our expected range of negative $1.5 million to negative $3.5 million.

We believe our ability to record a strong adjusted EBITDA bottom line even when facing challenges is a testament to the strength of our business model, strong margin profile, and our ability to control expenses. By far, the most exciting development of the second quarter was the launch of InnovidXP. InnovidXP, our newly expanded converged TV measurement offering was brought to life through the integration of Innovid extensive CTV advertising data set, combined with TVSquared's robust linear TV data set, creating a first to market global cross-platform TV measurement solution that has quickly gained traction.

As a reminder, Innovid's focus and emphasis spans all forms of television. Whether the TV content is delivered via broadcast also known as linear TV were streamed across devices such as connected TV, mobile TV, or desktop TV. CTV contributed 47% of total revenue in the second quarter when excluding TVSquared. As we continue to gain traction against our road map and vision to unify advertising delivery, personalization, and measurement for the converged TV landscape, we believe CTV will continue to be a driving force for the business.

I would now like to build on the update we provided in our last conference call and share more details on the current and future development of our overall business and the momentum that we have built around measurement and InnovidXP. Specifically, I will provide these updates within the context of our 4 key growth drivers, which are volume growth, product upsell, geographic coverage, and client base retention and expansion.

Let us begin with volume growth. I am pleased to share that CTV set a new record in the second quarter. For the first time ever, 50% of all TV ads delivered through our platforms were streamed to connected television. If you recall, Innovid was founded on the premise that one day, the majority of TV content will be delivered through streaming channels. That prediction is coming to life and our volume outlook is further supported by the ongoing migration of TV viewership towards not just CTV, but ad supported CTV, which is the foundation of Innovid's business. The introduction of ad-supported offerings from large global streaming publishers is a win for all, more affordable content for viewers and wider audience to reach for appetite.

Netflix recently confirmed its plan to introduce a lower cost ad-supported tier in early 2023. Disney+ will introduce its ad-supported period later this year and plans to expand internationally next year. And Warner Bros discovery just shared advertising is core to HBO and other networks growth strategy. We believe a substantial share of Stream's future will be ad supportive. It is also important to note that Innovid derives revenue based on the volume growth of ads served to our platforms or measured by our platforms and not as a percentage of media spent or what is referred to a stake rate. This means our business is typically less impacted by fluctuating media costs. In fact, we often benefit from the dynamics that increased pricing pressure as assuming similar budgets, lower media costs equate to more volume; therefore, more revenue to Innovid.

We remain optimistic about our volume growth outlook. As the CTV market matures, more and more TV media platform are being added to the ecosystem on a regular basis, each fighting for their individual piece of the streaming pie. This reinforces the need for an independent scalable platform like Innovid to integrate across all platforms and partners, enabling brands to tap into the opportunity for enhanced reach, engagement, and performance through CTV appetite. Our second growth engine is product upsell. Right now, the entire TV industry is undergoing a transformation, a quest for better metrics and measurement that brings linear TV and string TV together.

Advertisers need a simple, scalable, independent, and actionable view of their investments whether they buy direct programmatically or broth across all forms of TV, that is fundamental to the future of television. More than that, they need a unified solution that allows them to achieve timely analysis to inform, test, invest, and optimize continuously throughout the campaign life cycle. Last quarter, we shared that Innovid has successfully completed the acquisition of leading independent global TV measurement and attribution platform, TVSquared.

This quarter, the acquisition came to life through the launch of our unified measurement platform for Converged TV, InnovidXP. InnovidXP is the first global unified cross-platform measurement solution directly integrated with ad serving data and creative personalization. The InnovidXP name reflects the direction where Innovid and the industry are heading, a cross-platform TV marketplace requiring independent, consistent measurement, and outcomes across platforms and screens regardless of where, when, and how people watch.

We have seen early success with upselling our existing ad serving clients to InnovidXP this past quarter, including several leading multinational and national restaurant chains, a worldwide employment platform. Additionally, we have won several new clients, including an international design platform, further expanding our client base. We have also bolstered our measurement footprint through strategic partnerships, spanning programmatic via Magnite Expanded Measurement and Attribution Program, forge political TV advertising partnership with AdImpact and integrated with FreeWheel by Comcast newly launched international audience Express offering.

Overall, measurement grew to account for 22% of total revenue in Q2, and we predict measurement will be a driving force for our growth story moving forward. Why? We believe our foundation in ad serving gives us an edge in measurement. Think about it. Our platform already has the certification and scale to deliver ads everywhere, which means InnovidXP is an out-of-the-box solution for brands with no additional implementation requirements. It is automatic. And the best of all, through our unified platform, your measurement is tied to adserve, which is the way the digital ecosystem already transacts. The launch of InnovidXP comes just one quarter after the acquisition of TVSquared, demonstrating our commitment to measurement innovation. Beyond measurement, our advanced creative and personalization solutions continue to see significant growth in adoption.

Revenue from Creative Solutions grew 39% year-over-year this quarter, driven by a greater emphasis on experiences and performance. Our third growth engine is geographic expansion. Our international revenue measures ads delivered outside of the U.S. grew 51% year-over-year in the second quarter. The launch of InnovidXP produce a true global measurement platform to the market, supporting the needs of global, regional and local advertisers through measurement across 75 markets outside of the U.S. We have several significant developments underway to expand InnovidXP's footprint and coverage internationally and feel confident that our differentiated offering will unlock future opportunities in the international markets.

And last but definitely not least, expanding our client base. This past quarter, we secured numerous new advertiser clients for our ad delivery and personalization solution, including a multinational e-commerce company, a leading multinational restaurant chain, and international travel company, and one of the largest U.S. health insurance providers. And as previously mentioned we successfully grew our measurement advertiser client base.

Earlier this year, prior to finalizing the TVSquared acquisition, I shared that client-based diversification was one of the key areas the acquisition would advance. We believe expanding our purview and traction across both the buy side and the sell side of the advertising ecosystem is critical to fulfilling Innovid's mission to become pre-eminent measurement provider. While the buy side, which includes brands and their agency partners, is still a no star for the company, we have taken significant strides to deepen our engagement with the sell side, which includes publishers and pay TV operators.

To that end, I'm pleased to share we expanded our multiyear measurement partnerships with Tubi FOX streaming service, demonstrating the power of InnovidXP for always on incremental reach measurement across both FOX and Tubi. The continued growth of our strong and increasingly diverse customer base is a signal for the strength of our underlying business.

Next, I would like to address the macroeconomic factors that have impacted the advertising and technology landscape these past few months. And as a result, our guidance for the second half of the year. We, like all companies, are not immune to economic headwinds; however, our emphasis on CTV and its arguably stronger tailwinds make me optimistic about our future. Beyond large players moving to ad-supported models, we see huge upside for CTV at large and believe sports will be the catalyst for CTV's new wave of hybrid growth.

Audience phases are leading linear TV for streaming and live sports are critical content platforms for attracting audiences and revenue at scale. The NFL recently sewed their hat in the streaming ring with the introduction of NFL Plus, the move they see as key to their long-term success. This comes on the tail of last year's move of Thursday Night Football to Amazon. And according to NFL Commissioner, a pending motion for NFL Sunday Ticket to move to the streamer post the 2022 season. The strong tailwinds have supported their growth despite the headwinds that have impacted the industry such as prolonged impact of COVID-related supply chain disruption, geopolitical uncertainties and signs of softening consumer spending.

We continue to take a programmatic approach to ensure the realization of our long-term vision for the company. This includes our focus on maintaining margins and realizing what we anticipate to be several millions in measurement synergies related to TVSquared acquisition in the second half of this year. To summarize the opportunity ahead, I would like to share a quote from Andre Schulten CFO of Procter & Gamble, one of the world's largest advertisers. In their last earnings report, Andre spoke about the importance of measurement to enable transformation. Andre stated, "Our ability to improve effect investor reach and quality of reach is allowing us to drive cost per effective reach down both in digital and in TV. We have shifted more and more spend into digital. Now more than 50% of our advertising is in digital."

We are thrilled to be in the advertising TV business right now and look forward to bringing new innovations to life in support of our growing measurement focus. We remain committed to our core 2022 strategies, and we will continue to make investments we believe are strategically important to capitalize on the streaming market and going Converged TV market. I will now turn it over to Tanya, who will go into greater detail regarding the financial performance and guidance. Tanya?

Thank you, Zvika, and good morning, everyone. I will start with a review of our second quarter results before discussing our full year outlook. Innovid is the leading independent software platform that provides technology infrastructure for creating, delivering, and measuring TV ads across CTV, mobile, and desktop. Innovid's platform generates revenue from 3 key offerings: Ad serving solutions, creative personalization solutions, and measurement solutions, now known as InnovidXP.

In the second quarter of 2022, our revenue increased by 45% year-over-year to $33.1 million on as reported basis. The TVSquared business grew 31% year-over-year, contributing $6.8 million or 21% of total quarterly revenue following the acquisition completed in the first quarter of 2022. With the acquisition of TVSquared, an independent global measurement and attribution platform measuring becomes a significant revenue driver for Innovid, generating 22% of total quarterly revenue. Ad serving and personalization services drove the remaining 78% of total quarterly revenue. We expect the growth in CTV ad serving and personalization as well as measurement to continue to be our primary revenue drivers.

When excluding TVSquared, our Q2 revenue grew 15% year-over-year to $26.3 million. CTV contributed 47% of this revenue, up from 45% in Q2 of 2021; growing 20% year-over-year when excluding TVSquared, Mobile contributed 38% and desktop 15% of revenue and grew respectively, 13% and 7% year-over-year, excluding TVSquared. Revenue from ad serving and personalization services grew 16% year-over-year. This revenue is generated by serving ad impressions through Innovid's platform to various digital publishers across CTV, mobile, and desktop environments. Taking to video impressions composition, CTV accounted for 50% of video impressions volume served in Q2, up from 46% in Q2 of 2021 and grow 23% year-over-year. Mobile increased 11% year-over-year and accounted for 38% of all video impressions volume, and desktop decreased by 3% and accounted for 12% of video impressions served by Innovid.

In terms of geographical breakdown, the U.S. is the main contributor to our revenue accounting for 89% of total revenue and growing 44% year-over-year on as reported basis. Our total international revenue grew 51% year-over-year on a reported basis and increased its share to 11% of the total quarterly revenue, up from 10% in the second quarter of 2021. The majority of our clients are global advertisers and operates at a significant scale. Innovid's service customers globally deliver footprint covering over 70 countries. We plan to continue to grow our footprint in international markets in order to meet the needs of our global customer base.

Moving to costs. Total operating expenses for the second quarter, including cost of revenues, were $42.3 million and grew 87% on as reported basis from $22.6 million in the second quarter of 2021. A number of factors contributed to the increase in operating expenses.

First, nearly 50% of the increased $9.6 million or 23% of operating expenses were attributed to the inclusion of the risk were operating results in the second quarter of 2022.

Second, approximately 26% of the year-over-year increase in operating expenses was driven by the increase in installed base compensation, onetime acquisition-related, and the spec transaction-related expenses.

Lastly, the remaining 25% of the increase was a result of organic expansion of the operations. Net profit in the second quarter was $4.3 million or an EPS of $0.03. Net profit in Q2 benefited from finance income of $13.3 million primarily derived from our warrants being revalued as a result of market volatility impacting the company's share price. Net loss attributable to the rescue in the second quarter was $2.3 million, inclusive of $0.7 million of intangible assets amortization. Adjusted EBITDA for the second quarter of 2022 was negative $1.7 million, representing a negative 5% adjusted EBITDA margin, a decrease in adjusted EBITDA from $1.9 million in the second quarter of 2021 was a result of increased cost of revenues, R&D, sales and marketing and G&A expenses following the inclusion of the recurred operating results in the Q2 financials for the first time for the full quarter as well as the organic growth in the operating expenses, as I have noted before.

Starting in Q3, we expect the realization of certain cost acquisition synergies to positively impact the company's profitability in the second half of 2022 and beyond. Considering the current macroeconomic and geopolitical uncertainty, we believe that close monitoring of the macro trends and agility in expense management will allow us to adapt to any significant changes as quickly as necessary.

Moving to our balance sheet. After the acquisition of TVSquared, our cash and cash equivalents ending balance on June 30, 2022, was $44 million. Given our margin profile, we believe that we are well capitalized at this time. The total common stock outstanding as of June 30, 2022, was $132.4 million. Finally, I would like to go over our guidance. In the second quarter of 2022, we delivered a solid quarter, and we achieved results within guidance. While we have seen strong growth momentum in our client base in the start of this third quarter, the broader advertising market outlook in the current macroeconomic environment remains uncertain. Our guidance for the second half of the year considers the potential impact of the current worldwide macroeconomic and geopolitical trends on the advertising industry and reflects a potential pullback in digital ad spending in the second half of the year. For the third quarter of 2022, we expect revenue to be in the range of $33 million to $35 million, reflecting 41% to 49% year-over-year growth on an as-reported basis and 12% to 19% year-over-year growth on the pro forma basis.

We expect adjusted EBITDA in the range of minus $2 million to breakeven. For the full year of 2022, we expect revenue to be in the range of $127 million to $132 million, including TVSquared revenue. This guidance left 41% to 46% year-over-year growth on as reported basis and 17% to 22% year-over-year growth on a pro forma basis. We have revised our prior outlook for the full year of 2022 assuming impact at comparable rates across all revenue streams. The change in full year guidance does not anticipate a disproportionate effect on any single line of business.

Total annual adjusted EBITDA now following the TVSquared acquisition is expected to be negative $6 million or higher. We expect the adjusted EBITDA for the second half of the year to be nearly breakeven or positive compared to the total adjusted EBITDA in the first half of 2022 of negative $4.7 million. The significant operating leverage of our robust profitable core business and the realization of the post-acquisition synergies are the main drivers for the anticipated adjusted EBITDA improvement in the second half of the year. With that, I would like to hand the call back over to Zvika to take your questions. Thank you.

Thank you, Tanya, and thank you all for joining us on this call. We will now open the line for questions. Operator, please go ahead.

(Operator Instructions) And our first question is from the line of Shweta Khajuria with Evercore.

I guess could you please help us understand how you monetize InnovidXP? So what your go-to-market strategy is and then how monetization is incorporated into the business? And then the second question is, could you please talk about vertical performance across the strong verticals, maybe shopping, travel, etcetera, versus maybe some of the weaker ones, including auto and geographical performance as well? And the follow-up to that is what do you think is the difference that is driving the performance versus Trade Desk. For example, that had a strong CTV revenue growth. So could you help us try and understand the differences and similarities there, too, please?

Sure. thanks for joining us. So I think 3 to 4 questions here. I will take it quickly one at a time. The monetization of XP obviously, we are very excited that we integrated the platforms, the CTV, and linear TV measurements into a single offering within 3 months. Obviously, we had 6 months to prepare for this. So we are now in market with InnovidXP combined CTV and linear TV measurement solution. So with those 3 main and I am trying to make it sure, 3 main areas of revenue growth there, the classical existing client base of TVSquared when we acquired a lot of direct-to-consumer smaller local advertisers, then there is the sell side, which we are making a lot of progress, deals with publishers, et cetera.

And the third one, which is the most exciting from our perspective, the upsell to our large ad-serving client, large CPGs, audits, etcetera. And I have to say that we are positively encouraged by the level of interest. And actually, we were able to close already several deals upselling to our ad serving clients. That was our main driver for the acquisition. It is actually happening. At this point, the monetization is based on an annual agreement that are factor based on the media budget, so less on the impression level, but more in the media budget and on an annual contract. But I believe these are the early days, and we may explore other ways to monetize it. So currently, it is based on the size of the mega space, not a percentage, but the size of the budget of the customer and annual deal.

Your second question was on vertical. In vertical, except what we saw in Q4, the drop (inaudible), which was across the board, we are not seeing at this point a dramatic change in any of the verticals, we are seeing more generic like spot decisions by certain brands that could be either looking into the economical environment, and we are absolutely still seeing supply chain challenges that influence. There is a large CPG that were publicly in their earnings call, mentioning running short on supply for 2 major product categories, lowering the media spend and then increasing it again in Q3 when the supply came back. So we believe this is going to continue for the foreseeable future will be more about volatility rather than across the board in entire vertical changing.

Last, regarding the trading question; obviously, we do not monitor in other companies in terms of earnings and how I would say that the key difference between us and most of the media companies, definitely the media buying and selling platforms like the DSPs and the SSPs is the take rate. It's basically that doesn't exist in Innovid. So Innovid is a pure volume play. So things go up, we go up; when volume goes down, we go down, which behaves very differently than can behave differently from how a percentage of media take, right? There is more flexibility for bigger take rate and it is more narrow. So we charge volume across the board, including the wall gardens, including the open Internet, including everything. While the DSPs are obviously charging for what is only running on their platforms. It could be 15%, 20% of the plan. And based on the inventory they are buying and how they price the media. So the actual revenue, but they do not report volume growth, the actual revenue can go up and down. And I would argue there is more control by the platform on that.

On the long-term perspective, I believe Innovid is more immune to price pressure, price compression, or margin compression because we are just it is a flat C for (inaudible) and I believe and thank you for asking this question. I believe this will continue as the markets continue to evolve, I believe this would be a point that we will continue to discuss and for people to better understand the different dynamics between how the unique business model invite versus the media platforms.

The next question comes from the line of Laura Martin with Needham & Company.

Great numbers. You guys, congratulations. So Zvika, my first thing is you have got quite a wide spread of guidance for 3Q versus quite a narrow guidance range for 4Q. My question is, we are hearing that visibility is falling as advertisers are pausing or delaying or just giving much shorter notice. Is your visibility on 3Q falling, which is why I have a 700 basis point guidance range in organic growth. But then I do not understand why it is tightening so much for full year. So can you talk about visibility in your business, please, first?

Yes. And thanks, Laura, for joining. The dynamic is the volatility, right? So we have the headwinds like every company in the space from Google to DSPs to social, obviously, advertising, we believe we will see some overall advertising. We will see an impact because of the economical situation, and you heard it on every core, right? The tailwinds are extremely strong, and the tailwinds that include the move for Netflix ad based model, other platform to ad-based model, we believe we are seeing that the consumption of ad base CTV is growing and will continue to grow. So the inventory will be there.

And then we believe some brands while decreasing their spend might actually be able to buy more inventory, (inaudible) more in volume. So this dynamic is relatively new, and I think we will be accelerating in the next 3 to 6 months, which can create to your point, can widen the spread? I can even share I think we shared it on the earnings call, where we said we are seeing a strong beginning of the third quarter stronger than the end of the second quarter, right? It is just that it is in this environment, somebody runs a product or somebody is concerned about something else that can impact. So that is the reason. So we want to be an abundance of caution. We do not want to provide guidance that we will miss. So that is the reason for what we are seeing and kind of being more conservative on the fourth quarter and the overall year guidance.

Okay. Cool. And on political, I really like your partnership you announced on political. Do you think like how big political be in your 4Q this year as a revenue driver? What's your best guess?

Political historically and also even with the acquisitions, we are providing measurement solution. Revenue was never historically significant revenue divider for Innovid's since our focuses are the large CPGs and autos that consistently deliver what was in the past, predictable revenue, it is still relatively predictable. So we are less focused on selling into and monetizing political campaigns. With the acquisition of TVSquared definitely increased a little bit the exposure in a positive way for revenue through measurements. But strategically, it is not a major focus area for the company.

(Operator Instructions) The next question comes from the line of Andrew Boone with JMP Securities.

It is exciting to see measurement now reached 22% of revenue. Can you provide us an update on the impact of measurement to pricing? Maybe where are we now in terms of CPMs?

So at this point, what you start seeing since we are integrating measurement, the product is already integrated. We are now in market upselling to our existing client base. I believe we are going to evolve in terms of how we price it and to maybe a more advanced way towards the end of the year as we are exploring better pricing mechanisms. So we were cautious at this point, so technically to take, you add that revenue since we do not price it as on a volume base, it is more of subscription annual deals.

So if you take the overall revenue divided by impression report, you will get a much higher effective CPM kind of per ad delivered, but we did not want to share this number yet because we may evolve the way we are pricing it and I think it will be more accurate to combine those numbers if the way we price it is similar. So at this point, we are not updating that number. Overall, if you put measurement aside, it is the similar trend. We are not seeing any price pressure on any of our products. Actually, we are seeing great success on personalization that is going very fast.

CTV is now 50% and XP is being adopted faster than is up in terms of like large customer interest. So I believe that maybe by next year, we will come to market and explain how we are combining all the numbers to show an effective CPM. Mechanically, it obviously went up now, but I don't think it will be the right presentation to provide to investors.

Fair enough. And then just as we think about the macro environment, can you talk about what that is doing in terms of existing versus new clients? Are you seeing an elongation in terms of bringing new clients onto the platform? Clearly, you have had success where we talked about GM last quarter. But then how does macro impact the maturation of kind of those cohorts versus new clients?

Thanks for the question. Actually, it is a great question because to make it very clear and Laura asked about the guidance on all KPIs in terms of besides volume, what we are seeing, when the large CPG is running out of home care product and as rightly as they should in this environment, we do spending for a month and half or 2 and then come back. All other KPIs are moving as planned up into the right. So I would argue this actually positive acceleration of adoption because I believe at this point, especially the Netflix announcement provide like shockwave throughout the industry, if somebody was sleeping under a rock on the brand side, it is clear right now that in future, all TV will be IP delivered, that most television will be monetized through advertising-based model, not like 25 subscriptions per family. So this is clear now where we are heading with this. So the brands also understand that this is the future. And you also understand the need for an independent (inaudible) rumor that Netflix were in comfortable is in conversation with some of the other platforms out there besides Microsoft, which all of them are in a way, also competing with the Netflix business.

So the fact that there are multiple many walled garden, I believe Netflix will also be some sort of a well garden together with Microsoft, the fact there will be so many of them. And for brands like P&G or Chrysler or GM, they need to be everywhere, including Netflix. So that it should increase and accelerate our market share, when winning new logos, upselling to personalization, upselling to measurement, the environment we are in is forcing advertisers to get more for every dollar. So if they reduce the budget, let us say, from $100 million a year to $80 million a year, it will still kind of do more with less, right? They still want to gain more. The way to do it is do more personalization for ad to get better effectiveness and implement any measurement tool you can find to better optimize your plan and buy more of this inventory and less of this inventory, these are exactly the 2 products were absent.

So just to summarize on that, I believe and expect to see increase in the amount of customers, the percentage of upsell for personalization and the percentage of use into measurement. While the overall volume may fluctuates in the short term. On the long run, I am extremely bullish on growth on all KPIs.

Our next question will be coming from the line of Vasily Karasyov with Cannonball Research.

I wanted to ask a big picture question. Given the bifurcation and performance in connected TV names this earnings season, could you tell us what you see in terms of growth drivers, walled-garden versus open Internet or open connected TV, whatever we want to call it. What do you see in terms of trends that are driving the diverging performance from different companies? They used to look like they performed in a new lockstep, and now that is not the case anymore.

It's definitely very interesting dynamics, I will ask my co-founder and our CTO, Tal, who is working very closely with both walled-garden and we refer you (inaudible) work with all of them. Tal, would you take that?

Sure. Thank you very much, Zvika. Thank you for (inaudible). So first of all, just an important point about Walled-Garden versus Open Internet; I think that the future of connected television is not going to be a win or take sold. So there is not one massive walled garden like we have seen in search or social. So there will be a lot of different companies. We see right now, and we definitely think that it will be a combination. It is not going to be just an Open Internet with a lot of different small apps; obviously, as tested by many big apps like YouTube, even Hulu is defined as somewhat of a walled-garden, Amazon, and many others and Netflix as well. All of those are very large walled-gardens and we think that the future will be a combination of all of them, not one side.

To your question about kind of bifurcation of performance this quarter, I said that there was many differences in reasons to that, obviously, letting hard comps from Q2 2021 and also very different type of advertisers that feel different platforms from smaller marketers to very large TV advertisers. But I think in the long term that is really the big important point is that the long term of television, all linear will move into connected television. And it will be a mix of very large world gardens and a long-tail set of apps that allows users to just start on broadcast television.

At this time, we have reached the end of our question-and-answer session. I will turn the floor back to management for closing remarks.

Thank you, operator. And thank you, everybody, for joining us today. I really appreciate the timing. I know there are a lot of earnings calls today and the time and attention to Innovid obviously, we are extremely excited about what is going on and how things are evolving for us. We had a very solid quarter and started the year with a strategic move expanding into measurement space with the launch of InnovidXP.

And as we heard in the question, despite uncertain macro dynamics, we have and we are delivering our vision for the future television, and we definitely plan to further leverage the very strong strategic tailwinds that are creating a huge upside for ad-supported CTV all over the industry. As always, I would like to thank our talented and dedicated employees all over the world, our loyal customer base and of course, our shareholders and investors. Thank you, everybody, and have a great day.

This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.