U of Digital Newsletter: March 6, 2024 (Free Edition)

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The Last Of Q4 Earnings

Magnite (👍): Q4 revenue was up 7% for the largest, independent SSP to $186.9M, beating estimates. Full-year 2023 revenue was also up 7% to $619.7M. Shares rose nearly 15%.

Viant (👍): Q4 revenue was up 18% to $64.4M, missing estimates. Full-year revenue was up 13% to $222.9M. Q4 net income was up 141% YoY, swinging from a $8M loss to $3.3M profit. The demand-side platform credited its double-digit CTV growth in Q4, driven by AI and its cookieless ID tech. Shares rose about 10%.

DoubleVerify (👎): Q4 revenue was up 29% to $172.2M, beating estimates. Full-year revenue was up 27% to $572.5M. Social measurement was a bright spot, increasing 62% in Q4; Meta alone accounted for 7% of 2023 revenue. Unfortunately, 2024 and Q1 guidance came in lower than expected. Shares fell more than 10%. 

Taboola (👎): Q4 revenue was up 13% to $419.8M, missing estimates. Full-year revenue was up 2.7% to $1.44B, but its net loss widened from $12M in 2022 to $82M in 2023. Growth is now accelerating and the native ads company predicts a banner 2024 with revenue growing 33% to $2B thanks to its Yahoo partnership. Shares fell 13%.

Outbrain (🤷): Q4 revenue was down 4% to $248.2M for Taboola’s primary competitor, missing estimates. Full-year revenue was down 6% to $935.8M. Q4 gross profit grew 11%, and the company expects to return to revenue growth in 2024. Shares reacted with some volatility before eventually rebounding. 

Paramount (🤷): Q4 revenue was down 6% to $7.64B, missing estimates. Full-year revenue was down 2% to $29.65B. Paramount+ subscribers reached 67.5M and Q4 revenue was up 69% for the streaming service, helping to offset a weak ad market. Shares increased by lower single digits before falling this week. 

Opinion: Promising earnings from Magnite and Viant, but lackluster results from the content recommendation and brand safety / ad verification companies. It’s still a mixed bag on the earnings front. All categories (walled gardens, independent tech, publishers, agency hold cos, etc.) have seen Q4 winners and losers. It’s been hard to identify any specific trends. After a rocky couple of years, there are many signs that ad spend is rebounding, but it looks like we’ll have to wait and see Q1 earnings to feel really good about it.
 

Other Notable Headlines

Apple hit with more than $1.95 billion EU antitrust fine over music streaming - The European Union has found that Apple abused its App Store monopoly with anti-steering policies that prevented app developers from telling iOS users about cheaper music subscription services outside of the App Store. The investigation stems from a 2019 Spotify antitrust complaint about Apple's contractual restrictions prohibiting developers from sharing cheaper alternatives with customers. Considering that Apple had $383B in fiscal 2023 revenue—with $97B in net income alone—the nearly $2B is a drop in the bucket, but it's still one of the largest fines issued to a tech company by the EU. 

Opinion: Although Apple plans to appeal this decision (which means it will drag on for years), it offers a preview of the new regulatory environment that officially kicks off on Thursday. That's when the EU's Digital Markets Act goes into effect and forces Big Tech to open up products and services to increase competition. Ahead of the DMA, Apple has also opened iOS devices up to competing app stores, which will enable developers to avoid Apple’s 30% fee. Could the DMA signal the beginning of the lowering of the walls of the major walled gardens?

Google hit with $2.3 bln lawsuit by Axel Springer, other media groups - Thirty-two European media groups are going after Google for unfairly harming their businesses. Specifically, the companies say that Google's abuse of its dominant position in digital advertising caused them to receive lower ad revenues and pay higher ad tech fees. Some of those same practices inspired a class-action lawsuit from advertisers in the US, which a judge ruled last week could move forward. Advertisers claim that they were harmed by the anti-competitive practices of Google’s ad exchange. These are civil cases and separate from the federal and state-level complaints Google is fighting. Canada also just expanded a four-year antitrust investigation 🔒 into Google's digital ad practices and whether it uses predatory pricing. 

Opinion: It's increasingly difficult to keep track of all of Google's various antitrust cases and investigations in the US, Europe, and other nations. The walls are closing in from all directions and a reckoning is coming for Google. We predict a breakup within the next two years.

Snowflake Shares Tumble As Guidance Disappoints. Slootman Retires As CEO - Snowflake CEO Frank Slootman will retire immediately and be replaced with Sridhar Ramaswamy. During his 15-year run with Google, Ramaswamy was the ads chief from 2013-2018 before he left to launch Neeva, an AI-powered, subscription-based search product he built to counter ad-supported Google Search. Snowflake bought Neeva last May, and less than a year later, Ramaswamy is running the show. He steps in a little more than three years after Snowflake IPO'd during the pandemic on Slootman's watch. Slootman isn’t leaving entirely—he’ll remain the chairman of Snowflake’s board. The company announced his retirement during its recent earnings report, which revealed a 32% increase in overall Q4 revenue to $774.7M, beating estimates. But like many companies, Snowflake's conservative guidance for 2024 disappointed investors, sending shares lower.  

Opinion: Snowflake is a cloud powerhouse that has been making lots of noise in ad tech and mar tech as it works to become a dominant infrastructure layer for the industry. For example, it recently strengthened its data clean room offering with the December acquisition of Samooha. With Ramaswamy at the helm, we expect Snowflake to wade even deeper into AI and ad tech. 

Sir Martin Sorrell’s S4S Ventures Joins $9.4 Million Funding Round for tvScientific - The company specializes in performance-focused tools for TV advertising. Its self-serve CTV buying platform lets brands buy on a cost-per-outcome basis rather than CPMs. It offers custom CTV targeting segments and web-to-TV retargeting. It also helps retail data providers provide closed-loop, outcomes-based measurement for TV advertising. Sorrell called CTV advertising a "sleeping giant" and predicted companies like tvScientific that can deliver lower funnel activation and measurement are well positioned. Meanwhile, another self-serve CTV platform, Vibe.co, has picked up $22.5M Series A funding led by investment firm Singular. Vibe.co's TV and video ad buying platform caters to the "underserved" SMB market, competing with companies like Simpli.fi and Locality. The company will use the funding to grow its ad sales and tech teams and try to quickly meet its goal of reaching $100M in annual revenue.

Opinion: Always interesting to see where Sir Martin is making bets. Performance-focused CTV advertising is particularly hot right now!

FreeWheel Brings Biddable Programmatic TV Inventory to Upfront With New Tool 🔒 - FreeWheel’s new Allocation Module will enable advertisers to add biddable programmatic inventory to their upfront buys and better track that spend. Upfront negotiations typically include direct deals and programmatic guaranteed deals with fixed pricing. But biddable inventory bought in real time at variable price points is hard to include because it’s hard to track, which can lead to advertiser underspending or overspending. Allocation Module aims to solve this challenge and could increase the amount of TV inventory that can be sold programmatically. The tool could make it easier for advertisers to purchase linear and digital inventory in a single buy, in an upfront manner. It will be tested initially by NBCUniversal, Warner Bros. Discovery, and AMC Networks during the 2024-2025 upfront through FreeWheel’s DSP Beeswax.

IPG Unveils 'Engine,' Resets Creation In First-To-Market Adobe Deal - Agency holding company IPG will integrate Adobe's generative AI platform GenStudio into its platform, which will completely change how its agencies create content for its clients. The new platform dubbed IPG Engine will be powered by IPG's tools and data, including Acxiom’s identity resolution assets, and Adobe's generative AI models, Adobe Experience Manager, and other Adobe tools. The hope is to create more impactful and relevant creative and more precise audience targeting. IPG Health, MRM, and Mediabrands are already using IPG Engine.

TransUnion Makes Identity Data Available Through Samooha Clean Room - Companies with their data in Snowflake will be able to match and enrich it with TransUnion's TruAudience identity graph via Samooha's clean room. As we mentioned earlier, Snowflake acquired Samooha in December to enhance its clean room offering and make life easier for its customers so they don't have to move their data from the Snowflake data cloud to outside platforms, while also making it easy to collaborate with others (like TransUnion) in a privacy-centric way.

That's it for this week's newsletter. Drop us a line with any questions / feedback.

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