DoubleVerify Holdings, Inc. (DV) Earnings Call Transcript & Summary

All right. It's still morning, so good morning, everyone. Thank you for joining us. If you don't know me, I'm Michael Graham. I'm one of the Internet analysts here at Canaccord. Really appreciate everyone being here. But we definitely appreciate Mark and Nicola being here. DoubleVerify has been just a really great performer since its IPO a little over a year ago. Mark Zagorski is the CEO. He's got a super long track record in digital advertising. Nicola Allais is the CFO. It's really great to have both of you gentlemen here. So thank you. And maybe I could start, Mark, with you and just have you spend a couple of minutes and just give us an overview on sort of the state of digital advertising, where are we in the evolution of this industry, what are the key dynamics we should be thinking about as things unfold here over the next year or 2.

Sure. Sure. Thanks, Michael. It's great to be here. It's funny, we keep calling this digital advertising. But I think the advertisers themselves now just are starting to think of this as advertising, right? As we saw the progression of print to digital and now TV to CTV, there's really little out there that's not digital anymore. So as far as like a sector, we're in the middle of the growth phase of this. I mean it is no longer kind of an add-on to a traditional budget or something supplemental. It is the budget from an advertiser's perspective. And I think with that, what makes it interesting and dynamic is that unlike traditional advertising, which was what -- it kind of had its 3 channels that had print, outdoor and television and radio, right, in that 4 channels, digital keeps growing, right? And so advertising keeps growing, which is really I mean. And I think what dynamics that we kind of want to look at is in the upward trajectory of the space, there are constantly new venues for advertising to enter, right, because digital makes it really easy to enter into those spaces. In the old days, you actually have to build a whole new media to create an advertising opportunity. Here, we've got things like social, which advertising entered social, right? And that became a huge juggernaut. You've got connected television, which went from a subscription-based service to now folks like Netflix moving into it and Disney+ saying they're going to have ad supported tiers. So the nice part about where we sit is there's constant evolution in growth in a space that has become the norm for advertisers to put their money in. And I'd say the final thing to think about is the companies in this space because we've been here for long now, we -- there's growth that is still occurring in significant growth. So investors should be looking at growth because it is a growth sector. But because it's been around long enough and because it is the main place where advertiser is spending, there has to be profitability, too, right? So I know it used to be a few years ago, digital advertising is a growth vector. Don't worry about profitability, We're now mature enough that I think this sector and people that participate in the sector, not only can experience growth but have to have profitability as well because we're mature enough. So those are things I think that investors should be looking at. I think the growth in new sectors as well around CTV and around social, obviously, are still very high.

So that's a great intro. And we know this next question is coming, but like give us a little bit of an overview of how your company is positioned in this marketplace and tell us about DoubleVerify's unique value proposition.

Yes. So in the ad space, the role that we play is really as independent arbiter, an independent arbiter of quality and safety. So what we look at is digital ad transactions between buyers and sellers, and we help advertisers better assure that their spend and whether that spend is on things like social, meta, Twitter, Snap, Pinterest or CTV on Roku, Amazon, Hulu or the open web or mobile, that spend is secure. Those transactions are secure. So they're not fraudulent. The ads show up in a place where they can actually be viewed. So they're viewable. The ad delivery is aligned with a geography where they want to be or where they do business and that the context that it's exposed to. And whether that context is a social network or a CTV television show or a web page is the right context is brand-safe and brand-aligned with who they are. So think of us as being that software solution that enables advertisers to ensure that their ad spend is protected. It's secure, it's safe and it's in the right brand context for who they are as a company.

Okay. Great. And Nicola, maybe I'll shift to you for this one and just you guys just reported strong Q1 results, 43% revenue growth, 26% EBITDA margin, awesome numbers. What would you highlight from Q1 results from earlier this week?

Yes. I would highlight a few things. I would start with the revenue and what drove the revenue growth, which was volume more than fees. Our model is very simple. MTM, measured transactions times MTF, the fee that we charge for that transaction. And we saw volume, our MTM growth of 27%. What we like about that number is, it's well ahead of what the industry is growing at, right? We look at MAGNA, and they are forecasted for a 17% growth in digital ad spend. So we are outpacing the growth of the industry, just purely on volume of impressions that we measure. And that's really the core of our growth that we've seen and that we think we're going to see in the future, which is volume, right? We are underpenetrated. Our services are still -- our goal of verifying everywhere, we're pretty far from being able to verify everywhere. There's still a lot of opportunity there. So I would say the fact that our growth was driven by volume is a really good indicator of the health of our services and how much more growth we have there. Margin is obviously very important. As Mark said, we're very profitable. The growth comes at a high profitability rate, and we intend to keep it that way. Because of the overperformance in Q1, we actually intend to continue to accelerate our investments, both on the R&D side of things and on the commercial side of things. So growth led by volume, high profitability, and we have over $200 million of cash, which is also a very good position to be in.

And you mentioned the concept of being underpenetrated. You're sort of underpenetrated on 3 levels, but regulated: number one, you don't yet measure everything, and so that's an opportunity; number two, you don't have all the advertisers yet, so that's an opportunity; and number three, and this may be the smallest one, but your share of wallet, I guess, with the advertisers is still -- has some headroom, I think, as well.

Yes, that's right. And to just think about how underpenetrated we are, we can just talk about a few stats. Social is 15% of our revenue. Social is not 15% of our advertiser spend, right? So it's a vast majority of where they're spending their dollars. So that alone gives you an ability to kind of think about the opportunity that we have there. And so we verify everywhere we can for our advertisers, but there's still a lot of sectors that verification services are just in their infancies that will provide us for a lot of opportunity to grow on the volume side.

Okay. Great. So I want to start talking about your platforms or your set of products. And you had a great Analyst Day earlier this year. You relabeled your segments to measurement and activation, which is sort of like post bid and prebid. And now like the last 2 quarters, your activation revenue has been bigger than your measurement revenue. Just like talk us through these concepts and talk about how they work together, the activation and the measurement businesses.

Mark, do you want to take that? You want me to take that?

Yes. Yes, I'll jump on there. So as you noted, we've got the 2 main buckets of how we make money is we measure the performance of a campaign that's already been bought, right? And we also have the ability to block that impression. So for example, I'm buying an impression on a social media network, I'm buying -- I made a deal with New York Times. And I've already paid for that impression, but we flag something there that we don't like. We think that it could be fraudulent, we think that the context is wrong, we can actually block the delivery of that impression after it's been bought, right? So we call -- that's what we call post-bid or measurement, right? The other aspect of our business, you know it is, is activation, and that's prebid. That's where we actually tell an advertiser before they bid on an impression in a programmatic application whether or not they should even take the time to bid on that. It looks like a bad impression, don't bid on it. It looks like it could be fraud, it's not going to be viewable, et cetera. So we've got this kind of activation, which is prebid and measurement, which is post bid. They work together and the magic of them this working together is we're able to take the data that we get from measurement specific to a particular client and their campaigns and pump that back into the filters that they use to buy on a programmatic basis. This is the core of a product we call ABS, or Authentic Brand Suitability. ABS works dynamically off measurement data for that client and creates dynamic filters so that they don't target those users again -- or not target that type of content again. So we've got this virtuous cycle of measure, filter, measure, filter. And it drives better performance for advertisers because as we learn more from measurement, we refine the filters that they use for targeting, giving them a better ROI of their ad campaign. And we see the power of this cycle and the growth of our activation tools, as you know, they continue to now -- they make up a more or a greater part of our business. ABS as a tool set grew 55% year-over-year in Q1, revenue from ABS. And we added 100 new ABS clients in the first quarter of the year as well. So we've got not only this virtuous cycle, but a cycle that continues to grow upon each other and drive our business. The other nice part about ABS and our programmatic tools are they're premium priced, right? So they are the solutions in which as we drive more volume towards ABS and our activation tools, you'll see what we call our MTF or our management -- our managed transaction fee, what we charge per transaction actually, start to increase over time. And we saw that in Q1 where we saw a 7 percentage point increase in MTF year-over-year. So they work together pre and post, measure and filter. They drive a virtuous cycle of knowledge. And through that, we've been able to really form a very strong position with our clients as we drive better returns for their ad spend.

A couple of things to drill down into there. One is, I was getting this question from an investor the other day that if your activation product was perfect, you wouldn't need your measurement product. Of course, nothing is perfect, but it kind of raises the question when you talk about this MTF uplift, do the advertisers look at those 2 products as separate products? Or do they look at it as a cohesive bundle?

So the interesting thing about that is in a vacuum, that would be relatively true, right? We'd always learned, there's always be something to filter. However, activation now is predominantly and only on programmatic platforms. So you can't buy YouTube on Trade Desk. You can't buy Facebook on Amazon. It's DSP, right? So activation for the most part, is programmatic. Programmatic doesn't have visibility on social networks, on certain CTV applications, et cetera. So that's where we need to have measurement because in cases where advertisers are not buying programmatically, they're not doing pre-bid filtering. They're just -- they only have the ability to buy directly on those platforms, measurement still gives them the ability to block an impression before it's delivered where measurement refine how that actual property is performing. So there's a little bit of -- there's a kernel of traction there on that front, but the reality of it is measurement is far broader than just programmatically bought impressions.

And then ABS has been such a home run for the company built on your legacy core product, which was a DV authentic ad. Can you just talk about how long it took to develop ABS and just sort of like what that cycle was like? And is your development cycle getting faster as you get bigger?

Yes. So ABS was a natural spin-off of what we call our core programmatic products. So we've got a basic brand safety solution in programmatic. We've got a basic viewability product in programmatic and some fraud products in programmatic. ABS was the evolution of those solutions. And the development cycle was, I think, probably look at 12- to 18-month development cycle for solutions like that, that come out. We've seen a very rapid customer adoption. The one thing about ABS is that it is a bit of a sophisticated product. So it started -- at least it started, like with all products, your bigger advertisers, the one that want to jump into it because it does leverage the fact that they're measuring and putting those dynamic tools into their measurement from dynamic data sets from measurement into activation to make the thing work. However, now, as we've gotten smarter as the tool has become easier to use or ABS being that become easier to use, we've been able to move that from early adopters down to the core of our advertiser set to the point now where as opposed to being an upsell, ABS being upsell, we actually go to clients in now day 1 when we're trying to close them on an entire suite of solutions. It is our lead product now. So it went from being kind of a unique sophisticated product for a certain group of advertisers 12 to 18 months ago to one that was an upsell product to now one that goes in and leads our pitches with new clients as well. And I think that, again, is a testament to the fact that year-over-year, we've got 100 new clients using ABS in the first quarter.

So your next exciting product is Authentic Attention, which is still in its infancy or maybe its childhood, I don't know. But like this is such a cool kind of innovation because it measures kind of like, I guess, intent or engagement, but it's -- I don't know, it seems like it's like magic somehow. But can you just talk about Authentic Attention and where you think we are in the implementation and roll out? And could this be another blockbuster product?

Yes. So we're really excited about Attention. And just real briefly, Attention is a metric that we look at as the combination of exposure. So how a user is exposed to an ad, where it is on a page, how big it is, how long that -- if you're watching connected television, a CTV ad, how long it runs and engagement. So how long you're exposed to it crossed over with, what the level of engagement from the consumer was. Those 2 things are really a measure of Attention. And why we think it's so exciting. And going back to the first part, it's still in its infancy, right? It's still a baby wrapped in the cradle waiting to get out and crawl out for the first time. But that's a good stage for us to be because it's growing and it's getting stronger every day. Why it's so exciting for us is, as you see the issues around the great fragmentation of media, but as well as the challenges around privacy are making traditional media measurement currencies obsolete. Like you hear this every day, if you spend any time listening to what's going on with advertisers and their complaints around Nielsen or around what goes on with traditional ways of measuring reach and frequency, they've all fallen apart, right? You used to have one currency, which was Nielsen. And now the statement that is everyone talks about is alternative currencies, right? There's this world of measurement around TV and video and all platforms. It's about alternative currencies. We firmly believe that Attention is going to become a key alternative currency for advertisers. Because of those ideas around privacy, we're measuring individual users is going to become challenged. And because of the fragmentation of platforms, the ability to have a single metric, an Attention metric, which we do across social and mobile and video and connected television, is going to become increasingly important to an advertiser base that looks at all digital media holistically when they're looking for measurement. So I think Attention is very early stages for us. We believe that like viewability, which is now -- there's hundreds of millions of dollars that go into viewability as a metric, we believe Attention can be the next viewability. It took years for viewability to be seen as a standard, but I would challenge you to find an advertiser that does not have view -- that does not pay for some level of viewability measurement or viewability metric in the digital space. So I think Attention is going to become an alternative currency. I think the market is ripe for it because of what's happening with Nielsen and others who have lost accreditation and because of what's going on with the challenges to measuring individuals, i.e., reach and frequency and the value that, that has in the marketplace where cookies are going away, identifiers are going away and you need to have other proxies for measurement performance.

Well, so I'll pull Nicola in here, perhaps and just talk about when we're thinking about -- we talked about those different levels of underpenetration, and one of the key areas is just how much headroom you have within your current advertiser clients, I mean, we'll start there. And Mark was just talking about sort of adding new products into the bundle that folks are buying. Does that get to a point where the price -- the cost per impression starts to become more noticeable to the advertiser? Or just talk about how you expand your share of wallet with those advertisers.

Yes. So we -- the opportunity to expand with our customer is still high. So of all of our products, yes, 60% of our customers are using all of our 4 products, right? So there's still upside even within the customers that we have. We work with about 40% of the top 700 client -- large advertisers in the world. So there's also opportunity there. We're obviously gaining share, right? We have a lot of new customers that come in above and beyond what we spent with our current customers. But staying on the current customer conversation, ABS is a perfect example of us being able to upsell a product that is quality and that's premium. And as you just discussed with Mark, we have a lot of new products coming. So there's a lot to grow within the customer base that we have. Our products are still really cheap compared to the amount of media spend, right? So we don't represent a large portion of what they're spending on the media side of things. And that's kind of intentional, right? Like we -- as I said at the beginning, we have this MTM, MTF model. The fee side of things, we are not -- we're very focused on volume. We want to verify everywhere. We're not going to go after the fee unless it's a premium product, right? If it's a premium product, we can charge more for it. The customers are taking it. The share of wallet is really, really small. The ROI and what an advertiser is spending with us is tremendously high. And we like it that way, right, because we continue to verify everywhere for them.

So that's a good discussion. And then the next sort of topic in line there is just your penetration amongst advertisers. I think you shared on the conference call some metric like 40% of the top 100 advertisers are using ABS. But can you just talk about like how penetrated you are within the global advertiser base today? And maybe just share a little bit about how you go to market to kind of get the rest of them?

Yes. So it's 40% of the top 700 that we work with today. And the way we go after them really is, look, our businesses are key driven, right, and we win on the quality of our products, right? And so we are doing more and more enterprise sales. We reorganized the commercial team precisely to do that, to be able to go to the advertiser with all of our product suite as opposed to in the past, we were first going after measurement and then upselling them. But the success of ABS has shown us that going with the full suite of product is the right way to do it. Q1 volume growth, which I mentioned already, was driven by upsell, cross-sell as much as new sales, right? The upsell, cross-sell is really a good indicator that the way we reorganized the commercial team is working for us. So there's plenty more to do. I will give you one other example, which is even now that ABS is available on all platforms, even now that it is available and sold to most of our top 100 customers, even within their spend, right, our advertisers are saying, "All right, I want to try ABS now outside of the U.S.," for example, right? So they're still within our current base. There's a lot of opportunities to continue to upsell. And as I said, only 60% of our customers use all 4 products right now.

Okay. Great. Thank you for that. So maybe let's shift and talk about some of the channels that you're operating in, Mark. And you both mentioned earlier that you don't yet measure everywhere, but you really do a pretty comprehensive job of measuring social. I think you're all over Facebook, Instagram, TikTok. Like talk about where you are in the evolution of measuring social platforms. And is your approach different from others in the market?

Yes. I think -- look, I think we've done a really good job building relationships with the social platforms and getting them to trust us. And this has not been an easy go. If you think of how we verify transactions, there's open web transactions and then there are our walled garden transactions. For us to analyze a walled garden transaction to see what's going on, on that page or ensure that, that is -- those ads are viewable, sort of -- we have to have a relationship with that partner. They need to send us that data to analyze. And I think that has evolved over time. Several years ago, there was certainly a pushback from those platforms and saying, "We don't want you in here. We'll do this ourselves." I think very quickly, advertisers soured to that idea because it's the whole grading your own homework story. I don't trust you to tell me what's good, I'm buying from you. Let me have a third-party arbiter come in. And that's evolved pretty quickly in the space to the point where folks like TikTok, who have emerged very rapidly onto the social scene eating up a huge amount of customer time, have come with third-party first mindset, right? We want to bring third parties in. We know that to build trust with advertisers, we need to have independent arbiters out there. So that dynamic has changed all social platforms to the point where areas like on Twitter, for example, they've always had to feed off limits to verification. We're opening up a brand safety and suitability solution for them later this summer across trigger feed. Meta announced earlier this year that they're going to allow third parties to come in and analyze, obviously, the biggest part of Facebook, which is the News Feed, right? And TikTok, as I noted, has been very open there as well. So social, I think, as Nicola noted, it's still a relatively small portion of our total revenue, but I think has a huge amount of opportunity because of in the last -- literally, in the last 12 to 18 months, the very -- the dynamic shift in those platforms saying, "All right, we're going to be open to broader verification, not just little pieces of our business, but the crown jewels of our business." So the actual -- the feeds where most activity occurs. So we look at that as a great opportunity. The way we approach it is the way we approach all media, which is we have a set of standards. Those standards create a verification currency. So whether you're buying an impression on Roku, you're buying a programmatic impression through Trade Desk or you're buying an impression on TikTok, the same standards, the same quality standards, the same viewability standards, the same brand suitability metrics that we use are consistent across all those platforms. And that's super important for an advertiser and it creates stickiness for us, right, because they create a single currency upon which they trade, upon which they buy and they feel safe and secure whether they're buying on TikTok or they're buying on Roku. And that's a big deal for us and for them.

Do you have more like ground to cover there in social? Or are you feeling comprehensive at this stage?

Yes. I mean we certainly do. I mean, like I said, there's still -- those products I mentioned, so the News Feeds across all of those different platforms are yet to be launched. And I think -- so we've got work to do there. And if you had this conversation with us 2 years ago, we wouldn't be talking about TikTok. So who knows what the next emerging social platform is going to be, right? There could be something down the road. We still have places like Reddit as well, where we haven't dug into yet. So there's definitely new kind of sectors within social. I think that will continue to emerge and that we'll have to cover.

And is the gate on News Feed, is it technical manpower type of gate? Or is it integration and permission?

It's integration and permission, right? There's certainly some technical aspects to any kind of News Feed that comes on the news platforms. There, the volumes are massive, right? These interactions are massive. But the good news is we use the algorithms that we built over time, the same ontology structures to measure the content on them, and it's a volume play, but really, it's an access. And that's what takes time.

So the other big one for you is CTV, and you disclosed on your earnings call, you had some great pricing dynamics there. But can you just talk about like how important CTV is and what are some of the key things you're focused on?

Yes. Look, so many dollars are flowing into connected television. We started this conversation saying how it's transformed, the last fashion of kind of linear nondigital media into a digital media and so much more of it is becoming ad-supported. The interesting thing, though, is like we saw in display and like we saw in mobile and in online video, the same challenges that those people, that those sectors experienced with fraud, with viewability issues, with contextual challenges around brand suitability and safety, they exist in CTV. So for us, it just creates another venue upon which to push our verification tools. And the unique part about CTV is -- well, not unique. It's probably the non-unique part. It's still -- it's starting off like all digital media ads, which is mostly directly bought, right? But then so much more of it's being programmatically purchased over time. And whether an impression is being directly purchased or programmatically purchased, our solutions still have a huge value prop to our clients, right? So whether you're buying directly on a Roku impression or you're buying a Pluto TV impression via Trade Desk, the ability to ensure that, that ad is viewable, that sort of runs for the first quartile, the first 25% of the spot and the TV isn't turned off, the value and the fact that it's in the right context, that it's in a brand-safe environment, that there's no fraud, that the app is actually legitimate, you're not getting spoofed, all of those things still exist. So we see CTV as an incremental growth vector. We saw over 50% impression growth in CTV in Q1 year-over-year. And you mentioned kind of pricing dynamics there. We -- and Nicola noted that we've never looked at price as a driver of our business. We're a volume-driven business, right? We want to lower the level -- the barrier to entry to advertisers to keep friction low. However, on the activation side of our business, we just did a price bifurcation activity where we separated video pricing and display pricing on our analysis on the activation side, which we were able to kind of take a -- what we had before there was kind of a blended rate, and now we've separated out into display and video. And I think what that -- what's interesting about that is it provides an opportunity down the road for us as CTV becomes a bigger and bigger part of advertiser spend to create potentially even a third tier of pricing for connected television because the CPMs of that -- of media that are so much higher, which means every transaction that we protect, every dollar that doesn't get spent on fraud -- or every impression that's not fraudulent or that's in view is that much more valuable. When you go from -- we're saving advertisers from wasting dollars on a $2 display ad, we're doing the same thing on a $40 CTV ad. And so obviously, our value proposition continues to go up there. It gives us some pricing power. So we're bullish on CTV like everybody is. We're excited about the opportunity there. And for good or for bad, there's still the same challenges that other media have seen over time with regard to fraud and brand safety, et cetera.

Just on that pricing, I would imagine your philosophy is like we can raise the price, but the percentage of the cost of the impression is still going to be lower for expensive video ad then, yes.

For sure. It's -- I think these are marginal technology costs for advertisers.

Okay. I'd love to kind of get into your financial model a little bit. I've got like 5, 10 minutes left. And maybe start with just, your model is super easy to follow because it's P x Q. It's MTM x MTF. So let's focus on MTM, 27% growth. Nicola, can you just give us kind of a feel for the components of that growth and maybe touch on domestic versus international in your answer, if you could?

Yes, sure. So the MTM -- the majority of the MTM growth obviously came from activation, which you can see in the financials, right? Like activation is growing faster than measurement. I will say the measurement growth, right, which led to a 23% growth in that segment in the first quarter, that's an interesting gauge. We take a close look at that number as a gauge for how well we are going to do in the future because that's kind of an entry point for greenfield...

Like a funnel.

The entry point for greenfield activity. And so that remains healthy, right? That gives you a good sense for how you can then sell more products, right, and grow and expand. So we're obviously very excited about the top line growth. We're very excited about activation being as far as it is growing. We're equally excited about the fact that measurement grew over 20% because that's a good indicator of how well we'll do in the future. In terms of international, as we probably said it already, we're not overly exposed to international. So that's a good thing considering what's happening currently with the conflict. So the impact of that on our EMEA business is not very big right now. The interesting thing for us for international is that because our growth there is still expansion, the volume growth that we're seeing internationally is new clients. It's not necessarily an existing client saying, "I'm going to spend less." We're still in that phase of hyper growth internationally. And it still represents a very small percentage of our revenue, right? Our percent of revenue that's international is lower than our peers. And that's because we've got to international later than they did. And so the opportunity for us to grow and even get to their levels, which is 10 points higher than where we are today, is an obvious opportunity for us. And we're going after it, right? We're winning enterprise clients. We're both greenfields and takeaways. So we should be able to catch up on that, which is an area of growth above and beyond what we're reporting.

Did you ever segregate the MTM growth between existing clients and new clients? Like what does that look like?

We don't. It is -- we don't really have a different pricing strategy for that. The only pricing strategy that you'd see a difference on is international. There is a discount on international.

I was thinking more on volume, just like how much of your MTM growth that comes from new versus existing.

So our existing -- vast majority of our growth is existing. I mean we have -- net revenue retention are over 120%, right? So that alone gives you an indication that most of our growth is really cross-sell and upsell, right? It's an active cross-sell and upsell, but the vast majority of it is for existing.

So yes, so on MTF, which expanded 7% in the quarter, you've obviously got like a couple of things at play. I think one is, international is growing faster. It's got lower MTF, but then you're adding on a bunch of products. So like what's it like? Any other dynamics we should think about? And any thoughts on like what's a good expectation for MTF expansion over time?

Yes. I think the -- I think what we expect to see is the MTF expansion is going to continue because of product mix, right? So activation has a higher MTF than measurement, just because we're able to sell more products and some of them are premium. You will see -- as our revenue shifts more towards activation, you will see that impact on MTF. And that is the vast majority of what you saw in Q1. The price bifurcation had an impact. It was smaller. Most of that was just the fact that we are now more in activation, and that's a higher MTF. And it's as simple as that. So we expect that to continue. I think if you think of a few quarters out, the opening of new social sectors, the conversation that we had around Meta and opening the basic feed to verification will probably have an impact as well. Right now, the product is just not the same on social as it is for tag or for activation just because we don't see the main feed on Meta. So there are positive factors that should continue to grow MTF even before we decide to actually enact bifurcation between CTV and, say, every other video impression. Just the mix shift and the fact that our premium pricing product are still being sold should help MTF.

What do you think is the biggest governor on your growth rate? Is it customer wins? Is it pace of customer adoption once you get them in there? Or just how do you -- if you can like change one thing about your sort of pipeline and grow faster, like what would it be? Or is that even not a good question?

There's no bad question. No, I think -- listen, I think the -- as I said, most of our growth is upsell and cross-sell of our existing customer base. We're obviously doing extremely well on new, right? The number of new wins that we have is obviously helping us create a distance with our peers in the industry. And then I think the only other thing I would say is there will be accelerating factors to our growth, which will be opening up of brand-new sectors of the industry to verification. And going back to TikTok, Meta, those will have an accelerating factor to our growth. But the good news is it's across many sectors, and we're not depending on just one of them working.

Have you ever shared, Mark, any sort of timing expectation on the News Feed stuff?

I think Meta made it public that they are looking to bring in other partners in late this year. So for us, from a potential revenue driver, it's a '23 revenue driver. I would say, if I guess right now, probably mid-'23 is when we can start seeing real revenue against it.

And then one other like big opportunity could be a Netflix. I know there was an article about -- they were talking about they might have ads in place by the end of the calendar year. Like any thoughts on that opportunity?

Yes. I mean, look, that -- first of all, I was surprised, and we've obviously -- we were around the space, and we have great relationships with folks at Roku and Hulu and Amazon and all the platforms. I'm surprised at how quickly they're moving. It's a good thing for us. More volume is more volume. We got some questions around, "Well, does more volume suppress prices? Is that bad for the space," right, because there's been a supply-demand imbalance in CTV for a while. There's lots of demand chasing very little supply. There's Netflix and then Disney+, too, which is talking about ad tier. Does that create an issue? A, I think, first of all, there's still tons of demand out there. But B, since we are not a rev share or a take rate business, we get paid on transactions. So the more impressions that go to CTV, the better it is for us. So we think that is a nice, again, additive volume opportunity for us in the CTV side. We've launched some new products around Attention on CTV, so fully on screen, which is ensuring that an ad runs fully on a CTV screen, that it's not turned off, that it's not running in the background, which we saw some fraud around sets off and ads running in the background. So yes, we love it. We love more ad-driven volume coming into the market.

Awesome. I'm going to try to slip in 2 more before we wrap up. The first one is on international and just like any thoughts on how much longer it can grow a lot faster than domestic? And just sort of like what's the nature of the expansion of your international business?

Yes. I think smaller numbers for sure but grow -- faster growth rates. We just started leaning into international over the last couple of years. I think we've mentioned that 50% of our head count last year was outside of the U.S. -- of our hires last year, correct, were outside the U.S. So we're starting to see those investments pay off. There's definitely lots of greenfield out there that we still have to penetrate. So I think for the foreseeable future, we're going to see growth rates outside the U.S. continue to outpace what we do here. And I think we also -- if you look at one other thing to think about is 52% of digital advertising spend is outside the U.S., and only about 26% of our direct advertiser revenue is outside the U.S. So we've got a lot of catching up to do.

Any quick comment on like important countries or just where there might be particular focus areas?

Yes. So we acquired a company in Germany last year, which is helping us kind of get into Germany, some of the Nordics, et cetera. So we think that's an opportunity. Our APAC business continues to grow, launched from our -- we opened a Japanese office based on our Yahoo! Japan business that we closed. So both Japanese market plus Southeast Asia is a really nice one for us, too, and India. We've got Indian operations to support a lot of our Mondelez business there, and we continue to close some big brands in India, too. So those -- I'd say those couple of places are areas where we're leaning into.

All right. Last question. Just Nicola, maybe you could just talk about -- you have sort of Internet digital media investors and you have software investors, and your model looks kind of good on either sort of playing field. You've got like this rule of 60 sort of target model. It's 30% growth, 30% margin. You were a rule of 67% in Q1, which is cool. But like how reliable is that framework and maybe just talk through -- like I think people understand that if your growth slows, you'll be able to -- your margins would kind of naturally come up. But how should we think about the opposite, which is your growth is accelerating right now? And does that -- do you have enough stuff to spend money on kind of thing?

Yes. We -- I'll answer the last question, which is we're not short on the initiatives that we could invest in. We're obviously going to do it smartly. But these are incremental investments based on the fact that we have this authentic ad measure, right? So everything we do on the R&D side, it's kind of incremental to create a better product. We're not short of opportunities for us to invest. On the commercial side, we did a lot last year. We'll continue to do it this year. I think you kind of see a little bit how our approach is after Q1, which is to the extent that we are exceeding our expectation on growth. We're going to accelerate the investments. They're not going to be completely exotic. That's going to be close to what we know how to do well, and we're going to continue to do that. And you're right, the top line and bottom line mix, we're going to manage, right, so that we continue to invest for the future, and we're not going to let margins growth kind of get away from us.

All right, gentlemen. Well, listen, great job. Congratulations. It's fun to watch the company performing and executing, and we look forward to the future. Really appreciate you making time for us today. So thanks a lot.

Great. Thanks, Michael. Great.

Thank you. Bye-bye.