Nexxen International Ltd (TRMR) 2021 Q3 法說會逐字稿

Welcome to Tremor International's Third Quarter and 9 Months 2021 Conference Call. (Operator Instructions). This conference call is being recorded, and a replay of today's call will be made available on the Investor Relations section of Tremor's website and will remain posted there for the next 30 days.

I will now hand the call over to Billy Acker, Senior Director of Investor Relations for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Tremor International's Third Quarter and 9 Months 2021 Earnings Call. With us on today's call are Ofer Ducker, Tremor's Chief Executive Officer; and Sagi Niri, the company's Chief Financial Officer. This morning, we issued a press release, which you can access on our website at investors.tremointernational.com.

During today's call, we may make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution and reliance on forward-looking statements. These statements include, without limitation, projections about our future financial results and future business and statements concerning the expected development, performance and market share or competitive performance relating to products or services. All forward-looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business.

More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled Risk Factors in our registration statement on Form F1. Tremor does not Intend to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details including definitions of non-IFRS items and reconciliation of IFRS to non-IFRS results.

At this time, it is my pleasure to introduce Ofer Druker, CEO of Tremor International. Ofer, please go ahead.

Thank you, Billy, and welcome to everyone joining us on today's third quarter earnings webcast. Let me start by saying this quarter has been a significant period of growth for the company. Today, we reported our strongest quarter in corporate history, and we are encouraged by the momentum we have generated across our core verticals, which I will cover in more detail on today's call. Afterwards, our Chief Financial Officer, Sagi Niri, will review the highlights of our Q3 financial results. Following that, we will be happy to take your questions.

First, I would like to cover some brief performance highlights. For the 3 months ended September 30, 2021, we generated contribution ex-TAC of $76.7 million compared to $49.7 million in Q3 2020, 54% organic growth and adjusted EBITDA of $42.3 million compared to $19.6 million in Q3 2020, which is 2.2x growth. This reflected our strongest quarter reported today, highlighted by September being the strongest single month since the company's inception.

For the 9 months ended September 30, '21, we generated contribution ex-TAC of $213.4 million compared to $110.3 million in 9 months of 2020, which reflects organic growth of 93% and adjusted EBITDA of $107.2 million compared to $21.4 million during the period last year, which resulted in a 5x growth. Our core growth driver is in CTV services, where our revenues grew 115% in Q3 2021 versus Q3 2020 and 188% in the 9 months period ended September 30, 2021 versus same the 9-month period in 2020. We also achieved a 49% EBITDA margin in Q3 2021 on a reported revenue basis and a 55% margin on net revenue, which is the higher than the median of our direct peers.

I emphasize that core of this performance is the strength of Tremor end-to-end technology and business platform, which covers the 3 pillars of this business, DSP, DMP and SSP. Our end-to-end technology platform provides simplicity for our customers, better data empowerment for our advertisers and publishers, and is accelerating the industry move towards supply path optimization.

As we serve customers on both the demand side and supply side, Tremor obtains robust access to fasten third-party data from both advertisers and media partners which customers can leverage to generate better returns on ad spend and maximize their ad inventory revenue. Tremor's platform also offers customers key opportunity on who they choose as a partner with to best suit their needs. Our DSP Tremor Video is compatible with our SSP annually as well as other providers. While our SSP can also be leveraged by other DSPs as well.

Later in this presentation, I will touch upon the continued progress we are making in CTV, which is a key performance driver for Tremor. Tremor consistent primary focus on video and CTV is proving presence in today market, leading to a meaningful growth across our exchange and putting us ahead of platforms only recently evolving from display. We have enhanced our offering further through the acquisition of Spearad, our exclusive global ACR data partnership with VIDAA and our recent launch of programmatic TV marketplace.

I would like also to comment on perceived headwinds in our sector, as it relates to challenges associated with IDFA changes and cookies applications that are impacting our industry players. We do not anticipate a significant impact on our business. Our end-to-end platform and presence across all screens provide us with the key advantages that reduced Tremor's exposure to these issues. We believe this strategy has proven successful, and we will continue to advance and enhance this model as we look to the future. It's also worth noting that although COVID-19 proved to be challenging, it is also served as an opportunity for Tremor by accelerating growth trends in segments that we have strong exposure in such as CTV and Video.

Recently, however, many companies have been citing supply chain constraints attributable to the COVID-19 pandemic as a negative catalyst for the sector as certain advertisers have reduced budgets due to these constraints.

While we have seen some evidence of lower advertising spend to this point in Q4 2021, in certain sectors, particularly automotive, due to chip shortages we have seen stronger demand in other segments and the diversification of our customers base on both the demand and supply side have helped offset any significant adverse impact to our business.

I will now shift the discussion to our vision, and some of the key developments that have occurred since last quarter. As I have stated before, 4 years ago, our senior team set a plan to transform Tremor into a market-leading company focused on video, data and CTV. With the ability to capture users across all screens deliver through a full end-to-end tech platform. Our team has M&A execution experience and has successfully integrated companies in the past. We are constantly searching for strategic opportunities to acquire additional companies that can become meaningful contributors in video, data and CTV, such as what we accomplished with the recent acquisition of Spearad.

We believe we have delivered on a promise to continue expanding and enhancing each element of our end-to-end platform with an emphasis on CTV and will continue to do so going forward. One recent example of this comes from the previously mentioned acquisition of Spearad, a global CTV ad server featuring, a robust user interface with advanced tools for ad port monetization. Spearad was purpose-built for broadcaster to deliver seamless TV like experience in CTV and over-the-top environment. Spearad will integrate it into Tremor Unruly SSP, enabling CTV header bidding, channel inventory management and Ad Pod management. This transaction was particularly compelling as the addition of CTV Ad server further expands our differentiation and strengthen our position within CTV, while also significantly deepening relationship with our media partners and further complementing our end-to-end CTV offering.

Prior to this, media clients were reliant on either in-house Ad servers or third parties, whereas now broadcaster with deep relationship with Tremor can leverage us for our Ad server and Header/Bidder capabilities. This enabling us to maintain more of the relationship in-house and allow us to better serve our customers through added technology solution. This will also allow us to potentially expand our revenue footprint with current customers, and we expect that it will also attract future media partners seeking to utilize this advanced technology solution.

Not all Ad servers has CTV Ad Pod monetization capabilities like Spearad, which is why we were particularly excited about adding the technology built by semi industry veterans to our end-to-end platform. We anticipate this technology addition will allow us to capture a greater portion of CTV inventory through both current and future media partners and provide added benefits to help those partners better control their inventory and maximize revenue opportunities.

We will also continue to evaluate future strategic exclusive global partnership that expand our data reach and differentiation within CTV, such as the partnership we recently announced with VIDAA. The partnerships give us exclusive global access to VIDAA's automatic content recognition ACR data pre-installed on most Hisense smart TV and is also integrated into a number of premium original equipment manufacturer such as Toshiba. This partnerships give us access on an exclusive basis to VIDAA global ACR data, accelerating our U.S. and international growth and footprint. We will utilize this data for targeting purposes making us one of the only end-to-end technology platform outside of the walled-gardens with this type of data exclusivity.

The agreement provides us access to VIDAA distribution, which reaches approximately 20 million smart TVs globally, and we will anticipate this reach could roughly double over the course of our partnership. The data will be available for activation for customers on both sides of the end-to-end platform, which will enable the ability to offer proprietary measurement capabilities for TV intelligence campaign. I also want to highlight the recent launch of Tremor Programmatic TV Marketplace, which enable advertisers to access a centralized platform for planning CTV campaigns, facilitating turnkey campaign activation and providing great transparency into the creation of data-driven audiences.

Our TV marketplace give brands the ability to take even greater control over the planning, execution and customization of their CTV campaigns coupled with a more transparent view into the supply and audience targeting capabilities available to them. Within this marketplace, advertisers can activate deals, leveraging tremor content-level targeting solution enabled by TV-like content attributes from direct media partners. By curating deals based on content attributes like genere and rating from Tremor Media partners, advertisers can tap into traditionally linear TV buying tactics in digital environments like CTV at scale. This expansion of Tremor contextual capabilities also addresses the market needs for more privacy mantle, verifiable targeting solution across CTV and video.

Tremor also achieved a number of important business wins during the quarter. In Q3, we had a 35 new U.S. supply partners across critical growth verticals such as sports, entertainment and lifestyle as well as Original Equipment Manufacturers, OEM and multicast Video on-demand mVOD businesses. Our Unruly product team also streamlined revenue opportunities for publishers by rolling out consolidated and enhanced header bidding adapter on both the client-side and service-side. Publishers can now access Tremo Video demand for all Unruly formats via a single adapter rather than legacy version.

Additionally, through Q3 '21, Tremor Video observed a major increase in adoption of our data-driven Creative offering Tr.ly, since 2020, including expansion across CTV, as well as substantial increase in client usage of our custom QR code solution for CTV. Tr.ly continues to be a differentiator for Tremor and is unique offering and advantage within our end-to-end solution. Tr.ly, is our in-house creative studio, and it's allowed us to provide custom data-driven creative solution for our advertising customers to align with their complex global campaign objective. Leveraging Tr.ly underpins our strategy of being completely end-to-end, where advertisers and media partners can utilize us in all key aspects of their bank process across all screens, which offers us numerous growth trajectories and differentiation of revenue streams.

Finally, our strong balance sheet and cash position give us a strong foundation from which to continue exploring future growth opportunities through additional exclusive strategic global partnerships or acquisitions. Tremor has a robust history and proven track record of successfully integrating this into our unified end-to-end platform, and we will continue to remain active in evaluating deals that can further complement and enhance our existing platform

With those comments complete, it's now my pleasure to turn the call over to Sagi to review our financial results.

Thank you, Ofer. Thank you, everyone, for joining us today. We are encouraged to see another record quarter of revenue and strong business momentum as we move into the fourth quarter of 2021. Today, I'll be discussing some of the highlights of our Q3 performance as well as some of the key financial and operational drivers during the quarters. Tremor Internationally achieved an outstanding record quarter in Q3 with revenue and adjusted EBITDA propelled by steady organic revenue growth. Our net revenue grew 54% in Q3 year-over-year and resulted in $76.7 million for Q3 2021 versus $49.7 million in Q3 2020, all of which was driven through strong organic growth.

Our CTV revenues grew 115% in Q3 2021 versus Q3 2020, and we are poised to continue this growth as more business is increasingly being transacted through programmatic platforms. During the same period, our Video net revenues grew 58%. For the 9 months ended September 30, 2021, CTV and Video net revenues grew 188% and 112%, respectively. As a result, we achieved adjusted EBITDA of $42.3 million in Q3 2021 and $107.2 million in the 9-month period of 2021 or adjusted EBITDA margins of 55% and 50% out of net revenue for the same period, respectively.

For the 9 months ended September 30, 2021, Tremor generated $213.4 million in net revenues, which is increased of 93% year-over-year. We continue to generate very strong adjusted EBITDA while investing in the critical areas of our business that can drive our future growth. Costs were lower than expected, driven by a postponement of our return to office, lower anticipated marketing event spend and reduced travel and entertainment costs. We saw very strong year-over-year growth in Q3 and the 9 months period of 2021, which increased our EBITDA by 2.2x and 5x, respectively, compared to the same period in 2020.

We are focused on being highly competitive in the CTV space and entered the segment early. With the enhancements we made to our offering during the pandemic, our efforts resulted in 115% in year-over-year CTV revenue growth in Q3 2021. Our video net revenue increased 58% from $40.1 million in Q3 2020 to $63.4 million in Q3 2021, which was driven by our video capabilities and sharp focus on this segment. We delivered significant growth in the 9-month period of 2021, during we exceeded market expectations and proved once again that our strategy is working. Representing the latest milestone in the evolution of our end-to-end video first platform and TV Intelligence Solution, our recent acquisition of Spearad and exclusive VIDAA partnership will enable more effective TV campaigns going forward for our partners in several important ways, enhance our TV intelligence solution, not only by providing an exclusive data set, but also by providing an opportunity for real-time targeting capabilities.

VIDAA has a global reach of approximately 20 million smart TVs, allowing us to provide our international partners with a scalable TV targeting and measurement solution across the premium supply footprint, which we didn't have before. Spearad is a purpose-built technology for broadcasters, addressing the unique needs of delivering a seamless TV-like experience for consumers that can benefit our media partners through operational and cost efficiencies, increase buyer power, maximize revenue opportunities and advanced UI, and our customers with expanded access to premium global CTV and OTT supply and advanced Ad Pod targeting capabilities

We believe we have a competitive advantage with our omnichannel end-to-end platform versus other one-dimensional solution. We have developed a profitable business model with high efficiency around operating costs leading to operating leverage, economies of scale and strong productivity. Among our Ad deck peers, Tremor is one of the highest margin and operational profitability, resulting in a 49% adjusted EBITDA margin in Q3 2021 on a reported revenue basis and 55% on a net revenue basis.

Turning to our cash flow. we generated net cash from operating activities of $44.6 million for Q3 2021 versus $4.5 million in Q3 2020, which is an increase of around 900%. For the 9 months ended September 30, 2021, we generated net cash from operating activities of $121.4 million versus $11.7 million in the 9 months ended September 30, 2020, a 940% increase. As of the 13th September, we had $333.3 million cash and cash equivalent with no debt. We also experienced 99% free cash flow conversion during the quarter. Non-IFRS diluted earnings per ordinary share is $0.21 for Q3 2021 versus $0.11 in Q3 2020 and $0.56 for the 9 months ended September 30, 2021 versus $0.07 for the 9 months ended September 30, 2020.

Finally, I'll now turn to our outlook. As a reminder, we expect that return to offers marketing and travel costs will add an incremental $1.5 million to $2 million per quarter in operating expenses next year. For the fourth quarter of 2021, we expect net revenue to be at least $85 million, which represents year-over-year growth of approximately 16% and Q4 '21 adjusted EBITDA to be at least $42 million, which represents year-over-year growth of approximately 7%.

We also expect annual 2021 adjusted EBITDA to be at least $149 million, which represents year-over-year growth of approximately 145% and expected annual 2021 adjusted EBITDA margin of 50% as a percentage of net revenue compared to 33% in 2020.

This guidance reflects anticipated full-year organic contribution ex-TAC and adjusted EBITDA growth of approximately 62% and 150%, respectively, and underscores that our efficient end-to-end model focused on CTV is helping us achieve excellent growth and profitability. We believe that our growth profile, efficient end-to-end model, and healthy balance sheet positions Tremor to continue taking advantage of a rapidly growing digital advertising market.

With my remarks completed, I'll turn the call back to Ofer.

Thank you, Sagi. To summarize, we believe we are well positioned within the industry, thanks to the key advantages we achieved from being completely end-to-end. Our unified platform provides advertisers and media partners with simplicity and better data empowerment. While also accelerating the industry move towards supply path optimization. We have built this platform with a heavy focus on CTV, Video and data where our customers rely on our deep expertise and actionable insights, and which now accounts for 92% of our programmatic net revenue. We continue to believe that advertisers and media partners will rely on and allocate additional spend towards fewer companies with diverse portfolio of solutions that can service them across all parts of the buying processes and across all screens regardless of their service level needs.

We will also continue to deliver on our promise to expand and enhance our end-to-end CTV capabilities for customers, such as what we achieved through our recent acquisition of Spearad, which further complemented our end-to-end platform offering. We also have taken steps to further our U.S. and international footprint and accelerate our growth in those key markets while differentiating ourselves through global data exclusivity with our partnership with VIDAA. As we look ahead, we will continue to evaluate additional strategic acquisition opportunities while also continuing to make investments in our product, R&D, sales and marketing to help propel future growth and increase our market share.

Finally, On the investor relationship front, we anticipate being far more active with both U.S. and global investors through attending investor conferences, conducting Tech DaVos and participating in non-deal road shows with the firms that cover Tremor. We will be very busy working towards garnering the additional interest from current and prospective shareholders. We believe that we have a compelling story and value proposition with strategic differentiation and advantages that more investors and customers will see the benefit of as we move ahead.

We look forward to speaking with current and prospective investors at RBC Global Technology, Internet, Media and Telecom Virtual Conference on November 17, and Raymond James Technology Investors Conference on December 6 and Needham Growth Conference on January 10. We believe that we have significant room for growth and remain confident about our future.

Operator, we will now open the call to investors' questions.

(Operator Instructions) Our first question comes from Matt Swanson with RBC Capital.

Congratulations on the results this quarter. Ofer, you mentioned SPO as kind of a growing theme. And it certainly seems like there's no better way for customers to take advantage of that than going with a full stack like tremor. Can you talk about just kind of what sort of tailwind this has been for you during the quarter, during the year? And do you think there's a chance that, that theme accelerates in 2022?

Thank you, Matt. Yes, we started this process about 2.5 years ago when we acquired in April 2019, when we acquired RhythmOne and connected the RhythmOne basically to Tremor and created an end-to-end solution platform that includes the DSP and SSP. And we believe that in this way, it's creating a few elements, which are really important for the advertisers, but also for the publisher. The first one is simplicity for them to buy the traffic, to run their campaigns according to their objectives and so on. The second one is around data that is also an emphasis for us. And the third one is the supply path optimization, meaning less mediators between basically the DSP and the buyer to the media and reaching their clients. And what we see in the market that many companies and, of course, advertisers and publishers are adopting that, and this will become a standard in the near future. So we believe that it will grow in 2022, and it will support our growth also going forward.

And for Sagi, the profitable growth you're achieved in this year is really noteworthy. And when we think about the strength, particularly adjusted EBITDA, it was great to get that additional color on the returning expenses next year. But how are you thinking about balancing investments in growth for the opportunities in front of you compared to profitability when we're looking out to 2022?

So Matt, thank you. I think we are all aware that we want to grow the business organically and keep growing it into 2022 and going forward. We understand that in order to do that, we need to invest more in marketing, R&D, sales and product. Having said that and expecting the growth to come in 2022 and going forward, I think we still can maintain somewhere around the 45% adjusted EBITDA margins out of net revenue.

Our next question comes from Laura Martin with Needham & Company.

I have 3. The first is on these margins, just following up on the prior question, they are quite a bit higher, structurally you were at 55% in the quarter, you just said structurally, you can stay at 45%, Jeff Green sort of -- over trade that did 41% in the quarter, but really only committed to 30% margins. So the first question I have for you is, what is it about your business that structurally is so much more profitable than all the other ad tech firms? That's my first one.

My second one is on your slide 14. I love this slide. So basically, if I look at your CTV grew 115% year-over-year. And doing the math, it looks like online video grew 40%. My question is cannibalization or additive, why is online video growing so much slower than CTV? And then my third is, again, referencing Trade Desk again, Jeff Green said that he believes that CTV creates competitive advantage for the open Internet to take share back from the big-walled gardens. And I'm interested in whether you agree with that. And if so, what you're thinking would be supporting that thesis because that would be wonderful for investors, if true?

Laura. It's offered. I will take maybe the third question that you asked about CTV and that is giving an option for the open market to basically to grow compared to the walled-gardens. So I agree with this statement and with jeff that saying that, I think that CTV is an open market first of all, other companies also to grow their business, and it's not controlled by the walled-garden basically. And there is a lot of opportunities in growing elements in independent companies that can basically grow the business in parallel to that. And that's also the reason that we signed this agreement -- important agreement with VIDAA, which is an Hisense company that basically -- it's the operational system of this platform that allow us now to get ACR data from all their TV and CTV basically around the globe in an exclusive basis. And we believe that this competition will just enhance and it's less related to the walled-garden and also advertisers we like to reach more and more users through different channels and not just the -- basically the legacy ones.

Thank you, Ofer. Laura. I will answer the first 2 questions. So regarding profitability, yes, probably we are the highest profitability margin in our industry. I think that it's come from a couple of parameters. Of course, the main one is our end-to-end platform and our end-to-end business model, where we are catering both sides of our partners, the media partners and advertisers and agencies. The second one is our infrastructure, tech and product infrastructure where we are running very efficiently, and it's allowing to maintain a low cost base. So both of that are contributing to our amazing adjusted EBITDA margin.

For your first question regarding CTV growth versus video growth. So there is no cannibalism around that, because CTV, of course, is the device that we are running on, and video is the format. So we are very cleverly generating revenue through video. It's more than 80% of our revenue is coming from video. So the growth over there can be as high as we are doing in CTV where we started, of course, lower. We're doing around 26% of our revenues through CTV, and probably it will grow still higher than our increase in video going forward.

Just to add one point to -- about the EBITDA margin and so on. We are talking about -- we grow our costs investments in basically all the related engines by around 30%, but our income grew by 100%. And of course, this extra income went down to EBITDA. That's why we see this growth in EBITDA compared to the market and to our forecast basically.

Great results, guys.

(Operator Instructions) Our next question comes from Andrew Boone with JMP Securities.

Questions. Two, please. So the first you highlighted strength in the creative offering. Can you just talk about the value that Tr.ly offers and how customers are leaning into it? And then just how does that relate in terms of sticking through your relationships with advertisers as well as their agencies and Tr.ly?

And then question number 2 is on VIDAA, the international component, the global nature of that agreement was kind of highlighted multiple times, going back to when we started our relationship with you guys, our understanding with the focus it was more U.S.-based. So can you just step back and review kind of how you guys are thinking about international and any potential there?

Of course. So I will start with the second question, if you don't mind, regarding VIDAA. So first of all, our main focus is the U.S. and of course, close to 90% of our revenues are coming from the U.S. But we still have like very nice infrastructure in the international markets like in U.K., Germany, in Singapore, Australia and Japan, that is there, and it says it was suffering because of COVID and that non-ability to move the people here in order to train or to go there and raise more -- move more knowledge between the companies. But we feel that there is a big potential for us internationally. And one of the things that we learned how to do in the last 5 years is, running ACR targeting in the U.S. And we feel that there is a huge potential also in the international market. So we think that it will be a differentiator for us in some of these markets since VIDAA is a very major player in some of them, like Japan, Australia and also the U.K. So we believe that it's important to mention it, because we believe it will give us an edge and a differentiator in this market, and we'll be able to grow our revenues from middle of '22 going forward.

Regarding your first question about Tr.ly. So basically, the agencies and the advertisers are looking for unique and creative ways to basically enrich their offering. It's not the video itself, It's behind -- it's around the video that is like enabling to get more information on the product or the service point of contact to download the brochure to scan a QR and get more information or to download the product into their mobile phone and so on. And we are able to do that through Tr.ly that is growing very fast in the demand

And also, we need to remember that agencies conducted a few changes that lower the resources around that. So advertisers are looking for that, and it's giving them simplicity, again, when they're running with us to get all these services, when they are running with us on their platform. And another point is that the creative is now connected to our DMP and allow us basically to take decisions and to change the creative according to the data and according to the user that is basically watching the creative in order to adapt it to the goal and the KPI of the clients, which is very meaningful.

Can I just follow up really quickly on that last point? Does Spearad accelerate that at all in terms of now having an Ad server as well as then the creative elements. Can you just talk about how those 2 things are intertwined?

So of course, it will accelerate it when you have an Ad server, and Header/Bidder and mostly Ad server in the such a sophisticated Ad server as Spearad into the platform, it will enhance our capabilities, of course, together with -- also even with VIDAA that is creating -- providing us data. So all these elements together, of course, increasing the effectiveness of the Ad that we are showing to the user, according to different parameters and the KPI of the advertiser. And I think that in general, we didn't spoke a lot yet about Spearad, but we are going to do that in the near future. It's one of the most advanced platform that we saw that is incorporating and CTV Ad server and Header/Bidder in a platform that was built by very experienced Italy veterans that basically build this platform and created it and sold a company like that in the past of Ad serving to AOL a few years ago. Basically, what we will be able to offer one-stop shop for all the data, creative serving capabilities regarding CTV. That's what we enhanced basically in the last few months. Through the launch of Tr.ly the acquisition of Spearad and the deal that we've done with VIDAA for the next couple of years.

Our next question comes from Johnathan Barrett with Panmure.

Great. Just obviously, you changed your accounting show a while ago. I just wondered if you could, first of all, you could give us an update on the size of the billings that you are now involved with? Just to give us a sense of scale, what the annualized run rate is, first of all? And then second, I wondered if you could give us a breakdown of your net revenue so that we can understand how you're getting paid by clients now, what elements you're getting paid for the most? And Or how you're earning some of your revenues from the media buying/selling side? Just so we can get it understand of that mix of income. And perhaps you can talk about how that mix is evolving as well and what we might expect going forward? And then thirdly, just on our progresses -- public news on Tr.ly, but I guess it's the wider group as well. Just -- what are you seeing in terms of the demand for putting up guarantees on better quality media and either financial commitments and like, just perhaps talk around that subject matter, if you can?

Okay. I'll take the first 2 questions. So we changed like in 2020, our reporting basis instead of reporting only on a gross basis, we changed it where we are reporting now programmatic on a net basis, and performance on a gross basis. So where you're seeing our reported revenue, it's a mix of growth in net. And this is the reason we are emphasizing our contribution ex-TAC in order that we will be -- we can report on an apple-to-apple with our peers. And every other company, of course, billing and invoice sales are going on a growth basis, and this is how we are collecting the money and then paying to the mid to our media partners. We are not disclosing the gross revenues. And as per your question, what is coming out of programmatic and what is coming out of performance, I think we highlighted that in our press release. In Q3, we did in programmatic revenues, which are on a net basis, almost 69%. So the gap to the total of $76.7 million is, of course, performance. And in the 9 months, we generated $192 million in programmatic, which again, the gap to our $213.4 million of contribution ex-TAC is performance. Regarding MRG offer, you want to take?

Yes, MRG, we usually companies are not providing exclusivity in this world anymore, like publishers are not providing exclusivity. We saw a very big advantage to get exclusivity from new scope is one of the biggest publishers in the world's most respected one. So part of the deal of acquiring Unruly also provided an MRG to manage their media 3 years after the acquisition basically. Usually, when we are providing MRG is only for key media partners that we feel that it can be a differentiator or very interesting for advertisers to get a hold of and to run their campaigns against. But usually, it's not a practice anymore that is available so much in the industry. And most of the deals are done, as we mentioned programmatically.

So I have 1 more follow-up question if it's okay?

Of course.

Yes. So just -- we heard from ITV yesterday in the U.K. about their desire to control the transaction process and avoid middleman. How does that fit with

wider video universe in your view? I mean do you think it's credible for them to run their own platform that effectively is direct to advertisers? Or do you think they will include you in that? How do you see that evolve?

I think that this is exactly what I discussed when basically Matt asked his questions about supply path optimization, meaning that you are managing everything on one platform, meaning you are managing your DSP, which is the demand side, which is where the advertisers are basically running their campaigns, that we are running them for them. True basically, SSP that is connected to all the direct publishers in the case of the publishers that you are talking about, you can basically manage all this media, they are all these broadcasters under this platform. So it's exactly what is done. As we mentioned, this is a phenomena that is now growing. It's growing in 2 elements. One of them is that cooperation -- strong cooperation between DSPs and SSP to create supply path optimization. But we feel that the more advanced one is what we created, which is one platform that basically everything can be managed on one platform, and basically you are avoiding or minimizing the usage of middleman. So this is the path, and this is the vision that we created a few years ago, and that's what we are following now. So I totally understand what they are trying and where they want to go, and it makes sense, and we are doing it already for a couple of years.

There are no further questions. I'd like to turn the call back over to Ofer for any closing remarks.

Thank you very much. We are -- as we said at the beginning, we are very excited about the results and the progress of the company, and we are looking forward to keep talking and making progress with the company going forward. Thank you very much.

This concludes the program. You may now disconnect. Everyone, have a great day.