Outbrain (OB) Q1 2025 Earnings Call May 09, 2025 08:30 AM ET Company Participants None - ExecutiveDavid Kostman - CEOJason Kiviat - CFOYgal Arounian - Director - Internet Equity ResearchAndrew Boone - Managing DirectorJames Heaney - SVP - Equity Research Conference Call Participants Laura Martin - Senior AnalystZach Cummins - Senior Research Analyst Operator Good day. Welcome to Outbrain Incorporated's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen ...

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]