Good morning, everyone, and welcome to the Sabio Holdings earnings call for the first quarter of 2023. The financial statements and MD&A have been filed, and they can be accessed through the SEDAR website. My name is Aideen McDermott, Investor Relations Associate, and joining us on our call today, we have Co-Founder and CEO, Aziz Rahimtoola, and Sajid Premji, Chief Financial Officer. We'll start today's call with Aziz and Sajid's prepared remarks, and after that, they will take questions. Please note that certain statements made today may contain forward-looking information that is subject to both known and unknown risks, uncertainties, and other factors. For a complete description of risks and uncertainties facing the company, please refer to the company's MD&A and other continuous disclosure filings that are also available on the SEDAR website. Please also note that all figures discussed today are in US dollars unless otherwise stated.
With that, I will hand it over to you, Aziz.
Thank you, Aideen. Good morning, everyone. Q1 was probably one of our most challenging quarters we've had since becoming a public company. Not only did we have to deal with advertiser delays caused by uncertainty in the macro environment, but also, in some cases, requests for additional third-party analytics integrations with Google, which our engineering team did at lightning speed, providing us another unique offering relative to some of our peers. Despite those factors, we were still able to not only deliver strong year-to-year growth, organic top-line growth, but also deliver our Sabio first in being Adjusted EBITDA positive for one-third of Q1. As many of you know, we have a seasonal business, but even in our record year last year, we didn't manage to deliver monthly positive EBITDA until Q3 2022.
While this doesn't mean we'll be positive Adjusted EBITDA from here on out, we do believe that this demonstrates that we have the leverage to deliver on our goals of making 2023 the fourth straight year of positive Adjusted EBITDA and double-digit top-line organic growth, while continuing to outperform our peers in CTV/OTT market share growth. Speaking of CTV/OTT, the transformation of our business that we started two years ago from one focused on mobile display into one of the fastest-growing players in the high-growth CTV/OTT marketplace, continues to provide strong momentum, with 63% year-over-year growth, helping us secure historical high amount of $ from new top 50 U.S. nameplates in Q1. All while continuing to maintain a very healthy renewal rate of our existing brands.
Overall, we feel the worst is behind us, although the recovery in the ad market is slow and uneven, the fact that we have one of the most complete end-to-end tech stacks in the ad-supported streaming space, along with the fact that we have a strong foundation of repeat customers delivering strong organic growth, positions us well in one of the only areas of the market that continues to see overall growth in the ad market. I'm going to now hand it over to Sajid Premji, our CFO, to dig deeper into the numbers. Sajid?
Thanks, Aziz. Despite planning cycle delays and macro volatility that had a pronounced impact on the first two months of the quarter, we were once again able to post double-digit revenue growth for Q1 on the back of a strong turnaround in March. For the three months ended March 31st, 2023, Sabio generated $6.5 million in sales, up 16% from $5.6 million in the prior year. In further evidence of the stability of our sales model, 79% of sales were generated from repeat customers. The turnaround was led by our growing Connected TV and OTT business. Connected TV and OTT sales once again outpaced the competitive growth rates of our peers in the estimated 21% growth rate for the U.S. CTV industry at large.
Connected TV and OTT sales grew 63% to $3.8 million, compared to $2.3 million in the prior year's quarter. For the third straight quarter, Connected TV and OTT streaming was our dominant sales category, accounting for 59% of our overall sales mix versus 42% in the prior year. This growth was substantially organic, with the Vidillion acquisition contributing approximately 10% of our first quarter CTV/OTT sales growth. First quarter mobile sales, mobile display sales were $2.5 million, down 23% from $3.25 million in the prior year's period. Aligned with our sales strategy, our legacy mobile display customers continued to shift their spend with Sabio from mobile display to higher-margin mobile OTT streaming, which is recognized under our CTV and OTT streaming category.
On a trailing 12-month basis, the shift from mobile display to CTV, OTT, has contributed to a 45% increase in average deal sizes, with CTV/OTT as a category representing 61% of our overall sales mix on a trailing 12-month basis. Our quarterly Adjusted EBITDA loss of $2.2 million was fully incurred in the first two months of the quarter, as labor shortages within our partners contributed to a delayed start to the 2023 planning cycle. In a testament to our ability to quickly adapt our operating infrastructure to changes in market conditions, Sabio was able to quickly implement cost efficiencies both above and below the line. These measures, in addition to the return to significant top-line growth in March, culminated in Sabio delivering positive Adjusted EBITDA for the month of March.
Digging in deeper, gross margins increased to 62% from 61% in the prior year's quarter, aided by greater use of the Vidillion supply, while our closest peer group experienced year-over-year margin compression. As part of our supply path optimization strategy, approximately 70% of our CTV supply came through direct supply integrations. Meanwhile, operating expenses normalized for higher Q4 commissions declined on a sequential basis, as our cost efficiency initiatives had an expedited impact, with further returns expected to be realized over the next quarters. We expect some monthly variability, our ability to post monthly positive Adjusted EBITDA at the earliest point in our company's history, despite the infrastructure investments in Vidillion overhead added since the prior year's period, positions us well for the rest of the year.
Consistent with prior years, over 85% of our annual revenues are expected to be generated over the next 3 quarters. We ended 2022 with $3.3 million in cash on our balance sheet and $2 million still available under our line of credit with Avidbank. We intend to renew the line when the renewal negotiation period commences this summer under bank policy. Early discussions under the intentions to renew have been positive, with no renewal concerns communicated. At period end, we had 46.9 million shares outstanding, 4.2 million warrants outstanding, and 3.3 million options and RSUs outstanding, with insiders owning 64% of the company. I'll turn things back to Aziz to discuss our 2023 outlook.
Thank you, Sajid. As mentioned earlier, we feel good about the acceleration of our business in the second half of the year, driven primarily through the market share gains in our CTV/OTT business. In addition, our expansion of supply path efficiencies provided by our Vidillion business, as Sajid mentioned, having 70% of our CTV/OTT supplied directly from end source, one of the highest in the industry, gives us additional efficiencies. That, combined with momentum and interest in deeper analytics that our App Science business is providing, provides us a good stable of options as it relates to second half growth, all while maintaining our strong renewal rates and our cost discipline, so we can aim to achieve our fourth straight year of positive Adjusted EBITDA, another year of strong top-line organic growth. On that note, I'm going to hand it back to Aideen for any questions. Aideen?
Thanks, Aziz, and thanks, Sajid. We'll now open the call up for Q&A. Analysts have been given speakers permission, so please raise your virtual hand and we will take your questions.
Aideen, you can go ahead and turn on the camera for Sajid and I.
Yeah, you can go ahead, Aziz, turn on your camera.
Yeah, great. It says it's not allowing me to. It's all right. I guess the camera's not working for some reason. It's all right. Let's go and ask the question.
Okay. We will turn it over first to Neehal Upadhyaya from iA Capital Markets. Neehal, go ahead.
Thanks, Aideen. Thanks, guys, for taking my questions. I just wanted to ask about the average deal size growth. I know you provided some color last quarter in terms of, you know, annual growth. Is that something you'd be willing to provide for this quarter, or at least any information regarding the ACV for the quarter?
Yeah, Neehal, I can take that one. Our average deal size did increase on a 12-month basis. That's the way that we kind of view the average deal size, it increased 45%. You know, in the quarter itself, it was also double-digit growth.
Perfect. Can you talk about the expansion in the U.K. and the European region and what the timeline looks like, what you hope to accomplish within, say, the next quarter or the next year? What do you think, or when do you think that region will start providing meaningful contribution?
Sorry, what was that question, Neehal?
Yeah. Can you talk about the expansion in the U.K. and the European region, and then what the timeline looks like in terms of what you hope to accomplish within the next quarter and then the next year? Finally, when do you think that region starts providing meaningful contribution to the top line?
You know, it literally, it's in the early stages of we literally are just starting to understand the market. Keep in mind, when you go into a new market, like especially a new region that has all types of additional regulatory requirements, it takes a little while to really, you know, set up our systems, get everything going, make sure we're compliant in all those aspects before we could even start booking deals, which we expect to start happening in the next two or three quarters down the road. I mean, we think by the end of this year, Neehal, that we'll start seeing some revenue coming in from U.K., but in Europe, we don't expect significant amount of growth this year.
We do expect to start seeing some momentum next year. Really, like I said, it's not so much that we don't feel that there's a need there. It's just in the EU, there's different regulatory requirements and, you know, setups. We are literally just being very cautious and making sure we cross all the paths in terms of making sure we're compliant in every way before we do that. To answer your question, sorry, is towards the end of this year, we'll start seeing some revenue. We expect at the end of next year is when we'll really start scaling up EU and U.K. and global markets.
Perfect. Thank you. That helps. Maybe one last one for me, again, it's a compound question. In regards to App Science, I was just wondering, that, you know, I know you've said previously that platform is completely industry agnostic, but what patterns, if any, are you seeing in terms of interest from particular industries and verticals? Like, has it been random or, you know, has there been more interest from a particular industry in working with the App Science analytics?
Mm-hmm.
Can you provide some color on what the % was of brands who spent $100K or more that had an App Science component to their deal?
Yeah, and I think we have that stat. In terms of what we're seeing from an App Science industry perspective and where we're seeing a lot of interest there, what we're finding is, since we have this unique household graph that is, as a foundation of mobile IDs that provide a lot more personalized information, especially as it relates to diverse audiences, we're finding a lot of interest from agencies and of course, brands, to help them understand, validate that they're reaching these audiences effectively. Now, keep in mind, 49% of all consumers today under the age of 18 are diverse in the U.S., and that number is growing. These brands are really interested in figuring out, are we, A, you know, are we reaching the right people that, you know, our brand.
Our platforms are telling us we're reaching, validating that option, and B, you know, help us understand them a little bit better and more. Where we're seeing a lot of really interest and traction is from the agencies and brands that are now trying to grapple with this diverse audience element within their marketing spend. That's really where we're seeing a lot of really interesting and some of them, in fact, we had a situation where one of the agencies involved asked all of their vendors who they use to be integrated with App Science. We're in the process of starting to get integrated with different platforms because it is actually coming out of. This is a major brand that is asking this agency to do this.
We're seeing a lot of great traction there. Now, as it relates to the percentage of App Science deals in Sabio, Sajid, do you have that info?
I think we can actually get back to Neehal with that number.
Okay.
It's been a bit more.
We'll get back to you on that number. You know, it was obviously, it's a fairly... I mean, last quarter, I believe it was 40%, something in that range. We will get back.
Correct. Yeah.
Yeah.
That's right.
We will get back to you in the current number. That number continues to grow.
Mm-hmm.
You know, those are obviously, we're starting to see standalone deals with App Science, and we're excited about that.
Okay, perfect. Thanks, guys. Thanks for all the color. That helps. I'll pass the line.
Thank you, Neehal.
Thanks, Neehal. Next up, we have Gabriel Leung from Beacon Securities. Go ahead, Gabe.
Good morning, thanks for taking my questions. Aziz, can we spend a little time just talking about sort of the demand environment? Just curious if the momentum you saw in March has sort of continued into April and into May? That's the first question. The second question is, you know, as the year-over-year comparisons, I think, on the CTV business are going to get increasingly more difficult as we go through the year. I'm just curious, you know, what sort of visibility you have into your customers' expected ad spending to give you confidence that you'll be able to grow off that, you know, that base from last year on the CTV side.
Thanks for the question, Gabe. From a recovery perspective, we're seeing very uneven growth across the months that we saw in Q2. Overall, as I mentioned in my prepared comments, the worst is behind us. Q1 was by far, you know, one of the most challenging quarters we've dealt with. Having said that, we do see a little bit of a uneven growth in Q2, but positive relative to Q1. It's gonna be. We believe that what's gonna happen, Gabe, is that, at least for the next, you know, quarter or a half, there's gonna be a little bit of this unevenness, but we do see a solidification of the business. You know, we, you know, we're starting to see a lot more confidence.
Of course, we have this debt ceiling situation still hanging around or, you know, over our heads, which is causing concerns for advertisers as well. You know, how's that going to impact the economy? How's that going to impact the market? We do believe we're seeing an overall solidification and a little bit more confidence, and we believe that this debt ceiling bid is gonna be kind of, we're gonna pass that fairly soon, and that will continue to provide momentum. We're seeing more positive momentum from an advertiser relates to Q3 and Q4. Q2 was just, you know, it was really uneven all over the place.
In terms of the business as it relates to CTV/OTT, the year-to-year comparisons, you know, keep in mind, the backdrop is that linear TV, traditional TV and cable, continues to lose. It continues to deal with cord-cutting at an ever-increasing rate. In recession environments, in environments where people are now traveling more, you know, they're traveling in historic amounts, they're getting out of their house, they're doing all these things. That's gonna be a big issue for traditional TV. In that backdrop, we do believe we could still sustain this type of growth rate as it relates to CTV/OTT growth. We think there's just a lot of upside. We're in the early innings of this growth opportunity that CTV/OTT platform provides.
I'll tell you know, the numbers, the most recent cord-cutting numbers, which we could share with you separately, speak to that. You know, we see there's a lot of opportunity still ahead. Sajid, anything you wanna add to that?
I think that was well said, Aziz. I think that, you know, one thing that's worth pointing out as well is that we do have a great deal of insulation compared to a lot of our peers, and that's the fact that the majority of our revenues do come from existing customers. There is a lot of stickiness and dependability there.
Gotcha. Maybe on a similar note, I think this second quarter, we've seen the mobile, revenues decline on a year-over-year basis. I understand that it's, you know, customers shifting their spend, to CTV. Generally speaking, how should we think about that mobile revenue line, going forward? Do you view it as an ongoing year-over-year declining business? Do you expect there to be sort of a baseline, revenue figure? Just curious to your thoughts around that.
You know, we made a strategic decision two years ago, we started actually putting even our comp packages for sales connected to this. We made a strategic decision to basically start shifting away from mobile. So in that same vein, we expect that number to continue to kind of decline because we have so much demand. I mean, when I say demand, there is advertiser appetite. There's a lot of planning going on. I'm not saying everything is, you know, coming in tomorrow in terms of deals closed, what we're finding is there's just so much interest in CTV/OTT, both from an education perspective and a planning perspective, that it's taking a lot of bandwidth, that really is our focus.
With that being the focus, we're, you know, we're basically ceding ground on the mobile side to other companies, and we're fine with that because this is a strategic decision to go after this high-margin, huge opportunity overall. you know, in terms of an actual aggregate number, I can't, you know, we're not sure what that looks like. you know, we certainly can do some modeling and give you some expectations, but we do believe that... keep in mind, when we say mobile, Gabe, some of that mobile spending is sitting in OTT, right? Of the CTV/OTT portion, over-the-air portion. we do have mobile components, but they're now mobile streaming components relative to mobile display.
That mobile display business in our minds, we're fine with it continuing to kind of shrink, 'cause as Sajid even pointed out, and I just mentioned in my comments, 70%, we have supply path optimization now. 70% of our supply for CTV/OTT is direct, and that number is continuing to grow, which means that also provides us bigger margins. That's not the case in mobile. This is a competitive advantage for us, because of that Vidillion acquisition we made a little bit more than a year, that we really are honing in on in a bigger way.
Gotcha. Thanks for that. Maybe one last question. I know in your preamble, you've talked about some cost optimization initiatives, and I'm just curious, where are you looking to sort of optimize on the operating expense side of things, number one? Number two is, over the next, over the coming few quarters, conversely, you know, where are you gonna prioritize your spending on within the business?
Sajid, do you?
Yeah. I think to answer your question, Gabe, is that we are looking across all our business lines on cost optimization strategies. You know, we definitely remain focused on the bottom line, and as our numbers have shown in Q1, we have implemented cost efficiency to that effect. Similar to last year, we do expect Adjusted EBITDA to improve each quarter in 2023, driven by these cost reduction initiatives and sequential growth in our top-line numbers as well, with the majority of our sales still to come in the last half of the year. Circling back to your question, you know, we are looking across our business lines where we can dial back with expenditures as market conditions become more or less transparent.
All in all, we know we are gonna continue to manage expenses closely in 2023 but still looking to make those targeted investments with the objective of scaling our spend on our platform in 2023. I would tell you, Gabe, is that areas where we are seeing an immediate return on our spend in 2023, on the top-line growth, we're definitely gonna prioritize that this year.
One of the ways also, Gabe, to give you a real-life example. Over the last year, and I think you could even see this as we mentioned in Q2 of last year, we started really kind of our, you know, in terms of our hiring, we started throttling that back. We started, you know, that was kind of starting to get a little bit more flat. But in that process of what we did when we did the investments, we actually started adding more resources into content marketing relative to going out to events and doing a lot of in-person events, which were very expensive. You know, these were really expensive events that we were doing all the time. We really have now started receiving, achieving cost savings there.
We cut out all these events, we've shifted our marketing kind of, you know, from a contextual, inside, analytics-driven marketing capabilities. That really is one of the examples where efficiencies are starting to take place in our business. That, you know, and, you know, as even Sajid talked about in the past, despite the fact that our hiring has kind of throttled back, even in sales, our revenue per seller is going up. You know, even that, we're looking at, okay, how do we make sure that not only our sales folks focus in on, on, selling, but we have account management teams that are doing the same, and do we, you know, what resources do we still need?
We're an evolving business, and we're constantly looking at all costs within our organization, but we're not gonna look at it at the risk of growth. We're really still focused on growth and focused in on being positive EBITDA, positive Adjusted EBITDA this year.
Gotcha. Thanks for all the feedback and good luck for the rest of the year.
Thanks. Appreciate it, Gabe.
Thanks, Gabe. Up next, we have Kiran Sritharan from Eight Capital. Go ahead, Kiran.
Hey, morning, guys. Congratulations on the quarter. I'll start, can you discuss the growth in Vidillion's inventory and its roster of publishers? like, I'm just curious how the strategy is evolving around the supply here, and appreciate any thoughts on CPMs as well, and how you've seen them trend. Thanks.
Yeah. Thank you. Great, great to have you on the call, Kiran. We are really focused in on hooking direct supply. The strategy is very simply this, is when we hook up a direct partner and, you know, we can provide, and I think we have the most recent list, but we have a lot of great names still in the pipeline that we're gonna integrate directly. As Sajid mentioned, 70% of our supply is directly integrated with that end platform, and so... or that publisher. What's happening there is we're able to take that supply, have efficiencies with that, 'cause now we've cut out the middle intermediaries in the process of CTV/OTT supply. Now we have that direct connection.
We've negotiated a deal directly with these major platforms and publishers, and now we get that inventory coming in, but we also, in some cases, are able to now sell that inventory to other platforms. That inventory comes in, it's being used by Sabio. That's one aspect of it. In other cases, where now there's other platforms who do not have the capability that we do to integrate directly with the platforms. We are now providing inventory to those platforms. You know, our view and while The Trade Desk and Magnite have talked about, and I think PubMatic might have been saying this, that they don't wanna supply to DSPs, we're seeing the opposite.
We're like, "No, no, we are gonna supply to DSPs." We're not gonna only supply to the Sabio DSP directly, but we're gonna supply to other DSPs. We believe there's an opportunity here. While everyone is talking about, "Oh, we're not supplying to anyone else," it's like, "No, no, we're gonna supply to other DSPs." We know what it was like to not have direct supply capabilities when we first started the company. Our view is, we see that as a huge opportunity, not only for efficiencies on our own campaigns, as, you know. When I believe the number Trade Desk mentioned is 44% of their supply is direct. They have 44% of what they use in their business is direct supply. Ours is 70%.
Now, given, we're a smaller number, so we, you know, that's an easier task to achieve, but we see that as a huge opportunity, that we're gonna continue to really increase that direct supply number and make, get efficiencies there. Sajid, anything you want to add to that?
Just to touch on the last part of Kiran's question, is that we've seen the CPM rates remain stable, in Q1, which we're actually pleased to see this kind of inflationary environment.
That's helpful. Thanks. I think I saw some additions to the headcount in the quarter. I'm just curious where these, where the focus is with these adds and how hiring plans are expected for the rest of the year.
I think that, you know, we ended the quarter with 131 full-time employees, so not much changed since year-end. You know, where we are hiring is lower down in the funnel, particularly in our Indian operations, that supports our U.S. campaigns on both the Vidillion end and the Sabio Link end. I think that's gonna be a common trend that you hear from us, is that the hiring is gonna be in lower-cost jurisdictions as we become more and more efficient. We are also, you know, adding some incremental sales headcount to gear up for 2024 and the huge opportunity that we see next year.
Thanks. As the last one here, now, broadly, the ad tech and analytics industry have been talking about artificial intelligence more so this year. Is there anything you could share on Sabio's offering today or the pro-product roadmap ahead? I'll leave it there. Thanks.
Thanks, Kiran. You know, I know AI is all the talk now, and one of the things that people forget about AI is you have to have some sort of data component behind it. Of course, you have, you know, various forms of AI, ones that scroll through the internet and basically are able to get information that is not validated off of that. That creates some kind of issues. In our case, what we believe, we have a unique advantage in the sense that we have a treasure trove of data that essentially allows us, the foundation of it, which we've done machine learning on for a number of years, and that we have some form of AI there.
We do very basic levels of AI, but we do believe there's an opportunity to really kind of expand on that, specifically with App Science. The ability to essentially do a lot more iterative AI, where it allows us to really kind of understand. One of the things that when we set out to start, when we started this company, App Science was this idea of predictive modeling, and taking it to the next level is AI, is the ability to really understand consumer behavior before the consumer understands it. That's where artificial intelligence really comes into play with all this mobile data and now the streaming data, that combination of, you know, treasure trove of data that we have and get access to on a regular basis is really where AI benefits.
To help brands understand, like, "Hey, listen, this consumer is not thinking this yet, but in about seven months, this is where they're gonna be." That's where the artificial intelligence capability comes in a bigger way. We're excited about AI. We do have investments in, obviously, our engineering data science teams across the U.S. and in India, and we believe there's an opportunity in the coming months to add to that and build some additional capabilities for brands and agencies to also automate a lot of things that they're doing today from an analytics perspective.
It's exciting, guys. Thanks for taking my questions. I'll leave it here.
Thank you, Kiran.
Thanks, Kiran. Next up, we have Daniel Rosenberg from Paradigm Capital. Go ahead, Daniel.
Thanks. Good morning. My first question was around what you guys are seeing on the front lines with customers. I was just curious in the spending dynamics, understanding this year is probably, you know, everybody's dealing with the macro picture. You're clearly gaining market share, but what is the balance for you as you think longer term between, you know, gaining customer wallet share versus that wallet actually just growing, with the broader market? What's the opportunity as you look at kind of both those things internally, with customers in the base versus new customers being able to sign on?
What we're finding in just an overall marketplace, none of our existing brands, which are the top 50, these are major top 50 brands, no one is telling us there's a cutback. In Q1, as both Sajid and I referenced, there was a delay in spending. In that instance, what they're saying to us is, "Look, you know, we are coming in, we're just coming in in the later quarters." We know you're tried and true. We're confident about your abilities, we're gonna... In that same vein, as I mentioned in my remarks, we had a record number of revenue from new nameplates in Q1. You know, our strategy has always been to basically land and expand, to...
You know, we have these major top 50 brands that we are able to close deals with, and we're basically still getting a small %. Though that share of wallet is growing, but we're still getting a relatively small % of that share of wallet. If you think of brands like Toyota and Ford and GM and McDonald's. You know, our opportunity is certainly to continue to focus on that because the cost of sale is so much lower by doing that. In the same time, there is a gold rush going on in CTV/OTT, and so we see that as an expansion opportunity.
To answer your question, Daniel, what we believe is, as Sajid references, that, you know, we have a strong revenue renewal rate, and in Q1, the number is, I'm going to pull it up again, sorry. 79%, right. 79% of our sales were in Q1 from existing nameplates. We believe that's a strategy between 70%-80% existing new plates, and then add that 30% mix into with new nameplates. If we do that will, A, keep our cost of sale down because we don't have to go out and actually acquire new customers. B, we have the opportunity to really kind of organically grow.
That's the mix, between 70% and 80%, existing customer base and then, the new customer sets, you know, in somewhere in that range, between 30% and a little bit higher. Does that answer your question, Daniel?
No, I certainly appreciate the size of those customers. Thanks for that color. Around new opportunities, I also wanted to ask, you had mentioned politics in the past, while, you know, obviously early in the cycle, but nonetheless, we start to see headlines. Can you just give an update of what you're seeing there and what you think the opportunity is?
Yeah, we, you know, about 2 weeks ago, we hosted a summit, actually, in D.C., where we invited major clients out to share, you know, to, for them and ourselves to share thought leadership on CTV, OTT. What we're hearing is that, you know, there's a few different races going on, right? There's A, first and foremost, the presidential race, which we'll start having... You'll see some of the primary spend very targeted in the initial, the next few months. It will probably start accelerating in Q4, you know, in terms of as we get closer to the primaries, then the presidential money will start rolling in a little bit, it'll start rolling in early, you know, because Biden obviously is not gonna be challenged a whole lot.
What you're gonna have is you're gonna have a majority of that spending take place in Q3 of next year overall. The other opportunity we have, being California-based, obviously, we're Toronto-based, and foundation of L.A., is that the Senate race in California, which is going to break all historical records. We're gonna benefit from, certainly, we believe, positioned well in the presidential race, positioned well for potentially some revenue coming from the Republican primaries. We also see a huge opportunity with the senator's race, which should start kicking off in some capacity at the end of this year. We think that we're gonna start seeing some traction there. We're excited across all that.
You know, keep in mind, our other core, other opportunity in our business has been this idea of advocacy, which is, you know, the US Postal Service, you know, getting out and explaining to people why they need mail on weekends. We see that as a huge growth opportunity. Although we talk about political a lot, advocacy is also another really strong component, and that's really what that conference we put together three weeks ago. We hosted it with both companies that are both in the advocacy and political space, and we feel, you know, we're excited about what will happen at the end of, towards the end of this year, and then certainly into next year in a big way.
It's gonna shatter all records from what we're being told, both the Senate race in California and the presidential race.
Good to hear. It'll be interesting to see how that plays out. My last question was just around the competitive dynamic. I'd love to hear your thoughts on just how you look at, you know, you have some big players in the competition that you go up against, and you're able to win, but just any changes in the dynamic? What are the key things that you see as opportunities or challenges? Would love your take.
Yeah. What we're seeing is, you know, we're in a competitive space, but, you know, it's really, it's really amazing how, you know, what we have relative to our competitors, clients are finally starting to see that. You know, we're in the early stages of obviously seeing Vidillion. We only purchased Vidillion one year and what? Four months ago, last April of last year.
Last April, yeah.
Last April last year. What we're finding is our opportunity is, A, certainly on the DSP side, we're seeing efficiencies there, and we're having some major conversations about upfront deals going into next year. We're excited about that. Despite, you know, the, you know, the clouds over, you know, hanging overhead, there's a lot of great conversations there. We got. For the first time, we're at the table with some major brands talking about longer-term deals and or deals that, you know, for all of next year, that upfront commitment. There's a record number of conversations going there. Separately, on the Vidillion side, we're starting to have conversations with publishers who are saying to us: "You know, I've been using these other guys.
I've used two or three of the other competitors in your space, and no one's really helping me in the mid-size level. Meaning, they're not helping them monetize effectively. They're not providing the service that they thought they were gonna get. We're seeing an opportunity there for the Vidillion business to essentially start providing these kind of capabilities for the mid-level publishers, which then adds to our direct supply, which adds to our Vidillion capabilities, margins on Sabio and then Vidillion capability, Vidillion revenue model there. Separately, we're seeing a real interest and uptick in interest in using analytics and insights to better understand diverse audiences.
As it relates to the competitive marketplace, our biggest challenge, Daniel, is we're a small company that has a lot of opportunity. Obviously, we want to continue to be positive EBITDA and focus on that, but we have to. Really, resource usage is our biggest challenge. We see a lot of incredible opportunity just in the marketplace. We're still fairly small, as you know, and the question is, where do we put our investments? We can't do all. We just see an incredible opportunity in all three. We're excited about, you know, what we can do in the marketplace. We just don't see any limitation right now.
Yes, the marketplace and the numbers, maybe not, you know, like in Q1, there were some challenges there, but we're just literally like, these businesses are just getting started, and we just see a lot of upside in a competitive marketplace.
Good to hear your optimism. Thanks, Aziz. Thanks, Sajid.
It's been validated. I mean, I know it sounds like sometimes when I get on these calls, I sound like I'm the biggest cheerleader, but I'll tell you, if everyone's seeing it in the market. I'm here in Detroit today, to meet with clients. We're seeing a lot of momentum everywhere, I think everyone understands what we have under the hood is special relative to our competitors in the space.
Mm-hmm.
Thanks, Aziz. Thanks, Daniel, for the questions. That looks like that's it for the questions today. I will just hand it back to Aziz to sign off. Aziz?
Great. Thank you, Aideen. As I mentioned, I've reiterated a few times, we feel good about the second half of the year. That is going to be really driven by our CTV/OTT businesses, which include, obviously, the Sabio DSP, App Science analytics, and then, of course, the Vidillion addition that we made. The combined effect of those is to really continue to help us grow market share in the CTV/OTT space while maintaining a strong renewal rate. That really is the recipe for us to win. You will see those numbers. Of course, as we pointed out to Neehal earlier, the average deal size continues to grow. We feel really good about the year ahead and look forward to demonstrating that in the quarters to come. Thank you, everyone.