Digital Turbine [APPS] Conference call transcript for 2021 q4
2022-02-08 20:01:07
Fiscal: 2022 q3
Operator: Good afternoon, and welcome to the Digital Turbine Fiscal 2022 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Brian Bartholomew, Senior Vice President of Capital Markets. Please go ahead.
Brian Bartholomew: Thank you, Gary. Good afternoon and welcome to the Digital Turbine fiscal 2022 third quarter earnings conference call. Joining me on the call today to discuss our results are CEO, Bill Stone; and CFO, Barrett Garrison. Before we get started, I'd like to take this opportunity to remind you that our remarks today will include forward-looking statements. These forward-looking statements are based on our current assumptions, expectations and beliefs, including projected operating metrics, future products and services, anticipated market demand and other forward-looking topics. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. Except as required by law, we undertake no obligation to update any forward-looking statements. For a discussion of the risk factors that could cause our actual results to differ materially from those contemplated by our forward-looking statements, please refer to the documents we file with the Securities and Exchange Commission. Also during this call, we will discuss certain non-GAAP measures of our performance. Non-GAAP measures are not substitutes for GAAP measures. Please refer to today's press release for important information about the limitations of using non-GAAP measures as well as reconciliations of these non-GAAP financial results to the most comparable GAAP measures. Now I'll turn the call over to our CEO, Mr. Bill Stone.
Bill Stone: Yes. Thanks, Brian, and thank you all for joining our call tonight. First, I want to formally recognize the amazing hustle and effort of our combined One DT team. This is our second earnings call, announcing a full quarter of results as One Digital Turbine, and I'm proud of being part of such an amazing team that is successfully scaling together so quickly. I also want to welcome Mollie Spilman, who officially joined our Board of Directors last week. Mollie's deep ad tech, mobile and cloud experience will be helpful as we scale and grow our company. Tonight, we're going to focus on our December results and our near-term forward outlook. As a reminder, we hosted an Analyst Day in November where we discussed our longer-term outlook and strategies, and how we plan to build DT into a $4 billion top-line and $1 billion bottom line business. For investors that want to better understand our longer-term approach, I'd encourage you to go to our website where that replay is available. For our near-term results, I'm going to break my remarks into four areas: First is some commentary on our consolidated results for the quarter, including a breakout of each of our segments; second are some real-time operational updates; thirdly, we'll update on the strategic integration progress of One Digital Turbine; and finally, provide some commentary on the current events going on in our industry and economy such as regulations, supply chains, inflation, Apple's IDFA impact and others. For the December quarter, we delivered just over $375 million in revenue and $57 million in EBITDA. Compared to the December quarter of last year, this represents over a 300% increase on an as reported basis and nearly a 40% increase on a pro forma basis for revenues and more than 150% increase in EBITDA on a reported basis and nearly a 50% increase in EBITDA on a pro forma basis. I was most pleased to see the operating leverage of the model with our combined entity as we were able to deliver strong revenue growth while holding operating expenses flat year-over-year. As we've said on prior earnings calls, the ability for us to grow the top line faster than the expenses required to support it validates the profitability of our platform. To support this point, I want to call out our all-time record of $57 million of EBITDA generated from the December quarter as proof of the strong operating dynamic and the health of our overall business model. Turning to the segment results, this will be the final quarter that we break our results into our three segments of On-Device Media, AdColony and Fyber. We did this approach for the past year given the historic public company comps for all three companies that could easily provide a pro forma apples-to-apples basis for investors. But as we begin our new fiscal year on April 1, and we've now integrated our companies together, we will begin breaking out our business into two segments. Our On-Device business comprised of our App Media, Content Media and SingleTap business, and our App growth platform business comprised of our Fyber, AdColony and non-SingleTap Appreciate DSP business. This will allow us the best of all worlds in finding the right balance between a greater focus on our customers our ability to simplify and our ability to accelerate our synergies. We've recently completed a restructuring of our organization to align with these new segments. I'm pleased to announce that we have appointed Mike Ng, our former DT Chief Revenue Officer as President of our App Growth Platform business, and hired telco and ad tech industry veteran, Matt Gillis, to be our President of our On-Device business. Both leaders have P&L responsibility for the respective segments and are supported by a shared service infrastructure team to ensure we get all the one DT synergy benefits. We're using this current March quarter to make the transition from our three-segment to two-segment approach as we begin the next fiscal year. Turning to our December quarterly segment results, our On-Device Media business set all-time revenue records and generated over $134 million in revenue, which is 43% growth year-over-year. Driving the strong organic growth with strong performance in our Content Media, App Media and SingleTap business. Our revenues for the On-Device business in the last three December quarters have gone from $55 million in 2019, $93 million in 2020 and $134 million this past quarter. We're happy to see such strong organic growth driven by improved revenue per device and accelerating device growth. In the December quarter, we saw over 68 million devices integrated with DT Software, which is an all-time record. SingleTap has been a major driver of the strong top line results. After trying for many years, we proved in 2021, there's a real business with SingleTap as the growth broke out in a major way as revenues increased 800% year-over-year. Now as we turn to 2022, we are focused on four main areas for future SingleTap growth that's comprised of optimizing performance for our existing advertisers, increasing the number of advertisers on the direct platform or DSP that we purchased from Appreciate. Third is the licensing of the technology as more of a SaaS-like play. And finally, is getting SingleTap on more global devices. I'm pleased to report that we made progress in the quarter on all fronts as we increase the number of active direct advertisers to approximately 50 and are working with multiple Tier 1 partners on licensing SingleTap more broadly. As mentioned earlier in my remarks, we also added 68 million new devices in the quarter. But in addition to the strong SingleTap growth, revenue per device or RPD grew nearly 50%. RPD is a core health metric of our business as it showcases the value of our platform to advertisers and to customers. And finally, it is important to note that this is our organic growth and now with our synergies from our acquisitions and continued expansion with new and existing partners give us optimism on the future growth prospects for our On-Device business. Turning to our AdColony segment. AdColony rebounded strong from the September quarter with 53% sequential growth and 28% year-over-year growth comparing December quarter to last year. In particular, the AdColony brand business, which is highly strategic for our one Digital Turbine efforts, showcased approximately 35% year-over-year growth. The Performance business, which is contracted in the prior September quarter by 18%, primarily driven by Apple's IDFA changes, rebounded nicely with nearly 25% growth in the December quarter. We continue to be excited with the expanding new brand relationships in multiple industries with new top-tier names such as Procter & Gamble, Disney, CVS and Progressive Insurance, just to name a few. Turning to Fyber. Fyber's full quarterly results were impressive, showcasing year-over-year growth of nearly 50%. Even more impressive is Fyber's EBITDA increased over 150% year-over-year. In other words, Fyber is not only accelerating growth on the top line, but it's now at that critical inflection point of scale that enables accelerating operating leverage in the core business. The impressive growth was driven by both rates and volumes. On rates during the December quarter, Fyber saw eCPMs approved across all ad formats to a year ago, while increasing impressions by over 40%. More specifically, fueling a strong growth was marketplace video and our APAC region, which were both up over 100% year-over-year. Both AdColony and Fyber had made strategic investments in video rendering of mobile ads over the past few years and are now capitalizing on the macro global tailwind of video ad formats as advertisers prefer the stickier, richer a more pricing elastic ad format compared to other traditional digital formats. And for our AdColony and Fyber businesses, we saw combined APAC revenues grow by over 90% year-over-year. While it's still a small percentage of overall revenues at approximately 15% of our total AdColony and Fyber revenues, but is that we add more synergies and devices in the region, we're excited about the growth prospects in that part of the world. And finally, on our segment results, we're beginning to increase our focus on revenue synergies. Our synergy revenue run rate approached 10% of overall revenues as we exited the quarter. We're working on over a dozen different revenue synergies between the companies, whether it has AdColony's demand on Fyber supply, Appreciate buying on Fyber supply or expanding AdColony's demand reach with our DT Content Media products, just to name a few examples. In addition to the revenue, these synergies create, many of these synergies also improve our gross margins while simultaneously delivering more value for our partners by taking unnecessary links out of the supply chain of digital advertising. This is a major strategic focus area for our team to accelerate our progress here. Turning to our forward outlook. I want to provide some commentary on how we’re positioned for continued growth. With our acquisitions, our growth levers of devices, products and media have not changed. They’ve just been accelerated and expanded. First on devices. We’ve now passed over 800 million devices that our software has been installed on, including 68 million in the December quarter. We’re excited to begin working with new partners such as Oppo and Vivo and are also excited to begin expanding further with existing partners such as Samsung and Telefonica. On the product front, our revenues from Dynamic Installs grew by over 20% year-over-year in the December quarter, but now only represent 15% of our total consolidated revenues compared to over 50% last year, as the company has been repositioned to a monetization over the life of the device company versus just the monetization first activation company. Our revenues that occur over the lifetime of a device now represent approximately 85% of our total revenues compared to just about 50% last year. Diversifying away from revenues only attributable to first boot and monetizing over the life of the device has been a strategic priority for our business, and this progress is material. I mentioned SingleTap as a major growth driver earlier in my remarks, but we are also looking to drive growth in many other products such as Notifications, Discover Bar, FairBid, Offer Wall and Marketplace. As a simple example, our Smart Folder product grew by over 300% year-over-year. In other words, diversification is working well to drive both top line growth and we don’t have reliance on any single product to drive growth. And to further emphasize this point, this is now our second consecutive quarter where we do not have a single partner or customer that constitutes more than 10% of our revenues. I now want to turn to our integration updates. With the completion of the acquisitions, we’ve now successfully assembled the key pieces for our full stack end-to-end ad tech platform. Last quarter, I spent time in my prepared remarks discussing the strategy of how we’re going to win and tonight, I want to spend some time on the operational elements. We already discussed the organizational segments early in my remarks. So the first area I’d like to discuss is our Google relationship. Our first material milestone in leveraging our scale was our strategic announcement with Google. Our Google announcement has three primary benefits. First is the financial benefit of our hosting agreement. We expect this to yield material cost savings over the next few years. And secondly, is the commitment by Google to work with us across their businesses, including the Android group. We’ve already begun working with Google on a variety of operational and strategic areas into the future. And finally, is credibility. We understand that Google has been viewed as an existential threat by many to our business and hopefully, hearing from Google in their own words helps mitigate any of those concerns. We’ve been focused on integrating new systems like common HR, accounting, sales force and technology platforms so we can operate like one versus four companies. Combined with that, is also focusing on unifying our processes like how we work on new clients, manage our people and manage our customer accounts. These things all allow us to operate more efficiently so we can capitalize on the future strategy. I want to highlight this to investors to showcase how proud of this, I am from the team. Very few companies can walk and chew gum by simultaneously executing the present while doing all the necessary work to prepare for the future, especially when dealing with COVID fatigue that we’re all experiencing. To close out my prepared remarks, I wanted to reiterate my commentary from last quarter on the macro and industry-specific events happening real time. First, on the macro environment, one of the great things about our business as a cloud-based mobile software company is we don’t have input or hard costs. Thus, our exposure to supply chains and inflation risk is extremely low relative to other organizations. On the regulatory front, we are seeing legislation around the globe about regulating big tech firms to offer more consumer choice and control. In particular, here in the United States, Bill S. 2710 are also known as the Open App Markets Act received a 21:1 bipartisan vote from the Senate Judiciary Committee this last past week as a strong endorsement to continue to proceed through the legislative process. This would debundle the Google and Apple app stores from the operating system and offer consumer choice of which app stores and apps consumers can select. From a DT perspective, we are closely monitoring these regulations and have already partnered and supplied input to regulatory authorities. Given our unique position with operators and OEMs, we see today’s regulatory environment as a tailwind, not a headwind for our business. For investors interested in more details on these dynamics and what they potentially mean for us, I’d encourage you to listen to our comments we made at our Analyst Day in November, which are available on our website. Turning to Apple’s iOS platform and the impact of IDFA, I want to first emphasize for investors that our Android share continues to grow and is now over 70% of our total revenues. But even with this mix shift to Android, we saw a return to iOS growth in the December quarter. Our iOS revenues grew 33% sequentially and 20% year-over-year, which demonstrate that IDFA has not been a material headwind for our business. Other larger players that are relying upon IDFA for things like view through attribution have been hit hard by Apple’s changes, but these factors are not relevant for our business. If anything, IDFA has leveled the playing field versus providing disproportionate advantages to the mega-cap tech players. We already support Apple’s SKAdNetwork integration, also known as SKAN, and our machine learning models improve on device decisioning for players like us. However, what we believe makes us different from others is our concentration of brand dollars from AdColony that work both on iOS and on Android and tend to be a bit more pricing elastic. Our majority focus on Android and our capabilities with SingleTap. And finally, before I turn it over to Barrett, I want to make a comment about the market. Our job is to execute on our winning strategy and our enormous addressable market in front of us. That’s what we can control. But we are living in a time where investors seem to put companies into a growth bucket or a value bucket. We are very proud in our ability to deliver both significant growth but simultaneously deliver profitability that’s growing even faster than our top line. With that, this concludes my prepared remarks, and I’ll turn it over to Barrett to take you through the numbers.
Barrett Garrison: Thanks, Bill, and good afternoon, everyone. We’re pleased to announce a strong third quarter performance across all our business lines and also to provide our outlook for growth for the balance of fiscal 2022. I will occasionally reference results on a pro forma basis, which referenced quarterly results and comparisons as if all acquired businesses were owned for the third quarter of fiscal 2021. We believe these pro forma results provide additional insights into the underlying trends when comparing current performance against prior periods. My comments today will refer to comparisons on a year-over-year basis unless otherwise noted. Revenue of $375.5 million in the quarter was up 324% as reported and 38% on a pro forma basis. Adjusted EBITDA increased to $57 million growing 153% year-over-year and adjusted EPS of $0.49 per share increased 133% year-over-year. Before intercompany eliminations, our on-device media revenue, which represents existing revenue derived from the company’s Application Media inclusive of SingleTap, DST and Content Media platform products increased 43% year-over-year to $133.6 million. Total In-App Media AdColony revenue contributed $94.3 million during the quarter and was up 28% on a pro forma basis. Our In-App Fyber business contributed $157.4 million during the quarter and was up 48% on a pro forma basis. Non-GAAP gross profit was up 169% to $103.4 million in the quarter, and gross margin on the platform was 28%. And on a sequential basis, we experienced an adverse impact from partner and segment revenue mix shifts in the quarter. As a reminder, while gross margin rates can fluctuate from quarter-to-quarter based on our product and partner mix, we anticipate continued margin expansion in the future, in line with our growth targets recently outlined in our Investor Day in November, driven by continued execution on our product and partner diversification strategy. We delivered continued impressive expense scale in the platform as cash expenses were $46.4 million in Q3 or 12% of revenue down from 18% of revenues in the prior year. These same cash expenses were flat year-over-year on a pro forma basis, while revenues during the period were up 38%. Total operating expenses were $73.5 million, including $13.8 million in amortization of intangibles and $6.2 million in transaction-related costs and compared to a total as reported operating expenses of $17.2 million in the prior year. The integration of the acquisitions is progressing nicely, and we anticipate continued cost benefits to be realized over the coming quarters as integration efforts are successfully implemented to further improve our operating leverage. I’m very pleased that our operating leverage and consistent EBITDA growth is being achieved even as we continue to make a number of focused near-term investments, primarily within our sales force and technology teams to support new partners and products to drive future incremental revenues on the platform. In this context, we would expect our EBITDA margins to continue to expand over time given the inherent operating leverage in our business and the return to be realized from our near-term investments and synergies to be generated from the integration of our acquisitions. I continue to be pleased with the profitability and free cash flow delivered by our business. In the quarter, we achieved non-GAAP adjusted net income of $50.9 million or $0.49 per share as compared to $20 million or $0.21 per share in the third quarter of last year. Adjusted EBITDA was $57 million, up 150% over prior year. Our GAAP net income was $7.1 million or $0.07 per share based on 103.3 million diluted shares outstanding and compared to a third quarter of last year 2020 net income of $14.5 million or $0.15 per share. Our GAAP net income included an $18.2 million charge for the contingent consideration related to the Fyber acquisition due to higher-than-expected performance and also included a $6.2 million cost related to transaction-related expenses in the quarter. Free cash flow for the quarter was $36.6 million, enabling us to exit the quarter with $115 million in cash. Our debt position ended the quarter at $357.5 million, consisting of $345 million drawn on a revolving line, plus $12.5 million in debt assumed through the Fyber acquisition. We have recently amended our credit facility to increase the revolving line by an additional $125 million to a total of $525 million facility. Also in January, we made our final cash earn-out payment related to the acquisition, which was based on performance that met our original expectations. We have completed all the cash obligations related to the acquisitions earlier this year. With our expanded low-cost credit facility, a healthy balance sheet, strong free cash flows, combined with the recent transformative acquisitions added to the platform, we're pleased with our current capital position, and we're poised to execute on our growth plans for fiscal 2022 and beyond. Now let me turn to our outlook. We currently expect full year fiscal 2022 revenue to grow to between $1.225 billion and $1.24 billion. We expect adjusted EBITDA to grow to between $196 million and $198 million and non-GAAP adjusted net income per diluted share to be between $1.66 and $1.68 based on approximately 105 million diluted shares outstanding and an effective tax rate of 20% on our non-GAAP adjusted net income in the fiscal fourth quarter. I would highlight that the implied growth in the midpoint of our guidance has our fiscal 2022 revenues growing over 50% year-over-year and EBITDA growing over 80% on a pro forma basis. In closing, we're very pleased with our performance in the quarter and the continued execution from our teams. I'm extremely excited to build on the momentum and the success in our – in the fourth quarter of our fiscal year and beyond. With that, let me hand it to the operator to open the call for questions. Operator?
Operator: Our first question is from Anthony Stoss with Craig-Hallum. Please go ahead.
Anthony Stoss: Hi guys. Hey Bill, I'd love to hear a little bit more on the Telefonica relationship. Has that started or have they started to push out SingleTap over the air yet? And given – or since you've signed that, have you seen any uptick in other carriers interested in that? And then also probably for you, Bill or Barrett, I know it's only been two, 2.5 months since the Analyst Day is there anything that's changed that's either sped up or slow down, you're reaching some of those 12 to 18-month goals? Thanks.
Bill Stone: Yes. Hey thanks, Tony. I'll give a shot, on the first one. And then Barrett comment on the second one a little bit. On Telefonica, yes, we're just in the process of going. It's early days, we've launched in a few countries with them. Part of our plans as we get into the next six months or so is going to be to expand that as part of the global contract that we've signed with them. All the devices that we are shipping to them are SingleTap enabled. And so we're just in the process of ramping and scaling it. So as we think about growth drivers as we get into this year, obviously, that's going to be a key component for us. Just kind of a couple of high-level comments on your Analyst Day comment, yes, nothing's really changed from our comments. We're still as excited about the business, if not more, than when we talked about the long-term views in November. Things continue to be on track. We continue to get great feedback from customers in the marketplace right now about what we're doing. The TAM is enormous. The strategy is winning. So for us, it's just still let's go execute and get after it.
Anthony Stoss: Bill, as a quick follow-up related to SingleTap. Can you comment about what the current SingleTap revenue run rate might be and where you might see it a year from now?
Bill Stone: Yes. Yes. So what we're trying to do and that's why I actually gave some examples of some other products and growth is we want to start talking kind of more about all of our growth of our products versus just any single one. SingleTap continues to do well for us. It's a real business. We're excited about it. As I mentioned in my prepared remarks, we've got a number of growth drivers for it, not just more devices, but the ramping of existing advertisers were up to 50 now on the platform, which is fantastic. And then also, we're excited about the licensing capabilities of that. So as we think about that is more of a SaaS model going forward, that's something we think would be a nice catalyst for growth because that is a $100 billion app and sell market that we can now go after.
Anthony Stoss: Thank you.
Bill Stone: Thanks Anthony.
Operator: Your next question is from Tim Horan with Oppenheimer. Please go ahead.
Tim Horan: Hi, thanks guys. I think at the Analyst Day, you said you had about a dozen products or so. Can you just talk about that road map, where can we be maybe a year or so from now and how are some of the newer products doing? And I just had a few follow-ups. Thanks.
Bill Stone: Yes. Yes. Sure, Tim. Yes, I mean, that's what we're excited about, is the product road map is really robust right now. So whether it's on the Fyber side as we continue to advance things like mediation and expand our marketplace offerings, whether it's on the AdColony side with a lot of the products we have on the brand side, and then on the Content Media and App Media side as well. So we've got so many shots on goal with so many different products right now, gives us a lot of optimism on the growth where we're not just single threaded only to SingleTap. SingleTap is exciting. We're excited about it. We talked about it in a lot of detail at our Analyst Day about the market opportunity and our progress there. But we also want to make sure investors can keep their eye on a lot of the other products that have pretty impressive growth rates as well. And one of the charts that we really liked from our Analyst Day was where we showed all of our operator and OEM relationships and not just expanding new names like we talked about Telefonica here just on Tony's question or on Oppo or Vivo. We're going to continue to build out the pipeline, but also is getting a deeper set of products embedded with our existing partners. So as we expanded not just from one, but we can expand it to three, four, five and in some cases into double digits with a couple of our partners, so that's really where I think we're going to see a lot of growth is we are a trusted partner with many of these operators and OEMs. And so we can expand that whole product portfolio into them. So that's really strategic for us.
Tim Horan: And can you give us a sense with Mobile Posse, how many subscribers you have on there now or what the uptake looks like in the next 12 months?
Bill Stone: Yes. So for Mobile Posse right now, we're a little over 10 million daily active users on the Content Media platform right now, Tim. And as we're now just starting to get going with Verizon and AT&T, we expect those to be growth catalysts for us as we get into the future.
Tim Horan: And then lastly, Bill, sorry to monopolize here, there seems to be in the advertising ad tech world the haves and have-nots in. A lot of people seem to put you in a have-not bucket right now. Can you maybe just talk about what's going on in the whole ad market and why you think you can have been outperforming your peers and why that will continue?
Bill Stone: And you're just talking about the stock, Tim?
Tim Horan: The stock, yes. The financials look great. Yes. But there's a lot of obviously disruption in the industry going on. And people seem to be worried that you're going to get disrupted. Obviously, Facebook had some weak results. Snap and others had very, very strong results. Just from your perspective, kind of what's going on?
Bill Stone: We're excited. I mean, we're proud of our results, and you're talking about many, many hundreds of billions of dollars of TAM. And we've got such an aggressive market to go after. We're showing impressive growth. I mean, Barrett just had mentioned that for our full year guide, you're talking about 50% top line and over 80% bottom line growth. So we think that's pretty impressive. We're excited about that. And our view is that the markets may not get it right from day to day. But over the long term, they do. And we're going to keep doing our thing. We've got a great TAM, a great strategy, a great team, and we're putting up results quarter after quarter, and we'll let the chips fall where they fall over time.
Tim Horan: Thanks guys. Congratulations.
Bill Stone: Thanks Tim.
Operator: The next question is from Darren Aftahi with ROTH Capital Partners. Please go ahead.
Darren Aftahi: Hey guys. Thanks for taking my questions. So Barrett, just a question on your commentary about the EBITDA outpacing the revenue growth and the flat cash OpEx. So it looks like your Q3 performance in your guide are kind of in the low 15% adjusted EBITDA margin, if my math is correct. At what point do we see more operating leverage kind of beyond that level? And I guess, kind of what needs to happen? Is it any particular segment? Are there some integration costs that you feel like are behind you? You said you talked about investing in new products. I'm just kind of curious when we see some more operating leverage as you kind of grow at this high clip?
Barrett Garrison: Yes. I think it's a good question, Darren. One of the things Bill just highlighted the Google relationship, and I think it highlights some of the purchasing power and integration benefits and synergy we're starting to see, especially on the cost side. So these will bear out over the next few quarters. But I would say we've – I'll highlight that we grew revenue 38% and on an apples-to-apples basis, our cash expenses were flat. So just reiterating the operating leverage we're seeing in this business, and we'll begin to see, as we outlined in our – on our Investor Day. We'll begin to see those margins accrete on both EBITDA and gross margin. That will come over the next few quarters, we expect.
Darren Aftahi: Great. And then on your device expansion on the 6 million to 8 million, is any of that inclusive of the expansion of Samsung?
Bill Stone: Yes, absolutely, Samsung is a major driver of the expansion there. And so we saw some nice return to growth in the United States where that's been kind of really flattish in the past. And then internationally where we're seeing a lot of the growth in overall devices as we go forward. So it's good to see the momentum there and that's important just to continue to capture a wider base, especially as all of those devices that are being put out in the marketplace are SingleTap capable.
Darren Aftahi: Great. And just one last one, if I could squeeze it in. TikTok kind of was called out on the medical and I know you guys have a relationship with them in Latin America and expanded to North America on the delivery side. Is there an opportunity for you guys to kind of work with them on inventory within the application, whether it be video, banner, et cetera?
Bill Stone: The short answer is absolutely. And we've got active conversations going on with them right now to continue to help them better monetize our users as well as get new users. We've been pleased to see the partnership expansion here into North America. We think there's still a lot of juice left in that squeeze for us with them specifically. And then more broadly, you heard a lot of comments over earnings season, whether it's social media competition or streaming audio competition, streaming video competition or what have you. And you remember, we distribute all of those apps. So that's a good thing for a company like us. And so the more that there's competition in those markets, and they're trying to compete for users and get users, and that's what we do is deliver apps and content that puts us in a pretty good spot.
Darren Aftahi: Great. Thank you.
Operator: The next question is from Tim Nollen with Macquarie. Please go ahead.
Tim Nollen: Guys thanks a lot. I've got a couple of questions. One is on AdColony. But would you mind just elaborating a bit more on how that seems to have turned around in the December quarter. It was a source of a bit of weakness certainly on the IDFA that you referred to again just now. Just wondering how that managed to turn around. That's quite a nice rebound there? And then on Fyber, that growth looks like it slowed quite a bit versus – I'm talking the year-over-year growth rate versus the prior quarter. I'm guessing that's just a matter of kind of law of large numbers and a difficult comp, but if there's anything else you could comment on that, that would be great? Thanks.
Bill Stone: Yes. So yes, on AdColony that had a really nice quarter and really proud of the rebound in performance there. The brand business continues to grow, and that's highly strategic for our larger end-to-end ad tech ambitions to be able to leverage some of those brands and names I mentioned in my prepared remarks. So we're seeing really nice growth there across the board. But in particular, was AdColony's performance business, which had contracted in the September quarter and partially due to IDFA. And we saw a nice rebound as we got in December quarter and even December quarter year-over-year showed positive growth there. So that's encouraging for us on the performance side of the business. And we're seeing brand budgets come back. And just editorial comment here is a lot of the big mega-cap tech players have been able to leverage IDFA for things like view-through attribution, and they can't do that anymore. And so there's actually – I said in my prepared remarks, it was actually more of a level playing field right now. And so as we see brand budgets and performance budgets come back to iOS because our eyeballs are on Apple products, players like us are going to benefit from that. So we view that as a positive, and we'll let our machine learning models and our AI compete head-to-head versus things like you through attribution that really give a disproportion an advantage to other players. And so things like AdColony benefit from that. On the Fyber side, yes, you're right. It's just a little bit of a large numbers. Fyber hit a really inflection point in the December quarter of last year. But I do want to emphasize that we're still talking about 50-plus percent growth in that business. So we think that's pretty healthy. And more importantly, it was the 150% EBITDA growth in that business. So in other words, the bottom line's growing faster than the top line. APAC and Europe, in particular, shown really impressive growth as well as on the video side of the business. So we're really excited about the Fyber business and especially pairing it with AdColony's demand in Fyber supply and then being able to also leverage our user acquisition capabilities on the On-Device Media side with Fyber's publishers also has a tremendous amount of upside for us. So we're excited on all fronts in terms of putting this thing together.
Tim Nollen: Yes. No, that's great. 48% growth is nothing to complain about it, just noticing that more of a convergence between AdColony and Fyber now in the growth rates, which is good from the AdColony perspective. So thanks for the color there.
Bill Stone: Yes, I would add is that this is why we combined – we're combining those into one segment, too, right, is to get those synergy benefits so we can have more common approach in terms of how we do our performance, our DSP and in terms of how we also manage our publisher relationships.
Tim Nollen: Make sense. Thanks a lot.
Operator: The next question is from Allen Klee with Maxim. Please go ahead.
Allen Klee: My question has been answered. Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Bill Stone for any closing remarks.
Bill Stone: Yes. Thanks, everyone, for joining the call tonight. We look forward to reporting out on our progress against all the points made on tonight's call, and we'll talk to you again on our fiscal 2022 fourth quarter call in a few months. Thanks, and have a great night.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
