1. The Trade Desk (TTD) — New Partner & an Interview
a) The Trade Desk Partners with Adobe
The Trade Desk and Adobe’s Experience Cloud announced a new relationship which will free The Trade Desk to integrate emails stored in Adobe’s Customer Data Platform (CDP). The Trade Desk will then hash (or anonymize) these identifiers to use them to enhance programmatic targeting within Unified ID 2.0 (UID2). This marks a continued shift from Data Management Platforms (DMPs) to Demand Side Platforms (DSPs) like The Trade Desk which allow for more real-time, granular, actionable and scalable digestion of all this data to power auctions.
While Adobe partners with other advertising companies and UID2 alternatives, The Trade Desk will be the first to have access to its vast and lucrative email base. This deal was a year in the making as these two bellwethers carefully ironed out privacy and data-sharing issues to ensure compliance.
“This partnership is akin to how Google and Facebook have excelled by backing their ad IDs with their email data and successful Customer Resource Management (CRM) services… Adobe and The Trade Desk share many clients and this is where we’ve seen these customers getting ready for a new world.” — Director of Business Development for Adobe’s Experience Cloud Sahil Gupta
b) VP of Inventory Development Will Doherty Interviews with Rob Beeler
On the launch of Open Path:
“This is a different stance than what we’ve historically taken when working with publishers. Prior to this, the only way we were able to manifest bids for a publisher was through existing Supply Side Platform (SSP) relationships. What we’ve realized and heard from both buyers and publishers is that they wanted a means for direct connection.”
“Open Path leverages pre-bid technology to provide an opportunity for a publisher to receive the bids from us directly. We will bid into Open Path in the same way we bid into our SSP partners... All of those paths remain open. But now, for publishers with the technical capacity to manage bids directly, we will be available as a choice.”
While The Trade Desk leadership has been extremely careful in crafting this product launch as a non-competitive threat to the supply side, providing publishers with an option to directly receive bids does replace a small piece of what the supply side does. It can say it’s non-competitive all it wants — and should be doing so to remain as non-conflicted as possible — but there is a small amount of utilitarian overlap here in my calculation.
On what Open Path has to do with Google:
“This is related to Google in the sense that we’re being much more intentional within the supply chain. Google’s Open Bidding — just based on all of the law suits and un-redacted filings — really became a problematic integration. We were no longer sure which permissions had been granted to which parties. And so, if win rates are being established for other buyers, even when we had the best bid, we didn’t necessarily win because of some other agreement.”
“Buyers desire to have a more direct relationship with publishers rather than dealing with a pseudo-anonymous pool of inventory which prevents a complete understanding of where ad dollars were going. Open Path is the logical next step.”
On how this impacts relationships with SSP considering the Pre-Bid Direct approach:
“SSPs provide a wide range of services to publishers that we will never do. They have to help providers chose the best possible outcome (yield management) and we will never provide these yield services. These supply side tools are critical now and likely will be in the future.”
“The only thing Open Path will allow publishers to do is if they have those supply side capabilities internally, they can make a decision on which is the best possible outcome. Open Path is far narrower than what an SSP will do. At the end of the day, we’re still beholden to the buyer, we’re just trying the make the best possible decision via the choice for direct bidding. It’s not a one size fits all and will not work for every publisher.”
2. Progyny (PGNY) — CEO Peter Anevski Interviews with Barclays (which became a new Progyny client this year):
On macroeconomic factors fueling Progyny’s space:
While birth rates overall are falling, that drop is being driven by a sharp reduction in teen (thankfully) pregnancy. Women over 35 — who inherently need Progyny’s services at a higher clip — are having more babies today than in the past, which boosts the market share leader’s demand. Other factors cited are things like 67% of employers offering coverage vs. 50% just a few years ago. This continues to rise as employers see fertility benefits as a core enabler of hiring new talent. Tighter labor markets are accelerating demand for services like Progyny’s preservation (egg freezing).
Progyny’s broad ranging offering — which includes the LGBTQ+ and single mothers by choice communities while competition doesn’t — also allows users to bolster a company’s ESG standing which is important to young investors. Progyny often finds that when it enters one of the 30 industries it currently serves, competition generally follows in a sort of domino effect to compete for coveted talent and investor dollars.
“Hospital systems around the country as clients had been a challenge. They’re now going to become an opportunity for us thanks to signing Hospital Corporation of America. As the leaders in those industries tend to adopt earlier, the rest realize this is really something they should be looking at.”
On 2022:
“Obviously we’ve had challenging utilization periods throughout the pandemic, but the impacts have been really short-lived due to the resiliency (and time sensitivity) of pursuing treatment… although we are not a subscription model, we act like one in many ways.”
“The high end of our guidance assumes normal levels or utilization and mix which is what we’ve been seeing into the second part of Q1. The rest of our range considers a variety of factors that could hit utilization and any delays in clients going live.”
As a reminder, Omicron hit Progyny’s business hard in December and January, but the recovery in utilization was far more rapid and meaningful than with past variants.
On expansion into male fertility services:
Anevski talked about the 10% of urologists who focus on male reproductive services and how Progyny wants to plug these professionals into its network to handle male-based issues and to deepen the breadth of service. According to him, “This is an opportunity for Progyny in terms of average revenue per cycle.”
On Canada:
“We want to initially address our global clients with Canadian populations but we’ll ultimately put together a go-to-market strategy to go after Canadian companies with large populations. This is us dipping our toe into the water of international expansion. There are other counties in Europe we would look at after we see how Canada goes.”
Progyny’s strong balance sheet, cash flow and no debt frees it to make enthusiastic investments in expanding its range or services and geographies. It’s great to be profitable.
3. Revolve Group (RVLV) — Co-Founder/Co-CEO Mike Karanikolas Interviews with Barclays
On inflationary pressures:
“The inflationary environment isn’t something that we’ve really seen before. That said, we know our consumer is not as price sensitive as most. They want to look and feel great with price a secondary consideration. We’re hopeful that we’ll be more insulated from it.”
On reopening helping active user growth:
“Reopening 100% benefits us. Revolve is known for going out and traveling and for people wanting to look and feel their best. You don’t wear Revolve clothing to sit around the house. A lot of consumers still haven’t returned to going out as much as they used to and we think as this shifts, we will be a continued beneficiary.”
It’s interesting to think about an e-commerce company as a pandemic ending beneficiary. Considering the type of apparel it sells and its live event marketing strategy, this is the case.
On FWRD (its other brand):
“FWRD had been on fire… the Kendall Jenner partnership really pours gasoline on this fire. We’re outgrowing all other public luxury comps… the opportunity is quite large.”
Think of this as a digitally native Sachs Fifth Avenue. It curates a collection of luxury brands (many of which are unknown/up-and-coming) to provide shoppers with a unique, data-driven selection.
On supply chains — specifically considering Revolve’s strategy to buy shallow & “read & react” to sales trends with timely reordering:
“There are challenges, but I think these challenges have hurt our competitors much more than they have hurt us as you can see in our results. Read and react really insulates you from sharp changes in consumer demand. With shallow initial ordering, we cast this very wide data net and then react quickly to whatever is working with quick, automated decision making and some human oversight. We are very much quicker than a lot of the competitors out there. It’s a challenging environment but we’ve been very successful.”
“Neither my co-founder or I had any background in fashion. We were two guys trying to sell women’s fashion. So we solved the problem with spreadsheets and computer systems.”
Karanikolas is a consumer engineer by trade who orchestrated the building of Revolve’s entire internal tech stack — from inventory to ordering to interface.
On 2022:
“Even this year, we are still not quite back to normal. What we’re guiding to for investors is to expect some reversion to the historical mean on gross margin as % of sales at full price falls from record highs. But we do think we’re in a much better ongoing place than we were pre-pandemic as we leaned even more heavily into read & react during Covid-19. So we believe a lot of those gross margin gains will stay.”
On the new East Coast fulfillment center:
“Not only will there be cost benefits, but also benefits to serve our East Coast customers even faster with 1 day shipping rather than 2 days.”
Revolve sees an international distribution center as a probable investment in the long term once international meets large enough scale. It will continue to invest in experience localization by country in the meantime.
4. Match Group (MTCH) — CFO Gary Swidler Interviews with Morgan Stanley
On the metaverse and social discovery:
“The few things we’ve experimented with early on could be very different experiences from what we’ve had up until now…. we’re building experiences where people are immersed in a virtual world and moving around and sometimes taking introductions off-line: I think it could be the next phase.”
On looking ahead after a crazy 2 years:
“The business has stayed resilient, but it hasn’t gotten that tailwind from the end of the pandemic. They’ve resumed a lot of normal activity, but there’s still a lot that’s missing — events and socializing are coming back slowly but surely.”
“I think people do feel like Omicron was probably the last stand. It’s going to take time, but we’re heading towards normal… my confidence is high that we’re getting there. The spring and summer should be good. People are ready. Momentum is building.”
The USA and Europe are leading the recovery with Asia behind. Japan mobility specifically is at the lowest levels since March, 2020. This is an important Match market and is still struggling due to the pandemic. The recovery will look very different across countries.
Around 1% of Match’s revenue comes from Russia/Belarus/Ukraine.
On Google and App Store fees overall:
“They haven’t shown desire to announce a policy change. This is surprising based on the regulatory momentum. Regulators in the EU basically came out and said they weren’t listening to regulators in the Netherlands and Korea, so we’re going to clamp down harder… I think the EU and jurisdictions around the world are committed. Korea merely got the ball rolling… Changes will likely continue to come. The pace and order is hard to predict, but the momentum is there.”
As a reminder, the EU is currently considering the Digital Markets Act which would bar mandatory in-app payments usage (and so would lower overall fees) — which is what Korea and the Netherlands did with respect to dating. This would also prevent developers from being treated differently (so like Facebook getting a lower fee because they’re massive for example).
“We continue to believe change is coming in the App Store ecosystem, and we’re looking forward to it.”
On Tinder’s Explore tab:
Tinder will soon roll out Festival Mode to allow for people going to the same live event to connect.
“The key thing for the Explore Tab was building it and getting people to go check it out. That has happened really well and so now we can start to really build on it to give people different experiences and more reasons to spend time on Tinder. We’ll monetize this further down the road.”
On Hinge:
“We transformed Hinge into a great thing from a business that had nowhere to go in 2018. We thought it was a good product, but together with the Hinge team, we’ve really built it out from a marketing and product perspective.”
Swidler reminded us that Hinge is well on its way to passing Bumble as the 2nd most popular dating app globally. It’s already number 2 in many key markets according to Data.AI (formerly App Annie) and continues to grow share.
Things like voice prompts — which organically went viral on TikTok — greatly helped to accelerate Hinge’s adoption in the face of Omicron. It will expand throughout Europe in 2022 and then the rest of the world thereafter with localized products for each region.
“We keep giving the Hinge team the resources they need — from my perspective, the sky is the limit.”
On Hyperconnect (Azar and Hakuna):
“We didn’t quite get the start we wanted from Hyperconnect’s two apps. We didn’t get our arms around it as quickly as we wanted to just being in the middle of the pandemic and buying something halfway around the world.”
“I’m optimistic that we’re making the right moves and that it’s heading in the right direction. The financial performance has stabilized and started to improve. We are helping them a lot on the marketing side where they were a bit weaker in a tough environment. The product is making some tweaks and performing well. I appreciate everyone’s patience in this regard… We’re working hand in glove with the Hyperconnect team.”
Hyperconnect’s video and audio assets will be integrated in Tinder’s explore page at some point.
On the 40% long term EBITDA margin target:
“This ignores meaningful App Store changes. If that relief comes through as I think it will at some point, the goal of 40% + margins will go up from there.”
The company is currently around 36%.