Nexxen International Ltd. Q1 FY2022 Earnings Call

Welcome to Tremor International's First Quarter 2022 Conference Call. At this time, participants are in a listen-only mode, with the question-and-answer session to follow at the end of the presentation. This conference call is being recorded and a replay of today's call will be made available on the Investor Relations section of Tremor's website and will remain posted for the next 30 days. I will now hand it over to Billy Eckert, Senior Director of Investor Relations, for introductions and the reading of the Safe Harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone. And welcome to Tremor International's first quarter ended March 31, 2022 earnings call. With us on today's call are Ofer Druker, Tremor's Chief Executive Officer; and Sagi Niri, the company's Chief Financial Officer. This morning we issued a press release, which you can access on our website at investors.tremorinternational.com. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution and reliance on forward-looking statements. These statements include, without limitation, statements and projections about our anticipated future financial results and including discussions about our revenue, margin, expenses and guidance for Q2 2022 and future business, anticipated benefits of Tremor's current and future potential strategic transactions, product launches and commercial partnerships, anticipated continued and accelerated future growth in both U.S. and international markets, expected strengthening of Tremor's products and reach, expected ability to continue repurchasing shares, investing in technology, sales and marketing and evaluating strategic opportunities to acquire companies, forward-looking industry and economic statements and outlooks, and other statements concerning the expected development performance and market share or competitive performance relating to our products or services. All forward-looking statements are based on information available to us as of the date of this call. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business. More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled Risk Factors in our registration statement on Form-20F. Tremor does not intend to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures of financial information in IFRS and non-IFRS terms. We refer you to the company's press release for additional details including definitions of non-IFRS items and reconciliation of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, CEO of Tremor International. Ofer, please go ahead.

Thank you, Billy. And welcome to everyone joining us today. I will begin by giving an overview of our results and strategy, followed by our Chief Financial Officer, Sagi Niri, who will review the highlights of our Q1, 2022 financials. We will then open the call up for questions. The first quarter followed an incredible 2021 for Tremor, which was the strongest year of growth and profitability in the company's history and represents what we believe to be best-in-class performance across the adtech industry. During the quarter, our end-to-end technology and data-driven business platform focused on CTV and video expanded and enhanced capabilities while continuing to generate strong customer adoption. Despite challenging market conditions that impacted advertiser spending such as supply chain constraints, inflation, rising interest rates, and the war in Ukraine that began on February 24th when we last announced earnings, Tremor was able to achieve strong year-to-year revenue growth, free cash flow conversion, and profitability. We were also able to continue maintaining an industry-leading adjusted EBITDA margin, which is critically important during periods of economic uncertainty and serves as a testament to the strength and durability of our end-to-end business model. We will continue to maintain a strong focus on generating robust profitability as we believe it positions us well for the current environment, as well as future growth opportunities. Tremor's operating model enabled us to be opportunistic and continue investing in technology, sales and marketing to drive organic growth, continue repurchasing shares, and engage in meaningful M&A in an environment where valuation premiums have decreased, aiming to drive long-term shareholder value. Our ability to achieve these strong fundamentals and our success in Q1 was largely driven by the strategic path we intentionally chose in 2019 to become an end-to-end platform. Our belief in this model is stronger than ever, due in part to the growth and profitability we are continuing to achieve. For the three months ended March 31, 2022, we generated contribution ex-TAC of $71 million compared to $63 million in Q1 2021, representing 30% organic growth, and adjusted EBITDA of $33.6 million compared to $27.5 million in Q1 2021, which represents 1.2 times growth. We continue to experience growth and strength within our CTV and video offerings, greater adoption of our self-serve offering, and the diversity of our revenue streams and customer base helps us successfully navigate a complex industry environment. Our efficient data-driven end-to-end strategy drove a 42% adjusted EBITDA margin in Q1 2022 on a reported basis and a 47% margin on a net revenue basis. We believe these margins continue to represent the industry best-in-class. The strong profitability of the business positions us to weather current macro-related headwinds as well as future potential deterioration in the market environment and, more importantly, take advantage of future growth opportunities. We also have strong conviction in our end-to-end technology and business platform, as we are seeing others in the industry begin to realize that this type of operating model connects advertisers and publishers in the most efficient way. It provides simplicity, better installation against changes to data privacy regulations, strong access to data, reduced audience loss, key pricing advantages, and supports the industry trend towards supply path optimization. In recent commentary, certain SSPs have indicated that they are seeking to expand their direct relationship with brands and agencies. On the DSP side, we have heard companies indicate that they're expanding their media relationship and capabilities and allowing advertisers and brands to plug directly into inventory. Make no mistake, whether these companies are saying it directly or not, they are demonstrating that they believe operating end-to-end, at least to some extent, is beneficial for their business and their customers. We view this very positively as we have built a fully integrated and scaled end-to-end technology platform, and because we have robust experience operating this way for more than three years. As others in the industry are just recently realizing the benefits of this model for customers, shareholders, and their companies, Tremor anticipated this trend and has held relationships with brands, agencies, media partners, and data providers for years. These relationships across the adtech ecosystem contribute to our ability to achieve strong growth and profitability while effectively positioning us to take advantage of both industry and Tremor-specific growth catalysts expected in the second half of the year. Specific to Tremor, we expect to monetize our exclusive and unique global ACR data partnership and media relationship with VIDAA and fully integrate the CTV ad server Spearad. Within the industry, we believe the seasonally strong fourth quarter will be further boosted by advertiser spend associated with the soccer world cup, as well as the U.S. midterms election. Our platform is now comprised of a fully integrated demand-side platform, data management platform, supply-side platform, CTV ad server, and award-winning In-House Creative Studio. Across these components, we provide self and managed service offerings including PMP, programmatic offerings, and performance offerings across all screens for customers, regardless of their service level requirements. CTV and video continue to remain key growth drivers for Tremor as we saw CTV spend grow 21% in Q1 2022 to $46.2 million compared to $38.2 million in Q1 2021. Video revenues, including CTV, also continue to represent the overwhelming majority of our total contribution ex-TAC at approximately 80%. As many of our clients build platforms and invest budgets and attention in evolving their offerings and marketplaces from display focus to video, we believe our longstanding and substantial footprint capabilities and partnerships in this fast-growing segment will result in strong continued growth for Tremor. We also believe Tremor will experience more meaningful and significant growth over the next several years as several major streaming services have expressed interest in potentially supporting advertising or have already launched their supported channels and tools. This platform evolution signals long-term health and the ability of the CTV advertising market and reflects the steady consumer preferences for saving money on subscriptions and a willingness to view ads across valuable content. At the industry level, Tremor remains well-positioned for changes in the privacy landscape that can adversely impact adtech companies. Our end-to-end technology platform contains a significant and growing footprint of first-party and third-party data, and our DSP and SSP share the same audience graph, which eliminates data loss during cookie sync. We also believe we are minimally exposed to cookies. We support major universal ID solutions in the market and are developing our own Tremor universal ID solution. Contextual solutions, such as the content-level targeting solution announced in December, also better insulate us against privacy changes. This unique combination of factors gives us confidence that we will remain able to continue meeting our customers' needs despite these privacy changes. As we mentioned, during Q1, we saw continued evidence of lower advertising spend due to a combination of factors, including inflation, rising interest rates, supply chain constraints in certain sectors such as automotive due to ongoing chip shortage, and the war in Ukraine. While we are seeing increased growth in bookings as well as programmatic activities so far in Q2 compared to Q1, and we are also seeing challenged sectors such as automotive and travel show initial signs of recovery, recent microeconomic and market pressures could continue to challenge advertiser spend in the near term. We believe, however, that our highly diversified customer and revenue base will continue to position us well to offset any substantial adverse impacts on our overall business, further underscoring the durability of our tech platform and business model. During Q1 and into Q2, we have made significant progress that has helped enhance and expand our platform and believe we are well-positioned for positive industry and Tremor-specific catalysts expected in the second half of 2022. We are very excited about our exclusive and unique global ACR data partnership with VIDAA, a subsidiary of Hisense, which is expected to accelerate our U.S. and international growth over the second half of 2022 and beyond in key markets such as Canada, Australia, the U.K., and Germany. Hisense is currently one of the largest OEMs in terms of global market share and is ambitious to continue significantly expanding its reach, sales, and customer recognition over the next several years in the U.S. and internationally. VIDAA is the operating system for major OEMs including Hisense, Toshiba, and others. And we intend to use this meaningful ACR data partnership for segmentation, measurement, and targeting purposes. The availability of ACR data on the open internet provides advertisers choice in their media mix so they can leverage the data to run holistic strategic campaigns that reach consumers wherever they are viewing content. While we have been leveraging ACR data for several years, our partnership with VIDAA is exclusive and broad-based across data and media and enables us to offer unique and desirable capabilities, data sets, and advertising opportunities for our customers. In adtech, it's rare to have access to ACR data outside of the walled gardens that is accessible on the open internet. This data will be available in our TV intelligence solution, which already reaches 44 million U.S. households and will enable us to offer customers differentiated campaign strategies and optimizations, as well as exclusive blended and customized data sets that support their marketing KPIs. We believe VIDAA currently reaches approximately 20 million smart TVs worldwide, and we believe this reach will grow substantially in the coming years. VIDAA expands its relationship with Tremor beyond data, generally selecting Tremor as its strategic SSP while also adapting Spearad to enhance control over CTV ad delivery. Brands and agencies will now have to leverage Unruly to advertise on the exclusive content of TV for which VIDAA serves as the operating system. Tremor is also specifically poised to capitalize on positive industry growth catalysts expected in the second half of the year, such as the soccer world cup and the U.S. midterm election cycle. Hisense is an official sponsor of the FIFA World Cup, which is set to take place in Qatar during November and December. As an official sponsor, Hisense is expected to achieve substantial increases in global awareness during this event. We believe this will expand the benefits of our relationship with Hisense's TV operating system, VIDAA. As Hisense and VIDAA continue to pursue additional future sports sponsorship and exclusive content opportunities, we believe Tremor will be a major beneficiary of this advertising monetization, and we expect that customers will increasingly seek to advertise on this unique and exclusive content and leverage this differentiated data. We also believe we will see industry tailwinds from the U.S. midterm election cycle, which generally brings heightened levels of video ad spending from candidates during the second half of the year. So far in 2022, we have expanded upon our business win momentum from 2021. In February, we announced new partnerships that expand the reach of our data-driven TV intelligence solution to 44 million U.S. households. TV intelligence sets Tremor apart by providing global advertisers with access to blended TV data for targeting and measurement. To make it easier for marketers to run TV-like campaigns with precision on CTV and all screen video. Activating blended datasets across the open internet represents an incredibly important mechanism for advertisers to have the freedom to curate a media mix that meets their campaign objectives. We expect to continue to increase this scale and reach through various partnerships, including our exclusive global ACR data partnership with VIDAA. We also secured the partnership with Comscore in early April, which better enhances installation against changes in data privacy regulations for our customers. The agreement makes available Comscore cookie-free predictive audience for activation across our platform and allows Tremor customers to leverage cookie-free pre-bid audience targeting to reach granular behavioral audiences based on video-level contextual signals within CTV. Our SSP and Unruly added 87 new supply partners during Q1, 2022, including 36 in the U.S. across critical growth verticals in sports, news, entertainment, and lifestyle, including OTT apps from leading broadcast and multichannel video programming distributor businesses. We also continue to generate strong adoption of our self-service platform for publishers and Unruly CTRL, which experienced a 128% increase in PMP spend during Q1, 2022 compared to Q1, 2021. Additionally, Tremor Video added over 75 new advertiser logos during Q1 2022 across critical growth verticals in travel, CPG, and healthcare, which reflected one of the most significant quarterly logo increases in the company's history. Tremor's In-House Creative Studio continued to impress, garnering recognition and awards across major platforms such as Digiday, Business Insider, the Drum, and MediaPost and serves as a key differentiator for Tremor. It enhances customer engagement in a meaningful manner, creates stickier relationships, and adds revenues and profitability to each campaign it touches. Tremor experienced a 21% year-over-year increase in creative requests during Q1, 2022. We were particularly excited to see international spend on Tremor creative products grow 225% year-over-year compared to Q1, 2021. Tremor's custom QR codes for CTV ads remain its most popular feature in Q1 and were included in 34% of all creative campaigns. Additionally, in Q1, 2022 alone, Tremor executed 20% more custom data-driven video campaigns than it did in all of 2021, and it continues to see strength so far in Q2. We are also extremely proud for Tremor to have recently been awarded the Digiday 2022 Content Marketing Award for Best Use of Data for a campaign produced for Pure Michigan, the state of Michigan tourism brand. Finally, on our last quarterly earnings call, we were pleased to announce a $75 million share buyback program. The buyback program launched on March 1, and during the first quarter, we repurchased 1,684,510 ordinary shares at the average price of 572.89 pence for a total Q1 repurchase spend of approximately £9.7 million or $12.7 million. The strength of our balance sheet, as well as our profitability and strong cash-generating abilities, enable us to continue buying back shares at what we believe are discounted levels. Should we uncover acquisition opportunities that benefit Tremor and its investors in the near to intermediate term, we would consider extending and increasing the buyback program and also evaluate additional opportunities to return value to shareholders. It is now my pleasure to turn the call over to Sagi to review our financial results.

Thank you, Ofer. We were excited to see another record first quarter of revenue and profitability and strong business momentum and are pleased to see similar trends as we progress through the second quarter. Today, I will review highlights of our Q1, 2022 performance, as well as some of the key financial and operational drivers for the quarter. Tremor International achieved an outstanding quarter in Q1, with revenue and adjusted EBITDA propelled by continued impressive organic revenue growth and our efficient operating model. Q1, 2022 net revenue increased 13% to $71 million compared to $63 million in Q1, 2021, all of which was driven by strong organic growth. This growth was particularly impressive given the fact that Q1 tends to be the seasonally weakest quarter for FX and amidst well-known macro pressure associated with supply chain constraints, inflation, and the ongoing war in Ukraine. CTV spends on our platform grew 21% in Q1, 2022 versus Q1, 2021. We are well-positioned to continue this growth, as more business is increasingly being transacted through programmatic platforms, and we expect performance budgets to continue to move towards CTV and programmatic in the future. During the same period, our video net revenues grew 9% year-over-year. We also continue to generate very strong adjusted EBITDA margin while investing in the critical areas of our business that can drive future growth. For Q1 2022, we generated adjusted EBITDA of $33.6 million, which reflected 22% growth from Q1, 2021, and an adjusted EBITDA margin of 42% out of reported revenue and 47% out of net revenue. We believe our end-to-end platform gives us a competitive advantage versus point solutions. We have developed a highly profitable business model with high efficiency around operating costs, leading to operating leverage and economies of scale. Tremor can achieve significant profitability due to our ability to split costs across both sides of our end-to-end platform while maximizing revenue opportunities. We also achieve cost efficiencies as we own and operate our global server infrastructure, which results in significantly lower costs than if we were to operate exclusively on third-party cloud services. As mentioned previously, we believe we have best-in-class industry margins and operational profitability. Q1 2022 generated an adjusted EBITDA margin of 47% out of net revenue. Turning to our cash flow. We generated net cash from operating activities of $16.1 million for Q1 2022. As of March 31st, we had $370.8 million cash and cash equivalents, with no debt. We also experienced 100% free cash flow conversion during the quarter. Non-IFRS diluted earnings per ordinary share is $0.15 for Q1 2022 versus $0.12 in Q1 2021, an increase of 20% year-over-year. Finally, I will now turn to our outlook. For the second quarter of 2022, we expect net revenue to be in the range of $75 million to $80 million and Q2, 2022 adjusted EBITDA of approximately $40 million. We also expect our Q2, 2022 adjusted EBITDA margin as a percentage of contribution ex-TAC to be approximately 50%. Particularly during periods of economic uncertainty, we find prudent investors focus more on companies that can achieve significant and consistent profitability to remain well capitalized and take advantage of future growth opportunities. Tremor's efficient end-to-end operating model enables strong fundamentals, and we will continue to maintain an emphasis on generating robust profitability. This gives us confidence that we can remain able to meet our adjusted EBITDA target and generate best-in-class industry adjusted EBITDA margin in Q2, even amidst a challenging growth environment. This guidance underscores that our model focused on CTV is helping us maintain growth and continued excellent profitability. The forecast also factors in current macro-related headwinds, such as inflation, supply chain constraints, rising interest rates, the ongoing war in Ukraine, and potential recessionary economic indicators. We believe our growth profile and efficient and durable end-to-end model enable continuous strong profitability, investments for growth, significant operating leverage, and a healthy balance sheet while positioning Tremor well to continue taking advantage of a rapidly growing digital advertising in the CTV market, both in the U.S. and internationally. With my remarks completed, I'll turn the call back to Ofer.

Thank you, Sagi. Tremor was able to achieve great success during the first quarter, which we believe positions us well for the industry and Tremor-specific catalysts expected in the second half of 2022. We continue to see evidence that our data-driven CTV and video-focused end-to-end technology platform reflects the best model for advertisers, media partners, Tremor, and its shareholders. Our ability to generate significant cash and profitability fuels our ability to invest in technology, sales and marketing, to grow the business organically, continue to evaluate M&A opportunities at rewarding valuations, and continue buying back shares. Our conviction in the model is stronger than ever for these reasons, and because we are seeing others in the industry attempting to replicate a model that we have been capitalizing on for years. We also continue to fulfill our promise to enhance and expand our CTV data and video capabilities, which now accounts for approximately 80% of our net revenue and 93% of our programmatic net revenues. We are excited to be in a position to start monetizing our Spearad acquisition, as well as our unique global ACR data partnership and media relationship with VIDAA. Over the seasonally stronger second half of 2022 for adtech, which we expect to be boosted by the U.S. midterm election cycle and the soccer world cup, where Hisense is an official sponsor. We believe we have built a strong technology and resilient end-to-end business model to serve our customer's holistic needs and that we are in the right industry at the right time, with the strong global partners. I have now been in the adtech industry for 25 years and can honestly say that I'm truly excited about what the future can bring for Tremor International. Operator, we will now open the call for investors' questions.

Thank you. We will now begin the question-and-answer session. Our first question is from Matt Swanson from RBC Capital Markets.

All right. Thank you guys so much for taking my question. Sagi, maybe picking up kind of where you left off, the durability of leverage in the model really shined in the quarter, being able to beat the adjusted EBITDA guidance despite those top line headwinds. And it seems like there's a similar dynamic and guidance for Q2. Could you talk a little bit more though about the back half of the year specifically, are there going to be incremental investments needed to be made around VIDAA, Spearad to drive that second half revenue? Or are those kind of the investments we're seeing you make right now?

Thanks, Matt, for the question. Yes, I think that our end-to-end business model is what's allowing us to have these magnificent profitability margins. As we said, I think, in Q4 earnings, we are investing more in our R&D department, product, and sales and marketing, of course, to keep the organic growth despite the very challenging macro environment. Again, per your question, I think that Spearad is already fully integrated into Unruly, and it became the ad server of VIDAA/Hisense. So, I think all the things you mentioned and Ofer went over, will, of course, enable us to have an amazing H2. Of course, everything is according to what the macro will throw at us.

Thank you. And then, Ofer, the one positive thing, maybe from a Q1 sentiment standpoint is just really a lot of good news around CTV, especially that Netflix news. So, thinking about this a couple of different ways, one, could you maybe talk about what the impact on the overall CTV environment is from this amount of inventory potentially being added to the market between Netflix and Disney, HBO Max, and Apple? And then kind of more from a sentiment standpoint, what you think it says that the largest subscription streaming service feels the need to add ad support. And maybe what that says about the long-term health of ASBO.

For sure. Thank you, Matt, for the question. So, first of all, in previous conversations, we spoke about it. And I said that basically, when you look at this market of CTV, it will follow what's happened in display or desktop and after that in mobile, meaning people are willing to pay with their time in order to see more in order to get subscriptions or content for less or for free. And this will extend, of course, to CTV. And we see this phenomenon really happening now, also with this declaration and conversation about moving this big ASBO to become partly available. And I think that it's a good statement because it shows for us that the addressable market for us is growing. I believe that with our set of products that are really the first line in terms of targeting and content targeting and targeting with ACR and our TV intelligence product and TV library and so on. I think that it will give much more opportunities for advertisers to buy more media taking into account that all these efforts will open their market also to the open web. I think that the amount of demand that is coming for CTV is really great and it can serve all these needs from all these companies that are basically joining this model. I think we are really excited about it, and we feel that it's even come before we thought it would happen because we felt that it would maybe take the next two or three years. And now, I think it will happen probably faster.

Right. Thank you.

And the last point is that it will probably enhance the movement from linear to CTV, which is also welcome for us because it serves our purpose and interest that more budgets will move to digital.

We'll go to our next question from Mark Kelly from Stifel.

Great. Good morning. Thanks very much. I want to get your thoughts on just with the upfronts this week. Curious how much visibility you tend to get for the end of this year and the start of next year, after this week is over, or perhaps during the week? And second, just on CTV, obviously, you have some healthy growth in the first quarter. It did decelerate a bit from the fourth quarter, just would love to get the moving pieces as to what caused deceleration. Thank you.

Mark, just to ask, can you shorten the question about what is the acceleration that you are asking about CTV? Is it about which product or what is basically bringing this upside in this CTV front?

In the first quarter, CTV growth was 21%, while in the fourth quarter, it was in the high 40s. I'm curious about the difference; there's still healthy growth overall, but I would like to understand the reason for the slowdown compared to the fourth quarter exit rate.

CTV has been our primary focus for quite some time. A significant portion of our product development and research and development efforts is directed towards CTV because we see it as the future, along with ongoing developments in data. We have established a robust portfolio of products that cater to our clients’ needs in CTV targeting. It's important to note that the ACR data will be available in a meaningful way in the second half of this year, which will help us stand out in the market. In the open web, no one else has access to a database of ACR data that matches ours in scale. According to a recent Comscore article, Hisense and Toshiba already make up 10% of the CTV market in the U.S., and this is our target market for ACR data in the coming months. I believe this will further accelerate the potential and growth of our CTV offerings in the future, as we have a unique ACR data offering that is not locked within walled gardens. Regarding the CTV upfronts, we are witnessing growth and potential and are continuing to secure bookings for the upcoming quarters. We are confident that CTV is on an upward trajectory. While there is some market movement that we're monitoring, we still believe we can achieve overall growth this year as we initially expected.

All right. Thank you very much.

Our next question is from Michael Hill from FinnCap.

Great. Thank you. Could I just check if there's any detail that you can give on the percent of your ad spend that's from autos? And also, if there's any sectors that say over 15% or 20% of the ad spend, or is it really quite a diverse mix of sectors that you have on the platform?

Again, I couldn't understand what…

Ofer, I will take that question. Michael, hey, thanks for the question. I think that out of CPG, which is more than 10%, all of our verticals are less than that. So, we are quite diversified on that front. Automotive, of course, because of the supply chain constraint, is a little bit lower than it was in the past. I think that today it's something around 3%. In the past, it was like 5% to 6%. Other than that, of course, we are seeing a growing trend within travel and hospitality in the post-pandemic environment. So, I think that I answered your question.

Yeah. That's brilliant. Thanks very much.

Thank you.

Our next question is from Andrew Marok from Raymond James.

Hi. Thanks for taking my questions. I wanted to dig in a little bit on the programmatic versus non-programmatic revenue breakout. This was the third consecutive quarter in a row of like 40%-plus growth in the performance side of the business. Was wondering any of the drivers behind that, and does that change your thinking in the strategic importance of that side of the business? And then, second, on the M&A outlook, with valuations coming in, I know that you spoke about it briefly in the prepared remarks. But has the changing valuations changed your thinking around what's available from an M&A perspective and what could be on the shopping list? Thank you.

I will start with an M&A. We are always looking for ways to grow both organically and through M&A. We have the cash and the capabilities of doing that, not just cash, but also the knowledge and the experience so far to basically choose the companies that we want to acquire. More importantly, how we integrate them fully into our business. Just to indicate that, for example, last year in October, we acquired Spearad, and it's already fully integrated, by the end of the first quarter, into Unruly. So, of course, I think that the market is moving in our direction because last year, everybody looked at the public companies' valuations and asked for even more on the private side. I think that now things are moving back to something more reasonable that would make sense for us to make an acquisition and to bring value to our shareholders from that. We are looking and examining these opportunities all the time in parallel to the growth that we are generating organically. On the second question that you asked us about performance, so performance is growing because I think that the people in our performance team are doing a great job around that. They are growing the offering and the business with the partners that we bring along and so on. I think that we said it, I said it, and we said it in the past that I feel that in the future also CTV will feel that there will be more and more connectivity to performance and it will serve us for that. I think that our knowledge, our ability to bring the DNA from performance behavior and marketing into the CTV can help us to open new channels that we will be able to leverage together with our partners around that, and it is something that we are putting attention on in the next 12 to 18 months.

Yes. Just to add to what Ofer said, I think we have clients that are using both channels, i.e., using the programmatic platform and the performance channel. Sometime we're putting their focus on the performance side and some quarters putting their effort on the programmatic front. So, it's nourishing both sides of the one arm that we have. It's clearly helping us because we're bringing clients on one end and then we are executing sometimes on the other end and vice versa.

Hope that we answered your question.

Definitely. Thank you.

And our next question is from Andrew Boone from JMP Securities.

Hi. Good morning. Thanks for taking my questions. The press release talked about an acceleration in the back half of 2022. Understood the contributions from political as well as the world cup, but is there anything you can help us to better understand those comments? And then secondly, as we think about just capital allocation, this may just kind of extend Andrew's last question. But as you think about capital allocation and the $75 million buyback, it looks like you guys executed $10 million in a quarter. Shares are trading at kind of three times EBITDA, and just given the market downturn, how do you guys think about capital allocation in terms of M&A versus that, and then what's the possibility to accelerate the buyback and do something more meaningful, just getting more shares trading? Thank you so much.

I will address the question about M&A and provide more context. I agree that we are in a strong position when considering potential deals. We have available cash and the capability to make acquisitions, which is sensible for us. Our goal is to enhance shareholder value through various methods, such as share buybacks, which Sagi can elaborate on, while also expanding our efforts in that area. Our approach is largely influenced by the circumstances we face. In a block deal, adjustments are not feasible; however, we remain open to opportunities when they arise. Regarding M&A, I want to reiterate that our current position is advantageous. Given our cash reserves and the ongoing cash generation, even during challenging periods or typically weaker quarters for software, we continue to generate EBITDA and cash. This strong financial standing enables us to consider both accelerating the buyback program and pursuing significant M&A opportunities that would benefit the company. Our focus is on identifying the right acquisition targets to foster growth beyond organic means. Last year, we experienced 64% organic growth, though that figure may have been overshadowed by the turbulence following the invasion of Ukraine on February 24. Despite that noise, we maintained significant growth organically. This year, we are confident in continuing our organic growth while also being prepared for M&A activities. We possess the resources, expertise, and experience necessary to execute successful acquisitions, and we are actively searching for the right opportunities.

Yes. So, first question, we did $12.7 million of repurchase only through March because we started the program on the first of March. So, till today, we almost tripled it. Of course, when looking outside and looking at the valuation of Tremor, it may make economic sense to keep buying our shares. But if we are thinking about the long-term value to our shareholders, I think as Ofer mentioned, there are a lot of opportunities out there in a lower valuation than we saw before. In order to scale the business and to enjoy all the synergies and to grow our business, I think that an M&A makes sense even at current Tremor valuation. But of course, if we do not manage to conclude an M&A, we may enhance or increase the repurchase plan.

Thank you. And now, I'd like to turn the call back over to Ofer Druker for closing remarks.

Thank you all for joining us and for your questions. Once again, we have shown that the comprehensive solution we've developed is highly effective, delivering strong results in terms of return on investment for our shareholders, as well as growth and profitability. This profitability is crucial during this uncertain period in the markets. We continue to see growth in our EBITDA, profitability, and cash flow, which is vital in the current market conditions. It allows us to enhance our future growth and maintain our leadership position in key areas of CTV data and video. We believe the trends we've discussed regarding the shift from traditional media will boost our presence in the market involving video data and CTV. We are looking forward to the second half of the year as we prepare to launch our partnership with VIDAA, which is significant for us. VIDAA is one of the largest OEM companies providing us with exclusivity on all the ACR data that support targeting and measurement. They currently account for approximately 10% of the U.S. OEM market. With their growth plans and international market engagement, we believe we can further expand our business and become a dominant force in the CTV arena. Our goal is to enhance capabilities in the open web, as the data has largely been confined to a select group of companies. By partnering with us, more media partners and others will gain access to this data for targeting and measurement on both the demand and supply sides. We are thrilled about our current position and feel strategically well-placed as we look toward future success. Thank you all.

Thank you, ladies and gentlemen. That concludes today's call. Thank you for participating. And you may now disconnect.