Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ FORM 10-K ______________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _______ Commission file number 001-40643 ______________________________ Teads ...

Financial Data and Key Metrics Changes - Revenue in Q4 was approximately $352 million, reflecting an increase of 50% year-over-year on an as-reported basis, primarily due to the acquisition impact. On a pro-forma basis, there was a year-over-year decline of 17% in Q4 [15][16] - Ex-TAC gross profit in Q4 was $152 million, an increase of 122% year-over-year on an as-reported basis, but a decline of 19% on a pro-forma basis [17] - Adjusted EBITDA in Q4 was $37 million, and adjusted free cash flow was approximately $3 million in the fourth quarter and $6 million for the year [20] Business Line Data and Key Metrics Changes - CTV (Connected TV) revenue crossed the $100 million annual mark with growth hitting 55% in Q4, indicating strong performance in home screen placements [5][6] - Sales to enterprise customers saw a 300% increase compared to Q3, although it still represented only a few million dollars per quarter [5][6] Market Data and Key Metrics Changes - The U.K. market showed stabilization, with improvements noted in Q1, while the U.S. market is expected to benefit from new leadership and a positive pipeline [16][33] - The company experienced a headwind of approximately $20 million of Ex-TAC due to quality cleanup, impacting year-over-year comparisons primarily in H1 2026 [17][40] Company Strategy and Development Direction - The company aims to build a best-in-class digital advertising platform, focusing on premium marketplace sustainability and moving away from low-quality revenue [4][5] - The strategy for enterprise advertisers is built on three pillars: leading with CTV offerings, deepening relationships with agencies, and scaling performance business [7][10] - The company is investing in AI to enhance performance and productivity, aiming to simplify campaign setups and optimize outcomes [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth by Q4 2026, citing positive indicators from Q4 and early Q1 [14][16] - The company acknowledges the uncertainty of the overall environment but remains focused on executing its strategic plan and improving profitability [21][22] Other Important Information - The company recorded a non-cash impairment of around $350 million in goodwill due to declines in share price and market capitalization, which does not impact liquidity or cash flows [18][19] - The restructuring is expected to save approximately $35 million-$40 million annually [19] Q&A Session Summary Question: Sales force staffing and exclusive deals with Samsung and LG - Management is confident in the current sales force and leadership team, with exclusive relationships established in certain geographies with LG and Samsung [24][25] Question: Stabilization of the business and organizational changes - Management noted improvements in Q1 and expressed confidence in the current team and execution plan [30][35] Question: Assumptions behind full year EBITDA guidance - Guidance for approximately $100 million of EBITDA does not imply full year Ex-TAC growth, with expectations for growth by Q4 [38][40] Question: Specific ad verticals strength or weakness - No material verticals were highlighted, with some weakness in CPG and automotive, and strength in health and finance [44][45] Question: Google TV opportunity and inventory cleanup - The Google TV addition is seen as a significant growth opportunity, and the inventory cleanup process is largely behind the company, leading to a healthier network [48][51]

Financial Data and Key Metrics Changes - Revenue in Q4 was approximately $352 million, reflecting a 50% year-over-year increase on an as-reported basis, primarily due to the acquisition impact. On a pro forma basis, there was a 17% year-over-year decline in Q4 [15][16] - Ex-TAC gross profit in Q4 was $152 million, an increase of 122% year-over-year on an as-reported basis, but a decline of 19% on a pro forma basis [17][18] - Adjusted EBITDA in Q4 was $37 million, and adjusted free cash flow was approximately $3 million in the fourth quarter and $6 million for the year [20] Business Line Data and Key Metrics Changes - CTV (Connected TV) revenue crossed the $100 million annual mark with a growth rate of 55% in Q4, indicating strong performance in home screen placements [5][6] - Performance cross-selling to enterprise customers saw a 300% increase compared to Q3, although it still represents only a few million dollars per quarter [5][6] Market Data and Key Metrics Changes - The U.K. market has stabilized, and there is a deceleration in top-line growth attributed to operational challenges and merger distractions, particularly impacting the U.S. and U.K. markets [16][34] - The company expects a headwind of approximately $20 million of Ex-TAC due to quality cleanup, primarily affecting the first half of 2026 [17][40] Company Strategy and Development Direction - The company aims to build a best-in-class digital advertising platform, focusing on premium marketplace sustainability and moving away from low-quality revenue [4][5] - The strategy for enterprise advertisers is built on three pillars: leading with CTV offerings, deepening relationships with agencies, and scaling performance business [7][10] - The company is investing in AI to enhance performance and productivity, aiming to optimize campaign outcomes and improve margins [12][13] Management's Comments on Operating Environment and Future Outlook - Management is cautiously optimistic about returning to growth by Q4 2026, with positive indicators observed in Q4 and early Q1 [14][34] - The restructuring is expected to save approximately $35 million-$40 million annually, contributing to a healthier business foundation [19][20] - Management believes that the heavy lifting of the transition is behind them, with a well-defined execution plan and strong leadership in place [14][35] Other Important Information - The company recorded a non-cash impairment of around $350 million in goodwill due to declines in share price and market capitalization, which does not impact liquidity or cash flows [18][19] - The company has $139 million in cash equivalents and marketable securities, with $628 million in long-term debt due in 2030 [20] Q&A Session Summary Question: Is the sales force fully staffed now, and what about exclusive deals with Samsung and LG? - Management is confident in the current sales force and leadership team, indicating that while nothing is ever completely smooth, they are optimistic about the team's performance [25] Question: Can you provide additional color on the stabilization of the business and trends in Q1? - Management noted improvements in Q1, particularly in CTV and performance sales, with a focus on reducing costs and realigning operations [33][34] Question: What are the assumptions behind the full-year EBITDA guidance? - The guidance does not imply full-year Ex-TAC growth on a pro forma basis, with expectations of returning to growth by Q4 2026 [39][41] Question: Any specific ad verticals showing strength or weakness? - There is some weakness in CPG and automotive sectors, while health and finance are showing strength, but nothing material to report [45] Question: Can you elaborate on the Google TV opportunity? - The addition of Google TV is seen as a significant growth opportunity, with expectations of continued strong growth in CTV revenue [50] Question: Is the proactive cleanup of inventory largely behind you now? - Management confirmed that the cleanup process is behind them, resulting in a healthier network and better ROAS for performance advertisers [51]

Financial Data and Key Metrics Changes - Revenue in Q4 was approximately $352 million, reflecting an increase of 50% year-over-year on an as-reported basis, primarily due to the acquisition impact [15] - Ex-TAC gross profit in Q4 was $152 million, an increase of 122% year-over-year on an as-reported basis, but a decline of 19% on a pro forma basis [18] - Adjusted EBITDA in Q4 was $37 million, and adjusted free cash flow was approximately $3 million in the fourth quarter and $6 million for the year [21] Business Line Data and Key Metrics Changes - CTV revenue crossed the $100 million annual mark with growth hitting 55% in Q4, indicating strong performance in the living room segment [5] - Sales to enterprise customers saw a 300% jump compared to Q3, demonstrating significant growth potential [5] - Direct response advertisers are focused on ROAS, with a small but meaningful segment of arbitrage-based customers being turned away for higher quality [12] Market Data and Key Metrics Changes - The U.K. market has stabilized, and sales of performance campaigns to enterprise customers are accelerating [17] - The operational challenges primarily impacted the U.S. and U.K. markets, but improvements are being seen in Q1 [17][36] Company Strategy and Development Direction - The company aims to build a best-in-class digital advertising platform, focusing on premium marketplace growth and walking away from low-quality revenue [4] - The strategy for enterprise advertisers is built on three pillars: leading with CTV offerings, deepening relationships with agencies, and scaling performance business [7][11] - The company is investing in AI to enhance performance and productivity, aiming to simplify campaign setups and optimize outcomes [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth by Q4 2026, citing positive indicators from Q4 and early Q1 [14][36] - The company acknowledges the uncertainty of the overall environment but is focused on executing a well-defined plan to drive growth [22] Other Important Information - The company recorded a non-cash impairment to goodwill of around $350 million due to declines in share price and market capitalization, which does not impact liquidity or cash flows [19] - Restructuring is expected to save approximately $35 million-$40 million annually [20] Q&A Session Summary Question: Is the sales force fully staffed now, and what about exclusive deals with Samsung and LG? - Management is confident in the current leadership and team, and exclusive relationships exist with LG and Samsung in certain geographies, enhancing their competitive advantage [26][27] Question: Can you provide additional color on the stabilization of the business and trends in Q1? - Management sees improvement in Q1, particularly in CTV and performance sales, with a focus on reducing costs and realigning around growth drivers [32][36] Question: What are the assumptions behind the full year EBITDA guide? - The guidance of approximately $100 million of EBITDA does not imply full-year Ex-TAC growth, with expectations of returning to growth by Q4 [41][43] Question: Any specific ad verticals showing strength or weakness? - There is some weakness in CPG and automotive, while health and finance sectors show strength, but nothing material to report [46] Question: Can you elaborate on the Google TV opportunity? - The addition of Google TV is seen as a significant growth opportunity for CTV home screen, with expectations of continued strong growth [50]

Financial Performance - Revenue for Q4 2025 was $352.2 million, a 50% increase from $234.6 million in Q4 2024, and full-year revenue reached $1,300.5 million, up 46% from $889.9 million in 2024[2][7] - Gross profit for Q4 2025 was $120.4 million, representing a 115% increase from $56.1 million in Q4 2024, with a gross margin of 34.2% compared to 23.9% in the prior year[2][6] - Adjusted EBITDA for Q4 2025 was $36.5 million, a 115% increase from $17.0 million in Q4 2024, with an adjusted net income of $9.5 million compared to $3.5 million in the prior year[2][6] - Revenue for the year ended December 31, 2025, was $1,300,461,000, up 46.1% from $889,875,000 in 2024[39] - Gross profit for 2025 was $429,052,000, a 123.8% increase compared to $192,102,000 in 2024[39] - Adjusted EBITDA for 2025 was $93,374,000, compared to $37,300,000 in 2024, reflecting a significant increase[39] Net Loss and Expenses - The net loss for Q4 2025 was $428.2 million, compared to a net loss of $0.2 million in Q4 2024, primarily due to nonrecurring expenses related to goodwill impairment and acquisition costs[2][6] - Total operating expenses for Q4 2025 were $466.434 million, up from $53.527 million in Q4 2024, primarily due to goodwill impairment of $352.130 million[32] - Net loss for the year ended December 31, 2025, was $517,070,000, compared to a loss of $711,000 in 2024[39] - The net loss for Q4 2025 was $428.224 million, compared to a net loss of $167 thousand in Q4 2024[32] Cash Flow and Assets - Cash, cash equivalents, and investments in marketable securities totaled $138.7 million as of December 31, 2025[9] - Cash and cash equivalents increased to $129,700,000 at the end of 2025 from $89,725,000 at the end of 2024[37] - The company reported a cash outflow from investing activities of $554,184,000 in 2025, compared to an inflow of $67,153,000 in 2024[37] - Net cash provided by operating activities for Q4 2025 was $7.262 million, down from $42.663 million in Q4 2024[41] Operational Metrics - Connected TV (CTV) revenue crossed the $100 million annual mark, with a year-over-year growth of 55% in Q4 2025[4] - Branding customers utilizing omnichannel campaigns grew to 10% in Q4 2025, up from 7% in Q1 2025, with expectations to reach at least 15% by the end of 2026[4] - The company reduced headcount by approximately 10%, aiming for annualized cost savings of $35 million to $40 million[6] - Teads has a global workforce of approximately 1,700 employees across more than 30 countries, indicating a strong operational presence[28] Future Outlook - The company expects adjusted EBITDA of approximately $100 million for the full year 2026, indicating a positive outlook for growth[10] - The company anticipates challenges related to integrating acquisitions and managing growth effectively, alongside potential impacts from economic conditions and market volatility[24] Shareholder Information - The company reported a weighted average of 95,620,706 diluted shares outstanding for Q4 2025[32] - The diluted net loss per share reported for Q4 2025 was $(4.48), while the adjusted diluted net income per share was $0.10[41] Adjustments and Non-GAAP Measures - Adjusted net income (loss) is a non-GAAP measure that excludes certain items not indicative of core operating performance, such as acquisition costs and impairment charges[21] - Free cash flow is defined as cash flow from operating activities minus capital expenditures, with adjusted free cash flow including direct acquisition costs[22] - Total adjustments after tax for Q4 2025 amounted to $437.736 million, compared to $3.625 million in Q4 2024[41] - The total adjustments before tax for the twelve months ended December 31, 2025, were $422.734 million, compared to $6.216 million in 2024[41] - Adjusted free cash flow for the twelve months ended December 31, 2025, was $5.969 million, compared to $55.259 million in 2024[41]

Acquisition and Integration - The company completed the acquisition of TEADS for approximately $0.9 billion, including $625 million in cash and 43.75 million shares of common stock[178][184]. - The company incurred acquisition and integration costs of approximately $3.7 million and $25.5 million for the three and nine months ended September 30, 2025, respectively[185]. - A restructuring plan was announced on February 3, 2025, with estimated charges of $11 million to $14 million, primarily for severance costs[187]. - The company recorded impairment charges of $15.5 million related to the discontinuation of the video product offering associated with the prior acquisition of vi[196]. - Ex-TAC Gross Profit increased by $70.8 million, or 118.7%, to $130.5 million for Q3 2025, and by $210.0 million, or 125.2%, to $377.8 million for the nine months ended September 30, 2025, primarily due to the impact of the Acquisition[254]. - Adjusted EBITDA increased by $7.7 million to $19.2 million for Q3 2025 and by $36.5 million to $56.8 million for the nine months ended September 30, 2025, driven largely by the Acquisition[275]. Financial Performance - Revenue for the three months ended September 30, 2025, was $318.8 million, a 42.3% increase from $224.2 million in the same period in 2024[186]. - Gross profit for the three months ended September 30, 2025, was $105.7 million, with a gross margin of 33.2%, compared to $48.9 million and 21.8% in the prior year[186]. - The company recorded a net loss of $19.7 million for the three months ended September 30, 2025, compared to a net income of $6.7 million in the same period in 2024[186]. - Adjusted EBITDA for the three months ended September 30, 2025, was $19.2 million, up from $11.5 million in the same period in 2024[186]. - Revenue for Q3 2025 increased by $94.6 million, or 42.2%, to $318.8 million compared to $224.2 million in Q3 2024[246]. - Revenue for the first nine months of 2025 rose by $292.9 million, or 44.7%, to $948.2 million from $655.3 million in the same period of 2024[246]. - Gross profit for Q3 2025 increased by $56.8 million, or 116.4%, to $105.7 million compared to $48.9 million in Q3 2024[253]. - Gross profit for the first nine months of 2025 rose by $172.7 million, or 126.9%, to $308.7 million from $136.0 million in the same period of 2024[253]. - The company reported a net loss of $19.7 million for Q3 2025 compared to a net income of $6.7 million in Q3 2024[245]. - The company experienced a loss from operations of $6.3 million in Q3 2025, compared to a loss of $2.9 million in Q3 2024[245]. Operational Challenges - The company faced operational challenges in returning to growth during Q2 and Q3 2025, implementing a complex integration of two similarly scaled companies, resulting in a lagging indicator of sales in key markets like the U.S., U.K., and France[201]. - A decline in paid page views for premium publisher partners was observed, with an approximate decrease of 10% to 15% attributed to the shift in user behavior due to generative AI tools[202]. - The legacy Outbrain DSP business experienced a $5.0 million decline in year-over-year Ex-TAC Gross Profit, driven by a small number of customers spending a combined $30.0 million less on the platform[203]. - The global economic environment has been unstable, with factors such as geopolitical tensions and inflation negatively impacting advertisers and overall business performance[205]. Advertising and User Engagement - The click-through rate (CTR) for ads on the Outbrain platform is currently less than 1%, highlighting significant room for growth in consumer engagement[211]. - The company plans to expand its platform to new media environments and formats, including unique video and high-impact display, to enhance user engagement and advertising effectiveness[216]. - The introduction of Connected Ads solutions aims to provide a more immersive brand experience, which is expected to drive new types of advertiser demand[218]. - The company continues to invest in its AI prediction engine to improve ad relevance and user engagement, which is critical for enhancing return on advertiser spend (ROAS)[220]. - The company reported tens of thousands of unique advertisers active on its platforms for the nine months ended September 30, 2025, indicating a broad engagement with its advertising services[209]. Financial Position and Liquidity - As of September 30, 2025, total debt was $621,629,000, with long-term debt amounting to $604,023,000[300]. - The company had cash and cash equivalents of $130,751,000 and short-term investments of $7,501,000 as of September 30, 2025, totaling available liquidity of $238,252,000[291]. - The company plans to meet liquidity needs through available cash, cash generated from operations, and borrowing capacity, focusing on payments to media partners and operating expenses[298]. - The 2025 Revolving Facility allows for up to $100,000,000 in borrowing capacity, with interest rates ranging from 3.25% to 4.25% depending on the company's leverage ratio[292]. - The company recorded a pre-tax gain of $1,200,000 from the repurchase of $9,300,000 aggregate principal amount of notes for $8,000,000 in cash[300]. - As of September 30, 2025, the company was in compliance with the financial covenants under the Credit Agreement[297]. - The Company has a new Overdraft Facility with HSBC providing a revolving line of credit of up to €15 million at a 3-month EURIBOR plus a margin of 1.8%[303]. - Net cash provided by operating activities decreased to $0.3 million for the nine months ended September 30, 2025, down from $25.9 million in the same period of 2024[311]. - Adjusted free cash flow decreased to $3.4 million for the nine months ended September 30, 2025, compared to $13.6 million for the same period in 2024[312]. - Cash used in investing activities was $545.4 million for the nine months ended September 30, 2025, a decrease of $621.0 million from cash provided by investing activities of $75.6 million in 2024[313]. - Net cash provided by financing activities increased to $585.4 million for the nine months ended September 30, 2025, from net cash used of $116.9 million in the same period of 2024[314]. - The Company repurchased 1,410,001 shares with a fair value of $5.8 million during the nine months ended September 30, 2024, with $6.6 million remaining under the stock repurchase program as of September 30, 2025[306]. - The Company has long-term debt of $604.0 million as of September 30, 2025, with no long-term debt outstanding as of December 31, 2024[327]. - The Company incurred future interest payments of approximately $62.8 million annually from 2026 to 2029, and $31.4 million in 2030 related to the Notes issued for the Acquisition[310]. - A hypothetical 10% change in foreign currency exchange rates would result in a $2.2 million impact on operating income for the three months ended September 30, 2025[322]. - The Company plans to monitor its exposure to interest rate risk, with a 100-basis point change in interest rates affecting the fair value of its investment portfolio by less than $0.1 million[325].

Financial Data and Key Metrics Changes - Revenue in Q3 was approximately $319 million, reflecting an increase of 42% year-over-year on an as-reported basis, driven primarily by the impact of the acquisition [15] - On a pro forma basis, there was a year-over-year decline of 15% in Q3 [15] - Ex-tech gross profit in the quarter was $131 million, an increase of 119% year-over-year on an as-reported basis [19] - Adjusted EBITDA for Q3 was $19 million, with adjusted free cash flow being a use of cash of $24 million in the quarter [20][21] Business Line Data and Key Metrics Changes - Connected TV (CTV) revenue grew around 40% in Q3 and is projected to reach $100 million for the year [18] - The CTV business focuses on three key pillars: on-screen placements, proprietary formats, and cross-screen activations [9] - Cross-sell revenue showed notable inflection, with October revenue and bookings growing by more than 55% month-over-month [11] Market Data and Key Metrics Changes - The U.S., U.K., and France, which represent about 50% of revenue, are driving headwinds for the legacy Teads business [16] - The DACH region is noted as neutral or growing, contrasting with the declines in the key markets [16] - Page views on premium publishers declined by 10% to 15%, attributed to increased adoption of AI summaries and volatility in programmatic supply [39] Company Strategy and Development Direction - The company is focusing on three main dimensions: portfolio optimization, operational efficiency, and cost optimization [6][7] - The growth strategy centers on connected TV, deepening relationships with agencies, expanding performance campaigns, and algorithmic advancements [14] - A detailed three-year outlook and roadmap will be shared at an upcoming Investor Day in March [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in integration and operational changes taking longer than anticipated, but remains confident in the long-term vision [14] - The company is committed to generating positive cash flow and improving its cost structure [21] - Visibility remains challenged due to shorter planning cycles from advertisers, impacting guidance for Q4 [22] Other Important Information - The company welcomed Molly Spielman as the new Chief Commercial Officer, bringing extensive experience from Criteo and Oracle Advertising [8] - The company recognized $4 million of acquisition and integration-related costs and $1 million of restructuring charges in the quarter [19] Q&A Session Summary Question: Can you unpack the headwinds in the quarter? - Management noted a combination of factors including distractions from the merger and execution challenges taking longer than expected, with some weakness in key geographies [23][24] Question: What is your willingness to protect free cash flow? - The company is committed to generating positive free cash flow and has a transformational plan to focus on key areas [28] Question: Can you provide insights on the loss of several big clients? - The loss was attributed to changes in client business models and the company's strategic decisions around quality, impacting the DSP business [34][36] Question: What are the expectations for free cash flow going forward? - The company expects to be around break-even for the year, with a focus on cash flow optimization and improvements in EBITDA [42][43] Question: What are the assumptions for Q4 guidance? - Guidance reflects caution due to visibility challenges and expected impacts from headwinds in the DSP business [45][46]

Financial Performance - Revenue for Q3 2025 was $318.8 million, a 42% increase from $224.2 million in Q3 2024, primarily due to acquisitions and favorable foreign currency effects of approximately $5.0 million[3] - Gross profit reached $105.7 million, up 116% from $48.9 million in the prior year, with gross margin increasing to 33.2% from 21.8%[7] - Adjusted EBITDA for Q3 2025 was $19.2 million, a 66% increase from $11.5 million in Q3 2024[7] - Revenue for Q3 2025 reached $318.77 million, a 42.3% increase from $224.18 million in Q3 2024[31] - Gross profit for Q3 2025 was $105.75 million, compared to $48.87 million in Q3 2024, reflecting a significant improvement in profitability[31] - The net loss for Q3 2025 was $19.69 million, compared to a net income of $6.70 million in Q3 2024, indicating challenges in maintaining profitability[31] - Adjusted EBITDA for Q3 2025 was $19.17 million, compared to $11.53 million in Q3 2024, reflecting a 66.5% increase[38] - Free cash flow for Q3 2025 was $(29.44) million, compared to $8.67 million in Q3 2024[40] - Adjusted diluted net loss per share for Q3 2025 was $(0.17), compared to $0.11 in Q3 2024[40] Cash and Debt Position - Cash, cash equivalents, and investments in marketable securities totaled $138.3 million as of September 30, 2025[7] - Cash and cash equivalents as of September 30, 2025, were $130.75 million, up from $89.09 million at the end of 2024, showing improved liquidity[33] - Total debt obligations amounted to $621.6 million, including $604.0 million in Notes and $17.6 million under a short-term overdraft facility[9] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $131.88 million, down from $150.63 million at the beginning of the quarter[40] Growth and Market Presence - Connected TV (CTV) revenue grew by approximately 40% year-over-year in Q3 2025 on a pro-forma basis, with over 2,500 campaigns run since the launch of the CTV HomeScreen product[6] - Revenue generated through cross-selling increased 67% sequentially from Q2 to Q3 2025, with cross-screen adoption reaching over 10% of branding advertisers[8] - Total assets increased to $1.71 billion as of September 30, 2025, compared to $549.21 million at the end of 2024, reflecting significant growth in the company's balance sheet[33] - Teads is directly partnered with over 10,000 publishers and 20,000 advertisers globally, enhancing its market presence[28] Future Outlook and Strategic Initiatives - The company expects Ex-TAC gross profit for Q4 2025 to be between $142 million and $152 million, and Adjusted EBITDA to be between $26 million and $36 million[14] - The company plans to host an Investor Day in March 2026, with details to be shared closer to the event[8] - The company is focusing on leveraging predictive AI technology to drive advertising effectiveness and improve business outcomes[28] Risks and Challenges - Teads is navigating various risks including economic downturns, geopolitical tensions, and regulatory challenges that may impact advertising demand[31] - Operating expenses increased to $112.03 million in Q3 2025 from $51.82 million in Q3 2024, driven primarily by higher sales and marketing costs[31] - The company incurred $598.32 million in cash outflow for business acquisitions in the nine months ended September 30, 2025[40] - Traffic acquisition costs for Q3 2025 were $188.23 million, an increase from $164.48 million in Q3 2024[38]

Part I - Financial Information This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, the impact of the Teads acquisition, restructuring activities, and other financial components for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | **ASSETS:** | | | | Total current assets | $551,310 | $343,131 | | Total assets | $1,774,913 | $549,213 | | **LIABILITIES AND STOCKHOLDERS' EQUITY:** | | | | Total current liabilities | $502,613 | $289,471 | | Long-term debt | $602,962 | $— | | Total liabilities | $1,242,951 | $317,870 | | Total stockholders' equity | $531,962 | $231,343 | - Goodwill significantly increased to **$633,247 thousand** as of June 30, 2025, from **$63,063 thousand** as of December 31, 2024, primarily due to the Teads acquisition[14](index=14&type=chunk) - Intangible assets, net, rose to **$403,438 thousand** as of June 30, 2025, from **$16,928 thousand** as of December 31, 2024, reflecting assets acquired in the Teads transaction[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $343,096 | $214,148 | $629,453 | $431,112 | | Gross profit | $120,264 | $45,576 | $202,914 | $87,171 | | Loss from operations | $(2,259) | $(5,627) | $(46,695) | $(12,224) | | Net loss | $(14,313) | $(2,199) | $(69,156) | $(7,240) | | Basic Net loss per common share | $(0.15) | $(0.04) | $(0.80) | $(0.15) | - Revenue increased by **60.2%** for the three months ended June 30, 2025, and by **46.0%** for the six months ended June 30, 2025, compared to the prior year periods[16](index=16&type=chunk) - Net loss significantly increased for both the three and six months ended June 30, 2025, primarily due to increased operating expenses and interest expense following the acquisition[16](index=16&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section reports net loss and other comprehensive income or loss components, such as foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(14,313) | $(2,199) | $(69,156) | $(7,240) | | Foreign currency translation adjustments | $67,780 | $(1,143) | $102,043 | $(1,045) | | Comprehensive income (loss) | $53,473 | $(3,406) | $32,817 | $(8,595) | - The company reported a significant positive foreign currency translation adjustment of **$102,043 thousand** for the six months ended June 30, 2025, contributing to comprehensive income[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit - The acquisition of Teads resulted in the issuance of **30,320,161 common shares** and the reissuance of **13,429,839 treasury shares**, significantly increasing additional paid-in capital by **$186,864 thousand**[22](index=22&type=chunk) - Accumulated other comprehensive income (loss) shifted from a loss of **$(9,480) thousand** at January 1, 2025, to an income of **$92,493 thousand** by June 30, 2025, primarily due to other comprehensive income[22](index=22&type=chunk) - Net loss for the six months ended June 30, 2025, was **$(54,843) thousand**, contributing to an accumulated deficit of **$(238,649) thousand**[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $24,078 | $12,236 | | Net cash used in investing activities | $(548,869) | $(759) | | Net cash provided by (used in) financing activities | $585,553 | $(6,485) | | Net increase in cash, cash equivalents and restricted cash | $60,909 | $4,600 | | Cash, cash equivalents and restricted cash — Ending | $150,634 | $75,679 | - Investing activities saw a significant outflow of **$(548,869) thousand** for the six months ended June 30, 2025, primarily due to the **$598,319 thousand** cash consideration paid for the Teads acquisition[24](index=24&type=chunk) - Financing activities generated **$585,553 thousand** for the six months ended June 30, 2025, driven by proceeds from senior secured notes (**$625,305 thousand**) to repay the Bridge Facility[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization, Description of Business and Summary of Significant Accounting Policies](index=13&type=section&id=1.%20Organization,%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section details the company's business, recent name change, and significant accounting policies - Outbrain Inc. changed its corporate name to Teads Holding Co. on June 6, 2025, following the acquisition of Legacy Teads in February 2025[30](index=30&type=chunk) - The company operates as a leading omnichannel advertising platform for the Open Internet, leveraging predictive AI technology to drive outcomes for marketers[30](index=30&type=chunk)[31](index=31&type=chunk) - Revenue is generated from advertisers through various pricing models (CPC, CPM, CPV) and recognized when an action associated with an advertisement occurs[31](index=31&type=chunk)[40](index=40&type=chunk) [2. Acquisition](index=16&type=section&id=2.%20Acquisition) This section details the acquisition of Legacy Teads, including consideration, purchase price allocation, and financial contributions - The acquisition of Legacy Teads was completed on February 3, 2025, for approximately **$0.9 billion**, comprising **$625 million** in cash and **43.75 million** shares of Common Stock[56](index=56&type=chunk)[179](index=179&type=chunk) Preliminary Purchase Price Allocation (In thousands) | Asset/Liability | Preliminary Purchase Price Allocation (As Adjusted) | | :-------------------------------- | :------------------------------------------------ | | Total assets acquired | $687,455 | | Total liabilities assumed | $305,151 | | Net assets acquired | $382,304 | | Goodwill | $502,582 | | Total consideration | $884,886 | - The Legacy Teads business contributed **$139.1 million** in revenue and a net loss of **$14.5 million** for the three months ended June 30, 2025[64](index=64&type=chunk) [3. Restructuring](index=18&type=section&id=3.%20Restructuring) This section describes the restructuring plan, workforce reduction, and associated charges following the acquisition - A restructuring plan was announced on February 3, 2025, involving a workforce reduction of approximately **15%** to streamline operations post-acquisition[66](index=66&type=chunk) - Estimated charges for the plan range from **$14 million to $20 million**, with **$10 million to $12 million** expected in 2025[66](index=66&type=chunk) Restructuring Charges (Six Months Ended June 30, 2025, In thousands) | Category | Amount | | :---------------------- | :----- | | Severance and related costs | $8,272 | | Legal costs | $681 | | Total restructuring charges | $8,953 | [4. Investments in Marketable Securities](index=19&type=section&id=4.%20Investments%20in%20Marketable%20Securities) This section provides details on the company's cash equivalents and marketable securities, including fair value and maturity Cash Equivalents and Investments (In thousands) | Category | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :-------------------- | :------------------------- | :----------------------------- | | Money market funds | $26,789 | $30,754 | | U.S. Treasuries | $3,737 | $35,145 | | U.S. Government bonds | $4,095 | $5,484 | | Commercial paper | $9,946 | $11,943 | | U.S. Corporate bonds | $5,008 | $42,589 | | Total | $49,575 | $125,915 | - All of the company's available-for-sale securities with a fair value of **$49.6 million** mature within one year as of June 30, 2025[76](index=76&type=chunk) [5. Goodwill and Intangible Assets](index=20&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets) This section discusses changes in goodwill and intangible assets, primarily due to the Teads acquisition and impairment charges - Goodwill increased from **$63,063 thousand** at December 31, 2024, to **$633,247 thousand** at June 30, 2025, primarily due to the **$502,582 thousand** recognized from the Teads acquisition[77](index=77&type=chunk) Intangible Assets, Net (June 30, 2025, In thousands) | Category | Net Carrying Value | | :-------------------- | :----------------- | | Developed technology | $76,527 | | Customer relationships | $248,075 | | Publisher relationships | $53,089 | | Trade names | $25,186 | | Other | $561 | | Total | $403,438 | - An impairment charge of **$15,108 thousand** was recorded for intangible assets related to the discontinued vi video product offering during the six months ended June 30, 2025[80](index=80&type=chunk) [6. Balance Sheet Components](index=22&type=section&id=6.%20Balance%20Sheet%20Components) This section presents detailed breakdowns of specific balance sheet accounts like accounts receivable and current liabilities Accounts Receivable and Allowance for Credit Losses (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Accounts receivable | $343,898 | $155,089 | | Allowance for credit losses | $(6,216) | $(5,922) | | Accounts receivable, net | $337,682 | $149,167 | Prepaid Expenses and Other Current Assets (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Prepaid taxes | $20,162 | $9,247 | | Prepaid traffic acquisition costs | $9,109 | $11,379 | | Prepaid software licenses | $4,644 | $2,233 | | Other prepaid expenses and other current assets | $13,571 | $4,976 | | Total | $47,486 | $27,835 | - Accrued and other current liabilities increased to **$140,597 thousand** as of June 30, 2025, from **$56,189 thousand** at December 31, 2024, with accrued agency commissions being the largest component[86](index=86&type=chunk) [7. Fair Value Measurements](index=23&type=section&id=7.%20Fair%20Value%20Measurements) This section explains the fair value hierarchy for financial assets and liabilities and details impairment charges Fair Value of Financial Assets (June 30, 2025, In thousands) | Category | Level I | Level II | Level III | Total | | :-------------------------------- | :------ | :------- | :-------- | :------ | | Cash equivalents and investments | $26,789 | $22,786 | $— | $49,575 | | Restricted time deposit | $— | $1,185 | $— | $1,185 | | Severance pay fund deposits | $— | $5,310 | $— | $5,310 | | Foreign currency forward contract | $— | $1,530 | $— | $1,530 | | Total financial assets | $26,789 | $30,811 | $— | $57,600 | - The fair value of the **10% Senior Secured Notes** was estimated at **$497,084 thousand** as of June 30, 2025, compared to a carrying value of **$602,962 thousand**[96](index=96&type=chunk) - Impairment charges totaling **$15.5 million** were recorded for long-lived assets and capitalized software related to the discontinued vi video product offering, and **$0.1 million** for an exited office location[98](index=98&type=chunk) [8. Leases](index=26&type=section&id=8.%20Leases) This section outlines the company's operating lease assets, liabilities, and associated costs, including acquired leases Operating Lease Assets and Liabilities (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Operating lease right-of-use assets, net | $26,315 | $15,047 | | Operating lease liabilities, non-current | $19,619 | $11,783 | - Total lease cost for the six months ended June 30, 2025, was **$6,433 thousand**, an increase from **$3,156 thousand** in the prior year, reflecting the impact of acquired leases[102](index=102&type=chunk) - The weighted-average remaining lease term for operating leases as of June 30, 2025, was **3.63 years**, with a weighted-average discount rate of **9.86%**[102](index=102&type=chunk) [9. Debt Obligations](index=28&type=section&id=9.%20Debt%20Obligations) This section details the company's debt structure, including Senior Secured Notes, their issuance, and repayment of the Bridge Facility Debt Obligations (June 30, 2025, In thousands) | Debt Type | Amount | | :-------------------------- | :----- | | 10% Senior Secured Notes | $628,226 | | Debt discount | $(11,329) | | Unamortized debt issuance costs | $(13,935) | | Total long-term debt | $602,962 | | Short-term debt (€15 million) | $17,562 | | Total debt | $620,524 | - The company issued **$637.5 million** in **10% Senior Secured Notes** due 2030 on February 11, 2025, and subsequently repurchased **$9.3 million** principal amount for **$8.0 million** cash, realizing a **$1.2 million** gain[106](index=106&type=chunk)[107](index=107&type=chunk) - The **$625 million Bridge Facility**, used to finance the Teads acquisition, was fully repaid and cancelled on February 11, 2025, using proceeds from the Senior Secured Notes[109](index=109&type=chunk)[117](index=117&type=chunk) [10. Income Taxes](index=31&type=section&id=10.%20Income%20Taxes) This section discusses the company's effective tax rates and the potential impact of recent tax law changes Effective Tax Rates | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Three Months Ended June 30, | 28.7% | 36.3% | | Six Months Ended June 30, | 21.5% | 24.4% | - The effective tax rate for the three months ended June 30, 2025, was higher than the U.S. federal statutory rate due to increased profitability concentration in lower-tax jurisdictions, partially offset by uncertain tax positions and pre-tax loss[131](index=131&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, amending U.S. tax law, and the company is evaluating its impact on financial statements[132](index=132&type=chunk) [11. Commitments and Contingencies](index=31&type=section&id=11.%20Commitments%20and%20Contingencies) This section addresses potential legal proceedings and indemnification assets related to pre-acquisition tax matters - The company is not currently a party to any material legal proceedings[133](index=133&type=chunk) - An indemnification asset and corresponding liability of **$26.4 million** were recorded related to pre-acquisition tax matters, for which Altice Teads provides an indemnity[134](index=134&type=chunk) [12. Stockholders' Equity](index=32&type=section&id=12.%20Stockholders'%20Equity) This section details changes in stockholders' equity, including share issuance for the Teads acquisition and share repurchase activities - As part of the Teads acquisition, **30,320,161 new Common Stock shares** were issued, and **13,429,839 Treasury Stock shares** were reissued at **$6.01 per share**[136](index=136&type=chunk) - The remaining availability under the **$30 million** share repurchase program was **$6.6 million** as of June 30, 2025[138](index=138&type=chunk) - During the six months ended June 30, 2025, **143,108 shares** with a fair value of **$0.6 million** were withheld to satisfy employee tax withholding obligations[140](index=140&type=chunk) [13. Stock-based Compensation](index=34&type=section&id=13.%20Stock-based%20Compensation) This section reports stock-based compensation expense and details various equity awards granted to employees Stock-based Compensation Expense (In thousands) | Category | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------- | :------------------------------- | :----------------------------- | | Research and development | $658 | $1,259 | | Sales and marketing | $1,512 | $2,557 | | General and administrative | $1,620 | $2,915 | | Total stock-based compensation | $3,790 | $6,731 | - During the six months ended June 30, 2025, the company granted **6,796,762 service-based RSUs** and **1,272,848 PSUs** (**721,424 financial/operational** and **551,424 market-based**)[145](index=145&type=chunk)[146](index=146&type=chunk)[150](index=150&type=chunk)[154](index=154&type=chunk) - Remaining unrecognized stock-based compensation expense was approximately **$29.2 million** for unvested RSUs and **$4.3 million** for unvested PSUs as of June 30, 2025[144](index=144&type=chunk) [14. Defined Benefit Plans](index=37&type=section&id=14.%20Defined%20Benefit%20Plans) This section describes the acquired defined benefit plans and their associated net liabilities and periodic benefit costs - The company acquired defined benefit plans in two international locations with net liabilities of **$6.1 million** as of June 30, 2025[158](index=158&type=chunk)[159](index=159&type=chunk) - The total net periodic benefit cost for the six months ended June 30, 2025, was **$395 thousand**[160](index=160&type=chunk) [15. Net Loss per Common Share](index=37&type=section&id=15.%20Net%20Loss%20per%20Common%20Share) This section presents basic and diluted net loss per common share, highlighting the impact of increased shares outstanding Net Loss per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic Net loss per share | $(0.15) | $(0.04) | $(0.80) | $(0.15) | | Diluted Net loss per share | $(0.15) | $(0.04) | $(0.80) | $(0.15) | - Weighted-average shares outstanding for basic and diluted calculations significantly increased for the six months ended June 30, 2025, to **86,269,441** from **49,093,515** in the prior year, primarily due to the Teads acquisition[162](index=162&type=chunk) - A total of **7,037,797 weighted-average shares** were excluded from the diluted net loss per share calculation for the six months ended June 30, 2025, as they were anti-dilutive[164](index=164&type=chunk) [16. Segment and Geographic Information](index=38&type=section&id=16.%20Segment%20and%20Geographic%20Information) This section provides information on the company's single operating segment and revenue and long-lived assets by geographic region - The company operates as a single operating and reporting segment, with the CEO reviewing performance and allocating resources on a consolidated basis[165](index=165&type=chunk)[166](index=166&type=chunk) Revenue by Advertiser Geographic Location (Six Months Ended June 30, 2025, In thousands) | Region | Revenue | | :-------------------------------- | :------ | | The Americas | $194,384 | | EMEA (Europe, the Middle East and Africa) | $367,933 | | Asia | $67,136 | | Total revenue | $629,453 | Long-Lived Assets by Geographic Location (June 30, 2025, In thousands) | Region | Amount | | :-------------------------------- | :----- | | The Americas | $48,815 | | EMEA (Europe, the Middle East and Africa) | $22,216 | | Asia | $3,549 | | Total long-lived assets, net | $74,580 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting the impact of the Teads acquisition, recent financial performance, key business drivers, and the use of non-GAAP financial measures [Business Overview](index=40&type=section&id=Business%20Overview) This section provides an overview of the company's strategic positioning as an omnichannel advertising platform after the Teads acquisition - Outbrain Inc. completed the acquisition of Legacy Teads on February 3, 2025, and subsequently changed its corporate name to Teads Holding Co. on June 6, 2025[173](index=173&type=chunk) - The company is now positioned as an omnichannel outcomes platform for the Open Internet, leveraging predictive AI technology to connect quality media, brand creative, and context-driven addressability[175](index=175&type=chunk) - The platform operates a two-sided marketplace, serving global advertisers (including Fortune 500 brands) and media owners (from premium publishers to CTV platforms), with a focus on driving full-funnel results[176](index=176&type=chunk)[177](index=177&type=chunk) [Recent Developments](index=41&type=section&id=Recent%20Developments) This section highlights key financial performance, the Teads acquisition, restructuring, impairment charges, and macroeconomic risks Key Financial Highlights (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Revenue | $343.1 | $214.1 | | Gross profit | $120.3 | $45.6 | | Net loss | $(14.3) | $(2.2) | | Adjusted EBITDA | $27.0 | $7.4 | - The Teads acquisition, completed on February 3, 2025, for approximately **$0.9 billion**, combined offerings to create one of the largest Open Internet advertising platforms[179](index=179&type=chunk) - A restructuring plan initiated in February 2025, involving a **~15% workforce reduction**, is expected to incur **$14-20 million** in charges, with **$1.7 million** recorded in Q2 2025[182](index=182&type=chunk)[183](index=183&type=chunk) - Impairment charges of **$15.5 million** were recorded for the discontinued vi video product offering due to post-merger integration[191](index=191&type=chunk) - Ongoing military conflicts in Israel and regional instability, along with global macroeconomic conditions (inflation, interest rates), continue to pose risks to advertising demand and business operations[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) [Factors Affecting Our Business](index=44&type=section&id=Factors%20Affecting%20Our%20Business) This section discusses key business drivers, growth strategies, and industry dynamics impacting the company's operations - The company focuses on advertiser retention and growth by enhancing its platform with AI to automate tasks, improve creative performance, and expand into full-funnel marketing[196](index=196&type=chunk)[197](index=197&type=chunk) - User engagement is driven by the AI prediction engine, which matches consumers with relevant editorial and advertiser experiences, leading to improved monetization and data collection[200](index=200&type=chunk)[201](index=201&type=chunk) - Expansion into new environments (CTV, pre-installed apps, gaming) and new ad formats (Moments, Connected Ads) is a key growth strategy, leveraging AI prediction technology[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Industry dynamics, including the proliferation of generative AI tools (potentially reducing direct user traffic to publishers) and evolving user privacy regulations, are significant factors impacting the business[214](index=214&type=chunk)[215](index=215&type=chunk) [Definitions of Financial and Performance Measures](index=46&type=section&id=Definitions%20of%20Financial%20and%20Performance%20Measures) This section defines key financial metrics and operating expenses used in the company's financial reporting - Revenue is generated from advertisers based on actions like clicks, impressions, or completed video views, with pricing models including CPC, CPM, or CPV[218](index=218&type=chunk)[220](index=220&type=chunk) - Traffic Acquisition Costs (TAC) are amounts owed to media partners for inventory, based on contractual revenue share, CPM, or guaranteed rates[221](index=221&type=chunk) - Operating expenses include Research and Development, Sales and Marketing, General and Administrative, Impairment Charges (e.g., vi video product), and Restructuring Charges (e.g., workforce reduction)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, gross profit, operating expenses, and net loss performance for the reporting periods Revenue and Gross Profit Performance (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $343,096 | $214,148 | $629,453 | $431,112 | | Revenue (constant currency) | $337,696 | $214,148 | $626,553 | $431,112 | | Traffic acquisition costs | $198,927 | $158,191 | $382,162 | $323,001 | | Gross profit | $120,264 | $45,576 | $202,914 | $87,171 | - Revenue growth for both periods was primarily driven by incremental revenues from the Teads acquisition (**$139.1 million** for 3M, **$219.4 million** for 6M), partially offset by lower revenues from the legacy Outbrain business[238](index=238&type=chunk) - Operating expenses increased significantly (**139.3%** for 3M, **151.1%** for 6M) due to the acquisition, including integration costs, **$15.6 million** in impairment charges (vi business), and **$9.0 million** in restructuring charges[245](index=245&type=chunk)[246](index=246&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Interest expense surged to **$17.5 million** (3M) and **$40.6 million** (6M) in 2025, primarily due to interest on the new Senior Secured Notes and fees related to the Bridge Facility[255](index=255&type=chunk)[256](index=256&type=chunk) [Non-GAAP Reconciliations](index=52&type=section&id=Non-GAAP%20Reconciliations) This section reconciles non-GAAP financial measures such as Ex-TAC Gross Profit, Adjusted EBITDA, and Free Cash Flow to their GAAP equivalents Ex-TAC Gross Profit (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $120,264 | $45,576 | $202,914 | $87,171 | | Other cost of revenue | $23,905 | $10,381 | $44,377 | $20,940 | | Ex-TAC Gross Profit | $144,169 | $55,957 | $247,291 | $108,111 | Adjusted EBITDA (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(14,313) | $(2,199) | $(69,156) | $(7,240) | | Adjustments (selected) | $41,289 | $9,608 | $106,821 | $16,046 | | Adjusted EBITDA | $26,976 | $7,409 | $37,665 | $8,806 | Free Cash Flow (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $24,078 | $12,236 | | Purchases of property and equipment | $(4,064) | $(2,140) | | Capitalized software development costs | $(7,105) | $(5,130) | | Free cash flow | $12,909 | $4,966 | | Direct acquisition costs | $14,447 | $— | | Adjusted free cash flow | $27,356 | $4,966 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to various market risks, including foreign currency, interest rate, inflation, and credit risks, and describes the strategies employed to manage these exposures in the ordinary course of business - The company is exposed to foreign currency risk, primarily in Euros, New Israeli Shekels, and British Pound Sterling, with a hypothetical **10%** change in exchange rates potentially impacting operating income by **$2.4 million** (3M) or **$5.2 million** (6M)[309](index=309&type=chunk) - Interest rate risk is managed through investments in marketable securities (maturing within one year) and fixed-rate debt (**10% Senior Secured Notes**), though the Overdraft Facility carries a variable rate[311](index=311&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - Inflation risk could lead to reduced ad spend and negatively impact business, while credit risk is managed by monitoring customer credit and requiring prepayments for higher-risk customers[315](index=315&type=chunk)[316](index=316&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures, concluding they are effective at a reasonable assurance level - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[317](index=317&type=chunk) - The company is still in the process of evaluating and integrating the internal controls of the acquired Teads business, which was not previously subject to Section 404 of the Sarbanes-Oxley Act[319](index=319&type=chunk) Part II - Other Information This section contains disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the notes to the financial statements for information on legal proceedings, indicating that there are no material pending or threatened litigations - The company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened litigation that would have a material adverse effect on its business[133](index=133&type=chunk)[321](index=321&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There have been no material changes to the risk factors as previously disclosed in Item 1A of the company's 2024 Form 10-K[322](index=322&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of common stock to Altice Teads as consideration for the acquisition, which was exempt from registration, and outlines the company's share repurchase activities, primarily for employee tax withholding obligations - Common Stock shares issued to Altice Teads for the Teads acquisition on February 3, 2025, were exempt from registration under Section 4(a)(2) of the Securities Act[323](index=323&type=chunk) - The company withheld **70,108 shares** with a fair value of **$0.2 million** during the three months ended June 30, 2025, to satisfy employee tax withholding obligations on vested awards[295](index=295&type=chunk)[325](index=325&type=chunk) - As of June 30, 2025, **$6.6 million** remained available under the **$30 million** share repurchase program[293](index=293&type=chunk)[324](index=324&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section confirms that no directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter - None of the company's directors or executive officers adopted or terminated any Rule 10b5-1(c) trading arrangements during the three months ended June 30, 2025[326](index=326&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed with the Form 10-Q, including various compensatory plans, grant notices, and certifications - The exhibits include the 2007 Omnibus Securities and Incentive Plan, 2021 Long-Term Incentive Plan rules, various restricted stock unit and performance stock unit grant notices, and certifications from the Principal Executive and Financial Officers[329](index=329&type=chunk) Signatures This section confirms the official signing and certification of the financial report by key executives - The report is duly signed by David Kostman, Chief Executive Officer, and Jason Kiviat, Chief Financial Officer, on August 8, 2025[334](index=334&type=chunk)[335](index=335&type=chunk)

Financial Data and Key Metrics Changes - Revenue in Q2 was approximately $343 million, reflecting an increase of 60% year over year on an as-reported basis, primarily driven by the impact of the acquisition [20] - Adjusted EBITDA for Q2 was $27 million, representing an increase of nearly 2.5 times compared to Q1 [24] - Free cash flow was $19 million in the quarter, with adjusted free cash flow at $22 million after excluding transaction costs [24] Business Line Data and Key Metrics Changes - The US market experienced a year-over-year decline of more than 20%, which was identified as a significant headwind [9] - CTV business saw 80% year-over-year growth in Q2 on a pro forma basis, indicating strong demand in this segment [10] - The retail media front announced a partnership to activate performance campaigns, aiming to grow presence in retail media [11] Market Data and Key Metrics Changes - The company noted softness in key verticals such as consumer goods, automotive, and luxury goods, primarily due to tariff-related uncertainty and softer demand in certain geographies [21] - Despite challenges in the US, other markets in Europe have shown growth, indicating a mixed performance across regions [48] Company Strategy and Development Direction - The company is focused on executing integration decisively and making critical organizational changes to improve effectiveness [5] - Aiming to deliver $40 million in cost savings for 2025, with a full-year run rate of $60 million expected in 2026 [9] - The strategic rationale behind the merger is to build a go-to platform for advertisers seeking scaled, high-quality performance on the open Internet [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic changes made and the potential for market share gains and growth in the second half of the year [19] - There is an expectation of clear momentum building into Q4, despite challenges faced in Q3 [27] - Management is closely tracking leading indicators and believes that the changes implemented will positively impact revenue trends [35] Other Important Information - The company is accelerating investment in its next-generation advertising platform, Teams Ad Manager, expected to launch in H1 2026 [15] - The company has made a deliberate reduction in publishers that do not meet quality standards, resulting in a 5% year-over-year reduction in legacy Outbrain revenues [13] Q&A Session Summary Question: Why not spend all free cash flow on buying in debt? - Management indicated that they used what they were comfortable with in terms of excess cash and are open to more in the future [33] Question: How much of the US decline is structural? - Management noted that the issues are within their control and are tracking leading indicators that are trending up, indicating potential recovery [35] Question: Will the company cut more expenses if top-line growth does not materialize? - Management is currently focused on growth and believes they have the right cost structure to achieve this [38] Question: What is the confidence level for Q4? - Management expressed confidence in the changes made and the potential for improved performance in Q4 based on leading indicators [48] Question: How is the company addressing the impact of AI on traffic? - Management acknowledged the risk but noted that they are continuously improving monetization and tracking the situation closely [55]