Good to go. All right. Good morning, everyone. Thanks for being here today. I'm Justin Patterson. I lead the Internet Research Team at KeyBank. I'm really excited to have DoubleVerify with us again this year, both Mark and Nicola from the management team. Gentlemen, welcome.
Thanks.
Thank you. Awesome. So, Mark, for people who might be not that familiar with the story, could you provide just an overview of what DoubleVerify does and where you compete within the broader marketing tech solutions?
Yeah. So DoubleVerify is an analytics platform that helps advertisers better understand where their ads show up, the quality of the environment, and now increasingly how those ads perform in that environment. So we don't buy or sell media. We're not part of the transaction. We analyze the media transactions and ensure that the ads are viewable, they're not fraudulent, that they're brand safe or brand suitable, and, as I mentioned, increasingly whether or not those ads actually performed or not. And we do that across the so-called walled gardens. So think about social media platforms, across CTV, across the open web, mobile app, mobile web, et cetera.
Awesome. Thanks for that.
Sure.
So going back to the last quarterly conference call, you characterized 2025 as a transition year. It's certainly not been a boring world in social and ad tech, to say the least.
Sure.
So kind of talk about just the transition that the company is going through right now.
Yeah, and kind of we've characterized it also as an evolution, an evolution of our business, and I think on three kind of key fronts, the first being on the platform front and us becoming much more focused on social and proprietary platforms and on the open web and delivering our products across social, the second being on the products we've actually built and evolution of those products to not only ensure that the impressions are delivered in a quality environment, but also that those impressions are effective, so we've bought a company called Rockerbox, which actually measures media effectiveness and does attribution, and in between, that we ensure that the spend to get that effectiveness is compressed, so optimization, so think of the business, the product evolving from a media quality business to media quality, price optimization, and media performance, so that's the second thing.
And then the third P in that evolution is really about the people and ensuring that we're leveraging tools and technology to create an efficient business that doesn't need massive amounts of people to continue to grow. So that's the evolution that we're going through right now. It takes investment. It takes some time. But ultimately, where we end up with is a highly profitable, highly differentiated solution set that allows us to kind of break free or get escape velocity from our competitive set.
Great. So I want to come back to those points, product and just growth opportunities going forward. But before that, Nicola, I was hoping you could talk about just some of the customer transitions you're seeing right now. There was a cohort of six that had some spending challenges last year. There was a new customer, well, a large customer that recently just suspended service. How should we think about the headwinds of that and then kind of putting those businesses aside? What is the core actually growing ex those headwinds?
Right. So the headwinds you mentioned are a cohort of six advertisers that had uneven patterns of spend in 2024. They're exiting 2024 in a much more predictable spend pattern. So this is likely the last time we'll talk about the cohort of six. They just have a sort of a more muted growth trajectory in 2025 because they came out of 2024. And so it'll be a little bit of a drag on the overall growth of the company. But they are now in a much more stable, predictable pattern of spend. The customer that turned off our service in February of this year had just an acute impact related to commodity pricing going up. This customer still has a contract with us, but has said that they've had to change their entire media strategy, which impacts the services that they will use with us this year.
It is very specific to that advertiser within the CPG category. The entire CPG category for us actually grew in 2024. It's a large component of our revenue. It's about 30% of our revenue. And we added large customers into that category in 2024. So it was very specific to this advertiser. Overall, our advertisers are growing with us. Our strategy is to get more of the large advertisers on the top, right? So we signed a deal with Microsoft, Google with P&G in 2024. That allows us to work with more large brand advertisers. That is the key component of our clients, right? Large brand advertisers. They are sophisticated and understand our product. So the more we can sign of those clients, the more diversified we will be there. In addition to that, I think Rockerbox allows us to go into performance.
And what we mean by that is performance budgets of our large advertisers. Some of the advertisers have large performance marketing. And it allows us to go deeper into SMB as well. So we're trying to diversify both on the top and into the client base that we go after.
Got it. Got it, so stepping back for a second, it's kind of fun to have this conversation the day after the State of the Union address. I think, to say the least, that the idea of what constitutes brand safe post-election is a very fluid topic. How has your conversation with advertisers really changed over the past couple of months?
Yeah. I mean, there seems to be always some latest topic of controversy, which creates agita among our advertisers and concerning about where their ads run. The recent cycle has not changed that at all. What's different has been the platform's attitude towards managing that on their own. I mean, obviously, Meta decided to change their content moderation strategy, which as soon as that occurred, we got lots of calls from advertisers saying, "Hey, what does this mean for us?" So I think there's never been a lack of concern for advertisers of ensuring that their ad shows up in some place that is aligned with who they are as a brand. That hasn't changed, and I think, again, the only thing that has changed has been the environments themselves' attitude towards self-policing.
So you've mentioned the social a couple of times now. Could you provide an update of just where you are with Meta and really how that's driving some of these conversations with both the CPGs and these performance-centric advertisers?
Yeah. So social measurement is over $100 million business for DV last year. I think it's about $110 million. Meta is around 40% of that. So it's a large business for us. However, when we look at our penetration on social measurement, it's only about half of our top 700 customers who are using our tools. One of the big reasons why is in many platforms, many social platforms, Meta being the 800 lbs gorilla, we're able to measure and tell advertisers about potential violations. They can't do much about it, right? They can't block. They can't actually filter the impressions. But that's changed. And what we get excited about now is on February 18, we launched our Meta Activation Solution, which allows advertisers to take the data from their violations, push it into a filter, and actually avoid those violations again.
On top of that, there's about 13 categories of kind of brand safety. On top of that, we've added another 30 categories that are much more specific around brand suitability that advertisers can now filter against. This is the first time that we've been able to do this on Meta's feed. And it's a huge opportunity for us for a couple of reasons. The first is just that customer base itself, if you think about, we do $40 million or so in measurement. The pre-bid tool or the activation tool, we charge about two to two and a half times per impression for that solution. So there's an opportunity to upsell all those customers.
But the other opportunity, I think, is potentially even as big, if not bigger, which is that other half of our customers of our top 700 who don't use us for any type of social measurement. The pushback has always been, "I can't do anything about it." This now gives us an opportunity for them to do something about it. So we think it's a pretty exciting update for us. We also are in alpha with TikTok for a pre-bid solution. We're enhancing our YouTube solution as well. So we look at social as being a big driver of growth in the future and really the activation side or the pre-bid side of our business in social being the core driver of that growth.
So to put a finer point on that, I mean, 700 customers, that's a very big upsell opportunity. How should we think about just the sales effort to really get these people over the top and using the solution?
Yeah. I mean, I won't go too far into the weeds, but we do advertiser plans for every one of our top 100+ advertisers to go out to. And part of that is, "Hey, how much are they spending on each platform? Where are we working with them or not working with them?" And as you would guess, a vast majority of them put tons of money into social. But we're still not penetrating those budgets as well as we should be. So I think that is our number one priority right now. When I look at every salesperson, their number one priority is get customers to social measurement, get them to social activation.
I think, again, we're being helped along, as you noted, with the current environment and some of the moves by the platforms to say, "We're going to be a little bit looser on how we police content.
Got it. So stepping back to another product you mentioned earlier, the Rockerbox acquisition, could you talk a little bit more about just what attracted you to this asset and how that fits in the broader portfolio?
Yeah. So again, going back to kind of the evolution of the business, if we look at core media quality and assessing core media quality is where we started, we recently acquired a company called Scibids, which basically allowed advertisers to take some of that quality data and use it as a KPI and then compress what they paid for that. Scibids is out there kind of working through DSPs, working with advertisers to lower the cost of their bids and lower the cost of media that they want to buy, and while they were doing that, they were working with Weight Watchers. Weight Watchers is obviously a very performance-driven advertiser. They were storing all their data in Rockerbox. Rockerbox works with lots of kind of mid-market performance-driven advertisers.
Think of folks like Warby Parker and Dermalogica and Weight Watchers and Loews Hotels and Staples, people who sell stuff online, right, and who are driven by acquiring new customers. Scibids was taking Rockerbox data, acquisition data for Weight Watchers, and using it as a cost per acquisition as a KPI to optimize against, right? I know this is a long story, but we'll get to the punchline. What they were able to do is take that data from Rockerbox and actually compress the cost of acquisition by 40%, which was huge, right? But what we found is having that outcomes data is incredibly valuable to our optimization. But it also starts to overlap with what we do on media quality because we looked at Rockerbox. For example, they work with Unilever and they work with the DTC advertisers of Unilever.
We work with Unilever on the brand side. Wouldn't it be amazing to be able to offer Unilever a platform that allows them to measure and impact media quality, optimize the bid to drive media quality, but also show the results? And that is key. Our vision with these three components, which is media quality, optimization, and media performance measurement, is to have a single integrated platform so an advertiser can go one place and measure quality, optimize the price for delivering that quality, and then measure the effectiveness of those ads. No one has that. It would still be totally separate, and it's still solely separate from media transactions. So we're outside of buying or selling media. But it has all the components that any advertiser would want to determine the effectiveness and quality of their media spend. So we started working with Rockerbox.
It kind of completed our story. We're now in the process of closing that deal and integrating them afterwards. And I think it puts us on a very, very different trajectory than anybody else in the space as far as the value prop we're going to add to advertisers. And I think if you ever talk to a CMO, you will never hear the words, "I want to work with more companies rather than less," right? Being able to have all of these solutions that not only keep me in my job as a CMO because I am not running against bad stuff, but also help me sell more product and understand what works, that's a magic formula, and that's where we're heading.
For sure. And that definitely matters for CPGs as they're trying to drive volumes right now. But I like the way you characterize that journey with Rockerbox since I believe Scibids had that same evolution. Initially a partnership, and then you did the Scibids acquisition. At the time, the thesis with Scibids was this was really going to be the next evolution of the ABS product. So I'd love to hear just an update on how that progression is going and how you're thinking about that opportunity ahead.
Yeah. So that dating relationship ended up very well, as did the Rockerbox relationship. We're not polygamists, but we have lots of companies that we love and work with. But I think it gave us a really nice blueprint for how we can make this work. Scibids now works with 40 of our top 100 customers. That business grew over 50% last year. It's now on a trajectory to be a $100 million business by 2028, which is what we said it would be. And it's a real differentiator for us. It's helped us win enterprise deals. So beyond the direct revenue of that business, it's given us a package that we can go to advertisers with and basically show them that, "Hey, this is something unique.
Rockerbox completes that story, and I think that's what we look to try to do with M&A is not kind of buy revenue, but what we want to do is enhance differentiation and create a different value prop for our customers.
Since you mentioned winning enterprise deals within there, there was quite the jump ball last year with Oracle shutting down its business Moat and then just a lot of competition for that customer base. Any updates on just what you saw from that period and how we should think about that Moat opportunity ahead?
Yeah. I mean, that was literally like throwing raw meat in the middle of two dogs and just having them fight over it. And we mentioned it was a pretty brutal battle.
You are quite official with your analogies today. Look at me, dogs.
It's a Wednesday, and I'm trying to keep everyone awake.
We're keeping it brand safe this morning.
Look, it was pretty intense, and the usual buying process for our platform can be anywhere from three to six months, and this was compressed to six weeks, right? It was like, "We're going to lose our platform. We need to pick somebody," so all the bells and whistles off. I'll give you a good example. We closed Microsoft last year. We started talking to them in January. We closed them mid-year. That's like where you build the relationship. They understand your tools and product. This was like, "We got to pick somebody," right, so it was very aggressive, very aggressive pricing, but we came out of that with some pretty big names, P&G, Google, Inspire Brands, Charter Communications, like big wins, but they came in on a very basic product and a basic platform because that's what Oracle was really selling.
Now we're in the process, once we've launched them in Q4, it's about looking at where we have new opportunities to grow them, so selling them ABS, looking at pre-bid solutions, looking at things like attention, and now that we have Scibids and Rockerbox, looking at where we can help them optimize their spend and better measure the performance of their direct-to-consumer sales, so we're still in the early stages of upselling those customers and growing them, but we know that bringing them in-house and making them part of the DV platform is a very sticky proposition. Our top 50 customers have worked with us for an average of eight years, so once we bring them in, they like to have a consistent currency across all their solutions in every market, and it keeps them very sticky.
Got it. So two more from me before I open it up from the audience. CTV, that's your background, Mark. You've had a lot of success there. We've talked a lot about social, but CTV, not so much. So we are starting to see price deflation, starting to see more companies open up toward programmatic inventory. How does that change the opportunity set for you going forward?
Yeah. So we mentioned in the call, CTV was about 11% of our total measurement impressions. So I mean, that's not small, and it's growing. It grew 95% year over year in Q4. A lot of that, I think, has to do with Netflix growth, with Amazon putting a bunch of impressions into the market. And as you noted, that growth in the number of impressions is driving down CPMs. Since we're a CPM machine, right, we get paid based on impressions. Lower CPMs means higher volume. Higher volume for us is good. We still have more to do to advance our products, to get more granular in the solutions that we have to really get paid, I think, at the level we should be based on the average CPM. But we're getting there. There's a drive towards greater transparency on CTV. I think that helps us.
I think overall, we've got some work to do on the value prop that we provide for CTV, but I think we're well on the way of getting there. I think you're going to see that 11% of measurement have a bigger impact on revenue for us over time.
Got it. So bringing this back to financial terms with Nicola, we've talked about the headwinds in there. You've got a lot of irons in the fire on the growth side. Prior to this transition period, you were a very consistent 20% top-line grower with 30% margins. How should we think about just what the business looks like as you move out of this transition period and these growth investments start yielding results again?
Yeah. So what we're looking at is the 20% growth on the top line, right? How can we re-accelerate revenue growth? We are getting to 10% this year because we're being very measured on three large opportunities. We talked about social activation. We talked about the Moat clients that came in with basic products that now need to be upsold to our premium-priced solutions. And then for Rockerbox, we've really just put in a placeholder for the stub period of the year. Revenue synergy is coming in 2026. So the speed at which we go after those three categories will be the drivers of getting to a revenue growth that will be higher than the 10% that we're getting to. On the margin side, we're managing to that margin. We still are innovating aggressively into new areas. It's a consistently 33% or so margin.
We're finding efficiencies in the model as well, right? Now that we've scaled around sales and marketing and G&A, the investments are really around R&D. Even in there, AI is helping us create a more efficient way of going after innovation. The trajectory we're looking at is a 10% growth in 2025 as these major opportunities come in that will increase the revenue growth.
Got it. And could you put a finer point on just where AI is driving those efficiencies, whether it's on the top line or within the cost structure?
I'll speak to the cost structure, right, because that's intuitively simpler to understand. So on the COGS side, cost of sales has been over 80% for many years. And the way we're continuing to achieve that is actually using LLM and AI to create a more efficient way for us to actually measure and verify the quality of every single impression. And then within the operating expenses, it's really around efficiency for engineers.
Got it. All right. I think we have time for one or two from the audience. All right. Quiet room. So I mean, you've mentioned having this partnership and then M&A philosophy. Just struck me with polygamy, man. But how do you think about the pipeline of M&A opportunities going forward?
Yeah, so our strategy on M&A is look at companies that can either accelerate our own roadmap, right, help us get into adjacencies, or expand geographically. Getting into adjacency is really what Scibids and Rockerbox are about. The speed to market is just so much easier for us than to have to build it in-house as opposed to buying it. I think the pipeline, the valuations have settled at prices that make it more attractive. I think companies are looking for exits, and so I think the strategy hasn't changed. The pipeline hasn't changed, but I think the appetite for activities is a little bit higher.
Got it. And thinking about just competitive dynamics in the industry, are you observing any changes in competitive intensity these days?
It's always been a pretty robust competitive market. We've got one main competitor, but the point solutions are always picking and poking. Net net, I mean, I think the investments that we've made, particularly in M&A and product development, the goal of that is to actually put us in a very different plane so that we're not competing on the same products. We're not competing on the same value prop. We're competing on a very different value prop. And that's where we're heading, right? My goal here is to sit with you a couple of years from now and not even be talking about the direct competitor's immediate quality because we're providing a very different value prop at that point. And that's what we're building. That's what we've acquired. That's the innovation we're making. That's the integrations that we'll be doing over this transition or evolutionary period. So I'll be back.
I'll use many analogies that won't involve marriage, but may involve animals, so.
I'm not sure that's better, Mark. But maybe to round out, this is a highly theoretical question, but I think it's interesting for the time we're in. We'll have Jeff Green on stage later. I'm sure he'll talk about supply chain efficiency. The Google DOJ decision should be imminent sometime. So let's dream the dream. If we have a more efficient programmatic supply chain and Google has to divest supply assets, that theoretically takes some inefficiency out of that, is probably good for volume. What does the world look like for DoubleVerify there?
Our thesis has always been we need to be everywhere, right? We need to cover every platform. We need to measure and verify every impression, no matter where it is in the world and no matter how it's transacted. So to be direct, we're relatively agnostic. Now, what is not great for us is when one player has too much power, which puts up barriers to entry for us to do what we need to do or is very slow. So there are platforms that are easier or harder to work with. I'm not going to say where Google falls into that bucket, but you could probably guess. So having more diverse platforms that have power is actually good for us. More transparency and efficiency drives greater, lower prices, which means more impressions, which is good for us.
And I think what you're seeing right now is really interesting because there's a lot of jockeying for positions, right? You talk to the SSPs. They're trying to curate packages to disintermediate the DSPs. The DSPs are now trying to go directly to publishers to disintermediate the SSPs. So there's all kinds of pieces being moved all under the shadow of, hey, if Google gets broken up, I want to be in a very powerful position. So we stand on the outside. We want to make sure we're measuring everything and driving performance across any platform. So we will take advantage of however that ends up shaking out.
Measure all the things, marry all the things.
There we go.
Awesome. Thanks so much, Mark and Nicola. Pleasure as always.
Yep. Good seeing you, Jeff.
Thank you.
Thanks, Justin.