Direct Digital Holdings has reported a significant increase in revenue and adjusted EBITDA for the fourth quarter and full year of 2023, despite experiencing some challenges. The company announced total revenue of $157.1 million for the year, marking a 76% increase from the previous year, and an adjusted EBITDA of $11.3 million, up by 11%.
Despite lower demand in the fourth quarter and a decrease in gross profit margin due to higher costs, the company's strategic investments and collaborations, such as with Amazon (NASDAQ:AMZN) Publisher Services and HPE GreenLake, are expected to drive future growth. The company forecasts a revenue increase to between $170 million and $190 million for fiscal year 2024.
Key Takeaways
- Direct Digital Holdings reported a 76% increase in total revenue for 2023, reaching $157.1 million.
- Adjusted EBITDA rose by 11% to $11.3 million, indicating profitability improvements.
- The company experienced lower Q4 demand, attributed to cookie deprecation and transition efforts.
- Growth projections for FY 2024 are set between $170 million and $190 million in revenue.
- Direct Digital Holdings retired all outstanding warrants from its IPO, improving liquidity.
- The sell-side advertising segment is expected to grow by 10% to 20% in Q1 of 2024.
Company Outlook
- Revenue for fiscal year 2024 is projected to grow to $170 million - $190 million, a potential 50% increase from the previous year.
- Sell-side revenue is expected to grow by 10% to 20% over the previous year's first quarter.
- Investments in automation and headcount for sales initiatives will continue.
Bearish Highlights
- Gross profit margin decreased in 2023 compared to 2022 due to higher costs in the sell-side advertising segment.
- The company reported a net loss in Q4 of 2023 and a decrease in full-year net income compared to 2022.
- Operating expenses increased, driven by additional headcount and administrative costs.
Bullish Highlights
- The company has made significant investments in technology and advertising platforms.
- Strategic collaborations with Amazon Publisher Services and HPE GreenLake are expected to bolster future performance.
- The transition away from cookies is seen as an opportunity for innovation and a competitive advantage.
Misses
- Lower-than-expected demand in the fourth quarter of 2023 impacted the company's performance.
- The company experienced a decrease in gross profit margin due to higher costs.
Q&A Highlights
- Mark Walker emphasized the importance of customization with DSPs to maintain a competitive edge.
- There has been no degradation in campaign performance despite cookie deprecation.
- Larger publishers have adjusted to a cookie-less environment, while an opportunity exists to assist smaller and mid-sized publishers.
Direct Digital Holdings (the company's ticker not provided) has navigated the challenges of 2023 with a strategic focus on growth and innovation. While the company faced headwinds such as cookie deprecation and increased costs, its investments and collaborations are laying the groundwork for continued expansion in the advertising technology sector.
The company's confidence in its growth trajectory and its plans to support publishers through the transition to a cookie-less environment underscore its commitment to adapt and thrive in a rapidly evolving market.
InvestingPro Insights
Direct Digital Holdings (DRCT) has demonstrated remarkable revenue growth and a strong upward trajectory in earnings. According to real-time data from InvestingPro, the company has a market capitalization of $378.31 million and a P/E ratio of 70.07 based on the last twelve months as of Q3 2023.
This high P/E ratio indicates investors' expectations of future earnings growth, aligning with the company's optimistic revenue forecasts for fiscal year 2024.
InvestingPro Data metrics highlight the company's significant revenue growth of 105.32% over the last twelve months as of Q3 2023, with a quarterly revenue growth of 128.87% for Q3 2023. The gross profit margin stands at 25.2%, which, despite being squeezed by higher costs, still reflects a solid profitability framework.
InvestingPro Tips suggest that DRCT’s stock has experienced a large price uptick over the last six months, with a 968.95% return, and a strong return over the last year at 769.18%. This performance is indicative of the company's strong market presence and investor confidence, despite recent volatility reflected in a 16.61% hit over the last week.
For investors seeking more in-depth analysis and additional tips, there are 19 more InvestingPro Tips available at https://www.investing.com/pro/DRCT. These tips could provide valuable insights into Direct Digital Holdings’ stock performance and potential investment strategies. To access these tips and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
The data and insights provided by InvestingPro offer a comprehensive view of Direct Digital Holdings' financial health and market performance, which is crucial for investors making informed decisions in a dynamic advertising technology sector.
Full transcript - Direct Digital Holdings (DRCT) Q4 2023:
Operator: Good day, everyone, and welcome to the Direct Digital Holdings Fourth Quarter and Full Year 2023 Earnings Call. Today's call is being recorded. And all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the conference over to Brett Milotte, VP of Investor Relations. Please go ahead.
Brett Milotte: Good afternoon, everyone, and welcome to Direct Digital Holdings fourth quarter and full year 2023 earnings conference call. My name is Brett Milotte, and I'm representing Direct Digital Holdings from ICR. On today's call, our Direct Digital Holdings Chairman and Chief Executive Officer, Mark Walker; and Chief Financial Officer, Diana Diaz. Information discussed today is qualified in its entirety by the Form 8-K and accompanying earnings release, which has been filed today by Direct Digital Holdings and may be accessed at the SEC's website and DRCT's website. Today's call is also being webcast, and a replay that will be posted to DRCT's Investor Relations website. Immediately following the speaker's presentation, there will be a question-and-answer session. Please note that the statements made during this call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. These statements are made on the basis of DRCT's views and assumptions regarding future events and business performance at the time they are made and do not undertake any obligation to update these statements. Forward-looking statements are subject to risks, which could cause DRCT's actual results to differ from its historical results and forecasts, including those risks set forth in DRCT's filings at the SEC and on this call. And you can refer to those for more information. This cautionary statement applies to all forward-looking statements made during this call. During this call, DRCT will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance to generally accepted accounting principles. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings release that the DRCT filed in its Form 8-K today. I will now hand over the conference to Mark Walker, Chief Executive Officer. Mark?
Mark Walker: Thanks, Brett, and thank you to everyone joining our fourth quarter and full year 2023 earnings call. 2023 was an inflection point for our company, and I'm incredibly proud to report our strong financial results and operational performance for the year as we're now reporting our eighth quarter of double-digit revenue growth. As we discussed in previous earnings calls, we continue to make significant investments in Direct Digital Holdings technology stack, advertising platform and operational structure throughout 2023. Our strong technology partnerships and our overarching business strategy have enabled us to meet a growing number of customers' demand and further capabilities of our technology platforms. As a result, our open marketplace platform continues to benefit as middle market businesses seek our differentiated thoughtful approach to advertising solutions. Before we get into more detail about our fourth quarter, I'd like to begin with a quick review of our year. We achieved total full year revenue of $157.1 million or 76% growth over the $89.4 million achieved in 2022, at 29% above our initial 2023 guidance. We also achieved adjusted EBITDA of $11.3 million, 11% higher than the $10.2 million adjusted EBITDA for the same period in 2022. In 2023, we had a number of achievements, a few of which I wanted to highlight today as we're proud of how our team was able to grow the overall business. Firstly, we announced our new collaboration with Amazon Publisher Services with our Colossus SSP division integrated with Amazon's Transparent Ad Marketplace, or TAM. The integration allowed Colossus SSP's roster and publishers to tap into the benefits of TAM and serve beside header bidding solutions that offer direct auction approach. We also announced our partnership with HPE GreenLake, providing an edge to cloud platform to build a highly reliable, scalable and secure production environment across our technology stack. Throughout the year, we had significant growth on the buy side with strategic wins with the growth of our overall client portfolio by 7% and increased revenue per customer up 10% for the year. We began the transition to a cookie-less environment and saw the integration rollout of our alternative ID solutions. In addition, we launched our AI yield management tool, which allows us to achieve good efficiency and revenue optimization and we continued the transition of DDH shared services function for increased operational scale and support. While we saw strong growth in Q4 2023 year-over-year with revenue of $41 million, which was 33% higher than the same period last year, we were down sequentially from Q3 with Q4 revenue, which was shy of our revised guidance due to two primary factors. In the fourth quarter, based upon value change changes, it became clearer cookie deprecation would begin at Q1 2024. In addition, we noted softer demand that our revised guidance called for. As such, our team proactively began our transition off of cookies for media transactions. As a result, we believe our strategic decision to accelerate our investments has positioned us well for the future and ahead of our peers. In addition, in Q4, we did our complete beta testing on our original schedule for several strategic publishers, including Dotdash Meredith (NYSE:MDP), Weather.com, NBCU and Arete Group, which would have increased overall the pressure count. These strategic publishers have all been launched in Q1 of 2024. We continue to prioritize long-term successes for short-term gain and we are confident the strategic measures in internal calibrations were made in Q4 2023 will position the company to build on the successes of 2023 and continue revenue growth and market share gains in 2024. Our fourth quarter 2023 adjusted EBITDA of $2.3 million likewise was affected by the information revenue impacts during the quarter. Our supply side platform continues to increase publisher partner engagements in addition to increases in our impression inventory. In the fourth quarter, our sell-side advertising segment processed approximately 400 billion of month impressions, an increase of 201% over the same period of 2022 with close to 1 trillion monthly bid requests for the quarter. In addition, the company's sell-side advertising platforms received over 83 billion bid responses in the fourth quarter of 2023, an increase of 367% over the same period of 2022. Our buyers within the platform did see some degradation due to our platform transition decreased about 50% to 84,000 buyers compared to last year's fourth quarter. However, our revenue per buyer increased by 133% to $397 per customer over the same period. On the buy side, these businesses served approximately 234 customers, an increase of 7% compared to the same period of 2022, with buy-side revenue per customer consistent with the same period last year. As it relates to 2024, our industry outlook and point of view is the following. We believe that the middle market, the digital ad tech space remains fragmented and consolidation opportunities exist. We will continue to evaluate those opportunities for accretive platform integration, value creation, and strategic fit. We anticipate cookie deprecation will accelerate market consolidation of opportunistic investments. For our buy-side business, the introduction of AI and complex market dynamics will accelerate the market transition in digital media from traditional media. This transition will continue to present opportunities to expand our footprint and gain market share for tech-enabled services. In addition, alternative IDs will take on more importance in the industry as well as strong understanding of the impact of the privacy sandbox on campaign performance reporting and delivery. We also believe that the bifurcation in the marketplace between alternative ID, open CPM marketplaces and wall guards will continue to exist, along with continuing market tension between DSP and SSP relationships. We expect the streamlining of the value chain, we aim to build strategic relationships with our focus on agency and brand partnerships continuing to be the cornerstone of our strategy. Finally, AI tools will continue to proliferate through the value chain of allowing companies to leverage these tools and offer these capabilities across both of our business segments, increasing ROI and enhancing performance. For 2024, we're providing revenue guidance for FY 2024 of $170 million to $190 million or an increase of 50% over last year's performance at the midpoint. I will now hand things over to our CFO, Diana Diaz, who will walk through some of the financial highlights in further detail.
Diana Diaz: Thank you, Mark. As Mark stated, our revenue increased to $41 million in the fourth quarter of 2023, an increase of $10.3 million or 33% over the $30.7 million in the same period of last year. We finished the year with total revenue of $157.1 million, which was about 8% below the low point of our guidance range, but was an increase of $67.8 million or 76% growth over the $89.4 million of revenue achieved in 2022. As Mark mentioned, revenue for the fourth quarter of 2023 was lower than anticipated due to lower-than-anticipated demand, a delay in the release of Tier 1 publishers from beta testing and proactive efforts by the company during the fourth quarter to accelerate the transition towards a cookie-less advertising platform. Our sell-side advertising segment ended the year with a strong fourth quarter and drove the majority of the increase over the prior year. Colossus SSP grew to $33.4 million for Q4 and contributed $9.8 million of the increase or 41% over the $23.6 million of sell-side revenue in the same period of last year. For the full year, our sell-side segment achieved $122.4 million in revenue, an increase of $52.4 million or 104% of growth over the $60 million in sell-side revenue in 2022. For the fourth quarter, our buy-side businesses, Orange142 and Huddled Masses grew 7% year-over-year and contributed $500,000 of the overall increase, finishing the quarter with $7.6 million in revenue compared to $7.1 million in the same period of 2022. For the full year, our buy-side segment grew to $34.7 million, an increase of $5.3 million or 18% over the $29.3 million of buy-side revenue in 2022. For the fourth quarter of 2023, gross profit dollars were $9.3 million compared to $8.7 million for the fourth quarter of 2022, an increase of about $600,000 as a result of higher revenue. Gross margins for the fourth quarter of 2023 were approximately 23% compared to 28% in the same period of last year. Gross profit dollars for the year were $37.6 million compared to $29.3 million for 2022. That was an increase of $8.3 million as a result of higher revenue. Gross margin for 2023 was approximately 24% compared to approximately 33% for 2022. These margin results are in line with our margin expectations given the rate of accelerated growth in our sell-side advertising segment. Our faster-growing sell-side segment has higher cost of revenues compared to our buy-side segment. We also saw higher sell-side fixed costs related to an increase in server capacity in the amount of $1.6 million for 2023 to support our growth. Operating expenses increased to $9.3 million in the fourth quarter of 2023 or an increase of $3 million over the $6.3 million of expenses in the fourth quarter of last year. For the full year 2023, operating expenses were $30.9 million compared to $21.3 million in 2022, an increase of $9.6 million. Increases in compensation tax and benefits expense of $600,000 for the fourth quarter and $3.6 million for the year were primarily driven by head count additions throughout 2023, mainly in our operations area to support our growth as well as in shared services. The increases in general and administrative costs of $2.5 million for the fourth quarter and $6 million for the year were due to expenses associated with supporting our growth and ongoing marketing initiatives as well as our continued transition to an operation as a public company beginning in February 2022. We expect to continue to invest in automation as well as additional head count to support sales initiatives. As a consequence of the aforementioned revenue and operating expense impacts to our fourth quarter, we saw a net loss of $1.2 million in the fourth quarter compared to net income of $1.4 million in the same period of 2022. For the full year, net income was $2 million in 2023 compared to net income of $4.2 million in 2022. For the fourth quarter, adjusted EBITDA was $2.3 million compared to adjusted EBITDA of $3.1 million for the fourth quarter of last year. For the full year, adjusted EBITDA grew to $11.3 million or 11% higher than the $10.2 million adjusted EBITDA for the full year 2022. Now turning to the balance sheet. We ended the year with cash and cash equivalents of $5.1 million, an increase of $1.1 million over the $4 million we had as of the end of 2022. Total cash plus our accounts receivable balance as of year-end was $42.3 million compared to $30.4 million at the end of 2022. As part of our initiative to increase shareholder value and continue to facilitate our growth, during the fourth quarter of 2023, we retired all outstanding warrants issued in connection with the company's IPO. And we improved our liquidity by securing a revolving credit facility with capacity of $10 million and up to $5 million of uncommitted incremental capacity. We expect to continue to take steps in 2024 to improve liquidity in our balance sheet to support our business as well as facilitate inorganic growth opportunities. Now let's touch on guidance. Our guidance is subject to a variety of factors that may change over the year. In particular, it assumes that U.S. economic conditions do not materially deteriorate or that the economy does not otherwise experience significantly reduced advertiser demand. We plan to offer annual guidance and update it throughout the year. At present, we expect fiscal 2024 revenue to be in the range of $170 million to $190 million or 15% growth year-over-year at the midpoint. We are off to a good start for 2024. Based on preliminary results through mid-March 2024, we believe sell-side revenue is on pace to grow at a rate of 10% to 20% over the prior year first quarter. And now I'd like to turn it back over to Mark for some closing comments.
Mark Walker: Thank you, Diana, and thank you to everyone for joining. As always, we appreciate your interest in Direct Digital Holdings and are looking forward to your questions. Operator, please open up the line.
Operator: Thank you. [Operator Instructions] And we'll take our first question from Darren Aftahi with ROTH.
Darren Aftahi: Hey, guys. Good afternoon. Thanks for taking my questions. Mark, the -- I guess, the three kind of items you highlighted in terms of the fourth quarter, the lower demand, the pilots not coming out of beta for the Tier 1 publishers, and then the proactive kind of moves on moving to cookie-less. I'm just kind of curious, can you kind of handicap a couple of things? One, like how did each of those kind of impact your quarter relative to kind of initial thoughts when you guys gave guidance, I believe, on November 9? And then as we have moved into 2024, I know you said some of those publishers have come out of beta. But how have those items kind of changed versus the fourth quarter? Thanks.
Mark Walker: Yeah. Thanks for the question, Darren. I think a couple of things. One, I will say that I think our transition to dealing with cookie deprecation was an important strategic move for us. What we're seeing and what we have started to see in Q4 was that cookie deprecation was definitely occurring even though after it had four years of delay. And so switching over a platform in order to be able to manage and deal with that did take a lot of effort, and we did not anticipate that move until we got into 2024. But once we started seeing the transition in the marketplace and what we started hearing in the industry, we felt like it was a prudent approach for us to go ahead and make that transition in Q4 versus waiting to 2024 before we started making that transition. Again, looking at long-term benefit versus short-term gain. The second thing is we want to -- if you look at the amount of impressions that we delivered between Q3 and Q4 as it relates to our SSP was roughly about 400 billion for each of those. And if you noticed, we were flat. So the way that we have been historically able to grow is really by the increase of impressions that we actually be able to introduce into the marketplace. And so our delay in that beta was actually critical for us to ensure that we're able to grow, especially in light of the transition we were making with cookie deprecation. So I would say that Q4, even though we still performed 33% year-over-year, and we were excited about that level of growth, it didn't meet the expectations that we initially thought based upon primarily those two factors and being the impression count being really our hedge to make sure that we're able to maintain growth. What we are seeing in Q1 of 2024, after we have started making our move to alternative IDs and our proactive measures for cookie deprecation, we're seeing a 10% to 20% growth as it relates to our SSP in comparison of last year's performance, which we feel is really a justification of us making the right decision.
Darren Aftahi: And can you give any kind of color on maybe -- I know January always starts off as a pretty dismal month in digital advertising, but can you talk about maybe the cadence of growth? Like has it improved since you kind of put in -- since you switch the platform and working with alternative IDs, like is that what's driving the growth? Is it the new publishers coming off of beta which drive the growth? And just going back to your -- both of your comments, sorry, you talked about softer demand. I'm just kind of curious, is the softer demand correlated with the cookies or is that something that's absolute and unique?
Mark Walker: Yeah. I would say the softer demand was a combination of the change that we saw with making the transition over cookies because of the platform impact that we actually had in Q4. And we also saw it being lighter going into the holiday season. So it was a combination of both as it relates to Q3. What we attribute the increase in performance in Q4, has everything to do with the increase in publishers that we've actually added the ones that were delayed in getting out of beta with in Q4, and we moved those into Q1, coupled with the transition that we've made to the alternative IDs, we are seeing an impact based upon that in regards to the level of transitions -- the level of transactions that we're actually seeing.
Diana Diaz: We also see the benefits of the technology changes that we made in the second half of 2023 as we compare the first quarter to last year.
Mark Walker: Yes, that is correct.
Diana Diaz: That’s helpful. Thanks, guys.
Mark Walker: Yeah.
Operator: We'll take our next question from Dan Kurnos with The Benchmark Company.
Dan Kurnos: Mark, can we stay with that for a second? The Q1 SSP or sell-side guide is -- it's lower than 2Q of last year. It feels like there is either some revenue that you've decided isn't going to continue. And I don't want to put words in your mouth, but just -- because obviously, Q3 was big, and we had a lot of momentum with the partner wins and yes, the impression growth. And your guidance for the year kind of implies that there is a scaling growth in the SSP over the course of the year, assuming buy side is, I don't know, 10%, and maybe that's wrong. So if you want to parse out kind of buy side, sell side in terms of the guide for next year that might be helpful. I'm just trying to understand sort of how -- the choices that you made organically to, let's call this a reset, which is fair as we move towards cookie deprecation, and how much of that volume then picks up or comes back to platform you're assuming in the back half of the year as we think about what you've just kind of laid out for us, if that makes sense?
Mark Walker: Yeah, absolutely. So I'll parse this out buy side first, and then I'll go into sell side. So buy side, we're still anticipating and projected out the same 10% to 20% growth year-over-year, which has historically been how we performed this going into our third year of being public. As it relates to the sell side, we think two factors that we're taking into consideration in regards to our projection or pretty much our guidance that we've actually given. Number one, we're expecting the curve to maintain the same trajectory as we have historically in the past. We have no reason to think otherwise. So we're still maintaining that same curve because that's how it's been for the last four years with Q1 being the lowest, Q4 being the highest outside of last year's implication of what occurred. What we are seeing is 10% to 20% growth year-over-year as it relates to our sell-side platform this year, and they're attributed to those two factors. One, our transition off of cookies which is one important factor in regards to how the DSPs and also how the market place is already making moves to that transition. The second being the increase in publishers that we have -- that we've added and has been a very important part of our growth trajectory. The third being, as Diana pointed out, really the platform change that we made last year and the increase in the capacity that we're actually able to handle the amount of transactions that we can. So without going too far into the future, if you will, we are anticipating the same level of growth curve and what we're seeing in Q1 is 10% to 20% above year-over-year, and we're expecting and anticipating and working towards maintaining that level of growth trajectory to get to our recommended guidance for the year.
Dan Kurnos: Okay. And how should we think about SHE Media, FreeWheel, all these other things that you guys have added since we've talked before about getting deeper into video. I know you guys self-serve has been sort of on the table, but not necessarily where you want to go. Just how do we think about kind of new initiatives and some of the announcements that you guys have made recently?
Mark Walker: Yeah. I think you're really going to start seeing those impact in Q2, Q3 as those are new ones that we are getting in stage and moving forward into monetization. So our team has been highly active in getting new publishers, specifically, like you had said, with SHE Media and also FreeWheel and others that we're working towards to really look at those monetizations for Q2 and Q3.
Dan Kurnos: One for you, Diana, just to finish up. How do we think about -- on this reset, how do we think about margins? Do we get margin expansion this year? How do we think about kind of fixed leverage versus variable spend to kind of drive growth?
Diana Diaz: So I think we'll be about in the same range on margin by segment. So it's just a matter of the mix of sell side versus buy side. And we had some hosting costs that we saw in the last three quarters of 2023. Those will continue in the first quarter, but should tail off after that. And from a fixed cost -- cost of sales.
Dan Kurnos: Should we be looking at the Q4 margin as sort of representative or the full year margin for '23 is representative? And then obviously, adjusting that because the sell side will grow -- well, actually, I guess, sell side and buy side could grow similar rates this year, but historically, sell side was growing faster.
Diana Diaz: Right. I think that if you look at the full year margins by segment that would be a good indicator of what we'll see in 2024.
Dan Kurnos: Okay, thanks, guys. Appreciate it.
Mark Walker: Thanks, Dan.
Operator: We'll take our next question from Michael Kupinski with NOBLE Capital Markets.
Michael Kupinski: Thank you. Thanks for taking my question. I appreciate that. Going back to the cookies, I understand that you indicated that the marketplace is already making moves because of the deprecation of cookies. But it's also my understanding that Google (NASDAQ:GOOGL) has only deprecated cookies and 1% of its searches on Chrome in the last quarter. And I was just wondering, as we kind of cycle towards the deprecation and the full implementation of the deprecation of cookies later this year, do you -- how do you -- I guess I'm just trying to understand how you see the market evolving and how that might impact you as we go, especially in the second half of the year when we start to see the full implementation of what -- the deprecation of the cookies from Google?
Mark Walker: No, I think that's an excellent question. I think cookie deprecation is actually going to open up a host of -- I think it's actually had an impact on two things. I think, one, it has really introduced a significant amount of innovation as it relates into the ad tech space. I think people looking for how to transact for the trade of media for dollars has really been this year and starting at the Q4 of last year has really become a moment of innovation for the industry they probably haven't seen in the last 10 years. That's number one. I think number two, even though Google has only deprecated 1% of the cookie, there are other media types that have already seen some level of deprecation. As it relates to Apple (NASDAQ:AAPL), as it relates to some videos, some CTV, I think what you're going to see now in the future and what we've been experiencing is other DSPs have already started changing how they transact off of cookies. And so we work with roughly about 20 to 25 different DSPs, and not all DSPs treat data the same. And so the new paradigm that we're actually seeing is that we are adjusting how we treat each DSP differently. And we think that, that is really part of what's fueling a lot of the innovation that's in the marketplace today. So I think for the last half of the year, the more that you're able to customize and work specifically with certain DSPs, and we are actually in conversation and already running different tests and POCs with them, that is going to give us a competitive advantage in the future, and that's really what we're looking to capture.
Michael Kupinski: Thanks, Mark. And I was just wondering, in terms of the performance metric that these advertisers are getting, let's say, the ROI on the advertising. Has that gone down as a result of changes in the deprecation of the cookies and things like that?
Mark Walker: I think every marketplace is saying something different. We have not experienced the degradation of campaign performance from the conversations that we've had with our clients as clients continue to work with us. And so our anticipation is that there will be different workarounds when cookies completely go away, as it relates to campaign reporting. And that's one of the things that we've been working towards with our tech team and with different partners to make sure that the reporting capabilities as well as the degradation of the campaigns actually doesn't occur and actually the quality stays intact. So that's been an important proof point that we've been working with our clients on.
Michael Kupinski: And in terms of the most valued publishers that you work with, how -- where do you think they are in terms of this cookie-less environment and implementing and planning for it because I know we talked about this in the past. But I was just wondering, do you feel like most of the publishers have already kind of adjusted for it at this point? Or what are your thoughts?
Mark Walker: Yeah. I would say, I think that the more -- the larger publishers have started making the transition as what we have seen and what comes through with the partners that we work with. What we're seeing is the smaller to midsized publishers are a little bit behind or they are behind. And so I think that the small to mid-size publishers have a lot of catch-up to do in comparison to some of your larger, more sophisticated publishers that are out there in the marketplace. I think what you're going to see in the future come Q3 and Q4 is really a bifurcation of the marketplace as it relates to publishers that have the means and the capability to make those type of adjustments of going to alternative IDs and working with privacy sandbox. And they have ones that can't. And there -- that's really the opportunity that we think we can provide to the marketplace is helping those publishers that are the mid-tier publishers who might not have the means or capability and work with privacy sandbox or alternative IDs. And we're there to fill the gap for them.
Michael Kupinski: Got you. Thank you. That’s all I have.
Mark Walker: Thank you.
Operator: Thank you. That does conclude today's question-and-answer session. I would like to turn the call back over to Mark Walker for any additional or closing remarks.
Mark Walker: All right. Well, thank you very much for joining us for the Quarter4 and full year 2023 results, and we look forward to talking to you at the end of Quarter1.
Operator: Thank you. That does conclude today's presentation. Thank you for your participation today. And you may now disconnect.
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