Nexxen International Ltd. (NEXN) Q3 2022 Earnings Report, Transcript and Summary

Welcome to Tremor International's Third Quarter and 9 months ended September 30, 2022 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 it over to Billy Eckert, Senior Director of Investor Relations, for introductions and the reading of the safe harbor statement.

Thank you, operator. Good morning, everyone, and welcome to Tremor International's Third quarter and 9 months ended September 30, 2022 Earnings Call. With us on today's call are Ofer Druker, Trevor'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, statements and projections about our anticipated future financial results including discussions about our revenue, margins, expenses and guidance for full year 2022 and full year 2023 as well as future business, anticipated benefits of Tremor's strategic transactions and commercial partnerships, anticipated features and benefits of Tremor's products and service offerings, Tremor's positioning for future growth in both the U.S. and international markets in the fourth quarter of 2022 and beyond, Tremor's implementation of a substantial share repurchase program while also continuing to evaluate strategic opportunities to acquire companies and invest in technology, product sales and marketing to further expand its platform, Tremor's medium- to long-term prospects, management's belief that Tremor's well positioned to benefit from anticipated future industry growth trends and company-specific catalysts, the potential negative impact of inflationary pressures, rising interest rates, geopolitical macroeconomic uncertainty, recession concerns and the widespread global supply chain issues that have limited advertising activity, and the anticipation that these challenges could continue to have an impact for the remainder of 2022 and beyond, the anticipated impact of the FIFA World Cup on Tremor's anticipated performance, the anticipate benefits from the company's investment in VIDAA and its enhanced strategic relationship with Hisense. We anticipated benefits and synergies from the Amobee acquisition and ability of Tremor to continue to recognize those synergies, Tremor's ability to continue to execute on cross-selling opportunities and its introduction of new technology products to a significantly larger customer base and addressable market, the timing to complete the technology integration of Amobee and other statements concerning the expected development, performance and market share or competitive performance relating to our 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 and our most recent annual report on Form 20-F. 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 reconciliations 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. I will begin by providing an overview of our results, recent achievements and strategy. Then we'll hand the call to our Chief Financial Officer, Sagi Niri, to discuss our financials. We will then open the call for investor questions. Q3 was one of the most strategically important quarters in the history of our company. We accomplished several goals we have been working towards since late 2021 that further enhanced our strength within CTV and data. We also gained new strategic linear TV capabilities, which we believe will enable several growth opportunities across a large addressable market while positioning us strongly for the future as CTV and linear continue to converge. First, we closed our acquisition of Amobee, which was the largest in our history. I'm pleased to report that we successfully fulfilled significant cost-cutting measure and already realized the entire $50 million in total annualized operating cost synergies we initially expected. Within the first 18 days of closing the acquisition, we were able to generate a positive adjusted EBITDA from Amobee. This is a major testament to our ability to successfully integrate companies and quickly realize benefits for our shareholders as Amobee was a loss-making business when we acquired it. The acquisition significantly expands our financial scale, reach, customer base and talent footprint, and enable strong cross-selling opportunities. Trevor has a robust footprint in CTV and video while Amobee's DSP has a strong omnichannel position, including across display, mobile and performance. We believe the complementary nature of the 2 DSPs will enable Amobee customers to allocate more of their overall advertising budget to CTV and video and offer Tremor customers -- self-service DSP tools and the added omnichannel and data capabilities. Additionally, a very minimal amount of advertising dollar spend across Amobee DSP were purchasing ad inventory from the annually SSP prior to the transition. Over time, we will work together with Amobee's customers to enable them to realize the data advantages of our platform and cost benefit of transacting end-to-end, which we believe can also drive added revenues and profitability to trend. Amobee also enhanced our technology footprints across enterprise self-serve DSP, performance media buying, CTV and advanced data for different stages of planning while adding very important new linear TV capabilities. As CTV and linear continue to converge, this new capability strongly and uniquely position us for future success within the industry as I will elaborate on. Amobee advanced TV planner, or ATV, give us a new ability to work and cooperate with traditional TV broadcasters. ATV assist broadcasters by providing a planning technology that they can offer to advertising partners to better understand how to optimally run campaigns on their inventory in order to reach their target audience. Our pre-existing strength in CTV and having an in-house SSP enables strategic cross planning capabilities between digital and linear. We believe this capability will open several new facilities and capabilities for Tremor and its partners because we can now work with them to utilize reach and plan campaigns across both media platforms. In August, we also closed our $25 million investment in VIDAA, a smart TV operating system and subsidiary of Hisense. We believe Hisense is not one of the leading innovative growth brands in the CTV manufacturer market. And they also acquired Toshiba TV subsidiary several years ago, which further expanded their reach. Our investment in VIDAA extended for multiple years, the exclusive global agreement to share VIDAA's ACR data for global targeting and measurement across our platform. VIDAA also granted ad monetization exclusivity in the U.S., U.K., Canada and Australia to our Unruly SSP and Spearad ad server for the next couple of years. The ACR agreement enabled us to offer additional data sets and advertising opportunities to our customers and is expected to enhance our TV intelligence solutions. We also believe that data exclusivity creates new potential revenue opportunities for Tremor, SSPs, advertisers and streaming providers are seeking this data for targeting and measurement. ACR, or automatic content recognition data, is viewership data collected from the Smart TV, which enabled us with access to understand what content and commercial consumers were exposed to. With [indiscernible] expected to continue growing, our ACR agreement with VIDAA position us to take advantage of increased customer data for targeting and measurement purposes, which is critical within CTV. The data is also quite unique in the ecosystem as many other major smart TV OEMs monetize ACR data in-house similar to a world garden. Tremor now, through the agreement, as they become a major enablers of smart TV ACR data to the open Internet, a key differentiator and potential growth driver. According to Comscore, earlier in 2022, Hisense and Toshiba already accounted for approximately 10% of the U.S. Smart TV OEM markets. Market research agency or media also reported that for the first time, Hisense in Q2 2022 ranked second in the worldwide volume share of shipments. As Hisense work towards further penetrating the U.S. and global smart TV market, Tremor should further benefit from its investment in VIDAA. If VIDAA and Hisense continue to expand share, this anticipated increased TV distribution will make the ACR data even more desirable to advertisers than those seeking targeting and measurement capabilities. Tremor is also utilizing its end-to-end platform and leveraging its close relationship with VIDAA and its partners to exclusively monetize ad inventory shown within the FIFA+ app across connected TVs. VIDAA's partners will also distribute the FIFA+ app globally across their smart TV devices as well. Between the combined reach of VIDAA and its partners, we believe Tremor will have ad monetization exclusivity on the FIFA+ across more than 100 million smart TVs globally during the FIFA World Cup. As part of this exciting large-scale project, FIFA also granted Tremor the global rights to monetize ads on its FIFA+ website and mobile inventory during the tournament. This project and combined which reflects a sizable revenue opportunity for us. We also anticipate additional sport-related opportunities in the future, as Hisense, has made sports sponsorship and exclusive sport content opportunities, a key part of its growth and marketing strategy. In addition to all these milestones, we achieved in Q3, which position us strongly for the future. We also continue to expand our market share within CTV. CTV spend across our platform during Q3 was $73 million, which reflects an increase of 45% compared to Q3 2021. This $73 million also includes 18 days of results from Amobee. CTV is the fastest-growing segment within digital advertising, and we are incredibly pleased with our progress in growing and expanding our capabilities on this front. We also generated continued margin strength, achieving an adjusted EBITDA margin of 46% and as a percentage of contribution ex-TAC during Q3, which also include 18 days of results from Amobee. This highlights the efficiency and resiliency of our technology platform and business model, which enable us to generate robust profitability and cash flow despite a continued challenging macroeconomic environment. Spending by advertisers in Q3 remain constrained by rising inflation, rising interest rates, supply chain constraints, the ongoing war in Ukraine, macro and economic uncertainty and recession concerns. We continue to expect these headwinds to persist for at least the remainder of 2022 and likely into 2023. July and August were particularly challenging months for advertising demand. That said, we saw our results improve throughout the quarter and ended Q3 with a strong September. We have also seen some initial evidence of advertising demand from our customers increasing as a result of the U.S. midterm election cycle and fourth quarter seasonality. This has been encouraging as we also believe we will experience added benefit related to several upcoming catalysts, which can help offset some of the expected negative macro headwinds. During the quarter, we also completed our previous $75 million share repurchase program and announced an additional $20 million share repurchase program that began on October 1. In the quarter, we purchased approximately 6.4 million ordinary shares for a total investment of approximately GBP 24.9 million or $29.7 million. For the entire program, we repurchased around 13.8 million ordinary shares, which reflects roughly 9% of shares outstanding. Our ability to have repurchased a sizable amount of shares at what we believe are discounted levels while making a significant strategic acquisition and investment is a testament to our modest cash-generating ability and profitability. Finally, we continue to generate robust momentum across Tremor Video and Unruly, adding a significant number of supply side partners and new advertiser customers. During Q3, Unruly added 82 new supply partners, including 33 in the U.S. For the first 9 months of 2022, Unruly added 232 new supply partners, including 104 in the U.S. Supply partners were added across sports, news and entertainment verticals and several formats, including online video, mobile, CTV and over-the-top apps from leading broadcasters and virtual multichannel video programming distributor businesses. Tremor Video during Q3 added 56 new advertiser customers and 191 for the 9 months ended September 30, 2022, across retail, automotive and political verticals as well as others. Despite the challenging macro backdrop, we continue to generate strong results and adoptions across our technology ecosystem and reinforce our strategic positioning within the industry, which we believe positions us well for future growth. It's now my pleasure to turn the call over to Sagi to review our financial results.

Thank you, Ofer. Today, I will review highlights and key financials and operational drivers of our Q3 and first 9 months of 2022 performance, which include 18 days of results from our completed acquisition of Amobee. For the 3 months ended September 30, 2022, we generated contribution ex-TAC of $64.9 million compared to $76.7 million in Q3 2021, alongside Q3 adjusted EBITDA of $30.1 million compared to $42.3 million in Q3 2021. Our Q3 2022 figures include 18 days of results from our completed acquisition of Amobee. During July and August, we experienced pressure on our contribution ex-TAC due to a variety of macroeconomic challenges, which impacted advertising demand across several verticals and formats. However, we are encouraged by the results we generated in September and have seen initial evidence of potential recovering advertiser demand across our customer base to this point in the fourth quarter. We also continue to expand our share within CTV as CTV spend on our platform, including 18 days of results from Amobee, was $73 million during Q3 2022, which was a record for us and reflected year-over-year growth of 45% compared to CTV spend of $50.4 million during Q3 2021. We believe we are well positioned for future growth within CTV and video as programmatic transactions continue to increase in popularity across the advertising ecosystem as AVOD continues to grow and as we expect performance budgets to move towards CTV and programmatic in the future. Amobee also creates more CTV advertising cross-selling opportunities within a newly acquired customer base and we expect the integration of Spirit as well Spearad. as well as our investment in VIDAA to provide us ample opportunities to continue growing share within CTV and video. Including Amobee, video, including CTV, continue to reflect the overwhelming majority of total Q3 and 9 months 2022 contribution ex-TAC at approximately 87% and 81%, respectively. Our profitability remained strong as we generated a Q3 2022 adjusted EBITDA margin of 43% on a reported revenue basis and 46% on a net revenue basis, which includes 18 days of results from Amobee. For the 9 months ended September 30, 2022, we generated contribution ex-TAC of $206.7 million, including 18 days of results from Amobee compared to $213.4 million over the same prior year period. Over the same period, CTV spend, including 18 days of results from Amobee, was $183.9 million compared to $138.4 million during the first 9 months of 2021, which reflected a record for us and a 33% year-over-year increase. During the first 9 months of 2022, CTV spend, including 18 days of results from Amobee, reflected 39% of total spend and 44% of programmatic spend. We also generated adjusted EBITDA of $102.9 million during the first 9 months of 2022, including 18 days of results from Amobee compared to $107.2 million adjusted EBITDA in the same prior year period. We generated an adjusted EBITDA margin of 45% on a reported revenue basis and 50% on a net revenue basis over the first 9 months of 2022, including 18 days of results from Amobee. Turning to our cash flow. We generated net cash from operating activities of $12.6 million for Q3 2022 versus $44.6 million in Q3 2021. For the September 12 through September 30 period, Amobee contributed negative $13.8 million in net cash from operating activities to Tremor's Q3 2022 results. For the 9 months ended September 30, 2022, we generated net cash from operating activities of $59.1 million including 18 days of results from Amobee versus $121.4 million in the 9 months ended September 30, 2021. As of September 30, we add $109.1 million net cash following the closing of our VIDAA investment and Amobee acquisition as well as the completion of our $75 million share repurchase program. As we mentioned in the past, we secured a new $180 million credit facility in relation to the Amobee acquisition, under which we utilized $100 million in addition to existing cash resources to satisfy the purchase price. Within the new credit facility, we drew at closing $90 million from a secured term loan as well as $10 million from a revolving credit facility. The remaining $80 million on the revolving credit facility, alongside our existing cash resources provide us ample liquidity for future potential strategic investments and initiatives. We experienced 99% free cash flow conversion for both the 3 and 9 months ended September 30, 2022, including 18 days of results from mobile Non-IFRS diluted earnings per ordinary share was $0.11 for Q3 2022, including 18 days of results from Amobee versus $0.21 in Q3 2021 and $0.42 for the 9 months ended September 30, 2022, including 18 days of results from Amobee versus $0.56 for the 9 months ended September 30, 2021. As Ofer mentioned, we're very pleased to report that the Amobee integration is ahead of schedule and that we've already realized our initially anticipated $50 million in total annualized operating cost synergies on a combined pro forma basis. We fulfilled significant cost-cutting measures, successfully generating positive adjusted EBITDA from Amobee within the first 18 days of closing the acquisition. Most of the synergies to this point have come from the consolidation of human capital into one combined team, and we've reorganized Amobee employee base to focus efforts on the highest growth opportunities. We focused on retaining key talent from Amobee in sales, marketing, product and technology to enhance our product and fuel our future growth. Employee efficiency is a pivotal part of our operating model's long-term strategy as well as our integration strategy. This efficiency has also been a key enabler of our historically strong profitability and highlights our proficiency at managing the business, maximizing return on assets and maximizing return on invested capital. We expect this efficiency will continue to be a strong future growth driver for us while also positioning us well during challenging advertising demand environment. Laura Martin at Needham recently released a report stating that from Q4 2020 and through Q2 2022, Tremor improved its trailing 12 months revenue per employee by approximately $297,000, which was the largest increase of any company within our ad tech coverage universe over that time period. According to Laura, our Q2 2022 productivity of around $623,000 per employee was second only to the Trade Desk at around $642,000 with inner ad tech coverage universe and well above the mode value of $300,000 to $400,000. In our opinion, this proves that the largest companies in this space aren't necessarily the most productive in maximizing and improving employee utilization and maximizing their asset efficiency for their business and shareholders. We believe it also demonstrates that end-to-end solution with proficient management teams and operators tend to drive better results around efficiency. We also believe our historically strong employee utilization serves a strong barometer for the success we expect to achieve with our newly integrated Amobee team members. In addition, we've also made progress in consolidating duplicate spend on vendor contracts and technology fees and services. As we work towards fully completing the integration, we believe we've identified an additional approximately $15 million in operating cost synergies and now believe we will realize approximately $65 million in total annualized operating cost synergies on a combined pro forma basis upon the completion of the integration. We also believe the integration will now be fully completed by the end of 2023 with the vast majority expected to be completed by the end of Q2 2023. Going forward, our sales team will continue to focus on introducing and demonstrating Tremor Video's platform capabilities to newly acquired Amobee customers towards capturing additional CTV and video budget while also introducing Tremor Video customers to our new Amobee DSP to offer opportunities to boost self-service stands across our ecosystem as well as additional omnichannel capabilities. We will also introduce the end-to-end benefits of leveraging Unruly to advertisers running campaigns through Amobee. Very minimal amounts of advertisers' dollar spend on Amobee DSP have purchased ad inventory through Unruly the past. But as we work towards migrating some of the spend to Unruly, we believe we have the ability to capture take rates and profitability on both the DSP and SSP side while providing efficiency as well as data and cost advantages for customers. We will also be working to expand our relationship and revenue footprint with linear TV broadcasters through our newly acquired ATV technology and position ourselves even more strongly as budgets are deployed across both linear and CTV. The new data-driven tools we gained through the acquisition also enabled us to provide desirable added benefits for current customers to expand their revenue relationship with us while offering us opportunities to also introduce these benefits to land and expand within a newly acquired customer base. They also further expand our technology ecosystem and product offering for advertisers, linear TV broadcasters and CTV media customers, where we can now assist them even more with planning and executing campaigns across CTV and linear TV, eliminating the need to leverage several partners or technology solutions to accomplish this goal. Finally, I'll now turn to our outlook. For full year 2022, we now expect contribution ex-TAC of approximately $310 million and adjusted EBITDA of approximately $140 million, including results from Amobee. This lowered guidance factors in continued challenging market conditions, which cited that have impacted advertiser demand. We continue to believe these challenges will impact results for the remainder of 2022 and into 2023 as well. We believe, however, that we will experience positive tailwinds in the fourth quarter related to anticipated increased advertiser spend associated with the FIFA World Cup, where we have a number of catalysts and important exclusivity. For full year 2023, we now expect combined contribution ex-TAC of approximately $460 million and combined adjusted EBITDA of approximately $180 million, including results from Amobee. Despite ongoing market headwinds, the efficiency and benefits of our end-to-end operating model, continued focus on CTV, video and data, strong fundamentals, powerful partnerships and differentiators and recent milestones position us incredibly well to capitalize on future growth opportunities while continuing to generate high level of cash and profitability. Our newly enhanced suite of product solution allows us to holistically serve advertisers and media customers across linear and CTV in ways we believe no other single technology company can. I'm very excited for Tremor International near- and long-term future and positioning within the industry. With my remarks completed, I'll turn the call back to Ofer.

Thank you, Sagi. Over the last several months, despite ongoing challenging market conditions, we managed to execute on our long-term strategy, which we believe will help further enhance our position in video and data and further boost our already robust strength within the CTV and TV ecosystem. We believe our efficient end-to-end operating model and continued focus on generating strong profitability, high margin, a significant level of cash flow, enable critical flexibility for our business. This flexibility is even more important and a tremendous advantage during uncertain economic periods and uncertain advertising demand environments. We expect all of these recent wins alongside the pre-existing strength of our end-to-end model to create a strong flywheel effect that will empower our future growth through expanded relationships with both current and new customers. We are excited to continue executing on our long-term strategic vision and remain accurately focused on generating value for our customers and shareholders. Operator, we will now open the call to investor's questions.

[Operator Instructions]. Your first question comes from the line of Matt Swanson from RBC Capital Markets.

All right. And thanks for giving that data point from Laura. I think it really highlights the efficient way that you've been able to grow this company. And so to that point, could you just talk a little bit more about the early cost synergies from Amobee? And any updates around thoughts around the integration that you've made or discovered in the last couple of months? And then any updates or comments on what you've seen from early customer reaction on both sides from Tremor's in the Amobee DSP or Amobee customers taking full stack? That would be great.

Thank you, Matt. I will start by, first of all, over looking at what Amobee provide us as we see it and why we made this acquisition because I think that it's important also in this discussion. So first of all, I think that the ATV platform, which is the Amobee TV planning tool, it's a very useful tool in this period of time. And when we're looking at that CTV and linear TV are coming more and more together and people are trying to now to advertise or to plan their advertising budget on both of these platforms side-by-side basically. And with the increase of effort when we see Netflix and other guys that are coming into this world of supporting advertising video and streaming, we understand that also the advertisers will respond to that and will increase their spend also across CTV and streaming solutions. So they will have to take into account their linear TV and also to spend when they are spending in cross platforms from digital. So this is a very important element for us. And basically, Amobee, in their yield, they couldn't provide this CTV engagement because they didn't have an SSP like us. When we got our SSP, basically, we can integrate it side by side with the linear TV, and we can provide advertisers a much better view on their planning and also activation capabilities. So for that, we are already seeing a very good positive response from the partners of Amobee in the past and our partners that are showing interest in that. And we are -- and they are going to adapt our tools in order to move forward with that. The second thing is their enterprise DSP, which Amobee basically built over many, many years, and they created a very strong partnership. We believe that it will help us basically to integrate these 2 activities of us and them into one when they are bringing us more capabilities around omnichannel and performance, which are needed in the market. And we feel that there is a demand for that already when we are talking about cross-selling between the teams while we can give them much more concrete product capabilities around CTV. The third element is the managed sales, which both of the companies have strong teams that we are basically integrating now together. And I think that the offering, again, as I mentioned, about CTV on one side, the second side is performance and omnichannel will bring us a lot of value. And the last point regarding that, from our view, is moving more and more budgets or working with advertisers and partners of Amobee to educate them and to teach them and to partner with them in order to explain to them what are the values, if they are going to move basically to -- into end-to-end solution that we are offering and what price advantages they can get from that and other advantages, which are technology wise and moving more and more budgets from Amobee to basically Unruly platform that can increase our revenues and net revenues and profit in the future. So this is everything that I just said is already underway. And we feel that the market is accepting it very well. And I think that the Amobee platform is like adding to us a lot of credibility, a lot of clients, about 500 clients worldwide, which we are now integrating into our platforms and work. And I think that we move relatively fast in order to integrate it. And the idea is to basically finalize the integration of the technology element until the end of 2023, but the major stuff will be in the end of the second quarter of 2023 when we will basically integrate the DSPs and the platform to be one platform. I hope that I answered your question.

Yes. No, that was everything I was looking for and more. I guess it was a second, and this is for Sagi, thinking, about the macro, I mean the headwinds are all pretty apparent that we've seen them from on from peers this being a challenging environment. But you also have some secular tailwinds, I think, particularly around CTV, and you kind of mentioned there are some catalysts amongst this more challenging macro picture. So how are you kind of balancing those 2 things when you're thinking about guidance, especially for next year?

Thanks, Matt. I think we are trying to be conservative on our guidance since the macroeconomic, geopolitical issues are out there. We are trying to be cautious. And of course, also bright for the good and the other way. As you said, we are experiencing a very nice growth in our CTV market share. which we assure that we will continue on that. But on the other hand, we have, as Ofer mentioned, some CTV clients, which are seeing, because of inflation and recession, some headwinds to their business. And of course, it's affecting their ability or their advertising budget that they are taking into the market. So I think we are taking all of the different parameters that we anticipate in front of ours, and we are trying to give the conservative and cautious guidance that we think that we can handle through Q4 2022 and into 2023.

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

A couple of questions. So why don't I start with the one, our revenue -- IFRS reported revenue went from down 7% to down even though we had 18 days in that quarter. And now we're -- you're projecting for the fourth quarter, 18% growth. So if I strip out Amobee, what is the organic growth? And where I'm going is, why are you comfortable with this huge deceleration in revenue that you can actually report positive growth in the fourth quarter on an organic basis?

No. So I think the guidance that we gave for Q4, and of course, for full year 2023 is with Amobee on a consolidated basis. So we are not seeing like a huge organic growth with our solo business. But as we said in the past, we are -- the minute we completed the acquisition of Amobee, we are looking at assets as one company, one platform. Everything has been consolidated into one sales team, one marketing team, one product and research and development team. So we are not looking at it on a solo basis. We are looking on it in a group. And on a group level, this is the guidance that we gave. And we will not, by the way, in the future, like will give an Amobee number or Tremor International number.

Right. so you're saying all of the growth in Q4 is because of Amobee. You are projecting negative same-store growth in Q4. That's what you're saying?

I'm not saying that like strictly forward. But yes, we are not seeing like a huge organic growth on our solor basis. But having said that, yes, we are not giving -- like in our eyes, everything is becoming organic, the minute we are consolidating the 2 companies into one.

Okay. And then my other question was, you said in the press release that in the first 8 weeks, because it's only been 8 weeks since [indiscernible] you achieved all $50 million of projected synergies that was supposed to take 12 months. And then you're now projecting $65 million of synergies, Great. How exactly do you do that? How exactly -- what did you do to achieve $50 million of synergies in the first 8 weeks of owning this company?

So it's a few things that, of course, that are being done, first of all, analyzing growth synergies, where we can basically -- when we are organizing the company and restructuring it with other [indiscernible] and by the way, in the management also, we integrate managers from Amobee into the management team of Tremor. And we are building in advance the teams that we want to move forward with. And we are moving fast after this closing in order to release or to basically come back to changes because we don't want the people to be like in the air for a long time, not to feel safety about their positions and so on. So when we build this reorgan we build the structure that we want to keep, we basically conducted the change. And it's going from management across the teams until the bottom because first of all, we have experience in that. The second point is that we have experience in that and doing these moves and taking the decisions quickly. And the third element is also coming to the point that you mentioned a few weeks ago, Laura, which is we want to keep and stay effective and be an efficient company. So we are doing that very quickly because, if not, you're getting into a situation that you are bleeding and you are in a situation that people are in uncertainty and you are not controlling the ways. So I think that, again, it's reorg, building the teams in advance, moving fast after the closing and with a very clear vision about what we want to build. And as I answered, Matt, I think that we have a very good -- clear and good vision about what we want to do with our Amobee assets into Tremor and now it can be combined to a very interesting and powerful company that can provide very unique services and solutions to partners in the U.S. and globally. So I think that it's a mix of all these things that we've done, and I feel really the issue about this acquisition and the outcome of the reorganization that we've done very quickly. It was a major effort in Q3, but we've done it because we believe that when we looked at that 2022, it's basically here that we wanted to conduct the strategic investment. Just for you to know, we also -- in a few months before, we looked at other opportunities in the market, and then we switch to Amobee because we wanted to acquire another demand-side platform and to connect to our basically out of operation and platform. And that's what we've done. And in parallel to that, as you know, we concluded the invested in VIDAA. So management and the teams worked very, very hard in order to conduct all these acquisitions. And of course, after signing, signing, it's not a major event. After signing to conduct all this hard work in order to connect the platform, to connect the teams, to build a mutual vision and to move forward as one company like Sagi just mentioned.

Yes. And by the way, Laura, just to make sure it's all happened in less than 3 weeks because we just closed on September 12.

Okay. And so we should expect to see a write-off. If you're laying out people, maybe I missed it in this press release because I sort of perused it, but -- so we should expect to see a write-off on the hiring the people through the income statement, right? .

Sagi.

Yes, you will see it as a restructuring line.

Your next question comes from the line of Mark Kelley from Stifel. Your line is open. Mr. Mark Kelley, your line is open.

Would help if I took myself off mute. I was hoping you could talk about Amobee a little bit more just in terms of how much of having Amobee in-house and being able to look under the hood a bit more has impacted your outlook for 2023. I totally get the macro stuff, but it also sounds like after July and August, maybe things have stabilized and maybe even started to improve there. So just more color on the Amobee side would be great. And second, can you talk about how much visibility you get into the World Cup spend? Is that something that you have visibility to upfront? Or is it more scatter and programmatically bought stuff?

So maybe I will start with FIFA and then I will move to Amobee. So with the FIFA, I think that we have a very unique opportunity that in a regular year or a regular period of time, not under this pressure of the macroeconomics inflation and so on, we can expect to generate much more revenues because we are talking here about being distributed on more than 100 million TVs globally, which I think it's very unique achievement. And this is the first time that an event in this size and this importance globally is taking part also taking place also on CTV. So I think that it's a major success of us connecting all the points of bringing the FIFA bringing basically partnering with VIDAA, bringing FIFA, bringing other partners to distribute the app basically globally and getting the rights to exclusively this app globally. We have, of course, people that already placed orders into the book to buy advertising around that. And we believe that a lot will come also programmatically because, at the end of the day, when we are talking here about more than 100 million TVs, we believe that the adoption of the FIFA+ will be very high. And people will engage with the application because people like to consume this content, and it's important to them. I'm not from the U.S. For us, as foreigners, we believe we like FIFA and I'm following these games from '72 basically. And I know that when you're looking at the U.S., it's just now growing and becoming more and more interesting and more efficient and more something that people are getting their traction and looking at. So I believe that also in the U.S., we have nice adoption. One of the major issues that are like a cloud above that is the macroeconomic situation and also the fact that it's being done in Qatar that has basically has raised some issues to some people and some companies and also the timing of the games. But in general, we really believe in this content that we are doing -- content distribution that we are doing that is unique, is exclusive, and it's very powerful. And we believe in the power of course, of the CTV. And we think that we are doing a very unique stuff. But as Sagi said, we were conservative in our assessment of how much revenues it will bring us in the fourth quarter, and we are waiting for the games to start exactly in less than a week from now. So on the 19th of November, the game is supposed to start in Qatar. Hopefully, there will be like a nice buzz, nice games, good couple of games that will basically bring a lot of attention to this tournament. Regarding Amobee, when we're looking at Amobee, and I will maybe repeat it myself a little bit, but I -- after looking at many companies in the industry, we looked at Amobee, and we feel that it can really support us all the way from all the funnels from advertising, planning, discovery, discovery, planning, activation, which is very important for us. And it's also adding to us additional capabilities around basically working with broadcasters that are running on linear and growing their streaming business. And I think that this is something which is opening to us a lot of new markets that we were not being able to address in the past when we were just Tremor. So I think that when we look at that, we look at Amobee as a promise to get into working very closely with broadcasters, major broadcasters that are already engaged with Amobee, by the way, globally. And we can add to them, as I mentioned, the activation and the digital side of the business and the planning, which is very meaningful. And I think that it will bring us a lot of success in the future. In general, I think that also when we are looking at Amobee 500 clients globally, a very good reputation over the years that was built, very strong technology, investment in technology and acquisition that they made over the years in order to strengthen it. And I think that they created a very good team of talented people that are working on this platform. And the combination with us, we'll be able to basically provide us a lot of unique capabilities that we didn't have before and to strengthen our core capabilities that we have already around CTV. And our promise is basically to be able to do cross-selling like we did in the past when we acquired Unruly, for example. And when we acquired [indiscernible] is to basically introduced the new capabilities to the customers of the company that we acquire and engage with them and move much more budgets basically to us in the future. So it's a lot of effort that was done in Q3, and we believe that it will give us the benefit in the mid- to long term. And we are long-term runners. We are not looking just on the other corner of the next few weeks. We are looking for the next year and so. And we believe that this acquisition give us very strong position in the world of CTV -- in the work of CTV around broadcasters combined with linear TV and will enable us to use our strength with data, CTV and so on in order to attract their advertisers to buy and move and shift their budget of CTV to us basically in the future to Unruly. And when they are moving their budgets to Unruly, of course, can grow our business, grow our net revenues and profit. And this is the -- this was basically the target of this acquisition, and we achieved that. And it's coming together with VIDAA that will also basically give us the ACR data that is a great match also for basically introducing to clients, enabling them to buy targeting and to conduct measurement on our platform together with the Hisense/VIDAA data, which is very meaningful because, as all of us know, ACR data is very unique in the market. It's a very rare commodity because most of the companies that got this data are using it as part of their world gardens. And we can basically be one of the people that are serving the open web. And this is our basically our target and our goal and our vision.

Your next question comes from the line of Andrew Boone from JMP Securities.

I want to talk about two smaller line items that you guys have but clearly are getting impacted by macro. Can you help -- help us understand the difference in terms of performance gross revenue and the kind of 41% downturn that we saw in 3Q? And then also just thinking about non-video programmatic revenue. I'm trying to back into the number. And it looks like display or whatever is inclusive in that category is also down about 40%. And so is there anything just to highlight there across those 2 categories? And then lastly, just turning to World Cup. Frequently, when media rights like this are purchased and the exclusivity, is there anything to note just in terms of TAC or required payments that you guys have, just given the softness within the macro environment that we should be thinking about for 4Q? I'll leave it there.

Okay. Andrew, I'll answer the first one. I'm not sure I got it like 100% right, but I try to answer you. I think that our performance activity is not something that we are trying to be focused on. Of course, it's helping us, and we can help customers, advertisers and agencies like gross activity so we can do whatever we want on the programmatic side of the business, and they can even benefit from our performance arm. I think that first month of 2022, performance activity did well or as well as it did in 2021. In we show a little bit softness on the performance side as well. And again, it's relating to our DTC clients, which lowered their advertising budget due to inflation and recession. . On your video question, so again, we are heavily invested, and we are focused on video format, which is the most growing and the most engaging. Having said that and as Ofer mentioned, Amobee has a much robust omnichannel DSP, which most of the advertising budgets over there are being executed on display. So this gives us a lot of opportunity taking the display abilities and Amobee features into our clients and cross-sell it and vice versa to take all the CTV and video capabilities and knowledge that we have and allow them or cater to a Amobee client. So I hope that this answers your question. Regarding the second question, I'm not sure you asked if we are -- if we have like guaranteed payment to FIFA with the deal?

Yes. Just as we think about your access to FIFA World Cup inventory and especially considering just the softness within what I'm assuming a -- are there any guarantees that we should be thinking about as we think about 4Q.

Okay. So just one thing to note to understand the investment in VIDAA gave us an amazing relationship with this company, which is the operating system of Hisense. Hisense is heavily invested into sport exclusive sponsorship. And as part of that, VIDAA is benefiting to have some exclusive content. And from that, we are benefiting of being VIDAA exclusive partner on ACR data. And in major countries, their inventory and monetization partner, we are enjoying that. So per your question, we are not invested in dollars in that. We are not -- we don't have any minimum guarantee, and it didn't cost us anything. We are just benefiting from this amazing relationship. So it's only an upside for us.

Your next question comes from the line of Andrew Marok from RaymondJames.

One more on Amobee, if I could. I guess -- to the extent that you have seen so far in the first 18 days, can you comment on the sensitivity of Amobee versus the core tremor business to some of these macro trends. And then looking forward into 2023, can you just give us a little bit more color around your assumptions for macro and the shape of the recovery?

Regarding Amobee risk, I think that there or sensitivity, as you said, we are basically running on the same -- not sometimes the overlap of the clients is very minimal as we indicated in the past, but we are talking about the same type of -- same type of audience, basically, same type of clients, but sometimes different things, different businesses. So I think that it's relatively the same. Regarding the macroeconomic forecast and so on. I think that it's a very big question that I wish that I knew the answer to that, basically. But we are -- what we, I think, feel that we need to do as management. We need to be cautious, and we need to take into account that this macroeconomics, turnovers and changes will continue at least for the next -- until the end of the second quarter of next year. So it's very hard for us as a company to basically predict and know what will be the macroeconomic situation in this world. And I think that many people in this call will feel the same. But I think that what we are trying to do is to be committed to being conservative and not to provide not to ignore it and not to provide wishful thinking but to be conservative in the way that we are looking at things and so on. Having said that, it's like -- as we indicated, we saw some uptick in the fourth quarter, which is usually happening. We feel that also the midterm elections contribute some revenues, additional revenues to us. And we are looking forward to see what FIFA will bring, as I just mentioned. And hopefully, it will be meaningful. But it's very hard to predict right now, and we need to be careful about the future and take our steps step by step in order to understand what's going on in this market. And as we see also from the stock exchange and what's going on in general in the world, every day is a new day and things are changing and moving to different directions. So we need to be very careful about how we build our company and how we invest our resources. And now we're sharing results or forecast with the market basically.

Your final question comes from the line of Daniel Kang from Toscafund.

You've asserted on many occasions and including today, the strength of your business model. But if we look at the evidence of Q2 and Q3 in terms of net revenue, we see negative trends at Tremor and much better performance coming from your U.S. listed peers. I was wondering if you could give me some perspective around that. What do you think is happening at your peers compared with your own business.

Daniel. First of all, I think that you know our numbers also from the last year and so. So you know that last year, we grew 64% compared to 2020. Between 2021 to 2020, we grew 64% organically, which was a massive number basically reaching the best growth in the industry in any manner that you looked at. And we were also recognized as the growth -- the company that grew the fastest in 2021. I think that it's about the mix of advertisers that you've got, which is putting sometimes pressure on results. We are putting a lot of emphasis of keeping our margins, keeping our profitability, as you know. And I think that when you look at that, if you are getting it from D2C, like we mentioned in the PR, it's something that we cannot basically replace or exchange very quickly. So -- now we believe that with Amobee, basically the dependency on these verticals will go lower because of the total revenues and clients that we got. But in general, B2C was suffering from Q2 to Q3 from a lot of pressure in the market, and we felt it, and we basically acknowledge that to the market. So I think that it's -- everything is relative in life, and we look at it and we need to look at it in a perspective. And I think that in 2021, when we grew 64%, we created a very high bar. But I think that the company is still generating profits, and we have like we committed and we've done like 2 very important strategic events in the last quarter that will help us that will help us in the future. And I think that we are a long-term runners. So we are not just looking around the corner. And -- and we know that basically the investment that we've done and the integration that we are going to do and the quick response to our Amobee integration, cutting costs, and basically tending them to be part of us very quickly will help us in the future. So again, I'm not -- I'm explaining that we grew the fastest last year. We suffered from a vertical that is affected us, which is B2C, mainly that basically went down because of the macroeconomic recession inflation that basically infected these clients to lower their spend in general and with us, and we felt that's the major reason.

There are no further questions at this time. Mr. Ofer Druker, I turn the call back over to you. .

Thank you, everyone. Again, I want to say a few sentences just to conclude and summarize this call. I think that it's a very, very challenging days now because of what's going on in the market that we are not controlling, which is macroeconomic powers and forces that basically change and move the market and, of course, affecting our clients and affecting us in general. We are looking at 2022 and we looked at the last 2 quarters and from the beginning of the year, we worked very hard in order to fulfill our long-term strategy because I think that at the end of the day, companies are big, judged and measured for around the years not just from quarter-to-quarter. We are trying to build it. We are trying to build our company for the long term. And I think that we achieved -- 2 major successes in the last quarter, which is the acquisition of Amobee in a very attractive price that we basically can be integrated into our business, already integrated our business and we conducted the changes that were needed and the VIDAA investment that is very massive, creating for us a lot of interesting opportunities, including the FIFA+ monetization opportunity. But more than that ACR data exclusivity on CTV media in the U.S., Canada, Australia and U.K. for the next couple of years on one of the most growing CTV partners in the world. So I think that when we look at that, we are proud and we are -- we believe in our way going forward, and this is what's important. And in this period of time, we need to do our best, of course, to keep generating profit, keep strengthening our position in the market, and that's what -- that is exactly what we are doing. So thank you for your ongoing support, and thank you very much for this call.

This concludes today's conference call. You may now disconnect.