DoubleVerify Holdings Aktie

Hi, everybody. This is Omar Dessouky. I'm a senior analyst at Bank of America, covering Internet, and I cover a number of companies active in the advertising technology space, such as AppLovin, DoubleVerify, Unity, Magnite, Digital Turbine and a couple of others. Today, I have a company I've been very interested in for quite a long time, DoubleVerify, and the CFO, Nicola Allais. And DoubleVerify has been active on the conference circuit.

So I want to take a high-level view with this conversation because I think a lot of investors are going to be interested once DoubleVerify's revenues start to accelerate again. And I want to take a second to remind everybody that this was a very high-growth company at one point. And hopefully, we'll discover a little bit in this conversation what was repeatable during that high growth period and what was potentially unrepeatable during the high-growth period, so investors can think about the next high-growth period.

So I'm going to frame this conversation chronologically, Nicola. There was the first phase in the open web scaling period, roughly 2019 to 2023. DoubleVerify's Activation segment, I think, compounded at very high rates, something like 30% to 40% or something like that, really, really high for 4 years. And even the non-ABS portfolio grew very quickly. I think it was sort of around like 20% to 23%, right? So amazing growth. You became a much bigger company. And during that period, you consistently raised guidance and beat expectations.

Then there seemed to be a second phase, more of a transition period between '24 and '26 when growth slowed. And I wanted to be very explicit about what changed, what the market got wrong and how DV had executed. And then there's a third phase, which is now kind of looking forward. And let's dig into the current portfolio and think about how you think of guidance.

So let's go ahead and start just really as a kind of a background, that hypergrowth era, right? Can you look back at that era and that had one specific product that grew like gangbusters, Authentic Brand Suitability, 75% CAGR between 2019 and 2023. It was a new product, I think, in 2019 at the time. And the reason I want to focus on that is because it gives me the intuition that your business is very much a product portfolio-driven business. And if you find the right product for the right market, you can really change the game, right? So when you look back at that period, what were the 2 or 3 biggest drivers of DoubleVerify's growth?

Yes. So for those here who may be new to the story, just 1 minute as to what DoubleVerify does. So DoubleVerify helps advertisers make sure that their ads in the digital ecosystem are placed in environments that are brand safe, fraud-free in the right geography, and viewed by a human. And what we do that for advertisers wherever they spend. The idea for DoubleVerify is to verify wherever the advertiser is spending their dollars.

The period that you just mentioned, Omar, is a little bit of where the dollars were at the time, which was in the open web, and we were scaling with our clients. There was hyper growth in the open web. We had the right products for us to be able to create sticky relationships with our clients, as they were spending more and more through channels that were new to the open web. You mentioned Authentic Brand Suitability. That is a product that was in the programmatic space of open web, which is where the dollars shifted to in that period.

We don't control where advertisers are spending their dollars. We want to be able to verify wherever they're spending. And at the time, they were spending a lot through the programmatic channels and Authentic Brand Suitability was a perfect product for the advertisers to be able to use our services. What Authentic Brand Suitability does is on the programmatic side of the business, it allows advertisers to evaluate an ad impression even before they buy it. So even before they buy, the advertiser can use Authentic Brand Suitability to say, this is going to be a good impression for me or a bad impression for me. And that's naturally where the advertisers want to be. They want to be able to avoid spending dollars if they know it's going to be in the wrong space for them.

So the growth that we saw -- the way we think about the growth vectors that we have is you're correct that it's product driven, but it's also vertical driven. So in the history of the company, we went deep in open web because that's where the advertisers were spending. We're now entering a phase where we're going to look at replicating that for social. I'm sure we'll talk about it. And soon thereafter, we will be doing the same thing for AI. So for us, it's where can we verify? Do we have access to the vertical? And can we do it for every single dollar that the advertiser is spending?

So your product developers came up with that product. Can you tell us a little bit about, like, how they were thinking at the time and what that process was to come up with such a gangbuster product because they could potentially do it again. So what is that process?

Yes. So the process -- so the company started with measurement products. Measurement is very simple. An ad runs and we tell the advertiser, how the ad did. Advertisers like that. But they, of course, would rather have the information available before they actually bid. And what Authentic Brand Suitability did, what our product development team realized is that they could use the information that we were capturing on the measurement side to create a product on the programmatic side, pre-bid side.

So Authentic Brand Suitability captures the data that we collect anyway on the measurement side and creates a loop so that the advertiser can feed what they learn post running the ad into a product that's [ pre-bidding ]. That loop is a loop that the product team has been able now to replicate in social. So in social, which is now the next phase of growth for the company, we've been able to create that loop again. So in order to use an equivalent of Authentic Brand Suitability in social, you need to use our measurement product because that's the data that feeds the product. That loop is very unique, and it's really at the core of what we do to be able to help the advertisers both pre and post. And so the product team really thinks about all that all day long to try to replicate that loop. What's -- one part of the equation that we haven't talked about is integrations.

Now in the open web, it's easy to launch a product, information is available. What is a little bit trickier to do on the social platform is that you need to integrate with every single platform. That is where the product team gets very creative, right? It's what kind of information is going to be available to us from the social platforms and what are we going to be able to do with that level of information. The last -- you mentioned a period in the last 24 months has been a very critical period from a product perspective because the walled gardens have granted us access. They have finally provided information that allows us to create an Authentic Brand Suitability like product for social.

So before we move on to that, obviously, that's important. I still think there's some good information we can get from looking at the past, which is how do your product developers know what your customers want, right? Now what's that partnership like during the development process? Are there surveys? Are there like initial tests with a small set of customers? Or do you just sort of know what they want? And how is that knowledge of your customer enhanced now that you've been through the cycle once?

Yes. So one of the key things for DoubleVerify is we work with the largest brands in the world. Out of the 1,000 largest global brands in the world, we work with about half of them right now, and the number is growing. What that allows us to have is a commercial relationship with the client where we understand what they're looking for and that informs how the product development team thinks about what the next product might be. And so this will be quarterly business reviews of the clients where we hear about their pain points, and we tell them the types of products that we're working through. And that partnership then engages the advertisers to then speak to the platforms to say, hey, what DoubleVerify provides is actually something that's really necessary for us and they become kind of the spokespeople for verification to be available in all the verticals.

So it's a back and forth. We like to do tests. If we're able to get to a test period of our products, we have a high likelihood of winning that engagement because our products are superior in terms of brand safety and suitability and the levers that the advertiser can turn. That relationship with the client is really what's going to lead us to how we do AI and how we do verification in AI. The partners that we have with the advertisers is really the front line talking to the platform and saying, hey, we need verification to be able to spend dollars on your platform.

Got it. So then looking forward, I think your suite of tools for measurement on social sort of started, I think it was like beginning of '25 with measurement, and it took a little while to get the -- for the prebid up and running. It's up and running now and you're scaling. So I assume that was also done in partnership with your advertiser clients, right?

Correct. Correct.

So you have pretty good visibility to that.

Yes. The key part of that conversation, why is social only now, right? 70% of all digital ad spend. So why are we talking about verifying into the social platforms today? It's been a vector for a very long time. The reason why we're talking about it now is because the social platforms ultimately agreed that verification was useful in their space, right? This is not the open web where you can just build a product. You need access to data. That's where the advertisers played a large role, right?

They said, okay, we're not going to spend a lot on social until you have verification available. We now have the tools to replicate what we did in the open web on social. And that's, as you said, only in the last 24 months.

Got it. So let's now kind of maybe talk a little bit about your '26 guidance, I think is what a lot of investors are interested. The stock is trading really cheap. And if I was -- let me ask it in a different way. I think you guided to 8% to 10% revenue growth for '26. And can you talk about the growth drivers factored into that guidance? Some of the ways you're driving the bottom line improvement?

Sure. So we -- the foundation for the model is net revenue retention. So we exited last year with 109% net revenue retention. And the reason why that is, is because our clients stay with us for a very long time. So the average tenure of our top 75 clients is over 8 years, and the average spend by client has increased. So the top 100 clients used to spend $2.2 million a few years ago, they now spend $4.3 million a year with us. So the basis for the model is NRR. And last year, we exited the year at 109%.

So you'd say why are we guiding to 8% to 10%. We're in a time where we have just launched our social products. They're growing much faster than that rate. In Q1, we grew 23% social measurement. We grew over 90% for social activation, of course, off a smaller base. But that's the driver of what is going to become the overall driver of the company once it scales. So to answer your question, we start with 109%, which is the NRR. We have inside the business channels that are growing extremely fast, but they're still on a small scale.

And kind of comparing back to the ABS days, right? ABS, I think, probably opened a lot of new accounts for you.

Yes.

Right? I guess the question now is, is this new product also going to open kind of new accounts for you? Or is it mainly increasing your share of wallet within your existing clients at this point, what you think?

So I think -- it's a good question. I think the motion of having pre-bid and post-bid for social is going to allow us to verify advertising spend for clients that we already have. So it will be an upsell motion because now it's available. What is going to attract new clients is the new products that we've launched since. So we've been talking up until now basically about verification, right, post-bid and pre-bid. We have since -- over the last 3 years, we've acquired 2 companies that allow us to do not just verification, but also optimization. That's a company that's called Scibids, where after we say to an advertiser, hey, this is a good impression for you to bid on. Scibids allows them to, even within that inventory, to bid against the ones that will actually optimize their return on investment. That's an optimization tool.

And then last year, we bought a company that is going to allow us to do proof. So not only verification, but optimization and now proof. So the answer to your question is, I think the way we are going to continue to gain share is that we now have a 3-pronged approach. It's not just verification. Verification, optimization and proof is pretty unique in the market. No one else really has the breadth of those 3 products, and that's how we're kind of winning new clients.

So I'll give you one example. This is a competitive market. And when an RFP comes up, we always go and we lead with verification, optimization, proof. There's a client that's using a peer verification partner in the space, ran an RFP, decided they didn't want to switch their provider, but we were able to say to them, why don't you try optimization with us anyway. So now we have their optimization business, not yet the verification business. And that allows us to create a relationship that, at some point, will get us the verification business too.

So are we talking about kind of expanding past the kind of Fortune 500? Or are we talking about competitive share gain?

Yes, that's a good question. So first, it is share gain. We work with half of the top 1,000 advertisers. Now that we have a differentiated product, we feel good about being able to win more of those clients. And the bread and butter of our business is the large brands because those are the brands that are the most keenly aware of what it means to have a brand safety violation.

We do have businesses that are below the top 1,000 advertisers, and that generally comes through the DSP, the programmatic part of the business. So we are active in there. We have specific teams that go after those clients to try to grow them into a larger engagement. But really, the larger part of our business is the top 1,000 clients. And now that we have this differentiated product, we think we can gain share there.

Okay. Now your clients are large. They're quite interesting, right, because you have sort of the CMO and then you have international offices, right, each of which do their own advertising thing. So within any client, there are multiple stakeholders.

Yes. Correct.

Tell me how your portfolio potentially helps you kind of penetrate some of those pockets that you haven't been able to yet.

Yes. So every client is a little bit different. And I'll start by saying some clients go the global mandate way of things, right? Everybody needs to use DV, no matter where you are in the world and that becomes a global mandate that still requires us to go market by market to help turn on the product. And some of the clients will be more willing to let the markets decide which product -- which verification partner to work with. It's obviously -- we have a relationship at the CMO level, as you say.

And so what we try to do is create the value proposition there so that they can engage every single market to turn on DoubleVerify. What we've done in the last 3 years is we -- our share of revenue outside the U.S. is small today. It's smaller than the share of dollars that are being spent outside of the U.S. in terms of digital advertising. But now we have the people on the ground to kind of win the on-the-ground RFPs and RFIs for clients that are, let's say, in APAC or in EMEA. And so that's going to continue to be a growth vector for us.

The most important thing for us is to have the relationship at the brand. As some of you know, there's agencies involved in the space. Clients change agencies all the time. We want to have the relationship with the brand so that we can continue the relationship no matter which agency is also involved.

And just maybe developing that a little bit, do these big brands, are they familiar with both -- the frameworks of both you and your other primary competitors? So it's sort of like Moody's and S&P ratings. Everybody knows the ratings methodology? Or do they usually kind of only know one and there would be a switching cost like to move to the other vendor?

So they will generally know all the players in the market. An RFP generally starts with 2 or 3 names of companies. There are a whole bunch of single point solutions also that get involved. So I don't think -- this is a known space. There are not a lot of players that do everything that we do. So every advertiser will know. I think the onus is on us to show the differentiation with optimization and proof to kind of gain a market differentiation that's not just about price for verification. And that's been -- the players have been the same for 10-plus years. I don't think the market has changed too much on that.

Yes, probably -- Okay. Got it. Got it. So maybe let's go product by product here. So thinking about the open web portfolio, you talked about social being the driver of growth. So is open web essentially stable? Is it flat, declining? Like how do you guys think of that going forward?

Yes. So again, we want to verify where the dollars are going. So we don't make the decision to say we're more open web focused or social focused. What we know is that the advertisers are spending more on social. And what's important for us is to have the tools there that we now have to be able to verify as more dollars go there. And that's the part that we control, right? So we control 23% growth in measurement for social, 90-plus percent growth in social activation.

The open web is still a vast environment. There are a lot of dollars that are going through it. Digital ad spend in total is going up single digit every year. We don't participate in the media buying. So this is about us being available wherever the advertiser is going. Of course, open web is not growing as fast as social or CTV or soon AI. We need to remain involved in the space just because dollars are still going there, of course. But for us, what we control is just being able to be available as the dollars move to social from mobile, online, video and display.

So is it safe to say that like you're sort of deemphasizing R&D investment in that area that's less high growth and allocating it more to these other high-growth areas?

Yes. So that's a very interesting question because the -- what we do is we have a DV authentic ad metric that applies to any environment, right? The technology behind it is the same regardless of the environment. What's different is the integration into the different social apps as opposed to open web. So whatever development we're doing for social applies to open web as well.

So we're launching an attention product that will work both open web or social. We're launching CTV, Do-Not-Air products that are currently bought through the open web channels. At some point, they might be bought directly, they might be bought differently. But right now, that's a product that's launching in the open web buying space. So the emphasis on R&D is really how much better can our DV authentic ad become, and that applies to wherever the advertiser is spending. So we don't have really 2 teams, right? It's improve the product and it will be applied wherever the advertiser is spending.

Okay. And then let's talk about Authentic Brand Suitability. So are there any major unlocks that could drive another phase of big growth for that product? Because I think it's been sort of mid- to high single digits recently.

Yes. So Authentic Brand Suitability is -- if you think of the scale of the business, let's just talk a little bit of numbers here. If you think of the measurement side of the business for open web is about $120 million or so. The Authentic Brand Suitability and Core Programmatic Suitability products are over twice that amount. The reason why it's twice that amount is because the advertisers want to be able to prevent bidding on bad things, so they like that product. And it's also priced twice as much.

That product is now over 70% penetrated in our top 500 clients. It's been a runaway success because we've talked about the power of the product. The next vectors of growth for that product is going to be new clients for sure, because it is a pretty unique product that's not readily available in the market anyway. So new clients and then continuing to kind of sell the product into the lower base. It is a premium priced product. So the ability for a client that's, let's say, who's only spending in APAC on mobile for fraud, they might not be so interested in ABS.

So I think the answer to your question is it's very powerful. It's unique. The growth vector now that it's already 70-plus percent penetrated in top 500 is obviously not what it's been to get us there. The real focus for us is replicate that 1% to 2% -- 1 to 2x ratio measurement to activation that we have on open web on social. And right now, the activation on social is really, really small.

What -- okay. So social is growing very fast.

But are there any kind of bottlenecks to scaling at all at the moment that you're working on alleviating?

So if we were having this conversation 12 months ago, we would say the bottleneck was that we were not available to provide a pre-bid product that's akin to Authentic Brand Suitability. That has now been open. So we're able now to receive information, especially from Meta, which is a large player there, that allows us to do a pre-bid product for social that's close to what we do on the open web. It's not exactly the same because on open web, you can actually bid on impressions of our data. On social, it's a prescreen tool.

The unlock is we have a road map. We still need to integrate into TikTok to launch that product, and we need to continue to refine the level of data that we get from Meta to create a really powerful product. But considering where we were 12 months ago where we had no data, we are in a much better position now to ramp that product.

Got it. So let me ask you, we only have 6 minutes left here. I was wanting to talk about Authentic

AdVantage, Scibids, Rockerbox and MAP, but then there's also this topic of the LLM platform -- advertising opportunity. So which of those 2 do you think is more important to address?

Well, I think -- I mean, for new investors, the LLM is the big opportunity next.

Yes. Well, then let's talk about that. How should investors think about advertising on the LLM platforms as a source of growth for you?

So LLM is really exciting for us. And so the way to think about it for what we do is there's $1 trillion of digital ad spend. There's about $400 billion that's search. Up until today, verification is not available on search. It's a one-player field. Verification is not available on the search part of the ecosystem.

What LLMs will do is they will create a new environment. And we've heard some players saying OpenAI. So there would be $100 billion of ad spend on their platform alone in 2029 or 2030. We believe -- and we're not the only ones. We think that the dollars that will first shift to LLMs are dollars that were on search. If that happens, that opens up the TAM for us. This will be new dollars that we have not been able to do up until today.

The LLM platforms know they will need verification because it's a competitive space, unlike search. This is a very competitive space. There are plenty of platforms. And in order to have advertisers who are currently testing it, right, spend a lot of dollars. The advertisers that we have a relationship with will say to the platform, hey, we need verification in here, right? It's a new environment. Brand suitability is a big deal. Those are conversations that are happening now.

When those conversations unlock an opportunity for us to verify the inventory that's going there, it expands the TAM pretty dramatically for us. That's the next wave, right? We talked about open web. We talked about social and now we're talking about LLM advertising that is a TAM expansion for us, which is very, very, very exciting.

Okay. Well, that is exciting. And of course, we're interested in knowing like when. So let me -- let's just maybe start off with the R&D process. Like are you -- you're in an R&D process now, I assume, and you're already engaged with those LLM builders.

Absolutely. Yes. And the environment -- so what does product development look like? Product development for that environment is to learn the environment, to understand where the ads are going to be positioned because it's a chat, right, very specific to every single person. So to learn the environment to understand what the drivers of brand safety and suitability will be. So we can do a lot of that work ourselves, right? We're just learning.

Now the interesting thing with the LLMs, the way it's set up today is that unlike social, which is user-generated content that has many parameters, text, video, song, image, the chat environments right now are really text-driven, which is something that we've been doing for 10-plus years. So in theory, that is an environment that we know very well and that allows us to do a lot of prework. We are speaking with some of the platforms right now to essentially understand how they're thinking about building their ad business, right? They don't have one today.

So they're turning to us and saying, hey, can you help us understand how we should think about how to build the business. So we're having those conversations allow us to raise the awareness of verification. And then on the other side, the advertisers are testing dollars, but they've said very clearly, they're not going to spend a lot into those platforms until there's verification. So the answer as to when is hard to answer because there are competing priorities within the LLMs anyway. But those are active conversations right now.

What do you think is the kind of potential for self-verification, right? Because all of these platforms have their own tools, right, in whatever the open web and social, they have their own tools, which some advertisers don't trust, and that's why they have an independent source like you. So I guess like the high-level question here is how much will that new LLM space look like the other spaces that you've been in, in terms of market structure?

Yes, yes, so third-party independent verification is important to advertisers. They are today -- we're now a business that's been scaling for several years, even though free tools are available on every single platform, right? You can go to a programmatic DSP and use their free tools to verify. You can give your money to Meta and allow Meta to say, don't worry, we'll take care of where your dollars are going to be spent. The reality is the advertiser wants a third party to make sure that what they're hearing from the platform is correct. So that's one. Two is the advertisers want a measure that is the same across everywhere they spend, right? No single advertiser is just going to spend on the LLMs.

They're going to spend across social, open web and LLMs, which means that they want to be able to have a benchmark like the DV product that says, this is more brand safe or this is not as brand safe, and that allows them to make decisions around spend. So I think third-party independent with a benchmark that's the same everywhere is really critical for the large brands.

And maybe we can just finish on this last question here, Nicola. So when you say it's really critical, is it just really critical? Or is it required? Because I -- in some of my own expert readings, I've heard that in some cases, it's actually in the corporate governance that they have to have third-party verification. So like how widespread is that?

I think -- look, it's going to depend on every single advertiser. But no CMO -- we're not a very expensive product compared to the amount of dollars that they're spending, right? The ratio of our cost to the media spend is small on purpose in a way, right? Because it allows the CMO to say, it's required. I don't want to be the one CMO that's not using verification and then has a brand safety violation that kills my brand reputation. So whether it's in the governance or not, I think every CMO of a sophisticated company will say, I need this product.

Okay. Well, that's in there. Appreciate it.

Yes. Thanks for having me.

All right. Hi, everyone. I am Mark Schilsky, JPMorgan's tech sector specialist. Thanks for joining today at our TMC Conference. I'm joined today by 2 members of DoubleVerify's management team: Mark Zagorski, CEO, and Nicola Allais, CFO. Gentlemen, thanks for joining. So let's get to it.

Mark, you often have described DoubleVerify as the trust layer of the digital ecosystem. The industry has been moving more towards walled gardens, away from the open web. How has DoubleVerify's role in that world changed over the last couple of years? How do you see it going from here?

Yes. So the -- I think there's kind of a tale of 2 different challenges as we have evolved from kind of an open web trust layer to one which now is very well embedded into the walled gardens. In the open web, it was kind of the Wild West, but you could see what the challenges were, right? It was the open web. We acted as a layer between buyers and sellers of digital media on mobile, display, video, et cetera. As that's now evolved into playing that same role with walled gardens, it's a very different story. It's a walled garden, which in its definition, has opacity. You can't see into it, right?

And I think that is where our value really shines, which is when an advertiser is buying digital media on TikTok or on Meta or on YouTube. And there's an increasing amount of kind of obfuscation of what's going on there, where is my ad going to show up? What kind of context will be there? The role that we play has never kind of been more important. And as these black box optimization tools that you'll hear about, you hear that Google has PMax and Meta has Advantage+. As those solutions become more and more prevalent, the need for third-party objective verification becomes even greater.

As a matter of fact, on Meta, we see that customers who are employing their black box solutions, their Advantage+ solutions have a 2x higher attach rate of DV measurement solutions than those that don't. And it just shows you that advertisers still want independent objective verification and transparency, particularly in walled gardens, where they don't have as much control of the buys. They are using tools that are embedded into the systems, and they're looking for someone who can give them a stamp of approval saying, yes, this is what you thought you bought is what you bought.

All right. Perfect. So there are 3 legs of growth that you've talked about, social, CTV, AI. So social, obviously, one of the walled gardens, Meta being the largest of them, social activation, potentially one of the next legs. Like what is driving that business? It's relatively small today, but growing really rapidly. So what's driving it? How big can that get? Walk us through that.

Yes. So we've said that social is going to be the next real growth catalyst for the business. Our social measurement business with Meta alone is a $40 million a year plus business. Social measurement across the is well over $100 million of revenue for us and growing. We saw our social measurement business grow 23% in Q1. So nice double-digit growth. Our social activation business grew over 90%. And the catalyst behind those -- both of those is really kind of the growth of Meta.

Meta, we launched an activation or a pre-bid filtering tool on Meta early last year. That's gone through a couple of iterations and evolutions where it's now a product that we've got a relatively strong attach rate. Over 30 of our top 100 customers are now using it and starting to scale against that. We've said in the past, we believe that, that pre-bid solution alone on Meta is a $40 million to $60 million business. We're already at a $12 million run rate. So we're getting where we need to go with that business.

And the nice part about it is social measurement and social activation go together. You can't do one without the other. Measurement feeds activation. So when we look at, for example, on Meta, we're about 60% penetrated in our top 100 customers with Meta measurement. So every one of those customers, we're going to upsell pre-bid. Right now, we've sold about 30 of our top 100 customers. So there's growth there. But we also know that we see more customers using measurement when you have an activation tool.

So just for a quick definition, measurement for us is actually measuring and blocking a transaction after someone's purchased. Activation or filtering is actually keeping them from buying an impression beforehand. So the 2 work together, measurement feeds and creates intelligence for activation. In Meta, we didn't have activation up until last year.

So now that we have both of those, we have got this kind of virtuous cycle that we've seen in the open web play out. When we had our open web solutions, we had -- we launched first with measurement. Eventually, our activation tools became larger, almost twice large as our measurement tools because, a, they're priced at a premium; and b, it's a no-brainer that advertisers would rather avoid a challenge than have to block it or get a make good after they've already bought it. So we see social continuing to grow, Meta being a major catalyst to that.

We also now have launched a revised activation tool on TikTok. Our YouTube solution, which we've now kind of bundled with an optimization solution called Authentic Advantage is growing really well. So across the board, we see social as a major catalyst for our growth. We see that being driven by the bulk -- by bulk in meta, by actual percentage in TikTok, which is growing off a smaller base. But ultimately, that meta business, we think is a $40 million to $60 million pre-bid business on its own. You add the measurement business, which is $40 million already, and you're looking at a potential $100 million plus just on Meta.

Perfect. And then you mentioned TikTok. So a, how big could TikTok potentially get for you? And then b, like do you also have similar products on Pinterest and Snap? I know they're meaningfully smaller, but just curious if those are available as well.

Yes. So we do have -- so TikTok, I think TikTok is still coming off a small base. So it's probably ultimately 20% to 30% of the size of a Meta potential over time. With regard to Snap, Pinterest, TikTok -- I'm sorry, Snap Pinterest and some of the other platforms, we have measurement on all of those. We have various levels of pre-bid, but they're significantly smaller. I mean they're really marginal when it comes to kind of the overall opportunity. It's really YouTube and Meta and YouTube, we put into our social bucket. YouTube and Meta 1, 2, then TikTok, a relatively distant third and then all the rest in the bundle...

And then you said 60% of your top 100 customers are on -- you've gotten with the social products today. What is it going to take to get to 100%? And then Meta famously has 10 million-plus subscribers. I know they go way down their SMBs, but like how far into that SMB TAM can you potentially penetrate over time?

Yes. So the 60% number was just for Meta. So just the Meta penetration across our top 100 customers, varying levels of penetration of different social tools across the top 100, but lots of room there. When we think about our customer base, as you noted, someone like Meta has 10 million customers, right?

We work with the 1,000 largest brands. So we really are focused on kind of enterprise-level engagement. So think customers like Unilever and Colgate folks who spend really hundreds of millions of dollars across digital media. That being said, we do start looking at mid-market advertising agencies that we're engaged with. That provides opportunity to reach more customers. We are plugged into what we call demand-side platforms.

So folks like the Trade Desk, Google and others, in which our solutions can be applied basically in the self-serve motion against buys. And so we see a percentage of our customers coming from those self-serve motions, which are longer tail. But ultimately, right now, we're focused on enterprise customers.

We're still only working with about half of the largest advertisers in the world. So we're not even talking to the other half. So big opportunity there. Plus, we're still underpenetrated with the customers we have. So we think there's a lot of legs with current customers, a lot of legs with new customers in the enterprise side before we really have to start pushing into mid or smaller markets.

Perfect. Let's switch gears a little bit. Let's talk CTV. So CTV, I believe it grew 20% in the most recent quarter. How much is that existing customers where their advertising dollars are growing versus new logos? Walk us through exactly what's driving the growth there? And then what are some other major initiatives you have in that space?

Yes. On the CTV side, we grew, as you noted, 28% on the measurement side of our business. The opportunity there is I think we have a relatively low attach rate with current customers. And that's really based on a product innovation. I think we've had a product which has been good on the CTV side, but not great. The level of granularity that we've been able to verify impressions against is not equal in CTV as we have in social or in the open web. That's changing.

So earlier in Q1, we launched a solution called Verified Streaming TV. What this allows advertisers to do is actually identify whether or not impression ran against a high-quality full episode player, for example, a Hulu or Paramount player versus just ran in kind of an open web or a mobile environment. We launched a solution in ABS, our ABS tool through DSPs that's called Do Not Air list, Automated Do Not Air list that allow advertisers to exclude certain programs or genres out of their buys.

What that means and why I'm talking about that is that it's allowed us to drive a higher attach rate. Our attach rate was in the single digits on the pre-bid side for CTV solutions. Just in the last quarter, we've seen that double. So we've been able to double. So to give you kind of a sense of what that looks like on one of our DSP partners, our attach rate for what we call a product we called ABS is around 60% for open web impressions. For CTV, it was only around 5% because of the lack of granularity.

With this new solution, we've now been able to double that to 10%, which is driving a lot of pre-bid. Pre-bid application drives post-bid, and we see that reflected in measurement growth. So we think CTV is, again, another untapped opportunity for us where we're just scratching the surface. But as we noted kind of in our earnings call, everything we're doing right now is very much product-led innovation, right? It's not just selling more of what we have. It's actually driving new solutions into market, breaking new ground, getting folks to take on new social applications, new CTV applications and eventually new AI applications as well.

And then amongst all of the CTV applications out there and AVOD providers, so the biggest ones are YouTube, Roku, Netflix, Disney, Duby, Pluto, et cetera, are you plugged in all those platforms? Can you see all of those? And then where are you actually seeing the most growth come from?

Yes. So we do. We're plugged into the top 10 CTV solutions. The challenge there is we get various varying levels of data. We get a basic level of brand safety data at the app level. We get impression level viewability data. We get impression level fraud data, et cetera. But our entire solution is really based and where the value prop comes to bear is on brand suitability and getting that on a program level is our next big unlock. And we've been talking about that.

Lately, we just closed a deal with Spectrum. We had a deal previously with NBCUniversal to get impression level brand safety and suitability data. That's a big unlock for us. And so we're going to start to see growth, I think, in CTV as we bring more and more customers into the fold -- more and more platforms into the fold to share that data with us. On a platform-by-platform basis, I think CTV as a category, they're all growing well.

I think the big catalyst occurred last year when we saw Prime ads. I mean that just was a huge unlock because it flooded the market with ad impressions, which did one thing, which is relatively positive for us. So we charge on a per impression basis. Other platforms sometimes charge on a percentage of media. And we've never been able to take advantage of that kind of high CPM that CTV has.

But when a bunch of impressions come into the market, it lowers the CPM, increases the number of impressions sold, so that is actually beneficial to us. So we've seen volumes go up pretty much across the board on all CTV platforms, both because of the changes in CPMs, but also because of the new products that we've launched that have helped grow our attach rates in that market.

I think you mentioned you signed a deal with Spectrum on brand safety. Like what's kind of your forecast for signing new deals there? And like what are you working on?

Yes. So stay tuned. We've got other things in the work right now. We're pretty excited about announcing over the next quarter or so. The great news is, just like we saw in social, once you kind of break the log jam with one platform working with you. So TikTok was really our logjam breaker in social. Once they leaned in and said, we really -- we know as we grow, we need to have verification, we want third parties in here. Then you saw others follow, right?

I think we're right on the edge of seeing that logjam with CTV, which is, hey, if I am competing against others in selling my media and my streaming media, and I'm not providing the same level of granularity to buyers so that they can understand what's happening in suitability, I'm at a disadvantage, right? So if my sales guy goes in and there's an advertiser buyer on the other side and they're saying, "Hey, we can use DoubleVerify to buy across Spectrum or buy across NBC, but I can't use it on Paramount or Netflix or some other platform. That's a challenge for them. And I think it's just about getting enough Domino's to fall where they say, "Hey, we all need to be part of this. And I think we're close.

All right. Sounds good. Let's -- there's a variety of topics to talk about in AI. AI ads are extremely nascent. How do you think the AI ad world is potentially going to evolve? And then what is your place in that world going to potentially look like?

Yes. We look at, I think, kind of 3 -- AI is all opportunity for us, just to put very, very, very, very transparently because I think there's a narrative -- the narrative is AI eats everything and destroys every business, every software business, every media business, it's all over.

Our role as a trust layer has evolved from open web to video, to social, to streaming and will eventually play the same role in AI as we play in those platforms as well, which is wherever there's opacity, whether there's someone selling digital media, an advertiser wants an independent third party to be able to determine what's going on there.

So we think AI is a big opportunity. There's 3 things. Think of 3 areas where we've leaned into. The first is the general environment in which AI has created chaos, right? You've got slop. You've got AI slop everywhere, whether it's on social or whether it's on the open web, there's AI slop that advertisers need to navigate. We launched a product called SlotStopper, which keeps advertisers away from AI slop, allows them to block their ads from running against it. We launched on the open web. We've recently launched SlotStopper on YouTube, which allows them to avoid low-quality AI-generated content. That's the opportunity for us, right?

There's also a ton of AI-generated fraud. We call AI cyber fraud. As a matter of fact, in Q1, we just released a report. We saw 140% increase year-over-year in AI-driven fraud variants in the first part of this year. So it's creating chaos. That means people are leaning on us more.

The second on the AI front is really the growth of agentic buying. Advertising was bought and sold between 2 guys who passed a piece of paper, right? Then it became a fax machine, then it became an e-mail, then it became programmatic buying through bidding. The future is agentic buying, which is my agent is going to negotiate with your agent and you're going to -- as a seller and my agent is a buyer agent, and they're going to talk and they're going to make a trade happen there.

We will play the same role in that world, and we've already started building for the ad CP protocol and the other MCPs that are out there that someone needs to determine whether that agent is real or not. So we've seen a huge amount of general fraud in the marketplace. The next thing you will see is agentic fraud, which is people flooding the market with fraudulent agents trying to intercept that transaction, which if you think about it, we've got faster, we've gotten more efficient, but we've got much less trust.

When someone sat across the table from you and sold you an ad, you knew who they were, you knew where they lived, you knew where they worked, all that good stuff. Now you have an agent talking to another agent. You have no idea if that agent is legitimate or not. You don't know whether that agent is lying about the inventory they're trying to sell you. Our role will be to intercept that agent and make sure that agent is legitimate. We've already started building around that opportunity. So you've got this agentic AI opportunity that I think we play the same role in it.

And then finally is the AI ads themselves, which is you've seen large platforms like ChatGPT. You've seen smaller ones like Proplexitity and others who have said, "Hey, advertising is -- we have to have a way to monetize this future of ours. So like we're not going to get it through enterprise customers." We saw this with Netflix when Netflix said they will never ever, ever, ever, ever sell ads. And then they said, we can't support $12 billion of content costs by selling $30 subscriptions in India because we're not going to get enough of them, right? So we need to sell ads against that.

Same thing is happening in the LLMs right now. And the same response that we've seen happen in all walled gardens is happening there, which is our advertisers are coming to us and saying, we will test this out. We've added agency holding group TELUS where they've informed their customers and they've informed the ad-based LLMs. Our customers will test this out.

But until you have objective third-party measurement and objective third-party verification, we will not scale beyond test campaigns. So we see the LLMs again, as the next catalyst of growth for this company after kind of social and CTV. We have AI opportunity down the road, and we've been building some proof of concepts for that space, and I think there's a large opportunity.

The last thing I'll say there is if you think about the size of that opportunity, it's probably the one where we're least furthest along, but is the largest potential for DV. All of that money or a large portion of that money that's going to go towards the LLM ad models is going to come from search. And that search is a $350 billion to $400 billion market. And that's a market where we generate 0 today. So as streaming dollars came from linear, that was all new money for us, dollars from search into the LLMs as a potential to be all new dollars for us, too.

And then what's the pricing model look like for AI SlotStopper, which is a great name, by the way. And also for like agentic verification, is it still per impression?

Yes. So right now, it's bundled into what we call the authentic ad, which is an impression-based measurement tool where we get paid on each impression.

Okay. And then, I do have to ask on AI. So OpenAI eventually, at least according to their own internal projections, is going to have a very large digital ad business...

$100 billion...

Right, by 2030. I can't remember what the number was, but why doesn't that evolve like search, right? So search, you're functionally shut out of because Google does everything. Like why would OpenAI or any of their partners need to use DoubleVerify?

I think it's -- there's a couple of reasons. The first is search is a monopoly and LLMs are not a monopoly. There are many of them. They're all inviting for space. And you've got Google in the space. You've got ChatGPT. You've got Anthropic who said they'll never sell ads, but they will. You've got Grok and lots of others, Perplexity and other smaller ones.

So you have definitely a different playing field than you have with search. You also have advertisers who are looking at how ads are being placed in this environment, and it's very different than search. Initially, they're banner-like ads. They're contextually based. So they're -- when you're asking questions around how to plan a garden, there's Home Depot ads, right, as opposed to specific search query links, which are -- the environment is very specific and very driven. There's nothing really overly challenging about that for an advertiser.

They're also sold on a CPA basis, which means if you don't click, you don't pay. The LLM ads are being sold at a CPM basis. There's some talk about CPA. They're in an environment that can be very challenging for an advertiser. You may start that conversation about, hey, I want to dig up my backyard, right? And Home Depot is like, great, this guy is going to be looking for backyard tools. And then the end of the conversation is, because I'm looking to bury 27 bodies, right? That -- does Home Depot want to be -- have their ad show up there? No, right?

So contextually, it creates a different level of challenges that I think search just doesn't have, right? So you've got kind of competitive situation, I think it's different. You've got environmental situation different. And you've got just the way that the ads are currently, which are some level of display and now there's even talk of potentially video and video -- short video ads that could be run during LLM. So it's very different than search.

Okay. Perfect. And can I ask how are you using AI internally? Both for like your average knowledge worker and also for your devs?

Yes. So the engineering team is fully embracing AI tools to do -- just basically do their blocking and tackling to do coding. Our goal is for every engineer to be not writing a line of code by next year to have them actually managing a team of 5 agents. So each one will become a manager. Some of them love it. They think it's the greatest thing ever. Others are more old school and are challenged. But the old school guys will be gone and the guys who embrace it will be the future of the business. So we're driving efficiencies.

As we noted in our call, we're driving margins up because of it. We had a strong Q1 margins, which beat our expectations. We raised earlier -- or late last year -- earlier this year, we raised our target for EBITDA this year. We'll have less people in the house at the end of the year than we will at the beginning. So internally, it's driving more efficiency just from basic blocking and tackling.

But the other big win for us is what DV is, is just a big contextualization engine. We look at stuff and we say, is this suitable or not suitable? Is this viewable or not viewable? We just make decisions. And there's nothing better for AI to play a role in is kind of that scaled opportunity to classify context.

So we've mentioned in the past that we're now using this on our contextual engine to label content. This was something that we used to have humans do. We had semantic scientists and linguists that would look at content, label it once and put it into our machine learning models, and that would learn over time. But now we have AI doing that. So we're going to be removing 100 contractors this year just based on that capability. So internally, AI is making us more efficient. It's making our product more effective, and it's helping us drive better margins.

And can I ask -- I don't know if it's close to you to me, but like how big is your token cost these days? Have you had to update your budget over the last couple of months? I wouldn't be surprised if the answer is yes.

So we have, but it was off a low number. So it is managed. We're managing it centrally through our CTO. I think the benefit over time will translate into higher margins anyway, like the token costs will not offset what we're able to save, as Mark said, around people that are -- we're using even outsourced to do classification.

The other part that we haven't discussed is AI is really us do the actual gross margin part of our business much more effectively. So we're able to maintain gross margins over 80%. So we are managing. We know the costs will go up on token, but the net effect of using those tools is that we'll be able to grow with fewer people and grow our margins.

Yes, I was going to just comment on that was -- may I also assume that if I'd asked you a year ago, what your headcount growth will be over the next 3 years, that number is now somewhat lower, meaningfully lower?

Yes. Yes. We'll be growing with fewer headcount in the company for sure.

Perfect. Competitive landscape check. Historically, it has been a pretty competitive space for you. I think like MTF fees have been generally deflationary. What has changed there, if anything, over the last year? Anything you expect to change in the future? And then does AI potentially bring in any new competitors that you've seen or heard about?

Yes. So I'll start with the sort of what's happening in the market and peers and the effect that it has on their business. I mean we've been competing with similar companies for several years, right? So the peers are known, the companies that can do exactly what DV does, they're far and few in between. We have a product offering that's now broader. So we generally compete on just product offering and able to provide more and more services to our clients.

The net effect of what we do is that we're growing the relationship with our clients. Our top 100 last year spent $4.5 million on average. It was $2.2 million in 2022. And the way we're growing it is by being able to verify more and more of their impressions in whichever sectors that they're spending their dollars in. The effect of that is that the fee -- the effective fee, the output might be a lower fee as we go into verticals where the overall CPM is lower. So social generally drives a lower CPM, especially outside of the U.S., and that leads to a lower fee that we receive because we kind of track CPM, even though we don't charge on a CPM basis.

So all this to say, we're happy to see the client growth, the top line growth. And if the effect of it is for the fee to be declining, that's an okay situation for us because we want to be able to wherever the client is spending. What's happening right now is dollars are shifting from sort of mobile online video to social. As we've been discussing, we now have the products, but we're not yet penetrated in every single sector the way we are on mobile, online and video and display.

And so as that transition happens, there will be a moment where it's not dollar for dollar. But the opportunity is clear. What we have on mobile online video is 2x the revenue on ABS versus measurement. Half of our measurement is already social. Once we get to those kinds of ratios, you can see how we get to what we think we can do, which is 50% of our revenue being social and CTV by 2029. That will be a nice benchmark at which point social will have scaled also on activation. And so you'll see a very different business profile.

Right. And I imagine like the bull case there would be all of a sudden, half of your business or more is growing at a much higher rate, but we would see accelerating revenue growth.

Yes. Yes. And so just to speak to total revenue growth. So if you look -- we look at Q1 as a good indicator of what we think is going to play out for '26, which is we had higher growth in measurement than we had in activation. The higher growth in measurement is because half of it is social already and social grew 23%. So within that number, that is a significant amount of dollars that to grow.

Activation within activation, which grew 6%, you have social activation that grew 92%, but obviously, a very small base. As we continue to make that transition, those numbers over time will become a larger part of the business and we will show in the total revenue growth. We're just not going to see that in 2026. The most important for us is to continue to show strong social measurement growth and strong activation growth and the overall growth profile will change as those scale.

Perfect. Nicola, could you actually touch a little bit on your capital allocation policy? So you bought back, I think, $100 million of stock year-to-date. Why is that the right use of capital for your shareholders? And lay out for us the framework for the pace of buybacks from here?

Sure. So there's 3 prongs around the capital allocation. There's investing in the business. It's really important for us to continue to do that even though we're able to show growing margins, we're still investing in the business. There is M&A opportunities and then buybacks, which is now the third year that we're doing it in a row, and it's really part of how we think about capital allocation.

We said at the beginning of the year that we will do more buybacks this year than we did last year. That was $123 million last year, and we're well on our way. We're going to remain sort of measured as to which one of those 3 we do. M&A is, it is a bit of a disruptive space in terms of valuation. There are companies that feel they're still worth a lot that raised 5 years ago, and there are companies that have no revenue and they feel that they're really worth a lot of money.

So we're being very judicious on what we look at for M&A, especially because we think we have a good in-house opportunity to develop the products that we need for AI anyway. On the pace of the buybacks, yes, I'll stick to what we said, which is it will be more than last year for sure. We're not day trading on this. We basically set up plans and we kind of just make sure that we do what we say we're going to do.

We keep our eyes on making sure we more than cover stock-based comp, which we definitely will if we do more than last year, that was $132 million, and that also benefits ultimately our net income and earnings per share.

Perfect. And Nicola, one other question, which is, if I'm not mistaken, your Q2 guide is like a small deceleration on revenue. If you look at the Street, I think it's actually the slowest quarterly growth. So there's going to be a reacceleration in the back half. Let's assume you do reaccelerate in the back half. Like what's really going to drive that? What confidence do you have that you can do that?

Yes. So first to talk about Q2, it comes off a comp last year that was 21% growth. So we're lapping a strong last year number. What's going to happen in the second half is, again, if you project out what we did in Q1, if within the headline 10% growth, you look at social measurement and social activation and you extrapolate that for the year, you have a different -- very different pattern of growth in the second half. We are still winning new logos.

We had a win rate in the first quarter of 77%, where we didn't displace anybody to get that business. That's also going to grow into the second half. And we still have opportunity to scale the clients that we won once Moat shut off at the end of 2023. That takes time for those clients to upsell, but those are very large names. And as we're able to upsell them to our products, you also see the benefit of that in the second half.

All right. Perfect. Mark, we're almost out of time. But if there's like 1 or 2 last thoughts you want to leave with the audience. What do you think are 1 or the 2 biggest misconceptions that investors have about DoubleVerify that you often get asked about in meetings?

Yes. I think there's 2. The first is we get lumped with a broader category of ad tech. And really 95% of those companies in ad tech do 1 of 2 things, buy or sell media. The buying and selling of media is going to be very disrupted by agentic, and it's pretty much controlled by the walled gardens. We don't buy or sell media, and we verify in the places where most of those companies don't even have an opportunity to play.

So we're -- obviously, we've talked here a lot about social. I mean we're one of the few companies that sees across all the platforms TikTok and YouTube and Meta and Netflix and all the open web. We see everything. So we're not concentrated in just a challenged buying and selling of open web impression universe. I think that's one.

The second is the whole story around, well, AI is just going to eat everything and you're part of their dinner. We don't think so. The role we've played for all of the other places where ads were being sold is a role we're going to play in the LLMs. If anything, the AI universe has created more chaos for advertisers to navigate, which has made verification that much more important. So we see AI as a huge opportunity to save money, huge opportunity to grow top line and not a challenge to our business.

Perfect. All right. Mark, Nicola, this was wonderful. Thank you for coming.

Thank you.

Thank you, Mark.

We're gonna get started now. I'm Laura Martin. I'm the senior media and big tech analyst over here at Needham & Company. And I'd like to welcome the CEO of DoubleVerify. His introduction is over here and the CFO of DoubleVerify.

Mark Zagorski is the CEO of DoubleVerify, where he has spearheaded the company's growth as a critical trust layer in digital advertising since joining in 2020. A veteran of the ad tech industry, previously served as the CEO of Telaria, where he managed its merger into the Rubicon Project, which was then sold to Magnite. Prior to Telaria, Mark was the CEO of eXelate, which he sold to Nielsen.

And this is Nicola, and he's the CFO, and so we will create some questions for him on the run, which is fantastic. Glad he's here, because there's always one I ask him that he hates, so we'll do that one first. And I would just like to say as an introduction, we rate DoubleVerify a buy because its acquisition of Scibids, which it does AI optimization, and Rockerbox for attribution, are pivoting DoubleVerify towards high-value performance workflow optimization with broader ad tech platform economics and deeper integrations into ad campaign executions.

We believe that DoubleVerify will successfully transition from vendor verification middleware to mission-critical AI advertising infrastructure, which will give them upside pricing power and accelerate their revenue growth. So that's why we really like the stock. I wanna start with a leadership question, and you're gonna get to answer it too. Because you're on stage with me.

And that is that when we think about generative AI, it threatens to disrupt a lot of jobs. So how does your notion of leadership change in this environment where there's so much uncertainty? What kind of demands does it put on you as a leader that are different now?

That's a great question that you did not send in advance.

Yes, I'm sorry. I apologies.

Am I required to answer that now?

Yes.

It's a good one. I think AI has really upended how we look at talent. How we look at growth and innovation. How we bring those two things together in a very different way. I mean, in the past, when we thought about innovation, it was how many engineers can we hire and how many great engineers can we hire, right? And how best can we get the most out of them?

Now, it's more focused on how do we take the tools that are out there and apply them in ways that are gonna drive growth in our business, but also create efficiencies, which the market is absolutely expecting, right? And from a leadership perspective, what that's done is created massive fear amongst teams.

And so the way to frame it is less as this is something that's going to take your job, as opposed to this is something that's gonna give you longevity in a space that's going to change rapidly if you embrace it, right? And I think we've seen a really great embracing of AI within the company.

And I'll tell you, when we first started, folks were, especially engineering team, probably half of them were like, "I'm not doing this." Right? "I'm a coder. I'm not going to not code." Because we told them, "Hey, by the end of the year, you're going to be a manager. You're going to manage five agents"

And that's your job. They're like, "Well, I don't want to be a Manager." We said, "You're not going to have a job then." They changed though. You can see the people embraced it.

And a lot of times, the normal thought was, hey, your senior executives are the ones who are gonna be like, "Keep that away from me. I know what I'm doing." But it wasn't. It was they're the ones who embraced it first because they've seen this change before. Many of them had been through multiple cycles of change, and they're like, "If I don't embrace this, it's the end for me." So it's changed a lot.

I once saw Jeff Bezos right before they were going public and they said, "You got all these guys that are about to be worth $10 million each. How do you motivate them?" And Jeff Bezos said, "Because the best employees never work for money." The point is, the best employees don't just work for this job. They work for something bigger, something more interesting, something creative. And if they don't, then they're not a best employee. What about you in finance? I'm gonna actually add something. One of the most interesting things Roku's talking about, and I think they're right after you, is token cost.

He says, "I got everybody in my organization using tokens to try things in HR or in legal and stuff." And he says, "I have no return on capital metric. Like in coding, I can put a return on capital metric, but my costs are going through the roof of these tokens, and they aren't telling me in HR how this is making me, the CFO, more productive."

So talk about how you think leadership, but also this cost notion that maybe tokens need to have a capital spending cycle around them and put budgeting, and in legal you can use this many, so they're forced to prioritize. Talk to me about that, thank you.

We are actually doing that. We are managing the use of tokens centrally through our technology group. That it is spread across the teams in a way that is manageable and that we can monitor. Right now we're just taking a look at where exactly it's used. Is it used in a way that is efficient? That is actually accelerating, our own product roadmap, our own efficiencies, rather than just letting everybody trying out and seeing what happens.

I think in terms of the responsibility of finance around these tools, we do need to try them. And we are trying them. The ultimate result of their of using them will be a higher, more efficient business model, which we're already showing the signs of through our first quarter results of the year. There will be an ultimate measure to see that it is actually happening. But the way we're rolling them out is in a more centralized fashion.

I'll just give you the Fubo answer. He said, "From now on, I don't look at resumes." For interviewing new people, he says, "We put them, I expect them to make a video using generative AI tools to make an app, and then explain in the video what they did and why they did it and why it's useful." He says, "Because the two skills I need are people who can actually use gen AI. My next employee needs to be able to use gen AI" and explain to people why he used it to do that and why it matters in English. And I just thought and he's like, "I'm back to generalists. I don't want point solution people." I want generalists because I don't know where gen AI is going." I just thought it was an interesting way.

No, that's a great way.

To hire your next guy. Maybe you can't impose it on your current guys, thought it was an interesting idea. Okay, so let's talk about how does DV remain independent while integrating deeper into the walled gardens? Because some of your fastest-growing stuff is sitting within Meta or sitting within TikTok. And it feels to me like this gravitational pull to the big pools of money that are sitting in walled gardens does threaten your independence or trust in your brand as an independent brand.

Our role in the walled gardens is exactly the same role as the open web, which is exactly the same role in streaming, and which will be the exact same role that we have on the LLMs, which is that as an independent trust layer. We, just because we're analyzing something behind a wall doesn't mean we're not objective and doing so from a way that has only our advertisers' desires at the forefront. So that role doesn't change, and I think it's critically important because that's why people are hiring us.

They're hiring us because they need trust in those platforms. They've seen their ads run against stuff that they don't want it to be. How, look, the reality is, how can you trust someone who's selling your media to tell it's good? To tell you that it's good. CBS, there's a reason why Nielsen exists, right? Because if CBS came up with their own ratings and said, "Hey, buy against my ratings." Who would trust them, right? So, I think, our role there, and as you noted it's an increasingly growing role. It's important. Last quarter, we grew our social activation business by over 90%. We grew our social measurement business by 23%. So it's, we are leaning in there. There's demand for the solutions, and I think our innovation and our products are just catching up to that demand.

Okay. Fantastic. Retail media, CTV, 2 biggest TAM categories for DoubleVerify. How do you prioritize resources and which one will be bigger in three years from now, do you think? This can be for both of you.

Yes. I mean, we've leaned really into streaming right now, into streaming television as the bigger opportunity for the two. And maybe not for the reason why you think. First of all, streaming, we've barely scratched the surface on, I think, our opportunity there. We mentioned that our CTV impressions grew 28% last quarter.

We still have strong kind of growth trajectory there. Our products are catching up there. We've launched Verified Streaming TV, which is a pre-bid and post-bid application that ensures that ads are being run in high-quality, full-episode players, not, like, on a mobile gaming site or something like that. It's running in Hulu. It's running in Paramount. We created a product called Automated Do Not Air Lists, which give the advertiser the ability to avoid specific programs or specific genres of programs.

Or Gen AI, or is that a different product?

That's a different product. But this is specifically around streaming. We launched that through Trade Desk. It actually doubled the attach rate on Trade Desk of our ABS product because you buy the Do Not Air list through ABS, which was pretty significant in a quarter in less than three months. We're starting from a low rate to a higher rate, but it was great. So, I think, the reason why we're leaning to streaming today, we just think there's a lot more of a gap there for what we can deliver. What we've been able to deliver in the past, what we can deliver now and kind of what our attach rate is there.

Okay. Okay. All right. And retail media really, does retail media network just have an outcome so people don't really attach as much to the DoubleVerify products?

I mean, if you look at some of our biggest retail customers are folks like Walmart and Amazon, which are also the biggest retail media platforms. And Amazon is interesting. I think last stat I saw, something like Amazon's, like, 80% of the retail media network business. Yes. It's huge, and we work with Amazon as a supply platform. As a demand platform through their DSP, and as an advertiser. Right? So on all different aspects.

So that part of our business is really growing, but when you talk about retail media, for us, it's really about Amazon. And we're meeting kind of all of those demands. I think the interesting thing about RMNs, though, which I don't know if people are fully starting to embrace. An RMN is basically just a giant retargeting network, right? You're taking data from a site. And then they're using that data to retarget somebody when they leave your site. If you're Best Buy, if you're Target, that's what it is, right?

I thought an RMN was, a retail media network was sort of I spend an ad dollar, and I can actually just have an outcome of an actual physical sale at the other end, and that's what the RMN did, is it tied the ad dollar I spent to the actual outcome of a sale.

It's part of it, but the money comes from me as Best Buy, me as Target. Me as whatever, saying, "You came to my site, and you looked for a television." Now Sony, I'm gonna sell you that same user someplace else, and I'm gonna extend that data or that impression offsite. That's where the money comes from in retail media, the spend of impressions or dollar impressions based on data that I get from that retailer.

That's, so, but if you think about that, they're buying impressions offsite. Most of that's basically mobile online video or display. It's not like in a walled garden, right? That business is slowly going to be starting to be eaten by the LLMs, who are going to be focused on commerce.

I think a lot of retail media is moving to the LLMs. So that universe, I think, is gonna start to be becoming LLM universe.

Do you think it's cannibalized first by the LLMs?

The media part of that, for sure.

Okay. Interesting. Let's integrate you into our play here, Nicola. When you think about, like, do you prioritize by product category? Like, how are you guys prioritizing in the back office software?

In terms of product development?

Yes.

We're prioritizing by the channels where we're not yet fully penetrated.

Which is, like, OTT.

Would be social and CTV. Those are really the ones where we spent a lot of product development resources last year to launch the products that are now in market. The one that's growing the fastest is social activation. Those tools are now in the market, and Mark already mentioned the growth over 90%. That's where we're prioritizing, the product development. And, of course, in the background, we're also getting ready for verification on the AI platforms.

Is that, like, OpenAI? Is that what you mean?

Exactly.

Okay. Is OpenAI letting you in? That sounds like a no.

Yes. We can't talk about anything that's not been publicly announced yet. But we've mentioned on our calls that we're in conversations with LLMs around advertising.

Since Claude doesn't have advertising that narrows them down. We're not letting in Google.

I mean, our perspective is this. When we talk to advertisers, they expect us to verify media transactions everywhere where they spend. Right? And it started off in the open web, and then moved to programmatic, and then to social and then to streaming TV. The next phase will be LLMs.

They've made it very clear to us and to those LLMs, for them to move beyond test campaign budgets, they need verification. When Reddit went public, what did they say? "We want third-party verification." When Netflix started selling ads, what did they say? "We're going to have third-party verification and measurement in." So they called us. They called Nielsen, right? It's just history repeating itself that brand...

So long as you have brand advertisers. I do not think you need it if it's SMBs, because they have clear performance or outcome orientations.

Look, I think if you look at every platform has some percentage of brand advertisers, right? So even the social platforms have 30%, 40% on brand advertisers.

Yes, because I would've said Meta didn't need you, because they do all SMBs. They have 10 million SMBs.

Right. But they have 30% of their billions in revenue. I mean, you look at someone like P&G. P&G spends $1 billion a year on YouTube, right? $1 billion just on one platform.

And that's just P&G.

Yes. On one, you have to assume that there's going to be. If you go to, some of the LLMs now and look at the advertising, it there's big brands there. We've seen brands there already.

Well, OpenAI doesn't have the capability of doing granularity. They have to do big brands. Almost like a well, it's almost like a billboard sale.

Right. They made recent deals with demand generation companies, right? with Kargo and Pacvue, Criteo because they're trying to attract dollars from brands to spend across their platform. They don't have a sales infrastructure. So we -- and we know, we have dozens of our current advertiser brands who are testing campaigns across the LLMs. So we just feel it's inevitable at some layer, at some level that verification will come there driven by advertiser demand.

Yes. By the way, Claude's saying, "Hell no," and I'm like, "I've heard this with Netflix." Like, it's not a thing. Like, ultimately, you guys need money. And advertising targets a whole part of the U.S. that makes less than $70,000 a year. That's where advertiser targets. You just can't ask people to pay a fortune. That's the top half of them. So you need to reach everybody, and that means you need advertising.

Especially outside the U.S. Remember, Netflix hit the wall when subscribers started to slow in the U.S., and they moved outside the U.S. And you can't charge somebody in developing countries, Southeast Asia, $24 and spend $20 billion on content a year.

But even here, almost all of their new ads are here ad-driven, because people have seven streaming services and they want to $10 for Netflix, not $24. So it's not only offshore, but I take your point about the slowing subscription revenue.

As you expand into markets where you can't pay $19.95 a month.

You must have an ad-driven option. Yes. Well, and also, to me, it's more fair, because if you have a hit piece of content, why are you paying a fixed price to something crappy? Like, advertising allows you to make a little more money when you have Stranger Things and it blows everybody away or some breakout hit.

It allows same with sports. Like, they now have five sports, in this case five different live sports for the NFL. If you have programmatic, if you have advertising, you get to capture the upside if it happens to be a great game. Right? Whereas if you just have a flat subscription fee, like, it's like, I mean, the consumer got too much value in that particular month, in a sense.

So I like the combination of the two, like a downside protection layer of subscription, and then an upside warrant from advertising revenue if you do a really great job at your core business, which is making content. But anyway. Great. Let's go to social and do activation and measurement products on Meta, TikTok, YouTube, Snap.

They continue to grow at double-digit rate. Does growth slow? Are we in one of these periods, sometimes you guys have this fabulous first year or fabulous year because you have a new product, but then it sort of goes to, like, normalized growth rates of sort of single digits? Do you see that happening in social?

I think we have a while to go before we see that kind of, that kind of pacing. We've just launched our social activation tools on Meta early last year and to be honest with you, like, the V1 of that was not even close to where we are today. So the tool's advanced. You've seen an acceleration in revenue on social activation in Meta. We just enhanced our TikTok activation tool. That's gotten better.

And when you explain to the audience activation versus measurement, how you distinguish between that?

Yes. So think of activation's what we call pre-bid. It's actually filtering out a violation before you even buy it, before you bid on it. And measurement is what we call post-bid. So I've already bought an impression someplace, but we have the ability to block the actual rendering of that. Obviously advertisers would prefer not to buy it. First, than they would to try to get a make good from small block [Audio Gap] get money back.

So activation is pretty new for us on social. We just started kind of scaling it and launching it over the last several quarters. But what we found, which is what we saw on our open web, our activation business in the open web is significantly larger than our measurement business.

Make sense. Because they don't want the ad to run next to inappropriate content.

So right now, our activation business on social is smaller than our measurement. Our measurement business is, half social, half open web [Audio Gap] right now, and that was, how much was that last quarter?

$60 million.

Yes, $60 million in measurement, right? For our activation business is considerably smaller than that. So we see activation continuing to grow on the social side, to where a ratio that we see in the open web is similar, where it's almost twice as much revenue from activation as we do from...

So one of the things I remember when you guys did the pre-bid product is I was very whiny at you about why can't we raise our price from $0.08? And you said, "Well, the good news is in order to buy a pre-bid product, we require you to post-bid product," right? So you're calling them activation and measurement. But do you do that in social too? They can't buy the pre-bid product without buying the post-bid, so it sort of doubles your take rate in a sense because you're right.

The systems work together, right? We catch violations in measurement, and then we filter them out in pre-bid.

Right. And if they have just a post-bid, let's call it measurement, which is your word, what is the benefit they get? Like, on average, how much does it save them? How much does this measurement number go down for the fraud and value when they add a pre-bid to it? Like does it halve?

So we see anywhere from kind of like 3% to 6% or 7%, percentage point increases in suitability, for example by using a pre-bid filter. So if you're at 90%.

You think, you start at 90%, and it goes to, like, 96%?

96%, 97%. But think about that. If you're running a campaign that has 100 million impressions, 6 percentage points is a lot of impressions that you're keeping away from stuff, right? Still it's incredibly valuable. And we see those rates going up and the product getting better over time. The product learns, right?

So we're getting all this crap, and let's call it AI slop, by the way. I use that term because you guys called a product AI slop. On the data panel this morning, I'm like, "We should have data slop," because there's too much data. Data's confusing it. At some point, it doesn't add value. I'm like, "Well, let's take AI slop and apply it here to data slop." It's a great title you guys made a product of, AI slop.

SlopStopper, man.

SlopStopper. I love it. BUt on this point, specifically, going from the 90% to 96%, when you have a SlopStopper, or when you have more slop, could this 90% be structurally under siege going towards 80% because generative AI is going to make so much more content that's just, bad, not viewable. Is it a different issue?

I mean, look, the volume of challenging content continues to grow. Right? Our filters are still our filters, right? You're just jamming more into them. They're still identifying everything, right? Volume is never our product problem. Sophistication, for example, around AI cyber fraud, which is becoming more challenging. We saw 140% increase year-over-year in fraud variance between Q1 of 2025 and Q1 of 2026. Think about that, 140% increase in fraud.

And what does that mean?

That means there are more fraudulent attacks using AI. These are like bot attacks, things like that, than we've seen year-over-year. It's becoming more sophisticated. And this is where, like, there's good AI and bad AI. And bad AI is being used to spoof impressions, spoof advertisers, steal dollars. That's beyond brand. That's beyond quality and suitability and safety.

And it's like true fraud. Okay, and is it coming from offshore? Is it state actors from offshore, which is what I assume? Okay, it's not bad actors in America.

This is not a kid in his basement. These are sophisticated. No, because people sometimes think like, this is, like, sophisticated.

Some 15-year-old that's taking time off in the lunch break to, like, do fraud in the afternoon.

There's always that, but, like, these are sophisticated criminal enterprises. They spin up literally thousands of servers. Like, this costs money to do, right? So they spend money to steal money. And this is a multi-billion dollar industry. Billions of dollars get lost every year. Not from advertisers who use DV.

It's a $1 trillion. Yes. That's really great. Okay. We're gonna continue to grow. The answer was we're gonna continue to grow at double-digit rates and we're gonna continue to have for monetization. Okay. So, Nicola. Starting with you. Yes. We'll do you second. How are you using AI today to lower costs, and how much AI-driven productivity gains will be reinvested versus being allowed to expand your margins?

So how we're using AI to lower the cost on the efficiency of what we do, in terms of how we classify content. AI is allowing us to do it faster and for more content at a more efficient clip. And that's part of the way we've maintained gross margins over 80%. So that's on the top of the funnel in terms of what we classify.

Below that, we're able to -- what we said at the beginning of the year is we'll be able to grow, with fewer employees, and that we've already started to see it in, at the beginning of the year. And we'll end up seeing it at the end of the year, and the ultimate result is that our margins are growing. So in Q1, we had 31% margin. It's the first time we've had a margin over 30% in the first quarter.

So, we're seeing the results in the bottom. We're obviously being responsible in how we're doing it because people still need to trust us, so we're using the AI tools in the right way to classify. The efficiencies are great. They're large. Up until now, we've always said we're gonna continue to invest and reinvest in the business. That's not changed for us except that the way we're able to do that creates a lot of efficiencies, which is why we're able to expand margins.

Okay. And I'm glad you're managing tokens. I think a lot of CFOs are not doing that yet. So you're really ahead of the game on the token cost. What are you seeing, Mark, on maybe on the product development side in terms of by the way, I will say there was a time there where you guys were super innovative on product, and then, like, everybody went to sleep for, like, three years.

And now it feels like you're back in the new product introduction game. That's how it feels to me from the outside. I don't know if you see it that way.

Yes, I mean, I think, you know what? It was the innovation was done incrementally, and we are doing things around the edges as opposed to big swipes and big hits. And I think that's where we've moved to now, which is, like, taking on big challenges, like streaming TV and transparency around streaming TV.

And Gen AI Slop.

Like Gen AI Slop. Like, social and the opportunities within social. So I think, we mentioned last year, at the end of last year call, like, we launched more products in 2025, like, in two quarters than we had launched in two years before that, and I think it's part of it has to do with...

Why would you ever work on incremental if you can work on a big new category?

I think, we still saw a big pool of money there that we could go after that just tweaking things and investing, small. It wasn't like we weren't doing anything, right? We were building the base layer from which we could then launch deeper into social, deeper into streaming. I do have to say, over the last several quarters, AI tools have allowed us to do that so much faster. Right? Nicola mentioned classification. We can classify content 2,000x faster now with AI, 2,000x faster.

That feels like a cost thing, not a new product thing.

It's cost, but it allows us to expand to new languages faster and to new markets faster. We employ semantic scientists. We employ linguists, translators. All of those roles are now being done by AI. Right? I don't need to have someone translate text and then label it and then put it into a model. I have AI doing that.

We're gonna be down 100 contractors this year by just using AI to do labeling as opposed to having humans doing labeling and feeding our models. So it's driving efficiency. It allows us to move into markets faster. Allows us to test products faster. We're now building natural language interfaces for customer service, right? In the past, we'd launch that on a normal pace where it'd be like, "Okay, let's do a beta, which will take us six months, then get it to a customer."

Why do it yourself? Aren't there guys off the shelf that you can just use theirs day after tomorrow?

Well, I'm saying that's the old way. Because we can use AI to actually build prototypes very quickly and launch it. And we don't use off-the-shelf stuff because when you rely on third parties that's not your own product, then you're tied to them forever. We build our own stuff.

But it takes longer to get to market then. And you have to prioritize...

Not anymore.

Not anymore. Okay, fair enough. Okay. I have one CEO that is saying, and maybe you don't care because you guys are sort of hedged, but he's saying that programmatic rails are gonna be replaced by agentic rails, and he says over time, but what he means is, like, three years. Is it, like, a 10-year idea? Do you guys agree with that in your neutral position you sit at?

Look, no matter how someone buys or sells media, we're kind of indifferent, right? As long as our solution set is there, as long as, we're verifying that transaction, we're kind of indifferent how they buy or sell. In this case, though, what's really interesting is think about how folks used to buy with a piece of paper.

That's true, an IO. A lot of media still bought that way. It's crazy to me.

They bought with an IO, and then they bought through email.

It's an insertion order. It looks like a trading ticket like this and you hand it with the video to the company you wanna run the ad.

Right. And then it moved to programmatic. Right? Now programmatic ate everything, like, 85% of display and 85% of mobile is programmatically bought. It'll become agents, right? Our role's still gonna be the same. And the interesting thing about agentic buying, which, if you thought programmatic was gonna be fraught with challenges and opacity, think of an agentic world where I'm like because everyone's like, "Oh, think.

You don't need a DSP anymore. You're just gonna send your agent out to go buy media," right? Netflix, I'm gonna send my agent out, and we're gonna negotiate. Those agents are gonna negotiate. Guess what's gonna happen? That universe is gonna be flooded with fake agents. Flooded. You know that fraud we were talking about? There's some kid in his basement right now creating an agent, that agent's gonna sell media. And it's gonna look just like a Netflix agent.

And it's gonna say, "Hey," you know, "Procter & Gamble"

With $30 CPM.

Yes, don't you wanna buy this? And they're gonna be like, "This looks legitimate, but how can I tell?" Because we're gonna be able to tell.

The more fraud there is, the better for you.

We'll be able to tell because we've already built a tool called Agent ID, which is the first iteration of kind of giving advertisers the ability to understand what the role is of that agent and who their ad has interacted with. But the next stage will be when agentic buying truly scales is playing that same role. Is this person really selling you a safe page? Is this person telling...

A page at all.

A page, right. Is it safe?

Is it viewable?

Is it viewable? All of those things. We're just going to be employing, and so we joined AdCP, which is the ad...

Standardization...

Standardization group. We're involved with the IAB Standardization group. We'll be agnostic. Whatever protocol someone uses, we'll build for it, and, but we're going to play the same role, which is, "Hey, you need to stop here, and we're gonna check it first."

So one of the big, and I really do wanna is trust. Like, does trust in an AI world become more valuable?

I mean, I think it becomes as valuable as, when we're continuing to move people out of the equation, right? We just said you went from a person you trusted sitting across the table from you to then a machine. So then buying through a programmatic platform where you had no idea what was happening. Right? So transparency is always gonna be an issue as you bring more machines to it. Efficiency is there, but who can you trust? And I think that's the role we play, which is driving trust and transparency in opaque environments. And I'll give you a good example of where this comes into play.

I like sort of that tagline.

So think of Meta. We started talking about social platforms.

Yes, we do.

Meta has an amazing product called Advantage+. Which is a black box solution that you put your money into, and it guarantees you an outcome, right? You don't know where it runs. You don't know how it runs. You don't know the context it runs. They'll say, "Look, we'll get you this many clicks. We'll get you this many conversions. And it's doing quite well.

However, there's no transparency in it. Right? So when we see campaigns running on Meta using DV measurement verification, the attach rate is twice as much on Advantage+ campaigns as it is on non-Advantage+ campaigns. That means when you're buying into a black box.

People are relying us, on the attach rate's twice as high, because they want that transparency. So the more things move to black boxes and just trust me outcomes, the more they need transparency. And they lean on companies like DV.

Okay. Right. And the more fraud there is, the better it is for you 'cause you're like an insurance policy. You're like a low-cost insurance policy.

Yes.

Okay. One of the things I've really liked, as I've told you a million times, is this move towards percent of take rate, percent of like a take rate that's a percent of media. So let's talk and I don't think you guys talk about this as much, but talk about, like because of Scibids and because of some of these new products you're introducing, you're sort of getting, I would call it, a dual revenue stream where you have, let me call it, a subscription fee, which was like it's really a fixed fee.

It's not a subscription fee. It's a fixed fee, round number is like $0.08 or $0.14 per 1,000 impressions. Now you're going to a percent of money spent, which I think has more upside. But can you talk about the dual revenue streams and how you think about those?

Yes. On the optimization products, it makes plenty of sense to be on a percent of media, right? The take rate, it makes a lot of sense because you're showing a immediate return on your investment and what we're able to optimize for the media part of the business.

That is the one that we are pricing directly on a percent of media. The rest of the business is still, as you said, a fee. We receive a fee per impression that we're measuring and verifying for the advertisers. That is the model that we like for where we are today, which is we are still penetrating new verticals.

We're still penetrating new platforms where for us it's very important to be very simple for the advertiser, so rather than having a negotiation every time there is a new product that's available. It's a very simple fee per impression, and we just tack on more and more products to the impression.

It creates a very simple upsell motion for the client with our new products. I think there will be -- why is that different from a 10% take rate or a 2% take rate, just as simple?

Because every platform is not the same. Not everybody's thinking of what they're spending on social the same way as they're, what they're spending on the DSPs. It's generally not necessarily even the same budgets. The conversations are different. It's easier to just say, "This is how much we are charging you per impression that we see per channel," and it will vary by client.

It just makes it very fluid and very simple. I think once we end up in a situation where we are upsold into all the channels I think then we'll have a better opportunity to differentiate the price based on the CPMs that they're actually paying.

But the debacle in this was the $0.08 when you went to CTV, you never were able to raise the price when you went from a $2 CPM to a $20. So you were stuck at $0.08, so which is one of my big complaints. Because you just walked away from all this excess value, and you've never been able to raise the price. You keep saying, "Oh, we're gonna do it. We're gonna do it." No. You still haven't.

We -- so as part of that, it was the value prop on CTV versus other video versus social. I think we're now leaning into having that value prop that gives us greater ability to raise prices. We have raised price on video versus display. We think there's the trifurcation opportunity as we've launched new tools, like Verified Streaming TV. Like, the Do Not Air List. So there is an opportunity to increase price there for sure. I agree with you.

If simplicity costs you 10X, that wasn't the best economic decision.

Well again, it's not just simplicity, but it's actually the attach rates and the value of the product that we wanted to go for, right? Because, most CTV is now bought by PMP or PG.

Yes. Private marketplace or programmatic guaranteed.

Programmatic guaranteed. There's a little bit, our value prop there is a little bit less defined when you know I'm directly buying an impression from Hulu. Right? But when as more CTV inventory comes into the fold. As it becomes more opaque, as these black box solutions come into play, our value starts to increase, which means we have more room to start to raise prices there as well.

Okay. Questions from the audience? Any questions for Mark or Nicola? Okay from the audience? Okay. Great. Okay. When you think about staying on this issue of rev shares, when you think about share of revenue versus fixed fee three years from now, is this a growing segment, I assume? What we're doing over Scibids. So how big do you think that could be in three years?

Well, if you think about where our target for Scibids by '28, '29 was, like, about $100 million in revenue. So $100 million out of $1 billion by that time.

So 10%.

10% or so. We have a new catalyst around that which is, the product we launched kind of late last year, which was Authentic AdVantage for YouTube. That's a combination of a pre-bid filter, a post-bid measurement, and then Scibids as the sandwich in the middle. We mentioned on the call that's growing really well. It's a $10 million-plus run rate right out of the gate. We see that now we're expanding that to TikTok and to Meta as well...

So that could also positively influence how fast that -- because that's a percentage of media. There is a percentage of media in that as well. That will positively influence what percentage of our business goes there. And as you will like, YouTube is video, right? The CPMs are higher there. They're not CTV video impressions, but they're higher.

So we had a chance to get a bigger chunk of that than just our straight pre-bid costs off those video impressions.

What I would say is the goals we have there are stated is 50% of our business being social CTV and then AI when it comes. Right now, it's less than 30%. Whether it comes because of a percent of media or not, the goal is to penetrate the channels where we just launched our product.

So there'll be a motion there, whether it's helped by percent of media or not, I think we're more set on just making sure we are where the advertisers are advertising.

And now that we have the products, we're on our way to reaching that goal of 50% being social CTV AI. That's a more of an operational goal that we have in terms of diversifying our business and going where the dollars are. Now that we have the products.

I see. Yes. I really love all the new product innovation. I mean, it must be more interesting for you guys, too.

It absolutely is. I mean, look, we... As Nicola was like, "We need to go where the advertising dollars are going. And that's where they're going, those platforms."

Well, on that, just listening, like one of the things somebody said on stage is, "The problem with Trade Desk is they stop listening to their customers. And I think when you listen to your customer, where advertising dollars is going is code for we're listening to our customers."

Yes. And we have to -- like we don't need to be the first ones there because there's always -- remember Clubhouse a few years ago? Remember, do you remember Clubhouse?

I don't.

It was like a collaborative audio thing. Everyone jumped into, "This could be the next big thing." We're like, "Should we be building for that?" We're like, "let's hold off a little bit." No real advertising dollars followed. So we followed the ad dollars. Like, and if they're like, "Hey, we're going into the LLMs." And we will be in the LLMs.

Right. Well, I mean, that makes sense.

That's great. That's how we make money, right?

Yes. That makes sense to me. Measured transaction fees have been falling. And is this pricing compression structural, consumer specific, competitive, or tied to discounts for new clients only? Why has the average price been falling?

This is a story of mix. We're going in categories where social, the price for the social product is not yet the price that we have for mobile and online and display and video, because we're just launching the products. The price on CTV is still the same as video because we're just launching the products, and we are not yet at a point where we can charge a premium for CTV versus a regular video. So what you're seeing on the MTF is really just the mix of the business. As we grow, as we penetrate especially on activation, you should see an impact positively on MTF. I think the number that we keep a close eye on is revenue per client, right? So the top 100 per client...

Clients.

Yes. For top 100, that was $2.6 million in '22. It's $4.5 in '25.

Good for you.

So that's like scaling. It's not -- the fee is an output of that, which is we're scaling the opportunity with the clients wherever they're spending their dollars.

Got you. So you're doubling your average spending per client. But you may be tripling their impression growth, so it looks like a lower MTF in a sense. Okay, that make sense. Okay. I'm gonna call it there because we're out of time. Thank you so much.

Thank you.

Thanks, Laura.

Thanks.

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the DoubleVerify First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Brinlea Johnson, Investor Relations. Please go ahead.

Good afternoon, and welcome to DoubleVerify's First Quarter 2026 Earnings Conference Call. With us today are Mark Zagorski, CEO; and Nicola Allais, CFO.

Today's press release with this call may contain forward-looking statements that are subject to inherent risks, uncertainties and changes and reflect our current expectations and information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and Form 10-K.

In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at ir.doubleverify.com. Also, during the call today, we'll be referring to the slide deck posted on our website.

With that, I'll turn it over to Mark.

Thanks, Brinlea, and good afternoon, everyone. We delivered strong Q1 results as we continued our solid execution on our product innovation, strategic and financial road maps. In Q1, we achieved 10% year-over-year revenue growth, led by accelerating growth of our social verification and optimization solutions, and we delivered a 31% EBITDA margin, which exceeded expectations, largely due to AI-fueled operational efficiencies. Advertiser growth was positive across all key industry verticals in the quarter as we continue to benefit from our focus on further diversification of customer engagements and ad spend across various client types.

We also repurchased $100 million worth of shares year-to-date, reflecting confidence in our business and our commitment to returning capital to shareholders as a core element of our long-term value creation strategy. We expect to deliver a strong 2026 as we successfully execute on our strategic plan to verify the quality, optimize the investment and prove the impact of digital ad impressions across any platform, media or market or advertiser spend.

The solid results this quarter were fueled by our core growth catalysts, social activation and measurement products, streaming TV verification and our dynamic suite of solutions that empower advertisers to better navigate the evolving ecosystem of AI advertising platforms and Gen AI content. Across all of these sectors, our incredibly durable value proposition remains tantamount. DV is the independent essential trust layer that marketers rely on to ensure their ad spend is protected from fraud in unsuitable context and most importantly, delivers the highest possible return on investment. And this essential role in the ecosystem continues to expand as new product innovations power our growth flywheel.

Let me share a few recent stats that underscore the impact of these investments. Driven by continued success on Meta, social measurement grew 23% year-over-year, a significant acceleration from Q4. Social activation, our fastest-growing solution set, grew 92% year-over-year in Q1, up from 62% in the fourth quarter. Authentic Advantage on YouTube, which combines Scibid AI optimization with prebid filtering and post-bid measurement launched in Q3 last year and is also expanding rapidly. It is now on track to deliver $10 million of expected ACV in 2026.

CTV measurement impression volumes also grew, up 28% in the quarter. And our ABS-enabled streaming TV prebid Dot Air list entered general availability in January with 3 top 15 customers representing hundreds of millions in CTV spend implementing these DV-only streaming TV controls. DV continues to break new ground in the drive towards greater transparency in streaming TV.

AI measurement tools like Slop Stopper, which is now available on YouTube and AI agent ID are showing meaningful engagement rates. Our AI Slop Stopper measurement solution for mobile and online video and display is already applied to over 40% of measured impressions, and the prebid tool is being tested by 6 of our largest advertisers. Our midterm goal remains to increase the contribution of social, streaming TV and AI-driven solutions from under 30% of total revenue today to approximately 50%.

As we drive this evolution, our mobile and online video and display business remained stable in Q1 with approximately 2/3 of impressions that we engage with delivered on mobile, in-app and mobile web environments. We remain focused on creating a revenue mix that closely aligns with the fastest-growing global digital ad sectors.

TV continues to drive new revenue opportunities, distance ourselves from competition and create meaningful margin expansion through AI efficiencies and product innovation. AI solutions, social activation tools and streaming TV quality solutions are positively impacting our customers' ad performance and building a foundation for TAM and market share expansion for DoubleVerify.

Shifting focus to the role that AI is playing in the ongoing expansion of our product-led growth cycle, we continue to lean into AI to operate more efficiently, launch products faster and improve margins. And as the emerging AI advertising universe evolves, it is creating new revenue opportunities that expand our TAM as we extend our essential role in this burgeoning environment.

Regarding this new environment, we've identified 3 main areas where DV has the largest AI growth opportunities and which we are already seeing traction with customers. First, the agentic buying and selling of media, where we are building new products, connecting with and leading the development of the numerous protocols that will help advertisers lean into AI-based buying.

Second, we are empowering advertisers to navigate the dynamic AI-impacted advertising landscape as AI cyber fraud and AI content slot becomes prolific. And third, we are digging into the massive potential ad market on LLM chatbots where many of our current advertisers are beginning to deploy their marketing dollars, Gift had little in the way of transparency and independent measurement.

Let me talk briefly about each one of these opportunities. First, we are focused on establishing security and trust in the agentic advertising ecosystem. Trust has always been essential in our industry, and we recently joined the Ad Context Protocol, AdCP, a coalition of ad tech companies established by Agentic Advertising organization to define standards for ad buying and selling by AI agents. According to eMarketer, about 2/3 of ad buyers plan to focus more time on Agentic ad buying this year.

While in early days, we are actively engaged to make sure DV is at the forefront of establishing standards that will continue to preserve trust and transparency for its advertisers wherever they choose to deploy their advertising investments. As with all of our engagements, we remain independent and agnostic and the way we operate in the agentic advertising world will be the same with the ability to plug into any agentic protocol from the IAB framework to platform-specific systems that are important to our customers.

Second, we are expanding tools to protect ad investments from AI-fueled challenges. We continue to enhance our market-leading suite of AI tools that combat the increasing challenges of navigating AI slot and avoiding AI cyber fraud. With the launch of DV AI Slot soopper for social, we've expanded our capability for advertisers to avoid low-quality AI-generated content on YouTube and will broaden our coverage to other walled gardens in the coming quarters. Fueled by malicious AI, cyber fraud continues to become more sophisticated, threatening to challenge the ROI and efficiency gains driven by the positive use of AI.

In Q1 2026, DV's fraud web continued to harness AI to fight fraud as AI-powered fraud schemes proliferated at a record pace and became even more sophisticated. AI-powered bot schemes continue to evolve faster than ever with 140% more bot scheme variants emerging in Q1 '26 compared to Q1 '25. In parallel, app-based fraud continues to accelerate dramatically, especially across mobile and CTV, where we have classified over 1,300 apps as fraudulent since the beginning of 2026.

Finally, we are focused on capitalizing on the massive potential ad market that AI chatbot marketing will represent. According to eMarketer, ad spend on LLMs is forecasted to grow by over $25 billion by 2029, with ad spend expected to cannibalize over 14% of search spend, a $400 billion market that DV has historically not been able to access.

OpenAI recently shared that they expect to generate $100 billion in advertising revenue by 2030, underscoring just how the market may be moving even more rapidly than analysts are predicting. As has been the case for the open web, mobile, streaming and social environments, unbiased independent measurement will play a key role in engendering the advertiser trust needed for this new ecosystem to thrive.

While AI platform ad models continue to evolve, advertiser demands remain the same, ensuring ad transactions are trusted and transparent and ads are viewable, brand suitable and delivered to legitimate traffic within authentic content environments. Our enterprise customers and agency platforms have made it clear to us that expanding beyond test budgets in AI environments will require even greater transparency and trust than is present today.

We are confident that, as we have shown on social and streaming platforms, our role as an essential trust layer will extend to this new ecosystem, and we are engaged in discussions with several LLMs who are leaning into ad-supported models. As AI drives digital advertising to become more automated, agentic and opaque and as AI slot becomes the must-avoid content category for advertisers, the need for independent verification, protection and performance measurement has never been greater. Regardless of platform, buying mode or message, DV will be an integral trusted part of the ad equation.

Moving to social verification. The social sector remains our fastest-growing business segment and is a core driver of our next phase of growth. No other verification or measurement provider has more innovative solutions for advertisers seeking to protect their spend on social platforms and ensure it performs. Social activation accelerated meaningfully to over 90% year-over-year growth in the first quarter, up from around 60% growth in Q4.

This acceleration was driven by continued scaling of our social prebid solutions, elevated by enhanced product capabilities on Meta as well as expanded capabilities across TikTok and YouTube. 87 advertisers have now utilized Meta activation since launch, up from 68 in the fourth quarter with 31 of these customers coming from our top 100 clients. As of the end of the first quarter, our Meta activation product was already at a $12 million annualized run rate. On YouTube, DV Authentic Advantage has seen strong customer adoption.

Some of our largest CPG customers have started scaling on the solution, driven by the significant ROI improvements that it delivers. Through the combination of Scibids AI optimization with social prebid filtering and post-bid measurement, DV Authentic Advantage customers have seen their media CPMs decline by as much as 36%, while reach has expanded by 64% and brand suitability integrity remains strong.

As with DV's Meta prebid solution, we are just starting to scratch the surface with the impact that Authentic Advantage can have on our customers' business and our growth profile, and we're excited about the significant opportunities ahead for both products. As mentioned previously, our social suite of tools are ramping, and we recently announced the expansion of DV AI verification to include DV's AI Slot stopper for social.

This new industry-leading offering is designed to help advertisers navigate the growing challenges posed by low-quality AI-generated content and safeguard brand reputation across social and video-centric environments, starting with YouTube. DV's AI Slot Stopper for social is another DV tool that empowers advertisers to ensure their brand investment is protected wherever they spend while driving stronger media outcomes.

Additionally, in the quarter, we expanded brand suitability coverage across Snapchat's Discover feed format, enabling our advertisers to have complete coverage across Snap Discover Tiles placements. And we recently announced that we achieved Media Rating Council or MRC accreditation for TikTok video viewability, becoming the first measurement vendor to receive the accreditation.

As advertising investment continues to grow across video-centric social platforms like TikTok, independent verification plays a critical role in ensuring transparency and accountability. And with accredited measurement informed by tens of trillions of historical ad transactions, advertisers can now evaluate campaign effectiveness with greater confidence and ensure their media investments deliver real value. This milestone underscores our commitment to delivering the highest standards of measurement accuracy and transparency and further demonstrates the company's alignment with the MRC accreditation process as a critical layer of accountability in digital advertising.

Turning to streaming TV. We continue to deliver product innovation to address advertiser demand for independent transparency and increasing fraud in streaming environments. Our continued product innovations helped grow CTV measurement volumes by 28% year-over-year this quarter. We've already begun to see solid adoption of ABS Dot Airless from 8 of our largest advertisers as well as strong interest in our authentic streaming TV solution. And in this quarter, we announced that Spectrum Reach became the first partner to join DV's certified transparent streaming program, reinforcing its commitment to secure program level transparency across streaming TV inventory.

Spectrum Reach will share key show level data across their programming, including news and live sports, spanning both direct IO and programmatic buying. These insights will be available directly within DV authentic streaming TV reporting, giving advertisers verified post-bid visibility into the specific programs their ads ran alongside. By combining real, not implied or aggregated show-level transparency in a privacy-focused way with DV's performance analytics and optimization capabilities, advertisers can now better understand how contextual relevance drives outcomes and make smarter decisions to optimize future streaming investments.

This is just the start of our drive to deliver granular unaggregated show-level transparency across all streaming environments, and we are seeing momentum from additional platforms to join our certified transparent streaming program. The results of our innovation leadership are clear. We are growing client engagements and winning deals with new solutions where there aren't any competitors.

We work with over 340 advertisers now generating more than $200,000 annually. And our unique solution underscored a 77% greenfield win ratio in Q1, meaning that we're winning deals with solutions in new areas in which there are no competitive incumbents to displace. Investment in innovation continues to be DV's secret sauce to get stickier with our customers, win new deals and gain market share.

And AI is enabling us to innovate more efficiently than ever as we continue to expand margins while launching and expanding the tools that cement our role as the essential trust layer for buyers and sellers of digital media. With strong execution in the first quarter, we're leaning hard into AI-powered innovation that will continue to extend our leadership position.

Looking ahead to the rest of the year, we remain focused on product development acceleration, partner expansion and market share growth and continued strong margins and cash flow.

With that, let me turn the call over to Nicola.

Thanks, Mark, and good afternoon, everyone. For the first quarter, we achieved 10% year-over-year revenue growth and 31% EBITDA margins. Off the strong start to the year, we are reiterating guidance for the full year. For the first quarter, total revenue was $181 million, representing 10% year-over-year growth.

Total advertiser revenue, which includes activation and measurement, represented 90% of total revenue and grew 9% year-over-year, driven by 12% growth in volume or MTM, partially offset by a 4% decline in fees or MTS. Activation revenue grew 6% with ABS representing 53% of activation revenue in the quarter. As of quarter end, over 75% of our top 500 clients were using ABS.

Measurement revenue grew 16% year-over-year with social measurement revenue increasing 23% and representing 49% of measurement revenue and international revenue increasing 18% and representing 27% of measurement revenue. Supply side revenue represented 10% of total revenue in the quarter and grew 12% year-over-year. We're driving growth by adding new CTV and digital platform partnerships and by continuing to expand DV solutions on retail media networks.

Moving to expenses. In the first quarter, we delivered 82% revenue less cost of sales. Our continued investments and use of AI capabilities are allowing us to scale at a consistently efficient rate even as we measure increasing levels of volume. We delivered $55 million of adjusted EBITDA, representing a 31% margin as compared to 27% margin in Q1 of 2025.

Total expenses for product development, sales and marketing and G&A increased 2% as compared to 10% revenue growth. We are showing early signs of the benefit of using AI capabilities to grow through improved productivity across the organization and increased software capitalization related to product development. We are scaling the business more efficiently, which results in increasing EBITDA margins.

Stock-based compensation was $24 million in the first quarter, flat to prior year. For the second quarter, we expect stock-based compensation of approximately $25 million to $27 million and weighted average fully diluted shares outstanding of approximately 157 million shares. For the full year, we continue to expect stock-based compensation to range between $102 million to $107 million, a decline year-over-year, reflecting the impact of our updated equity incentive plan that reduced the annual value of equity grants in 2026 by over 40% as compared to 2025.

Turning to cash. Year-to-date, we have repurchased 9.8 million shares for $100 million, of which 7.3 million shares were repurchased in the first quarter for approximately $75 million and 2.5 million shares were repurchased in April for approximately $25 million. Year-to-date, the 9.8 million shares we repurchased represent approximately 6% of fiscal year-end 2025 outstanding shares.

Net cash from operating activities in the first quarter was $4 million and was impacted by timing of collections and payments at the end of the quarter. For the full year, we expect free cash flow conversion of approximately 60%. We ended the first quarter with approximately $174 million in cash and no long-term debt.

Now turning to guidance. For the second quarter of 2026, we expect revenue to range between $199 million and $205 million, representing a year-over-year increase of approximately 7% at the midpoint. As a reminder, we're lapping our 21% growth rate in Q2 of 2025. And we expect adjusted EBITDA to range between $63 million to $67 million, representing a 32% adjusted EBITDA margin at the midpoint.

For the full year 2026, we are reiterating our prior guidance. We expect revenue to range between $810 million and $826 million, representing an 8% to 10% year-over-year increase and expect adjusted EBITDA margins of approximately 34%.

As discussed on our prior call, incremental growth in 2026 will be driven by 3 product-led growth engines. First, continued adoption of our solutions across social and streaming TV; second, growth from existing enterprise clients scaling our product offering; and third, continued new customer acquisition driven by DV's differentiated products.

Our first quarter results demonstrate progress on each growth driver with increasing social activation revenue growth, increased adoption and scaling of new products and a consistently high win rate. Our first quarter results show solid execution. With a clear focus on durable growth and expanding profitability, we're well positioned to continue to deliver long-term shareholder value.

And with that, we will open up the line for questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Matt Swanson with RBC Capital Markets.

Congrats on a solid start to the year. I think I'll pick up right where Nicola left off there. So I mean it was a great quarter for social measurement. But I mean, really focusing on that growth opportunity in social activation. any time you have something with over a 90% growth rate, we should probably start there. Can you just kind of give us an update on how things are trending and kind of how the rollout has been going relative to your expectations with your customers, especially on Meta?

Yes. Thanks for the question, Matt. So obviously, we're really pleased with the scale -- scaling and speed of scaling on social activation, which is really being driven by all 3 prongs. The first, as you mentioned, Meta activation and the new meta prebid tools we have there. The second, growth in YouTube through our Authentic Advantage solution; and third, through TikTok as well, which is -- continues to grow at a really nice pace on the pre-bid side.

So our social activation business is really running on all cylinders. And one of the things I think this really underscores is the fact that our solutions are really playing an essential role in the walled gardens. I think there were some questions about whether or not, hey, is DV as powerful or as needed in the walled gardens it is in the open web. And this -- the growth of this is proving that out. I think it also underscores the power of the prebid and kind of post-bid engine where we can launch prebid solutions where we already have measurement in place, we see a nice catalyst for growth.

So it's scaling well. Meta, in particular, now is over 80 clients have engaged with it. Some of our biggest advertisers are now engaged there. We mentioned, I think, in the last call, we wanted to get to a $15 million ARR by the end of '27 -- or '26, I'm sorry, and we're already at $12 million. So like this is growing well. I think it's scaling well. And again, it's definitely being driven by Meta, but it's also that social activation 90% growth number is being supported by our innovations in TikTok and YouTube as well.

Great. And then, Nicola, just kind of thinking more on the guidance side. I know over the last couple of years, you've become less exposed to kind of the CPG and retail sectors. But if there's anything from kind of a macro standpoint that you would point out to us? And then just any update on the advertiser who went through the agency change last quarter?

Yes. So I'll start by saying from a vertical perspective, we spoke a lot about retail and the impact it had on our business for the end of the year. That has normalized as we had expected. We already spoke about it on our last call. And overall, all of our key verticals showed growth in the first quarter of 2026. And we haven't seen material changes across the verticals. If anything, we've been able to diversify further into health care and technology, which allows us to not be as reliant on retail and CPG.

So it feels more normalized, and it feels that we are continuing to diversify in a way that's going to help to create a more predictable business for us. In terms of macro, if you look at the verticals, I'll address the 2 verticals that I generally mentioned in terms of uncertainty based on what's happening in the macro for us, auto and travel are fairly small verticals. So we're not as exposed to those. And just a general comment on macro. We're obviously not assuming strong tailwinds, but we're assuming an environment that's going to remain fairly stable.

Your next question comes from the line of Brian Pitz with BMO Capital Markets.

Mark, since I know Slop Stopper is one of your favorite topics, maybe you could give us your latest expectation around penetration rate and maybe thoughts on the future opportunities around this product. And then maybe stepping back more broadly, as AI content continues to proliferate across the Internet, talk about what you're hearing from advertisers in terms of how they're adapting to this changing environment? Are they starting to get more comfortable? Maybe just a little bit more insight.

Thanks for the question, Brian. And yes, I love Slop Stopper just because I love saying the name on these calls so much. As we noted in the call, Slop Stopper is now being applied on the measurement side to about 40% of all of our impressions. That's a pretty -- it's probably one of our fastest scaling attach rates for any different category that we've seen. So on the measurement side, it's really being picked up pretty quickly, and that's a great thing. And it also shows to your second part of your question that advertisers are still just trying to figure out how they navigate this world of AI content.

And Slop Stopper is built for a specific reason. It's to avoid low-quality, questionable AI content, right? Not all AI content is bad, but there's certainly stuff out there that advertisers want to avoid, and that's what Slop Stopper helps them do. When we think about kind of what's next for that tool, so we launched a prebid Slop Stopper solution on YouTube. We're going to expand that to additional social platforms over the next few quarters.

And it's the platforms that -- the social platforms, particularly around video, that are the most kind of challenging for advertisers to try to figure out where they should and shouldn't advertise against. So we see this as, again, another catalyst for higher attach rates for our solution and another catalyst for folks to actually lean into working with DV, maybe even if they're not because it gives them another tool to use to navigate challenging content.

And I think the other thing, and as I mentioned in my earlier question, there is -- there's a growing need for our solutions within the walled gardens and not because the content there is particularly better or worse than any other platform, but the content there is becoming really overrun with a good amount of AI content and the advertisers really are looking for tools to help navigate that. So the problems that advertisers saw in the open web are evolving to different types of challenges behind walled gardens. And the great thing is that we've got solutions to address all of them.

Your next question comes from Maria Ripps with Canaccord.

Mark, you said that you were in discussions with several LLMs regarding sort of fine ads on their platforms. Is this the same brand safety stack that you offer today? Or will the agentic ad environment require sort of a fundamentally different product? And how are you thinking about sort of pricing -- sort of structuring pricing models for agentic ads?

Thanks for the question, Maria, and it's a really great one. So when we think about what's going on with the ad-supported LLMs, what we've seen so far, even as recently as this week, there's been announcements that OpenAI is embracing third-party ad solutions, right, from demand solutions and creative optimization through companies like cargo and pack you and smartly. The next step for them, as we've noticed, is really to start looking at measurement and verification. And we're leaning into discussions with lots of different LLMs on that front.

And when it comes to kind of what we think about what our solution can do there, it really is to play the same fundamental role that we do in social and in streaming and in display and online video, which is acting as a trust and transparency layer. And that has everything -- has to do with everything from ensuring that ads are viewable and visible by a real human to ensuring that the context where it ends up with is aligned with what that brand and who that brand is and where they want to be. So from a general thesis perspective, the application of our solutions in that environment is pretty much the same. It's building trust between the buyer and the seller.

When it comes to the business model around it, we've got lots of different business models when we employ with platforms. But almost all of them are advertiser paid and they're based on volume of engagement. So as we look at the opportunity within the LLMs, our assumption is that model will extend into there as well, which will be volume-based, advertiser paid based on the scale and level of engagement of that advertiser with the impressions on those platforms.

Got it. That's very helpful. And then just following up on Slotopper. So as we think about the product, do you view it primarily as a retention tool sort of bundled into existing relationships? Or is this a product that can be priced and sold independently? And sort of you just launched it on YouTube, it's coming on other platforms. But sort of what's the realistic time frame for this product to move the needle on revenue either directly or indirectly?

Yes. It's another great question. So I think of Slop Stopper really as 2 -- having 2 positive impacts on our business. The first, as you noted, is the retention. It creates greater value in our engagements with our customers by giving them another category of content to have greater transparency on. So for current customers, who already are using our measurement, I think it gives us kind of a stickier, more ingrained relationship. That is always helpful as we go back to renegotiate deals and look at price increases down the road, right? So that's one.

The second is it helps with attach rate, right? So it helps advertisers who maybe, for example, aren't using us on prebid on YouTube. But now knowing that they can avoid AI slot by using our solution, that drives up attach rates for our solutions there. So I think it has, again, a two-pronged impact the way it currently is structured. A, it helps us retain and grow our relationships with current customers, but it also drives up attach rate. If there's a third aspect as well, it is a differentiator in the market, right?

We're -- it is a unique solution for DV that our competitors don't have. It allows us to win deals on a greater scale than we would if we didn't have it. So there's a direct impact to kind of the new customers that we are able to bring on as well. I think we're already seeing -- and so the last part of your question is like when does it create a financial impact in the business. I think we're already starting to see that a little bit. When you see kind of our measurement growing at 16%, which is a great rate for us there. When you see our social activation growing, which -- of which AI Slop Stopper is part of social activation growing at 92%. Those numbers are fueled by features like this, which are unique to DV, which drive attach and create new customer engagements.

Your next question comes from the line of Andrew Marok with Raymond James.

Maybe just one for me on the chatbot surface again. Obviously, we've seen OpenAI kind of evolve its offering from a CPM to a CPC over time. And of course, nothing is finished yet. But from the architecture of the chatbot ad offering itself, is there anything that they could do that would be more or less advantageous for you to partner with? Are there any kind of structures that you kind of hope that they might lean toward?

Thanks for the question, Andrew. You made some great points. The first is that the model is evolving, and it's evolving very quickly, right, as both advertisers experiment and as the LLMs experiment with advertising, right? So they're changing pretty quickly. The current setup of the structures actually lean very well into what we do very well, which is analyzing content and context that's text-based at scale very rapidly.

So the way that the engagements are set with consumers, the predominant nature of how consumers engage with those chatbots falls kind of very nicely into what DV has done for the last 15 years, which is analyze advertising in contextual or text environments. So that current structure actually fits well to what we do. Our experience working with walled gardens and getting real-time feeds of content, whether it's from folks like TikTok or others, gives us kind of a really strong legacy to build upon to be able to analyze the ads in those environments.

So I guess that's a long way of saying we're pretty flexible. We've built for many different types of systems from video systems to short-form video systems to text-based open web engagements. So the way that ChatGPT or any of the platforms are set up today are relatively easily engaged with our current system and our current classification system based on what we've done in the past.

So we are ready. We've built for very challenging environments before, real-time environments, unique environments based on an individual engagement. And I don't think this is going to be a significant lift for us to move beyond that.

Your next question comes from the line of Matthew Condon with Citizens.

This is [ Briana ] on for Matthew Condon. Just a question. You've raised the Authentic Advantage on YouTube ACV to $10 million from $8 million last quarter and then Meta activation, I think it was now $12 million versus 8 million shares prior. Just can you help us understand the incremental growth you're seeing within these 2 products? How much is it coming from new advertisers? Or is it more so the existing advertisers ramping spend?

So it's a combination of both. So it's current DV advertisers that we've upsold to this solution launching and the previous advertisers who we brought on board actually scaling. As we've noted, we went from high 60s number of engagements to 80-plus now. So we've got new customers scaling the solution on Meta Prebid. The same kind of scaling is happening on Authentic Advantage. So it is a combination of both. What we love about it is once advertisers get engaged, they really do stay sticky and scale with us over time.

And we've got a handful of our largest advertisers kind of growing at very solid rates across both Meta and Authentic Advantage. I mean when you get a 90% growth rate on something like social activation, it's going to be fueled not just by new customers, but by current customers really starting to scale their business, and that's what we're seeing here.

Got it. That's helpful. And then just on the social side, activation grew 92%. Just on activation revenue, it slowed to 6% from the 4Q number. Just can you help unpack what's going on within that line item?

Yes. So activation for the quarter was up 6%, which equates the growth that we had in the fourth quarter of last year. Mark spoke of the social activation growth, which is a high percentage on a smaller base. The rest of the business, as we said in our remarks, has remained fairly steady in the first quarter, and the majority of that business would be driven by mobile and online video and display business.

Now we are obviously focused on being able to verify and continuing to grow where the advertisers are spending. And so tied to that growth that you see on social activation is the social measurement growth of 23%. Those are the vectors that we're focused on so that we're able to continue to verify wherever the advertiser is spending.

Your next question comes from the line of Mark Murphy with JPMorgan.

I'll add my congrats. Interested in behaviorally, what are you seeing out of the group of 6 or 7 of the large retail and CPG companies that had started to drag on your growth rates. I think that was about 1.5 years ago. And with the understanding, obviously, you would have lapped that slowdown. Is there any signaling from those companies relating to their own internals or how they're coping with commodity prices or consumer spending trends? I'm just wondering if you see any kind of different behavior there? And I have a quick follow-up.

Mark, we're not seeing any different behavior than the overall vertical, right, for both CPG and retail. And as I said earlier, Retail, in particular, we've sort of seen the spend patterns normalize after the end of last year, which is a positive for us. And then in general, across the verticals, basically all of our key verticals showed growth in the first quarter.

So the performance we had was spread. We are diversifying away from CPG and retail because we have large clients that are scaling, especially in health care and technology. And so as much as we can diversify as a result of us signing larger brands in different verticals, that obviously helps the business. But to go back to the initial part of your question, what we saw in Q1 is more of a normalized pattern of spend for CPG and retail.

Okay. That's encouraging. So my other question is coming back to the prospect of working with the LLM providers, whether it's OpenAI or Plexi or someone else. I'm curious when you think might be the earliest opportunity for some of those ads to maybe run in scale where they could conceivably be measured and verified in a way that would start to contribute noticeably. And then -- and also, is the push to do this coming more from the LLM providers themselves? Or do you think it's coming more from the brand advertisers?

Yes. Mark, it's a great question. Things are moving very rapidly on the LLMs with regard to advertising. We've mentioned in the last call and this call that our advertisers are more than excited to test them out -- but to scale budgets, and they've been very clear with us and their agent has been clear with us to scale budgets, they've let the platforms know that they're going to need third-party measurement, they're going to need more transparency and more verification.

So the drive to kind of integrate into the platforms is really coming from our partners and the brands who want the same level of transparency, the same level of currency type measurement on the LLMs that they get everywhere else. I mean, on Meta, on YouTube, on TikTok, on the open web, on streaming, they get that kind of agnostic verification and they're demanding it on the LLM. So things are evolving rapidly there. We saw this week that ChatGPT and OpenAI opened their ad platform to numerous third parties to buy -- to allow for buying and creative optimization on those platforms.

So it's clear that they're definitely embracing the marketplace. They're embracing third parties to come in and help build that business. And when you throw a number out there like $100 billion by 2030 in ad revenue, they're going to need partners to do that. So we're very positive and bullish on the opportunity. It certainly hasn't materialized yet, and we've been very clear on that, but we do believe that if we can use history as a guide with what's happened with social with us and streaming and mobile, et cetera, that we think this will be a great opportunity for DV down the road.

Your next question comes from the line of Tim Nollen with SSR.

Could I switch topics to CTV? Actually, you've had an announcement or 2 during the quarter. And I'm just curious, what are you bringing to TV measurement to CTV that is new and different versus what has existed thus far? And I'm using the term measurement loosely, there's a lot of new ways to measure TV. I'm just curious what is the opportunity for DV in a much more complicated TV market these days than it used to be. And just relatedly, you mentioned MTMs for CTV were up 28%, I think, in the quarter. Could you just put that in a bit of context for us? I assume that's accelerating on the new products and kind of where is that trending for the rest of the year?

Yes, Tim, thanks for the question. We've said that of our -- we've got 3 pillars we're focused on for growth: social, AI, which we spend a lot of time on, but streaming is incredibly important to us as well. Impression growth last quarter was up 28%. And it was driven by higher attach rates for some of our new solutions. So the launch of verified streaming TV, which gives advertisers the ability to actually measure and ensure that their ads are being delivered on a high-quality full episode player, not on an outstream or embedded video someplace that it is a truly streaming TV environment. That is gaining traction and driving attach rates up on the postpaid measurement part of our business.

We've also seen with our tools like the automated do not air which allow advertisers to create dynamic exclusion lists of programming that they don't want to be around. Our attach rate has almost tripled for that across our prebid solutions on specific DSPs. So we've seen attach rates grow, which drives prebid. We've seen -- and when prebid attach grows, post-bid attach measurement grows as well. And I think it's because that advertisers have been demanding more transparency on CTV, right?

Believe it or not, they probably get less granular verification data on CTV than they get on social or even on like short-form video and YouTube. So I think our solutions are starting to touch a nerve with advertisers. It's driving up attach rates. And it's increasing, obviously, the number of impressions that we're measuring across streaming TV as well. This is all good for us. Attach rates mean more money on how people are using our solutions more.

Yes. And Tim, on your question for the volume of impressions. So yes, it grew 28% in the first quarter, and we do expect that to continue to outpace the overall revenue growth of the company just because it is the area that is growing. So we do expect that to continue. Okay. And just a quick follow-up. When you're talking about -- I use the term CTV again kind of loosely, but -- and you mentioned streaming, Mark, are you specifying this from video that you've been measuring on -- in other areas like in social?

Yes. CTV, we designate as something that actually ends up on a large player in a living room. Streaming TV includes CTV, but includes high-quality branded entertainment that may end up, for example, on a mobile device or a tablet, but it's Hulu. It's not a TikTok video. It's Paramount. It's not a real. That's different. So streaming TV, think of it includes all high-quality TV. CTV includes stuff that ends up in your living room on a big screen.

Your next question comes from the line of Youssef Squali with Truist.

This is Rob on for Youssef. On the gross margin expansion due to AI, I'm just curious if we could unpack that. And then is this the new norm for 2026? Or are you still targeting the 80%? And then I'm just curious on the drivers behind the sequential trend in large advertising customers and ARPU for that as well.

Yes. So on the gross margin, we achieved 82% in the quarter. And the way we're able to do that is that we are using AI tools to essentially allow us to verify and classify content a lot more efficiently. And our expectation is that even though the volume of impressions that we measure will continue to grow, we'll be able to maintain a healthy gross margin. Whether it's 80% or 82%, it's going to depend a little bit on the volume that comes from the new batch of verification that we will have to do, including on the AI platforms. So it's hard to say.

But one thing is certain is that we will be able to continue to remain efficient as the volumes grow. And so 80% is a safe benchmark, and it's a very healthy benchmark. And then on the other question, which was trending on large advertisers, what we're seeing -- and we called this out in the last call, which is the average dollars per client for the top 100 is continuing to grow year-over-year. We look at that on an annual basis, but it is certain that our large advertisers are being upsold to the new solutions and are part of the growth rates that we mentioned on social activation. So the ARPU is growing as we're able to offer them new products, especially on social and soon on CTV.

Your final question comes from the line of Justin Patterson with KeyBanc Capital Markets.

This is Jacob on for Justin. I guess kind of hitting on that last point about how you're using AI internally on classification. Can you talk about maybe some of the areas that DoubleVerify is using AI internally in terms of ramping engineer productivity and maybe how you're keeping that -- keeping a scaling token costs in mind while kind of ramping adoption internally these tools?

Yes. Thanks for the question, Jacob. We look at obviously, 2 large buckets of how we are leveraging AI. First is in kind of internal execution where we focus on efficiency and effectiveness and better client engagement. And the second major bucket is kind of the AI product development, which we've talked about a lot on this call. When it comes to kind of internal AI execution, we are focused really on agentic development and using agents to create code. So far, we've seen 40% faster software development. We're triaging IT tickets at rates we've never seen before. And it's allowed us to, as we've said before, maintain a headcount that will continue to show efficiencies over the coming year.

So, just in general, engineering operations, we've been able to balance the cost of tokens with kind of the impact on it. And we look at everything from an ROI perspective when we lean in on using AI. You also mentioned core classification. And we've been using that to help our core systems kind of do what they do much faster. It's increased our productivity by 4x in classification. We're driving labeling, what we do when we label content by about 2,000x faster.

And we've been very clear that we've got a decent number of contractors that have been helping us with the labeling and feeding our models. That number of contractors will be reduced by over 100 by the end of the year. So we're seeing efficiencies by using AI and an engineering team across core classification. And eventually, we're going to see this with client interaction as well as we start moving towards more natural language interfaces that enable better client interactions with less client service engagement and overhead. So it's a big impact on our operations. That's why we're seeing not only increasing margins, but faster go-to-market with product and more efficient client engagements.

I will now turn the call back over to management for closing remarks.

Thank you all for joining us this evening. As we look ahead, we remain confident in the performance of our business and our priorities are clear: deepen adoption of the core products with core customers, accelerate the growth of our solutions for social, streaming TV and AI and drive industry-leading margins by leveraging the power of AI. We appreciate your continued support and look forward to connecting with many of you at upcoming conferences.

Ladies and gentlemen, that concludes today's conference call. Thank you all for joining. You may now disconnect.

All right. Thank you everyone for being here. My name is Matt Cost from Morgan Stanley U.S. Internet team. Very excited today to be joined by Mark Zagorski and Nicola Allais, CEO and CFO of DoubleVerify. Thanks for being here.

Matt, thanks for having us.

Of course. Before I get rolling, the disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your MS sales representative.

All right. And with that out of the way, maybe Mark, I'll start with you. Just from a high level, maybe for those in the audience that are newer to the DoubleVerify story. Give us a quick overview of the company, where you fit in the ad ecosystem and how the business has changed over the past few years?

Yes. So we occupied a really interesting spot in the ad ecosystem different than most layers that you probably are familiar with. Most folks are involved in the buying and selling of media. We sit outside of the transaction and actually do something called verification. We ensure that those ad transactions, being the buyer/seller are fraud-free, that the ad impressions are delivered in an environment that's brand safe or brand suitable that the ads are viewable by a real person, and generally are distributed in a geography that makes sense for that advertiser.

That's what we've been doing for over a decade, starting off really focusing on fraud and expanding kind of the analysis that we do those transactions over time. Last year, we analyzed 9.5 trillion transactions. So we do this at scale. And how that business has evolved as it started as an open web business. and then it evolved into a programmatic business where we looked at ads both before they were bought and after they're bought and then morphed into now a social business.

So we have integrations across Meta and TikTok and Snap and X and Pinterest, and eventually will become an AI business as well plugged into the chatbots that are -- and start selling ads. So our thesis has always been wherever an ad can be bought, however it will be bought, we will be there to inform that buy and ensure an ad is protected.

Great. A lot in there that I want to touch on, maybe let's talk about the ad market backdrop first. So what are you seeing broadly there? You mentioned on the call that you saw some retail softness in 4Q and some customer campaign spend pull back. Have you seen those trends continue into 2026? And if so, how are you adapting in response?

Yes. For the most part, 26 is starting off well. We're seeing no kind of sector-based or systematic kind of bumps in the road or issues, which this is a world where advertisers, I think, have become to use to disruption, right? Every year, I think at this time, we have something whether it's Ukraine war or tariffs or now the situation we have here. There's always something. I think advertisers have become very resilient. It doesn't mean there isn't sparks and kind of challenges in certain sectors.

But we've done a really good job of focusing on diversifying the sectors that we're in. and kind of creating guardrails around any one sector kind of creating too much of a bump. We saw some softness in retail but other sectors like pharma and technology did really well for us in the quarter. So for us, it's about diversification and ensuring that we have enough other kind of arrows in the quiver to take care of any kind of sector-based issues and macro slowdowns.

Great. Nicola, maybe I'll go over to you. So you guided to a range of 10% revenue growth for the year, driven by social, streaming TV, some upsell across your enterprise clients and then new customer opportunities as well. So I guess, walk us through the put, some of which I just mentioned, and then it takes underlying the guidance.

Yes. So the building blocks of the guidance, the main building block of the guidance is the net revenue retention of 109% that we saw in 2025. And that's core products with our core customer, and that's the base that very much has been with us for over 9 years. If you look at our top 75 top 50, top 25 clients, it's a base that's growing with our top 100 customers spending 7% more in '25 than in '24 and more and more clients spending more than $200,000 with us every year. So that base had an NRR of 109%. We're guiding to 8% to 10%, the difference there being the all product-led growth.

So new products that are now in market. They are already scaling. Mark already mentioned social activation grew 60% in Q4 off a small base. CTV impressions grew 33% last year, AI products and yet even in market. Those new products will have a ramp into 2026, which will contribute to growth that will be above the net revenue retention. We still have momentum on clients that we want from a moat exiting the space. This will now be the beginning of the third year with those clients, and we have very large brands that are continuing to upsell into our premium priced products and of course, new logos that we get every year.

So that's the math between the 109% NRR and what we're guiding to. The speed at which those products ramp will ultimately result in growth that is within that range or even above.

Great. I want to go back to moat in a few minutes, but maybe I'll go back to you, Mark, on your Authentic AdVantage. So you saw meaningful acceleration of that product in the fourth quarter. I think it was up 60% year-on-year. And I think you mentioned even stronger so far in 2026. So talk about how much of a contributor Authentic AdVantage is to growth? How are you viewing it ramping through the rest of the year?

Yes. So we saw our entire kind of social activation category, which includes Authentic AdVantage, which is prebid on YouTube as well as our prebid on Meta, grew around 60% in Q4 and kind of rolling into the year at a strong basis. We look at social as being probably our largest opportunity for as a catalyst for growth across numerous products. So Meta Prebid,, Authentic AdVantage for YouTube. And I think we've laid out that Authentic AdVantage for YouTube, we think, is a $100 million opportunity at our Innovation Day last year. It's scaling very well with some of our largest customers.

We're going to be expanding Authentic AdVantage into Meta, which we're testing as well as TikTok this year. So we've got platform expansion and customer expansion on YouTube as well. And then just in general prebid on social, we've launched a TikTok solution. Meta is scaling very nicely on the prebid side. So all of our social kind of prebid tools, both Authentic AdVantage and Meta Prebid prebid are scaling well, and I think will be large catalyst for growth for us in the future.

Great. And then maybe moving on to your bundled MAP product. I guess what are some early learnings there? How are customers reacting? And how are you incorporating their feedback into your vision for that in 2026?

Yes. So MAP is the structure in which we looked at taking verification, our core verification solutions, optimization, which is what Scibids does. And performance proof, which is a company called Rockerbox, which we just purchased and bringing them together into one kind of framework to sell customers. The first embodiment of that, as you mentioned, was Authentic AdVantage, which is combining verification measurements with -- and Prebid filtering with optimization from Scibids. So 2 of those the M&A of the math, right? And the launch has been great. So it's given us a catalyst for growth, but more importantly, it's created a differentiator in the marketplace.

So when we look at the combination of optimization and measurement and prebid filtering, none of our competitors have a solution like that. When we look at the ability to bring Rockerbox data into optimization, no one else has a solution like that. And what that's meant is we mentioned recently in our earnings call in Q4 of all the wins we had, so think of all of our new wins. So we're not sitting across one of our competitors in a pitch.

We're entering an entirely new segment where there's no one else that's incumbent or competing with us. That's really important because we've been able to actually build the relationships with customers on an entirely new front. It acts as an opportunity for growth in the future. And we've always had this land-and-expand motion where it's get a product in and then grow with that customer over time.

And we've seen that in action over the years where our top 100 customers now averaged $4.5 million in fees with us, up from $4.2 million. We now added over 20 new million customers in the last year, so people have moved in to the $1 million tier. And that's all about upselling and MAP as part of that, which is bringing integrated solutions together that none of our competitors have.

Got it. From a channel perspective, I want to talk about CTV for a second. So obviously, a key element of the business on the measurement side, and I think some strong impression volume growth in the fourth quarter. Tell us more about the opportunity ahead for DoubleVerify in CTV. How are you limiting fraud in CTV, which has obviously been an issue for that channel at times in the past? And what are some early learnings there?

Yes. So the thing that we always start with when it comes to CTV is that there's a significant amount of fraud in like billions of dollars of fraud every year or dollars diverted to places where they should be on CTV where -- that aren't authentic CTV apps where ads aren't being delivered environments where the TV is actually on, where the set is off, for example. We recognize 4 million fraudulent devices a day. We saw over 100% uptick in Q1 of this year so far in CTV fraud schemes. So this is a real issue. And this leads to kind of like when we see our opportunity for growing in CTV, it's building more products that allow advertisers to avoid those problems, those issues.

One that we launched last year was authentic streaming TV, which is a solution that allows advertisers to ensure that their ads only show up, for example, on a real full episode player of a legitimate CTV applications. So if I feel like I'm buying a Hulu ad, I know I'm buying a Hulu at that's showing up in the Hulu app or on someone's CTV screen. We can allow them to do that in a prebid implementation as well as post bid measurement. We've also automated something called Do Not Airl lists. These are things that linear TV is used for years, which is I don't want to be around these programs specifically. We've now created a tent-based interface that allow advertisers to build Do Not Air lists and then implement them through the Trade Desk through our ABS solution to allow them to avoid certain programs in CTV buys.

So all of these are around 2 main drivers, creating greater transparency in CTV buys and avoiding fraud. We're implementing them at scale now on the buy side through DSPs on the sell through measurement on the sell side. And that will continue to grow. As you noted, we saw 33% growth in CTV impressions last year. And our drive is to continue to get our attach rate on CTV volumes to grow in this year so we can continue to see the online some there.

Great. Maybe I'll address this to both of you and let you kind of carve it up as you will. So going back, you had a number of client wins from moat last year, and I mentioned it may take a couple of years before you actually see the full scale of those customers on the platform. So TalkTalk to us about how you're viewing that upsell opportunity? And how is your go-to-market balancing the opportunity to upsell most clients alongside the existing enterprise?

So I'll start with when we acquired the Moat clients acquired the clients with a product that was equivalent to what they had on the Oracle platform, which was a what we would call a basic product. So we acquired the clients with a basic product at a commensurate price point. And since we've had the clients, we've been able to start to upsell them into the premium price solutions that they didn't have access to when they will with Moat. That motion is going as we expected. We said last year, even though they're very, very large clients, the contribution that they had to our total revenue in 2025 is not to the level that we think it's going to be once we are able to upsell them.

In terms of the upsell motion for Moat clients versus other clients, it's not really very different, except that they are starting from a more basic product. So the upside in year 2 and 3 from the Moat clients is obviously quite substantial, and that's kind of what we're looking to see in 2026.

Great. Maybe going off of that, what products are you the most excited about in terms of upsell opportunity next year?

So I think we've been focused very heavily on social and CTV and the products within those 2 sectors, I think, are probably the biggest opportunities for us. We see Meta Prebid as a solution in which we went from 56 customers to in Q3 to 6% in Q4. We exited the year at $8 million run rate. And we think as we frame that, we do about $40 million in measurement revenue. This is a product on the prebid side that is priced twice what it is on the postpaid. So even if we get half the customers who use us for measurement to buy prebid, that's a $40 million opportunity. We're well on our way there, and we think that's a great growth driver for us in the future.

So I would say, a, in social, it's Meta Prebid and Authentic AdVantage, which we talked about, which is our YouTube product. We've got one of our largest CPG customers now using it, and we've sold it through to another large CPG customer. That's a bit lumpier. So as like clients come in, they test it and then when it works, they spend a ton on it. So we've got $8 million in ACV booked in that business already coming out of last year. We think that's going to accelerate as well. So we're excited about that.

We've talked about CTV solutions, both the authentic streaming solution, the ABS prebid those will be great catalysts for growth. And I think the one kind of big thing out there that we haven't talked about a lot, but I think it's a large opportunity, maybe not in '26, but down the road, is verification of chatbots. And obviously, their chat GPT is now in the ad business and they've embraced third parties in a way that is really exciting for us. They announced a relationship with Criteo this week. There was an article that just came out a few hours ago that they've been talking to Trade Desk, which means they want to bring third parties in to make that business real.

We've seen this story in the past when we were brought in, in the early days of Netflix. We were partners with Reddit prior to their IPO. So I think the role of verification and in this case, dozens of our customers are testing out the ChatGPT ad business. have already told us that they expect the same level of measurement and transparency on ChatGPT that they get on Meta and TikTok and Snap and Netflix and red it. And that's a good sign for us. So our customers are behind us. ChatGPT is embracing the ecosystem in a real way. So I think that to us is kind of like it's not something we've baked into our '26 numbers, but I think it's an opportunity that's quite large for us down the road.

And the last thing I'll say about that, which is really, really the cool thing for us is that's money that's expected to come out of search. And we play no role in search right now. So that's a $400 billion industry that we don't make any money from. If that starts moving into a platform, we do have access to, it's all incremental to us.

That's such an important point. I want to linger on it just for one second. From your perspective, what are the forces that have prevented your product from being adopted in search that are not at play in these LLMs?

Google. When you control 98% of the search market, there's no need to let third parties in and kind of engage you. So I think that's part of it. I think the other part of it is just the nature of the competitiveness of wanting to take ad dollars into a whole new realm. And to do that, to want to be part of an ecosystem, which we're seeing at parity with. It's just a different ballgame altogether for, I think, the folks coming into chat and the ad-supported chat universe. I mean, you already see other people like Copilot, which are starting to play around the fringes. Google with Gemini is going to eventually do advertising as well. So it will be much more even playing field for competitors than it ever was with search.

Great. I guess staying on the AI point, from an investment perspective, Nicola, you've highlighted that you plan to invest in AI capabilities throughout the year. to help maintain gross margins while also accelerating product development in the time to market. Can you share some specific areas of the business that you feel benefit the most from AI integrations and maybe what are some so far?

Yes. So the type of investment we're making is not the infrastructure type of investment that other companies have to do for AI, right? So what we're doing is we are using AI tools to enhance the proprietary models that we have to classify content. And what AI does is it allows us to do it much, much faster. And with fewer resources. So the investment that we're making is using the agents to help inform how we classify at a faster speed, which has the obvious which has the obvious result of just creating a more efficient process for us.

What we said is we basically intend to be able to grow with fewer people because these tools will be able to kind of offset the resources that would have had to put into the business, which leads us to be able to even guide to an EBITDA margin that's 34% as opposed to 33% last year. Those are investments that are efficiencies that are coming out naturally in the way we do business. We're continuing to invest. Most of the investments initially will be around engineering time. And it's a natural way of expanding our margins because the tools are so much faster than humans.

And how should we think about the timing of that push and pull? Because obviously, there's investment now and payoff later?

Yes. We're in the thick of it now. I mean we've already baked in a significant amount of efficiencies this year. We'll have less people working for us at the end of the year than we will at the beginning of the year. And that's based purely on the fact that we can continue to innovate with less people, get code out faster. We're seeing -- our engineers, we've told them, you're no longer writing code. You are managers. By the end of the year, you will run a fleet of agents. Those agents will work for you. You will manage them and they will write the code. And I think that is a whole different perspective on the efficiencies that we have, and we're knee-deep in it. So we'll see value this year, and I think that value will grow going into '27.

Got it. So -- and this kind of relates back to the point about LLMs versus search and kind of how platforms behave. But I guess when you think about major platforms and walled gardens that are, in some cases, trying to build their own proprietary measurement and attribution tools. How are you articulating DoubleVerify's unique value proposition and competitiveness to advertisers in light of that?

Yes. It's a great question. And I think one that has a really simple answer is that we're not biased. Those free tools have always been out there. There's always been an opportunity for someone to use a tool within a platform. But the reality of it is, you can't trust someone to grade their own homework. And that's the case, built an $800 million-plus business on the fact that our advertisers trust us. We don't buy or sell media. We're not part of the transaction.

We have an objective view on what's suitable on what's fraud, on what's viewable and that resonates with buyers, particularly in an era where transparency is getting less and less. There are a black box solutions on all the walled gardens, where those black boxes are give me your money, and I will give you an outcome. But what does that mean for an advertiser, where am I going to show up? What kind of content can be next to? Don't worry about it is not an answer that a CPG brand that has been around for 100 years is comfortable taking.

So we've seen nothing but greater traction in social, greater traction in platforms that are large and closed due to the fact that advertisers want transparency, and I'll give you an inching data point. So Advantage+, which is Meta's optimization solution, which they use, which is relatively a black box across meta, we see our attach rate of our solutions on Advantage+ Plus campaigns 3x higher than non-Advantage+ campaign. So advertisers want the surety of a third party whose objective being able to give them objective information and greater transparency on what's happening in the walled gardens.

So I think would it be fair to assume then, or I guess can you provide any color? Have you ever seen an example where a certain particular type of campaign or certain particular type of advertiser has had enough success that they have replaced tools that you've offered with any of these? Or is that just not happen?

There's always advertisers who are willing to take a chance and risk it. And for us, it's a really simple equation, which is let's run a suitability measurement test with and without us being engaged. And let's see what the results are. And the results are always better when you have an objective referee out there playing it.

Yes. That makes sense. So I guess from a client base perspective. So you've talked in the past about having the impact of some large advertisers pulling back on spend. How have you been able to diversify the client base to help mitigate the impact of those one-off headwinds?

So the diversification happened on 2 levels. One is -- and we said this, that was kind of our goal, right, because we don't control media spend, but we can control the mix across industries. So as Mark already mentioned, in 2025, retail was soft, but CPG actually did very well. And technology and health care now grew into our top 3 in terms of categories. And that's not because we're going after those industries because we acquired clients, especially from Moat that have now scaled into our base. And so that creates a diversification around industries, which really helps.

And then diversification around clients. We're very focused again on the top 100 and getting more dollars out of the top 100. That base is growing. We have 20-plus new customers that are spending $1 million or more. So for us, it's what do we control? It's diversification around industries, greater clients, larger enterprise wins that then allow us to kind of mitigate one-offs. And that's the part that we control, and that's what we're going after.

Great. From a product perspective, I want to talk for a second about Scibids. It's something that's come up a couple of times an acquisition you made, I think, almost 3 years ago now. At the Investor Day last year, the Innovation Day, I think you highlighted a $100 million revenue opportunity over the next 5 years. So talk to us about how you're tracking towards that target? And what are the key hurdles we should be watching as you move towards it?

So Scibids is on plan and what's changed since we acquired Scibids is we've now figured out how to make it the core of what we provide. So before Scibids, in this space, they were really verification companies, and we're one of them. Now we have a verification and optimization company, and now we've been a performance company with Rockerbox. So Scibids is not only an acquisition that had clients and integrations but also had the technology that we could incorporate into what we do and propose Authentic AdVantage and doing much more interesting product offerings well beyond what verification is.

And there really isn't another company that's been able to do that. So not only is it a product that is integrated, that we're able to sell to our clients, but it's now the underpinning of what we can actually do across in terms of the map and in terms of a product that is not out there in the market. It's been very successful, and Rockerbox is the same theory. It's a company that was smaller, but already had clients already had integrations. Those 2 things really give us a jump starting in terms of how we can accelerate our own road map and create performance on top of optimization there.

Yes. The interesting thing about Scibids, as Nicola said, it's a tool that we can leverage by fueling it with our own data to deliver results, right? As a standalone, it does optimization. It optimizes against any KPI. But when we put together with our data, it allows us to do Authentic AdVantage, which is filter impressions right, find stuff that doesn't work, measure how the success of that is and then optimize in the middle of Scibids. So it's all intrinsically linked together.

And so Scibids runs off our data our data in that and to drive a specific KPI, which in the Authentic AdVantage case is lowering costs of impressions, increasing suitability rates, which is our data set and driving greater reach. That, to me, it's like the holy grail of an advertiser, which is better quality, more reach, lower cost. So Scibids is inherently part of that. It's not a stand-alone business anymore. It's part of everything we do.

Got it. I guess in light of how core Scibids has become to your strategy going forward, how excited you are about the product. I guess how are you evaluating M&A opportunities out there? I mean, the ad tech space. There's a lot of assets on sale in the space right now. You've had 2 deals that I think you're very excited about right now. How are you evaluating future M&A opportunities going forward?

Yes. I mean the filters for M&A for us haven't really changed. The market has changed, and we can talk about that, but the filters have always been, can we expand geographically? Can we find an acquisition that can accelerate our own product road map or something that has a product that's an adjacent product that sort of creates a broader offering in terms of solutions that we have. That's still the filter that we're using. The market, yes, they have been deals, but there are 2 things that are happening. Some valuations are still pretty high.

And then I think the introduction of AI into the equation creates a moment where you're kind of waiting to see if we might be able to do it ourselves. So we're still looking, but it feels like we have a lot to do internally. We have a lot of growth that's organic, especially with the AI platforms right around the corner us needing to scale social. So it is still part of the equation, but probably not as much as it was when we did those 2 acquisitions.

Got it. I want to close on 2 kind of big picture ones. Obviously, your business is much more than just open web. I mean, so much of your measurement is social, and there's lots of exciting stuff on activation. Of course, emerging opportunities like on the LLMs. But there's certainly a narrative out there in the market about the health of the open web ecosystem and how that might change, frankly, especially because of the AI developments that we're seeing. So I guess, what is your response to that? What do you think the market might be getting wrong there?

So I think I guess I can be selfish and make it specific to us and say, what they're getting wrong around DV is that we play in many places outside of the open web and those will be growing parts of our business, right? Social activation grew 60% last quarter. We have CTV growing at 33% volume year-over-year. So our growth catalysts have very little to do with the open web in the future. And even our open web exposure, 2/3 of that is mobile and mobile web. So it's not what people consider like a banner on a banner page.

So I think from a selfish perspective, I think we have vast opportunities and our growth catalysts will come from non-open web opportunities. And that would have happened no matter if there is AI or not. 75% of digital ad spend ex-search is in walled gardens. So chasing the 25% and is not the most optimal growth strategy. So I think we've already focused the business on CTV on social. Those will be our growth catalysts moving forward.

But regardless, the open web certainly has a lot of legs left in it. right? You see there's more content than there ever has been before. And some of that's AI generated. So we built tools like slap stopper to keep advertisers away from that. advertisers still don't want to spend every dollar in a walled garden at some point, they still want to reach other people who may not be there. So there's always going to be an open way of opportunity.

And I think there's a great opportunity for us to still play there. No matter what -- the piece of the open web that has been monetized to date has always been very small. So there's an infinite amount of that inventory still to take advantage of their there's still going to be ad dollars going there. And for us, again, the way that inventory is bought and sold may change, but the fact that people need verification and trust in that layer is not going to change.

Then maybe finally, just closing on the topic of AI. You obviously have had an opportunity to talk to logs investors in the flow in the aftermath of earnings and at this event. In those discussions with investors, what do you feel is the most underappreciated AI opportunity for DoubleVerify? And then are there any underappreciated challenges that you're really focused on executing through?

I think we've hammered the opportunities pretty solidly with investors and even today, which is there's a massive opportunity to increase margins for us over time, which we're already starting to take advantage of this year with our increasing guide on EBITDA, to be more efficient to grow and launch more products faster. So from an operational perspective, AI is just accelerating the speed at which we do and letting us to do it more efficiently.

And I think the other big opportunity is one we talked about, which is there's this huge search business that we've never played in that eventually, many of those dollars most analysts think are going to head towards chat environments in which I think creates a huge opportunity for DV for all the reasons we've talked about before, which is there needs to be verification on those platforms. And I think we have a huge opportunity there. So I think we look at AI as nothing but upside for us in both the short, mid and long term. or all those things.

With regard to AI headwinds or things that we could be missing as a challenge. I think the only thing is from us from an operational perspective, how fast we can implement it. there are people still involved in this, right? AI doesn't exist without someone to champion it and someone to manage it. So getting a team of hundreds of engineers to think of themselves as managers, not as coders is like that's a real thing. And I think the ability for us to do that will actually play a huge role in our ability to take advantage of those margin upsides that we can get out of that. So nonetheless, again, we think AI is nothing but a catalyst and opportunity for us in a margin increase for us over time.

Excellent. Thank you both for being here. Thank you.

Awesome. Thank you.

Thank you.

All right. Well, thank you for joining us. We're happy to have DoubleVerify. Mark and Nicola, thank you so much for stopping by.

Great being here.

Maybe we can kick it off. Mark, we reported 4Q last week. What were some of the highlights coming off of the call? And what are the biggest growth drivers we should think about as we head into '26?

Yes. So we ended the year last year growing around 14% year-over-year, delivered 33% EBITDA margins. So had a very solid year for DV coming off of an expectation. At the beginning of the year of about a 10% growth rate. So we are happy with the yearly drive. Coming out of the quarter, we had some really strong highlights in kind of 3 areas: Social, CTV and then AI solutions.

On the social side, we saw social activation grow 60% year-over-year, which is a great growth rate for kind of our emerging solutions there on Meta pre-bid and Authentic AdVantage. We saw our CTV volume impressions grow at 22% for the quarter and ended up around 33% for the year. So we continue to expand into connected television. And then we had some really strong AI offerings launched into the marketplace.

So our agent ID solution, some of the areas around combating AI swaps. So a strong quarter in product development, a strong quarter in delivering kind of solid growth across the 3 kind of emerging growth lines for us.

And we'll dig into each one of those as we go through here. But maybe taking a step back and looking at just like the broader advertising environment, and there's this narrative that's going on that even brand advertisers are shifting to increasingly performance advertisers. There's not as much brand advertising anymore. It's brand performance. Just how do you think about that impacting brand safety specifically? Are brands not as focused on brand safety anymore as they focused on pure performance?

Yes. I think it's an interesting narrative because there's this concept that brands never cared about performance. And all advertising is driven through the fact that you need to sell something, right? And building a brand is about selling more solutions -- or selling more product. So the idea of brand performance, I think, has always been out there. And it is an increasing focus just due to the fact that the tools to track that performance have gotten better and better overtime.

With regard to kind of where does brand safety and suitability fit in, it's always been part of the equation. And just simply put, if you take garbage out of the system, if you take ad fraud, if you take impressions that are not relevant because they're geographically misaligned, if you take brand suitability or safety violations, that's garbage that you're pulling out of the system. What's left performs better.

So we've always thought of ourselves as a performance player no matter what, because eliminating bad stuff helps the good stuff perform better. So brand safety has always had a role. Brand suitability has always had a role. And more interestingly, we've also leaned into solutions like Scibids, which takes that data and makes it even more powerful.

So beyond just taking garbage out, what you have left, how do you make that perform better? That's where Scibids comes into play. And Scibids is an algorithmic bidding solution that we bought a couple of years ago that we're now integrating across our platform and has had significant uptake with our top 100 customers. I think over 50 of our top 100 customers now are using some level of Scibids in their engagements with us.

And then maybe another high-level question is it just I think with everything that's going on with AI, I think people are focusing on what are the structural assets that ad tech companies have that differentiate them from the competition. Can you maybe just take a step back and talk about DV and what are the assets that you have that really sets you up for structural differentiation?

Yes. So I think the core asset that we have that differentiates us is data, right? If you think about what drives an advertising decision, there are tools out there that make the decision, and there are people out there who inform the decision I think where AI disruption is going to be greatest is in the tools that make the decision, right, whether it's an agent -- it used to be a DSP in the future, it will be an agent, right?

The data though is imperative to what that agent -- the decision that the agent makes or what that AI runs off of. That's where we have an incredible proprietary asset. And it's data based on trillions of proprietary transactions that we see every year from our customer base that no one else has access to. But more importantly, that's based on proprietary integrations into leading social, CTV and transactional platforms that are relatively limited.

So if you look at someone like Meta, they work with 3 companies and brand suitability that have access to transaction data that you can make a decision on. If you look at Netflix, it's the same thing. It's 2 brand suitability or safety companies. Those integrations are contracted and they're limited. No matter how good your AI crawler is, it's not going to get into Meta. No matter how good it is, it's not going to get into Netflix.

So the fact that we have these proprietary relationships that are based on our independence and unbiased and unconflicted perspective, give us a data pool, which acts as a really significant differentiator. And that data pool only grows over time and the number of transaction only grows over time. So it creates this really wonderful flywheel where we get proprietary important data that allows us to make better decisions. Those better decisions help us close new clients. Those new clients give us access to more data, and it spins over and over again. So we have a data engine that just gets smarter over time based on proprietary information.

That's helpful. And then maybe let's dig into some of these catalysts that are coming to 2026. And specifically, Meta activation is one of the big ones. Can you just talk about what you're seeing so far to date? And I think one of the big things you talked about before, Mark, was getting to the annual budgeting cycle and getting this into some of those contracts. Can you just talk about how we should see this progressing throughout 2026?

Yes. So we saw a really nice acceleration in the Meta pre-bid or activation part of our business running into Q4. We grew from 56 customers to 68 customers A large number of those, 28, I think, are top 100 customers of ours. So we're starting to scale with the kind of companies that matter with Colgate, with Unilever, with Fidelity, with Sony. These are big brands that spend a lot of money on Meta, and they're now starting to implement the tool.

A catalyst for that was the fact that we launched in GA, but it was relatively alpha-based GA in early -- in Q1 of last year. That product has gotten better overtime. Data transfer from Meta to DV has gotten significantly faster. The number of categories that we're able to filter against has gotten significantly larger. And that's meant that the product efficacy has gotten better. That allows us to sell new customers because they run it -- they only have -- they not only have a budgeting cycle, but they have a testing cycle they run through.

So they want to run the filter, run impressions across Meta with the filter and without the filter and see what their suitability rates are, for example. And we're seeing significant lifts in suitability after you run the filter. That continues to grow as the product gets better. So we've seen that scale over time. We mentioned we exited the year around an $8 million run rate on the solution. And we ended the year at an even stronger run rate in 2026.

So we look at that solution if we start to scale it. We do around $40 million of measurement with Meta on just verification measurement. This is a solution that costs roughly twice as much. So even if we sell half of our customers through on Meta pre-bid at twice the price, you're looking at a $40 million business opportunity for us in the relative short term. So we're scaling there nicely. The uptake has really started to pick up. We've got some big brands against it, and we're very optimistic that that's going to be a real impact driver for '26 and beyond.

And then the other big one is DV Authentic AdVantage. Can you just talk about maybe step back and inform investors exactly what Authentic AdVantage is? And then two, what are you seeing as far as adoption and then also performance outcomes?

Yes. So I know for those of you who don't know a lot about DV, we talk about a lot of products, right? So we do have a lot of stuff we throw out there. But just to take a step back, the main goal for everything that we do is to ensure that ad impressions perform and that ad spend is protected from bad behavior, from fraud or brand safety or suitability violations and lack of geo alignment.

We do that either before an impression is bought, which we call pre-bid, so filtering or we measure it or block it after it's purchased. There's one other aspect of this tool where we started this conversation, which is around performance. And performance is about optimizing what happens before you buy based on data that you have after you buy. That's where Scibids comes in. And Authentic AdVantage is a solution we launched last year, first on YouTube, which takes all 3 of those aspects.

So pre-bid filtering, post-bid measurement and optimization and puts them together into one package. We launched that across YouTube in mid last year with some beta customers. We've now continued to scale that. We mentioned about $8 million in ACV have been closed running into the end of the year. And that business continues to grow really nicely. The value prop there is pretty straightforward. We are able to drive 20% to 30% higher reach, 20% to 30% lower cost per unit while increasing brand safety and suitability at the same time.

So it's kind of like the Holy Trinity for an advertiser, give me more reach that's cheaper, but give me quality that's better. And that's what Authentic AdVantage does. And we've launched it across YouTube, and we have plans in the midterm to roll it out to some other platforms as well.

Got it. Okay. That was my next question. [ I wouldn't expect ] any additional platforms. But it sounds like they're coming, but it just the takes time.

Yes. So we're testing it on Meta now. Still very early days. We're testing on Meta. And we also -- now that we have prebid on TikTok as well, we think there's some opportunities to roll into there. But our main focus right now is expanding our Authentic AdVantage implementations on YouTube. We've got customers that spend $1 billion a year on YouTube, $1 billion. And if we can just scratch the surface of that $1 billion, and this is a percentage of media product. So when you buy Authentic AdVantage, you usually pay against the percentage of media. There's really significant upside for us.

At our Investor Day that we had last year, we saw this as a $100 million opportunity down the road. And I think it's early days, but we're seeing really great uptake. We're seeing great results and some of our biggest customers are trialing it out. So more to come there for sure.

And then CTV, this is another key catalyst for you. I think some of the product launches or [ do-not air list ], the Authentic streaming solution that you launched. Just how should we think about those products scaling in 2026 and beyond? Where are we, I guess, in like an innings perspective on CTV?

Yes. I'd say we're solid second inning there. We're a little bit out of the first inning because we have a decent CTV business. As I mentioned earlier, it grew over 30% last year. In the last quarter, it grew 22%. But I think we're still underpenetrated on CTV to be direct. Part of it has to do with the fact that some -- how CTV is bought, but also it has to do with the kind of data that we've been able to get to make our decisioning based on what advertisers are really starting to get concerned about, which is greater transparency in CTV.

Both of those things are changing. So through our relationship with IMDB, we're starting to now pull and create program level analysis on CTV impressions. And we've got significant scale across the CTV platforms as well. Both of those things together have helped us launch things like Authentic streaming TV, which allows an advertiser to basically have the confidence that they're buying real branded CTV impressions.

I know it sounds nonsensical, but in many, many cases, advertisers think they're buying CTV and they're buying a gaming app someplace or something else. And we've seen significant amounts of CTV fraud out there. With Authentic streaming TV, both on a pre-bid focus and a post-bid, advertisers are able to measure and ensure that they've gotten an authentic streaming platform and filter out those impressions that don't that don't align with that.

The ABS list right now, it's a relatively small program that we've rolled out only on Trade Desk. But the goal there is our attach rate for ABS on CTV, and ABS is our authentic brand suitability solution, which is hundreds of millions of dollars of revenue for us, only has an attach rate about 10% on CTV impressions, right? So we have a huge opportunity for ABS on CTV, but we've got to find the right fit.

And I think with [ do not air list ] through ABS, we've got the right fit. What the tool does is it allows advertisers to literally exclude programs through an agentic interface, so they have -- we have an agentic-based interface, exclude programs that they do not want their programs that they don't want their ads to run on. This is something that's been done in linear TV since started. Don't run me on this kind of program and show.

We've now moved this into digital in the agentic age by building this solution. The goal there is to obviously drive attach rates up and also drive the CPMs up as well. Because on CTV impressions, I don't think we're getting the value from our buyers of what that product is worth. We now have some new tools to start charging a higher rate for ABS, for CTV because I think now it has real value against CTV impressions.

That's great. And then maybe one that's more of in the distant future, not distant, but maybe near distant future, is just verification on AI platforms. Obviously, it's an early concept. It really hasn't -- no one's launched it yet, but it's coming. Just how does DV fit into that environment? And how do you expect it to evolve the company as a whole and opportunities that you guys could get into?

Yes. So Matt, I mean, to be direct, it's evolving way faster than we expected. With ChatGPT now launching an ad-based version much faster than I think we expected or anyone in the industry expected, this is something that's barreling forward. And the interesting thing is that we've seen this story before, and we've played in this story before.

Rewind 2 years ago to Netflix, which was never ever, ever, ever going to run ads and then 1 day to decide to run ads. Within the first 60 days, they gave us a call and said, hey, we need verification. We're seeing a similar story play out with ChatGPT, where they were never going to run ads. Now they're running ads, they're launching tests. We have several dozen of our customers as part of that test.

So we've been involved with our customers from day 1. And what our customers have told us is -- we expect the same level of verification that we have everywhere else across social, across CTV, across mobile web, across the Open Web on chat environments as well.

So that to us is a good sign that we have our customers behind us. I'm sure you saw this week that Criteo announced that they're a third party now is going to allow us to be part of the trial test. So all those indications are pointing towards the fact that [ ChatGP ] is -- wants to play with the broader ad tech ecosystem. It wants to bring in partners that can make a difference for them and that there's tons of customers out there who are leaning in and they're customers of ours that are kind of saying, we want the consistency on ChatGPT that we're getting everywhere else.

The other thing that's really interesting for the -- on this front is that from what we've read, most analysts are saying that dollars that will go into chat advertising are dollars that are coming out of search. And that's expected to be somewhere from $25 billion to $30 billion in the next 4 years. That's money that we don't go after right now. DV has 0 coming from search.

So we look at this as a total incremental TAM of like $400 billion that we've never tapped into. And then if it rolls in there and it proceeds the way we expect it to, it will be a great new opportunity for us.

Great. And then Nicola, Scibids and Rockerbox were 2 key acquisitions you made. We actually kind of hit on Scibids and the adoption that you're seeing there. But can you just talk about what you're seeing as far as adoption and just how those products are going?

Yes. So maybe we start with why we acquired these companies and what the philosophy was there in terms of M&A. These were 2 companies that were in market with clients and already with integrations within the ecosystem when we acquired them. So we bought businesses that already existed with client relationships where they didn't have the distribution that we have with so much more -- so many more clients. And what it allowed us to do is expand from where we were a few years ago, it was just protection to then adding outcomes and now performance, right?

And so you now have a suite of products that no one else really has out in the market, and that allows us to have conversations with clients that other companies cannot have. And so Authentic AdVantage -- the core assumption around Authentic AdVantage really is built on Scibids and Rockerbox will come into the fold as well as we develop products around outcomes and performance. So it's worked out very well in terms of our whole M&A strategy. it is really driving all these product evolution that we've seen in the past few years.

No, that's great. Maybe I can sneak another one in here because I think I think it's important for everybody is just as we think about guidance for 2026 and just -- I know for 1Q, I believe it's a slight acceleration that people are seeing. What can you give investors as far as just comfortability around like hitting the guidance targets and then moving forward, what's embedded in those? And just -- yes, what can you give as far as like is it some of these new product initiatives? What are we seeing in there?

Sure. Yes. So the anchor for our guidance is the core products into the core base of our clients. The average tenure for our top 75, 50 and even 20 clients is almost 9 years. And our NRR last year was 109%. So off that base, that's the baseline for what we expect for 2026, 109% NRR. And then, of course, we've guided to on the higher end, 10%. So you have an extra point there that comes from everything we just is cut. It's going to be a product-led growth from all the adoptions of these new products. The speed at which the products are adopted.

It depends a little bit on us, but it also depends on the clients and opening up budgets and adoption of the new solutions. But that's how we're thinking about the guidance. And the only other thing I would say is it is going to be more towards the second half of the year that you'll see the acceleration just because last year in the first half, we had a strong first half. But that's how we think about it. And the upside to the numbers will be the speed at which we can have an adoption of these new products.

No, that's great. Yes, it definitely seems like there's not too much that's embedded into these new products. And if things go well, there is potential. You've operated this business typically at 33% EBITDA margins, at least for the past couple of years. You just guided to 34%. What's changed and what's enabled you to maybe bump up those margin targets?

Sure. So what's not changed is the need for us to continue to invest in the business. So we are a company that invests in the business and this is how we were able to launch all these products that others cannot have in the market. What has changed, though, is that the advent of the AI tools really allows us to create efficiencies within the business. The investments we need to make around AI for us is not the infrastructure of AI, right? It's the usage of their tools to continue to develop our own proprietary databases and our own proprietary classification of content.

But that is now at such a speed that we're able to actually extract efficiencies that naturally will fall to the bottom line. So we're able to continue to invest yet show efficiency growth. We expect to be able -- simply said, we expect to be able to grow with fewer people because the tools are going to allow us to do what we were in the past doing with a lot more people.

Yes. No, that's great. And then a $300 million share buyback you announced last quarter, I think the biggest in the company's history, if that's...

Correct.

Can you maybe just take a step back and just talk about capital allocation priorities? Should we expect any more M&A from Scibids and Rockerbox that you bought previously? Like just what are the priorities as you sit here in '26?

Yes. So the 3 pillars of the capital allocation, again, haven't really changed, which is we invest in the business. We look for M&A opportunities like Scibids and Rockerbox, which, by the way, we're able to fund with the cash that we generate and then buybacks, right? So '26 will be the third year that we're doing buybacks. $300 million is the largest available amount for buybacks. What we said is that we will do buybacks that is at a clip that's faster than we did in 2025.

For '24 and '25, we were anchoring buybacks to the stock-based comp expense. In '26, we said we're going to do it at a clip that's going to be faster than that. Last year, buybacks allowed us to reduce outstanding shares by 3%. $300 million would create a much bigger reduction in shares if we use it all. So that is the beauty of the business, right? Like the free cash flow conversion, it was 70%. Last year, it was 60% the year before. And so we have a lot of options to use cash, and we're always focused on return to shareholders and buybacks as part of that.

And look, we firmly believe that we've got a great plan in place. We've got huge opportunities ahead and who better to bet on than ourselves. And I think that's a great use of our capital.

Yes. No, definitely. And then Mark, maybe a last one here just because last year, IAS got acquired. And like just can you maybe take a step back and talk about the competitive landscape? Has anything changed since then? Just like as we sit here today, how do you think about the competitive intensity in the...

Yes. I mean it's a great question. And if anything, we feel like the competitive landscape has tilted more in our favor over the last 12 months due to the fact that we just spent 30 minutes talking about all these amazing products that we've invested in. And out of all of those, our competitors have launched none, right? They have no optimization solution. They've got no solutions in social to address kind of AI slop. They've got no solutions like Authentic AdVantage out there that bring together pre-bid, post-bid and kind of performance-based in 1 package. They've got no CTV solutions.

And why that's happened is because when you're distracted by acquisitions and not up deploying capital, you can't deploy products into the market. And you could listen to me rant or you can look at our 90% of our wins in Q4 were greenfield wins. And those were wins in which there was no competitive product on the other side of the table that we were displacing. That means we're going into totally new areas with a totally new value prop that our competitors can't meet.

So I think in addition to the great uses of capital that we do in investing ourselves, we're also investing in product and tech that our competitors can't do because they're distracted by $1 billion of debt sitting on their balance sheet when we've got 0.

No, definitely. Well, it's setting up for a great year for 2026. Lot of product catalysts. Mark and Nicola, thank you so much for that.

Thanks for having us.

Appreciate it.

Thank you.

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to DoubleVerify Q4 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Brinlea Johnson. You may begin.

Good afternoon, and welcome to DoubleVerify's Fourth Quarter and Full Year 2025 Earnings Conference Call. With us today are Mark Zagorski, CEO; and Nicola Allais, CFO.

Today's press release and this call may contain forward-looking statements that are subject to inherent risks, uncertainties and changes and reflect our current expectations and information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and our annual report on Form 10-K.

In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results. Reconciliation to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at ir.doubleverify.com. Also, during the call today, we'll be referring to the slide deck posted on our website.

With that, I'll turn it over to Mark.

Thanks, Brinlea, and good afternoon, everyone. Let me start today's call with a quick take on the most recent quarter. In Q4, we delivered a strong 38% adjusted EBITDA margin and 8% year-over-year growth in revenue, demonstrating the strength of our operating model even as revenue came in below expectations.

As we mentioned last quarter, while we anticipated some retail softness, our results were impacted by further pullbacks of a customer campaign spend late in the quarter, primarily due to agency-related changes. We saw no broad-based spend decreases or detachment of DV services and noted exceptional strength across multiple sectors in the fourth quarter, including health care and technology. We reported strong customer retention during the quarter with no new deactivations among our top 100 customers in Q4 and usage across social and streaming TV continue to scale.

In addition, our Programmatic business continued to grow, with nearly 2/3 of the impressions that we engage with delivered on mobile, in-app and mobile web environments. Outside of mobile, both programmatic display and video measurement impressions grew at double-digit rates in 2025.

The investments we are making in building durable, diversified long-term growth in sectors that continue to thrive alongside the AI revolution, namely social, streaming and AI platforms are becoming core catalyst for our future growth. Social activation accelerated meaningfully growing at approximately 60% year-over-year in Q4 and starting 2026 at an even stronger year-over-year growth rate. And Authentic AdVantage on YouTube is entering the year with $8 million of expected ACV.

CTV measurement impression volumes also grew impressively, up 22% for the quarter continuing their cadence of outsized growth. We also saw strong interest in our ABS enabled Do-Not-Air-Lists for Streaming TV, which entered general availability with a strong debut this January with 3 top 15 customers, representing hundreds of millions in CTV spend implementing prebid controls. AI measurement tools like SlopStopper and Agent ID showed meaningful engagement rates and are now being tested by 6 of our largest customers with a broader rollout scheduled for the coming months. Together, the areas which are most important for a durable growth story in the future are setting us up for a strong 2026.

Before turning to the full year 2025 results, I want to discuss the continuing evolution of our product-led growth cycle and what is really on everyone's mind, our take on the potential impact of AI on advertising and DV's business. DV's growth cycle and trajectory is foundationally shaped by the timing of product releases, platform enablement and customer adoption. Over the last year, our new product development cycle accelerated across social, CTV and AI platforms with several major releases rolling out in the fourth quarter of 2025. With Social and CTV innovation is now broadly available and AI capabilities continue to expand, we've entered 2026 with a more diversified revenue mix driven by a broader product offering.

These new solutions fuel 2 main product-led growth engines. First, we have a significant opportunity to expand within our existing customer base. As we elevate product attach rates for our new social CTV and AI Platform Verification capabilities, we drive higher wallet share, spur revenue growth and create broader, stickier client relationships as enterprise customers adopt more of our platform. As a result, average revenue per top 100 customers grew by 7% for the year to $4.5 million. Second, our accelerating product cycle is enabling us to win new customers and gain market share with proprietary solutions as entry points to new customer engagements. Our leadership in the fastest-growing areas of digital advertising, social CTV and AI-enabled performance optimization is expanding our relevance, increasing our competitiveness and landing us new logos. These differentiated solutions drove a 90% greenfield win ratio in Q4, our highest ever recorded meaning that we are winning deals with solutions in new areas in which there are no competitive incumbents to displace.

Ultimately, our product innovation in 2025 harnessed the power of AI to expand TAM improved solution efficacy and drove stronger margins and also helped deliver solid results that will set the stage for future growth. We grew total full year revenue 14% year-over-year, while exceeding the 10% growth outlook we provided at the start of the year. We also delivered double-digit growth across all 3 revenue lines. We continue to onboard large global enterprise customers, further strengthening our position as a trusted partner to the world's leading brands. This momentum delivered strong profitability and cash generation with a 33% adjusted full year EBITDA margin and $211 million in net cash from operating activities.

Now turning to the impact of AI on marketer behavior and more importantly, for this call on DV's business, to put it simply, we see this evolution only in terms of accretive future opportunities for DV. The ad ecosystem has always been on in constant flux. Where marketers buy ads, how they buy ads and even how they create those ads changes with each advancement of media and technology. The current AI revolution is just the next evolution of this story. And all of these evolutionary cycles, what has never changed is why marketers buy ads, their need for measurement and their demand for trust and transparency. Whether it was ad networks in 2010, programmatic platforms in 2018, social networks in 2021 or agent-based AI platform buying in 2026 and beyond, DV has been and will be essential in driving transparency and trust.

Regardless of changes in media or mode of buying, our customer value proposition lies in the vast amount of data we gather and the trust layer that supports the unbiased independent analytics we provide. In the AI era, the question isn't about who has the best model. It's about who has the best data. DV generates a massive proprietary data set from the hundreds of terabytes of advertising data we process every day across trillions of annual transactions. This isn't generic web data that anyone can access or scrap. These are proprietary signals tied to actual ad delivery, brand suitability, fraud detection and business outcomes based on contracted relationships with leading platforms. LLMs can help us interpret this data faster and more efficiency, but they cannot replace its unique value. DV has never been about the media or the method, but about the data supporting the motive.

In addition, OpenAI's introduction of advertising marks the creation of an entirely new digital media environment, and DV is ready for this evolution. According to e-Marketer, ad spend on LLMs is expected to grow to over $25 billion by 2029, cannibalizing over 14% of search spend, which is a $400 billion market that DV has historically not been able to access. We believe advertising within LLM platforms has the potential to create a new search like digital channel for independent verification for companies like DV becomes foundational.

Independent metrics in this new environment are critical and several dozen of our current customers who are experimenting in this new space have already indicated that they expect consistent measurement across everywhere they advertise. While AI platform ad models continue to evolve, advertiser demands remain the same. Ensuring ad transactions are trusted and transparent and adds a reviewable, brand suitable and delivered to legitimate traffic within authentic content environments.

As digital advertising becomes more automated, agentic and opaque, as AI slop becomes the must avoid content category for advertisers, the need for independent verification, protection and performance measurement has never been greater. Regardless of platform, buying mode or message, DV will be an integral trusted part of this ad equation.

Building on our progress in product innovation in 2025, I'll now walk through the updates on our Q3 product cycles. Starting with Social, Streaming TV and closing with AI. As noted on previous calls, our goal is to increase the contribution of social streaming and AI-driven solutions from under 30% of total revenue today to approximately 50%, creating a revenue mix that more closely aligns with global digital ad spend trends.

Starting with social, it remains our fastest-growing environment and a core driver of our next phase of growth. As I mentioned earlier, Social Activation accelerated meaningfully to approximately 60% year-over-year growth in the fourth quarter, up from around 20% growth in Q3. That acceleration was driven by continued scaling of Social Prebid, building upon Meta's specific product enhancements that we upgraded through the year. Expanded content level avoidance across feed and reels nearly doubled filtering coverage and materially improved activation effectiveness.

By year-end, 68 advertisers were live on Meta activation, up from 56 in the third quarter. Adoption is being driven by large enterprise advertisers, with 28 coming from our Top 100 clients. We exited December with Social Activation at an annualized run rate of approximately $8 million, ahead of our expectations, and it continues to be our fastest-growing area as we start 2026.

Adoption of DV Authentic AdVantage on YouTube also expanded during the quarter with estimated ACV of approximately $8 million driven by continued customer adoption. Some of our largest CPG customers has started scaling on the solution, and we are excited about the opportunity to grow this business over the coming quarters.

Also driving social growth into 2026, we expanded attention measurement on TikTok during the fourth quarter, becoming the platform's first badged marketing partner to deliver impression-level attention insights. In addition, we expanded our post bid brand suitability measure on Meta to include Facebook Real Overlay placements, extending independent transparency across one of the platform's fastest-growing ad formats. Finally, we expanded our integration with Meta through the launch of Rockerbox Relay, which enables Rockerbox customers to set attribution results to Meta as an optimization signal. This launch improves advertisers' ability to drive performance against outcomes.

Turning to Streaming TV. 2025 marked an important inflection point in our expanding CTV strategy. Over the course of the year, we launched a series of products to address growing advertiser transparency demands and increasing fraud in streaming environments, including verified Streaming TV measurement and pre-bid controls, automated Do Not Air workflows, and enriched program level intelligence through our licensing of IMDb data. We've already begun to see solid early adoption of ABS Do Not Air Lists from our largest advertisers as well as strong interest in our Authentic Streaming TV solution, which we launched at CES in January.

Expanding our growing CTV footprint. We launched our integration with LinkedIn to deliver measurement for CTV impressions. This expansion extends DV's independent verification and authentication to LinkedIn CTV ads across existing streaming environments, increasing measured CTV coverage and reinforcing DV's leadership in transparent cross-channel media measurement. Together, these innovations helped grow CTV measurement volumes by 33% in full year 2025, reflecting continued advertiser demand for independent transparency in streaming environments.

As mentioned previously, the tools that we launched in 2025 to combat the increasing challenge of navigating AI slop are gaining traction with our largest customers. This momentum will be bolstered in the first half of 2026 with the launch of DV Slop Stopper for Social. A premium solution to address a content arena right with issues that advertisers are eager to avoid on platforms that attract the lion's share of advertiser spend. 2025 was a year of product development acceleration, partner expansion, meaningful growth across all of our business lines and continued strong margins and cash flow.

Before turning it over to Nicola, I want to briefly address capital allocation. Returning capital to shareholders is a core element of our long-term value creation strategy. And as of today, we have $300 million authorized for share repurchases, the largest amount in DV's history, which we plan to actively deploy in 2026 at increased levels versus prior years. This reflects our confidence in our business the continued strength of our balance sheet and our commitment to creating long-term shareholder value.

With that, let me turn the call over to Nicola.

Thanks, Mark, and good afternoon, everyone. Let me walk through our fourth quarter and full year 2025 results and then discuss our 2026 outlook, including the key growth drivers and assumptions underlying our guidance.

For the fourth quarter, revenue was $206 million, representing 8% year-over-year growth. For the full year, revenue was $748 million, representing 14% year-over-year growth despite variability driven by the retail sector in the second half.

In the fourth quarter, activation revenue increased 6% year-over-year and measurement revenue increased 8% year-over-year, both driven primarily by Social. In the fourth quarter, Social Activation and Measurement together represented approximately 19% of total revenue. Supply side revenue increased 17% year-over-year supported by retail media platforms and expanded publisher and platform integrations. In the fourth quarter, total advertiser revenue, which includes activation and measurement grew 7% year-over-year driven by 8% growth in volume or MTM, partially offset by a 3% decline in price or MTF, excluding the impact of an introductory fix arrangement from one large customer onboarding from Moat.

Fourth quarter activation revenue grew 6%, with ABS representing 52% of activation revenue in the quarter. As of year-end, 78% of our Top 500 clients were using ABS. Measurement revenue grew 8% year-over-year, with Social management revenue increasing 11% and representing 49% of measurement revenue and international revenue increasing 5% and representing 29% of measurement revenue. Excluding the previously disclosed CPG customer suspension at the start of the year, social measurement revenue would have grown 22% in 2025. Finally, revenue from Rockerbox was slightly ahead of expectations.

Turning to full year 2025. Revenue grew 14% driven by double-digit growth across each revenue line, including 15% growth in activation, 10% growth in measurement and 25% growth in supply side. Advertising revenue growth remained primarily volume driven, with MTMs increasing 15% year-over-year to $9.5 trillion billable transactions measured, partially offset by a 3% decrease in MTF to $0.07 excluding the impact of an introductory fix fee arrangement for one large customer onboarded from Moat.

We expect volumes to remain the primary driver of growth in 2026, as we continue to verify more digital ad impressions through new product launches and through new channel and geographic expansion. Supply side revenue grew 25% year-over-year by adding new CTV and digital platform partnerships and through continued expansion on retail media networks, with DV tags now accepted across 152 retail media networks, including 18 major platforms and 134 retailers globally.

For the full year, we achieved a net revenue retention rate of 109%, and gross revenue retention remained above 95% for the fifth consecutive year. Average revenue for Top 100 customers increased by 7% year-over-year to $4.5 million, and we ended the year with 344 advertisers generating more than $200,000 annually. Our long-term customer relationships remain strong with Top 75, Top 50 and Top 25 customers working with DV for approximately 9 years.

Moving to expenses. In the fourth quarter, we delivered 83% revenue less cost of sales and $78 million of adjusted EBITDA, representing a 38% margin. For the full year, we delivered 82% revenue less cost of sales and $246 million of adjusted EBITDA, representing a 33% adjusted EBITDA margin to combine continued revenue growth with solid profitability. We ended 2025 with 1,231 employees slightly down year-over-year, excluding the impact of the Rockerbox acquisition.

In 2026, we expect to continue to invest in AI capabilities that will enable us to maintain revenue less cost of sales over 80%, accelerate product development and time to market while also growing with fewer employees through improved productivity across the organization. This will allow us to scale the business more effectively and increased EBITDA margins in 2026.

Turning to cash flow. We generated approximately $211 million in net cash from operating activities in 2025. capital expenditures were approximately $39 million or 5% of total revenue, driven by investments in innovation and platform scalability. This resulted in free cash flow of approximately $173 million, representing a conversion rate of approximately 70%, up from 61% in 2024 and reinforcing the durability of our cash-generating model. Our strong cash generation enabled us to repurchase 8.4 million shares for approximately $132 million in 2025, outpacing stock-based compensation expense and driving a net reduction in shares outstanding of approximately 3%. We ended 2025 with approximately 162 million shares outstanding, approximately $260 million in cash and no long-term debt, providing us with significant flexibility to invest in growth, pursue strategic opportunities and return capital to shareholders.

Reflecting continued confidence in our financial strength and long-term growth prospects, we have, as of today, $300 million authorized for share repurchases, which we plan to deploy in 2026 at increased levels versus prior years.

Now turning to 2026 guidance. For the first quarter, we expect revenue to range between $177 million and $183 million, representing a year-over-year increase of approximately 9% at the midpoint and adjusted EBITDA to range between $48 million and $52 million represented a 28% adjusted EBITDA margin at the midpoint.

To provide context, fourth quarter growth of 8% reflected elevated retail pressure driven by campaign pullback late in the quarter from a couple of large customers. Based on the current momentum we have seen to date, our first quarter guidance is 9% growth despite a 17% growth comparison in the first quarter of last year. This improvement reflects expected higher contributions from our recently launched Social and CTV products, along with continued sector diversification towards health care and technology.

For full year 2026, we expect revenue to range between $810 million and $826 million, representing an 8% to 10% year-over-year increase. Our full year revenue outlook is driven by a recurring base of growth of core products to core clients, which is reflected in our net revenue retention of 109% in 2025. Incremental growth in 2026 off the base will be driven by 3 product-led growth engines.

First, adoption and scale deployment of the recently launched solutions across Social and Streaming TV. Second, incremental revenue growth from existing enterprise clients scaling across our product offering. And third, continued new customer acquisition driven by DV's differentiated MAP product vision, which integrates independent verification with real-time optimization and outcomes measurement. Our 8% to 10% year-over-year revenue growth guidance assumes a measure take on the impact of these product like growth drivers as they scale in 2026 and doesn't assume an improved macro advertising environment.

In terms of quarterly growth cadence, 2026 shapes into a stronger second half growth as we lap 19% growth in the first half of 2025 as compared to 9% growth in the second half of 2025.

For full year 2026, we expect adjusted EBITDA margins of approximately 34%. We're guiding to an increased adjusted EBITDA margin of 34% in 2026 as compared to 33% over the last 3 years, reflecting our ability to grow the business more efficiently while improving productivity across the organization.

Below the line, we're implementing an updated equity incentive plan that is projected to reduce the annual value of equity grants by over 40% as compared to 2025. As a result, we expect full year stock-based compensation to decline year-on-year and range between $102 million to $107 million. For the first quarter, we expect stock-based compensation of approximately $23 million to $26 million and weighted average fully diluted shares outstanding of approximately $164 million. We expect capital expenditures, including capitalized software to be approximately $46 million in 2026, reflecting continued investment in product innovation, AI-driven automation and platform scalability.

With zero debt and approximately $260 million of cash on the balance sheet at the end of 2025, we remain well positioned to invest in growth and execute on our capital return strategy. In closing, 2025 was a year of product evolution for DoubleVerify. We launched the next generation of Social Streaming TV, and AI products, deliver growth, maintain strong margins, generating meaningful cash flow and return capital to shareholders. As we move into 2026, we're well positioned with a more diversified business, a clear focus on durable growth and expanding profitability to deliver long-term shareholder value.

And with that, we will open up the line for questions. Operator, please go ahead.

[Operator Instructions] Your first question comes from the line of Matt Swanson with RBC Capital Markets.

Mark, I really enjoyed all the color you were giving us on the kind of AI opportunities and maybe kind of explain to us why the risks might not be what some of the market participants might think they are. I also love the name SlopStopper. But if you go a little bit deeper into just kind of what inning you think we are in terms of like this AI revolution, whether it be from the content side or from like your internal products? And just how you think this is going to play out throughout 2026, but also kind of the changes you might be making for the long term.

Yes. Thanks for the question, Matt. And I would say for both internal and external opportunities, we're early first inning. Like we're just scratching the surface right now, which makes it so exciting. As we noted, we see AI as nothing but a huge opportunity for DV. Our role in the ecosystem has always been one to provide trust and transparency in buying and whether those are agents buying or DSPs buying or an exec sitting behind a keyboard somewhere 15 years ago, we've always played that role. And when we think about those opportunities internally, they're about efficiency and driving operating margin.

And as you saw, we were able to raise our guide this year on our EBITDA expectations. A lot of that is driven by the fact that the things that we do, contextualize content, try to stamp out fraud, driving greater transparency. All those things are done faster, more seamlessly and cheaper through AI. We mentioned before, full the classification volume already 4x the productivity, 2,300x faster labeling of content. All of those things are real lifts for our business and drive better margins.

On the outside and the external, we look at not only the universe of challenging content that AI creates as being an opportunity. So as you mentioned, SlopStopper, we'll be expanding that into social later on this year. and looking at AI as an opportunity for optimization through authentic advantage as well as just this big meatball that's out there is the chatbots, which are now running advertising. And just as the other venues that we've entered, whether it was CTV through Netflix or social when we added Reddit in the last few years, that new platform is going to need verification. We've got many of our customers already leaning in there and spending money and saying, "You guys need to be here next." So lots of opportunities to be more efficient, lots of opportunities to build new products and lots of opportunities to add new platforms to our mix, all driven by AI.

Appreciate that. Are we sticking to the one question?

You could ask another, Matt, go ahead.

The other one I was going to ask was just on the MAP side and just kind of early responses you've seen from the bundling strategies that you laid out at your Analyst Day just anything. I know still early, but anything you're hearing from your customers right now?

Yes. So it's been a really solid response to our first integrated product, which is authentic Advantage. That's for YouTube that is bundling together prebid social filtering plus post-bid measurement plus optimization on YouTube. That helped drive Social Activation to 60% growth year-over-year. And we're seeing an even stronger growth rate coming out of the gate on social activation. So that strategy is working. It's also working to introduce new customers to totally new solutions within our realm. We mentioned that really extremely high greenfield win rate for Q4 of 90%. That means 90% of the customers that we won that quarter weren't using a competitive product in that space. That means we're bringing in new customers into total use solutions, bringing them into that map system and giving them the ability to upsell over time.

So it's been early, but I think we're getting really good results out of the initial solutions we've launched from the MAP strategy.

Your next question comes from the line of Matt Condon with Citizens.

First question, I just really wanted to ask on what happened at the end of the quarter. Just what are you seeing? It seems like there's some agency partnerships, but maybe there are some pullback in spend. I was just wondering if you could elaborate on that. And just what gives you the confidence that you have in the 1Q and the implied acceleration of revenue growth?

Yes. So I'll take that. So what happened at the end of the quarter is related to the retail vertical. We had talked about that during the third quarter already and I had already mentioned that as a little challenged in terms of ad spend. And that continued into Q4 as we had expected. What we didn't expect is towards the end of the quarter, additional pullback from specific customers that were going through at agency changes. That was not something that we had anticipated when we had given the Q4 guidance.

Now that leads us to an ending growth rate in Q4 of 8%. We're guiding to 9% going into Q1 2026, and that's based on visibility that we have to date into the quarter, uptick from the Social CTV products that we just launched and generally not seeing a continued degradation around the retail sector.

In offsetting the retail sector, I have to say health care and technology did very well for us in 2025. We're entering '26, we're more diversified mix across verticals with retail representing less than it used to in prior year. So we feel good about having been able to diversify the mix across the various variables -- the various verticals.

Great. And maybe just a quick follow-up, Mark, just as we think about social prepaid ramping here, it's good to see the progress continue. But how do we get that to even grow faster in 2026? And how are you planning on just driving further adoption?

Yes. So we saw really strong social activation, as we noted, up almost to 70 customers now on Meta pre-bid and a large number of our top 10, top 15, top 20 customers now engaged in some pretty big brands, right? So folks like [ Lilly and Inspire Brands ] and Capital One and even better themselves. So big brands out there spending on the platform. Now it's just about scaling. There's always a testing process. There's always a testing cycle. And the great news is we've launched increasingly accurate, increasingly powerful versions of this solution on a regular basis.

As it gets more accurate, as it gets to be a more effective arbiter of eliminating waste and finding challenges on those platforms, it's easier uptake for us. So we see that as on a really nice acceleration pace, particularly across Meta. And again, right now, it's outpacing our expectations and we hope that will continue through the year.

Your next question comes from the line of Eric Sheridan with Goldman Sachs.

This is [ Alex Baglione ] on for Eric Sheridan. I just want to dig into some of the investments you're making this year to support the product development. Any planned investments in go-to-market to support the adoption curve of some of these social prebid products? Or will the investments that you're making and what's implied in your guide? Just be more concentrated on product development and AI?

Yes. As far as kind of headcounts and people investments. We're actually looking to stabilize or decrease those over time. The efficiencies that we're getting out of AI tools have been exceptional and particularly when it comes to classification and our ability to kind of do what we do best, which is identify challenging content and drive greater transparency and trust. We're doing that with fewer people at a faster pace and more accurately. So efficiencies there.

As far as go to market, I think we have a great team out there. We spent the last few years building out a super engaged global sales team. They've gotten deeper and deeper into brands, 8 of our top 10 relationships are now brand direct. And I think that we've got the right folks in the right place telling the right story with the right products, and that is going to continue to drive growth for us throughout the year.

Your next question comes from the line of Brian Pitz with BMO.

Mark, maybe a follow-on regarding category comments. I know CPG is been challenging to you in the past few quarters. Has that category recovered? Any comments would be helpful. And then any additional color on specific growth drivers going forward are the key success factors? Really how [indiscernible] your guidance range?

Yes, I'll take the first question, Brian. The -- actually, CPG did well. And as you'll recall, we had one client at the beginning of the year, suspending its service with us. But the category did well because we acquired clients in 2024 that scaled into 2025. So on balance, that category did well. There obviously are pressures that are tied to CPG that also impact retail. We saw it more on the retail side than on the CPG side. But I think CPG has remained strong for us because of the fact that we have large clients that are scaling within the product portfolio that we have.

Yes. And then just as far as growth catalysts that we're really focused on, we kind of hammered them in the script, which is our social tools and social solutions. So expanding authentic advantage beyond just YouTube and looking at TikTok as well as Meta. Expanding our SlopStopper solution into social and walled gardens, which I think is going to be a huge hit. And then continuing to invest in CTV and right now our ABS Do Not Air List or really live on Trade Desk, but we've got the opportunity to expand that to additional DSPs.

So I think for us, it's all about a focus on social, a focus on CTV, and then our AI tools that cover both of those products with an opportunity out there as the AI platform start to scale advertising, looking at that down the road is a big opportunity for us as well.

Your next question comes from the line of Tim Nollen with SSR.

I'd like to come back to the CTV topic, if I could. TV has always had its own measurement systems and the TV network groups have never historically relied on their own platforms to provide the measurement and attribution reporting. So I'm curious, what is different about CTV for you guys versus web or mobile? Meaning, is it easier for you to penetrate this medium given your differentiated tools that you can bring to CTV now? Or is it difficult given how TV measurement has always operated under its own terms?

Yes, it's a great question. I think the difference in the CTV universe versus kind of the linear universe is the fact that the metrics that advertisers are using to evaluate success go well beyond just reach and frequency, right? They go to driving results effectiveness of results. But you also have challenges to that. So things like fraud pop up, things like screen is not being on while ads are playing, you've got views which drive viewability issues, which all drive the effectiveness of CTV.

So I think our role in CTV is a different role than the measurement companies played in the kind of linear world. And our role is not just to determine whether or not something works, but determine whether or not something is valid. And that's why we see a more and more advertisers turning us on and our scale growing significantly in CTV. We saw a 33% year-over-year growth in volume because, again, it's a world that's not as transparent as the linear world has been. We see bigger opportunities there as advertisers demand greater transparency. So getting show level data on a granular basis and being able to expose that. We're already doing some of that, and we're starting to do that at scale with our Authentic Streaming TV solution because, believe it or not, advertisers, in many case, on a lot of programmatic platforms are buying CTV that's not really CTV.

We can ensure that it is that it was delivered on a full episode player in a highly branded environment. So those things are starting to become a bigger and bigger deal to advertisers as the billions and billions of dollars, they're scaled quite a bit. So I think we play a unique role in that universe. I think that role continues to expand as we see CTV volumes expand. And the number of tools that we provide to address those problems is this going to grow over time.

The next question comes from the line of Alinda Li with William Blair.

Awesome. I wanted to just learn about how have conversations evolved with the driving interest of AI solutions? And have you observed any changes in customer interest in the way that you're looking in approaches?

It's a really interesting question. So I think a lot of the stuff that you hear around advertising and agentic-based tools is really -- it's still relatively early days. Vast majority of buying is still being done through programmatic platforms or through platform-enabled tools on the social networks, et cetera.

So first and foremost, advertisers still want to ensure that what they're buying is what they think they're buying, and it's going to drive a result that they expect. And that's the role we play on those platforms. It's the role we'll play with agents when that starts to scale. So the dialogue is today with most advertisers is, how are you guys going to play in that new world, right? And what role will you play? And I think the role we play is exactly the same one we play today, which is driving trust and transparency. In those cases, it will be with an agent who's going to search for a buy needs to make sure that, that buy is safe, so it's going to contact us first. The same way a DSP pings us first. And within 200 milliseconds, we return a response that says this is good or bad. We'll just be talking to an agent in the future. So -- and we're ready to do that, which is pretty cool.

The other aspect of the kind of the AI discussion has to -- is really as to focus on how are you guys leveraging tools, but with human guidance to make sure that what you're contextualizing, what you're calling brands suitable is going to be relevant invested. So beyond the accreditations that we have, which guide us to what we do, RAI and the efficiencies that we're driving from AI and conceptualization are always guided by humans and we always have a human hand in there because we think that's important. And our customers think that's important, too. So that's the second, and I'll just do one more quick one, which is an increasing number of advertisers are just getting frustrated with the fact that a lot of their ads are running against slop, right? And it's a big deal, and you see statistics out there that at some point in the next few years, 90% of all content will be AI generated.

On the web, some of that will be okay and some of it won't be. That's part of the role that we're going to play. We did that with made for advertising sites and content and we're doing that now with AI slop. So lots of questions. I think all of them are really interesting and all of them are places we're leaning in, building solutions and providing trust.

Your next question comes from the line of Laura Martin with Needham.

Sure. My first one is on events. So you guys are 2 months in the year, 3-month quarter, and I'm really surprised the guidance for Q1. Is it for more of an acceleration given the social media talking about Bad Buddy and the Super Bowl and all of the sort drama around the Olympics that ended up on social media. So can you remind us like why those big events don't drive higher impression and therefore, faster growth rates for you?

I think volumes are still scaling pretty rapidly around social. I mean our products there are still relatively early stage. But as we know, do we exit the year for example, on social activation growing 60%. I think it's starting the year out even faster at a higher growth rate. So we're seeing those numbers grow pretty quickly as well.

We're also starting to lap the customer that we had paused services last year, which was a big social customer. So we will see social show meaningful growth in Q1 based on that engagement and that event's activity, which brings up another good point. I mean, look, you have a year ahead of us, which should be really interesting around -- we've got elections. we've had Olympics, we've got World Cup. All of those will be interesting factors to see where that activity and where that activity ends up, whether it will be social or open web or streaming or all of the above?

Okay. Great. And then my other one is on pricing. I'm so sad to revisit this with you, Mark. So when we went public, I think your average price was $0.09, and now it's down to $0.07. And I feel like we've set -- you've set 4 years investing in cool new products, new capabilities, you're bundling and yet we're under pricing pressure here. Pricing down 3%, although it sounds like it was worse because you had a onetime moat customer that [indiscernible] a contract to. So what's going on with pricing here? Why don't we get -- when are we gaining pricing pressure given all the value you're adding to the product?

Yes, Laura, I'll take the first part of the answer, which is what is driving the price down right now, which is really a mix shift between environments where we have a full slate of products that is fully penetrated, and that would be ABS as a premium-priced product, along with measurement for the open web.

On the social side, as you know, we are we now have the products, and we are increasing penetration of the premium price side of that equation on social versus the measurement side that we've had for a while. And so as impressions are shifting from open web to social until we have rule penetration of our pre-bid social premium products. that is not a dollar-for-dollar switch. The opportunity, of course, is now that we have the product, we're going to see the benefit of the premium price product.

What I can say is on the social side, we are able to charge a premium price the same way as we're able to charge a premium price for ABS versus basic brand safety and measurement.

Our last question comes from the line of Youssef Squali with Truist Securities.

All right. Maybe, Nicola, if you can just help me reconcile a couple of things you said earlier. So your NRR is about 109%. You're guiding for the year at 8% to 10%, and you said that we should see better performance or faster growth in the second half than the first half, yet you're guiding to Q1 at 9%. So what's -- what am I doing wrong in my math that doesn't make sense? Because that would imply that you should ultimately either grow at least at the high end of the range at 10% or even better? Or is the assumption that maybe NRR's are coming down a little bit?

So I mean you have the right dynamics. So just -- I'll explain how we're thinking about it. So the base the base for the view for 2026 is this NRR number of 109%. That is how we're exiting 2025. And we're seeing that as basically the recurring base of growth of core products to core clients, and that's the 109%. And on top of that, of course, what is going to drive our growth is product-led engines, right? So adoption of the new products incremental revenue from enterprise clients that are scaling and then acquisition of new customers.

One item that I will mention for the year in '26 is entering the year, we are lapping Q1 growth last year of 17% and Q2 growth of 21%. So the 9% growth that we're guiding to in Q1 is off very high year-on-year comps. And so that creates a year where the better part of the growth will be in the second half. Now your statement around what could lead to growth that is higher than what we're guiding to. It would be faster adoption around the new products. We've taken a measured view of the adoption of these new products. We feel it's the right thing to do in terms of how we're planning for the year. But in order to achieve numbers that are ahead of the guidance, that's what we would have to see. We're entering the year with $8 million of NRR on some products, at least 2 of them that we've mentioned, that's already $50 million of revenue. It's all going to be about the speed of adoption for us to be on the higher end of that number.

Okay. That's helpful. And maybe just one other one for Mark. More of a high kind of color kind of question. If we kind of zoom out historically, we've talked about growth in digital advertising as being like a base or how fast you guys can grow over time. The market is very large, penetration of measurement and verification remains relatively low across several pockets and you've highlighted, done a great job highlighting many of these. What needs to happen to get you guys back to growth to be at least in line with that of the overall digital ad market, which I don't know, the estimate to be maybe in the low double digits, maybe 12%, 13%.

Yes, it's a great take Youssef. And the data point we have this year, I think we have digital ad growing around 6% so we're seeing -- we're expecting obviously better than that, which we should because that should be a tailwind to what we do, but new products should help accelerate that.

I think the key is that 6% is not all places are equal, right? And you're seeing areas like social continue to eat up dollars. You're going to see streaming eating up more dollars. And then you see other areas, which I think are going to grow considerably lower. So for us, it's all about getting that focus on the areas that are growing faster, so that we can grow faster than the overall digital market and we noted in the call, we've always been tilted towards open web. And our goal now is to get 50% of our revenue from Social, Streaming and AI platform, so really kind of closed areas. That will get us in a place there where the dollars are going, where they're growing faster and I think gives us a more accelerated view on the future. So that's why we're talking about those areas. That's where our product innovations are, that's where our investments will continue to be, and I think that's where the future growth opportunities lie.

We have a next question from Maria Ripps with Canaccord.

So as we think about mode customers sort of maturing on the platform and heading into year 2 with you, do you expect growth from this cohort to accelerate and maybe become a larger contributor to your overall growth? And I guess what are you seeing in terms of upsell rate from these customers? And what's factored in your outlook from this cohort?

Yes. So Maria, you're correct. We are assuming that we will see continued scaling from the mode customers. You will know this, right, we acquired those customers with base product because they were coming from a platform where some of our premium priced product was not available. So -- and we've always said it would take 2 to 3 years before we see the full scale of the mode customers on our platform. It's going very well with some clients. It's slower with others just because it takes time for the client to unlock some of the budgets that are needed for some of the premium priced products that we have.

It is going as we planned. And so yes, the answer is it will contribute more in 2026 than it did in 2025. As you know, some of these customers are very large and have a large opportunity to be sold into our premium priced products.

And I'll add one more thing. So going to add one more thing. Not specific to moat clients, but an interesting thing to look at is year 3 of our customer engagement actually has the highest growth rate in aggregate of all the years that we're engaged with customers. So on average, in aggregate, it's like 18% growth, year 2 with them and 22% growth year 3 with our top clients. So it's interesting taker as our upsell cycle that we talk about usually takes several years and that third year of upsell is usually where the biggest is. So just kind of a rule of thumb when we think about all customers.

That concludes our Q&A session. I will now turn the call back over to Mark Zagorski for closing remarks.

Thank you all for joining us this evening. As we look ahead, we have confidence in the performance of our business and our priorities are clear: deepen adoption of core products with core customers, accelerate the growth of our solutions for Social, Streaming TV and AI, and drive industry-leading margins by leveraging the power of AI. We appreciate your continued support and look forward to connecting with many of you at the upcoming conferences.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

All right. So we're at the top of the hour here. So why don't we go ahead and get started. Thanks, everyone, for joining us at the Raymond James TMT and Consumer Conference this year. And thank you also to Mark Zagorski and Nicola Allais, CEO and CFO of DoubleVerify, who are here for a nice little presentation. So Mark, Nicola, thanks for joining us.

All right. Great being here.

All right. So the classic start-off question. So for those who are maybe in the room, not as familiar with the DoubleVerify story, can you give us the overview of the company and where you sit within the digital advertising ecosystem.

Yes. So DoubleVerify is an integrated software platform that, at its core, enables advertisers, digital advertisers to verify, optimize and prove the effectiveness of their ad spend. So think about what we do is ensure that a digital ad is viewed by a real person in a contextually relevant environment that's viewable and ultimately delivers a result for that advertiser. That was our core value proposition, ensuring that, that kind of transaction between a buyer and seller was safe and secure. We've expanded from that to not only ensure that, that ad is delivered in basically what we say in authentic way to ensure that, that ad is delivered an authentic way, but also done at the price that is most optimal. And then it drives the result as well.

So we don't buy media. We don't sell media. We are outside of the media transaction, but we ensure that everything about that media transaction is effective for an advertiser in the digital ad ecosystem.

Great. Definitely want to get into some of those elements a little bit more deeply over the course of the conversation. But before we do, let's take a little 30,000-foot view of the macro environment right now. I think we've heard kind of some uneven feedback on macro conditions through different participants in the market. So I guess from your perspective, both on an industry basis and a DoubleVerify basis, how are you seeing the macro environment playing out?

Yes. So our business model is fundamentally driven by volume, right? The more we can verify, the better it is for us. And of course, that means that it is tied to advertising spend pattern and so to the extent that advertisers are impacted by what they're seeing in their own business or in the macro, particularly around this year around tariffs and other uncertainty in the macro, that obviously impacts the volume that we're able to see which impacts the recurring part of our business. In particular, what we saw and we mentioned it for Q3, it was specific volatility around the retail space. Retail and CPG are 2 large verticals for our business. And so to the extent that it impacted their spend, it impacted our business. What can we do about it? We have ways to control the other parts of the business.

So if recurring, the recurring volume is impacted we can control new clients that we can gain in the market. So we said that 1/3 of our growth came from new clients to the business. We can impact the number of clients that upsell to our new solutions, and we can impact it by new products that we put into the market. So those are the 3 things that we can control that are going to go against any sort of recurring volume that we can see in the market.

Great. And then maybe on that new customer side, I guess, who is -- is there any specific type of customer or customer cohort who is now coming into your fold?

Yes. So our bread and butter are large enterprise clients, right? Those are the ones that have spent a lot of money on their own brands. And so brand safety is obviously something that they're looking for. Return on their investments, I think they're very focused on. So that's where the company started, and that's where most of our revenue still comes from. We do have a business that -- these tools are as useful for a large enterprise client as they are for a smaller client. And we have about 10%, 15% of our monthly programmatic business that comes from clients that we don't necessarily have a direct relationship with, but do pick DV as part of their solutions use a programmatic partner. So we do appeal to a lot of different types of clients, but obviously, the large enterprise clients is bread and butter of our client.

Great. And then maybe let's touch on that product momentum that you were talking about. So you've made a couple of notable acquisitions over the last several quarters. And in June, held an innovation day to show how some of those capabilities are being added into the DV platform. So I guess, how is that product offering overall evolving? And how have Scibids and Rockerbox enabled that change?

Yes. So this summer, we talked about the launch of what we call our Media Advantage platform, and this is a combination of leveraging our core verification assets. So what I mentioned earlier, making sure that, that ad is viewable, delivered in a brand safe or suitable environment, is not fraudulent and is geographically aligned. That combined -- that starts off as our core. We go from there to ensuring that, that spend when an advertiser goes and looks for those verified impressions that they can do that as the cheapest rate possible. That's optimization, and that was the acquisition of Scibids, right? So Scibids allowed us to do what we call algorithmically based bidding, so to take a KPI like brand safety or suitability or viewability or attention and optimize against that KPI by basically using AI to bid for impressions.

That's where Scibids came in. And then we bought a company called Rockerbox, which allows us to kind of close the loop and say, did that impression actually drive results. So the idea behind the Media Advantage platform is we verify, we optimize and we prove the effectiveness of the solutions. Start off as 3 separate entities, so our core business, Scibids and Rockerbox. We've now started integrating those solutions so that, for example, we also launched DV Authentic Advantage on YouTube. So an advertiser now can find high-quality impressions, so safe and suitable impressions at a considerably lower cost by integrating Scibids and our core verification pre-bid and post-bid measurement. So the idea behind all of this is that we've created a high-value closed loop system that enables advertisers to find exactly the quality of the impressions that they want at the price that they need and determine whether or not it actually drives the results.

Great. And then maybe on that theme of driving results. Performance is something that we've heard come I don't even want to say into vogue, but it's becoming much more emphasized among a lot of what we've been maybe considered traditionally brand-focused advertisers. I think one thing we've historically heard about verification, it's maybe harder to calculate ROI, like what is the value of brand safety or blocking an objectionable impression. But I guess, how does this performance shift in the industry help quantify that for decision makers?

Yes. So it's interesting. I think performance has always been part of the math that advertisers use, right? As 60 years ago, there was a concept of -- I know that half of my spend works. I just don't know which half of it works, right? "The old John want to make her" that still exists today. Advertisers, even if they're big brands want to ensure that their advertising is actually making people do something. It works, it's effective. Part of that is starting with the math behind it. And so when advertisers first look at verification, there's a direct ROI from verification.

If we're taking fraud out of the system, if we're taking nonviewable ads, those ads have 0 impact, a bot crawling on an ad can't buy something for the most part. We can talk about that later in a second. For the most part, fraudulent bots can. The ads that aren't viewed or never rendered don't deliver a result. So when an advertiser looks at our data and we can show, for example, that 5% of the ads were fraudulent on a $10 million campaign. We're able to save them $500,000 right there in showing here's a direct ROI by cleaning out results that were not delivered to a human that couldn't actually have an impact on the return. So I think the ROI of verification is pretty straightforward. And we actually have a dashboard that allows advertisers to look every day and see what percentage of their ads that were delivered were not authentic, right, not viewable, not delivered to a real human.

And brand suitability and safety have an impact on performance as well. Ads that end up in extreme violent content or ads that end up in terrorist content are not going to sell a product, right, for the most part. So there is a direct relationship between suitability, safety and performance as well as the bottom line of ads that aren't delivered to a human are not viewable. So there is direct ROI around that. On top of that, with the new introduction of tools like Authentic Advantage, where we're actually optimizing pricing and lowering the cost of finding quality, those things are no longer mutually exclusive. And I think there has always been this thought, well, it's great. You've pulled the ads that I can't see out, but for me to find higher quality cost me more money. What is that worth to me?

We've now changed that whole thesis and saying that you can get high quality without having to pay as much as you used to because we're able to use our optimization tools in Scibids to lower the cost of that. So Authentic Advantage on YouTube now has been able to find at least as high quality and suitable impressions at 20% to 30% lower CPMs, which allows advertisers to get 30% to 40% more reach for the same cost. So there's a direct relationship between now quality and reach and performance that we're able to drive. So there is real ROI around verification, and we're even driving better results on that ROI based on some of the new tools that we acquired and are integrating into the platform.

Great. Really interesting. And then maybe another specific product question around some of the streaming TV features that were announced just ahead of the 3Q report. I guess, how do they add to the overall holistic DV offering? And what are some of the unmet needs in CTV that you'd still be interested in fulfilling for your clients?

Yes, I think it's super relevant today based on what's happening in the streaming world, right? Like CTV is eating all really premium video engagement. We see that just in everything that's happening with linear, what's happening the consolidation in the space. And I think advertising really hasn't caught up with regard to -- you've got this mix of the beauty of site, sound and motion that television has already been able to produce and the efficacy of digital, right? And that's what CTV brings together. That's why advertisers love it so much. The challenge there, there's a pretty significant lack of transparency.

Outside of YouTube, most of the large streamers don't provide a level of granularity that you would expect from digital advertising. I want to know where it showed up. I want to know the context around it where it showed up. I want to have greater transparency of what I'm buying. It's just not there. So we've launched a series of tools around CTV that allow advertisers to better understand where their impressions are showing up. We've estimated around -- and believe it or not, it seems like it's nonsensical. Well, from buying certain CTV, I should be getting CTV, right? Not if you're buying through a lot of programmatic channels where there's reselling going on. There's obfuscation of where the actual CTV ads are coming from. Advertisers have had to put up with this because it was the only game in town, right? If I want to get CTV, I have to buy in this blind manner, and I don't get a lot of transparency around it. And we found around 15% of what advertisers supposedly are buying a CTV are showing up in things like Solitaire apps or outstream players, not in high-quality environments.

And that's over $1 billion a quarter, we estimate. So with our tools now, we're able to actually flag and verify whether an impression went into what we call a branded player environment. So if you bought Hulu, it ends up in a Hulu player someplace, right? It's not a resold impression that you're ending up someplace else. We're able to show that and give advertisers a lot more transparency around their CTV spend. We've also launched what we call automated Do Not Air lists. And again, until we get full contextual capabilities on CTV, most advertisers now use what they call the exclusion list. The ability to say, I don't want to be around this kind of programming. I don't want to be around these kinds of shows. The publishers still allow that to occur. You can't cherry pick programs, but you can exclude programs. We've automated that through platforms like Trade Desk now. So what advertisers are going and buying, they're able to say, exclude these programs from my list because they don't align with who I am as a brand.

I think these are some of the first steps in giving advertisers the real control over CTV spend like they have with all of their other digital media spend. And if CTV, if the real publishers, if the Netflix, the Paramount's, the Warners of the world want to compete against YouTube, they have to provide that level of granularity or advertisers are just going to spend all their money on YouTube.

Makes sense. And maybe Netflix and Warner will be the same publisher.

Who knows? Exactly.

Maybe turning to AI quickly. So first, we've heard questions from investors about the impact of generative AI on the business. The bear case being that AI can interpret the signals that DV does and do the job of verification. So maybe it could be brought in-house. But the bull case is that AI is making new threats, creating new opportunities for DV to drive efficiency. I guess how are you looking at the threat and opportunity landscape here that AI is posing.

We only deal with bears with bulls at DV. So I look at AI, AI as a tool, right? It's a hammer. And hammers don't build houses, right? Architects and people build houses. We look at AI as a tool. We are now using AI in our verification solution that it's now enabled us to verify and look at contextual cues 2,000x faster, do so at volumes like we've never seen before and actually eliminate significant overhead in both people and other technologies to do so. So AI for us is a tool in doing what we do best and better. People trust us, our advertisers' trust is. If you look at the tenure of our top 25 customers, it's nearly 8 years, right? People and large brands work with us over time because they trust what we do.

They trust our analysis of context to create a verification score that makes sense to them and that is independent of the media transaction. That's super important, right? AI, as we've all seen, AI is incredibly powerful. But we've all got hallucinations. We've all seen bad results. And an advertiser can't rely on an AI just doing something without some human control. It's a tool. And we're the masters of those tools. So we're using that to actually drive better results for our customers. So I think on that -- addressing that kind of bear case of AI is just going to do what you guys do. it can't do it. A hammer just doesn't build houses on its own. I think the bull case is really interesting for us because as we've seen now, we've now crossed the Mendoza line, right?

There's more content being created by AI than there is by humans now on the open web. So more content on the open web is created by AI. A lot of it is junk, right? A lot of it is what we call AI slop. It's infiltrating everywhere. I just saw an article today about Reddit having challenges, pulling it out of their feeds. They don't -- their content moderators can't do it fast enough. We've launched tools to allow advertisers to identify AI slop. And because if you're a big brand, right, you invested millions, if not billions, in your brand over time. The last thing you want to end up next to is some weird AI-contrived content that your logo is going to stand next to. So we've given advertisers the ability to avoid that on a pre-bid basis to measure and block it on a post-bid basis. So AI is creating new opportunities for us to do what we do best which is ensure that advertiser spend is aligned with who they are as a brand and is not wasted in places that won't move the needle for them.

The slop stopper.

That's it, slop stopper.

That's right. And then last on AI, maybe talking about the bots who can interpret and can buy products. Of course, speaking about agentic AI advertising. So you announced an Agentic verification solution a few weeks ago, maybe putting aside things like deepfakes and AI slop, I guess how do you see AI affecting the way brands advertise a genetically and how does DV meet them where they are?

Yes. It's kind of a really interesting time for us right now because in the space, it's always been, as we started, bots were always seen as bad, right? They're just waste. They don't do anything. Bots don't buy was the old saying, so why advertise to a bot? Well, bots are starting to buy, right? Personal agents are going out and crawling for people and saying, "Hey, I want to purchase something. So think of it this way. If you're a consumer and you sent your bot out and said, "Hey, I'm interested in new winter coat, go look for the cheapest price for a Moncler ski jacket for me. The bot would go out and look for those and let's say your Saks Fifth Avenue and you're engaging with that. In the past, you'd say, don't engage with a bot. It's not going to buy anything, but maybe you could say, wait, this is a shopping bot. I want to give a 10% discount to this bot, so it can come to the Saks Fifth Avenue site.

That's the new world we're living in. So we launched the first stage of kind of that universe is identifying who the bot is. Are they a good bot or a bad bot, right? To quote a movie. That's also very popular today. And the first -- identifying that is the first step in kind of realizing, okay, now how should I engage with that bot, if I'm an advertiser because bots right now ignore all advertising. They're trained to ignore advertising, and that's why those ads generally aren't rendered on pages. And if they are rendered, advertisers like don't pay for it. But very shortly, and I say in the future, like we're talking quarters, not years, advertisers will want to engage with that bot, and that bot will want to engage with that advertising. We're at the position, the perfect position to manage that. We are already tagged on trillions of ad transactions, right? We're already seeing all those today.

And as a matter of fact, we see billions of ad transactions as well with those kinds of bots. There is a point at which not just identifying those, but helping advertisers monetize those and engage with those is going to be part of what we do as a company. So it's all evolving very fast. We're literally at the crossroads of that activity. And I think it's a good place for us to be to take advantage of it.

Yes. And yesterday, I used the shopping research tool from a certain scaled AI company yesterday, and it was really interesting. And I can definitely see the opportunity there. I used it for shopping for myself, not for holiday gifts. I don't know what that says about me. But it's -- yes, it's a very interesting surface for advertising to come to. And then, of course, I don't want to neglect DoubleVerify social business. You've got the pre-bid offering scaling and announcements about product expansion within social networks still coming pretty frequently. What's the road map for the social business in '26? And how are you thinking about the expected contributions?

Yes. Everything we do from a verification perspective, we look at all places where advertising runs in all places where consumers engage, whether it's the AI universe, the social universe, the open web universe, the CTV universe as being important, right. Important parts of our road map and important parts of where advertisers are looking for return. On the social side, we've now launched a series of what we call pre-bid or prescreen filters, which enable advertisers on Meta, on YouTube, now on TikTok to actually put their brand suitability criteria in and allow them to avoid certain content that doesn't meet that suitability criteria. Meta was launched earlier this year. It's scaling quite nicely. We announced in Q3 that we've got 56 of our brands now using it. We're ending the year -- we should end the year at around a $7 million run rate, which I think going to grow considerably faster over time.

And we're seeing growth for that. We've got a continued expansion of our social activation business on YouTube. Social activation grew for us 20% last quarter, and I think -- and it will continue to grow at a really strong rate for us as more and more dollars move into social. So for us, it's all about making sure that advertisers get the core verification solutions they need on any platform that they're in, whether it's again social, CTV or open web.

Great. And Nicola thank you for joining us, having forgotten about you. But last quarter, you talked about a 10% revenue growth base case for '26. What are some of the more likely factors that could drive outperformance versus that base case?

Yes. So first, what's this base case based on, right? So we have an NRR that's been consistently over 110%. It was 112% last year. And so you have that, that basically informs a 10% base case. Before we talk about everything else that I mentioned upfront, which is new clients, new products and upsell, right? The motion of those 3 things are what's not in the 10% base case and we've been talking about a lot of new products that is going to be driving that growth above the 10%. The next cycle of growth that we see is going to be product-driven, right? Everything that we're launching is what's going to get us to be above the 10%. But the 10% is based on just basically the recurring clients that we have, continuing to spend on levels that we've seen in the past. And that's kind of how we're building the whole story.

Great. And then ad tech is kind of an arms race in terms of tech and product and you have a lot of irons in the fire. How are you thinking about the margin trajectory given the investment needs of the business?

Yes. So we've been a 33% margin for now quite a few years. And we've said already that we think that that's certainly sustainable again as a base case as we go into next year. The exciting thing that's happening in our business is everything we discussed about AI, right, which basically unlocks a lot of efficiencies in the business. The classification tools that we now have in place allow us to classify a lot more information much, much faster and without necessarily having to hire as many people in-house. So our expectation is that the growth in headcount is not going to be a significant amount.

And the beauty of the business that we have now is that all the efficiencies that we have unlocked through AI is -- are dollars that we can reinvest in the business, which is why we continue to think of a margin that's fairly steady around 33% as a base case, even though we are generating quite a bit of efficiencies in the model. So not as many headcount growth. And talking below EBITDA, stock-based comp is something that we're looking at as well and sort of resizing the level of equity incentives that we're going to use going forward. We've mentioned that we don't intend to have an equity grant that's going to be as high as 25% is actually going to go down. Over time, it will impact stock-based comp as well.

Got you. Thank you for that. I think we have time from the audience for 1 question, if anybody has anything particularly burning. Go ahead.

Efficiencies grow AI applications in your products, you see that free cash flow being used for more acquisition purposes or for your own company.

Capital allocation. So we've been very diverse, right? We can do M&A. We've done some stock buybacks, and we've been able to invest in the business. I think we're going to stay pretty disciplined around the 3. We still have $90 million available on the stock buyback. So it will depend on what we think can help us accelerate our road map faster.

Anyone else? All right. Well, I guess the last one. And I guess, since we have 2 people up here, I will allow 2. But if you had to call out 1 thing each maybe that investors should look forward to in the DV story for 2026, what would you highlight?

I'll start to like the big. Look, we mentioned this idea that we want about half of our business to come from non-open web. And so everything we discussed today, which is CTV, social, all these new AI solutions is really, as I said, the product-driven growth that we're going to see in the next few years. So that's one measure that we will keep an eye on to see exactly how the business is evolving.

Yes. And I think for us, the second thing would be just looking at AI as a catalyst, not as a headwind. It's helping us become more efficient. It's helping us build new solutions, and it's creating new opportunities for new products for us, and that's really exciting for us.

Sounds great. Mark, Nicola, DoubleVerify. Thanks for joining us.

Thank you.

Absolutely. Thank you.

[Audio Gap]

Day one of the RBC TIMT Tech Conference. Super excited to once again welcome back DoubleVerify. We have CEO, Mark Zagorski; and CFO, Nicola Allais.

Heading into 2025, big investment year for DoubleVerify is what we were talking about all through last Q4. I mean, looking back at the year, what are the achievements that were maybe the most impactful to the future of the company? And how did you feel like you're leaving this year better positioned in the current environment than where you entered?

Yes. So when we kind of came in to '25 sought as a year of kind of transition and evolution and we had 2 main things that we wanted to focus on. First, extending our core value proposition, beyond just verification. And around midyear, we launched what we call the AdVantage Platform, which expanded our business not only to -- just to do more verification, but expanded into optimization. So algorithmic-based bidding compression and through performance measurement. So basically, this idea that we can verify an ad transaction, optimize or reduce the cost of that transaction and then prove whether or not those ads worked.

So we expanded the value proposition. Now that was one of our core tenets for the year. The second was to take our core value prop of verification and move that into entirely new spaces and evolve those spaces as well and specifically social CTV and the emerging AI advertising universe. And I think we've made some great strides there with the launch of our Meta pre-screening products, which obviously is social. The launch of Authentic AdVantage a few weeks ago, which is a social quality and optimization solution first for YouTube and eventually, we'll launch that across other social platforms and our CTV solutions that we recently launched, Verified Streaming TV and our automated Do Not Air lists, which are just a first of kind of many solutions we'll have around CTV.

That plus the launch of our AI verification tools, I think were really investments that we've made that are going to set us up for a different kind of business moving forward. One which is less concentrated on verifying transactions in the OpenWeb, one which provides different value beyond just verification and one which is poised to take advantage of what's going on with AI, not just how it's affecting advertising but how advertiser -- advertisers are actually leveraging it to do what they're doing better and easier.

So Nicola, heading into 2025, you talked about at least 10% revenue growth. Most recently, you guided the full year number to 14%, what went better than expected? Obviously, we just talked about this big year that we were focused on the investment side, but we're now seeing some other momentum building into 2026 that has shown up in numbers, right? .

Yes. So what we were positively surprised by in '25 is 2 things. One is our recurring base, which is the majority of our revenue every year kept spending within an environment that's fairly uncertain in the first half going into the second or the third quarter and our advertisers, our clients kept spending get upselling into new products and kept seeing the value of what we provided regardless of what was happening in the macro.

And that was one of the benefits that we saw for the first 3 quarters where we've grown 16% just in the first 3 quarters of the year. So that's one, which is the value of our product remains really powerful regardless of what's happening in the macro. The second part is that the uptick of our new products has been very, very positive. It's not yet shown in the numbers. But we're entering 2026, knowing that we've invested into products that now have clients testing them and getting us into a solid runway into 2026. So those 2 things were the positives. We started the year expecting the second part of my answer which is we thought we would have good traction. We did get that. And on top of that, we had recurring spend that was even stronger than we expected.

Yes. No, that's helpful. I mean, maybe building out on that -- can you guys give us an idea of how revenue visibility has changed over these past few years? And maybe how your guidance philosophy has adapted to that?

Yes. So the revenue -- so we -- our philosophy is to be able to verify wherever the advertisers are spending. And to the extent that if you look back in the past few years, a lot of spend has moved to programmatic and activation. And that is an environment that's very transactional, where advertisers don't need to necessarily commit ad campaigns in the long term, right? So they're able to make decisions pretty quickly in terms of where they want their dollars to be coming -- to come at play.

That has reduced visibility because essentially, we don't control the ad spend and we don't control where they're going to spend. So within that environment, the visibility is reduced. Against that, what we have is a recurring base that is becoming stronger with larger enterprise clients. And so to the extent that we can enrich the top of the funnel, the top 100 were larger brands. That allows us to offset maybe quarter-on-quarter while variability that we would have on specific clients. So last year, we gained clients like Microsoft and Google and P&G. And those will, of course, be in our top 10 even clients pretty quickly which will offset variability that we might have from other clients.

And if I could add a little bit, too, is part of the philosophy coming into the year with the expansion of value prop as well as the expansion into new sectors, was to ease some of the variability or reliance strictly on programmatic buying in the OpenWeb, right? So commitments in social tend to be a little bit more structured, a little bit more sticky so, a, leaning into social, I think, has helped us on that front.

The second is, as Nicola noted, buying just about any type of media now has become much more fluid. But if that media works, it becomes a recurring buy over time. And you'll hear that from other companies up here is that, yes, their revenue may be not totally baked in.

But if it works, advertisers keep spending it over and over. When we expanded our solution set, the idea was let's tie ourselves to helping drive performance and helping measure performance so that we become more part of the machine that stays sticky, right? Because if you can show that performance is working, then you're helping underwrite a long-term spend with your company. And I think that's where we've kind of leaned in with our solutions like Authentic AdVantage with what we've done with some of the side bids, custom bidding algos, those have become very sticky because advertisers know when they use those tools, they're driving performance, and there's no reason for them to pull back on spend if they can show results.

Yes. And that kind of builds naturally into this next question. So Nicola, looking out to next year, you gave us kind of like a, I would call like a foundational baseline growth rate of 10%. Can you give us kind of what gives you confidence around that core number? And then maybe what are some of the levers or layers that may come in over top of that?

That's exactly how we laid out our [indiscernible] foundation for earnings based of our revenue at a 10% rate. And the way to think of that is that net revenue retention was 112% for the first 3 quarters, 16% [indiscernible] said that 1/3 of that can decline if you pull that out, you are already at 11% or 12% [indiscernible] that's the foundation of existing clients product.

So the building blocks off of that are existing clients upselling products, which we offer to new clients [indiscernible] . And then more importantly, for '26 will be new products, we feel like we're at a point where the next phase of growth for us is product led, we look back a few years ago, we had a launched a [indiscernible] product that drove a lot of the growth that we saw in the last 5-year cycle.

We're now launching several products, not just one. And we're looking at growth coming from those products we introduced in the market and having new clients and existing clients. So [indiscernible] the foundation. It's based on NRR and [indiscernible] date. Then on top of that, you have new products and upsell.

I guess maybe thinking about those new products, Mark, you have expanded the product portfolio following this year of investment. But we've seen traditionally the majority of revenue came from the installed base. So how do your customers influence your product road map? And what do you think they're currently looking for or one more of from DV?

Yes. So regarding products, we've talked a lot about new stuff. We've launched more new products in the last 5 months than we have in the last 5 years. It's a lot, and there's a lot of acronyms were thrown out there and trademarks. That's the fun part. But customers are intimately involved when we develop solutions. I mean they drive the solutions based on their needs. And the things that we started hearing from that are lack of transparency in the marketplace and a concern for continued performance acceleration. On the transparency side, I mean, this touches everything.

Everyone has heard about the large walled garden saying, look, we've got these amazing AI-based black box advertising solutions. You just give us your money, we'll give you results, right? That's great if you're the person who's taking the money and measuring the results, right? So you kind of have all the things on your side. But if you're the advertiser, how do you trust what's going on there, right? How do you break open that black box? So as we started leaning more into the walled gardens, it was clear that advertisers wanted more transparency. They wanted more granularity with that transparency, and they wanted solutions from third parties that they could trust to do that. So in the social media universe, we leaned into platforms like Meta and TikTok and YouTube where our measurement solutions provide more transparency as to what's going on.

We actually saw in those black box solutions, are attach rates for verification, we're actually 3x higher than when advertisers who weren't using those solutions. So it's clear they want more transparency. Same thing is starting to happen in CTV environment. So we launched a series of CTV tools where we've got questions all the time, like why do people need DoubleVerify on CTV. They're buying quality impressions on big screens in someone's living room. And most of those are what's called PMPs, which are private marketplace packages, which we kind of know what's going on with. Well, the reality is, just like a box of cereal that looks relatively healthy. When you look at the ingredients, you kind of don't know what's going on there.

And a lot of these PMPs are the same way. There's not a lot of transparency. There's reselling that goes on, then an advertiser thinks they're getting a quality show but they're actually getting a video impression on Solitaire app someplace. And this happens. We believe it's about 15% of all streaming TV impressions actually end up in places where they shouldn't be. So we launched Verified Streaming TV. And again, this was driven by advertisers coming to us and saying, we know that something smells wrong, and we need your help in digging it out. So our road map is driven by customer demands, the drive towards greater transparency and a feeling that they want third parties to help them determine what performance really looks like. And whether that performance is driving an outcome or measuring attention or just driving down the cost of reach. They are looking for a trusted third party to be that partner for them to do so.

And maybe this will stitch together a few of the things we talked about with social and CTV. But you recently said over the medium term, expanding social CTV and AI from under 30% of revenue to over 50%. And could you just talk, I guess, about the investments you have to make, to make that a reality. And then I guess the benefits DoubleVerify could see. Maybe 2 things like that revenue visibility that we talked about over time. .

I'll start with the investment. So investment side, we've been investing for a long time. We're always investing to the financial profile that we have. We've already invested [indiscernible]. We are now investing in [indiscernible] launch products, AI is the next generation of our event. We're going to continue to invest. What's interesting for us is that the way we invest has evolved with AI. So we're able to be more efficient would have taken a lot of people. Now we can rely on machine to help us most of the way there, that inherently unlocks cost savings that can be invested to other areas of [indiscernible].

And so we said this year we're not intending to hire same clip as we had in the past few years because AI is helping us fill the gap a little bit. The market has changed quite dramatically recently. We've also announced that the equity grants that we'll get, the value of those grants will be less than [ 1.5 ] you won't see it on the stock-based comp line straight away, it will take time to flush through. But the actual value is there. So we're able to do things more efficiently, more quickly. We arte continuing to invest, CapEx is the last part where we might see some investments there as we go with AI tools, but it shouldn't go higher than [ 5% ] of the revenue so it's more nimble in the way we invest and we're very excited.

Right. And maybe just to lean a little bit there on the AI investments and kind of what we've done there. As Nicola noted, if you think about what our core value prop is, we're just a giant contextualization engine, right? We take in tons of content and tons of interactions, and then we analyze them. We label them and then we analyze them and put them in buckets so that advertisers can use them to make decisions based on. And a lot of that used to be machines learning from humans. So humans labeling, machines taking those labels, then building models around them and then expanding and scaling.

Now we're using machines to do the labeling to feed a machine to actually scale itself. As Nicola noted, we're getting 4x more productivity per labeling engagement [ that allows the client ] more speed in actually doing the labeling, which allows us to scale massively into these new environments like social, where the volumes are huge. It allows us to scale into areas like CTV, where the content is very detailed and very granular with regard to what happens in the scene. It allows us to do this cost effectively and efficiently.

If you look at our -- this is a company that runs on 80% plus gross margins that runs on EBITDA margins of over 30%, right? It still scales and still is handled trillions. And that's with the T, trillions of transactions every year.

This is a massive undertaking. And we're doing this incredibly efficiently with almost no headcount growth this year with the exception of an acquisition we made and leaning into even more efficiencies going into next year. So AI is underscoring not only our efficiencies but one of the things that we haven't talked about on the product side, it's creating tons of new opportunities for us too as well. We're building -- we launched AI verification tools to not only suss out AI content that advertisers aren't super comfortable being around but also starting to understand and engage with agents, right? So there's a lot of discussion of what's going on with agents out there.

We have the ability because we see billions of agents every month, right, on our sites. And those agents are doing stuff that's usually good, sometimes not. But we can help advertisers determine what that engagement should be with that agent. And I think that's a huge opportunity that's coming down the road. If you think of the growth of independent commerce agents, so me sending a shopping agent out, or chatbot agents that are continuing to grow and do things. Those right now have very little interactions with advertisers. Advertisers, as a matter of fact, currently, the current standard is if I'm running an ad on a page, and a chatbot engages me, don't serve the ad. It's called general and valid traffic for the most part, don't serve the ad, don't pay for the ad.

But think of a world where, wait a minute, I absolutely want to serve this ad because I want to talk to that agent and I want to give them some information. Maybe I want to give them a coupon. Maybe I'm going to give them a discount, maybe I want to give them more information about how do they make a decision like that is a universe where we are smack dab in the middle of it because we're seeing so many of those ads out there. I think that's a huge exciting opportunity for us that we -- Nicola certainly hasn't baked into his growth plans for '26, but we're just starting to lean into the investment around.

Yes. No, that's super interesting. And I think we've seen when these newer disruptive formats or companies come out, they do lean quicker into DoubleVerify than maybe the -- like we saw how much faster TikTok adopted you guys, let you in relative to Meta because you actually bring them validity.

I mean if you think about folks like Netflix right, who weren't going to do advertising forever, right? He'd sat on stages like this and said, "We will never advertising" and then do an earnings call and they say, "oh, we're going to do advertising next month," right? And then the amazing thing around that was they said, "We're going to do advertising", and then within 2 weeks, they called us and said, we need to work with you guys because we call a couple of agencies, and we tried to sell them. We said, hey, you're interested [indiscernible] , yes, but we need third-party measurement and verification. So they called us.

They called Nielsen, they called another company. And within 90 days, we had a solution up and running for them so they could run. Companies like Reddit, who went public and said, we're going to lean heavily into advertising. This is going to be our future. And they've had an amazing run. I mean think of what Reddit has done. They work with DV as their verification provider, giving them credibility. So we see the same types of opportunities as the AI tools who've said, we're not thinking about advertising, but they will, when they start to emerge, we think there's a great opportunity for us, again, to be independently involved in verifying what happens with advertising on those properties.

Speaking to one of those opportunities that's become a little more tangible here. The DV Authentic AdVantage, you said you closed an $8 million ACV deal in the first few weeks. Can you help size the opportunity into Q4 and next year? And how we should think about the potential ramp given some of the bundling strategies?

Yes. So as far as kind of -- it will have very little impact on Q4, just to be clear. But we see this as one of our real growth driver running into '26, especially the latter half of '26. Authentic AdVantage for the first platform we've launched it across is YouTube. And what Authentic AdVantage does, it combines what we call prescreen filtering, so quality filtering, plus Scibids powered or AI-powered bidding optimization and measurement, all into one package, which allows you to find quality impressions at the lowest price possible and then drive reach. And our initial test that we've run and we've run with some of the biggest CPG companies out there.

We've seen 25% to 35% decreases in CPMs with 30% to 50% increases in reach at higher or comparable brand quality or quality and suitability. That's massive. So we mentioned that we've got -- just out of the gate in the first couple of weeks, we had $8 million in ACV. We're testing this now with the largest CPG customers. We believe this is a solution that can be as large as ABS is for us someday. ABS right now is a $200 million-plus product. I think the opportunity with, Authentic AdVantage at some point can be as large as that. We've scoped out at our Innovation Day that we feel this is anywhere from $100 million to $150 million over the next 3 to 4 years and I think we're well on our way of getting there.

If you just think about it this way, this is a product which offer a percentage of media billing opportunity because since we're compressing costs, expanding reach, taking a percentage of that win. And for -- we basically have shown that for every dollar someone spends, there's like a $4 return. Taking a piece of that makes total sense for us. And if we think we have clients, individual clients that spend over $1 billion a year on YouTube on one platform, this is a massive opportunity for us. If we can just get our attach rates to some even small percent of that spend, I think there's a big upside for us.

Another piece that I feel like comes up every year is the partnership with Meta is always in focus. Can you just talk about, especially with some of the new products moving into pre-bid, how things are tracking versus expectations? And then when do you think you'll start to see maybe kind of that inflection point from a growth perspective?

Yes. So Meta is right out as a measurement customer. It's around $40 million a year for us. So it's sizable. We launched prebid and prescreen earlier this year in V1 and there was a lot of excitement around it. But like all products, it takes time to evolve and V2 -- or V 1.1 and probably closer. It was launched this summer, which we expanded the number of block lists that we were able to do expanded the speed at which we are able to translate, violations into blocks. So that product has gotten better over time. And between Q2 and Q3, we went from 26 customers to 56 customers. We are ending the year at an ACV, we should end up around $7 million.

We think that product is -- we can be as big as our measurement, which is around $40 million on the prescreen size and that will continue to grow. Adoption has been great. We've not lost a single customer since launch. So every customer that's tested is now a current paying customer. And now we're starting to see the scale around that as well. So it is a value prop that I think is -- takes time to prove out because you need to start with the baseline of quality and safety measurement and then see how you're improving that but we're showing marked improvements in quality when someone uses the prescreen.

And as Meta has changed some of its internal policies around content moderation and their role, for example, they pulled themselves out of brand safety accreditation from MRC, basically said we're looking for third parties to take the helm here.

So I think this is a great opportunity for us. It will grow over time as we test it out, continue to build a base of customers that are looking to expand on this. And it's a powerful growth engine for us. That and Authentic AdVantage, I think, will be 2 key growth drivers going into the second half of '26.

And then Nicola, not to ever oversimplify this, but MTM and MTF, right, the 2 variable models are driving your revenue. Looking out to 2026, like how should we think about each of these? And then what should we kind of keep into consideration looking at those growth rates?

Yes. So the model is -- can be summarized as the media transactions that we measure time, a fee that we charge per transaction that we measure and we said in the past few years that it's been -- our revenue model has been driven by transitions that we measure, right? We measure more and more transactions as advertisers are advertising new verticals and we're able to verify there. So that's -- and MTF has kind of hovered moved mainly because of the product mix. We do have premium-priced products versus base products.

And as the shift -- as the mix shift changes, MTF changes. If we think about 2026, it is still going to be MTM driven more and more impressions that we will be able to verify now that we have a new product. The MTF part has always been an output. I think there are drivers into 2026 that should start to help MTF, right? So the products that we're launching are premium priced, the CTV products that we mentioned on our earnings call around Do Not Air lists, et cetera. These will be premium priced products that will be closer to ABS pricing as opposed to basic brand in fraud. And so I think over time, as those products scale into our mix, it will have a positive impact on MTF.

But going into '26, we're still looking very much on MTM. I'll add one other point, which is percent of media is something that we are now considering for some of our products. We're allowing advertisers to kind of think about whether they would prefer to percent of media versus a fixed fee. And that's also going to start to play a bigger part of the model.

When we think about competition, there's clearly been some changes in the pure-play landscape over the last couple of years. One potential, and then one, obviously, we've spent quite a bit of time talking about. When you expand your product portfolio, how should we think about the way that you compete fo dollars as you get more into performance, is it a new slew of competitors that you're aimed at? Or is it more just we compete with ourselves around ROAS and the dollars will follow?

I mean, look, I think for any company, when you expand your product suite, you're going to start to touch on other folks and I think optimization is one in which there are lots of people involved in trying to drive better results from buys. But I think we play a unique role in the fact that we don't own media, right? And we never have ownership of the media. So our drive to compress costs is intrinsically connected to one goal only, that drive value for the advertiser, not increase margin for ourselves in any way. So I think that plus the fact that we're doing so from a base of proprietary and unique data that we see in the marketplace.

So we see data across every major platform. Social, CTV, mobile, OpenWeb and that puts us in a differentiated position to help drive better optimization. So it means, yes, our competitive set is expanded. But because we're approaching it in a different way from a different data set and with different motivations. I think it's created a unique carve-out for us in that universe. So I think ending on one note on competition, our space has always been one in which there's been only a handful of players, and that handful is getting smaller which means I think we had talked about this being a winner takes most scenario for years, I think that's really starting to play out now.

We're $150 million largest than our next closest competitor, who was the same size we were a few years ago. Another competitor has kind of fallen off the map. So I think we are well on our way to being that winner who will take most.

That's great. We could have gone a lot longer. I completely forgot it up for questions. So I apologize to anyone in the room who had some. DoubleVerify, thank you guys so much for spending time with us.

We're here all day for [indiscernible] if you have questions. Thank you. Thanks, Matt.

Ladies and gentlemen, thank you for standing by. My name is [indiscernible], and I will be your conference operator today. At this time, I would like to welcome everyone to the DoubleVerify Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Tejal Engman, Senior Vice President of Investor Relations. You may begin.

Good afternoon, and welcome to DoubleVerify's Third Quarter 2025 Earnings Conference Call. With us today are Mark Zagorski, CEO; and Nicola Allais, CFO. Today's press release and this call may contain forward-looking statements that are subject to inherent risks, uncertainties and changes and reflect our current expectations and the information currently available to us and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our Form 10-Q and our annual report on Form 10-K. .

In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at ir.dobleverify.com.

Also, during the call today, we will be referring to the slide deck posted on our website. With that, I'll turn it over to Mark.

Thanks, Tegel. And thank you all for joining us today. Q3 reflected disciplined execution and resilient performance across the business. Revenue grew 11% to $189 million within our guidance range, and adjusted EBITDA margin reached 35%, once again above expectations, demonstrating the scalability of our model. We're leveraging automation and AI to drive structural efficiency and profitability, proving DV's ability to deliver strong margins even in a dynamic ad market.

During the quarter, market dynamics led to some retail budgets being softer, while growth in our other core verticals, including CPG, remained in line with expectations. Upsell momentum stayed strong, led by early demand for our AI-powered DV authentic Advantage solution, which closed roughly $8 million in annual contract value after only its first few weeks in market, fueled by early adoption from global CPG leaders. We also maintained strong customer retention with 0 churn among our top 100 customers in Q3, underscoring the stability of our largest relationships.

Core customer engagement and adoption rates remain healthy, and we continue to execute with discipline. At the same time, social and CTV are adding new growth and diversifying our revenue, strengthening the foundation for 2026. To frame the quarter simply DV's growth drivers, AI-driven product innovation, margin expansion and customer success remain firmly in our control and on those levers we continue to deliver.

Today, I'll focus on 3 themes shaping our progress this quarter and beyond. First, innovation, how we're harnessing AI and automation to launch new products for the AI era, advanced content classification and drive greater efficiency at scale. Second, diversification, how growth across social, streaming TV and programmatic is strengthening the durability of our model. And third, monetization, how we're translating that innovation and diversification into sustained revenue growth, operating leverage and cash flow.

Each of these themes builds on the next. Starting with innovation. At the center of innovation is AI, the engine behind our product development, precision and scale. AI is driving the next major transformation in digital media, fundamentally changing how content is created, distributed and consumed. Marketers, publishers and AI agents themselves are beginning to design advertising strategies around this new layer of engagement and DV is already embedded within it, capturing proprietary data that reveals how this ecosystem is taking shape. Each month, we analyze nearly 2 billion automated agents, crawlers and bots, giving us unmatched visibility into how declared a systems like ChatGPT, Quad and perplexity as well as undeclared or evasive bots and personal stopping agents, shape media performance.

These interactions represent an untapped opportunity for a marketer to LLM engagement that DV is driving to enhance and monetize. To meet this moment, this week, we launched the DV AI verification offering. A group of tools built to empower advertisers in an AI-driven world. The suite includes DV's agent ID measurement, which in its first generation, identifies measures and classified declared and invasive AI activity. It also features DV's AI slap stopper, which detects and blocks synthetic or manipulated media across the programmatic open web with expansion to social underway.

Within Pinnacle, advertisers were able to view and act on this data in real time, quantifying AI impact and eliminating waste prebid, Powering the AI swap stopper and our broader contextual classification capabilities is our Agentic classification system, which uses generative AI to automatically build and retrain thousands of models using DV's proprietary data across programmatic and walled gardens. Rolling out this technology will enable us to double our classification volume with fewer people and should achieve a fourfold gain in productivity per classification specialists by the end of 2026.

It also lets us scale labeling volume by 260% and generate results 2,300x faster than human labeling, all while maintaining human-level accuracy at lower cost. Bottom line, we're leveraging AI to not only innovate but also to expand margins, doing more, faster with fewer resources while simultaneously creating new monetization opportunities as AI agents play a larger role in digital advertising.

Just as DV helped define transparency during the rise of programmatic as well as the emergence of ad-supported CTV, we're now beginning to set the standard for trust and accountability in AI-powered media positioning DV as the independent benchmark for verifying both human and AI mediated engagement and content. Moving to our next growth engine diversification. Our progress in AI-powered innovation is driving customer adoption in social and CTV.

Beginning with social activation, both DV Authentic Advantage and our Metaprescreen solutions are off to solid starts, underscoring the demand for transparent performance-driven solutions in walled gardens. Social within activation is growing at 20% and remains one of our fastest-growing sectors. DV Authentic Advantage, which launched on YouTube towards the end of September is a DV-exclusive solution that unifies prebid brand suitability, SibisAI optimization and postbid measurement into one seamless automated workflow. Early adoption has been strong, led by major CPG brands, including Kraft Heinz and Helion. Much like our flagship authentic brand suitability product, which was 1 of the most successful launches in DV's history, authentic Advantage delivers measurable ROI right out of the gate.

In early CPG test, this solution delivered 24% to 34% lower CPMs and 26% to 50% higher impression volumes while maintaining or improving brand suitability. Continuing on social activation and turning to Meta, we significantly expanded content level avoidance on Facebook and Instagram feeds and reels nearly doubling our ability to filter our content on behalf of an advertiser's suitability preferences across categories and markets. Revenue from meta activation solutions continues to outpace expectations with 56 advertisers now live and in the early stages of scaling up from 26 last quarter. 20 of our top 100 customers now leverage our meta activation solution, up from 13 in Q2 and usage is beginning to ramp.

Today, our prebid solution is attached to roughly 6% of our brand suitable measurement impressions on meta, representing an upsell opportunity we expect to rise meaningfully as adoption deepens. On TikTok, we expanded our video exclusion list by 100x, significantly enhancing advertisers' ability to proactively avoid unsuitable content and reducing their rate of unsuitable content by 1/3. Together, these advancements strengthen prescreen protection on the world's largest social and video platforms and demonstrate our partners' commitment to giving advertisers the tools they need to safeguard brand equity and improve contextual relevance at scale while still driving performance.

There's been some debate about whether platform native AI optimization tools those black box tools that automate targeting, creative and attribution could reduce the need for independent verification. The reality is while those systems optimize delivery they don't disclose where ads run or how suitability is maintained. And a sample of AI run social campaigns, we found brand suitability rates to be roughly 2 points lower than in non-AI campaigns. As these closed algorithm scale, advertisers are relying even more on DV for the transparency control that platforms don't provide. In our sample, our prebid protection was applied more than 3x as often on AI campaigns than on standard campaigns, evidence that advertisers see higher risk in these black box solutions and a greater need for safeguards.

The takeaway is clear. As platform AI engines become more sophisticated, the need for an independent trusted verification becomes even more essential to ensure performance, suitability and accountability worked together. Turning to social measurement. We continue to expand post bid coverage across the world's largest social media environments, expanding our AI-powered brand suitability measurement to meta threads giving advertisers independent transparency on yet another fast-growing social media platform. We also extended our brand suitability measurement on Snapchat to shows and publisher stories adding to our existing coverage of creator stories and spotlight and giving advertisers greater clarity across more premium inventory.

Shifting to diversifying revenue through CTV growth advertisers continue to describe the streaming landscape as fragmented and opaque. They often don't know where their ads run, the quality of the content they appear in or even if those ads are viewable and paid attention to by a real human. In some cases, ads are intended for premium full episode TV experiences end up in mobile gaming apps like Solitaire or other non-TV environments. This is a problem we estimate impacts roughly 15% of CTV impressions and waste over $1 billion of media spend each quarter, eroding trust as well as ROI.

At the same time, advertisers still rely on manual time-consuming and error-prone workflows to manage do not Air brand suitability list leading to misplaced ads and miss optimizations at scale. We've said before that DV has not fully monetized its CTV exposure, and we're now addressing that opportunity head on with 3 streaming TV specific product launches this quarter and with more to come in 2026. On the measurement side, this week, we announced the launch of DV Verified streaming TV measurement, a market-first capability that provides impression-level transparency across digital video campaigns helping advertisers ensure that ads are delivered in high-quality TV-like environments, not an outstream players on blog pages or in gaming apps, which too often pass as TV inventory and reseller channels in the open market and private marketplace.

We're also extending our verified streaming TV capabilities into activation launching prebid verified streaming TV segments across leading programmatic platforms such as The Trade Desk, Teads, STACKAdapt, Microsoft Curate and Index Exchange allowing advertisers to target authentic streaming inventory in open market and PMP buys and avoid wasted delivery to rogue environments.

Additionally, in activation, we've launched prebid Donat Air list for streaming TV with an ABS, modernizing what was once a manual spreadsheet based process and to one that automatically enforces brand compliance policies across streaming platforms at scale.

And finally, we announced a new deal with entertainment database IMDB, leveraging authoritive metadata and popularity insights licensed from IMDB to enhance show-level transparency and classification for streaming TV. This partnership will help fuel Agentic streaming TV contextual solutions that we'll be launching in early 2026. Together, these innovations strengthen both sides of our CTV business, measurement and activation, giving advertisers the visibility, precision and performance they need as streaming becomes the centerpiece of digital media. On measurement, our adoption continues to accelerate. In Q3, our CTV measurement volumes grew 30% year-over-year, reflecting the growing scale of our streaming verification footprint and growing advertiser demand for transparency in CTV.

Turning to programmatic. We continue to see healthy volume growth across open web environments on mobile and desktop. Approximately 65% of the Open Web media transactions we measure today occur on mobile devices underscoring the increasingly app-centric nature of digital advertising. Excluding CTV, programmatically purchased video display impressions grew at double-digit rates in the third quarter and year-to-date in 2025 reflecting sustained advertiser demand for transparent, measurable and brand suitable media. Programmatic display and video impression volumes continue to rise across high-quality content-rich publishers in categories like news, lifestyle, food and hobbies for advertisers continue to find engaged brand suitable audiences.

On the supply side, growth was also a standout again this quarter, up 27% year-over-year, driven by continued momentum in Retail Media, which grew 30% year-over-year. DV's tags are now accepted across 149 of the key global retail media networks and sites, including 18 of the top retail media platforms. We also added new platforms and publishers, including AMC, Univision, Comcast, Versant, Rumble, Wiley, Peracutans Viber. As we look ahead, all of these innovations are creating clear catalysts for our largest monetization streams, activation and measurement. Our medium-term North Star is to grow social streaming TV and AI verification solutions from under 30% of total revenue today to roughly 50% while continuing to efficiently grow our other key sectors.

Achieving this revenue mix will provide a more defensible and scalable platform for growth that more closely mirrors global digital ad spend allocation. In activation, our social products are already turning adoption into revenue. DV Authentic Advantage and Metaprebi are scaling quickly driven by advertiser demand for transparent, performance-driven tools and side-closed platforms. And just a few weeks since the launch, DV Authentic AdVantage has closed nearly $8 million in expected annual contract value, while we expect MetapreBid to generate an annualized run rate of at least $7 million by this year's end.

Together, we believe these social activation solutions could represent a $120 million to $160 million annual revenue opportunity over the long term. In streaming TV, we expect our prebid verified streaming TV segments and do not air list within ABS to add roughly $10 million in incremental annual activation revenue once fully ramped. Across measurement, we see upside from our AI verification suite, verified streaming TV measurement and content level transparency from partnerships like IMDB. Together, these products are expected to deliver meaningful incremental revenue as adoption scales. While the digital ad ecosystem continues to evolve, our strategy and product innovations are positioning DV for durable long-term growth. We're deepening relationships with global leaders, including Vodafone, Paramount Pictures, Calian, Papa John's and Sonos, expanding partnerships across new solutions, markets and media types.

We've recently also added new enterprise customers like TESCO, Citigroup U.K., Henkel, Red Bull, Under Armour, Burger King, Subway, Popeyes, Premier Inn and Domino's by continue to strengthen our foundation for growth. Our large customer base is also becoming more diversified. The number of advertisers generating over $200,000 in annual revenue grew by 11% year-over-year to 347, reflecting broader adoption, higher product penetration and increasing long-term value per client.

Fueled by our industry-leading scale and innovation, DV continues to differentiate itself from its competitors as the only public independent scaled verification platform emerging as the benchmark for transparency and trust in the AI era. We've built this position through investing $210 million more in GAAP R&D than our closest competitor from 2023 through 2025 to date, creating product differentiation across social and streaming TV, empowering the launch of unique proprietary offerings such as DV Authentic Advantage, DV verified streaming TV, DV agent ID, DV AI slop stopper and more.

Additionally, through acquisitions like Cyviz, AI and Rocker Box, we've expanded our value proposition beyond verification into AI-powered optimization and outcomes measurements, core pillars of our Media Advantage platform strategy, which brings the full power of our data and technology to advertisers. Together, these form a broad-based scaled solution, unlike any in the market that will further distance us from the competition and provide future avenues of growth. TV is innovating and evolving with AI, enabling us to do so at increasing speed and efficiency, helping to expand margins in parallel.

We are developing unique solutions that differentiate and diversify our revenue into the fast-growing sectors of social and CTV and with new AI verification tools we are positioning ourselves for expansive growth as the inevitability of LLM centric advertising becomes a source of new monetization opportunities. When we kicked off 2025, we shared with you all that this will be a year of transition and evolution. We've leaned into both weathering variable market conditions while introducing more TAM expanding solutions than at any time in our history, catalyzing future growth opportunities and delivering full year growth ahead of our initial plans.

As we move into 2026, our priorities remain clear. Execution, innovation and sustained value creation for our customers and shareholders. We appreciate your continued support as we drive towards an exciting future for DV. With that, let me turn the call over to Nicola.

Thank you, Mark, and good morning, everyone. Our third quarter results reflect continued double-digit year-over-year revenue growth, solid profitability and strong cash generation. We delivered approximately $189 million in total revenue in the third quarter, up 11% year-over-year and within our guidance range. Adjusted EBITDA was $66 million, representing a 35% margin and above the high end of our guidance range, driven by cost discipline, operating leverage and AI-driven efficiency gains across the organization. .

As we outlined last quarter, Q3 revenue was essentially flat on a sequential basis, driven primarily by tougher year-over-year comps as we lapped our strongest quarter of 2024 and further driven by softer retail spend. we expected second half revenue growth to moderate, consistent with our full year outlook for double-digit revenue growth, strong profitability and the scaling of new activation and measurement products focused on social, CTV and AI heading into 2026. Last quarter, we noted that approximately 1/3 of our first half, 19% year-over-year revenue growth came from new advertisers with moat wins from last year contributing approximately 1 percentage point.

Through the first 9 months of 2025, revenue increased 16% year-over-year with a similar contribution pattern to the first half. Approximately 1/3 of revenue growth came from new advertisers with moat wins from last year contributing approximately 1 percentage point. The majority of our growth continues to come from existing customers expanding their use of DV solutions. In the third quarter, total advertiser revenue grew 10%, driven by increased volumes. Media transactions measured or MTMs increased 12% year-over-year, while measured transaction fees or MTFs, decreased 4% year-over-year, reflecting product and geographic mix and excluding the impact of 1 introductory fixed fee deal.

Activation revenue grew 10% year-over-year in the third quarter. ABS, which accounted for 54% of activation revenue grew 12% year-over-year, driven by new logo activations, upsell to existing customers and expanded usage among current users. 73% of our top 500 customers have now activated ABS, up from 68% in Q3 last year, demonstrating the continued adoption of this premium product. non-ABS activation revenue grew 8%, reflecting solid demand for our social activation solutions, partially offset by softer spend from retail advertisers. Measurement revenue grew 9% year-over-year with momentum in social, partly offset by weaker retail spend.

Social measurement grew 9% and accounted for 48% of total measurement revenue, while international revenue grew 2% and accounted for 27% of total measurement revenue. Excluding the suspension of the 1 CPG customer at the start of the year, social measurement revenue would have grown 22% in Q3 and 21% year-to-date. Revenue from Rockerbox was in line with expectations and is on track to achieve our expected 2025 revenue contribution of approximately $8 million.

Finally, supply side revenue grew 27% in the third quarter driven by growth on existing platforms and new platform and publisher partnerships. Moving to expenses. Cost of revenue increased 14% and primarily due to growth in activation revenue, which carries increased partner costs tied to revenue sharing arrangements as well as higher data and hosting costs driven by increased usage.

In Q3, we delivered an 82% margin on revenue less cost of sales, and we expect to maintain margins between 80% and 82% in Q4. R&D expenses increased as we continue to invest in AI capabilities, engineering talent and product development, including the integration of Rockerbox and continued improvement of DV Authentic Advantage. Sales and marketing expenses and G&A included costs related to the Rockerbox acquisition and other strategic initiatives.

As noted last quarter, hiring remains disciplined as we realign resources towards growth priorities and continue to optimize for efficiencies. Adjusted EBITDA of approximately $66 million in the third quarter represented a 35% margin, exceeding expectations, driven by cost discipline, operating leverage, and AI-driven efficiency gains across the organization. GAAP net income reflected the impact of higher tax expenses, which is largely driven by the tax impact of our lower share price and by higher stock-based compensation costs.

Looking ahead to 2026, we're implementing an updated equity incentive plan that is projected to reduce annual stock-based compensation cost by 20%. This quarter, we also introduced an adjusted EPS calculation to provide an additional metric to evaluate the business. We delivered net cash from operations of approximately $51 million in the quarter. Capital expenditures were approximately $12 million in the quarter as compared to approximately $6 million in the same quarter last year as we accelerated investments in new solutions across social, streaming TV and AI.

In terms of capital allocation, in the third quarter, we repurchased 3.3 million shares of DV common stock for $50 million. As of November 7, remain available and authorized for additional repurchases. Through September 30, we deployed $132 million to repurchase 8.4 million shares more than offsetting the anticipated full year 2025 stock-based compensation costs. We also deployed $82 million net of cash to acquire Rockerbox as part of our M&A strategy to diversify our product offering from protection to performance.

In addition to investing into the business, we will continue to evaluate M&A opportunities and buybacks, including beyond the current authorization as part of our capital allocation strategy to maximize shareholder value. In the first 9 months of 2025, we delivered net cash from operations of approximately $138 million compared to approximately $122 million in the same period last year. Capital expenditures in the first 9 months of 2025 were approximately $28 million compared to approximately $20 million in the same period last year.

In the first 9 months of 2025, cash generated from operations after funding capital expenditures totaled approximately $110 million as compared to adjusted EBITDA of $168 million. We ended the third quarter with approximately $201 million in cash and cash equivalents. Our strong cash generation combined with disciplined capital allocation and share repurchases continues to enhance long-term per share value.

Turning to guidance. we're updating our fourth quarter outlook to reflect ongoing retail softness in a key seasonal period. We expect revenue to range between $207 million and $211 million, representing 10% growth at the midpoint. We expect adjusted EBITDA to range between $77 million and $81 million, representing a 38% margin at the midpoint and continued strong operating leverage. While Q4 is our easiest comparison for existing customer growth, it is also our toughest for new customer growth as we lap a period of outsized advertiser, publisher and platform additions.

For full year 2025, we expect to deliver approximately 14% year-over-year growth at the midpoint and are raising our adjusted EBITDA margin guidance from approximately 32% to approximately 33% and reflecting margin expansion even as revenue growth normalizes to approximately 10% in the back half of the year. We also expect a full year 2025 margins of approximately 33% to be a base case for full year 2026, supported by continued cost discipline, AI-driven efficiency gains and the inherent operating leverage in our model.

For the fourth quarter, we expect stock-based compensation to range between $25 million and $28 million and weighted average diluted shares outstanding to range between $163 million and 165 million shares. Looking beyond 2025, upside from the 10% base case revenue growth we're expecting for the second half of 2025 will be driven by the pace of adoption and scaling of our social activation products, our CTV solutions alongside the ramp of our new AI offerings. As Mark mentioned, our medium-term goal is to grow social, streaming CTV and AI verification solutions from less than 30% of total revenue today to approximately 50% while continuing to expand our other key sectors. This evolution will create a more diversified and resilient growth profile and position DV to capture a larger share of the fast-growing digital advertising ecosystem.

In closing, our results show consistent double-digit growth, disciplined operational execution and strong profitability. Our balance sheet remains robust with over $200 million in cash and no long-term debt, supporting innovation, strategic partnerships and share repurchases. DV's business model continues to demonstrate resilience and scalability and we remain confident in our ability to create long-term value for our shareholders.

And with that, we will open the line for questions. Operator, please go ahead.

[Operator Instructions] And our first question comes from the line of Maria Ripps with Canaccord Genuity.

First, can you maybe help us sort of think through some of the growth drivers for next year? And I know you sort of touched on this a little bit in your prepared remarks, but it would be great to get a little bit more -- a little bit more detail around some of the drivers there. And then if the business performed similarly to this year, let's say, mid-tens growth hypothetically, how should we think about sort of incremental profitability and the cash flow through next year? And then I have a quick follow-up.

Yes, Maria, I'll take that question. So as we said in the remarks, we're looking at a base case scenario of a 10% growth, which is basically where the second half of '25 is coming out. We're not providing guidance, but that's a base case based on what we see today, and that's based on the recurring business that we have. As we said at the beginning of this year, entering this year, which we've always noted as a transition year, the upside will come from all the new solutions that we're putting in market for social, for CTV, which we've been discussing and now for AI solutions. And the upside to the base case will depend on the ramp for the adoption for those new products. And we've been very consistent with that story, and we see that flowing into 2026 as well. .

In terms of margins, we are raising the overall margin for 2025 to 33%. And we're considering that a base case for 2016 as well. The upside on that margin number will come from adoption of AI tools and solutions that allow us to be more efficient in the business. I would say our strategy remains to reinvest in the business for new solutions, but AI tools will allow us to be more efficient in how we go after those opportunities.

That's very helpful. And then you mentioned several streaming sort of product launches later this quarter. Could you maybe share a little bit more color around that sort of maybe expected adoption rate? And you [indiscernible].

Sure. So as Nicola noted, we look at our growth drivers going into next year as being focused really on social CTV and AI-specific tools. On the social stuff, obviously, we talked a lot about Authentic Advantage and that of Prebid, and we see triple-digit millions coming out of that over the lifetime of those products. But CTV is something where we've arguably been hammered on for years, which is, hey, this is a fast-growing segment, why aren't you guys driving more revenue from it. We're seeing great volume growth. So this quarter, CTV grew at over 30% to 30% on a volume perspective.

But where we haven't been able to really extract the value is have on the commensurate CPM or percentage of media. I think we're finally getting to the point with the new products that we've launched that we're going to start to be able to do that. So this V1 of CTV measurement includes what we call verified streaming TV. And as we noted in the call, we estimate around 15% of CTV impressions don't end up any place near a real CTV type or streaming quality -- high-quality experience. That could be as much of $1 billion a quarter in spend.

What we're able to do now is very clearly identify the fact that an impression ends up in a high-quality CTV environment or streaming player environment, not in an app or a blog post or an outstream player someplace and do that both on a prebid and a postbid fashion. So I think, a, we're starting to lean in now to this quality initiative around CTV. And I think Jeff Green said something really interesting on The Trade Desk call last night, I said, there will always be more supply than demand when it comes to kind of open markets. And I think that that is starting to take place in CTV where with the emergence of Amazon and Netflix, there is lots of CTV supply. So the ability to make sure that you're getting the cleanest, highest quality supply is something that's becoming more and more important to advertisers. And we're providing tools that allow them to do that.

The other tool we've launched is automated [indiscernible] Air list, which I think is the first step towards a much finer targeting capability for advertisers to block certain types of content as well as on a program level to exclude those programs from any type of open market or PMP buy. So this is the first step in a much broader suite of CTV products that are going to enable us to actually extract the kind of value out of that segment that we should have and that we can.

Next question comes from the line of Mark Murphy with JPMorgan.

I'd be interested if you could shed more light on the softness that you have mentioned in retail. And for instance, is it concentrated within a handful of customers? Is it something that is broader based? And then -- do you sense -- like would you connect the dots between the low-end consumer pressures that are becoming evident in the U.S. economy and what you're seeing? Or is it -- are you seeing it kind of up into the high end as well?

Yes. So Mark, I'll take the question. The softness is across the vertical. And as you know, retail is a large vertical for us. So it represents a large share of our top 100 spenders. So it's not concentrated on specific accounts. It has been a disruptive year with both tariffs and other factors in the market, and it is impacting the retailers, whether it's our our base of clients are generally large distributors of retail, so it does impact them. But we are seeing the impact across the entire vertical.

And then for Mark, how do you think about trying to project the timing for OpenAI, Perplexity, Anthropic, et cetera, to begin their own advertising at scale and how aggressively do you think your customers might push them to make sure that DoubleVerify is showing up in those venues?

Yes, it's a great question. And interestingly enough, we've seen this story play out before, particularly on connected television. And the most recent example is Netflix, who for years said they're never going to ever have advertising. They're never going to have advertising and then literally out of the blue decide that they are going to have advertising. And in that case, within 90 days of that announcement, we had already been engaged with building a product and we're ready to launch that product with them.

So we think that the movement into advertising is going to be one that's going to be pretty quick. It will be I think it's going to be broad-based. So it's not going to be one of them will go into it. I think they all go into it. And from what we've seen in the past is as soon as they engage with advertisers, the first thing advertisers are going to want to know is how am I going to drive ROI from this? And the second thing they're going to want to know is how can I trust anything that's occurring in this engagement. And I think that's where we play a big role, whether it's social platforms like Meta, TikTok, YouTube, where we play a verification role, the Open Web, CTV, I think the LLMs are going to be the next venue for us to actually provide verification, trust and control for advertisers.

The products that we just launched are kind of a first step in giving our advertisers much more transparency of the kind of engagements that are occurring out in the open web with LLMs and I think starting from that base, we're going to be in an interesting position to actually start to now play a larger role when the advertising rolls out across those platforms.

Next question comes from the line of Raimo Lenschow with Barclays.

Can I stay on the direction that Mark started. Nicola, if you think about the -- you talked about the base case for next year, the 10%, which is kind of what you're seeing this year. Can you speak to like what are the assumptions around economy, et cetera, that we're doing there, it's like stable? Is it worth maybe building an extra buffer in. Can you speak to that your thinking there? .

And then, Mark, one for you. Obviously, your industry looks like it's changing because [indiscernible] now one of your other public competitors might be going. How do you think about the impact to the industry overall?

Yes. So I'll take the first question. I would say we're not expecting a dramatic change from what we're seeing right now in the macro. But having said that, what we're seeing in the macro this year has been pretty disrupted. We had advertisers that kept spending through uncertainty in the first half. We're now feeling some of the impact on the retail vertical based on what's actually happening in the macro. So the assumption for next year is that it is not materially different than what we're seeing today, and that is a year where we will achieve 14% growth but it's 10% in the second half, which is where we were expecting all the time.

And regarding the kind of the landscape I think there's a few things to think about. Obviously, less scaled competitors with the departure of moat in the last 12 months. But also our direct competitor now going private, does create a different marketplace with regard to kind of pricing dynamics. They're a different business now. They're one that's heavily loaded with debt. That's going to have to think how that impacts pricing dynamics for their product in the marketplace. And the competitive field looks different with the fact that you've got a company here in DV that's kicking off a ton of cash that has no debt and has the ability now to continue to invest in product development. Obviously, we've just launched a slew of products to invest in M&A to build out a broader platform. And to keep focused on revenue growth and market growth as this is -- as the dynamics of the market keep changing.

So I do think it puts us in a very advantageous position right now with regard to the ability to invest, the ability to maintain price and the ability to kind of continue to grow our solution set, both organically and inorganically. And so I think -- we've always said we're in this to win it. We're now $150 million of revenue larger plus than our closest competitor, and I think we can continue to extend that gap over time.

Next question comes from the line of Youssef Squali with Truist Securities.

So maybe one quick follow-up to this 10% base case growth for 2026. Nicola is the assumption that continues to be pretty so the way it is, it has been? Or do you expect that to worsen or to maybe improve? And then maybe this could actually be related, maybe not. But can view as a top customer. It's being acquired by Kimberly Clark. One is Kimberly Clark [indiscernible] can be still spending at the same level as before? Just kind of what's going on in adoption?

Yes. So I'll take the first part. Again, just to be clear, we're not providing guidance for 2026. I think the idea around a base case of 10% is what we're seeing in the second half of 2025. And with all the drivers that I already mentioned around uneven spend and a pretty disruptive macro environment. we're essentially assuming that we can maintain that 10% base case in 2026. It's a base case, off of which we can grow based on how we can sell new products. Again, we will end up this year at 14% growth in a macro that was very disruptive quarter-on-quarter. So the 10% does not assume a dramatic difference in the macro.

And with regard to kind of Ken view and let's just talk about the broader health care segment in general, in consumer products in general. We had strong growth last quarter in CPG and in health care, both of which grew in double digits year-over-year. And with regard to that specific customer, we continue to see growth. Kimberly Clark is not a current customer of ours, but we've had strong engagement with them in the past. We have strong relationships at can view -- and we are assuming that, that relationship will continue moving forward. So -- we've been really good in the past about continuing to maintain relationships in light of agency changes and in light of kind of structural changes that company. So Kent is a client that we just won this year. They've continued to grow with us. They're a solid partner. They're expanding their use of our solutions. And we don't see any change to that in the short term. .

Next question comes from the line of Laura Martin with Needham & Company.

My first one is on client base. I love all the new products. Do you -- Mark, I think Wall Street is really excited about SMBs coming into the CTV space and sort of expanding the TAM. My question is your client base has historically been very large. Do you see any of these new products as maybe potentially garnering new and maybe lower coming down the size, scale of products? And then my second one is on almost every ad tech company we cover, we've asked them this question about traffic. Are they seeing diminution in traffic? And they're all saying, "No, no, no, we're not seeing any demise of traffic even in spite of Google doing answers. And then when you ask them, but is some of that bought, they say, "Oh no, no, we have verification for impressions, and we know get your humans or which are bots. I assumed that was you doing that. But are there new competitors doing that since it sounds like you're just now introducing Gen AI verification solutions.

Let me -- thanks for the question, Laura. I'll take the latter half of that first. We've always been able to identify basically we call nonhuman traffic. Right, the idea around what we call either SIBT or GIVT. GIVT is more benign. Those are your usual crawlers, they could be search crawlers, any type of other kind of positive or neutral crawlers. And then SIBT, which we consider kind of fraud or negative engagement activities. So that's always been able to be kind of verified and cleanly kind of identified.

And in most cases, it gets blocked or is unpaid for. What we've launched now is a much more greater level of transparency. And I think this is really interesting because there's greater engagement with ads and even with content with LLM and in some cases, personal agents, right? And those have always been defined as GIVT which is something an advertiser shouldn't pay for, right? It's not a human. But what if that agent or that crawler or that bot is actually doing something positive and is looking to buy a product is looking to find a coupon. Those are engagements that right now that the universe of the ad tech world is basically said, all right, don't engage, right? It's -- we're not going to pay for this. But what about the future? What about when an advertiser does want to engage with an agent from one of the LLMs, who is going to decide in what information do they have on that. That's the kind of granularity that we're starting to provide, which is what is the bots motive what is -- where is it coming from? And right now, again, I think advertisers are still in the learn phase, but in the future, it could be something where they do want to engage and do want to render or pay for the ads.

So I think it's a level of granularity and that we're able to provide now with this new tool that gives us the basis from which to launch new solutions in the future. in which agents may be talking to agents and bots may be talking to bots and advertisers might want to be part of that engagement. On the first part of your question, the growth of SMBs in the CTV world, I think like we have in the programmatic space with our ability to kind of be part of The Trade Desk buying tool be part of DV 360's buying tool, where we insert our data directly into those -- and we know that in those cases, upwards of 15% to 20% of our engagements every month are from non-scaled, non-engaged customers who literally click a box and say, apply DV pre bid to my Buy. As more buyers come into the CTV universe and they're buying through platforms, we think there's an opportunity in the same manner where they can apply DV, for example, verified streaming TV segments to our buy or apply a do not air list to my buy very seamlessly.

So I think the entrance of SMBs into the CTV world is an opportunity for us in the same way that we get upside from that through the programmatic buying platforms. we'll be inserting our solutions into the buying platform for SMBs on CTV as well and more scale is better, more opportunity is better. And I think since we are a CPM-based business for the most part, as more impressions get pushed through CTV, that's a good thing for us.

Next question comes from the line of Matt Condon with Citizens. .

My first one, Mark, just as we sit here today and you said you've had discussions with advertisers just around meta prebid and you're thinking about 2026. Just how are those conversations developing? And how are you thinking about that product in 2026. And then similarly, with just TV Optimatic Advantage, it seems like it's off to a very good start. Can you just talk about this can there and also just scaling through 2026.

Yes. So on both of those solutions, we've got pretty high hopes for continued growth and scaling. The Meta prebid solution, it's a product that we launched earlier this year, and it's gotten better and better over time. We've expanded the number of block lists that we're able to push through. We've expanded the categories that we're able to refine the filtering around and that's helped catalyze a pretty significant growth rate. I think as we mentioned in the call, we're now approaching a $7 million run rate, and that continues to scale. And we've got some pretty large -- some of our largest CPG customers are already starting to scale against that.

So as we look at that rolling into next year, we see pretty significant upside coming from that solution. And as we noted on our Innovation Day, we believe that pre-bid business can be as large as our postpaid business on meta, which is currently around a $40 million a year business. So -- we feel good about that. It's beginning to scale well and our customers are leaning in.

On the Authentic Advantage front, I mean, this is a brand-new solution we just brought to market in September and it's going gangbusters. Like we love what we've seen from the initial test where we're increasing scale, decreasing CPMs and making brand suitability better all in one package on YouTube. That is our -- we've already booked almost $8 million in ACV for that product in the first few weeks. And we think that can be a real home run for us, very similar to where ABS was. It hits a lot of bases for advertisers. We've had a prescreen business on YouTube for a while, but one of the challenges always was, when I filter out inventory, what's left costs more. We've been now able to address that by saying you can filter out inventory that's not great for you increase or maintain your brand suitability or band safety standards while compressing costs, gives advertisers more reach, allows their spend to be more effective. And I think it's really resonating. So we see that scaling up well into 2026 and beyond. And we framed our Prebid or Authentic Advantage products to be triple-digit millions over the life of that solution. And I think we're well on our way there.

Next question comes from the line of Justin Patterson with KeyBanc.

Great I was hoping you could expand on international some more. If we go back to the Innovation Day, I know some of your go-to-market changes were designed to just simplify the selling process over there. So would love to hear about just how that's trending in more detail and what actions you might take to make international more material in 2026?

Yes. Thanks, Justin, for the question. I think international has been really a very variable area for us. 2 years ago, we had very soft international growth. Last year was relatively strong. This year is kind of in the middle. And I think we have put in together a strategy that will enable us to continue to scale there better. We -- what we've looked at are localized sales resources in region, but built on a centralized go-to-market plan. That's allowed us to scale efficiently, which is, as you can see in kind of our margins, we continue to improve, but also build local relationships there. .

The one thing that we have found is from region to region, the product needs and where folks are leaning in are very different. You've got APAC, which is a very social driven market. which has lower CPMs. You've got North America, which obviously is a very video and CTV driven market with higher CPMs. And you've got Europe, which is somewhere in the middle, depending on the region. So what we've done is really focused on leaning into specific product suites in specific markets that align with the kind of media they're buying there.

And ultimately, one of the things that we put out there is our North Star is we want 50% of our revenue coming from social CTV and new AI-focused solutions. And I think a big part of that is scaling our international business around social and getting those new products to market that make social buys, particularly across video and social video, i.e., YouTube, much more acceptable in markets where things like CPMs are much lower. The way we've done that is look at different pricing models. And one of the things we did talk about our Innovation Day was a percentage of media model, which we've now launched on our social solutions, so on Metri as well as on authentic advantage. And that gives us the ability to sell those solutions in markets where CPMs are lower but still get good reach and good revenue upside opportunity.

Next question comes from the line of Matt Swanson with RBC Capital Markets.

Mark, you just mentioned briefly the different pricing models. And obviously, this has been a big year for innovation. There's a lot more product. We've come up also with some kind of bundling strategies. Could you just talk about how you're thinking about go-to-market and just making sure that your sales force is -- maybe it's more of a shift like value-based selling of solving some of these problems that are arising for your customers. But just how are you thinking about pitching the value proposition as you expand what you're offering?

Yes. One of the challenges when you launch a lot of products are is that you got a lot of products, right? And our customers are really looking for simplification, simplification of their engagement, but also simplification of how they buy media. And this is one of the reasons why some of the AI-based kind of black box solutions are doing so well, whether it's Advantages Plus or P-MAXs, et cetera, the ability for an advertiser just to set it and forget it, buy something and drive ROI is really important. And I think we're thinking the same way with our solutions, where things like Authentic Advantage are products where you can set a brand safety or suitability floor or target, but then let the solution run and drive CPMs down and drive volume up and reach up. So from a market kind of implementation practice, we're kind of following that solution set.

From a go-to-market and sales process, the idea here is, a, making bundles more digestible. So rather than have 17 different features that we sell for '17 prices, particularly on the measurement side, to bundle our solutions up and enable an advertiser who's buying across CTV to kind of get everything that we offer on CTV for a fixed price. And to do the same across social and Open Web, et cetera. So bundling on the measurement side, flexibility on pricing on the programmatic or buy side when it comes to filtering and prebid. These are ways that we're kind of easing the introduction of numerous suite of tools that continues to grow, but has value in different markets for different types of customers. So it's a lot that we're introducing. And I think the way that we're going to -- the way that we are making it digestible is making pricing adaptable to the market and making bundles much more part of how we sell things.

Next question comes from the line of Andrew Marok with Raymond James.

So we heard your commentary around the EBITDA margin outlined. But maybe within that, how do you think about potential flex in places like product development or [indiscernible] costs from having to invest in AI solutions like Agentic and Slop [indiscernible] as that space and the potential AI threat landscape evolves at a rapid pace. And then maybe for Mark, just how you're setting up the teams to respond to AI landscape innovations in as nimble a fashion as possible.

Yes. So I'll take the first question around investment. So the profile of the companies that we have been able to invest and achieve the growth that we have within a margin range of 33%, right? And what's happened with the opening of the AI tools is that it allows us to reinvest faster into new opportunities because we're able to achieve what we are doing already in the core business more efficiently. So AI tools allow us to classify more effectively and do it in a more cost-efficient basis.

And with that in mind, we will be able to essentially invest into the new categories more efficiently. And still, as we said at the beginning of the call, I feel confident that we can achieve as a base case of 33% margin. So we're able to reinvest in the right categories more efficiently now that AI tools are available to us.

And first of all, I want to thank you for being the first analyst to say slop stopper on this call, which we are hoping someone would ask about. But our philosophy around AI is pretty straightforward. We're AI first, AI always and AI everywhere. And that has to do really with 3 main areas of focus. Our operations, our current solutions and then building out solutions for a new AI-enabled ad tech ecosystem. What Nicola just mentioned was kind of the second part of it, which is how do you make our solutions better more granular and more efficiently do so. And we talked about how we're doing that with labeling.

And if you think about labeling, what that is, is just kind of the contextualization of content, which is the base of everything we do, whether we call something suitable or viewable, et cetera, that has to do with labeling. Through AI, we're doing that faster and more accurately than we ever have before, allowing us to more than quadruple the volume that an individual labeler can handle and increase the speed in which it's done by over 2,000 times. I mean, think about that. This is in a process that's taken us less than a year. We've been able to get these kinds of achievements. That will ultimately make a better product, a better core product and allow us to do so at a much more efficient rate. And that's why we've been able to kind of lean into both investment while actually increasing margins. I think that's super important to understand. And then on that -- the third leg, which is building products for an AI universe, I think that's a place where we've just started because most of the AI-enabled universe isn't really ad-driven yet.

So what we've done is start looking at the impacts of AI so far in that space, whether it's the volume of crawlers and agents or the AI-generated content that slop stoppers trying to keep advertisers away from -- that is an opportunity for us to continue to grow our position as a transparency and verification leader the same way we have in all of the other media spaces that we've gone after.

So AI is infused in who we are as a business. It's infused in what our efficiency and operational capabilities are in the future. And it's infused in the new products that we're going to be building for in a new environment that we're building for in the future.

Next question comes from the line of Brian Pitz with BMO Capital Markets.

Mark, maybe a quick one on TikTok. With an increasingly likely TikTok will be allowed in the U.S. if the company needs to launch a separate app, how much headwind could it be to DV going forward? Or will all the products essentially be transferred very easily with that app staying in the U.S., are you seeing more demand from advertisers for TikTok products? Any color would be great.

Yes. So we -- TikTok currently is our third largest social platform after Meda and YouTube, which make up over 80% of our volume and around 50% or so of TikTok volume for us is U.S. So 50% outside of yes, 50% in the U.S., so the impact on the business, although it's growing really fast, it's still relatively small on our social and our [indiscernible] social footprint. That being said, I think our products are -- would likely be relatively easily transferable to the new solution. They exist via APIs and via a block list that are relatively transferable from place to place. And if you remember, we actually do this in multiple languages across multiple instances of TikTok. And I think that's kind of flexibility enables us to kind of move this into any new app that environment that comes to play. So we're not overly concerned about that. We've been flexible before with TikTok and with all the social platforms. And I think we'll be able to make that transition relatively easily when it comes. .

Next question comes from the line of Arjun Bhatia with William Blair.

Perfect. I had 2 quick questions. First, let me just go back to the retail sort of weakness. Nicola, is there any way to just quantify how big of a headwind that was in Q3? And then how you see that kind of factoring into your guidance in Q4 as well, given it's obviously the strong holiday season. And then for Mark, I'm curious, just as you think about the Meta ramp, you have 56 advertisers already. When you think about growth there, how much of that is going to come from the existing kind of advertisers scaling their usage and volume versus kind of adding new advertisers?

Yes. So Arjun, I'll take the first part. So as we said, Q3 results reflect some disruption on the retail spend, right? And it is our largest -- it's one of our largest industry vertical. So it does have an impact on our results into Q4, Q4 is a high retail spend season. So guidance does reflect sort of more muted spend from retail going into a season that would otherwise be strong for them.

Regarding 2026, I'll go back to what I was saying earlier in the call, which is we feel 2025 was a very disruptive year in terms of macro drivers. We had started the year guiding to 10%. We'll end up achieving a 14% growth. So within a disruptive macro off of a base case of 10%, we were still able to achieve 14% and going into '26, we're not anticipating macro to necessarily do any worse or any better. And that's what's kind of in the 10% base case.

Yes. Arjun, on the question on meta, we've mentioned in the last 2 calls that we're pleasantly surprised and scaling ahead of expectations on that product. We know any new product takes time to scale, especially one that's within a walled garden and has specific limitations that need to -- it needs to grow into in advance. And in this case, the 56 customers that we have on that platform, 9 are new to measurement. So they were not using us on the measurement side and came to us do both measurement and prebid. I think that's a great sign of new customers.

But a vast majority of them, the other 47 are upsells and that's where we're going to see the real volume growth. Customers are just starting to scale, just starting to launch that in specific markets. And -- but some of those upsells are some of our biggest CPG customers and some of the biggest spenders on social. So we see volume growth primarily coming from current customers based on upsells. And that's a good thing because that means we're getting the low-hanging fruit. We're getting the folks who are spending who we haven't been able to happen to those social budgets yet. And now we have a solution on their arguably largest social spend platform that we can start to monetize.

Next question comes from the line of Tim Nolan with SSR.

I'd like to come back to the topic of CTV again. if that's okay. You had a press release several days ago about your work with Roku. You mentioned Netflix on the call. My question really is how penetrated are you across the CTV platforms? How difficult is it to provide coverage across both the open and the walled garden CTV services? And then just kind of stepping out a bit more broadly, what is your view of the role that DV can play in TV measurement in general, given everyone complains about how bad the measurement is or how inconsistent it is or how much is changing? Just what is the role that DV can play across this evolving landscape?

Thanks for the question. With regard to kind of penetration, I mean, we are working with all of the top 10 streaming TV platform. So everybody from Netflix to Disney, to Warner Bros, and the rest of the folks, Paramount, et cetera. So with regard to provide basic verification, viewability, impression accounting, et cetera, we're there. So we have the relationships, we have the integrations, et cetera.

With regard to kind of getting into the measurement business and the measurement business in the TV or CTV world usually means reach and frequency measurement, I don't think that's a space that we plan on entering. I think for several reasons. The first is, I think it's becoming increasingly less important to advertisers who are looking to drive outcomes and they look at CTV as just another outcome engine the same way. Search or display or social is. So I think being in the measurement of that, I don't think being in the measurement of reach and frequency is a place where there's lots of people competing over a piece of pie that I think is going to eventually shrink.

But I do think we can play a role on something that's increasingly important, which is evaluating quality, driving greater transparency and enabling better and more granular targeting and those are areas where we've leaned in, I think our new solutions are the first step in getting further down that path. And those are areas as more and more impressions are being bought, through PMPs or through open marketplaces as the level of inventory increases. I think the ability to drive greater transparency, to drive greater trust in that engagement is going to be incredibly valuable, and that's a role that DV is playing, and we'll continue to play and expand that role over time.

That's great. I met measurements in a very broad sense, which I think you did address in your answer.

Sure.

And our last question comes from the line of Omar Dessouky with Bank of America.

Thanks for squeezing me in. Earlier this fall, President Trump ordered his health department to look into direct-to-consumer pharmaceutical advertising and I was wondering if you had any update on whether that's potentially affecting some of your pharmaceutical clients. Whether it affects programmatic advertising at all, if you saw any effect in the quarter and if it's contemplated in your fourth quarter guide?

It's a great question. We work with a significant number of health care and pharma companies. So everybody from Lilly to Novartis to Pfizer. And to be blunt, we've not seen significant drag or friction on any of their advertising. As a matter of fact, the lean-in to GLP drugs has been a real catalyst for advertising growth. And in discussions with them, it doesn't seem like there's any indication that, that is going to slow down at all. That being said, any type of regulatory is obviously out of our hands and out of their hands. But as of right now, the indications are spend continues to be strong on health care. It grew double digits for us last quarter, and it's grown double digits for us all throughout the year. And as of now, we look at a forecast in which we don't see significant headwinds against pharma advertising anytime soon.

That concludes the question-and-answer session. I would like to turn the call back over to our CEO, Mark Zagorski.

Thank you all for joining us this early morning. We are laser-focused on disciplined execution, continued innovation and delivering sustainable growth and long-term value for our shareholders. We look forward to seeing many of you at the conferences in the coming months.

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.

Okay. I think in the interest of time, we're going to keep the train moving along the track. It's my pleasure to introduce the team from DoubleVerify and have them be part of the conference this year. Nicola, thanks so much for being here at the conference.

Thank you for having us.

Okay. Always enjoy a chance to catch up with you. You've been a regular participant, so we always appreciate when you want to come and be part of the conference. I always do like to start by just kicking off for those that are new to the story. There's so many moving pieces with respect to DoubleVerify. You've been on this journey as a company over the last couple of years. Why don't you level set with the journey you've been on and sort of where the company is right now in its evolution?

Sure. Sure. So DoubleVerify is a technology company that helps advertiser making sure that the advertiser is placed in an environment that's brand safe, that's viewed by humans, and it's fraud-free. That is basically where the company started. It started as an insurance for advertisers to make sure that their ads were placed in an environment that was the quality they wanted with the context that was intended to be for them.

The company has now evolved and is evolving, and we'll talk about it, I'm sure, from verification to performance and to outcome. So specifically in the last few years, we have acquired some companies that allow us to move not just to tell the advertiser whether we can verify the quality of the ad, but also to tell them where they can optimize their spend. And then more recently, now we bought a company that will allow us to prove the outcome of that ad placement.

The 2 companies that we bought are Scibids for the optimization part and then Rockerbox for the outcome. We're still early stages. Most of our business is still the verification, but we now have all the pieces together to create a much broader proposition for the advertisers that moves away from just saying, hey, keep me away from the bad stuff, use DV to also tell you what's good for you and show me that it actually was good for you.

And how should investors think about that framework scaling in the years ahead. So obviously, you've now put all these pieces in place. You had a really insightful Investor Day just a couple of months ago. How should investors think about the narrative building and its momentum as the execution meets the strategy?

Right. So it will take time, of course, to set it up in place. It's a framework. It's really an integration of 3 discrete products that already exist. The very first step will be around optimization. This is a company Scibids that we bought over 2 years ago. It's already in market. It already has clients, and it's already integrating most of the DSPs that we want to be integrated with. There's still work to be done. So that will be the first part of the journey, and that we'll talk, I'm sure, about it, which is the authentic advantage solution. And then the proof point really will come a little bit later. That is really early on. Right now, we're just integrating the company into DV.

Okay. I will need to ask about sort of just the current ad environment role operating in. I think this has been a big debate point over the first 1.5 days or so of the conference. Level set for us what you as a company are seeing in the current operating environment. And how that might be distinction out there between types of advertisers, types of advertising solutions where you might see some nuance in the operating environment?

Yes. So the operating environment is uncertain. It is volatile for sure. The year started with a lot of uncertainty around tariffs and the impact that it would have on ad spend. The first half of the year, actually, we saw a lot of resilience around advertisers continue to spend into the uncertainty. But we're now in the second half where the impact of tariffs is actually starting to be felt in the market.

We have some clients, and this is all public, what they've said is some are saying we're going to continue to spend through this. Some are saying we're not going to spend through it. Over half of our revenue comes from programmatic, which is a very transactional part of the business, right? Advertisers are able to push in and out, spend very, very quickly, and we're subject to that, right? So the sentiment -- if the sentiment turns, we will feel it.

The third quarter, in particular, is very heavy weighted on September. And so that is happening as we speak. Our 2 largest verticals are CPG and retail, which are also susceptible to quick decisions, right, that can be made around programmatic to full spend or not full spend. So it is -- it has always been variable. Advertisers now don't have to plan campaigns for 6 months or 12 months ahead. But I think the environment right now is even more unpredictable. So we'll have to see. Now what we are focused on is what we're controlling, which is just continue to develop the products. Despite the cyclicality of the space we're in, we have a plan to continue to develop our product, and that's what we can be focused on despite the cyclicality.

Yes. Understood. In your control versus out of your control, very clear. Now turning to some of the building blocks of the business, let's go in that direction. Social media activation, especially pre-bid solutions. I think there's an area that gets a lot of focus from investors. Talk a little bit about the current landscape in that business, but more importantly, how you see it evolving and scaling in the years ahead?

Yes. So when we were talking last year, pre-bid was not a solution for social. So now pre-bid is available for Meta, TikTok and YouTube. It is in the early stages because it's available, but clients need to understand exactly how to use it and to be able to compare to what they have available on the OpenWeb. Part of having these solutions in the market is it allows the advertisers to benchmark how their spend is working in different environments. But that takes time, and you need to test it and make sure that the lists that we're using for exclusion are actually giving them the results that they want.

It is available. It is scaling. Those are new dollars that the advertisers need to find as well, right? So going back to the macro environment, there is a little bit of a friction there in terms of adoption rate, but it's available. What's very unique to us is that Scibids, right, is also now available on YouTube. And that product allows you to do not just the basic pre-bid tooling that everybody will have access to because the platforms will give access to the data to all the providers that they want to, right? They're not going to be exclusive to DV. Scibids, the optimization part is exclusive to DV. And that allows the advertiser to not only do pre-bid filtering, but also then say, okay, I'm going to use Scibids to optimize my spend that we feel is very different. There really isn't another integrated solution in the market that does that. So we think that the power of those 2 tools together is really going to make a difference.

Okay. Understood on the differentiation. Let's talk about 2 of the bigger growth areas in advertising at large are our CTV and retail media, your relative exposure level to those engines of growth in the broader digital advertising landscape and how you see the evolution of your mix or exposure to that in years ahead?

Sure. So CTV has spoken about more than it's actually yet sort of a channel, right? So it's 11% of our measurement impressions. It's about that in terms of total ad spend in digital, right, that goes through CTV. But it's an area that's growing very fast and a lot of dollars are going to move to CTV from linear TV. So it's an area of very high focus for us. It's 11% of our measurement revenue, but it grew 45% last quarter. So a lot of dollars are moving there.

What we're focused on there is, again, product differentiation. So we can measure, we can do what we can do in all other environments on CTV. But what we're going to be launching in the next few quarters are products that are specific to the environment. One of the things that we see in CTV is there's a difference between saying, I'm on a big screen, and it is CTV. And I'm actually buying CTV, but it's actually going to an extension of those ad networks.

It's nothing wrong with being in an extension, right? It expands the TAM and it expands the reach that you can have with you're ads, but it's not the same as being on a large screen. And so we're looking at products that are going to allow you to basically see if you were really on a full episode, right? Or if you were kind of partially on episode and then went to sort of an extension. We're thinking about do not air categories on the pre-bid side that will be tied to our authentic brand safety tool, which is our premium product.

So we're creating products that are specific to the challenges that are around CTV, which is it's not just a big screen, it's also extensions to allow the advertisers to really know where their ads are showing. That's the key for us. So we're spending quite a bit of time thinking about those kind of product development for next year.

Okay. And with respect to retail media in particular as well.

Yes, retail media -- the beauty of retail media for us is that it is exactly that extension, right? So it has allowed us to work with clients that wouldn't otherwise be direct clients for DV. Smaller advertisers that do have ad spend dollars, but wouldn't necessarily be a client that we have a direct relationship with. So it's expanded the availability of our data to more clients. We have very strong relationships there. I mean retail media -- the growth of retail media network surpassed the growth that we saw in the supply side line in our financials in Q2. So it's really a strong growth. And the same products that work for brands work for retail media.

Okay. We're at technology conference. We have to talk about AI. Talk to me a little bit, and you alluded to a little bit in your first answer, but I want to go a little bit deeper in terms of how you guys are thinking about aligning AI with solving and providing solutions to what advertisers are trying to get out of their decision-making process?

Right. So AI for us -- we've been using AI in large language models to do what we do, which is classified content for many years. Of course, now it's accelerated, right? The ability for us to use AI has accelerated as it has for a lot of companies. Now the difference is there are AI tools, which are available for everybody, but not everybody has the data that DV has, right? So the combination of those 2 allows us to do a finer job in classification.

So this is a cost -- this is an efficiency play first and foremost for us, right? It allows us to classify faster. It allows us to create categories that are specific to AI. Some brand advertisers do not want to be near AI-generated content. Some advertisers do. There's -- so it's a tool that's allowed us to do our job more efficiently and faster.

You always need humans anyway. And again, as I said, the DV data tied to AI is really what makes a big difference in terms of what we can do versus, say, an upstart company that says, we're going to use AI to do brand safety. Brand safety is based on knowing what's out there and the years of us having been able to do that creates a much better model for AI. So that's sort of step one.

Step two is the efficiency that we can gain with AI are obvious, right? So we can -- we're able to do things faster, we're able to do them more efficiently. I'm sure we'll get -- at some point, we'll get on a question around margins, but it basically has freed up resources within our own cost structure, which is a very interesting play as well. So it's part of what we've always done. It's just accelerated it. And I think it creates a differentiation from companies that say, yes, we're just going to use AI to do brand safety. You do need a base of data that we have that others don't.

So building on the concept of the data advantages you have and the client focus you have, talk a little bit about DV Authentic Advantage feeding off of that strategy and how you think about that scaling as well?

So DV Authentic Advantage is of the 3 pieces that we discussed, right, verification, optimization and then proof. The DV Authentic Advantage is a platform framework solution that allows the clients to do all these 3 things kind of seamlessly, right? So right now, we have 3 pieces that kind of patch together. This will allow to be a workflow that really creates an ability for an advertiser to see what was measured and then quickly decide what to do on the filtration side and then what to do on the optimization side.

It's a workflow that puts it all together in a way that the advertisers really will like it because they'll be integrated into their own workflow. It's again something that others don't really have. The optimization part, if you think about what verification does is takes you away from the bad stuff. It also filters out if you're doing it on a pre-bid side, right? It filters out inventory where we're saying, don't bid there because it's not going to be good for you. But if you do that, you're kind of limiting the inventory that you're going to bid on, which has an impact on price because you're going to pay more because you have less inventory that you're bidding on.

Scibids within that framework, which is a good one, allows you to really optimize where you're going to be putting your dollars at play. One of the things that we're able to do now with Scibids, which the advertisers really like is go into an RFP or talk to a client. And the conversation always starts the same way, which is what can you give me for verification? It's a price conversation. How cheaply can you give me verification? We're now able to have a conversation that says, if you use Scibids, we will optimize your spend so that we can save you dollars on the media side that will actually cover the cost of verification.

So it's a totally different conversation. It's no longer just a cost conversation, it's an efficiency conversation on media -- on their media spend that actually even covers the cost of verification. And that conversation is very interesting to the advertisers.

Okay. Understood. At Innovation Day, you did talk about Agentic AI as well and the rise of Agentic AI, the role that might play in the broader advertising ecosystem going forward. For those who weren't able to tune in, tease that out a little bit in terms of what did you introduce and how should we be thinking about that becoming a component of your offering in the years ahead as well?

Yes. So Agentic AI for -- so we talked about AI as a cost component, right? Agentic AI is going to be a different part of the ecosystem. It's always going to be everywhere, right? And we're kind of using it to, again, first and foremost, on efficiencies, right? But also, it's creating a new environment where ads are going to be showing up, right? So there is ChatGPT and all those providers at some point will be ad supported. And that will create a new opportunity for us to kind of see more dollars.

It's a different environment. It kind of feels like search, but it is not really search. You could see brands not wanting to be next to certain results that AI gives you, right? So it kind of opens up the space to more dollars. It's a whole new category of ad spend. And I think we're well positioned to be talking to the advertisers as soon as that becomes available.

So, not to tease this out, but it is a debate I've had with some investors at the conference this week. What are the challenges around brand safety that's tied to human-created content versus brand safety tied to computer-created content. Because I think the element of not wanting to show up next to hallucination, but you don't know that the hallucination even exists yet. How does that present both an opportunity and a challenge when you think about Agentic AI?

I mean the challenge is that there is so much content that's created so fast, right? And so for us, it's a matter of just remaining really embedded in where the categories of content are created. We can tell what is the AI generated or not. Of course, there are extreme cases of hallucination and those kind of cases we can see as well. I think the sophistication will be around cases that are partially AI or not partially AI. Right now, just to give a basic example, most recipe sites are kind of AI generated, right? Even the person that you see on the side that says this is my grandmother's recipe, probably isn't a person. It probably is just kind of generated. And some advertisers are okay with it, some advertisers don't want to be okay.

For us, the purpose of our solution is to be able to tell the advertiser, if it is or isn't AI and then the client will decide. There are some clients that will be very happy to be next to that kind of content and some clients that will not be happy to be next to that content. It's interesting. Obviously, at some point, there will be a lot more inventory that needs to be verified because it is more than not likely to be ad supported at some point.

Got it. I want to turn next to the continued runway for ABS and how you think about the opportunity set there continuing to evolve in the years ahead.

Yes. So ABS is our premium solution. It grew 23% last quarter, which was a very strong quarter after a few quarters where we even ourselves were thinking maybe we've tapped out on the product, it is premium price, it is already pretty deep into our top 100, and it keeps getting sold into our top 200 and top 500.

So it's a product that has more runway than we expected. And when we say -- when I say we expected it not to have as much runway because it is, again, premium price and we thought that it was really for brands that were very sophisticated and really wanted to understand brand safety at a deep level. It continues to have a runway about 80% of what we saw last quarter in terms of growth came from existing clients kind of upselling and using the solution even more, right? And so it has runway. I think I've already mentioned the fact that we're trying to apply new categories to the ABS product are specific to CTV, which will allow us to continue to see that product being utilized on more than just regular pre-bid.

So it continues to have a lot of runway. I mean it's a testament to the power of the product because it's 6 years old now, and it continues to be something that's very appealing.

Just to double-click on that, because we do get this question from investors. When you think about how that product has surprised to the upside. What have been the key learnings as to the why it's surprised to the upside? I know we typically try to talk more going forward than going back. I think investors do ask that question a fair bit.

I think, again, we thought it's 2 to 3x more expensive than regular brand safety. And so I think the efficacy of the product, we knew existed and we knew it would work for large brands. I think we're surprised that even as you keep going down the list of our clients, and we have a lot of clients that spent over $200,000 a year with us, but still it becomes an expensive proposition versus regular brand safety. I think the integration in their workflow, ABS basically takes all the information you have on the measurement side and seamlessly puts it through ABS and it's used for pre-bid.

I think the power of how we did that and the power of the ease of use of the product is one where advertisers understood the value of it and the ease of use of it. And this is why I think it continues to be used. Now there's also a sales motion here, which is not every client uses it on every impression on day 1, right? So they'll use it on some brands and then continue to go down the funnel within their own brands. But I think it's a testament to how good the product is and how unique it is. They're not -- there really isn't something in the market that is so uniquely integrated between measurement and pre-bid.

There are other solutions you can kind of patch together. But the workflow is really something very powerful. And I would say this is why Authentic Advantage and even what we're trying to do with measurement optimization and an outcome, the integration of the workflow is really what's appealing to the advertisers.

Got it. Coming out of Innovation Day, and we've been talking about DV Media Advantage with large and sort of the pillars of the strategy. If you play this out to its end state, what's the market opportunity you think it opens up for you in terms of either scale of advertisers or scale of advertiser activity, however you want to measure it versus the size of the business today?

Yes. So the -- if we think about what the business looks like today, there's few benchmarks that I think will make it clear that we're not yet fully penetrated, right? So social is not even 20% of our business. right? Outside of the U.S., it's not even 1/3 of our measurement business. The ratio of pre-bid to measurement on the OpenWeb, which is where most of our business comes from today is about 3:1, right?

So for measurement dollars that we have, ABS and core activation on the pre-bid is 3:1, partially because price but also partly because people really want to be on the pre-bid side. That ratio today on social, which is still only 20% of our business is much, much smaller, right? We just launched the pre-bid solutions.

So in terms of opportunity, the way we think about it operationally, the way we think about it tactically is well, we should be able to replicate that on social and social should be a lot more than 20% of our business. So I'm not answering the question from a TAM perspective, I'm answering more in terms of how we penetrate and where we see the opportunity right in front of us. I think if we can replicate what we have on the OpenWeb for social and then for CTV, which is a 3:1 activation to measurement ratio. And then if we can raise social to be a lot more than 20%, if over 60% of all dollars are already going to social and if we now have the solutions available, we should be able to raise that and look more like how the advertisers spend. So you get a sense there that there's a lot of percentages there to keep growing the business.

Okay. Understood. No, very, very clear and interesting dynamic to play out over multiple years. So we've talked so far about the growth engines, the market opportunities, where the product is going, bring us back to funding all of these growth investments but then continuing to deliver on operating efficiencies and margins and all the things investors want. Investors always seem to want the growth and the margin, talk about striking that balance going forward.

Yes. So our strategy hasn't -- our approach hasn't changed. We're very much focused on the top line growth of the company and not so much just to deliver top line growth, but also to show the scaling of the solution, right? There is a point where if you become almost a de facto currency in the market, everybody will all know that DV measurement and DV pre-bid is what you want.

We're not there yet. There are plenty of players in the market, right? But if you go -- if you compare us to our peers that are also publicly traded, the gap that we've been able to build between us and other companies in terms of top line, just scale, how many clients we work with and how much larger we are, that's working out for us, right? Like we're able to continue to scale on the top and that's really our main operating focus.

Now with that in mind, we are also over 30% margin, and we're able to continue to show that top line growth staying at a 30-plus percent margin. We like that balance. What's changed in the last few quarters is that AI has allowed us to free up a lot of dollars even within that 30% margin. So even maintaining that allows us to actually free up quite a lot of resources to continue to invest, right?

So in other environment, you might have seen margin degradation for us to invest in Authentic Advantage, the MAP, CTV and social. We're not seeing that because AI actually frees up a lot of dollars. So top line growth remains our primary focus. Over 30% margin remains a number that we want to keep our eyes on. And we're able to continue to innovate within those thresholds.

Okay. So moving from margins and sort of further down the output of the business, what are the priorities for capital generated by the business. Obviously, one of them, as you talked about, is investing back into the business, whether that's savings or degrading margins, which you have not had to do more recently. But think about what excess capital the business generates and what your key priorities are for that excess capital?

Yes. So we're -- I mean, the company has a very strong balance sheet, right? So we generate a lot of cash, we don't have any debt. The priorities are, first, innovating the business right? And so make sure we can fund what we know we need to do on CTV, social, et cetera. Second is to use M&A to differentiate our product. And I think the acquisition of Scibids and Rockerbox are precisely examples of that, right? We're able to create something that's very different than just verification.

And we were able to do those acquisitions with cash on hand, right? And so those are acquisitions that accelerate the product road map or gets us into an adjacent product that broadens the product portfolio that we have. And we've been able to do that and integrate them and again, not show necessarily margin degradation even though those businesses were basically breakeven when we bought them. And then the third piece is, obviously, share buybacks. We've done quite a bit last year. We're already done in the first half of -- in the first quarter of this year, we've done as well.

It's still available. It's the third prong. We want to make sure we keep -- again, keep an eye on the top line. But we're in a fortunate position that we generate enough cash that's actually on the table. We have $140 million that's already approved by the Board, and we'll look into it for sure.

Okay. Great. Understood. So we have a few minutes left, but I think I wanted to end on a bigger-picture topic. So this year, you guys, as a team, have framed it as a transition year, right? You're trying to get the company aligned with the strategy for the medium to long term and then these externalities on the advertising side that are sort of generally out of your control.

When you think about positioning the business for moving past 2025 and into 2026 and beyond, talk a little bit about what those strategic priorities are? And how investors should be thinking about those priorities sort of setting the business up for those future years?

So we talked a lot of -- we talked about many strategic priorities, right? So this is a year of transition because of the fact that we're launching the products that are going to allow us to do pre-bid on social, are going to allow us to essentially replicate what we have on the OpenWeb into the social environment and then into CTV. So it truly is a transition in terms of making sure that those products are tested and then scaled. This is why we started the year saying it was a transition because the products are available, but we do need to upsell them and the clients need to try them. And so that hasn't changed, right?

So we had a very strong first half, right, well ahead of where we expected. The upside came from OpenWeb tools, which is great and off the power of ABS, which we talked about, which is unique in the market. But it doesn't take away from the fact that it's still a transition year because we need the social tools and then the CTV tools to kind of scale so that our mix of OpenWeb to non-OpenWeb is not what it is today, right? So right now, CTV and social is about 30% of our business.

We like OpenWeb. We're clearly very successful in it, but we do need that mix to switch that is a transition that will take some time, right, before we are at a 50-50 split between OpenWeb and social TV. It will take time just because of OpenWeb is such a large business for us. So the -- what we saw in the first half doesn't take away from the fact that it is a transition year.

The market is choppy. So as you said to me, can we work through the cyclicality of the business, it is the reality of the business, right? So that will have an impact on the business that's outside of what we can control, which is continuing into the transition into '26 when those products actually start to scale.

Yes. Maybe just one quick follow-up because I do think this is a central issue. You're trying to get to where advertiser budgets and user times are today in terms of the mix of the business. What are the biggest unlocks that we should be looking for from the outside in, in terms of the execution path on that? Again, not to say it's a negative comment about the OpenWeb, but there's user behavior and the technological dynamics going on that the OpenWeb will be what social is today? And how do you align against that?

Yes. I think the signs of the transition is happening will be around adoption of the pre-bid products, right? How much more of our business CTV represents, right? The launch of the CTV products and the adoption of that will tell you that it's working. And I think that the -- especially the optimization part of our business, the Scibids component of the business is something that you're going to start to see work also in social, also in CTV. And then you'll have an idea that we're no longer just verification and you're seeing it.

So I think the measurement of whether it's working will be around adoption really, you'll be able to see it. And then ultimately, if you do see less of our business on the OpenWeb because we've been able to grow the other side of the business, that's really when you'll see that the transition is happening.

Okay. Well, I would appreciate the opportunity to have a conversation. Thanks so much for sharing all the insights into the business and what's going on. We're looking forward to 2026 and beyond.

Thanks for having us.

So please join me in thanking DoubleVerify for being part of the conference this year.

Yes. Thank you.