DoubleVerify Holdings, Inc. (DV) Q3 2021 Earnings Call Transcript

DoubleVerify Holdings, Inc. (DV 0.98%)
Q3 2021 Earnings Call
Nov 09, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the DoubleVerify third quarter 2021 financial results conference call. All lines have been placed in a listen-only mode, and the floor will be open for questions and comments following the presentation. [Operator instructions] It is now my pleasure to turn the floor over to your host, Tejal Engman, investor relations.

Tejal Engman -- Investor Relations

Good afternoon, and welcome to DoubleVerify's third quarter 2021 earnings conference call. With us today are Mark Zagorski, CEO; and Nicola Allais, CFO. Today's press release and this call may contain forward-looking statements that are subject to inherent risks, uncertainties, and changes and reflect our current expectations and the information currently available to us, and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings, including our S-1 registration statement.

In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to and not as a substitute for our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release, which is available on our Investor Relations website at ir.doubleverify.com. Also, during the call today, we'll be referring to a slide deck posted on our website. With that, I'll turn it over to Mark.

Mark Zagorski -- Chief Executive Officer

Thanks, Tejal, and good afternoon, everyone. We're excited to share with you our third quarter results, expectations for the full year, and additional detail on recent strategic investments we've made. We grew the third quarter revenue by 36% to $83.1 million, achieving the top end of our revenue guidance range. We grew third quarter adjusted EBITDA by 82% to $26.4 million, representing 32% EBITDA margins and exceeding the top end of our guidance range.

Advertiser programmatic, advertiser direct, and supply side revenue all delivered double-digit year-over-year growth. Our core revenue growth continues to be driven by our product success in fast-growing sectors such as programmatic, social, and CTV and a global expansion strategy that's winning large enterprise clients in a growing number of international markets. We've had a great year so far. Revenue in the first nine months of 2021 grew 37% year over year.

Adjusted EBITDA grew 52% year over year. We were not impacted by Apple's app tracking transparency changes because our measurement in pre-bid targeting solutions do not rely on cookies or individual identifiers. Additionally, because we verify, target and measure nearly everywhere that digital dollars are spent, we are largely insulated from platform-specific supply and demand fluctuations. Our fixed fee solutions follow the spend.

In addition to generating strong core revenue growth, we are focused on investing in long-term strategic initiatives that expand our product leadership and deepen our coverage in fast-growing sectors. In doing so, we not only increase our potential TAM and create broader upsell opportunities with current clients, but we also further enhance our ability to optimize their advertising outcomes. On that front, we're excited to announce our second strategic investment of the year, the acquisition of OpenSlate, having just completed our acquisition of Meetrics in the third quarter. I'd like to spend a few minutes on how both of these transactions enhance DV's customer value proposition and cement our market leadership.

Acquiring OpenSlate will help us drive better outcomes for advertisers by providing pre-campaign targeting and brand suitability solutions that integrate with our measurement tools and increase our total coverage across key CTV and social platforms. OpenSlate's pre-campaign solutions perfectly complement DV's post-campaign measurement capabilities on CTV and social platforms such as YouTube, Facebook, and TikTok. Integrating the two provides advertisers with unparalleled end-to-end brand safety, suitability, and contextual optimization. No other company will be able to deliver a fully owned and integrated solution across these leading social and CTV walled gardens.

We've seen the power of integrating pre-bid and post-bid solutions on the open Internet with the success of DV's programmatic tools, including Authentic Brand Suitability. The efficacy in driving powerful outcomes by connecting pre-bid and post-bid capabilities has driven stickier client relationships and expanded our revenue opportunities. Today, nearly all of our top 100 customers use DV for both pre-bid programmatic targeting and post-bid quality measurement for their media buys on the open Internet. And half of our total revenue now comes from our pre-bid solutions.

We expect the acquisition of OpenSlate will help expand our existing social and CTV coverage and customer base. OpenSlate has the most sophisticated contextual targeting technology and the widest coverage across YouTube and TikTok in the industry. DV has achieved exponential growth in social and CTV revenue since 2018 with our post-bid measurement solutions. Our YouTube revenues have increased more than sixfold while our Facebook revenues have increased fivefold over the last four years.

YouTube and Facebook are expected to represent nearly 15% of our total 2021 revenue on a combined basis. Adding pre-campaign targeting via OpenSlate only increases our revenue growth potential from these and other fast-growing CTV and social platforms. OpenSlate has won the trust of the leading agency holding companies and over 200 large global brands, including Procter & Gamble, Coca-Cola, Kimberly Clark, Nestle, Sony, Unilever, and Volkswagen. We see significant revenue opportunities to cross-sell OpenSlate and DV solutions across our combined customer base, offering advertisers a unique integrated solution that drives better advertising outcomes.

OpenSlate also aligns with DV's core value of providing unbiased, objective third-party measurement that is independent of the media transaction. Additionally, neither company relies on persistent tracking technologies such as third-party cookies or mobile device IDs like Apple's IDFA. These shared principles, market-leading technology, and deep social and CTV coverage make OpenSlate a strong strategic fit for DV. We're excited to unlock meaningful new growth opportunities that will be created by bringing businesses together.

Our other recent strategic investment was the acquisition of Meetrics, a leading European ad verification company. Meetrics provides DoubleVerify with a strong operating platform and experienced sales, product, and engineering teams, as well as the opportunity to scale existing customer relationships through access to DV's global capabilities. Global revenue growth continues to be a focus for DV as we see ample opportunities for the market share expansion outside of the Americas. As we continue to execute our global expansion strategy, we grew third quarter EMEA revenues by 44% year over year and APAC revenues by 96% year over year.

In the third quarter, we won the global business mandates of key European advertisers, including Burberry, Patek Philippe, and HRA Pharma, as we continue to see our investments in international markets deliver results. Other key expansions and new logo wins include Facebook, now known as Meta; Sony Japan, Disney Studios, TJX, American Family Insurance, Dropbox, Afterpay, ANZ, and Peloton Global. This exceptional number of Q3 deals further position us for growth in 2022. The addressable market for DV solutions remains significant and approximately 64% of the new enterprise logos that we've won in Q3 were greenfield.

Direct revenue outside of the Americas grew 60% year over year in the third quarter, representing approximately 25% of direct revenue and exemplifying the expanding opportunity for our solutions in markets around the globe. The market penetration of our social solutions remained a highlight for DV in the third quarter as we grew social volume by 83% year over year. Our recent milestone in our social coverage was the launch of our partnership with TikTok to measure viewability, fraud, and in-geo impressions across the TikTok platform. This development, combined with the new solutions we gained through the acquisition of OpenSlate, will position DV as the only company to offer brand safety controls and comprehensive quality measurement coverage across TikTok.

We believe there is significant growth potential for our solutions as advertisers continue to invest in the TikTok platform, which is expected to expand beyond 1 billion users each month. Turning to CTV. Our products continue to gain traction in one of the fastest-growing segments of the advertising market. DoubleVerify grew third quarter CTV volumes by 41% year over year, driven by DV Video Complete, which remains the only solution that allows brands to effectively block brand suitability and fraud violations on CTV.

DV remains the most MRC-accredited verification platform for CTV. As the cost per advertising impression remains high on CTV compared to other formats, it's increasingly attracting fraud, a challenge to the industry, and an area where we are committed to addressing. In August, our Fraud Lab uncovered and neutralized SmokeScreen, an advertising fraud scheme which caused screensavers to hijack CTV devices and generate ad impressions even when the screen was off. While DV neutralized SmokeScreen for our clients and partners, helping them avoid wasted investment, the scheme remains active on unprotected CTV platforms, generating up to 10 million fraudulent requests per day and costing unprotected advertisers millions of dollars per month.

Switching our focus to programmatic revenue growth, Authentic Brand Suitability, or ABS, grew 64% year over year, driven by its continued adoption on major buying platforms, most notably Google's DV360 and The Trade Desk. And although still nascent, our newest programmatic pre-bid solution, DV Custom Contextual, saw a 60% sequential increase in the number of advertisers using the product since last quarter. We are encouraged by its early growth trajectory and continued adoption in platforms like The Trade Desk and Amazon. In summary, Q3 was another strong quarter for DV.

Our core revenue growth continues to be driven by advertiser demand to solve the fundamental challenge of optimizing ad spend while protecting brand integrity in an increasingly complex digital ad ecosystem. DoubleVerify supports this imperative across the fastest-growing channels, geographies, and platforms. The acquisitions of Meetrics and OpenSlate will expand our ability to drive better advertising outcomes on a broader scale, differentiating our platform and making DoubleVerify solutions even more essential for our customers. We couldn't be more excited about the growth opportunities ahead.

With that, I'll turn it over to Nicola.

Nicola Allais -- Chief Financial Officer

Thank you, Mark, and good afternoon, everyone. Let me begin with a review of our quarterly performance before discussing our 2021 outlook and providing additional color on the OpenSlate acquisition. Our revenue performance in the third quarter reflects continued broad-based strength in advertiser platform and publisher demand for DV products. Each revenue type grew sequentially from the second quarter to the third quarter, which is seasonally weaker.

For the third quarter, our revenues were $83.1 million, up $22.1 million or 36% year over year. On a sequential basis, third quarter revenue grew nearly 9% and outperformed the 7% sequential growth we delivered in 2019. Revenue was driven by strong volume or MTM growth for both direct and programmatic. Gross revenue retention remained above 95%.

Advertiser programmatic revenue grew 49% in the third quarter year over year, primarily driven by continued ABS adoption, particularly on DV360. As Mark mentioned, ABS delivered 64% year-over-year revenue growth in the quarter and now represents over 50% of programmatic revenue. To date, we have been successful at upselling this premium product to our existing customers, and we are now focused on making ABS the cornerstone of every RFP for prospective enterprise clients as well. Advertiser direct revenue grew 23% year over year, driven in part by large existing enterprise clients, including Unilever and Amazon, expanding DV's coverage to international markets.

We also benefited from newly signed clients, including Airbnb, Target, and Sony, ramping up their business with us. On the supply side, we recognized new revenue from MoPub, Taboola, and Tremor in the third quarter as we continue to expand partnerships with key platforms and publishers. Shifting to expenses. Our cost of revenue increased by $4.4 million year over year in the third quarter, primarily due to an increase in costs from revenue-sharing arrangement with our programmatic partners as programmatic revenue grew as a percentage of total revenue.

In addition, we continue and intend to accelerate our investments in cloud-based hosting solutions to provide the scale and flexibility necessary to support our geographic expansion. Our product development costs increased by $3.3 million, while sales, marketing, and customer support expenses increased by $2.8 million year over year in the third quarter. Following a period of strong organic hiring and investments in the first part of the year, we're now focused on integrating engineering, product, and sales talent from our recently completed acquisition of Meetrics and from our pending acquisition of OpenSlate. While we anticipate realizing synergies by eliminating duplicative costs over time, we expect operating expenses to trend higher in the fourth quarter, which is reflected in our fourth quarter EBITDA guidance.

Third quarter 2021 adjusted EBITDA was $26.4 million, up 82% year over year and representing a 32% adjusted EBITDA margin. Excluding the impact of $1.4 million of bad debt recoveries in the quarter, adjusted EBITDA would have been $25 million, representing a 30% margin. And finally, we delivered $7.9 million of net income, up 37% year over year. In terms of cash flow and balance sheet, we generated $58.4 million in cash from operating activities through the third quarter of 2021 as compared to $17.8 million through the third quarter of 2020.

We had approximately $320 million of cash at the end of the quarter, even after paying for the Meetrics acquisition in cash, and we continue to have zero debt on the balance sheet. We are acquiring OpenSlate debt-free and expect to fund the $125 million cash portion of the acquisition with cash on hand. Now turning to guidance. We expect fourth quarter revenue in the range of $98 million to $103 million, which at the midpoint implies revenues of $100.5 million and growth of 28% year over year.

We expect fourth quarter adjusted EBITDA in the range of $34 million to $36 million, which at the midpoint implies an increase of 27% year over year and an adjusted EBITDA margin of 35%. The prudence in our fourth quarter outlook reflects the supply chain uncertainty and its impact on ad spend that some of our large CPG and auto customers have shared with us. Following our strong year-to-date performance, we are reiterating our full-year 2021 revenue guidance range of $325 million to $330 million, a year-over-year increase of 34% at the midpoint. We also continue to expect adjusted EBITDA in the range of $103 million to $105 million, a year-over-year increase of 42%, and an adjusted EBITDA margin of 32% at the midpoint.

Finally, we expect our fourth quarter weighted average diluted shares outstanding to range between 166 million and 169 million shares. Turning to OpenSlate. As the acquisition has not yet closed, we do not expect OpenSlate to have a material financial impact on our 2021 results. And while we're not providing 2022 guidance here, we currently expect OpenSlate to contribute between $15 million and $18 million of revenue in 2022.

The company is near breakeven today, and we expect to streamline operational costs over time by integrating the smaller scale operation into our broader global infrastructure. And with that, we will open the line for questions. Operator, please go ahead.

Questions & Answers:

Operator

Thank you. The floor is now open for questions. [Operator instructions] And our first question comes from Arjun Bhatia from William Blair. Go ahead, Arjun. 

Arjun Bhatia -- William Blair -- Analyst

Yes. Thank you very much. I wanted to start maybe just with the OpenSlate acquisition. Can you just give us a sense for maybe the customer overlap that you have with OpenSlate? Obviously, the technology seemed complementary, but how many, if you can quantify in any way the number of joint customers.

And then I would love to hear maybe just some commentary on the build versus buy, why did the acquisition make sense? And what's difficult about the technology itself that made this acquisition attractive? Thank you.

Mark Zagorski -- Chief Executive Officer

Yes. Thanks, Arjun. Great question. I mean, it's pretty clear hopefully that through the script that we're super excited about the OpenSlate acquisition.

It is a differentiator in the market that allows us to be the only platform with really end-to-end pre-bid and post-bid measurements and verification across platforms like TikTok and YouTube. It really does expand our coverage footprint to give us unrivaled coverage across, obviously, the hottest platforms that are out there today. And it allows us to further live our story of being a single platform through which advertisers can come to and be confident that their investments are going to be protected and ads that will be delivered across a brand suitable and verified environment. Specifically, around customers, that's where we even get more excited.

Whereas the OpenSlate technology is really awesome, as a relatively subscale company, their ability to sell to a lot of enterprise clients has been a long time coming. Right now, we have about client overlap of around 60 customers. And when you think about DoubleVerify working with over 1,000 brands worldwide, the way I look at it is we've got 940 more customers to sell to, which is a pretty awesome opportunity for us. So, there's some customer overlap, but it's really minimal.

And for us, it's all about upselling. And we've had a really solid track record of upselling new solutions to current clients. So, A, that's super exciting. On the aspect of build versus buy, I think there's obviously a lot of considerations here and one of which is timing to market, and with specific time to market, timeliness to market.

And we know that platforms like TikTok and YouTube are just booming. And since the pandemic started, the engagement on those platforms has only gotten greater. So, the ability to move very quickly with a solution that complements our post-bid measurement solution and helps optimize those outcomes for advertisers and do that without having to go through a build and wait for a time to build over while those platforms scale. I think that was the real selling point for us, which was moving quickly into markets to take advantage of those growth, getting stickier with our current clients when they're going to be making those decisions, and then starting to deleverage and use some of that dry powder that we have in a way that can really grow it exponentially over time.

Arjun Bhatia -- William Blair -- Analyst

Awesome. That's great to hear, and that's very helpful color, Mark. One more question if I can just on TikTok. Obviously, there's a lot of exciting things happening there.

You have the new partnership. Now you have OpenSlate that gives you kind of a unique way to capture share there. Just give us a sense for how you're positioned to grow in the TikTok opportunity? And if there's any way you can help us frame the potential contribution over the next year or so now that you have some of these pieces in place to really attack that opportunity, that would be super helpful.

Mark Zagorski -- Chief Executive Officer

Yeah. So, if you think about kind of the way that the products are lining up, we recently announced the launch of our viewability and fraud solutions across TikTok. OpenSlate was one of the first partners in on brand safety. So, we've kind of got all the bases covered there with regard to pre-bid, brand safety, and post-bid measurement and verification on the viewability side.

So, when we look at the completeness of solution, it's really exciting there. When we think about that platform in particular, and if you just kind of do some back-of-the-envelope math, you figure it's about a third the size of Facebook now in active users in the Americas. Right now, between Facebook and YouTube, they make up about 15% of our total revenue. So, take half of that or so for Facebook, gives you about 7.5%.

If you say they're a third of Facebook, you could see potentially this business being anywhere from 3% to 4% of our total revenue after time. So, I think when we look at the opportunity on that specific platform, we think there's a comparable opportunity that we've seen with platforms like Facebook and YouTube just based on the scale of user engagement and the demand that we're seeing from our advertisers.

Arjun Bhatia -- William Blair -- Analyst

It's very helpful. Thank you very much, and congrats on the acquisition and the quarter.

Mark Zagorski -- Chief Executive Officer

Great. Thanks. 

Operator

And our next question comes from Andrew Boone from JMP Securities. Go ahead, Andrew.

Andrew Boone -- JMP Securities -- Analyst

Hi. Good afternoon, and thanks for taking the questions. So, question No. 1, first on Custom Contextual customers growing 60% quarter over quarter.

That seems like a very good omen for 2022. So, can you talk a little about the drivers behind the ads? And how do you move those customers more test budgets into something that's more persistent or is it more persistent today?

Mark Zagorski -- Chief Executive Officer

Yeah. Thanks, Andrew, for the question. We like the traction the product is getting. And like all of our pre-bid or pre-filtering products, so ABS on the programmatic side, what we've just done with OpenSlate and now Custom Contextual, it ties really nicely to our post-bid measurement, building this kind of optimization cycle over time.

So, we know that once people start using those pre-bid solutions, it helps fortify and leverage our post-bid solutions as well. So, it creates this virtuous cycle. So, on the contextual side, we've seen a lot of client uptake. We know that first take is the uptake and then the volume after that.

So, as we see the number of clients using it increase as we saw last quarter, 60% sequentially, we know that puts us in a good position for 2022 as now dollars start rolling off other solutions to our solution. The nice part about a lot of these, what we call, again, pre-bid solutions that are on programmatic platforms, so ABS and then Contextual, is that the ability to move dollars to those solutions is pretty fluid. So, the stickiness comes with the post-bid measurement afterwards, but the fluidity of adoption and dollar flow into Contextual on the pre-bid side is pretty loose. And what that means is, we feel good about next year and Contextual's contribution to our growth next year as part of our overall pre-bid performance suite. 

Andrew Boone -- JMP Securities -- Analyst

That makes sense. And my second question is around international. I think you talked about 60% growth in the quarter. Can you just provide a little bit more detail on just the go-to-market, whether that's more international kind of customers that are expanding into new markets or whether these are local wins? Just kind of help us understand the strength of international where you guys are finding success.

Thank you so much.

Mark Zagorski -- Chief Executive Officer

Yeah. I mean, look, we've been pretty upfront about saying that we think there's a good amount of white space in the international markets. It was one of the reasons why we acquired Meetrics and closed that deal in Q3. 50% of our, 55%, excuse me, of our new hires so far this year are outside the U.S.

and 40% of our headcount is outside of the U.S. right now. So, it's a commitment we've made. And the reason why we've done so is for both of the reasons that you noted.

Our global clients are getting bigger. And by that, meaning, they're moving toward enterprise single-platform solutions, and they want those solutions to work wherever they are. So, whether it's a Unilever or a Mondelez, they're looking for a solution that can be leveraged in every market where they buy and sell advertising. So, our ability to have people on the ground, to have support, and to have resources that can help optimize their spend in those markets is really critical.

So, as we look at our international investments, it's to continue to further support our enterprise clients. But we get this nice residual impact as well when we put those people on the ground. What we're able to do is sell through a significant number of local brands as well, so we get both. And both parts of that are prongs in our attack strategy.

So, we cover the global clients through a team that we call GCAP, which is focused on enterprise clients around the world. And then we attack the local clients through the teams on the ground at end market. And if you think about some of the names that we mentioned in the call, there are the big guys that are international, so the Facebooks and the Disney Studios, etc. But then there's folks that are like, that are local.

So Patek Philippe, which is obviously a French brand. The Afterpay and ANZ, which is in New Zealand, in Australia, and Sony Japan, another great one. We look at local brands as being an offshoot of what our enterprise client relationships enable us to do in those local markets. 

Andrew Boone -- JMP Securities -- Analyst

Great. Thanks, Mark.

Operator

And our next question comes from Justin Patterson from KeyBanc. Go ahead, Justin.

Justin Patterson -- KeyBanc Capital Markets -- Analyst

Great. Thank you very much. Very impressive growth out of ABS. You did note the DSP additions during the quarter.

Would love to hear more about just how we think about ABS' growth opportunity and just where you are in terms of client adoption from that product. So that's question No. 1. And then question No.

2, there's a lot of changes in the measurement ecosystem right now. I understand that iOS is not necessarily a headwind for your business. But I'm curious how everything from what's going on with measurement, so Nielsen, MRC, is creating opportunities for the business. Thank you.

Mark Zagorski -- Chief Executive Officer

Great. Great questions, Justin. Let me take on the ABS one first. I think that if you kind of put this in a baseball analogy, what inning are we in with ABS.

I think in the Americas, as far as platform adoption, we're probably like in the seventh inning, right? We've got the big guys. We've got Google. We've got Trade Desk and Amazon all signed up with ABS. So, I think in the Americas, we're probably on the platform side well into the game.

On the scale side, however, we think there's a significant amount of upside still to be made out of ABS just by volume and new client adoption on those platforms. So, we've kind of got the showrooms open and now we're filling it with cars and people coming into those showrooms. So, I think we're probably still well into the early part of the game as far as how much volume can get on those platforms. And then one other consideration, too, is our next level of penetration on ABS, from a platform perspective, ties into the question Andrew just laid out, which is on a global perspective, we've got local DSPs that we would call them local here, but they're pretty dominant in the markets that they're in.

And whether that's in APAC or parts of Eastern Europe or Middle East, there are significant platforms in those areas that we still need to get distribution across, I think, that can help those local clients, too. So that's still early going. So, net-net, we think there's a good amount of growth for ABS, both on a volume perspective and then outside of the U.S. from a platform distribution perspective.

In regards to your second question, I mean, how much time do we have? Because we would love to talk all day about this. I mean, I think that you bring up some great points around what's going on in the measurement space. And everything from the decline of efficacy in panels, to the loss of accreditation for major platforms, to the real questioning of whether or not single platform antiquated currencies have a future. I mean, all of those things have thrown the measurement in performance market up for grabs.

And we think we're in a really good place to take advantage of that. Because at the end of the day, what advertisers are looking for is a proxy for an outcome, right? And they've always used reach and frequency for that in the olden days of linear television. They're looking for new proxies that can help them drive those outcomes. DoubleVerify supplies those proxies.

And whether we start with a base of evaluating media quality and saying, hey, this is actually a safe place for you to be. That's the first part of actually delivering a result which is saying, let's take the crap off the table, and let's lead with the good media out there you can buy against to then moving upstream to doing things like ensuring that they're targeting against the right contextual elements, moving into new metrics like the launch of our Authentic Attention solution. You're going to hear a lot about Attention over the next few quarters because advertisers are waking up to say, what are those other proxies that we want to have besides just knowing that this is a male and there's 50,000 males watching my show? I want to know how engaged they are and how that relates to selling a product. And I think that this all comes back down to is, what are those things that I can measure, what are those indicators of performance that will help me drive the outcome of selling a product? And if you can't tell yet, like we are super enthusiastic about the role that we can play.

We think there is a huge amount of the market that's up for grabs. And our investments in companies like OpenSlate and our continued investments in products like Authentic Attention, which will launch in CTV early next year, are places where we think we're going to take a bigger piece of that pie.

Justin Patterson -- KeyBanc Capital Markets -- Analyst

Great. Thank you.

Operator

And our next question comes from Michael Graham from Canaccord. Go ahead, Michael.

Michael Graham -- Canaccord Genuity -- Analyst

Thank you. OpenSlate sounds exciting. Just a comment maybe on how long you think it will take to integrate that into the product set? And then, Mark, just on the guidance and sort of the impact from supply chain with some of the CPG advertisers. Do you think this is coming at a time sort of toward the end of the year when we're setting budgets for next year? Like are you worried about that for budgets for next year? Are you hearing from the advertisers that they think a lot of this will be behind them by the time we sort of get into the new calendar year? Just any high-level comments you have there would be helpful.

Mark Zagorski -- Chief Executive Officer

Sure. Thanks for the questions, Michael. So, on the integration process for OpenSlate, the nice part about the acquisition is that there's really no redundant functionality. So, we don't have to rip anything out or rebuild anything that we've already created to work with OpenSlate.

So, we look at that integration will probably be over the next year or so, different levels of platform functionality integration. Light integration first with UIs will probably be shared and clients will be engaged with together from an operational perspective. But you're probably looking at a year for a full kind of system integration. And I think over that time, we'll be working with our customers to ensure that the product that we put together between pre and post is something that actually helps them drive better results.

So more to come there on that front. With regard to kind of the guide, and I'll talk about this from a qualitative perspective and maybe Nicola can jump in on a quantitative perspective. But we have a good roster of CPG clients. They make up a decent chunk of our client base.

But as we've said before, we don't have a heavy concentration in any one area. And we had talked, I think, a few quarters ago about travel and leisure and entertainment. The nice part is, we've seen those industries all come back in Q3, Q4. And we provided some caution around whether or not they'd come back, and we've seen a nice balance back there.

CPG is the latest poster child for post-pandemic challenges. But the reality of it is, you bring up a great point is, we think this is pretty short-lived. As a matter of fact, we know it's short-lived. The indications that we're getting is early next year, they think they're going to shake off these supply chain issues, and we'll be ready to move on.

So, we don't see this as an ongoing drag in any way. You saw it as a relatively light temporal issue that we want to be cognizant of and we're not overconcerned about it, but we want to certainly be aware of and then make sure that we're updating everybody around that. Nicola, anything to add?

Nicola Allais -- Chief Financial Officer

Michael, the only thing I would add is, what Mark said is reflecting what we did, which is we took a modest change to the fourth quarter revenue guidance just to be cautious based on what we heard from our customers, right? So, this is not just a macro consideration, it's really what the CPG customers are telling us. And we're seeing it happening in October a little bit. And the guidance that we've put out there sort of assumes that that will continue, not deteriorate for the rest of the quarter. And as Mark said, we're not hearing or anticipating this to continue to 2022.

Michael Graham -- Canaccord Genuity -- Analyst

OK. Thank you, guys.

Mark Zagorski -- Chief Executive Officer

Thank you.

Operator

And our next question comes from Matt Hedberg from RBC Capital Markets. Go ahead, Matt.

Matt Hedberg -- RBC Capital Markets -- Analyst

Thanks for taking my question, guys. Congrats on the results. Mark, I have a question for you. In terms of, I'm thinking more like reopening and people getting out and traveling and whatnot.

I mean, do you think that has an impact? I'm thinking from like your sales perspective. Building pipeline perhaps on the new customers, you guys have obviously done a good job on new customers throughout the pandemic. But sort of curious on your views as we think forward to 2022 in a bit more of a reopening phase?

Mark Zagorski -- Chief Executive Officer

Yeah. It's a great question. Thanks, Matt. And it's one that we live every day.

One of the things that we noted in the script is that Q3, we closed more new logos than we have any time in the year, right? And a lot of those closes are still being done remotely, right? These are brand-new clients, many of which we've never met before in person, and we're still closing deals. So, you know, A, it's interesting how quickly the industry has adapted to buying and selling virtually because they know their spend is only increasing digitally, so they need to have that security and they need to have that performance drivers. So, I think when we look at the market opening up a bit, not that we need that to happen to drive pipeline because we don't, obviously. This year, we've closed 108 so far, 108 new logos this year, brand new.

And that's pretty exceptional for our client. And I think that when we look at next year, we certainly want to do better. And we think we have the opportunity to do better with having people on the road. But we'll see.

I don't think that's going to be the deciding factor. We're going into 2022 with a really strong pipeline. We're super happy with where we sit today. I would say, I've only been here less than 18 months, but it's the best pipeline I've ever seen going into a new year.

So that is an absolute statement I can make, and we feel good about it.

Matt Hedberg -- RBC Capital Markets -- Analyst

That's great. I can hear in your voice. And congrats from me on OpenSlate. Seems like a really, really nice complement to what is obviously a very, very diverse platform already.

Mark Zagorski -- Chief Executive Officer

Thanks. 

Matt Hedberg -- RBC Capital Markets -- Analyst

Thanks, guys. Congrats again.

Mark Zagorski -- Chief Executive Officer

Yeah. Thank you.

Operator

And our next question comes from Mark Murphy from J.P. Morgan. Go ahead, Mark.

Pinjalim Bora -- J.P. Morgan -- Analyst

Thank you. Hey, this is Pinjalim sitting in for Mark. Congrats on the quarter. Most of my questions have been answered, but one quick question on competition.

DoubleVerify is obviously strengthening its position with some of these acquisitions, OpenSlate, Meetrics, and whatnot. But would love to hear what are you seeing with respect to the competitive dynamics? How are your competitors kind of reciprocating or looking at you kind of becoming the leader in the market?

Mark Zagorski -- Chief Executive Officer

Yeah. It's a great question. We are laser-focused on having the broadest verification across the most platforms in the most markets across the most media. The acquisition of OpenSlate continues down that journey.

And our focus on being independent, free of the media transaction, and ensuring that we're the company that not only is the largest, but the least encumbered by any bias is a big deal for us. And I think we're well on that way. When you look at the, and that's resonating with the people that we're talking to, both our current clients and new clients. When we look at the competitive takeaways that we've been able to do, it's been pretty extraordinary, right? I think we shared some stats in the past about the last 18 months, I think we've won something like over 80% of our competitive tenders.

When you look at some of the names we mentioned on this call. So, TD Bank and Sony Japan, Disney Studios and American Family Insurance, and Dropbox and Merck, these are all competitive sales. They're competitive takeaways. So, I think from a competition perspective, we know that we haven't lost a top 100 client in the last 12 months.

We continue to take clients away from our competitors. And we continue to live that mission of having an unbiased independent take with the most complete coverage across the most platforms of any other system out there. So, we feel good about where we stand against competition. And it's not just about feeling good, it's about delivering results.

And we're delivering results, too.

Pinjalim Bora -- J.P. Morgan -- Analyst

That's great to hear. Nicola, one, a quick clarification. I think you said $16 million to $18 million from OpenSlate next year. Is there any contribution from OpenSlate or even Meetrics in Q4 at all?

Nicola Allais -- Chief Financial Officer

For 2021, no, we haven't even closed the OpenSlate acquisition. So, we're not banking on that at all, and Meetrics is not material.

Pinjalim Bora -- J.P. Morgan -- Analyst

Thank you.

Operator

And our next question comes from Youssef Squali from Truist Securities. Go ahead.

Nick Cronin -- Truist Securities -- Analyst

Hi. This is Nick Cronin on for Youssef. Thanks for taking the question. So, volume has been the primary driver of growth for you.

And as you look at pricing, particularly as media mix turns toward higher price CTV and other formats, how should we think about your ability to charge more per validated impression?

Nicola Allais -- Chief Financial Officer

Yeah. So, you're right. MTM has been the main driver of our growth, but volume is what's been the main driver of our revenue generation. The fee part of our business, we have, up until now, look to stay on a fixed fee model because that allows our customers to not think of us as part of their decision as to where to verify or not.

And that has allowed us to basically continue to grow with the volume. Now on the upsell opportunity, we are able to upcharge when we have premium products, which is what we're able to do with ABS. And that overall has an impact that increases the MTF, our media transaction fee that we charge. You have a point around CPMs being higher and lower or our ability to charge more on a higher CPM.

That opportunity remains. We know it's available and we obviously track it. But at this point, we are still focused on being able to measure more and more of the volume. The opportunity will remain there as more impressions move to higher CPM-based opportunities.

The upsell opportunity for us is still really large, right? As Mark mentioned, being able to upsell to ABS, which is a premium-priced product, that opportunity is still large. Custom Contextual will behave the same way. Now that with the acquisition of OpenSlate, we will be able to add on more services to the same impression that we measure. So, we see a lot of opportunity that way to increase the MTF.

Nick Cronin -- Truist Securities -- Analyst

That's helpful. Thank you.

Operator

And there are no further questions. I would now like to turn the floor back over to CEO, Mark Zagorski, for closing remarks.

Mark Zagorski -- Chief Executive Officer

Thanks, everybody, for your questions. You can tell, the team here at DV is extremely enthusiastic about what the future holds for us. We continue to deliver strong revenue growth and profitability while executing key strategic initiatives, expand product leadership, deepen our coverage in fast-growing sectors and grow our global footprint. We expect to fuel our long-term growth trajectory and deliver better business outcomes for DV customers by driving media quality and performance everywhere.

We appreciate your time and attention today and look forward to updating you all on future calls.

Duration: 49 minutes

Call participants:

Tejal Engman -- Investor Relations

Mark Zagorski -- Chief Executive Officer

Nicola Allais -- Chief Financial Officer

Arjun Bhatia -- William Blair -- Analyst

Andrew Boone -- JMP Securities -- Analyst

Justin Patterson -- KeyBanc Capital Markets -- Analyst

Michael Graham -- Canaccord Genuity -- Analyst

Matt Hedberg -- RBC Capital Markets -- Analyst

Pinjalim Bora -- J.P. Morgan -- Analyst

Nick Cronin -- Truist Securities -- Analyst

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