Outbrain (US:OB)2025-11-06 14:30Financial Data and Key Metrics Changes - Revenue in Q3 was approximately $319 million, reflecting an increase of 42% year-over-year on an as-reported basis, driven primarily by the impact of the acquisition [15] - On a pro forma basis, there was a year-over-year decline of 15% in Q3 [15] - Ex-tech gross profit in the quarter was $131 million, an increase of 119% year-over-year on an as-reported basis [19] - Adjusted EBITDA for Q3 was $19 million, with adjusted free cash flow being a use of cash of $24 million in the quarter [20][21] Business Line Data and Key Metrics Changes - Connected TV (CTV) revenue grew around 40% in Q3 and is projected to reach $100 million for the year [18] - The CTV business focuses on three key pillars: on-screen placements, proprietary formats, and cross-screen activations [9] - Cross-sell revenue showed notable inflection, with October revenue and bookings growing by more than 55% month-over-month [11] Market Data and Key Metrics Changes - The U.S., U.K., and France, which represent about 50% of revenue, are driving headwinds for the legacy Teads business [16] - The DACH region is noted as neutral or growing, contrasting with the declines in the key markets [16] - Page views on premium publishers declined by 10% to 15%, attributed to increased adoption of AI summaries and volatility in programmatic supply [39] Company Strategy and Development Direction - The company is focusing on three main dimensions: portfolio optimization, operational efficiency, and cost optimization [6][7] - The growth strategy centers on connected TV, deepening relationships with agencies, expanding performance campaigns, and algorithmic advancements [14] - A detailed three-year outlook and roadmap will be shared at an upcoming Investor Day in March [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in integration and operational changes taking longer than anticipated, but remains confident in the long-term vision [14] - The company is committed to generating positive cash flow and improving its cost structure [21] - Visibility remains challenged due to shorter planning cycles from advertisers, impacting guidance for Q4 [22] Other Important Information - The company welcomed Molly Spielman as the new Chief Commercial Officer, bringing extensive experience from Criteo and Oracle Advertising [8] - The company recognized $4 million of acquisition and integration-related costs and $1 million of restructuring charges in the quarter [19] Q&A Session Summary Question: Can you unpack the headwinds in the quarter? - Management noted a combination of factors including distractions from the merger and execution challenges taking longer than expected, with some weakness in key geographies [23][24] Question: What is your willingness to protect free cash flow? - The company is committed to generating positive free cash flow and has a transformational plan to focus on key areas [28] Question: Can you provide insights on the loss of several big clients? - The loss was attributed to changes in client business models and the company's strategic decisions around quality, impacting the DSP business [34][36] Question: What are the expectations for free cash flow going forward? - The company expects to be around break-even for the year, with a focus on cash flow optimization and improvements in EBITDA [42][43] Question: What are the assumptions for Q4 guidance? - Guidance reflects caution due to visibility challenges and expected impacts from headwinds in the DSP business [45][46]