ironSource CEO on going public via SPAC, outlook

Yahoo Finance’s Brian Sozzi and Myles Udland speak with ironSource CEO Tomer Bar-zeev about the company’s SPAC debut and outlook.

Video Transcript

MYLES UDLAND: Today down on the floor of the New York Stock Exchange, IronSource is making its debut after going public in a SPAC transaction. And the company's CEO, Tomer Bar-Zeev joins us now to discuss. Tomer, thanks so much for joining this morning. Congratulations on the deal. Let's just start with your business, which as a SPAC IPO is unique in that you guys, $300 million in revenues in 2020, $100 million in adjusted EBITDA with profits and revenue expected to grow this year. Why did you guys choose to go public via a SPAC route with those kind of financials, which can be unique [AUDIO OUT].

TOMER BAR-ZEEV: Sure. Hi, guys, good morning, thank you for having me. Well, the story is, we were actually on our way to a traditional IPO, were quite advanced in that process. And then all of a sudden, we got a call from Orlando Bravo, from Thoma Bravo, probably the best software investor out there. And we thought that after talking to them and getting to know them, seeing that we show the same sentiment and the same values of how to build a company, we thought we can get the best of both worlds, go public and have them joining us as a partner. Orlando Bravo will be joining our board. And with that, we felt it's a great vote of confidence and we thought we would be better off shifting towards going public through a partnership with them through a SPAC and then being public after that.

BRIAN SOZZI: Tomer, what's driving your business right now?

TOMER BAR-ZEEV: Sorry, what? What's driving our business?

BRIAN SOZZI: What's driving, what's driving the business?

TOMER BAR-ZEEV: So we operate in the app economy, and the way to understand the motivation for what we do is derivative of the fact that we all spend a lot of time on our mobile devices. And 83% of that time we spend in apps. We download billions and billions of those apps every year to our devices. But there is a great dissonance between how easy it is to create an app, to create content, and how hard it is to make it a successful business. And that is what's driving our business, because we're a business platform for those content creators, those app developers, those game developers. We help them concentrate on creating great content, and relay on us as a business platform to help them scale into scalable, successful business.

BRIAN SOZZI: Perhaps you can help me understand--

MYLES UDLAND: Go ahead, Soz.

BRIAN SOZZI: Yeah, Myles, I was just going to add, follow up on what, Tomer, help us understand the financials just a little bit here. So sales last year grew 83%. This year you're forecasting 37% growth. Why that growth rate slowdown?

TOMER BAR-ZEEV: So actually, we have already updated. We had a very strong Q1 result, which we publish. And following that, we increased the guidance for Q2 and the rest of the year. Currently we're looking at 36%, if I'm not wrong. And we want to be, we're taking the first baby steps becoming a public company. We want to be prudent and cautious and conservative in the way we give guidance. And hopefully, we'll be able to do much better.

MYLES UDLAND: Tomer, I wanted to ask a little bit about your large customer base. Your customers with over $100,000 in revenue almost doubled from '19 to '20. You guys are looking for almost 300, or you had almost 300 customers at that level through the first quarter of this year. What's the visibility on growing that part of the user base? And is that really where you're going to spend a lot of your attention going forward?

TOMER BAR-ZEEV: Yeah, so we operate, if you go right now and you down, you go and search for the top 100 downloaded games, you would see us integrated in around 90% of those. And the beauty of the app economy and the game economy, that it keeps changing. One of the beautiful things that our platform enables is a full democratization of content creators.

You can be today a very small indie developer somewhere in the world developing great content, and when you rely on us as a business platform scale your business, you can really become top of the charts. So that constantly grows. That economy constantly grows. People constantly download and enjoy more content on their apps and games that they download, and we're here to help them with that. And we have a lot of customers today, many of them are big. They generate over $100,000 a year with us, and we see that keep growing.

BRIAN SOZZI: Tomer, tell me quickly a little bit about your origin story. Why did you get involved with IronSource? And can you believe you're now a public company and you're standing on the New York Stock Exchange floor?

TOMER BAR-ZEEV: Yeah, so this is a very, very emotional day for all of us. We're very excited to be here, and it's a very important milestone for us. We started this company over a decade ago, and we have a very unique story, because we started this company eight founders. I personally don't know of any company with this amount of founders. And what's beautiful, is that we all stay here for over a decade. We're all active and running the company. And that's very unique. And we're now excited, because being public will enable us to grow even faster and stronger than ever before now that we have that public currency and we're trading. And I see, I'm very excited to start this new chapter in the life of the company.

MYLES UDLAND: All right, always good to see a band that gets together and doesn't break up through all the hard times over more than a decade building a company. Tomer Bar-Zeev, CEO of IronSource. Tomer, thanks so much for joining us. Congratulations on the public offering, and I hope we'll talk soon.

TOMER BAR-ZEEV: Thank you, guys, thank you very much.