DoubleVerify Holdings, Inc. Price & Performance (DV)

Today's press release and this call may contain forward looking statements that are subject to inherent risks, uncertainties and changes and reflect our current expectations and information currently available to us and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including annual report of Form 10 ks In addition, our discussion today will include references to certain supplemental non financial measures and should be considered in addition to and not to substitute for our GAAP results. Reconciliations to the most comparable GAAP measures available in today's earnings press release, which is available on our Investor Relations website at ir.doubleverify.com. Also during the quarter, we'll be referring to the slide deck posted on our website. With that, I'll turn it over to Mark. Thanks, Basil, and good afternoon, everyone. 2024 was a year of meaningful progress in the face of significant business and market challenges, We grew total revenue by 15% year over year to $657,000,000 powered by double digit growth across all three revenue lines. We measured a record $8,300,000,000,000 billable media transactions a 19% increase year over year demonstrating DB's unmatched scale across every digital media environment format and device.

We won an unprecedented number of large global enterprise customers in 2024 further cementing our position as the trusted partner for the world's biggest brands. Our 2024 win rate remains above 80% across all opportunities, with greenfield deals where advertisers weren't previously using third party tools, accounting for 64% of full year wins. Major new partnerships with P and G, Microsoft, Google, Kellogg's, [indiscernible] National Bank of Canada, and BetMGM highlight BB's continued industry leadership and reinforce the accelerating adoption of our solutions worldwide. Moreover, our growth extended beyond advertisers. Supply side revenue grew 25% year over year fueled by rising demand from retail media platforms record influx of platform and publisher customers. This momentum helped our business remain strong and profitable delivering a 33% adjusted EBITDA margin and $160,000,000 in net cash from operating activities in 2024. Up 33% from last year. These results highlight our ability to execute effectively while also making the strategic investments necessary leverage our unique data assets and client engagements and evolve DoubleVerify for a partner that ensures media spend is protected, to one that also measures performance and optimizes the effectiveness of that spend. Despite our successes, 2024 also tested our resilience and adaptability.

Throughout the year, we navigated some isolated headwinds, including scaled back ad spend from six large customers. And in Q4, one of our largest customers facing billions of dollars of sharply escalating commodity costs dramatically reduced its spend with TV as part of a sweeping cost reduction initiative that also impacted their other advertising and marketing partners. Although this customer has maintained limited standard native tools within each tech platform, we have completely excluded them from our 2025 guidance to provide a realistic outlook These factors combined with the absence of a post election rebound in ad spend resulted in a disappointing Q4 that fell short of our expectations. Beyond these isolated customer challenges, we also saw proprietary platforms like social most of our activation solutions were unavailable until early this year. And spending in private marketplaces, PMPs and direct programmatic temporarily limiting advertisers' ability to attach TV solutions to every transaction. But let's be clear, these challenges do not define DB's long term future. In fact, they have sharpened our strategy and fueled our drive for diversified growth and product innovation. We've taken decisive action to address these market shifts and will continue to do so. Our investment in pre bid solutions across Meta and TikTok will position us for future social growth as dollars shift into proprietary platform.

Our recent launch of sell side curation and decisioning solutions on major SSPs will drive higher attach rates of DV data to PMP and PG deals, aligning with the evolution of the programmatic ecosystem. And with strategic acquisitions like DD Cybiz and the newly acquired RockerBox, we're expanding further into performance measurement and optimization, unlocking an entirely new TAM of mid market customers and lower funnel direct response ad budgets. At the same time, we're accelerating revenue diversification continuing to add large new customers. In 2024, we grew the number of customers generating over $200,000 of revenue to three thirty one up from two ninety in 2023. We are executing with focus adapting with speed and positioning DB for long term success. With these actions in motion, and with less macro variability than we saw around the elections late in 2024, we are entering the year with confidence. Ready to drive continued growth.

These tactical moves are part of a larger strategic evolution leverage DB's unmatched data scale, relentless innovation and extensive client engagements to turn challenges into catalysts for future growth. Our vision is simple but powerful. To unify media quality, optimization and performance measurement, into a single platform to help advertisers maximize the effectiveness of every ad dollar. In a market increasingly driven by demands for efficiency and accountability, DB delivers the tools advertisers need to make every impression more impactful. Media quality has always been foundational to performance. It separates inventory with the potential to perform from inventory that never will. With our unique scale core data asset of essential signals like fraud prevention, brand suitability, viewability, attention and context DV gives advertisers the critical insights they need to invest with confidence. With the addition of Skybiz AI, we take campaign optimization to the next level. Leveraging these and other data signals to drive advertiser KPIs more effectively than standard bidding algorithms can. Life Decided's acquisition the pending acquisition of RockerBox a leader in marketing attribution and performance measurement, marks another important step forward for DV. [indiscernible] and CIBB's AI optimization giving advertisers a comprehensive real time view of media performance.

Enabling cross platform adjustments for smarter spending and stronger outcomes. And it continues DV's legacy of powering media performance while remaining agnostic and independent to media channel and media investment. Expanding DV's capabilities to deliver a comprehensive end to end performance measurement solution meaningfully expands dd's total addressable market, unlocking access to mid sized performance advertisers and direct response budgets. While Rockerbox current client roster, which includes household names like Staples, Lowe's, Hotels, and Way Watchers has minimal overlap with DB's existing customers around 200 of their target customers already partner with DB. This alignment opens the door for meaningful cross sell further enhancing the value we deliver to our customers. Driving media ROI is critical and performance measurement is essential for all advertisers [indiscernible] cross channel attribution, DB's media quality analytics and Sybase AI driven optimization transforming fragmented marketing data into a unified actionable intelligence platform. We've already seen a great example of this dynamic in action. With a direct to consumer brand that was using several of DV's media quality solutions, then also employed RockerBox, to track media spend performance. Their key conversion KPI was the cost of customer sign ups, for membership and their goal is clear.

Reduce CPA. DB sideband optimization, the brand was able to optimize their bidding strategies leveraging the CTA data measured in Rockerbox integrating these real time performance insights to dynamically adjust their bidding algorithm.

The results were immediate. A nearly 40% reduction in CPA within the first eight weeks, followed by an additional 20% decrease in weeks nine through 12. This is the power of a fully integrated performance measurement and optimization engine. Delivering measurable business results at scale.

The success highlights a larger shift in the industry. Advertisers need a unified data driven approach to navigate an increasingly complex the landscape. Together, we will provide advertisers with a single integrated solution to measure optimize and drive real business outcomes with greater efficiency in an increasingly complex digital landscape. To explore the future of measurement and data driven innovation at DV and to highlight the role of Rockabox cross platform performance and measurement capabilities, DB's executive team, along with industry experts, will host an in person innovation day for the investment community. On Wednesday, June 11, from one p. M. To four p. M. At the New York Stock Exchange in New York City. The event will also be broadcast live. Now let's take a few minutes to dive into how we're evolving Didi's the open web, and CTV.

Social media accounts for over 60% Yet today, DB measures only about 5% of all U. S. Social impressions. In 2024, we grew our social media measurement revenue by 27% making it a nearly $110,000,000 business for DV. That's more than double the $45,000,000 it generated just three years ago in 2021. A testament to our relentless focus on expanding social media product and language coverage. A key part of ensuring continued future growth in social is expanding DD's value proposition from solely post bid measurement to pre bid activation. Helping advertisers optimize their media investments before they are made. I'm thrilled to announce the launch of our content level avoidance solution for Facebook and Instagram feeds and reels. Powered by DB's Universal Content Intelligence AI.

This game changing innovation ensures advertisers can proactively avoid unsuitable content while continuing to drive superior media performance. In partnership with Meta, we're delivering this solution at an incredible scale. What's more, by seamlessly integrating our content level avoidance controls with post bid measurement tools we've created a closed loop system that ensures every ad delivers max impact In addition, we've rolled out 30 new content level avoidance categories Giving advertisers unprecedented control and precision in their campaigns across Facebook and Instagram feeds and reels. Similarly, we've launched TikTok's video exclusion lists powered by DB, and expanded alpha testing, empowering advertisers to proactively exclude videos flagged as unsuitable through our reporting further strengthening our pre bid coverage across social media. We've seen solid initial interest in both activation solutions with nearly 200 customers in our meta pipeline and several already launched and live in the weeks since the solution has made available. Rockerbox will also play a role as we continue to grow our overall value proposition in social. By linking social performance and conversion data from Rockerbox, DD Media quality data and optimizing against both the Cybids advertisers will be able to eliminate waste, drive better engagement and higher ROI all while ensuring their ads appear in safe, high quality environments.

As we redefine how advertisers drive performance in social media, We remain as committed as ever to expanding our measurement coverage across key social media platforms with enhanced viewability and invalid traffic detection for display ads on Facebook Reels.

On TikTok, we extended our brand safety solutions to 18 new international markets and introduced advanced vertical sensitivities tailored to local market needs. Finally, we recently expanded our viewability and brand safety coverage across additional formats on YouTube as well. Now turning to the open web, the largest driver of DD's revenue across both activation and measurement, performance solutions are already delivering strong results even as they scale from relatively small base. In activation, dd5Bits revenue grew over 50% year over year surpassing the top end of our expectations. Since acquiring Cybins in August of twenty twenty three, we successfully upsold the solution to 79 DV customers. And 40 of our top 100 clients have started to use SciBiz AI to optimize their On the measurement side, DB Authentic Attention continued its strong momentum growing nearly 190% year over year. As I mentioned earlier, as advertisers increasingly shift their open web spend to PMPs and programmatic direct eMarketer projects U. S. Programmatic display ad spending to grow just 4% for the open exchange, but over 30% for PMPs and programmatic direct deals between twenty twenty four twenty twenty six. We always drive to ensure DB data can be deployed wherever and however advertisers focus their spend.

As advertisers increasingly prioritize curated inventory, they're turning to DB to help them achieve greater control, transparency and performance. By leveraging our trusted brand safety, contextual viewability and fraud data, DVE delivers optimized inventory that powers smarter, more effective media investment To that end, I'm excited to share that we launched an integration with Google Ad Manager allowing programmatic buyers to seamlessly access BD's media quality data through curated inventory packages. This integration allows advertisers to source inventory that meets critical benchmarks for context, brand safety and viewability all while driving better performance at scale. By connecting directly with Google Ad Manager, we'll make it easier than ever for advertisers to ensure their campaigns are optimized for safety and effectiveness. Empowering them to achieve stronger results across the programmatic ecosystem. This is in addition to other sell side integrations we recently announced, including new solutions with Index Exchange, Entriddio, Turning to ZTV, our strategic vision is helping fuel one of the most exciting growth opportunities in digital media. In 2024, we delivered impressive results in CTV, with measurement impression volumes growing 66% for the full year and 95% in the fourth quarter alone.

This momentum drove a significant milestone. CTV accounted for 11% of DB's total measurement impression volume in 2024. More than doubling its 5% share in 2023. Our growing CTV base creates a significant future monetization opportunity for DV as we develop deeper content level contextual insights, and stronger connectivity to outcomes data that drive performance. Turning to retail media networks, 20 contributing to our overall supply side growth rate of 25% year over year. Led by our partnerships with the leading retail media platforms, our global reach and connectivity in retail media continues to expand. Dd's measurement tags are now accepted on 124 key global retail media networks and sites, including 16 top retail media platforms and 108 major retailers. With close to half supporting DB measurement on their owned and operated properties. More broadly on the supply side, we secured over a dozen new platform and publisher deals in Q4. Including names like Newsweek and Ozone, underscoring the continued opportunity for DB to support leading open web publishers. As we wrap up, it's clear Double Verify continues to make meaningful progress to address our challenges while we lay the foundation for future growth. Looking ahead, our opportunity remains vast.

We already work with nearly half of the world's top 1,000 advertisers, yet our revenue contribution represents less than 0.5% of their total media spend. Demonstrating the significant runway for growth within our existing customer base. Beyond that, we continue to expand and diversify our reach, evolving our solution set to power performance measurement, outcomes optimization, and attribution while strengthening our presence with mid market and direct response advertisers. With a strong and profitable core, and expanding customer base, an unmatched commitment to quality innovation Didi is well positioned to capture the opportunities ahead. With that, let me turn the call over to Nicola. Thank you, Mark, and good afternoon, everyone. In the fourth quarter, we successfully ramped our new customer wins, highlighting our ability to swiftly onboard large global enterprise clients. However, as Mark mentioned, Q4 revenue fell short of expectations as the slowdown in spend from existing customers that began in October due to political ad spend crowding out brand advertising persisted throughout the quarter. This was exacerbated by a sharp reduction in driven by rising commodity costs. As part of a broader cost cutting initiative affecting most advertising and marketing partners, this customer suspending its business with DB in early February twenty twenty five.

This customer contributed over $20,000,000 of revenue in fiscal year where nearly half of this revenue attributable to social measurement and almost a third generated through ABS. As a result, we have removed this customer from our 2025 guidance.

For the fourth quarter of twenty twenty four, total revenue of $190,000,000 grew 11% driven by 10% growth in activations, 7% growth in measurement, and 34% growth in supply side. Our activation and measurement businesses, which are driven by advertisers, comprise 91% of our total fourth quarter revenue. Advertiser revenue grew 9% in the fourth quarter, driven by 14% growth in volume or NTM, and a 5% decrease in pricing or NTF.

Excluding the impact of an introductory six deal one large customer that we onboarded from Moot. 53% of our activation revenue in the fourth quarter, grew 6% year over year driven by new logo activations and upsells to existing customers. Adoption of this premium product continues to expand. With 70% of our top 500 customers activating ABS in Q4, up from 68% in Q3. Our core programmatic solutions and Sybiz.ai also delivered solid year over Fourth quarter measurement revenue grew 7% driven by 9% growth in social revenue. Social revenue growth was impacted by the slowdown in spend by large brand advertisers that persisted after the election and by the same customer that significantly reduced its spend with us due to a sharp increase in commodity costs.

International measurement revenue grew 11% in the quarter and comprised 30% of measurement revenue up from 29% in the fourth quarter of twenty twenty three. Supply side revenue grew 34% driven by growth in existing platforms, including retail media, as well as several new platform integrations, including with former Mode clients. Full year 2024 revenue grew 15%, driven by 13% growth in Social measurement revenue grew 27% for the full year as compared to 47% growth in the first half of twenty twenty four. As mentioned in prior calls, the adoption of our measurement solutions [indiscernible] progressed at a more gradual pace than we anticipated in 2024 as some advertisers waited for the rollout of social activation solutions to test both measurement and activation together. The social activation solution is now in market as of mid February Social measurement revenue represented 48% of measurement revenue in 2024, up from 43% in 2023. Supplies and revenue growth of 25% was driven by increased platform revenue. Advertiser revenue growth for the full year was primarily volume driven with 8,300,000,000,000.0 billable transactions measured a 19% year over year increase in NTM, while MTF decreased by 4% to $0.072 In 2025, we expect volumes to remain the primary driver of growth as we continue to verify more digital ad impressions through new product launches and channel and geographic expansion.

We expect NTF to continue to decline in 2025 reflecting the impact of competitive rates for major new global brand wins in particular Oracle accounts, a greater shift towards measurement and international impression. For full year 2024, we achieved a net revenue retention rate of 112% while gross revenue retention remained above 95% for the fifth consecutive We grew average revenue from our top 100 customers by 14% year over year to 4,200,000 We grew the number of advertisers generating more than 200,000 of annual revenue by 14% year over year to three thirty one. And our long term customer relationships remain strong with top 75, top 50 and top ten five customers working with us for approximately eight years. Moving to expenses. In the fourth quarter, cost of revenue increased 14% primarily driven by an increase in revenue sharing arrangement costs with programmatic partners driven by activation revenue growth as well as higher hosting and bandwidth costs. We delivered 82% revenue less cost of sales. Total non GAAP operating expenses, which reflecting the efficiency of our operating model. Finally, we delivered $74,000,000 of adjusted EBITDA or record 39% margin. And $23,000,000 of net income. For full year 2024, cost of revenue increased by 9% and we delivered 82% revenue less cost of sales.

Total non GAAP operating expenses grew 15% and represented 49% of total revenue, the same as in 2023. We delivered full year adjusted EBITDA of $219,000,000 representing a 33% adjusted EBITDA margins to combine revenue growth with solid profitability. We ended 2024 with eleven ninety seven employees, up from eleven oh one at the end of twenty twenty three. Over 40% of our headcount growth in 2024 was in R and D investments for engineering, and product resources. In 2025, we expect hiring to slow as we continue to invest in product innovation while we reallocate resources towards growth initiatives and actively optimize the organization. Net income for full year 2024 was $56,000,000 or 9% margin as compared to a 12% net primarily driven by slower year on year revenue growth and higher year over year stock based compensation expenses. Stock based compensation through 2020 introduced in 2021 when we went public. Looking ahead and excluding the potential impact of future M and A, we expect the annual growth in stock based compensation expenses stabilize in the high teens. In terms of share buybacks, we repurchased in the fourth quarter 4,200,000.0 shares of DD common stock for $78,000,000 bringing total share repurchases for full year 2024 to 6,800,000.0 shares for $128,000,000 January 2025, we repurchased an additional 1,100,000.0 shares for $22,000,000 As of 02/27/2025, dollars 200,000,000 remain available and authorized under the new repurchase program utilization throughout 2025.

Moving to cash flow, we generated approximately $160,000,000 of net cash from operating activities in 2024. This represented an operating cash flow to adjusted EBITDA ratio of 73% highlighting a strong cash flow generation and EBITDA conversion. Capital expenditures were approximately $27,000,000 in 2020 finally, we ended the year with $311,000,000 of cash on hand and short term investments and zero long term debt. Turning to RockerBox, have agreed to acquire this leading platform measurement for $85,000,000 in cash. The transaction is subject to customary closing conditions and adjustments is expected to close in the second quarter. We expect Rockerbox to contribute approximately $8,000,000 to DB's total revenue in 2025, within our measurement revenue line and this partial year contribution has already been included in our 2025 guidance.

Currently near breakeven, Rock A Box offers scalable growth across plan to accelerate this growth through strategic investments in talent, technology and integrated data systems across both companies.

Now turning to 2025 guidance. For the first quarter of twenty twenty five, we expect $55,000,000 representing a year over year increase of 9% at the [indiscernible] and adjusted EBITDA to range between $37 representing a 25% adjusted EBITDA margin at the midpoint. For full year 2025, we expect revenue growth of approximately 10%. Our guidance reflects the business transition that we are navigating in 2025 with the impact of two specific headwinds related to clients, and a measured take on the impact of three large opportunities that we expect contribute meaningfully beyond this year. On headwinds, our guidance accounts for the suspension of service for one of our largest customers, and a limited anticipated year over year growth from the quarter of '6 advertisers that waited on 2024 results. In terms of opportunities, our guidance accounts for moderate growth in new social revenue, factoring in time for clients to test and onboard a newly launched social activation solution A one to three year period to upsell our premium solutions to the most clients that we onboarded in Q4 twenty twenty four and a measured in year revenue upside from RockBox as we prioritize the integration of products and operations in 2025.

We expect the weighting of our full year revenue between the first half and the second half of the year to mirror 2024. We expect full year 2025 adjusted EBITDA margins of 32% to account for the acquisition of RockerBox, which is near breakeven today and year one investments to integrate the acquisition. We expect full year revenue less cost of sales to remain above 80%.

For the first quarter of twenty twenty five, we expect stock based compensation expenses to range between $22,000,000 and $25,000,000 For full year 2025, we expect stock based compensation expenses to range between $105,000,000 and $110,000,000 We expect weighted average fully diluted shares outstanding for the first quarter of twenty twenty five to range between $168,170,000,000 dollars We anticipate 2025 capital expenditures including capitalized software of approximately $36,000,000 to invest in new product innovation and product infrastructure growth. With zero debt and $311,000,000 of cash on hand, and short term investments we're well positioned to drive business expansion and long term growth in 2025. In closing, in 2024, we maintained strong margins and grew revenue despite shifting ad spend trends and a slowdown from key customers, while returning capital to shareholders through our share repurchase program. As we mentioned on our previous call, we recognize 2025 as a transition year We're taking decisive action to navigate an evolving advertising environment and we remain committed to investing in innovation, operational efficiencies and scalable growth drive long term value for our shareholders. And with that, we will open the line for questions. Operator, please go ahead.

Thank you. We will now be conducting a question and answer session. The first question is from Matt Swanson from RBC.

Please go ahead.

Great. Thank you guys for taking my question.

Mark on Rockerbox, it's an intriguing acquisition given the focus on attribution performance measurement. Obviously, differing from kind of the core verification business. And as you mentioned, this has always been part of the long term strategic idea of expanding wallet share. And getting up from that 0.5% of media spend you talked about So can you talk about or elaborate on kind of the strategic rationale and specifically how this is going to enhance the customer value proposition? And fits in with the existing solutions?

Yes. Thanks for the question, Matt. And this is something, as you know, that we've been talking about for a while here is this evolution of DB to leverage our relationships and core data to not only ensure that media spend is protected, but that it starts to perform as well. And I think Skybiz was one of the first steps we took there. Our investments in metrics like attention were were other steps. And I think this kind of starts to round out the picture [indiscernible] we can verify, optimize and then measure performance in one platform.

And I think what's really cool about Rockerbox is similar to ZyBids, it fits that narrative, but also creates a real competitive differentiator for us. We won numerous deals last year, enterprise deals based on the fact that we had differentiated products that and attention in Cybex played a big part of that. Rockerbox does the same thing. So number one, it plays out our evolutionary store being an end to end measurement solution that also addresses performance and outcomes.

The two, it creates a differentiator for us that helps us win business As you know, like none of these acquisitions have in themselves had a ton of revenue when we bought them. But as we saw with Sided last year, it grew over 50%. Rockerbox is small, but we're going to look at leveraging that as a differentiator to grow other business. And continue to invest in that property so that we can increase that value prop.

As you noted, it's not just about wallet share for advertisers, but it's about making it easier for them to understand what their spend is doing, where it's going and how it's performing. And if we can do that, that's a huge win not just for our customers, but it's a win for us too.

So we're excited about the acquisition. As always, it will will take time to integrate and scale. But we've had a really good track record and we're going to use the playbook that we use with Cybids to extend that with LockerBox as well.

I appreciate that. And then Nikolai, thank you for kind of going through all the moving parts to the 2025 guide, highlighting some of those headwinds and tailwinds. But we're thinking about some of the other things that we're excited about for this year in the story or for [indiscernible] [indiscernible] How are you thinking about those ramping throughout the year? And I guess the other way to put it would be things that you said were headwinds feel like they might be confined to 25 and the tailwinds seem they're just starting 25. So is it reasonable to think about the model accelerating in 2026?

Yes, Matt, I think the way you're describing is how we're seeing it, right? So we have headwinds that are client specific. And then we have opportunities that are in the long term, we believe will be very large for us. We're taking a measured approaching '25 for those opportunities. But the size of them, it doesn't take away from the size that we think those are. So the three that we specifically mentioned in the guidance section are social active and we believe it will be a large opportunity for us in the longer term in 2025. We're going to account for time for clients to test and activate the solution. That's one. The second part is Mote. We were very successful in winning clients in Q4 of 'twenty four. But they were coming from a platform that had basic services. And so we won those clients on a basic service like for like. And now we are going through the motions of upselling those clients to solutions that are more sophisticated and we just didn't have time to present during the RFP process for the Mote client.

And as we've shown many times, the opportunities for us to upsell [indiscernible] could expand the opportunity two to three times once you have declined on the basic product. So that's the second one. And then the third one is Rockabox. So as Mark said, it's a very interesting acquisition. It expands what we can provide to our customers. It also expands our opportunity to SMBs. First year is going to be about integrating the acquisition. There is a small amount of revenue in 2025. Rockabox has an existing business and will be for a partial year. Really the opportunity there is in 2026.

Thank you. Next question is from Eric Sheridan from Goldman Sachs.

Please go ahead.

Thank you so much for taking the question. Maybe two if I could. Mark, there's been a lot of for for what you expect to be the impact broadly from AI across the advertising ecosystem as we look out over the next twelve to eighteen months? And then maybe following up on that question with respect to 2025, is there a way to go a little bit deeper in how the margin trajectory to the business builds beyond Q1, were there specific guidance against the full year and how some of the headwinds to margin in Q1 might have been or scaled to a better outcome as you get deeper into 2025 on the margin side for Nicola? Thank you so much.

Thanks for the questions, Eric. So on the AI front, we obviously are leaning really heavily into AI as part of our core value prop and what we do for our customers and how we do it for them. Our universal content intelligence tool in which we analyze video and images on social. Is powered by AI. It's helped us scale very rapidly on the measurement side on social networks. Moving to new languages and new markets So I think it's a core part of our investment in growing our social [indiscernible] which is basically an AI first business, which looks at how do we use algorithms to compress bids to find more efficient media based on certain KPIs first and foremost leveraging AI to drive value for customers. So like our product set continues to grow based on that and I think it's important.

Finally, aspect of using AI in our own operations as Nicola noted in the call, we're going to look at relatively limited investments in human capital this year and a lot of that's not because we're not growing, it's because we're being more efficient. Our engineers are leveraging it to write code. Our teams are leveraging it to to engage with customers and find solutions for them.

So across the board, I think it's part of what we do. In the ecosystem itself, I mean, you can't deny the fact that it's changing some of the nature of advertising from dynamic creative to bidding algoes like we're talking about. So even how it's impacted search and publisher page views. I think you're going to see a greater impact on the sell side than on the buy side with regard to what AI is doing to site traffic and web traffic, etcetera. So it is having a pretty significant impact I think the key for us as a company is making sure we harness it, we leverage it to our [indiscernible] and we don't get caught in areas where AI is eating up opportunities, but we're creating opportunities. And on the margin side, Eric, a few points I'll say. If you the historical patterns of the business is that margins grow as the year progresses and part of that is because the the latter quarters of the year are large in terms of revenue. So So we're guiding to 32% margin for the year. That is to account the fact that we are acquiring Rock A Box and we will have one investments So it's a little lower than where we ended the year at 33% in 2024.

But we did end at 39% in the fourth quarter of twenty twenty four. So we have capacity to expand the margins. We're planning for the investments for the year one acquisition.

And the trajectory over the course of the year will follow very much depends as we saw in prior years with higher margin in the second half of the year.

Great.

Thank you.

The next question is from Youssef Gulley from Truist Securities.

Please go ahead.

Great. Thank you for taking the question. So I have two as well.

Mark, so if I look at the performance of the business over the last several quarters, it seems like it's been your growth has been pretty clouded by a number of one time items like the six customers, that you guys mentioned early last year than lower pricing some of the most customer wins, particularly on the measurement side than this new customer. That pops up this quarter and is causing you to lower maybe growth versus what you would have expected for 2025. As you step back can look at the health of the ecosystem, can you maybe just Helpful point on that. And any of this gives you pause in terms of either the TAM or in terms of the sustainability of this segment of the market, of digital advertising which I guess is somewhere in the low teens, at least based on some numbers we've seen. And then Nicola, can you maybe just parse out the puts and takes in your NCF comment about that being down this year. I know it's been down for the last several quarters, but how much of that is pure just product mix versus maybe other things that we need to be aware of as we look to maybe model this beyond 2025?

Thank you. Yes. I'll start off, Youssef. So thanks for the question. [indiscernible] You kind of nailed it one aspect is right when we think we got our arms around what the isolated challenges have been, we've had another one pop up. And I think we've done a good job trying to manage a lot of that variability during the periods. And I think rolling into '25, some of the comments we made is that I think we've addressed them both in our guidance and in our confidence in the year going forward. That being said, questions around the health of the ecosystem really have to do with not is advertising a digital advertising healthy, but where those dollars are going and who can take advantage of that shift.

We've noted over the last few calls that we continue to see dollars moving into proprietary platforms. And that our solutions are playing a bit of catch up there to have the same kind of efficacy and scale as we had in the open web. I think we're in a good position now with the launch of our meta tools on prescreen and the alpha release of our TikTok tools in the same place on activation. So I think ultimately we can start taking advantage of where those dollars are shifting. And some of that variability that we saw in Q4 and other companies mentioned around I think, have been cleaned out a bit. [indiscernible] So we are confident that our long term growth prospects remain strong. Due to the fact that the investments that we've made over the last several quarters and following where dollars are going, are going to pay off. And as Nicola noted, we've been measured in that in those expectations in '25. But the addition of new customers who can leverage those tools from the dissolution of Moat. And the initial pipeline and initial scaling that we've seen, I think, give us optimism that we've done the right things, We're in a great position to take advantage of it.

And dollar shifting to those platforms is going to be a win for us, not a drag for Yes. And on the question for MTF, we so we've been consistent on the drivers. Of what impacts MTF, right, which is a continued mix shift towards international and social, which is at a lower price point at this point. And we've also been consistent with the idea that as we launch new premium price products, we're able to offset what would otherwise be a declining MTF. What's new in the story since the middle of last year are these most deals that we won at competitive rates. Very large clients. And we won them for basically a basic solution that mirrors what they had [indiscernible] I will be able to upsell them to our products. That's a new factor in MTN MTS. The overall story for 2025 that we do expect overall the NTF to go down because those these large deals as we onboard them and as we start to upsell the premium price product, So we do expect the MTF to continue to decline in 2025.

We are launching new products. We talked about social activation, which is going to be something that is very interesting for us in terms of getting more dollars into the ecosystem for us. $25,000,000 will be a decline NTF, but it doesn't mean that overall it will continue decline. It's on us to launch premium price products that will allow us to upsell to better solutions. If I can add one thing too is that even though we've seen declining MTF base on the factors that Nicola noted, we're able to maintain a really strong gross margin right, which is still about 80%. It shows that the leverage we have in the model, the resiliency in our cost structure, and still dropping strong EBITDA numbers as well. Even in Q4, we dropped the 39% EBITDA margin. So So we still are running very profitable business even if our cost or revenue per impression is impacted it's still driving real results and bottom line results. The next question is from Maria Ripps from Canaccord Genuity.

Please go ahead. Great. Thanks so much for taking my questions. First, can you maybe share a little bit more color on the advertiser that impacted you Q4 results and outlook?

Again, I guess, did that advertiser sort of scale back at 10 more broadly or was it sort of more so for adjacent services? Anything you can share kind of in terms of the vertical exposure for this advertiser, just given that sounds like it's macro related or commodity prices related, Could we see sort of other advertisers in that vertical pulling back as well?

Yes.

So I can start Maria. So just to repeat what we said, this is an advertiser we experienced a sharp reduction in spend from this advertiser and it driven by rising commodity costs reduction is not just for our services, it's part of a broad cost cutting initiative across multiple advertising and marketing partners And as a result, the customer has suspended business with us. This is a CTG customer. This is very much specific to a commodity pricing variability that we haven't seen impact our other CPG customers. As a matter of fact, our CPG vertical is growing and we signed several deals that we mentioned in the within CPG is a large category for us. And we don't see this as a contagion on other CPG clients. We have not seen that. And so it's very specific to this one client.

Got it. That's very helpful. And then wanted to ask about sort of new social media. And I know you said grow there. Will likely be sort of moderate here. But maybe more broadly, can you talk about your expectations for the cadence of ramp in activation sort of relative to what you saw with measurement on meta? And are you factoring any expectations that kind of launching activation also should help accelerate measurement adoption? [indiscernible] A great question. So as Nicole noted in the guide, we've been pretty tempered in how we're looking at social activations impact on the budget or on our guide for the year. We do know that it it takes time for advertisers to scale and implement a launch The good news there is that we had a pretty nice test bed of customers And we've got a really nice pipeline of customers that we'll start to see impact from. We've launched several already in their scaling well. So I think the impact will be certainly greater next year than this year, but we'll see some dollars come in this year as well.

With regard to growing measurement, at least for one of the solutions, for example, for Meta, you need to be a measurement customer for activation to be employed.

So we do think that there's going to be a flywheel effect here. So if advertisers want to use activation solution, they're going to have to be in measurement to help prime that pump we did do some promotions at the end of Q4 to get new customers to at least try measurement to build a test bed for potential activation in the future and it was really successful. So So net net, those two solutions go together. We do think that there's a potential flywheel effect We've got a really strong pipeline The handful of customers who've launched over the last week or so are showing nice volume growth. And again, we're going to be measured in that rollout. But we're optimistic about its impact on the business moving forward.

Great. Thank you so much.

Next question is from Andrew Boone from Citizens.

Thanks so much for taking my questions.

Wanted to start off in terms of Rockabox and moving more into a smaller advertiser. As we do think about DV's ability to go into maybe not the mid market, but certainly the larger end of kind of mid tier advertisers. How do their needs change in terms of the solutions that DV provides? And how do you guys think about solving those problems And then Mark, just something that's a little bit more philosophical.

If we do think about growth slowing, EBITDA margins are coming down in terms of 25%. Can you just talk to us about the cost structure and how maybe the top line and EBITDA margins connect in your mind in terms of whether you have ability to invest or whether there is some sort of threshold that you want to hold in terms of kind of a margin profile? Thanks so much. [indiscernible] So on the first one, I think I would look at this at Rucker Mox as yes, a mid market opportunity, but also really a performance advertiser opportunity. And we've talked about this in previous calls, which is in an area that's relatively untapped for our solutions because we work with a lot of big brands Now there is a crossover, which is pretty cool. That we start to see with brands like Unilever, for example. Unilever works with Rockerbox, because Unilever has some DTC brands.

That creates the perfect storm for or the perfect storm opportunity for us to work with Unilever on both branding and on performance based solutions that some of their DTC brands use.

So I think that there are lots of other folks out there that are brand customers of ours that either have DTC applications or have been really performance driven and that we haven't been able to provide them with a solution that is directly tied to their performance until we really launched Cybex. A little bit over a year ago. That's where we saw such a good a good penetration of our top 100 customers with Cybids since then. And I think we can see a similar opportunity with RockerBox down the road.

The other aspect of this, you mentioned what are the needs, the difference. I think, look, Advertisers are looking for clear data, which we've always provided. That is relevant in every market in a granular fashion, which we've always provided. And in this case, they want to be able to apply it.

And I think, again, the combination of our verification measurement, our outcomes data that we gained from RuckerBox and inside the ability to activate it it brings all of those things together. So I think that creates a unique opportunity. Kind of the philosophical growth measure, one thing to note is, Nicolas, said in his comments, our EBITDA margin actually with the exception of just absorbing RuckerBox would have held this year at the same rate we had last year. And when we look at '25 transition year. Our Q3 call last year, we started talking about the transition and evolution of the business is going to. We look at this as being a time in which we're investing We're continuing to evolve our solution sets, evolve our teams, and still do so in a way that really is still quite profitable but positions us for future growth. And I think that's always been our philosophy, which is you have to innovate or you will die, right? And if you don't spend money on innovation, you end up like some of our competitors have, [indiscernible] being around, right? So we think there is an opportunity for us to continue to invest in growth, This is a transition year.

We know where we're heading. We have a clear path To do so, we've laid out the tactics of where we're heading. With investments in social, investments in sell side solutions, investments in outcomes and attribution products. And I think that positions us for future growth.

So we're doing that We're still delivering great margins. By still delivering cash to the bottom line and setting ourselves up for a much stronger future than many companies in the space.

Thank you. The next question is from Brian Pitts from BMO Capital Markets.

Thanks. Two questions please. Last quarter you mentioned Oracle client are mostly using the basic product.

Any comments on the onboarding and are you seeing Oracle clients starting to incorporate new products and or transition to more sophisticated offerings? And then secondly, maybe a follow-up to Maria's question. Any specific details or updates on the CPG category, which was obviously more problematic for you last quarter.

Has it gotten better or is it about the same? Thanks.

Thanks, Brian. So on the first one, I think it's still relatively early days for some of those those new acquisitions that we made in the last half. Or in the last quarter. But we are seeing uptake We've got a handful of those customers now that are starting to look at [indiscernible] That they hadn't used previously. We've launched CyBids with a couple as well. So it's slow, but we're getting there. Right? These were guys who kind of got what saw it pretty quickly and needed to just get something up and live. But our teams have done a great job of upselling and growing those customers over the last Couple of months really, think about it since the beginning of the year. Yes.

And on the Brian, your question about CPG. So CPG is about 27% of of our revenue, not by design, it's because large brands are in TPG. And they want our services. We do believe that the the items that we discussed about this one specific customer is specific to that customer. The overall category is good. We signed large customers in the the CPG category. Last year and they are growing and they are adopting more and more of our services. If the question is around tariffs, that could hurt every customer. Or others? I will say, our moving to performance and SMBs and mid market clients with the acquisition of Rock and Box is part of our strategy to kind of broaden the the scope of the clients that we work with. Because we do need to diversify, right, so that we're able to to offset other surprises by a specific client. But it is the CPG category is 30% of our revenue is growing. It grew last [indiscernible] And we did find large customers from that category last year that will grow for us 25.

Thanks for the color. The next question Hi. So philosophically, I'm wondering, one of the things we're hearing from a lot of ad agencies is they want to work with fewer providers. And so my guess is and I understand you've added SideBiz, which is great and you've added now RuckerBox, which is great. So you're sort of branching out. The question is, is your product too narrow even after you add these two acquisitions? Or do you need to keep extending it to become more of a one stop shop for services for your clients?

Thanks for the question, Laura. I think it's definitely a fair take, but if you look at the kind of landscape of measurement, and attribution. I think we're starting to cover quite a few of the bases that the agencies and the advertisers are really concerned about. They want to measure outcomes. They want to optimize performance and they want to make sure that their spend is safe. Right? And I think bringing all of those together does check a lot of boxes Now we've always said, as we said in the script, we want to be agnostic to media. We want to be agnostic to channel. We don't want to be part of the media transaction itself. So I think we're doing a pretty good job of covering a lot of the bases that advertisers and marketers want when it comes to independent analysis of what's working, what's not working, how to make it work better, and ensuring that the quality is there.

So I agree and this is part of our thesis too, which is advertisers want simple.

And agencies want simple and they want to work with less. So everything from SPO to consolidation to platforms is our trends we're hearing from. And I think we're in a good position to take advantage of.

We always use that data around how many solutions our customers are using out of our total solutions that it continues to grow. And I think you have the opportunity to make that basket bigger while making it simpler and more efficient and using one currency and one dataset across multiple ecosystem.

Okay. And then my last question is about pricing. I think you've been talking for a long time about increasing prices on the CTV measurement because there's so much more value you're contributing there. And I can't find it in my notes, but I think you said that impression from CTV doubled from 5% to 11%. So in this transition year, wouldn't this be the right time to increase the fixed cost of measuring fraud in the CTV ecosystem where the CPMs are sort of 10 the social CPM.

Yes. You got the numbers right. We just about doubled the volume of impressions that I'm sorry, the percentage of our measurement impression that CTD makes up. So it is of scale and it is of kind of importance to both us and our customers. So So look, I think we've always said that there needs to be a commensurate value prop with our advertisers. As you know, Laura, there's There used to be a mama of discontent with the level of transparency in CTV think that's now becoming a a loud roar, which is saying trans I think we're right on the edge of getting more transparent program level data And I think that coinciding with the amount of inventory that's being pushed into the market kind of combines to an opportunity for us to provide greater transparency on a granular level and then look at that as an opportunity for us to over time to increase our the pricing that we get for those impressions. So the things are starting to come together. Obviously, we're not going to commit to that in any day of the week or date this year, but I think the opportunity is getting closer for us.

Thank you very much.

Sure.

The next question is from Arjun Batu from William Blair and Company.

Please go ahead.

Perfect. Thank you. Mark, one for you. If I can just follow-up on something that you said in the prepared remarks. [indiscernible] EMPN and programmatic direct deals. Can you just clarify how that's impacting DB? Is that just more related to increased spend going in social? Are there other areas there that that maybe I'm missing? And what are you doing to sort of counteract that? I'm sure you still have a kind of a growing market to go after?

Yes. So we've been talking about PNG and PMP for P and P and P for the last couple of calls and really in reference to connected television.

Right? So that was the first kind of play where a lot of CTV impressions were bought and sold that way. So the attach rate particularly against P and G of PG was pretty light for DD Solutions. We've seen that grow and expand further into display solutions and display impressions. So I think it's had a somewhat of a drag on the ability for us to attach data into those app What we're doing about it, we announced part of that today, which is working more on the sell side with both curation platforms like Google curate and other platforms like Index Exchange and Crudeo who are we're looking at moving data into the sell side and actually packaging it into the PNP that could push out. So that creates an opportunity for us And as we've always said, we want our data to be employed anywhere in the ecosystem where it makes sense. And I think again, what is a short term, I think, somewhat drag, I think going to be a long term opportunity based on the technology and the investments that we've made in that Okay. Perfect. Thank you. And then the next question, just going back to that for a sec.

Obviously, you're having you're making progress there, right? The pre bid activation capabilities are alive and up and running. I'm curious what you make of matters decisions and third party fact checking? And is there any read through of what that means for kind of their focus on brand safety and what it means for DV? Are those maybe two kind of separate issues Meta here.

They seem like they would be linked, but I think they're a bit more disparate than you would think because fact checking really has to do with content [indiscernible] and what content makes it to a a customer's fee. And from an advertiser perspective, the advertisers always have the ability to avoid content that they did not were not comfortable with, right? So at the end of the day, I think our tools as an independent look at what's going on on meta. Are complementary to what Meta's tools have done in the past, but I don't think it it creates a new opportunity. The content is the content. The advertisers have had the tools to and will have the tools with us now to do it from an independent angle to be around content and context that makes sense for them. For sure, there's definitely more noise in the market. And more noise and uncertainty usually drives advertisers to safety.

And suitability and comfort. And that's never a bad thing for our business. But ultimately, I think If the advertiser has choice, has always had choice. And I think our role in that is now just as an outside party that can complement what Swetmet is doing. All right. Wonderful. Thank you, Mark.

Sure.

The next question is from Andrew Maroc from Raymond James.

Please go ahead.

Hi, thanks for taking my question. Maybe one if I could on the announcement of the expansion of the URL level reporting that you announced earlier this week. Just how should we be thinking about that in terms of the potential lift that it can provide to metrics like retention, spend per customer, outcome lifts and things like that? Thank you.

Yes, it's a great question. So we announced the extension of log level or URL level transparency to our customers. It was something that we've always provided more or less on demand. Now we're making a more broadly available and we'll make it available in our UI and then further available in kind of third party system.

I think it's more of a transparency initiative than an driver. It kind of shows our commitment to driving greater ecosystem to giving our advertisers comfort and confidence in where and how they're buying.

So we did not look at this and don't look at it as a kind of a business accelerator. We look at it as as part of our responsibility in driving trust in the ecosystem and that's what people do. They trust DB with their spend. So I think this is part of that story and an important part of that story.

Thank you. Our next question comes from the line of Raimondo Lechtra with Barclays. Please proceed with your question.

This is Frank on for Raimo. Thanks for taking the question.

I just want to check-in and ask what trends you guys saw out of the existing cohort of six Q4.

What specifically are you assuming from those customers in the 2025 guide relative to their performance in 2024? Thank you.

Yes. So, we exited 2024 with a fairly stable performance from the cohort of '6. So if you recall at the beginning of the year, it was very uneven pattern of spend across the various months. Guided by specific issues that each of these six advertisers were having In Q4, as a cohort, it was more predictable. And in 2025, we're assuming a muted growth, right? So this is weighing on the overall growth of the company. But it has become more predictable. We don't anticipate this cohort to be something that materially moves the way it did in 2024 month on month.

Thank you. Our next question comes from line of Mark Murphy with JPMorgan. Please proceed with your question. Other macro demand factors you saw changed over the last few months and I assume some of that impact from the post election was kind of focused in The U. S. Yes. I think the post election impact was really was really that, which was an impact in November and December and the trends worsened based on what we were seeing in October. We called it out in the prior call saying there's still uncertainty and the facts are that it actually worsened in November and December. It is still very specific to Q4. We're entering 2025 with a more stable outlook. It did not feel that it was beyond the fact that it was just an unstable environment from an at ad spend perspective, it was tied to political. So we're entering '25 with a more stable view for the year. Q4 twenty twenty four was just very unpredictable. Very helpful. Thank you. And then you guys also noted some pretty notable wins with Home Depot and Dollar General. Can you talk about what you led with in those deals and whether social solutions are part of those conversations?

Yes. I think this is those were great examples of our continued growth focus on land and expand. Right, where getting with the basic solution usually around measurement and then look for opportunities around [indiscernible] Increasingly that land and expand is is pressing in on things like Cybids, where it's an optimization and differentiation play. Which once get addicted to Cybus, they They love that because it continues to lower their costs. So that's a big part of as we move into these other areas like outcomes measurement, and optimization. The real ROI is what the hook is and what keeps them sticky with us. So Those customers and the others we drew with are great examples of the land and expand and moving into solutions that actually drive outcomes in ROI that keep them attached to us.

Great. Thank you.

Thank you. Our next question comes from the line of Alex Brondu with Wells Fargo. Please proceed with your question.

Hey, thank you so much. I wanted to ask a question on RockerBox. I think there's kind of a lot of these nascent measurement plot specific capabilities that RockerBox had? Or are there points of product synergy with your vision that led you to kind of pursue a transaction Yes, it's a great question. One of the things that we found is there's kind of market diligence where you go out and just look at a bunch of companies.

Which is one thing. But then there's actually working with the company. And in the case of RockerBox, we actually did projects with them. We work together with customers Similar to how we work with Sybiz, And we definitely dated before we got married. And I think that was the key part of it. So, the features and functions of the tools, the breadth of not only looking at things like MTA, but also market mix modeling and the granular data that they had in there. The scope and scale of their integrations which was something that was really complementary to us. So again, plugging into all the different social platforms to CTV platforms to to mobile web and app platforms. That breadth versus other platforms I think was unmatched. And ultimately, it came down to to how well do they work together with our team, how well the solutions work together? Were we able to actually drive results for customers, because at the end of the day, can we deliver value to customers? And what we found with Blocker Box is that the short answer was yes. So, although relatively small acquisition it's one again where I think there's great scaling opportunities They had under invested in sales and BDE and I think that's something that we proven to be really good at.

And I think there's just strong opportunities down the road for both companies together. Thank you. Thank you. Our next question comes from the line of Omar Dzaski with of America. Please proceed with your question.

Hey, thanks for taking the question. So, your supply side business has been on fire for the last three quarters. You printed 34% growth this quarter and I just wanted to know what you think a normalized kind of growth rate for that would be longer term, or if we should expect these kind of growth rates beyond calendar twenty five and into '26 and onwards. [indiscernible] yes, we've had success on the supply side and a reminder, the way these deals work are platform deals [indiscernible] you secured a deal, you have sort of volume, you have minimum on a monthly basis and then upside if certain volumes are met. And so it's kind of a step process, which is once you win a customer you have them and then as volume grows, you get more revenue. I'll let you say that in the last three quarters, the success that we see in that line was tied to us signing a lot of new deals. Part of it was from Moat We were very successful in terms of our win rate quarter.

And so we basically reached a new level that we're going to stay at until we the next platform. Within supply side, there's also the success that we're having in the recent media networks, part of the retail media network offer that we see is precisely with those types of platforms. Overall, it is about 9% to 10% of our revenue. It is unprofitable and growing very well. We don't anticipate this to be much, much larger than 10% of our revenue mix, but it is obviously contributing very well to the top line and the bottom line. So that and we'll continue to find new platforms to go after, especially around retail media network. Okeydoke, answers my question. Thanks a lot.

There are no further questions at this time. I'd like to turn the floor back over to Mr. Grisorski for closing comments.

All right. Thank you all for joining us this evening. We're excited about the future and the investments we've made to take advantage of the opportunities that lie ahead. We look forward to seeing many of your upcoming investor conferences and encourage all of you to join us at our Innovation Day. On June 11 at the New York Stock Exchange in New York City, we will dig into our ongoing evolution Have a great evening.