Bernard McTernan

Bernie Mcternan of Needham & Company asked how the recently integrated SimpleBet assets will impact new product offerings for the upcoming NFL season and how this plays into expectations for second-half handle trends.

Answer

Co-Founder & CEO Jason Robins praised the SimpleBet team and technology, crediting the acquisition as a primary reason for DraftKings' leadership in live betting. He expressed excitement for the first full NFL season with the integrated assets and expects the significant work done over the past year to be evident in the product.

Bernard McTernan of Needham & Company asked about the company's plans for using its expected $850 million in 2025 free cash flow, particularly regarding share buybacks, and if the hold impact could be disaggregated.

Answer

CEO Jason Robins stated they are not breaking down the hold impact but confirmed it was a mix of unfavorable team and player prop outcomes. CFO Alan Ellingson then stated that with significant free cash flow expected, investors should expect the company to be 'more active with repurchases in future quarters' as liquidity and scale increase.

Bernie McTernan asked about the impact of the ESPN blackout on YouTube TV/Monday Night Football on BetVision viewership and tactics to retain consumers, and also inquired about advertiser response to Sports Innovation Lab data and when benefits will materialize.

Answer

Mark Locke (CEO) did not comment on the specific blackout but highlighted BetVision's overall strong growth (over 120 customers, 20,000+ global events), emphasizing its benefits for content distribution and engagement. For Sports Innovation Lab, Mark Locke (CEO) stated they are already benefiting from smooth and immediate integration, yielding strong results and positive customer feedback.

Bernie McTernan asked if the ESPN blackout on YouTube TV and Monday Night Football was beneficial for BetVision viewership and what tactics could retain consumers. He also questioned the advertiser response to Sports Innovation Lab data and when benefits from this data and identity graph would materialize.

Answer

Mark Locke (CEO) focused on the overall strong growth of BetVision, with over 120 customers and 20,000+ global events, benefiting sports leagues and sportsbooks by increasing engagement. He did not comment specifically on the ESPN blackout. Mark Locke confirmed that Sports Innovation Lab data is already benefiting the company, with smooth and immediate integration yielding strong results and positive customer feedback.

Bernie Mcternan of Needham & Company noted the implied 60% year-over-year media revenue growth for the second half and asked about the linearity of this growth and any potential bottlenecks, such as ad inventory.

Answer

Nicholas Taylor (CFO) confirmed the back-of-the-envelope math, stating that both Q3 and Q4 are expected to see around 60% year-over-year media revenue growth. He attributed this to a layering effect of several tailwinds, including existing minimum media contracts, new agency deals like PMG, and expanded ad inventory from the NFL partnership. He expressed confidence in long-term growth, citing strong brand interest in sports advertising.

Bernard McTernan asked for a breakdown of the 2025 media growth guidance between existing sportsbook contracts and new traction from FANHub. He also explored the different monetization opportunities for BetVision in the U.S. versus Europe.

Answer

CFO Nicholas Taylor explained that the current guidance is predominantly based on existing programmatic services, with any significant FANHub contribution representing potential upside. CEO Mark Locke detailed that while BetVision drives in-play adoption in the U.S., its value in Europe lies in product innovation, such as introducing new bet types from GeniusIQ data, reducing bet delays, and increasing user stickiness.

Bernard McTernan inquired about any notable seasonality factors to consider for the upcoming year and the potential impact of foreign exchange (FX) on the 2025 financial guidance.

Answer

CFO Nicholas Taylor projected strong growth throughout 2025, with betting growth being more pronounced in the first half and media growth stronger in the second half. He also expressed confidence in continued growth and margin expansion into 2026. On FX, Taylor stated its impact was immaterial in 2024 and the 2025 guidance is based on current rates, with no significant impact anticipated.

Bernard McTernan asked about the quantifiable impact of unfavorable October sports results on Q4, the sustainability of Europe's 22% growth rate, and the structural details of the new U.S. sportsbook renewal agreements.

Answer

CEO Mark Locke explained that the sportsbook renewals successfully revalued Genius's data and universally require the rollout of BetVision and media products, with staggered term lengths to de-risk future negotiations. CFO Nicholas Taylor stated that while October's U.S. sportsbook results were a headwind, it was not material due to offsetting growth levers. He also noted Europe's 22% growth was strong and expects continued double-digit growth from the region.

Bernie McTernan asked about the timeline for bringing personalization tools from Overstock.com to Bed Bath & Beyond and how this might influence the quarterly revenue cadence for 2026.

Answer

Executive Chairman and Principal Executive Officer Marcus Lemonis explained that a recent, risky move to a new unified tech stack at Overstock.com, while initially costing $6.2 million in top-line revenue, has since improved conversion. He stated they need at least one more solid quarter to ensure the platform's robustness before migrating to Bed Bath & Beyond, aiming for mid-year or middle of Q3 2026. The goal is a unified customer experience that integrates POS and a new code structure for seamless omnichannel transactions, emphasizing a cautious, data-driven approach.

Bernie McTernan asked about the timeline for bringing personalization tools from Overstock.com to Bed Bath & Beyond, and how this might inform the quarterly cadence of revenue expectations for the upcoming year.

Answer

Marcus Lemonis, Executive Chairman and Principal Executive Officer, explained that Overstock.com recently transitioned to a new unified tech stack, which initially caused a $6.2 million top-line revenue loss in the quarter due to conversion contaminants but is now showing accelerated conversion. He stated that Bed Bath & Beyond would not adopt this new code structure until Overstock.com consistently achieves 1.3% or better conversion and 10-15% quarter-over-quarter growth. Lemonis hopes for Bed Bath & Beyond to modify its code structure by mid-year or Q3 2026, aligning with the expected conversion of all 250 omnichannel stores by mid-2026. This integration aims to tie the POS and a new unified code structure for a seamless customer experience, including buy online, pick up in store, and ship from store options.

Bernie McTernan of Needham asked for Ibotta's reaction to Amazon's move to free same-day grocery delivery and sought to clarify if the two paused pilot accounts represented a high single-digit million-dollar impact in the quarter.

Answer

Founder and CEO Brian Leach positioned speedy delivery as 'table stakes' and a positive for Ibotta's omnichannel solution, which is integrated into e-commerce platforms. Regarding the paused accounts, he confirmed they caused the company to miss guidance but would have otherwise beaten consensus, stating the experience has led to a more conservative guidance approach going forward.

Bernard McTernan inquired whether the CPID transition requires additional financial resources beyond management's time, noting the sequential increase in R&D and G&A expenses.

Answer

Bryan Leach, Founder and CEO, stated that financial resource allocation is 'broadly flattish,' with the company primarily refocusing existing resources toward the CPID initiative, similar to its prior IPN transition. He reiterated the guidance for flattish sequential operating costs, while acknowledging that the company has been hiring for specialized skill sets, particularly on the measurement side, within that overall cost structure.

Bernard McTernan asked about the drivers for the sequential decline in redemptions for Q1 and whether publishers were providing negative feedback on low offer content.

Answer

CFO Sunit Patel explained that Q1 is seasonally the slowest quarter for redemptions, lacking major holidays, and typically represents the low point for the year. CEO Bryan Leach added that publishers are not providing negative feedback, as they recognize Ibotta is still the largest source of content and are supportive of the company's long-term innovation strategy to grow the entire category.

Bernard McTernan asked for CEO Bryan Leach's level of confidence in securing sufficient CPG offer supply to meet the rapidly growing redeemer demand, especially with the addition of Instacart and continued growth at Walmart.

Answer

CEO Bryan Leach expressed high confidence, citing Ibotta's 12-year history where supply has consistently caught up with demand. He highlighted that new publisher additions like Instacart tap into separate e-commerce budgets and that Ibotta's new measurement tools will encourage more continuous investment from CPGs. He emphasized that the primary growth lever is deepening budgets with existing partners, not just adding new ones.

Bernie Mcternan of Needham & Company asked about the strategy for merchandising Same Game Parlay Live and its retention. He also questioned whether the impressive iGaming growth is driven more by market expansion or market share gains.

Answer

CEO Peter Jackson explained that their leading live betting product leverages European expertise to reduce friction and create an immersive experience. On iGaming, he stated that market penetration still has a long way to go and that Flutter's growth is driven by a clear focus on direct-to-casino customers and product enhancements like the rewards club and exclusive content.

Bernie Mcternan of Needham & Company asked for details on the competitive pressures in Ontario and inquired about the strategic rationale for hiring a new Group CTO, questioning if it signals a major replatforming or a focus on product capabilities.

Answer

CEO Neal Menashe explained that the pressure in Ontario relates to high customer acquisition costs and that resources from the U.S. exit will be redirected to improve the Canadian product. He clarified the new CTO's role is to drive a disciplined approach to cost and process efficiencies across the tech stack to enable profitable scaling, rather than signaling a major replatforming.

Bernard McTernan of Needham & Company, LLC asked about the potential size of the Africa business as a percentage of the total mix and inquired if incremental margins in the region are higher than the company average. He also asked for color on the full-year guidance, given the strong Q1 performance.

Answer

CEO Neal Menashe emphasized that the focus in Africa is on profitable revenue, confirming that incremental margins there are significantly higher than the global average. He noted the company's 26% marketing-to-revenue ratio provides fuel for growth. CFO Alinda Van Wyk stated that guidance is assessed as the year progresses and will be updated after Q2, while Menashe pointed to typical seasonality, like the end of European soccer leagues in Q2, as a factor to consider.

Bernard McTernan of Needham & Company questioned the 2025 revenue guidance, noting it implies a deceleration in growth compared to 2024's performance. He also asked about the contribution from the African asset acquisition and sought an update on the U.S. strategy and its path to profitability.

Answer

Executive Alinda Van Wyk clarified that the ex-U.S. guidance represents double-digit growth for both revenue and EBITDA. Executive Neal Menashe added that the guidance figures are a baseline ('greater than') and are prudently set to account for sports results volatility. Regarding Africa, Menashe noted the sportsbook was already their own, and benefits stem from product leadership and marketing. For the U.S., he reaffirmed the 2027 profitability target, stating the business now covers all costs except for marketing.

Bernard McTernan asked for details on the drivers behind the strong October performance, the company's year-to-date revenue growth excluding India, the long-term outlook for profit margins, and clarification on U.S. shutdown costs and other market closure expenses.

Answer

Executive Neal Menashe attributed the strong October to high customer volumes and the successful execution of efficiency strategies, also revealing that year-over-year growth ex-India was 24%. CFO Alinda Van Wyk stated that long-term margin targets could be lifted to a 22-24% range in 2025. She also confirmed that all U.S. sportsbook shutdown costs were accounted for in Q2 and Q3, with no bleed into Q4, and that the 'other market closure' cost was a final impairment related to the 2023 India exit.

Bernie Mcternan from Needham & Company asked if the incredible incremental margins should be expected to change as e-commerce expands, due to factors like marketing spend to acquire advertisers or the economics of plugging into new supply sources.

Answer

CEO Adam Foroughi clarified that new supply sources would be reported as net revenue, not affecting margins in the same way. He noted that while performance marketing will be a new cost line, it will only be scaled if it's highly profitable on an LTV-to-CAC basis, suggesting shareholders should welcome its growth as a sign of a massive, profitable opportunity.

Bernie Mcternan asked if the company's high incremental margins should be expected to change as the e-commerce business expands, potentially due to marketing costs or new supply partnerships.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi clarified that new supply partnerships would likely be reported on a net revenue basis, while new performance marketing would be a cost line item. However, he stressed that any marketing spend would be highly disciplined and tied to a strong LTV-to-CAC ratio, meaning it would only be scaled if it were highly profitable. He suggested that growth in this expense would be a positive indicator of future business growth.

Bernard McTernan asked about the opportunity to create mobile-gaming-style ads for e-commerce brands and inquired about the feedback from gaming companies regarding AppLovin's expansion into new verticals.

Answer

CEO Adam Foroughi responded that AI will ultimately determine the optimal ad formats, which could include gamified e-commerce ads. He noted that gaming clients are happy with the platform's continued performance improvements, and that game publishers are 'absolutely excited' to see their ad inventory monetized by non-competitive e-commerce brands.

Bernie Mcternan of Needham & Company asked about the timing for bringing Vector technology to other ad products and whether the current guidance for Unity ads assumes any further model improvements.

Answer

CEO Matthew Bromberg described the application of Vector technology to other products as a gradual and constant process of improvement, not a single event. CFO Jarrod Yahes explained that the Q3 guidance is based on performance seen six weeks into the quarter, acknowledging that while they are consistently being surprised by improvements, they are also remaining prudent as it is still early in Vector's journey.

Bernard McTernan from Needham & Company asked how Vector's current performance compares to the historical peak performance of Unity's ad networks. He also inquired how the cited 15-20% performance improvement is expected to trend over time and what the typical evaluation period is for publishers to shift ad spend.

Answer

CEO Matthew Bromberg noted that the company recently saw some of its highest ad spend days in many years. He emphasized that the current 15-20% lift is just the beginning, as the models are designed for continuous daily learning. Regarding budget shifts, Bromberg explained that their advertisers are long-term, ROAS-based buyers, so shifts are not typically immediate or sharp but are based on sustained performance.

Bernie Mcternan asked for color on the take rate of the 40% of clients using four or more products versus the other 60%. He also questioned the drivers behind higher MTS trading margins and their sustainability.

Answer

CEO Carsten Koerl explained that the 40% figure highlights a significant upselling opportunity within the remaining 60% of clients, using the growing MTS pipeline as a prime example of this strategy in action. He attributed the higher MTS margins to a combination of favorable sports results and improved algorithms like "alpha odds," noting that the algorithmic improvement is a sustainable trend that improves with scale.

Bernard McTernan asked if additional assets or capabilities are needed to further scale the Marketing Services business and also requested a view on the NBA betting season, given contrary comments from other operators.

Answer

CEO Carsten Koerl stated that the focus for Marketing Services is continued execution and reducing costs via their Fan ID product, rather than needing new assets. Regarding the NBA, Koerl asserted that performance is 'very well' and over projections, citing the successful launch of 1,800 new player and micro markets.

Bernard McTernan questioned the scale of the IMG Arena business, asking for its current revenue and EBITDA, and whether the accretion commentary includes synergies. He also asked for the average remaining contract term for the major rights being acquired.

Answer

CFO Craig Felenstein stated that if Sportradar owned the IMG assets for the full year, its 2025 revenue growth would be in the high 20% range, versus the guided 15%, and confirmed the deal would be margin accretive due to synergies from their larger distribution network. CEO Carsten Koerl added that the average term remaining for the major contracts being acquired from IMG is approximately three years.

Bernard McTernan followed up on the MLB deal, asking if the expected margin accretion would be immediate or occur over the life of the contract. He also probed why Sportradar is confident in securing favorable terms, questioning the role of its product and technology in negotiations.

Answer

CEO Carsten Koerl clarified that the potential MLB deal is expected to be margin accretive from the start and improve further over its duration, fitting within the company's target margin profile. He explained that a key value proposition for the MLB is Sportradar's ability to drive global expansion in markets like Japan and Korea by leveraging advanced technology like computer vision for sophisticated betting products.

Bernie Mcternan of Needham & Company asked about the impact of the competitive advertising market, particularly from Shein and Temu, on new buyer growth during Q2 and for the forward guidance. He also inquired about the primary bottlenecks in signing new Resale-as-a-Service (RAS) brand partners and the timeline for RAS to become a material contributor.

Answer

CEO James Reinhart acknowledged the dynamic ad market, noting that competitors like Shein and Temu pulled back in April but returned by mid-May. However, he expressed confidence that ThredUp's performance is primarily driven by internal improvements in its product experience and conversion funnel, making it resilient to external ad rate fluctuations. On RAS, Reinhart cited timing as a key factor, as some brands are in existing contracts or navigating tariff news. He does not expect RAS to be material in 2025 but is optimistic about its impact in 2026.

Bernard McTernan sought to clarify the macroeconomic expectations embedded in the Q2 and full-year guidance, particularly concerning tariffs and consumer demand. He also asked for an update on the new 'Shop Social' feature, its beta status, and its expected impact on customer engagement.

Answer

CEO James Reinhart stated that ThredUP is not directly exposed to tariffs and that its value proposition will, at worst, remain the same and could improve relative to others. CFO Sean Sobers confirmed the guidance assumes no tailwinds from tariffs and no recession, reflecting current business trends. Regarding 'Shop Social,' Reinhart expressed strong optimism, calling it a key innovation that bridges social media inspiration with commerce. He expects it to be widely available soon and to drive strong conversion.

Bernard McTernan requested more details on the AI-powered image search feature, asking what drives its higher conversion rate and why it is more effective than traditional text-based search.

Answer

CEO James Reinhart explained that image search drives an 85% higher conversion rate because it allows customers to shop visually, using inspiration from social media or real-world items to find exact looks. He noted the technology delivers more relevant results, leading customers to adopt it as their default search method, which validates its effectiveness.

Bernard McTernan inquired about how management's time and resources will be reallocated following the EU business divestiture and asked for color on how new AI initiatives like Style Chat are impacting new buyer acquisition and retention.

Answer

CEO James Reinhart stated that as a U.S.-only business, the company is redoubling its focus on its core advantages: its marketplace model, data, and infrastructure. He noted that without the cash consumption of the EU business, ThredUp is now free to invest more deeply in U.S. growth, particularly in marketing and operations. Regarding AI, Reinhart explained its impact is felt across the entire funnel, from improving ad tech and targeting on platforms like Google and Meta to enhancing on-site search and retargeting, all of which incrementally drive customer conversion.

Bernie Mcternan from Needham & Company inquired about the assumptions for state tax increases in the updated guidance, particularly the strategy in Illinois, and the growth trajectory for the Latin American market in Mexico.

Answer

CFO Kyle Sauers confirmed that the impacts from tax changes in Illinois and New Jersey, as well as the Colombian VAT tax, are fully incorporated into the raised guidance. He noted that in Illinois, the company has raised the minimum bet to $1 but remains flexible. CEO Richard Schwartz described Mexico as a future major market, expecting it to be larger than Colombia, with current growth outpacing Colombia's early stages due to a differentiated, high-quality casino product.

Bernard McTernan inquired about the competitive dynamics in Colombia, specifically whether competitors are also absorbing the new VAT tax and if RSI believes it is gaining market share. He also asked for the growth outlook for the Delaware market in 2025, considering the tough comparisons from its successful launch year.

Answer

CEO Richard Schwartz confirmed that competitors are also absorbing the tax through higher bonusing, a strategy that has allowed RSI to maintain or grow share, evidenced by record GGR and handle. Executive Kyle Sauers added that while Delaware's growth rate will logically slow as it laps its launch, there is still significant upside, projecting it could become a nearly $300 million GGR market over time.

Bernie Mcternan from Needham & Company inquired about the nature of the projected $50 million benefit for 2026, asking if it represents a run-rate saving or an actual year-over-year reduction in OpEx. He also asked for a broader perspective on the long-term state of the real estate industry given recent structural shifts.

Answer

CFO Kalani Reelitz clarified that the $50 million is a run-rate benefit expected to directly improve profitability and EBITDA, while also enabling the company to scale efficiently as the market recovers. Founder, Chairman & CEO Robert Reffkin described an ongoing industry tension between seller choice, which Compass advocates for, and control by portals and MLSs, suggesting the ultimate resolution may occur in court.

Bernard McTernan asked about the agent and homeowner response to the 3-phase marketing strategy, particularly regarding listings on Zillow. He also inquired if NAR changes have impacted organic agent recruiting and sought clarification on whether Q2 OpEx serves as a good run-rate for the year.

Answer

CEO Robert Reffkin reiterated that the strategy is about homeowner choice, which includes the option to list on Zillow, and noted other brokerages are now following Compass's lead. CFO Kalani Reelitz confirmed strong recruiting momentum, with 700 organic agent adds in Q1, driven by the platform and competitors' struggles. Reelitz also advised that Q2 OpEx is the 'right proxy' for modeling the rest of the year, as it includes annual compensation changes.

Bernard McTernan questioned if there are different commission economics for agents on private or 'coming soon' listings and asked for an update on the expected total non-commission revenue following recent acquisitions.

Answer

CEO Robert Reffkin stated there is no different commission structure for private listings; their primary value is as a powerful tool to help agents win more listings by offering sellers a sophisticated marketing plan. CFO Kalani Reelitz declined to provide a specific forecast for non-commission revenue but reiterated the ~$500 million total revenue contribution from the recent acquisition, noting brokerage would remain the largest component.

Bernie Mcternan asked for more detail on the potential AI partnerships mentioned in the prepared remarks, specifically what form these collaborations might take.

Answer

Micha Kaufman, Founder & CEO, explained the concept as 'scaled AI using experts.' He elaborated that many AI tools, while powerful, require human expertise for the 'first and last mile' to create a complete, competitive product. The potential partnerships would involve embedding Fiverr's talent network directly into AI platforms, allowing users to seamlessly hire experts to configure, customize, or complete their AI-driven projects.

On behalf of Bernie McTernan, Stefanos Chris of Needham & Company asked for more detail on the buyer experience and satisfaction with the new Fiverr Go product.

Answer

CEO Micha Kaufman elaborated that buyers love Fiverr Go because it's an 'always on' assistant that provides instant, humanized responses based on the specific seller's portfolio and style. He noted the experience is so seamless that some buyers don't realize they are interacting with an AI, leading to higher confidence and faster conversions.

Bernard McTernan inquired about the take rate for Fiverr Go, the primary areas for investment in 2025, and whether the financial guidance accounts for foreign exchange impacts.

Answer

CEO Micha Kaufman stated that the take rate for Go transactions is currently the same as standard ones, with the AI tools also generating separate subscription revenue. CFO Ofer Katz noted that investments are consistent with past strategy, with an early focus on Go, and confirmed there is no material FX impact as revenue is in USD and expenses are hedged.

Bernard McTernan from Needham & Company asked for a breakdown of the Q4 revenue guidance, specifically the puts and takes between take rate and GMV growth. He also inquired about the early success metrics for the new Dynamic Matching feature and its potential impact on the platform's advertising take rate.

Answer

CEO Micha Kaufman stated that guidance acceleration is driven by product improvements and value-added services offsetting negative macro trends, rather than a change in the macro environment. He noted that GMV recovery will take time. Regarding Dynamic Matching, he explained it's for complex, custom projects and early signs are "extremely positive," with projects being several times larger than typical. He does not foresee an impact on advertising, as it serves a different use case than the standard catalog, and Promoted Gigs continues to grow.

Bernie Mcternan of Needham & Company asked if the patio category saw year-over-year revenue growth and whether positive overall revenue growth is a reasonable target for next year. He also questioned the rationale and funding strategy for establishing a Bitcoin reserve.

Answer

Executive Chairman & Principal Executive Officer Marcus Lemonis clarified that while patio revenue was down year-over-year, its contribution margin improved materially from a loss in the prior year. He affirmed that the company expects to achieve year-over-year revenue growth in 2026. On the Bitcoin reserve, Lemonis explained it aligns with the company's identity as a blockchain-focused firm and will be funded by future positive cash from operations and potentially existing cash, not through high-risk capital deployment.

Bernie Mcternan asked if the patio category grew year-over-year and whether positive revenue growth is a reasonable target for next year. He also questioned the rationale for establishing a Bitcoin reserve and how it would be funded.

Answer

Executive Chairman Marcus Lemonis clarified that while patio revenue was down year-over-year, its contribution margin improved materially, making it a profitable category versus a loss-making one in the prior year. He affirmed that the company expects year-over-year revenue growth in 2026. Regarding the Bitcoin reserve, he explained it aligns with the company's identity as a technology and blockchain-focused entity and will be funded by future positive cash from operations and potentially some existing cash, not through aggressive, high-risk measures.

Bernard McTernan asked about the path to $1.2 billion in run-rate revenue, questioning the mix between marketing efficiency versus new channels like buybuy BABY. He also asked about the rationale for the sales and marketing expense guidance, which implies an increase from current levels before declining long-term.

Answer

Executive Chairman Marcus Lemonis explained that the higher short-term marketing spend guidance (13.5% to 14.75%) is a deliberate shift to a growth mindset to build the customer file, as he was dissatisfied with Q1's transaction count. The path to $1.2 billion relies on both adding new products and, more critically, mastering the 'science and art' of marketing. He gave the team a flexible spending 'sandbox' to drive growth, with the expectation that the range will tighten as efficiencies improve.

Bernard McTernan asked for management's perspective on the current trends in U.S. online sports betting (OSB) handle growth.

Answer

CEO Jay Snowden explained that with fewer new state launches in 2025, overall industry handle growth will likely be less significant than in recent years. He anticipates more muted growth in Q2 and Q3 due to seasonality, followed by an inflection to stronger growth with the start of the football season in September.

Bernard McTernan from Needham & Company asked if the account linking feature is already delivering personalization for bets and promotions. He also questioned how Penn could more aggressively drive adoption of the feature.

Answer

CTO Aaron LaBerge clarified that linking accounts was the necessary first step, and now personalized content and offers will begin to roll out organically across the ecosystem. He added that Penn is actively promoting the feature on both the ESPN and ESPN BET platforms to drive adoption beyond just organic discovery.

Bernard McTernan from Needham & Company asked about the drivers behind the 11% GSV growth from large customers and the strategic shift toward higher LTV clients, questioning whether this was a result of Upwork's actions or a broader market trend.

Answer

CEO Hayden Brown attributed the growth directly to Upwork's focused strategy initiated last year. She highlighted the launch of the 'Business+' offering and adjustments to the enterprise sales approach as key drivers designed to capture more spending from larger organizations, noting that the early results are consistent with their strategic plan.

Bernard McTernan asked for an overview of Instacart's enterprise strategy following the Wind Shop acquisition and whether there is any evidence of consumer trade-down affecting average order values (AOV).

Answer

CEO Fidji Simo described the enterprise strategy as both a direct GTV driver and a strategic asset for deep retailer integration, noting the Wind Shop acquisition enhances their ability to power storefronts and upsell services like Carrot Ads. CFO Emily Maher addressed AOV, stating the decline was driven by restaurants and the new $10 minimum, but was partially offset by growth in the remaining basket, indicating incremental spending rather than trade-down.

Bernard McTernan asked for the reasoning behind the Q2 take rate guidance being flat sequentially, which deviates from the typical pattern of sequential improvement throughout the year.

Answer

CFO Lanny Baker explained that the company is now lapping the implementation of key take rate drivers from the previous year, such as the new seller fee and significant improvements in Etsy Ads. After a period of strong growth from these initiatives, management now anticipates a more consistent take rate for the remainder of the year.

Bernard McTernan asked for the key drivers behind the strong Q4 bookings acceleration and sought clarity on the guided deceleration for Q1, including any underlying core business trends.

Answer

CFO Ravi Inukonda attributed the Q4 strength to consistent growth in restaurants and even faster growth in new verticals and international markets, driven by MAU growth and record order frequency. For the Q1 guide, he pointed to a tough comparison due to a leap day in the prior year and a minor FX headwind, while affirming confidence in the full-year outlook.

Bernard McTernan questioned DoorDash's broader partnership strategy, particularly in light of the new Lyft partnership, and asked if this collaboration has unique aspects.

Answer

CEO Tony Xu explained that DoorDash's primary focus (80%) is on building its core products to drive organic growth for its membership program, DashPass. Partnerships represent the other 20% of the strategy, aimed at adding attractive benefits for members, similar to past deals with Chase and MAX. He positioned the Lyft partnership as a way to increase engagement and acquire new members for DashPass by tapping into Lyft's large user base, while giving Lyft access to a high-frequency local commerce platform.

Bernard McTernan of Needham & Company asked to quantify the impact of the recent price increase on the current revenue growth. He also inquired about the potential revenue contribution from new, discretely monetized products planned for the next year.

Answer

CFO Lior Shemesh acknowledged the positive impact of the price increase but did not break it down, emphasizing that growth is a combination of factors, with Studio innovation being a more significant driver for the Partners segment. He stated that while it's hard to quantify the impact of new monetized products, the company believes they will be significant drivers of future growth for self-creators.

Asked about the recurring nature of data deal expansions, the specific new content types from Envato relevant to AI, and whether TikTok was already a paying GIPHY partner.

Answer

Data expansion opportunities are seen as recurring. Envato brings valuable content like templates and fonts for AI training. The company declined to specify the prior financial relationship with TikTok but stated they have been a long-term partner and the new deal enhances the relationship.

Bernard McTernan questioned whether land-and-expand data deals would generate recurring revenue, what new content types Envato contributes for computer vision, and if TikTok was a paying GIPHY customer prior to the new deal.

Answer

CFO Jarrod Yahes confirmed that they are seeing recurring demand for incremental data and services, which enhances business durability. CEO Paul Hennessy highlighted that Envato adds valuable assets like templates and fonts for both traditional use and data training. Regarding TikTok, Mr. Hennessy declined to discuss specifics of any single partner but noted they have been a long-term partner and the new agreement is a 'plus to the business'.

Bernard McTernan questioned whether revenue from Data deal expansions, such as added metadata, would be one-time or recurring. He also asked for details on new content types from Envato for computer vision and if TikTok was a paying GIPHY customer prior to the new deal.

Answer

CFO Jarrod Yahes confirmed that customer demand for incremental data and enhanced services is recurring, making the business more durable over time. CEO Paul Hennessy identified templates and fonts as key content types from Envato that add value for both traditional use and data training. Regarding TikTok, Hennessy stated they have been a long-term partner and the new deal is a positive for the business, but did not comment on the specifics of the prior commercial relationship.

Bernard McTernan inquired about the updated plan to return the Content business to growth, given the slower-than-expected recovery, and asked about the use cases and revenue model for the new 3D GenAI product with NVIDIA.

Answer

CEO Paul Hennessy stated that while the Content business is improving sequentially, the recovery is taking longer than hoped. The strategy involves simplifying product offerings and filling a product gap with unlimited subscriptions via the Envato acquisition. Regarding the 3D GenAI product, he noted early use cases include accelerating workflows in gaming and immersive retail. He added that the revenue share will be high-margin on a net basis, though the corporate margin will be impacted by sharing revenue with contributors, consistent with their ethical AI approach.

Asked about the strategy to return the Content business to growth, the use cases and customer adoption for the new 3D Gen AI product, and its expected revenue model and margins.

Answer

Paul Hennessy explained the Content strategy involves simplifying product offerings and introducing unlimited subscriptions via the Envato acquisition. He noted that 3D Gen AI use cases are broad (gaming, retail) and will become clearer as beta customers onboard. The revenue share from this product will have high initial margins, but will be shared with contributors, aligning with the company's overall margin profile and ethical AI approach.

Bernard McTernan inquired about the updated strategy to return the Content business to growth and asked for specific use cases for the new 3D GenAI product with NVIDIA.

Answer

CEO Paul Hennessy stated that while the Content business is improving sequentially, the recovery is slower than hoped. The strategy involves simplifying product offerings and filling a product gap with unlimited subscriptions via the Envato acquisition. For the 3D GenAI product, he highlighted use cases in gaming, retail, and immersive experiences, noting it dramatically accelerates 3D model creation workflows.

Bernard McTernan inquired about the breakdown of the updated 2024 guidance, seeking to distinguish between the impact of the Envato acquisition and organic business performance. He also asked for an update on the computer vision business, referencing a previously mentioned $60 million figure and rumors of a deal with Apple, and questioned the expected expense and profitability trends for Giphy throughout the year.

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CFO Jarrod Yahes explained that the guidance increase reflects both Q1 outperformance, particularly in the Data, Distribution, and Services (DDS) segment, and the anticipated contribution from the Envato acquisition. While declining to comment on specific customers, he confirmed the DDS business is outperforming and the prior $60 million data figure should be considered conservative. Regarding Giphy, Yahes noted that despite ongoing hiring for its sales force, its rapid revenue growth is expected to outpace expenses, leading to improving profitability and a positive contribution to Shutterstock's overall profits as the year progresses.

Bernard McTernan asked for a breakdown of the updated 2024 guidance, distinguishing between the impact of the Envato acquisition and organic business performance. He also inquired about the status of the previously mentioned $60 million computer vision revenue target and the expense and profitability trajectory for the Giphy business throughout the year.

Answer

CFO Jarrod Yahes explained that the guidance increase reflects both the outperformance of the core business in Q1, particularly in data distribution and services, and the anticipated contribution from the Envato acquisition, which is expected to close in Q3. He noted that the $60 million data revenue figure should be considered conservative given the strong start to the year. Regarding Giphy, Yahes stated that while the company is aggressively hiring a sales force, the rapid revenue growth is expected to be a tailwind to profitability, allowing Giphy to improve profits sequentially throughout the year.