18 Jun 2020 07:00
18 June 2020
Tremor International Ltd
("Tremor" or the "Company")
Trading Update
Tremor International Ltd (AIM: TRMR), a global leader in advertising technologies, provides the following trading update ahead of its annual general meeting later today.
As reported in the Company's full year results in March, Tremor made a solid start to 2020, however it was too early in the outbreak of COVID-19 to fully assess the impact on the overall outlook for 2020.
Consequently, due to the impact of the global COVID-19 pandemic lockdown on the global advertising industry, trading has been severely impacted with clients cutting advertising budgets across all platforms. This has been particularly evident in the travel, hospitality, automotive and retail verticals, which have experienced significantly reduced demand since mid-March 2020, with increased demand in certain industries such as online services, e-commerce and pharmaceuticals mitigating some of the decline. Revenues in H1 2020 are therefore expected to be between $131-135 million, 27-29% lower than expected, with an adjusted EBITDA loss in H1 of c. $3-6 million.Trading volumes in April 2020 were significantly lower when compared to April 2019. However, a recovery began in May 2020 with significant further improvement evident during June 2020, particularly in the past two weeks.
Tremor's revenue split across its divisions in Q1 and Q2 2020 versus a quarterly breakdown for the prior year, is provided in the following table:
| Q1 20191 ($m) | Q2 20192 ($m) | Q3 20192 ($m)
| Q4 20192 ($m)
| Q1 2020 ($m) | Q2 20203 ($m) |
Branding | 27.5 | 75.0 | 67.1 | 78.8 | 61.0 | 51.5-54.5 |
Performance | 18.0 | 24.3 | 19.0 | 16.0 | 9.5 | 9.0-10.0 |
Total revenue | 45.5 | 99.4 | 86.1 | 94.8 | 70.5 | 60.5-64.5 |
1 Prior to the acquisitions of RhythmOne and Unruly
2 Prior to the acquisition of Unruly
3 Includes forecast outturn for remainder of June 2020
Whilst we are seeing month by month recovery, the ultimate impact of the COVID-19 pandemic on the global economy and Tremor remains uncertain, and therefore the Company is not giving guidance for the full year 2020.
Despite the wider macroeconomic environment, management remains confident in Tremor's medium- and long-term prospects as the market begins to normalise. The Company has introduced a number of measures to mitigate the impact of COVID-19, including cost-cutting initiatives with respect to reducing operating expenses, reducing headcount, freezing new hires, as well as accelerating the integration of Unruly which has been completed two months ahead of schedule. This integration included the removal of duplicated costs and headcount and the consolidation of Unruly's technology into Tremor's stack, which has delivered significant operational benefits to the Group. Finally, the Board and management have taken a temporary reduction in their compensation. The result of all of these initiatives, will be cost savings of over $23 million in 2020 versus the yearly budget.
Management believes Tremor's strategy of offering an end-to-end software platform with a clear focus on video advertising technologies, Connected TV ("CTV") and data driven advertising has been further reinforced in the year to-date. CTV usage has accelerated during lockdown, resulting in increased investment across the sector, driven by advertisers examining how and where consumers allocate their viewing time. Tremor CTV media inventory grew by over 50% from Q1 to Q2 2020, with estimated CTV revenues in Q2 2020 versus Q2 2019 increasing by c. 264% and management expects CTV and data-driven advertising to continue to grow.
In order to increase transparency around the Company's performance, Tremor is also introducing a number of key performance indicators ("KPIs") from which to monitor both the Company's strategic and financial progress across its key growth engines:
Revenue KPIs | Q2 2019 ($m) | Q2 2020 ($m)
| % growth |
Connected TV | 3.9 | 14.2 | 264% |
Private Marketplace Packages (PMPs) | 1.2 | 6.0 | 400% |
Self-serve Demand Side Platform | 1.8 | 4.2 | 133% |
Acceleration of share buyback
Tremor maintains a strong balance sheet, with c. $76 million of net cash as at 31 May 2020. In March, the Company announced a buyback of $10 million which was originally due to be completed across the remainder of 2020.The Board has decided to accelerate this buyback with the aim of completing it within the next three months. The Board will continue to review the most efficient use of its capital.
Ofer Druker, Chief Executive of Tremor, commented:
"Tremor took swift and decisive action to manage and mitigate the impact of COVID-19, by focusing first on our people and their safety, and by continuing to reduce costs and tightly manage our cashflow and liquidity. We accelerated the full integration of Unruly two months ahead of plan and have implemented a number of cost saving initiatives to further control our cost base.
"We have stayed close to our advertiser customers and are pleased to see month by month recovery. We are now confident on emerging from this crisis in a strong position as the industry comes out of lockdown."
All numbers disclosed within this announcement are unaudited.
For further information please contact:
Tremor International Ltd | via Vigo Communications |
Ofer Druker, Chief Executive Officer Sagi Niri, Chief Financial Officer
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finnCap Ltd Jonny Franklin-Adams James Thompson Hannah Boros
| Tel: +44 20 7220 0500 |
Vigo Communications Jeremy Garcia Antonia Pollock Charlie Neish tremor@vigocomms.com
| Tel: +44 20 7390 0230 |
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
About Tremor International
Tremor International Ltd is a global leader in advertising technologies, it has three core divisions: Tremor Video, RhythmOne and Unruly.
Tremor Video helps advertisers deliver impactful brand stories across all screens through the power of innovative video technology combined with advanced audience data and captivating creative. Tremor Video is one of the largest and most innovative video advertising companies in North America, with offerings in CTV, in stream, and in-app.
The media side of Tremor, RhythmOne, drives real business outcomes in multiscreen advertising. Its highly ranked programmatic platform efficiently and effectively delivers performance, quality, and actionable data to demand and supply-focused clients and partners.
Unruly is a strong video marketplace with more than 2,000 direct integrations with publishers, unique demand relationships with the world's biggest advertisers and privileged access to News Corp inventory. Unruly works with 95% of the AdAge 100 and 82% of video views are delivered across Comscore 1,000 sites.
Tremor International Ltd is headquartered in Israel and maintains offices throughout the US and Canada, Europe, Asia-Pacific and Australia and is traded on the London Stock Exchange (AIM: TRMR).
Glossary
CTV | Connected Television: Video content consumed on a TV screen, delivered via an internet connection. This includes TVs directly connected to the internet (Smart TV), as well as hardware that enables a TV to become connected, such as dongles, games consoles and set-top boxes.
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SSP | Supply-side Platform: An advertising technology platform which represents the suppliers of online ads (publishers). SSPs give publishers the ability to increase their website advertising revenues by engaging with multiple demand-side channels (Ad Networks, Ad Exchanges and DSP's) through a single vendor.
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DSP | Demand-side Platform: An advertising technology platform which allows marketers to manage their online media campaigns by facilitating the buying of auction-based display media and audience data across multiple inventory and data suppliers in a centralised management platform.
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Exchange | Ad Exchange: Online, often highly automated auction-based marketplaces that facilitate the buying and selling of inventory across multiple parties ranging from advertisers, direct publishers, ad networks and Demand Side Platforms.
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PMP | Private Marketplace Packages: Private Marketplaces are invitation only marketplaces where publishers offer their inventory to a selected group of advertisers.
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U7 | The U7 is a brand and agency-powered council designed to engage the advertising community in discussions around emerging trends and the health of the industry. The council is comprised of tier 1 brands including P&G, Unilever, Nestle and American Express. |