Ziff Davis (ZD) 9 Nov 222022 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Ziff Davis third quarter 2022 earnings call. My name is Paul, and I will be the operator assisting you today. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. be Chief CEO Davis. Financial will and Ziff call Richter, Bret Officer this Vivek of Shah, Davis; On of Ziff will Davis. call Financial the now Bret I Chief Richter, over Officer to Ziff of turn Thank you.

may You begin.

Thank Davis qX conference Ziff to investor morning, you. call everyone, Good welcome the and XXXX. for

Bret When call. mentioned, presentation Executive Officer Officer, website. on Shah. our Chief launch on which available A of is presentation A by Ziff button As the the Richter, joined viewer this Chief operator Davis; there available webcast, the our will expand a today's the you for is to of is copy the I am Financial side, and slides. I'm allow Vivek on you right-hand

the through access press release, If have you you our website of it at www.ziffdavis.com. not received copy corporate may a

regarding addition, formal The In completing will at After the be a access questions. Q&A. conducting time to procedures you'll this you operator webcast site. from able the presentation, instruct for be asking we'll the the

In addition, investor@ziffdavis.com. can to email you questions

remarks, our safe the language. we harbor begin read to allow me Before prepared

and results. webcast As results this call differ actual would and the Such uncertainties involve the you that cause statements. will include from to materially statements know, may anticipated forward-looking risks

filings, as discussions have Some proxy those forward-looking that well as webcast. slide to, factors in that well XX-Q are we of XX-K statements risks harbor our we refer for included We safe our uncertainties language, have and documents filings, SEC not as in risk additional to as of various the those show statements. part regarding the as include, you the recent but filings, disclosed and X-K limited risk factors filings, including

remarks. call me for Vivek turn let to over Now, the his

forma strong third in X.X$ good EPS morning, pro in quarter. of Against able headwinds non-GAAP as XX.X%, you, the as well global respectively, EBITDA the economic and Bret, to growth backdrop market, deliver advertising of uncertainty adjusted were and and pressures, we Thank the and everyone.

Our through we're generating environment. earnings growth investments, recovery for focus managing same cost remains time, on targeted has reduced focused the macroeconomic while and a market company challenging through the base. changes eventual organizational a positioning been upgrades, and and operating At an

continuing We fund the our sheet current to Finally, climate believe balance we of present opportunities. program. a us rich acquisition will our strengthen to ultimately are targets and set with

us. And roughly quarter, growth, category. we quarter, quarter, was for the Entertainment a and a as like in third me saw comps. explain revenues declined in ongoing QX, share year advertising the time, the the Advertising unpacked was continued market, combination we In RetailMeNot and bright prior pressures vertical, market we and tougher our Let which spot mid-single which At The similar was to in we observations advertising ad flat given about some the ad environment decline. Gaming in by experienced comps, the business. like tough just did the our second it grower decline QX. same be to the a of digit well-known and positive, revenue X% needs last in view the

offers.com, view have at declines we smaller as We our seen some properties, of one reversible. which

revenue. The provider pregnancy advertising business being in and business our health we business within by advertising offset pressure main pharma continues sustained has by in quarter, direct our growth on Our in consumer direct where the declines in parenting and continued was been our drag the business double-digit be in with to stability segment, to flat aided tech, pharma acquisition. and

the rising dollar. interest quarter, rates, strengthening the sits As at supply said issues the of the last economy, tech including inflation, category center roiling global and I the chain,

a has Subscription across connectivity allows we quarter. back challenges, a XX% to cycle multiple the itself is market. weather X% revenues that shopping, RootMetrics, will out, categories, providers in this have we're needs. and We business advertising experience in and gone we clients our stream very of governmental but integration diversification Lose well believe broadband connectivity continues most including As complete star tech, space have We continued will play Lose and advertising organic to The Gaming to Entertainment, to incremental demand need our for growth revenue the And positioned within to very that This close well unique The which the and technology has as connectivity to positive gains their on It! acquisitions. their meet pair this quarter tools added as health they and expenditures. business, we strengthen. an Healthcare, universal to having pushes by our trajectory, through the and business. as subscription and which remains broadband believe to well. It! Ekahau, allow been grew users surge, the grew us includes dataset Ookla, continued believe

team the the with overhaul we've about security, in we've an new this promise, underutilized US lapped X%, focus more which on optimistic program, quarter with a fully addressing VPN, the MarTech outside see to as a ability strategy, app acquisition, an third to and continue pressure partners the we're such Cybersecurity and QX. Moz including will time, added grow partner In our Our our means channels market new to go our as pivoted business, in unit. to stores. consumer in mobile and revenue by but now In take some businesses new we're which in showing declined market we This channel-first uptick of Cybersecurity are a in opportunities the subscription Cybersecurity BXB activities.

adjusted not the were This year, we're seeing informs than FX, slightly point, for for of guidance. and any FX. adjusted points lowered declined a why but X.X%, view evidence at for had marked is in slightly We balance the revenues revenue organic XXX the revenues our roughly we've recovery, by our a for what QX, of which when total but this basis X.X% hoped saw QX year-over-year, down improvement. when up quarter our is we but While worse for

However, we're doing to and we're EPS the proud of growth. pro to deliver forma EBITDA work continue adjusted

EPS full forma pro growth X.X%. shows adjusted and year guidance new Our of

our As margin I these at management. are last said we that like it's call, times at particularly in adept

forma year, XXX what pro points margins EBITDA were meaningful done an and FX headwinds. about planning we've notwithstanding on do last in versus QX elaborate basis bit of XX.X%, adjusted to earnings. improvement Our I'll are to support a

the First, and employees from about about XXXX very we've the we're start approximately the X,XXX really judicious entered been pro X,XXX. with forma We year. acquisitions, for of at year currently headcount

headcount. year. has versus to roughly last should I by continue X% will our out point manage also per that head our We increased revenue

pursue well. cost as measures other to continue savings We

While understanding implementation new with onset we COVID software our XXXX, pandemic, a of corporate savings we right improve with the the procurement spend established to in solutions inside a our enhanced improved will of visibility. number opportunities the efforts of function of data pockets identify an of We at we recently the company. all believe the of

executive managing recovery. from to structure for we success. led optimize split Jarrett towards We've executive clear see continue Slide, us approach unit, recently our been continue estate has accelerating a Raise, over development and hybrid view our At also and for shopping a the to real well-respected costs, which real time, technology Finnerty, now eye allowed to key Mike portfolio. being Sidaway, opportunities who has we're to embraced the the shopping for further longstanding business same We to us two the up came estate reduction. and work, He's to with a our well and ours, with setting by We took the assets who reduce a positioned and Groupon. challenges, retail run and in be space. shopping of organizational business technology into rate current units, substantially

of to million has great that with us. welcomed have deploy was capacity right also us ratio are a These and opportunities a organizational times, acquisitions. XXX Altice, cash of made our of Layth are a our leverage two drive Taki and new deal comes sheet, of Officer. in future the changes capital best investments we and Accounting selective With key very company being Chief on of CAO, now, Layth as also longstanding continue working relationship to the just hires We he we've to a Bret. success. from few where front the to We're gross for balance to believing and

instincts. patients our for to discipline. I timing appreciated a have investors when is our capital be our precious, of assessment I and and in rewarded expect At market. prudent We time we're being believe the believe

with we now selective prior window right significant XXXX. as approach. felt the correctly continues and believe are that M&A we Having to will today's a proper the accelerated we a consummate to that, the year market work the I like market. instance, capital our next being to amount complete Similarly, end read specific our we challenges anytime of last we likely be recognize spinoff resolved cash to shareholders’ put efforts year, the of which in broader in soon. the said not Consensus tax-free macroeconomic is the that had to For very we of believe transaction to our

are SBTI released Let committing over me inaugural for our validation. we comprehensive years near-term we efforts. as scope provide Science-Based best and after science-based to Initiative, and with targets and and ESG working submit Ziff emissions meet and exceed one, ESG setting, promotes committed setting we the known several hopefully This is our three target are report, practices next SBTI. you with In defines reduction about to because be we'll a SBTI Davis's reduction an to two, to March, targets, Targets emissions exciting them. shortly update we to on targets in

companies times to in mentoring the group I with by group host to these hear in of employees supporting Ziff to we setting week, the they science. leading environmental, family transformation proud year, second communities. climate an employees, who continue are affecting need It's our that grounded be enormous Summit involved a our with a challenges our join very for where to targets are participating, on focused and in our global Moreover, Davis done proud with throughout its colleagues employee do social, to program, are be Ziff and are upon will our caregiving Earlier within say, family esteemed this at We from to Mentorloop and out of us. company work XXX employees. as particular zero-carbon like and who of change added programs. annual mentorship rolled making to over we'll next to us and who employees one Davis XXXX difference XXX Needless their recently societal impactful we continues continues to and year-to-date, in our Ziff Davis incredibly partnerships the recently has positive respond life. resource awarded mentoring grow, most groups Engagement over support Purpose

longstanding our has been that reiterating growth. by profitable focus as conclude a me Let company on

a deliver We're the but total our growth company, organically focus growth pursue through both business on the and bottom bottom demonstrating regardless ability we to cycle. a As M&A, on to a protect with always how is challenging growth operated line being our needing in of change approach. to market. not pivot to or downside, the our we've upside. This always exploit is which simply business, poised We're ourselves the line while

me let call the Now, hand back Bret. to

Thank you, Vivek.

results. financial our discuss Let's

both release Our non-GAAP reflects financial GAAP earnings XXXX. for results our QX and

Our adjustments also are impact reconciliations dispositions. release. adjustments pro the reflects various earnings asset release XXXX and of the provided of Explanations in for these for forma

XXXX in reflected previous XXXX our sale our related are respective BXB their business we date. the September completed were results are BXB voice sold sale, As UK Backup year-to-date in sale these of of our through our XXXX, in and to discussed through The XXXX. reflected and results during our business QX of the results date February, its our Backup assets earnings divestitures in calls, financials

presentation do these However, October or results spinoff of not XXXX completed impact the XXXX, Consensus. X, of we QX year-to-date divestitures the On our

the financial financial GAAP Consensus relate income the activity operations. related of that discussion the operations, to to business, Consensus from Our the year-to-date Ziff the in our XXXX Davis. discontinued my from will pro our continuing they from exclude businesses QX contributions which for XXXX divested the commentary contributions our QX forma We'll and and reflects by portion period owned were focus today non-GAAP results primarily and QX exclude statement

adjusted the results value as third for on in the increased reflecting with We period, foreign EBITDA Now, prior would from a currencies, let's compared and from Pro have review reported values million growth quarter, for million our negatively certain And for the year X.X%. by with XXXX the comparable the revenue results, financial US X. for the The of applied pro forma reflecting operations was this $XXX.X our summary decline of impacted quarterly growth $XXX.X continuing rate. XXXX prior $XXX.X Slide QX $XXX.X if year X.X%. compared of the currency dollar of XXXX, continuing of approximately forma million million to were as period, QX operations revenue strength X.X%. of decline

EBITDA adjusted was forma per X, earnings margin This Our non-GAAP performance adjusted as advertising Slides On reported subscription. pro X sources two primary XX.X% of quarter our non-GAAP We our third XX.X%. provided $X.XX. forma revenue, and with figure reflects for for the summaries results. a we XXXX and diluted pro quarter increase QX have share of compared

in months. the QX As revenue by prior markets. you this declined Advertising revenue as again, slide can by last period. currency during advertising XXXX pro compared declined And by X, with impacted forma see foreign on was the trends X% XX X% negative the

trailing quarterly, that XX FX. approximately revenues, XX.X% statistic and QX XXXX, on Our months was recent advertising annual net pressures including for revenue reflecting update advertising we retention the

the the negatively with performance. As during the the Slide quarterly decline of The the Sequentially, X,XXX seven revenue X for revenue to year, forma compared nearly advertiser average driver third on by and primary XXXX FX. Ziff subscriber full per decreased was a again XX quarterly includes is months. $XX.XX have which grew defined of metrics our $XX,XXX. QX our XX% subscription average of the with other approximately quarter, businesses. quarter was $XX.XX. significantly of subscription at this last pro of quarters. It!, Subscription of average subscription average impacted a last depicts Lose X% per the a than in revenues The by revenue grown by in number as significant revenue acquisition last had slide, Davis subscribers, characterized subscription table bottom Slide revenue the monthly X advertisers, recent of our lower our inclusion

customers, slightly It! average of and million Excluding count. subscription revenue subscriber and a the per its higher impact revenues, actually quarterly slightly Lose to sequential customer increased X roughly due lower

of Our points reflecting overall revenue XX revenue in data basis Because sales is as from primarily in data compared often contracts a the QX churn metric, six with other licensing activity. certain contracts, rate figure excess revenue period impact to these churn churn which increased disproportionately, X.XX%, are of sums, Ookla. of XXXX any at given this timing subscription can

which while from year-over-year XX new total revenue Ekahau’s and for provides growth owned company's XXXX included rates. driven Revenues revenues X other QX are million, XX organic to forma sales months was XXXX. for businesses at to by in full launched revenue, QX least owned X% businesses quarterly pro revenues Slide than months. relate in acquired the $XX.X we've Additionally, a organic of grew Sidekick X, less

with adjusted XX%. reflects third X%, last decline compared which the growth headwinds. was growth total was is growth reflecting third minus our XXXX For again in XX organic while And months, part during FX quarter organic a revenue X.X% quarter, FX, X.X% this or for

refer please Slide sheet, X. balance our to to Turning

extremely Our balance sheet strong. continues to be

cash of end cash nearly of had $XXX long-term investments. XXXX, short and and QX of equivalents, As $XXX we million million and of the

significant have trailing quarter leverage leverage a gross value and net end, our leverage X.X to the X.X if XX financial also basis. declined include two net on Gross you was adjusted We At both investments. times, EBITDA. of leverage times only and times months capacity, our

our delever monetizing Solution balance Cloud a again XXXX, to of half our million Consensus QX sheet we a transaction further completed complex During by shares.

the monetize basis. discussed on the anniversary prior the we to spinoff, a completed we these of shares tax-free on prior had to As the have opportunity extent calls, to first

required securities. tax light million for in with exchange certain In the of outstanding all, from the this portion notes. second XXX value the specific a repurchases, retiring we towards the We repurchase shares. debt we million us these an we QX of realizing in applied value However, these $XX our during and considerations, the completed of a respect expense, of very interest quarter, of to shares, shares third transaction XXXX, for of value senior Consensus exchange a while the the resulting In during notes accretive the equity third realized transaction, Davis believe Davis cash of these par, applied a future million XXXX along be towards steps, our additional value transaction only the our reducing $XX this million repurchases Consensus discount In reflects notes. the during Ziff at X.XXX% and of senior could gross these Ziff with remonetization to approximately transaction, QX providing us company, flexibility. of financial of for prior half quarter, achieved the leverage through

with Moving potentially shares holding realizing forward, value our regards for of securities alternatives Consensus, opportunistic we for to remaining be million of X.X time. a to considering these will period including

deployed dispose which As anniversary years securities a XXXX, the our $XX from to to capital the more of third we is shares. shares repurchase these end did the spinoff than we common our million four the notes, approximately our X.XXX% We of reminder, and senior million of fifth value quarter. repurchase QX par prior Consensus, of to of $XXX need common of during now. Through approximately not

in health face to to continue environment, challenging pursue sheet. value, the a we prioritize an continue continued continue capital have priority and balance of various will M&A attractive macroeconomic to We flexibility We enhance to of shareholder the that believe our we investments. effort with pursuing allocation a to alternatives

formidable enhance user and believe small related quality, of service will transactions, we and assets the mobile third Ookla’s film, data M&A the period of CellRebel, enhance acquisitions which in we marketers, certain to current During have of $XXX already and certain and creative with and collect relationship nearly ability social and product we of prior closed experience and streaming analyze quarter, deployed integration we which activity. believe Year-to-date, two XXX, support will to million capital further TV, deepen its capabilities. IGN's service

are XXXX in that to to this Slide we are August. presented revising Turning guidance, range And guidance presented. we XX, Vivek as noted, you revised the details refer range the if of

as XXXX year guidance rates, concerns. US by rising indicators our midpoint Our QX X%. the views QX fiscal the of reflects and macroeconomic including performance, well certain performance, lowered recessionary and pressures, dollar, our our guidance of interest of revised strength revenue continued We updated the as

end EBITDA, non-GAAP adjusted high by end, the the For low keeping range we the narrowed lowering place. in but

we non-GAAP X%. raise For year-to-date our EPS, bond including income, a expense, guidance adjusted midpoint to reflecting of lower year-to-date factors, higher number other is by attributable our This the of repurchases. and interest

We have compared with XXXX, expectations. as experienced revenue initial pressures throughout our

throughout in XXXX, sheet, However, structure, our we earnings to as been well on have an managing continue as goals. focused cost effort to balance our our support growth

to our expectation our have all expectations discussed of continue. that As XXXX will We the earnings believe we strong we efforts and prepare year-over-year is prepare today. these XXXX, notable, continued growth conclude given factors of for

our GAAP are GAAP statements non-GAAP Following our XX free business operations. reconciliation on flow various slides for a supplemental measures including reconciliation continuing Slide equivalent. to section from the outlook that This includes materials, cash nearest reflects their

EEPs you including a of metrics, how proud that, September adjusted be QX from XXXX. This year-to-date for as the having adjusted figure continuing would disposed result, ended Consensus, nine million. our but their non-GAAP our a collected XXXX months Overall, disposal expected continuing quarter our as free discontinued and of the XXXX contributions free in to typically to QX EBITDA the I cash revenue our UK from Note, comparable growth questions. XX, seasonally a on a achieved current assets operations $XXX.X recently flow key XXXX. was instruct challenging also free are and dates, flow well both financial queue With not as our also performance, environment. Backup This reflects slide QX us EBITDA, adjusted rate, is reflects the we Our as reflects portion company's now is of ask stronger rejoin in operator number cash in and QX and to operations. BXB through fourth a cashflow voice typically significant conversion and a quarter for revenue and lower for is

Instructions] Rishi is Jaluria the from first from [Operator question line is coming Rishi, And your live. RBC.

my Thanks wonderful. Oh, much question. so taking for

time some environment? pertains Just going that time accurate the one into for this year, me. Vivek, given about the as I be around. like, thinking a challenging and everything as pretty and eCommerce on out comments and QX, we proved eCommerce about you how kind are you know to to it of this macro forward-looking looking around last think had season

So, implied into it about what's we season of us give as embedded expectations QX and the guidance? think you Thanks. kind into this your time, the how should heading

Good morning, Rishi.

that season, shopping look, So, characterize our in QX of would in I and I eCommerce cautious. as holiday think view particular the

a environment bit QX, think think recognize comp that of the as point year's seen we you that and the last weakness. showed in I signs do improvement. as we little really any sense out some hasn't had easier I is thought, the

and I consumer think the the we'll are like, what know obviously the of in of coming in a weeks combination marketplace. what deals lot retail what to opportunities as and demand the the nature different more looks

So, it's and would convince I where may I there risks. be think see We our I ourselves our see say, characterize can upside, we scenarios there cautious. potential then are opportunities but early being where character view where can guidance, as you say to would - too

I fairway built in and call. into our shared our of terms the revenue the we So, in earlier think of we've center that guidance of kind what's guidance gone

Wonderful. Thank you so much.

Will, line is is Thank from Will you. coming the Baird. your And question from Power live. next

environment? some looks and mean, results what that given broader on it that at, right you're just it creating there, just a Thanks, actually just I be reading meeting the M&A targets active. comfortable given on broader macro? of would macro to principally little quieter valuations looking great. pipeline it current any get know pipeline. like getting like you with expect and function perspective to here. operations probably sounds just Okay, the I broader what's mean, Is the if I been the and reticence for you've of you, your Vivek, more is love still color the a I'm

question, said done the I of I is, great no, listen, a we markets job in it’s Yes, good which go back in to what operate. which really the earlier call, a and I understanding think we've

I Consensus success saw and and well, the think ago year obviously I a we a been spin, that's shareholders. back to affected great for when that a window over we think we timed

Our headcount understate I don't that piece management, underestimate want to that or it. of

have signs. top down headcount the see year of were of starting been these as some We on XX% of this beginning from to the we

so, put believe our precious And which capital patience is, to to and is our do discipline I for time M&A We when be into sensational that very be category capital opportunity we are precious. us. of going there thinking, at want with that a

have patient. And more being the we so, as we've word, but been - use why I think view I your to reticent, that's reason it

I view market also think has view I I I turning. think cycle don't the would mean. as this to and macroeconomically market there into. said, short-lived, settle in though, think the maybe they be anyone cycle, I And think that that views that As now, do earlier is need this was a I the something

word capitulation, a word to think so, we're perspective, want I you whether the whatever think approaching that. And use, seller's I from is

exciting my view, of it's point us position for in. be to from so, an And

this seller's rewarded. and well, patience As only the we think what think acquisition-driven an our in going I have last I company a to think been I this you been know, to rotation, And time has we be will is decade we - market. hope for

effort are believe deals, had is, the for deal or close in all only the opportunity have want in of but this Well, take capital. I on else. we Vivek we've on move add we I'd XXXX reasons or whether impact kind some actively not also, of some of managing the consider to we these and deals, something mentioned, but thing versus human the integration to And to to

out we had many them are So, there for you next an is is months? allocate we've where say, but to six XX and are energy opportunities them, asset our just and look this patience but And in want the we attractive of some environment. in to there that believe ways,

makes all That you. Thank Right. sense.

next is Thank James, from question live. of you. James the line from Blair. your Breen William And coming

the taking Thanks for question.

Just about there. customer loss on the subscription the you talked side,

this move would to average the low subscriber forward? revenue, of we say So, and there, Thanks. or monthly you come see that the revenue revenue of per in we'll back quarterly point is the down start in churn sort rate terms as a

on think to James, lot new metrics, obviously, to mean, highlight going are these tried a metrics think Yes, we've these couple company. and in I relatively I a these I there's the in calls.

It! of what them tried dynamic as subscription see. will, very large them think is we this average by in way revenues. if is as customer you a the I evolve formally Lose at few And revenue. customers, was the base characterize very make of changed I an seeing a mix the started even quarter, we as impact, average these you quarterly by and metrics. the to that's - activity opposite the we're sure at we low back, And the end We're But And on year, And analyze revenue this at year relatively ago acquisition characterized at us year. taking we Lose points some they're rate continue particularly in customers characterized have that's the term across really But impacts, of and revenue try early second different a going this types and many metrics by these the revenue different to we've a characterized the per customers. customer - to I also possible. many, a rate, a to other a prepare which to about churn rate significant impact subscriber Ookla’s timing of number acquired mean, for them. of step end, to mean, low seven churn figures It!. biggest to helpful

to on give should full to the going quarters the Lose simple That have that in in quarter there. relative think, now you settle of answer a to lot It! a question, said, begin we there's your down I it. do there, So, numbers without the to

The of Lose It! only subscription. growth on the It! like versus trajectory. is a subscriptions impact other Lose The consumer-oriented the business non-consumer-oriented is rates the relative nice

of more will revenue. that then towards average And on starts subscriber, show pointing mix It!, thing churn, It's out. see account-based. the that so, as show you you'll I revenue-based, Lose of customer see And think then not Bret's just up churn terms to what one revenue total but overall also subscribers weigh per in is in up the

one at we quarter of in contract So, have any kind that QX. did of simple that from that, goes and another, influence Ookla a movement to can

Great. Thanks.

coming Thank next John, Jon question live. line is is you. from from CJS. And the your Tanwanteng

good Pete It's John. Hi, Yes. Lucas for morning.

a covered lot. guys You

Just on one business. the Cybersecurity question

You your with there. growth you Can help mentioned expect some us see going traction forward provide that near-term? will ability on drive the where to in the to optimistic about you update programs grow and any

product in in look, disaster features have the mentioned think might from so of No, Sure. some a important our we're last business. I of piece BXB QX point out roll our endpoint call, we in recovery features looking view, to as are that

So, we're for excited that.

a the think amount leadership There's bunch in partners I also marketing Vipre quite pretty gone distribution within a the our and brought of sales been And an we change on a Cybersecurity have down. much as we've in then significant business. the new through move to We Group, channel-first turnover model channel. entire on of organization that from

will you're some also don't, time think The growth. like which subscription includes particularly businesses this piece is distinct, and going And else. before, be a sticky someone it is dislocating it's what implementations. email to us Cybersecurity, some become business, apart why coming only the particularly it, add, three venture market consumers call for space, a for. where and more generally training, which we this It on And sits it, time to The to unless the business sticky when is It's competition that on customer space. it take marketing engine bounty-based business, on Cybersecurity of the Cybersecurity acquisition it generate from security we company, bundling been and is someone businesses, these that are and privacy kind really first people will fair endpoint. can for believe a outbid those our time, into largely competitive these great It were I good opportunities. what a is of the which really amount establishing frankly, take for of a to And I've go includes really you said a into business. together are privacy but for other this this Now, awareness I has security, that, And includes we some lots often shared consumers. the customers, tunnel got that's from. and is looking of that allowed initially a hit programs. There's outpay was cross-selling part of much we've suffered well, VPN us that's gone really growth thing that's is that why

haven't that We in to tried compete world.

to I like the think it's diseconomic. CAC don't We LTV.

return some are sobriety in we've customers, more really for is view, do kind what pay are for to competitors willing of terms or pay point of see got people to So, a acquisition customers. what to willing from of what innovate customer

first a the different pieces, but these new Consensus I also and you me story. where it a when dial progress, few in new was work really company dynamic, product. and know, little bit of of a CEO ideas, role the So, of we attractive a be of growth could new reminds if again, took This can on a said, leadership,

the Very helpful. Thanks. I'll in queue. jump back

Shyam, next from Thank line instructions]. your Susquehanna. And coming is you. from is [Operator Patil live. question the Shyam

on Aaron for our for Shyam. taking you is this questions. Hey, Thank

the just First, acquisition where declines into Are a And is year-over-year. wanted talk could now? to there that saw or the anything there down a sales you the for for and OpEx you far. about Thank right M&A more driving dig a the We declines. just headcount and Is particularly then any maybe else meaningfully call opportunity sequentially there? more potential about the Can R&D category? Thanks bit looks categories marketing you. declines environment came colors so it also larger what's new the to in strategy. all ask M&A out? and one mostly attractive the bit secondly, on And a

Yes, no, Aaron. thanks

which and feel advertising coming ad space. digital what same in acquisition those predicated party undercapitalized, is segment their feeling a time, advertising market the your deprecation have targeting, the third are may that currently those that set sort just the anyone the media whole types on put more At the of most interest-based is would that in on and to this, take of the So, Apple think questions, I ad changes being of M&A, ecosystem ad and respond made quick businesses that know cookie, through to as we probably obviously, first and in say tenuous of has ecosystem, weren't I target-rich of the

can we monetization, and type what more The see those is, first a do is think So, we there. trick contextual models data-driven in. transition specialize which we to party opportunities

would an weathering types are companies their I those. this well. will at grow are resilience interesting are very too. like looking of we same companies to interested I time, in like that that that storm in earnings say, really And us environment we're we the this, those So, proving that actually At are say can are

to So, of sides that coin. it’s me, both

As for units. a say around. we look to larger tend that view, which spread of I verticals look, feed is, deals, to tend our in changed business and our to capital We different anything's number our wouldn't

We new versus general but platforms towards existing bias always platform. a we're have our new a creating platforms, open to feeding

this environment. really, make capital-constrained ROIC we're bets really of need high, needs the going we're that particularly level then to really a if in confident an to conviction of somewhat is environment concentrated just like be that, that be we the from in because to Our inside company, going see to

On largely is side, the would cost that I it headcount. say

company's of managing expenditures manage really, and I to and to As about going well, are we've continue the in really headcount, we're been XX% that mentioned, that well.

We dialing that that of the at have nonproductive isn't marketing LTV looked back what view generating we'd marketing non-productive as kind like. CAC and we

for managing also you're to if that. headcount those GAAP I'd which impact this year-over-year reiterate it's divestitures basis on I'm from But really of our efforts and clearly in the would the still some into opportunities. forma, out, looking items. On is managing a point our where of have an sequential environment categories, to XXXX, P&L, on those comparison, I you're and factors - no, cost relative but our even year, the and line assuming revenue expenditures focus our an Yes, focused the at of pro we obviously, and regards But with it's cost precious. the in revenue our base

much helpful. guys. Very very you Thank

ISI. next Khajuria coming your And is is live. the Shweta you. Thank Evercore Shweta, from from line question

Thank Vivek, for this you have you taking my fairly question. is question. - a high-level

any when could Thank relationships And with a you is. pretty sentiment the of folks? At thinking advertisers are in QX, advertisers good what are agencies QX and a where or have thinking what larger of high You we are thoughts and the sentiment level, next on from you. sense of hearing those change, year? terms

in Shweta, the say quarter. back about would And I human about nature hear the that heard that, I heard this question, sort returns around that year the it's many some say QX, present but say of to think it's half. it's and for earlier I I quarter. QX, I've that

said are to going expecting new going recovery responsible can. our that We're we very on just of to recover, the business that environment growth, more also promise. the the sheet, about that going reality no think feeding inside business. We're rely being opportunities be When is the not the strong unchanged. operating true, market as focus building remain market And on view our to and the be point only because balance starts precious think we I've the I company as point the the we macroeconomic our important manage that well we it's in to we Not we I in one are because have but in capital, We're from earnings manage is, a is, knows. to us talent. to know will near-term. I for think driving very to way what a position, we're bringing think smart

it's generate one And of we so, continue to EBITDA allocation We've have a gross margin I mid-single to proud QX media that single I am I flow-through do very, very certainly can a is in I easy thing on. a for successive that's we're our reallocation decline guidance it's growth that business. And that about digit with of am we're it for for our talking implies done think for any to reality, revenue, which resources Obviously, possibly the an quarters. Look, company focused fact - think is three high easy growth. proud or businesses, impact. do, think the digit earnings same. the of. organic I not which don't

an to all in look, certain tell but could in think wish I put be same, environment a capital to tell I a from of think down in point I are going could it returns that the I few wish return, quarter, the the So, some are think certain the really ball years crystal I when us you, date amplified to you, things opportunity like ways, going road. I this, affords view to ways work,

say but for would built one this. likes no I we are this, So,

That makes sense.

is with and also thing - only it's add sectors the I'd Shweta, sub-sectors.

company feel a capital and a overall. to year pretty sense. human So, the if the take and in of to we multi-year I negative but happening make about tech comfortable market. of lot on make betting the bet, strongest of saying one this big tech, - what's impact has were not multi the from tech at a see of commentary that Clearly, some moment. It’s been There's layoffs the we going the economy to biggest seems our players, all parts

and pharma. delays, more Consumers particularly to And to health been release pushes, impact. is tied more that's tied cycles. specific And quality on been our hit on releases, of advertising we business, to a business And businesses advertisers, it's lot this better. it's year, releases, a large quarter-by-quarter by mix. performed see wellness gaming largely going a if basis, Our professional decisions while

not environment So, consistent advertising has business. been I a overall, aspect way, headwind but meaningful every in of think a our advertising the in it's

makes Thanks, Vivek. Bret. That sense. Thanks,

closing like Thank Richter you. now the have any to Bret I There other remarks. questions call in for time. no at were back queue this to would

call. XXXX joining all today you for appreciate us our We Paul. you, Thank QX earnings

we Our and participation’s to day. have and details are of all our on you participate, a upcoming Relations some We website. where see conference Investor hope thank you good

this Thank gentlemen, conclude you. does Ladies today’s and conference.

wonderful time, have this lines and a your your you disconnect for day. Thank may You participation. at