AI-based ad-tech firm Adtheorent released first quarter results after the bell Tuesday. The company
posted a slight miss on earnings, but revenue increased over 10.5% as the company continues to be an industry leader in the digital advertising space. Jim Lawson, CEO, AdTheorent, joined Cheddar's Opening Bell to discuss.


Opening Bell

AdTheorent Reports Strong Q1 Earnings, Outperforms Nasdaq

for more on this Jim Lawson ceo of ad theory and joins us now. Jim this is your second report since going public late last year. Can you just break down some of the biggest highlights from the first quarter results? It's great to be here. Thank you Alicia. Um yeah we're really happy with the first quarter. We we met our guidance and beat our guidance. So we came in on revenue 11%. Um up year over year at 34.2 million. R. A. G. P. Our adjusted gross profit grew 11% year over year at 23 million. That was above our guided range. And our Ibadan despite the fact that we are in a meaningful growth year, came in ahead of our guided range. So we couldn't be happier about the first quarter. We're very confident in the full year. We have an incredible amount of opportunity given the way we use data and the way we target ads effectively. Uh and we believe we're gonna leave the industry, the programmatic ad industry into a post I. D. Era. And we think that the market the cmos, we talked to their very, very interested in what we're offering. So we couldn't be more happy about it. And for those who are less familiar with that theory, just walk us through exactly you know what you guys do and how your platform actually benefits advertisers. Absolutely. So programmatic media buying, what is that, what is the demand side platform. So we essentially have a platform that allows advertisers to place their ads on media and to decide among the billions of ad impression opportunities that exist every second. Where do you place your ads? Um Most often programmatic DSPs leverage and I. D. Based approach to do that whether it's a cookie that is on your device because of the fact that you've searched or utilized or access certain content or some other I. D. Tied back to a user and a user profile. Obviously the walled gardens know all there is to know about everybody that accesses those walled gardens. But in the open internet the idea approaches typically use cookies most most predominantly Advair and uses machine learning and statistics to identify and analyze data attributes associated with every media placement opportunity. And then we connect the dots between for example if we're trying to drive sales, we connect the dots between the impressions that lead to sales. And we say these data attributes were in common and therefore let's try to find media impressions that look like that In the digital world because those are going to have a higher predictive score. We predictably score over a million ad impressions per second and over 87 billion impressions per day. And we don't need a user I. D. to do that. It sounds to me in layman's terms just like smarter advertising in terms of really truly data driven advertising that really narrows in on exactly what is working what is not working and doubling down on what is working and it seems like overall it's working right? I mean to the tomb were at their and is outperforming the broader tech sector on the NASDAQ That's down over 25% year today while adhering The stock is up about 25% year to date. How is your company managing to outperform amid what is a challenging environment for so many others in a similar space? It's a great question. Every day we think about how we can grow the the differentiation of our platform. We're making significant investments in the technology and our capabilities and our product suite so that we can drive performance for our customers, blue chip household name customers and we can drive return on ad spend for them at a way in a way that no other platform can, the more we do that the more consistently we do that we don't have to we're not gonna worry about the fluctuations, the daily fluctuations or weekly fluctuations of this crazy stock market. We're in we will put our heads down, we will build value and again we we believe we're going to take the ad industry into the future of the post I. D. Era for programmatic Digital. It does sound to me like this environment while its seemingly on the surface it seems to be challenging for everyone else you guys have the opportunity to benefit from it because we see so many companies having to be more efficient and having to scrutinize how every dollar is spent. And if you can offer a value proposition in terms of where their marketing dollars are going to. That just makes more sense. And I imagine more clients who are looking for something like that. This is what I also imagine more clients are looking for. Obviously recent headlines have shown that that privacy that can be compromised when you're giving too much information to certain apps. We saw reports exposing grinder mental health apps also around there really around the potential leaks of privacy and information there. Can you break down how consumer privacy is protected with your machine kind of learning models? Absolutely. It's it's one of the main reasons why we're experiencing such great demand from from customers and such interest in the market because of the fact that we are predictably scoring ad impression opportunities meaning at a moment in time a piece of digital real estate on a given app or web property. We're scoring that opportunity. We're not identifying people, we're not building user profiles. We're not trying to upend personal information to an I. D. And then create an offline profile for a person and then trying to find that person in the digital ecosystem. That is not what we do. Those are the systems that run into privacy trouble as well as the cookie uh focused retargeting focused platforms where you mentioned mental health there are organizations that offer mental health services and then retargeting retargeting someone who's seeking mental health services or somebody visits a cancer website to research health a serious health condition and then there, you know, reading some leisure, uh content and then they're retargeted for cancer and they're just trying to get away from that. That's, you know, it's inconsistent with the spirit of the and frankly, the words of the self regulatory code for digital advertising, but it's, but it's but it happens everywhere in our world, that's just not the way to go. We believe that brands alienate customers when they go in that direction and that's why they're really, really excited about predictive advertising and at their instability to use statistics and not really focus as much on the individual and personal data. It's interesting because it's kind of predictive advertising model does feel like it's in the spirit of where consumers are at right now in terms of wanting to maintain privacy and not have to worry about their data and information getting leaked and used in a way that they don't understand, but also in the spirit of where clients and companies are right now, in terms having a value proposition that works for them that maximizes um you know, they're advertising and marketing dollars in terms of the future for ad theory and what areas of the company do you see kind of having the most growth opportunity moving forward. We continue to invest in vertical specific solutions. So the more that we know about the, because we're also a performance first platform where rather than just trying to drive upper funnel awareness, we really try to help advertisers convert on whatever business goal um they are trying to achieve. We talked a lot in our earnings release um this quarter about the improvements to our algorithms, some of the advancements that we're making with our price optimizers, all of these are designed to make it possible for us to drive lower cost for actions. In other words, the amount of money and advertiser needs to spend to drive a sale or an insurance policy sale or a prescription of a pharmaceutical product. So the more we can do to make those capabilities stronger and more differentiated the better. So we continue to do that vertical ization and understanding what the different, you know, what travel and tourism, what KPI is they're trying to drive and how we can use data and machine learning and measurement to prove out our values. So we're going to continue to make those investments were significantly ramping up our product and tech infrastructure um as well as our sales and marketing infrastructure. And this was, as we said at the very beginning of the year, an opportunity for adhering to level up. We were a privately held private equity owned business for for our entire um you know recent history and now is the time to go capture more of this market and we're making an investment to do that. Although I will say we will continue to pursue our goals in a profitable fashion jim before I have to let you go here as you're talking I'm just curious about this sector in this space more broadly when I think of you know predictive advertising as opposed to what we've been used to over the past decade or so. What stage is this sector? And in terms of is this truly kind of a new wave of advertising in terms of utilizing Ai and technology better than we have in the past, especially with personal data. Yeah we we believe that it is the it is the answer um predictive advertising, machine learning based scoring And last and and less of a of a 1-1 focus we believe is the answer to uh to the to the industry and it solves for many of the problems we think it could be more accountable. Um we can we can drive performance at a. Level that um cookie based and other I. D. Based targeting just can't touch. So we're really excited to tell the world about that and have a bigger stage to to tell our story. But yeah I mean I think that there are still most platforms are still using the legacy methods of I. D. Based. Um there's a lot of effort to create posts cookie unified and universal ideas and those those are great. I mean those efforts are not based on cookies and we support those efforts and work in that community as well. But we think it's a really special thing to not be dependent upon individual user i. D. S. In order to target ads, you can have it both ways. You can give consumers relevant valuable content without having to cross that line into the invasion of personal space. Jim a really interesting conversation congrats some kind of your earnings report, Make sure to come back and keep us posted on how you guys are doing Jim Lawson ceo of Adherent.