Report Highlights

  • Q1 revenue was up 7% YoY, but 11% below our estimate amid lower-than-expected ad spending. Major digital ad platforms, YouTube (NASDAQ: GOOGL), and Meta (NASDAQ: META), saw their ad revenue rise by 20% and 27% YoY, respectively.
  • However, gross margins increased 13 pp YoY to 53%, primarily driven by higher direct vs reseller sales, beating our estimate by 11 pp. As a result, EBITDA and EPS improved YoY, and significantly surpassed our expectations.
  • Since Q1 revenue typically represents only 10%-15% of the year's total, predicting the full-year revenue trend based on Q1 alone is challenging. Q1 could potentially be an anomaly, and we expect stronger revenue growth for the rest of the year given the anticipated growth in global digital ad spending.