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Thank you. at this moment until the completion of the pre-record. Thank you. Hello and welcome to the Mountain Second Quarter 2026 Results webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to the.

to brinley johnson please go ahead good afternoon thank you for joining us for mountain's second quarter 2026 earnings call with me today is mark douglas ceo and patrick poland cfo just to remind everyone today's call includes four looking statements that are subject to risks and uncertainties and actual results could materially differ from those anticipated in these four looking For the risks and uncertainties that may affect future results, please see our most recently filed periodic report, which is also available on our website. We will also discuss non-GAAP financial measures on today's call. Reconciliations of these measures are available in our earnings materials on our website. With that, I'll turn the call over to Mark.

Thank you for joining us today. Mountain delivered a strong second quarter with revenue of $82.5 million representing 21% year-over-year growth and adjusted EBITDA of $21.5 million representing 48% year-over-year growth. Both of these metrics finish at the high end of our guidance. We're pleased with the quarter and are reiterating our 2026 full year outlook. Before I get into the details, I want to talk about our strategy. Performance TV is about giving businesses that historically haven't had access to television a way to reach specific consumers across premium streaming inventory and measure whether that advertising is driving revenue. Mountain created this category and now we're seeing Performance TV move from an early adopter market toward a mainstream part of the marketing mix.

To capture that move, Mountain began expanding our sales organization in Q4 2025, strengthening our leadership in sales and increasing our investment in marketing. For the next stage of growth, Mountain has focused on three main priorities. Expanding our products and continuing to invest in AI, broadening access to premium television, and strengthening our go-to-market organization. This isn't a change in strategy or new story for Mountain. It's the same opportunity we've been building towards over the past year, now with products and go-to-market structure ready to execute at greater scale. Turning to our product suite, I've said many times that half of the company's headcount is in engineering, and they've been building products. We released new versions of Mountain's performance TV platform that create distinct versions for small business, mid-market, and upper mid-market.

We found that different sized businesses need different levels of features and complexity so we've divided the platform into three main tiers express pro and premium mountain express was launched on april 1st express is specifically built for small business distinct from mid-size advertisers brands can get live in minutes and do from any device. We've had over 7,000 signups for Express in the first 120 days since we launched. Importantly, hundreds of those signups have become paying customers and momentum continues. The revenue contribution from Express is small today in comparison to Mountain's overall business, but it's growing quickly and I believe will be a meaningful contributor to growth as we enter 2027. For mid-sized customers, we've added significant agentic AI technology into the platform that gives our customers even more automation and more performance. We surround them with AI tech to give our customers customers control of the daily decision making. We're leveraging AI across the organization, especially within engineering where we're AI native, using AI to build faster while embedding AI throughout our product suite.

We've talked about Quick Frame AI a number of times and its importance for enabling the S&B opportunity in connected TV. Quick Frame AI is doing exactly what we planned, lowering creative barriers, increasing launch rates, and making it easier for businesses to create television-ready advertising. We've had over 37,000 Quick Frame AI signups in Q2, bringing us to over 73,000 signups year to date. We're seeing an incredibly diverse set of businesses across retail, financial services, healthcare technology, education, and many other industries successfully leverage the technology to create their ads. broad interest in AI creative and it's critical for performance TV. We've always believed that mountain customers should have access to and the ability to specify ad placement alongside the same premium television inventory as the world's largest brands. In January this year we doubled down on premium of inventory as part of our platform. Today, our customers have the ability to insert the ads alongside nearly every major sports league, in addition to the premium streaming shows on our network of partners.

As a result of that focus on super premium content, we have many customers who advertise during the FIFA World Cup games March Madness, and on MLB, NBA, NHL, and soon the NFL. For the first time, any size business can consistently get guaranteed access to television's biggest moments and make that part of their ad strategy. To fuel the growth of new customers, we are strengthening our team to market organization. The first half of this year has been focused on construction with additional leadership at in sales, marketing, and business development. We built vertical teams that understand the economics, objectives, creative needs, and customer acquisition dynamics of specific industries. makes our sales process and the customer experience more effective. In summary, we expect the benefits of our strategic investments to contribute to stronger growth in the second half of the year and meaningfully in 2027 as the core business accelerates, complemented by new revenue streams from Express and Premium. Our focus remains simple, help more businesses advertise on television than ever before, while continuing to grow efficiently, profitably, and strengthen the category we created.

Now, I'll turn it over to Patrick. Thank you, Mark. We reported strong second quarter results exceeding the midpoint of both our revenue and agenda.

adjusted EBITDA guidance. Our solid performance reflects continued customer adoption of Performance TV, particularly by companies that had not previously advertised on television. Our second quarter revenue increased to 82.5 million, up 21% year over year. Second quarter gross margins improved to 80%, up 350 basis points over the prior year period. As you can see from the table on our earnings release, at the end of the second quarter, we had 4,225 active PTV customers when measured over their trailing 12 months. On a year-over-year basis, this represents growth of approximately 40%. As a reminder, the number of active PTV customers we add to the platform is largely within our control and is primarily driven by how aggressively we choose to invest in sales and marketing. We continually assess and calibrate that approach to ensure that we are onboarding customers with a strong product market fit and a high probability of succeeding on our platform.

As we adjust the pace of that expansion over time, the number of customers added is expected to fluctuate from quarter to quarter. Our expansion rate which measures as the spend of our current customers as compared to those same customers spend a year ago remains quite healthy and is still well north of 115%, further demonstrating that when our customers achieve their desired returns on advertising spend, they continue to increase their budgets with us. Total operating expenses for the second quarter were $59.2 million. For the second quarter, we achieved positive net income of $6.7 million for a GAAP EPS of $0.09. Adjusted EBITDA for the quarter increased to $21.5 million, up from $14.5 million in Q2 of 2025, an increase of 48%. The company's adjusted EBITDA margin grew to 26.1%, up 490 basis points compared to 21.2% in Q2 of 2025. Improvement reflects the combination of higher revenue and expanding gross margins, further underscoring the operating leverage built into our business model.

While we remain focused on steadily improving profitability over time, our top priority continues to be investing behind growth rather than optimizing near-term adjusted EBITDA margins. To capitalize on this significant opportunity in this early stage market, we plan on continuing to make disciplined but aggressive investments in sales and marketing to drive broader customer adoption. Our balance sheet remains strong and we entered the quarter at 237 million in cash and cash equivalents with no borrowings outstanding. We ended the quarter with 74.2 million shares outstanding. As of August 3rd, 2026, Mountain's Board of Directors has authorized a stock repurchase program of up to $100 million worth of its Class A common stock through August 5, 2027. We think the stock represents a compelling value, and we believe this action signals our confidence in the company's long-term trajectory and further solidifies our commitment to providing value to our shareholders. we remain confident in our momentum and the underlying health of our business as we progress through 2026 and beyond. For Q3 2026, we expect revenue to be between $86 and $89 million, representing 25% year-over-year growth at the midpoint of 87% $7.5 million.

We expect adjusted EBITDA to be between $22 and $25 million, reflecting continued leverage as we scale the business while continuing to remain disciplined in our investments. For the full year 2026, we are reiterating our revenue guidance range of $347 to $357 million, representing over 24% year-over-year growth at the midpoint of $352 million, excluding the impact of the maximum effort, the bestiture. adjusted EBITDA to be between 96 and 101 million dollars. To wrap up, we delivered another solid quarter and believe Mountain will continue to gain market share in the massive performance television market. We are confident that our future growth initiatives and the strength of our operating model will position Mountain to drive continued growth and profitability. With that, we'll open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand, star 6 to unmute. Please stand by as we compile the Q&A roster. And your first question comes from the line of Cheyenne Patil with Susquehanna. Your line is open. Please go ahead.

Hey guys, nice job on the quarter. I had a couple of questions for you. Mark. In your prepared remarks, you talked about the go-to-market investments, and you talked about Express and Premium and the impact that you expect to see. I'm wondering if you could just talk a little bit more about this and just... you know, how you think about the impact of revenue growth over the course of this year and next year. And then second question, there's been some consolidation in the industry recently. Was wondering if you could just talk about this and perhaps, you know, what kind of impact it could be having on the PTV opportunity and just kind of any opportunities that it may be creating for you guys. Thank you.

Thanks, Sean. I'll take both of those questions. So I think the first one, is about Express and Premium and the impact this year and next year. So as I said in the opening remarks, we really felt that we needed to create versions of our product that would, just like we were purpose-built for the overall SMB market, were purpose-built for the different sectors. segments or the different tiers. So, and that each tier, meaning small business, midsize and larger, they had unique, similar needs in the overall need for performance television, but unique needs in terms of usability. So we are really confident and really happy with where we've delivered on that. especially with small business, that's something we've been focused on for a while, and we're happy to see the adoption. In terms of the impact this year and next year, they're definitely contributing. I think for next year, we see a really big opportunity because they're small now, but growing virtually. very quickly.

And so I think you should look to 2027 to really start to see the larger impact coming from these two segments of the overall SMB opportunity. In terms of your question about the consolidation in the industry, impact on the CTV opportunity, Obviously we're seeing that too. We're purpose built for the SMB portion of that market. We believe we're very differentiated. We can essentially establish that created the concept of performance TV and using streaming for small mid-sized business. So, kind of the validation that it's providing us we think that some of the consolidation you're seeing is providing, we think is real validated the opportunity in terms of specific impact for us. It's just making the market even more aware of the opportunity here. And I think creating even more green space for Mountain Execute.

So we're pretty pleased with the opportunity essentially the consolidation is occurring and the larger opportunity and the greater green space that creates for the company.

Thank you. Thank you. Sure. And your next question comes from the line of Andrew Boone with Citizens. Your line is open. Please go ahead. There's. Andrew, we can't hear you. You might be muted.

All right, let's try that again. Can you guys hear me? Sure. Now we can, yes. All right, great. Well, thank you for taking the question. I wanted to also ask on SMB. If we think about the go to market strategy for SMB and the difference of that versus kind of a mid market customer. Is there any change that we should expect for sales marketing or any other of kind of the organization strategy or cost structure that we should be thinking about with this change.

And then, Mark, just a big picture question. You mentioned sports in your prepared remarks. Can you just talk about the benefit of the World Cup? What did that bring for you guys in the quarter? And then talk about the sports opportunity more largely. Understood that's always been a draw, but...

But how has that changed the conversation? Thank you. Sure. Happy to answer those. So in terms of go-to-market for SMB, we've been very focused since we talked about in I think last quarter we talked about continued investment marketing. And so those, and I talked today about kind of those themes. And so we think the opportunity here, the key thing is that we created an early adopter market. That market is now becoming mainstream. I mean by that, that more and more companies expand, but who previously had no access to television as a medium. And remember, television is the biggest entertainment medium in the world, meaning more people watch TV a day than use social media, then you essentially do any other activity.

And that was entirely cut off from the SMB market. And so the the and so So as we're seeing more companies know that they can be on TV and almost start to expect to be on TV, we wanted to invest more in sales and marketing in order to make sure we capture more of that opportunity. We did that by strengthening our leadership, by investing more in marketing, and in terms of our own marketing, We've traditionally leveraged the mountain platform for a lot of our marketing, meaning we stream TV ads in the homes of our future customers. We also use social media. And so there's an interesting dynamic in performance marketing that everyone uses each other's platforms, so they can uncover customers that you know, wherever they are. And so we're doing the same. For express customers, meaning our smallest customers, We, again, lean on our own platform, we lean on social. For mid-market, it's pretty much the same.

The investment's a little different, but the techniques are the same. And so we're really pleased with how that's going and we expect to continue to expand our investment there. In terms of sports, The reason sports, and it's not just sports, it's like reality television, it's home improvement. We want to give our customers, when you think of sports, the advertisers have to, like for something like the World Cup, they have to be named and approved by the World Cup. So to start to be able to get small, mid-sized businesses into those, level, that level of sporting events took a lot of partnership conversations with some of the biggest media companies in the world who get the sports rights for these leagues and for these major events. And we were able to do that. The benefit to our customers is that inventory performs really well.

There's often more than one person in front of the TV There can be many people watching like a World Cup game or an NFL game or something like that. So you have an interesting dynamic in terms of performance. And I also think it validates Mountain as the market leader in this space that we're not just, you know, we're not putting our customers on remnant inventory. They're going on the best content and television television to get the best performance in performance mark in performance television. And so that's why it's so important to us. I think our customers are seeing as a differentiator and we're really pleased with that.

Thank you. And your next question comes from the line of Robert Coolbreath with Evercore ISI. Your line is open. Please go ahead.

Great. Thank you for taking my question. Can you hear me all right? Yes. Great. Thank you. Just wanted to ask on a quick frame, we had formerly thought of that as just enabling technology. But just given this very strong early traction that you're seeing, wanted to ask you on a couple of three topics related to that. Everyone, if you could talk about, you know, are you thinking about this now as a standalone opportunity? We've certainly seen some other entrants in this space grow very large businesses very quickly, really just within the past few months. Is that part of the ambition here, given what you're seeing early? And secondly, I wanted to ask a little bit about the gross margin profile of that product. Anything you could tell us there? And then third, maybe also the funnel that QuickFrame AI can create for the core PTV business, given the amount of signups that are coming in.

Are you seeing an ability to sort of cross-sell or attach PTV once people have their creatives up and running? Thank you very much. Sure.

Sure. So I'll take those on one at a time. So in terms of standalone opportunity, it was always my belief that we had to create, build, quick frame AI, not just to be a feature of the Mountain Performance TV platform, but to be successful in its own right. The importance of that is unless you do that, at some point you wouldn't. you wouldn't be keeping up in terms of feature functionality if we didn't build it so that people saw value in it, you know, separate from Performance TV. So the Quick Frame product supports Mountain Performance TV, it supports YouTube ads, it supports social ads, all of those. So it's certainly a standard in terms of usage of the product, in terms of monetization of the product, we're looking at that. There's obviously some opportunity there, but at this moment, we're making available at no charge. And, but we are closely looking at usage and essentially engagement on a product to make sure people are really actively using it and essentially getting value from it.

So stay tuned on that. In terms of gross margin, there are some gross margins margin costs, but the overall effect to the business is pretty neutral because we're able to continue to get basically gross margin improved efficiency in our overall hosting environment in particular, which makes room for our use of all of the AI models that Quick Frame AI orchestrates in the order to create TV quality and YouTube quality and social quality ads. So it's essentially gross margin neutral. And then the funnel for core PTV, the answer is yes. the people were bringing in on Quick Frame that creates an opportunity for them to learn about performance CB. One thing to keep in mind though, is that a lot of the Quick Frame users are creators. They're not necessarily the marketers. So it creates a cross-sell opportunity to make so that if that creator is using Quick Frame and maybe they were creating something for social. They're now aware that way I can create this asset for TV also and I think often it's fun for them because they haven't ever created a TV ad. So there's definitely cross opportunities. All of that is being closely looked at and and you know, kind of pursued as part of the growth of the, the quick frame AI product.

Yes.

Great. Thank you. Sure. And your next question comes from Matt Weber with Ken Accord.

The line is open, please go ahead. Hi, thanks so much for taking the question. Just one from me. On the strength and measurement and activation ecosystem that now features partnerships with HubSpot, NorthBeam, Upwave, could you just update us on if those are premium add-ons that advertisers pay for, if they're still part of the core platform? And then how did the economics of those partnerships work? Is there any impact to gross margin or other areas of the P&L as adoption scales? Thanks so much. Sure. So it depends on the partnership.

in terms of the answer to your question. So for something like HubSpot, or some of our partnerships, I'm not 100% specifically sure on HubSpot, but some of our partnerships we integrate in at no cost to our customers. So we use our buying power in the same way we use our buying power with the networks to secure advantageous pricing for our customers. We do that with with some of our partnerships where that partnership is very broadly used across our entire customer base. And then other partnerships where something like attribution where the customer is deciding which third party attribution partner they wanna use, then we build partnerships with that company. like NorthBeam as an example, and make sure that our customers get the best possible experience in Mountain's platform, but also the best possible data and experience in NorthBeam's platform, but the customer has a separate direct relation with NorthBeam. So it depends on the partnership. In all those cases, again, get so much leverage in our gross margins as we scale our business from our revenue growth that we're able, when it's appropriate, to absorb the the cost rather than adding additional costs.

We want our customers to have an experience where there is one cost to using Mountain, which is the cost of media, and they're not getting nickel and dime for little charges here and there, is more of the experience in the enterprise market, but we believe in the SMB market, you should pay one price and get everything you need to be successful.

Very helpful. Thank you. Sure. Your next question comes from the line of Andrew Merrick with Raymond James. Your line is open. Please go ahead.

Hi, thanks for taking my questions. Maybe two for me, please. Can you talk a bit about what to maybe expect in the second half from the flood of political spend that's coming down the pipe? I mean, not for Mountain specifically directly, but maybe more in terms of effect on the volatility of CFPB. CPMs in the space and what that leads then into the ROAS calculations for your customers. And then second, on QuickFrame, with it now in market for a full quarter now in 3.0, how's that feedback been and maybe what sort of features might be on the roadmap as a result of that feedback? Thank you.

Sure. So in terms of second half political spending, traditionally, remember, Mountain is pre-purpose built for the SMB market. And so we traditionally have not participated in any significant way in political spending. We see that that is dominated by by some big agencies that we consider to be more enterprise clients. And so it doesn't have much of a direct impact on Mountain. In terms of the volatility on CPMs, that volatility tends to affect what we refer to as the open market. So Mountain, we have direct deals with nearly, if not all, kind of media companies in America that are active. ad supported. And so those deals are bought, executed programmatically, but they have kind of commitments in the form of pre-negotiated pricing for us to continue to spend on that platform.

And so when you get these like Q4 spikes or political spikes, they don't affect our pricing because that has already been negotiated with the network for the continued volume we continue to bring through the S&P market. But the inventory that's left over might get affected. And that's referred to as open market. And that has more volatility in price and more volatility in margin. So neither of those will affect us. They may have some effect on anyone who's much more dependent on the open market, which we are not. I think we're over 99% private marketplace deals, meaning direct deals with the networks.

In terms of Quick Frame 3.0 features, we essentially are doing releases every single week, if not multiple times a week. What you can expect is we have a team dedicated on Quick Frame just to all of the iteration on the AI models themselves. The product orchestrates multiple models, scene by scene, in order to deliver the creative you get. We're getting feedback from our customers. We're watching their usage. We have our own vision. Another thing that we're putting a lot of effort, emphasis on is having really fast use cases. I'll give you an example. like you want to essentially get it, take an existing ad and you want to reinvent it as a new ad, but with the same characters in it or something like that.

Just really fast paths to executing really specific use cases with the product. And we find when someone comes in a product and they have an idea of what they want to do, and we have something that exactly exactly matches their needs. They're even happier with the use of the product, and we see more engagement. But there's a lot of features coming. There's a pretty decent sized team on Quick Frame, and they are iterating literally at AI speed, releases multiple times a week.

Great. Thank you. Sure. And just a reminder, if you'd like to ask a question, please raise your hand. If you are dialed in, press star nine to raise your hand, star six to unmute. I see no further questions at this time. I'll now turn the call back to management for closing remarks.

I just want to say thanks for everyone's time and we're looking forward to Q3 in the second half of the year. And we'll, I'm sure, talk further before then and on our next earnings call. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

All right. Welcome, everybody. I'm just going to quickly start with the disclosures. For important research 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.

And with that out of the way, my name is Matt Cost from the Morgan Stanley U.S. Internet team. Very happy to be joined today by Mark Douglas, CEO of MNTN. Thanks for being here.

Thank you.

Awesome. So maybe we can jump right into it maybe as a high level. For people in the audience who may be newer to the MNTN story, talk to us a little bit about an overview of MNTN, where you fit into the advertising ecosystem and how the business has changed over the past couple of years?

Sure. So at MNTN, with the advent of streaming television, relatively early in that journey from linear TV to streaming, we recognized that, that was a digital marketing opportunity. And we created the world's first Performance TV platform, and the idea of using television as a direct response marketing vehicle similar to what companies do with paid search and paid social. And so -- and we did that specifically for the SMB market, small and midsized businesses who the majority of spend was on search and social and now for the first time, can really come on -- into the television ecosystem and drive measurable results from streaming TV.

Got it. And I guess talking about the ad market for a minute, you've talked about and alluded to it in your comments just now, 92% of your customers are SMBs. Obviously, it's a volatile ad market out there. Given your exposure to that SMB market, are there any macro trends that you'd call out that are impacting them right now? It's a question that we get all the time about your business.

Yes. So I think the opportunity we're pursuing with performance television, that's a TAM we've essentially created. And so it's not really, I think, subject to macro trends just because the scale of the opportunity is significant. And I think that, that arena tends to have emerging companies who are almost by definition, bucking the macro trends. So we don't really see macro as a strong -- as significant factors. It's just significantly, like we're creating our own TAM. We can grow into that, and we see -- we've had consistent growth, and we see that as a continuing opportunity.

Got it. And just following up on that, I guess, thinking back a little less than a year ago when all the tariffs hit, I guess, in light of your comments, did that impact your customers, their ability, willingness to spend?

No. I mean we definitely heard from our customers, some of them, but I think only a single one of them paused spend because, again, when you're an emerging brand, no matter what the factors you're facing, you're not really giving up your growth aspirations. You might give up some of the margin you're taking. You might -- you'll find a path. And so that was a really good example of that not occurring. I think I've seen charts in the past that showed to some extent, performance television being almost -- not performance television, performance marketing being almost like recession-proof and like -- because the number of e-commerce companies and travel brands and other brands that are active in the space. And so it's a reiteration of kind of macro not really being a key factor. It's more the scale of the opportunity that we're growing into is the key factor.

Let's stick with Performance TV kind of really what you were alluding to there. I mean the fact that you're bringing performance advertising to streaming TV is really the main differentiator of your platform. So talk to us about some of the technology that you're leveraging there to make that possible. MNTN Matched, just one example of something that comes to mind there. And how are you iterating on your offering to grow how much you can scale on Performance TV going forward?

Yes. So I think the comparison is there are really 2 ad markets. There's a brand ad market which is represented, I think, has represented past a lot of the television ecosystem. And there's a performance market, which is kind of the segment that we're growing into. They're very, very different. I'll give you a very simple example. In the -- look at 2 very different types of customers. Let's say you have a customer like a Verizon. Virtually everyone in America be a Verizon customer.

So the technology needs there are very different. There's not -- you don't have the targeting needs. You don't have the measurement needs. It's more about them building the Verizon brand, that brand being top of mind if it's time for you to potentially want to switch carriers. Now look at an example, one of my favorite customers, Onewheel. They sell a single wheel skateboard, very extreme sports. You probably see people in San Francisco or New York. It looks fun, but it also looks very dangerous, right? So not everyone is a customer for that. They are not trying to get 100 million customers. They're trying to get their next 10,000. So we have to apply AI models to the targeting generative models to profile who their target consumer is, machine learning models to find them. Everything has to be much more precise. The budgets are smaller.

Verizon probably spends -- I think they're third largest television advertising in the United States. So that means they're spending something like $35 million a month on TV advertising. Someone like Onewheel is going to be spending far lower than that. And so every ad has to hit the right consumer and it has to be measured and they have to A/B test the creative, which creatives -- everything is done with a deeper level of technology. MNTN services all those technology needs end to end. purpose-built for the SMB market and purpose-built so you can take those dollars and you can use them very, very efficiently.

So each of our customers can find their next customer. And the purpose of that example was to show how different that is from like a big global or enterprise brand. And so the technology that they're targeting, the measurement, the campaign management, the creative tools because they don't have TV ads when we meet them. So that's why we have QuickFrame for creative, that's all like a part of the whole package we deliver into the market for Performance TV.

Got it. Let's stick with creative for a second. So obviously, it's not generating a significant amount of revenue, but you just alluded there to how important it is for the customer experience and for retention of your advertisers. So talk about the innovations you're making there, QuickFrame AI and a little bit about customer adoption and how important the creative tools are.

Yes. So we see it as a revenue enabler, not specifically the revenue from QuickFrame, but how it enables customers to get live on our platform faster and also have more creative, meaning if you lower the cost and lower the time to have it, then you can have more of it. And more -- the more you're thinking about how to communicate your value to consumers, the more likely -- and trying different ideas, the more likely you're finding kind of the messaging and the creatives that really hit home that consumer.

So that's why we built QuickFrame, is we want to have a solution that was really specifically built for TV 30-second ads and which means it has to be generated in multiple scenes, consistent characters across the scenes. We've been very happy with the adoption. We've announced early on right out the gate. We had over 5,000 users. The number is greater now. We're doing -- it's still in beta. We're doing a series of product releases that we think just really nail the fit from our customers. We're actually getting a lot of feedback from our own use of it.

With MNTN now, our own commercials are largely -- we're using our own tools to build our commercials, and we're getting a good response like marketing response to. So it's a really key component. And to net it out, is more than 95% of our customers have never advertised on TV before, which means more than 95% don't have a TV ad when we meet them. And they certainly don't have many TV ads. So that QuickFrame solves that problem. It allows them to get that creative at a lower cost faster and do -- and build creative more often.

Got it. So you gave that really helpful example just a minute ago about Verizon versus Onewheel and sort of the differences in the needs of those enterprise versus SME type customers. I guess, talk to us about the key differences in terms of approaching and onboarding those customers. So time to first campaign, retention. And how do you ensure that you're profitable when you're going after these smaller advertisers?

Yes. I mean I think the profitability, I'll start with there is just having discipline in terms of customer acquisition cost and so forth. And you can see that in our numbers. We've been able to do that pretty -- profitably pretty consistently for many, many quarters, the adjusted EBITDA -- on adjusted EBITDA basis and now EBITDA basis. The -- in terms of -- go back to the original question...

So just the difference between onboarding, time to first campaign, the process of...

Yes. So that relates very specifically to the previous question. The majority of the time it takes for a customer to go live is waiting on creative, especially in the mid-market, where not only do you have to build creative for TV, you also need approval like people -- it might be a bigger marketing team, and so there are people that need to approve and so forth. So one of the other reasons I mentioned QuickFrame and I keep mentioning FAST, it's not FAST for them, it's FAST for us.

So if they get creative faster, that means they go live faster. And that's something that we want to see happen. And honestly, they want to see happen. When they're new to TV, they're excited about it. They want to get live. There's a lot of momentum there. And so that's the key thing. And the go-live times typical platforms literally -- it approaches 90% of the time just waiting for creative. So that's the number we've been attacking, and we're really happy with how that's progressing right now.

You talked in passing a moment ago about using your own platform as a means of acquiring users. So talk to us more about how that fits into your marketing and user acquisition strategy and your plan to use that going forward. Is that a growing part of your marketing mix? How important is it?

Yes. So we use a number of different channels in order to acquire customers. So our own platform is the leading source of new customers for MNTN, meaning we run MNTN TV commercials on streaming TV. And essentially, it's -- the ads are not like billboards or anything, but it's like you ever see a billboard that says you could advertise here. It's somewhat -- the ads don't say anything like that, but that's kind of the message, right? You -- SMB customer could be here on house wives, on Landman, on my favorite show last week, which is Traitors, the favorite reality show. And so that's the mix. But we also use social LinkedIn, Instagram and TikTok and other vehicles to acquire customers. And so that mix allows us to do that with a pretty stable customer acquisition cost, and that fits into the economics of the business.

And I guess thinking of it as a driver of your own marketing mix, I mean, what are the unique aspects of using your own platform to acquire users? How are you able to reach people differently?

Yes. Well, the nice thing is the thing about streaming TV, about television advertising, it's like against the literal best content in the world. Like when people go out to dinner, they don't talk -- I mean, they don't talk about like the YouTube video they were listening on the way to, on the way to dinner, they talk about the season finale of Traitors or when White Lotus -- like they're talking about the first episode of White Lotus, they're talking about the best content in the world.

And the other thing on streaming TV, the ad space you get against content like that is 30 seconds uninterrupted. It's like a real opportunity to tell your story. And so -- and as a result of that, combined with all the tech, it performs really, really well. And I think for all our customers, they're doing the same mix. They're using social search. And so the opportunity to now make a big platform like television, the largest screen in the home. There's generally no larger screen in a home than the television. And they get 30 seconds of time uninterrupted against that -- against the best content in the world is a really, I think, important part of marketing mix and more and more SMB customers are recognizing.

Got it. I guess thinking about your expectations for 2026, I believe you guided to another year of 20-plus percent revenue growth. So what are some of the key growth levers that you're looking at that are kind of underpinning that expectation? And just broadly, what is driving that strength in the business?

Yes. Well, I think one is, honestly, is AI. The -- and I don't know, maybe that sounds like a coin response, it's not. The -- all the targeting I mentioned is enabled through AI models. Like we used to ask our customers who their consumer is. Now we tell them who their consumer is and then they agree or adjust the things like that. So we literally use machine learning model -- I'm sorry, we use generative AI to literally say, what does this company sell? What products do they have? What other things would this -- someone who bought this, what else would they be interested in? And with that really precise consumer profile, then we use that in order to essentially run machine learning models in order to find that consumer.

The AI models we talked about in creative, the more creative you have, the better performance you're going to get. I mean it plays an important role also, data and the creative. We have AI media planning right now that we have in beta. What that does is it really, again, does the same thing that looks at -- predicts the context of the content that these products and this brand will perform against and tells that to the customer so they can see what the game plan is in terms of the execution of the campaign. So that's basically the #1 driver is technology in particular that -- those levels of technology and then also just our continued sales and marketing expansion is also with any growing business is an important component also.

Got it. Let's talk for a second about competition. So I think you mentioned right at the top that you're kind of building this market as you go. So you're changing advertiser behavior away from things -- maybe not away, but in addition to stalwart performance channels like search and social. So I guess, how do you see the performance TV competitive landscape changing over the next couple of years? And what aspects of your platform, your go-to-market and your customer experience do you think create a moat around MNTN?

Yes. Well, I think the TAM for the segment will keep growing. So that's an important component of what we're doing. In terms of the TAM, it's a whole set of facts -- excuse me. So do we have water in the room or something like that?

I think there's some...

Thank you. I appreciate it. So the -- I think, one, the TAM here can continue to expand. So that's really important. And the nice thing is, again, we're contributing to the creation of the TAM because we enable the idea that the SMB market could do performance marketing there. So that's the -- and remind me the question I got, I want to make sure I nailed it.

Talk about the competitive landscape.

Yes. And then in terms of competitive landscape, the -- as TAM grows, there's bound to be competition to show up the old thing is if you don't have competition, you don't have a market, right? And so I think competitively in terms of our defensible position, the performance tech I've mentioned, we have a big head start on that. It is really hard to catch up. The things that maybe a potential competitor wants to do that we've already done in built-in platform, we're already doing additional things that I'm not talking about because honestly, I don't want competitors to know about. So we're continuing to invest in that.

Also our relationships with the networks, we are the #1 player in Performance TV. And so we are -- we have deep relationships with the networks right now around that, the pricing that reflects that, that also contributes to our performance. And then our go-to-market motion, I think, is another really important point. Like we've been going to market here for a bit and really learn like how to bring companies in, get them through a sales cycle, get them through a go-live cycle and have them be successful. And so all of those play a role. Like if they -- if you bring them in efficiently, but they don't see the performance and -- or they can't get the creative. And everything you've heard me talk about in terms of platform is kind of a direct response to having a competitive -- like a big moat that also works efficiently to bring on customers and grow the business.

I think something that's probably a really -- not really, but somewhat poorly understood differentiator of what you do is the relationships with the networks that you just mentioned. So I guess maybe spend a second on the supply side and what you're doing with them and sort of the win-win that you have with them that others would have a hard time maybe replicating.

Right. So I think the streaming networks view us as a growth channel because we're bringing a cohort of customers in the market that they previously didn't really have good access to. They might have had some smaller customers in the local market, but definitely not e-commerce, right, definitely not travel. Online kind of highly targeted, highly measured. That just -- I mean it was rare to see -- even -- it was literally rare to see like kind of a true emerging e-commerce brand leveraging TV. And the reasons were the targeting, the data, the measurement, the integration with Google Analytics and all the different measurement platforms and stuff like that.

So as a nature of where growth channel, we have really collaborative relationships with all the streaming networks. And I think they see us in a different bucket. One thing we constantly -- every time we're having meetings with any of the networks is more than 95% of our customers have never advertised on TV before and weren't going to, if not enabled by a platform like MNTN. So it's created really, really key relationships. Also, our relations with the networks are one-to-one, meaning that we have direct partnerships, negotiated what's called private marketplace deals, which I think are really critical to having the relationship and the pricing that makes us work well for everyone.

Got it. So you mentioned travel and e-commerce is important vehicle -- excuse me, verticals. Do you have outsized exposure to any particular verticals? And how does seasonality and vertical-specific events impact the predictability of your business?

Not really. I mean the -- a really good example that this is going back to like 2020, a year that I think everyone wants to forget, but like 23% of our revenue came from travel that went to 0 in 1 week, and we had a great year. So the -- as long as we're continuing to grow and so forth, I don't think there's any revenue concentration or vertical exposure that we feel concerned about.

That's interesting. I mean, I guess 2020 is sort of an unusual example, but what did happen that year? Because you're talking about bringing in groups of advertisers who've never done this before. So some of them went dark because of the situation at that point in time, who replaced them?

Well, it honestly relates back to one of the earlier questions you asked, which is about macro is that in challenging times, emerging companies, SMB companies, growing -- they don't give up their aspirations for growth. And so when they -- so they find -- this happened earlier this year with tariffs or earlier last year with tariffs and things like that. So when one segment goes out of -- there's always winners and losers is maybe the way to say it.

And so if one sector is facing some really big headwinds through factors out of their control, that generally means someone else is actually growing as a result of that. And so overall, I think the performance advertising space in general tends to be kind of relatively immune from like individual factors because it's just so broad, and there's so many different companies. And no player in this market is really highly dependent on one. That was particularly challenging, obviously. But yes, there were a lot of other companies that were like, I'm not giving up my growth aspirations. I'm doubling down, and they did.

And I guess your expectation would be that given the scale of performance advertising at this point, it is kind of this always-on spend for a lot of companies. But your expectation would be, it sounds like that even as things might get more turbulent in the future, if they were to, you'd expect there to be offsetting factors between different verticals.

Yes. I have yet to see in the performance space. I don't mean just MNTN. I mean across the entire space where there's something that like -- that really interferes with the market to grow. Remember, growth in the performance advertising space is somewhat indexed to growth of your customers because you're really -- I think there tends to be a focus on CPMs in the brand advertising arena because it's viewed more as a cost. But in the performance space, it's viewed more as a revenue enabler. So as companies grow, they tend to grow their marketing spend along with that. And then any company that's providing measurable benefits to that spend is going to tend to grow with them.

Got it. Let's talk for a second about agencies. I think you've called out on a couple of recent earnings calls that you've seen some growth with performance agencies, ones that were maybe more focused on search and social historically. So it seems like an important proof point, frankly, for getting mind share with advertisers. How important is that as a source of new growth? How does it interact with your traditional ways of reaching advertisers?

Well, in the overall performance marketing space, agencies are probably about 10% of the overall revenue. But they are early adopters, right? And they can -- and they also are force multiplier. One agency can bring many clients. What we're seeing is that the agencies start to recognize this as another growth opportunity for them. And so we're out meeting with a lot of them, signing them up as customers, giving them the support in order to grow Performance TV as a component of the business. So it's an opportunity like I'm particularly excited about. In terms of the overall business, it's not -- it's still likely to be less than 10% or 20% even over time. That's where it typically lands within -- because most performance advertisers prefer to run in-house. When your goal is measurable revenue, you don't have a strong tendency to outsource that unless you really feel the need to get assistance.

Got it. One thing that we get asked about all the time as it relates to online advertising is how consumer behavior might change going forward. And frankly, streaming TV is probably one of the least frequent areas that comes up as something that might be at risk. In fact, it's something that people highlight is like, well, this will be kind of like a safe port in the storm. We're going to still be watching Breaking Bad or whatever it is, The Traitors, the show of the day. But I guess when you think about how you expect attention to change, do you see opportunities? Do you see risks? And how do you think MNTN fits into that changing...

Yes. I mean -- and I think the underlying source of the change is AI and the agentic AI and other things. We see that -- we see AI as an enabler for the business. We don't think -- so I think one thing that's important to understand is -- even within performance advertising, there are things that you're going to buy where you know you need it and you tend to use search for those things, right? And then there are things you buy that you didn't know you need it, right? And you tend to discover those things on TV, on social, like -- I see many things like on TV ads or on Instagram, where I'm like, I didn't really -- I didn't know I needed this, but I need it, I want it. And so the behavior in them is very different.

So on TV, people love to be entertained and shopping itself is a form of entertainment for many people. And so I think that's why you can logically think, oh, this thing is somewhat like this is where people are going to go for entertainment. I don't think we're going to see a mass abandonment of shopping. Now shopping for Bounty paper towels, you might like say, I'm not manually doing that anymore if like agentic AI can do that for me. And so that's really a competitor to search, the Amazon search or Google search. The other thing I'll say is I never in the history of performance advertising see a rising tide not lift all boats.

Because if the companies who are benefiting from new ways of acquiring consumers, they tend to then -- they don't want to become dependent on any one source of revenue, right? So -- and again, some of their customers might come from discovery, some might come from the person word of mouth and they're just doing a search to find it or whatever it is. But I guess to finish trying to answer your question, the -- yes, I kind of agree. I think the introduction of AI marketing or things like that, I think overall, that's going to be beneficial to everyone. I think in particular on TV, the thing to leave behind is this is a channel where people discover new things. And that's an activity. I don't think that people want to outsource the AI.

And it sounds like from the -- just the way you went through that, it sounds like from a road map perspective, everything you're thinking about doing still is in the streaming TV world. There's not other services that are interesting or that you're focused on.

Yes. I mean we're definitely exploring some very closely related areas. But for the most part, it's video on large devices.

Yes. Yes. Fair enough. Maybe let's talk about kind of the headcount and OpEx footprint. So I think half of your headcount is engineers. You're continuously investing in a lot of AI development stuff that you've been talking about in this conversation. How do you think about the trade-off between investing in AI now versus profitability? And how do you measure the ROI on the bets that you're making?

Yes. I mean I think we're -- the market or the use of AI is already divided into those who build the models and those who leverage those models to create additional value. And that could be a lot of value or it depends on what it is. For us, it's largely around targeting and creative, although we're using AI, both in our business as well as in like media planning, and we're using AI models across all of those.

The cost of that is actually very manageable. Like so we're not one of a company -- because that -- the cost of that is working with Google through GCP and Gemini are working with -- we're actually working with many models. So I don't see a conflict. The kind of benefit we're getting definitely exceeds the cost. And so we're not fighting this battle. Now if we were training our own models rather than leveraging the best models out there, that might be a difference there. And it's also smart because the best models out there feels like it changes every month, and we're pretty agnostic to it.

Yes. I guess how do you think about that dividing line between renting versus building technology because there's a lot of important proprietary tools that you have built at MNTN. I guess how do you locate that line and think about it?

It's sometimes hard. I mean you look at QuickFrame AI, we chose to build that. I mean we're using models for the actual generation, but we chose to build the entire environment because that the best models are rapidly changing. So we're not dependent on any one model. As a matter of fact, in a 30-second commercial, it generates into multiple scenes and each scene can be a different AI model. And the technology to do that to go across multiple models with consistent characters, that the orchestration of that is actually pretty complex. And so that's where we add value in order to pick the models if you're doing a product commercial, it tends to go this way.

If you're doing talking characters, these models tend to be used. So we chose something that's that important to our business. That's something we want to directly invest in like the orchestration layer, the environment, everything. And something that's a little less important, we might make a different choice. In all cases, we are -- the area we are essentially generating our own models is on the targeting side because there are no models to do targeting, and we think we can really differentiate there. So there's specific choices and even there, the cost is manageable. We're not running LLM models across the entire Internet. We're running it against a large but very specific data set that's far smaller than the entire Internet. So I think the original part of your question was the cost. It's a very manageable cost, especially relative to the benefit you get.

Got it. Maybe we can close just on really zooming out. We've talked a lot about AI opportunities. I guess when you think about the single most underappreciated opportunity from AI at MNTN and then maybe a challenge that you think is worth highlighting that you think you're in a good position to execute through.

Yes. I mean in terms of underappreciated at this talk, maybe it's not because I've said targeting or what -- I like to call it matching because the targeting sounds like a sharp shootings on the matching is -- I always view our business as we are matching consumers with brands and products they're potentially going to love. And the TV commercial is the means to make that match. It is absolutely the biggest opportunity where we've already made -- seen a lot of benefit and continue to see the benefit. Same with the creative, it comes up a lot.

It's because -- I mean, even in our own business, the number of commercials we're making for us has gone up substantially since we started using AI. If you do -- if you see a commercial from MNTN and it doesn't have Ryan Reynolds in it, it is AI generated. And if Ryan wasn't in SAG, maybe that would be AI generated also. So that's just been important. We can put out so much more content. And the thing about -- I think in this market, it's almost consumer level marketing, even though we're a B2B company. And so the first real consumer level marketing is you can never predict the behavior of the consumer.

So it's really good to always have a lot of different messaging and trying out and see what resonates and see what people respond to. So I think it's a reiteration of what we've talked about in terms of targeting, creative and so forth. In terms of the biggest challenge, honestly, the -- we establish a market. It's really like is making sure that we remain like the market we created that we maintain that competitive moat and add to it. So we are the biggest winner in the market we created, which is Performance TV. That term is now a fairly broadly used term in the industry. That did not exist on the Internet when we -- the first time we put Performance TV on our website.

That's a great point to close on. Mark, thank you so much.

Thank you.

Hello, and welcome to the MNTN Fourth Quarter and Full-Year 2025 Results Conference Call. [Operator Instructions]

I will now hand the conference over to Brinlea Johnson. Please go ahead.

Good afternoon. Thank you for joining us for MNTN's Fourth Quarter and Full-Year 2025 Earnings Call.

With me today is Mark Douglas, CEO; and Patrick Pohlen, CFO.

Just to remind everyone, today's call includes forward-looking statements that are subject to risks and uncertainties, and actual results could materially differ from those anticipated in these forward-looking statements. For the risks and uncertainties that may affect future results, please see our most recently filed periodic report, which is also available on our website.

We will also discuss non-GAAP financial measures on today's call. Reconciliations of these measures are available in our earnings material on our website.

With that, I'll turn the call over to Mark. Please go ahead.

Thank you for joining us today.

We reported strong financial results, delivering fourth quarter revenue growth of 36% year-over-year and 36% for the full year. We also reported very solid adjusted EBITDA growth as well as record positive net income. Before we get into the numbers, I want to take a step back and talk about MNTN's unique value proposition and why we're well positioned for a long runway of durable growth.

I founded MNTN with the mission to democratize television advertising. For decades, the TV industry was dominated by large global brands with big budgets, big ad agencies and campaigns built to drive brand awareness. That's not our market. We don't operate in the open web or retail media. MNTN is a true pure-play Connected TV company. Our customers are emerging e-commerce companies and category leaders. They have efficient marketing teams who deploy their budgets wisely while expanding into Connected TV on their journey and winning new customers. And the reason for them to expand into Connected TV is it expands their revenue by marketing with the most exciting content in the world.

Everything from the best reality shows on Bravo, dramas on HBO Max to live sports, they're interested exclusively in using their ads to drive incremental revenue by reaching specific consumers. This is the true definition of performance marketing applied to the largest storytelling platform, streaming television. While performance is a new concept for television, it's not new to advertising. Performance advertising helped build the e-commerce industry, giving companies the ability to target users and run ads that convert into traffic, making it possible for emerging brands to compete with established giants. That's exactly what MNTN is bringing in streaming TV.

Our technology enables advertisers to target users with the same types of signals that the big search and social companies use to target their users. Only we enable our clients to launch ad campaigns on hundreds of premium streaming TV networks like Paramount+, Disney and ESPN. This is a monumental shift for television advertising, transforming TV from a branding medium to a true performance channel.

MNTN created a completely new market that we're uniquely positioned to dominate. The intersection of streaming television and performance marketing is huge and growing every day as more consumers move to streaming TV and as a result, more brands follow them there. MNTN campaigns generated over $18 billion in revenue for our customers in 2025, and every aspect of our platform is built to expand the reach and revenue of our customers efficiently and with measurable results.

Ease of use is core to our strategy from cost-efficient customer acquisition to our easy sign-up and measurable results. Our platform is built exclusively for small and mid-sized businesses. MNTN advertisers can launch, manage and optimize campaigns entirely on their own in our self-service platform. While they can also use an agency, they don't have to. And the agencies they do use are nimble performance marketing agencies that are experts at search and social marketing and are now also experts at Performance TV advertising. Everything is automated from targeting to optimization, bringing digital marketing precision and accountability to streaming TV.

As part of that automation, AI plays an ever-expanding role. MNTN was the first company to provide AI consumer targeting for CTV when we launched MNTN Matched. We were the first because half of MNTN's team is engineers, and small and mid-sized customers need precision targeting with the best technology to identify their next customer. We were the first company in CTV to take on the challenge of creating TV commercials because more than 95% of our customers don't have one when launching their first campaign. And now we have creative AI tools with QuickFrame AI. Stay tuned as we continue to launch exciting new AI tools through 2026.

We're leveraging AI tech to make every aspect of our product and business the best it can be for our customers and drive even more compelling results in helping them grow their revenue. Being everything the SMB market needs is our mission. We aren't taking an enterprise-grade product and simplifying it for SMB users. That never works. You can see it in any market. The company that builds for the SMB market segment always wins, Shopify being one of the prime examples. Even our marketing is specifically designed for SMBs, which is why we're able to get LTV CAC ratios that are handily in the double digits on the majority of our mid-market customers.

There are other companies that enable Connected TV advertising, and some of them are huge companies, but those companies are focused on a different area of the Connected TV world than we are. Their tech stacks were designed to maximize what their brand-focused customers need, and that's reach and frequency. Remember, the biggest TV advertisers in the world, the one that our competitors have focused on are brand advertisers. They're looking to maximize eyeballs, views and impressions, and they want to get those views at the lowest cost. This is very different from what MNTN does because our customers want performance. They want incremental sales and a high return on their advertising spend. They're actually willing and interested to pay a higher price for an ad slot if it means that ad will convert to incremental sales.

Instead of seeking to maximize the number of impressions at the lowest cost, MNTN surgically targets the right audience to drive conversions. I'd like to say that MNTN customers aren't buying ads, they're buying incremental revenue. Think about huge companies like Verizon and Coca-Cola want to drive impressions, so you know who they are and remember them when you go to purchase. They want to reach every American over and over again, so they're buying ad slots in bulk and want the lowest price per impression.

On the other hand, a snowboard brand that wants to drive more revenue isn't interested in reaching every consumer at the lowest cost. They're interested in reaching the right consumers, the ones who are most likely to buy their product today. That brand is willing to spend to acquire these customers as long as the incremental revenue outweighs the cost of the ads. They're looking for a return on their ad spend and MNTN is uniquely built to deliver on CTV. That's also why the over 200 networks we work with love us.

We're bringing them companies that have never advertised on TV before. More than 95% of MNTN customers launched their first TV commercial on our platform. We aren't just moving brand dollars from one network to another. We're actually increasing the pie. The bottom line is that the market for Connected TV advertising is huge. And there will be a place for both brand advertisers and performance advertisers and for large advertisers and for small. MNTN is the leader in the SMB market and will remain the leader because we wrap our entire solution into an easy-to-use package. Everything from our marketing to our tech stack is purpose-built for these smaller companies, and we're leading the way with continued innovation.

Wrapping up, we're executing against a massive opportunity, transforming TV into a measurable performance-driven advertising channel. We've got many exciting vectors for growth from moving further down market to integrating AI to even more premium content and many more, all while continuing to sharpen our platform and our measurement tools to be exceptionally easy for anyone to use.

Remember, MNTN enables marketers of any size to press the easy button to get their ads on TV quickly to drive incremental revenue. With strong customer growth, expanding margins and continued innovation across our platform, MNTN is well positioned for sustained profitable growth. We're successfully building the next generation of performance marketing on streaming TV.

Now, I'll turn it over to Patrick to discuss fourth quarter and full-year 2025 results in more detail.

Thank you, Mark.

We reported strong fourth quarter results, exceeding our prior revenue and adjusted EBITDA guidance. We closed out a very strong 2025. Our solid performance reflects continued customer adoption of Performance TV, particularly by small and mid-sized companies that had not previously advertised on television.

Our fourth quarter revenue increased to $87.1 million, up 36% year-over-year after adjusting for the divestiture of Maximum Effort on April 1, 2025. To note, we again included a table in our press release and also in our investor presentation that breaks out our revenue growth and gross margin over the past several quarters, both including and excluding the prior year's contribution from Maximum Effort.

On a 2025 full-year basis, revenue increased to $290.1 million. When adjusting for the divestiture of Maximum Effort, revenue growth was 36%. Fourth quarter gross margins improved to 82%, up 530 basis points. Our core PTV business improved over 300 basis points, with the balance coming from the impact of the Maximum Effort divestiture. For the full year, our reported gross margins increased to 77%, up 560 basis points year-over-year, with our core PTV business improving over 300 basis points and the balance coming from the impact of the Maximum Effort divestiture.

As you can see from the table in our earnings release, at the end of Q4, we had 3,632 active PTV customers when measured over the trailing 12 months. On a year-over-year basis, this represents growth of 63% Recently, we've made inroads moving down market into the SMB market opportunity, which we believe is a testament to the strength of our platform and to its applicability across companies of all sizes with performance marketing budgets. It's worth noting that the number of active PTV customers we bring into the platform is entirely within our control and is predominantly a function of how firmly we step on the accelerator to move down market.

Our intent is to regularly evaluate and adjust our efforts to ensure that we are onboarding clients that have strong product market fit and a likelihood of success on our platform. Our expansion rate, which measures the spend of our current customers as compared to those same customer spend a year earlier is quite healthy and remains well north of 115%, demonstrating that when our customers achieve their desired returns on advertising spend, they continue to increase their budgets with us.

Total operating expenses for the fourth quarter were $50.9 million and were $200 million on a full-year basis. During the fourth quarter, we added a number of people in sales and marketing, and their expense is factored into our fiscal year 2026 guidance. For the fourth quarter, we achieved positive net income of $34.5 million for a GAAP EPS of $0.47. On a full-year basis, we reported a net loss of $6.4 million, or GAAP loss per share of $0.13, primarily due to a one-time charge of $23 million as a result of our initial public offering and settlement of our convertible notes in the first half of the year.

Adjusted EBITDA increased to $28.1 million, up from $20.7 million in Q4 of '24, an increase of 36%. The company's adjusted EBITDA margin grew to 32.3% compared to 29.6% in Q4 of 2024. For the full year, adjusted EBITDA was $68 million, up from $38.8 million in fiscal year 2024. The full-year adjusted EBITDA margin grew to 23.4% compared to 17.2% in 2024. The improvement was driven by increased revenue and gross margin expansion, and demonstrates the leverage inherent in our model.

As you saw with our investments during Q4, we will continue to invest strategically in sales and marketing, as well as technology and development to support future revenue growth while remaining focused on delivering operating leverage. Our balance sheet remains strong, and we ended the quarter with $210 million in cash and cash equivalents with no borrowings outstanding. We ended the quarter with 73.9 million shares outstanding. And looking ahead, we remain confident in our momentum and the underlying health of our business.

For Q1 2026, which is typically a seasonally slower quarter for us, we expect revenue in the range of $71.3 million and $73.3 million, representing 22.3% year-over-year growth at the midpoint of $72.3 million when normalizing for the effect of the divestiture of Maximum Effort. We expect adjusted EBITDA to be between $13 million and $14 million, reflecting continued leverage as we scale the business while continuing to remain disciplined in our investments and adding sales resources, as I previously noted.

For the full-year 2026, we expect revenue in the range of $345 million and $355 million, representing 22.9% year-over-year growth at the midpoint of $350 million when normalizing for the effect of the divestiture of Maximum Effort. We expect adjusted EBITDA to be between $94.6 million and $99.6 million.

To wrap up, we delivered another strong quarter and believe MNTN will continue to gain market share in the massive performance television market. We are confident that our future growth initiatives and the strength of our operating model will position MNTN to drive continued growth and profitability.

And with that, we'll open the line for questions.

And your first question comes from Shyam Patil with Susquehanna.

Great quarter, great year. I just had one question. Very strong growth at 36% year-over-year ex Max Effort. Mark, can you just talk a little bit about how you plan to continue to drive this type of growth and just the opportunities that you're the most excited about going forward?

Absolutely. Thanks for the question. So, I think the first thing is, is the market we're in Performance TV, the market we created, that continues to be the primary focus of the company is growing into that opportunity with continued focus on sales, marketing, product initiatives that drive performance. And so that's the core of what we're focused on. But with that, we have a number of other initiatives that we've initiated. The continued move down market towards smaller businesses is something that's very important to us. The AI initiatives, in particular, what we did with QuickFrame AI in order to enable customers to get live faster.

Within the first month of releasing that, we already have 5,000 people on product and more have followed. And so that enables customers to basically get live a lot faster because the majority of the time it took them was actually developing the TV commercials, do so at a lower cost and have more creative. And then we have other AI initiatives that are all primarily geared towards driving greater performance and giving our customers even more visibility into how our platform operates and the controls that they want. So, all of those combined is what our focus is for 2026, and we're very excited about the year.

And your next question comes from Mark Mahaney with Evercore ISI.

Two questions, please. Could you provide some color on the new customers coming in? How they -- are they similar to the customers you had before in terms of size, vertical? Is there something -- is it more of the same? Or is there any sort of differentiation?

And secondly, Mark, you talked about investing and rolling out new AI tools during the course of this year. Could you give us a general sense of what those tools would be focused on?

Sure. In terms of the first question, we continue to focus on the SMB opportunity, so small to mid-sized businesses, predominantly in e-commerce and travel. We also have B2B customers added to that. And so the shape of that customer base remains largely the same, although the small business segment, we think is continuing to open up and we're really excited about the growth in that arena. We also have added in that we announced last year, we had a lot of growth with performance agencies. So basically, the types of agencies that previously focused on search and social and them becoming a big part or a bigger part of our mix.

So, I think all these things just signal what was an early adopter market is starting to go mainstream, and we've led the way on that. In terms of AI technology, we have media planning, AI tech, basically, meaning technology that makes an even better choice as to where to place our customers' ads. And that's important because that's another way to drive increased performance in addition to MNTN Matched, which was about targeting which are the users. And you can essentially assume that we're doing that kind of tech across every aspect of our customers' campaigns. And so we have tech there.

And then there are some unannounced price. Half the company is engineering. So, there's always -- in addition to our core business, there's always extensions to the business that we're working on that we haven't yet announced. But the upcoming one is AI media planning, which I'm pretty excited about.

And your next question comes from Ron Josey with Citi.

Can you hear me okay?

Yes.

Yes.

I want to ask about more details, Mark, on just QuickFrame AI. With the adoption ramping here, I think I heard 5,000 users. Would love to hear any insights you have on improvements to the business as a result of it in terms of time-to-market perhaps maybe post-sales cycle? And then anything on the improvements on time-to-market on sales cycle, but then also just the creative itself, just given how many new-to-TV customers are on MNTN to begin with?

And then, Patrick, if you could just talk to us about -- we definitely saw the customer acquisition, PTV customer growth of 63%. Just talk to us about the benefits from adding more sales force from that and plans on outreach going forward.

So in terms of QuickFrame AI, it's been released less than 3 months. So, what we've been doing is doing a series of product releases. We announced Version 1 and Version 2 within 60 days of each other. And we're taking our own ambition, our own essentially focus. And we're also adding an input from creators and also from our customers, and we're iterating on the product to just make it, be able to produce any type of video they can imagine. I think early on, everyone is really pleased with the results. We're seeing a pretty high percentage of our new customers and our existing customers adopt it and a fairly high percentage of very well deep into the double-digits percentage that are publishing creative into MNTN's platform. In terms of user adoption numbers, we continue to see them be strong and we'll be providing more information on that in the future.

Ron, in terms of your question, I think you were asking about the additional headcount in sales and marketing. Is that correct?

That's exactly right.

Yes. So, we hired 53 people. We did that largely in November. We expect them to be productive at the end of Q1 into Q2 and drive future revenue opportunities. It breaks down -- I think you've heard us talk in the past about SDRs. And so 34 of the 53 are quoted on demos. So, it's really filling the top of the funnel, both mid-sized and small businesses. We have 15 that are 10 sales people and 5 customer success, which in our model generates additional revenue from existing customers. Those 15 carry a sales quota and the remaining 4 are support. So, we expect that to drive future revenue in '26 and beyond.

And your next question comes from Andrew Boone with Citizens.

I wanted to ask on CDNs, one of kind of the new generative text to video models that's out there. Mark, can you just talk about the inflection point that we seem to be at in terms of technology and the enablement of AI for video? What does that either mean from a competitive context? Or what does it mean in terms of internal capabilities that are now being unlocked?

And then, Patrick, if I look at the '26 EBITDA guide, it's another year of solid margin expansion. Is there any help you can provide to understand the sales and marketing investments? Or am I misinterpreting that if I think about where expenses are going to be for '26?

So, I'll address the question about QuickFrame and kind of models. So, we're integrated with a number of different generative AI models for both video and audio. So, that includes some of the obvious ones like Gemini from Google, Sora 2 from OpenAI, but there are numerous -- Nano Banana also from Google, but there are numerous models and each of them tends to be better at something different. So if our customers want like a video that emphasizes product, we might -- the tool automatically will select a different model for that scene of the video with the product in it or people talking or voiceover.

So depending on the use cases for the commercial itself that's being generated, we pick automatically. We orchestrate the models to use. And honestly, there are new releases of models. It feels like every week, sometimes it feels like every day. And we have a team on QuickFrame dedicated to integrating those models and then updating the orchestration software, which itself is an AI model in order to pick what to use for each various scene or even multiple models in a different scene.

Our competitive advantage here, we're focused on a professional use case. So, you can use Sora 2 to remix a video, put on your social account. That's not what we're focused on. We're focused on full 30-second professionally create, built creative with workflows, use cases, approval cycles and all the things you'd have for human creative video, but now for AI video. So, I think that gives us a pretty strong reason for having the tool as well as a pretty strong staked out area in terms of how it succeeds in the segment of the market that we're going after. And ultimately, again, this is also our customers can get live faster with the most professional creative they can build. And we ourselves, MNTN, we are now using those tools and putting out at least one AI video a week for our own advertising this week to -- I think last week 2, this week 3. So, we're using these tools ourselves in our own marketing.

Andrew, to the question you asked me, we are going to continue to invest strategically in sales and marketing and technology and development to drive more revenue growth. As you know, we have a very strong financial model, so more revenue growth leads to higher gross margin. Gross margin, keeping more of that and having a higher gross margin allows us to continue to invest in sales and marketing and technology and development and still be profitable on the bottom line.

And your next question comes from Andrew Marok with Raymond James.

And I think this is a question that we've asked before, and it's kind of recurring. But around the industry, we hear more and more from other companies about adding performance characteristics to TV advertising, creating entry points to targeting smaller businesses. So, I guess some of these offerings have spent a little bit more time in the market and presumably have some level of sales or awareness building efforts behind them. Have you seen them affect the way that your customers are behaving at all or some of the pitches that you're having to make to them?

Well -- so one, we respect all competition, and we take it very seriously and both larger companies as well as smaller companies. Generally, the space we're in is very large. I don't think a lot of companies are running into each other at this point. What we're focused on is providing the most complete platform that is easiest for our customers to adopt and use. And we have a long lead, like a big lead on doing that, and we feel very confident and comfortable where we sit in terms of our customers adopting.

Also, what's very important is the literal performance that's delivered out of our platform. That relies on a history of data, initially machine learning models, now AI models. And so the actual performance, that investment in that technology is why half the company is -- half a MNTN is engineers is because it's not just about having a user interface to address SMB. It's about having the core technology that allows you to pinpoint, almost sharpshoot those specific consumers for a brand. And I've talked in the past about a brand like Onewheel, where it's extreme sports, very specific type of consumer, how do you identify them.

So, it's technology and data enables us to do that. And then campaign management, AI tools, so you can build a lot of creative, which also contributes to performance and of course, all the measurement attribution. So, we think we have a very complete platform, first-to-market, most feature complete and we believe the best performance in the industry.

Got it. And if I could maybe sneak one more in on the Magnite partnership. How impactful for that -- how impactful for you do you think that can be here in the near term or maybe over the longer term? And can you dig a little bit deeper into the new inventory you'll have access to, like maybe on which platforms or which segments of Magnite you're specifically accessing?

Yes. Absolutely. I mean, we're very bullish on that partnership. We have a really good relationship with Magnite. And specifically, when we announced it, we were talking about paused ads, but there's also live sports and other very premium content that we've introduced both through our direct partnerships with the media companies, all of whom we have direct partnerships with, but also through Magnite.

And so this is all part of often -- another thing that can contribute to performance is the best content. The content that consumers are most engaged in is also the content they're most going to pay attention to. So, we see that as a really strong partnership and a company that we've had a long relationship with, but we've expanded that partnership in this area and we're very excited about where it's leading.

Your next question comes from Rob Sanderson with Loop Capital.

I've got one for Mark and one for Patrick. Maybe, Mark, can we talk about attribution measurement? Like, what makes verified visits the best attribution in CTV? What else are you doing to further strengthen this? And then what are the challenges in educating performance marketers? Like there seems to be a perception out there that attribution measurement is inherently weak on Connected TV, and I'm sure you'll say otherwise, but how do you educate the industry?

And then I'll follow up with Patrick in a second.

Cool. So addressing attribution, this is something that we took on, I think, first in the CTV industry that if you want, especially the SMB market to invest in CTV, you have to provide them a way to measure that, target and measure the effectiveness of that. And so with verified visits, we essentially have multiple data integration partnerships in order to have as many signals as possible in order to measure who has responded to which ads and which campaigns. And so we also have an identity graph that is virtually every household in the United States. And every interaction, every tracking pixel call, every bid request, all of the underlying technology at scale are contributing to identity graph, which then contributes to the attribution.

In regards to like how people feel about it, -- so in CTV, there is no click on an ad. You can -- even if you're watching on your phone, and let's say, the Disney app, you're not generally allowed to click on the ads. So, we do what's called cross-device measurement, meaning the first device is the device you're watching TV on, which is generally a television in your living room, bedroom, family room and the second, third devices are your phone, tablet, computer. We connect those dots through our identity graph, and then we report that data to our customers. And then we send that data out to, I think, approximately 11 other attribution platforms.

So, our customers not only get data from MNTN, they get it from third-party mixed modeling tools, from multi-touch attribution tools, from Google Analytics. So, they have a range of sources in order to look at performance for MNTN and also look at it in comparison to wherever else they're spending money, search, social or any other channels that they're engaged with for their marketing.

Okay. Great. Patrick, a couple of cost questions. Gross margin year-over-year looks like 300 basis points after the consolidation of Max Effort. I know you had some infrastructure alignment projects. Did these go better than planned? Are there other drivers worth calling out? And you're already above the high end of your long-term target. So, I'm just wondering if we're kind of getting at the top end here? Or do you anticipate there's further room? And then on the sales and marketing hires, thanks for all the color. That's helpful. But I assume the SDRs are not really focused on the long tail of small advertisers. Maybe that's wrong. But are they more focused on growing the middle, more agencies, more B2B? Can you just sort of maybe give us a little bit of color, if there's a little bit of change of focus because of these hires? It seems like there might be.

So, I'll answer the last one first, Rob, mostly because it's right in my head. And that is the SDRs are focused on the SMB market. So, they're going after both mid-sized customers as well as small customers. And all of -- they're driving demos because demo is the first step to getting a trial and the trial is first step to getting a post-trial customer. So, there's no change in focus by hiring SDRs. And just what's interesting is, ironically, with the 53 hires, we are flat in headcount in sales and marketing from the end of '24 to the end of '25. So, we were getting a lot of efficiency, but we decided we wanted to drive more revenue growth with these 53 hires.

What was the first part?

Gross margin.

Yes. So gross margin -- so it actually ties into the second part of your question, which is we want to drive more revenue. More revenue drives gross margin increases with nothing else. But as you all know, we've done a lot. So the first thing is we spun out Maximum Effort. That had a very significant impact on gross margin. The second thing is we switched hosting providers. That cutover was at the end of October. So, we haven't really seen the full impact of that reduction in the hosted environment cost. And we have a number of other initiatives. So, I think that for the year, we finished at 77%, and I believe that we will be firmly in that range going forward. The 82% for the quarter is just a -- we aspire to just have it be in the long-term range of 75% to 80%.

And your next question comes from Laura Martin with Needham.

Sure. Great. The first one I wanted to follow up on an earlier question, which is what -- you talked about inventory expansion in the letter. How much of that is coming from actually your direct deals with your suppliers, CTV suppliers? And how much is coming from sort of third parties like your Magnite deal? That's my first question.

Yes. So, both are involved. So through our direct deals, we work directly with the networks generally on availability, what type of inventory, pricing and things like that. But the inventory still comes to us through a programmatic auction, which is what we want. We want to be able to pinpoint the specific ad impressions for the specific users we want to buy and that involves running a programmatic auction. And so the SSP, the Magnites and others, they run those auctions on behalf of that network. So in all cases, we have a direct deal with the publisher, the media company and the streaming TV network. But Magnite or -- and others in the industry are still involved in like the pipes that pipe those impressions to MNTN. We don't have -- and I think a part of your question, Laura, is we're not buying from Magnite. In all cases, we're buying from the network. Magnite is a technology partner, not a financial partner in that sense.

Okay. Perfect. And then my other one is for Patrick. Looking down the cost structure, when I think about margins, either operating income margins or EBITDA margins, we're projecting now a very nice, given your guidance, increase in margins. My question is peak margins. When you think about growing revenue over time, where do you think peak margins are, either however you think about it, operating income margins or EBITDA margins for this business at maturity, please?

Sure. Our long-term target, Laura, for gross margin is 75% to 80%, and our long-term target on adjusted EBITDA margin is 35% to 40%.

Okay. Great. So, we still have some ways to go.

And our last question comes from Matthew Weber of CG.

Mark, you touched on pause ads earlier. I just wanted to ask about these ad units. How is the performance and cost compared to in-stream ads? And is there a chance for you guys to sort of work with some of your other publisher partners to bring these ad units to those platforms, basically off of Magnite inventory?

Yes. So for pause ads, it's a new ad unit. It's one that the industry and a lot of our customers are very excited about. And for anyone listening, it's when -- what a pause ad is, is when you are watching TV and you pause for any reason, like you have to grab a drink or for whatever reason is, it basically pauses -- it puts an ad up on the screen. During the time, the programming is paused. And it could sit there for a while. So it's very noticeable. It's full screen on your television on the wall wherever you pause. And so people are pretty excited about it.

I think in terms of the performance of it, the jury is still a little bit out. We've been measuring it for Q4. We introduced it in Q4, and it continues in Q1. We're not yet sure mainly because the volume is still not quite as high as we want to really fully form a judgment, but it's fully what customers want. So, I think in terms of that judgment, companies like it. They intuitively think it looks good and can perform well.

So it's going really well there. And we expect to see a lot more demand for it. And there are a lot of new ad units coming out. I think the TV industry is really -- or the streaming TV industry is really innovating right now in terms of how to capture consumer attention, not just with the 30-second TV commercial, but captured in other ways. And we're really excited about it for that. And I think this year is really a year of live sports. We're excited about that and just anything that the networks want.

I'll finish by saying one thing that's really interesting about MNTN is that our customers trust us to put their brand on television wherever it's going to perform the best. So, a lot of streaming networks increasingly come to us first because we can place those ad units across thousands of brands essentially literally overnight or even faster and as opposed to them having to go to very large brands and have to negotiate that one brand at a time. So, we're increasingly seeing these ad units kind of the innovation in the industry as early as it becomes available, and we're really excited about that. It's another value add for our customers that we provide just intuitively as part of working on our platform.

There are no further questions at this time. I will now turn the call back to management for closing remarks.

I'd like to say that we're very excited about 2026. I've talked numerous times in this call about what percentage of the company is engineering. So, we have a lot. We're focused on in terms of product, the continued growth of the CTV market, in particular, the Performance TV segment. And I appreciate everyone's time and listening and participating in this call.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the MNTN Third Quarter 2025 Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Brinlea Johnson. Please go ahead.

Good afternoon. Thank you for joining us for MNTN's Third Quarter 2025 Earnings Call. With me today is Mark Douglas, CEO; and Patrick Pohlen, CFO.

Just to remind everyone, today's call includes forward-looking statements that are subject to risks and uncertainties, and actual results could materially differ from those anticipated in these forward-looking statements. For the risks and uncertainties that may affect future results, please see our most recently filed periodic report, which is also available on our website. we will discuss non-GAAP financial measures on today's call. Reconciliations of these measures are available in our earnings materials on our website.

With that, I'll turn the call over to Mark. Please go ahead.

Thank you for joining us today. We had another strong quarter with revenue and adjusted EBITDA growth, as well as positive net income. But before we get into the numbers, I want to take a step back and talk about what makes MNTN different, why this moment in time is so exciting and where our next stage of growth is coming from because understanding MNTN is key to understanding our results, and this quarter's success is a direct reflection of our strategy and technology.

I founded MNTN with the mission to democratize television advertising. For decades, the industry has been dominated by the 200 biggest advertisers, big brands with big budgets and big agencies to support them. We built MNTN for everyone else. MNTN is focused on the millions of other small and medium-sized businesses that never thought they could afford to advertise on television.

One thing I've said before, but you'll hear me say over and over, 97% of MNTN customers have never run a TV ad before coming on to MNTN. This means we're bringing new people to TV advertising and creating our own category. For years, these small to medium-sized businesses have served as the real growth engine of digital advertising because they are focused on one thing, performance marketing. They expect their advertising investments and platforms to be measurable, targetable and as ROI-driven as search and social. TV could never be bought and measured the way digital could, and that kept a lot of businesses shut out of one of the biggest opportunities in marketing. That changed when we built MNTN Performance TV, a self-serve platform that makes connected TV measurable, accessible and performance-driven.

Today, MNTN advertisers can launch campaigns across more than 200 premium streaming networks like CNN, Paramount+, Bravo, ESPN and more. They can target audiences using real intent data powered by AI and measure actual business outcomes like site visits, conversions and return on ad spend. That's a monumental shift for television advertising, transforming TV from a branding medium to a true performance channel.

Let's not forget, television is still the most powerful medium in the world. Every day, more than 5.5 billion people watch TV for an average of 3.5 hours, more than the nearly 4 billion who use social media and more than any other form of entertainment. It's what people talk about at dinner, not the video they scroll pass on social media, but the season premiere of Landman, the finale of White Lotus or that last game of the World Series. And the way we watch TV has fundamentally changed. Connected TV is now the fastest-growing segment in all of advertising, and it's not slowing down.

Yet despite that growth, CTV remains undermonetized because most of the spend still comes from a small number of large brands. TV had never traditionally been considered performance channel, only brand. We're changing that. MNTN is bringing the small business revolution to television just as Meta did for social and Google did for search. More than 80% of digital ad spend on these platforms still comes from small and midsized businesses. But TV has historically been out of reach for them. We're opening that door and unlocking the next wave of growth for Connected TV.

Streaming TV captures the attention of consumers with professionally produced content that costs millions to make. And now with MNTN, every business can reach their next customer alongside that same premium content. It resonates in a way that other media just can't. That's the magic of television. And now with MNTN, every brand can be part of it. Our Performance TV platform is the most advanced software in Connected TV, and it makes getting an ad on TV simple. Advertisers can launch, manage and optimize campaigns entirely on their own in a self-serve environment that delivers real-time results. Everything is automated from targeting to optimization, bringing the precision and accountability of digital performance marketing to television.

Performance TV gives advertisers of every size the ability to run measurable performance-driven campaigns across the best and biggest streaming networks in the world. And we didn't stop there. We've also removed one of the biggest barriers to TV advertising, creative. While creative might seem like a commodity, for our customers, it's an [ on-ramp ], a critical enabler that helps them get started quickly and stay engaged within our ecosystem. So we've built a complete suite of creative tools to meet every brand where they are.

It started with our acquisition of QuickFrame, which connects brands with a marketplace of over 5,000 vetted video professionals quickly and affordably. It expanded through our continued partnership with Ryan Reynolds, George Dewey and the Maximum Effort team. Then last week, we took that even further by launching the public beta of QuickFrame AI, a new platform powered by the best generative AI models out there that lets advertisers create complete TV spots in minutes. We've lowered the barrier to creating an ad, a huge enabler that accelerates how quickly businesses can launch on MNTN and bring their stories to TV. It's simply helping more customers say yes to television.

As we scale, our buying power and optimization technology drives lower cost per view and therefore, stronger returns for our clients. The more advertisers that join MNTN, the more efficient the platform becomes. Our buying power drives down costs. Our optimization technology improves performance. And as our customers see stronger return on ad spend, they invest more. That creates a virtuous cycle. Scale drives efficiency and efficiency drives growth. And because our model scales with efficiency, not headcount, every new advertiser strengthens our unit economics and improves performance across the entire network, the true definition of a flywheel effect. And as a result, our Performance TV business has averaged 39% year-over-year growth for the past 6 quarters, and our customers are seeing great results.

Take [ Fazzo ], a fast-growing e-commerce brand that sells personalized apparel and home goods. They started testing MNTN last summer. What began as a small trial quickly became a core performance channel with spend more than doubling year-over-year, verified visits up over 120% and a return on ad spend consistently above 20x. Zazzle is a great example of how performance-driven marketers can start small, see measurable results and quickly scale in the television and meaningful levels of investments. Then there's Guesty, a hospitality software brand that never thought TV could reach their niche target audience of property managers and vacation owners. With MNTN, they found it could. They started small, tripled their investment and now drive tens of thousands of site visits each quarter with strong efficiency. Both brands also rely on QuickFrame for their creative, showing how our ecosystem gives small teams the speed and scale to compete and win like big advertisers.

There are 3 key pillars that define our business and form our competitive moat. First, MNTN is purpose-built for small and medium-sized businesses. Ad tech can be incredibly complex. Just look at those Lumascape charts, full of logos. Our customers never see that complexity. Everything they need, targeting, measurement and campaign setup, is built right into one simple platform. And when a company sees themselves on TV for the first time and sees the incremental revenue it can generate, it's a magical moment made by MNTN Performance TV.

Second, we've built direct connections to more than 200 premium streaming networks. Because 97% of our advertisers are new to TV, we're bringing incremental revenue to the largest media companies and delivering the best premium content to our customers. And then have I mentioned 97% of MNTN customers are new to TV, nearly every customer who joins MNTN needs their first TV commercial. We built the resources to make professional creative accessible to everyone. Together, these 3 pillars make MNTN unique, built to drive real performance for SMBs, connected to the most premium content and powered by best-in-class creative solutions. Because of these, we're leading the category, transforming television to the next great performance marketing channel.

Every new MNTN advertiser, every new TV campaign, every new creative made through QuickFrame AI reinforces the same belief we started with that great ideas and measurable performance shouldn't be reserved for the biggest brands. We're executing against a massive opportunity, transforming the largest and most influential medium into a measurable performance-driven channel. With strong customer growth, expanding margins and continued innovation across our platform, MNTN is well positioned for sustained profitable growth. We're successfully building the next generation of performance marketing on TV, and I'm very proud to do it.

Now, I'll turn it over to Patrick to discuss our third quarter results in more detail.

Thank you, Mark. We reported strong third quarter results, delivering on our prior revenue guidance and exceeding our previous adjusted EBITDA guidance. Our solid performance reflects continued customer adoption of Performance TV, particularly by small and midsized companies that had not previously advertised on television.

Our third quarter revenue increased to $70 million, up 31% year-over-year after adjusting for the divestiture of Maximum Effort on April 1, 2025. Please note, we included a table in our press release and in our investor presentation that breaks out our growth over the past several quarters, both including and excluding the prior year's contribution from Maximum Effort. On a GAAP basis, which includes the prior year's contribution from Maximum Effort, total third quarter revenue grew 23% year-over-year.

Gross margin for Q3 increased to 79% compared to 72% in Q3 of 2024, an increase of 720 basis points. We continue to drive additional gross margin improvements across our core business and believe we have a number of levers that we can use to maintain and grow our gross margin on a year-over-year basis. The table we included in the press release and in our investor presentation also breaks out the gross margin contribution from Maximum Effort. You can see that of the 720 basis point year-over-year improvement in our reported gross margins, our core PTV business improved over 400 basis points with the balance coming from the impact of the Maximum Effort divestiture.

As you can see from the table in our earnings release, at the end of Q3, we had 3,316 active PTV customers when measured over the trailing 12 months. On a year-over-year basis, this represents growth of 67%. Recently, we have made inroads moving down market into the SMB market opportunity, which we believe is a testament to the strength of our platform and to its applicability across companies of all sizes with performance marketing budgets. This initiative has helped support the strong growth of our customer base. Accordingly, our calculated Q3 ARPU, which reflects this increased mix of smaller customers on our base, was $20,904, in line with our expectations. Our expansion rate, which measures the spend of our current customers as compared to those same customers' spend a year ago, is quite healthy and remains well north of 115%, demonstrating that when our customers achieve their desired returns on advertising spend, they continue to increase their budgets with us.

Total operating expenses for the third quarter were $47.7 million. We achieved positive net income of $6.4 million for a GAAP EPS of $0.09 a share. Of note, this was the company's first quarter of GAAP profitability in the last 4 years. Adjusted EBITDA was $16 million, up from $10.5 million in Q3 of '24, an increase of 52.9%. The company's adjusted EBITDA margin grew to 22.8% compared to 18.3% in Q3 of 2024. This improvement was driven by increased revenue and gross margin expansion and demonstrates the leverage inherent in our model. We will continue to invest strategically in sales and marketing and R&D to support future revenue growth, while remaining focused on delivering operating leverage.

Our balance sheet remains strong, and we ended the quarter with $179 million in cash and cash equivalents with no debt outstanding. We ended the quarter with 73.2 million shares outstanding.

Looking ahead, we remain confident in our momentum and the underlying health of our business. For Q4, which is typically a seasonally strong quarter for us, we expect revenue in the range of $85.5 million and $86.5 million, representing a 34% year-over-year growth rate at the midpoint of $86 million when normalizing for the effect of the divestiture of Maximum Effort. This translates into a reported GAAP growth rate, which includes Maximum Effort in the year ago, comparison of 23.2% at the midpoint. We expect adjusted EBITDA to be between $25 million and $26 million, reflecting continued leverage as we scale the business, while continuing to remain disciplined in our investments.

Our Q4 guidance implies full year 2025 revenue between $288.5 million and $289.5 million, representing 35.5% year-over-year growth at the midpoint when normalizing for the effect of the Maximum Effort divestiture and 28.1% year-over-year growth on a GAAP basis. 2025 adjusted EBITDA would be between $64.9 million and $65.9 million for an EBITDA margin of 22.6% at the midpoint.

To wrap up, we delivered another solid quarter and believe MNTN will continue to gain market share in the massive Performance TV market. We are confident that our future growth initiatives and the strength of our operating model will position MNTN to drive continued growth and profitability.

With that, we will open the line for questions.

[Operator Instructions] Your first question comes from the line of Shyam Patil with Susquehanna.

Mark, you mentioned that you guys are averaging almost 40% year-over-year growth over the past 6 quarters, which when you look at the overall market that you're in, it's by far the highest growth rate in CTV. Can you just talk about what's driving that? And then, how you think about the runway ahead of you from here?

Sure. Thanks for the question, Shyam. So there are a number of growth drivers in place for the business. And so, I'll start with the business ones first. You're seeing accelerating new customer growth. So that's as a result of our continued investment in marketing and sales, as well as our expansion in the small business. Our expansion rate is well north of 115%, meaning new customers are spending more over time. And we have a really efficient go-to-market motion. So approximately 3 years ago, 2% of our leads came -- were inbound. Now, that percentage is, north of 75% is inbound. That's a direct result of our marketing investment. But there's also technology, so improved targeting, the MNTN Matched, which is our AR targeting system. We have partnerships with over 200 premium streaming networks. So we have the right content. And now, I think QuickFrame AI is really critical. You can get true 30-second professional-quality videos using AI technology, and we have a number of partnerships for that. So all of that combined is driving the growth, and it's going to continue to drive the growth. And we're really early, by the way. I mean, this market is huge, and we're really just at the early stages of really monetizing this market to the levels of search and social. So we're pretty excited about that.

Your next question comes from the line of Robert Coolbrith with Evercore ISI.

Congratulations on the solid results. I wanted to ask about your expectations for the QuickFrame AI launch. How do you think that could impact your close rate, your time to get customers up and running, and then, also maybe the rate of creative refresh for your existing customers as well?

And then, secondly, I just wanted to ask about the sales and marketing expense in Q3. It looked like that ticked down a little bit sequentially. Just curious if that was increased efficiency or maybe a timing difference around the QuickFrame AI launch. Anything else you could tell us about that?

All right. Thanks for the question. So the way to think about QuickFrame AI is, 97% of MNTN's customers have never advertised on TV before. So they don't have TV commercials when we meet them. And so, we want -- we've always addressed that problem. We want to do even more. So the way we see it is, QuickFrame AI is an accelerant. It's basically an enabler for our customers doing a few things. One, it's going to shorten the time to go live, so meaning customer gets creative faster, they can go live faster. It lowers the cost of the creative like an order of magnitude or more. And because it's lowering the cost, we don't think that they'll save the money. What we think they'll do is they'll create a lot more creative. And so, more creative equals more return on ad spend because now they can A/B test their way to the best messaging and do that very cost-efficiently. So this is really a critical part of our business. It's always been in terms of creative. And now with QuickFrame AI, we're really excited about it. By the way, I encourage everyone go to quickframe.com to see QuickFrame AI. It's honestly a pretty amazing tool. So we're pretty excited about it. We literally launched it late last week. So we're very excited about it.

On your second question, Rob, yes, the sales and marketing expense dipped down a little bit. I think it was 30.5% as a percentage of revenue. I don't think that -- and the long-term target is 25% to 30%. So we're kind of just outside the range, but we are going to strategically invest in sales and marketing. We're probably going to add some headcount. It'll be the first time in 3 years that we add headcount. And we also might do our own marketing. Again, as Mark mentioned, we're already north of 75% inbounds from using our own product to drive inbound leads. So we will do that, though, strategically and smartly.

Your next question comes from the line of Andrew Boone with Citizens.

I would love to talk about just the 4Q revenue guide and the acceleration that's built in there. Patrick, is there anything to call out as we think about the drivers of that? And then, Mark, you talked about just the efficiency of go-to-market. And Patrick, it sounds like there may be a slight increase in terms of sales and marketing as we think about kind of 4Q. Can you just talk about the efficiency of go-to-market and how we think about that net add number going forward?

Sure. So the guide is $85.5 million to $86.5 million. So we're keeping a pretty narrow range. We -- midpoint is 86%, Andrew. That would be 34%, giving effect to the Maximum Effort divestiture. We're also guiding $25.5 million at the midpoint for adjusted EBITDA. That's 29.7% adjusted EBITDA margin. It is our strong quarter seasonally. And we just see a lot of opportunity in the quarter and frankly, in the business as a whole.

Yes. And I'll add to that also. So because of how strong the marketing is on our go-to-market motion, we look at our marketing expenses there on essentially a monthly basis and make small adjustments either for new product or because we want to bring in maybe additional small business. So it's something that generally is trending the way we want, but we will adjust up and make small adjustments up and down quarter-to-quarter, while still hitting the adjusted EBITDA targets that we're setting for the business.

Can you -- did we answer your second question, Andrew?

Just anything in terms of the onboarding of customers, anything around self-service or any other kind of change in terms of how you guys are kind of growing the net add number? And then, how do we think about that going forward?

So Andrew, I'm going to correct you again, not self-service. The platform has always been self-service, self-sign-up.

Yes. So the -- yes, so the platform, like Patrick said, self-service has always been a part of the platform from day 1. What you're seeing is, as we go a bit more down market on small business, that's all self-sign-up, and so -- meaning that, that new customer doesn't in any way interact with our sales team. Just like they might go to Google and create an AdWords account, they just go to MNTN and create a MNTN Performance TV account. And so, all of that revenue, as well as an increasing portion of our mid-market revenue, comes from that investment in marketing, where we're over 75% in terms of inbound -- the percentage of revenue that comes from inbound leads.

We still are getting great efficiency from our sales team, even with the heads we're planning to add.

Yes.

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

Two, if I could. So maybe building on to that last point a little bit. So, on the PTV customer growth, obviously, we have the emphasis on the S in SMB. Have there been any surprises relative to expectations in terms of the ability to onboard customers or their behavior once they've gotten on to the platform?

And then, separately, can you expand a little bit on your success in the agency business that you called out in the press release? Is there anything you've done there that specifically made agencies take note? Or is it more just like a general scaling of awareness in MNTN and the maturity of the offering?

Yes. So I'll start with the small business. So small business was approximately 6% of our revenue in Q4 of last year. It's now 15% 3 quarters later and still growing. The midsized market is also still growing. So the core of our business has always been midsized. We're layering in more small business, and that's happening even faster. And as we just said in answering the previous question that the efficiency in doing that continues to grow. We're also just anecdotally -- well, not anecdotally, we're measuring it, that mid-market is also just doing self-sign-up. And so -- and what we're seeing in those cohort of customers is that spend is pretty strong. We expected the small business, once a customer comes live, the spend to grow at a slower rate than potentially a customer that came in talking to our sales team, but we're not seeing that. They're actually coming on board, spending well. And we're seeing that as a sign that the market, which is so nascent in the size and the growth of the Performance TV market, we see it as a sign plus some other things that the market is going from -- moving from the early stage to a stage where kind of -- you reach what I'd kind of refer to as escape velocity, where people just know they need to be on Performance TV. So we're pretty excited about that. And overall, we are really happy with the results we're getting in that sector, and we have a team dedicated to it also in terms of just the success of self-sign-up in that cohort of customers.

And can you repeat your second question, Andrew? I apologize for that.

Yes. No worries. Thank you for the answer on the first one. It was on the agency business. Anything there that you've specifically done to appeal to agencies? Or is that kind of building on that theme of just greater awareness and escape velocity?

Yes. So we created a dedicated team. So agencies kind of grew for us organically. We were traditionally pretty much 100% direct to brand, which is unusual. I mean, I think we -- possibly we're the only company that was 100% direct-to-brand for television because previously, you always had an agency involved. Some of our customers, though, did have agencies, and we just kind of organically grew those relationships and realized like this is a really healthy opportunity, put a dedicated team on it. And the results we announced early in the quarter is kind of the results of creating that dedicated team. We have product coming that we think is particularly appealing to that cohort of customers. And these are independent agencies that are traditionally strong in performance marketing. So these are the agencies that built their business on paid search, built their business on paid social and now are signing agreements where -- committed agreements with MNTN using MNTN's dedicated platform for Performance TV. So we think that sector is going to continue to grow. And we have some product announcements in the future, I think, that are going to be pretty interesting to everyone. That is almost a direct result of some of the conversations we've had with those agency customers.

Your next question comes from the line of Rob Sanderson with Loop Capital.

I've got 2 as well. Maybe we could stay on agencies for a moment. You recently disclosed that the agency channel -- agency-led accounts, rather, are up like 4x. Now, is that like an effort to move more upmarket and bring in larger brands? I know, Mark, you just described that this has sort of grown organically because there's opportunity here. But you didn't really mention agencies in response to earlier question about demand drivers. So I just want to get any color as to what you should expect or investors should expect from these new agency efforts as a driver of incremental demand in '26 and '27 and beyond.

Sure. So the way to think about this is there -- traditionally, I think most people think about -- when you think agency, they think big ad agency, holding company like WPP, [ OMV ], those kind of firms. They are big partners with other companies in the space because they're focused on big companies, big global brands essentially and the budgets of those big global brands. The agencies we're referring to are independent agencies. There's literally thousands of them. 500 of the thousands are probably -- account for more than half the market. And again, they are focused on the needs of performance marketers. So businesses that are -- mid-market businesses generally that are basically trying to be very successful with search, social, and now AI and also now Performance TV, they're seeing Performance TV as an opportunity to grow their business. And what we've done is we put a dedicated effort to making that successful, supporting them in that effort. We're supporting their marketing, their ability to explain Performance TV to their customers and other -- we're giving them creative credits that they can use to help customers initially get live. And so, this is a kind of expanding channel for it, but the customers in the channel are still the exact same customer. They are mid-market brands, performance brands, in some cases, small business brands. So the profile of our customer is not changing. Just we're getting access to another way to reach those new customers. And so, it doesn't fundamentally in any way change the model, but it definitely somewhat accelerates the growth in terms of those mid-market businesses, especially the growth in their budgets.

That makes sense. If I could have a follow-up. Just several weeks back, you announced a partnership with PubMatic. So I wanted to ask kind of where does partnering with SSPs sort of fit in? You've got direct relationships with 200 publishers, pretty comprehensive supply. Do SSPs kind of fill in gaps here or -- and augment these supply relationships? Or what other benefits do these types of partnerships bring to MNTN?

Yes. So we've always had partnerships with various SSPs. I think we announced a partnership with -- obviously, with PubMatic, the one you're referencing. We also announced a partnership with Magnite early in the quarter. They did a press release in terms of certain premium content, what's called Pause Ads that they have brought into the market. So the way those SSP relationships work, I think that's important to understand. Every streaming network, when we do a direct relationship with that network, they are still running an auction and the SSP is the auctioneer. They are the Sotheby's of that auction in this example. So even when we say, oh, we have a direct relationship with, for example, Paramount, Paramount is using one of these SSPs as the connection between their inventory and MNTN, even though we've negotiated terms and pricing directly with Paramount. So the SSPs have always been in place.

Now, what we announced with PubMatic is, we're very focused on premium and what we call super premium content. It performs really well. And our customers love it, meaning they're on the most premium television content. These shows cost millions of dollars an episode to create often. And so, we want to get more and more of that supply. You're seeing live sports come online, Pause Ads. And so, we're expanding our relationships across the board, not only with kind of all our content is premium and continuing that, but also specific opportunities to get even more premium content. We did that with PubMatic, and I'll see -- I think you'll see us continue to do that both directly with the streaming networks, as well as with the SSPs, who are the conduits between us and the streaming networks in terms of the actual movement of the ad impressions between, for example -- in my example, Paramount and MNTN to bid on it and buy it.

Your next question comes from the line of Matthew Cost with Morgan Stanley.

Two, if I could. Just one on the pace of customer adds. Is there any seasonality that we should be aware of in terms of the just gross number or net number of new customers coming on to the platform? Because the guide would imply, I think, very strong customer growth in the fourth quarter. So I guess, how should we think about contribution of user growth? And should we expect a seasonal pickup there in the fourth quarter or customer growth, I should say?

And then, the second question is just on the gross margin front. It seems like around 79% gross margins, give or take, this quarter, you're really kind of getting towards the upper end of the 75% to 80% range that you've talked about historically. I guess, Patrick, you talked about in the prepared remarks the potential for further gross margin improvement. So I guess, where are we in that journey?

So I'll take the first part of the question. So in terms of the pace of customer adds, we are continuing to invest strongly in sales and marketing. And I think you're also seeing just, again, the market like more companies just assuming that they should be looking at Performance TV. When we first launched kind of the -- essentially launched the market, the concept of Performance TV, we -- a lot of our sales and marketing effort was just convincing people, they could be on television. They just thought of it as something that was very expensive, very time-consuming. Creative, they were going to have to roll 18-wheelers to build -- to shoot creative. And it was something that was out of reach for the small and midsized sector. Now increasingly, that's not the case. They are aware this is doable, and they are seeking us out or sales cycles -- one of the metrics -- our sales cycles have steadily gone down. So I think the pace at which we're bringing on customers is both a combination of our investment in making it happen, as well as a shortening of our sales cycle and increasingly from now with QuickFrame AI, a shortening of the go-live process. Creative used to take 40 days on average. We had -- like a customer yesterday built creative like in 2 hours, and really compelling creative through the partnerships we have on the generative models. So that's what's happening there, and we are excited about that. I think you're going to continue to see that.

And then, I'll hand the gross margin question over to Patrick.

So we did have nice gross margin expansion in Q3, Matthew, 720 basis points. 400 plus of that was attributable to MNTN, that increased revenue, and then 300-plus basis points were attributable to the Maximum Effort divestiture. The latter is a structural permanent change. And as we enter Q4, we've talked about it's the highest quarter from a revenue perspective. And so, that will drive further gross margin improvements during the quarter. We also -- as I mentioned, I believe, on the last call, we have switched our hosting provider to GCP. And that -- if the hosting environment remained constant, which it likely won't, that is also a significant reduction in that COG portion of -- in that COG item. So it's a long-winded way of saying that we expect there will be levers for us to pull on a go-forward basis. We are in the range currently of 75% to 80% long-term gross margin.

[Operator Instructions] There are no further questions at this time. I will now hand it back to Mark Douglas for closing remarks.

I just want to say thanks, everyone, for attending the call. We're very excited about the results for the quarter and, honestly, even more excited for Q4 and beyond. So we'll see you on future earnings calls. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.