James Heaney

James Heaney asked Matt Stumpf about the guidance philosophy for Q4, how e-commerce seasonality from last year was used as a proxy, and assumptions regarding current versus new e-commerce customers.

Answer

Matt Stumpf, CFO, AppLovin, explained that Q4 guidance reflects optimism around the e-commerce referral program, continued model enhancements, and normal holiday seasonality. He noted that it does not include incremental assumptions for new advertisers from the referral program due to unpredictability.

James Heaney asked about the characteristics of advertisers onboarded since October 1, specifically if their GMV is smaller than the initial pilot cohort, and for Matt Stumpf to discuss the Q4 guidance philosophy, e-commerce seasonality, and assumptions for current versus new e-commerce customers.

Answer

Adam Foroughi, Co-Founder, CEO, and Chairperson, AppLovin, explained that the new advertisers are a filtered set, predominantly shops, comparable in mix to last year's cohort, and represent a broad set of categories. Matt Stumpf, CFO, AppLovin, clarified that Q4 guidance is not directly comparable to last year due to the new e-commerce business then, and reflects optimism around the referral program, model enhancements, and normal holiday seasonality, with no incremental assumptions for new customers.

James Heaney of Jefferies inquired if there have been any observable changes in user acquisition spending from gaming companies following the Apple vs. Epic lawsuit and asked about the company's capital allocation priorities given its high free cash flow margin.

Answer

CEO Adam Foroughi stated there has been no impact yet from the lawsuit, expecting it will take several quarters for major gaming companies to adapt and for benefits to materialize. CFO Matt Stumpf reiterated that the capital allocation strategy remains consistent: first, invest in organic growth and talent, and second, return capital to shareholders via share buybacks.

James Heaney inquired about any observed changes in user acquisition spending from gaming companies following the Apple vs. Epic lawsuit and asked about the company's capital allocation priorities given its high free cash flow.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi noted that there has been no material impact yet from the lawsuit, as large gaming companies tend to move slowly, but he anticipates a compounding benefit to ad platforms in the coming quarters. CFO Matt Stumpf reiterated that their capital allocation strategy remains consistent: first, invest in organic growth initiatives and talent, and second, return capital to shareholders through share repurchases.

James Heaney from Jefferies requested an update on the rate of new web advertiser additions since December and asked about progress in serving advertisers with longer conversion windows.

Answer

Executive Adam Foroughi stated that the pace of new advertiser onboarding has intentionally slowed due to manual resource constraints. The immediate priority is launching the self-service dashboard to automate the process. On conversion windows, he explained that the platform excels at driving immediate transactions due to attribution limitations (e.g., cookie windows), and while this poses a challenge for high-consideration products, the current addressable market is so vast that it is not an immediate focus.

James Heaney asked about the take rate dynamics between gaming and e-commerce and how the business mix shift will impact overall seasonality for revenue and expenses.

Answer

CEO Adam Foroughi explained that the platform does not optimize for a specific take rate; it naturally expands as monetization improves. CFO Matt Stumpf noted that expenses are driven by usage, not seasonality, but as e-commerce becomes a larger portion of revenue, the company will become more exposed to traditional retail seasonality, such as a stronger Q4 holiday period.

James Heaney from Jefferies Financial Group Inc. noted that Q4 guidance implies a 2025 entry growth rate well above the 20-30% range and asked for an updated outlook for 2025. He also inquired about the timeline for incorporating generative AI features into AppLovin's products and the potential benefits.

Answer

CFO Matt Stumpf reiterated that the company does not provide annual guidance and that the 20-30% range is a directional goal for gaming alone, with e-commerce being additive. CEO Adam Foroughi added that the growth rate can exceed 30% if technology enhancements occur more than once a year. Regarding generative AI, he confirmed it is on the roadmap and will be very impactful for personalizing ad creative, but could not provide a specific timeline or size the opportunity yet.

James Heaney inquired about the current macro environment's impact on IAC's businesses in Q4 and the company's capital allocation strategy going forward, particularly regarding buybacks versus M&A.

Answer

Barry Diller, Chairman and Senior Executive of IAC, and Christopher Halpin, COO and CFO of IAC, noted a strong macro environment at the middle and upper ends, with weakness at the lower end, and highlighted exceptionally strong travel market performance. Neil Vogel, CEO of People Inc., added that ad markets are solid but not fantastic. Diller reiterated a focus on opportunistic share repurchases for IAC and MGM, stating that current asset pricing makes M&A less attractive, and IAC is 'wildly underpriced.'

James Heaney with Jefferies asked for an update on the macro environment observed in Q4 across IAC's various businesses. He also inquired about IAC's capital allocation strategy going forward, specifically concerning buybacks, potential M&A, and other uses of cash.

Answer

Barry Diller, Chairman and Senior Executive of IAC, noted a strong macro environment at the middle and upper ends, with challenges at the lower end, a trend he expects to continue. Christopher Halpin, COO and CFO of IAC, added that performance marketing is strong, consumer spending is holding up, but Care's enterprise business is seeing belt-tightening. Neil Vogel, CEO of People Inc., rated the ad market as 'solid' (a 6 out of 10), with momentum in higher-end categories like travel and tech. Diller reiterated a focus on opportunistic share repurchases for IAC and MGM, stating that current asset pricing makes M&A less attractive.

James Heaney noted that Search segment revenue was lighter than expected and asked about the timeline for stabilization and whether the performance was due to an intentional pullback or market-related weakness.

Answer

IAC CFO & COO Christopher Halpin explained that the Search business is actively managed for margin, not top-line revenue. He noted that despite lower-than-guided revenue, the segment exceeded its adjusted EBITDA guidance by focusing on higher-margin channels. While the market remains volatile, Halpin expressed confidence in their ability to maintain profitability and meet their adjusted EBITDA guidance for the segment.

James Heaney inquired about the recent appointment of Jim Lawson as the President of D/Cipher and his primary strategic objectives for the ad-tech product.

Answer

Neil Vogel, CEO of Dotdash Meredith, described Jim Lawson as a 'star' hire from the ad-tech industry, brought on to provide commercial leadership for D/Cipher. Vogel stated Lawson's main objective is to build out and sell D/Cipher Plus, which extends their first-party data targeting capabilities across the open web. He emphasized that this is a key part of DDM's future growth strategy for 2026 and beyond.

James Heaney requested details on the divergent performance trends between Care.com's enterprise and consumer businesses. He also asked about the drivers of IAC's elevated corporate costs in 2025 and the expected normalized run rate.

Answer

Christopher Halpin, an IAC executive, explained that Care.com's enterprise business is benefiting from a tailwind as care benefits become standard for employers, while the consumer business declined due to product deficiencies that a new CEO is now addressing. Regarding corporate costs, Halpin stated that the 2025 figure is elevated by approximately $50 million in non-recurring expenses related to Joey Levin's transition, the Angi spin, legacy litigation, and corporate streamlining, which will not be in the 2026 cost structure.

James Heaney asked about trends in the M&E vertical for Q3 and Q4, the influence of media industry consolidation on Roku's distribution partner position, and the overall macro environment.

Answer

CEO Anthony Wood affirmed Roku's essential partner status due to its scale, regardless of industry consolidation. President of Roku Media Charlie Collier noted M&E challenges but highlighted theatrical advertising strength and Roku's diversification, stating M&E improvements would be upside. He also described positive ad trends, programmatic excellence, and strong upfront pricing for Q4. CFO Dan Jedda reiterated strong platform growth for Q4, driven by advertising and subscriptions.

James Heaney asked about the expected platform revenue growth trajectory for the remainder of the year and inquired about growth drivers for the home screen beyond the M&E vertical.

Answer

CFO Dan Jedda noted that while Q4 growth may be slower due to a tough comp, the underlying growth rate is similar to Q1's when excluding prior-year 606 adjustments. On the home screen, CEO Anthony Wood explained it's a key part of their strategy to drive both subscriptions and ad reach beyond M&E, citing a new recommendations row as a successful example. President of Roku Media, Charlie Collier, added that non-M&E brands like Hellmann's are now using premium home screen ad units.

James Heaney asked about the potential risks of generative AI to PubMatic's display business and for an update on the overall demand environment seen throughout the quarter.

Answer

Co-Founder and CEO Rajeev Goel stated that exposure to AI search is limited, representing a single-digit percentage of revenue in a worst-case scenario, as nearly 60% of impressions are from CTV and mobile apps. CFO Steve Pantelick noted that while top ad verticals grew in Q2, some consumer discretionary categories saw sequential weakness in July versus June, which was factored into the Q3 outlook.

James Heaney inquired about the month-over-month trends during the fourth quarter, specifically asking when the company began observing weakness and about overall CPM trends.

Answer

CFO Steven Pantelick explained that the underlying business, including CTV and mobile, performed as expected. However, softness emerged in the latter part of Q4 from a single DSP partner, primarily impacting the display format. He clarified that overall CPMs were positive for both Q4 and the full year 2024, driven by the strategic shift to high-growth areas.

James Heaney of Jefferies questioned what factors are driving PubMatic to achieve critical mass in CTV and inquired about the company's infrastructure capacity needs for the remainder of 2024 and into 2025.

Answer

CEO Rajeev Goel attributed CTV success to a combination of organic technology innovation, such as a Gen AI tool for political ads, and strong SPO relationships that attract premium streamers. CFO Steve Pantelick addressed capacity, stating that 2024 needs are met and that for 2025, the focus is on optimizing existing infrastructure, with no major uptick in CapEx expected due to efficiency gains and the higher value of video impressions.

James Heaney from Jefferies asked for more detail on the underlying drivers of the impressive growth in the Publisher segment and the outlook for its future growth.

Answer

CEO Lisa Utzschneider explained that the Publisher segment's 36% growth was driven by several factors. These include expanding OEM partnerships, increased adoption of new CTV products like Publica Vault, and securing new international customers in EMEA and APAC. She added that the core IAS publisher solutions also experienced double-digit growth.

James Heaney asked about the key drivers behind the strong, approximately 30% year-over-year growth in the Publica publisher business, inquiring about specific product or go-to-market factors.

Answer

CEO Lisa Utzschneider attributed the 33% publisher revenue growth to the value large OEMs find in Publica's differentiated offerings. She highlighted ongoing investment in product features that increase bidding competition in ad auctions, which enhances performance and is highly valued by OEM partners.

James Heaney inquired about the company's hiring philosophy for 2025, specifically how it plans to balance profitability with the headcount required for continued business growth.

Answer

CEO Lisa Utzschneider explained that hiring in 2025 is strategically focused on areas that drive accelerated growth. Key investment areas include R&D and data science to enhance performance and AI capabilities, as well as sales and go-to-market teams with a focus on programmatic, performance, and the mid-market segment.

James Heaney requested more detail on the preliminary 2025 outlook for double-digit growth, asking what key factors give management confidence in sustaining this growth rate into the next year.

Answer

CEO Lisa Utzschneider outlined three primary drivers for the confident 2025 outlook: the scaling of products launched in 2024, the growing adoption of pre-bid optimization in social media (especially with Meta), and the full-year revenue contribution from recently won Oracle business. She also noted a target for the 2025 adjusted EBITDA margin to be similar to the 2024 forecast.

James Heaney from Jefferies asked about the company's recent pricing actions, including customer response, magnitude, and the expected price-cost dynamic for the second half of the year. He also questioned what percentage of the Fire Service pipeline is committed to purchasing before the new NFPA standard versus waiting for it.

Answer

President & CEO Steven Blanco stated that MSA took targeted price increases in the first half and plans further action in the second half to counter tariff impacts, with a goal of reaching a cost-price balance in early 2026. Interim CFO Elyse Brody added that price contributed a couple of points to revenue growth in Q2 and that the company remains on track for its full-year gross margin target of 47% to 48%. Regarding the Fire Service pipeline, Blanco declined to give specific percentages for competitive reasons but affirmed MSA is prepared to serve customers whether they buy now or wait for the new standard.

James Heaney of Jefferies asked about the marketing strategy for the new Battlefield, how it differs from prior launches, and the expected timing and magnitude of the marketing investment.

Answer

CEO Andrew Wilson described the marketing as their largest investment ever for a Battlefield title, framing the game as a 'platform.' The strategy involves a massive creator-led reveal. CFO Stuart Canfield added that the associated marketing spend is driving Q2 operating expense growth and will be front-loaded in Q2 and continue into Q3.

James Heaney inquired about the specific drivers behind the impressive operating leverage guided for fiscal 2026 and asked about the marketing strategy for Madden versus College Football, including the importance of bundling.

Answer

CFO Stuart Canfield attributed the operating leverage to launching large-scale owned IP like Battlefield, whose development costs are already in the P&L, allowing new revenue to flow through at high margins. CEO Andrew Wilson added that the Madden and College Football bundle was very successful and is part of a larger strategy to build a unified American football fan community, encouraging players to engage with both titles.

James Heaney asked for details on the fiscal 2026 operating expense outlook, particularly around mobile and GTA-related marketing, and questioned the reasoning for a seemingly narrow bookings guidance range.

Answer

CFO Lainie Goldstein reiterated the guidance for approximately 3% operating expense growth, driven by higher marketing for current and future titles, but noted this is outpaced by the 6% planned net bookings growth. She also clarified that the full-year guidance range provided was not narrower than what the company usually provides.

James Heaney asked about the required level of marketing spend to support new title launches and the resulting impact on the ramp-up of operating expenses.

Answer

CFO Lainie Goldstein explained that marketing spend is concentrated at launch but is now spread over a longer period for live service games. She noted that while budgets are stable, the marketing mix has shifted more towards digital and analytics, with expenses front-loaded at launch and then amortized over the title's life cycle.

Asked for perspective on the DOJ vs. Google lawsuit and the growth strategy for the 'Moments' vertical video product.

Answer

The Google ruling is seen as a net positive for the ecosystem, potentially creating a tailwind for Teads' performance business, though the direct impact is limited due to their end-to-end model. The 'Moments' product is part of a broader, significant investment in vertical video experiences, seen as a key growth driver.

James Heaney of Jefferies asked whether the rollout of 'Simple Snapchat' has been factored into the company's Q1 guidance for revenue and user growth, and if its impact might be felt later in the quarter.

Answer

CFO Derek Andersen clarified that there is nothing material from the 'Simple Snapchat' rollout factored into the Q1 guidance for either revenue or user growth. He stated that the forecast is based on the existing momentum in the business, including strength in the direct-response ad platform, growth in the SMB segment, and recent increases in the global user community.

James Heaney asked about the performance of the new app install product and what is needed for it to become a meaningful revenue driver, and also inquired about the revenue trends in Q4 that informed the guidance.

Answer

CFO Derek Andersen detailed the process of testing and scaling new ad products, noting app purchase optimization is now a growing contributor. For Q4 guidance, he cited continued momentum in the DR business, no expected recovery in the weaker brand ad business, and the potential for near-term disruption from limited 'Simple Snapchat' testing as key factors.

James Heaney of Jefferies Financial Group Inc. asked for the key drivers behind the company's conviction in its multiyear high single-digit subscription streaming growth forecast, specifically the expected contribution from ARPU versus subscriber gains.

Answer

CFO Bryan Castellani attributed the conviction to three catalysts: subscribers, price, and share. He stated that subscriber growth remains the vast majority of the driver, with penetration in developed markets expected to grow from ~33% to nearly 50% and emerging markets from single to double digits. He noted that pricing assumptions in industry projections are modest, leaving room for upside from superfan tiers, wholesale price optimization, and improved family plan economics.

James Heaney asked how management ensures it is making the right level of investment across its brands while still maintaining its 36% margin target amid various business challenges.

Answer

CFO Gary Swidler described it as a core part of their portfolio strategy, constantly making trade-offs. He cited funding Tinder's turnaround and Hinge's expansion as key investments, which are being offset by cost-saving measures like the E&E consolidation and the exit from live streaming businesses.

Asked how YouTube's fan experience initiatives translate to financial results and inquired about the specific drivers for the company's long-term 10% EBITDA CAGR target.

Answer

The company stated that initiatives with partners like YouTube are part of a broader 'artist-centric' strategy to reorient the ecosystem around high-value music, which drives the business. The 10% adjusted EBITDA CAGR will be driven primarily by operational leverage from the 7%+ revenue CAGR, supplemented by €250 million in run-rate savings from their organizational realignment plan by the end of 2026.