Earnings Call: Q1 2021

May 10, 2021

Earnings release

Good morning, everyone, and welcome to Acuity S First Quarter 2021 Financial Results Conference Call for 3 months period ended March 31, 2021. Before we begin the official remarks, I will read the cautionary note regarding forward looking information. Certain information to be discussed during this call contains forward looking statements within the meaning of applicable security laws, including among others, statements concerning the company's 2021 objectives, the company's strategy to achieve those objectives as well as statements with respect to management's beliefs, plans, estimates and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Such forward looking statements reflects management's current beliefs and are based on information currently available to management and is subject to a number of significant risks any uncertainties that could cause actual results to differ materially from those anticipated. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference call over to Tal Hajek, the Co Founder and Chief Executive Officer of Acuity Ads to update you on the operations of the business. For years, media plans have been put in a black box that you didn't have access to, Until now. Now, Illumin has reinvented advertising technology. Now you can see everything. The Illumin journey canvas lets you plan, buy and See results on a single platform in real time. Drag and drop your creative to plan the consumer journey on any digital channel and Activate it. Track the consumer journey, target the right message at the right time and get a better return on your advertising spend. Illuminate the consumer journey with paralleled insights all the way to conversion. Illumina's advertising automation like you've never seen before. Goodbye Black Box. Hello I get so excited about Illumina. What a game changer this has been for our company. Good morning, everyone. My name is Tal Hayek, and I'm the Co Founder and CEO of Acuity Ads. I'd like to welcome everyone to our Q1 investor video presentation. I have to start by thanking the Acuity family. Each and every one of you Have contributed to the success of this great company that we built. Thank you for an amazing Q1, a quarter of overall growth And a quarter of massive growth when it comes to Illumin. As many of you know, we launched Illumin in Q4 of last year. Illumina over exceeded our expectations many times over, anywhere from the amount of revenue that we delivered on it to the Adoption that is happening faster than we expected to just the fact that it's changing the world of advertising one brand at a time. Great brands like Purina, Purple Mattress, Weight Watchers And Mercedes Benz have already began using this system. They've already begun to see the power of advertising automation. And the beauty of that is that this is the way they plan. This is the way they think. They always plan and think consumer journey. And Illumina now gives them the ability to execute on it, give them the ability to plan and execute on it. So it's It's really a dream come true to many marketers out there. And the kind of results that they're getting from it and the kind of insight they're seeing from it It's something they could never see before and never get before. So needless to say, we're so excited about where Lumin is taking us and how it's really changing the company as a whole. Towards the end of the call, I'm going to share some very exciting news about the a little bit about the outlook of Q2 and about what's happening in the NASDAQ. So please stay tuned. What a great Q1. We delivered $27,500,000 We are now officially back in growth mode. On the Illumina side, we've seen a 107% sequential growth to $3,200,000 And our LTM EBITDA keeps climbing And it's now at $18,500,000 Illumina gave us a great competitive advantage, but it is so important to be able to maintain it. A lot of times I get the question, is somebody going to copy Lumin? Look, my response is probably, probably eventually somebody will tried to copy it. But we're so far advanced and we're advancing so fast all the time that it's going to be very difficult for anybody to be able it to be successful. And Lumin, like the idea came to us about 4 years ago. And 2 years ago, we started building it. And we're now in the 6th iteration of it, Starting at alpha and then beta and then full release and we get all the feedback from our clients and our product team is making changes, The engineering team is making changes and we're just making it better and perfecting it all the time. Couple that with all the partnerships that we're adding to it along the way so far and plan for the future. And then the most important part is that in the background of Illumina, the part that makes All the decision is the AI system that was built in house here and started 11 years ago and been We've been perfecting it ever since. And that is something that cannot be duplicated. I would love to share some Illumina numbers with you. We currently have 29 clients on the system. That is 29 clients. We only released the system in Q4 of last And we already have 29 clients running on the system. Out of those, 15 of them are Tier 1 clients. And the majority of the revenue is coming from new business to us. Our closing rate from leads is substantially higher than our legacy business and we have 100% renewal rate. All that is a great, great recipe for just great future growth. And in fact, I can share that we're seeing again into Q2 strong growth on the Illumina side. I'd like to share a little bit about the different categories. So Illumina is ready for any category out there. So far, we've seen and welcoming any other types of industry that would like to take advantage of it. At the end of the day, all major brands continued consumer journey and now Illumina gave them the ability to plan and execute on it. It's a great, great time to be in the ad tech business. Programmatic started about 10 years ago and grew to over $100,000,000,000 but that's not the end of it. The growth of the future is going to continue and continue very, very aggressively. In fact, The prediction is that it's going to go over $150,000,000,000 in the next few years. And that's not a wonder for me because at the end of the day, as an advertiser, I would like to Really concentrate my budget on things that make sense and things that are proven to me. So programmatic gives you that. It allows you to measure your ROI all in real time and generally speaking, get a It's a superior ROI to what you're getting somewhere else. So it's no wonder why more and more people are moving into it. And another major driver that's contributing to the growth of programmatic is connected TV. It's not a secret anymore that people are cutting their cords And moving more and more into consuming TV in a digital means. And as we do that, we're seeing the ad tech revenue starting to grow in the Connected TV space. In fact, we had 987% growth in Q1 over Q1 of last year just from TV. So we're very excited about what's happening in connected TV and do believe it's going to be a major contributor to the future growth. I will now ask Jonathan to share some financial updates with us. Thank you, Thao. We have enjoyed a very strong start to 2021 and I too would like to thank all of our team members for their hard work in making this happen. We're extremely excited about what lies ahead. As Tal discussed, we're seeing incredible traction in the market for our advertising automation platform, Alumin, And this success was indeed a significant growth driver in the Q1. Alumina has vastly exceeded our expectations once again, and we believe this bodes very well for the remainder of 2021 and beyond. With that in mind, I'd like to discuss the financial results for our Q1 2021. Total revenue in the Q1 was $27,500,000 compared to $24,200,000 in Q1 2020, an increase of 13.4% year over year. Growth would have been approximately 20%, excluding the impact from COVID-nineteen trees, including travel, leisure and entertainment. Revenue from Illumina this quarter totaled $3,200,000 compared to $1,550,000 in Q4 2020, an increase of 107% sequentially. We continue to see strong demand for aluminum and are extremely excited for what the remainder of the year holds. We also saw strength in newer emerging verticals such as pharmaceutical, technology and direct to consumer brands in the quarter. Gross profit or net revenue was $14,400,000 in Q1 2021 compared to $12,200,000 last year, an increase of close to 18% year over year. Our net revenue margin in Q1 2021 was 52.3% compared to 50.3% last year. This year over year increase reflects a continued focus on best in class AI Technology. Total operating expenses for the quarter equaled $12,100,000 compared to 12,800,000 For the same period last year, a decline of 5.2% year over year. We continue to see strong operating leverage in our business resulting from streamlined operations as well as a reduction in travel expenses associated with our sales and marketing teams. This improved operating leverage Led to an adjusted EBITDA in Q1, twenty twenty one totaling $4,500,000 up 152 percent from $1,800,000 last year. Net income for the same period was $1,400,000 up from net income of $200,000 in Q1 2020 And adjusted net income for the period totaled $4,200,000 or a 3 18% growth compared to $1,000,000 in the same quarter last year. As a reminder, adjusted net income reflects the add back of non cash expenses including depreciation, amortization, foreign exchange and stock based compensation. Finally, operating cash flow for the Q1 of 2021 totaled $5,700,000 compared to $4,000,000 for the same period last year, an increase of 43%. On the next slide, our profitability continues to strengthen With each passing quarter, as we realize the benefits of the previously mentioned operating leverage inherent in our business. Here you can see the strong consistent growth and profitability on an adjusted EBITDA trailing 12 month basis over the last 7 quarters. As at the end of Q1, 2021 Acuity generated $18,500,000 in LTM adjusted EBITDA and we expect to exceed the $20,000,000 hurdle soon. On the balance sheet, you can see here on the left side, Our cash on hand as of Q1, 2021 has increased again in the Q1. As of March 31, 2021, Our cash balance stood at a record $27,000,000 an increase of $4,400,000 from $22,600,000 as at December 31, 2020. On the right side, you can see our working capital position as it has evolved over the past several quarters. We continue to improve our working capital position each quarter and despite Q1 typically being a softer quarter due to seasonality, We are in the best working capital position in our company's history. Working capital ended the quarter at a record $30,400,000 Looking ahead, we see continued strong aluminum growth supplemented by continued emerging vertical growth and a rebound in spending from clients and industries that were hit the hardest by COVID-nineteen. As vaccinations continue to roll out globally And lockdown restrictions lifted, we expect to see many clients that pause their budgets over the course of 2020 begin to resume spending once again. Now I'd like to send back to Tal for some closing remarks followed by Q and A. Thank you very much. Thank you, Jonathan. But with all this exciting news, I have to congratulate the Acuity team once again. Just before we go into Q and A, thank you again to the Acuity family for delivering such an amazing quarter of aggressive growth on the Lumin side Of growth overall of $4,500,000 in EBITDA, thank you, thank you, and thank you. As I see more and more brands are adopting Illumina, I get more and more excited. At the end of the day, Illumina is fixing a huge problem in our industry. The problem that there's a huge disconnect between the way marketers plan and the way marketers think, which is on a consumer journey, And the way that programmatic gets executed, which is generally speaking, tell the whole story in one the type of creative. Illumina comes along and now gives the ability for marketers to plan and then to execute on a consumer journey And then be able to see the insights that they could never see before and get the performance. And that is a recipe for amazing future of Acuity and the company. I feel that the wind is in our back. The pipeline, the amount of meetings that we're having, The types of conversations we're having in those meetings, the RFPs, the demo requests we're getting into the system on a daily basis And the amount of demos that we are performing are in an all time high. And I'm very happy to report that we're expecting strong growth in Q2 on the Lumin revenue numbers. And in general, so things in Q2 are going extremely well. And the overall revenue In Q2, we are now expecting to be at minimum 50% growth on a year over year basis. I know a lot of people are anxiously waiting for news about the NASDAQ. I'm personally looking forward to the time that I can go and share the acuity story with more and more investors. And I'm very happy and very excited to report that our application to the NASDAQ is going very well, And we expect to be listed there in the coming weeks. So with all these exciting news, Jonathan and I are now Our first question comes from Aravinda from Canaccord. Aravinda, if you can turn on your video and audio, you can go ahead. Hi, guys. Congratulations on the quarter. Hope you're doing well. Thank you. A couple of questions from me. I'll start with Tal. With respect to Illumina, obviously, very encouraging numbers. I was curious to hear from you. I know that So the key focus is the brands and the advertisers. But have you had the opportunity to pitch the product in a material way to the agencies as well? And is there any material feedback that you care to discuss. And the second question, I'm sorry to make you talk about 3rd party cookies again this quarter, But there was obviously some noise around an update from Google in February that created some disturbance in the market. I wanted to give you an opportunity to sort of get your updated thoughts based on that update and how you feel sort of independent DSPs can fare in a sort of unified IT environment going forward? Yes. Okay. So that's 2 very good questions. So let's start with the agency side. I was actually surprised how the agencies love the product because the original intent was for brands and giving them the tools to bring it in house and create the We started pitching into brands as well, and the response was Amazing. Like they love the product. They love to come back and show innovation to our to their clients and show them something different. At the end of the day, what it is, It's a dream come true for every marketer. And then if an agency can come and do it for them, then they it Makes them look very good and makes them perform better. So we did and some of our clients our brands to agencies and some are brands direct, and it's all working very well. So that's on the agency side. The 3rd party cookies, Look, at the end of the day, I'll go back to my to the way that I think about it It is the fact that consumers are getting content from the Internet for free, generally for free. And I don't believe that consumers are going to start paying for content that they're getting for free today. Therefore, it has to be supported by ads. And if that's the case, then there's going to be some kind of mechanism that's going to make it all work. Now I do believe the universal IDs are the right solutions and they actually work better than the cookies. And I'm looking forward to, in the next couple of years to get them replaced. So I am not concerned about the industry going away or being able to track going away and all that stuff. I mean, look, at the end of the day, if That happens. We do have other mechanisms in place to use and other input variables that we can use in order to great performance. Publishers are going to be the ones that suffer the most out of that as CPMs will go down. But again, if Publishers are suffering, then it will provide less content but no content. So at the end of the day, somebody has to pay for it. And I It's very important to zoom out of the situation and think about it that way. Thanks, Tal. A couple for for for Jonathan, and I'll pass the line. Obviously, you're seeing really good growth on the managed services front. Any kind of color for the analyst as to when you would start to see that self serve perhaps We accelerate ahead of managed services. I know that's the long term direction, but any kind of update in terms of the timing? And then, as we come out of COVID-nineteen, Jonathan, any sort of restart costs we should think about? Obviously, you did a very good job reducing costs during the pandemic. Are there sort of Could there be blocks of restart costs that we should factor in? Thank you. Thanks, Aravinda. So your first question with respect to self serve, we're already seeing some growth in Q2 because the lumen, obviously, as that continues to grow, we'll get more growth than that. But as Tal has always said, the second half of twenty twenty one is when that Self serve aluminum will take off, and we're investing in it now, and we should see that definitely grow. But we're also very happy that The growth, as Tom mentioned, the over 50% year over year in Q2 will be driven by both Managed and Self. When it comes to your question about COVID, unfortunately, we've been paying rent through the last 12 months, so there's no startup cost there. But what we do believe is there will be some increased travel and entertainment expenses, but I don't think it's going to be material. I think people have learned they don't have to do as much travel and entertainment, but I do believe those costs will increase. But when we look at the size of the business today, obviously generating $25,000,000 $30,000,000 $30 plus 1,000,000 quarter in revenue. It's not going to be a material cost for that T and E increase. And the only other thing we expect to increase Thanks very much, Aravinda. Our next question is coming in from Sutan from 8 Capital. Sutan, whenever you're ready, go ahead. Good morning, gents, and congrats on congrats on a very strong quarter. Nice hats. It's become a necessity here. Let's do it. With a lack of haircuts. Thank you. Thank you. Guys, the first question for me is more so on more And apologize if you guys touched on this in the opening remarks. I wasn't able to capture a lot of it. But in terms of the recovery that you're seeing from some of your COVID impacted customers and in the travel and entertainment sectors. What's your sense on kind of the recovery that the recovery and the trajectory of the recovery over the course of this year, as you start to see, you know, these broader kind of digital ad spending, how is this going to play out? Yes. So I we're not seeing any recovery from the existing revenue We have so far, we're seeing kind of signs that it's starting. And, you know, our belief is that During this year, it's going to come back more and more and more. Something interesting that is only my thoughts about the travel industry is there's not like like right now, there's still not a lot of flights, like scheduled flights, commercial flights. Flights. So, and there's a lot of pent up demand for it. So they're kind of filling up without advertising right now. But I think that as soon as they start adding more and more flight And you need to start fighting for passengers, then we will see more and more of that coming back. So I do feel that. It's slowly coming back and it's by the, this year, it should come back full force. My personal feeling With all the pent up demand and people are dying to go on vacations, it's going to come back very strong. But we are seeing little bites from a bunch of the travel and entertainment companies, but as Tal said, they're little. But the good news is, it's better than 0. And the number of brands doing small amounts now is much greater than it was 3, 4 months ago. And as Tal said, we do expect that pickup, especially as we get into the summer months. Perfect. And, Jonathan, I think you can confirm, but I believe, in an earlier call, I think you mentioned about 30% of your business pre pandemic was actually from the travel and hospitality industries. Is that accurate? Yes, I'm not sure if it was a every quarter is different, but We had some very large travel entertainment companies. And we believe, as Tal, and we all believe that they're going to come back very strong. So if you take the base that we have now and just add that revenue we lost, you could see the huge growth potential just from that one source. Sure. Okay. Great. Guys, my next question is on is on Illumina. Now obviously, this has been a Very important driver for new customer acquisition. And you're seeing really strong momentum there obviously. When do you plan to start onboarding some of your existing Marzante. Can you talk a little bit more also about, you know, what are you investing in terms of some of the growth areas for the platform over this year? Yes. So it's interesting because at the end of the day, we don't want to manage and maintain 2 platforms, Right. So we would like to eventually move everything to Lumen. However, Lumen is not built like a normal DSP. So it's not like you take all the fun if you take all the functions of norm BSP and put it to Illumina, it's going to turn into the normal BSP. It's going to turn to be complex. It's going to It turned to be something that takes you hours to set up a campaign, and that's the last thing we want to do. So we We're very, very careful about doing that. Even though a lot of times customers ask us, do you want this feature and that feature? And a lot of times, we'll say, no. That feature doesn't work with with advertising automation. It works with a DSP if you want to do it manually. So us? So there's the legacy clients that are used to using DSPs and they're professionals at it and they're using It will take them longer to move. But look, I think that over by the end of next year, let's say, We want to sunset the old ESP and move everybody to the new ones. How fast that's going to go along the way? Right now, we're really On going after the bigger brands and new lows for Acuity. And then probably next year, that's when we Okay, great. And guys, and maybe just one quick one for me on M and A. What are your thoughts on how the current valuation environment looks like and where are you seeing kind of interesting opportunities as part of your M and A year. Is it tech? Is it market access? Is it customers? We're seeing so we're seeing we're having a lot of conversations. This slide. It's the most we have had. And anywhere from something similar to what we do, Not on the advertising automation side, but on the DSP side, 2 things that would integrate very nicely to Alumet. I personally like marketing automation to be the next add on to Illumina, but There's many things we can add and we'll add to it, anything from email marketing to search to social, There's a whole bunch of things that we want to add to it. And we're having many of the discussion. In general, I think that People expectations are crazy right now, and it's really hard to when it comes to valuations, it's hard to make sense. This. But also, our valuations are aligned. So We don't have anything in it right now. We keep having direct conversations, but we're really, really, really focused on Illumina. And as soon as you do something like an M and A deal, which I'm not saying we're not going to do, but if we do that, you know, some of the focus goes to that. So for us, it's important to, at the moment, at least, focus on Illumina and at the same time, look at other companies that will add value to the to the Alumina journey at the end of the day. So Perfect. It's going to be interesting over the next few months to see what we find. Perfect, perfect. Great, guys. That's it for me. Thanks for taking my questions. Thank you. Thanks, Suthan. Thanks very much, Suthan. The next set of questions comes from Laura Martin at Needham Co. Laura, whenever you're ready, please go ahead. Can you hear me okay? There you are. How are you doing? Hello, Laura. Good morning. So I guess my first one, I'm interested in you comparing and contrasting. We had both Trade Desk and Magnite report sort of 35% revenue growth yesterday and the stocks corrected hard Because people were sort of underwhelmed with the growth rates. So can you talk about your growth rates quite a bit slower than that? Why the juxtaposition between your growth rate and theirs? Yes. I think that a lot of our for us, a lot of our revenue before COVID was travel entertainment. So it was close to 30%. So We obviously felt the loss of revenue and had to make it up and Ricaro We're proud of that. So that was great to see that we're back for to growth. So yes, 13% Growth rate is not as much as we want to be, but the great news, in Q2, we're seeing over 50% growth already. And we have the possibility to overachieve that a lot. And what we are concentrating on It's not our overall growth. We're constantly on the Illumina growth. We feel that this is our edge. This is where we're changing the world. And you can see the type of growth that we're seeing, over 100% growth on a quarter over quarter basis. And then Q2, very strong growth again. So we're very happy about where this is going. Okay. So you may recall, you probably read the transcript for Trade Desk yesterday, they're introducing Solimar, Which is to me it sounds like a lot like they sort of took a lumen and copied it, but I haven't seen it yet. It hasn't been introduced. On that point, precisely, if Trade Desk is successful at replicating some of the aspects of Illumina, Does that slow your growth rate and lower your competitive advantage as they roll out Selimar later this year? Yes. No, I haven't seen it. So it's hard for me to comment on it, but I'll go back to the fact that we've The idea came to us about 4 years ago. We've been working on this over 2 years. We're on our 6th iteration right now. And we're becoming experts in the field, and we're getting better and better and better all the time. Anybody new comes along right now, they're way, way behind us. It will take them a long time to catch up. And in the background of everything that we do at Illumina is the algorithm that we perfected over the last 11 years. And that is what making the decision. That's, at the end of the day, what delivers the ROI to customers. That cannot be duplicated. So I'm not worried about anybody catching up to us on that. Okay. And then my final question is just can you remind us about international expansion and how you see international as a growth driver going forward? We are focusing mostly in the U. S. Because we have a lot of work still to do in the US. We have some LatAm business. It's not huge, but it's there, and it's easy for us to expand on that. So we're doing a little bit of that. We can definitely expand more in Europe than we have today. And then you think about areas like Asia and so forth, which I don't think we're ready for it right now. It's not something you want to do on your own, you want to do it with a local partner. We had some conversations in the past and Probably have more in the future, but there's so much to do in North America and Europe. And that's really our focus now, let's get Illumin adopted by the major brands out there. That's the first step. The second step is, You know, Illumina is going to be ready sometimes next year for the small to medium sized market. And then we can start concentrating on any pizza store that wants to spend $500 a month by logging into Luminant and drive business within a 5 mile radius around the store. It's going to be so easy for them to log in, create their, their campaign within a few minutes without being an expert, And then Ewen will go and execute for them. So I think we still have tons of work at the places that haven't been touched yet. Okay. So I just want to add one thing, Laura, that despite our Spanish and Latin American business being relatively small, it's never been stronger and it is growing very nicely As part of the overall business, but as Tal said, Illumina is the focus and Illumina is going to be integrated with our Spanish and Latin American business. And I'll just throw in one last one. Do you agree with the notion that COVID Accelerated the convergence between performance advertising and brand advertising? In principle, yes. And it's logical. And I believe we see more and more Brand advertisers now would like to have more control over their spend and not just having more control, being able to measure it in real time. Even though it's trending, there's ways to measure it. And also being able to pivot very quickly without needing to make major upfront commitments and Making changes as things happen out there. So I think that's important. And then obviously with CTV, That's clearly going that way as well. But as you know, CTV numbers in general, the absolute numbers are still low compared The industry end up growing very, very quickly. So we're definitely looking forward to see a major number coming out there and that will be driven by today. Thanks very much guys. Thank you. Thanks Laura. Thank you so much, Laura. The next question we have coming in is from Eric from Lake Street Capital Markets. Eric, whenever you're ready, please go ahead. Okay. Hey, gentlemen. A couple of questions for me. I want to focus first on the Lumin. I heard you say in the past, Tal, but you would be disappointed with less than $10,000,000 in 2021. Given the $3,200,000 that you just reported for Q1, would you care to revise that? Yes. I do believe it's going to be a lot more than €10,000,000 at this point. But again, it's early days, and It's over exceeded on our expectations multiple times over, but I do believe now it's going to be way Okay. And we're still talking about sequential growth throughout the year? Yes. Okay. And then given those you talked about 29 clients using the platform. And by the way, that's terrific traction for a product that only launched in October. I think one of the ways I would characterize it as incremental to your overall business as opposed to A shift between managed service and self-service is if you were to tell me that those 29 clients grew Sir, than the 13% that the overall company grew. Is that a correct statement? Yes. So the first of all, the majority of them are new to the company. Oh, those clients are new to the company? Yes. So the majority of them. Okay. I thought you were. And We're tracking a lot of different metrics to be able to share in the future, but what we're seeing is the average Spend on eloan is way higher than the spend on the traditional DSP, and we'll be able to share more numbers as we have More experience with it, but generally speaking, we're definitely seeing higher spend per client on the loan. Got you. And then, Jonathan, final question is for regarding the NASDAQ. This is the greatest clarity you've given thus far. It's always been this amorphous time somewhere in the future, it's a little bit less amorphous now when you talk about, you hope to complete the process in the next few weeks. What is the last 1 or 2 gating items here? So it's been a process because NASDAQ has never been busier. I'm sure you've read about that over and over again. We are continuing to push this forward. I think it's the coming weeks, not the next few weeks, just to be clear, give us a little bit more Hedge there. As I said to people, it will be likely before the end of Q2 and full team on deck. It's just unfortunately, the NASDAQ has never been busier and it takes a little bit of time to navigate it, but we're very pleased where we are today and we'll have more of an update Thanks very much, Eric. The next question is coming from Collin, from Vince at TD Securities. Hi. Can you guys hear me okay? Yes. Perfect. A couple of questions. First, is there anything regionally that you're seeing in terms of the recovery in Demand in the growth you saw this quarter, anything in certain regions of the U. S. That may be opening faster Are there any big differences between your U. S. And Canadian clients and how much they're spending? Jonathan, maybe you have those comments? Well, the growth let's talk about Q2 growth because Q2 growth I think coming from all parts both Canada and the U. S. Driven by as Tal mentioned before the direct to consumers, the pharmaceuticals, even some of these financial firms. But at the end of the day, what we're still waiting for is a lot of the travel and entertainment clients it to come back in full force as they have before. But we expect to see that as we roll through Q2 and into Q3. Okay. I guess it's part of the reason I asked the question, Jonathan, is the airport volumes in the U. S. Are Significantly higher than Canada, where it's still almost an entire lockdown in Canada. But you're not seeing any notable difference in the pickup from travel and hospitality advertisers in the U. S. Versus Canada? Well, I'd say most of our business, as you know, Vince, is in the U. S. We are seeing, as I said, some bites In the U. S. From the travel entertainment companies, I would tell you that a lot of the airport traffic has gone up in the U. S, but it's still a very low compared to what it used to be, but we are excited by some of what we're hearing from our sales team and the pitches they're doing in the meetings they're having with their clients in these industries that took a pause over the last 12 months. As I said, They are very excited, our sales team. We hear it every week on our sales call, and we expect that to be generated into revenues relatively soon. Excellent. 2nd question on the Lumin. I want to make sure we don't get ahead of our skis here and hopefully you can level set expectations. With all these new clients coming on and more people using it and you say you're going to have significant sequential growth, I mean should we be thinking that in terms of Another sort of $1,700,000 quarter over quarter lift? Or should we be looking more at the percentage growth and expecting another basic double from Q1 to Q2 to get you up to the $6,000,000 range? I think it's we're still like not close to the end of the quarter. So It's a little early to comment on that. But we are seeing the indication for another strong sequential growth. We just Not ready to share the numbers yet, but we will as soon as we're more comfortable. And on that, is there any reason why the April 13 release had a lower number than the number today? Yes, I'd say it's a combination of a few things. 1, it takes time for our team to close the books every quarter. So we do a preliminary close and then with the close of a quarter and our auditors coming in to do a review, we obviously spend more time and do some more diligence on it. So we usually see the preliminary close and then the final close. We want to get that number out early in April and then we finish the closing of the books a few weeks later. Good. Let me just say, I appreciate the fact that the number is higher today, not lower. That your initial estimate, you're not trying to be overly ambitious with it. So So kudos on that. And I'll leave it there. Thanks for the answers. Thank you. It's always about under promise over deliver, right? Thanks so much. The next question is coming in from Kevin from Desjardins. Kevin, whenever you're ready, please go ahead. Hi, can you hear me? Hi, Kevin. Hey, good morning, gentlemen. Nice to see you. A couple maybe modeling questions first. Just Can you clarify on the Q2 guidance, you called for 50% growth. I think you did mention balanced managed service, self-service. Is that Fair or do we see one of them outpace the other in terms of the revenue growth? I would say that the approximate 50% growth we Expect to achieve year over year in Q2, may be a higher percent versus the self serve, but I don't think it's going to be 2 to 1. Okay. And then on the quarter, your gross margin was continues to tick higher at 52%. Is that driven can you talk about the drivers there? Are you getting better are you delivering better ROI on the managed service or is that a function of Alumin, maybe making the self serve margin, I think, typically has been at 30%, 35%. Are you seeing Any benefits there, just the drivers on the gross margin? It's really a function of the AI always getting better and always getting always improving. And as that is improving, then you deliver better ROI to clients. And sometimes you can take more for you a little bit more for yourself as long as you get most of it defined. So that's a function across the board. And As you know, one of our major focus has always been AI and it's continue and always will be AI. And Doctor. Nathan McCune and his team are always working on that, improving it. So it's something that we will never stop doing. But To level set, I think the margins in Q1 were higher than even we expected, which was great. But I would say as the Lumin continues to grow, The margins will level set around that 50% level throughout the year. Okay, very helpful. And then a couple of questions on Illumin. First, Really good to see the the 29 clients and the majority of them are new. Are they are these competitive displays? Like, how would you characterize them? Are they Coming from kind of greenfield, are these new brands? Are they new agencies that maybe are getting into digital? Or are you actually winning, you know, business away from like A Trade Desk or or someone else? These are these would be people that we will try to pitch them in the past and they would never even see us. Okay. So that's what we're seeing. So, you know, as being a DSP, a smaller DSP And competing in a world of everybody is doing more or less the same thing, it was very hard to even get meetings with these us. And now with Lumin, first of all, people are coming to us. 2nd of all, when our sales team goes out there, they're taking the calls. Whenever we have meetings and doing a demo for LUMIN, that seals the deal. So imagine you're a marketer And all your life, you're trying to plan a consumer journey and then you're trying to translate it into a black box. And now, Illumina comes along and lets you plan it and then execute it all from 1 platform. So that's really something That they really get excited about. So that's why we're seeing more and more new clients coming into the Evolus system. And is it more So are you in terms of the wins then, is it how much is coming like how much is inbound versus outbound? Are you getting any Are you seeing more momentum just coming in? Are you still is there still more outreach? Are you do you plan to put more marketing out there to advertise the awareness? And How do you see things kind of building over time? It's still very early, and these are impressive numbers for starting early. Yes. I would say that we, As a company in general, security never invested a lot in marketing. So it's something new for us. We started last year. We didn't do a lot, We've done a lot around the launch event. We have recently, Brian, a VP of Marketing that is already Doing an excellent job, and I do believe that more and more of the revenue is going to come in from marketing. Today, already, Some of the revenue is coming from marketing. In the past, it was always sales driven. Today, it's marketing and sales. And in the future, I do believe that We have the opportunity to get it very much into the marketing side of things and that will create a much more ability to scale much faster. Yep. Absolutely agreed. Excited for that. One more maybe thought for you then just more on the numbers. If I So, Illumin, just correct me if I'm wrong, just for clarity, the Illumin, is it it's all self serve or are you driving any of that on the managed service, are you running any campaigns for clients or is it purely self serve? We're selling it as self serve. Some of the clients, that need help, we We do a little bit of a hybrid for them as they learn the system, and we help them out. And so We will tell the self serve, and then we would charge them to manage if they want us to do it. But the overall All future of the loan is all self serve. Okay. Because when I look at the 3,200,000 reported versus the 5,200,000 self serve. I mean, that's a big number. It's 60%. It was only 20% last quarter. So it's a big step up. Is that Am I looking at it the correct way in terms of the mix? No. So in Q1, as Tal said, most of the aluminum revenue was swayed toward the managed Because that's how they start. So they start through the concierge model and then they transition over to self serve. So over the period of time, the percent of Alumin revenue that is self versus manageable flip. Okay. Can you help us with like in that 5.2 2, though, on the self serve, how much in there was related to Alumin? Was it like a 1,000,000 or? Less than a 1,000,000. Less than a 1,000,000? Okay, that's That helps because I was looking at the year over year comps 4.9 versus 5. So now it all makes sense. Okay. Thanks so much. Congrats on a good quarter guys. I'll pass the line. Thanks, Kevin. Thank you. Thanks very much, Kevin. The next question we have coming in is from Daniel Rosenberg at Paradigm Capital. Daniel, when you're ready, please go ahead. Thank you. Good morning, guys. Congrats on a good quarter. I just had a couple of quick questions around Illumin. I was wondering if you could provide any color around customer feedback and how they're evolving their usage in these early days. Maybe, you know, what percentage of revenue growth is coming for from more campaign usage versus bigger campaign usage. Just any color around on their usage, please. Yes. We're tracking metrics, but it's like we only have 2 quarters. So it's very, very hard to decide what's going to be a long term metrics and We don't want to do it sporadically. So we don't have exact numbers to share. But what I can we can tell you is that Customers are, 1st of all, need to change the way they think even before they start the Illumina because In the past, they used to send all their messages in one specific creative and then kind of rotate between creative. Now they have to Tell a story in many creatives and think about the sequence and divide it into different part of the journey. So they have to think about their campaign more. They have to come up with a creative in a different way. And they love the ability to plan that and then to execute on it. But what they love, I'd say equally as much is the insight that they're seeing when they're looking at the reports. They're seeing that they're looking at the insights and they're seeing where do people start? How do they go through the funnel? How do they get transferred from the different stages of anything from awareness to engagement to conversion. How much did it cost them to do the translate every consumer from one stage to the other? And then how [SPEAKER PIERRE ANDRE DE CHALENDAR:] It's possible to actually convert the users. So this is data that they could not see before, being able to also I work on the upper panel, the mid panel and the lower panel from all from one specific platform is also a great advantage for them. So they love that. They learn from it and then they come back for more. So like I said, the renewal rate is 100%. And we're seeing increased spend on it as well. So at this point, I would say that There's clients who are using now Lumen as part of what they're comparing, which is the smaller clients. And then we have bigger clients that are still testing it and figuring out how to accelerate that, how to become closer to us. And that's why I always say closer to the end of the year, this is where we're going to see the majority of revenue coming into this system. Thanks for that. And maybe just on the pricing model, as it's It's early days and it's new. Any thoughts around your pricing strategy with Illumina and any feedback you're getting from clients around that? So this year, the pricing model is very similar to what we're doing on the other DSPs. We're toying up with the idea of charging more platform fees and more More fees and more SaaS types fees, something that hasn't been succeeded in this industry ever. And the other part is, we're starting to introduce long term contracts with minimum guarantees. So Again, something we're testing in early days. It's an industry that's not used to it. Ultimately, you want to be able to deliver the results Did not make and spend money with you, and that's the ultimate success for Lumin. But it's also very nice to have commitments from Pfizer as well. So, by the end of the year, we'll have more and more information on how that's going. Thanks very much, Daniel. And we're just going to have time for one more question that is coming in from Rob Goff at Echelon. Thanks, Rob. Please go ahead. There we go. And thank you for taking my questions. Two simple questions. There's been a lot of discussion about the external demand for alum. Could you discuss the internal capabilities and expansion to support that demand? And then the second question perhaps for Jonathan would be on the CTV. Can you talk to the growth expectations sequentially in that market. Can you clarify the what did you say, the external? We've talked about the external demand for Lewin. Could you talk to your internal capabilities to match that demand? Are your internal resources a gating factor in any way? No. So not anymore. We're obviously in Q4, we're really, really Surprised by the amount of activities we had on. And we had quite a small team. We set up an enterprise team and anywhere from the sales side, sales engineering side and also the support side. And we had to expand on that and bring more people in and train them. And we've done that, and we're in good shape now. And I believe we're going to keep on expanding that team over time And probably not need as big of a team on the other side and that's where all balance is at. And Rob, on your other question, we expect sequential growth in CTV every quarter. Already in Q2, we did announce, I believe a month or month and a half ago that we got a Lumin CTV contract exclusively. So that bodes quite well for Q2 CTV revenue. And when we release, obviously, our Q2 results in August, you'll see that continued sequential growth. Rob, something that's interesting actually about CTV as it relates Illumene is that brands love running CTV on Illumene because they see the impact running the entire funnel and how it relates to CTV. So they can actually see The impact on display, the impact on mobile, the impact on video when they're running CTV campaigns on the same journey, and they can See how that flows and helps them convert better. So that's actually something that they're very excited about, and that's why a lot of the the aluminum banks come with CTV Part C. Awesome. Thank you very much. Okay, great. This concludes our Q1 conference. Thanks everyone for participating And have a great day. Thank you, everyone. Appreciate all your support and congratulate to the Acuity team once again for delivering such an amazing quarter and for very, very excited about what's happening today in Q2 and beyond. And again, much appreciate all the support of our great shareholder. Thank you, everyone.