PR Newswire
NEW YORK, Aug. 3, 2023
Total revenue increased 13% to $113.7 million
Net income of $7.7 million, or $0.05 per share, at a 7% margin; adjusted EBITDA increased to $37.4 million at a 33% margin
NEW YORK, Aug. 3, 2023 /PRNewswire/ -- Integral Ad Science Holding Corp. (Nasdaq: IAS), a leading global media measurement and optimization platform, today announced financial results for the second quarter ended June 30, 2023.
"We continue to execute on our growth strategy with results for the second quarter ahead of our prior expectations," said Lisa Utzschneider, CEO of IAS. "We are leading with innovation as we scale our products to new markets with our platform partners and unlock valuable insights with increasingly actionable data. Our global business momentum continues with several new brand logos added recently."
Second Quarter 2023 Financial Highlights
- Total revenue was $113.7 million, a 13% increase compared to $100.3 million in the prior-year period.
- Optimization revenue (f/k/a programmatic) was $52.8 million, a 10% increase compared to $47.9 million in the prior-year period.
- Measurement revenue (f/k/a advertiser direct) was $44.9 million, a 23% increase compared to $36.6 million in the prior-year period.
- Publisher revenue (f/k/a supply side) was $15.9 million, a 1% increase compared to $15.8 million in the prior-year period.
- International revenue, excluding the Americas, was $34.7 million, a 10% increase compared to $31.6 million in the prior-year period, or 30% of total revenue for the second quarter of 2023.
- Gross profit was $89.8 million, a 9% increase compared to $82.2 million in the prior-year period. Gross profit margin was 79% for the second quarter of 2023.
- Net income was $7.7 million, or $0.05 per share, compared to net income of $2.0 million, or $0.01 per share, in the prior-year-period. Net income margin was 7% for the second quarter of 2023. Net income for the second quarter of 2023 includes $23.5 million of stock-based compensation expense related to return-target options as well as an income tax benefit of $29.1 million in the period.
- Adjusted EBITDA* increased to $37.4 million, an 18% increase compared to $31.6 million in the prior-year period. Adjusted EBITDA* margin was 33% for the second quarter of 2023.
- Cash and cash equivalents were $98.8 million at June 30, 2023.
Recent Business Highlights
- TikTok Expansion - During the quarter, IAS announced a significant expansion with TikTok of its Total Media Quality (TMQ) brand safety and suitability measurement product. TMQ is now available to advertisers in more than 30 markets.
- Meta Partnership - In June, IAS rolled out Viewability measurement tools for Facebook and Instagram Reels. IAS will now provide viewability and invalid traffic measurement (IVT) for Meta's rapidly growing Reels video feed inventory.
- Google Video Partners (GVP) Integration - In July, IAS expanded its TMQ solution for GVP. IAS is first-to-market providing GARM-aligned brand safety and suitability measurement on GVP inventory.
- YouTube Shorts Integration - In July, IAS expanded its measurement capabilities to YouTube Shorts. IAS will provide viewability and IVT measurement for YouTube Shorts' inventory.
- Roku Integration - IAS announced a partnership with Roku to help advertisers accelerate their shift to TV streaming with confidence. IAS integrated its IVT pre-bid filters on Roku's OneView DSP. In addition, IAS supports Roku's Advertising Watermark to combat device spoofing on CTV.
- IRIS.TV Partnership - IAS partnered with IRIS.TV to launch TMQ for CTV brand safety and suitability, the industry's first video-level brand suitability measurement for CTV. IAS will provide marketers with reporting on CTV buys aligned to the GARM framework.
- MRC Accreditation - IAS received the industry's first accreditation for CTV viewable impressions from the Media Rating Council (MRC). IAS is the only company to date to have earned this accreditation as well as also receiving MRC accreditation for CTV-rendered impressions.
- Criteo Partnership - IAS announced a first-to-market partnership with Criteo. IAS will enable onsite viewability and IVT measurement across Criteo's network of retail media partners.
- Uber Integration - IAS is partnering with Uber's advertising division to validate performance and effectiveness of Journey Ads campaigns on Uber's mobility platform. IAS will verify viewability, fraud, and brand safety to bring further transparency to Uber's brand clients.
- Anzu Expansion - IAS strengthened its partnership with Anzu to provide the industry's first independent measurement solution for 3D in-game advertising.
- Strategic Hire - IAS announced the appointment of Sam Cox as Senior Vice President of Product Management. Cox oversees global product strategy and execution for IAS's programmatic and optimization solutions. He brings nearly two decades of experience in advertising technology and exchange-based trading and joins IAS most recently from Amazon and Google. IAS also announced separately that Tom Sharma, Chief Product Officer, departed IAS effective August 3rd.
Financial Outlook
"Our financial performance in the second quarter reflects our ability to meet our customers' needs with diverse offerings across the digital media ecosystem," said Tania Secor, CFO of IAS. "We expanded our margins during the quarter while investing in key growth areas. We continued to generate strong cash flow, which enabled us to pay down $20 million of debt in the period. We are on track to deliver a healthy mix of revenue growth and profitability for the full year."
IAS is introducing the following financial outlook for the third quarter of 2023 and increasing the midpoint of its full year 2023 outlook for revenue and adjusted EBITDA:
Third Quarter Ending September 30, 2023:
- Total revenue of $112 million to $114 million
- Adjusted EBITDA* of $35 million to $37 million
Year Ending December 31, 2023:
- Total revenue of $459 million to $465 million
- Adjusted EBITDA* of $149 million to $153 million
* See "Supplemental Disclosure Regarding Non-GAAP Financial Information" section herein for an explanation of these measures. IAS is unable to provide a reconciliation for forward-looking guidance of Adjusted EBITDA and corresponding margin to net income (loss), the most closely comparable GAAP measures without unreasonable effort, because certain material reconciling items, such as depreciation and amortization, interest expense, income tax expense (benefit) and acquisition, restructuring and integration expenses, cannot be estimated due to factors outside of IAS's control and could have a material impact on the reported results. However, IAS estimates stock-based compensation expense for the third quarter of 2023 in the range of $13.0 million to $14.0 million and for the full year 2023 in the range of $80.0 million to $82.0 million. |
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||
(IN THOUSANDS, EXCEPT SHARE DATA) | June 30, | December 31, | |
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 98,799 | $ 86,877 | |
Restricted cash | 70 | 45 | |
Accounts receivable, net | 73,187 | 67,884 | |
Unbilled receivables | 39,460 | 41,550 | |
Prepaid expenses and other current assets | 11,766 | 24,761 | |
Due from related party | 20 | 29 | |
Total current assets | 223,302 | 221,146 | |
Property and equipment, net | 3,837 | 2,412 | |
Internal use software, net | 31,746 | 23,642 | |
Intangible assets, net | 198,273 | 217,558 | |
Goodwill | 674,866 | 674,094 | |
Operating lease right-of-use assets | 23,572 | 22,787 | |
Deferred tax asset, net | 1,743 | 2,020 | |
Other long-term assets | 4,711 | 5,024 | |
Total assets | $ 1,162,050 | $ 1,168,683 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ 50,322 | $ 60,799 | |
Due to related party | 13 | 122 | |
Deferred revenue | 431 | 99 | |
Operating lease liabilities, current | 7,982 | 6,749 | |
Total current liabilities | 58,748 | 67,769 | |
Net deferred tax liability | 7,972 | 45,495 | |
Long-term debt | 193,493 | 223,262 | |
Operating lease liabilities, non-current | 22,461 | 22,875 | |
Other long-term liabilities | 1,162 | 1,066 | |
Total liabilities | 283,836 | 360,467 | |
Commitments and Contingencies (Note 13) | |||
Stockholders' Equity | |||
Preferred Stock, $0.001 par value, 50,000,000 shares authorized at June 30, 2023; 0 shares issued and outstanding at June 30, 2023 and December 31, 2022. | — | — | |
Common Stock, $0.001 par value, 500,000,000 shares authorized, 156,279,075 and 153,990,128 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively. | 156 | 154 | |
Additional paid-in-capital | 867,490 | 810,186 | |
Accumulated other comprehensive loss | (1,971) | (2,899) | |
Retained earnings | 12,539 | 775 | |
Total stockholders' equity | 878,214 | 808,216 | |
Total liabilities and stockholders' equity | $ 1,162,050 | $ 1,168,683 | |
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | 2023 | 2022 | 2023 | 2022 | ||||
Revenue | $ 113,651 | $ 100,328 | $ 219,743 | $ 189,570 | ||||
Operating expenses: | ||||||||
Cost of revenue (excluding depreciation and amortization shown below) | 23,819 | 18,132 | 45,501 | 34,693 | ||||
Sales and marketing | 31,702 | 26,691 | 57,962 | 49,771 | ||||
Technology and development | 21,110 | 17,624 | 36,639 | 34,611 | ||||
General and administrative | 42,339 | 19,137 | 63,062 | 35,932 | ||||
Depreciation and amortization | 13,521 | 12,510 | 26,346 | 24,968 | ||||
Foreign exchange gain, net (1) | (631) | (512) | (1,147) | (561) | ||||
Total operating expenses | 131,860 | 93,582 | 228,363 | 179,414 | ||||
Operating income (loss) | (18,209) | 6,746 | (8,620) | 10,156 | ||||
Interest expense, net | (3,221) | (1,814) | (6,638) | (3,240) | ||||
Net income (loss) before income taxes | (21,430) | 4,932 | (15,258) | 6,916 | ||||
Benefit (provision) from income taxes | 29,107 | (2,971) | 26,081 | (3,796) | ||||
Net income | $ 7,677 | $ 1,961 | $ 10,823 | $ 3,120 | ||||
Net income per share – basic and diluted | $ 0.05 | $ 0.01 | $ 0.07 | $ 0.02 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 155,425,264 | 155,140,684 | 155,267,531 | 154,812,037 | ||||
Diluted | 162,634,310 | 156,973,684 | 160,850,434 | 157,309,858 | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustments | (221) | (6,996) | 928 | (7,970) | ||||
Total comprehensive income (loss) | $ 7,456 | $ (5,035) | $ 11,751 | $ (4,850) | ||||
(1) Prior period amounts have been reclassified to conform to current period presentation. |
Stock-Based Compensation (UNAUDITED) | |||||||
(IN THOUSANDS) | Three Months Ended, | Six Months Ended, | |||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | ||||
Cost of revenue | $ 126 | $ 101 | $ 210 | $ 157 | |||
Sales and marketing | 8,258 | 3,662 | 12,145 | 6,193 | |||
Technology and development | 7,362 | 2,276 | 10,532 | 3,811 | |||
General and administrative | 24,689 | 4,682 | 28,854 | 8,699 | |||
Total stock-based compensation | $ 40,435 | $ 10,721 | $ 51,741 | $ 18,860 | |||
During the three months ended June 30, 2023, with the filing of a "shelf" registration statement on Form S-3, the market condition and the implied performance condition relating to the Return-Target Options were deemed to be probable and the Company recognized $23,450 of stock-based compensation expense for such options. Included within total stock-based compensation for the three and six months ended June 30, 2023 is the below expense related to Return-Target Options:
(IN THOUSANDS) | |
Stock based compensation for Return-Target options | |
Cost of revenue | $ — |
Sales and marketing | 2,099 |
Technology and development | 2,568 |
General and administrative | 18,783 |
Total stock-based compensation | $ 23,450 |
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) | ||||||||||||
Three Months Ended June 30, 2023 | ||||||||||||
Common Stock | ||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Retained | Total stockholders' equity | ||||||
Balance, April 1, 2023 | 154,811,980 | $ 154 | $ 824,498 | $ (1,750) | $ 4,862 | $ 827,764 | ||||||
RSUs and MSUs vested | 1,218,542 | 2 | — | — | — | 2 | ||||||
Option exercises | 248,553 | — | 2,878 | — | — | 2,878 | ||||||
Stock-based compensation | — | — | 40,114 | — | — | 40,114 | ||||||
Foreign currency translation adjustment | — | — | — | (221) | — | (221) | ||||||
Net income | — | — | — | — | 7,677 | 7,677 | ||||||
Balance, June 30, 2023 | 156,279,075 | $ 156 | $ 867,490 | $ (1,971) | $ 12,539 | $ 878,214 | ||||||
Six Months Ended June 30, 2023 | ||||||||||||
Common Stock | ||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total stockholders' equity | ||||||
Balance, January 1, 2023 | 153,990,128 | $ 154 | $ 810,186 | $ (2,899) | $ 775 | $ 808,216 | ||||||
RSUs and MSUs vested | 1,590,282 | 2 | — | — | — | 2 | ||||||
Option exercises | 587,502 | — | 4,993 | — | — | 4,993 | ||||||
ESPP purchase | 111,163 | — | 882 | — | — | 882 | ||||||
Stock-based compensation | — | — | 51,429 | — | — | 51,429 | ||||||
