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…

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…

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…

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…

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…

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…

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.