Viant Technology Inc. Q1 FY2023 Earnings Call

Hello, everyone. And welcome to Viant Technology’s First Quarter 2023 Earnings Webinar. My name is Kelsey, and I will be your operator today. Before I turn the program over to the Viant leadership team, I’d like to go over just a few housekeeping notes for today. As a reminder, today’s webinar is being recorded. Attendees are in view and listen-only mode, but following the speaker’s remarks, there will be a Q&A session. We thank you for joining us today. And I will now turn the webinar over to Nicole Kunzman from The Blueshirt Group. Nicole, over to you.

Thank you, Kelsey. Good afternoon. And welcome to Viant Technology’s first quarter 2023 financial results conference call. On the call today are Tim Vanderhook, Co-Founder and Chief Executive Officer; Chris Vanderhook, Co-Founder and Chief Operating Officer; and Larry Madden, Chief Financial Officer. I’d like to remind you that we will make forward-looking statements on our call today, including our guidance for Q2 2023 that are based on assumptions and subject to future events, risks and uncertainties that could cause actual results to differ materially from those projected. We undertake no obligation to update these statements, except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements, and our entire Safe Harbor statement, please refer to the news release issued today, as well as the risks and uncertainties described in our quarterly report on Form 10-Q for the quarter ended March 31, 2023, under the heading Risk Factors and other filings with the SEC. During today’s call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the news release we issued today which has been posted on the Investor Relations page of the company’s website and in our filings with the SEC. I would now like to turn the call over to Tim Vanderhook, Chief Executive Officer of Viant. Tim?

Thanks, Nicole, and thanks everyone for joining us today. I’m pleased to report that we started 2023 with solid financial results in Q1. We exceeded our guidance on contribution ex-TAC and adjusted EBITDA and delivered revenue at the high end of our guidance. Our team executed well, capitalizing on our large market opportunity amid a spending environment showing signs of stabilization. Our primary focus remains on making thoughtful investments in our platform to win market share and drive long-term growth and profitability. We continue to balance investing for growth with spending discipline while driving expanded revenue and contribution ex-TAC performance. This was primarily led by product adoption in key areas such as household ID, advanced reporting and measurement, and the Viant Data Platform. One of the most significant industry trends we’re capitalizing on is the growing importance of AI and machine learning, which we have previously described as our vision of autonomous advertising. At Viant, we are focused on delivering products that automate the laborious and complex tasks associated with using programmatic ad platforms. Tasks like creating an ad campaign or ad format, selecting channel, device, publisher, and ultimately bid prices for inventory, all of this can be streamlined and optimized through AI. Our AI-driven approach is poised to create substantial future revenue growth for Viant. We have already built all the essential infrastructure components to apply AI on behalf of advertisers. And we are ahead of many of our competitors in this area. To succeed in this new era of ad tech, companies need to solve for identity across channels, have deep integrations for ad supply, and possess a real-time data platform that enables companies to utilize their first-party data for closed-loop measurement. Viant has all these components in place, including our patented household ID, our Adelphic DSP, and the Viant Data Platform. The Viant Data Platform is a critical piece of the ad tech stack. It centralizes vast amounts of data from various sources, enabling us to quickly develop, train, and fine-tune AI models for our customers. This comprehensive data foundation is a key differentiator for Viant and one that has taken years to develop. And it sets us apart from competitors and positions us for substantial future growth. Throughout 2023, we plan on releasing a suite of new AI-driven tools that will help our customers improve the efficiency and effectiveness of their advertising investments. Our extensive infrastructure and data integration give us a competitive advantage in training our AI models, while our competitors are still just working on individual components. By leveraging AI, we not only streamline the ad process, but also provide a compelling reason for potential customers looking to optimize their ad spend. In addition to AI, we are also capitalizing on the strength of Connected TV as a key industry channel. Connected TV represents a strong segment of growth in the ad market, and we are seeing a reacceleration of growth in Q2. Our supply path optimization initiative Direct Access targets the largest CTV publishers, ensuring our advertisers receive the most efficient price for ad inventory. Lastly, we are focused on sustainability, which remains a crucial industry challenge, where Viant is demonstrating leadership with our recent initiatives. Last quarter, we discussed the launch of Adtricity, our customer carbon reduction program, which helps clients meet their corporate sustainability goals. This program has gained early traction, and we are partnering with Scope 3 to measure campaign emissions of our customers to curb the carbon impact of running their digital ad campaigns. At the same time, we are working on reducing our own carbon emissions with the goal of being carbon neutral by the end of 2023 and plan on releasing our sustainability report later this year. In conclusion, our progress with AI and machine learning initiatives, the Viant Data Platform, and a stabilizing advertising environment gives us strong momentum going into the second half of 2023. Our business is poised for substantial future revenue growth, and our extensive data-driven, omnichannel platform makes us a compelling choice for advertisers and their agencies. Now, I will hand the call over to Chris to discuss more around the business.

Thanks, Tim. Q1 was a very strong quarter for Viant as we continue to win with mid-market agencies and clients. Our sole focus is on the buy side, meaning we represent the marketer and their agency in the market by delivering on the following value propositions: first, procuring the lowest CPM costs in the market through direct relationships with content owners, providing an efficient supply chain, and leveraging AI-based bid algorithms to defend against supply-side price inflation; second, improving campaign performance with automated platform capabilities that deliver superior return on ad spend; third, enabling our customers to quantify the return on ad spend through our advanced reporting and measurement offerings; and finally, providing exceptional customer service that is second to none. These areas of focus are helping us win new customers and drive incremental revenue, as customers see more value in our platform, expertise, and independent buy-side only representation. Last quarter, I set up three key business priorities for 2023, and I’d like to provide some progress updates. As Tim mentioned in his remarks, we are seeing growth in adoption with our new and improved Viant Data Platform. We have leveraged big data for over a decade, and this has always been a differentiator for us. Our focus and investment in expanding our data platform is already beginning to pay dividends in terms of customer adoption and revenue expansion. Data management is a core capability our clients are asking for, as they want to be able to use their first-party data in conjunction with their advertising campaigns. This need is nearly universal across all clients, but we don’t believe that existing solutions solve for marketers’ needs, which is why we are so confident in our ability to scale adoption of this product. Tim also mentioned the importance of investing in AI and machine learning as part of our journey towards autonomous advertising. Now is the time to actively implement AI and ML to drive step-function improvements in programmatic advertising. The number of applications is truly uncapped, and we have a number of initiatives in the works, several of which will launch in the second half of 2023. Finally, I want to pick up on our supply path optimization program I announced last quarter called Direct Access. Direct Access is a program that creates the most efficient supply path for our customers by creating partnerships with premium content owners to merchandise their content to our clients directly. This program will drive a more efficient supply chain, provide bids on ad impressions directly to publishers, and eliminate duplicative ad requests that result from reselling. Our focus here is to deliver the lowest cost of media while helping drive the highest return on ad spend for our customers. In closing, I’m happy to report that since Q4, we’ve grown our product and tech teams by 20%, ushering strong talent into the Company while maintaining cost discipline across the board. This is core to delivering on our key initiatives as we invest in our platform and drive long-term growth and profitability. Thank you. And I’ll now turn it over to Larry to provide more details on our financial performance.

Thanks, Chris. Before I begin, I’d like to remind everyone that we have posted a presentation to our Investor Relations website that includes supplemental financial information to accompany today’s presentation. As Tim mentioned, we are pleased to report that in Q1, we outperformed our guidance for contribution ex-TAC and adjusted EBITDA and achieved the high end of our guidance for revenue. Revenue for the quarter was $41.7 million, a decrease of 2% versus the prior year period, and at the high end of our guidance of $42 million. Contribution ex-TAC for the quarter was $28 million, an increase of 2% versus the prior year period, and 2% above the high end of our guidance. I would like to draw your attention to several noteworthy points relative to our Q1 top-line performance. We are especially encouraged by the improving trends we saw as we moved through the quarter, with February stronger than January, and March stronger than February. As a reminder, in the second half of 2022, we saw the exact opposite as customers were pulling back budgets as each quarter progressed due to macroeconomic uncertainty. We also did not see as big of a seasonal step down in spend from Q4 to Q1 as we normally see. While overall growth rates have not yet returned to what we were seeing prior to the current market pullback, the trends we saw in Q1 indicate that the market is stabilizing. I would also point out that advertiser spend in Q1 2022 grew 44%, which was well above industry growth rates, making for a challenging year-over-year comparison this quarter. Despite the modest decline in revenue in Q1, contribution ex-TAC grew 2% in the quarter. As we have stated in the past, as the mix shift toward percentage of spend becomes less impactful and as fixed price becomes a smaller percentage of total advertiser spend, we expect contribution ex-TAC to grow faster than revenue. As Tim and Chris highlighted earlier, the growing customer adoption of our newer products, such as advanced reporting and the Viant Data Platform, also drove incremental revenue and contribution ex-TAC in the quarter. This is a clear indication of the growing recognition of the unique benefits of our platform and the value that we bring to our customers. We expect further expansion and customer adoption of these offerings as we move forward. Our team has also been hard at work developing cutting-edge AI and ML-based products that we anticipate will unlock even more revenue and contribution ex-TAC in the coming quarters. We are confident that these new products will not only be highly innovative but also highly valuable to our customers as they will be able to leverage the power of AI and ML to enhance their advertising strategies and drive even greater results. We look forward to sharing more details on these exciting new developments as they become available. In terms of customer verticals in the quarter, while we did see weakness across some of our customer verticals such as business and financial services, retail, and CPG, we saw continued strength across our travel, online gambling, healthcare, and automotive verticals. In terms of channels, CTV and mobile each represented more than one third of the total spend in the quarter. From a format perspective, video, which includes CTV and mobile video represented over 60% of total spend in the quarter. Streaming audio also continued to perform exceptionally well in the quarter, growing 40% and representing 6% of total advertiser spend. Our commitment to delivering innovative and effective advertising solutions across all channels and formats has been a key factor in our success, and we are dedicated to building on this momentum in the future. Advertiser spend per active customer increased 6% on a year-over-year basis, and our percentage of spent customers spent on average nearly three times more than fixed price customers on an LTM basis. We ended the quarter with 327 active customers, flat with the prior year period and up one net new customer from Q4. On a year-over-year basis, the number of percentage spent customers continues to increase, offset by a decline in fixed price customers, which tend to be less resilient during challenging macroeconomic periods. As we mentioned last quarter, in line with our commitment to continuously improving our platform, we took a close look at our customer base in setting our priorities for 2023. As we analyzed the growth trajectory of our customer base, we found that the large majority of our existing customers demonstrated a consistent and upward trend in scaling their advertising spend on the platform. We also identified a subset of customers that were too small and did not have the capacity to scale their spending like the others. As a result, we are cycling through some lower spending customers. and there will be some negative impact on customer count as we move through 2023, although we anticipate negligible impact on overall revenue and contribution ex-TAC. Moving now to operating expenses. Non-GAAP operating expenses totaled $28.4 million in the quarter, representing a year-over-year decrease of 10% and a quarter-over-quarter decrease of 8%. This is the result of the cost reduction actions we took in Q4 and our continued focus on driving operational efficiency. Our streamlined cost structure enables us to continue investing in our top priorities while positioning us for meaningful operating leverage and EBITDA generation. For the first quarter, we exceeded our adjusted EBITDA guidance by a significant margin with an adjusted EBITDA of negative $389,000. This exceeded the high end of our guidance by $2.1 million and outperformed the prior year period by $3.5 million. Our focus on streamlining operations and improving operational efficiency coupled with better than expected contribution ex-TAC were key factors that contributed to these strong results. Regarding liquidity, we ended the quarter with $202 million in cash, which translates to a noteworthy $3.25 per share outstanding. We also had $223 million of positive working capital and no debt. To further strengthen our financial position, in early April we also upsized our existing credit facility from $40 million to $75 million while also extending the term for five years. This solid financial foundation positions us extremely well to fully capitalize on the substantial market opportunity ahead of us. In terms of share count, we ended the quarter with 62.1 million Class A and Class B common shares outstanding. As we look ahead to Q2 and beyond, we recognize the ongoing uncertainty in the macroeconomic environment and its potential impact on customer demand. Despite this, we remain optimistic about our future growth prospects. For the second quarter of 2023, we expect revenue in the range of $52 million to $55 million, representing a year-over-year increase of 4% and a quarter-over-quarter increase of 28% at the midpoint. We expect contribution ex-TAC in the range of $32 million to $34 million, a year-over-year increase of 4% and a quarter-over-quarter increase of 18% at the midpoint. Non-GAAP operating expenses are expected to be $30 million to $31 million, representing a year-over-year decline of 12% and a quarter-over-quarter increase of 7% at the midpoint. Finally, we expect adjusted EBITDA to be in the range of $2 million to $3 million, which represents a year-over-year increase of $5.6 million and a quarter-over-quarter increase of $2.9 million at the midpoint. Amidst our anticipation for a dynamic market landscape in the coming months, I’d like to emphasize some essential considerations regarding our Q2 guidance and our overall outlook for the year. In Q2 of last year, we had 32% growth in spend across the platform, making it a challenging comparison for this quarter. As we progress through 2023, we expect to see improving revenue and contribution ex-TAC growth rates. We also expect adjusted EBITDA to increase each quarter in 2023, driven by the cost reduction initiatives we undertook in Q4 of 2022 and sequential growth in contribution ex-TAC as we move through the year. We will continue to closely manage expenses in 2023 while making targeted strategic investments with the objective of scaling ad spend on our platform while generating meaningful positive EBITDA in 2023. In closing, we are pleased with the continued adoption of our platform despite the current challenging market conditions. We are confident that our unique points of differentiation will allow us to fully take advantage of the growing market opportunity. Through our strong balance sheet, strategic technology investments, innovative new product launches, and disciplined cost management, we believe that we are optimally positioned to deliver significant top-line and EBITDA growth. We remain committed to our strategic priorities and focused on delivering long-term value to our customers and shareholders. That concludes our prepared remarks today. And with that, I will now turn it back over to the operator to open the video to questions.

Thank you so much, Larry. And we will hear first from Maria Ripps with Canaccord.

Great. Thanks so much for taking my questions. So, it seems like the broader ad trends are sort of stabilizing here. Can you maybe talk about what you are hearing in your conversations with advertisers, kind of their level of commitment to 2023 budgets at this point? And I guess what’s your level of visibility as you look into the second half of this year?

Yes. I’ll take that. Thanks, Maria for the question. I think that definitely in January, there was a lot of uncertainty. Clients themselves, the marketers, a lot of them still didn’t have their budgets really for the first half of the year. And I think by February, that materialized down to the agencies, and then we started to see some spending start to increase. I would say we still don’t have great visibility for the full year, but certainly what we see is increased spending all throughout the first quarter, and we are seeing that trend continue into the second quarter.

Got it. That’s very helpful. And then can you maybe talk about the structure of your sales team at this point? And what are your thoughts there as sort of the ad environment is kind of starting to stabilize here?

The structure of our sales team is geographically based. We are in all the major markets. I think we are in about a dozen or so markets across the country. But really, it’s a two-pronged approach that we are always making sure that we are talking with our agency partners as well as the clients in partnership with them. One that helps us on visibility and transparency, but it really helps enforce our value propositions to both agencies and customers, the clients directly themselves, just so they are aware of our services. And we see that doing really well right now. I expect that we have some new initiatives that we rolled out at the back half of last year, training programs with our sales team, so I expect that our operational efficiency to improve this year as well on the sales side.

Got it. Thanks so much for the color.

Okay. Can you guys hear me okay?

Yes.

I have a two-parter, I will ask two, because that is your instruction. I’ll start with AI. So, I do notice that your tech and dev costs are up double digits, even though revenue was up like 2%. Is that the impact of this new AI that you are talking about today? And are you using these large language models in AI, because I would’ve guessed you’ve been using the old kind of machine learning and AI for many years, like your competitors. But can you talk about what you’re doing with AI that’s different and how much is it going to cost us in 2023 to do these new things with AI?

I’ll address the first part, and Chris can add anything I might miss. Our primary goal is to develop an autonomous advertising platform that operates without human intervention. This means that programmatic trading can occur from campaign creation to optimization and insights analysis without human involvement. This is our long-term vision. You are correct that we have expanded our product and engineering teams to enhance our capabilities. We have been utilizing machine learning for years, but now we are focusing on implementing deep learning artificial intelligence on top of the data we have. I emphasized the infrastructure needed for this process since AI relies on training models using a stable dataset. Our household ID provides that stability, allowing us to train models not just for bidding and buying, but also for closed-loop measurement, enabling proper attribution of sales to advertisements. The ultimate aim is a completely autonomous ad platform. Throughout the year, we will apply machine learning and artificial intelligence to various aspects of the programmatic process, such as bidding and buying. We are exploring large language models from OpenAI and Google Bard as potential future products in our pipeline. However, our existing AI-driven products, which we have been developing for years, are expected to be launched in the second half of the year.

And just to add a little bit to that, if you think of putting them in AI and ML just a few comments, large language models will see us predominantly use externally to customers. Anything in kind of UI or UX, both, if you think in terms of buying, you can prompt and it can execute something for you as opposed to you making selections, which can take time and also reporting. So, that’s a large focus with our customers to work with us, reporting and measurement where they can ask a question and get an answer back versus running reports just saves time. So, that’s where predominantly you will see large language models used. And then ML is typically in things around campaign performance, making associations between creative and maybe a particular household or formats. Anything like auto optimization, a lot of those things we have been doing for years, but we’ve really stepped up our investment here and we’re seeing just some really great results and campaign performance. So, we’re excited about some of the things that we’re working on.

In just regards around what’s this going to cost us, Larry, can you talk about product and engineering costs for the rest of the year?

Yes. If you look at the profit and loss statement in the earnings release, it was up about 18%. We will continue to invest in our product and engineering teams this year. However, as you can see from our overhead numbers, especially compared to last year and even last quarter, we are managing our overall expenses very carefully. We are being strategic about where we allocate new funds, and we will keep growing that team throughout the year.

Okay. That’s super helpful. Thank you guys. It’s all new stuff. The second one I will do is your supply path optimization. So, is this like trade desks where you don’t disintermediate the SSP with your direct access product, or is it more like what GroupM is doing with Magnite, where they are disintermediating the DSP? Which one is yours for this supply side optimization?

I don’t view it as disintermediating anyone. What it’s really about is establishing direct connections with content owners. Just to clarify, as a demand-side platform, we only represent the buy side, not publishers. Representing both sides is not feasible from our perspective. Publishers aim to maximize their prices, while our goal is to facilitate direct connections with content owners so they can offer their inventory to our clients at the lowest possible price. That’s the responsibility of a buy-side representative. If they are using a supply-side platform for mediation or other purposes, they will continue to do so. Ultimately, we are focusing on creating transparency for our clients with direct access to content owners, emphasizing price efficiency. There are also additional benefits, like improved signal quality. Direct connections to content owners yield better signals, which might include basic information like an IP address or more detailed data such as an authenticated first-party match based on email or physical address. There are numerous advantages, but our focus isn't on disintermediating any particular group. We are indifferent to the publisher's partners; our priority is to establish the most efficient and transparent connections possible for better pricing.

We are really focused on selling and eliminating middlemen.

Perfect. Super. So it’s more like trade desks. Okay, sounds great. Thank you very much you guys. Really excellent margins this quarter. So, congratulations.

Thank you.

I wanted to ask a little bit about the client portfolio. It sounds like you guys are proactively talking to certain customers about whether it remains a good idea to stay on. Can you just talk a little bit about that and specifically what’s going on there and what should we expect as we think about kind of the rest of 2023? And then, I’d like to ask about the cash balance and the increase in the revolver, right? Kind of suggests that you guys are looking to do something with the cash balance. Can you just philosophically remind us how you guys are thinking about the $200 million that are on the balance sheet? Thank you so much.

Thanks, Andrew. Regarding customer accounts, we have a few customers who have been with us for a while, but their spending hasn't kept pace with others year after year. We approached these customers and suggested that either they need to spend more or this relationship might not be the best fit, as their size is just too small. We estimate that around 5% of our active customers might cycle off this year, but this won't have a significant impact on our overall spending and contribution. So, we don't foresee any material effects from this change. Larry, can you address the next question?

In terms of liquidity, we have a strong balance sheet at this time. Since the IPO, we have considered mergers and acquisitions as part of our strategy and will continue to do so. The market has started to adjust valuations for private companies, which are now aligning more closely with public market valuations. We will be opportunistic in our approach. We are examining opportunities, though we have not made any moves yet. We believe it was important to address the credit facility as it was nearing its term with about a year remaining. Our receivables balance is sufficient to increase the facility. The cost to do so and manage it was minimal, making it a smart decision, particularly considering the current conditions in the capital-raising and credit markets.

And our next question will come from Andrew Marok with Raymond James.

Hello. Thank you for taking my questions. Can I start off on CTV? I mean, normally you give a little granularity on CTV growth in the presentation, but didn’t see at this time. Anything that you can say in terms of growth in the format, trends you are seeing, or potential bright spots or weaknesses would be really helpful. Thank you.

Yes. CTV was slow in Q1, but we have seen that stabilize into Q2. So with brand advertising getting pulled back, we talked about the focus and change of tactics by marketers moving into performance-driven campaigns. We did see a pullback in CTV, but we have seen that stabilize into Q2. Larry, can you provide any other color?

Yes. I mean quarter to date, it’s up very nicely in Q2. The other thing I would say is if you recall, we were really growing quickly last year. So the comps on CTV are a bit challenging relative to Q1 and Q2. But again, as Tim said, we were a bit soft in Q1, low single-digit decline, but certainly are seeing that turnaround in Q2. And certainly I think it is partly at least due to brand dollars coming back into the platform, which is another sign of stability that we look at.

Great. Really helpful. And then my second on Direct Access and SPO in general, I think you guys are giving a lot of really helpful color on the functioning of Direct Access and things like that. But just kind of thinking more generally from a market perspective with those lines between supply and demand potentially becoming blurrier. I guess, how does that impact your thinking on the state of the ad tech market and like the traditional definitions or roles that companies have taken in the space?

Yes, it's a good question. I don't think the definitions and roles will change much. Our focus remains on representing the buy side, the marketer, and their agency. We will strive to get them the lowest possible price and concentrate on campaign performance. We will show them what they receive for their investment through our measurement offering, and that is what we will continue to do. Many of the recent announcements might be copycat actions, as some companies may feel pressured to follow suit. However, I believe they will not have a significant impact because, ultimately, one group needs to represent the marketer while the other represents the content owner. When you try to serve both, it becomes challenging to meet the needs of each party effectively.

We will now hear from Jason Kreyer with Craig Hallum.

So, I have two questions. First, Chris, you mentioned the uniqueness of the data cloud market. Many solutions talk about integrating first-party data into their platforms. Could you elaborate on the uniqueness you're referring to? The second question is for Larry regarding the metrics you shared about the two revenue models. It appears there is a notable shift towards the percentage of spend model. Is this an acceleration for customers, or are you onboarding fewer clients with a fixed fee?

I’ll address the first question. I previously mentioned the Viant Data Platform. To clarify, we have allowed customers to onboard CRM data, like email addresses and physical addresses, into our user interface for several years, likely since 2015 or 2016. However, the Viant Data Platform takes this a step further. Since around 2015 or 2016, marketers have been gathering that CRM data in a centralized location. Back then, they didn't have this data readily accessible, but now it exists in clean rooms with companies like Snowflake or Amazon. The Viant Data Platform has enabled cross-cloud integrations regardless of where the data is hosted. Many customers that have moved to these clean rooms struggle to fully utilize them. While clean rooms often function well as databases, they lack robust marketing services, necessitating partnerships with companies like ours for integration. For instance, if a marketer has data stored in Snowflake, we efficiently match their customer data with others in our ecosystem, including publishers and data companies, enabling targeted marketing in authenticated environments. More importantly, as device IDs fade away, the future will rely on customers using their own data stored in their clean rooms to match with their ad exposures. They need companies to help represent them in the market and maximize the use of their first-party data, which is where the Viant Data Platform plays a vital role. We're thrilled about the numerous features available in this platform, leading to strong recent adoption. There's significant functionality around workflow automation, effectively empowering a single data scientist with the capabilities of 10 to 20 additional team members, resulting in increased workflow efficiencies. We're very excited about this development. While many companies discuss first-party data, few are successfully facilitating cross-cloud matching to utilize that data for personalized messaging and measurement.

In terms of mix, Jason. So, percentage of spend in Q1 continued to grow nicely. That now has been for some time, the large majority of total spend on the platform. Fixed price, although it was down moderately in Q1, it has stabilized. Certainly, beginning in Q1, it’s starting to stabilize after a rather steep decline in Q4. We see further stabilization in fixed price in Q2, which is very positive. As you may know, fixed price tends to be a bit more discretionary in nature. It’s short-term tactics. It’s quarterly dollars. So with macro issues, those dollars tend to get pulled back first, certainly as compared to percentage of spend. So, we’re starting to see a stability on the fixed price side as well, which is good.

No further questions at this time. So, Chris and Tim, I’ll turn it back to you for any closing comments you might have.

Thank you everyone for joining today, and we’ll see you this time next quarter.

Great. Thank you so much. And again, everyone, that does conclude our webinar for today. Enjoy your summer. We’ll see you next time.