Welcome to Tremor International's second quarter and six months ending June 30th, 2022 conference call. At this time, participants are in a listen-only mode, with a question-and-answer session to follow at the end of the presentation. This conference call is being recorded, and a replay of today's call will be made available on the investor relations section of Tremor's website and will remain posted there for the next 30 days. I will now hand over to Billy Eckert, Senior Director of Investor Relations. For introductions and the reading of the safe harbor statement, please go ahead.
Thank you, operator. Good morning, everyone, and welcome to Tremor International's second quarter and six months ended June 30, 2022 earnings call. With us on today's call are Ofer Druker, Tremor's Chief Executive Officer, and Sagi Niri, the company's Chief Financial Officer. This morning, we issued a press release which you can access on our website at investors.tremorinternational.com. During today's conference call, we will make forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. We advise caution and reliance on forward-looking statements. These statements include, without limitation, statements and projections about our future anticipated financial results, including discussions about our revenue, margins, expenses and guidance for full year 2022 and full year 2023 and future business. Anticipated benefits of Tremor's current and future potential strategic transactions, product launches and commercial partnerships.
Management's belief that Tremor is well-positioned to benefit from future anticipated industry growth trends and company-specific catalysts. Anticipated, continued , and accelerated future growth in both U.S. and international markets. Expected strengthening of Tremor's products and reach. Expected ability to continue repurchasing shares, investing in technology, sales and marketing, and evaluating strategic opportunities to acquire companies. The potential negative impact of inflationary pressures, rising interest rates, geopolitical and macroeconomic uncertainties, recession concerns, and widespread global supply chain issues. Forward-looking industry and economic statements and outlooks, and other statements concerning the expected development, performance and market share or competitive performance relating to our products or services. All forward-looking statements are based on information available to us as of the date of this call.
These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those implied by these forward-looking statements, including unexpected changes in our business. More detailed information about these risk factors and additional risk factors are set forth in our filings with the U.S. Securities and Exchange Commission, including but not limited to, those risks and uncertainties listed in the section entitled Risk Factors in our most recent annual report on Form 20-F. Tremor does not intend to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in IFRS and non-IFRS terms.
We refer you to the company's press release for additional details, including definitions of non-IFRS items and reconciliations of IFRS to non-IFRS results. At this time, it is my pleasure to introduce Ofer Druker, CEO of Tremor International. Ofer, please go ahead.
Thank you, Billy, and welcome to everyone joining us today. I will begin by providing an overview of our results and strategy, followed by our Chief Financial Officer, Sagi Niri, who will review our Q2 and H1 2022 financials. We will then open the call up for questions. During the second quarter, Tremor experienced increased customer acquisitions and delivered record profitability , alongside achieving an impressive industry-leading adjusted EBITDA margins of 55% as a percentage of net revenues. Our durable data-driven end-to-end technology and business platform has continued to drive strong and resilient results, fueling our ability to execute on our long-term strategic vision. Looking at the market environment, the advertising industry faced several global headwinds in Q2 that we are continuing to see drive macroeconomic uncertainty and recession concerns in Q3, which could remain for the duration of the year.
Challenges associated with inflation, rising interest rates, supply chain constraints in certain sectors, such as automotive, due to continued chip shortages, and the ongoing war in Ukraine have been well-publicized and are factored into our planning for the remainder of 2022. On a positive note, however, we are seeing initial signs of recovery in sectors that have been historically strong for Tremor, such as entertainment and CPG, and continue to believe we will see benefits from the FIFA World Cup and U.S. midterm election cycle later this year. We remain confident that our highly diversified customers and revenue base, coupled with our robust operating model, position us well to successfully navigate these market challenges while continuing to invest to future scale, differentiate, enhance, and expand our platform.
Since the beginning of 2022, we achieved several important milestones to drive long-term value for our customers and shareholders and reinforce our position in the market over the coming years. First, we increased our CTV and video reach and significantly strengthened and expanded our platform capabilities through several initiatives, including the completed integration of our CTV ad server stream. Through our strategic investment in VIDAA, we further strengthened our CTV assets by extending our exclusive global ACR data agreement while gaining ad monetization exclusivity in key markets such as the U.S., U.K., Canada, and Australia. In addition to deepening our partnership through an investment in what we believe to be a rapidly growing global operating system, we also build strong relationships with Hisense, VIDAA parent company.
Our preexisting and recently enhanced strength within CTV and strong strategic partnership with VIDAA and Hisense enable powerful additional capabilities and high-quality content opportunities, particularly around exclusive content for our customers. For example, Hisense is an official sponsor of this year's FIFA World Cup and will also sponsor an exclusive daily show throughout the tournament. It was also recently announced that FIFA+, FIFA's digital app, will launch on Hisense and Toshiba VIDAA-enabled smart TVs. This is the first major example of how having an exclusive data, ad monetization, and CTV media partnership with an operating system and strong relationship with the major global OEMs can benefit Tremor, as brands and agencies we look to leverage and willing to advertise on this highly desirable sports content.
Furthermore, we took steps to dramatically scale the business and further diversify our offering and ability to serve customers through our pending acquisition of Amobee. The acquisition is expected to significantly grow our global market share, expand our self-service data technology and performance capabilities, and add critical new linear TV capabilities. These new linear TV capabilities allow us to better serve broadcasters, which we view to be important as we continue to see a convergence within the linear and digital worlds. The acquisition will also enable us to offer our specialized CTV products, such as TV Intelligence across a significantly wider customer base, creating additional revenue opportunities.
Following the anticipated closing and integration of the proposed acquisition of Amobee, we expect to generate Contribution EBITDA of approximately $500 million and Adjusted EBITDA of approximately $200 million on a combined pro forma basis for the full year of 2022. We believe our proven track record of successfully and efficiently integrating acquisitions will enable us to smoothly integrate Amobee and create a strong combined business. Finally, we were also able to repurchase under our previously announced share repurchase program, a sizable number of shares at attractive prices. Our ability to achieve these milestones while generating strong results in a challenging operating environment has solidified the conviction that we have in our long-term prospect and stems directly from the benefit derived from operating end-to-end.
Our model provides several advantages, including simplicity for customers, beneficial positioning for changes in data privacy regulation, better insulation against challenging market conditions, and the ability to maximize revenue streams and profitability. Our ability to service across all screens, regardless of service level requirements, enable us to maximize revenues opportunities and build deep relationships, stickiness, and trust with our customers. Our operating model allow us to generate extremely attractive margins and profits while enabling customers to achieve data and return benefits, particularly when they leverage our platform end-to-end. Our platform also contain a significant and growing footprint of first and third-party data with minimal exposure to cookies, and our DSP and SSP share the same audience graph to eliminate data loss during cookie sync, which better ensure we remain well insulated against privacy changes.
Our decision to intentionally build and scale end-to-end platform was the correct one as we continue to see competitors attempt to replicate elements of our well-established model. Our competitors who are newly operating end-to-end platforms focus on learning the nuances of engaging with both sides of the ecosystem. Tremor has well-established expertise as well as relationships with brands, agencies, media partners, and data providers, and is focusing on its next leg of growth and differentiation. On July 26th, we entered into a definitive agreement to acquire Amobee for a total consideration of $239 million, subject to certain customary adjustments. We intend to satisfy the purchase price using a combination of existing cash resources and new debt facility we expect to obtain prior to closing the transaction.
The acquisition, which we expect to close later in the third quarter, is expected to significantly increase our global market share and create one of the most compelling and scaled CTV and video end-to-end platform in the market. The acquisition also significantly enhance our technology and business footprint across self-service DSP, performance, CTV, and data, while adding new insight tools and linear TV capabilities. The transaction also greatly expands Tremor's U.S. international talent footprint, market presence, and customer base. Amobee's 500+ global customers include Fortune 500 brands and multinational ad agencies, and the company maintain strong relationships with some of the world's leading media partners.
For the 12 months ended June 30, 2022, Amobee generated preliminary unaudited Contribution EBITDA of approximately $150 million, which will have meaningful impact on Tremor financial scale. We also expect to benefit post-integration from significant operating cost synergies. We initially expect to achieve annual run-rate operating cost synergies of approximately $50 million on a combined pro forma basis post-closing and following the completion of the integration. Following the anticipated closing and integration of the proposed acquisition of Amobee, we expect to generate Contribution EBITDA of approximately $500 million and Adjusted EBITDA of approximately $200 million for full year 2023 on a combined pro forma basis. Amobee represent our largest acquisition to date and delivered on our commitment to execute meaningful and strategic M&A in a market where valuations have decreased.
We remain confident that we have the expertise necessary to quickly integrate the company into our business and generate significant benefits for our customers and shareholders. In June, we also deepened our relationship with VIDAA through a strategic agreement to invest $25 million in VIDAA. The investment offers several key advantages to Tremor. The investment extended for multiple years the exclusive agreement to share VIDAA's global ACR data for global measurement and targeting purposes across our end-to-end platform. It also allow us to offer additional data sets and advertising opportunities to our customers. As VIDAA leverage the investment to support its plan to increase distribution across additional OEMs, we also expect the data set to become even more desirable and for Tremor to benefit further through this increased reach as well.
Additionally, after initially being designated as VIDAA preferred global monetization platform in January, VIDAA granted Unruly and Spearad exclusivity for monetization in the U.S., U.K., Canada, and Australia. This unique combination of exclusivity to share global ACR data and the exclusive ability to enable ad monetization in several key markets could have powerful future growth implications for Tremor. Hisense, for which VIDAA serves as the operating system, is an official sponsor of the FIFA World Cup, set to take place in Qatar in November and December this year. In addition to expecting Hisense to achieve a substantial increase in global awareness during the event, FIFA+ will also launch on Hisense VIDAA-enabled devices. Hisense is also the lead sponsor for an exclusive daily show throughout the World Cup, featuring highlights for the matches, star guests, and live reactions.
As VIDAA's exclusive monetization platform in key markets, brands and agencies will look to utilize Unruly to advertise on this desirable and exclusive content, which provides strong potential revenues benefit and leverage for Tremor. As Hisense and VIDAA pursue future sports sponsorships and exclusive content opportunities, Tremor is well-positioned to significantly benefit from its recent investments. Outside of our company-specific catalyst, Tremor remains well-positioned to capitalize on expected industry tailwind as well. CTV and video continue to grow at the fastest rates within digital advertising, and the vast majority of our platform's contribution EBITDA is derived from these formats. Additionally, we continue to expect meaningful growth within AVOD over the next several years, as evidenced by several streaming services currently launching ad-supported channels and tiers, and others showing interest to do so.
This further reinforces the ability and long-term health of the CTV market, and we believe our strong foothold in the fast-growing sub-segment of digital advertising position us well to potential growth and market share gains. We believe the fourth quarter will be further enhanced by the FIFA World Cup, and that Tremor will experience added benefit through Hisense official tournament sponsorship. We also expect industry tailwinds later this year from the U.S. midterm election cycle, which typically brings heightened levels of CTV and video ad spending from candidates leading into the election. Since our last earnings call, we have continued to generate further business momentum alongside increased industry recognition.
Our SSP, Unruly , added 63 new supply partners during Q2 2022, including 35 in the U.S., and 150 new supply partners, including 71 in the U.S. during H1 2022, across critical growth verticals in sports, news, entertainment , and lifestyle, including OTT apps from leading broadcast businesses. We also continue to generate strong adoption within our self-service platform for publishers, Unruly CTRL, which experienced a 560% increase in PMP spend during Q2 2022 versus Q2 2021, and 750% increase in H1 2022 versus H1 2021. Additionally, Tremor Video added 60 new advertisers signed during Q2 2022 and 135 new advertisers signed during H1 2022 across travel, CPG and , retail verticals, as well as others.
Tr.ly, our in-house creative studio, continued to impress and create over 13 times more unique video ads in Q2 2022 than in Q2 2021. Over 15 times more unique video ads in H1 2022 than in H1 2021. We are continuing to see strong customer adoption across our data-driven creative products, robust international growth, and significant increase in demand for our creative services across travel and retail verticals. Finally, during the second quarter of 2022, we repurchased 5,716,960 ordinary shares at an average price of 452.6 pence for a total Q2 repurchase investment of approximately GBP 25.9 million, or $32.5 million.
From March 1, 2022, when we launched the repurchase program through June 30, 2022, we repurchased 7,001,470 ordinary shares at an average price of 479.98 pence, reflecting a total investment of approximately GBP 35.6 million, or $45.3 million. Our ability to repurchase shares at what we believe are discounted levels to drive long-term shareholder value in addition to our other ongoing growth initiatives is a testament to our continued balance sheet strength and cash-generating abilities. It is now my pleasure to turn the call to Sagi to review the financial results.
Thank you, Ofer. We were excited to see another record second quarter and H1 of profitability, expanded margin, resilient revenue, and excellent business momentum. Today, I will review highlights of our Q2 and H1 2022 performance, as well as some of key financial and operational drivers for the quarter and first half. For the three months ended June 30, 2022, we generated Contribution ex-TAC of $70.8 million compared to $73.7 million in Q2 2021. Alongside record Q2 Adjusted EBITDA of $39.1 million compared to $37.3 million in Q2 2021, which reflected 5% year-over-year growth. This performance was particularly impressive given the well-known macro pressure that challenged advertisers spending during the quarter and first half.
We believe CTV and video remain core future growth drivers for Tremor, and CTV spend on our platform was $64.7 million during Q2 2022, compared to $49.8 million during Q2 2021, which represented a record for Q2 and strong year-over-year growth of 30%. We believe we are well-positioned to achieve future growth in this segment, as more business is increasingly being transacted through programmatic platforms, as we expect performance budgets to continue to move towards CTV and programmatic in the future. We also believe the pending acquisition of Amobee, the agreement to strategically invest in VIDAA, and the recent integration of Spearad will help accelerate our growth and footprint within CTV. During Q2 2022 and for H1 2022 as well, video, including CTV, continued to reflect an overwhelming majority of our total Contribution ex-TAC at approximately 80%.
We also generated a record Q2 Adjusted EBITDA margin of 52% on a reported revenue basis and 55% on a net revenue basis, which we believe further expanded our margin lead within the industry. Our continued ability to achieve such strong profitability highlights the durability, efficiency, and sustainability of our end-to-end models. We were able to generate this expanded margin while continuing to invest in critical initiatives to drive future growth, scale, and differentiation within our platform. For the six months ended June 30, 2022, we generated Contribution ex-TAC of $141.8 million compared to $136.7 million over the same prior year period.
Over the same period, CTV spend was $110.9 million compared to $88 million during H1 2021, which reflected an H1 record and a 26% year-over-year increase. During H1 2022, CTV spend reflected 36% of total spend and 41% of programmatic spend. We also generated record adjusted EBITDA of $72.7 million during H1 2022, which represented 12% growth from the $64.8 million adjusted EBITDA we generated in the same prior year period.
We generated a record H1 Adjusted EBITDA margin of 46% on a reported revenue basis and 51% on a net revenue basis over the first six months of 2022, which we believe represented best in class across AdTech. Turning to our cash flow, we generated net cash from operating activities of $30.4 million for Q2 2022 versus $57.5 million in Q2 2021. For the six months ended June 30, 2022, we generated net cash from operating activities of $46.5 million versus $76.8 million in the six months ended June 30, 2021. As of June 30, we had $361.4 million cash and cash equivalents with no debt.
However, we expect to obtain new $150 million debt facilities comprised of a secure term loan and a revolving credit facility to partially fund our acquisition of Amobee and to support future strategic investment and initiatives alongside our existing surplus cash resources. We also experienced 98% free cash flow conversion during Q2 2022 and 99% free cash flow conversion for H1 2022. Non-IFRS diluted earnings per ordinary share was $0.16 for Q2 2022 versus $0.23 in Q2 2021, and $0.31 for the six months ended June 30, 2022, versus $0.35 for the six months ended June 30, 2021. Finally, I'll turn now to our outlook.
For full year 2022, we expect Contribution ex-TAC of approximately $290 million and full year 2022 Adjusted EBITDA of approximately $155 million, excluding any impact from our pending acquisition of Amobee, which we expect to close later in Q3. This guidance considers challenging market conditions that limited advertiser activity in Q2, including inflationary pressures, rising interest rates, geopolitical and macroeconomic uncertainty, recession concerns, and global supply chain issues, with the expectation that these challenges could continue to impact the advertising demand environment for the remainder of 2022 and beyond. For Q3, we feel various macroeconomic headwinds will continue to impact our Contribution ex-TAC.
However, we believe our recent achievements, such as our pending acquisition of Amobee and our proposed investment in VIDAA, which we expect to achieve further benefits around the upcoming FIFA World Cup, will begin to positively impact the business and our results during the fourth quarter and beyond. Tremor's efficient end-to-end operating model enables strong fundamentals, and our continued focus and emphasis on generating strong profitability gives us confidence that we can continue to generate high profitability and adjusted EBITDA margin for the remainder of the year, even amid a challenged growth environment. We believe this critical emphasis on generating strong profitability is even more important in the current market environment, as it drives our ability to continue innovating and growing the business organically while having the necessary capital to evaluate value-added future potential acquisition and investment opportunities.
Looking ahead, we will also be working hard to quickly integrate Amobee upon the close of the acquisition to enhance and expand our platform's capabilities for customers and expand our reach and scale while seeking to achieve meaningful operating cost synergies for Tremor and its shareholders. We initially expect to achieve annual run rate operating cost synergies of approximately $50 million on a combined pro forma basis, post-closing and following completion of the integration. Following the anticipated closing and integration of the proposed acquisition of Amobee, we expect to generate contribution ex-TAC of approximately $500 million and adjusted EBITDA of approximately $200 million on a combined pro forma basis for full year 2023.
We believe the strength and efficiency of our model, the recent investment we've made to enhance, differentiate, and scale the business, our focus on CTV, video, and data, and our continued and consistent ability to generate high levels of cash and profitability positions us well to both take advantage of future growth catalyst and succeed in current market conditions. With my remark completed, I'll turn the call back to Ofer.
Thank you, Sagi. Our team has done an exceptional job managing the business through current conditions while continuing to execute on our long-term strategic vision. Since the beginning of 2022, we took several important steps to enhance and expand the reach and capabilities of our platform to position ourselves strongly for the future. Our end-to-end model continued to allow us to best serve our customers' holistic needs. It has also provided the necessary capital to drive significant scale in our business through our pending acquisition of Amobee and significantly differentiates our offering through our strategic investment in VIDAA.
We believe the increased scale and added capabilities that Amobee will provide position us well to continue increasing our global market share and presence in the digital advertising space, and open the doors to access new customers as well as cross-selling and partnership opportunities. Our strategic investment in VIDAA and relationship with Hisense is a potential game-changer that could be significantly impactful for our business. Being mutually aligned with a rapidly growing global partner expanding its share in the streaming operating system and smart TV OEMs ecosystem is a powerful differentiator in itself. However, when you couple that with our exclusive global access to VIDAA ACR data we share across our platform, exclusivity in key markets to monetize advertising on exclusive content, including sports content, and strong relationships with major global OEMs, we feel that this is a very special potential growth opportunity.
Tremor company-specific and industry-related catalyst, end-to-end technology and business model, robust profitability, best-in-class margins, and strong liquidity position the company well to succeed in the current environment and for future growth and market share expansion. We continue to remain excited about our growth prospects and positioning within the industry, and to drive continuous value for our customers and shareholders. Operator, we will now open the call to investors' questions.
As a reminder, to ask a question, press star one on your telephone keypad. If you'd like to remove yourself from the queue, press star one again. Your first question is from the line of Laura Martin with Needham.
Good morning. Yeah, I have a couple questions. The first one I'm very interested in is, so your results in Q2 were pretty much in line with other DSPs, other than, of course, The Trade Desk, which was much higher. My question is, excluding acquisitions, what do you think the long-term secular growth rate is of your top line, excluding acquisitions?
Sagi, you want to take this one? Hi, Laura.
Hi.
Hey, Laura. Thanks for the question. Yes, I will take it. I think that it really depends, you know, on when the macroeconomic and the environment will go. We've proven in the past that we know how to, you know, to grow our business very fast and in large scale, when macroeconomic parameters are in place. Having said that, I say not anticipating anything going forward with all the macroeconomic parameters, I think that it will be double figure, and it will be somewhere between, I don't know, 12%-16%. This is what we are anticipating on a regular macroeconomic environment.
Okay, 12%-16% top line growth excluding acquisitions and in a normalized environment. At that 50% EBITDA rate is your normalized. Okay, that's super helpful for trying to value this company. The other thing is, one of the things that you said is that you added a lot of sell side capacity in this particular period. I'm just curious as to if demand is soft right now, why, how is adding sell side capacity. Doesn't that just hurt the price in the auction if we're adding a lot of sell side capacity, but demand is soft? Doesn't that actually put more pressure?
What we added, Laura?
What's that?
I didn't understand what you asked for, what we added. Can you repeat it? Maybe the line is not good.
Yeah, I thought you said you added a lot of sell side capacity in the quarter.
Yes. Yeah. Yeah.
Doesn't that hurt your auctions more because you have soft demand because of macro? If you add a lot of sell side, that adds a lot of units available for sale. Doesn't that put even more pressure downwards on your average price?
No.
No?
No, because I will explain. First of all, what we are usually doing, we are enhancing and growing our media side all the time in order to, because the advertisers, our partners, are looking every time for different audiences. That's the capability that we can offer them through the data and usage of our platform. We are not offering any commitment to these publishers. It's connected to our platform, and we are enabling our clients to basically reach bigger audiences and more diverse audiences through this growth of our sales side partners basically that are connected to our platform. It's not putting pressure on pricing, and it's not putting more pressure on our sales, of course.
Okay.
I hope that I was clear.
Yeah, perfectly.
Yeah.
That's great. Okay, thanks very much, guys. Thank you.
Thank you.
Thank you.
Your next question is from the line of Matt Swanson with RBC Capital Markets.
Hi, Matt.
Yeah, thanks. Morning, guys. Sagi, maybe picking up where you left off on your prepared remarks and thinking about guidance. You know, you noted all the headwinds that we see, you know, pretty much in the news on a daily basis. You also have the company-specific tailwinds in the second half with VIDAA and Spearad, World Cup, political. Could you just give us a little more color on maybe how you're thinking about balancing the tailwinds and headwinds , and then where you may be building in some conservatism into that guidance for the second half?
I think it's a great question. Ofer, do you want to take it?
Again, I didn't understand the question, so I would love to hear it again.
Yeah, I was just saying that there's obviously a lot of macro headwinds, right, in the second half of the year, but there's company-specific tailwinds that we've been talking about for a while with VIDAA and Spearad, World Cup, political. Just kind of how you're thinking about balancing those two things, and then maybe just giving us a sense for the level of conservatism that you guys are building in given that macro uncertainty.
Of course. Thank you. Thank you for repeating the question. We worked very hard in the past, even close to a year now on all these initiatives like the VIDAA, which is the ACR data that's supposed to be effective in the second half of the year. We took it even further, and we enhanced the capabilities that we are offering to the market by cooperating even deeply with VIDAA licensees about content that is unique and high quality, like the FIFA+ that is going to be distributed in exclusivity on VIDAA and Hisense TVs, basically. We feel, and also the VIDAA show that they basically created that will give, like, more color on the games and so on.
As we know, FIFA and the World Cup in soccer is a major thing in this, in the sport event. People really, of course, there are billions of fans that are waiting for these games to start. That's why basically we believe that with all these headwinds that are in the market, we have also very strong tailwinds, which is the ACR data, the FIFA and the basically the content opportunities that we built. We are also encouraged by the fact that with the first proof of concept that we got, we got basically a partnership around the partnership with VIDAA around the FIFA+ and the World Cup, which is of course a very major event and will give us like a very strong opportunity to generate additional revenues in the fourth quarter.
We also didn't include Amobee that, you know, we have high confidence that this deal will be closed in the third quarter. You know, we try to give like a full picture about the year as a standalone to the market in order to remove uncertainty and to give more clarity about it. We are conservative in this in general because we feel that there is a lot of uncertainty and headwinds in the market, and we need to be aware of them, and we take them into consideration.
As we mentioned also in our PR, we believe that these headwinds and this macroeconomics will not end in the end of the third quarter but will end probably the end of the year or early, or even will move to 2023, basically. I hope that I answered your question, but I think that in general, we see a lot of tailwinds that can be supported by our hard work that we've done. I think that basically we are trying to balance it with the headwinds that we are feeling in the market, and we gave like a focus for the full year for this reason, in order to be transparent and to show what we feel is the status of the business until the end of the year.
Yeah. Thank you. No, that's really helpful. Flipping to maybe a more positive macro note, Ofer, you mentioned all the companies that are switching to AVOD right now. Maybe thinking about what your expectations are in the next, you know, year or two as this kind of flood of premium content comes to CTV, and what you think the impact is on the market, you know, advertisers, publishers, when all of a sudden, you know, we see a 2-3x times the a mount of content come to streaming.
Okay. I think that it just show that the CTV is here to stay and is growing, and it's becoming like a main channel for online advertisers and for advertisers that wants to reach their audiences no matter, you know, on which platform right now. I think that it just show that the center that this CTV is taking in the market. We are, as you can see also by our results, growing our capabilities. We have very quality product that we are basically pushing in the market, we are offering in the market. We add to that also this content that we are now testing.
As I mentioned, we are glad that the first test and the POCs with FIFA+, basically, our ability to work together with VIDAA and Hisense in order to monetize this opportunity. I believe that all these opportunities that are open in the AVOD will create more curiosity and more activity among advertisers to test CTV, to run their campaigns on CTV , also in order to reach their clients and potential clients. I think that it will grow the market and will make it more advanced and more efficient in the future. I look at that in a positive manner.
In the short term, when you have like so much supply coming to the market, it's also connected to what we see in the market, which is of course it can affect pricing, and it can affect the ability of publishers to sell all their media and so on. I think that what we see in the markets right now is just the beginning of more and more companies choosing to work with AVOD and believe in this model, which is great for a company like us, of course, that's what we are selling and that's what we are offering in the market.
All right. Thank you. Appreciate the time.
Thank you.
Your next question is from the line of Mark Kelley with Stifel.
Hey, great. Thanks very much. I want to ask you about the 2023 guide that you put out there. Should we assume that Amobee revenue is roughly $150 million? I know you in the past have said that that was you know, flattish year-over-year. Is that the right way to think about it for 2023? And if so, that would imply the core Tremor business you know, excluding Amobee, would be growing a little over 20%. Is that the right way to think about it? Or is the right way to think about it, you know, basically using that 12%-16% growth that you talked about? Yeah, what's the right way to think about Amobee's impact in 2023? Thank you.
I will take this question. First of all, when we are acquiring a company, we are moving very quickly in order to integrate the company into our business. We are not keeping silos, and we are not keeping the different business units. We are creating one company. I think that we also this is part of our promise and the way that we are working basically is to create one company with the acquisition that we are making, and that's what we did in the past, and that's what we are planning to do, of course, with Amobee. After the closing, we will basically mix and connect the things, and we will not keep it as the silos.
In general, when you look at that, we said approximately $500 million because , as we mentioned, we said that we will grow between 12%-16%. We said that Amobee last year was about $150. I think that we kept it conservative basically when we gave these numbers, and which are very impressive as they are, because to reach $500 million in net revenues and $200 million in EBITDA, it's a major event, and it's a very big statement in this industry of AdTech right now.
Okay. Thank you. Structurally, should the Amobee business also grow in line with that, you know, call it low teens, low to mid-teens, that you suggested for the core Tremor business?
We are not talking about the different units. Again, what we are going to do after closing is to connect the businesses. Basically, we'll create like a business units that are part of the full company, but they are connected, so we will not be able to measure it. We did it in the past with Unruly, we did it with RhythmOne, and we are planning to do that with basically with Amobee.
Okay. Great. Thank you.
Yes. Just to add to that, Mark, I think that, you know, Amobee is a less profitable company than Tremor. First of all, as Ofer mentioned, we are moving fast. It will take us some time in the first 12 months in order to get them to the right place. Secondly, they are only one-sided, so we will do our best in order to make them like part of our ecosystem and enjoy the end-to-end solution. As Ofer mentioned, we will not measure anymore Amobee solo and Tremor solo. It will be one ecosystem and one reporting.
Okay. Makes sense. Then maybe just one quick one on, you know, where you're seeing the softness. You did a nice job talking about, you know, the macro, stuff. I guess in terms of your products in particular, like, are you seeing more softness on the supply side versus the demand side? Like, I guess when people are using your tech, is there any one type of customer softer than the others?
Of course, everything start with the demand. I think that in general, the demand, if you're looking at the demand side that is weakened, and it's weakening the ecosystem. It's across the system, meaning that when the demand is low, of course, it's affecting all the revenues that the business is generating.
Okay. Makes sense. Thanks very much.
Thank you.
Your next question is from the line of Andrew Marok with Raymond James.
Thanks for taking my questions. I wanted to drill down a little bit more quantitatively on that second half guidance and try to get a sense on the scale of your assumptions for contributions from the inorganic events like the World Cup and political advertising in the back half of the year, and then have a follow-up after.
I'm not sure, you know, we'll be able to tell exactly what will be the FIFA or the World Cup revenue generating because we are not measuring it as that, and you are calling it like non-organic, but it will become organic almost every year there's a major tournament, and Hisense VIDAA are very heavily invested in exclusive sport content, which we will monetize in the future as well. I think that's the answer, unless, Ofer, you want to add something.
No, I think that it's part of the business that we are doing, and this is, of course, it's organic growth. We worked on that so hard in order to build it with the investment and partnership that we created with VIDAA and Hisense, and we are proud of that. It's the first time that we are launching an event like that or able to sell and monetize this type of content in the market, and we are waiting to see. We of course believe that it will be very meaningful because we believe that the opportunity is really interesting for advertising, advertisers, and we see the first impression, first response of advertisers, it's very positive. We are now continuing to build the offering and to go out to the advertisers and basically start to get the business signed.
Okay. Thank you. Then in the second quarter, can you point to anything specific as to why EBITDA margins were higher than kind of trend, higher than expected? Was there anything in any of those specific expense lines that was worth calling out? Thank you.
Sorry, take it. You will take it, Sagi. Sorry.
Yes, I think, you know, it's a combination of different initiatives that we took during, at the end of Q1 already , when we saw the headwinds and the macroeconomic situation. Of course, we closed some open positions. Some indirect costs that are revenue-related , of course, went down. We went and made extra efficiency on our data and hosting cost line. We did some renegotiation with some of our vendors. Of course, we put like a hold on P&E and professional services on average. I think all of that contributed to this like extraordinary EBITDA margin in Q2.
Okay, thank you.
Your final question comes from the line of Andrew Boone from JMP Securities.
Good morning, and thanks for taking my questions. Can we start with just helping to better understand 3Q? Is there a way that you can help us understand kind of the first half of what you've seen, so July and August to date, as we think about kind of this quarter?
We are assessing, and we are providing like, a numbers that are below consensus. Of course, it's not according to our plans. If it was according to our plans, we didn't give this assessment, and we didn't get this number. We feel the weakness in the market that is coming from across the board, from a lot of advertisers and partners that we have. That's why we basically adjusted our forecast.
Okay, thanks. Kind of playing off of the last question you just got asked, can you talk about the impact of FX on the model? Were there any top-line kind of headwinds that you guys can call out there? I understood it's mostly a U.S. business, but then additionally on the cost side, is there also a benefit from ex-FX that you guys are seeing on the cost side of the business?
Again, talk about the-
Yeah, on the top line, you know, the vast majority of our revenues are coming from the U.S., so we don't see any FX effect over there, no benefit and no loss. On the cost side, yes. You know, as the dollar went up and strengthened through the last month worldwide, we see some cost savings due to FX. It's not like material or changing, you know, the needle, but we did see some cost saving regarding FX effect.
Okay, thanks, Sagi. Just my last question is, one of the key differentiation pieces in our view, is certainly the creative side of the business with Tr.ly. Can you just talk about the drivers of increased use of Tr.ly for video ads? Just help us understand what that brings to the rest of the model, right? Understood , more engagement is just good, but kinda put that, help us understand that as we relate this back to Excel. Thanks so much.
Thank you. I will take it, Sagi. I think that when we are talking about creative, we have to understand that there is a few elements to the importance of the creative. First of all, as you indicated, is to increase the engagement. Apart from that, is to increase the efficiency when you are connecting between creative and data. This is something that we were able to grow a lot, the efficiency and the engagement in the last one and a half years or close to two years since we basically started that, because Tr.ly is basically after we acquired Unruly, we released this product, and it did a very good job, and we see the growth about it. I think that advertisers like it because it's basically serving two of their goals.
First of all is to reach the right audiences with the right message, and the second one is to basically increase the engagement with them. We see that as a catalyst also to sales when we are offering this capability to advertisers when compared to other companies that are less doing that. I think that we are gaining more attention, we are getting more budgets, and we are getting more response from advertisers. It's a tool that we really enjoy using in the market, and it's bringing a lot of great results to us, and of course, to our clients that are using that.
Thank you.
Thank you. I'll now hand today's call back over to Ofer for any closing remarks.
Thank you, everyone. I think that, as we said, we build a very strong foundation for the company, and we look at it and we see that we have a lot coming in in the months to come, but also in years to come through the deals and the investment and the acquisition that is still pending. We are feeling confident that it will be closed in the third quarter. I think that when we are looking at the future, we are still excited. We know that there is headwinds in the market, but you are not building a company for the next quarter, you are building a company for the years to come.
We feel that we build the right foundations with the right partners, and we have the talent that is needed in order to grow our business and to move forward in full power. I'm really excited about it, and I think that we proved in the past year that we are able to fulfill our strategy, meaning increase our CTV holds through the agreement with VIDAA, getting exclusivity in major markets like U.S., U.K., Canada, and Australia, and on the CTV data, which is the ACR, to get like a global multi agreement with one of the biggest and most powerful operating system and OEMs in the market.
The second thing is also to move through this agreement to drive also quality content that can be an interesting business model, an interesting thing for our clients to be associated with events like FIFA and others that will come, which is really powerful. The acquisition that we've done that is fulfilling our strategy that we basically indicated after the dual listing that we done last June, that we are going to keep using our profits and our cash in order to make acquisitions that will grow our demand side.
We looked at Amobee as a great opportunity for that with their size, with the right size, capability, talent, technology capability, more than 500 clients and tools and technology capabilities that are in line of what we are doing, including linear TV, that we look at it as a great opportunity in the future because we see that the linear TV and the CTV are getting closer together through data, usage of data. We are excited, we are confident about our moves and our strategy, and we are working hard in order to accelerate our capabilities in the coming years and so on. Thank you very much for joining us today, and thank you.
This concludes today's call. Thank you for joining. You may now disconnect.