Year-End Investor Letter

Dear Investors,

As the end of the year approaches, we can conclude that 2024 has been a remarkable year for Verve. We have been able to demonstrate that we are on a strong profitable growth path, we have materially reduced our leverage and further strengthened our attractive market position. Based on this strong foundation, we will continue to grow our earnings in the coming years and show a meaningful growth in our earnings per share for our shareholders. In this letter, I would like to reflect on the year 2024 and provide an outlook for 2025 as we prepare for a very promising year ahead.

The digital advertising market saw a strong 2024, driven by increased optimism in the overall economy, reallocated and growing advertising budgets, elections, and events like the Olympics. The digital advertising market is expected to continue its structural growth in the coming years, as it remains a key channel for advertisers to execute targeted campaigns effectively.

The year 2024 also showcased the differentiating and winning elements of the ad-tech industry. There was an increased focus on ad quality (e.g., avoiding malicious fake accounts or MFAs). Another very relevant priority is greater attention to privacy. We believe the shift to ID-less solutions is unstoppable, even though Google faced a setback with its Privacy Sandbox, which delays the deprecation of identifiers on their platform. Another growth driver are the fast growing emerging channels such as mobile and CTV. All three areas present considerable opportunities for us.

The recently published ID-Less Solutions Guidance from IAB Tech Lab reinforces our early commitment to ID-less advertising. It notes, “that the loss of cookie-based identifiers and similar privacy-driven modifications to the digital ad supply chain will drive up costs to maintain campaign ROAS/CAC/CPMs from 29% to as much as 200%." It further emphasizes the importance of alternatives such as contextual data, probabilistic cohorts and private marketplaces, areas where Verve is already excelling with multiple award-winning solutions such as Moments.AI, SKAN and ATOM 3.0.

In 2024 we continued our strong growth path. Based on our guidance we will achieve 25% to 30% revenue growth and 32% to 42% adj. EBITDA growth for the full year 2024. In the first three quarters of 2024, we achieved strong organic growth: 21% in Q1, 26% in Q2, and 31% in Q3. With these growth numbers we are solidifying our position as one of the fastest-growing companies in our industry. Our strong growth is driven by a significant expansion of large customers (+25% in Q1, +24% in Q2, and +56% in Q3) and an increase in budgets from existing large customers (10% in Q1, 9% in Q2, and 8% in Q3). Our leadership in ID-less advertising has been a crucial driver of this success and, with the growing demand for ID-less solutions, we are well positioned for further strong growth and capturing additional market share in the quarters to come.

We have been able to build a very strong market position in the U.S., now representing 80% of our revenues. The U.S. remains the world’s largest and most dominant advertising market. The U.S. economy enjoys a very positive outlook, and, because of that, advertising spend in the U.S. is expected to continue its growth trajectory. Verve has become a dominant force in mobile advertising in the U.S., currently ranked #1 in terms of reach and quality, according to Pixalate¹.

Our materially higher EBITDA results in strong cash flow growth and a noticeable reduction of debt. Our commitment to decreasing our leverage is progressing well; we expect a net debt ratio below 2.5x already by year-end. The higher free cash flow and lower indebtedness should allow us to refinance our debt next year, resulting in materially lower financing costs. Our strengthened balance sheet is already reflected in the strong market performance of our bonds, currently trading well over par. Overall, we expect to save approximately €10-15m on annual interest costs.

In July, we acquired the highly accretive Jun Group. The integration of Jun Group is progressing well, benefiting from our deep experience in executing successful integrations. This acquisition is accelerating our growth and especially strengthens our relationships with advertisers and agencies. First meaningful sales synergies have already been realized. In parallel, we are developing and strengthening major strategic partnerships. I would particularly like to emphasize our cooperation with Google, which is helping us to substantially lower our cloud costs while simultaneously enhancing our AI capabilities. Together with our strategic partners, Verve’s large and expanding team of world-class engineers fosters innovation to further enhance our platform performance and our products.

The successful rebranding of our company to Verve and the introduction of Verve Performance+ and Verve Brand+ (formerly PubNative and Smaato), have been well-received across the industry. These changes have significantly boosted our market perception and aligned our offerings with the evolving needs of the market.

Our most important driver of success is our team. With over 800 employees, representing over 60 nationalities and based in over 15 countries, we have the bandwidth to manage the business while also investing in further growth. Our global presence, with substantial development teams in a.o. India, allows us to find a good balance between talent and costs. At the executive level, we’ve further enhanced our team with significant media expertise. Our C-level team now boasts over 100 years of combined industry experience and our board has been expanded to include highly regarded media and advertising experts.

We look forward to 2025 being another successful year, allowing us to capture share and achieve healthy growth:

By following our mission to make media better and executing on these growth drivers, we are confident that we will continue our strong path of profitable growth in the coming years. We stand to our mid-term guidance, targeting 25 to 30% revenue growth, a 30-35% EBITDA margin, and a 20-25% EBIT margin, while maintaining leverage in the range of 1.5–2.5x EBITDA. We expect meaningful growth in earnings per share in the coming year and beyond.

Based on our early investments in ID-less targeting solutions, our AI-based continuous platform improvements, and our wide high-quality direct supply base, in combination with improving our advertiser and agency contacts, Verve has built a unique moat and is in a strong position to drive further strong profitable growth in the years ahead.

I would like to thank our investors, our partners, our team, and all others who support us, for your continued trust and support as we work to shape the future of media and advertising. We look forward to achieving even greater success together.

Sincerely,
​Remco Westermann
​CEO, Verve Group