Mntn Inc-a Aktie

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.

Thank you, everyone, for joining. My name is Ron Josey. I cover the Internet sector here at Citi. And look, I'm excited to have with us today, Mark Douglas. Mark and I, we've known each other now for 3, 4, maybe 5 years or whatever. And so you're the Co-Founder, President of Mountain MNTN. And we'll start this process here. Just a quick overview. Mountain is a performance, we call it PTV, but performance, Connected TV ad platform. 93% -- correct me if I'm wrong, Mark, 93% of the advertisers on Mountain are new to TV advertisers....

97% as of the end of Q2.

Perfect. 97%. And I believe the customer base grew by 85%.

Yes, year-over-year.

So to say there's demand is maybe an understatement, right? Like we're seeing lot of benefits. So with that, Mark, welcome. Thanks for coming. Excited to have you here.

Thank you. Sure.

So we're a few months post IPO, which is pretty exciting. What I wanted to do is maybe take a step back and...

You know our IPO was the weekend before Memorial Day.

That's funny.

Here we are the weekend after Labor Day.

I'll never forget that.

That's how you bookend things.

That's great. Well, let's talk to us about your background first and foremost, as we get into this. So I would love to hear more about your background about the opportunity of Performance TV overall. And then when you think about the value prop for advertisers, how does Mountain differentiate itself?

Sure. So in terms of my personal background, I'm a self-taught programmer. I actually grew up in New York City, taught myself to code while I was growing up. And so within Mountain, I spend at least 70%, 80% of my time kind of on product and focusing on customer needs, product. The nice thing is anything that we think of talk about -- I don't have time to code it myself anymore, but I'm capable of coding it myself. So it kind of gives us kind of, I think, more ambition.

Makes you a little dangerous too. You know it can be done.

Yes, exactly. And so -- and I was at Oracle working with Marc Benioff, Larry Ellison in the early days, and I was -- they've done a series of start-ups was at eHarmony, when eHarmony kind of grew and it was Match.com and eHarmony back in those days. So I've been through a number of things. And Mountain, we're focused on Connected TV advertising, but specifically for performance advertisers. So essentially small, midsized e-commerce companies, travel brands, subscription service, basically the brands that previously did most of their marketing investment on search and social but didn't have access to TV.

And the interesting thing about -- to finish answering your question about television, I think that's like just -- I think it's intuitive, but people don't really think about. The largest consumer engagement platform in the world is television. So more people watch TV a day than use social media. The numbers, I think, for TV are about 5.5 billion daily users watch TV, social is in like 3.8 billion, yes. And so you have this incredibly large consumer engagement platform that has been really undermonetized because the large media companies, the Disneys and others, instead -- they focused almost entirely on about maybe 1,000 large global brands and have entirely ignored kind of the midsized brands, the smaller brands that are really the big growth drivers in the world and are going to drive the growth in this industry. So we saw connected television.

So let's say, what was the reason for that? Well, it was really old technology. We brought literally broadcasting out of signal. With the advent of Connected TV, we saw an opportunity to say, okay, now this is a true digital platform. So we can -- instead of having this undermonetized media platform, which is television, we can now start to bring in thousands and then tens of thousands, eventually hundreds of thousands of smaller and midsized brands and really fully monetize that and build scale, and that's what the company is doing.

And so let's talk a little bit about the change in industry from the 1,000 advertisers to now the SMBs overall. The unlock event was the technology that allowed it, right? And so talk to us about where we are in that sort of transition, if you will. I don't know if you can call it transition anymore, just given I think streaming now has overtaken linear here in the U.S. So tell us where we think we are in the transition, not from a consumer perspective, but from an advertiser perspective.

Right. So the advertisers, they -- so -- well, we'll talk specifically about the SMB opportunity. So when we first entered the market, the first thing, you have -- when I say small, midsized, I'm talking like brands like ThirdLove or Western Governors University or the -- just tons of emerging or midsized brand that, again, we're entirely focused on search and social. And by the way, don't want to be. They don't want to be like have all the eggs in the Meta basket or the Google basket. They want their marketing to be diversified because they're relying on these platforms to help drive their growth.

And so the ability to then bring TV in the mix. So what do they need? Well, one is the streaming the TV ad is the easiest part of what we do. The hardest part is determining who to stream it to right? These are -- our customers, when they come on board on our platform, they average their initial spend averages. I think it's right now $28,000 a month. So they're not spend -- they're not coming on a platform spending millions. So that money has to be really super targeted at who their next customer is going to be. So we had to build out the entire targeting platform. 97% of our customers are first-time advertisers, they don't have TV ads when we meet them. So we had to build out a way for them to get the commercials at a very reasonable costs and we call that QuickFrame.

The -- we talked about on our last earnings call, we're about to launch some AI tools. Yes, they're compelling. It's incredible actually what the generative AI models capable of doing right now. So we had to help them with the TV commercials. 97% of our -- now about 92% of our customers don't use an agency. So we had to give them a full self-serve platform that they can understand, that gives them kind of -- they can come on to, they don't -- we don't need a big services team to help support them that they can feel comfortable launching their first TV campaigns and then more campaigns and increasing their budget.

So the self-serve platform, the creative tools, the targeting technology, all the reporting -- how do we measure what the impact of these campaigns are. So all of that plus more had to be built out, plus the actual bidding platform to actually stream its TV commercials, which I think most people tend to focus on, but ironically, is the easiest part of what we do is actually like streaming a TV ad.

But even that is a significant scale. We have -- when we started -- we saw about 100,000 TV commercials a second that we could buy that we could bid on as of this month, that will cross 4 million a second. So all the technology that basically, again, bid on it, decide when to bid, who to bid, how often -- how often should this consumer see the commercial? How are they responding? Should we -- should the customer -- it's just like a whole tech stack made this possible. I told you I spent a lot of time on tech. You shouldn't ask me -- I'll just keep going on and on.

I think that's what makes it differentiated to be completely honest here. So let's talk about that 4 billion number. Because I think...

4 million. Exactly. Per second.

4 million per second, right? That's a tremendous amount of supply that the system is seeing that needs to be targeted to where -- I want to understand about the inventory and supply that you have. And so I think Mountain works with about 150-plus or so networks directly. And it's 15- to 30-second spots, if I have that correct.

Yes. These are truly TV commercials, while you're watching your favorite shows on television. Including live sports.

Completely. And maybe Netflix later this...

Netflix is not really fully in the market in programmatically, but I think in Q1, Q2, they'll be ready and will be ready.

Interesting. That's exciting. So I would love to hear more just about your content relationships, specifically, how you created the -- how you built these relationships, these 150-plus networks and allow you to offer that type of inventory to your advertisers.

So there -- in terms of CTV, the way it works, there's 3 ways for -- to acquire inventory, meaning you're watching a TV show and there's a block of ads, 30 second -- generally 30-second commercials, how do those get bought? So one way is you're a very large brand, you have an agency and they go and negotiate a deal directly with the network. And people think of that as like an upfront. And even though this is now streaming rather than linear, that process remains largely unchanged. The second way is you can just buy an open market, meaning what there's 4 million ads a second available.

I'm just going to jump in there through some type of DSP platform and go buy that. And that's a lot of what Trade Desk does. The third way is you do direct deals with the streaming networks, but to programmatically buy that inventory so you can do it with pinpoint accuracy. And that's how Mountain does it. So we have negotiated deals with pretty much every ad-supported streaming network in America. So that includes Disney, Warner Bros., HBO Max, Paramount, all of them. The -- and then we also have deals with the TV manufacturers, Samsung, LG, they all -- and then everyone's probably heard of [ fast ] networks. We have deals with pretty much every [ fast ] network.

And in those deals, because $0.97 out of every dollar spent on our platform is net new revenue into the industry, we have negotiated deals that represent the volume we're bringing and that this is literally that network's growth channel. So we're essentially almost becoming like a walled garden around the entire TV industry where we are bringing new consumers in the market. I'd like to say that the -- this market is a lot like the job market -- like most of the jobs in America come from small business. Well, most of the new revenue in this industry is going to come from small business and Mountain is doing that scale. So that makes us almost like the growth channel for every streaming network. And those, again, are through negotiated deals at pricing that's very fair to both parties.

And are these negotiated deals, are these longer term in nature, shorter term in nature or...

They're not like an upfront like a guarantee. In other words, we forecast -- I mean, it's really easy, especially now because I just look at our numbers. But we say we're forecasting that we're going to grow -- we can grow, our spend this much. And based on that, these are the terms that we're looking for, and the network agrees to that. There's no like if we didn't spend as much as we were forecasting, we get penalized or anything like that because the numbers just keep increasing. So there's no -- it's pretty friendly, but it's more of a nature of this pricing will likely generate this much demand from the customer base.

Understood. Yes. And we're going to get into the customer base in a second. While we're talking a little bit about the inventory and the tech, talk to us about the measurement tools, like the capabilities to really target myself or whomever that's watching live sports or whatever it is.

Yes. So for the targeting AI has helped obviously a lot. So when 2 years ago, our customers would come into our platform and they would describe who their customer is. And then we use that to kind of as a profile to then find that using a lot of data, a lot of retail media data at this point, third-party data. We use that in order to then say, okay, this is the consumer looking for, let's use all this data to find them. Now we tell them who their customer is who using generative AI. And so we give them a profile of who their consumer is often kind of -- it's unbiased, right?

It's just like based on all publicly information -- public information about your branded products, this is who would buy it, and these are the other types of products they would likely buy. And that profile then goes in machine learning models against really vast pools of data. And in that regard, the all performance platforms do. In other words, Meta does the same thing, Google, especially Meta, Google a little less because they have search terms. And so that then helps us to find the consumer. Again, that's the critical piece of what we do. Then connecting with the TV ad, we actually call that Mountain Matched because I like to say we're matching consumers with brands, right?

And then -- and the TV ad is the means to make that match. And then from there, we measure it. And so we measure it basically, you're watching TV, you're watching show in the ESPN, you pull out -- while you're watching, you get streamed 30-second commercial, you like what you see, you pull out your phone, tablet, computer and go visit that brand. We have tracking pixels live with our entire customer base in order to measure the ad streamed at 8:15. They visit your brand at 8:20. They went on to purchase a day later. We see all of that. And that -- and all performance platforms do that. I don't actually -- it's a differentiator in the TV industry because we're the first company to do this largest still because we're entirely focused on performance marketing, the largest still the only, but like all performance platforms measure what the -- yes, pixels to measure what -- how the consumer respond. [Technical Difficulty] And that's critical to these -- to our customers.

Let's talk about your customers here. 97%, right, that are first-time TV advertisers. You talked about SMBs. I would love to hear just what does the average advertiser look like on the platform. Walk me through the process, and then we have very specific -- I want to understand, we lowered minimums. I think we have some self-service here. There's a lot to go through. But talk to us just about the average advertiser...

Yes. So generally, the person is a marketer or VP of Digital Marketing or Director Digital marketing in an e-commerce brand. It's largely direct-to-consumer brands. We have started to work also with B2B brands, but it's almost -- it's more than, I think, 86%, it's direct-to-consumer brands. And they are looking for a way to expand their marketing beyond search and social. They use e-mail for retention marketing, meaning to get try -- you already bought from them and they wanted you to buy again, so they'll send you 20% off this -- literally this weekend, you probably got tons of e-mails.

Now you get them in text messages.

Yes, in texts and it's hard to stop them in text messages. They -- but the core of that -- they don't -- I think a lot of people think of the advertising business as people want to buy ads. And when you're a big global brand, that is the case. But when you're a direct-to-consumer brand, you don't want to buy an ad. What you're trying to buy is consumers that potentially are going to be interested in what you're offering, right? And so like you don't pick up the phone and say, Google, I want to buy ads from you. You say, I want to get traffic from you that's going to be interested in my product and then use keywords to describe what would -- they would be interested.

So in Mountain, again, they're looking for that traffic, and it's that direct-to-consumer brand who, again, was cut off from television. It's like I don't have the budget, I don't have an agency, I don't have -- nor do I want an agency because they're slow and expensive. I don't have TV ads, but I really want to get my brand onto a bigger screen against not just user-generated content on like Instagram, but against professionally created content. Like I want to advertise on an NFL game. I want to -- I hear live sports constantly or I want to be on White Lotus on HBO Max for the people who have the ad-supported versions and stuff like that. So they -- but it's that same type of performance marketer within that direct-to-consumer brand that becomes a Mountain customer and adds us into their marketing mix.

And so talk to us about how this -- and so the direct to is a key part, I think, having a direct relationship with the brand. Talk to us about awareness of Mountain. So how does that marketer, the VP or someone who's in charge of digital marketing, how do they know about Mountain? Question one. And maybe a secondary question, post IPO, have you seen any benefits from just sort of, oh my god, I've heard about Mountain [ Next ] all over the place now and any benefits post IPO?

Yes. So about 77% of our revenue is inbound. So 3 years ago, roughly 3 years ago or 3.5 years ago, about 2% of our revenue was inbound. So 98% of our revenue was someone on our sales team sending you e-mail saying, "Hey, did you know you could -- your brand could be on all these TV networks and drive your next purchases and stuff like that. Now 77% come to us and that percentage is still growing. We think our goal -- my Head of Marketing is actually in the room. So his goal -- I'll say his goal, not my goal, is to get that to 99% is inbound. So how we do that is pretty simple. We actually use our own platform.

So Mountain actually streams Mountain TV commercials into the homes of our future customers in front of marketers in the U.S. and just shows them what's possible on TV while they're watching TV. And then they go to our website, they can -- just like they can create a Google AdWords account or Meta ad platform account, they can create a Mountain Performance TV account and become a customer sales cycle averages 19 days from the time they see an ad, come to our website, and from time they come to our website, they're, on average, a customer within 19 days, and they go live within about 39 days. And within that 39-day cycle, the vast majority is just them getting a TV commercial. So that's -- we expect that to shorten also.

And I think you hit the nail on head. Before they couldn't do TV because it was no budget, no agency, no creative and now a lot of that is sold from what the team is doing.

Yes. And even a lot of bigger brands now are like, why would I want to spend months with an agency when like we -- some of the creative tools we have with QuickFrame, I've seen some very big brands like create commercials like in really short periods of time because they don't want to spend months and a lot of money doing that either.

So one of the things that I found really interesting throughout this whole process and getting to know you over all these years is the -- the minimum thresholds of advertising a Mountain have been coming down, and that's eliminating or removing a lot of barriers to entry. So Mark, talk to us about where we are on minimum thresholds, the decision to lower them, where do we go from here? Would love your thoughts.

Sure. So the way to think about it is you mentioned -- sorry, you mentioned early that demand doesn't seem to be too much of a problem. So we're growing pretty consistently at about 35% quarter. Our guidance is lower, but -- because we want to be conservative. But we grew 35% quarter year-over-year. Last quarter before that numbers that were in that range, I think, a bit higher. If anything, we're holding back demand. And the reason for that is the smaller the brand, the harder it is to find their consumer, okay? So the key to our growth is not like hiring a lot of salespeople or anything like that is the targeting and measurement technology.

So if they come on board and they bring a marketing budget, how accurately can we identify their consumer? Because if we can really pinpoint their consumer, then putting the right ad creative in front of them, so they'll go and visit that brand and hopefully purchase. Again, I keep saying like streaming the ad is the easy, right? It's finding that consumer. So we actually -- the main driver of our growth is the targeting technology. So it's also almost -- I think about 40% of our head count is engineering, and that's actually increasing. And it's just a large portion of that is the investment in the targeting technology. And so that's what's really critical in that growth story. I'm not sure I answered...

No, I think you -- I mean, so we talked about how the barriers to entry for regular TV and then the targeting is what's bringing people on. But then we did lower minimum threshold.

Right. So now correlating that. So as we keep investing in targeting, that enables the pinpoint accuracy of finding that target consumer gets better and better and better, which does 2 things. One is it allows us to lower our minimums because we can allow smaller and smaller customers to take advantage of the platform. And two, we can literally just keep opening up our marketing, so we bring customers on faster and faster. Yes. So it's a very different profile from, you think, most B2B companies where the growth is driven by like a heavy investment in sales, and it's often unprofitable. I think we've been profitable, something like 24 out of the last 27 quarters. This is like technology, technology, technology, it drives small and smaller business, which allows us to grow faster. And that's why our customer count, the customer growth rate grew 85%-over-year.

Right. That was a big number. And so maybe last one, a few more, but just would love to hear your thoughts on how budgets evolve on the platform, but also for the audience insights on net run retention rates, like revenue retention rates, which I think we've talked about in the past.

Yes. So budgets grow, a customer comes on board, and they normally come on board for a 3-month trial. And all performance marketers essentially have a trial budget that they're always looking for like the next big thing. And again, if we go all the way back to the beginning of our conversation, television is the largest consumer engagement platform in the world, period.

And so -- and -- but you have the vast majority of the SMB market has been not taking advantage of that. It's just been -- whenever anyone talks about television advertisements, they talk about the big Super Bowl -- whatever it is. It's also -- one thing about TV also, like I just -- it was a holiday weekend. I went travel.

Where did you go?

I went to Dominican Republic. Yes. And there's -- and I did -- while you're traveling, you want to be entertained, right? So besides the beach and all that kind of stuff, watch some TV. There was no point in the vacation that I said to my girlfriend, "Hey, why don't we watch some YouTube together, right? It just doesn't happen. YouTube plays a big role. Instagram plays a big role. All these is effectively entertainment platforms, but still the -- like the entertainment medium that you're going to do together is [indiscernible]. You're not going to like turn your phone on in crowd or around your phone or tablet, you're going to watch like this new -- what's the new show that on Netflix or what's the new show on HBO Max or whatever. And so it's just a very different medium.

And again, it's why brands want to be connected to like that kind of experience with the consumer is really paying attention. So again, if you make that to really precise targeting technology where that while they're watching they're seeing the right brand, that's going to produce really good result. And so going back to your question, they come on board, they have a test budget. The trial averages 3 months. It's not contractual. You don't sign contracts with Meta or Google. You just come on, create a Mountain Performance TV account, get going, launch your campaigns. If you're seeing good performance, then you're going to spend more. If the performance is okay, you're probably going to spend.

Fine-tune, may be.

Yes. So budgets grow, a customer comes on board, and they normally come on board for a 3-month trial. And all performance marketers essentially have a trial budget that they're always looking for like the next big thing. And again, if we go all the way back to the beginning of our conversation, television is the largest consumer engagement platform in the world, period. And so -- and -- but you have the vast majority of the SMB market has been not taking advantage of that. It's just been -- whenever anyone talks about television advertisements they talk about the big Super Bowl whatever it is. It's also -- one thing about TV also, like I just -- it was a holiday weekend. I went travel. Where did you go? I went to Dominican Republic. Yes. And there's -- and I did -- while you're traveling, you want to be entertained, right? So besides the beach and all that kind of stuff, watch some TV. There was no point in the vacation that I said to my girlfriend, "Hey, why don't we watch some YouTube together, right? It just doesn't happen. YouTube plays a big role. Instagram plays a big role. All these is effectively entertainment platforms, but still the -- like the entertainment medium that you're going to do together is telling. You're not going to like turn your phone on and crowd around your phone or tablet, you're going to watch like this new -- what's the new show that on Netflix or what's the new show on HBO Max or whatever. And so it's just a very different medium. And again, it's why brands want to be connected to like that kind of experience with the consumer is really paying attention. So again, if you make that to really precise targeting technology where that while they're watching they're seeing the right brand, that's going to produce really good result. And so going back to your question, they come on board, they have a test budget. The trial averages 3 months. It's not contractual. You don't sign contracts with Meta or Google. You just come on, create a Mountain Performance TV account, get going, launch your campaigns. If you're seeing good performance, then you're going to spend more. If the performance is okay, you're probably going to spend.

Fine-tune, maybe.

Yes. Well, yes, actually, you're right. They're going to fine-tune and really try to make this work. The nice thing about our customers, they really want -- like they're committed. They really want this to work. Net retention rates are 112%.

That's after the trial. So they do the trial for 3 months. And then once you're on, you go and that's say $28,000 a month on average -- first, whatever.

So some customers will really scale their budgets. Some will keep it about the same. But the goal is they keep increasing. And then we keep investing in technology to give them more and more reasons. We have a pretty big product road map. I mentioned on our earnings call, we have some -- at least one product we're announcing this month, which is just an expansion of what we are currently doing. So we -- in order to help those customers continue to expand, we keep investing in the performance tech and other tools to make that possible.

Let's get to product in a second. We get the question all the time. How is Mountain different than, say, a Trade Desk, for example. So would love your thoughts on if there's any customer overlap. I think you mentioned Trade Desk earlier in our conversation, but -- any insights on that?

Yes. I mean Trade Desk services an entirely different segment of the market. So I've known Jeff Green, I've known Trade Desk for quite a while actually. They've been focused on those large global brands. So their customers are generally large agencies and providing them those agencies a platform to service the needs of those large brands. Those large brands, our customer and their customer just looks very different. So the larger brands tend to be focused more on reach and frequency, just kind of brand building over a longer period of time. They can afford to allocate that budget without having necessarily much direct measurement against the benefit. Our customer they expect to see a return within the same month.

Right. Their small businesses.

Literally, like usually, the -- what we call the attribution windows, meaning I spend and when did I see the return, they default to 14 days. So it's not like you're going to spend for the year and then do a brand survey a year later and see how lift your brand. This is I'm spending right now within 14 days on average. I want to see how much more revenue that drove to my business. And then I want to compare that to Meta and Google, right? So we really think our competitor or other performance platforms, which is actually great because the customers are willing to move budget. They're willing to -- they want to be -- just like investors want to have a diversified portfolio. Our customers want to have a diversified marketing portfolio. They want to be spending on e-mail, search, social, Performance TV, Amazon search. They want in order to grow their business.

So we're going to open up to questions. Just last one from me, and then we'll open up so get your questions ready. We sort of danced around this, but definitely, we want to talk about QuickFrame AI.

Awesome.

Is this the product you were teasing about before? Don't -- this is...

No, that's fine. It's not -- I've talked about it and I talked about at CNBC. So I think it's considered public information. Yes. So the -- our first way of tackling the problem of our customers don't have TV commercials, we bought a company called QuickFrame, December 31, 2021. QuickFrame is a network of about 5,000 independent creators who our customers can get matched with. So it's like Uber for creative. You come on board and you say, I need creative and we match you with the creator and then they build creative for you for between generally $2,000 to $5,000. They do it for search and for -- not search, for social also. So for Instagram, TikTok and Mountain, you can pick any combination that you want. And obviously, with AI, that's an opportunity. We're about to release QuickFrame AI. I'm really excited about it.

And the creative I'm seeing out of it is kind of astonishing. What some of these generative models, we're partnering with Google on it. What some of the models are capable of doing is incredible. But...

Google Veo...

Google Veo. Yes. Veo 3. But enabling an average like kind of person to get back incredible put out of it is hard. So that's creating part of value. We're also bringing our creator network. So you can go in the AI platform, and you can do it yourself or you can hire professional for a few hundred dollars, and they will basically help create AI commercials for you. So we're pretty excited about that.

Timing for that, this is sometime in the back half of this year?

It's early in Q1 at the latest -- Q4, I'm sorry. It keeps it at the latest and possibly even this month.

Any questions from the audience? There is a mic there if you want to..

Yes and I can hear.

Yes, we can hear you too.

Yes. So we call in performance marketing, we call that share of wallet. There tends to be this -- people tend to be obsessed with CPMs in advertising, but especially in the TV industry, but Google and Meta are not obsessed with CPMs, they're obsessed with share of wallet. What percentage of the marketing budget are they getting. Meta, we believe, has the highest share of wallet in the industry, somewhere just below 25%. So meaning company, that percentage of the whole marketing budget has gone to Meta. Google, we think is actually roughly in the 17%, Mountain is in the low teens, like on average with our customers.

So the like 12% to 14%. And by the way, I think you asked -- lightly alluded to has anything changed since the IPO. It's easier to get that percentage up. Because remember, the customer is not allocating expenses in their mind, they're allocating revenue. They're saying, what percentage of my revenue is going to come from Meta what percentage going to come from Google, what percentage is going to come from Mountain. So if they -- we want that percentage to be higher, they have to have a lot of confidence that we're stable and we're growing and that they can count on us. So that's the big thing. It's becoming easier to increase that share of wallet for us.

That's great. That big breaking barriers is helpful. Any other questions we have maybe a few more seconds. Yes.

I just want to piggyback on this. How are the new advertisers doing? You talk about a share of revenue. Are you seeing your customers grow revenue? Or are they just kind of small and stagnant and trying to see growth again?

Yes. The -- our goal -- we are. So they -- but that's a -- I wouldn't say that has changed. That's been something consistent. We kind of track it that a customer comes on board, they do a 3-month trial. They incrementally increase budget, then they go through cycle of validation. So if you follow performance marketing, you probably have heard like incrementality or mix media modeling a multi-touch attribution. So the customer kind of does 3 months, they keep spending, but then they're like before we increase spend further, we want to do some validation. And we provide some of those validation tools plus we're partnered with a lot of other companies on that. So are Meta, Google, all performance platforms do that. And then we see their spend peak at about 10 months into the relationship.

One of our things we're focusing on right now is to shorten of 10 months. We think if we can get them ramped faster by -- they can increase their performance faster during the trial and then get them through the validation phase. By the way, this is not explicit, it's just kind of -- it's not like we write -- we scan them a contract and say, at month 4, you're going to do validation. It's just kind of how it works. If we can get them through that phase faster, then we can get them that can bring that 10 months down and that would have a very positive -- yes, it would add a growth driver to our business.

Makes a lot of sense. With that, I think we are over time. So Mark, thank you very much. Congrats on all the success so far, and there's to more.

Thanks. Appreciate it.

Thank you.

Hello, and welcome to the MNTN Second Quarter 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Brinlea Johnson. You may begin.

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

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 our future results, please see the Risk Factors section of our IPO prospectus filed with the SEC on May 22, 2025, 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 IR website.

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

Good evening. So thanks -- thank you for joining us on MNTN very first earnings call as a public company. Today marks a major milestone not just for MNTN but for the thousands of brands we serve and for the future of TV advertising. We build MNTN around a bold mission of democratize TV. Our goal is simple, to make connected TV the most effective performance marketing channel and to give every brand from startups to household names, the tools to succeed on television. On behalf of the entire team, I want to thank our investors, partners and shareholders for your belief in our mission. The -- we are not only helping brands advertise better we are helping them grow smarter.

Let's get to the headline. We delivered a strong Q2. Second quarter Performance TV revenue grew over 35% to $67.8 million, with total revenue of $68.5 million, driven by our unique value proposition as well as our ability to efficiently attract new customers to the platform and increased usage for existing customers. Gross margin improved to 77% and adjusted EBITDA grew 92% year-over-year and a record $14.5 million. We ended the quarter with $175 million in cash and cash equivalents. But our quarterly results only part of the story. Our strength lies in how well our strategy is aligned with the state of the market and the need to mine marketers. Marketers today are navigating a rapidly shifting landscape fueled by automation, rising customer acquisition costs, AI-generated content and the increasing pressure to do more with less.

That's why Performance TV is resonating. It's not just an evolution of connected TV. It's a new category altogether, one that combines the reach and storytelling powered television with the precision, speed and accountability of digital. And MNTN is leading the way. Our platform is purpose-built to close the gap between where audiences are spending their time and where ad dollars are still catching up. Nearly half of all TV time in the U.S. is now streamed, yet only 1/3 of TV ad budgets have followed.

In the past 12 months, thousands of brands have run campaigns on MNTN, many of them seeing TV drive revenue for the first time. In fact, the number of live customers on our platform has increased 85% year-over-year, a majority of which are small and midsized businesses. These aren't legacy advertising titans. They're growing challenger brands looking for the next engine of acceleration and finding it with MNTN. Since 2019, ads run through MNTN have generated over $27 billion in revenue for our customers. And notably, 97% of our customers that launched in 2025 had never advertised on TV before using them. MNTN is turning television to a growth engine for the small to midsized businesses that were once priced out or left out. While others chase the top 1% of advertisers, we've gone the other way, making Performance TV accessible, measurable and effective for brands that never thought they could afford it, let alone scale with it.

This is where MNTN shines. Our Performance TV platform is the most advanced software and connected TV. We build Performance TV on a simple belief that TV advertising should be effective, measurable and as easy to buy as search and social. This is TV advertising engineered for outcomes. Our platform combines the creative powered television with the intelligence of performance marketing. Brands handle the rest -- our platform hands the rest, targeting optimization, attribution are all built in. This is what sets now in the part. Every campaign is optimized for forward performance.

Three key proprietary technologies make this possible. MNTN Matched is our proprietary AR targeting engine. It matches brands with the viewers most likely to convert based on real behavior, intense signals and household data. Verified Visits is our cross-device attribution system. It connects a TV commercial downstream action like a purchase or a site visit across more than 400 million devices in the U.S. with household level accuracy.

MNTN's programmatic bidders our AI-powered proprietary bidding engine. It automates media buying, optimizes spend in real time and processes hundreds of thousands of streaming TV ad requests per second, maximizing performance across trusted, professionally created premium streaming inventory. This is what transforms TV from a top-of-funnel awareness play into a direct response growth engine for a challenger brand.

Our competitive moat isn't just technology. It's also a year's long lead in understanding how to make TV work like digital for everyone. As for the road ahead, we remain confident in our momentum in our mission and in our market opportunity. We're raising the bar on performance and making TV a viable growth channel for brands of all sizes.

Thank you again to our investors, our shareholders and our partners. Your belief in MNTN is helping us lead a major shift in one of advertising's most powerful medium and we're just getting started. Now I'll hand it over to Patrick to walk you through our financial results in more detail and share our guidance for Q3.

Thank you, Mark. As Mark mentioned, we had a very strong second quarter, our first quarter as a public company. We delivered strong second quarter results with Performance TV revenue growth of 35% to $67.8 million. This performance reflects continued customer adoption of Performance TV, particularly among small and medium-sized businesses. For a bit of clarity on revenues, on April 1, 2025, the company closed a transaction that transferred its interest in Maximum Effort to an affiliate of its original owner. Maximum Effort continues to play a key role in our brand and creative strategy just as a separate company. Maximum Effort continues to be a big part of MNTN.

Adjusted for this transaction, our total revenue grew 34% year-over-year to $68.5 million in Q2. Without adjusting for this transaction, that is including Maximum Effort in Q2 of '24 and not in Q2 of '25, total revenue grew 25% year-over-year.

Turning to gross profit. Our gross margin for Q2 was 77% compared to 70% in Q2 of 2024, an increase of 700 basis points. Looking ahead to the second half, we are taking further steps to drive additional gross margin improvements, specifically reductions in hosting costs. On the OpEx side, total operating expenses for the quarter were $48.8 million, up 21% from Q2 of last year. This increase was primarily driven by 2 things: one, investment in technology and development; and two, marketing to support customer growth as we move down the long tail.

Sales and marketing spend was $24.3 million. We continue to invest in customer acquisition and brand visibility while maintaining efficient unit economics. Technology and development spend was $10.7 million. We remain committed to driving differentiated results for our customers through product innovation and improvements like MNTN Matched. [ GAA ] totaled $13.1 million for the quarter.

On a GAAP basis, our net loss was $26.2 million. We concluded our initial public offering in the quarter. And as part of our public offering, convertible notes were converted into cash and equity which added $23 million on a onetime charge to net loss. A $26.4 million expense was incurred on the extinguishment of the convertible notes, which were paid off in the IPO. This was partially offset by a $3.4 million net gain related to fair value adjustments on warrants and convertible notes.

Adjusted EBITDA for the quarter was $14.5 million, up from $7.6 million in Q2 of 2024, an increase of 92%. The company's adjusted EBITDA margin was 21% compared to 14% in Q2 of 2024. This improvement was driven by increased operating leverage throughout the business. We have a very strong balance sheet, ending the quarter with $175 million in cash and cash equivalents and no debt outstanding. We ended the quarter with 72.6 million shares outstanding. And looking ahead, we're confident in our momentum and the underlying health of our business.

For Q3, we expect revenue in the range of $69.5 million to $70.5 million, representing a 22.5% year-over-year growth at the midpoint. We expect adjusted EBITDA to be between $13.5 million and $14.5 million, reflecting continued leverage as we scale the business while remaining disciplined in our investments. As a reminder, we will continue investing strategically in R&D and go-to-market capabilities to support our future growth. We remain focused, though, on delivering operating leverage over time.

To wrap up, we're pleased with the results for this quarter, our first as a public company, and we believe we're uniquely positioned in a massive and rapidly evolving market. Performance TV is unlocking new growth for advertisers, and we're proud to be leading the way. Our financial performance is strong. Our market opportunities expands it, and we have the team, technology, platform and capital to execute.

With that, we'll open the line up for questions.

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

Congrats on your first earnings call and the strong results. I had a couple of questions. Mark, clearly, you guys are seeing very strong trends. Can you just talk about the momentum you're seeing right now? And then kind of as you look out maybe the 2 to 3 things that you're most excited about? And then second question for Patrick. You guys have solid margins and free cash flow dynamics already. But as you kind of look out from here, can you just talk about how you see margins trending and what the key levers are?

I'll start -- thanks for the question. I'll start with the first part of that. So I think the key thing we've started to see, and I can't completely give you a metric on this is that marketers for our -- in our target segment, which is small and midsized businesses, the SMB market, they've gone from being surprised that they can use television to now they're really assuming they can. So it's just kind of -- I think a lot of that is due to our market -- our company's marketing. And you're seeing like more content about how to do performance marketing on TV and we're as the -- essentially the creators of the -- first-mover advantage to creator into the segment and market, we're really benefiting from that. And you can see it reflected in some of our stats, like 77% MNTN's revenue now comes from inbound leads. And that percentage has gone up even since we did the IPO, the metric we had for the IP only 2 months ago. So we're just seeing all this for momentum.

In terms of what we're most excited about, I think it's the efficiency. So all of these customers, 97% of our customers have never advertised on TV before. So we're obviously investing heavily in AI. So we're doing AI targeting to help those companies find their next customer, AI creative to help -- and some things that we're working on there to help lower the cost of building television commercials. 97% of our customers don't have a TV ad when we meet them, although they have a lot of video. So we can help them through tools and through a network of creators in quick frame and part of MNTN have TV commercials at a very efficient cost.

And so -- and there are other areas we're applying AI to. I think if you look at our sales headcount, we haven't added head count in sales in over 3 years, and that's all due to gaining efficiencies and a lot of efficiencies are increasingly coming from our use of AI and the AI technology we're building. Now I'll pass it to Patrick for the rest of the question.

Yes. So Shyam, first of all, thanks for your kind words. So gross margin, our long-term target is 75% to 80%. And we have -- in advance of the Maximum Effort spin-out, we had been doing some things, but the real value in the increase in gross margin starts with the Maximum Effort transaction. And we have a couple of things planned during the course. And so we're sitting at 77% for the quarter. And that's a quarter in which we didn't have Max Effort and the creative costs. So that's a significant reduction.

Data, as you may recall, is a fixed COG. So we're now looking at the other two. One is hosting costs, which we are underway to reduce our hosting costs in a relatively significant manner, and that should occur during Q3 and part of Q4. Then we'll turn our attention to media costs, and we expect to generate additional gross margin improvements around media. So we're sort of sitting right now at the bottom end of the range. And so we expect with those hosting and media to drive us up higher in that range.

In terms of adjusted EBITDA, we're also on a journey there. That is a more balanced journey that is, we want to be profitable, but not at the sake of driving revenue growth. And so right now, we ended the quarter, I think, a 21% gross margin, and that leads to about 18% for the first half of the year, which is a pretty significant improvement, 92%. So 92% increase in adjusted EBITDA for Q2. And we'll end the year sort of in the -- I'm guessing approximately around the 20% gross margin -- I'm sorry, adjusted EBITDA with a long-term target of 35% to 40%.

In terms of components of OpEx, where we've continued to drive sales and marketing down a long-term range of $20 million to $25 million. That's directionally where the trajectory is. Gross G&A, $10 million to $15 million, same thing moving into that range and then technology and development where we're going to spend additional money on engineers to improve, maintain the product and develop new products, we're sitting in that range already.

The next question comes from Mark Mahaney with Evercore ISI.

I want to ask 2 questions, please. And congrats on the first quarter out of the gate. One of the things that you've been doing is kind of lowering the minimum spend in order to bring on kind of reach out to more small, medium-sized advertisers. Could you talk about the impact that's had on the business and where you are now in terms of that kind of minimum spend? And then secondly, Patrick, thanks for the disclosure on the reported versus the organic growth rate. Would that same sort of delta apply to your guidance for the September quarter, roughly a 10-point faster organic than reported growth rate?

Yes. I'll start off that question. Just talking about the product minimum. So if we go back a couple of years ago, our minimums per campaign per month were $25,000. Those now sit at $500. And essentially, our improved targeting 3 MNTN Matched has allowed us to open the platform and product to more customers. But right now, we're not seeing big adjustments in our average budget. We do anticipate that those will go down as we begin to scale with the 1.5 million advertisers in this market. And the other thing I'll say on the budgets. Remember, it's a bit of a choice for MNTN. We -- our go-to-market, we decide what customers we want to target, what size, and so that does give us a lot of control.

To the second part of your question, Mark. So at the midpoint of our guidance for revenue, we're at 23%. I think we'd expect high single-digit increases, both in the core business, PTV revenue, and then if you just adjusted the comparison to remove Maximum Effort revenue from Q3, also in the single high digits.

The next question comes from Andrew Boone with Citizens.

Congrats on the first public company quarter. Two please from me. One is I would love to touch on net revenue retention rates. And I understood you guys may not want to quantify this quarter. But can you please speak to kind of what you guys are seeing with existing customers and the trends there? And then secondly, VO3 has certainly changed in the game in terms of text to video creation. Can you guys just speak to where you guys are with QuickFrame AI and what is going on in terms of content creation generative AI?

Yes. I'll cover the first question just around net retention. So what, net retention is not something we're revealing now, but it's very, very strong. And to piggyback on to the last question, we're seeing very, very strong performance from existing customers and especially small businesses. Among our small business is really the S and small- and medium-sized business, we see the strongest net retention number of any of our segments. And so while we're moving down market, we're seeing very, very strong net retention and customer performance.

And I'll take the AI -- the quick frame AI. So MNTN, we have been working on generative AI tools for more than 2 years now. I made a comment about them on CNBC recently. So we generated over 1,000 customer facing fully AI-generated ads on a beta version of that platform in June, more than 18,000 in total in test, and we'll have some announcements in coming up about those tools and how they're being used and how they're helping our customers.

The next question comes from Andrew Marok with Raymond James.

First, I wanted to talk about the ZoomInfo deal that was announced recently. Just trying to get a sense of how big you think the scale of the unlock can be from that deal and the timing. I'm just trying to get a sense of from a customer perspective, is B2B overrepresented or underrepresented as a percentage of the SMB market versus large enterprises? And then I have a housekeeping follow-up.

Yes. So on the ZoomInfo, that's a partnership where ZoomInfo is essentially driving advertisers and customers to MNTN to use our software to grow their business. It's one of several types of those partnerships we have. I can't speak to what the numbers are going to turn out, but it's a good customer base who has a good understanding of our features and product and we're going to continue to expand those type of relationships.

Great. Maybe one for Patrick, just on the housekeeping side really quickly. I just want to make sure, it sounded like from a previous answer, that the gross margin is kind of -- this is what to assume the trajectory going forward. But just want to make sure that in the context of your EBITDA guide for 3Q, it does assume these kind of higher gross margins than we've seen in the previous few quarters.

No. It assumes, Andrew, there's going to be variability in the gross margin quarter-over-quarter, but it assumes a gross margin that is at the bottom of the long-term range in that general vicinity.

So I'm going to add just a little to what Patrick said. We -- there's an interesting subtlety to our gross margin, which is as our revenue increases in quarters like Q4, the some of our costs, like the cost to bid -- like people don't watch more television. So if we're getting 300,000 bid requests in the slowest quarter, Q1, and then you get 300,000 bid requests in your biggest quarter because people are watching the same amount of television, 140 million households in America. So just growth alone expands your gross margin, although we've been investing in other ways like reducing our hosting costs and others. But it's an interesting part of our business, and you can see it reflected in last year's numbers, where Q4 has the largest gross margin and Q1 is the smallest. So I don't know off the top of my head, but I believe this quarter is bigger than the largest quarter or close to...

No, it is.

It is. So Q2 of this year, which you would consider smaller has a higher gross margin than our biggest quarter last year. So that's something you can put in the spreadsheet and trends out.

Yes. So we have a fixed component, which is data. So that's fixed and so higher revenue all by itself drives increase in gross margin. And then the [ slop line ] and the variables are all less than the revenue growth line.

The next question comes from Rob Sanderson with Loop Capital Markets.

Also my congratulations on turning public. I've got a question for one of each of you. For Mark, maybe could we talk a little more about the GenAI tools for creative feedback from beta? And generally, like how much cost does creative add to PTV campaigns and any thoughts on how much more productive your community can get with these tools? Maybe it's too early to talk about this stuff as you maybe alluded to earlier, but I'd like to get any thoughts you could add.

For Chris, how has your go-to-market strategy been evolving? Any commentary on near-term funnel dynamics and maybe impact of the IPO. And then is there a large opportunity for other partnerships like ZoomInfo, do you think partner channels can become a meaningful part of your customer acquisition over the next, say, 2 or 3 years?

And then for Patrick, just curious the impact of Max Effort on gross margin and operating margin. Obviously, we assume the PTV platform business is meaningfully higher. But is there a way to like dimensionalize like the apples-to-apples expansion exclusive of the transaction, just how you're trending on a year-over-year basis? If you could add any color there, that would be great.

Cool. So I'll get started on the first question. And we're trying not to preannounce the software to be honest. But the -- with 97% of our customers never having advertised on TV before, we feel compelled to help solve that problem. So our initial solution as we acquired QuickFrame in December 21, QuickFrame is a network of thousands of independent creators, who can build television creative. They also build creative for Instagram, TikTok, YouTube, so ads for any of the platforms, including MNTN, and we've kept it that way. And that would be initial solution.

Now with AI tools, we think that, that is an important component, but we think the independent creator can still play a big role. Even if you lower the cost of creative, you can lower it to a point where like someone's choosing between spending their night using AI tools to build an ad or they can pay someone hundreds of dollars to do it for them. And so we intend to keep both Generative AI tools that we haven't launched yet, but we just spoke about, we've been testing as well as our independent creator network and kind of combine them together.

And by the way, we're totally open to partnerships also. At the end of the day, we're investing in -- there are other companies investing in Generative AI tools also. And we decided to invest because we didn't feel we could like delegate 97% of our customers needing TV ads when we meet them to other companies. But if they are using other companies, we are fully embrace that. And we also are fully embracing the partnership around the tools we're building. So we're not -- it was mentioned we are working with Google 11 labs and others on the best use of their generative technologies and putting them into an environment purpose built for television ads and social app.

Yes. And to jump into go-to-market, and I'll piggyback Mark's comment, what are some changes or challenges we've seen in our go-to-market it's become a lot faster since we went public. And so a part of that is the IPO. Another part of that is the creative tools we have, those AI tools that allow the customer is a lot much, much faster. Remember, our go-to-market is we take the e-mail addresses of our future covers. We upload that to our platform, which matches to their household, and we start serving TV commercials directly in their living room. If we want to expand into a new vertical or a new part of the market, we just need those e-mail addresses, and we can grow from there.

And Rob, on the question for me. So we kind of answered it when we talk to Andrew, and that is -- and I haven't sliced it exactly the way you're asking, which is what if Max effort had stayed what would the gross margin be. But it would have ticked up for the reasons that Mark and I discussed, which is there's a fixed component. So our revenue grew 25% year-over-year and the gross margin in the prior period was 70%. So we certainly -- and the 25% slope line is still much higher than the variable slope line. So gross margin would have gone up. I just can't tell you precisely where it went up. I have in the back of my head, what I think Maximum Effort contributed. But I don't want to go -- I had a target for that reduction in COGS and increase in gross margin. But I think it would have been a couple of points.

I want to add one thing to that. I just wanted to be very clear Maximum Effort and in particular, Ryan Reynolds in George Dewey are massive contributors to the building the MNTN brand and ultimately, the growth. And although we all agreed to spin out Maximum Effort because it doesn't really make sense to have like the world's most creative people and agency be dealing like -- yes, dealing with quarters and lawyers and accounts and things like that. The form of the partnership change but the function of meaning like how tightly we work together has not. And if anything, we've been working even harder together, and we're excited to still have them as to -- I can't even say still have them, and we're excited that they let us in their door to have such an incredible partnership because we're always amazed at what they do and they, I think, are always amazed that the technology we built and the sales organization and marketing organization that Innes is built for the company. So I just want to be very clear on how tight that partnership continues to be and how well we all work together.

Yes. I mean, just anecdotally, I have worked more with the Maximum Effort people since we've gone public than I did before.

The next question comes from Laura Martin with Needham.

Great results. I'll ask just 2. So revenue -- you said you had 85% growth in active customers, and you had 25% revenue growth, 600 basis points above our estimate. I would have guessed that came from Meta, Google Search and maybe YouTube. But Meta grew 600 basis points faster in revenue at 22%, and both Search and YouTube grew 13%, well above consensus estimates. So my first question is where are you getting your new customers from and your new spending if they are growing as fast as [indiscernible].

My second question is on mix. So you guys have brought performance to connected television, hugely differentiated, lots of pricing power. But Amazon is sitting in the area of performance called purchases. When you look at how your customers define performance, what percent of your advertisers define performance of an actual sale versus something else, a site visit, a website, a query, an email address. Could you talk about your mix of how your customers define performance on your platform?

Yes. And so remember, it's 35% year-over-year Performance TV growth. And where are we getting those customers, it's just part of our normal go-to-market. And so we have a process to gather brands and e-mail addresses, the brands we want to work with. We upload those to our platform. That matches to their household, and we start serving them TV commercials. The sales team will come in essentially on top over that.

In terms of the customer base and how they think about performance, most of our customers, more than 80% are using return on ad spend as their key metrics. So they have a tracking pixel live, they're essentially handing us that conversion data. We see each sale, and we're attributing it. We have B2B customers that make up a smaller fraction of that. They're still measuring to some type of conversion. It's normally a cost per action. And then some of our smaller brands, B2B and other brands, maybe a cost per visit to optimize towards.

And on the Meta question, I may have misunderstood that. So I think about it in terms of share of wallet. What percentage of a brand's budget do we have versus Meta. MNTN is in about the 15% range. And so we have 15% of a brand's overall marketing budget. Meta is the highest in the industry sitting at about 22%, where Google is at 18%, and they've been quickly declining.

And remember, Laura, it's not a zero-sum game. Our customers don't choose to use MNTN or Meta. All of our customers are using paid search, paid social, e-mail for retention marketing, MNTN for Performance TV. But definitely -- so all of our customers -- I'm not sure we could find a customer that is like, no, I don't advertise on Instagram. So the -- and that just grows over time. Obviously, our goal is that eventually that -- I of course, advertise on performance television with MNTN. And then we get the second part of the question?

Amazon, user by Amazon.

In terms of -- can you repeat your second part of your question, Laura, I'm sorry.

I just interested in how much competitive exposure you have to Amazon because Amazon actually drives the purchase. And I'm wondering if you guys have a broader mix, it doesn't always drive the purchase and therefore, is more protected from big tech competition.

Yes. So the majority of our customers are direct-to-consumer brands. We talked earlier about how we're expanding in the B2B brands. But the vast majority of our business is direct-to-consumer brands and their goal is to drive outcomes to drive purchases or to drive some other consumer action. And they -- and so they're looking -- and again, they're going to use MNTN -- they're doing search advertising on Amazon. They're doing streaming TV advertising on MNTN, they're [ search ] on the social, on Instagram. So we think Amazon's advertising business is obviously really important. It has grown tremendously, but it's not competing with MNTN's business. The TV business is, at this stage, so entirely focused on their own brand advertisers and focused on their inventory. So to the exclusion large -- largely excluding the 199 other streaming network in America.

But the highest -- our customers' highest outcome as a percentage is sales, like far and away sales.

Yes. The revenue the platform is driving and they're able to compare MNTN to these other platforms directly through the data we provide them as well as other third-party tools that pretty much all performance advertisers use.

The next question comes from Ivan Feinseth with Tigress Financial Partners.

Congratulations on the great Q2 results in your first quarter as an IPO as well. Where are you seeing the biggest growth in new customers, like what types of businesses or industries or products?

So we -- in Q4 of last year, we began to open the top of the funnel to move to smaller brands. And so we picked up a lot of small franchises like Orangetheory, their 600 stores along with a lot of smaller local businesses. We launched the ability to do radius targeting late last year, which has helped fuel that. But these are mom-and-pop businesses all across the United States.

And then are you seeing a lot of new customers go through the self-service portal or are they using your sales force? And if they use the self-service portal, does that help contribute to the margin expansion?

Absolutely. So we call it self-sign-up. We started expanding our self-sign-up efforts in Q2 this year. We're still using humans on a portion of that just as we perfect our process and all of our metrics.

The other thing, Ivan, it's been interesting because we thought we needed to do the self-sign-up or smaller budgeted customers. But it turns out the midsized customers will have self-sign up, too. So it's been an improvement across all type customer types.

The next question comes from Ron Josey of Citi.

Great to see the results. I wanted to ask maybe a bigger picture, Mark. In the past, you've just talked about TV is a greater engagement and scale and scale than other platforms online, like search and social and yet it's still undermonetized. Just talk to us about what unlocks the bigger picture of those greater engagement and scale online. So talk to us about the opportunity around PTV and CTV overall?

And then, Patrick, on the sales and marketing side, I would love to hear your thoughts on brand building and awareness and the investments that the team is making in the advertising front, given I think I heard headcount for sales is about flat.

Sure. So the first part of the question, it primarily has to do with data. So what makes -- there are 2 things that help to monetize TV better. One is bring in small, midsized businesses. This is a medium that has been predominantly -- it's been dominated by large brand advertisers focused on reach and frequency. The ultimate ad is the Super Bowl ad or the ad during Olympics or those kinds of moment. But for -- so small, mid-sized businesses will largely excluded.

I think that when MNTN -- the first campaign was launched on MNTN, it was the first time certainly a scale. We'll say, first time at scale that you could advertise on TV without having to have months of meetings and like find people to help you just like go to mountain.com, create an account. And you are live on every streaming -- now live on every -- pretty much every streaming TV in America.

So then the question is, well, the growth of this medium is going to come from small, midsized businesses. I'd like to say, just like in the job market, while the growth in jobs comes to small, midsize businesses in the advertising market, all the growth in TV advertising is also going to come small and midsized businesses. Remember, $0.97 of every dollar spent through MNTN is net new revenue into this industry because these customers have not advertised on TV before. So then it just comes down to, well, what makes us cost effective, what makes us measurable? What makes us fond for a small business, not a T-Mobile, every person in America can become a customer. I'm talking a business looking for the next 500 customers. What makes us work? It's data applied with machine learning algorithms and AI -- and at this stage now AI technology.

So that's the heaviest investment in our engineering effort is in finding that right target consumer. When you find the consumer, you put that brand on 65-inch television on the wall, it's got versus a 6-inch screen in your hand is going to perform. 30 seconds of time uninterrupted. So it's all about the data, the machine learning AI algorithms and then applying that to the SMB market, Patrick?

Yes. So on sales and marketing, it continues to hold the line on head count increases, but there was a condition precedent going down to the small, the long tail, and that was MNTN Matched. The other thing we did, just for a bad pun is the match that we use to get to the small businesses was additional ads ran to those targeted customers. And we did that in Q1, and we continued it in Q2. So it's driving more brand recognition in the small and medium-sized businesses and more leads into the company from that cohort of customers. So the increase is not headcount. It's actually marketing.

The next question comes from Matthew Cost with Morgan Stanley.

Just on the 85% customer growth, if you could just break down how much of that is coming from kind of your core midsized customer base that's made up, obviously, most of your customers historically versus kind of cracking into these smaller customers? And how much of that growth is coming from them?

And then I just want to maybe close the loop on a couple of comments you've made over the course of the Q&A. Is it fair to assume that you're actually getting more efficient even as you move down scale from a customer perspective? Just because of the adoption of self-serve and the efficiency with which you're acquiring them. So is your cost to acquire and serve customers improving even if you capture the smaller ones?

Yes, absolutely. And as we begin to acquire smaller advertisers, as you look at that 85%, it's the small advertiser makes up more of the count than the revenue. Our -- the majority of our revenue still comes from midsized brands over time as we continue to open the top of the funnel towards smaller brands. I'm sure that will change. And what was the second part of the question?

Off to acquire and serve those customers.

Cost to acquire. So we've become very, very efficient and effective with that. And Ali leads our marketing team is doing a great job there. We're using a lot of AI to improve our content, our messaging, our strategy and more. And as our own product gets more efficient with MNTN Matched, that makes our customer acquisition costs even better.

Yes. So I think the answer to your question is we have gotten much more efficient. We did it primarily for the small customer, but it runs now through the whole business. So we are getting great operating leverage in sales and marketing across all customer types.

Yes. Every -- like a number of businesses, they increased headcount just as kind of like a function of the way the business -- we're going to increase our revenue goal. We're going to increase sales headcount. At this point in MNTN, literally every new hire is a strategic hire. Like you can name what they're going to contribute strategically to the business. And there's no increased headcount that's just kind of a function of the revenue plan.

And so -- and one thing that's happening also, you can't really tell in our numbers but 1/3 of the company's headcount -- we started the 1/3 of our headcount as an engineering. We're now over 40% that's headed over 50%. So one out of every 2 people working in MNTN is in engineering where -- and again, strategic hires and then throughout the sales organization, the marketing organization, everything, every single person that joins the company has a specific reason to be here. They are not part of like just a spreadsheet that if sales revenue increases than this headcount will have to increase also. And that again gives us operating leverage as part of continuing to increase our EBITDA margin.

Yes. But both OpEx increases, Matthew, are targeted to drive revenue. So the engineering headcount is to maintain the product, improve the product, add functionality, add features and develop new products. All that drives revenue, and the same is true of the marketing expense. So the OpEx things we're doing are headcount related as it relates to engineering to drive revenue and then marketing focused on the sales and marketing side.

This concludes the question-and-answer session. I will turn the call to CEO, Mark Douglas, for closing remarks.

So this is my first set of closing remarks. So it's actually surprisingly hard to decide what to say. So I'll just speak from the heart. So one of the things I think a few of you know is I grow in New York City, I went to Aviation High School here in the city like in the city, not just in New York, in New York City. And I actually aviation -- I wanted to be a pilot. I wound up going into tech industry. I love what I do in tech. I love learning the code and then coding throughout my career. But I also learned -- love flying and some in jet pilot also. And one of the things you -- about flying that you really love is tailwind, like it's free speed. And so I said all that to say, I think at MNTN, we have a lot of tailwinds in the business right now. So we have customers that increase -- or prospects that increasingly recognize their ability to leverage streaming TV as a performance advertising medium and are coming to us to help them do that. We have in terms of all the efficiencies that we mentioned in sales and marketing. We have products that we continue to improve and continue to work on and release.

So I just honestly feel, and it's my mission to have the company just fire on all cylinders. I spend a majority of my time on engineering and focus on that. And so we just see it and to finish up the remarks is that performance marketers increasingly are learning about connected TV, MNTN is a conduit for that. We created that story. We told that story and we continue to -- we plan to continue to lead and most importantly, win in making that happen for ourselves, for our customers and obviously, our team and our partners.

So I'll leave it there. I thank you for all the time and all the questions and for those listening, listening in earnings call, I sincerely, thank you for your time.

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