Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VerticalScope Holdings Inc (VFORF, Financial) reported a 14% increase in revenue for Q2 2024, demonstrating strong business performance.
- EBITDA grew by 29% to $7.1 million, showcasing significant operating leverage.
- Monthly active users (MAU) increased by 42%, indicating strong audience growth and engagement.
- The company generated $6.6 million in free cash flow, reflecting a 58% year-over-year increase.
- Programmatic advertising revenue posted a 35% gain, contributing to a 20% growth in overall digital advertising.
Negative Points
- The advertising macro market remains tepid and subdued, affecting overall market recovery.
- E-commerce revenue declined by 16% year-over-year in Q2, although it showed signs of stabilization.
- Direct advertising growth was flat in Q2, with some revenue recognition pushed into Q3.
- Certain historically strong advertising categories, such as insurance, continue to show muted spending levels.
- The company did not sign any large language model (LLM) deals in the quarter, with ongoing discussions but no concrete outcomes.
Q & A Highlights
Q: On your Q1 call, you mentioned digital ad revenue would accelerate in Q2, but it was 20% compared to 26% in Q1. What changed?
A: (Christopher Goodridge, President, COO) CPMs were solid but not as strong as expected. Some direct deals had revenue recognition pushed into Q3. Direct advertising has become more challenging to predict, while programmatic remains more predictable due to ad tech investments.
Q: Can you sustain over 10% digital ad revenue growth in Q3 and Q4?
A: (Vincenzo Bellissimo, CFO) Yes, we believe we can sustain north of 10% digital ad revenue growth in both quarters.
Q: What initiatives are planned to maintain MAU growth momentum?
A: (Rob Laidlaw, CEO) We're focusing on increasing daily active users (DAUs) and user engagement through our mobile app and integrating AI for better user experience, such as improved search and thread titles.
Q: Will direct advertising catch up to programmatic in growth?
A: (Christopher Goodridge, President, COO) It's unlikely direct will match programmatic's growth rate. Direct deals have longer cycles, but audience growth makes us more attractive to direct advertisers, supporting long-term growth.
Q: How is the mobile app deployment progressing?
A: (Rob Laidlaw, CEO) There are no blockers, but we're ensuring the app performs well in increasing DAUs and engagement before a full push. We aim to have it ready in the next quarter or two.
Q: Can you provide more color on The Trade Desk integration?
A: (Christopher Goodridge, President, COO) The Trade Desk is enhancing auction efficiency and CPM pressure, opening new opportunities. It's supportive of our programmatic business, though we don't disclose specific contributions.
Q: How does Google's decision to end cookie deprecation affect your strategy?
A: (Christopher Goodridge, President, COO) Short-term, it supports stable programmatic markets. Long-term, our privacy-friendly platform with authenticated users and high contextual relevance remains valuable, aligning with privacy trends.
Q: What are the expectations for M&A activity?
A: (Christopher Goodridge, President, COO) We're patient, waiting for attractive pricing. Our strong balance sheet allows us to be selective, focusing on opportunities where Fora can deliver significant gains.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
