ironSource Ltd.
Q3 2021 Earnings Call Transcript

Published: 10 Nov 2021

Operator:

Hello everyone, and welcome to the ironSource Q3 Earnings Call. My name is Daisey, and I will be coordinating today’s call. You have the opportunity to ask a question at the end of the presentation. I’ll now hand over to your Daniel Amir, Head of Investor Relations, ironSource. Daniel please go ahead.
Daniel Amir:

Good morning everyone and welcome to ironSource’s third quarter fiscal 2021 earnings conference call. My name is Daniel Amir, VP of Investor relations. With me today we have Tomer Bar Zeev, Chief Executive Officer; Assaf Ben-Ami, Chief Financial Officer; Arnon Harish, President; and Omer Kaplan, Chief Revenue Officer. Before handing the call over to Tomer, let me remind you that this call is being recorded. A replay of this recording will be made available on our website shortly after the call. We have posted the earnings release and the accompanying slide presentation on our Investor Relations webpage at investors.is.com. Elements of this presentation as well as statements we may make on this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our public filings with the SEC that could cause our actual results to differ materially from these forward-looking statements. For more detailed information, please see disclaimers in the earnings materials relating to forward-looking statements that involve risks, uncertainties and assumptions. For a discussion of some of these risks, uncertainties and assumptions please refer to ironSource's SEC reports. Other than as required by law, we assume no obligation and do not intend to update any such forward-looking statements. We also note that the financial information discussed on this call reflects estimates based on information available now and could differ materially from the amounts ultimately reported in ironSource's other SEC filings. During this webcast, unless otherwise specifically noted, all comparisons are year-over-year comparisons with the corresponding prior-year period. For financial information that has been expressed on a non-GAAP basis, we've included reconciliations to the comparable GAAP information, other than with respect to adjusted EBITDA guidance for which we have not provided a reconciliation because certain items that impact adjusted EBITDA are out of the Company's control and/or cannot be reasonably predicted and, accordingly, a reconciliation is not available without unreasonable effort. Please refer to the tables and slide presentation accompanying today's earnings release for those reconciliations. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. With that, I'd like to turn it over to Tomer.
Tomer Bar Zeev:

Thank you, Daniel. Hi, everyone, and thank you for joining us today for our Q3 earnings call. It’s been another great quarter for ironSource, not only from a financial perspective, but also in terms of the meaningful expansion of our platform offering and the value we deliver to customers. We also recently announced two strategic acquisitions which we’re very excited about, and which, once closed, will serve to deepen our platform offering further, as well as increase our scale in the market across both apps and games. We’ve maintained our leadership position in the App Economy, with some of the largest apps, games and telcos using our platform to grow their businesses. Last quarter 86% of the top 100 most downloaded games across both the App and Play stores used our platform to grow their businesses, and we signed a strategic partnership with one of Europe’s leading telecom operators, Vodafone. Before I dive into the platform and business highlights in more detail, I’d like to share a few quick financial highlights. In the third quarter we achieved record results with total revenues of $140 million, up 60% year-over-year. This was primarily driven by continued momentum across both the Sonic and Aura solution suites, and market share gains as we have seen an increase in the use of our platform by both existing and new customers. For the third quarter, adjusted EBITDA was $51 million, up 70% year-over-year in the same quarter last year, and that’s consistent with our long history of providing profitable revenue growth while benefiting from operating leverage. Finally, we saw further evidence of the stickiness of our platform and the value it provides to our customers, with a dollar based net expansion rate for the quarter of 170%. As a quick reminder, the ironSource platform is designed to serve the two core constituents of the App Economy, app developers and telecom operators. It’s made up of two solution suites
Assaf Ben-Ami:

Thank you, Tomer. We are excited to deliver another quarter of excellent results. Before diving into the results I want to start with a brief reminder about our business model. Our revenue consists of three main drivers
Operator:

Thank you very much. Our first question is from Colin Sebastian from Baird. Colin, your line is open. Please go ahead.
Colin Sebastian:

Thanks very much. Good morning and good afternoon, everyone. I guess first Tomer with the consolidation of game development and advertising kind of changing the competitive environment. Is this an area where you're able to capitalize from these trends from a business development perspective? And then secondly, would you say at this point that the iOS IDFA issues are, are a net positive to the platform as developers have to broaden out their customer acquisition and monetization efforts? Is that fair? Thank you.
Tomer Bar Zeev:

Hi, Colin. Great to hear from you again and thank you for joining today. So briefly on both points. So indeed we've seen a lot of consolidation in the ecosystem both around the game developers among them and also the different platforms, adding additional solutions to their stack ironSource. We announced two acquisitions Tapjoy and Bidalgo which goes very much in line with our strategy of growing both organic and non-organically. I do believe we will continue to see further consolidation with two main – I would say two main narratives expanding. We would see game developers acquiring other game developers to expand the offering, their portfolio of games. We would see some casual developers going into hyper casual. We will see the other way around hyper casual and maybe growing into casual, and we will see more of those. And I believe we'll continue to see the platforms growing also non-organically, adding additional solutions. As for ironSource we repeatedly said that we as a platform, as a business platform for the App Economy are going to continue focusing on expanding the platform, expanding the solutions we add to the different solution suites we have in within ironSource's platform. So we can better serve our customers, helping them concentrate on creating great content, great apps, and relying on us to grow their business. And I believe this will – we'll continue to see that in quarters ahead. As for IDFA, as I've also repeatedly said in previous calls, we continue to pay close attention to every development in that area, in the ecosystem. I think it's – it becomes clearer and clearer today that some companies are net beneficiaries of the changes, some are a bit less. And again, as I previously said, we so far, thus far we've seen IDFA being a net positive. So ironSource still a bit difficult to quantify exactly. And we – when we look a guidance of continue giving, and when we contemplate into the future, we are still taking into account potentially short-term negative effects of IDFA though we still haven't seen them for the last three quarters also. So we are still budgeting those IDFA still not completely over, but it's even clearer than ever before that in the long-term ironSource as we already stated is going to be one of the platforms clearly beneficiary from IDFA.
Colin Sebastian:

Okay. Thank you Tomer.
Operator:

Thank you very much. Our next question comes from Bernie Mcternan from Needham & Company. Bernie, your line is open. Please go ahead.
Bernie Mcternan:

Thanks for taking the questions. You highlighted in the slide deck, you work with SYBO on Subway Surfers with, in that bidding driving greater efficiency for the customer. Can you talk through how unique and differentiate your product is for in-app bidding relative to peers? And then just to follow up on Vodafone, appreciate the commentary that you provided in the prepared remarks, but how should we – how should we be thinking about this revenue stream starting off and growing over time and how big of an opportunity can it be?
Tomer Bar Zeev:

Sure. Hi, Bernie, and thank you for joining as well. Omer will like you, the rest of the first part of the question, and Arnon you can address the second part on Vodafone.
Omer Kaplan:

Sure. Hi, Bernie. So regarding inner bidding so we've also spoke about it in our previous earning call. We today now in our mediation has basically completed the migration to primarily work on inner bidding or to allow our customers to use our mediation and to work with inner bidding with all of their relevant network partners. And it gives several advantages, right? So in addition to increasing the overall revenue, any CPA, like you've stated in the Subway Surfer example, and we've also seen a very big increase in efficiency, right? When you're using inner bidding it really, really save some of the manual work that in the past developers needed to do to manage our monetization, so that's a great value. We are – it's definitely something that we've led the marketing that migration and we're happy to be one of the platforms that are really leading this and having the majority of everything done in a mediation working through inner bidding.
Arnon Harish:

Hi, Bernie. Regarding Vodafone, again, Vodafone is one of the largest telcos in Europe, and we are obviously starting the partnership with them. It's going to fully materialize in 2022. We're going to integrate more and more solutions into their devices. Then obviously it's going to be meaningful. We're continuing to add additional product, both that are current in the market and ones that we are developing to our kind of platform, allowing us to do more and more with each and every user that we have in our platform. Thank you.
Operator:

Thank you very much. Our next question comes from Clark Lampen . Your line is open. Please go ahead.
Clark Lampen:

Good morning. I have two please. The first is on Sonic publishing. I understand you guys don't want to provide a formal revenue breakdown, but I'm curious if you could maybe update us on the number of submissions you don't gain but you partnered with year-to-date, and then also the performance of some of those titles? Second question is on Apple and Epic. Apple's request for a stay was denied recently. I'm curious if you guys might share with us what you expect the impact to be, if anything on the gaming space and your customer's ad budget. Do you envision that in a scenario where gross profits are up, that most of those would be reapplied on marketing and on your platform as well?
Tomer Bar Zeev:

Sure. Hi Clark. This is Tomer. I would start with your second question, and Omer you can probably give a bit more stats on the publishing solutions. I think the – the, we've be nice about this question about Apple and Epic and our, what we, our approach here is of course will all for full democratization of the App Economy. So we believe developers should have a choice who they want to work with and how, and more choice is always better and we are all for competition. This is part of the values of ironSource's platform, right? The full democratization of content creation and so we very much believe in that. As for how I think these might evolve into practically what it means in terms of numbers and who would benefit from that? So at the end of the day, there is one basic truth, which is whenever developers can generate higher revenues or whenever their lifetime value, the lifetime value of a user is higher, which this is what potentially can happen here. Developers will be able to spend more into user activation, right? Because each user will potentially generate more revenues since they will be gaining, gaining more, more revenue. They will be able to spend that in our platform and others. So clearly this one way or the other, right, either it will see more competition or we will see Apple reducing the different fields that they charge. Delta, these additional revenues will flow back into the App Economy, usually in the form of additional user acquisition, because of a sudden user will be worth more for those game developers and they will be able to spend more within the platform. So I think that's a very – that's a clear assumption that I believe we will see. Omer, you want to comment on publishing?
Omer Kaplan:

Yes. Sure. So just within our publishing product we launch our publishing product in February 2020, and we've seen great success with it so far. And up until the end of Q3, we've launched 35 – we've published 35 games. 25 of them reached the Top 10 most downloaded games in the store. And our vision around our publishing product is really to completely automate the process, right, to completely productized publishing and allow indie developers can choose the other elements of our software independently to use our publishing product in that way to automate the entire process with them, and we are continuing to see great success with that product.
Clark Lampen:

Very helpful. Thanks.
Operator:

Our next question is from Mike Ng from Goldman Sachs. Mike, your line is open. Please go ahead.
Mike Ng:

Great. Thank you for the question. I just have two. First, I was just wondering if you could talk a little bit more about the non-gaming mobile ad ecosystem and some of the differences between gaming based apps in terms of monetization and ecosystem. So for instance do non-gaming advertisers use a lot – utilize different ad formats or work with a different set of ad publishers. Are you seeing them advertise on gaming? And then second, I was just wondering if you could talk a little bit more about the fourth quarter revenue guidance. Do you see a typical seasonal uplift and is the guidance burdened by IDFA headwinds? And if you could quantify what assumption you're making there, that'd be great? Thank you.
Tomer Bar Zeev:

Sure. Hi Mike. I will start, Omer and Assaf if you – if you would like to add, please feel free. So look, I often – I often describe gaming as the cannery in the mine for other type of verticals within the App Economy. Very often that games are really leading the way, and then the rest of their verticals with follow. We've seen that multiple times in the past, and I think this is what – what's happening at the moment. We, our non-gaming revenues are growing fast, very fast. The – by the way, the two acquisitions that we made Tapjoy and Bidalgo both companies generate significant revenues from non-gaming apps and that's an area of strategic importance for us, because we've always said at ironSource's we want ironSource to be the business platform for the App Economy, not just the game economy, granted gaming is the biggest part of our platform today and we will continue in the near future to be that, but we are focusing very much also in growing outside of games. And eventually we believe that there is a need for one platform providing an end-to-end solution for the App Economy. So of course non-games are very important. Now, I think different ad formats and different characteristics vary between the different verticals in the App Economy. But eventually I believe that there were pretty much all look the same in terms of what type of ads and what that performance worked there. It's a matter of evolution, which eventually I believe also other verticals will catch-up with games. As for Q4, look so we started a year with I think it was 37% year-over-year growth we're now at 62%. So evidently we've increased our guidance as we see. When we started the year, there were some unknowns I would say mostly around IDFA how that will roll out? And so we wanted to be conservative and prudent in the way we budget and the way we guide. As it's becoming clearer and clearer quarter-after-quarter that as originally assumed by us, we're a net beneficiaries of dispose IDFA. We feel more comfortable increasing guidance as we've also done this time, right? We've for three consecutive quarters; we've increased guidance twice by $30 million now by $25 million. So we feel very strong with our ability to continuable filming. And also looking a beyond that we feel very strong with the growth drivers of the business across the different activities that different solution suite. So I think as mentioned, we feel very bullish about our EBIT did continue – continue growing. Now that IDFA mostly is I think behind us.
Mike Ng:

Great, thank you for the thoughts. That was very helpful.
Operator:

Thank you very much, Mike. Our next question comes from Jason Bazinet from Citi. Jason, your line is open. Please go ahead.
Jason Bazinet:

Thanks so much. If I decompose your revenue growth between growth and large customer’s year-over-year, as opposed to growth in the revenue per customer, it seems like...
Tomer Bar Zeev:

Jason, I'm sorry. I can hardly hear you. Jason, if you – I can hardly hear you.
Jason Bazinet:

I will try and speak up. Is that better? Yes.
Tomer Bar Zeev:

Yes. Yes. Thank you.
Jason Bazinet:

Okay. So if I try and decompose your revenue between growth in the number of large customers, as opposed to growth in revenue per customer, it feels like back in 2019 and 2020, most of your growth is coming from an increase in customers. And this year it's been more about revenue growth per customer driving this sort of top line. It given that you're moving more into non-gaming, but you're also doing acquisitions to broaden your portfolio. How do you anticipate that mix changing in 2022, 2023, 2024? Is it growth in customers or growth in revenue per customer as the main driver? Thanks.
Tomer Bar Zeev:

Sure. Hi, Jason. Now I could hear you well, and thank you for joining today. So look, I would – if you analyze different KPIs and I do think it's important to analyze different KPIs. We provide to understand the way we run and manage and operate the business, right? So I think the triangulation between mid-dollar base expansion rate, our gross retention rate, and also for example, we said that in this quarter, I think the number is 86% of the Top 100 games are using our platform, at least one product within our platform. So I will model that the way in the unique way ironSource – we run ironSource as a platform for the App Economy, the land and expand is really a main focus for us, because the flywheel effect where here. Remember that we have a full alignment between us and the customers we serve. We're here to help them concentrate on creating great content, while we help them expand that into – expand our business into a scalable, successful business. So what we want is for them to continuously adopt more and more products within the platform, because that will eventually make them a better business, and they will be able because of the flywheel effect, they will be able to expander their business also with us. And this is the reason we keep adding additional solutions to the platform, which we also plan to continue doing that both organically and inorganically. Because again, this flywheel effect is key for the App Economy in general, of course, our platform. So very much focused on growing the business with our current customers, as well as adding additional customers, but adding, expanding the business with customers I would say is our top priority. As you can see from our net dollar-based expansion rate this quarter of 170%, I believe it's the best in our peer group. So we're very much focusing on that and that's the whole idea of the overall end-to-end platform for those developers.
Jason Bazinet:

Thank you.
Operator:

Thank you very much. Our next question comes from Bhavan Suri from William Blair. Bhavan, your line is open. Please go ahead.
Bhavan Suri:

Hey, team. Nice job there. Really, really solid quarter. I guess I want to touch it at a high level, Tomer, just about this ability of developers. If they're able to circumvent potentially, app stores leverage third party payment providers. I'd love to learn a little more about the potential for ironSource here. I guess, a) do you just take advantage of it? Which I think developers will. But two, what adjacent areas could you ironSource enabled with like, is payment integration, just a natural adjacency? How should we think about the adjacencies to the app ecosystem that you would do hypothetically, if we could circumvent the app stores and leverage third-party payment providers directly?
Tomer Bar Zeev:

Yes, so thanks for the question. I think it's important to first understand that if of course the payment to the app stores will eventually be lower, then the app developers will have more money to invest in doing marketing, like in debt, of course, will make us and other platform net beneficiaries of debt and improve the entire ability of over developers to scale. I think that it's a bit too early to predict what's going to happen. But our mission is to provide a comprehensive business platform for app developers, so everything they need to turn their app into a business. So, we definitely might look at helping them also with the finding relative alternative there. It’s something that we are, of course, following closely and it’s a potential future opportunity.
Bhavan Suri:

Yes. And fair. It's too early to predict. And then I want to ask a second, follow-up just on the ad creative marketing teams. I'd love to dig into the opportunity you obviously acquired a company in the space. But as you see budgets spread out across more networks, more campaigns et cetera. And then there is limitations, right, in the number of potential campaign IDs to analyze. How should we think about that? How should we think about the budget spend given some of the acquisitions you've made and you've moved in sort of this, not just mediation, but the marketing and the communications piece of reaching developers and then developers? I'd love to understand sort of how you've seen budgets expand or the potential for the addressable budget that you have access to expand within your customers.
Tomer Bar Zeev:

Yes. So, I assume you are referring to the Bidalgo acquisition.
Bhavan Suri:

Yes.
Tomer Bar Zeev:

It’s a marketing software that allows developers to basically manage their creative and their user acquisition across multiple channels. And so yes, what it does is it gives us the ability to increase the depth of solutions that we give also from the marketing side, I can really be this one stop shop to the management counsel of everything they need around UA. It also adds roughly an incremental TAM of $7 billion $10 billion, because we're looking here at really all of the performance budget that aps are spending on all of the relevant channels. And again, it really sits with our mission to continue and expand our business platform and to give our app developers more and more tools, of course, the entire life cycle in their entire set of needs in order to turn their apps into businesses.
Bhavan Suri:

Yes. I think that makes sense. I guess the question was sort of also additionally, there must be a data piece that flows into sort of the data you have, so talking about contextual data, the ability to understand sort of the response rates. How does that add to the data mode you have today? Thank you.
Tomer Bar Zeev:

Yes. Yes, I would say it's a great question. Thank you. So, in general, one of our main advantages on our ability to target in an effective way is our close relationships and partnerships with all of our customers that really generates really deep data integrations. So, we have data flowing from many, many of our customers. And of course, when we add more solutions and we have a wider view in the market, of course, that also helps and give us more data flowing into our systems. And then, of course, we've invested heavily. And we continue to invest in our machine learning capabilities and to really have the best data science team out there, and to be able to get all of these data coming from all of the sources out there and to improve our targeting and machine learning capabilities.
Bhavan Suri:

Super helpful. Thanks guys.
Operator:

Thank you. Our next comes from Tim Nollen from Macquarie. Tim, your line is open, please go ahead.
Tim Nollen:

Well, thanks very much. A couple of questions on the ad mediation side please. Just a bit more on Tapjoy if you wouldn't mind. First off, there has been a bit more consolidation in the space. I know you're already quite large there. Just how important is scale there? And what more really does Tapjoy bring you on the ad mediation side? And then secondly, I saw your announcement about the custom adapters giving customers more, I guess, flexibility, more options in who they work with within the SDK network. Could you just explain a bit more, what's new about this? What this offers to customers that's new and different from what you or anybody else offers? Thanks.
Omer Kaplan:

Yes. So, I'll take it dime. We didn't identify before, it’s Tomer taking the question. Thank you. Thank you for the question. So, I'll start with the second part regarding the customer adopters. So, the change there is that before we released this new capability, the customers who were using our mediation could only work with networks that our mediation is certified and it was a group that was of existing network partners and limited to that group that was certified and maintained by our mediation. When we launched our customer adaptors, it can mean that basically any network out there, right it, of course, follows our protocol and guidance, but any network out there basically can work with our customers who are using our mediations through adapters that they can build in order to support these connections. So now all of the customers using our mediation can basically work with any network that they want. So, customer adaptors are not only with the existing certified networks that are operating in our mediation. So that's regarding that. Regarding your question about Tapjoy, so of course, this acquisition really reflects our platform-based approach to the economy, and they really add important solutions to our platform that increase our total value-add and stickiness with our customers. It's also an extremely, seasoned and great executive team, primarily U.S.-based, but globally. And like Tomer said, both Tapjoy and Bidalgo gives us additional customers, additional know-how and additional technology around also helping app developers, not only game developers, which is something that we are scaling as well, but with them, it's something that will help us to generate that goal even faster and allow us to scale our activity with app developers in addition to helping game developers.
Tim Nollen:

Got it. Thank you.
Operator:

Thank you. Our next question comes from Brent Thill from Jefferies. Please go ahead. Your line is open.
Brent Thill:

Thanks. Tomer, as we look into 2022, maybe if you could share your top two strategic, drivers or areas that you are most excited about as we head into the new year?
Tomer Bar Zeev:

Hi, Brent. Indeed, very much looking forward to 2022, I think, with the current growth of the festival and the new additions we're really best geared to continue capturing and expanding our leadership in the app economy. So, I think in 2022 what we will see for ironSource specifically, we're going to see expansion within games. If you remember, typically ironSource has very strong still, very, very strong with the AAA gaming companies and with us automating the publishing solution, we are expanding also to the longer tail of the category with a clear ambition to fully democratize content creation. I think we've added a lot of products to the Sonic solution suite that will accelerate that growth. And of course, recent addition of Luna Labs, which we announced last quarter to help developers with everything around creative’s and now with the addition of Tapjoy and Bidalgo, and also together with Luna Labs, which we did before, I expect that to really help us grow across the category. And of course, growing faster with other verticals outside of games. But I remind you all that most of what we do in Aura is non games and already around 10%, probably a bit more than 10% of Sonic is non-games and we expect to grow that. Similarly, to the way we lead the gaming category and the democratization of content in the gaming category we expect to do that beyond games. And it's going to be a very strong area of focus for us in 2022.
Arnon Harish:

And real quick on Tapjoy, the integration of this asset. Can you speak to how quickly you can get to market? Is there a concern model of heavy lift on the back end to get this integrated or is this I know these aren't easy to do, but is it a slightly easier integration from your perspective?
Tomer Bar Zeev:

So look the additional color at the moment I can add to that is, as I stated before, a very big part of our current customers using both Tapjoy and Bidalgo in addition to at least few of the products within the ironSource platform itself. So, we know these customers very well and they know ironSource, and of course Bidalgo and Tapjoy. So, to that extend it’s being very well received because what all they care and all we carry is again, the flywheel effect of how we can help them become a better business. So, it's still a bit early to say, how the full PMI will look like. We're in initial stages there. But we know those businesses very, very well. And of course, we know very intimately the customers of those businesses as well, because there are also ironSource customers today. So, the barriers and I hope I'm right, but the barriers to those PMIs in the market, as well as integrating the platforms platforms, I do expect that to be, and I hope it will be even easier than previous acquisitions we've made. Reminding you all that ironSource is a fairly acquisitive company. So, we have experienced with that. For us transactions, surely of this type are very, very much related to how impressed we are. In this case, we are deeply, deeply impressed with the quality of the management teams and in the overall team, in both companies. And we feel the full feed to our DNA that we'll be able to unlock really significant value for the app economy going forward. And I'll be happy to update on how the PMI is going in future calls.
Brent Thill:

Thanks Tomer.
Operator:

Thank you. Our next question comes from Martin Young from Oppenheimer. Martin your line is open, please go ahead.
Martin Young:

Thank you for taking my question. And good afternoon. My first question is on your total customer count of over a 100,000 in revenues. The total net ads in this quarter seems to have accelerated, can you maybe break down what was driving that, was it existing customers growing much bigger or are you seeing maybe more customers moving from other platforms over to yours?
Tomer Bar Zeev:

Hi Martin. I don't have the breakdown – the exact breakdown, but I would assume maybe Assaf, you can elaborate, but I would assume both contributed to the addition of the new customers expanding more than a 100,000. But maybe Assaf you have some color on this.
Assaf Ben-Ami:

Yes, sure. So, of course, it's both. Remember that we counted them on more than a 100,000 for the last trailing 12 months. So, customer who joined few quarters ago, they will get to the above a 100,000 after a few months, at least. So, this is one. Just to mention the 332 or the 23% increase from last quarter last year, it's after about 40 customers that merge with other large customers because of a lot of merges in our industry. So basically, this is also why the value per large customers is increasing because when two customers are merging, two large customers are merging you are counting only one, we're counting on the parent company. So, this is the reason. And again, both new customers that are increasing the usage of the platform with the lend and expense approach and they become large customers. And of course, the large customers continue to grow in the platform.
Martin Young:

Thank you. My second question is on the M&A landscape, may be can you update us on what you see in M&A environment, whether you feel that you have a good pipeline and that will continue to provide you with more services to add onto your platform?
Omer Kaplan:

Sure. Yes, so very consistent with our growth strategy. The fact that we operate ironSource as a platform, as a business platform for the app economy, with two solution suites, right? Sonic for app developers and Aura for telco operators. And because of the size of the platform and adoptions of the platform within the different customers we serve, we are very, very, very, this is our main focus, adding additional solutions to the platforms to increase the stickiness, to increase the level of service we provide to the customers we serve. And we tend to continue growing that. And by doing that – we focus on doing that both organically and non-organically. Since we went public we've done four full acquisitions and we have a very healthy pipeline of different companies that we're looking at potential targets. And, and as I said, ironSource is a very acquisitive company. We see for a company of our size, and a platform of our size in the app economy, we see all or most of the deal flow out there. And we know what makes sense for our platform. For example, as I said with Tapjoy and Bidalgo, two acquisitions we announced now our customers anyways are already working with both companies. So, it really makes sense to make it one, make it as part of the platform so that the flywheel effect can increase, can expedite and so, we can better serve our customers. This was part of the main reason to go public at the moment. We're very much focusing on growing also through M&As, and of course also organically. And I expect our ability to continue being the consolidators in the market to remain as we've shown today or even increase.
Martin Young:

Got it. Thank you very much.
Operator:

Thank you. Our next question comes from Stephen Ju from Credit Suisse. Steven, your line is open, please go ahead.
Stephen Ju:

Okay, great. Thank you so much. So, I was wondering if you can talk about what percent of advertisers are buying into both Sonic and/or inventory? And are there any like impediments longer term to driving that adoption higher over time? And especially, as you're set to onboard, I guess a more users and inventory with the Vodafone partnerships? And second from a, definitely more of a bigger picture perspective, there is a lot of acquisitions and initiatives that you've announced between Tapjoy, Bidalgo, and Vodafone. So, what do you think your global user reach will be when everything is integrated and rolled out, especially as you think about becoming, I guess, a more attractive destination for ad budgets, particularly for those marketers that are outside the games industry? Thank you.
Omer Kaplan:

Hi, Steven. I'm not sure I got the second question, but let me start with the first one, see how much time we have left. So as I said, we operate one person with two solutions suite. I think that the number of – around 16% of the large customers are using both solution suites. And we plan to actually increase that as also Sonic will take a bigger part in the non-gaming category. When that happens or when that continues happens at larger scale, we expect to see more correlation between Sonic and Aura, which at the moment is around 16%. I'm sorry; I didn't understand the second part of the question or the second question if you can please repeat?
Stephen Ju:

You've done a lot of – you've announced a couple of acquisitions and you now have the Vodafone partnership. So, these are all designed to bring on additional supply and demand to your platform. So, when everything is integrated and rolled out, I'm just wondering how many users do you think you'll have exposure to across the globe? Because some of them – you are trying to become the more attractive destination for ad budgets. So there has to be a consideration there for marketers outside the games industry, because they are going to be looking for reach in some cases, in addition to, I guess, the direct performance type ads.
Omer Kaplan:

Right. Of course, look so as a whole balance of that we see billions of unique users a month, right, billions of unique users. And on the Aura side, we have 160 million daily devices that are connected to the platform. That of course, that's a very, very unique supply source, right. So, of course, with the addition of Vodafone and current and future operators that we will add to Aura, that number will increase and will create a very premium, very high premium, very special supply source that of course will help advertisers, delegate users in a more efficient way, in the most scalable way. So, we very much look forward to expanding those numbers and the daily active users and monthly active users.
Operator:

This is all the questions we have time for today. I will now hand back over to Daniel for any closing remarks.
Daniel Amir:

Great. Thank you for dialing in today. We look forward to connecting with you over the coming weeks and investor conferences. And hope everyone continues to stay safe and healthy during these times. Thank you very much.

ironSource Ltd. Q3 2021 Earnings Call Transcript

Other ironSource Ltd. earnings call transcripts:

ironSource Ltd.
Q3 2021 Earnings Call Transcript