Earnings Call Transcript - EVC Q4 2021

Operator, Operator

Greetings. Welcome to Entravision Communications Corporation Fourth Quarter and Full Year 2021 Earnings Conference Call. As a reminder, this conference is being recorded.

Kimberly Esterkin, Investor Relations

Thank you, operator. Good afternoon, everyone, and welcome to Entravision's Fourth Quarter and Full Year 2021 Earnings Conference Call. I hope everyone is staying healthy and safe. Joining me on the call today are Walter Ulloa, Chairman and Chief Executive Officer; and Chris Young, Chief Financial Officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Entravision's SEC filings for a list of risks and uncertainties that could impact actual results. This call is the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited. Also, this call will include non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures in today's press release. The press release is available on the company's website and was filed with the SEC on Form 8-K. In addition, all pro forma figures, including revenue, operating expenses and consolidated adjusted EBITDA noted throughout the prepared remarks, include the contribution of Entravision to Cisneros Interactive, MediaDonuts and 365 Digital in the prior year period. I will now turn the call over to Walter Ulloa, Chairman and Chief Executive Officer.

Walter Ulloa, CEO

Thank you, Kimberly, and good afternoon, everyone. We appreciate you joining us for Entravision's Fourth Quarter and Full Year 2021 Earnings Call. 2021 was a transformational year for Entravision. Through organic growth, strategic partnerships and acquisitions, we continued to develop our business beyond traditional television and radio broadcasting. We have become a leading global media marketing services and technology company, serving technology and media platforms and advertising clients around the world. We have a talented, experienced and energetic team of professionals in over 30 countries with the expertise and resources to continue to grow Entravision's business into the future. I'm also pleased to announce that our Board of Directors has approved a new share repurchase program of up to $20 million of our common stock. The Board also approved a cash dividend for the first quarter of 2022 of $0.025 per share payable to shareholders on March 31, 2022. Now let's review Entravision's consolidated results for the fourth quarter 2021. Net revenue for the fourth quarter totaled $233.9 million, up 36% year-over-year. On a pro forma basis, revenue increased 21% over the fourth quarter of 2020. Growth during the fourth quarter was largely driven by our digital segment as well as from improvements in our core television and audio businesses. Consolidated adjusted EBITDA totaled $32.9 million for the fourth quarter, up 1% year-over-year. Excluding $12.8 million in net political ad-related cash flow in the fourth quarter 2020, adjusted EBITDA increased 65% year-over-year in the fourth quarter 2021. Moving beyond the quarter, our full year results were even more impressive. For the year, consolidated net revenue reached an all-time record and totaled $760.2 million, up 121% over 2020. Free cash flow also reached an all-time record and totaled $78.7 million, up 83% over 2020. Consolidated adjusted EBITDA totaled $88 million in 2021, an increase of 46% over the prior year period. Importantly, even as our top line continued to grow, we maintained a lean cost structure. As Chris Young will discuss in his remarks, we have retained many of the cost reductions we put in place at the beginning of the pandemic. Our continued focus on expense management has helped drive our incredible EBITDA and free cash flow. Now let's take a look at our segment performance, starting with digital, which is our largest segment and comprises 76% of our total revenue in the fourth quarter. For the quarter, digital revenue totaled approximately $177.5 million, up 69% compared to the prior year period. On a pro forma basis, digital revenue increased 40% compared to the fourth quarter 2020. For the full year 2021, digital revenue totaled $555.3 million, up 288% over 2020. Our digital segment's growth during the fourth quarter and the year was driven by the excellent performance of Entravision, Cisneros Interactive and Smadex, our global mobile programmatic and DSP user acquisition business. Also contributing to our growth were our more recent acquisitions of MediaDonuts, serving the Southeast Asia market; and 365 Digital, a leading marketing services and commercial digital partnership business based in South Africa. As I mentioned earlier, Entravision is now a global digital enterprise. Our digital segment serves over 1,800 clients each month across 30 countries with campaigns running in more than 120 countries spanning 5 continents. Our Entravision Cisneros Interactive digital commercial partnership business has a unique capability to execute very large digital ad campaigns on Facebook and Spotify throughout Latin America. Compared to the United States, Latin America is still in the early stages of digital advertising and marketing growth but is showing impressive industry growth and potential. Due to its unique market position and the demand for local digital ad solutions, Entravision Cisneros Interactive revenue grew 95% in 2021 as compared to the prior year. As I noted, we are also seeing strong performance by our Entravision MediaDonuts and Entravision 365 Digital business units. With MediaDonuts, Entravision provides services across 8 countries in Southeast Asia, and with 365 Digital, we serve the broader South African market. We've been able to leverage the local teams of these business units to generate global synergies to help advertisers reach audiences and consumers in these markets. In addition to our digital commercial partnership businesses, programmatic digital services have also helped drive our growth. Smadex, our proprietary DSP business based in Barcelona, Spain, has been a cornerstone of our programmatic digital services since 2018. There are a few companies in the world that offer demand-side platform services like Smadex. Smadex has developed a highly competitive offering, in part due to a favorable competitive landscape and the efficiency, transparency and performance of the platform. Smadex has demonstrated strength in the gaming, fintech and mobile delivery industries, to mention a few, and we continue to strengthen our staff with expertise in these categories. With the strong understanding of the mobile gaming market, Smadex has been setting new monthly revenue records. Smadex revenue increased 120% in the fourth quarter 2021 compared to the prior year. Even with this record performance, we are at the very beginning of our expansion in mobile gaming, and the growth opportunity ahead of us is tremendous. Mobile users grew at a compounded rate of 25% since 2019, with gaming representing 40% of that growth. Along with gaming, fintech and delivery have also become top focus areas for Smadex and Entravision. Now let's turn to our television segment, which comprised 17% of revenue for the fourth quarter. Television revenue was $40.2 million in the fourth quarter, down 20% compared to the prior year period, primarily due to a decrease in political ad revenue. Excluding $11.1 million in political ad spend in the fourth quarter 2020 and $400,000 of political spend in the fourth quarter 2021, core television advertising increased 2%. National advertising revenue increased 4%, and local advertising revenue declined 1% year-over-year. When comparing the fourth quarter 2021 total television revenue with pre-COVID fourth quarter 2019 results, television improved 9%. For the full year, television revenue was down 5%. Excluding political revenue, however, television finished up 11% compared to 2020. In terms of advertising categories, the auto category, and in particular new car sales, continue to face supply chain pressures. While auto ad sales were down 30% in the fourth quarter year-over-year, many of our clients have recently indicated to us that they anticipate some improvement in auto spending in the second half of 2022. Offsetting auto declines, services were up 8% and travel and leisure were up 92% compared to last year's same period. Media, grocery, restaurants and product brands also grew in the fourth quarter from the previous year. We're also looking forward to the return of political ad spend this year. Entravision's local television markets are situated in the states where political messaging to Latino voters continues to be a top priority for both parties as well as special interest groups. In addition, with California considering legalizing sports betting, it could be a very robust year for political ad spend. One last comment about our television segment. As we previously discussed, on December 31, 2021, we ended our Univision affiliations in the D.C., Orlando and Tampa markets. We anticipate some impact to the television segment's top line and operating cash flow as a result of the loss of these affiliations. However, the growth of our digital segment, along with the anticipated strength in political advertising spend this year, is expected to more than offset this loss in revenue and operating cash flow in 2022. Finally, let's turn to our audio segment, which comprised the remaining 7% of fourth quarter revenue. Audio revenue totaled $16.1 million for the fourth quarter, consistent with the year-ago period. Excluding political spend of $3 million in the fourth quarter 2020 and $200,000 of political spend in the fourth quarter 2021, core audio revenue increased 20% versus the fourth quarter of 2020. When comparing the fourth quarter 2021 with the pre-COVID fourth quarter 2019 results, audio grew 16%. On a full year basis, audio revenue improved 25% when compared to 2020. National advertising revenue increased 28%, while local advertising revenue was up 24% year-over-year. Execution across our audio business was strong. The segment's cash flow generation during the fourth quarter alone exceeded that of the full year 2019. Gross margin of the audio segment was also a record and totaled 36% in the fourth quarter. Services, retail, travel and leisure, restaurants, product brands, telecom and media, all delivered strong double-digit growth for our audio division in the fourth quarter 2021 versus the prior year period. In short, I could not be prouder of Entravision's performance in 2021, and we believe that we have created significant momentum for 2022. Before I speak further, I will turn the call over to Chris Young, our CFO, to further discuss our fourth quarter 2021 as well as provide our first quarter 2022 pacings. Chris?

Christopher Young, CFO

Thanks, Walter, and good afternoon, everyone. As Walter discussed, revenue for Q4 2021 totaled $233.9 million, an increase of 36% from the fourth quarter of 2020. For the year, revenue totaled a record $762.2 million and represented a 121% increase over the $344 million we generated in 2020. For our digital segment, revenue totaled $177.5 million in the fourth quarter, up 69% year-over-year and up 40% on a pro forma basis as compared to Q4 2020. For the year, digital revenue totaled $555.3 million and represented a 288% increase over the $143.3 million in digital revenue generated in 2020. On a pro forma basis, for our various acquisitions, digital revenue for the year grew 80%. For our TV segment, total revenue was $40.2 million in the fourth quarter, down 20% year-over-year. Excluding political, core ad revenue was up 2% year-over-year. Retransmission revenue for the quarter totaled $9 million, which was up 2% year-over-year. For the year, TV revenue was up $146.8 million, which represented a 5% decline over the prior year. Excluding $22.6 million of political advertising in the prior year, core TV revenue increased by 11% over the prior year. Lastly, for our audio segment, revenue totaled $16.1 million in the fourth quarter, consistent with the prior year period. Excluding political, core audio revenue was up 22% over Q4 of last year. For the year, audio revenue totaled $58 million, which represented a 25% increase over 2020. Now let's turn to expenses. Direct operating expenses totaled $33 million for Q4 2021, up 3% from $31.9 million in Q4 2020. Excluding Entravision Cisneros Interactive, MediaDonuts and 365 Digital, direct expenses were flat year-over-year. SG&A expenses were $15.1 million for the quarter, an increase of 8% compared to $14 million in the year-ago period. Excluding Entravision Cisneros Interactive, MediaDonuts and 365 Digital, SG&A expenses were down 5% compared to the prior year quarter. Finally, corporate expenses increased by 21% to total $11.2 million for the quarter compared to $9.3 million in the same quarter of last year. The primary driver of corporate expense increases was an increase in noncash stock-based compensation expense. Consolidated adjusted EBITDA totaled $32.9 million for the fourth quarter, up 1% from $32.6 million in the prior year period. For the year, consolidated adjusted EBITDA totaled $88 million, up 46% from $60.4 million in 2020. Free cash flow, as defined in our earnings release, was $30.9 million in the quarter or a conversion rate of 94% of adjusted EBITDA compared to $28.6 million in the fourth quarter of last year. For the year, free cash flow was $78.7 million, an all-time record, up 83% over $43 million generated in the prior year with a conversion rate of 89% of total adjusted EBITDA. The very high cash flow conversion in both digital and audio segments helped drive the strong conversion rate during the quarter. Earnings per share for the fourth quarter were $0.04 compared to $0.24 per share in the same period last year. The decline is primarily due to an $8.2 million increase in the fair value of contingent consideration, which is the amount we owe the sellers of Entravision Cisneros Interactive due to the significantly improved performance since we acquired it, along with contingent consideration for other transactions. Excluding this one-time charge, plus an additional one-time noncash impairment charge for the cancellation of a contract, earnings per share were $0.15. For the year 2021, earnings per share were $0.33 compared to a $0.05 loss per share in 2020. Excluding the one-time fair value contingent charge and the one-time impairment charge, earnings per share were $0.44. Cash paid for income taxes was $0.6 million for the fourth quarter compared to $2.2 million in the same quarter of last year. For the year, cash paid for income taxes totaled $4.1 million in 2021 compared to $7.7 million paid in 2020. Net cash interest expense was $1.6 million for the fourth quarter compared to $1.3 million in the same quarter of last year. Cash capital expenditures for Q4 totaled $1.6 million, bringing our full year capital expenditures to $5.8 million, down from $9.1 million in 2020. Turning to our balance sheet. Cash and marketable securities as of December 31, 2021, totaled $185.1 million. Total debt was $212 million. Net of $75 million of cash and marketable securities on the books, our total leverage as defined in our credit agreement was 1.56x at the end of the fourth quarter. Net of total cash and marketable securities, our total net leverage was 0.31x. On to our pacings for the first quarter of 2022. As of today, revenue from our digital segment is pacing up 52% over the prior year. Factoring in Entravision Cisneros Interactive, MediaDonuts and 365 Digital revenue generated in Q1 of 2021, our digital segment on a pro forma basis is pacing up 39%. Our TV segment is pacing down 16% over the prior year period, with core TV advertising excluding political booked thus far in the quarter pacing at minus 18%. As Walter noted, we do expect our TV revenue to decline in 2022 from the loss of 3 of our Univision affiliations. That said, we more than make up for any TV revenue decline with our digital segment performance. Lastly, our audio segment is pacing at plus 7% over the prior year period, with core audio excluding political booked thus far in the quarter pacing at plus 6%. All in, our total revenue compared to last year is pacing at a plus 32%. On a pro forma basis, our total revenue is currently pacing at a plus 24% over last year.

Walter Ulloa, CEO

Thanks, Chris. As you can see from our pacings for the first quarter, Entravision's business remains on an upward track. We are a leading global advertising media and adtech solutions organization that connects brands and advertisers on platforms like Facebook, Spotify, TikTok, Twitter and Univision with audiences and consumers in growth economies around the world. We are excited about the enormous opportunities these connected consumers bring to thousands of global companies, and we are investing in the future of mobile-connected consumers. At the same time, we've expanded our digital services and offerings. We've also expanded our geographic footprint in Latin America, Southeast Asia and Africa. These are massive addressable markets where the digital consumer has yet to be fully engaged and where Entravision has a strong early-mover advantage. With the transformation of our business and overall go-to-market strategy, we believe that our value proposition for both our advertising clients and our investors has grown even stronger. Linear television and audio remain core contributors to Entravision's overall performance, while our digital businesses will drive strong growth going forward. We have positioned ourselves to partner with some of the largest, most innovative digital companies today. That concludes our prepared remarks. I want to thank you again for your continued support of Entravision. Chris and I would like to open up the call to your questions. Operator?

Operator, Operator

Our first question is from Michael Kupinski with NOBLE Financial.

Michael Kupinski, Analyst

Congratulations on your quarter. You exceeded almost every expectation I had for each segment, so great job. I have a couple of questions regarding your loss of affiliate agreements. Can you discuss the mitigating factors? Your pacing data for TV looks better than what I estimated for Q1. Were there any offsetting items that helped mitigate those revenue losses that you can share?

Christopher Young, CFO

Michael, thanks for your remarks, by the way. So mitigating factors, we do have programming up and running. We still have the stations in the market. We just lost the affiliation. So right now, we've got some independent programming that's running on those stations, and that's going to generate about $1.5 million in cash flow on an annual rate. Those are somewhat temporary arrangements. We are still looking for something that's a bit more attractive. But that's the mitigating factor to that stance.

Michael Kupinski, Analyst

Got you. And Chris, can you give us a sense of what the expense outlook is going to look like, particularly for television and maybe your digital businesses as well? I know that you're showing very strong revenue growth for digital, but can you kind of give us a sense of how we should think about margins and so forth?

Christopher Young, CFO

Sure. So for TV, you should think about total operating expenses for Q1 to be down low to mid-single digits. Radio expenses should be around flat. And for digital all-in, this is before COGS, mind you, COGS is a big ticket item. But before COGS, you should look for digital to be right around a high single digit to maybe 10%. It's obviously a higher-growth business.

Michael Kupinski, Analyst

Sure. Can you discuss the geopolitical issues and if you've noticed any impact on advertising as a result? Have any advertisers expressed concerns? What feedback are you receiving from them?

Walter Ulloa, CEO

Michael, it's Walter. And by the way, thank you again for the comments you made earlier in the call. We haven't seen any impact on our business as a result of the international conflict. That's basically the summary. Very little, I would say no impact so far. And we'll continue to monitor and see how things develop, but so far, it all looks pretty stable on our end.

Michael Kupinski, Analyst

It's terrific that you guys are generating such large free cash flow as well. And now you have this building cash balance. Can you give us a sense of uses of cash or appetite for acquisitions, the current market environment for acquisitions? Obviously, you have a share repurchase authorization as well, but just kind of like what your thoughts are in terms of allocation of capital?

Walter Ulloa, CEO

We are actively looking for strategic and accretive businesses that will enhance our current operations. This will be our focus moving forward. Aside from that, there isn't much more I can share at this time. You brought up the stock purchase program, our buyback initiative, and the dividend we announced, which pretty much encapsulates my comments. Chris, perhaps...

Christopher Young, CFO

No. Yes, you've got the new buyback program that shows that we see nothing but strength and green lights for the upcoming year. We've got a lot of confidence in the business. And to the extent that we've continued to look for opportunities on the acquisition front, that's where most of our work is focused on.

Michael Kupinski, Analyst

And you guys have to be immensely frustrated with the stock price trading at 6.5 times your value to cash flow. Obviously, trading below radio companies, trading below that of TV companies and significantly below that of digital companies. What do you think investors are missing here at this point? Do you think that they just haven't caught up to the story of your digital transition? Or what are your thoughts about the current stock price?

Christopher Young, CFO

I think we agree with your comments on the stock price. A buyback seems like a good idea, which is why we have the stock buyback program. However, I lost my train of thought. What was the question?

Michael Kupinski, Analyst

I was discussing the disconnect with the stock price. What do you think investors are missing here at this point?

Christopher Young, CFO

So I think, historically, when you say Entravision, everyone thinks TV/radio broadcast. And I think that's what we're stuck with as far as a reputation. And we're pivoting the business as we speak. You see that in the numbers. We're attracting a different investor base. But we're right smack in the middle of that transition, and I think that transition is going to take time with investors. And that's what we're doing. We're going to be much more proactive on the stock circuit with presentations, getting the word out, getting on the road, non-deal roadshows, just to kind of get the message out that we are a completely different company than we were 3 years ago.

Walter Ulloa, CEO

Just to add to Chris' comments, Michael, we're transforming the business as we've mentioned. It's a transition period, so it will take some time for investors to fully grasp our strategy and growth story. However, we continue to achieve the kind of growth we saw last year, and we had a very strong fourth quarter. All of our businesses performed well, with our digital business excelling and radio performing exceptionally. We're very pleased with the work being done, which stems from the cost management and cutbacks implemented in 2020. Chris Munoz, who manages national sales, has done an outstanding job leading his team to grow national and network sales for our radio business. As mentioned in Chris' pacing report, we're happy with how our first quarter is developing, and we anticipate a great year ahead.

Michael Kupinski, Analyst

Well, congratulations again. Good luck to you guys.

Walter Ulloa, CEO

Thanks, Michael.

Christopher Young, CFO

Thanks, Michael.

Operator, Operator

Our next question is from James Dix with Industry Capital Research.

James Dix, Analyst

I want to start by discussing some broader concepts regarding digital. I have been reviewing the S-1 that I filed over the last quarter, and it has brought up some larger questions that I thought you could address during the call. First, when considering the overall digital segment, do you have any approximate insights on the revenue mix from your major partners in that segment, especially since you mentioned that this group is your largest partner for Cisneros? With recent acquisitions made, do you anticipate any significant changes in that revenue mix over the coming year? What factors might influence that?

Walter Ulloa, CEO

I will address the first part of the question regarding our biggest partner in the commercial digital partnership business, which is Facebook, among others like Twitter, TikTok, and Spotify. As for whether we anticipate any changes, we're pleased with how the year has begun. Each quarter presents its own challenges, but we are optimistic about our fourth quarter's performance, which has given us strong momentum into Q1, and we are looking forward to the rest of the year. I hope this answers your question.

Christopher Young, CFO

We are also working on expanding our partnerships in various regions, and this is an ongoing effort. As a result, we expect some changes in the mix moving forward.

Walter Ulloa, CEO

Good point. As you know, we just announced our partnership with Roku in Mexico. We think that's going to be certainly a growth story for our digital business.

Christopher Young, CFO

We've secured another partnership, but we aren't ready to make an announcement yet. This is still a work in progress.

James Dix, Analyst

Okay. I mean, I think, for example, indicates that Facebook is their biggest partner, but it's not quite 50% of their revenue. I mean is it safe to say that it's more for you, that Facebook is more than 50% for you?

Christopher Young, CFO

Yes. Definitely.

James Dix, Analyst

Okay. Great. And then...

Walter Ulloa, CEO

I just want to add that we have three digital businesses in our suite of digital products, and the first is our U.S. digital business, which provides digital solutions primarily to medium and small businesses in our broadcast markets. That division had a great base year. Smadex, which is the core of our lab performance business and our proprietary DSP technology, had another fantastic quarter in the fourth quarter. It's off to a great start in Q1, so we expect excellent results from Smadex this year. Additionally, our commercial partnership business with Facebook, Spotify, TikTok, and others has performed well throughout 2021, in Q4, and now into 2022.

James Dix, Analyst

Okay. Great. And just shifting a bit, following up on the geopolitical issues. I mean, is it safe to say that, at least internationally, the bulk of your revenue comes from Latin America once you're outside of the U.S. as opposed to Europe? I know 365 Digital is your newest one, and then you have MediaDonuts, but just it might be helpful for investors to have a little bit better sense of your revenue mix in terms of the major regions, Asia, Europe, if there is any Latin America just as we kind of go through this year.

Walter Ulloa, CEO

The majority of our digital business does come from Latin America. Like I said, our other MediaDonuts and 365 Digital are all growing at a great pace as well as Smadex. So we just want to make sure that everything is going on an upward track, and that's what we see right now.

Christopher Young, CFO

Yes. First and foremost, you've got the Latin America; secondarily, you have the Southern Asia Pacific Rim and then everywhere else, particularly in the U.S.

James Dix, Analyst

Is it safe to say you have minimal revenue exposure in Europe?

Christopher Young, CFO

Yes.

Walter Ulloa, CEO

Yes. Our Smadex business is located in Barcelona, but that's quite distant from the...

Christopher Young, CFO

Western Europe.

James Dix, Analyst

Yes. Okay. And then one last question on digital. Based on what has been shared, it appears they are experiencing significant EBITDA margin expansion, even though they are smaller than your business. What kind of margin expansion or overall margin trajectory do you anticipate? Now that all your units are integrated, how should we expect this to evolve over the next year or two? What do you think are the margin dynamics at play?

Christopher Young, CFO

Sure. Well, we finished up for 2021, and digital margins were right on 7%. And as revenue scales, you should see that 7% move into the 8%, 8.5% and maybe even 9% range, depending on how revenues scale.

James Dix, Analyst

And do you think that could happen over the next year or 2?

Christopher Young, CFO

I do. Yes.

James Dix, Analyst

Okay. Great. And then just on the rest of the business, one thing, Chris, do the pacing numbers that you gave for TV, they included the loss of the affiliations?

Christopher Young, CFO

They do. That's right. They do.

James Dix, Analyst

Any rough sense as to what the pacings would be if you kind of excluded those affiliation changes and just look at the rest of the group?

Christopher Young, CFO

Excluding the lost stations, we were looking at a plus 4%. So the core business is healthy. It's just the loss of those stations creates that hole that you...

Walter Ulloa, CEO

For television.

James Dix, Analyst

Yes. Okay. Great. And then for retransmission revenue, any outlook we should be looking at for the year just as the whole pay TV industry continues to work through pressure on subscribers and things like that?

Christopher Young, CFO

Yes. Retransmission revenue for the year finished out at $37 million. For '22, for the year, that will probably drop by $1 million or $2 million, mainly being driven by the loss of subscribers. That's just what's happening today.

James Dix, Analyst

Okay. Great. And then one last one. Just in terms of your corporate expense, how should we be thinking about kind of the steady-state corporate? Is it going to be kind of slightly up from last year, and then the timing of noncash comp will once again be kind of a fourth quarter item? Or how should we be thinking about that?

Christopher Young, CFO

Yes. You should expect corporate expense for the year to increase in the low single digits. The main reason for this is that there was noncash compensation in the fourth quarter; without that, corporate expenses would have been down by 3 points. So, consider the growth to be in the low single digits.

James Dix, Analyst

Okay. So low single digits of what you printed for the year?

Christopher Young, CFO

Yes.

Operator, Operator

Our final question is from Chris Sakai with Singular Research.

Joichi Sakai, Analyst

I'm in for Lisa Springer. I just had 2 or 3 questions. Could you comment on which platform partners are currently the most important contributors to digital ad revenues and what you see as the opportunities to both add new partners and grow revenues from existing partners?

Walter Ulloa, CEO

I mentioned earlier that our top partner for revenue growth is Facebook. However, we also have partnerships with Spotify, TikTok, and Twitter, all of which are growing nicely. Facebook remains the largest.

Joichi Sakai, Analyst

Okay. Great. And then do you have any opportunities for new partners?

Walter Ulloa, CEO

We do. I mentioned Roku earlier, and we're working on another partnership that we should be able to announce probably in the second quarter. But we're continuing to develop new partnerships and find ways to continue our revenue growth and momentum.

Joichi Sakai, Analyst

Okay. Great. With 2022 being an election year, what size impact on political ad spending have you seen in the past midterm elections? And do you have any sense of ad spending during this cycle be higher than in the past?

Walter Ulloa, CEO

We anticipate that the spending will be higher. Internally, we have set a goal of $11 million for political advertising, and there is a strong possibility we could exceed that. A significant market for us is California, which is currently assessing the legalization of online gambling. This issue will be on the ballot this November, and we expect substantial resources to be dedicated to this specific political initiative in California.

Joichi Sakai, Analyst

Okay. Great. I know you mentioned acquisitions. Are you looking for additional acquisitions? Will these new acquisitions target new geographic markets or focus more on expanding your footprint in existing markets?

Walter Ulloa, CEO

Probably both, new geographic markets and then adding to our existing market coverage.

Operator, Operator

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Walter Ulloa for closing comments.

Walter Ulloa, CEO

Thank you, operator. Thank you all for joining us today and for your support. We look forward to sharing our progress with you at the upcoming Deutsche Bank, Guggenheim, and NOBLE Capital Markets investor conferences in March and April, and then again on our first quarter earnings call in May. Thank you.

Operator, Operator

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.