Good afternoon, and welcome to Kubient's third quarter 2021 conference call. Joining us for today's call are Kubient's Founder, Chairman, Chief Strategy Officer, and Chief Executive Officer, Paul Roberts, and Chief Financial Officer, Josh Weiss. Following the remarks, we will open it up for questions. Before we get started, I need to alert you to our Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995. During this conference, we will be making forward-looking statements, including statements related to future events or to our future financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, level of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, and achievements expressed or implied by these forward-looking statements.
Listeners should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could and likely will materially affect actual results, level of activity, performance, and achievements. Any forward-looking statements reflect our current views with respect to future events and are subject to these and other risks, uncertainties, and assumptions related to our operations, results of operations, growth, strategy, and liquidity. These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected and implied during the call.
Furthermore, listeners are referred to the documents filed by Kubient, Inc. with the SEC, including our annual report on Form 10-K filed with the SEC on March 30, 2021, our quarterly report on Form 10-Q for the first quarter of 2021, filed with the SEC on May 14, 2021, and our quarterly report on Form 10-Q for the second quarter of 2021, filed with the SEC on August 16, 2021, with the understanding that our actual future results may materially differ from what we expect, which include these and certain other important risk factors. We qualify all of our forward-looking statements by these cautionary statements. Please note that the forward-looking statements on this call are based on information available to us as of today's date.
Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Please refer to Kubient's SEC filings, specifically its registration statement on Form S-1, initially filed on December 12, 2020, for a more detailed description of risk factors that may affect the company's results. During the call today, management will discuss adjusted EBITDA, a non-GAAP financial measure. In the company's press release and filings with the SEC, both of which are posted on the company's website, you will find additional disclosures regarding this non-GAAP measure, including a reconciliation of this measure with its comparable GAAP measure.
Non-GAAP financial measures are not intended to be considered in isolation from a substitute for, or superior to GAAP results. The company encourages you to consider all measures when analyzing its performance. Now I will turn the call over to Paul Roberts. Sir, please proceed.
Thanks, operator, and thanks to everyone who has joined us today. The third quarter marked a period of steady growth for Kubient as we continue to move forward full steam ahead. Our net revenues for Q3 were $677,000, which represents a 141% increase year-over-year from the same period and a 36% increase from the prior quarter. We continue to believe we are just starting to scratch the surface, although at times we were limited by the speed at which our partners, customers, and stakeholders were able to operate. Nevertheless, a common underlying theme we have unveiled both internally and to our shareholders is that our customers and partners continue to be very interested in our technology and are keen on digging deeper into how our solution can play a key role in their ad tech ecosystem.
In early 2020, due to the impact of COVID-19, nearly every brand hit the pause button to really evaluate their advertising strategy. Some companies completely paused all advertising spend, while some took the opportunity to take a deeper dive into the ROI of each ad dollar they spent. It is with companies that took the latter approach who have decided to explore potential opportunities with Kubient, as they've recognized that we can help boost up that ROI figure for them. We have also recently benefited from some news reports outlining that Google takes a cut of 22%-42% of U.S. ad spending that goes through its systems. This figure does not include the additional fees charged by agencies, additional DSPs, SSPs, and ad exchanges.
This is prompting more brands, both large and small, to reconsider the walled garden of Google and forcing them to take a look at more agile and nimble partners that can help solve the efficiency and fraud issues plaguing the industry. With that said, the conversations and feedback we have been receiving in and of itself is quite encouraging as it proves that prospective users of technology see the value that we provide as it solves real problems and boosts efficiency. The one variable that we don't have control over, though, is time. We have noticed that lead times can be longer than we would like them to be, but the fact of the matter is that it requires time to get large corporations to fully buy into a new process and transition away from their legacy ones, regardless of how powerful the data we show them may be.
Despite this, our growing team remains laser-focused on controlling all variables within our.
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What's also been encouraging is that from a macro view of the advertising industry, we are seeing a lot of traditional areas, especially CTV and mobile advertising, come out of a large COVID-induced slump. As a result, we're beginning to witness early signs of the pent-up demand come to fruition here in the midst of the fourth quarter. Digital advertising is more important than ever to deliver success for businesses, and every brand in the world is looking to their advertising leaders to find value and efficiency to add to their bottom line. We are cautiously optimistic that we will be able to ride the tailwinds of this trend and are hopeful this will prove to benefit us on our constant quest to win deals with strategic and accretive partners. Shifting gears to our growing team. We continue to onboard new hires and expand our workforce.
This past quarter, we hired a total of six employees, and year to date, we have onboarded a total of 20 new employees. Although we've been expanding, similar to what I mentioned on the previous call, we are still seeing the effects of the macroeconomic job market trend of supply far exceeding demand. In conjunction with the limited demand and analogous to our M&A strategy, which I'll touch on later in the call, we're being very selective with the employees that we hire because they truly are the lifeblood of Kubient. An exciting update since the last earnings call is that our employees have begun returning back to the office, which has turned out to be a huge benefit as it increased the quality of collaboration between the different segments and obviously allowed for face-to-face interactions.
Although our employees were able to maintain consistent levels of productivity prior to re-entrance to the office, the overall morale of our workplace and the cohesiveness certainly was positively affected by the return. With that said, before I discuss further updates on our core business for the quarter, I'll be passing the mic over to Josh for an update on the financial front. Josh?
Thanks, Paul, and good afternoon, everyone. Thanks for joining our call. Now to our financial results for the third quarter ended September 30, 2021. As Paul mentioned at the start of the call, net revenues increased to approximately $677,000 compared to approximately $280,000 in the same period last year. This represents a 141% increase year-over-year from the same period and a 36% increase from the prior quarter. As previously mentioned in our Q2 earnings call, revenue is not generated nor realized immediately after a customer signs up to use the Audience Cloud. After contract execution, our engineering team will typically integrate our technology into a customer's infrastructure, followed by a testing period, which altogether ranges from a 4- to 10-week turnaround time, depending strictly on the complexity of our partner's technology.
I am proud to share that in the third quarter, we were able to successfully integrate 15 supply side and five demand side partners into our Audience Cloud, which compares to two supply side and three demand side partners in the previous quarter. As you can tell, we have seen these integration times reduce quarter-over-quarter and remain committed to maximizing the number of integrations going forward to increase efficiency and have a faster path towards revenue recognition. Turning to our expenses. Technology expenses increased to approximately $777,000 from approximately $546,000 in the same period last year. The year-over-year increase was a result of increases in salary expense arising from a surge in technology personnel headcount, as well as in increased consulting fees, cloud hosting costs, and non-cash expenses of stock-based compensation and amortization of software.
General and administrative expenses increased to approximately $1.5 million, compared to approximately $1 million in the same period last year. The year-over-year increase was primarily due to increases in salary expense, primarily arising from an increase in general and administrative headcount, as well as increased stock-based compensation, insurance expense, office-related expenses, and taxes. GAAP net loss was approximately $2.3 million or $0.16 loss per share, compared to a net loss of approximately $4.2 million or $1.03 loss per share in the same period last year. The year-over-year decrease in net loss was due to increased revenues and a decrease in other expenses. Adjusted EBITDA, a non-GAAP measure, decreased to approximately $1.9 million EBITDA loss, compared to an adjusted EBITDA loss of $1.5 million in the same period last year.
As of September 30, 2021, the company had a cash balance of $28.7 million. That concludes my financial summary. For a more detailed analysis, please reference our Form 10-Q, which we plan to file this week. I will now turn the call back over to Paul, who will discuss some of our major operational updates and provide a general outlook of our business. Paul?
Thanks, Josh. I'd like to start with some updates regarding our M&A activity. As previously discussed in the second quarter's earnings call, our team has continued to work alongside Lake Street Capital, diligently vetting a number of quality companies that would add accretive value to our growth proposition. At this moment, we're deeply engaged within the due Diligence Phase with three separate companies and have two Non-Binding LOIs, or letter of intent, of which we are confident will not only result in acquisition, but will add lasting value to our growth strategy. These companies will both vertically and horizontally grow our existing ecosystem of services by adding additional direct publisher, direct advertising partnerships, as well as additional engineering, operational, and business development resources.
Though I cannot go into further detail at this time, I am very confident the shareholders of Kubient will be satisfied with the set of updates we plan to provide in the near future. Next, our sales team continues to fire on all cylinders as we search for customers and partners that are willing to test and plug into our Audience Cloud while also trialing the capabilities of KAI. The team members who are tasked with socializing the capabilities of our marketplace and KAI continuously report back that their prospects are thankful someone is tackling the huge issues of inefficiency and fraud that are impacting their advertising budgets. One of the last mutually beneficial partnerships we announced was with Verve Group, a privacy-first omnichannel ad platform which connects advertisers and publishers to people in real time.
In essence, the partnership opens up Kubient's premium publisher inventory for advertisers working with Verve Group and enables Kubient's advertisers the ability to access additional premium publisher inventory from Verve Group, ultimately creating more transparency and efficiency for our respective partners. This deal provides a seamless process for our advertisers to access quality inventory that's specific and relevant to the audiences they're trying to reach, and also tremendously impacts our supply side partners by expanding the number of advertisers that can bid on their inventory. The reason why the Verve Group chose Kubient for this partnership is because we both share a mission of delivering a fraud-free and efficient media buying experience for our partners. Moving on, I'd like to focus on and provide an update regarding KAI.
I'm pleased to share that as of September 30, 2021, we have performed a total of 14 KAI audits with prospective customers, eight of which were conducted during the third quarter. Similar to what I mentioned at the outset of this call, the feedback we received about KAI has been nothing but positive from customers, and we are confident in our ability to ramp up the number of audits performed going forward. Another thing to note is that the total number of publishers plugged into our Audience Cloud decreased quarter-over-quarter by 298 to a total of 3,270. This decrease in publishers is actually positive, as it was KAI's reporting that led us to remove fraudulent websites within our Audience Cloud, and again, show the power of using pre-bid machine learning to identify where others struggle.
With KAI, the Kubient marketplace quality team can see in real time which websites are being used by criminals to generate fraudulent traffic and completely remove them from the marketplace, resulting in a decrease of overall usage of the marketplace. That was offset with the inclusion of new marketplace partners. As you can see, KAI is truly a game changer and makes a significant impact in solving a real problem. With respect to our Audience Cloud, thanks to the capabilities of KAI, we're able to provide our partners and customers an efficient and fraud-free ecosystem. As it relates to the chicken and egg scenario that we have consistently alluded to, we're continuing to see a large uptick in the fraud-free and efficient audience that we're able to provide to our demand-side partners.
We are also optimistic that the potential acquisitions we referenced earlier in my comments will add incremental depth on both the advertiser and publisher side of the marketplace by increasing direct publisher integrations along with direct brand partnerships. In addition to our sales team conducting their efforts, we've also augmented our go-to-market strategy by attending industry-specific conferences. Recently, members of our team have attended and at times presented at very well-known industry events in our space like Adweek, Programmatic I/O, and Affiliate Summit. These events are an incredible opportunity to meet with industry leaders on both the brand and publisher side of the world and gives us a real opportunity and platform to further evangelize Kubient's value proposition. We again remain very optimistic and encouraged from the feedback we have received regarding our solutions.
In closing, the macro issues facing the world economy have stretched their arms to the space of digital advertising, yet we are in the early stages of proving that the solutions we have built are sturdy, secure, and efficient. I am confident that our go forward plan of partnering with high quality partners and customers, having aggressive M&A initiatives, and perpetually improving our already robust suite of solutions will propel us in a growth-oriented trajectory. Thank you everyone for your time today. Operator, if you'll please transition the call to the Q&A session, it'd be very appreciated. Thanks.
Thank you. If you would like to ask a question, please Press Star one on your telephone keypad now. You will be placed into the queue in the order received. Please get prepared to ask your question when prompted. Once again, if you have a question, please Press Star one on your phone now. Our first question comes from Jack Vander Aarde from Maxim Group. Please state your question.
Hi, this is Albert speaking for Jack, and thanks for taking my question and congrats on the great quarter. I want to start off with a question on the Verve partnership. I know it hasn't been too long since the announcement, but I was just wondering if you guys could provide a bit of color on, I guess more detail on how it's been going, whether you guys are seeing immediate contribution on revenues yet and if not, when you might expect it to, you know, trickle in.
Sure. Obviously thanks for joining us, Albert. The Verve partnership was a big win for us because this is a company that had a large footprint on both the supply and demand side of the industry, and we basically brought the concept of KAI to them early on, and they were in a position to basically connect to our Audience Cloud as both a buyer and a seller. Once we signed the paperwork, it took us approximately five weeks to get the integration done. The integration is completed. We are transacting with the Verve Group, and typically what happens is you start at a smaller scale, so you're only going to basically give, you know, 10 or 15% of your inventory or supply for them to bid on.
As we match up the numbers and everything looks good on both sides, we're going to continue to increase that, and I would expect by, you know, mid-December, we'll be at 100% capacity with that relationship.
Okay. Yeah. Thank you for that information. That was very helpful. Kind of as a follow-up related to that, I think you touched a bit on this on the call, but just in the process of plugging in publishers, partners, and advertisers to the marketplace, could you guys provide more detail on kind of the plan or color on what you guys are doing to improve the rates?
Sure. Typically, when, you know, companies are building programmatic or advertising technology, they build it with a certain way that you can integrate into their tech. We understood from being veterans in the industry that every brand, every advertiser, every publisher, they have a preferred way of integrating with another partner. We've created a platform that gives a tremendous amount of flexibility of how people can connect to the Audience Cloud. Typically, when a partner comes to us, we work with them to understand their preferred methodology. Our team then ensures that we can connect and do it in the most efficient way possible. Then we hand it off to our client success team, who works with our technical team to complete that integration.
What we've really been focused on, you know, over the last two quarters is how do we speed up that integration? How do we get from an agreement, a signed contract to actual revenue recognition? You know, we're not quoting any numbers, but we've been successful in adding some automation and some other process that's gonna help us going forward to see that revenue come in a lot quicker than it has in the past.
Okay. Great. Thanks. Just one last question from me. Could you talk a bit about the digital out-of-home section of the business, any updates on it, and also kind of related to the recent buzz in the metaverse, if you see any space or opportunities for Kubient to advertise and enter that space?
Sure. To answer the first part, you know, digital out-of-home, I've actually started to travel again. Some of the team has started to travel again to industry events. We are seeing some demand enter back into the digital out-of-home side of the industry. You know, we've always from day one kind of looked at digital out-of-home as a feature within our platform to reach an audience regardless of where they are. It's been beneficial for us to obviously see advertiser demand come back into that side of the space. I think it's gonna continue to build up, and we hope it gets to a normalized level towards, you know, Q2 or Q3 of next year. We continue to have those discussions with our partners and try to service them and their needs in the best way possible.
Regarding the metaverse, it's obviously a very hot topic right now. You know, we have looked into what this means for advertisers, how they engage with their audience. From what we're seeing is advertisers want and need to be involved in the creation of these environments. The question is gonna be how do we standardize and deploy advertising that's both relevant, engaging, and real time for the audience? We've had some very good conversations with partners of ours around how are we gonna basically plug in? How are we going to make sure that when users are enjoying their experience, they're seeing the right ads? I personally am excited about it because it's one of the newer mediums that we've heard of in the last, you know, 10 or 15 years. We're involved in those conversations.
Kubient will be a part of it, and I think it's gonna be a matter of time before, you know, we have a more standardized integration and technology implementation into the metaverse for advertisers.
Great. Thanks. Seems to be a lot to look forward to. That's all the questions for me. Again, thanks for letting me ask questions, and congrats on the solid quarter.
Great. Thanks, Albert.
Once again, if you would like to ask a question, please Press Star one on your phone now. At this time, this concludes the company's question and answer session. If your question was not taken, you may contact Kubient's investor relations team at kubient@gatewayir.com. I'd now like to turn the call over back to Mr. Roberts for his closing remarks.
Thanks. I just wanted to take a minute and thank everyone for joining us again today on our Q3 in 2021 earnings call. I especially wanna take a minute and thank our employees, our partners, our investors, and customers for their continued support. We really appreciate your interest in Kubient and look forward to updating you on our next call. Operator?
Thank you for joining us today for Kubient's third quarter 2021 earnings conference call. You may now disconnect.