Integral Ad Science shares dropped more than 10% on Wednesday, after the company reported lackluster revenue growth and softened its guidance for the Q4 season during its quarterly earnings Tuesday afternoon.
The company’s total revenue increased 11%, from $120 million in Q3 2023 to $133.5 million during the period this year. And it turned a net profit of $16 million.
IAS also has a nice tailwind in the form of former Oracle Advertising customers who need a new verification and ratings provider. Peacock, Heineken, Emirates Airlines, NASCAR and Pandora are among the new logos picked up from Moat, CEO Lisa Utzschneider told investors.
However, IAS saw advertising unexpectedly dip in September and October, “primarily with CPG and retail clients,” said CFO Tania Secor. Ruh-roh.
September spending “did not materialize”
August is always a relatively soft month for US consumers, but with an upswing in September and the start of back-to-school shopping.
“September is typically a strong seasonal month,” Secor said. “We were expecting an uptick in September, which did not materialize.”
The low spend continued into October, which is after the official earnings period covered in this report. That advertising reduction might also be partly attributable to the US political election, IAS execs noted.
But it is an ominous tone, especially while so many other ad tech businesses are touting retail media growth, and it explains why Wall Street investors knocked about $200 million from the IAS market cap.
IAS focuses on going social
IAS missed on a couple key growth categories.
Retail media moved to the sideline, as IAS waits on CPGs and retailers to ramp back up. And though the company doesn’t disclose CTV revenue, that wasn’t a shining star either.
Twice, Utzschneider pointed to a silver lining in that IAS “did see growth in our non-CTV publisher business.”
The implication, though not described or detailed in the earnings report, is not good for CTV.
So what is working?
IAS is flexing its growth in social media and walled garden partnerships.
The highlights IAS cites in its earnings include being first to test and commercialize Meta’s pre-bid optimization for brand suitability, expansions of its TikTok partnership, a Misinformation Detection integration with YouTube and a new curation partnership with Google Ads Manager. Last on the list is the expansion of its Quality Attention metric to publishers and SSPs – formerly it was only available to advertisers.
The company doesn’t disclose social media revenue. But it did this time. Secor benchmarked social revenue at 22% of the total business in Q3, after growing 21% year-over-year.
A year ago, “social media” was barely discussed during IAS’s quarterly earnings. Yesterday, it came up more than 30 times.
And social media is officially the top target for IAS.
One investor asked about the new video game partnerships, citing Roblox.
Emerging channels are important, Utzschneider responded. But what are customers actually pressing for?
“When it comes to IAS products,” she said, “it is social optimization, retail media, audio and then gaming.”
