IAS Q1 Earnings Call: Optimization and Product Expansion Offset Mixed Segment Growth

Ad verification company Integral Ad Science (NASDAQ:IAS) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 17.1% year on year to $134.1 million. Its non-GAAP profit of $0.13 per share was in line with analysts’ consensus estimates.

Is now the time to buy IAS? Find out in our full research report (it’s free).

StockStory’s Take

Integral Ad Science’s first quarter was defined by robust adoption of its optimization products, which management credited as the primary driver of revenue growth. CEO Lisa Utzschneider highlighted 24% growth in optimization, particularly within financial services and retail, as well as gains from onboarding former Oracle clients. While measurement revenue grew only 4%, Utzschneider noted ongoing customer shifts from display measurement toward performance-oriented offerings, reflecting advertisers’ increased focus on return on investment. Growth outside the Americas also contributed, with EMEA regions seeing notable expansion as global advertisers adopted the company’s TMQ suite across social platforms.

For the remainder of the year, Integral Ad Science’s leadership emphasized continued investment in performance-driven and automation-enabled solutions, particularly targeting mid-market and international advertisers. Utzschneider pointed to the successful launch of new optimization features and partnerships with platforms like TikTok, Reddit, and Nextdoor as evidence of product momentum. She stated, “We expect double-digit profitable growth in the second quarter and for the full year,” while cautioning that guidance reflects both ongoing macroeconomic uncertainties and observed industry shifts toward efficiency. The company also plans to scale its presence in emerging digital channels, such as gaming and audio, and deepen its AI-driven product suite.

Key Insights from Management’s Remarks

Management attributed mixed segment growth to product mix shifts and changing advertiser priorities. Expansion in optimization and new product integrations offset headwinds in display measurement.

• Optimization adoption led growth: IAS’s optimization business saw notable momentum, with management attributing performance to increased adoption in financial services, retail, and travel. CEO Lisa Utzschneider described optimization as “a reflection of the value that we’re offering to brands as they’re leaning into performance programmatic offerings.”
• Publisher segment expansion: Publisher revenue grew rapidly, supported by enhanced Publica product features and new OEM partnerships. Management highlighted investments in bidding technology to improve auction competition, which resonated with large OEM clients.
• Social measurement growth: Social media measurement outperformed other formats, driven by adoption of TMQ products across major platforms like Meta and TikTok. Utzschneider noted that social measurement accounted for a growing share of total revenue, particularly in international markets.
• Open web display softness: The company acknowledged industry-wide declines in open web display measurement, attributing this to broader digital ecosystem trends and a continued shift in customer budgets from measurement to optimization.
• Mid-market and Oracle customer traction: IAS made progress expanding its mid-market offering, with performance-based products resonating among advertisers with annual spends between $200,000 and $1 million. Additionally, the integration and cross-sell of Oracle-acquired clients contributed to growth across all business lines.

Drivers of Future Performance

Integral Ad Science’s outlook centers on sustained demand for performance-driven solutions, ongoing investments in automation and AI, and further international market penetration.

• Performance and optimization focus: Management expects continued revenue growth from the expansion and adoption of its optimization suite, with ongoing product launches designed to drive measurable outcomes for advertisers seeking efficiency and ROI.
• AI and automation investment: The company is prioritizing AI-powered product innovation and automation, aiming to streamline client onboarding and enhance product scalability, particularly for mid-market and self-serve customers.
• International and emerging channels: IAS is scaling its presence in international markets, including China, and expanding coverage into newer channels such as gaming and audio, which management sees as incremental growth opportunities, though still smaller than core social platforms.

Catalysts in Upcoming Quarters

In upcoming quarters, key areas to monitor include (1) the pace of optimization product adoption and cross-selling to former Oracle clients, (2) the effectiveness of international expansion, particularly in EMEA and China, and (3) the scaling of new product integrations across major platforms and emerging channels. Execution on AI-driven automation and mid-market penetration will remain important indicators of progress.

Integral Ad Science currently trades at a forward price-to-sales ratio of 2.2×. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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