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]

[Company Overview and Q2 2025 Performance](index=1&type=section&id=1.%20Company%20Overview%20and%20Q2%202025%20Performance) Teads Holding Co. reported its Q2 2025 results, meeting guidance, with strong CTV growth and strategic rebranding, while addressing integration challenges [Executive Summary](index=1&type=section&id=1.1.%20Executive%20Summary) Teads met Q2 2025 guidance with strong cash generation and over 80% CTV growth, but integration benefits are slower, prompting focus on H2 2025 growth - Achieved Q2 guidance on both **Ex-TAC gross profit** and **Adjusted EBITDA**, with strong cash generation and over **80% CTV growth year-over-year**[2](index=2&type=chunk) - CEO David Kostman noted Q2 results were within guidance for the combined company, but integration benefits are taking longer, with a focus on reigniting growth in **H2 2025 and into 2026**[3](index=3&type=chunk)[4](index=4&type=chunk) | (in millions USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :---------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Revenue | $343.1 | $214.1 | 60 % | $629.5 | $431.1 | 46 % | | Gross profit | 120.3 | 45.6 | 164 % | 202.9 | 87.2 | 133 % | | Net loss | (14.3) | (2.2) | (551)% | (69.2) | (7.2) | (855)% | | Net cash provided by operating activities | 25.0 | 3.6 | 590 % | 24.1 | 12.2 | 97 % | | **Non-GAAP Financial Data*** | | | | | | | | Ex-TAC gross profit | 144.2 | 56.0 | 158 % | 247.3 | 108.1 | 129 % | | Adjusted EBITDA | 27.0 | 7.4 | 264 % | 37.7 | 8.8 | 328 % | | Adjusted net (loss) income | (9.7) | 0.1 | NM | (25.0) | (4.8) | (415)% | | Adjusted free cash flow | 22.1 | 0.3 | NM | 27.4 | 5.0 | 451 % | [Business Highlights](index=1&type=section&id=1.2.%20Business%20Highlights) Teads rebranded to 'TEAD', repurchased debt, expanded CTV revenue over **80%** with new OEM partnerships, and launched innovative AI-powered ad formats - Corporate name changed from "Outbrain Inc." to "Teads Holding Co.", with common stock trading on Nasdaq under **"TEAD"** from June 10, 2025[6](index=6&type=chunk) - Repurchased **$9.3 million** aggregate principal amount of **10% senior secured notes** for approximately **$8.0 million** in cash, a discount of approximately **17%**[6](index=6&type=chunk) - Grew Connected TV ("CTV") revenue by more than **80% year-over-year** in Q2 2025 on a pro-forma basis, securing premium homescreen inventory through new OEM partnerships, including Samsung[8](index=8&type=chunk) - Introduced innovative ad formats like the beta launch of Connected Ads and scaled vertical experience offerings, alongside launching Amplify MCP Server with agentic AI for campaign management[8](index=8&type=chunk) [Financial Highlights](index=2&type=section&id=1.3.%20Financial%20Highlights) Q2 2025 revenue grew **60%** to **$343.1 million**, gross profit **164%**, and Adjusted EBITDA **264%** to **$27.0 million**, driven by acquisition, with significant synergies expected - Expects to realize at least **$40 million** of total synergies in **2025**, and **$65 million to $75 million** in **2026**[8](index=8&type=chunk) - Over **500 advertisers** spent at least **$0.5 million** over the twelve months ended June 30, 2025, representing approximately **70% of total customer spend**, with an average spend per advertiser over **$2 million**[8](index=8&type=chunk) | Metric (Q2 2025 vs Q2 2024) | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change | | :--------------------------- | :--------------------- | :--------------------- | :------- | | Revenue | $343.1 | $214.1 | 60 % | | Gross profit | $120.3 | $45.6 | 164 % | | Gross margin | 35.1 % | 21.3 % | +13.8 pp | | Ex-TAC gross profit | $144.2 | $56.0 | 158 % | | Ex-TAC gross margin | 42.0 % | 26.1 % | +15.9 pp | | Net loss | $(14.3) | $(2.2) | (551)% | | Adjusted net loss | $(9.7) | $0.1 | NM | | Metric (Q2 2025 vs Q2 2024) | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change | | :--------------------------- | :--------------------- | :--------------------- | :------- | | Adjusted EBITDA | $27.0 | $7.4 | 264 % | | Net cash provided by operating activities | $25.0 | $3.6 | 590 % | | Adjusted free cash flow | $22.1 | $0.3 | NM | | Cash, cash equivalents and investments (as of June 30, 2025) | $166.1 | N/A | N/A | | Total debt obligations (as of June 30, 2025) | $620.6 | N/A | N/A | [Outlook and Guidance](index=3&type=section&id=2.%20Outlook%20and%20Guidance) Teads provides Q3 2025 financial guidance but withholds full-year Adjusted EBITDA outlook due to Q4's significant contribution and post-merger integration uncertainties [Third Quarter 2025 Guidance](index=3&type=section&id=2.1.%20Third%20Quarter%202025%20Guidance) For the third quarter ending September 30, 2025, Teads expects Ex-TAC gross profit to be between $133 million and $143 million, and Adjusted EBITDA to range from $21 million to $29 million | Metric (Q3 2025 Guidance) | Range (Millions USD) | | :------------------------ | :------------------- | | Ex-TAC gross profit | $133 - $143 | | Adjusted EBITDA | $21 - $29 | [Full Year 2025 Outlook](index=3&type=section&id=2.2.%20Full%20Year%202025%20Outlook) Teads anticipates generating positive Free Cash Flow for the full year 2025, but has not reaffirmed FY 2025 Adjusted EBITDA guidance due to Q4's significant contribution and post-merger integration uncertainties - The Company expects to generate **positive Free Cash Flow** for the full year **2025**[9](index=9&type=chunk) - FY 2025 Adjusted EBITDA guidance is not reaffirmed due to Q4 historically contributing nearly **~50% of annual Adjusted EBITDA** and the wide range of outcomes from post-merger integration[10](index=10&type=chunk) [Non-GAAP Financial Measures Definitions](index=4&type=section&id=3.%20Non-GAAP%20Financial%20Measures%20Definitions) This section defines Teads' supplemental non-GAAP financial measures, including Ex-TAC gross profit and Adjusted EBITDA, used to assess performance and trends [Overview of Non-GAAP Measures](index=4&type=section&id=3.1.%20Overview%20of%20Non-GAAP%20Measures) Teads uses various non-GAAP measures like Ex-TAC gross profit and Adjusted EBITDA to assess performance, acknowledging their limitations and potential for foreign exchange impact - Teads uses **Ex-TAC gross profit**, **Ex-TAC gross margin**, **Adjusted EBITDA**, **free cash flow**, **adjusted free cash flow**, **adjusted net income (loss)**, and **adjusted diluted EPS** as supplemental non-GAAP financial measures[14](index=14&type=chunk) - These non-GAAP measures have limitations, including potential differences in definition by other companies, and are not substitutes for GAAP measures[14](index=14&type=chunk) - Operating results comparability is affected by foreign exchange fluctuations, with constant currency measures used as a non-GAAP supplement[15](index=15&type=chunk) - Quantitative reconciliations for forward-looking non-GAAP financial measures are not provided due to the inability to predict excluded items with reasonable certainty[16](index=16&type=chunk) [Ex-TAC Gross Profit](index=4&type=section&id=3.2.%20Ex-TAC%20Gross%20Profit) Ex-TAC gross profit is a non-GAAP measure, adding 'other cost of revenue' to GAAP gross profit, used to evaluate operating performance and trends - **Ex-TAC gross profit** is a non-GAAP financial measure calculated by adding back **other cost of revenue** to gross profit[17](index=17&type=chunk) - It is a key profitability measure used by management and the board to understand and evaluate operating performance, trends, and make strategic decisions[18](index=18&type=chunk) - Limitations include that traffic acquisition cost is a significant but not the only component of total cost of revenue, and its definition may vary among companies[18](index=18&type=chunk) [Adjusted EBITDA](index=5&type=section&id=3.3.%20Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure, adjusting net income (loss) for non-operating and non-recurring items, used to evaluate core operating performance - **Adjusted EBITDA** is defined as net income (loss) before gain on repurchase of long-term debt, interest, taxes, depreciation, amortization, stock-based compensation, and other non-core operating expenses[19](index=19&type=chunk) - It is a key profitability measure used by management and the board to understand and evaluate operating performance and trends, facilitating period-to-period comparisons[19](index=19&type=chunk) - Adjusted EBITDA should be considered a supplemental measure and not in isolation or as a substitute for GAAP financial performance measures[20](index=20&type=chunk) [Adjusted Net Income (Loss) and Adjusted Diluted EPS](index=5&type=section&id=3.4.%20Adjusted%20Net%20Income%20(Loss)%20and%20Adjusted%20Diluted%20EPS) Adjusted net income (loss) and diluted EPS are non-GAAP measures excluding non-core items, used for performance comparisons, not replacing GAAP metrics - **Adjusted net income (loss)** is a non-GAAP financial measure excluding items not indicative of core operating performance, such as gain on debt repurchase, acquisition and integration costs, and severance[21](index=21&type=chunk) - **Adjusted net income (loss)** is also presented on a per diluted share basis (**Adjusted Diluted EPS**) to facilitate performance comparisons across periods[21](index=21&type=chunk) - These adjusted measures should not be considered in isolation or as a substitute for net income (loss) or diluted earnings per share reported in accordance with GAAP[21](index=21&type=chunk) [Free Cash Flow](index=6&type=section&id=3.5.%20Free%20Cash%20Flow) Free cash flow, and adjusted free cash flow including direct acquisition costs, are non-GAAP measures used to evaluate cash generation, not replacing GAAP cash flow - **Free cash flow** is defined as cash flow from operating activities less capital expenditures and capitalized software development costs[22](index=22&type=chunk) - **Adjusted free cash flow** is defined as free cash flow plus direct acquisition costs[22](index=22&type=chunk) - These measures are used by management and the board to evaluate the company's ability to generate cash and provide a more complete analysis of available cash flows[22](index=22&type=chunk) - **Free cash flow** and **adjusted free cash flow** should be considered supplemental and not as substitutes for GAAP cash flow measures[22](index=22&type=chunk) [Forward-Looking Statements and Risk Factors](index=6&type=section&id=4.%20Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines forward-looking statements and associated risks, including integration challenges, market volatility, and regulatory compliance [Forward-Looking Statements and Risk Factors](index=6&type=section&id=4.1.%20Forward-Looking%20Statements%20and%20Risk%20Factors) Forward-looking statements regarding Teads' future business and Legacy Teads integration are subject to risks including integration challenges, market volatility, AI impact, and regulatory compliance - The press release contains forward-looking statements regarding future business, financial condition, results of operations, liquidity, plans, objectives, and the acquisition and integration of Legacy Teads[23](index=23&type=chunk) - Statements are subject to substantial risks and uncertainties, including successful integration of Legacy Teads, realizing anticipated benefits, unexpected costs, ability to raise financing, attract customers and personnel, volatility of advertising demand, economic conditions, and geopolitical concerns[24](index=24&type=chunk) - Additional risks include the potential impact of AI, competition, loss of media partners, conditions in Israel, maintaining revenues despite fluctuations, R&D efforts, data collection limitations, and regulatory compliance[25](index=25&type=chunk) - Investors should not rely on forward-looking statements as an indication of future performance, as actual results could differ materially from projections[26](index=26&type=chunk) [About Teads Holding Co.](index=7&type=section&id=5.%20About%20Teads%20Holding%20Co.) Teads Holding Co. is an omnichannel outcomes platform for the Open Internet, leveraging AI to connect marketers with premium media globally [About Teads Holding Co.](index=7&type=section&id=5.1.%20About%20Teads%20Holding%20Co.) Teads Holding Co., formed by Outbrain and TEADS, is an omnichannel outcomes platform leveraging predictive AI for marketers across 10,000+ publishers and 20,000+ advertisers globally - Teads Holding Co. was formed by the combination of Outbrain Inc. and TEADS on February 3, 2025, with the corporate name change and Nasdaq ticker **'TEAD'** effective June 6, 2025[27](index=27&type=chunk) - It is an omnichannel outcomes platform for the Open Internet, driving full-funnel results for marketers across premium media[27](index=27&type=chunk) - The company leverages predictive AI technology to connect quality media, brand creative, and context-driven addressability and measurement, partnering with over **10,000 publishers** and **20,000 advertisers** globally[27](index=27&type=chunk) - Headquartered in New York, New York, with a global team of nearly **1,800 people** in **30+ countries**[27](index=27&type=chunk) [Condensed Consolidated Financial Statements](index=9&type=section&id=6.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Teads' condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows [Statements of Operations](index=9&type=section&id=6.1.%20Statements%20of%20Operations) Q2 2025 statements of operations show substantial increases in revenue and expenses, leading to a larger net loss due to acquisition and restructuring costs | | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $343,096 | $214,148 | $629,453 | $431,112 | | Total cost of revenue | $222,832 | $168,572 | $426,539 | $343,941 | | Gross profit | $120,264 | $45,576 | $202,914 | $87,171 | | Total operating expenses | $122,523 | $51,203 | $249,609 | $99,395 | | Loss from operations | $(2,259) | $(5,627) | $(46,695) | $(12,224) | | Total other (expense) income, net | $(17,805) | $2,177 | $(41,413) | $2,645 | | Net loss | $(14,313) | $(2,199) | $(69,156) | $(7,240) | | Basic net loss per common share | $(0.15) | $(0.04) | $(0.80) | $(0.15) | | Diluted net loss per common share | $(0.15) | $(0.04) | $(0.80) | $(0.15) | [Balance Sheets](index=10&type=section&id=6.2.%20Balance%20Sheets) June 30, 2025 balance sheets show total assets increased to **$1,774.9 million** and total liabilities to **$1,243.0 million**, primarily due to acquisition-related goodwill and new debt | (In thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :------------- | :------------------------ | :---------------- | | **ASSETS:** | | | | Total current assets | $551,310 | $343,131 | | Total non-current assets | $1,223,605 | $290,052 | | **TOTAL ASSETS** | **$1,774,913** | **$549,213** | | **LIABILITIES AND STOCKHOLDERS' EQUITY:** | | | | Total current liabilities | $502,613 | $289,471 | | Total non-current liabilities | $737,238 | $28,399 | | **TOTAL LIABILITIES** | **$1,242,951** | **$317,870** | | Total stockholders' equity | $531,962 | $231,343 | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$1,774,913** | **$549,213** | [Statements of Cash Flows](index=12&type=section&id=6.3.%20Statements%20of%20Cash%20Flows) Cash flow statements show increased operating cash flow, substantial investing outflow due to acquisition, and significant financing inflow from senior secured notes | (In thousands) | 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 cash provided by operating activities | $25,044 | $3,631 | $24,078 | $12,236 | | Net cash (used in) provided by investing activities | $(2,549) | $3,470 | $(548,869) | $(759) | | Net cash (used in) provided by financing activities | $(10,541) | $(2,215) | $585,553 | $(6,485) | | Net increase in cash, cash equivalents and restricted cash | $12,158 | $4,131 | $60,909 | $4,600 | | Cash, cash equivalents and restricted cash — Ending | $150,634 | $75,679 | $150,634 | $75,679 | [Non-GAAP Reconciliations](index=14&type=section&id=7.%20Non-GAAP%20Reconciliations) This section provides reconciliations of GAAP financial measures to their non-GAAP counterparts, including Ex-TAC gross profit, Adjusted EBITDA, and free cash flow [Gross Profit to Ex-TAC Gross Profit](index=14&type=section&id=7.1.%20Gross%20Profit%20to%20Ex-TAC%20Gross%20Profit) Reconciliation of GAAP Gross Profit to non-GAAP Ex-TAC Gross Profit, showing **$144.2 million** for Q2 2025, a **158%** increase, with margin improving to **42.0%** | (In thousands) | 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 | | Other cost of revenue | $23,905 | $10,381 | $44,377 | $20,940 | | Ex-TAC gross profit | $144,169 | $55,957 | $247,291 | $108,111 | | Gross margin (% of revenue) | 35.1 % | 21.3 % | 32.2 % | 20.2 % | | Ex-TAC gross margin (% of revenue) | 42.0 % | 26.1 % | 39.3 % | 25.1 % | [Net Loss to Adjusted EBITDA](index=14&type=section&id=7.2.%20Net%20Loss%20to%20Adjusted%20EBITDA) Reconciliation of GAAP Net Loss to non-GAAP Adjusted EBITDA, showing **$27.0 million** for Q2 2025, a **264%** increase, with **18.7%** as a percentage of Ex-TAC Gross Profit | (In thousands) | 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 (e.g., Interest expense, D&A, Stock-based comp, Acquisition/Restructuring costs) | $41,289 | $9,608 | $106,821 | $16,046 | | Adjusted EBITDA | $26,976 | $7,409 | $37,665 | $8,806 | | Net loss as % of gross profit | (11.9)% | (4.8)% | (34.1)% | (8.3)% | | Adjusted EBITDA as % of Ex-TAC Gross Profit | 18.7 % | 13.2 % | 15.2 % | 8.1 % | [Net Loss to Adjusted Net (Loss) Income and Adjusted Diluted EPS](index=15&type=section&id=7.3.%20Net%20Loss%20to%20Adjusted%20Net%20(Loss)%20Income%20and%20Adjusted%20Diluted%20EPS) Reconciliation of GAAP Net Loss and Diluted EPS to adjusted non-GAAP counterparts, showing Q2 2025 adjusted net loss of **$9.7 million** and adjusted diluted loss per share of **$(0.10)** | (In thousands, except per share data) | 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) | | Total adjustments, after tax | $4,657 | $2,273 | $44,205 | $2,399 | | Adjusted net (loss) income | $(9,656) | $74 | $(24,951) | $(4,841) | | Diluted net loss per share - reported | $(0.15) | $(0.04) | $(0.80) | $(0.15) | | Adjustments, after tax | $0.05 | $0.04 | $0.51 | $0.05 | | Diluted loss per share - adjusted | $(0.10) | $0.00 | $(0.29) | $(0.10) | [Net Cash Provided by Operating Activities to Free Cash Flow](index=15&type=section&id=7.4.%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Reconciliation of net cash from operating activities to free cash flow and adjusted free cash flow, showing Q2 2025 free cash flow of **$19.5 million** and adjusted free cash flow of **$22.1 million** | (In thousands) | 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 cash provided by operating activities | $25,044 | $3,631 | $24,078 | $12,236 | | Purchases of property and equipment | $(1,143) | $(805) | $(4,064) | $(2,140) | | Capitalized software development costs | $(4,406) | $(2,503) | $(7,105) | $(5,130) | | Free cash flow | $19,495 | $323 | $12,909 | $4,966 | | Direct acquisition costs | $2,643 | $0 | $14,447 | $0 | | Adjusted free cash flow | $22,138 | $323 | $27,356 | $4,966 |

Core Viewpoint - The acquisition of Teads by Outbrain has been finalized, leading to a rebranding of the combined company as Teads Holding Co., which will trade under the new ticker symbol "TEAD" on Nasdaq starting June 10, 2025 [1][2]. Company Overview - Teads is positioned as a leading omnichannel outcomes platform for the open internet, focusing on delivering measurable results for marketers through a combination of branding and performance strategies [4]. - The company leverages predictive AI technology to optimize media spending, ensuring value is generated with every dollar spent on advertising [4]. - Teads has established partnerships with over 10,000 publishers and 20,000 advertisers globally, highlighting its extensive reach in the advertising market [4]. - The company is headquartered in New York and employs nearly 1,800 people across 36 countries [4]. Rebranding Significance - The name change to Teads is described as a significant milestone in completing the rebranding process of the combined entity, emphasizing the integration of strengths from both legacy companies [2]. - The rebranding will not affect existing stockholders, contracts, or operations, and no action is required from shareholders regarding the name change [2].

Part I - Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Financials reflect the Teads acquisition's impact, showing asset growth funded by debt and a wider net loss due to one-time costs Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $136,312 | $89,094 | +$47,218 | | Goodwill | $587,494 | $63,063 | +$524,431 | | Intangible assets, net | $391,022 | $16,928 | +$374,094 | | **Total Assets** | **$1,688,040** | **$549,213** | **+$1,138,827** | | **Liabilities & Equity** | | | | Accounts payable | $274,060 | $206,920 | +$67,140 | | Long-term debt | $610,816 | $0 | +$610,816 | | **Total Liabilities** | **$1,213,375** | **$317,870** | **+$895,505** | | **Total Stockholders' Equity** | **$474,665** | **$231,343** | **+$243,322** | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $286,357 | $216,964 | +32.0% | | Gross Profit | $82,650 | $41,595 | +98.7% | | Loss from operations | ($44,436) | ($6,597) | +573.6% | | Net loss | ($54,843) | ($5,041) | +988.0% | | Net loss per share (basic & diluted) | ($0.70) | ($0.10) | +600.0% | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($966) | $8,605 | | Net cash used in investing activities | ($546,320) | ($4,229) | | Net cash provided by (used in) financing activities | $596,094 | ($4,270) | - On February 3, 2025, the company completed the acquisition of Teads for approximately **$0.9 billion**, resulting in the recognition of **$501.6 million in goodwill**[54](index=54&type=chunk)[55](index=55&type=chunk)[59](index=59&type=chunk) - The company initiated a restructuring plan post-acquisition, expecting to incur **$16 million to $24 million** in total charges, with **$7.3 million** recorded in Q1 2025[64](index=64&type=chunk)[65](index=65&type=chunk) - The company recorded an impairment charge of **$15.1 million** on intangible assets related to its prior acquisition of 'vi'[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analysis focuses on the Teads acquisition's impact, highlighting revenue growth offset by significant one-time expenses and new debt - The acquisition of Teads was completed on February 3, 2025, for approximately **$0.9 billion**, making Q1 2025 financials not directly comparable to prior periods[162](index=162&type=chunk)[168](index=168&type=chunk) Key Performance Metrics Comparison | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $286.4M | $217.0M | +32.0% | | Gross Profit | $82.7M | $41.6M | +98.7% | | Net Loss | ($54.8M) | ($5.0M) | +988% | | Ex-TAC Gross Profit (Non-GAAP) | $103.1M | $52.2M | +97.7% | | Adjusted EBITDA (Non-GAAP) | $10.7M | $1.4M | +665% | - The revenue increase was primarily due to **$80.3 million** in incremental revenue from the Teads acquisition, partially offset by a **$10.9 million** decrease from the legacy business[222](index=222&type=chunk) - Operating expenses surged by **163.7% to $127.1 million**, driven by acquisition costs, impairment charges, and restructuring charges[229](index=229&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - To finance the acquisition, the company issued **$637.5 million in 10% Senior Secured Notes** and established a new **$100 million** revolving credit facility[175](index=175&type=chunk)[177](index=177&type=chunk)[236](index=236&type=chunk) - As of March 31, 2025, the company had total available liquidity of **$255.9 million**[260](index=260&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency, interest rates, inflation, and credit - A hypothetical 10% adverse change in weighted-average exchange rates would impact quarterly operating income by **$3.1 million**[287](index=287&type=chunk) - Interest rate risk primarily relates to cash and investments totaling **$155.9 million** and a **$16.2 million** variable-rate facility, while the main **$610.8 million** debt is fixed-rate[289](index=289&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - The company is exposed to credit risk from accounts receivable and mitigates it by monitoring customer creditworthiness[294](index=294&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with integration of Teads' internal controls currently underway - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures are **effective**[296](index=296&type=chunk) - The company is integrating the internal controls of Teads, which was not previously subject to Sarbanes-Oxley (SOX) requirements[298](index=298&type=chunk) Part II - Other Information [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is **not currently a party to any material legal proceedings**[130](index=130&type=chunk)[300](index=300&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last annual filing - **No material changes** to risk factors have occurred since the filing of the 2024 Form 10-K[301](index=301&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 43.75 million unregistered shares for the Teads acquisition and made no share repurchases - **43.75 million shares** of Common Stock issued to Altice Teads as part of the acquisition were exempt from registration under the Securities Act[302](index=302&type=chunk) - As of March 31, 2025, **$6.6 million remained available** for repurchase under the company's share repurchase program, with no shares repurchased during the quarter[134](index=134&type=chunk)[303](index=303&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The Chief Operating Officer entered into a Rule 10b5-1 trading plan for the potential sale of company stock - The company's COO, Asaf Porat, entered into a 10b5-1 trading plan for the potential sale of up to **311,036 shares** of Common Stock[306](index=306&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed with the report, including acquisition and financing agreements - The report includes an index of all exhibits filed, such as the amended Share Purchase Agreement and Indenture for the new notes[310](index=310&type=chunk)

Financial Data and Key Metrics Changes - Revenue in Q1 was approximately $286 million, reflecting a 32% year-over-year increase, primarily driven by the acquisition of Teads [19][20] - X TAC gross profit for the quarter was $103.1 million, an increase of 98% year-over-year, indicating that profit growth is outpacing revenue growth [21][22] - Adjusted EBITDA for Q1 was $10.7 million, representing a greater than 7x increase year-over-year [23] Business Line Data and Key Metrics Changes - The company closed Q1 with over 50 Joint Business Partnerships (JBPs), including new commitments with major brands like Ferrero and Philip Morris International [11] - CTV revenue grew over 100% year-over-year, now representing approximately 5% of total ad spend [14] Market Data and Key Metrics Changes - The U.S. business, which represents around 30% of total revenue, showed improvement in trends during Q1 [20] - The company has access to over 300 million TV screens globally, with significant partnerships enhancing its CTV offerings [14] Company Strategy and Development Direction - The vision for the new Teads is to create an open Internet advertising platform that connects fragmented channels to drive measurable business outcomes [6][9] - The company is focused on integration, efficiency, and execution post-merger, aiming for $60 million in annualized cost savings by 2026 [15][23] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in demand levels and positive trends in the legacy Teads business since the merger [29][44] - The company expects to see continued growth in the second half of the year, driven by cross-selling opportunities and improved performance metrics [70][73] Other Important Information - The company recognized $16 million in acquisition-related costs and $7 million in restructuring charges during the quarter [22] - Free cash flow was a use of cash of approximately $7 million, impacted by acquisition-related costs [24] Q&A Session Summary Question: Can you expand on the macro environment and advertiser focus between brand and performance? - Management observed improvements in demand levels and noted that advertisers are scrutinizing their budgets more closely, which is seen as a positive for the company [29][31] Question: How much of the JVP wins are a result of the new combination versus existing pipeline? - Management indicated that the growth in JVPs is a combination of the merger's value proposition and existing relationships, with significant excitement around the combined capabilities [36][38] Question: Can you discuss the trends in the legacy Teads business? - Management highlighted that the legacy Teads business has shown month-over-month improvement since the merger, with a focus on execution and restructuring contributing to this growth [44] Question: What is the strategy for expanding the Moments vertical video product? - The company views vertical video as a significant growth opportunity and plans to invest in expanding this product across new publishers [64] Question: How does the Google lawsuit ruling impact the company? - Management believes the ruling could provide a headwind to SSPs, potentially benefiting the company due to its exclusive supply relationships [62] Question: What are the near-term opportunities for the CTV business? - The company sees significant potential in performance CTV, leveraging its unique capabilities and partnerships to capture market share [76]

Financial Data and Key Metrics Changes - Revenue in Q1 was approximately $286 million, reflecting a 32% year-over-year increase, primarily driven by the acquisition of Teads [16] - X TAC gross profit for the quarter was $103.1 million, an increase of 98% year-over-year, indicating that profit growth is outpacing revenue growth [18] - Adjusted EBITDA for Q1 was $10.7 million, representing a greater than 7x increase year-over-year [20] Business Line Data and Key Metrics Changes - The company closed Q1 with more than 50 Joint Business Partnerships (JBTs), including commitments from major brands like Ferrero and Philip Morris International [9] - CTV revenue grew over 100% year-over-year, now representing approximately 5% of total ad spend [12] - The marketing campaign objectives are balanced, with approximately two-thirds of spend on performance campaigns and one-third on branding campaigns [8] Market Data and Key Metrics Changes - The U.S. business, which represents around 30% of total revenue, showed improvement in trends during Q1 [17] - The company has access to over 300 million TV screens globally, with significant partnerships enhancing its CTV offerings [12] Company Strategy and Development Direction - The vision for the new Teads is to create an open Internet advertising platform that connects fragmented channels to drive real business outcomes [5] - The company is focused on integration, efficiency, and execution post-merger, aiming for $60 million in annualized cost savings by 2026 [13] - The strategy includes leveraging proprietary data and AI to optimize advertising outcomes across various platforms [6][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is a shortening of planning and buying cycles, they have not seen a meaningful impact on results due to macroeconomic conditions [27] - The company expects to achieve adjusted EBITDA of at least $180 million for the full year 2025, despite uncertainties in the market [24] - Management expressed confidence in capturing market share as advertisers scrutinize their ad spend, aligning with the company's mission [22] Other Important Information - The company recognized $16 million in acquisition-related costs and $7 million in restructuring charges during the quarter [19] - Free cash flow was a use of cash of approximately $7 million, impacted by acquisition-related costs [21] Q&A Session Summary Question: Can you expand on the macro environment and how advertisers are focusing on brand versus performance? - Management observed improvements in demand levels and a positive trend in the legacy Teads business, with performance holding up better than branding [27][28] Question: How much of the JBT wins are a result of the new combination versus existing pipeline? - The growth in JBTs is attributed to the combined value proposition of performance and branding, with significant excitement from clients [35][36] Question: Can you discuss the trends in the legacy Teads business and the opportunity with larger clients? - Management noted month-over-month improvements in the legacy Teads business since the merger, with a focus on gaining more share of wallet from both large and small clients [42][44] Question: What is the path from meetings to revenue generation? - Management indicated that sales are expected to ramp up exponentially in the second half of the year, with some sales already occurring [49] Question: How does the Google lawsuit ruling impact Teads? - The ruling is seen as a positive for the overall ecosystem, with Teads benefiting from its exclusive supply relationships [60] Question: What is the strategy for expanding the Moments vertical video product? - The strategy includes leveraging vertical video as a significant growth driver, with plans to invest in various vertical video opportunities [63]