Latest / The Yield Doctor with James Deaker / Shiv Gupta Earnings May 2025

Transcript

Shiv Gupta Earnings May 2025 · The Yield Doctor with James Deaker

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Today I'm going to be talking to Shiv
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Gupta about what we can learn from the
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latest earnings release cycle in adtech.
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Shiv has been in digital media a long
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time and previously had sales roles at
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ad.com AOL and Critio and for the last
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seven years he's been working as the
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founder and CEO of the U of digital that
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offers professional coaching and
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training around all aspects of adtech
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and digital media. most relevant for
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today's discussion is that he publishes
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a newsletter on key trends in the
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industry and he's been publishing
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observations as announcements had made
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in the earning cycle. One piece of
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context that I'll give given the rapidly
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evolving economic cycle in the US is
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that we're recording this on May 16 and
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the big news from this last week was a
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90-day reduction in the tariffs between
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the US and China and this that has
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caused a broad market rally. With that
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as context, Shiv, I'm so happy that
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we're able to talk today. Yeah, thrilled
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to be here, James. Thanks for having me.
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Excellent. Now, Shv, I want to get into
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some of the themes that we're seeing,
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but for those that don't read your
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newsletter yet, uh, can you ground us in
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what's been happening the last few weeks
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in the earning cycle? Who's surprised on
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the upside and who missed? Yeah,
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absolutely. So, you know, I think the
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earning cycle for Q1 has been pretty
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interesting to monitor. I think, you
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know, coming into it, everyone was
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feeling skittish for a few reasons. one,
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Q4 was a little soft uh across the
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board. Um, and you know, people
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obviously kind of look at the last
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quarter and remember the most recent
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quarter as kind of like a uh indicator
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of what will happen, you know, in the
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next quarter. And so I think people were
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a little skittish about what would
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happen in Q1. Um, and so I think people
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were nicely surprised to see that mostly
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across the board things looked up. Um,
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you know, Google, uh, or, you know, I
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should say Alphabet, Meta, earnings were
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positive for those guys. Um, and Amazon,
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I think, was like the one that was a
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little bit kind of on the the fence, but
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I think generally speaking, like it was
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good from the advertising standpoint,
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right? I think overall Amazon's running
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into some stuff, but overall it was
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okay. And I don't think the stock took
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much of a hit. But you know if you look
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across the board the DSPs you know
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especially you know trade desk um you
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know Viant others and then SSPs as well
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Pubmatic Magnite everyone kind of beat
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expectations for the most part. There
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were some outliers. I think some of the
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hold codes um you know hold codes are
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obviously a very different business than
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the tech companies. Not all hold codes
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are doing well. Publus is doing well but
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the other ones are are you know quarter
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over quarter they're they're running
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into challenges. And then you know some
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of the legacy traditional media
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companies um you know the paramounts of
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the world etc are are still struggling
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but overall the advertising sector the
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tech sector looked pretty healthy in Q1
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and that was surprising to folks. So I
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think the market and the share prices of
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these stocks saw a big pop. Um and then
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also you know one other thing to note is
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guidance for the rest of the year has
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been not great and that is to be
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expected because you know we're we're
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still in this kind of moment of
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uncertainty uh in terms of
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macroeconomics and tariffs and things
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like that. So that's kind of what we're
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seeing at a high level. Got it. Uh just
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to drill into one area that you talked
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about. You talked about some of the
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traditional cable companies that are now
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obviously doing CTV and streaming.
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Paramont, Warner Brothers down year on
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year. Uh it seems like there's not a lot
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of prospect for growth in these segments
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and the market is more focused on
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whether they can increase their
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profitability. Would would that be fair?
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Yeah, I think that's right. I mean,
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these companies obviously have legacy
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businesses that are, you know, slowly
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bleeding out, uh, you know, in terms of
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linear and and broadcast and cable. Um,
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you know, they're all doing their darn
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best to to move into streaming and
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digital obviously, but that's a tough
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category. And there's all sorts of new
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competitors in that category that they
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haven't dealt with before, right? It's
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Netflix, it's Disney Plus. I mean, I
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guess Disney you could put in both
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buckets, but it's Netflix, it's Roku,
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right? It's Amazon. And um, and that
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market, the CTV market is so fragmented.
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Um, and it's hard to get market share,
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right? And so it's easy for for us to
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sit here and say like, "Oh, well, they
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should just kind of move into
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streaming." Well, you know, being a
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behemoth in linear and then just moving
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into streaming is not as easy as it
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seems. Um, and so they they have a tough
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road ahead in terms of profitability, to
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your point, growth, um, and just, you
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know, their their financial outlook in
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general. Uh, another announcement from
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the last actually two days is that
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Microsoft is shutting down Xander. Uh
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obviously Xander has been around for a
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really long time in one form or another.
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Is this a slight positive for the rest
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of the ad tech companies that there's
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one less player in the space or is it a
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negative in the sense that it's um sort
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of reaffirmation of the fact that this
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is a tough space to play in?
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Um I guess it's a little bit of both. Uh
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in general I think it's positive for the
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other players, right? Because to your
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point, one less competitor, one less big
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name kind of going uh after those
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budgets. And so, you know, I think the
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trade desks, the Yahoos, the Amazons,
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the Googles of the world saw that news
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yesterday and, you know, had a had a
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little mini celebration of like, okay,
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cool. Let's go after these customers.
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Let's get some of that budget into our
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DSP. I think on the flip side, to your
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point, um the DSP business is hard,
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right? When a company like Microsoft is
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basically shutting down their DSP, um
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you know, that tells you a lot about the
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sector. uh and it's a low margin
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business. It's a extremely competitive
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business. Um I think the margins are
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getting compressed further and further
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and further. Uh and so I I think it's a
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tough road and so you know on one hand
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yes they should see a bit of a windfall
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of revenue coming from uh Microsoft and
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Xander sunsetting their DSP. On the
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other hand, it's just kind of
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reaffirmation of like this is a tough
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ride. I think what we're gonna see is
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like the richer the the rich get richer,
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right? Right. So, I'd say the big three,
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the big four in the DSP sector will grab
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a lot of that money that Xander is um,
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you know, pushing out because Xander, if
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you think about it, was more of an
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enterprise DSP. It was working with
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bigger customers. It wasn't working with
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mid and longtail. And so, I think some
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of the mid and longtail DSPs will
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probably not see the upside of it. And I
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do think we're going to see more
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consolidation in the DSP category, uh,
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you know, looking forward a year from
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now, two years from now, uh, where
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companies didn't necessarily see the
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benefit and the rich just got richer.
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Yeah.
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uh when you look at earnings and you've
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already touched on this briefly, it's a
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reflection of both what happened in the
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last quarter and also sort of guidance
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on what is going to happen for the rest
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of the year. And you mentioned there
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hasn't been a lot of uh guidance, but
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what did you read in the announcements
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in terms of expectations going forward
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for the rest of the year? Yeah, so I
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think guidance is, you know, being
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frozen or being cut by a lot of these
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companies again because of uncertainty
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and the macroeconomic climate climate.
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Um, I think that Q2 has been soft
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already. Like we're hearing that Q2 has
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been soft across the board for a lot of
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companies. Q1, you know, we were kind of
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riding a wave from Q4 into Q1. Um, you
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know, people were kind of pumped, I
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think, about the new administration, you
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know, and and how it's going to be pro
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economy and, you know, pro uh pro
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business. Uh, and I think people were
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riding high from that. And then all of a
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sudden, you know, everyone got hit with
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this hammer of tariffs. And so Q2 has
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been soft. I think the guidance that
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you're seeing is a reflection of Q2
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having a soft start. Um and so I think
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you know we're going to have the same
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conversation in 3 months and say like Q2
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didn't look so good. Um and I think a
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lot of these stock prices are probably
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going to get hit from that. But I think
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you know the big picture is important
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here. if things are stabilizing like
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we've seen in the last couple of weeks,
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you know, that the tariff, you know,
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between China and the US has been um cut
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down or frozen, I forget ex exactly the
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specifics there, but um I think, you
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know, the big picture hopefully is that
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if the tariffs kind of goes away, which
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is not, you know, something that we can
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fully expect to happen, but if it does
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kind of go away, like we should be on
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the right track, we should be up and to
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the right. And so while Q2 may not look
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great and may hurt the 2025 outlook for
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a lot of companies, hopefully by the
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time Q3 and Q4 roll around, we're kind
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of like where we were in Q1.
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So that this is the yield doctor
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podcast, so I have to ask about pricing
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and demand dynamics and to some extent
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you're already creating the right bridge
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for me talking about Q1 into Q2. I think
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one of the interesting questions is
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always is sort of media spend a leading
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indicator of the the state of the
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economy or a lagging one. Um, you know,
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I'm currently seeing that in the face of
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a lot of this uncertainty, people are
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holding back budgets. But if we have
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entered a period of some stability and
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there is more certainty around tariffs,
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how long do you expect the lag to be
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between that playing out and okay, we're
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in a better environment and budget
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starting to come back and the and the
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media industry broadly being in a
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healthier place. Yeah, it's a really
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interesting question. I mean I think it
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depends on a lot of factors. You can
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look at kind of legacy how how media has
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reacted in the past and I think there is
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usually a bit you know I think the
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industry reacts quicker when it's on the
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the downswing right to your point and I
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think it reacts a little bit slower to
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get going again. Um I think it depends
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the the lag time will depend on some
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other factors right so it's obviously
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economic stuff but it's also just like
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the what what is the administration
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signaling around a bunch of stuff right
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so that's geopolitical things right that
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affects the economy um it's rates you
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know that affects the economy um it's
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the deficit and how we're treating that
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it's taxes you know and and also I think
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in general it's like stability versus
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instability, right? I think like one of
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the big reasons why people are a little
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frozen right now, it's not 100% tariffs.
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It's more uncertainty and instability
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and kind of like how the administration
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is just kind of whiplashing back and
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forth between policy. And so I think
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what people want to see in the markets
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and and in media is stability and like
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kind of, you know, good consistent
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decision-making. And I don't know if
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we're going to get that at any point.
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And so I think the lag, you know, I
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think the lag could be slow um in terms
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of kind of reactivating budgets. Yeah.
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Uh I was going to ask you a question of
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what is the top of the stack of things
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driving the behavior and and obviously
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the political sort of uncertainty
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tariffs is is in the top one or two. So
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my question I I'll pivot and ask you
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aside from tariffs, what is the other
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thing that seems to be driving
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expectations around valuation? Is it the
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impact of AI? Is it privacy regulation?
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Is it potential consolidation? So other
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than tariffs, what's the what's the big
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story right now? Yeah, I think I mean
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it's all those things for sure. Um I
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think those things are not like as
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immediately impactful on the market. I
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feel like the market's priced in like
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you know AI is changing the world and so
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you know the market's kind of priced
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some of that stuff in. Um, I think where
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more like whiplash happens and
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reactionary kind of behavior happens is
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honestly rates, like Fed rates, like we
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see this all the time. Anytime the Fed
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says anything in terms of rates, that
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pushes the market up or down
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significantly. And I think long-term,
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people want to see rates come down,
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right? And if rates come down, money
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gets cheaper, capital is cheaper, uh,
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it's easier to invest, um, and, you
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know, the the economy starts moving,
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right? And so, uh, obviously you have to
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balance that with inflation. And
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inflation is, you know, still in a
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little bit of a tricky spot. And so, um,
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the Fed is going to do the right things,
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um, to manage those two those two
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variables, but I think rates, right?
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Like the market positively reacts to
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interest rates. Okay. Um, so a lot of
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what we've talked about sort of your
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observations around what's happening.
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Now, I'm going to push you on on an
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opinion. uh if you had to summarize your
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own sentiment or or outlook on the
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market for the next sort of 6 months or
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really for the rest of 2025, are you
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relatively bullish or bearish on the
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outlook for ad tech and sort of digital
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media broadly? I'm bullish. I'm always
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bullish, but I'm I'm particularly
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bullish right now. Um I think there's a
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bunch of interesting stuff going on in
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terms of antitrust, right? like the
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antitrusting is real. It's going to, you
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know, if executed properly, you know,
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everybody will win from that. Um, of
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course, there's no guarantee it'll be
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executed properly, but, you know, let's
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see. Uh, I think that's a positive
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thing. I think the the AI kind of uh
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revolution is going to be extremely
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positive and create tons of efficiency.
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Um, you know, there's obviously going to
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be some short-term pain in terms of
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employment and and layoffs and things
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like that, but I think it's going to
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tremendously improve the efficiency of
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the industry and just like the
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innovation that we're we're like, you
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know, that that that is exists in the
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space. I think, you know, it's
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interesting to be in this moment and be
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like, wow, there's so much innovation
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right now. Um because in every moment
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right you always feel that there's a lot
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of innovation but looking back over the
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last three to five maybe maybe 10 years
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there actually hasn't been much
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innovation compared to what we're going
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through right now right so I think
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between antitrust between the AI stuff
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um and uh you know there there's a
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couple other things I think also just
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between like kind of the acceleration of
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um you know consumer behavior towards
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digital the migration from streaming to
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or migration from traditional to
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digital, all those things, right? I
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think are kind of creating this melting
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pot of growth and excitement and and a
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bull market for for this industry
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specifically.
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Shiv, thank you for taking the time. Uh
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really appreciate it. If people want to
14:13
find you and more particularly get
14:15
insights on a more regular basis, where
14:17
do they find your newsletter? Where do
14:20
they find you? Yeah, absolutely. Please
14:22
check us out. Uh we are a training
14:25
company for the media and and marketing
14:27
industries. Uh we provide all sorts of
14:29
cool training you know and important
14:31
training on critical topics like AI and
14:34
you know adtech and martekch. Um you can
14:36
find us at
14:39
www.youofdigital.com. Uh you can follow
14:41
us on social. We put out a ton of
14:43
content on social media. Our newsletter
14:46
which you can access through our website
14:47
goes out every week. You know every time
14:49
there's an earning cycle uh we talk
14:51
about the earnings. We summarize the
14:53
earnings. We make it easy to digest
14:54
what's going on with the financial
14:56
health of the industry. And then we just
14:57
make it easy to kind of digest, you
14:59
know, all the headlines in the space.
15:00
So, please check us out. Um, we'd love
15:02
to we'd love to have your uh subscribers
15:05
and your audience follow us. I I
15:07
appreciate it and uh I appreciate you.
15:10
You and I only met I think for the first
15:12
time in this last year and I really
15:14
appreciate the East Bay Happy Hour that
15:15
you run and host. So, thank you for that
15:17
as well. Absolutely. Another one coming
15:19
up in two weeks, I think. Excellent.
15:21
Have a good rest of your day, Chef.
15:23
Thank you. You