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 |

Combined Company to Operate as Teads and Trade on Nasdaq under the New Ticker "TEAD" NEW YORK, June 09, 2025 (GLOBE NEWSWIRE) -- Outbrain Inc. (NASDAQ: OB), which is operating under the new Teads brand following Outbrain's acquisition of Teads in February 2025, announced today that the combined company has completed its corporate renaming from "Outbrain Inc." to "Teads Holding Co." The combined company will begin trading under the new ticker symbol "TEAD" on the Nasdaq effective June 10, 2025. "The name cha ...

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]

[Q1 2025 Performance Overview](index=1&type=section&id=Q1%202025%20Performance%20Overview) The company's Q1 2025 performance saw significant revenue and gross profit growth post-Teads acquisition, despite an increased net loss due to one-time costs [Key Financial Metrics](index=1&type=section&id=First%20Quarter%202025%20Key%20Financial%20Metrics) Q1 2025 saw revenue grow **32%** to **$286.4 million** and Ex-TAC gross profit rise **98%** to **$103.1 million**, with Adjusted EBITDA up **665%** to **$10.7 million**, though net loss increased to **$54.8 million** due to acquisition costs Q1 2025 Key Financial Metrics (in millions USD) | | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $286.4 | $217.0 | 32% | | **Gross profit** | $82.7 | $41.6 | 99% | | **Net loss** | $(54.8) | $(5.0) | NM | | **Ex-TAC gross profit** | $103.1 | $52.2 | 98% | | **Adjusted EBITDA** | $10.7 | $1.4 | 665% | | **Free cash flow** | $(6.6) | $4.6 | (242)% | - CEO David Kostman highlighted a strong start post-Teads combination, noting that the company delivered financial results above the mid-range of its guidance while achieving major integration and synergy milestones[3](index=3&type=chunk) [Business Highlights](index=1&type=section&id=First%20Quarter%202025%20Business%20Highlights) Q1 business highlights include the successful Teads acquisition, increased synergy expectations of **$40 million** for 2025, over **100%** CTV revenue growth, and new strategic brand partnerships - Completed the acquisition of Teads for approximately **$900 million**, consisting of **$625 million** in cash and **43.75 million** shares of Outbrain common stock[5](index=5&type=chunk) - Expects to realize **$65 million to $75 million** of synergies in 2026, with an increased benefit of approximately **$40 million** from cost synergies expected in 2025[5](index=5&type=chunk) - CTV (Connected TV) revenue grew by more than **100%** year-over-year in Q1 2025, now accounting for about **5%** of total ad spend[7](index=7&type=chunk) - Secured new strategic Joint Business Partnerships (JBPs) with major brands including Ferrero, Haleon, Philip Morris International, and Beiersdorf[7](index=7&type=chunk) [Financial Highlights & Liquidity](index=2&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Q1 financials were significantly impacted by the Teads acquisition, leading to a **$54.8 million** net loss due to one-time charges, while liquidity stands at **$155.9 million** cash with **$627.0 million** total debt - Net loss of **$54.8 million** was driven by several one-time, pre-tax charges: **$16.4 million** in acquisition-related costs, **$15.6 million** in impairment charges (related to discontinuing the vi product), **$7.3 million** in restructuring charges, and **$12.0 million** in bridge facility costs[7](index=7&type=chunk) - As of March 31, 2025, the company held **$155.9 million** in cash, cash equivalents, and marketable securities[10](index=10&type=chunk) - Total debt obligations stood at **$627.0 million**, primarily from **$610.8 million** in senior secured notes due 2030 issued to finance the acquisition[10](index=10&type=chunk) - Entered a new credit agreement for a **$100.0 million** super senior secured revolving credit facility, expiring in 2030, for working capital and general corporate purposes[10](index=10&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) The company provides its financial guidance for the second quarter and full year 2025, projecting key non-GAAP metrics [Second Quarter and Full Year 2025 Guidance](index=3&type=section&id=Second%20Quarter%20and%20Full%20Year%202025%20Guidance) The company projects Q2 2025 Ex-TAC gross profit between **$141 million** and **$150 million**, Adjusted EBITDA between **$26 million** and **$34 million**, and reiterates full-year Adjusted EBITDA of at least **$180 million** Q2 2025 Guidance (Non-GAAP) | Metric | Guidance Range (in millions) | | :--- | :--- | | **Ex-TAC gross profit** | $141 - $150 | | **Adjusted EBITDA** | $26 - $34 | - For the full year ending December 31, 2025, the company continues to expect Adjusted EBITDA of at least **$180 million**[8](index=8&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited consolidated financial statements, detailing the company's operational results, financial position, and cash movements [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 revenue grew to **$286.4 million**, but increased operating expenses and interest led to a net loss of **$54.8 million**, or **($0.70)** per share, compared to a **$5.0 million** loss in Q1 2024 Q1 2025 Statement of Operations Summary (in thousands USD) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Revenue** | $286,357 | $216,964 | | **Gross Profit** | $82,650 | $41,595 | | **Loss from operations** | $(44,436) | $(6,597) | | **Net loss** | $(54,843) | $(5,041) | | **Diluted Net loss per share** | $(0.70) | $(0.10) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The March 31, 2025 balance sheet reflects a significant expansion post-Teads acquisition, with total assets surging to **$1.69 billion** and total liabilities increasing to **$1.21 billion** due to new debt Balance Sheet Summary (in thousands USD) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $534,082 | $343,131 | | **Goodwill** | $587,494 | $63,063 | | **Intangible assets, net** | $391,022 | $16,928 | | **TOTAL ASSETS** | **$1,688,040** | **$549,213** | | **Total Current Liabilities** | $472,545 | $289,471 | | **Long-term debt** | $610,816 | $— | | **TOTAL LIABILITIES** | **$1,213,375** | **$317,870** | | **TOTAL STOCKHOLDERS' EQUITY** | **$474,665** | **$231,343** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 cash flows show **$1.0 million** used in operations, a **$598.3 million** outflow for the Teads acquisition, and **$596.1 million** provided by financing, ending with **$138.5 million** in cash Q1 2025 Cash Flow Summary (in thousands USD) | | Three Months Ended March 31, 2025 | | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(966) | | **Net cash used in investing activities** | $(546,320) | | **Net cash provided by financing activities** | $596,094 | | **Net increase in cash** | $48,751 | [Non-GAAP Financial Measures & Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles the company's non-GAAP financial measures, including Ex-TAC Gross Profit, Adjusted EBITDA, and Free Cash Flow, to GAAP results [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures like Ex-TAC Gross Profit, Adjusted EBITDA, and Free Cash Flow to assess core operating performance by excluding specific non-recurring or non-cash expenses - Ex-TAC gross profit is a key profitability measure calculated by adding other cost of revenue back to GAAP gross profit, used to evaluate operating performance and trends[14](index=14&type=chunk)[15](index=15&type=chunk) - Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, depreciation & amortization, stock-based compensation, and other non-core expenses such as acquisition-related costs and restructuring charges[16](index=16&type=chunk) - Free cash flow is defined as cash flow from operating activities minus capital expenditures and capitalized software development costs, used to evaluate the ability to generate cash[19](index=19&type=chunk) [Reconciliations of Non-GAAP to GAAP Measures](index=13&type=section&id=Reconciliations%20of%20Non-GAAP%20to%20GAAP%20Measures) Detailed Q1 2025 reconciliations show GAAP Gross Profit of **$82.7 million** to Ex-TAC Gross Profit of **$103.1 million**, Net Loss of **$54.8 million** to Adjusted EBITDA of **$10.7 million**, and Free Cash Flow of negative **$6.6 million** Reconciliation of Gross Profit to Ex-TAC Gross Profit (Q1 2025, in thousands) | | Amount | | :--- | :--- | | **Gross profit (GAAP)** | **$82,650** | | Add: Other cost of revenue | $20,472 | | **Ex-TAC gross profit (Non-GAAP)** | **$103,122** | Reconciliation of Net Loss to Adjusted EBITDA (Q1 2025, in thousands) | | Amount | | :--- | :--- | | **Net loss (GAAP)** | **$(54,843)** | | Adjustments (Interest, Taxes, D&A, etc.) | $12,873 | | Stock-based compensation | $2,941 | | Acquisition-related costs | $16,418 | | Restructuring charges | $7,279 | | Impairment charges | $15,614 | | Other adjustments | $23,227 | | **Adjusted EBITDA (Non-GAAP)** | **$10,689** | Reconciliation to Free Cash Flow (Q1 2025, in thousands) | | Amount | | :--- | :--- | | **Net cash used in operating activities (GAAP)** | **$(966)** | | Purchases of property and equipment | $(2,921) | | Capitalized software development costs | $(2,699) | | **Free cash flow (Non-GAAP)** | **$(6,586)** |

Core Insights - Outbrain Inc. reported strong financial results for Q1 2025, achieving guidance on Ex-TAC gross profit and Adjusted EBITDA, with CTV revenues growing over 100% year-over-year on a pro forma basis [1][2] - The company completed the acquisition of Teads for approximately $900 million, which is expected to yield significant synergies and integration benefits [4][21] - Full-year guidance for 2025 remains positive, with expectations for continued growth and strategic partnerships [6][7] Financial Performance - Revenue for Q1 2025 was $286.4 million, a 32% increase from $217.0 million in Q1 2024 [2][5] - Gross profit reached $82.7 million, up 99% from $41.6 million in the prior year, with a gross margin increase to 28.9% [2][5] - Ex-TAC gross profit was $103.1 million, a 98% increase year-over-year, with an Ex-TAC gross margin of 36.0% [2][5] - The net loss for the quarter was $54.8 million, compared to a net loss of $5.0 million in Q1 2024, influenced by acquisition-related costs and restructuring charges [2][5] Business Highlights - The integration of Teads is on track, with expected synergies of $65 million to $75 million by 2026, including $40 million in cost synergies for 2025 [4][6] - The company has initiated cross-selling of legacy Outbrain solutions to Teads' enterprise brand customers, with several campaigns already sold [4] - New strategic partnerships have been established with major brands such as Ferrero and Philip Morris International [4] Guidance and Future Outlook - For Q2 2025, the company expects revenue of $286.4 million, with continued strong adoption of its Moments vertical video offering [6] - Full-year guidance for 2025 includes Ex-TAC gross profit expectations of $141 million to $150 million and Adjusted EBITDA of $26 million to $34 million [6][7] - The company is focused on leveraging predictive AI technology to enhance its advertising platform and drive business outcomes [21]

Company Overview - Outbrain Inc. has rebranded under the new Teads brand following its merger with Teads on February 3, 2025 [4] - The new Teads operates as an omnichannel outcomes platform for the open internet, focusing on delivering full-funnel results for marketers [4] - The company partners with over 10,000 publishers and 20,000 advertisers globally, employing nearly 1,800 people across 36 countries [4] Upcoming Financial Results - Outbrain Inc. will release its first quarter 2025 results before the market opens on May 9, 2025 [1] - A conference call to discuss the results and business outlook will take place at 8:30 a.m. (Eastern Time) on the same day [1] Conference Call Details - The conference call can be accessed live via phone or through a webcast on the company's Investor Relations website [2][3] - A replay of the call will be available two hours after it concludes, accessible until May 23, 2025 [2]