We are pleased to be joined by Mark Zagorski, CEO of DoubleVerify, and Nicola Allais, CFO. Thank you so much for joining us. Great being here. As you all know, I have to run through the disclosures. You're all probably familiar with that by now, but any statements made today by DoubleVerify may be considered forward-looking. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Forward-looking statements are based on assumptions as of today, and DoubleVerify undertakes no obligation to update them. Please refer to DoubleVerify's Form 10-K for discussion of the risk factors that could affect actual results. On the Morgan Stanley side, important disclosures can be found on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures. So with that. You do that without even reading, by the way. No, I know that at this point. Yeah, I've got it memorized. I've done it a couple of times, so I dream about it now. So. Just want to start off, Mark, high level. For the audience members who are new to the DV story, talk to us about an overview of DoubleVerify, where you fit into the broader ecosystem, and what makes DoubleVerify unique. Yeah. So DoubleVerify is an advertising analytics platform that works directly with large brand advertisers and performance advertisers to ensure that their media spend and their ad spend is of high quality. So it is delivered in environments that are fraud-free, that are viewable, and that align with their brand safety or suitability standards. But we also now are increasingly helping to make sure that the advertiser spend performs and that the price that they pay for it is optimized. So think of it as a platform that helps CMOs determine that their media spend is in places that are high quality, but also in places that perform as well. And we do that by sitting outside of the media transaction. So we don't buy or sell media, and we analyze impressions or transactions across all types of digital media, from the open web and mobile app and mobile web to the proprietary platforms, so social platforms like YouTube and Meta, etc. So we are a unique and differentiated platform that is the only one in this space right now that enables advertisers to determine what works and what's good. And I think those are the two main questions the CMO already has, which is, how do I protect my brand, and how do I sell more stuff? And we help them better understand both of those things. That makes a lot of sense. We're sitting here, beginning of March, a lot of 2025 in front of us. I want to think through kind of how you think about the go forward for 2025. Nicola, maybe I'll start with you. On the last quarter's earnings call, you talked about some of the puts and takes that are impacting you in 4Q and in 2025. You had a large advertiser pull back on spend, but you're also going through a business transformation. How do you think about the changes that are going forward with the DoubleVerify business over the course of 2025? Talk us through that a little bit. Yeah. So we've qualified 2025 as a transition year, and I'm sure we'll talk about all the various initiatives that we have in place. The transition is from just being in the open web, moving into sort of the walled gardens, and being able to provide activation products for the walled gardens. Within that, our transition is around a few vectors. There is obviously the opportunity around activation to grow faster on social. Last year, we won a lot of the large Moat deals, which are large clients, such as Google and P&G, and those clients are now learning the value of our premium price products. They came in with very basic products that were like what they had in Moat, and now we're sort of going through the motions of upselling them to what really the power of our tool is. And then the third transition in 2025 is the acquisition of Rockerbox, which I presume we'll talk about as well, where in 2025 we just assumed a very basic kind of stub period within the year for the revenue, but the revenue synergy opportunities that we see for that product is very large. All that is reflected in a 10% growth guidance that we have for the year. That is a guidance that basically assumes that the client is out, as you mentioned. It assumes a moderate growth for a cohort of six advertisers that we had in 2024 into 2025. I don't anticipate to have to speak about the cohort of six because now they're kind of behaving as we would expect them to behave in 2025. So we have those two headwinds, and then we have those three large opportunities. The upside on the opportunities is there for us to take. The transition is really how quickly we get to these opportunities in 2025. And we've taken a measured view on what that opportunity is in 2025. I think as we exit 2025, you'll see the benefit of that. That makes a lot of sense. I want to dig into those initiatives, but I have to ask a macro question first because it is top of mind over the last couple of days. Given the broader macro environment, what are your advertisers saying, your customers saying with respect to how they're thinking about the go-forward into 2025? Yeah, go ahead. I was going to say, so if we think about our business, we're going after large advertisers, the brand advertisers. Q4 was very disruptive. There was the election, and then those advertisers didn't come back post-elections. It feels like a more stable environment as we get into 2025. Obviously, talks about tariffs might impact that view, but right now it feels much more stable than it was at the end of 2024. Specifically to the verticals, the client that has stopped using our service is in the CPG category, which is about 30% of our overall categories. The rest of the CPG categories actually grew quite well for us in 2024. We signed very large clients across many verticals. We had Microsoft, we have P&G, we have Google, we have Kenvue, and that category as an entirety actually grew for us in 2024. So we're seeing a macro that, of course, could be impacted by tariffs and other conversations, but 2025 is starting much better than it did in 2024. Great. Getting to the more exciting stuff to talk about now, which are these initiatives that you just referenced. Mark, maybe you here, when you think about which of these initiatives are going to be most incremental to 2025, what you're most excited about, just level set for us, and then maybe we'll dive into a couple more of them in more detail. Yeah. So broadly speaking, to kind of bucket what we're focused on in 2025 and really beyond, it's product, performance, and people initiatives. On the product side, we're leaning very heavily into social platforms. And the most exciting thing there is our pre-bid solution, which we launched on Meta. It's been a long time coming. Meta is somewhere around a $40 million measurement business for us. So we just do kind of measurement, which is understanding what happened on the page, whether or not it was suitable or safe, viewable, etc. We've now added the ability to filter impressions based on 43 different categories of suitability and safety. And the reason why that matters is a lot of our customers, as we do in the open web, use both measurement and activation solutions. Actually, a vast majority of them, 90% +, use both solutions for us in the open web. We haven't had that opportunity in social at any scale. So the ability to launch this tool means that it is a premium price product that we charge 2x-2.5x more per impression for activation than we do for measurement. So that creates an opportunity of upwards of $80 million-$100 million of just core base customers upsell. We also have the added bonus of the fact that right now for our top 700 customers, only about half use us for social measurement. And one of the biggest reasons is, hey, like in the open web, where I can filter these impressions out, in social, I've never been able to do that. So I'm not going to really measure something that I can't do something about. That was their pushback. That's gone. So we have these kind of dual catalysts there. So on the product side, Meta and social pre-bid is obviously a big one, but we're also now, we've announced we've launched an alpha product with TikTok. We're going to be expanding and improving our pre-bid solutions on YouTube. So really, on the product side, that's the first big thing. The second thing that we're excited about is our performance solutions. So with the growth of Scibids, which we acquired and integrated over the last 18 months, that business grew 50% + last year. 40 of our top 100 customers now use Scibids. And what Scibids is, it's a product that allows them to optimize their bid on the pre-bid side through platforms like Trade Desk and Google and Microsoft Xandr. It's a performance product that drives real results. It lowers the cost of basically attaining high-quality impressions. So if we're in the quality impression measurement business, if we're able to lower the cost of that impressions, it's a double win for our advertisers. So focusing on Scibids as a performance tool, and then Rockerbox is a performance measurement platform that we announced that we're acquiring. And that kind of gives us the beautiful end cap of saying, we're managing media quality, we're determining what works with media performance, and in the middle, Scibids allows us to compress the cost of doing so. So when we talk about products for social, it's just as important and just as an exciting opportunity for us as we move into performance as well. Last P, on the people side, we're leaning into looking at efficiencies around AI and how we measure and how we measure productivity of our teams. It's helping us actually grow and create more leverage in our model as we add new customers, but we don't have to add people against it. So those are all super important initiatives that are going to grow revenue for us, increase our TAM because we're now going to performance advertisers, and finally, reduce variability. As Nicola noted, we can't be reliant on single categories of customers or single large customers. By moving into performance, it allows us to get a longer tail of performance-driven advertisers to ease that out. By having a complete platform, it allows us to add even bigger enterprise customers to add to that top of the funnel group too. So all of this strategy is in place to not only catalyze growth, but reduce variability over time. I want to dig into each of those in more detail, but maybe we'll start with the first on pre-bid. What's been the early customer response to the product? How do you think about potentially driving greater adoption and then potentially also that you talked about on Meta, but potentially other social platforms as well? Yeah, I mean, the response has been really great. We've got about 200 customers now in our pipeline. The product launched February 18th, so we're a couple of weeks in, and we already have a handful of customers live and scaling. So response has been positive. Our go-to-market motion is exactly how we build our ABS solution. So ABS is our open web filtering solution that's at a premium. That's a $200 million product. And the way that we did the go-to-market was go to all of our measurement customers and now upsell them the pre-bid filtering solution. Same thing we're doing in social, and the response has been great. As I noted, the next step is now moving that type of product into other social platforms that are growing, like TikTok and others. Again, the advertisers are much more willing and excited to pay for something that helps them avoid a problem rather than just measure or afterwards block a problem. I think the enthusiasm has been exceptional. Has Meta's changes to fact-checking impacted advertiser willingness to adopt the product? How have you seen that potentially flow through in your conversations? Yeah, to be direct, you kind of can't ask for a better marketing environment. They announced content moderation changes about a week before we launched the product. So it was very well aligned with the fact that a lot of our bigger enterprise customers became very concerned about what the environment was going to look like for them. And I think having a product that helped them navigate that, and to give Meta total credit, they've been very leaning into what we've been doing and helping us expand that product because they know third-party tools and agnostic tools are important for big brands to help them navigate. And what they don't want to do is lose potential advertiser revenue. They have a fine line to walk. They want to create an environment that allows for free expression, but they want one where advertisers have tools to make sure that whatever gets expressed there is aligned with who they are, and I think that's great, and that's why we launched with 13 categories and very shortly added another 30 on top of that, so now we have 43 categories that advertisers can use to better align their spend with what their brand represents. You talked about earlier AI and how it factors into the efficiency side of things. I know it also factors into a couple of your products as well, Scibids being one of them. Talk to us maybe as AI has come onto the scene over the last two years and has factored into people's product launch pipeline. How do you think about the most exciting opportunities in AI over the next year and where you're investing going forward? Yeah, I mean, AI has had internal impacts in our business, but external too. The amount of what's called slop, which has been created by AI and the open web is immense. And we've done some reports on that lately. There's so much AI-generated content out there that advertisers now have to navigate. And most of it's what we call MFA or made-for-advertising content. It only exists so that ads can run against it. And advertisers are very wary of that stuff. There's no real author. There's not a lot of real quality. Some of it's replicated. You'll see the same content literally on not just dozens of sites, hundreds of websites that are exactly the same. So it's created a more fraught environment for us to work in. But we've always said what we do is you use fire to fight fire. So now we use AI to identify heavy concentrations of certain types of content. We use AI to identify AI-generated images or AI-generated content. In short-form video, we were just talking about TikTok. We use AI to do predictive analysis of video so that it's really expensive to do a frame-by-frame analysis of even a one or two-minute TikTok video. In a single frame or a single second of video, you have 40 frames. We use AI now to look for scene changes and do predictive modeling so we don't have to look at every frame and analyze it. So it's changed the environment. It's changed how we look at content. It's made us more efficient in how our engineers work. And all of that has allowed us to continue to maintain really strong gross margins. Our costs of analyzing video are actually lower today than they were several years ago, even though we're analyzing much, much more video as a percentage of our business. And last year, we ran at 82% gross margins, whereas some of our competitors who are not as sophisticated on the AI front are running at 70%-high 70s% margins. So it's helped efficiency. It's created more noise in the marketplace, which kind of spurs our business a bit. But it really has upended everything around the advertising and marketing space. That gross margin comment leads me to a next natural question. But as you talk about these initiatives, and Nicola, maybe we bring you in for this one as well, as you talk about these initiatives, how do you think about the cost associated with them, the incremental investment that's required, and the broader margin trajectory going forward? Yeah. So our strategy has been up until now to continue to gain share in the market. So it's a revenue play. We only work with half of the top 1,000 advertisers. And the way we go after the opportunity is to essentially expand the product offering that we have. We're going to exit the year with a product that's very different than just verification. We'll have optimization. We'll have performance to it. So our strategy here is to continue to invest into innovation because that's how we show superior revenue growth. Within that strategy, we've been able to maintain 32%-33% margins even while absorbing M&A transactions. So there's always a bit of a blip when we actually acquire a company. Rockerbox is break even, essentially. So it'll take us a little bit of time to integrate it. And there's a bit of that that's included in our 2025 guidance for margins. But the model is becoming much more scalable. So investments in G&A and sales and marketing are far less than they used to be. Our investments are now in R&D. And even within the year, we have plenty of opportunities to continue to kind of just make that more efficient. So we're not anticipating having to hire as many people as we did last year, excluding the acquisition of Rockerbox. So it's a very profitable model. We're investing into what we think we need to continue to innovate. But the opportunity for us to expand the margin is obviously there. You touched on the relationship with Meta earlier. When you look at some of your strategic relationships, Meta, Netflix on the CTV side, what have you learned from those partnerships in the past? And how does that impact the way you think about those strategic relationships going forward and potentially reaching out and making additional partnerships? It's a really, really good question. It's the first question we've had like that this whole week. It's a good one. So as we increasingly lean into what we call proprietary platforms to grow our business, those relationships are critical. And what we've learned over the years is that there's two factors that kind of create better connections. The first is leveraging our advertiser relationships in a really positive way so that it helps grow their business. If you think about who we work with, we work with huge brands like Unilever and Colgate and Kenvue and Microsoft and P&G. Those relationships are relationships that those platforms also want to have or want to expand. So when we work together to grow those, that creates closeness with the platforms. That's the first thing. The second thing is looking for ways that we can drive value for them as a platform and the products that we create. A good example of that is Reddit. So Reddit was looking to IPO last year. It was a very successful IPO. And Reddit is a place where there's a lot of free expression there. But for them to grow as a public company, they need to attract advertisers. So how can we help them do that? Well, we can help them by giving them tools and building tools together that enhances that environment for advertisers. It's a benefit for them. It's a benefit for us because we are now partners, and it builds a relationship over time. So for us, it's about how do we help them create value through our products that gives them more ability to grow, and how do we leverage our relationships with advertisers to bring business to them and help grow their business. So it is truly complementary. I think if you would have asked me several years ago, I wouldn't say it was antagonistic, but we had knocked on the door of a lot of platforms that were like, "We're not letting you in. We're not going to let you tell us our baby is ugly." But now it's kind of like, "No, we can work together to actually create a cleaner environment, make advertisers feel good about coming in, and grow business together." And that's been super positive. I mean, the last thing I'll say is you mentioned Netflix. When Netflix decided to drive for an advertiser-supported model, they launched with three partners because they knew they needed to have verification and measurement. So it was us and another company in Nielsen that they launched with. And that's a real testament to saying when platforms know that need to drive advertising growth, verification is a key part of that. Talking about Netflix and maybe CTV more broadly, it's a quickly growing and evolving space. It's also a space you've talked about having a bit of fraud on the measurement side of things and with potential viewership. And so when we think about the products that DoubleVerify offers to solve that challenge for advertisers, how do you think about that suite of products going forward? Yeah, so CTV is an interesting one for us. Our CTV volume in Q4 grew 95% year -over -year, which was pretty extraordinary. But it's still only around 11% of our total measurement volume. So it's still relatively small. The products that we offer advertisers there are focused a lot on making sure that ad spend is viewable. So we found, for example, and everyone's like, "How can CTV ads not be viewable?" Well, through our research, we found that 25% of apps running on any CTV platform were enabling ads to be run when the screen was off. So think about that. 25% of apps were not sending a signal to say, "Hey, screen is off. Ads are still running in background." So that's a viewability issue that we can measure and we can let advertisers know about. There's still CTV fraud. A lot of the CTV fraud, however, is not in the CTV universe itself. It's other devices representing themselves as connected televisions and being pushed into kind of buying platforms, DSPs, etc., as more inventory gets transacted through those platforms. Our product helps identify that. As recently as a year ago, we found that connected appliances were representing themselves as CTV. Refrigerators, things like that, were sending pixels out and running ads in single pixels on screen saying, "This is a CTV ad." The product focuses very much on protection of spend right now. I think where we have an opportunity to grow is in the media quality side, which is looking at brand suitability and safety on a program level. We still haven't cracked that quite yet. But I think the dynamics that you've mentioned with more inventory coming into the market, more pressure on the platforms to differentiate themselves is going to enable us to get some of that program-level data and doing analysis on a program level for suitability and safety so that we can provide the same level of transparency that we provide on YouTube and on TikTok on CTV. If you think about it, it's a little crazy. An advertiser knows more about safety and suitability on TikTok on an individual program or ad impression level than they do on a CTV platform right now. I think that's going to change. And I think our product will grow and evolve with that over time too. How has Amazon's entrance or growth in the CTV space, particularly over the last year, potentially catalyzed some of these conversations? How has that impacted the business? First of all, obviously, we saw huge volume growth, and Amazon was a part of that. Netflix, actually, their growth has been really nice too, and that's part of that, so the addition of all that inventory in the market, I think, has changed CTV from being a seller's market to a buyer's market. You've seen CPMs go down. It also has added a ton of innovation to how it's bought and sold, so Amazon is obviously the leader in showing the connection between viewing and viewability and what gets bought and sold, so I think it's changed the dynamic around CTV. I think it has created a much more competitive market. It means that we see a very similar pattern that we saw on social, so social for years did not want to provide granular data for brand safety and suitability. Along comes TikTok. And TikTok says, "Hey, we're going to open up. We're going to have lots of third parties measure on a granular basis." Next thing you know, you see others start to fall. Meta starts to fall, etc. I think the same thing is going to happen because Amazon has leaned very forward into working with innovative ways of analyzing their content, driving performance. So I think all it takes is kind of one domino to fall there. And the competitive pressure to open up and be more transparent, I think, is going to happen in CTV too. I want to talk about cohort dynamics and large advertisers a little bit on the platform. Last year, you talked about six advertisers who had maybe pulled back a little bit. How do you think about cohort dynamics heading into next year and potential stabilization around those trends? Yeah, so I think specifically on the cohort, it is stabilized. And so we expect them. They won't grow as fast as the rest of the company, but as a cohort, their behavior will be pretty normal, we expect, in 2025, so I don't think we'll be talking about the cohort in 2025. I think in terms of what we can focus on is what Mark was mentioning before, which is we've had success with very large brands, and the way for us to continue to have success is to sign up more large brands, diversify on the top, and have more large clients, which is why winning Google and P&G and Microsoft will help in that, so we'll diversify on the top, but then also diversify elsewhere with performance products, and when we speak about performance and how it helps our dynamics, there are two factors there. One is the brand advertisers that we work with have performance marketing dollars, and so as we provide those services now, especially with the acquisition of Rockerbox, we have the ability to tap into those dollars and create a more wholesome relationship with those large brands, then, of course, performance also will be relevant for smaller companies that may not work with us directly, so our strategy here is to just continue to diversify both on the top, which we're very successful, and also for smaller companies and different budgets. Performance is going to become a big part of how we grow next. You captured a portion of the Moat customers last year. How do you think about the cross-sell and upsell opportunity as we head throughout 2025 for selling advertisers? Yeah. So So this was a very aggressive, competitive set of deals. And we won them at a basic like-for-like product with the anticipation that we will be able to upsell them. And these are sophisticated advertisers. So it's just a matter of time showing them what the power of, let's say, ABS is. It is going to happen. We've been measured as to how long it will take just because the advertisers need to learn our systems, and they have their own cycles. But that is a big opportunity. We've just been measured by it in terms of how much we'll see in 2025. When we think about investment priorities as we head into 2025, are there one or two things you would call out where you say, "This is what we're most focused on heading into the next year"? R&D around the product innovation is number one, making sure that the activation products on social do what they're meant to do, upselling those opportunities to our clients. And that requires R&D and engineering resources. And then the integration of Rockerbox is going to be a focus for us in 2025. Again, I think we'll be able to do it at a more efficient pace just because AI is helping, and we've scaled the company at a point where we can go after innovation without really needing to hire that many more people. But those are the main opportunities. Yeah. And just to underscore one thing, we have a great case study in what happens when you don't innovate in this space. And that's what happened with Oracle and Moat. They did not fund that business. They did not innovate. They did not move into pre-bid. They had no social integrations at all. And as dollars shifted from open web to social, they were just caught. What big brand wants to say, "Well, I'm going to work with one company here on social, and one company on open web, and one company on pre-bid, and one company on post-bid"? It just didn't make sense. So as Nicola noted, we're constantly leaning in on innovation. It's critical. And it not only is a catalyst for future growth, but it ensures that we protect our business for today too. How do you think about balancing internal innovation with potential acquisitions going forward on the capital allocation side? Yeah, so our strategy around M&A, we've been successful with M&A, and the strategy has been either it accelerates our roadmap, it expands into adjacencies, or it grows us geographically. The expansion into adjacencies is kind of what you've seen us do recently. Scibids and Rockerbox are precisely in that field where it's just simpler and easier and faster to acquire a smaller company and then we're able to integrate it into our own product. So the way we think about M&A hasn't really changed. I'll say the market right now is a little bit different than it was a year ago. I think there's more willingness from some companies to entertain conversations, which is helpful for us, and I think in terms of capital allocation, we will remain measured on that, which is internal investments, M&A opportunities we see, and of course, the buybacks which we started last year. We did $128 million. And we have another $200 million that's available. I know we're running towards the end of our clock here. So maybe I'll try to squeeze in two more at the end. Mark, what do you think is the most underappreciated part of the DoubleVerify story? The thing that maybe us as investors just fundamentally misunderstand when it comes to the bigger picture? I'll get three, and I'll try to get them all in. I think the first is if you look at the power of our business model, it has a ton of leverage. Even in a quarter that was softer than we expected, we still delivered 39% EBITDA margins in Q4. And we threw off a ton of cash, and we've got no debt. And we're still growing. Any other software company on the planet would love to have this profile. So I think, A, the financial profile of the company is amazing. B, the stickiness that we have with big brands. The average tenure of our top customers is around eight years. And that means we have the ability to continue to grow with them over time. We've got a strong NRR. Our GRR has been above 95% since the IPO. So I think the stickiness that we have with customers gives us the ability to win and grow with them over time. And I think the third thing is as we go into this year, Nicola calls it a transition. I like to call it an evolution. We're evolving into a platform that is not only going to be a nice-to-have for advertisers, but it's going to be a must-have because we're going to be addressing the two biggest questions they have, which is, "I'm a CMO. How do I protect my brand? And I need to sell more stuff because the CFO is breathing down my neck. So how do I figure that out?" We'll be doing those two things independent of the media transaction. And that is a very unique proposition for us that I think we're going to talk about more at our Innovation Day, which we'll be holding in June. That's my pitch, June 11, I believe, in New York. And we'll be digging in there so that we can hopefully even share longer than two minutes on where that takes us and how that makes us an even more important company in the future. Looking forward to that. And we've talked a lot about the exciting innovation that you have coming up over the next year. If there was a challenge, anything that you look at and say, "I really need to get this right, really want to get this right"? Is there anything you'd point to that's a core focus for the company into 2025? Yeah. And this is no different than I have told the team over the last several quarters. We've got an amazing plan. We've got amazing customers. We've got an incredible financial position. This is simply about execution. This is about getting product to market efficiently. It's about ensuring that our customers know what we're doing and stick with us. And it's about ensuring that we keep the position in the marketplace that we've had, which is as a trusted, independent partner to all of those customers that ensure that they don't get fired because ads run in the wrong place, and they don't get fired because they're not selling enough products. So this is a simple execution story for us right now. And I think we're in a great place to take advantage of that. Great. Well, Mark, Nicola, thank you very much. Thank you all for attending the Morgan Stanley TMT Conference. Enjoy the last day. And thank you. Thank you. Thank you.