Hello, everyone, and welcome to the VerticalScope Holdings, Incorporated Q3 2024 earnings call. My name is Emily, and I'll be coordinating your call today. After the presentation, there will be the opportunity for you to ask any questions, but you can do so by pressing the star followed by the number one on your telephone keypad. I will now hand over to our host, Diane Yu, Chief Legal Officer, to begin. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to VerticalScope Holdings' 3rd quarter 2024 earnings call. I'm joined by Rob Laidlaw, our Founder, Chair, and Chief Executive Officer, Vincenzo Bellissimo, our Chief Financial Officer, and Chris Goodridge, our President and Chief Operating Officer. We'll begin with commentary on the quarter before opening the floor to questions.
Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements.
A more complete discussion of the risks and uncertainties facing the company appears in the company's Management's Discussion and Analysis for the three and nine-month periods ended September 30, 2024, which is available under the company's profile on SEDAR+ as well as on the company's website. We were cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
The company disclaims any intention or obligation except to the extent required by law to update and revise any forward-looking statements as a result of new information, future events, or for any other reason. Our discussion today will include references to adjusted financial measures, including adjusted EBITDA, free cash flow, free cash flow conversion, and MAU, which are non-IFRS measures. All references to currency in this presentation shall refer to USD unless otherwise specified. Now, I will turn the call over to Rob Laidlaw, Founder, Chair, and CEO of VerticalScope. Rob?
Thanks, Diane. Good morning, everyone, and thank you for joining us today. Our business performed well in the 3rd quarter of this year, growing revenue by 15% while serving a record 122 million MAUs, up 21% over last year. There is very strong demand for our communities right now, and while we expect to lapse some strong quarters from 2023, we continue to see positive MAU growth headed into Q4 and 2025.
AI content and AI overviews are continuing to drive more users to seek out the authentic content that is found on Fora, Reddit, and other user-generated content communities, while traffic from AI search bots is just beginning but is also growing rapidly. We believe this will be a years-long trend as user behavior has shifted. As we break down our revenue growth, we saw digital advertising grow by 22%, with strong demand for programmatic advertising leading to a 36% increase.
Programmatic is one of the core strengths of our team and platform and allows us to capitalize on increased MAUs and scales effortlessly. It is high margin and now makes up 71% of the channel. On the direct advertising side, we were flat for the quarter but concluded Q3 with some strong momentum as we signed a major automotive OEM for Q4 and have another in the works for late Q4/Q1. We expect to see direct return to double-digit growth as we start to recognize these revenues. Overall, last quarter I mentioned the ad market was tepid, and I would say this narrative is finally improving.
With a run-up to the U.S. election, CPMs began Q4 very strong, and we are seeing nice momentum building into the holiday shopping season, and as mentioned previously, with some key direct sales clients. We are hopeful that this time the momentum in the ad market will carry forward and feel this is likely with a new administration bringing out a greater risk and investment appetite in the United States. Turning our attention to our profitable business model, our Adjusted EBITDA grew 9% versus last year, coming in at $7.4 million, while free cash flow increased 7% to $6.4 million.
This level of free cash flow is sustainable and gives us a wide variety of options to grow our business organically and through M&A. Speaking of M&A, we are close to making our 2nd small tuck-in acquisition while ramping up our team size. We think there is a better deal-making environment around the corner and will be prepared to close on an increased number of transactions. Interestingly, we are seeing some fast-growing upstart communities that are new on our radar. Some are break-offs of subreddits, and others are entrepreneurs just starting out.
There is more interest in the sector, and it is great to see, and that is leading to more opportunities. Our pipeline is growing, and we think 2025 will be fruitful for forum tuck-ins. We are building an impressive financial position at VerticalScope. Our debt is down to less than 40 million as of this call, and we are now at 1.3 times leverage. We have plenty of dry powder available on our balance sheet and through our new credit facility to make deals happen.
We will be patient to only take swings on deals we love, and that will be immediately accretive to our business. Product-wise, we are continuing to invest in our Fora mobile app and exploring more deeply some of the opportunities available to us around product ownership, user-created communities, and emerging technologies, including both AI and blockchain. We view both of these fast-emerging technologies as providing us with credible opportunities to grow our user base, improve retention, and increase engagement.
We are in the very early days of exploring opportunities around further enhancing and verifying the authenticity of our users, potentially using blockchain technology. We think it could help to further differentiate our communities from Reddit and highlight the verified authenticity of our users and the products they own. Similar to Reddit, we are seeing a lot of the same growth opportunities with AI technology, including using it to increase engagement and also drive new audiences, including international audiences.
AI provides us a lot of opportunities with a 2 billion-plus post-content corpus, and we look to report back some concrete results in future quarters. Lastly, we did not sign any LLM deals in the quarter. The process towards finding the right licensing arrangements will continue into 2025, and we remain patient and steadfast in our belief that this will one day be a meaningful contributor to our business. We do not intend to provide any further comments on the timing or quantum of potential deals in our pipeline. With that, I'll turn it over to Vincenzo and Chris.
Thanks, Rob, and good morning, everyone. As Rob noted, Q3 saw continued strength in our advertising business, which posted another quarter of double-digit organic growth driven by higher impression volumes from our growing base of MAUs, stronger display CPMs, and incremental contributions from video. Total revenue in Q3 was $17.8 million, up 15% organically compared to prior year, driven by accelerating growth in our advertising business. E-commerce revenue was flat compared to Q2 and has ceased to be a drag on our operating results.
Year-to-date, total revenue across all channels is $49.2 million, up 14% compared to prior year. Drilling into our advertising results, ad revenue was $15.6 million in Q3, up 22% compared to prior year, improving from the 20% growth rate we saw in Q2. Year-to-date, advertising is $42.6 million, up 23% compared to prior year. P rogrammatic continues to set the pace for the business, increasing by 36% in Q3 and marking the 3rd consecutive quarter with growth exceeding 35%, and programmatic made up 71% of our total ad revenue in the quarter.
Our programmatic technology continues to make great strides with a number of initiatives taking shape, including identity solutions, price-flooring algorithms, ad rendering improvements, and direct DSP connections like our partnership with The Trade Desk. We have an outstanding team and a deep pipeline of opportunities that will continue to push this part of our business forward. We are also still in the early innings with our video solution, which to date has been primarily monetized against desktop traffic.
We're working on mobile experiences where the bulk of our audience is that will drive incremental revenue without compromising user experience. Turning to our direct advertising business, direct made up 29% of our ad revenue and was flat in Q3. However, we experienced a pickup in demand as the quarter progressed, and we've seen this activity carry into Q4. Power sports and outdoor advertisers have been very consistent with their spending throughout the year, and this was the case again in Q3.
And notably, as Rob mentioned, we're starting to see more direct activity from automotive OEMs that will support growth in Q4 and into next year. Turning to e-commerce, as you mentioned off the top, e-commerce is no longer a headwind to our overall revenue. Representing only 12% of total revenue in Q3, e-commerce was $2.1 million, down 20% from prior year, but flat compared to Q2. And 65% of our e-commerce revenue in Q3 was subscription-based.
Looking ahead, Q4 is showing strong momentum, with October bringing accelerating advertising growth driven by continued robust programmatic performance and an uptick in direct advertising. We anticipate continued organic revenue growth in advertising throughout the remainder of the year. And turning briefly to M&A, as Rob mentioned, our pipeline is strengthening, and we're working on a handful of tuck-in acquisitions that should close in Q4. Inbound activity has also picked up, and valuation gaps are narrowing.
With our strengthened balance sheet, we expect M&A to be a bigger driver of growth in 2025. And with that, I'll turn it over to Vincenzo to walk you through the rest of our financial results.
Thanks, Chris, and good morning, everyone. The organic growth trends in our business remain strong, and we continue to strengthen our financial position and deliver on results. In Q3, we beat market consensus across all of our core KPIs and are excited about the trends we are seeing to start the 4th quarter. So let's dive right in. We had another quarter of strong performance, with 15% top-line revenue growth driving $1.2 million in net income and an earnings per share of $0.06 for the period, compared to a net loss of $516,000 in the prior year.
Adjusted EBITDA on the quarter increased by 9% to $7.4 million, while our adjusted EBITDA margin declined slightly to 42% compared to 44% in the prior year. This was primarily due to higher performance-based incentives and investments in technology and new partnerships that will drive future growth for our business. The increase in performance-based accruals is reflective of our strong year-to-date results and increased confidence in achieving our growth targets.
These accruals are a positive indicator for our business and the alignment of our incentive plans with our long-term growth strategy. In the period, we also harnessed new technology and partnerships that will drive growth in our programmatic channel. While these solutions have added incremental costs to the period, we expect these investments will drive long-term benefits, including increased efficiency and revenue growth. For the year, we have recognized Adjusted EBITDA margins of 40% and expect to deliver margins of 40% or better in Q4 on seasonally strong results.
Our total operating expenses in the quarter were in line with prior year, increasing by 2%, with increases in wages and consultants costs offset by lower share-based compensation and a reduction in the rate of amortization relating to acquired intangibles. Our operating expenses also continue to experience a benefit from the strengthening U.S. dollar relative to the Canadian dollar and Israeli new shekel, with offices and 65% of our workforce residing in these two geographies.
Our profitability continues to transit into robust free cash flow for our business that is redeployed towards strengthening our balance sheet and returning capital to our shareholders through share buybacks under our NCIB. Free cash flow in the quarter grew by 7% to $6.4 million for a conversion of 86% compared to an 88% conversion in the prior year. The slight decrease in conversion for the period is as a result of higher cash taxes in the quarter, offset by a reduction in CapEx related to internally developed software.
Excluding 418,000 in refunds relating to prior period returns, cash taxes paid on a year-to-date basis were 26% lower than prior year as a result of ongoing optimizations to our global tax structure. On a year-to-date basis, our business has generated $18.1 million in free cash flow, up 45% from a prior year for a conversion of 92%.
So far this year, we have repurchased 326,000 shares at an average price of CAD 7.79 per share under our NCIB and have made $14.8 million in voluntary debt repayments, bringing our net leverage ratio to 1.3 times as defined by our credit agreement, compared to 2.1 times leverage at the start of the year. In October, we amended our credit agreement, extending the term by two years to October 2028, and expanded the revolver to $100 million, giving us increased flexibility to quickly execute on M&A when the right accretive opportunities arise.
We also increased the strength of our lending syndicate with the addition of Citibank, which joins Capital One, Royal Bank, and National Bank as our lenders. This is a well-rounded lending group that supports and understands our business and gives us a very strong presence in both the U.S. and Canadian markets. There is currently over $60 million available to draw on the revolver. We are encouraged by the strong performance of our digital advertising channel as we head into Q4, driven by impressive growth in programmatic and improving trends in direct.
We expect the momentum in the channel to continue contributing low to mid-double-digit growth in Q4. E-commerce remains a small but stabilized component of our business, with new leadership hyper-focused on exploring new products and initiatives that will drive long-term growth in the channel. As we look ahead to Q4 and beyond, we remain confident about our growth trajectory. In Q4, we anticipate MAU will continue to grow as we lap a strong comparable and accelerated growth period that began in the 2nd half of 2023.
As a management team, we are committed to delivering sustainable long-term growth. We will continue to invest in our core business and explore new opportunities to drive profitable results and long-term value for our shareholders and employees, and with that, I will pass it back to Rob for some closing remarks.
Thanks, Vincenzo. We're excited about the future of the Fora platform and continuing to deliver long-term growth for our shareholders. That will open it up for questions.
Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can withdraw yourself from the queue by pressing star, followed by two. Our 1st question today comes from Aravinda Galappatthige with Canaccord Genuity. Please go ahead, Aravinda.
Good morning. Thanks for taking my questions. Congrats on the quarter and your results. Two for me. 1st of all, Rob, you talked a little bit about the outlook for MAU growth. It seems promising. I think you mentioned you expect a year's long trend in terms of MAU growth. Maybe give us a little bit more about what's sort of driving that confidence. I know you talked about sort of the underlying trends.
Is there anything more in terms of sort of categories where you're seeing certain categories have sharper growth that kind of give us some insights as to what sort of this underlying what the underlying drivers are? And then my 2nd question, perhaps a little related, I know that you talked about increasing engagement and translating MAUs to DAUs. Any kind of progress on that and maybe some of the technology that you've highlighted that you can build on that in terms of sort of driving that conversion rate? Thank you.
Thanks, Aravinda, for the questions. Really good questions around the MAU growth and just kind of repeating myself a little bit around the, I think, just confidence that we have in our community side. That's where we're seeing the strength is on the Fora platform, and really the kind of I'm going to call it macro interest, kind of widespread, not just with VerticalScope in our Fora communities, but Reddit and other user-generated communities, and I think a lot of that goes back to some of the low-quality content and AI-generated content that was out there.
And I think AI has its place, but it's also driving a lot of interest to these communities, so in terms of a category, it's really not verticalized. It's not just automotive or outdoors or power sports. It's really across all of our community websites. Certainly, I think where we have benefited is around particularly the product-based communities.
We're very, very strong in that, I think, from the early outset of when we started doing acquisitions and getting into the community space, we were always very focused on large-ticket items, things that people are really passionate about, where their hobbies are, where they spend a lot of their money. And I think that's the area where these enthusiasts can really see through AI-generated or even just kind of these desk-written product reviews.
And they come to our communities because they're looking for that authenticity and those perspectives that can really only be ascertained from human-to-human connection. So I think those connections are driving the long-term growth and the confidence that we have in the business and the model. And I would say that the challenge for our team, as you mentioned, is converting more of those MAUs to DAUs.
And we're using a variety of tactics: email, the mobile app, and even some kind of early AI-driven algorithms and experiments to try and get that traffic coming back on a daily basis, not just when they're looking to make their next product purchase. So that's a real opportunity for us. As you know, the mobile app opens up the opportunity for our enthusiast users to be a member of many communities. We've talked, albeit very briefly, about user-created communities and the ability for users to create their own communities like they would on Reddit on our platform.
And I think that's an exciting kind of growth opportunity once that gets kind of more off the ground. So overall, MAUs are something we're feeling very confident. I know there's been some noise in the market around MAUs, but we've just come off a record quarter. We've, again, I think, said that we expect growth in Q4, even though we're lapping some very, very strong quarters from last year, and going into 2025, obviously, we continue to think that the types of content that we own and are on our platform are very well positioned given the macro outlook.
Thanks very much. I'll pass the line.
The next question comes from Vince Valentini with TD Cowen. Please go ahead, Vince.
Thanks very much. 1st, can I just clarify growth in MAU in the 4th quarter? Are you just talking year-over-year, or do you think you can grow it from where you were in the 3rd quarter?
Hey, Vince. We're always talking year-over-year because of the seasonality and those seasonal trends in our business. So I haven't looked specifically at the quarter-over-quarter in depth, but definitely year-over-year growth is what we'll always be focused on.
Okay. And in terms of the revenue, Vince, thanks. Sort of guidance, if I can call it that, on advertising revenue versus e-commerce. If you package those two together, still have visibility to double-digit total revenue growth on a year-over-year basis in the 4th quarter?
Yes. Yeah. We still have visibility to double-digit overall growth in the 4th quarter.
Okay, and then looking out to next year, the comps get tougher. I assume you wouldn't want to commit at this point to double-digit organic revenue growth throughout 2025, but if we include these tuck-ins that the pipeline seems to be improving on and you got lots of cash to execute on them, if we include not huge acquisitions, but just the regular cadence of tuck-ins plus organic, could we possibly see double-digit revenue growth again in 2025?
Yeah. Yeah. I think we could, Vince. And it sort of speaks to some of the trends we're seeing right now, and especially in direct coming out of Q4, signing these automotive OEMs and others on the horizon. We expect that will benefit the channel into the 1st half of next year, coupled with the trends we're seeing in programmatic and e-commerce being stable. I think it is possible that we will see double-digit organic growth, low double-digit organic growth in next year.
Okay, so even better than what I sort of tried to lead you to, Vince, you think on an organic basis with no acquisitions, it could be?
Yeah. It could be that, and layering in some of these tuck-ins would obviously accelerate that growth rate.
Okay. And last, I appreciate the direct deals that you seem to be signing recently that may negate some of my concern here. But is there any risk that the huge momentum that Reddit seems to have? I mean, your revenue growth is great, but I'm sure you've seen their numbers. It's quite a bit higher than yours, even off a larger base.
Would we see market share shifts in direct more than programmatic if they were doing a better job convincing advertisers to do direct deals with them to reach these kind of community audiences? And it takes a little while for you guys to catch up and convince people you're just as relevant, or am I reading too much into the relative revenue for them versus you?
Yeah. Hey, Vince. It's Chris here.
Sorry. Go ahead, Chris.
Sorry, Rob. Didn't mean to speak over there. Vince, so quickly on that, I think there's a couple of things to think about. 1st of all, the digital ad market is massive and incredibly fragmented, right? So you're not necessarily running into any one competitor at a given time. The other thing, I think, so there's a couple of things to think about. Reddit provides incredible validation for our model with the market, with agencies, with big advertisers. If there was any reluctance to go and invest ad dollars against a community like user-generated experience, Reddit's really helping to kind of push through that.
So we see that as we see ourselves as a net beneficiary as more and more advertisers come around to seeing the benefits of investing alongside communities. And then the last thing I would say is in the categories we serve, we go incredibly deep. And so we can fulfill a little bit of a different purpose for an advertiser in categories like automotive or outdoors where we have all this concentrated expertise. So we see Reddit as very positive for the space and for ourselves. And we think we can also compete really effectively in the categories where we have scale.
If I can paraphrase, Chris, the opportunity is really for both of you and for the whole category to take mind share from media buyers and maybe take some share from the other mega digital platforms to prove out that this is a great category to advertise in and as opposed to worrying too much about how much goes to them versus how much goes to you.
Yeah. That's well said, Vince.
I'll pass the line. Thank you.
The next question comes from Adhir Kadve with Eight Capital. Please go ahead.
Hey, yeah. Thanks [audio distortion] . Thanks for taking my question. This is Kiran, on for Adhir . I'll just start. I just wanted to. You've spoken on platform enhancements before with video ads and ad placements. Would that lead to an increase in ARPU ahead? Just trying to unpack how you are improving the monetization with these large MAUs.
Yeah. Chris here again. So that's exactly it. I mean, that's where you'll see as video starts to ramp more, that's where you'll see the benefits come through that we're monetizing that user base better. Like we've said throughout since we've been having these calls, we're always balancing that against the user experience and the authenticity of the platform.
So we're very deliberate with the testing that we do, but when we find the right formula, we'll scale it up quickly. Again, that's the benefit of the common platform. When we find something that works, we can move quickly. And so the video and the continued rollout of video will be no different.
Thanks for the call, Chris. And then for my 2nd here, given that free cash flow and your commentary on a higher velocity with deals than before, I mean, you also called out some new startup communities. Curious if target profiles would change, and maybe there are larger companies out there you'd like to own. Just some broad color would help. Thank you.
Yeah. I mean, our pipeline. We've built a pipeline over many, many years of doing deals. They come in all shapes and sizes. We're certainly not afraid of doing many, many small deals because we have the processes in place to make the acquisition process go quickly and painlessly for the seller, but then also to integrate the acquisitions we make. There are some bigger players, by no means large, as far as individual aggregators that exist that own maybe 20 or 30 sites without common technology, but they just happen to own a collection of communities.
There's several of those. They're in our pipeline. As the M&A conditions improve, there'll be opportunities for us to consolidate there. We're not afraid of doing lots of small acquisitions because we think they can deliver tremendous value. But there will also be some opportunities to pull in some consolidators too over time.
Thanks. I'll pass the line.
Our next question comes from Drew McReynolds with RBC. Drew, please go ahead.
Yeah. Thanks very much, Jack. Good morning. Just following up on the M&A question, maybe, Chris, in terms of kind of valuation multiples in the past, you've done some pretty accretive M&A. Just thoughts on how that's evolved in the current environment. And then 2nd, maybe for you, Vince, just on the margin profile as you look out into next year on an annual basis.
You've spoken about investments going back into the business, and you've been through a kind of cost-cutting phase when the environment was weak over the past kind of 18 months. So how does it all kind of shake out in terms of a normalized kind of margin trajectory when you look out maybe the next couple of years? Thank you.
Hey, Drew. Just on the 1st question, then I'll pass to Vince. So on the M&A environment, so one thing to remember and reflect on is oftentimes we're dealing with individual sellers, right? They aren't structured processes. And so the conditions around a sale can be different than you'd expect in kind of a normal kind of larger M&A transaction. So there's that to keep in mind. But we do see more inbound activity. There's more people reaching out to us to look to do deals, which is often the case because we build the pipeline over time.
And when we 1st approach a target, they are not always necessarily ready to transact. And it can be other events that cause them to want to do so. And so we're just seeing more and more of that materialize. And so when you have that inbound activity, I think the multiple expectations, when the outreach is on the other side, I think shift a little bit. So I think we'll see. I think we're seeing a better opportunity to acquire than we've seen in the last two years.
Yeah. And hey, Drew, this is Vince. Just on the margin profile. So yeah, as you saw in Q3, we continue to invest in organic growth in our business. I called out the new partners as well as sort of investing in people. And we think that investment will continue into the outer years when you think of things like AI layering on expertise across our business in order to drive organic growth in those key areas, whether it's engagement growth or top-line revenue growth.
And so far, it appears to be working. So I would say from a baseline perspective, low 40s from a margin is what we're targeting as we continue to reinvest. And that margin will tick up as we layer on M&A to the platform.
Got it. Yep. That's helpful. Thank you.
The next question comes from David McFadden with Cormark Securities. David, please go ahead.
Okay. Thank you. A couple of questions. So you talked about how you expect the advertising to be up low double-digit in the 4th quarter. Should we expect that the direct advertising could also maybe move up to that range as well in the 4th quarter? And what do you think the outlook would be for 2025?
Yeah. David, Chris here. So like we said, the quarter started really strong with direct and was in that low double-digit range, which is really what we've been trying to target all year. And so we're starting to see it happen. And it's certainly possible that the quarter could finish that way. And it's hard to have full visibility on total 2025 in that channel.
But as we enter Q1, which is a seasonally slower period for advertising generally as you come off of a higher Q4, the bookings we're seeing and again, the positive signals we're seeing from the automotive space give us confidence that we're going to start 2025 on a really good foot.
Okay. Okay. That's great. So when we look at the digital advertising, it's being driven primarily, well, all by growth and MAUs. Just wondering, what would it take to get the ARPU growing as well? That way, you could have that revenue line grow faster than MAUs. Is it solely contingent upon the video success? Or I'm just wondering what you think it would take to get the ARPU to grow on that segment.
I think there's a couple of things there, David, just to unpack. Like we've mentioned, programmatic's grown at around 35% this year, right? So programmatic itself is growing at a higher rate than overall MAU growth. Some of that is video. Some of it is the tech improvements we've been talking about. Some of it is just stronger demand, CPMs, particularly in the most recent quarter. So there's that. So that's been a positive contributor to ARPU direct. As we know, it's been relatively flat so far this year. And so it hasn't been additive to ARPU as the MAU growth has been there.
But as we see direct really start to uptick, we think that can be a positive contributor. And then exactly as you mentioned, video is a really good example of a relatively new ad format for us. It's been roughly a year of rolling that out and engaging how users respond, and we do think there's opportunities to kind of further evolve that and improve it to drive ARPU higher in the coming quarters from advertising.
Okay. All right. Thanks, guys.
The next question comes from Valery Heckel with CIBC World Markets. Please go ahead, Valery.
Hi. Good morning. This is Valery on for Todd Coupland. Thanks for taking my question. So I'm also curious about your MAU trends, which held up in line with levels from last quarter and was nice to see. You talked a little bit about your efforts of converting MAUs to DAUs. And I was wondering if you could characterize how those efforts are trending relative to your expectations and if there are any milestones we should be looking out for to assess these trends.
Thanks for the question, Valery. Yeah. MAU to DAU trends are improving. I would say that ultimately, DAUs will 1st kind of shine through with our member traffic. And then it's a matter of kind of converting more of that guest traffic into member traffic. So getting, especially when users come from things like search engines, getting them moved over onto a membership basis and then obviously using a lot of our retention techniques to drive DAUs. So we are seeing really impressive growth in registered members.
And I think the one nugget of information I can share there is just our growth in registered members last month in October was plus 29% year over year. So again, it's a focus area for us and for the team. And we continue to really push forward on improving engagement. I don't want to get into the weeds on a whole number of initiatives that we're running internally to increase that, but it is a focus area for us. I think throughout 2025, it will continue to be kind of top of mind for us.
Okay. I really appreciate that. Thank you. I'll pass the line.
Our next question comes from Gabriel Leung with Beacon Securities. Please go ahead.
Hi. Good morning, and thanks for taking my questions. Just two follow-ups. 1st, just curious if you're able to provide some talking points around how the integration with The Trade Desk is going, whether it's been added to overall revenues and ARPU?
Yeah. Hey, Gabriel. It's Chris here. Yeah. So Trade Desk has been terrific for us. We started to see it. We just really got it integrated towards the end of Q2. And we see a nice pickup in that line. It's certainly contributing incrementally to those growth numbers you're seeing. The other thing that it does is it creates auction pressure, right? So because you just have another bidder in play. So it's harder to quantify that impact precisely. But you certainly see Trade Desk being one of the biggest ad-buying platforms in the world, right?
Having that direct connection is really powerful. What it's also led us to explore is additional direct DSP connections that have that same sort of efficiency associated with them where you don't have as many players in the value chain going through SSPs and exchanges and everything else. So we've got a few of those in the works. And we think similarly, although not at the same size and scale of the Trade Desk, we string together a couple of those. And we think that can be another catalyst for programmatic growth next year.
Gotcha. Thanks for that. 2nd question is around your direct advertising business. So I appreciate the commentary around the new automotive OEM. So I'm curious, though, if I look back over the last quarter or so, what does the composition of your direct advertiser base look like? Is it largely recurring advertisers, or are you constantly putting in new direct advertisers every quarter? And just curious about how you think about direct advertising ARPU's, I guess, what it's looked like over the past year and what your expectations are over the coming quarters. Thanks for that.
Yeah. So it's a mix as far as direct advertisers are concerned. We have some that do annual deals. More commonly, we see quarterly planning. That tends to be so we have some insight entering a quarter with those types of advertisers. And that tends to be more the norm. And then you do have a handful that run kind of more on a month-to-month basis.
With respect to the ARPU, I don't think I'll break it down specifically to an ARPU number from direct, but what I would say is if you think about it being roughly 30% right now of the overall, as we see that direct growing, the higher CPMs that it attracts and everything else, it will be additive to our ARPU going forward. Now, you'll see, of course, seasonality. We do have Q4. I just want to remind everyone, we do have Q4 being our strongest quarter, Q1 being our weakest, and then Q2 and Q3 being kind of somewhere in the middle.
Gotcha. Appreciate the feedback and congrats on the progress.
Thanks, Gabriel.
We have no further questions, and so it's now called back to Rob for closing remarks.
Great. Thank you all for the great questions. And please feel free to reach out to management if you have further questions. We're available to answer your calls. To close, we're very excited about Q4 and 2025 and look forward to delivering strong results for our shareholders. Have a great rest of your week.
Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.