IAS Reports Second Quarter 2022 Financial Results

Total revenue increased 34% to $100.3 million; programmatic revenue increased 51%

Net income of $2.0 million, or $0.01 per share at a 2% margin; adjusted EBITDA increased to $31.6 million at a 31% margin

NEW YORK, Aug. 4, 2022 /PRNewswire/ -- Integral Ad Science Holding Corp. (Nasdaq: IAS), a global leader in digital media quality, today announced financial results for the second quarter ended June 30, 2022.

"We exceeded our outlook for the second quarter with 34% revenue growth and strong profitability," said Lisa Utzschneider, CEO of IAS. "Marketers trust IAS as an independent provider of verification, targeting, and optimization solutions. Our programmatic revenue grew 51% in the second quarter driven by continued adoption of Context Control."

Second Quarter 2022 Financial Highlights

• Total revenue increased 34% to $100.3 million compared to $75.1 million in the prior-year period. Second quarter 2022 results include the contribution from Publica, acquired in the third quarter of 2021.
  
  
• Programmatic revenue was $47.9 million, a 51% increase compared to $31.8 million in the prior-year period.
  
  
• Advertiser direct revenue was $36.6 million, a 4% increase compared to $35.3 million in the prior-year period.
  
  
• Supply side revenue increased to $15.8 million compared to $8.0 million in the prior-year period.
  
  
• International revenue, excluding the Americas, was $31.6 million, a 7% increase compared to $29.6 million in the prior-year period, or 31% of total revenue for the second quarter of 2022.
  
  
• Gross profit was $82.2 million, a 32% increase compared to $62.2 million in the prior-year period. Gross profit margin was 82% for the second quarter of 2022.
  
  
• Net income was $2.0 million, or $0.01 per share, compared to a net loss of $(35.1) million, or $(0.26) per share, in the prior-year-period. Net income margin was 2% for the second quarter of 2022.
  
  
• Adjusted EBITDA* increased to $31.6 million, a 23% increase compared to $25.7 million in the prior-year period. Adjusted EBITDA* margin was 31% for the second quarter of 2022.
  
  
• Cash and cash equivalents were $77.4 million at June 30, 2022.

Recent Business Highlights

• IAS announced that Thomas Joseph will join the firm as its Chief Technology Officer, effective August 8, 2022. Joseph will lead the engineering team to develop and scale new offerings while continuing to evolve existing products. Joseph brings over two decades of tech-industry leadership with SiriusXM and Pandora as well as with Microsoft. He has extensive experience working in media, advertising and emerging platforms including gaming.
  
  
• IAS expanded its integration with Mediaocean's Prisma, Mediaocean's buyer workflow. Brands that use Prisma, IAS Signal, and Google Campaign Manager 360 will be able to link campaigns and enable auto-tagging via Google seamlessly. The expansion is expected to have an immediate impact on campaign and workflow efficiency for ad buyers across the globe.
  
  
• IAS announced a partnership with Anzu, an in-game advertising leader. This partnership enables global brands and agencies to effectively monitor the quality of their in-game media investments in mobile gaming environments. Through this collaboration, IAS provides advertisers with invalid traffic (IVT) measurement and reports on viewability through the IAS Signal platform.
  
  
• IAS extended its reach in digital audio with announced global partnerships with Spotify and Pandora. IAS and Spotify plan to establish a first-ever brand safety solution for podcast advertisers based on GARM brand safety and suitability categories. The announcement was followed by the launch of IAS's audibility verification and IVT measurement solutions on Pandora, which help brands validate their media spend.
  
  
• IAS has been selected by LinkedIn to provide ad verification services, including viewability, fraud, and brand safety for its global paid media marketing campaigns across platforms.
  
  
• IAS launched its Quality Sync Pre-bid solution with Xandr's Invest DSP. This solution allows advertisers to seamlessly mirror their post-bid advertising campaign settings with their pre-bid settings.
  
  
• IAS partnered with Clinch to launch its industry-leading automated tag wrapping solution. Advertisers can easily activate IAS's verification solutions across all campaigns in Flight Control, Clinch's omnichannel campaign management platform.
  
  
• IAS announced enhancements to IAS Signal that incorporates the Total Visibility solution via a new and improved dashboard. Marketers can access critical insights into their supply paths in one reporting platform, simplifying how they analyze and manage campaign performance.

Financial Outlook

Utzschneider commented, "We are revising our full-year outlook to reflect the current macroeconomic environment. We expect full-year 2022 revenue growth of approximately 24% compared to 2021, and we are maintaining our adjusted EBITDA margin outlook for 2022 at prior levels of approximately 31% based on the midpoint of our revised guidance ranges, reinforcing the profitable and durable nature of our business model."

IAS expects revenue and adjusted EBITDA for the third quarter and full-year 2022 in the following ranges:

Third Quarter Ending September 30, 2022:

• Total revenue of $99 million to $101 million
• Adjusted EBITDA* of $28 million to $30 million

Year Ending December 31, 2022:

• Total revenue of $398 million to $402 million
• Adjusted EBITDA* of $120 million to $124 million

* See "Supplemental Disclosure Regarding Non-GAAP Financial Information" section herein for an explanation of these measures.

Supplemental Disclosure Regarding Non-GAAP Financial Information

We use supplemental measures of our performance, which are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. Adjusted EBITDA is the primary financial performance measure used by management to evaluate our business and monitor ongoing results of operations. Adjusted EBITDA is defined as income/loss before depreciation and amortization, stock-based compensation, interest expense, income taxes, acquisition, restructuring and integration costs, IPO readiness costs, foreign exchange gains and losses, and other one-time, non-recurring costs. Adjusted EBITDA margin represents the adjusted EBITDA for the applicable period divided by the revenue for that period presented in accordance with GAAP.

For the periods included herein, we also present operating expenses excluding stock-based compensation for comparability since there were no stock-based compensation expense for the periods prior to the Company's initial public offering.

We use non-GAAP financial measures to supplement financial information presented on a GAAP basis. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Moreover, we believe these non-GAAP financial measures provide our shareholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period-to-period comparisons. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, as discussed below, these measures are not a substitute for, or superior to, U.S. GAAP financial measures or disclosures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

IAS is unable to provide a reconciliation for forward-looking guidance of Adjusted EBITDA and corresponding margin to net income (loss) and corresponding margin, the most closely comparable GAAP measures, because certain material reconciling items, such as depreciation and amortization, interest expense, income tax expense (benefit) and acquisition, restructuring and integration expenses, cannot be estimated due to factors outside of IAS's control and could have a material impact on the reported results. However, IAS estimates stock-based compensation expense for the third quarter of 2022 in the range of $13.5 million to $15 million and for the full year 2022 in the range of $46 million to $50 million. A reconciliation is not available without unreasonable effort.

Reconciliations of historical Adjusted EBITDA and corresponding margin to their most directly comparable GAAP financial measures, net income/loss and corresponding margin, and operating expenses excluding stock-based compensation to operating expenses, are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items.

Conference Call and Webcast Information
IAS will host a conference call and live webcast to discuss its second quarter 2022 financial results today at 5:00 p.m. ET. To access the conference call, please dial U.S./Canada Toll-Free: 800-715-9871 International: 646-307-1963 Conference ID: 5570558. A live webcast and replay will be available on IAS's investor relations website: https://investors.integralads.com. 

About Integral Ad Science
Integral Ad Science (IAS) is a global leader in digital media quality. IAS makes every impression count, ensuring that ads are viewable by real people, in safe and suitable environments, activating contextual targeting, and driving supply path optimization. Our mission is to be the global benchmark for trust and transparency in digital media quality for the world's leading brands, publishers, and platforms. We do this through data-driven technologies with actionable real-time signals and insight. Founded in 2009 and headquartered in New York, IAS works with thousands of top advertisers and premium publishers worldwide. For more information, visit integralads.com.

Forward-Looking Statements
This earnings press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely," and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results or our plans and objectives for future operations, growth initiatives or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including: (i) geopolitical, economic and market conditions, including heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, currency fluctuations, challenges in the supply chain and any disruptions in European economies as a result of the conflict in Ukraine; (ii) the adverse effect on our business, operating results, financial condition, and prospects from the ongoing COVID-19 pandemic; (iii) our dependence on the overall demand for advertising; (iv) a failure to innovate or make the right investment decisions; (v) our failure to maintain or achieve industry accreditation standards; (vi) our ability to compete successfully with our current or future competitors in an intensely competitive market; (vii) our dependence on integrations with advertising platforms, demand-side providers ("DSPs") and proprietary platforms that we do not control; (viii) our international expansion; (ix) our ability to expand into new channels; (x) our ability to sustain our profitability and revenue growth rate decline; (xi) risks that our customers do not pay or choose to dispute their invoices; (xii) risks of material changes to revenue share agreements with certain DSPs; (xiii) the impact that any future acquisitions, strategic investments, or alliances may have on our business, financial condition, and results of operations; (xiv) interruption by man-made problems such as terrorism, computer viruses, or social disruption impacting advertising spending; (xv) the risk of failures in the systems and infrastructure supporting our solutions and operations; and (xvi) other factors disclosed in our filings with the SEC. Given these factors, as well as other variables that may affect our operating results, you should not rely on forward-looking statements, assume that past financial performance will be a reliable indicator of future performance, or use historical trends to anticipate results or trends in future periods.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to update or revise any forward- looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Investor Contact:
Jonathan Schaffer / Lauren Hartman
[email protected]

Media Contact:
[email protected]

SOURCE Integral Ad Science, Inc.