Integral Ad Science (IAS) - 2025 Q3 - Quarterly Report

Financial Performance - Revenue for Q3 2025 reached $154,358,000, a 15.5% increase from $133,528,000 in Q3 2024[11] - Operating income for Q3 2025 was $7,574,000, down 62.6% from $20,187,000 in Q3 2024[11] - Net income for Q3 2025 was $7,045,000, a decrease of 56.3% compared to $16,089,000 in Q3 2024[11] - Net income for the nine months ended September 30, 2025, was $31,446,000, an increase of 39.5% compared to $22,524,000 for the same period in 2024[21] - Net income for the three months ended September 30, 2025, was $7,045 million, compared to $16,089 million for the same period in 2024, representing a decline of approximately 56.3%[105] - Net income decreased by $9.0 million, or 56%, for the three months ended September 30, 2025, compared to the same period in 2024[161] - The net income for the nine months ended September 30, 2025, was $31.4 million, compared to $22.5 million for the same period in 2024, representing an increase of 39.8%[200][201] Revenue Breakdown - Total revenue for the three months ended September 30, 2025, was $154.36 million, a 15.5% increase from $133.53 million in the same period of 2024[55] - Optimization revenue reached $73.72 million for the three months ended September 30, 2025, up 20.6% from $61.12 million in 2024[55] - Measurement revenue increased to $57.13 million for the three months ended September 30, 2025, compared to $52.90 million in 2024, reflecting a growth of 8.3%[55] - Total revenue increased by $20.8 million, or 16%, for the three months ended September 30, 2025, compared to the same period in 2024[162] - Optimization revenue rose by $12.6 million, or 21%, reflecting a 15% increase in average CPMs[164] - Publisher revenue surged by $15.6 million, or 29%, primarily due to the growth of Publica[175] Operating Expenses - Operating expenses for Q3 2025 totaled $146,784,000, up from $113,341,000 in Q3 2024, reflecting a 29.5% increase[11] - Total operating expenses increased by $33.4 million, or 30%, for the three months ended September 30, 2025[161] - Operating expenses increased by $19.4 million, or 24%, mainly due to higher hosting fees and revenue share to DSP partners[176] - General and administrative expenses grew by $15.1 million, or 21%, largely due to increased professional services and compensation expenses[180] Cash and Assets - Total assets increased to $1,207,818,000 as of September 30, 2025, up from $1,151,571,000 at the end of 2024[9] - Cash and cash equivalents rose to $129,204,000, a significant increase from $84,469,000 at the end of 2024[9] - Cash, cash equivalents, and restricted cash at the end of the period totaled $131,940,000, up from $59,607,000 at the end of September 2024, reflecting a year-over-year increase of 121.1%[21] - As of September 30, 2025, cash and cash equivalents totaled $129.2 million, with total noncancellable purchase commitments related to hosting services amounting to $376.8 million[189][190] Merger and Acquisition - The company entered into a Merger Agreement with Igloo Group Parent, Inc., with each share of common stock to be converted into cash of $10.30 upon completion of the merger[25][26] - The merger is expected to close in the fourth quarter of 2025, subject to customary closing conditions and regulatory approvals[28] - The company is involved in a merger agreement with Vista Equity Partners, with stockholders agreeing to vote in favor of the merger, indicating strategic expansion plans[112] - The company has highlighted risks associated with the merger, including potential delays and regulatory approvals, which could impact business operations and stock price[117] Foreign Exchange and Currency - The company reported a foreign exchange loss of $667,000 in Q3 2025, compared to a gain of $2,607,000 in Q3 2024[11] - The company reported a foreign exchange loss of $7,723,000 for the nine months ended September 30, 2025, compared to a loss of $1,775,000 in 2024, highlighting challenges in currency fluctuations[38] - The company reported unrealized foreign currency gains of $7.7 million for the nine months ended September 30, 2025, compared to $1.8 million in 2024, showing a significant increase of 328.9%[200][201] Stock-Based Compensation - Total stock-based compensation expense for the three months ended September 30, 2025 was $22,625, compared to $16,443 for the same period in 2024, reflecting an increase of 37.4%[83] - The total number of Time-Based Options outstanding as of September 30, 2025, was 2,149,893, while Return-Target Options outstanding were 1,220,893[88] - The Company recorded $23,450,000 of stock-based compensation expense related to Return-Target Options during Q2 2023[87] Customer Metrics - Net revenue retention of advertising customers increased to 111% for the trailing-twelve-month period ended September 30, 2025, up from 108% in the prior year, driven by a 13% growth in advertising revenue[146] - The total number of large advertising customers rose to 248 as of September 30, 2025, compared to 232 in the previous year, with these customers representing 87% of total advertising revenue[147] Economic Conditions - The company has not experienced material impacts from macroeconomic conditions in the first nine months of 2025, despite ongoing economic uncertainties[132]