Innovid Corp. (NYSE:CTV) is an enterprise cloud software platform that provides critical technology infrastructure for many of the world's largest brands, agencies, and publishers. The company's solutions enable the creation, delivery, measurement, and optimization of advertising across connected TV (CTV), mobile, and desktop environments.
Innovid's vision is to keep television open for everyone and controlled by no one. The company's cloud-based platform tightly integrates with the highly fragmented advertising technology and media ecosystem, offering three key solutions: Ad Serving, Creative Personalization, and Measurement.
Financials
In the first quarter of 2023, Innovid reported revenue of $36.7 million, reflecting 21% growth over the same period last year. The company's adjusted EBITDA improved significantly, reaching $4.4 million in Q1 2023 compared to just $0.1 million in Q1 2022, representing an adjusted EBITDA margin of 12%. Innovid also delivered positive free cash flow of $2.0 million in the first quarter, a $4.8 million improvement over the same period in the prior year.
The company's financial performance was driven by continued growth in CTV advertising, which accounted for 52% of all video impressions served by Innovid during the first quarter of 2023, up from 48% in the same period last year. Mobile video impressions grew by 38%, while desktop video impressions increased by 12% compared to Q1 2022.
Innovid's ad serving and personalization revenue, which makes up 79% of total revenue, grew 23% year-over-year, while measurement revenue, accounting for 21% of total revenue, increased by 11%. The company's measurement solution, InnovidXP, continues to gain traction, providing valuable insights to advertisers, streaming platforms, and agencies.
Recent Developments
In addition to its strong financial performance, Innovid made significant strides in product innovation during the first quarter. The company launched a series of first-to-market interactive ads in partnership with Paramount+ during Super Bowl LVII, the most streamed Super Bowl ever. Innovid also developed interactive ads for Pfizer, which drove viewers to their "Let's Outdo Cancer" website.
Furthermore, Innovid was recognized as the Best Measurement Tool by Digiday in their 2023 Digiday Video & TV Awards, highlighting the power of the company's platform and the value its measurement solution provides to brands and publishers.
The highlight of the quarter was the launch of Innovid's Harmony initiative, a strategic effort to address some of the biggest challenges facing the CTV advertising ecosystem. Harmony aims to optimize CTV advertising at the infrastructure level, improving efficiency, enhancing transparency and control, reducing carbon emissions, and increasing ROI to provide a better viewing experience for CTV viewers.
Innovid's unique position in the ecosystem, with the ability to deliver and see 100% of its clients' CTV advertising, allows the company to provide data-driven intelligence to the industry. The Harmony initiative includes the launch of Harmony Direct, which connects Innovid's buy-side ad server directly to the publisher ad server for the delivery of guaranteed non-biddable CTV ad impressions, streamlining the workflow and removing friction points.
Innovid is offering an impression-based software pricing model for its Harmony product suite, rather than a percentage of media model, to maintain its position as an unbiased partner to customers and publisher partners. The company believes this will increase the amount of working media dollars that actually make their way from the advertiser to the publisher, creating a true win-win scenario.
While the Harmony initiative is still in the early stages, Innovid expects it to drive revenue growth over the long term by enhancing cross-sell opportunities and strengthening the company's strategic positioning. The company has a roadmap of additional Harmony products to be released throughout 2023, but the commercial impact is not yet reflected in Innovid's 2023 guidance.
Outlook
For the full year 2023, Innovid expects revenue to be in the range of $157 million to $163 million, representing 12% to 17% annual growth, and adjusted EBITDA between $24 million and $29 million. In the second quarter of 2023, the company expects total revenue in the range of $37.5 million to $39.5 million, representing 9% to 14% year-over-year growth, and adjusted EBITDA between $5 million and $6 million.
Conclusion
Innovid's financial performance and strategic initiatives position the company well to capitalize on the continued shift from linear TV to CTV advertising. With its innovative solutions, unbiased approach, and commitment to value creation for customers and shareholders, Innovid is poised to play a leading role in improving the CTV advertising ecosystem.