Welcome to Tremor International's Fourth Quarter and Year Ended 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 turn the call over to Billy Eckert, 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 fourth quarter and full year ended December 31, 2021, earnings call. With us on today's call are Ofer Druker, 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.tremorinternational.com. During today's conference call, we will 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 in 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, Chief Executive Officer of Tremor International. Ofer, please go ahead.

Thank you, Billy. And welcome to everyone joining us today. Let me start off by saying that I'm extremely pleased with our results for both the fourth quarter and full year. 2021 represented the strongest year of growth and profitability in the company's history. During the fourth quarter and full year, we continue to validate our strategy of being an end-to-end tech and business platform with a focus on CTV video and data, and continue to experience strong market adoption of our products. We remain encouraged by the results we are generating. We believe that our strong balance sheet profitability and cash flow will enable us to maintain continued growth both organically and through potential M&A, while adding value for our shareholders through the $75 million share buyback we announced today. I will begin by giving an overview of our results and strategy followed by our Chief Financial Officer, Sagi Niri, who will give you the highlights of our Q4 and full year 2021 financials. We will then open the call up for questions. For the 3 months ended December 31, 2021, we generated contribution aspects of $88.6 million compared to $74 million in Q4 2020, representing 20% organic growth and adjusted EBITDA of $54 million compared to $39.1 million in Q4, which reflect 1.4x growth. These results were highlighted by continued growth in advertising spend on CTV, which increased 47% during Q4 2021, compared to Q4 2020, and greater adoption of our self-service and various tech-enabled programmatic offering. The greater adoption of this technology solution supported our ability to generate strong profitability. The efficiency of our platform, our end-to-end strategy and the growth we achieved in this segment drove a 53% adjusted EBITDA margin in Q4 2021 on a reported revenue basis and a 61% margin on a net…

Thank you, Ofer. We were excited to see another record quarter of revenue, profitability and strong business momentum, closing out a fantastic 2021 and moving into the first quarter of 2022. Today, I will review highlights of our Q4 and full year 2021 performance as well as some of the key financial and operational drivers for the quarter and year. Tremor International achieved an outstanding record quarter in Q4 with revenue and adjusted EBITDA propelled by continued organic revenue growth. Q4 2021 net revenue increased 20% to $88.6 million compared to $74 million in Q4 2020, all of which was driven from strong organic growth. This growth was particularly impressive when considering the higher levels of political spend from the U.S. election cycle across asset during Q4 2020. CTV spend on our platform grew 47% in Q4 2021 versus Q4 2020, and we are well positioned to continue this growth as more business is increasingly being transacted through programmatic platforms. We also continue to generate very strong adjusted EBITDA and margin while investing in the critical areas of our business that can drive future growth. For Q4 2021, we generated adjusted EBITDA of $54 million, which reflected 38% growth from Q4 2020 and adjusted EBITDA margin of 53% out of reported revenue and 61% out of net revenue. For the 12 months ended December 31, 2021, net revenue increased an impressive 64% to $302 million compared to $184.3 million in the full year 2020 period, all of which was driven through strong organic growth. We focused on being highly competitive in the CTV and video space as a result of the enhancements we made to our offering during the pandemic, CTV spend on our platform grew 108% in 2021 versus 2020, while our video net revenues grew 69% from $143.4…

Thank you, Sagi. To summarize, Tremor had a very strong finish to 2021 in what was a transformational year for the business as we achieved strong organic growth without contribution from acquisitions. We believe our data-driven end-to-end technology and business platform focused on CTV and video reflects the preferred model that our customers desire through the simplicity, installation from privacy changes, supportiveness of industry trends and ability to maximize returns. The 64% contribution to expect growth and customer adoption we achieved during 2021 and the fact that we are seeing other in the industry attempt to replicate this structure only enhance our confidence that the model is working. This model also benefits shareholders as it enables significant profitability and cash generation, which allow us to expand our investment in technology, sales and marketing to grow the business organically while evaluating future M&A opportunities. We also look forward to returning value to shareholders through a $75 million buyback we just announced. Tremor also continued to fulfill its promise to enhance and expand its CTV, data and video capabilities, which now accounts for 80% of our net revenues and 91% of our programmatic net revenues. Our exclusive global ACR data partnership with VIDAA will enable targeting within highly desirable data sets and accelerate our international growth around CTV as we look to monetize the unique and a meaningful partnership in the second half of 2022. We are also extremely pleased to have VIDAA select Unruly as a strategic SSP and integrated Spearad, which positions Tremor well for future U.S. and international growth with an aggressively growing partner for years to come. Our recently acquired CTV Ad server and Header/Bidder Spearad allow us to capture a greater portion of CTV inventory globally with current and future media partners. The launch of programmatic TV marketplace and content levels targeting furthers our innovation and differentiation within CTV, while providing better insulation against privacy changes. Finally, we look forward to continue to engage with both U.S. and international investors through continued participation in conferences, tech demos and NDR with firms that cover Tremor. We believe we have a compelling value proposition for investors and remain excited for additional future opportunities to tell our story. Operator, we will now open the call to investors' questions.

And we will get to our questions and answers in just one moment. And our first question is from Matt Swanson of RBC Capital.

All right. Congratulations on a strong finish in what's been kind of a challenging environment here. Ofer, I think you did a great job of explaining kind of the lack of risk from some of the signal loss, but kind of flipping that, based on all the new offerings you have, whether it be the programmatic TV marketplace, content level targeting, the creative suite and obviously, both your data sets coming from VIDAA and then the data you get from a full stack. What do you think the potential is for single loss to actually be a catalyst for the company and to be something that becomes more about market share gains than risk, especially kind of in the wake of STL.

Matt, it's a great question and a great point to discuss. I think that what we understand, what we see now in the marketplace is that everybody is preparing, of course, for this loss of signals in the market. I think that Tremor in general is better suited to deal with it because of our basically every line on CTV and growing on CTV and mobile and less on cookie supported the businesses. That's one. The second thing is the end-to-end solution that we spoke about and the data that we are able to gather from partnerships that we do. So I think that it can become like a potential advantage in the future. But right now, and I hope that all the other companies and all our peers are, of course, preparing themselves also for the situation. But I think as we mentioned also in the notice that we are well situated in this situation in order to tackle it in the coming years when all this regulation and changes in security come into effect. And I think that when people are now viewing and looking for partners for the long term, they can rely basically on Tremor to be that partner for the long run.

Yes. No, absolutely. And then, Sagi, kind of thinking through guidance, it was helpful to get the context around the supply chain and the inflation concerns in Q1. But then we also have VIDAA coming on in the second half as well as expectations for a return of a lot of political spend. Can you give us some context on how that might kind of work out in terms of full year seasonality? Does this feel like maybe more of a back half-loaded year?

Yes. Matt, thanks for the question. I think, again, as we said previously, we don't have like a real concentration on any vertical supply chain issues, of course, affecting the flow globally. I think that we are well positioned in order to increase some other verticals that are not affected from that issue. And we did it in the past and during 2021 and probably we'll do it in 2022. Regarding VIDAA I think, again, as Ofer mentioned, it kicks in 1st of May. It will give us a lot of exclusive ACR data, which we can execute for the first time outside of the U.S. internationally. So we are very excited in doing that and take our international activity much further and scale it up in 2022. And again, we are waiting for that as well as our clients and publishers and partners, and it will happen.

One more thing to add to Sagi is Spearad that we acquired in last October that is in the first quarter now is being integrated into Unruly, and we believe that will make its major effect starting from the second half of this year because we know these cycles of integrating Ad servers and Header/Bidders are taking longer time than a usual business. So we believe that it will start affecting the business mostly in the second half of the year going forward.

Our next question is from Laura Martin of Needham.

Great numbers. You guys should be really proud of it. Congratulations. I have a couple. So 38% of your net revenue came from third-party DSPs is my recollection. And I'm really interested in the Trade Desk announced Open Pass and whether that has a positive or negative impact on tremor as the largest DSP tries to squeeze out some of the supply path optimization. Can you comment on that?

Sure. Thank you, Laura. Yes, I think that the Trade Desk move will create a few things in the marketplace from what I understood until now. One of them is that publishers are basically -- publishers will basically will have to -- sorry, I will rephrase it -- I will rephrase my question -- my answer. I think that when you look at that, publishers already got more than one way to connect to a bidder to sell their traffic. And basically, they will make the effort and open more channels to work with an SSP if they have an advantage of doing that. Unruly and Tremor, in this case, got a lot of inputs to bring and a lot of value to bring to publishers, like additional data, unique and exclusive demand that we bring from our other DSP when we sell it and from self-serves and from PMPs and so on. So I believe that in this case, when publishers that are working with us -- and they will switch to other platform and other systems in order to connect to us in order to get our demand, the Trade Desk. And I think that we have no issue with that because we really bring value. In cases that an SSP doesn't bring value to these publishers. I think that the publishers will basically will not be able to -- they will not connect with this SSP anymore. So basically, I think that this move -- the Trade Desk is basically reinforcing and accelerating of the supply path optimization. But as a company, there's so much advantages to work with working with publishers that we deliver them so much advantages. I don't think that we have any issues connected to them. And we already know that we can connect to pre-bid and other means in order to run campaigns on that even through the Trade Desk -- for the Trade Desk. So for us, it's a no-issue or even in some cases because the number of SSPs that we work with the Trade Desk will lower, it will give us some advantage.

And I think that will -- we are very happy from the announcement of the Trade Desk because it's validating our end-to-end solution. We are happy that we're seeing the advantages in that as well.

Yes.

Super helpful really. And then my second and then my last question will be about -- I'm really excited about the bottom of funnel advertising opportunities for CTV. And so that naturally takes you to the e-commerce convergence with CTV. I'm interested in your thoughts there. One of your competitors said that not to have an e-commerce strategy in 2022 is like not having a mobile strategy 10 years ago. Okay, that's hyperbole. But my question is, when you think about CTV over the next year or 2, do you agree with him that e-commerce and bottom of funnel is going to be a good growth driver for CTV ad revenue?

Thank you, Laura, for that. I just want to remind you that in our previous conversation, we spoke about it. And I mentioned that I think that the big volumes of CTV media will be fulfilled also by performance-related campaigns, which while doing that, we may, of course, lower funnel and e-commerce is a very big part of that, but there are also -- you can sell products or services through performance. So for sure, we do that it's -- we should think that this will be a very major player. And I agree with the statement that you just said that if you are not building a lower funnel or a e-commerce strategy around CTV, probably you are missing something very big, and we agreed to that. And we believe that CTV will open also to performance advertising and performance video because it's happened in other verticals, if you remember that we spoke about in the past, and I think that it will happen also in CTV. So we are -- we know that and we are getting ready for that. And this is something that is on our plate for long time.

Our next question is from Mark Kelley of Stifel.

Great. I appreciate you taking my questions. I had 2 quick ones. First one is on the increase in R&D for this year. I guess, is there a component of that, that's kind of onetime in nature to get ready for this upcoming VIDAA partnership? That's the first one. And the second one is, can you remind us what political was in Q4 of last year, just to give us a better sense of the growth ex-political?

I will start by saying that we are putting a lot of emphasize in the last 3 years on technology and innovation, mainly in CTV. And you can see also when we spoke about all the things that we've done in the past year, and we spoke about TV marketplace. We spoke about content-based targeting, and we are talking about, of course, Spearad and the integration of Spearad into our technology in tech spec with integration basically, not just connection. And when we are talking about the VIDAA of course, to build it and to integrate it into our ecosystem, all of that, of course, is innovation and things that enhance our capabilities around CTV. And we are proud of that. And I think that in this ecosystem that we are living now, we need to invest in technology and innovation around mostly around CTV because this is a major part of our future and a very big revenue source already of today where it had been for us - it's a 25% already of our business. So I think that we will keep innovative -- innovating and building tools around CTV, and we can talk about -- Sagi can talk about onetime and about political now.

Yes. So again, to add to what Ofer said, I don't think it's a onetime like increase in R&D and product, which we are doing all the time, and we are doing it also in marketing and sales. It's an increased investment in those fields, as Ofer said, because we are a technology company, and we need more and more components in order to scale our business up. And by the way, it's not related to VIDAA. We've done it before and probably we'll do it more in the future. And VIDAA as well is investing a lot on their side to develop some tools in order to help them and us to facilitate their ACR data and their inventory. Regarding political spend, I don't have the exact number or the absolute number we did in Q4 and a little bit in Q3 2020. It wasn't like very material, but we did -- to some extent, we did a couple of millions of dollars on that as well.

Our next question is from Andrew Boone of JMP Securities.

Two, please. The deck talks about a 74% increase in creative requests in 2021. Can you talk about the drivers just behind the greater use of creative? And then just -- I know you mentioned the competitive differentiation in your prepared remarks. But can you just talk a little bit more about that, whether that's truly an on-ramp for new customers, whether it just drives more spend? Like how should we think about that?

On the creative, we're…

Yes.

So I think that the pandemic in general created a situation that creative is getting much more stage in this business because people want to control better the -- how they engage with our customers because there is a lot of sensitivity and a lot of things that happen not just the pandemic, but also in the world in the last 2 years, a lot of social unrest that was related to in the U.S. and in other places as we see today. So people want to control the way they engage with their clients and potential customers. So I think that what happened in the last 2 years is something that is like transformational in many ways because advertisers and clients are looking to -- are looking to get like better creative response and better options in order to run their campaign. So I feel that I was asking in the past, and I think that when I'm thinking about it again and again, I think that this is something that we stay from this pandemic, meaning that people will like to control more of their messaging. Targeting is part of that, and we're already doing a lot around data, and we are signing a lot of unique and exclusive data partnership in order to enhance this targeting capability. But on top of that, you can see a lot of importance now around the messaging and in order to create more efficient creative. So we saw a very big trend in the last 2 years and mostly in 2021 that people are using these solutions that we provide. And we are unique in that because we don't know a lot about a lot of other SSPs or DSPs that are using or providing this capability to their clients, and we are doing that as part of the package when we are offering to the clients and the customers to run with us.

That makes a lot of sense. And then for my second question, I wanted to touch on the contextual tools that you're talking about. Are you seeing more demand for this for advertisers as there are greater privacy announcements? Like where are we in terms of the adoption curve for contextual tools more broadly across digital advertising?

Thank you. Yes, we saw that when we announced the solution, we got a lot of people that approached us and asked for more information and to get to know more about the product because they want to test it and use it. And I think that it shows that people are taking into account that there will be changes around privacy, and they need to adapt and to learn about more tools that they are capable of using in order to run basically in the marketplace also after this changes with the call. So we already engaged with a lot of clients and customers around that. And I think that it will just enhance because we just saw now -- we also had this sandbox issue in Android, which is, of course, creating more, let's say, requests from people to find solutions for targeting so and so. I feel that it's the right solution in the right time. And together with other advantages that we got and we spoke with Matt before about end-to-end solution and the fact that we are mostly running on CTV and mobile and we are using audience graphs, which are shared by the DSP and SSP and so on. We are providing them like peace of mind that we are here to stay and we can provide them solutions also in the future.

Our next question is from Andrew Marok of Raymond James.

You've talked in the past about your focus on programmatic revenue versus non-programmatic. Over the last couple of quarters, we've seen the non-programmatic accelerate while programmatic came in at about 11% this quarter. What are some of the moving pieces that went into the dynamic in 4Q? And how should we be thinking about the growth in respective lines into 2022?

So again, I think as we said in the past, performance is where we grew and it's our -- we are proud of that. Having said that, we are not investing a lot in that activity. It's like activity that we did a lot in the past, and we are calling it like a legacy. Again, we are not aiming to grow this part of the business, but we are not angry if it's happening. So in 2021, what happened, we estimated that this activity will decrease by 5%, but it increased instead. Going into 2022, I think that the aim is to keep this activity on a flat basis. So this is what we are aiming. By the way, at the beginning, we wanted to estimate it as a decrease, but we saw the number, we saw the trend. So we are keeping it flat.

And this concludes our question-and-answer session. We'd like to turn the call back to Ofer Druker for closing comments.

Thank you. Thank you everyone. I think as I said, we had a very exciting year last year, and we finished it very strongly. And thank you for your support and your interest and for the questions. And I hope to see you soon in our additional calls that we'll have during the year. Thank you very much.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.