Telaria, Inc. (TLRA) Q3 2019 Earnings Call Transcript

Telaria, Inc. (TLRA)
Q3 2019 Earnings Call
Nov 05, 2019, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Telaria's third-quarter 2019 earnings conference call. [Operator instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Andrew Posen, vice president, investor relations.

Please go ahead.

Andrew Posen -- Vice President of Investor Relations

Good morning. Welcome to Telaria's third-quarter 2019 earnings call. During the course of today's call, we may make forward-looking statements, including statements regarding Telaria's future financial and operating results, future market conditions and management's plans and objectives for future operations. These forward-looking statements are not historical facts but rather are based on the company's current expectations and beliefs and are based on information currently available to us.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to those, factors contained in the Risk Factors section of the company's most recent annual report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 19, 2019, and in our future SEC filings and reports by the company, including its Form 10-Q for the period ended September 30, 2019. All information provided in this conference call is as of today, November 5, 2019. Except as required by law, we undertake no obligation to update publicly any forward-looking statements made on this call to conform to the statements -- conforming statements to actual results or changes in our expectations. Our commentary today will include non-GAAP financial measures.

We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in understanding company performance, but note that these measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in the earnings press release issued today, a copy of which can be found on our website. And now I'll turn the call over to Mark Zagorski, Telaria's CEO.

Mark Zagorski -- Chief Executive Officer

Thanks, Andrew. Good morning, and welcome to our third-quarter 2019 earnings call. This morning, we reported quarterly results in line with our expectations, reflecting continued returns from the successful execution of three strategic pillars of our plan: a focus on growing our CTV business, constant technology innovation and a commitment to premium publishers in a transparent ecosystem. As a result, our total revenue grew 23% year over year to $16.6 million, with CTV growing 115%, and our market-leading platform continued to expand its global footprint of customers.

CTV is central to our technology road map, strategic investments and market positioning. We continue to see impressive growth in this business, both in absolute dollars and as a percentage of total revenue. CTV revenue grew to $7.3 million for the quarter and represents nearly 45% of our revenue, up from 39% of our revenue last quarter. Last year, in Q3, CTV was only 25% of our revenue.

Our CTV momentum has also driven an impressive 27% increase in platform eCPM, up year over year to $15.68 from $12.32. As part of our commitment to technology innovation, we released several platform enhancements that maximize inventory yield for our partners and improve upon traditional TV advertising capabilities, helping make broadcast advertisers more comfortable transacting on CTV. First, we launched a suite of addressable audience-based buying solutions called Telaria Audience Connect by integrating first and third-party data sources, contextual data and campaign performance metrics so our VMP ensures publishers extract the highest value from their two most critical assets, their audience and their content. Telaria Audience Connect includes three key products.

The first contextual connect allows advertisers to reach years through show level, genre and device targeting, in addition to whitelist and blacklist preferences that further instill trust. This feature is increasingly relevant as ad buyers begin to shift dollars from traditional TV to OTT and expect a TV-like show level alignment. The second product, Performance Connect, enables advertisers to buy against key campaign goals such as viewability, completion rate, eCPM and click-through rates, all in a turnkey fashion. The third product, Addressable Connect, enables advertisers using any DSP to target desired audiences using the published proprietary first-party data, as well as verified audience data from leading third-party sources like Nielsen.

This enables the growing number of subscriber-based AVOD CTV providers to leverage their viewer data to intelligently drive higher CPMs. We are particularly excited about Addressable Connect, which has been live for less than three months and is already has hundreds of private deals running globally across many of our top publishers. We've seen great market traction with these data-driven products as they enable marketers to successfully reach the right viewer in the right context and empower publishers to maximize inventory yield, increasing the value proposition of programmatic CTV for both. Our second key technology initiative this quarter expanded on our already industry-leading brand safety controls.

Through our enhanced creative communication status tool, we added new levels of transparency and communication features to make it easier for demand partners and publishers to transact seamlessly on our VMP, allowing DSPs to submit creative in advance for publisher reviews. Once a creative idea is approved, campaign workflow becomes fully automated as the DSP can bid with confidence knowing their creative will serve when it wins an auction. This first-to-market tool is essential for premium CTV publishers that require consumer and brand experience that replicates the quality of their broadcast product. Our innovative product advances continue to deepen our relationships with premium publishers and help win new ones as well.

This quarter, we added several global video publishers to the roster leading media companies using our platform. In the U.S., we launched new partnerships with Crown Media, which owns the Hallmark family of channels and Plex TV, a streaming service that enables consumers to watch live local TV broadcast, as well as curated collections of online shows and news programs. Outside of the U.S., we are excited to announce our first deal in Japan with one of Japan's leading broadcasters. We also continued our impressive VMP expansion into Canada, driven by the sales and operational resources we successfully integrated through the acquisition we completed in 2018.

The Telaria Canada team recently added the The Globe and Mail, Quebecor and La Presse, three of the best-known and most respected publishers in the market to our list of platform partners. In addition to Bell Canada, which we announced last quarter, these publishers provide us with significant momentum as we finish out the year. In Australia, Telaria, together with the consortium of Australian publishers, including Seven West Media, Network 10, SBS, Foxtel Media, Pedestrian Group and Daily Mail, recently announced the launch of a programmatic editorial video marketplace built on Telaria's VMP. The consortium's goal is to create higher viewer engagement with short-form editorial content and drive additional demand via a more seamless advertising experience.

Our collaboration with these premium publishers is another example of Telaria's technology and thought leadership, attracting the biggest and best video brands around the world. With new addressable CTV products, enhanced VMP tool sets and those premium publisher inventory, we believe Telaria is in a strong position to capitalize on the upcoming political campaign season. We believe CTV will play a pivotal role in the upcoming elections for the next year. For the last 60 years, the best place for candidates to connect with their constituencies was in their living rooms via the site, sound and motion of TV.

With over 30% of U.S. households, whoever, no longer reachable through traditional TV, CTV is becoming essential to reach and engage voters. A recent report from advertising analytics and cross screen media estimates political ad spend for the next election cycle could reach $6 billion in the U.S., with approximately $1.6 billion of that projected for digital video. In keeping with our CTV thought leadership track record earlier this year, we conducted a research study with Sling TV to better understand how the TV viewing habits of younger voters, who are CTV sweet spot, might impact the 2020 elections.

This CTV first generation is comprised of roughly 52 million people, aged 18 to 29, who were mostly college educated, and the majority of which are cord-cutters or cord-nevers. They will make up 20% of the 2020 voting block, and the study found that nearly half of them are undecided on a candidate. Moreover, the study found that young voters deeply mistrust both social media content and its advertising. We believe this creates a significant opportunity for political campaigns to reach these voters on CTV, and Telaria has dedicated resources to deliver on the political CTV opportunity.

In summary, Q3 was a strong quarter. Our focus on CTV continues to drive our growth as it approaches a majority of our revenue. As more consumers cut the cord, more CTV content becomes ad-supported and more CTV publishers embrace programmatic technology. We're well-positioned to take advantage of this opportunity.

Our TV-like technology advancements enable greater addressability in digital video, helping shift linear TV dollars to CTV and deliver higher advertising yield opportunities for our publisher partners. This has helped create stronger and stickier platform relationships. Our expanding roster of premium publishers around the globe and our commitment to transparency independence has established a clear leadership position for Telaria among a world of black box solutions and conflicted wall of gardens. We believe this will gain added importance as advertisers from political to consumer product companies seek trusted venues to deliver their message.

All of these efforts reinforce our confidence that we are in a great position to grow our business and deliver value to our shareholders. I will now turn the call over to John to walk you through the financials in more detail.

John Rego -- Senior Vice President , Chief Financial Officer

Thanks, Mark. This quarter, we reported revenue of $16.6 million, up 23% from the same period last year and an adjusted EBITDA loss of $300,000, slightly down from last year. Our gross profit increased 13% to $13.1 million from last year, while our gross margin decreased year over year to 79.4% and 80.8% year to date through the first nine months of the year. The decrease in our gross margin primarily reflects a continued positive contribution from our outstream solution, which has acted to support our desktop and mobile business but operates at a lower gross margin.

Importantly, our core CTV business operates with a gross margin of around 88%. CTV revenue continues to drive our overall revenue growth and increased 115% to $7.3 million from the same period last year and represents nearly 45% of total revenue. CTV continues to be the core focus of our strategic, marketing and technical investments and the business continues to grow at an exponential rate. Our quarterly core operating expenses, which exclude noncash items, increased 16% from the same period last year, due mostly to increases in our headcount.

As a percentage of revenue, we continue to demonstrate operating leverage with core operating expenses for the quarter at 81% of revenue, down from 86% of revenue in Q3 2018. This was a significant reflection of our commitment to managing our cost base and driving our top line growth to our EBITDA. Our balance sheet remained strong with working capital of $41 million, no debt and an unused credit line of $25 million. I'd like to finish our call this morning with our expectations for the remainder of 2019.

We're tightening our guidance range for the full year with a revenue between $69 million and $71 million and adjusted EBITDA between $2 million and $4 million. And we're now going to open the line up for some questions.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from Austin Moldow from Canaccord Genuity. Please go ahead.

Austin Moldow -- Canaccord Genuity -- Analyst

Hi. Thanks for taking my questions. Can you explain quickly what the EBITDA calculation change was regarding the lease costs from prior corporate facilities? Was that the concurrent lease of the old building that you weren't occupying? Because I thought that was already included in G&A previously and that was done with.

John Rego -- Senior Vice President , Chief Financial Officer

Yeah, Austin, John here. So before -- the leasing change came into effect on January 1. Prior to January 1, operating cost, leasing expense were just flushing through the P&L, right, and it was an offset into EBITDA. In 2019, we actually take the operating lease expenses and we capitalize them.

So there's an asset with an offsetting liability on the balance sheet. We subsequently go in for the calculation of EBITDA and pull out the operating expense that would have flushed through the P&L last year and we offset that against EBITDA. So it's apples-to-apples versus last year.

Austin Moldow -- Canaccord Genuity -- Analyst

OK. Now sort of shifting to top-line metrics. Can you talk about auction dynamics, improvements, and if that contributed to pricing expansion in the quarter? And if so, is there a way to think about how much more of that will impact pricing going forward? Or if it's just sort of a continual incremental thing?

Mark Zagorski -- Chief Executive Officer

Yeah. Austin, it's a great question. This is Mark. Auction dynamics and the ability to optimize the return for our publishers is in a constant technology investment for us and a constant focus for us because it allows us, obviously, to extract more from less, right? And the parts of the VMP that we've built out to take advantage of that or things such as some of the AI tools that we have around for management, for our pricing partners, but also basic things like the Creative Review tool, which allows people to actually -- if they win, ensure that the ads are being delivered so that it's less of a pricing dynamic issue but more of a delivery issue.

So it's something that we're constantly focused on. It is a functional investment in the tool set that allows us to take more share from -- in places where we do not have an exclusive agreement. So we see that as all kind of incremental growth that is built into the way we look at overall growth. And as we've said before, we believe that a majority of our revenue increases come from same-store sales.

And by that meaning, what we can extract from those publishers from the inventory they have and what share we can take from our competitors in those places. So our ability to kind of manage auction dynamics across the board, it becomes critically important. And that's why we do talk so much about technology investments, what we've done on the CTV front, building out tools like addressable, which allow us to kind of extract more from the same inventory by leveraging, targeting and data. So it's an important part of what we build out.

It's an important part of our investment scheme. And I think it's allowed us to continue to kind of maintain that faster than market growth, which -- one of the things, it's important to note and it's a little bit of a tangent is that this morning, eMarketer came out with stats for CTV this year that grow at 40% for the year. We're growing at nearly triple digits for the year. And I think a lot of that has to do with our ability to kind of manage those auction dynamics on the CTV side and continue to extract more for our partners.

Austin Moldow -- Canaccord Genuity -- Analyst

Got it. That's really helpful. And my last question, I just wanted to drill down into mobile and desktop. Can you speak to which of those channels maybe suffer the largest decline? And what's your current outlook for them?

Mark Zagorski -- Chief Executive Officer

Yeah. So we haven't broken them out specifically in the past, at least on these calls, but it's clearly we look at relative pressure on both the mobile and desktop business, it's really the desktop business that sees the most negative pressure on it. Just due to the fact that, a, desktop as a business from a macro perspective is declining year over year. So if you look at industry statistics, desktop video will actually shrink over the next several years.

So you've got that dynamic. And the fact that it's an area in which, if you look at our partners and the people that we're focusing on in the CTV space, it's an area that just isn't that important to them, right? They're growing -- the growth part of their business is really in large screens, and to some extent -- a lesser extent, in mobile. So the biggest pressure that we have -- the negative pressure on either of those areas is in the desktop area. Most of that is negative headwinds coming from just a decline in the sector as a whole.

As we've noted in the scripts, we've shored up some of that decline with our -- the upstream business and making sure that we can take advantage of any small pockets of growth there. But really, if you look at it, it's the desktop part of that business that really has the most negative pressure on it.

Austin Moldow -- Canaccord Genuity -- Analyst

Great. Thanks very much for taking my questions.

Operator

Thank you. Your next question comes from Kyle Evans from Stephens Inc. Please go ahead.

Kyle Evans -- Stephens Inc. -- Analyst

Hey, good morning. Thanks for taking my questions. I know SlimCut has been fully integrated and you're not going to break that out, but margins suggested continuing to grow as a percent of overall revenue. Could you, at a high level, talk about how the outstream ad unit is performing? You just referred to it as a pocket of growth.

And help us also think about how we should be transitioning that longer term from a gross to a net revenue recognition? And I've got some follow-ups.

Mark Zagorski -- Chief Executive Officer

Yeah. I'll take the first part of that, and John can take the second. We've been, as we've noted in the last few calls, we've been pleasantly surprised with the ability for that business to continue to grow in light of a space that is not arguably not our core focus nor one of the hottest spaces in digital today. So having an outstream business that's been able to shore up some of the pressure, which I just noted on the desktop part of the business and the desktop industry has been really positive, and we've been able to enjoy that growth from that business.

More importantly, from that acquisition, as we've also noted is the ability for that team to continue to grow our core VMP business in Canada. And some of the recent deals that they've been able to close, with Bell and Quebecor and Le Presse and others, really signifies the fact that: a, not only was this a good investment for us from building an outstream business but also it's been a great investment for us from starting to expand our core platform footprint to a new market. So net-net, we continue to be pleasantly surprised by the performance of that group. As we've also noted though, our core focus as an organization is to continue to build out our position as a leader in the CTV space.

And that is our vision, that is what we're driving toward. It's -- and that's why when we look at the real asset that we've been able to gain through that acquisition, it's their further capability and able to expand our footprint on the VMP side to kind of build out CTV relationships outside of the U.S.

John Rego -- Senior Vice President , Chief Financial Officer

OK. And then this is John speaking on the other part of the question. So majority of SlimCut revenue is accounted for on a gross basis, which is what you're referring to. That's not a desire, that's just the way the accounting regs suggest we have to do it.

Not all, some cut revenue, but majority. I'd say, about 80% of it is gross, the rest is net. Because it's gross, that has a negative impact on the combined gross margin of the company. And we already told you earlier that CTV gross margin is in the high 80s, 88%.

What's really driving that in the accounting to be gross accounting is that the way that folks like to transact business in outstream right now, it's very insertion-order oriented. And once there's an insertion order involvement, it's going to be gross, not net. So -- but if you are desired to get this to a net accounting down the pipe, we're going to keep working with that. But it's been pretty much of a slug right now to get that back to net.

Kyle Evans -- Stephens Inc. -- Analyst

Great. Mark, I'd be interested to get your perspective on Roku's recent acquisition of DataXu. I'm not sure if that has any meaningful impact to your business specifically, but if it does, I'd love to hear it. And then if it doesn't, I'd still like to kind of get your broader view of how that may or may not change the broader Connected TV landscape?

Mark Zagorski -- Chief Executive Officer

Yeah, it's a great question. And I think I'll start with the macro and kind of burn down to the micro. From a macro perspective, I think it shows -- it's a definite market kind of validation of a position that we've taken since day one of launching Telaria, which is the idea that: as more people cut the cord and more people go toward watching video over-the-top through channels, such as Roku, that the advertising dollars will follow. And consistent with what we saw with mobile and desktop, those advertising dollars will be increasingly transacted programmatically.

And that is the thesis upon which Telaria is built, and we're seeing that playing out in the larger macro market. So Roku is a venue through which, I would say -- a vast majority of their ad sales have been direct in nonprogrammatic. Their investment in a programmatic platform, which they own to kind of start moving inventory through there, basically says, "Hey, we believe in this programmatic positioning for our business. We're going to invest in that." And we think that's where a majority in the future of our revenue is going to come from when it comes to ad sales.

So I do think it's a pretty strong validation of that thesis around programmatic driving the future of CTV advertising. Specifically to us, I think it has a few relevant factors. The first being that: as the programmatic transaction of CTV dollars becomes more mainstream and you see macro players like Amazon and Roku and others kind of pushing more dollars there, that only benefits us, right? It only benefits the fact that as TV dollars start to shift to CTV, that an increasing number of those TV dollars that end up in CTV will be transacted programmatically. That's a great macro tailwind.

From a customer or partner perspective, we've worked with DataXu for the last several years as they start to build out their CTV competencies. And the strategy upon which, I think, Roku has publicly stated that they're going to use DataXu is to continue to expand what they call kind of audience-extension-type campaigns that may fall outside of the Roku universe. And that, again, may bode well for us as a partner to DataXu and the fact that we provide inventory outside of the Roku universe as well. So I think that it's -- again, it's a further justification of programmatic as a real force in CTV.

We, I think, are sitting in a really good spot to take advantage of all -- both the macro tailwinds, and in this case, some of the specific micro tailwinds or micro factors as well. So again, generally, I think, a good thing for the marketplace and a good thing for Telaria.

Kyle Evans -- Stephens Inc. -- Analyst

Great. Thank you.

Operator

Thank you. Your next question comes from Jason Kreyer from Craig-Hallum Capital Group. Please go ahead.

Jason Kreyer -- Craig-Hallum Capital Group LLC -- Analyst

Good morning. Thanks for taking my questions. Mark, just wanted to focus for a minute on the Q4 outlook. So if we look at the Q3 results, we see CTV remaining a big growth driver, a source of outperformance, while mobile and desktop lagged that a little bit.

So wondering if you can kind of break down that Q4 outlook? And how we should think about that trend line moving quarter over quarter, kind of the balance of what goes into CTV versus the contribution on the desktop/mobile side?

Mark Zagorski -- Chief Executive Officer

Yeah. I mean, it's a great question, Jason. I mean, look, we have not been shy about saying that the future of this business is connected television. And that trend continues to play itself out quarter to quarter as you see more of our business being CTV.

That trend will continue into Q4. We see strong connected TV growth going into that quarter and -- which will result in likely stronger CPMs. A bigger percentage of our business being connected TV. And I think that is playing out against our investment strategy and our overall business thesis of becoming the leading platform in CTV.

So net-net, we see CTV growing as a percentage of our business. We see continued outpacing of the general market growth rate for CTV within our business. And Q4 is going to be an interesting one for us because I think it will be one in which close to a majority of our business will be CTV. It will be the first time in the company's history.

So we're going to see, as we've noted in the past, much more TV-like seasonality, and I think that is going to be an interesting perspective for us as a company moving ahead.

Jason Kreyer -- Craig-Hallum Capital Group LLC -- Analyst

That was actually going to be my next question. Just do you guys have kind of a time frame for when you think we see that cross over into CTV? Or maybe you're not prepared to kind of pinpoint when that transition starts?

Mark Zagorski -- Chief Executive Officer

Yeah. I mean, I think, look, we've stated this before, which is like -- we want all parts of our business to grow, but we know that where our biggest investments are CTV and that's where the focus is. And that is, at some point, we'll reach this inflection point. Based on our current trends and where we're looking at, we're not going to comment down to a day or date.

But if you extrapolate out where we're heading, the kind of growth that we're seeing in CTV, the market tailwinds that we have, it's fair to say that sometime in the first half of next year a majority of our business will likely be CTV.

Jason Kreyer -- Craig-Hallum Capital Group LLC -- Analyst

OK. Great. And then just last one for me. We're seeing a lot more new streaming platforms hit the market.

You had Apple last week, Disney next week and then a couple more on the horizon for early next year. And while you may or may not be working with some of those, just wanted to get your thoughts on what that means for Telaria having more options out there for consumers?

Mark Zagorski -- Chief Executive Officer

Yeah. I mean, look, I think we're starting to reach critical mass of not only the number of platforms out there but the number of people who are engaging with those platforms and literally cutting the cord. I think in the recent call that we heard from AT&T, the number of cord-cutters actually is accelerating, which I think there is some surprise around that. So we're reaching critical mass across the board.

What is also interesting, as you noted, is a lot of these services are coming out as SVOD services with rumored AVOD variations coming out shortly after that. I think we are also reaching this -- reaching a point of subscription fatigue, which we've talked about since day one, and is that there's going to be a limited portfolio of subscription-based services that people are going to be willing to pay for and the rest of their viewing portfolio will really be made up of AVOD players. That's only good for us, right? And I think that even with rumored transitions of even such things as the Peacock Network, which was supposed to be a fully SVOD network coming out as potentially an AVOD opportunity as well, you're seeing the increase in advertising-supported platforms out there actually creating a greater proliferation of opportunities for us as a company to help those guys monetize that inventory. So again, I think these are great market tailwinds for us.

And from a sector perspective, it just shows more advertising opportunities for growth across the board.

Jason Kreyer -- Craig-Hallum Capital Group LLC -- Analyst

All right. That's it for me. Thank you.

Operator

Thank you. Your next question comes from Lee Krowl from B. Riley & Co. Please go ahead.

Lee Krowl -- B. Riley FBR -- Analyst

Great. Thanks for taking my questions. A couple of quick ones. Just first, on these Audience Connect tools, kind of curious how they jive with the kind of regulatory environment as we go into CCPA next year? Do you think that these Audience Connect products kind of makes the platform more relevant? And where they built kind of with that in mind? And then just curious, perhaps if you can maybe just qualitatively talk about the potential uplift in CPM as it relates to better targeting?

Mark Zagorski -- Chief Executive Officer

Yeah. It's a great question, Lee. So when we look at the Audience Connect suite of tools, the idea there was to do two key things: to both create a more addressable advertising opportunities in cases where there may be a lack of individual level data so to provide more TV like addressability for advertising buyers. So whether that's context or show-level information, just to make the CTV buying experience much more like TV but doing so in a very privacy-friendly and clean-data perspective.

So that was kind of section one, which is, hey, in cases where there may be challenges around individual-level data, let's provide tools that allow buyers to have a TV-like buying experience so that when they're moving dollars from TV to CTV, there's a consistency there. So that was piece one. The second was, in cases where there is no data conflict or challenges around data, when a publisher actually owns data has an opt-in and clean data trail with the consumers how can they leverage that to actually give them addressability plus, right? Give them an even stronger way for advertisers to reach consumers in a more targeted fashion, and I think that the suite does that. So the idea here is to take advantage of the capabilities of CTV, while doing so in a really privacy-friendly and flexible manner that encourages TV dollars to move to CTV but also gives TV buyers an even greater reason to want to move dollars there because there is a more accurate audience reach capability.

As far as what we've built into models around revenue growth from this, we look at all of this as being part of our overall strategy to, again, extract more from our current publishers. And that means, A, giving them the ability to sell their inventory to higher CPM because it's more targeted, which, again, based on our model, drives more revenue for us but also creates an opportunity for us to take more share from them, from our competitors, by having stronger tools like this. So we don't quantify a specific growth rate based on this, but we do think this is an important part of our current track record of growing faster than what the industry has grown out. And again, we've mentioned, you're looking at an industry that's growing at about 40% growth rate this year.

We're more than doubling that based on our CTV growth rate, and I think tools like this play a big part in that.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. And then specifically on the political advertising front, do you guys kind of anticipate that to become a tailwind for you guys, I guess, as of today? Or is that kind of more of a second half 2020 sort of potential year-over-year growth driver for you?

Mark Zagorski -- Chief Executive Officer

Yeah. It's a great question. And this is another place where we are cautiously optimistic, but it's really unknown. It's unknown waters right now for connected television, right? We've done some research around it that really points -- paints a pretty good story around why CTV should play a pretty significant role in the next election, and particularly when you see guys like Twitter and other social networks kind of walking away from political advertising.

There's only really going to be two venues through which to reach consumers with a significant amount of -- potential voters with video. And we believe that's going to be television, which provides pretty limited addressability beyond just geo targeting and contextual targeting. And then CTV, which provides the addressability and targeting capabilities that are found in social with the full-screen site sounded motion that advertisers -- I'm sorry, political advertisers have always embraced in the TV world. So we think we've seen a trickle of kind of advertising and political advertising coming in over the last several months.

I really think this is -- the dynamic here is going to probably be a 2020 dynamic, but this is, again, uncharted territory. This will probably be from all recent reports, be the highest spending campaign season in the history of the world, and that's not an exaggeration when you look at the numbers. And with estimates being at $1 billion plus going to digital video, we do think that there is certainly an opportunity for us as a company to take advantage of that. When that starts hitting, I think, again, it's totally new because -- the last election cycle in '16, at least from a Presidential perspective, CTV wasn't a real factor.

I think we're heading into a year in which CTV will be a real factor, not just because of the things we mentioned before about addressability and relevancy but also the fact that you've got a medium now which has reached critical mass. You're looking at 30% of households plus not being reachable through traditional television. So I think it's going to be a really interesting year for the political advertising universe and particularly for us in our role that we play in that.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. And then one last quick one. With SpotX kind of in a strategic review, the announcement with Clypd being sold to Xandr a week or two ago, and then, obviously, the DataXu announcement with Roku. Just kind of your thoughts on publisher relationships as you kind of have some of these M&A events over the last quarter?

Mark Zagorski -- Chief Executive Officer

Yeah. I mean, look, I think I've always had the position that market kind of turmoil creates great opportunities. And I think this is no exception when the ownership structure of a competitor is up to question and particularly in a world in which walled gardens can really turn off potential publisher partners and the concern that a competitor may end up in a walled garden, it just creates opportunity for us. Not only does it mean that their eye has been a little bit off the ball but it also means that a deepening partnership with a company that may be up for sale to a walled garden creates questions on a publisher's mind.

So we greedily take advantage of those concerns, and I think it creates opportunity for us. And if you've seen this quarter, we had pretty exceptional CTV growth. And I think a lot of that was based on the fact that we're able to drive some additional share with partners.

Lee Krowl -- B. Riley FBR -- Analyst

Got it. Thanks for taking my questions.

Operator

Thank you. Your next question comes from Mark Argento from Lake Street Capital Markets. Please go ahead.

Mark Argento -- Lake Street Capital Markets -- Analyst

Hey, guys. Just a couple of quick ones here. First off, obviously, AVOD is becoming a bigger and bigger deal, it's moving a lot more quickly than people anticipated. And you guys sound like you're well-positioned.

Is there any opportunity on the M&A side to kind of bolster your kind of positioning and really take advantage of how quickly things are moving? Then my second one, I'll just give it to you right now. The eCPMs, where do you think that can trend to you here over the next couple of quarters?

Mark Zagorski -- Chief Executive Officer

Thanks for the question, Mark. On the M&A front, I think we've stated previously, we're always looking for interesting acquisitions that can help accelerate our position in the market, either globally or by giving us a more robust tool set that can help drive yield for our partners or provide more insight in their capability -- in our capability, so they can kind of extract more from their own inventory. We certainly don't comment on any potential M&A that we have, obviously, before it happens. But there -- I think we are consistently looking for those opportunities to kind of build out the platform.

We did -- I think our acquisition that we did last year has helped to expand that global footprint, as I mentioned, which is one of our key objectives in a new market, so in Canada, as well as in France, which we added a new partner in, recently. So I think we're looking on that global perspective for acquisitions, but we're also looking at small technology tuck-ins. And I think the nice part of where the market sits today is that there are a lot of ad tech jewels out there that I think have been underrecognized, that are looking for a home. And we consistently look for an opportunity to push those into our platform.

So a little bit of a relatively vague answer around that. But with the driving perspective is that it's something we're constantly looking to invest in, it's something that we believe that there are opportunities for us to continue to grow. And based on our track record with the acquisition last year, we know we can successfully integrate those companies to help drive growth for us. On the second aspect of that, with eCPM, we've seen steady growth in CPM, based on not just the share shift toward CTV but also in the fact that we've been able to help those publishers on the CTV front get more from their current inventory through the tools that we've built.

I think we're going to see -- we were pleasantly surprised with the continued growth year over year. As we've said before, I think that growth is going to slow a bit because as we start reaching critical mass on the CTV side, that -- a lot of that juice that's kind of driven the CTV -- or the CPM growth will start to flatten out a bit. But nonetheless, I think we're going to see continued gradual growth in eCPM as both the share of our business in CTV grows as a percentage of our overall business and as our tools continue to extract more value from the same inventory. And I think tools like we've launched on the addressable side, which are really just getting their legs on the commercialization side, those will help us kind of push those numbers up as well.

So I think we've got a couple of decent factors that will help with the eCPM growth, but as we stated in the past, I mean, we've got a lot of the big pop out of there. It will continue to grow, but expect a slight flattening out of the CPM growth over the next several quarters.

Mark Argento -- Lake Street Capital Markets -- Analyst

Thank you.

Operator

Thank you. We have reached the end of the question-and-answer session, and I will now turn the call over to Mr. Mark Zagorski for closing remarks.

Mark Zagorski -- Chief Executive Officer

Thank you, operator, and thank you all for joining us this morning. In closing, this was another strong quarter. We continue to expand our leadership position in CTV, which is now nearly a majority of our revenue. We continue to make advancements in our platform technology to create more opportunities for CT buyers -- for TV buyers to move to CTV and maximize yields for publishers.

And we continue to deepen our publisher relationships and expand our footprint around the globe, while creating a fully transparent ecosystem. Through the successful execution of our strategy, we are hitting key milestones and delivering on our expectations for the year. This gives us confidence in our outlook as we head into 2020. Thanks for your participation in the call this morning, and we look forward to updating you in the months ahead.

Operator

[Operator signoff]

Duration: 46 minutes

Call participants:

Andrew Posen -- Vice President of Investor Relations

Mark Zagorski -- Chief Executive Officer

John Rego -- Senior Vice President , Chief Financial Officer

Austin Moldow -- Canaccord Genuity -- Analyst

Kyle Evans -- Stephens Inc. -- Analyst

Jason Kreyer -- Craig-Hallum Capital Group LLC -- Analyst

Lee Krowl -- B. Riley FBR -- Analyst

Mark Argento -- Lake Street Capital Markets -- Analyst

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