illumin Holdings Inc. (ILLM) Earnings Call Transcript
August 6, 2026
Earnings Call Speaker Segments
Good morning, everyone. Thank you for joining today's presentation of illumin Holdings' Second Quarter Financial and Operating Results.
[Operator Instructions] We will now take our first question, and the first question comes from Daniel Rosenberg from Paradigm Capital.
Congrats on a strong quarter. Great to see the results. My first question just comes around some of the partnerships you mentioned in your release. I was wondering how you could describe that a little bit more and how that might relate to some demand for you guys [ other firms ].
Absolutely. And thank you very much. And obviously, we're very excited to deliver this kind of quarter. The partnership. So first of all, we do partnerships and add more partners into our demand side platform on a regular basis. And we plan to continue doing that. The 2 specific -- the first one that we've done was all about helping advertisers really measure the brand lift, and it's built right into the system. So that's something that's very important for advertisers, obviously. The second one with Audience Acuity. And coincidentally, we used to be called Acuity, but we're very excited about this partnership. Has nothing to do with our historical name. But we're excited about it because it provides really, really, really good data to our advertisers. And, at the end of the day, when you have good data, it delivers better results and better ROI. Now, what do I mean by good data? In the data world, there's really 2 types of models. There's the deterministic model, which is when you know the data about certain people and you can target them directly, and probabilistic model. This is when you don't have enough data and you just expand it with AI and algorithms and so forth. Probabilistic is not great, and that's where most of the data is out there. And the data that we have with Audience Acuity is all deterministic. And from early testing that we're seeing, it really drives a much, much bigger ROI or better ROI for advertisers. So needless to say, we're -- we have a special relationship with them, and we are very excited about moving forward together with them and to, at the end of the day, help advertisers get better ROI in their campaigns.
All right. And then digging a bit deeper, I mean some extremely strong growth in the exchange side. Could you speak to some of the demand drivers here? I mean, I look across the industry and look at growth rates across the board and it seems like you're outpacing, albeit coming from a tougher place last year. But nonetheless, curious if anything changed on the demand front.
So are you asking on the DSP side, on the exchange side, on all?
I mean, I'll leave it to you to call out what needs to be called out, but the exchange side is, kind of, standing out to me.
Okay. So we'll start with the exchange side, 108% growth year-over-year. Amazing growth. And, at the end of the day, it's a function of getting more and better quality publishers into the exchange and getting more supply demand partners as well. So the [ biz dev ] team and the exchange were very busy in getting more of these types of publishers into the system. And when you get better type of quality of publisher, you get better inventory, and you can increase your revenue because you're doing a better job for your advertisers and you're getting better results. So that's what it is on the exchange. And we are very happy about where this is going and where it's today. And on the DSP side, we came off from a tough year last year, a year that we actually went backwards, which I think it's the first year we ever went backwards on revenue on the DSP side. And I'm so happy to see that we're growing. So it's a 15% growth. It's not where I want it to be. We're used to do 20% to 30% growth on the DSP side for many, many years. And that's where I want to get the DSP side to go back to. But I'm very, very happy about the progress and moving forward with that. And it's a function of many, many things. It's a function of improving the product, creating more partnerships, but a lot of it is in the sales process. We spoke about in the past that we still sometimes feel like we're selling like a start-up, and we're really starting to move upstream now. We're not fully there yet, but we are making a lot of progress on the marketing and sales side. At the end of the day, to move upstream to bigger clients, bigger advertisers are going to spend more with us.
Are there any verticals to call out that are -- have come back online in size for you?
No, we actually looked at it yesterday. I don't think there's any specific callout on any verticals. It's just across the board, and it's not like big customers who are spending all of a sudden a lot with us. No, it's really across the board, like medium-sized customers, and more of them are spending consistently.
Okay. And then just on the mix, I mean, I'm curious how you think about allocating resources and what the right mix of revenue is between product lines? Or is that the wrong question that it really is offering something across all sorts of products going from best.
So I'll try to answer it because we do, it's always risky for a DSP to own an exchange. Why? Because if the DSP starts favoring to buy media from its own exchange, it's now not having the best intention for the advertisers. At the end of the day, you want to deliver the results for advertisers. So we really, really do our best to separate them. And how do we do that? We have an algorithm on the DSP side that makes the decision where to buy the ads, and the major decision is the ROI for the customer. So as long as you do that, you can run both sides. Now -- so the majority of our people and the focus of the company is still on the DSP side. And the exchange is running with less people and more reliant on systems and algorithms and so forth in order to deliver it. So it's really hard to predict what the revenue in the exchange side is going to be. We didn't predict it's going to go up 108%. We just delivered it, and we're very happy about it. We have a lot more experience on the DSP side, as you know, and it's easier for us to predict and to allocate the right resources into it and to make the right investments into it, and we're learning a lot about the exchange business at the same time. And we have really great and amazing management team that is running that exchange and doing a really great job. So that's what I can share about that.
Okay. Fair enough. Maybe turning to the cost side of things. So the mix worked out well for you guys in bringing profitability to the bottom line. How would you talk about the margin profile of illumin? Is this a fair baseline to kind of say this is where we want to operate? And then I know you also spoke to the cost optimizations looking out for those. Anything to say about the OpEx number -- change or steady state here? How do you think about that?
Yes. So OpEx, we've done some cut in early Q2, and that's affecting obviously the -- so we have some savings on the expenses. And I think we're good from that perspective. We do have increase in the variable OpEx side of the things, which is related to sales. So we have higher revenue, more commissions and so. But in general, we've seen good savings from the OpEx perspective. And remind me the first question again?
Maybe on, kind of, the gross margin line, like, is there a sense you have of bottoming from that?
So we are -- I think we'll be improving the gross margins by a few points. That's what we're after. We have some accounts that were running on low margins that we are either removing or negotiating higher margins with them. And therefore, I believe that we will see slightly maybe a couple of points, 2, 3 points slow progress throughout the year that we can improve margins on the DSP side.
Okay. And then last couple for me, if you don't mind. One was M&A, lots of things going on out there in terms of valuations. Any update there? And -- and the one other question I had was around the sales go-to-market. In terms of the team you have, you -- it sounds like you're automating a lot. So to continue the growth, does there need to be an investment in sales? Or are you having more success in making each salesperson more productive?
On the M&A side, we have a banker that we hired to do -- to execute on that role for us. They created a list. They started calling, sending e-mails. We already had a few conversations. Nothing imminent at the moment, but we're seeing companies that are anywhere from $10 million in revenue to close to $300 million in revenue. So the $300 million revenue is too big for us right now, but maybe this is a pipeline for the future. And you're right, valuations are all over the place. I think that, in general, we can see the valuations in the market is lower at this point, and it should be favorable for us from that point. And regarding sales and marketing, it's -- yes, it's all about making it more efficient. I think we have probably the right amount of salespeople out there. It's all about getting more -- so getting them to go after bigger accounts and, at the end of the day, manage a bigger book of business on average. And therefore, we should be able to grow the revenue without increasing any major investment on the sales and marketing side.
Great to hear. Congrats again on a strong quarter and I'll pass the line. Thanks.
Thank you, Daniel, and thank you for the support. And I'd like to thank again the illumin team for delivering such amazing quarter, and to our Board of Directors, to our investors that are patient with us and allowing us to come back and deliver good results. We're working hard on it, and we will obviously update you in the next few quarters as well, and looking forward to continued momentum here. Thank you, guys.
Thank you very much for that, Daniel. As there are no further questions, this will conclude our time this morning. My thanks to Tal, Michael, and a special thanks to our analysts and shareholders for attending. Please join us next time as we present our third quarter 2026 financial and operating results. Bye for now.
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