Outbrain Inc. (NASDAQ:OB) Q4 2021 Results Conference Call March 1, 2022 8:30 AM ET Company Participants Jason Kiviat - Sr. Director, FP&A Yaron Galai - Co-Founder and Co-Chief Executive Officer David Kostman - Co-Chief Executive Officer Elise Garofalo - Chief Financial Officer Conference Call Participants Andrew Boone - JMP Securities Shweta Khajuria - Evercore Ross Sandler - Barclays Laura Martin - Needham Operator Good morning, and welcome to Outbrain's Fourth Quarter and Full Year 2021 Earnings Conferenc ...

Financial Performance - Q4 2021 - Revenue increased to $290 million, a 18% increase compared to $245 million in Q4 2020[19] - Ex-TAC Gross Profit increased to $77 million, a 15% increase compared to $67 million in Q4 2020[19] - Gross Profit increased to $67 million, a 17% increase compared to $58 million in Q4 2020[19] - Adjusted EBITDA reached $24 million, representing 31% of Ex-TAC gross profit and 20% of revenue[25] - Net income was $39 million, which included a one-time tax benefit of $318 million[25] Financial Performance - Full Year 2021 - Revenue reached $1016 billion, a 32% increase compared to $767 billion in FY 2020[31] - Ex-TAC Gross Profit increased to $272 million, a 40% increase compared to $194 million in FY 2020[31] - Gross Profit increased to $240 million, a 46% increase compared to $165 million in FY 2020[31] - Adjusted EBITDA reached $89 million, representing 33% of Ex-TAC gross profit and 20% of revenue[34] - Net income was $11 million, representing 1% of revenue[34] Media Partner Performance - Media Partner Net Revenue Retention was 126%[21] - New Media Partners accounted for 7% of revenue[21]

[Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This section provides the company's unaudited condensed consolidated financial statements, management's analysis of financial performance, market risk disclosures, and internal controls assessment [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Outbrain Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets significantly increased to **$747.3 million** driven by IPO proceeds and debt, turning stockholders' equity positive Condensed Consolidated Balance Sheets (In thousands) | | September 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $482,447 | $93,641 | | Total current assets | $671,506 | $277,416 | | TOTAL ASSETS | $747,344 | $356,486 | | **LIABILITIES & EQUITY** | | | | Total current liabilities | $270,817 | $256,750 | | Long-term debt | $236,000 | — | | TOTAL LIABILITIES | $522,780 | $273,855 | | TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | $224,564 | ($79,813) | | TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) | $747,344 | $356,486 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew **34.5%** in Q3 2021, but a **$53.9 million** net loss was recorded due to a **$42.0 million** one-time IPO-related charge Key Operational Metrics (In thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $250,784 | $186,510 | $725,961 | $521,704 | | Gross Profit | $60,269 | $41,873 | $172,800 | $106,600 | | (Loss) income from operations | ($6,416) | $3,621 | $25,519 | ($5,597) | | Net (loss) income | ($53,906) | $2,541 | ($27,959) | ($9,652) | | Diluted Net (loss) income per share | ($1.13) | $0.05 | ($1.01) | ($0.58) | - The net loss for Q3 2021 included a significant one-time charge of **$42.0 million** related to the exchange of senior notes upon the company's IPO[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) The company reported a comprehensive loss of **$55.1 million** in Q3 2021, primarily due to a net loss and foreign currency translation adjustments Comprehensive (Loss) Income (In thousands) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net (loss) income | ($53,906) | $2,541 | | Foreign currency translation adjustments | (1,187) | 1,006 | | **Comprehensive (loss) income** | **($55,093)** | **$3,547** | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29) Stockholders' equity significantly increased to **$224.6 million** due to the IPO, including conversion of preferred stock and issuance of new common shares - In connection with the IPO, all outstanding convertible preferred stock with a carrying value of **$162.4 million** was converted into 28,091,267 shares of common stock[19](index=19&type=chunk) - The company issued 8,000,000 shares of common stock from its IPO, raising net proceeds of **$145.1 million** after issuance costs[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to **$61.1 million**, while financing activities provided **$340.0 million** from IPO and debt issuance Cash Flow Summary (In thousands) | | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $61,077 | $43,525 | | Net cash used in investing activities | ($11,360) | ($6,868) | | Net cash provided by (used in) financing activities | $340,043 | ($3,247) | | **Net increase in cash, cash equivalents and restricted cash** | **$388,782** | **$34,278** | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, the July 2021 IPO, debt exchange, a DOJ antitrust investigation, and a new **$75 million** revolving credit facility - Outbrain is a recommendation platform that generates revenue from marketers through user engagements with promoted recommendations on third-party media owners' properties[27](index=27&type=chunk) - On July 27, 2021, the company closed its IPO, issuing 8 million shares of common stock and receiving net proceeds of **$145.1 million**[28](index=28&type=chunk) - In July 2021, the company issued **$200 million** in senior notes, which were then exchanged for **$236 million** of 2.95% Convertible Senior Notes due 2026 upon the IPO closing, resulting in a **$42 million** charge[61](index=61&type=chunk)[62](index=62&type=chunk) - The company was notified on April 29, 2021, that the U.S. Department of Justice's Antitrust Division is conducting a criminal investigation into hiring practices in its industry, which includes Outbrain[75](index=75&type=chunk) - Subsequent to the quarter end, on November 2, 2021, the company entered into a new amended and restated revolving credit facility for up to **$75.0 million**[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong revenue growth, Q3 net loss impacted by IPO-related charges, increased Adjusted EBITDA, and a confident liquidity position [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q3 2021 revenue grew **34.5%** to **$250.8 million**, but a **$53.9 million** net loss resulted from one-time IPO-related charges Financial Performance vs. Prior Year (In millions) | Metric | Q3 2021 | Q3 2020 | Change | Nine Months 2021 | Nine Months 2020 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $250.8 | $186.5 | +34.5% | $726.0 | $521.7 | +39.2% | | Gross Profit | $60.3 | $41.9 | +43.9% | $172.8 | $106.6 | +62.1% | | Net (Loss) Income | ($53.9) | $2.5 | - | ($28.0) | ($9.7) | - | - Q3 2021 net loss was driven by **$42.0 million** in one-time charges for the exchange of senior notes and **$16.5 million** in one-time incremental stock-based compensation expense related to the IPO[109](index=109&type=chunk)[153](index=153&type=chunk) - Revenue growth was driven by net revenue retention on existing media partners (**28%** of growth in Q3) and new media partners (**7%** of growth in Q3)[143](index=143&type=chunk) [Non-GAAP Reconciliations](index=37&type=section&id=Non-GAAP%20Reconciliations) Reconciliations for non-GAAP measures show Q3 2021 Ex-TAC Gross Profit at **$68.1 million** and Adjusted EBITDA at **$19.9 million** Reconciliation of Gross Profit to Ex-TAC Gross Profit (In thousands) | | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Gross profit | $60,269 | $41,873 | $172,800 | $106,600 | | Other cost of revenue | 7,846 | 6,771 | 22,555 | 22,292 | | **Ex-TAC Gross Profit** | **$68,115** | **$48,644** | **$195,355** | **$128,892** | Reconciliation of Net (Loss) Income to Adjusted EBITDA (In thousands) | | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | ($53,906) | $2,541 | ($27,959) | ($9,652) | | Adjustments | 73,763 | 10,220 | 92,980 | 29,735 | | **Adjusted EBITDA** | **$19,857** | **$12,761** | **$65,021** | **$20,083** | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents reached **$482.4 million** due to IPO proceeds and debt, with a new **$75 million** revolving credit facility secured - Principal sources of liquidity are cash from operations, **$145.1 million** in net proceeds from the July 2021 IPO, and proceeds from the issuance of Convertible Notes[179](index=179&type=chunk)[201](index=201&type=chunk) - On July 27, 2021, the company exchanged **$200 million** of senior notes for **$236 million** of 2.95% Convertible Senior Notes due 2026[191](index=191&type=chunk) - On November 2, 2021, the company entered into a new Amended and Restated Loan and Security Agreement with SVB for a revolving credit facility of up to **$75 million**, maturing in 2026[186](index=186&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $61,077 | $43,525 | | Net cash used in investing activities | ($11,360) | ($6,868) | | Net cash provided by (used in) financing activities | $340,043 | ($3,247) | [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from foreign currency exchange rates and interest rates, with a **$1.1 million** impact from a 10% FX change - The company's primary market risks are foreign currency exchange risk and interest rate risk[209](index=209&type=chunk) - A hypothetical **10%** change in weighted-average foreign exchange rates would result in a **$1.1 million** favorable or unfavorable change to operating income for the three months ended September 30, 2021[211](index=211&type=chunk) - Interest rate risk is primarily tied to cash equivalents and potential future borrowings under the revolving credit facility, as the **$236 million** in convertible notes carry a fixed interest rate[212](index=212&type=chunk)[213](index=213&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes identified - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at a reasonable assurance level[214](index=214&type=chunk) - There were no changes to internal control over financial reporting during the third quarter of 2021 that materially affected, or are reasonably likely to materially affect, internal controls[215](index=215&type=chunk) [Part II - Other Information](index=45&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal proceedings, key risk factors, details on unregistered equity sales and IPO proceeds, and a list of filed exhibits [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to material legal proceedings but is cooperating with a DOJ criminal investigation into industry hiring practices - The company is cooperating with a criminal investigation by the Antitrust Division of the U.S. Department of Justice into hiring practices in its industry[293](index=293&type=chunk) - The company is not currently a party to any legal proceeding that would be expected to have a material adverse effect on its business, financial condition, or cash flows[218](index=218&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) Key risks include dependence on advertising demand, intense competition, data privacy regulations, cookie deprecation, and political instability in Israel - A summary of principal risks includes: - Dependence on overall advertising demand and media partner traffic - Failure to manage growth effectively - Loss of large media partners - Failure of the recommendation engine to predict user engagement - Intense competition in the digital advertising industry - Limitations on the ability to collect, use, and disclose data - Hardware/software failures or security breaches - Political and regulatory risks in various markets[221](index=221&type=chunk) - The business is subject to evolving data privacy laws such as GDPR in Europe and CCPA/CPRA in California, which could impact data collection and usage for advertising[273](index=273&type=chunk)[278](index=278&type=chunk)[281](index=281&type=chunk) - The discontinuation of third-party cookies by major browsers like Chrome and Apple's opt-in privacy models could adversely affect the business by limiting data collection capabilities[253](index=253&type=chunk)[255](index=255&type=chunk) - Political, economic, and military conditions in Israel, where many employees and management are located, could materially and adversely affect the business[237](index=237&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; **$145.1 million** net IPO proceeds are for working capital, general corporate purposes, and potential acquisitions - On July 27, 2021, the company sold 8,000,000 shares of common stock in its IPO at **$20.00** per share, for net proceeds of **$145.1 million**[332](index=332&type=chunk) - There has been no material change in the planned use of IPO proceeds, which are intended for working capital, general corporate purposes, and potential acquisitions[333](index=333&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with the Form 10-Q, including corporate documents, debt agreements, and officer certifications - The report includes exhibits such as the Indenture for the 2.95% Convertible Senior Notes, the 2021 Long-Term Incentive Plan, and officer certifications[336](index=336&type=chunk) [Signatures](index=69&type=section&id=Signatures) The report was signed and authorized on November 12, 2021, by the Co-Chief Executive Officer and Chief Financial Officer - The report was signed on November 12, 2021, by the Co-CEO and CFO[339](index=339&type=chunk)[340](index=340&type=chunk)

@utbrain We Recommend Third Quarter 2021 Earnings Results November 2021 NEW YORK POST billion years ago, it was flooded with water and home to a hourishing ocita. It so, the sediment wight, still-contain signs of the & Smartle 0 Seartleed Pack your bags: Poll reveals the happiest states in America With travel podcasts, explore the world through your ear buds Study finds that people who happier, healthier and more NASA announces it's looking for companies to help mine on the moon Forward-Looking Statements: ...

Financial Data and Key Metrics Changes - Revenue grew 34% year-over-year to approximately $251 million [33] - Ex-TAC gross profit increased 40% year-over-year to $68 million [33] - Adjusted EBITDA rose 56% year-over-year to approximately $20 million [62] Business Line Data and Key Metrics Changes - Net revenue retention was 128%, indicating strong monetization from existing partners [35] - The company added over 100 new digital properties in Q3, including significant renewals with key partners [36] - Video revenue increased to approximately 9% of total revenue, growing faster than other formats [45] Market Data and Key Metrics Changes - Approximately 70% of total revenues came from mobile, with 60% of revenues generated outside the U.S. [56][111] - The company experienced strong growth in various verticals, particularly in health, entertainment, and finance, despite some temporary tightening in automotive budgets [77][118] Company Strategy and Development Direction - The company positions itself as an operating system for publishers, focusing on long-term partnerships and delivering value beyond ad monetization [11][17] - Investments in algorithmic improvements, such as the quality rating algorithm, aim to enhance ad quality and expand user engagement [18][84] - The company plans to deepen relationships with publishers and expand into new ad placements to drive growth [26][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning amidst privacy changes and the shift towards contextual targeting [29][30] - The outlook for advertising recovery remains strong, with expectations for increased budgets and higher pricing in the digital advertising space [101][102] - The company anticipates continued growth opportunities driven by the shift of advertising dollars to digital and the open web [47][108] Other Important Information - The company raised significant capital through its IPO and convertible notes, enhancing its liquidity position [63][64] - Operating expenses increased due to investments in personnel and costs associated with becoming public [58][60] Q&A Session Summary Question: Impact of cookie depreciation and advertising verticals - Management noted that the company has successfully operated without third-party cookies in certain environments and sees strength in contextual targeting and first-party data [73][75] - Demand remains strong across various verticals, with some temporary tightening in automotive budgets [77] Question: Quality score algorithm and revenue potential - The quality rating algorithm aims to improve engagement with non-engaging users and attract more brand advertisers [84][86] Question: Video revenue growth and publisher placements - Management is focused on expanding video placements and sees significant growth potential in this area [88][89] Question: Competitive landscape and advertiser pricing - The company is experiencing higher pricing in its network, which is driving yield improvements and attracting new advertisers [96] Question: Macro outlook for 2022 - Management believes that advertising recovery will remain strong, with expectations for increased budgets in the second half of 2022 [102][104] Question: International revenue trends and customer count - International revenue continues to outpace U.S. growth, and the advertiser count has increased year-over-year [111][112]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 001-40643 Outbrain Inc. (Exact name of registrant as specified in its charter) Delaware 20-5391629 (State or other jurisdicti ...

Outbrain Inc. (NASDAQ:OB) Q2 2021 Earnings Conference Call August 17, 2021 8:30 AM ET Company Participants Yaron Galai - Co-Founder And Co-CEO David Kostman - Co-CEO Elise Garofalo - CFO Jason Kiviat - Sr. Director, FP&A Conference Call Participants Nick Jones - Citi Shweta Khajuria - Evercore ISI Ron Josey - JMP Securities. Ross Sandler - Barclays Operator Good morning, and welcome to Outbrain's Second Quarter 2021 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for ...

@utbrain We Recommend Second Quarter 2021 Earnings Results August 2021 NEW YORK POST billion years ago, it was flooded with water and home to a hourishing ocita. It so, the sediment wight, still-contain signs of the & Smartle 0 Seartleed Pack your bags: Poll reveals the happiest states in America With travel podcasts, explore the world through your ear buds Study finds that people who happier, healthier and more NASA announces it's looking for companies to help mine on the moon 2 Forward-Looking Statements: ...