Total revenue increased 8% to $114.5 million
Net loss of $1.3 million at a 1% net loss margin; adjusted EBITDA of $33.1 million at a 29% margin
Introduces positive second quarter outlook and raises full-year outlook
NEW YORK, May 9, 2024 /PRNewswire/ -- Integral Ad Science Holding Corp. (Nasdaq: IAS), a leading global media measurement and optimization platform, today announced financial results for the first quarter ended March 31, 2024.
"Our first quarter results exceeded our expectations. We expect favorable demand trends for our industry-leading products in the second quarter, and we are raising our full year outlook," said Lisa Utzschneider, CEO of IAS. "We benefited from strong social media revenue growth of 40% in our measurement business in the first quarter as we increased availability of our Total Media Quality (TMQ) product across the major social media platforms. We have also established several industry-first partnerships which reinforce demand for the accuracy and sophistication of our innovative AI-backed solutions and the trust the leading platforms, marketers, and publishers place in IAS. We have a robust product pipeline that we expect will drive performance in the back half of 2024 across several fast-growing channels."
First Quarter 2024 Financial Highlights
- Total revenue was $114.5 million, an 8% increase compared to $106.1 million in the prior-year period.
- Optimization revenue was $52.5 million, a 3% increase compared to $51.0 million in the prior-year period.
- Measurement revenue was $46.3 million, a 14% increase compared to $40.7 million in the prior-year period.
- Publisher revenue was $15.8 million, a 10% increase compared to $14.4 million in the prior-year period.
- International revenue, excluding the Americas, was $36.0 million, a 13% increase compared to $31.9 million in the prior-year period, or 31% of total revenue for the first quarter of 2024.
- Gross profit was $88.4 million, a 5% increase compared to $84.4 million in the prior-year period. Gross profit margin was 77% for the first quarter of 2024.
- Net loss was $1.3 million, or $0.01 per share, compared to net income of $3.1 million, or $0.02 per share, in the prior-year-period. Net loss margin was 1% for the first quarter of 2024.
- Adjusted EBITDA* was $33.1 million compared to $34.1 million in the prior-year period. Adjusted EBITDA* margin was 29% for the first quarter of 2024.
- Cash and cash equivalents were $83.9 million at March 31, 2024.
Recent Business Highlights
- Meta Expansion - IAS launched its AI-driven Total Media Quality (TMQ) brand safety and suitability measurement product across Facebook and Instagram Feed and Reels on February 5th. During the quarter, IAS expanded its solutions with Meta to include 21 new languages for a total of 28 supported languages. In April, IAS expanded to include GARM-aligned misinformation measurement capability.
- TikTok Expanded Markets and Capabilities - In April, IAS expanded its global industry-leading brand safety and suitability measurement on TikTok including Vertical Sensitivity/Category Exclusion segments, expanded coverage to 11 new countries, Automated Suitability Profiles and enhanced reporting.
- Snap Partnership - In March, IAS expanded its partnership with Snap and will be the first to provide AI-driven brand safety and suitability measurement for advertisers. By integrating IAS's TMQ product, advertisers now have access to increased transparency across their Snapchat campaigns.
- X Expansion - In February, IAS launched its exclusive pre-bid product with X, providing the opportunity for U.S. advertisers to opt-in to activate pre-bid IAS Optimization for X on the Vertical Video product. IAS classifies vertical video ad adjacencies for brand safety and suitability aligned to the GARM framework, giving advertisers maximum control over where their ads appear on the X vertical video feed.
- Roblox Integration - In May, IAS announced its first-to-market integration with Roblox to provide 3D in-experience viewability and IVT measurement.
- Netflix CTV Attention Measurement - IAS collaborated with Netflix to provide CTV attention measurement with IAS Quality Attention to demonstrate the effectiveness of Netflix's ad- supported attention metrics, including across international markets.
- YouTube MRC Accreditation - In March, IAS earned MRC accreditation for its integrated third-party calculation and reporting of YouTube video viewability for desktop and mobile including web and app using Google's Ads Data Hub for Measurement Partners (ADH-MP).
- SIVT MRC Accreditation - In April, IAS received accreditation for filtration of sophisticated invalid traffic (SIVT) in CTV environments as applied to video impressions, viewable impressions and viewability related metrics.
- TrustArc Certification - In April, IAS received TrustArc's TRUSTe Responsible AI certification, demonstrating its commitment and alignment with the highest standards of AI governance.
Financial Outlook
"We expect to accelerate revenue growth and profitability from the first quarter in 2024 as we execute on our business plan," said Tania Secor, CFO of IAS. "In addition, we plan to expand adjusted EBITDA margins, invest for long-term sustainable growth, and lower debt."
IAS is introducing the following financial outlook for the second quarter of 2024 and raising its full year 2024 revenue and adjusted EBITDA outlook:
Second Quarter Ending June 30, 2024:
- Total revenue of $125 million to $127 million
- Adjusted EBITDA* of $37 million to $39 million
Year Ending December 31, 2024 :
- Total revenue of $533 million to $541 million
- Adjusted EBITDA* of $174 million to $180 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 second quarter of 2024 in the range of $15 million to $17 million and for the full year 2024 in the range of $63 million to $66 million.
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||
(IN THOUSANDS, EXCEPT SHARE DATA) | March 31, 2024 | December 31, 2023 | |
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 83,947 | $ 124,759 | |
Restricted cash | 298 | 54 | |
Accounts receivable, net | 67,764 | 74,609 | |
Unbilled receivables | 43,198 | 46,548 | |
Prepaid expenses and other current assets | 32,468 | 18,959 | |
Total current assets | 227,675 | 264,929 | |
Property and equipment, net | 4,088 | 3,769 | |
Internal use software, net | 43,729 | 40,301 | |
Intangible assets, net | 169,316 | 178,908 | |
Goodwill | 674,454 | 675,282 | |
Operating lease right-of-use assets | 19,766 | 21,668 | |
Deferred tax asset, net | 2,433 | 2,465 | |
Other long-term assets | 4,361 | 4,402 | |
Total assets | $ 1,145,822 | $ 1,191,724 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ 42,176 | $ 72,232 | |
Operating lease liabilities, current | 9,119 | 9,435 | |
Due to related party | 83 | 121 | |
Deferred revenue | 1,318 | 682 | |
Total current liabilities | 52,696 | 82,470 | |
Deferred tax liability, net | 20,330 | 20,367 | |
Long-term debt | 123,841 | 153,725 | |
Operating lease liabilities, non-current | 17,707 | 19,523 | |
Other long-term liabilities | 6,172 | 6,183 | |
Total liabilities | 220,746 | 282,268 | |
Commitments and Contingencies (Note 13) | |||
Stockholders' Equity | |||
Preferred Stock, $0.001 par value, 50,000,000 shares authorized at March 31, 2024; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023. | - | - | |
Common Stock, $0.001 par value, 500,000,000 shares authorized, 159,761,454 and 158,757,620 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively. | 160 | 159 | |
Additional paid-in-capital | 919,192 | 901,259 | |
Accumulated other comprehensive loss | (1,975) | (916) | |
Retained earnings | 7,699 | 8,954 | |
Total stockholders' equity | 925,076 | 909,456 | |
Total liabilities and stockholders' equity | $ 1,145,822 | $ 1,191,724 | |
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | ||||
Three Months Ended March 31, | ||||
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | 2024 | 2023 | ||
Revenue | $ 114,530 | $ 106,092 | ||
Operating expenses: | ||||
Cost of revenue (excluding depreciation and amortization shown below) | 26,161 | 21,682 | ||
Sales and marketing | 31,825 | 26,260 | ||
Technology and development | 17,978 | 15,529 | ||
General and administrative | 21,380 | 20,723 | ||
Depreciation and amortization | 15,080 | 12,825 | ||
Foreign exchange loss (gain), net | 1,569 | (516) | ||
Total operating expenses | 113,993 | 96,503 | ||
Operating income | 537 | 9,589 | ||
Interest expense, net | (1,926) | (3,417) | ||
Net (loss) income before income taxes | (1,389) | 6,172 | ||
Benefit (provision) from income taxes | 134 | (3,026) | ||
Net (loss) income | $ (1,255) | $ 3,146 | ||
Net (loss) income per share - basic and diluted: | $ (0.01) | $ 0.02 | ||
Weighted average shares outstanding: | ||||
Basic | 159,385,167 | 154,315,219 | ||
Diluted | 159,385,167 | 157,884,615 | ||
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (1,059) | 1,149 | ||
Total comprehensive (loss) income | $ (2,314) | $ 4,295 | ||
Stock-Based Compensation (UNAUDITED) | |||
Three Months Ended March 31, | |||
(IN THOUSANDS) | 2024 | 2023 | |
Cost of revenue | $ 124 | $ 84 | |
Sales and marketing | 5,738 | 3,887 | |
Technology and development | 4,399 | 3,170 | |
General and administrative | 5,477 | 4,165 | |
Total stock-based compensation | $ 15,738 | $ 11,306 | |
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) | ||||||||||||
Three Months Ended March 31, 2024 | ||||||||||||
Common Stock | ||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated | Retained | Total stockholders' equity | ||||||
Balance, December 31, 2023 | 158,757,620 | $ 159 | $ 901,259 | $ (916) | $ 8,954 | $ 909,456 | ||||||
RSUs and MSUs vested | 806,546 | 1 | - | - | - | 1 | ||||||
Option exercises | 44,049 | - | 313 | - | - | 313 | ||||||
ESPP purchase | 153,239 | - | 1,895 | - | - | 1,895 | ||||||
Stock-based compensation | - | - | 15,725 | - | - | 15,725 | ||||||
Foreign currency translation adjustment | - | - | - | (1,059) | - | (1,059) | ||||||
Net loss | - | - | - | - | (1,255) | (1,255) | ||||||
Balance, March 31, 2024 | 159,761,454 | $ 160 | $ 919,192 | $ (1,975) | $ 7,699 | $ 925,076 | ||||||
Three Months Ended March 31, 2023 | ||||||||||||
Common Stock | ||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated | Retained | Total stockholders' equity | ||||||
Balance, December 31, 2022 | 153,990,128 | $ 154 | $ 810,186 | $ (2,899) | $ 775 | $ 808,216 | ||||||
RSUs vested | 371,740 | - | - | - | - | - | ||||||
Option exercises | 338,949 | - | 2,115 | - | - | 2,115 | ||||||
ESPP purchase | 111,163 | - | 882 | - | - | 882 | ||||||
Stock-based compensation | - | - | 11,315 | - | - | 11,315 | ||||||
Foreign currency translation adjustment | - | - | - | 1,149 | - | 1,149 | ||||||
Adoption of ASC 326, net of tax | - | - | - | - | 941 | 941 | ||||||
Net income | - | - | - | - | 3,146 | 3,146 | ||||||
Balance, March 31, 2023 | 154,811,980 | $ 154 | $ 824,498 | $ (1,750) | $ 4,862 | $ 827,764 | ||||||
INTEGRAL AD SCIENCE HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||
Three Months Ended March 31, | ||||
(IN THOUSANDS) | 2024 | 2023 | ||
Cash flows from operating activities: | ||||
Net (loss) income | $ (1,255) | $ 3,146 | ||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation and amortization | 15,080 | 12,825 | ||
Stock-based compensation | 15,738 | 11,306 | ||
Foreign currency loss (gain), net | 1,395 | (678) | ||
Deferred tax benefit | (5) | (2,767) | ||
Amortization of debt issuance costs | 116 | 116 | ||
(Reversal of) allowance for credit losses | (188) | 514 | ||
Changes in operating assets and liabilities: | ||||
Decrease in accounts receivable | 6,436 | 6,642 | ||
Decrease in unbilled receivables | 3,167 | 1,292 | ||
(Increase) decrease in prepaid expenses and other current assets | (13,759) | 3,063 | ||
(Increase) decrease in operating leases, net | (202) | 20 | ||
Decrease (increase) in other long-term assets | 19 | (19) | ||
Decrease in accounts payable and accrued expenses and other long-term liabilities | (28,278) | (13,073) | ||
Increase in deferred revenue | 644 | 522 | ||
(Decrease) increase in due to/from related party | (39) | 47 | ||
Net cash (used in) provided by operating activities | (1,131) | 22,956 | ||
Cash flows from investing activities: | ||||
Purchase of property and equipment | (1,128) | (1,282) | ||
Acquisition and development of internal use software and other | (9,163) | (7,060) | ||
Net cash used in investing activities | (10,291) | (8,342) | ||
Cash flows from financing activities: | ||||
Proceeds from the Revolver | - | 75,000 | ||
Repayment of long-term debt | (30,000) | (85,000) | ||
Proceeds from exercise of stock options | 313 | 2,115 | ||
Cash received from Employee Stock Purchase Program | 1,393 | 787 | ||
Net cash used in financing activities | (28,294) | (7,098) | ||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (39,716) | 7,516 | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (847) | 305 | ||
Cash, cash equivalents and restricted cash at beginning of period | 127,290 | 89,671 | ||
Cash, cash equivalents, and restricted cash, at end of period | $ 86,727 | $ 97,492 | ||
Supplemental Disclosures: | ||||
Net cash paid during the period for: | ||||
Interest | $ 1,879 | $ 3,004 | ||
Taxes | $ 268 | $ 935 | ||
Non-cash investing and financing activities: | ||||
Property and equipment acquired included in accounts payable | $ 2 | $ 433 | ||
Internal use software acquired included in accounts payable | $ 573 | $ 1,309 | ||
Lease liabilities arising from right of use assets | $ 189 | $ - | ||
Supplemental Disclosure Regarding Non-GAAP Financial Information
We use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. Adjusted EBITDA is the primary financial performance measure used by management to evaluate our business and monitor ongoing results of operations. Adjusted EBITDA is defined as income/loss before depreciation and amortization, stock-based compensation, interest expense, income taxes, restructuring and severance costs, acquisition and integration costs, foreign exchange gains and losses, and other one-time, non-recurring costs. Adjusted EBITDA margin represents the adjusted EBITDA for the applicable period divided by the revenue for that period presented in accordance with GAAP.
We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our shareholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period-to-period comparisons. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, these measures are not a substitute for, or superior to, U.S. GAAP financial measures or disclosures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Reconciliation of historical Adjusted EBITDA and corresponding margin to their most directly comparable GAAP financial measures, net income/loss and corresponding margin are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items.
Reconciliation of Adjusted EBITDA | ||||
Three Months Ended March 31, | ||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | 2024 | 2023 | ||
Net (loss) income | $ (1,255) | $ 3,146 | ||
Depreciation and amortization | 15,080 | 12,825 | ||
Stock-based compensation | 15,738 | 11,306 | ||
Interest expense, net | 1,926 | 3,417 | ||
(Benefit) provision from income taxes | (134) | 3,026 | ||
Acquisition, restructuring and integration costs | 126 | 811 | ||
Foreign exchange loss (gain), net | 1,569 | (516) | ||
Asset impairments and other costs | - | 38 | ||
Adjusted EBITDA | $ 33,050 | $ 34,053 | ||
Revenue | $ 114,530 | $ 106,092 | ||
Net (loss) income margin | (1) % | 3 % | ||
Adjusted EBITDA margin | 29 % | 32 % | ||
Conference Call and Webcast Information
About Integral Ad Science
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Forward-Looking Statements
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
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SOURCE Integral Ad Science, Inc.
