Sabio Holdings Inc. (SBIO) Earnings Call Transcript & Summary

[Audio Gap] Quarter of 2023. The financial statements and MD&A have been filed and they can be accessed through the SEDAR website. My name is Aideen McDermott, Investor Relations Associate with Sabio and joining us on today's call. We have Aziz Rahimtoola, Founder and CEO; and Sajid Premji, Chief Financial Officer. -- Sorry. We will start today's call with Aziz and Sajid discussing our Q2 results, and we will then follow it up with a Q&A session. Before we begin today's call, I would like to remind everyone that certain statements made today may contain forward-looking information that is subject to known and unknown risks, uncertainties and other factors. For a complete description of risks and uncertainties facing the company, please refer to the company's MD&A and other continuous disclosure filings that are also available on the SEDAR website. Please note that all figures discussed today are in U.S. dollars unless stated otherwise. And with that, I will turn it over to Aziz.

Good morning, everyone. How are you doing? Happy to have you on our 2Q call. One second, my Internet just pause for a second. I'm going to jump back on, based in L.A. So we've been having a lot of issues within our -- so all right. Here we go. We are able to deliver double-digit growth despite an increasingly difficult environment as peers and industry have all pointed out. Our strength was driven by unique value proposition that CTV advertising powered by our 55 million cross-screen household [graph] brings. This combined by the fact that we have 1 of the most complete end-to-end tech stacks in the space allows us to touch multiple parts of the CTV/OTT ecosystem, while delivering price leverage at good margins. Some key highlights from this quarter include strong renewal business numbers, average deal size increases and a host of accolades and recognitions, including being added to the LUMAscape, a prestigious list of top and growing players in the CTV/OTT space. In addition, we are in the final stages of the renewal and increases of our credit facility, providing us operating flexibility. Lastly, the capital raise, we also, as noted, we did a recent capital raise, which Sajid will get into, which adds additional leverage for inventory maximization. Finally, we're in a growing sector. A couple of slides I wanted to use to highlight this aspect. Next slide. So we're continuing now non-pay TV households have outnumbered U.S. pay TV households. And so this number is just continuing to increase at an ever-increasing rate. And as you can see, Sabio has 55 million households. Within the next year, we potentially have the opportunity to actually have more U.S. households. And these are validated CTV homes than cable has in terms of total subscribers in the U.S. So we're heading in the right direction. Unfortunately, cable continues to see the challenges. And we see a huge opportunity along those lines as well. In addition to that, this is leading to more time spent on streaming, which also benefits us from more advertising spend moving to this platform. And finally, it is more diverse viewership wise relative to general market linear TV, traditional TV, which also is where Sabio has positioned early on and well in that space. So the combination of all these elements certainly bodes well for us in a long-term perspective and really is contributing to our growth this quarter. And then as you could see, we're set for long-term growth and talking about some of the key elements of this quarter, I'm going to hand it over to Sajid to talk about Q2 specifics. Sajid?

Thanks, Aziz. Despite a challenging economic environment, we are pleased to report another quarter of record sales with continued double-digit revenue growth. This came on the back of significant top line gains in connected TV and OTT streaming. For the 3 months ended June 30, 2023, Sabio generated USD 8 million in sales, up 11% from USD 7.2 million in the prior year. Evidencing the stability of our sales model, 74% of sales in the first half of 2023 were generated from repeat customers. The increase was led once again by CTV and OTT business that continues to grow significantly above the competitive growth rate of our peers and the 21% growth rate for the U.S. CTV industry at large. CTV and OTT sales organically grew 57% to USD 5 million compared to USD 3.2 million in the prior year's quarter. For the fourth straight quarter, CTV and OTT streaming was our dominant sales category, accounting for 62% of our overall sales mix versus 44% in the prior year. Meanwhile, the unique analytics and insights provided by our App Science business continues to differentiate us from the pack. Approximately 38% of Sabio consolidated revenue during the first half of the year had an App Science component compared to 25% in the prior year's comparable period. Second quarter mobile display sales were USD 2.9 million, down 24% from USD 3.9 million in the prior year's period. Aligned with our sales strategy, our legacy mobile display customers continue to shift our spend with Sabio for mobile display to higher-margin mobile OTT streaming recognized under our CTV and OTT driven category. While on a trailing 12-month basis, the shift from mobile display to CTV/OTT has contributed to a 50% increase in average deal sizes with CTV/OTT as a category, representing 64% of our overall sales mix. As our closest care group continues to experience a sharp deterioration in gross margins, we continue to leverage our end-to-end CTV/OTT technology stack to protect ours. Gross margins for the quarter increased to 60% from 59% in the prior year's quarter. Once again, Sabio's use of [direct] supply and our continued ability to ship legacy mobile display customers into CTV/OTT benefited gross margins. Our quarterly adjusted EBITDA loss of USD 1.7 million was primarily driven by overhead added during and subsequent to the second quarter of 2022, which included the continued expansion of our sales and marketing apparatus. Sequentially, second quarter operating expenses normalized for commissions were flat in comparison to the first quarter of 2023. Cost efficiencies implemented by management offset incremental headcount additions to our sales force to position ourselves for 2024 U.S. election. We expect further cost efficiencies to take hold in the quarters ahead as cost reductions implemented during the second quarter are fully realized and additional reductions by management are implemented. Our ability to maintain strong gross margins combined with improving efficiencies in our cost structure, positions Sabio well for adjusted EBITDA gains in the second half of the year and into 2024. [indiscernible] the thoughts of our closest peer group, rising interest rates have [created] a more deliberate ad market. Meanwhile, the political and [advocacy] demand that accelerated in the second half of 2022 may create difficult comps for the rest of 2023 before the [material] benefits of the 2024 election cycle take hold. We ended the quarter with USD 1.7 million in cash on our balance sheet. And subsequent to quarter end, we structured our cash position with the closure of a non-brokered CAD 1.7 million convertible note offering. Finally, the renewal of our loan facility with Avidbank continues to progress well. Amendments under an executed term sheet included a potential of USD 3 million increase to the facility, subject to approval from the banks on committee. At year-end, we had 46.9 million shares outstanding, 4.2 million warrants outstanding and 3.9 million options in RSU outstanding, with insiders owing 64% of the company. Now I'll turn things back to you, Aziz. Thank you, maybe you are on mute, Aziz.

Sorry about that. Thank you, Sajid. As Sajid -- as we mentioned, we are positioned well with our end-to-end offering. Having said that, we are dealing with as our peer group has mentioned, we are dealing with uncertainty in the macro environment. This is -- this is having an effect with major advertisers that we work with, with their level of uncertainty across the board. And this is limiting our visibility as it relates to Q3 revenue relative to the same time last year. The good news is we continue to retain logos and add additional logos providing us an opportunity to accelerate out of the downturn the ad ecosystem is currently experiencing. In order to be prudent in these uncertain times, we will be undergoing additional cost reduction initiatives with the objective of returning to positive adjusted EBITDA in 2023. Just [as] we delivered since 2020 and we dealt with during COVID, we understand what it takes to use the levers on our -- we have at hand to maximize revenue and to return back to profitability, while continuing to position ourselves in the CTV/OTT growth story ahead of that, we still believe is in the early innings. With that, I'll hand it over to Aideen to take questions. Thank you.

Thanks Aziz and Sajid. We will now open up the call for Q&A. So analysts have been getting speakers permission. So please raise your virtual hand, and we will take questions. Okay. So first up, we have Daniel Rosenberg from Paradigm.

My first question was around the balance sheet. So there were a few announcements about subsequent to the quarter. So I just was wondering if you could walk through how we should think about how you'll be allocating capital, especially given in the Q4 time frame when the cash flow comes in, in that seasonally strong quarter.

Yes. Thanks, Daniel. That's a good question. And you touched on a good point. We did raise CAD 1.7 million after quarter end through a convertible note offering. And that was really to prepare ourselves for next year in the 2024 election cycle and a higher demand period. Our Vidillion business continues to grow. We saw a pretty [doable] increases in our supply and demand integrations that were noted in our MD&A and in press release. And as part of that traction, we are continuing to add more higher-tier publisher onto the platform. And as we get those higher tier publishers onto our platform, there are certain expectations that the company that they partner with has sufficient working capital levels. That's really the focus of that offering was really just to raise our cash reserves to put ourselves in the best position to compete.

And Daniel, to add to that, we feel like we have what we need in terms of to continue growing. The company, in fact, if anything, we're going to look at some additional cost-cutting measures, but we don't believe there's a need to -- we think we're going to -- in Q4 in that key period, we're going to be able to keep cash on hand, and not allocated to other things.

And so maybe a follow-up to that to that point right there, in terms of allocating to other things, would that be -- is there a target debt level that you want to be at? Are there growth opportunities that you'd really be looking to just maximize? What's that balance of where you see investment versus balance sheet shoring up the balance sheet, let's say.

Yes. I think we're going to be more focused on shoring up the balance sheet. I don't think we really have a desire to look for growth opportunities at this point. I think there is a level, as I mentioned, in terms of visibility in the marketplace. It's limited we just want to position ourselves as we come out of this currently challenging environment to be ready for what entails. And we think there's going to be opportunities early part of next year to potentially pick up some companies who won't have a strong balance sheet. So really, that's our focus in Q4 is to shore up our balance sheet and really, once again, watch costs all across the board.

Yes. And to that end, you may talk about growth opportunities. We actually feel that we're very well positioned for the growth opportunity ahead in 2024 in that U.S. election cycle. So I think that as Aziz touched upon right now, our focus will be comping a more efficient company, [noting] that we have made the investments to prepare to really maximize the opportunity ahead.

Understood. I appreciate all that context. My next question is just around the shift in legacy mobile to CTV. I was wondering if there's been a change in the pace of that shift from the customer front. And then maybe do you anticipate that shift to kind of persist? How should we be thinking about that as we model the business?

Yes. So I think if you compare the first quarter and the second quarter of 2023, that rate was pretty consistent by around 23% or 24% decline. What we would expect going forward is probably as Aziz touched upon the uncertainty in the overall economy, particularly as it pertains to Q3. Is that shift will be more pronounced probably in the third quarter, going back to more normal levels in the fourth quarter and beyond.

Thanks, Daniel. Up next with questions, we have Kiran Sritharan from Eight Capital.

I want to start, can you comment on some of the new logo activity in the quarter? Like is there any verticals that you call out that have seen some strength here? Just some commentary on that would be helpful.

Yes. In 2Q, we did see a return in automotive in Q2. Having said that, we are concerned about some of the overhang in clouds as it relates to the UAW strike. There's automotive worker strike that's potentially around the corner that could have some potential effects. We saw growth in travel. We did see gains in CPG. We saw -- in Q2, we saw some level of normalization. Having said that, some of these headwinds that we're experiencing currently in Q3 are not consistent with [naturally] what we saw in Q2. And so it's been this really interesting kind of time. Having said that, we feel like we're seeing more traction now in Q4. So the visibility in Q3 is limited. There are some things that are still obviously in flux. And some advertisers are really looking to kind of potentially punt to Q4, move that -- move to [ dollars ] in Q4. But Overall, we saw a solidification in Q2. Having said that, it's been this -- we do believe that interest rates are finally really taking hold, especially as it relates to marketing budgets, and that's having some effect in Q3, but we believe that some of these advertisers are just waiting and also negotiating upfront deals. We're having a lot of good conversations about upfront deals now. Some of our peers, including Roku came out and said their upfront deals are smaller than they were. They have less upfront deals than they did previous year. We're relatively new to the game for -- with upfront deals. So we believe we have some upside opportunity as it relates to Q4 and going into next year. But right now, Q3 is just -- it is all over the place.

That's helpful, Aziz. Now moving on, looking at your margins for the rest of the year. How do you see the supply side cost evolving? Would it be fair to assume that you might see better pricing given the environment on the cost there as well?

Yes, it is possible. And we do believe that there's -- and part of this capital raise that Sajid alluded to is to give us some additional leverage to do that. So we do think there's an opportunity certainly in Q4. Having said that, keep in mind that there will be some election spending taking place at the end of this year. So you got the Republican primary portion, which should start kicking in towards the end of this year, which will affect inventory prices. So -- and part of -- usually what you see is advertisers get out of the way of political and they don't want to really be around political. What I believe is happening is some of these advertisers are saying, okay, let's -- yes, there's going to be some political spend, let's negotiate our Q4 and going into the 2024 cycle, and then we might take some pauses in between the key periods of that political spend, which should happen, if you think about the primaries, they're early January, they start off early January. So they will be starting to have some spend in December. So that combined with retail season is going to be a little bit challenging. So yes, we think there's some opportunities for our supply. But quite honestly, what we're seeing more than price opportunities as we are seeing the opportunity to integrate directly with some big partners. And to us, that has more value than just simply price because these are major players in the space who are integrating directly with us, some of which we hope to announce in the coming weeks. That is -- that, we believe, is a bigger opportunity. They see us as a demand source that can help push additional revenue to them. And these are big players, which is strategically important for us.

Understood, Aziz. And I'll ask 1 final here. With the new programmatic platform you guys announced, what are your early thoughts on the go-to-market there? Do you see it being available to both your current and new customers? And also some commentary on the margin impacts there would be pretty helpful.

And I'll have Sajid talk about the margin impact. But as it relates to how we want to go to the market, look, what we're known for is our insights, our cross-screen capability, our service and then also our creative. And the programmatic offering we believe, is an alternative for some people who don't need any of those additional capabilities. So it's not a zero sum in our minds, and we're just going to make it available because some of our key clients have asked us to consider having programmatic in addition to what we're offering with managed service. So it's not a zero sum in our minds. And we will just simply offer that out as an opportunity because -- we've had a client tell us. We're leaving money on the table. We could actually give you even more than what we're giving you today, and it's a major client. And we would love to do that if you can have programmatic because some of the spend is only allocated to programmatic. Sajid, anything you want to add on the margin side?

I think that speaking of margins, I think on a net income EBITDA kind of basis, the margin will be kind of neutral. On a gross margin basis, you might see a bit of deterioration on a part it's just for the programmatic business, but that business takes less OpEx to run, right? So it's sort of more of a going through your very bottom line. And so you may see a bit of pressure on the top cost of sales margin, but those benefits will still be there in the bottom line.

And keep in mind, when -- even though we have not been talking about programmatic, when we purchased Vidillion in April of last year, this is what we had in mind. We knew that, at some point, the space is going to continue moving to programmatic. We are playing in the programmatic space through Vidillion, because we're actually providing supply to programmatic players in the space today. And we believe -- so we are technically playing programmatic today. As it relates to our offering, this just helps us that Vidillion acquisition in the additional direct supply we have in there. We have 1 of the most highest percentage of direct supplies as a DSP in the CTV/OTT space today. And that Vidillion acquisition helped us do that. So we are excited about the opportunity of that programmatic plays. And the key to that is you've got to have good quantity of quality supply to make that all work.

And next up, we have Neehal Upadhyaya from iA Capital Markets.

Maybe I was just wondering if you can provide some additional color on the cost initiatives that were implemented last quarter and continue to be implemented?

Yes. And so I think that it was really twofold, right? We have cost efficiencies on the operational side and the technology infrastructure. That's a good place. Some of them were identified from our acquisition of Vidillion. So there were certain cloud computing synergies that we enacted and otherwise. And there's also headcount reductions as well. We reduced about $1 [billion] of head count, some of that occurring during the second quarter. That's not going to be fully felt until the third quarter and beyond of 2023. And I think a lot of these efficiency that we've been talking about. We've been talking about efficiencies in the third quarter of 2022, right? We basically said at that time at the end of the quarter 2, we ended the heavy investment in our infrastructure. And if you're a casual investor looking at our other statements, you may see double-digit OpEx growth, right, in 2022. And when you think about that, 2022 was again 2021 comparable when we're still kind of the company. 2023 in the first half of the year, we saw some moderation done, but not comparable with against the heavy investment period in 2022 after we got our RTO money. I think is where you're going to see really the benefits of the cost initiatives in Q3 and beyond. If you look at our OpEx in Q2, it's very similar to our OpEx rate in Q3 last year, normalized for commissions. And what we're telling you today is that we're expecting sequential declines going forward. So I think you're going to see a lot more stability and restructuring efficiencies going forward.

Perfect. That helps. And then I guess I was just wondering if you could provide additional color on the App Science deal that was signed with the media agency that represents the global automobile manufacturer. Any details around deal size and how the agency chose the App Science offering would be helpful.

Yes. And it was -- deal size was relatively small. We haven't said any specific publicly yet, but what it was is an opportunity to help us fine-tune our product. And what excites them about what we're doing on App Science Is we're the only insights platform that is focused in on the diverse market space. If you think about it, you got Nielsen who -- and I haven't looked at the recent numbers. So -- but Nielsen from what we've seen in the past roughly has about 20,000 to 40,000 households that account for Asian audiences, for example. In our case, we have 55 million households across the U.S. Of that 55 million households, we actually have agents split up into different categories of Asian, Indian, Filipino, Chinese. And so we could start really kind of starting to separate that out. And -- and that's not just for Asian that's obviously Hispanic and African-American. And so where they see the opportunity and is an additional understanding of that audience marketplace, not only for the major automaker brand, but for other clients they have. And that's just the first portion of that agency, and we're literally -- what's great about that relationship that we've built is we are working closely with them to make our platform. In fact, we announced that -- we have now put in some AI capabilities in App Science, natural language AI capabilities that we're just testing out today. So we're getting an opportunity to really kind of push some of this technology capability out to the marketplace. All the while, we are now getting an increase in actual publishers who are integrating App Science. Part of our challenge in App Sciences, unless you're fully integrated with enough publishers, you can't provide enough insights across the ecosystem. That problem is being dealt with. And the fact we are -- we had a record number of integrations this last quarter. And so the way to think about it is we're literally laying the pipes for App Science. And that's what these next couple of quarters are laying the pipes getting the integrations and then going into the marketplace along with this major automotive brand who has said to us, they are excited about what we're doing. We're working closely. We're looking at a discussions of a renewal and adding some additional components to that and in other categories, including CPG and political. So we're really excited now that we're having this scale-up of our publishers who are integrated with App Science. So it's still -- I know it sounds like we've been talking about App science, and we are now making some great traction, but it takes a little time from [building person]. The good part is it doesn't cost us a whole lot to continue integrating these publishers. We have the capability, and so we don't have to add a lot of OpEx or anything to that. We're just going to continue integrating publishers and become 1 of the -- in terms of the diverse space become a leader by being integrated with more diverse publishers than any other platform. That's really what we're attempting to do.

Perfect. No, that helps. And maybe 1 last 1 for me. In terms of the broad market Aziz with Disney now offering ad-based subscriptions and most others likely to follow suit at some point. I was wondering if you were in either talk with any of those platforms, as I'd imagine the App Science piece would be fairly compelling to them at some point? And if not, do you view that as an opportunity?

Yes, absolutely. And we've had some conversations. I mean, I think -- as you can imagine, right now, a lot of these major entertainment companies are doing with a lot of challenges with the SAG strike going on overall, and they're really kind of in this challenging time. We're doing a lot of layoffs, heavy layoffs. So we've had some conversations, but there's a lot of changes going on in that world today. But we do see an opportunity. If you can imagine everyone who has a streaming ad-supported streaming platform needs better insights, they need more demand for that inventory. And we're in a unique position where we're an independent player. We can basically provide that capability to build. So yes, we will have some further conversations. But as we continue to grow, you could see, as Sajid mentioned, we once again grew market share in the CTV/OTT space. We're going to continue growing market share in the CTV, even in a bad environment, right? Yes, we are seeding mobile. We believe CTV/OTT, as we said numerous times, is our opportunity, and that is where we continue gaining market share. And if we continue gaining market share, we integrate with all of these publishers on the App Science side, that creates a big opportunity for everyone who has an ad-supported vehicle.

And up next, we have Gabriel Leung from Beacon Securities.

A couple of things. First, just to confirm on the cost saving side of things, you mentioned you're expecting about $1 million of cost to come out. So was that $1 million annualized? Is that $1 million per quarter?

Yes. So that was $1 million annualized. We've already enacted on the -- that was -- on the headcount side of the coin. We are expecting some further synergies to be enacted as this quarter progresses, we become a more efficient company overall.

We would -- we've identified more cost-cutting opportunities, and we're going to do that in the coming weeks.

So how should we think about that from a dollar perspective than beyond the $1 million you've already announced?

Yes. I think we're still doing an analysis around that front and there'll be more news to share shortly. But I think is that what we'll tell you is that you're going to see sequential declines from our current operating infrastructure. And again, touching upon the comparison to last year, right? We're already at close to Q2 2022 OpEx rates, right? So we're expecting to come under that in -- as the quarter progress.

Got you. Is there any particular areas you guys are focused on, on trying to drive some of those synergies?

Yes. So I think that it's -- we're looking across the organization. There are opportunities across the spectrum. We -- I mean we're not going to cut to the bone. We're still a growth company. We still see a big opportunity ahead. This is basically just becoming a more efficient company as we consume ourselves ahead of next year in the years afterwards. As far as individual departments, I would expect all the permits to be cash in some form or other.

To Sajid's point, we do -- we are still very much in growth mode. Having said that, we do believe there's efficiencies to take place. So we want to kind of balance the 2 worlds -- carefully overall. But we will see, as Sajid mentioned, sequential quarter-to-quarter declines in OpEx.

Got you. And just looking at growth for the second half of this year, obviously, there's a lot of variables in play. What's happening, obviously, [indiscernible] mobile side -- the macro overall. I'm curious when you sort of look at -- given the visibility you have right now in Q3 and I get into early Q4, do you anticipate you'll be able to show overall revenue growth in the second half of this year versus last year?

Go ahead Aziz.

It's still -- I'll tell you, Gabe, this is probably limited level of visibility we have has never been this limited. And at this point, we're still doing some assessments on our end as it relates to Q3 and Q4 what we're feeling. I mean, overall, we do believe there could be some additional opportunities coming in from political. But as it relates to the macro environment, specifically with brand spending, we are we're fortunate that we work with some major brands. Having said that, a couple of brands of ours that we work with are dealing with some macro environments and their own cost restructuring, including in tech and in the automotive space. And so we're still a fairly small company, working with some major brands that obviously are giving a decent -- some portion of their revenue to us. That is having a disproportionate effect as it relates to what we're seeing, the visibility we're seeing for Q3. We believe, and we've been told by them that some of this visibility will come to an end potentially towards the end of Q3, and then we'll see some real kind of clearing of the clouds in Q4. But until we see this all happening, we really are kind of in this spot where we're just -- we're fortunate to work with these big brands. Having said that, when you're a small company and you work with some major brands and 2 or 3, last year, especially, we're dealing with some really challenging comps because 2 or 3 of those brands really came in beyond our expectations last year. And so we're dealing with some challenging comps in that respect and specifically in the automotive and in the advocacy space. So that -- overall, obviously, that is our aim and our objective. Having said that, we don't have enough visibility yet, especially as it relates to Q3 and going into Q4, where things stand.

And it's Sajid. If we take a more prudent approach as we kind of manage through this uncertainty that the overall narrative hasn't changed. We're still in a fast-growing industry, CTV/OTT. We're not only [indiscernible] of a rising industry, but we're outpacing the industry as well, right? So we're not going to do anything to impair our future growth. We see a big opportunity ahead. But that said, there definitely are rooms for more efficiencies.

Unfortunately, not all growth is linear. So it's like -- it's a -- sometimes it's a jagged situation where it's like, yes, we see this growth, then we're seeing overall macro environment pullback, which affects everyone. And some others as I think 1 of the analysts are kind of pointing to, the mobile pullback is more severe in general in the marketplace. And if you look at that -- and what's happening in the mobile marketplace, there's a big pullback in mobile in general across the board in desktop and then of course, traditional TV. And of those categories, CTV has a biggest opportunity. Having said that, when the broader categories sneeze, the new and upcoming categories of CTV, which is still a small percentage of overall spend gets a cold. So there's some challenges on that overall.

Got you. And then, Aziz, just -- I was just hoping if you could give us some sort of big picture commentary on what you're seeing in the space. And I'm talking specifically about maybe on the -- on your traditional DSP side, whether you've seen any change in behavior from your big agency customers in terms of -- especially in this kind of market consolidation of buying with certain DSPs and how that might impact pricing or demand for you guys going forward? And then on the supply side, whether you're seeing any same thing, any changes in behavior on publishers, maybe some of the larger publishers going direct. And how that might impact your supply business going forward as well?

So on the DSP side, we're not seeing a whole lot of change. I mean it's been pretty consistent. The only change we're seeing in DSP. And despite the talk about a lot of consolidation happening, we don't believe it's taking place in CTV/OTT right now. We believe that what we're dealing with on the DSP side is more of a macro environment situation. And certainly, there are 1 or 2 advertisers of ours who've asked us to now make sure we have a programmatic offering that they could then also leverage. And so that's the change we are seeing. There is a request for us to provide programmatic in addition to what we're providing today. And that is being necessitated by a lot of last-minute deals. So going back to kind of the behavior, a lot of last-minute deals are happening within 2 weeks, hey, listen, we decided to allocate this budget. Here we go. And we're seeing this, and we're not the only 1 seeing this across the board, the industry is a just-in-time kind of situation where the planning cycles are compressed which leads -- which obviously benefits programmatic and some capacity because the ability to switch on and off quickly is a play. As it relates to the SSP side, we see a continued opportunity there. In fact, if anything, we have been speaking with some major studios and providers of content distribution about for us to obviously tap into the inventory that they have. And these are big players in the CTV/OTT [space], not other DSPs, we're talking about actual like end companies who have it. And they are very open to us integrating with them. So that provides us an additional opportunity in supply for Vidillion. And if you could -- if you can imagine, Vidillion today, as we've talked about, is really used as a tool for us to manage our margins. To get the most cost efficiency to pass on to our clients on the DSP side. That's really what it's being used for. The other opportunity that is coming up even more so as other SSPs say, "Oh, we're not going to sell to ad networks, we're not going to provide to third parties, we're going to provide to third parties. And so we are getting a record number, as Sajid mentioned, we have a record number of DSPs that have integrated with us. And they're -- the dollars are not huge yet, but they're going to start scaling up as we get into the selection cycle next year. So we are set up -- we are set up well from the DSP side, both from a managed service and then eventually a programmatic offering by the time election cycle comes around next year. And I'm talking about the general election, obviously, not the primaries. And then separately from that, we're set up in the -- to provide supply to people when they need it going into the general election next year. So we set all the things, and it's not all about political, quite honestly, we believe that the consumer is fairly healthy. And we think that the challenges we're seeing in Q3 are more of a delay than it is a cancellation. Our advertisers are still with us. We haven't -- as you saw by our renewal rate, we continue having great conversations. We have not lost any -- we're not losing any major brands, any we have not lost any major nameplates in the last couple of quarters. So it's like -- nothing like that is happening. It's not like, oh, we're going to be using the Trade Desk, we're not using guys anywhere. In fact, we are getting a record -- we got a record number of nameplates that want to test this. I think people want to have additional options. They do not want to just use the Trade Desk and have another Google on their hands. They don't want to do that. They want to have a diversity of DSPs and supply partners that they have. Sorry, I know that's a big [indiscernible] , but that's really what we're hearing across the board. And not only just in the U.S., by the way, we talked about we recently had someone join us in the U.K., and we're seeing the same thing out in the U.K. and European markets. A lot of interest in what we are offering as an alternative to the key players that they see over and over again.

No, that was great. That's super helpful. Just 1 last question for Sajid. When do you expect that the final approval for the term loan extension to materialize?

Yes, I expect between 30 to 45 days [indiscernible]. The bank is in the best the process for us. They are very keen to renew as well. They -- we are an outlier in their book. As we talked about before, the advertising in general is doing it with a very uncertain market at this time, and we are actually faring a lot better than some of the other companies in their portfolio. So I think that we did -- sign a term sheet with them. So that's good news, and I'm looking forward [taking] this up in the days to come.

And we did have -- as Sajid being the main CFO is we did look at alternate options. We have other options that are available at our disposal, but we really like what in the relationship we have with AvidBank, and they really have been very responsive to our needs. And so -- because of that, Sajid is very close to finalizing some details there. But we did have alternative lenders who are very interested in kind of playing with us on this. So -- and which is a great spot to be in. I mean, in this environment, to have multiple options and then it just speaks to the work Sajid and his team are doing. I mean we have built some great relationships across the board.

So that's it for all the questions today. So I will just hand it back to Aziz for his closing remarks.

Thank you, Aideen. As we mentioned, we are in a growing industry. We're set up well both with our end-to-end technology across the board, touching every aspect of CTV/OTT. Having said that, we are dealing with headwinds as it relates to the macro environment. And we are seeing the challenges of that macro environment in Q3, but we do believe there's a clearing of cloud that are happening in the Q4 time line. So overall, we are optimistic of our long-term growth and we're excited about the technology and the capabilities we have to get there. So on that basis, thank you for joining us for the call and look forward to chatting with you again in the next couple of quarters.