Conference Transcript - MNTN 2026-05-13

Laura Martin, Analyst — Needham & Company

Okay, we're going to get started. I'm Laura Martin. I'm the senior media and internet analyst at Needham & Company. I'm going to introduce Mark Douglas, our next speaker. Mark is the founder and CEO of Mountain, where he has spent over a decade transforming connected TV into measurable performance marketing channel. In addition, Mark recently led Mountain's 2025 IPO, a seasoned engineering leader and entrepreneur. He previously served as the VP of engineering at Magnite Rubicom and VP of technology at eHarmony, where he developed the platform's foundational matching algorithm. So I want to start with a question about leadership. And I think most people would agree that generative AI is transformative. And so what kind of demands does that put on you as a leader that are different from when maybe times are a

Mark Douglas, CEO

little more incremental? Yeah, well, when something is transformative, I think everyone has to decide, is this going to become an enabler? Or is this meaning, is this something I'm excited about there's this something I'm afraid of and so for me personally I think one is I like change the as a matter of fact I love change and so I see AI as completely enablers something that me personally and the team and mountain have kind of jumped on very very early we're the first introduced AI targeting which we call mountain match we I think when it first introduced create AI creative tools because the vast majority of our customers have never advertised on TV before so we had to enable a way for them to build TV ads we're putting AI throughout our platform we're adding MCP or we just added MCP support meaning you can MCP yeah oh that's how AI platforms talk to each other so that you can have like open chat gpt or applaud basically you can use them to tell our software what to do and that's something that's also important so the it's all about just basically seeing these opportunities seeing these changes as opportunities rather than seeing them as a threat and we

Laura Martin, Analyst — Needham & Company

definitely view it that way okay does it does it put any demands on you as a leader to handhold more or be more visible with the humans in the enterprise because of the fear level you mean

Mark Douglas, CEO

within the company i think we you know i i think a lot of people are viewing ai currently at this moment as something that reduces cost we're seeing as something that increases speed okay and so and there are potential yeah there are cost benefits but the technology doesn't come for free and so So when we articulate, when I articulate to the company and to our customers as we want to enable more faster and they are a part of that, then, you know, I don't think that drives fear. I think that drives excitement that enables us to be a market leader in adoption of new tech like general AI and other forms of AI.

Laura Martin, Analyst — Needham & Company

Does it make a difference? You guys don't have any physical plant, right? You guys are all distributed. Yeah, we have no office.

Mark Douglas, CEO

We're fully remote.

Laura Martin, Analyst — Needham & Company

So does that make your organization more easily adaptable to technological change?

Mark Douglas, CEO

I think it does, mainly because we had to, so post-COVID, we never went back to office. We've been fully remote. We've hired many, many people who are fully remote. And so it drives a discipline in the business in terms of setting clear goals, measuring the effectiveness of that. We don't manage people based on time. We manage based on goals and results. And so I think just the nature of the company's DNA is one of doing things differently, again, enables. I don't have conversations in the company at all about people viewing me as fear. I have it as, like, if anything, like what they want us, I want to, and they want us to see around corners. Like, how do we enable, again, rather than, you know, kind of be threatened by that? So I'm completely excited about all the technological change that's occurring before and unrolling it.

Laura Martin, Analyst — Needham & Company

So you and Reddit are both 100 percent, I'm going to call it virtual, where you don't have actually a head office. And I'm just wondering if that affects the adaptability to generative AI. And your point, which is well taken, is if you're already 100% distributed, you must have clear goals and deliverables. Otherwise, how do you tell if somebody's pulling their weight? So that discipline from not having an office and not just being in office means people have to be more substantive.

Mark Douglas, CEO

We also, like I was talking to our head of engineering literally last week, and we were talking about adoption of AI coding and, like, the various ways it's being used and what are the right ways and what ways don't make sense. And so I think they, I don't think that being fully remote is playing much of a role. It's much more about is the leadership of the company leaned in to a tech savvy, even if it's a tech company, it doesn't mean you have tech, always have tech savvy leadership. Are they tech savvy and are they leaned in? And are they curious and are they actually looking not just for adoption to say it's adopted but you know to produce material benefits so in our engineering organization we are definitely like what is the right way to do AI coding to use AI tools to make sure we have maintainable code and things like that same thing happening in our sales organization we leverage AI as part of our go-to-market motion but we don't want you obviously don't want people to feel like they're talking to a computer when if that's not the conversation they want to have. So you have to leverage it very smartly. And those are conversations me, my COO, my head of engineering, my head of sales are having regularly. Okay. One of the unique things

Laura Martin, Analyst — Needham & Company

about your strategic position is that increasingly in CTV, advertisers want to tie their connected television purchase to performance. You guys really embedded the market in this in performance see tv but what's changing in 2026 and is that good for you or bad for your economics yeah so

Mark Douglas, CEO

the the literal concept of performance we the term performance tv was created by by mountain and we deliberately did not trade market because we wanted we the whole idea when we launched mountain performance tv i said to the team the easiest way to win a market is to create that market so we're going to create the market for performance television and that's what we did we anticipated that if we're successful in that it will eventually be it's not just mountain it's bigger than mountain so now that we see other companies using that term number one that's a validator that the of the scale of the opportunity here the tam um and number two it you know puts more customers in the market who it kind of starts to move the market from early adopter phase where we're evangelizing to more mainstream where companies especially S&B companies believe they can be there. For Mountain we are purpose built for the S&B portion of this opportunity so I think other companies may potentially be looking at performance should be a part of the enterprise brands, that's not an area we play in. We feel that SMB has unique needs, unique go-to-market motion, unique knowledge and talent needed to win there. That's where we're the market leader, where we intend to play, and we feel very secure in all the capabilities we have in our products and also our go-to-market motion around that.

Laura Martin, Analyst — Needham & Company

Okay, so performance TV done by other people isn't really necessarily SMB targeted. They're doing something different.

Mark Douglas, CEO

And what's happening, I think, when you first brought up the point, is larger brands are also saying, hey, we should be measuring the impact of the spend. You know, there's many, many tens of billions of dollars a year, and we agree with that. It's just that segment of the market is not a segment we're pursuing. And I think some of the bigger enterprise companies in the TV space find it very difficult to come into the market segment that we're in.

Laura Martin, Analyst — Needham & Company

Yeah, that makes sense. So one of the things that happened in the most recent quarter is your revenue slowed, and then your guidance is for slowing revenue. Are we running up against the TAM in SMBs, do you think?

Mark Douglas, CEO

No, I think what we basically have a lot, as the opportunity moves from an early adopter to mainstream, we are basically enhancing a lot of things in the business. We added Garland Hill, who's the former head of growth at TikTok, now Mountain CRO. He built TikTok's SMB revenue literally from zero. He was the first person to billions in revenue. We have a lot of product initiatives rolling out, and we just thought it was prudent with so many things happening at the same time. We just wanted to be very prudent in our guidance, and that's what we did. But we're not seeing any long-term revenue slowing, certainly not any capping of the TAM or anything like that.

Laura Martin, Analyst — Needham & Company

Okay, because you wouldn't think hiring a big, huge executive from TikTok would slow your revenue growth. So to me, that's the opposite. If you hire a big guy, you'd think he'd accelerate revenue growth, but I'm getting...

Mark Douglas, CEO

Right, which is why we guided hire in the second half of the year.

Laura Martin, Analyst — Needham & Company

All right, so we think he has impact in the second half of the year. Okay, cool. All right. It feels like... I do have a lot of competitors like Buyant saying they're going to target the SMB. They're doing self-service. They're adding it to their core DSP, and they're trying to come down into your market. Do you just think they won't be successful because they weren't purpose-built for SMBs and it's a harder hurdle than they're exposing?

Mark Douglas, CEO

I think there's a couple of things. One, easier said than done. You actually have to build the technology and succeed in doing so. The go-to-market motion is very difficult. And then most of all, we actually are not just the market leader in terms of the idea of performance TV. We are the market leader in terms of the actual performance. and so all and that is many many years of investment in performance technology plus now many two plus years of investment in AI technology around performance and we're not standing still so more than half a mountain is engineering so we have a big investment in technology and we I honestly think not everyone is going to succeed in that effort and the ones that do there's more than just having a self-serve platform you actually have to deliver performance on the level with paid search and paid social but do so for television and that's what mountain has done for many years now and we're continuing to grow in terms of and one of the things we're seeing is

Laura Martin, Analyst — Needham & Company

where these people decide to go into your business they're hiring separate sales forces because they can't get their normal sales force that calls on big clients to call on smbs yeah and so how do you do that? Do you guys have salesmen or is it mostly, like you're mostly using programmatic advertising to get

Mark Douglas, CEO

your clients? Yeah, it's a combination of we have lead gen using our own product as well as using social and other channels, LinkedIn and other channels as well as we have, yes, a very efficient go-to-market motion on the sales side. For the mid-sized customers there's a bit more selling involved because there are more decision makers involved. for the very small for the much smaller businesses it's much more marketing driven but again that didn't happen overnight we had to build that out we had to learn how to do it we had to grow it and then once you do all that now you have someone who's like yeah this sounds exciting like to try it and then and then you actually have to deliver the goods which is you help them

Laura Martin, Analyst — Needham & Company

grow their business not just you grow your own yeah they don't renew i assume if you don't help

Mark Douglas, CEO

sales lift and renew is spend tomorrow there are no contracts in performance marketing like there's no one has signed a contract to run ads on google adwords right so it's not like next week it's like i spent money today do i see the sale tomorrow yeah i mean they generally want to see results within the length of their sales cycle so they like um like one of our customers is hex lab and you know their sales cycle is people look at the pans and then they look go shopping someplace else and they get interrupted by their kids it takes more than sometimes a few days to commit but within a reasonable sales cycle most sales cycles we see for e-commerce for multi-hundred dollar price points are in the range of like you know one to three weeks yeah so they're they're judging within those kind of time horizons not not literally a day overnight yeah but they're not like I'll wait till next year when the contract green is because there is no contract at all in performance marketing. No, Meta doesn't sign contracts. Google does, neither does Meta.

Laura Martin, Analyst — Needham & Company

Yeah, okay. And are they having an always-on all year? Are you bringing in an ad campaign, or do you have an always-on kind of idea?

Mark Douglas, CEO

Yeah, it's always-on. We call that evergreen, and that's a pretty common term in performance marketing. These are evergreen campaigns. You see some... If they have a very seasonal business, they might...

Laura Martin, Analyst — Needham & Company

Like Christmas or Mother's Day.

Mark Douglas, CEO

Exactly. Like we had a customer that, or have a customer that does like pool stuff so they don't sell that in the, yeah, pool supplies, so that's that stuff. But they, so they shut down in the middle of the winter, they're not doing much marketing, but for the most part, most of our customers are evergreen, budgets change throughout the year based on seasonality. If they're doing a new product launch, there might be, you know, extra, but for the most part, performance marketing is evergreen marketing.

Laura Martin, Analyst — Needham & Company

And I remember a big client of yours early on was Purple Mattress, wasn't it? Because that was a performative. And then what happened to that?

Mark Douglas, CEO

I think they haven't, over the long term, done well. But we have a number of other mattress brands. We somehow, in the early days, became big in the mattress sector.

Laura Martin, Analyst — Needham & Company

And you've kept a lot of those guys.

Mark Douglas, CEO

We've kept a lot of them. Yeah, we're pretty happy with that.

Laura Martin, Analyst — Needham & Company

Well, I just bought a new mattress. It wasn't Purple. But it comes all bundled up. It's like the size of those stack of papers. and then it opens up into a queen-size mattress over 72 hours. I know, it's insane. It's crazy.

Mark Douglas, CEO

It's pretty insane.

Laura Martin, Analyst — Needham & Company

It's crazy.

Mark Douglas, CEO

We actually just picked up a pretty well-known mattress brand. So it continues to be a strength of the business.

Laura Martin, Analyst — Needham & Company

Yeah, very interesting. And I guess, like YouTube, you don't really care which mattress brand works as long as they're doing lead gen through you guys.

Mark Douglas, CEO

Well, I mean, ultimately. But, I mean, I do. I tell our team all the time because I feel like as a company, we don't sell ads. What we do is we connect consumers with brands and products they're going to potentially love.

Laura Martin, Analyst — Needham & Company

Like a lead gen kind of commerce?

Mark Douglas, CEO

Yeah, I mean, when you take it down the marketing terms, it's lead gen. But it's like for every brand, there's someone who's excited about the products they built. And what we do is we connect them with consumers through 30 seconds of uninterrupted video on the biggest screen in the home. and that hopefully leads to a lot of leads and a lot of purchases and then everyone's happy the brand is happy the consumer is happy you got a new mattress you're happy with it everyone's happy and I think sometimes people forget that television is such an amazing storytelling medium and so for us to connect brands to that medium we're literally telling this story into nearly every household in America and helping those businesses grow. I say this as just like it's kind of an emotional underpinning of what we do as a business is connecting brands with consumers that are potentially going to hopefully love those products. So that's kind of how I describe what we do.

Laura Martin, Analyst — Needham & Company

And one of your competitive advantages has been this sort of unique access you have to connected television ad units. Why don't you walk the audience through on how you get this unique CTV ad inventory?

Mark Douglas, CEO

Yeah, so consumers, meaning are watching TV everywhere. And I think one thing that sometimes people forget, the number one consumed entertainment medium is not social media, it's television. 5.1 billion people a day watch television worldwide on average three hours a day. 4.1 billion use social media. And then the content that people talk about, there are funny memes out there on social but the big conversation piece over dinner is often like what shows are you watching what season finale did you see or did you see this so it's just a very powerful medium that small business were cut off from so we connected that we went to every streaming network in america all of them apple tv doesn't have ads and we you know when we first launched this platform and we built direct relationships to access their inventory programmatically meaning we have a programmatic technology stack that targets the consumer bids for each campaign that's running bids on that inventory so if that person in that audience is watching Disney or they're watching Landman on Paramount or they're watching Warner Brothers any network or fast channel we are able to access that inventory bid on it for specific campaign when we win that auction then we stream a 30-second TV commercial into the home during a commercial break and then we measure the results of that and all of that's provided in our platform including the ability to create to create the ads through AI technology now and so you you don't see the end of any of

Laura Martin, Analyst — Needham & Company

those contracts coming because that is a big competitive advantage this unique

Mark Douglas, CEO

content no no not at all i mean i think that we we are considered by most of our part arts our media network partners as a growth channel so i think the key stat is more than 95 percent of mountain customers have never advertised on tv before so this is net new customers revenue it bring brought into the industry so we're a growth channel we're not competing with them at all we're not competing with their sales teams we are literally just bringing new companies into the television ecosystem and we were talking earlier the SMB opportunity they're recognizing it how important SMB is and they see us as we kind of created that segment of the market a lot of those

Laura Martin, Analyst — Needham & Company

providers that have very high quality video are very sort of crazy about the quality of the ad yeah and some of these SMB ads you see now like on Fox News or something are pretty sort of like Low quality is what I would call it. And especially if they're performance-driven, right? So how do you keep the quality standards up so that you don't get kicked off one of these very high-end content suppliers?

Mark Douglas, CEO

Well, ironically, we actually use AI technology to review the ads. Yeah, there is a little bit of a human... It used to be entirely human. Now it's predominantly AI, and the AI will... Technology reviews that flag it for a human review. So they do get reviewed. Their technology standards, It's both automatically enforced, meaning it has to be a 30-second TV commercial, down to the frame. Like you can't even have a single frame missing. That's automatically maintained. But also it's just bringing down the cost of creative so they can build better quality creative but do so at a lower cost. That's the key thing. The brands want high-quality, professional-level creative, and that's why we've invested in building Quick Frame AI, because we consider it part of our mission is that they can produce a lot each brand can produce a lot of creative at very reasonable costs and as creative they would be proud to show their customers their friends their family and so forth on a 65 inch screen on the 65 inch screen and the the mob the AI models were or quick frame which is the technology that provides that is orchestrating multiple models across C dance playing the VO and and orchestrating these in the scenes to produce really good video our generation times are 15 minutes to generate 30 seconds so this is a lot of steps that are happening to generate higher quality video

Laura Martin, Analyst — Needham & Company

And then is that, is this Quick Frame AI sort of cannibalizing that? Or are you bringing new money into the ecosystem?

Mark Douglas, CEO

Yeah, so some of those, so Quick Frame started out as a marketplace of independent creators. And we were kind of like Uber for that marketplace. Like we would connect the creators with the brands. So now for the, even when you bring down the costs, people are very busy. and even though it's easy they're very busy so some some of the brands now use those creators to do AI video for them and the our marketing team does that ironically like we've been putting out quite a bit of video and then we we some of that's created in-house and some of that we use the we use some of the creators to create and they do it at a very reasonable cost we increasingly also have been connecting with social media creators and connecting them with brands using

Laura Martin, Analyst — Needham & Company

AI tools. So the whole creator... To create a 30 second spot, not to talk about it on their...

Mark Douglas, CEO

Exactly, to create a 30 second spot. So what you're seeing is that this is an arena where AI is actually creating more work. So instead of people saying, oh, well, it costs a lot less, so I'll do a lot less. They're saying, no, it costs a lot less, so I actually create a lot more ads, and I'm very busy, so maybe I can find someone to help me with that. So we're creating a new marketplace of creators for Quick Frame AI, as well as some of the existing ones. And it's actually creating a lot of work for people.

Laura Martin, Analyst — Needham & Company

So they make five ads, let's say. Let's say they make five ads. Then does the software, they try to put it in, does it A-B test them? Like, once you make more ads, how does that get used in the mountain ad text?

Mark Douglas, CEO

Yeah, it basically, so we have full A-B, you've said it exactly. So we have full A-B testing capabilities, meaning testing one creative versus many. And so the more creatives you create, the more you test. And this is something that's pretty common. Like, it's been done for many years, like in Instagram's ad platform. And then Google, there's, you know, the creative is tech. So it's been done for many, many years on their platform. and it's done on our platform too by bringing down the cost of creative it allows a lot more testing more testing tends to lead towards more better outcome even better performance and so again if you're going to do the average user in quick frame is creating seven projects a month and so there was no way they were doing that like picking up a camera and hand editing videos creating seven separate projects a month so people are definitely seeing it from that kind of data as a way to enable more and more creative and more and more testing and then those independent creators come in by being like they'll do that they'll help them with that for a very reasonable

Laura Martin, Analyst — Needham & Company

price right right right okay um makes sense i think it's funny they still offload it they just don't want to do the creator you know from the moment we started creating quick frame i'll say

Mark Douglas, CEO

this is everyone's like okay so is this going to replace the crater and I said I the response from the market is going to be oh so now I have to create the videos to everyone so if they can delegate they're going to delegate especially the people you even with AI you still want someone has a sense of aesthetics right like specialized right when you said like sometimes you see ads that are cringy on CNN, like they probably were not created by... Right, exactly.

Laura Martin, Analyst — Needham & Company

Probably some finance person. Exactly. Staying right out of the commercial space. Okay. So where are you using AI today? Internally, do you actually... Like how are you using it and where today is like new forms of AI? Generative AI showing results either on the revenue or the cost side?

Mark Douglas, CEO

Yeah, so where you have a site license. Of course, people can use whatever tools they want. I won't say who. I don't want to answer that debate of OpenAI versus Anthropic or anything like that. And so the whole company has access to AI tools and then we're doing things where people are sharing how they're using them. Okay. Is that a billboard?

Laura Martin, Analyst — Needham & Company

Like a shared board?

Mark Douglas, CEO

No, more like group meetings over Zoom and things like that facilitated by some of the leadership. And the and so and for different areas so this is across the company our engineering team our sales team our marketing team and they're and they they're learning like what like where it's offering benefits and maybe some people didn't think about also like any new technology they're early on an individual level they're early adopters and they're late adopters so the late adopters seeing the you know the benefits the early adopters get are another way to you know kind of amplify the use of technology and we're viewing it as more of a like it it slows the growth on headcount rather than it so much of replaces when we do see roles in a company that don't make sense anymore obviously we're going to make changes there but what we want to do is move quickly we want to grow and you know it ultimately we don't want to cut our ability to execute by just viewing it as a cost-cutting it's more about moving

Laura Martin, Analyst — Needham & Company

faster but but your revenue is decelerating so wouldn't this imply that your revenue should be accelerating the yeah if you're not cutting costs and you want this to be a revenue accelerator but i have revenue falling well our sequential quarter over quarter revenue growth this but so

Mark Douglas, CEO

meaning q2 over q1 for this year is more than twice the size it was last year so our our in terms of actual dollars added into the business our revenue is actually growing faster the we We're adding more dollars Q2 over Q1, and then again, as we go into the second half of the year, all of this is contributing in order to why we got it higher in the second half of the year.

Laura Martin, Analyst — Needham & Company

Well, and I guess presumably if it doesn't accelerate, you'll have to start cutting costs because your first choice is to accelerate revenue growth.

Mark Douglas, CEO

Well, as our revenue grows, if we hold our costs, we're cutting costs. Yeah, yeah. That I agree with.

Laura Martin, Analyst — Needham & Company

That I agree with. Okay. We keep track, as you know, of FTE. So we're, you know, in the big, the guys that are really using the big hyperscalers, we're all cutting people as they're adopting these Gen AI tools.

Mark Douglas, CEO

Well, I don't think we overhired as much as maybe some of them. Maybe they did.

Laura Martin, Analyst — Needham & Company

Yeah, that's possible. Yeah, that's possible.

Mark Douglas, CEO

And we've seen, like, we took our sales operations team, and that team, a lot of what that team does has been fully automated. and so those are areas where we see like there's a lot of humans hands and human steps in that process now fully automated so you get two benefit benefits you cut the cost and it's actually more accurate meaning it's less mistakes less mistakes more accurate and you cut costs but on the engineering side we build a lot of technology we absolutely don't want to cut engineers but we want to amplify their contribution yes so that's where we view it more as let's move faster rather than cutting people. So one in two people at Mount is on the engineering team. I don't see that changing at all. But I think as a company, we've never been producing product at a faster rate than we are right now.

Laura Martin, Analyst — Needham & Company

But if you're producing product, we would expect to see that in the revenue line, assuming you can charge for the products and they're not free.

Mark Douglas, CEO

Everything needs product market fit. So you've got to release it. see if people use it, adjust it. So I don't want to pre-announce, but we have a lot of exciting stuff.

Laura Martin, Analyst — Needham & Company

And are you charging for it? You're not just including it in what you have?

Mark Douglas, CEO

Well, some of it is enhancements on the targeting side. It's just included. And some of it is new things that we're working on that are being tested with customers. There's quite a bit of AI technology that we have kind of new uses of AI models within our product and so we'll be announcing these you know as we feel like they're coming

Laura Martin, Analyst — Needham & Company

out of beta and they're fully production but i'm trying to get at the money so where you have new tech like where you said you're going to be announcing does it just in it does it just upgrade your product that you have already or is it an upsell yeah it's not an upsell but we are

Mark Douglas, CEO

investing to basically continue to grow at the rates we are or faster okay because this is one

Laura Martin, Analyst — Needham & Company

of my big takeaways from possible in miami was that a lot of people are doing ai work and just including it in their product yeah which i don't like like i want money like i don't want you just to keep because what it says to me is you're discounting price that if you have to add new stuff to keep your market share yeah that to me is like a pricing discount yeah if you can't upsell

Mark Douglas, CEO

yeah i mean i anticipate our revenue is going to grow i absolutely you know like don't the We need to see all the technology we've built in market, people paying for it before, you know, I want to talk about the financial profile of that in the future. Okay, great.

Laura Martin, Analyst — Needham & Company

So one of the things that's really true in ad tech right now is we're getting this supply path optimizations or DSPs or disintermediating SSPs and vice versa. And so assuming that is successful, that we get these sort of open Internet take rates down from the 40% level towards the 20% level, let's say. Does your take rates suffer, and do you get injured by this SPO?

Mark Douglas, CEO

Yeah, for Mountain, absolutely not. And the reason why is we already had private marketplace deals with pretty much every source of inventory in the industry, streaming network, fast network, and so forth. So it is the publisher's decision as to if they use an SSP and who that is. It is not our decision. We don't pay publishers. so that might show up in the pricing we get from the publishers if they choose not to use an SSP, but it doesn't at all affect our mounds economics. And so we were already kind of set up for this. I think you think of a more classic DSP platform with a media buyer, a programmatic media buyer, where they view their value as cutting costs and things like that. That's kind of a different scenario where, yeah, I agree with you. There's a lot of like our SSPs becoming DSPs and DSPs becoming SSPs. Mound is a platform for small, mid-sized businesses to drive results through performance marketing on television.

Laura Martin, Analyst — Needham & Company

So they just stop spending the money if they're not getting performance. Exactly. They don't care what's happening with these fees over now.

Mark Douglas, CEO

Yeah, it's not a topic that they're aware of, and it's kind of just they're insulated from. And then Mound, we have direct relationships, so we're somewhat insulated from it also.

Laura Martin, Analyst — Needham & Company

On the supply side?

Mark Douglas, CEO

On the supply side. I'll give you a very specific example. The NBC Universal owns Freewheel. If they want us to buy through Freewheel, you know, execute those buys through Freewheel, great. If they say we don't need Freewheel anymore, great. It doesn't change any aspect of our relationship with that specific publisher. So we're kind of, that's their decision, and we're happy to buy wherever we get the fastest execution.

Laura Martin, Analyst — Needham & Company

The highest return on ad spend. Because your publisher spends more if you get a five times return on the dollar versus if you get a two times return on the dollar.

Mark Douglas, CEO

Now, if you're a big agency, your role with a big advertiser is to cut costs wherever you can finance a different relationship. Yeah, that is.

Laura Martin, Analyst — Needham & Company

Questions from the audience for Mountain? Okay. So is your view that in the near term, open internet benefits from generative AI disruption versus walled gardens versus open internet? Who wins and loses?

Mark Douglas, CEO

I think open Internet benefits, and the reason why... Now, let me step back a second. In order to benefit, you have to embrace change. Okay, so if you're a company that is not tech forward, that is not change forward, that is trying to protect your position rather than expand your position, then, you know, that's a choice. You're operating out of fear, and that's a choice you're making. If you're a company that's leaned in to being a market leader, then it's an entirely different scenario. In that scenario where you're a market leader, you benefit. Why do you benefit? Because AI is democratizing the models across the industry, like the targeting models. Now you can leverage AI technology, LLMs. I'll give you a very concrete example. When we serve ads, we want to serve ads to specific consumers that are going to respond to a specific product, right? So, example, the Onewheel. They sell a single-wheel skateboard. It looks really cool. You see it in Manhattan. But it also looks very dangerous, right?

Laura Martin, Analyst — Needham & Company

Yeah, it does. It looks really dangerous.

Mark Douglas, CEO

So how do you find the consumer that's not only going to like seeing someone on it but want to spend almost $2,000 to risk their life on it, right? So the way you do that is you apply, first you need an LLM in order to say, who would buy this? Like, what's the profile of this consumer? And not like age, gender, geo. Like, this is an adventure seeker. This is someone that probably owns a surfboard if they live in California. They might go helisking, you know, in Canada. Because they have to have a lot of money, too. Exactly. So you build a profile using LLM. You couldn't do that two years ago, right? right and then you apply machine learning models once you have that profile then you take large pools of data and you run those models to find those people using to find those individuals using machine learning models and then you use our relationships with the networks to deliver that ad directly in that person's home the first two steps wasn't possible two years ago that was very different technology stack than it is today so that's an example of how ai is leveling the playing field because Google people are just literally typing in what they're interested in meta obviously I think they have something like 30,000 engineers but now AI technology is leveling the playing field in terms of targeting it's laying the playing field and just apply that example across the entire tech stack for advertising and so but to be that winner you have to be heavily invested in technology and that part of it is obviously self-serving that's why one in two people at mountain on the engineering team and me personally i'm a coding engineer i don't get to code unfortunately as much but i certainly can hold up but everybody's saying that i have a lot

Laura Martin, Analyst — Needham & Company

of ceos like the reddit ceo the tabula ceo is like i know i'm supposed to be leading people but i spend four hours a day on cloud and it's the most exciting i'm so happy to be back you know learning

Mark Douglas, CEO

new things in code i'm not spending four hours a day on cloud but i'm definitely in four hours of conversations about our products and technology.

Laura Martin, Analyst — Needham & Company

I think a lot of people are software.

Mark Douglas, CEO

Obviously, like everyone else, I use a lot of AI technology, but I do wish my retirement job many, many years from now will be coding.

Laura Martin, Analyst — Needham & Company

A lot of CEOs love the coding stuff. Okay, but so in the near term, you think the open Internet benefits? Because walled gardens are cutting people as they move towards these LLMs, and they're accelerating revenue growth because they have cloud. A lot of them have clouds, so that's helping them.

Mark Douglas, CEO

I also think brands want, just like investors want a diversified portfolio, they want a diversified marketing portfolio. Right, okay. It's true. Mark Zuckerberg's vision of just give us all your money and you could just be a drop shipper and we'll do everything else, I don't think builds brands and I don't think is how people view it. I think they view it as we understand the customer and we leverage all this technology to lower the cost to reach that consumer and then connect with them.

Laura Martin, Analyst — Needham & Company

I definitely see the niche aspect of what you do for the $2,000 skateboard. I totally see how that is a value added because there might be in the world, there might be 3,000 guys, but if you sold even 500 of these, that's an awesome return on investment.

Mark Douglas, CEO

They sell 10,000 a year.

Laura Martin, Analyst — Needham & Company

Are they really? There's 10,000 lunatics a year.

Mark Douglas, CEO

I own one.

Laura Martin, Analyst — Needham & Company

You own one? Is it as dangerous as it looks? It is as dangerous as it looks. I thought wheelies were dangerous.

Mark Douglas, CEO

I don't get to ride it very often. My fiance is kind of not as risk averse.

Laura Martin, Analyst — Needham & Company

She's got you on hourly. Okay, you could do two hours a month. That's as much risk as I'm willing to partner with. As ad buyers demand more transparency and large publishers gain negotiating leverage, How would you think about your take rates over time?

Mark Douglas, CEO

I think they're very stable. For us in particular, our customers, the way they view Mound's platform is, let's say they have $10,000 they can spend on social, $10,000 they can spend on search, or $10,000 they can spend on performance TV. And none of those conversations is take rate, additional fees, anything a part of it. It is just money allocated to drive a room.

Laura Martin, Analyst — Needham & Company

And how much revenue lift do I get? So performance TV is the highest, which it should be, because they've spent the least there, if 95% have never spent a dollar, then as long as it performs, all this money, in theory, can move, and it isn't a take rate. Exactly.

Mark Douglas, CEO

That's not part of the conversation. In the enterprise side of the market, with agencies, that's a very different scenario.

Laura Martin, Analyst — Needham & Company

Okay, but that's not a very big part of your business, right? That's a zero part of our business.

Mark Douglas, CEO

We are small and mid-sized.

Laura Martin, Analyst — Needham & Company

Right, right, so it's all performance, 100% performance. Okay, that makes sense. Okay. Any other questions? Okay. I'm going to call it there because we have eight seconds left. We're right on time. Thank you.

Mark Douglas, CEO

Pleasure. Thank you very much.