[10-Q] Teads Holding Co. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Teads Holding Co. reported combined results following its February 3, 2025 acquisition of Legacy Teads. Revenue rose to $343.1 million for the quarter and $629.5 million for the six months ended June 30, 2025, versus $214.1 million and $431.1 million in the prior-year periods, driven by the acquired business contribution. Gross profit expanded to $120.3 million for the quarter.
Despite revenue growth, the company recorded a net loss of $14.3 million for the quarter and $69.2 million year-to-date, reflecting higher interest expense, acquisition-related amortization and restructuring and impairment charges. The balance sheet shows material acquisition effects: goodwill $633.2 million, other intangibles $403.4 million, and long-term debt of $602.96 million, offset by $149.4 million in cash.
Teads Holding Co. ha riportato risultati combinati a seguito dell'acquisizione di Legacy Teads avvenuta il 3 febbraio 2025. I ricavi sono saliti a $343.1 million nel trimestre e a $629.5 million nei sei mesi chiusi al 30 giugno 2025, rispetto a $214.1 million e $431.1 million nei periodi dell'anno precedente, trainati dal contributo dell'attività acquisita. L'utile lordo è aumentato a $120.3 million nel trimestre.
Nonostante la crescita dei ricavi, la società ha registrato una perdita netta di $14.3 million nel trimestre e di $69.2 million da inizio anno, a causa di maggiori oneri finanziari, ammortamenti legati all'acquisizione e oneri per ristrutturazione e perdite per riduzione di valore. Lo stato patrimoniale evidenzia effetti significativi dell'acquisizione: avviamento $633.2 million, altri intangibili $403.4 million e debiti a lungo termine per $602.96 million, compensati da $149.4 million di cassa.
Teads Holding Co. informó resultados combinados tras su adquisición de Legacy Teads el 3 de febrero de 2025. Los ingresos aumentaron a $343.1 million en el trimestre y a $629.5 million en los seis meses cerrados al 30 de junio de 2025, frente a $214.1 million y $431.1 million en los periodos del año anterior, impulsados por la contribución del negocio adquirido. El beneficio bruto se expandió a $120.3 million en el trimestre.
A pesar del crecimiento de ingresos, la compañía registró una pérdida neta de $14.3 million en el trimestre y de $69.2 million en lo que va del año, reflejando mayores gastos por intereses, amortización relacionada con la adquisición y cargos por reestructuración y deterioro. El balance muestra efectos significativos de la adquisición: goodwill $633.2 million, otros intangibles $403.4 million y deuda a largo plazo de $602.96 million, compensados por $149.4 million en efectivo.
Teads Holding Co.는 2025년 2월 3일 Legacy Teads 인수에 따라 결합 실적을 발표했습니다. 매출은 분기 기준 $343.1 million, 2025년 6월 30일로 종료된 6개월 기준 $629.5 million으로 전년 동기 $214.1 million 및 $431.1 million 대비 증가했으며, 이는 인수한 사업의 기여에 따른 것입니다. 매출총이익은 분기 기준 $120.3 million으로 확대되었습니다.
매출 증가에도 불구하고 회사는 분기 동안 $14.3 million의 순손실을 기록했고 연초 이후 누계로는 $69.2 million의 순손실을 기록했으며, 이는 높은 이자비용, 인수 관련 상각 및 구조조정·손상차손 때문입니다. 대차대조표에는 인수의 주요 영향이 반영되어 있습니다: 영업권 $633.2 million, 기타 무형자산 $403.4 million, 장기부채 $602.96 million, 이에 대해 $149.4 million의 현금으로 상계되고 있습니다.
Teads Holding Co. a communiqué des résultats combinés suite à l'acquisition de Legacy Teads le 3 février 2025. Le chiffre d'affaires a augmenté pour atteindre $343.1 million au trimestre et $629.5 million sur les six mois clos le 30 juin 2025, contre $214.1 million et $431.1 million aux mêmes périodes de l'année précédente, tiré par la contribution de l'activité acquise. La marge brute s'est élargie à $120.3 million pour le trimestre.
Malgré la progression du chiffre d'affaires, la société a enregistré une perte nette de $14.3 million pour le trimestre et de $69.2 million depuis le début de l'année, en raison d'un coût d'intérêt plus élevé, d'amortissements liés à l'acquisition et de charges de restructuration et de dépréciation. Le bilan traduit des effets significatifs de l'acquisition : goodwill $633.2 million, autres immobilisations incorporelles $403.4 million et dettes à long terme de $602.96 million, compensés par $149.4 million de trésorerie.
Teads Holding Co. meldete kombinierte Ergebnisse nach der Übernahme von Legacy Teads zum 3. Februar 2025. Der Umsatz stieg auf $343.1 million für das Quartal und $629.5 million für die sechs Monate zum 30. Juni 2025, gegenüber $214.1 million bzw. $431.1 million im Vorjahreszeitraum, getrieben durch den Beitrag des übernommenen Geschäfts. Der Bruttogewinn erhöhte sich im Quartal auf $120.3 million.
Trotz Umsatzwachstums verzeichnete das Unternehmen einen Nettoverlust von $14.3 million im Quartal und $69.2 million seit Jahresbeginn, bedingt durch höhere Zinsaufwendungen, übernahmebedingte Abschreibungen sowie Restrukturierungs- und Wertminderungsaufwendungen. Die Bilanz weist deutliche Akquisitionseffekte aus: Goodwill $633.2 million, sonstige immaterielle Vermögenswerte $403.4 million und langfristige Verbindlichkeiten von $602.96 million, ausgeglichen durch $149.4 million an liquiden Mitteln.
Positive
- Significant revenue growth: Q2 revenue rose to $343.1 million from $214.1 million year-over-year and six-month revenue increased to $629.5 million from $431.1 million.
- Completed strategic acquisition: Acquisition closed February 3, 2025 with total consideration of $884.9 million, combining Outbrain and Legacy Teads.
- Improved cash position: Cash and cash equivalents increased to $149.4 million as of June 30, 2025 from $89.1 million at December 31, 2024.
- Positive comprehensive income drivers: Foreign currency translation and unrealized gains produced a $101.97 million increase in other comprehensive income for six months.
Negative
- Material net losses: Net loss of $14.3 million for the quarter and $69.2 million year-to-date.
- High leverage and interest burden: Long-term debt of $602.96 million (10% Senior Secured Notes) and interest expense of ~$40.6 million for six months.
- Large goodwill and intangible balances: Goodwill $633.2 million and other intangibles $403.4 million increase impairment and amortization risk.
- Significant cash used in investing for acquisition: $598.3 million paid for acquisition net of cash acquired, producing large investing outflow and reliance on financing.
- Restructuring and impairment charges: Restructuring charges of $8.95 million YTD and impairment charges totaling ~$15.6 million recorded in the period.
Insights
TL;DR: Revenue growth is strong but profitability is pressured by acquisition costs and heavy interest expense.
Teads' top-line increased markedly year-over-year to $343.1 million in Q2 2025 and $629.5 million for six months, reflecting inclusion of Legacy Teads. However, operating loss and a $69.2 million YTD net loss were driven by elevated sales and marketing, amortization of acquired intangibles, impairment and restructuring and significant interest expense (approximately $40.6 million YTD). The balance sheet reflects the acquisition financing: goodwill of $633.2 million, intangibles of $403.4 million and long-term debt of $603.0 million. Liquidity shows cash of $149.4 million and net cash provided by operations of $24.1 million YTD, but investing used $548.9 million primarily for the acquisition. For financial analysis, the interplay of integration costs, amortization schedules and high coupon debt will determine near-term free cash flow and leverage metrics.
TL;DR: The acquisition materially scales the business but creates sizable goodwill, intangibles and leverage to monitor.
The Acquisition closed February 3, 2025 with total consideration of $884.9 million (cash ~$621.9 million and stock ~$262.9 million). Preliminary purchase accounting allocated $384.4 million to intangibles and produced $502.6 million of goodwill (adjusted to $502.582 million in the schedule and $502.582 million contributing to closing goodwill of $633.247 million after translation). The deal immediately increased revenue contribution from Legacy Teads (Q2 contribution of $139.1 million; Feb 3–Jun 30 contribution $219.4 million) but also introduced contingent tax liabilities and an indemnification asset. Financing via 10% senior secured notes and bridge/revolver facilities provided deal funding but elevated interest and covenant considerations. From an M&A viewpoint, the combination expanded scale and product footprint, while integration execution, amortization and debt service will be material to value realization.
Teads Holding Co. ha riportato risultati combinati a seguito dell'acquisizione di Legacy Teads avvenuta il 3 febbraio 2025. I ricavi sono saliti a $343.1 million nel trimestre e a $629.5 million nei sei mesi chiusi al 30 giugno 2025, rispetto a $214.1 million e $431.1 million nei periodi dell'anno precedente, trainati dal contributo dell'attività acquisita. L'utile lordo è aumentato a $120.3 million nel trimestre.
Nonostante la crescita dei ricavi, la società ha registrato una perdita netta di $14.3 million nel trimestre e di $69.2 million da inizio anno, a causa di maggiori oneri finanziari, ammortamenti legati all'acquisizione e oneri per ristrutturazione e perdite per riduzione di valore. Lo stato patrimoniale evidenzia effetti significativi dell'acquisizione: avviamento $633.2 million, altri intangibili $403.4 million e debiti a lungo termine per $602.96 million, compensati da $149.4 million di cassa.
Teads Holding Co. informó resultados combinados tras su adquisición de Legacy Teads el 3 de febrero de 2025. Los ingresos aumentaron a $343.1 million en el trimestre y a $629.5 million en los seis meses cerrados al 30 de junio de 2025, frente a $214.1 million y $431.1 million en los periodos del año anterior, impulsados por la contribución del negocio adquirido. El beneficio bruto se expandió a $120.3 million en el trimestre.
A pesar del crecimiento de ingresos, la compañía registró una pérdida neta de $14.3 million en el trimestre y de $69.2 million en lo que va del año, reflejando mayores gastos por intereses, amortización relacionada con la adquisición y cargos por reestructuración y deterioro. El balance muestra efectos significativos de la adquisición: goodwill $633.2 million, otros intangibles $403.4 million y deuda a largo plazo de $602.96 million, compensados por $149.4 million en efectivo.
Teads Holding Co.는 2025년 2월 3일 Legacy Teads 인수에 따라 결합 실적을 발표했습니다. 매출은 분기 기준 $343.1 million, 2025년 6월 30일로 종료된 6개월 기준 $629.5 million으로 전년 동기 $214.1 million 및 $431.1 million 대비 증가했으며, 이는 인수한 사업의 기여에 따른 것입니다. 매출총이익은 분기 기준 $120.3 million으로 확대되었습니다.
매출 증가에도 불구하고 회사는 분기 동안 $14.3 million의 순손실을 기록했고 연초 이후 누계로는 $69.2 million의 순손실을 기록했으며, 이는 높은 이자비용, 인수 관련 상각 및 구조조정·손상차손 때문입니다. 대차대조표에는 인수의 주요 영향이 반영되어 있습니다: 영업권 $633.2 million, 기타 무형자산 $403.4 million, 장기부채 $602.96 million, 이에 대해 $149.4 million의 현금으로 상계되고 있습니다.
Teads Holding Co. a communiqué des résultats combinés suite à l'acquisition de Legacy Teads le 3 février 2025. Le chiffre d'affaires a augmenté pour atteindre $343.1 million au trimestre et $629.5 million sur les six mois clos le 30 juin 2025, contre $214.1 million et $431.1 million aux mêmes périodes de l'année précédente, tiré par la contribution de l'activité acquise. La marge brute s'est élargie à $120.3 million pour le trimestre.
Malgré la progression du chiffre d'affaires, la société a enregistré une perte nette de $14.3 million pour le trimestre et de $69.2 million depuis le début de l'année, en raison d'un coût d'intérêt plus élevé, d'amortissements liés à l'acquisition et de charges de restructuration et de dépréciation. Le bilan traduit des effets significatifs de l'acquisition : goodwill $633.2 million, autres immobilisations incorporelles $403.4 million et dettes à long terme de $602.96 million, compensés par $149.4 million de trésorerie.
Teads Holding Co. meldete kombinierte Ergebnisse nach der Übernahme von Legacy Teads zum 3. Februar 2025. Der Umsatz stieg auf $343.1 million für das Quartal und $629.5 million für die sechs Monate zum 30. Juni 2025, gegenüber $214.1 million bzw. $431.1 million im Vorjahreszeitraum, getrieben durch den Beitrag des übernommenen Geschäfts. Der Bruttogewinn erhöhte sich im Quartal auf $120.3 million.
Trotz Umsatzwachstums verzeichnete das Unternehmen einen Nettoverlust von $14.3 million im Quartal und $69.2 million seit Jahresbeginn, bedingt durch höhere Zinsaufwendungen, übernahmebedingte Abschreibungen sowie Restrukturierungs- und Wertminderungsaufwendungen. Die Bilanz weist deutliche Akquisitionseffekte aus: Goodwill $633.2 million, sonstige immaterielle Vermögenswerte $403.4 million und langfristige Verbindlichkeiten von $602.96 million, ausgeglichen durch $149.4 million an liquiden Mitteln.
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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, 2025
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
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| | | ||||||||||
(Address of Principal Executive Offices) (Zip Code) | |||||||||||
Registrant's telephone number, including area code: (646) 867-0149
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of July 31, 2025, Teads Holding Co. had 94,971,708 shares of common stock outstanding.
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TABLE OF CONTENTS
| Page | ||||||||
Part I - Financial Information | ||||||||
Item 1. | Financial Statements | 5 | ||||||
Condensed Consolidated Balance Sheets | 5 | |||||||
Condensed Consolidated Statements of Operations | 6 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 7 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | 8 | |||||||
Condensed Consolidated Statements of Cash Flows | 9 | |||||||
Notes to Condensed Consolidated Financial Statements | 11 | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 35 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 54 | ||||||
Item 4. | Controls and Procedures | 55 | ||||||
Part II - Other Information | ||||||||
Item 1. | Legal Proceedings | 56 | ||||||
Item 1A. | Risk Factors | 56 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 56 | ||||||
Item 5. | Other Information | 56 | ||||||
Item 6. | Exhibits | 57 | ||||||
Signatures | 58 | |||||||
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Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements may include, without limitation, statements generally relating to possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives, and statements relating to the acquisition (the “Acquisition”) by Outbrain Inc. of TEADS, a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg (“Legacy Teads”), following which we changed our corporate name to Teads Holding Co. (hereinafter, together with its subsidiaries, the “Company” or “Teads”). You can generally identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “guidance,” “outlook,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “foresee,” “potential” or “continue” or the negative of these terms or other similar expressions that concern our expectations, strategy, plans or intentions or are not statements of historical fact. We have based these forward-looking statements largely on our expectations and projections regarding future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors including, but not limited to:
•our ability to successfully integrate Legacy Teads or manage the combined business effectively;
•our ability to realize anticipated benefits and synergies of the Acquisition, including, among other things, operating efficiencies, revenue synergies and other cost savings;
•our due diligence investigation of Legacy Teads may have been inadequate and risks related to Legacy Teads’ business may materialize;
•unexpected costs, charges or expenses resulting from the Acquisition;
•our ability to raise additional financing in the future to fund our operations, which may not be available to us on favorable terms or at all;
•our ability to attract and retain customers, management and other key personnel;
•the volatility of the market price of the Common Stock, $.001 par value per share (the “Common Stock”);
•overall advertising demand and traffic generated by our media partners;
•factors that affect advertising demand and spending, such as the continuation or worsening of unfavorable economic or business conditions or downturns, instability or volatility in financial markets, tariffs and trade wars and other events or factors outside of our control, such as U.S. and global recession concerns, geopolitical concerns, including the ongoing war between Ukraine-Russia and conditions in Israel, Iran and the Middle East generally, supply chain issues, inflationary pressures, labor market volatility, bank closures or disruptions, the impact of challenging economic conditions, new or proposed legislation or other political and policy changes or uncertainties in the U.S., and other factors that have and may further impact advertisers’ ability to pay;
•our ability to continue to innovate, and adoption by our advertisers and media partners of our expanding solutions;
•the potential impact of artificial intelligence (“AI”) on our industry, our ability to adapt to advancements in AI within the context of the Open Internet and display advertising, and our need to invest in AI-based solutions;
•the success of our sales and marketing investments, which may require significant investments and may involve long sales cycles;
•our ability to grow our business and manage growth effectively;
•our ability to compete effectively against current and future competitors;
•the loss or decline of one or more of our large media partners, and our ability to expand our advertiser and media partner relationships;
•conditions in Israel, including the ongoing conflict between Israel and Hamas and any conflicts with other terrorist organizations or the conflict between Israel and Iran and any conflicts with other countries;
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•our ability to maintain our revenues or profitability despite quarterly fluctuations in our results, whether due to seasonality, large cyclical events, or other causes;
•the risk that our research and development efforts may not meet the demands of a rapidly evolving technology market;
•any failure of our recommendation engine to accurately predict attention or engagement, any deterioration in the quality of our recommendations or failure to present interesting content to users or other factors which may cause us to experience a decline in user engagement or loss of media partners;
•limits on our ability to collect, use and disclose data to deliver advertisements;
•our ability to extend our reach into evolving digital media platforms;
•our ability to maintain and scale our technology platform;
•our ability to meet demands on our infrastructure and resources due to future growth or otherwise;
•our failure or the failure of third parties to protect our sites, networks and systems against security breaches, or otherwise to protect the confidential information of us or our partners;
•outages or disruptions that impact us or our service providers, resulting from cyber incidents, or failures or loss of our infrastructure;
•significant fluctuations in currency exchange rates;
•political and regulatory risks in the various markets in which we operate;
•the challenges of compliance with differing and changing regulatory requirements, including with respect to privacy;
•the timing and execution of any cost-saving measures and the impact on our business or strategy; and
•the risks described in the section entitled “Risk Factors” and elsewhere in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2024 (the “2024 Form 10-K”).
Accordingly, you should not rely upon forward-looking statements as an indication of future performance. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or will occur, and actual results, events, or circumstances could differ materially from those projected in the forward-looking statements. The forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. We undertake no obligation and do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events or otherwise, except as required by law.
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Part I Financial Information
Item 1. Financial Statements
TEADS HOLDING CO.
Condensed Consolidated Balance Sheets
(In thousands, except for number of shares and par value)
| June 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS: | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments in marketable securities | |||||||||||
| Accounts receivable, net of allowances | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-current assets: | |||||||||||
| Property, equipment and capitalized software, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Deferred tax assets | |||||||||||
| Indemnification asset | |||||||||||
| Other assets | |||||||||||
| TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation and benefits | |||||||||||
| Deferred revenue | |||||||||||
| Short-term debt | |||||||||||
| Accrued and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities: | |||||||||||
| Long-term debt | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
| Deferred tax liabilities | |||||||||||
| Contingent tax liabilities | |||||||||||
| Other liabilities | |||||||||||
| TOTAL LIABILITIES | $ | $ | |||||||||
Commitments and Contingencies (Note 11) | |||||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
Common stock, par value of $ | |||||||||||
Preferred stock, par value of $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury stock, at cost − | ( | ( | |||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| TOTAL STOCKHOLDERS’ EQUITY | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | |||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TEADS HOLDING CO.
Condensed Consolidated Statements of Operations
(In thousands, except for share and per share data)
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Traffic acquisition costs | |||||||||||||||||||||||
| Other cost of revenue | |||||||||||||||||||||||
| Total cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Impairment charges | |||||||||||||||||||||||
| Restructuring charges | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
Gain on repurchase of long-term debt | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income and interest income, net | ( | ( | |||||||||||||||||||||
| Total other (expense) income, net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Benefit from income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net loss per common share: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TEADS HOLDING CO.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
Unrealized gain (loss) on available-for-sale investments in debt securities (net of taxes of $( | ( | ( | ( | ||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TEADS HOLDING CO.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except for number of shares)
(Unaudited)
| Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of Teads | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock units, net of shares withheld for taxes | — | — | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – March 31, 2025 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock units, net of shares withheld for taxes | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – June 30, 2025 | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2024 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock units, net of shares withheld for taxes | — | — | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased under the share repurchase program | — | — | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – March 31, 2024 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net of shares withheld for taxes | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased under the share repurchase program | — | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – June 30, 2024 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TEADS HOLDING CO.
Condensed Consolidated Statements of Cash Flows
(In thousands, Unaudited)
| Six Months Ended June 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||
Gain on repurchase of long-term debt | ( | |||||||||||||
| Depreciation and amortization of property and equipment | ||||||||||||||
| Amortization of capitalized software development costs | ||||||||||||||
| Amortization of intangible assets | ||||||||||||||
| Amortization of discount on marketable securities | ( | ( | ||||||||||||
| Stock-based compensation | ||||||||||||||
| Non-cash operating lease expense | ||||||||||||||
| Provision for credit losses | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
| Deferred income taxes | ( | ( | ||||||||||||
| Impairment of assets | ||||||||||||||
| Unrealized foreign currency transaction losses | ||||||||||||||
| Other | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Accounts payable and other current liabilities | ( | ( | ||||||||||||
| Operating lease liabilities | ( | ( | ||||||||||||
| Deferred revenue | ( | ( | ||||||||||||
| Other non-current assets and liabilities | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Acquisition of a business, net of cash acquired | ( | ( | ||||||||||||
| Purchases of property and equipment | ( | ( | ||||||||||||
| Capitalized software development costs | ( | ( | ||||||||||||
| Purchases of marketable securities | ( | ( | ||||||||||||
| Proceeds from sales and maturities of marketable securities | ||||||||||||||
| Other | ( | |||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Proceeds from the Bridge Facility | ||||||||||||||
Repayments of borrowings under the Bridge Facility | ( | |||||||||||||
| Proceeds from senior secured notes | ||||||||||||||
| Partial repayment of senior secured notes | ( | |||||||||||||
| Payment of deferred financing costs | ( | |||||||||||||
Payment of stock issuance costs | ( | |||||||||||||
| Treasury stock repurchases and share withholdings on vested awards | ( | ( | ||||||||||||
| Principal payments on finance lease obligations | ( | |||||||||||||
Proceeds from bank overdrafts, net | ||||||||||||||
| Net cash provided by (used in) financing activities | ( | |||||||||||||
| Effect of exchange rate changes | ( | |||||||||||||
Net increase in cash, cash equivalents and restricted cash | ||||||||||||||
Cash, cash equivalents and restricted cash — Beginning | ||||||||||||||
Cash, cash equivalents and restricted cash — Ending | $ | $ | ||||||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash, included in other assets | $ | $ | ||||||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||||||||
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OUTBRAIN INC.
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
| Cash paid for income taxes, net of refunds | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
| SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
Stock consideration issued for acquisition of a business | $ | $ | |||||||||
| Purchases of property and equipment included in accounts payable | $ | $ | |||||||||
| Operating lease right-of-use assets obtained in exchange for lease obligations | $ | $ | |||||||||
| Stock-based compensation capitalized for software development costs | $ | $ | |||||||||
| Unpaid deferred financing costs in accounts payable and accrued expenses | $ | $ | |||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization, Description of Business and Summary of Significant Accounting Policies
Organization and Description of Business
On June 6, 2025, Outbrain Inc. (“Outbrain”), operating under the new Teads brand following Outbrain’s acquisition (the “Acquisition”) of TEADS, a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg (“Legacy Teads”) in February 2025, completed its corporate name change from Outbrain Inc. to Teads Holding Co. (together with its subsidiaries, “Teads,” the “Company,” “we,” “our,” or “us”). Combining the offerings of Outbrain and Legacy Teads, the Company is a leading omnichannel advertising platform focused on driving outcomes across the Open Internet. The Company is headquartered in New York, New York with various wholly-owned subsidiaries, including in Europe, the Middle East and Asia. Teads Holding Co.’s Common Stock, par value $0.001 per share (“Common Stock”), began trading on The Nasdaq Stock Market LLC under the new “TEAD” ticker symbol effective June 10, 2025.
The Company generates revenue from advertisers purchasing media owner inventory through its platforms. Teads is the omnichannel outcomes platform for the Open Internet, driving full-funnel results for marketers across premium media. With a focus on meaningful business outcomes, the Company ensures value is driven with every media dollar by leveraging predictive AI technology to connect quality media, beautiful brand creative, and context-driven addressability and measurement. The Company’s platform provides advertisements on media owners’ online properties. The Company generates revenue from advertisers through consumer engagements with advertisements that it delivers across a variety of third-party media owners’ online properties, including through connected TV (“CTV”). Advertising campaigns are priced using various models, including cost per click (“CPC”), cost per thousand impressions (“CPM”) or other actions, such as a cost per view (“CPV”) based on a number of completed video views. Accordingly, revenues are recognized when an action associated with an advertisement occurs, whether that be an ad is clicked on, displayed or viewed by the end user. The Company pays traffic acquisition costs to its media owner partners on whose digital properties the advertisements are shown.
Basis of Presentation
The accompanying condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and are unaudited. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on March 7, 2025 ("2024 Form 10-K").
On February 3, 2025, Outbrain completed the previously announced Acquisition. As such, the accompanying condensed consolidated financial statements of the Company include the results of operations for Legacy Teads from February 3, 2025 through June 30, 2025. As a result of the Acquisition, the financial information presented as of and for the three and six months ended June 30, 2025 is not directly comparable to our financial information presented for the corresponding prior year periods.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and judgments are based on historical information and on various other assumptions that the Company believes are reasonable under the circumstances. Estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the allowance for credit losses, sales allowance, software development costs eligible for capitalization, valuation of deferred tax assets, the useful lives of property and equipment, the useful lives and fair value of intangible assets, valuation of goodwill, the fair value of stock-based awards, and the recognition and measurement of income tax uncertainties and other contingencies. Actual results could differ materially from these estimates.
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Reclassifications
Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation. These reclassifications primarily included the reclassification of publisher obligations of $57.4
Revenue Recognition
The Company recognizes revenues when it transfers control of promised services directly to its customers, in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services. The Company recognizes revenue pursuant to the five-step framework contained in ASC 606: (i) identify the contract with a client; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue as the Company satisfies the performance obligations.
The Company generates revenue primarily from advertisers (and/or through the media agencies that represent such advertisers) through user engagement with the ads placed on media partners’ web pages and mobile applications. The Company’s platform delivers ads to end-users that appear as links to articles and videos on media owners’ and CTV partners’ sites.
The Company’s customers include brands, performance marketers and other advertisers, which are collectively referred to as its advertisers, each of which contract for use of its services primarily through insertion orders or through self-service tools, allowing advertisers to establish budgets for their advertising campaigns. Advertising campaigns are primarily billed on a monthly basis. The Company’s payment terms generally range from 30 to 60 days.
Advertising campaigns are priced using various models, including CPC, CPM or other actions, such as a CPV based on a number of completed video views. Accordingly, revenues are recognized when an action associated with an advertisement occurs, whether that be an ad is clicked on, displayed or viewed by the end user.
Variable consideration, including allowances, discounts, refunds, credits, incentives, or other price concessions, is estimated and recorded at the time that related revenue is recognized. Advance payments from advertisers for future services represent contract liabilities and are recorded as deferred revenue in the Company’s consolidated balance sheets.
Contract Balances. There were no
Cost of Revenue
Traffic Acquisition Costs. Traffic acquisition costs consist of amounts the Company owes to media partners for the purchase of or use of inventory. The Company incurs costs with its media partners, which may be publishers or third-party intermediaries, in the period in which certain actions, such as click-throughs, impressions or views, occur. Such costs due to media partners are based on the media partners’ contractual revenue share, a CPM model or guaranteed rates of payment based on certain media partner conditions. In some circumstances, the Company incurs costs based on a guaranteed minimum payment, which may be based on either impressions, page views or a fixed amount if the partner reaches certain performance targets, in exchange for guaranteed placement on specified portions of the media owners’ online properties. Traffic acquisition costs also include amounts payable to media partners whose supply is purchased programmatically.
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In some instances, the Company may make upfront payments to media owners in connection with long-term contracts. The Company capitalizes these advance payments under these agreements if specific capitalization criteria have been met. The capitalization criteria includes the existence of future economic benefits to the Company, the existence of legally enforceable recoverability language (e.g., early termination clauses), management’s ability and intent to enforce the recoverability language and the ability to generate future earnings from the agreement in excess of amounts deferred. Capitalized amounts are amortized as traffic acquisition costs over the shorter of the period of contractual recoverability or the corresponding period of economic benefit. Amounts not yet paid are accrued systematically based on the Company’s estimate of user engagement.
Certain Risks and Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, restricted cash, investments in marketable securities, and accounts receivable. The Company’s cash and cash equivalents, restricted cash and investments in marketable securities are generally invested in high-credit quality financial instruments with both banks and financial institutions to reduce the amount of exposure to any single financial institution.
Segment Information
The Company has one
New Accounting Pronouncements
Under the JOBS Act, the Company meets the definition of an emerging growth company (“EGC”) and can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards would otherwise apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the Company is no longer an EGC or until the Company affirmatively and irrevocably opts out of the extended transition period. Based on the anticipated total gross revenue of the Company, the Company expects that it will cease to be an EGC as of December 31, 2025.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 is focused on increased visibility into specific income tax components, requiring disclosures of specific categories and a greater disaggregation of information by jurisdiction within the effective tax rate reconciliation and income taxes paid disclosures. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, or our Annual Report on Form 10-K for the year ended December 31, 2025, with early adoption permitted. The Company is in the process of evaluating the impact of ASU 2023-09 on its tax-related disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” (“ASU 2024-03”). ASU 2024-03 requires disclosures about certain costs and expenses, including but not limited to, purchases of inventory; employee compensation; depreciation; intangible asset amortization; and selling expenses. The ASU is required to be applied prospectively and is effective for annual reporting periods beginning after
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 15, 2026, and interim periods beginning after December 15, 2027. The Company is in the process of evaluating the impact of ASU 2024-03 on its audited consolidated financial statements.
See Note 1 to the Company’s audited consolidated financial statements for the year ended December 31, 2024 in the Company’s 2024 Form 10-K for a complete disclosure of the Company’s significant accounting policies.
2. Acquisition
On February 3, 2025, the Company completed the Acquisition, with consideration paid at the closing of approximately $0.9 billion, comprised of a cash payment of $625 million, subject to certain customary adjustments, and 43.75 million shares of Outbrain’s Common Stock, pursuant to Amendment No. 1 to the definitive share purchase agreement, dated August 1, 2024, by and between the Company, Altice Teads S.A. (“Altice Teads”), a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg and the sole shareholder of Teads, and Teads, as amended (the “SPA). The Company also appointed two additional new directors designated by Altice Teads to its Board of Directors, as required by the SPA. Following the closing, Altice Teads owned approximately 46.6 % of the Company’s issued and outstanding shares of Common Stock. The Acquisition combined the offerings of Outbrain and Legacy Teads into one of the largest Open Internet platforms, allowing the combined company to better serve enterprise brands and agencies, as well as mid-market and direct response advertisers across different media environments.
The following table summarizes the total purchase consideration as of the acquisition date:
| February 3, 2025 | |||||
| (In thousands) | |||||
Cash consideration paid on acquisition date(1) | $ | ||||
Fair value of stock consideration(2) | |||||
| Total consideration | $ | ||||
_____________________________
(1) The cash portion of consideration was funded by the Bridge Facility pursuant to the Credit Agreement, each as defined below, entered into on February 3, 2025. See Note 9 for additional information.
(2) Calculated based on the stock price of $6.01 per share prior to transaction close.
This Acquisition was accounted for as a business combination under Accounting Standards Codification 805, “Business Combinations,” using the acquisition method of accounting and Outbrain was determined to be the accounting acquirer. During the three and six months ended June 30, 2025, the Company recorded transaction costs (direct acquisition costs) of $1.1 million and $12.1 million, respectively, which were included in general and administrative expenses in the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2025. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values at acquisition date, which required management to use significant judgment and estimates, including valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, and identifying comparable companies. The Company engaged third-party valuation specialists to assist in determining the fair values of the acquired assets and liabilities.
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents the preliminary allocation of the purchase price to the identifiable assets and liabilities based on their estimated fair values as of the Acquisition date:
| Preliminary Purchase Price Allocation | Measurement Period Adjustments | Preliminary Purchase Price Allocation (As Adjusted) | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
| Accounts receivable, net | ( | ||||||||||||||||
| Prepaid expenses and other current assets | |||||||||||||||||
| Property and equipment | |||||||||||||||||
| Operating lease right of use assets | |||||||||||||||||
| Other intangible assets | |||||||||||||||||
| Indemnification assets | ( | ||||||||||||||||
| Other assets | |||||||||||||||||
| Total assets acquired | $ | $ | ( | $ | |||||||||||||
| Accounts payable | |||||||||||||||||
| Accrued compensation and benefits | |||||||||||||||||
| Accrued and other liabilities | ( | ||||||||||||||||
| Short-term borrowings | |||||||||||||||||
| Deferred tax liability | |||||||||||||||||
| Contingent tax liabilities | ( | ||||||||||||||||
| Operating lease liabilities, noncurrent | |||||||||||||||||
| Other long-term liabilities | |||||||||||||||||
| Total liabilities assumed | $ | $ | ( | $ | |||||||||||||
| Net assets acquired | ( | ||||||||||||||||
| Goodwill | |||||||||||||||||
| Total consideration | $ | $ | $ | ||||||||||||||
The above purchase price allocation of the fair values of the assets acquired and liabilities assumed is preliminary and is subject to change, as the Company’s estimates of consideration and other balances, such as intangibles, goodwill, and deferred income taxes are finalized during the measurement period, up to a year from the Acquisition date. Measurement period adjustments are based on information about facts and circumstances that existed at the Acquisition date that, if known, would have impacted the amounts recognized on that date.
The difference between the fair value of the consideration paid for the acquired entity and the estimated fair value of the net assets acquired is recorded as goodwill, and is primarily attributable to the future growth and monetization opportunities and expected synergies. Goodwill is not amortized but will be evaluated for impairment at least annually, or more frequently if there are indicators of impairment. The Company has some basis in goodwill for U.S. income tax purposes for certain acquired foreign entities, but no basis for U.S. income tax purposes for acquired U.S. entities and no basis for foreign income tax purposes for any entity.
The Company also recorded an indemnification asset and a corresponding liability of $25.4 million related to certain tax matters that existed prior to the Acquisition, for which Altice Teads has agreed to provide an indemnity (see Note 11 for further details). The indemnification asset and liability are included within indemnification asset and contingent tax liabilities in our condensed consolidated balance sheet as of June 30, 2025. Altice Teads’ indemnification obligation may be increased if other indemnified risks materialize and will remain in place until all covered matters are resolved.
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The identifiable intangible assets included within other intangible assets in the table above consist of the following:
| February 3, 2025 | |||||||||||
| Amount | Weighted-Average Amortization Period | ||||||||||
| (In thousands) | (In years) | ||||||||||
| Customer Relationships | $ | ||||||||||
| Publisher relationships | |||||||||||
| Technology intangibles | |||||||||||
| Tradenames | |||||||||||
| Total other intangibles | $ | ||||||||||
Pro forma financial information
The Company’s consolidated statements of operations include Teads’ results of operations from February 3, 2025 through June 30, 2025. For the three months ended June 30, 2025, the Legacy Teads business contributed revenue and net loss of $139.1 million and $14.5 million, respectively. For the period from February 3, 2025 to June 30, 2025, the Legacy Teads business contributed revenues and net loss of $219.4 million and $36.9 million, respectively. These amounts include the interest expense on the debt used to finance the Acquisition and the amortization of intangible assets recognized on Acquisition.
The following unaudited pro forma financial information for the periods presented are based on our historical consolidated financial statements, adjusted to reflect the Acquisition as if it occurred on January 1, 2024. The unaudited pro forma financial results are as follows:
| Six Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||
| June 30, 2025 | June 30, 2024 | June 30, 2024 | ||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||
3. Restructuring
2025 Restructuring Plan
On February 3, 2025, in connection with the completion of the Acquisition, the Company announced a restructuring plan (the “Plan”), as part of its efforts to streamline operations and reduce duplication of roles. The Plan involves a reduction in workforce of approximately 15 %. The Company estimates that it will incur approximately $14 million to $20 million in charges in connection with the Plan, of which approximately $10 million to $12 million is expected to be incurred in 2025. These charges primarily consist of severance and other related payments.
The actions associated with the employee restructuring under the Plan were initiated in February 2025, were implemented in large part in the second quarter of 2025 and are expected to be completed by the first quarter of 2026. The estimates of the charges and expenditures that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan. The Company recorded the following pre-tax charges within restructuring charges in its condensed consolidated statement of operations for the periods presented:
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||||||||
| (In thousands) | ||||||||||||||
| Severance and related costs | $ | $ | ||||||||||||
| Legal costs | ||||||||||||||
Total restructuring charges | $ | (1) | $ | (2) | ||||||||||
_________________________
(1) Includes $0.9 million related to sales and marketing and $0.8 million related to general and administrative expenses.
(2) Includes $0.8 million related to research and development, $5.9 million related to sales and marketing and $2.3 million related to general and administrative expenses.
The employee severance and related costs for the six months ended June 30, 2025 are related to the termination of approximately 194 employees.
The following table summarizes accrued severance and related liabilities recorded within accrued compensation and benefits and accrued and other current liabilities in the Company’s condensed consolidated balance sheets for the six months ended June 30, 2025.
| Severance and related costs | Legal costs | Total | |||||||||||||||
| (In thousands) | |||||||||||||||||
Restructuring charges | $ | $ | $ | ||||||||||||||
| Cash payments | ( | ( | ( | ||||||||||||||
| Foreign currency translation | |||||||||||||||||
Balance as of June 30, 2025 | $ | $ | $ | ||||||||||||||
4. Investments in Marketable Securities
All of the Company’s debt securities are classified as available-for-sale. The Company’s cash equivalents and investments as of June 30, 2025 and December 31, 2024 consisted of the following:
| June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Fair Value Level | Amortized cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Cash Equivalents | Short-term investments | ||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 1 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasuries | 2 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Government bonds | 2 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | 2 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Corporate bonds | 2 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Fair Value Level | Amortized cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Cash Equivalents | Short-term investments | ||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | 1 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasuries | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Government bonds | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | 2 | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Corporate bonds | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
__________________________
(1) The amortized cost of debt securities excludes accrued interest of $0.1 million and $0.7 million, respectively, recorded within prepaid expenses and other current assets in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.
During the six months ended June 30, 2025, proceeds from the sales of securities were $22.5 million, which included gross realized gains of approximately $0.1 million, which were released from other comprehensive loss and recorded within interest income and other income, net in the Company’s condensed consolidated statement of operations for the period. The gross realized gains and losses were determined using the specific identification method.
As of June 30, 2025, 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 and December 31, 2024, the Company’s investments have been in an immaterial gross unrealized loss position for less than 12 months. As such, no
5. Goodwill and Intangible Assets
The changes in the carrying value of the Company’s goodwill balance was as follows:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Goodwill, opening balance | $ | $ | |||||||||
| Acquisition of Teads | |||||||||||
| Foreign currency translation | |||||||||||
| Goodwill, closing balance | $ | $ | |||||||||
The Company has not no
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The gross carrying amount and accumulated amortization of the Company’s intangible assets are as follows:
| June 30, 2025 | |||||||||||||||||||||||
| Weighted Average Amortization Period | Gross Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Developed technology | $ | $ | ( | $ | |||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Publisher relationships | ( | ||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| Total intangible assets, net | $ | $ | ( | $ | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Weighted Average Amortization Period | Gross Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Developed technology | $ | $ | ( | $ | |||||||||||||||||||
| Customer relationships | ( | ||||||||||||||||||||||
| Publisher relationships | ( | ||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||
| Content provider relationships | ( | ||||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| Total intangible assets, net | $ | $ | ( | $ | |||||||||||||||||||
During the six months ended June 30, 2025, in connection with the post-merger integration of the newly acquired Teads business, the Company made a decision to discontinue its video product offering associated with its prior acquisition of vi. Accordingly, the Company fully wrote off the associated intangible assets, as detailed below:
| Six Months Ended June 30, 2025 | ||||||||
| (In thousands) | ||||||||
| Developed technology | $ | |||||||
| Customer relationships | ||||||||
| Publisher relationships | ||||||||
| Trade names | ||||||||
| Content provider relationships | ||||||||
| Impairment charge | $ | |||||||
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TEADS HOLDING CO.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of June 30, 2025, estimated amortization related to the Company’s identifiable Acquisition-related intangible assets in future periods was as follows:
| Amount | ||||||||
| (In thousands) | ||||||||
| Remainder of 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
6. Balance Sheet Components
Accounts Receivable and Allowance for Credit Losses
Accounts receivable, net of allowance for credit losses consists of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Accounts receivable | $ | $ | |||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net of allowance for credit losses | $ | $ | |||||||||
The allowance for credit losses consists of the following activity:
| Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
Allowance for credit losses, beginning balance | $ | $ | |||||||||
Provision for credit losses | |||||||||||
Write-offs, net of recoveries | ( | ( | |||||||||
Allowance for credit losses, ending balance | $ | $ | |||||||||
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consists of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Prepaid taxes | $ | $ | |||||||||
| Prepaid traffic acquisition costs | |||||||||||
| Prepaid software licenses | |||||||||||
| Other prepaid expenses and other current assets | |||||||||||
| Total prepaid expenses and other current assets | $ | $ | |||||||||
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Property, Equipment and Capitalized Software, Net
Property, equipment and capitalized software, net consists of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
Capitalized software development costs(1) | $ | $ | |||||||||
| Computer and equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Software | |||||||||||
| Furniture and fixtures | |||||||||||
| Property, equipment, and capitalized software, gross | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Total property, equipment and capitalized software, net | $ | $ | |||||||||
_____________________
(1) During the six months ended June 30, 2025, in connection with the post-merger integration following the Acquisition, the Company decided to discontinue its vi video product offering and recorded a charge of $0.4 million to fully impair the remaining unamortized capitalized software development costs associated with this technology.
Accrued and Other Current Liabilities
Accrued and other current liabilities consists of the following:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Accrued agency commissions | $ | $ | |||||||||
| Interest payable | |||||||||||
| Accrued tax liabilities | |||||||||||
| Accrued professional fees | |||||||||||
| Operating lease obligations, current | |||||||||||
| Other | |||||||||||
| Total accrued and other current liabilities | $ | $ | |||||||||
The Company’s accounts payable includes $223.9 million and $193.4 million of traffic acquisition costs as of June 30, 2025 and December 31, 2024, respectively.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company’s financial instruments include restricted time deposits, severance pay fund deposits and foreign currency forward contracts. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the Company uses the fair value hierarchy described below to distinguish between observable and unobservable inputs:
Level I — Valuations based on quoted prices in active markets for identical assets and liabilities at the measurement date;
Level II — Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be principally corroborated by observable market data for substantially the full term of the related assets or liabilities; and
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables set forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:
| June 30, 2025 | |||||||||||||||||||||||
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Cash equivalents and investments (1) | $ | $ | $ | $ | |||||||||||||||||||
Restricted time deposit (2) | |||||||||||||||||||||||
Severance pay fund deposits (2) | |||||||||||||||||||||||
Foreign currency forward contract (3) | |||||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Foreign currency forward contract (4) | |||||||||||||||||||||||
Total financial liabilities | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Cash equivalents and investments (1) | $ | $ | $ | $ | |||||||||||||||||||
Restricted time deposit (2) | |||||||||||||||||||||||
Severance pay fund deposits (2) | |||||||||||||||||||||||
Foreign currency forward contract (3) | |||||||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | |||||||||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Foreign currency forward contract (4) | |||||||||||||||||||||||
Total financial liabilities | $ | $ | $ | $ | |||||||||||||||||||
_____________________
(1)Money market securities are valued using Level I of the fair value hierarchy, while the fair values of U.S. Treasuries, government bonds, commercial paper, and corporate bonds are considered Level II and are obtained from independent pricing services, which may use various methods, including quoted prices for identical or similar securities in active and inactive markets. See Note 4 for additional detail relating to the Company’s fixed income securities by balance sheet location.
(2)Recorded within other assets.
(3)Recorded within prepaid expenses and other current assets.
(4)Recorded within accrued and other current liabilities.
The Company enters into foreign currency forward exchange contracts to manage the effects of fluctuations in foreign currency exchange rates on its net cash flows from non-U.S. dollar denominated operations. Pursuant to the new master netting agreement entered into in February 2025, the Company may set off the amounts payable in the same currency. However, the Company records the fair values of the assets and liabilities relating to its undesignated foreign currency forward contracts on a gross basis in its condensed consolidated balance sheets and no amounts have been offset. The Company was required to post $0.5 million of cash collateral as of June 30, 2025.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
months ended June 30, 2025, the Company recognized net gains of $1.9 million and $1.1 million, respectively, within interest income and other income, net in its condensed consolidated statements of operations, related to mark-to-market adjustments on its undesignated foreign currency forward contacts. The Company recorded corresponding net losses of $0.6 million and $1.5 million, respectively, for the three and six months ended June 30, 2024.
Due to their short term nature, the fair value of the Company’s borrowings outstanding under its Overdraft Facility (as defined below in Note 9), generally approximates their carrying value. The Notes (as defined below in Note 9) are recorded within long-term debt on the Company’s condensed consolidated balance sheets at their carrying value, which may differ from their fair value. The fair value of the Notes is estimated using external pricing data, including any available market prices and based on other debt instruments with similar characteristics. The following table summarizes the carrying value and the estimated fair value of the Notes, based on Level II measurements of the fair value hierarchy:
| June 30, 2025 | |||||||||||
| Carrying Value | Estimated Fair Value | ||||||||||
| (In thousands) | |||||||||||
| $ | $ | ||||||||||
See Note 9 for additional information relating to the Notes.
Non-Financial Assets
The Company’s non-financial assets include goodwill, definite-lived intangibles assets, operating lease right-of-use assets and property and equipment, which are recorded at their carrying value. The Company’s goodwill is assessed for impairment at least annually, while other long-lived assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated. The Company determines the fair values of these assets using Level III measurements, based on the Company’s best estimates of the amount and timing of future discounted cash flows, historical experience, market conditions, business plans and performance expectations.
8. Leases
The Company leases certain office facilities, managed data center facilities and vehicles under non-cancelable operating lease arrangements for its U.S. and international locations that expire on various dates through 2032.
Upon completing the Acquisition, the Company classified the acquired leases as operating leases under U.S. GAAP and performed a measurement of the lease liabilities as of the Acquisition date. The right-of-use asset was measured at the same amount, adjusted to reflect any favorable and unfavorable market adjustments. The Company elected to apply the short-term lease measurement and recognition exemption to acquired leases that had a remaining lease term of 12 months or less as of the Acquisition date, as well as its existing election not to separate the lease and nonlease components for its real estate leases.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes assets and liabilities related to the Company’s operating leases:
| Condensed Consolidated Balance Sheets Location | June 30, 2025 | December 31, 2024 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Operating lease assets | Operating lease right-of-use assets, net | $ | $ | ||||||||||||||
| Current liabilities | Accrued and other current liabilities | $ | $ | ||||||||||||||
| Non-current liabilities | Operating lease liabilities, non-current | $ | $ | ||||||||||||||
The following table presents the components of the Company’s total lease expense:
| Condensed Consolidated Statements | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
| of Operations Location | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
Operating lease cost: | |||||||||||||||||||||||||||||
| Fixed lease costs | Cost of revenue and operating expenses | $ | $ | $ | $ | ||||||||||||||||||||||||
| Variable lease costs | Operating expenses | ||||||||||||||||||||||||||||
| Short-term lease costs | Operating expenses | ||||||||||||||||||||||||||||
Lease impairment cost (1) | Impairment charges | ||||||||||||||||||||||||||||
| Sublease income | Operating expenses | ( | ( | ||||||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||||||||
| Depreciation | Cost of revenue | ||||||||||||||||||||||||||||
| Interest | Interest expense | ||||||||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||||||||
___________________________________________
(1)During the six months ended June 30, 2025, the Company exited one of its office locations, resulting in a non-cash charge of $0.1 million to impair the associated right-of-use asset, recorded within impairment charges.
As of June 30, 2025, the maturities of the Company’s lease liabilities under operating leases were as follows:
| Year | Operating Leases | |||||||
| (In thousands) | ||||||||
| Remainder of 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total minimum payments required | $ | |||||||
| Less: imputed interest | ||||||||
| Total present value of lease liabilities | $ | |||||||
The following table summarizes weighted-average lease terms and discount rates for the Company’s operating leases:
| June 30, 2025 | December 31, 2024 | |||||||||||||
| Weighted-average remaining lease term (in years) | ||||||||||||||
| Weighted-average discount rate | ||||||||||||||
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
9. Debt Obligations
The Company had no borrowings outstanding as of December 31, 2024. The following table presents the Company’s debt obligations as of June 30, 2025:
| June 30, 2025 | |||||
| (In thousands) | |||||
| 10% Senior Secured Notes | $ | ||||
| Debt discount | ( | ||||
| Unamortized debt issuance costs | ( | ||||
| Total long-term debt | |||||
Short-term debt (€ | |||||
| Total debt | $ | ||||
10% Senior Secured Notes due 2030
On February 11, 2025, the Company’s wholly-owned subsidiary, OT Midco (“Midco”), completed a private offering (the “Offering”) of $637.5 million in aggregate principal amount of 10.000 % senior secured notes due 2030 (the “Notes”) at an issue price of 98.087 % of the principal amount thereof in a transaction exempt from registration under the Securities Act of 1933, as amended. The Notes bear interest from February 11, 2025 at an annual rate of 10.000 %, payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2025. The Notes will mature on February 15, 2030. The associated discount of $12.2 million and debt issuance costs of $15.0 million were recorded as a reduction in long-term debt and are being amortized using the effective interest method over the five-year term of the Notes. During the three and six months ended June 30, 2025, approximately $16.9 million and $26.1 million of interest, respectively, including the amortization of the related discount and deferred financing costs, were recognized within interest expense in the Company’s condensed consolidated statement of operations.
On June 17, 2025, the Company completed the repurchase of $9.3 million aggregate principal amount of the Notes for $8.0 million in cash, including accrued interest, representing a discount of approximately 17 % to the principal amount of the repurchased Notes. As a result, the Company recorded a pre-tax gain of $1.2 million within other income in the Company’s consolidated statements of operations for the three and six months ended June 30, 2025.
The Notes are guaranteed, jointly and severally on a secured, unsubordinated basis by the Company and each existing and future wholly-owned subsidiary of the Company that becomes a borrower, issuer or guarantor under the 2025 Revolving Facility (as defined below). The Notes are also secured by first-priority lien over (i) all or substantially all assets of Midco, the Company and Teads Australia PTY Ltd., a subsidiary of the Company in Australia, and (ii) certain assets of some of the other direct and indirect subsidiaries of the Company in England and Wales, Canada, Germany, Mexico, Singapore, Switzerland, Luxembourg, Japan, Italy, France and Israel.
The proceeds from the Offering were used, together with cash on hand, to repay in full and cancel the indebtedness incurred under the Bridge Facility, including accrued and unpaid interest thereon, that was used to finance and pay costs related to the Acquisition, as well as pay fees and expenses incurred in connection with the Offering and the Bridge Facility (as defined below) refinancing.
Midco may redeem the Notes in whole or in part at any time prior to February 15, 2027 at a redemption price equal to 100.000 % of the principal amount thereof plus a ‘‘make-whole’’ premium set forth in the Indenture dated February 11, 2025 (the “Indenture”), plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Midco may redeem the Notes in whole or in part, on or after February 15, 2027, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, prior to February 15, 2027, Midco may redeem up to 40 % of the Notes with the proceeds of certain equity offerings, at a redemption price equal to 110.000 % of the principal amount redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. During each of the two successive twelve-month periods commencing on the closing date and ending on February 15, 2027, Midco will have the option to redeem up to 10 % of the aggregate principal amount of Notes at a redemption price equal to 103.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Upon certain change of control events, the holders of the Notes may require Midco to repurchase all or a portion of the Notes at a purchase price of 101.000 % of their principal amount plus accrued and unpaid interest, if any, to, but excluding the date of purchase. In addition, subject to certain conditions and limitations, Midco must, within 30 days after Outbrain’s delivery of its annual report, with respect to Outbrain’s fiscal years ending December 31, 2025 and 2026, apply an amount equal to the Excess Cash Flow Amount (as defined in the Indenture) to make an offer to purchase outstanding Notes at a price equal to 100.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to but excluding the date of purchase.
The terms of the Indenture, among other things, limit the ability of the Company and its restricted subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock, (ii) pay dividends or make other restricted payments; (iii) make certain investments, (iv) transfer and sell assets, (v) create or incur certain liens, (vi) engage in certain transactions with affiliates and (vii) consolidate or merge or transfer all or substantially all of the Company’s assets. These covenants are subject to a number of important exceptions and qualifications. The Indenture provides for customary events of default which include, among other things, (subject in certain cases to customary grace and cure periods) defaults based on (i) the failure to make payments under the Indenture when due, (ii) breach of covenants, (iii) acceleration of other material indebtedness, (iv) bankruptcy events and (v) material judgments. Generally, if an event of default occurs, the trustee or the holders of at least 30 % in principal amount of the then outstanding Notes may declare all of the Notes to be due and payable.
Short -Term Debt
Upon the close of the Acquisition, the Company’s new French subsidiary has an overdraft short-term credit facility with HSBC (“Overdraft Facility”), which provides Teads France with a revolving line of credit of up to €15 million at a 3-month Euro Interbank Offered Rate (“EURIBOR”), plus a margin of 1.8 %, payable quarterly in arrears. This facility may be used to fund general working capital needs of Teads France. Borrowings under this facility are subject to a commission fee of $0.035 % per annum, and a facility fee of 1.25 % per annum. There are no financial covenants relating to the Overdraft Facility. As of June 30, 2025, approximately $17.6 million (€15 million) in borrowings were outstanding under this credit facility, which were recorded within short-term debt in the Company’s condensed consolidated balance sheets.
Credit Facilities
Credit Agreement
On February 3, 2025 (the “Credit Facilities Closing Date”), the Company and Midco entered into the Credit Agreement, which established the Credit Facilities, including a super senior secured revolving credit facility in an aggregate principal amount of $100.0 million (the “2025 Revolving Facility”) and the a senior secured bridge term loan credit facility in an aggregate principal amount of $625.0 million (the “Bridge Facility”), with Goldman Sachs Bank USA, as sole administrative agent and swingline lender, U.S. Bank Trust Company, National Association, as the collateral agent, and the lenders, issuing banks and arrangers party thereto from time to time. The Bridge Facility had a maturity date of February 2, 2026, which could be extended under some circumstances.
On the Credit Facilities Closing Date, Midco borrowed $625 4.75 % per annum or (b) an alternate base rate plus an interest rate margin of 3.75 % per annum, in each case subject to an increase by 0.50 % on each three-month anniversary of the Credit Facilities Closing Date. In addition, for so long as any Bridge Loans remained outstanding, the Bridge Facility accrued a duration fee equal to 0.25 % of the aggregate principal amount of outstanding Bridge Loans.
On February 11, 2025, the Bridge Facility, including accrued and unpaid interest thereon, was fully repaid and cancelled using proceeds from the private offering of the Notes and cash on hand. During the six months ended June 30, 2025, approximately $13.3 million of the associated costs and fees and interest were recognized within interest expense in the Company’s condensed consolidated statement of operations.
Loans under the 2025 Revolving Facility (the “Revolving Loans”) bear interest, at the Company’s option, at (x) Term SOFR, subject to a “zero” floor, plus an interest rate margin of 4.25 % per annum or (y) an alternate base rate plus an interest rate margin of 3.25 % per annum. In addition, the 2025 Revolving Facility accrues an unused commitment fee at a rate ranging from 0.375 % to 0.50 %, depending on the Company’s senior secured net leverage ratio, as set forth in the Credit Agreement.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The 2025 Revolving Facility may be used for working capital and other general corporate purposes of the Company and its subsidiaries. Up to $10.0 million of the 2025 Revolving Facility is available in the form of letters of credit and up to $20.0 million of the 2025 Revolving Facility is available in the form of swingline loans. The Company may seek incremental commitments under the 2025 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount equal to the greater of $62.5 million and 25 % of the Company’s EBITDA (as defined in the Credit Agreement). The Revolving Facility lenders will not be under any obligation to provide any such incremental commitments, and any such increase in commitments will be subject to certain customary conditions precedent.
Additional wholly-owned subsidiaries of the Company organized in certain jurisdictions may become borrowers under the 2025 Revolving Facility from time to time. The Credit Facilities are senior secured obligations of the Company, Midco and the Credit Facilities Guarantors (as defined below), provided, that, with respect to the application of proceeds from enforcement or distressed disposals of collateral, the 2025 Revolving Facility will rank super senior to other senior secured indebtedness of the Company, Midco and the Credit Facilities Guarantors (as defined below), including the Bridge Facility.
The Revolving Loans are not subject to scheduled amortization payments. The Company may voluntarily prepay loans under the Credit Facilities and reduce commitments under the 2025 Revolving Facility at any time without premium or penalty (subject to breakage costs).
The Company’s obligations as borrower under the 2025 Revolving Facility are initially (a) guaranteed, jointly and severally, fully and unconditionally, on a senior secured basis, by the Company, Midco and each of the Company’s wholly-owned material subsidiaries organized in the United States and certain other jurisdictions, as specified in the Credit Agreement (such subsidiaries, the “Credit Facilities Guarantors”), and (b) secured by a lien on substantially all assets of the Company, Midco and the Credit Facilities Guarantors (subject to customary exceptions, and subject to other prior ranking liens permitted by the Credit Agreement). The obligations of the Company, Midco and any additional borrower under the Credit Facilities will continue to be guaranteed by, and secured by a lien on substantially all assets of, subsidiaries of the Company that, together with the borrowers, in the aggregate, directly account for 80 % of the consolidated EBITDA and total assets of the Company and its subsidiaries, subject to certain limitations set forth in the Credit Agreement.
The Credit Facilities include a number of affirmative and negative covenants, that among other things, will restrict, subject to certain exceptions, the Company’s ability and the ability of the Company’s restricted subsidiaries to: incur or guarantee additional indebtedness; pay dividends on, redeem or repurchase our capital stock; make certain other restricted payments and investments; create or incur certain liens; impose restrictions on the ability of subsidiaries to pay dividends or other payments to the Company; transfer or sell certain assets; merge or consolidate with other entities; and enter into certain transactions with affiliates.
The Credit Agreement includes a customary springing financial covenant with respect to the 2025 Revolving Facility that will require the Company and its restricted subsidiaries to comply with a maximum senior secured net leverage ratio from and after the fiscal quarter ending September 30, 2025, in the event that utilization under the 2025 Revolving Facility exceeds 40 %.
The Credit Agreement contains customary events of default, including, among other things, payment default, cross default, judgment default and certain provisions related to bankruptcy events, subject to cure and grace periods in certain cases. If an event of default occurs under the Credit Agreement, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings immediately due and payable.
As of June 30, 2025, no event of default (as defined in the Credit Agreement) has occurred under the Credit Agreement and its available borrowing capacity was $100.0 million, based on the defined borrowing formula. Other assets in the Company’s condensed consolidated balance sheets as of June 30, 2025 include deferred financing costs of $3.6 million, which are being amortized over the term of the 2025 Revolving Facility. During the three and six months ended June 30, 2025, approximately $0.2 million and $0.3 million of deferred financing costs were recognized within interest expense in the Company’s consolidated condensed statement of operations.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Termination of the 2021 Facility
On February 3, 2025, in connection with the Company’s entry into the Credit Agreement described above, the Company terminated the Second Amended and Restated Loan and Security Agreement, dated as of November 2, 2021, by and among the Company, Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, Zemanta Holding USA Inc. and Zemanta Inc. Accordingly, the Company recognized the remaining $0.2 million of unamortized deferred financing costs within interest expense in its condensed consolidated statements of operations for the six months ended June 30, 2025.
10. Income Taxes
Due to the ongoing post-merger integration efforts and inability to reliably estimate the annual effective tax rate, for the three and six months ended June 30, 2025, the Company's interim benefit from income taxes is computed using the actual year-to-date results rather than an estimated annual effective tax rate. For the three and six months ended June 30, 2024, the Company's interim benefit from income taxes is determined based on its annual estimated effective tax rate, applied to the actual year-to-date income, and adjusted for the tax effects of any discrete items.
The Company’s effective tax rates for the three and six months ended June 30, 2025 were 28.7 % and 21.5 %, respectively. The Company’s effective tax rates for the three and six months ended June 30, 2024 were 36.3 % and 24.4 %, respectively. The Company’s effective tax rate for the three months ended June 30, 2025 was higher than the U.S. federal statutory tax rate of 21%, primarily due to increased concentration of profitability in lower-tax jurisdictions, partially offset by an increase in uncertain tax positions, coupled with the pre-tax loss during the three months ended June 30, 2025. The Company’s effective tax rates for the three and six months ended June 30, 2024 were higher than the United States federal statutory tax rate of 21%, primarily due to the tax impact related to the profitability of non-U.S. jurisdictions and certain non-deductible stock-based compensation expenses, partially offset by a deduction related to foreign-derived intangible income and the impact of uncertain tax positions.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the U.S., with certain provisions of OBBBA effective in 2025 and others becoming effective in 2026 and beyond. The OBBBA amends U.S. tax law including provisions related to bonus depreciation, interest deduction limitations, research and development, and foreign derived intangible income. The Company is currently in the process of evaluating the impact of the OBBBA on its condensed consolidated financial statements.
11. Commitments and Contingencies
Legal Proceedings and Other Matters
From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened litigation that, in its opinion, would have a material adverse effect on its business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.
In connection with the Acquisition, the Company identified and recorded an $18.1 million provision related to certain income tax items under ASC 740, “Income Taxes,” and an $8.3 million provision related to certain non-income tax items accounted for under ASC 450, “Contingencies,” within contingent tax liabilities in its condensed consolidated balance sheet as of June 30, 2025. The Company has also recorded an indemnification asset in the full amount of the provision of $26.4 million, as the Company is indemnified against certain tax liabilities under the SPA. Altice Teads’ indemnification obligation may be increased if other indemnified risks materialize and will remain in place until all covered matters are resolved.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
12. Stockholders’ Equity
Equity Acquisition Consideration
On February 3, 2025, as part of the equity portion of the Acquisition consideration, the Company issued 30,320,161 shares of new Common Stock and reissued all 13,429,839 shares of its Treasury Stock at $6.01 per share. A $6.3 million gain on issuance of Treasury Stock, representing the excess of the fair value at the time of issuance of $80.7 million over the original cost of $74.4 million, was recorded to additional paid-in capital. In addition, the Company incurred direct stock issuance costs of approximately $1.6 million, which have been recorded as a reduction to additional paid-in capital.
Share Repurchases
On December 14, 2022, our board of directors (“Board”) approved a share repurchase program, authorizing the Company to repurchase up to $30 million of its Common Stock, with no requirement to purchase any minimum number of shares. The manner, timing, and actual number of shares repurchased under the program will depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through privately negotiated transactions or open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The repurchase program may be commenced, suspended, or terminated at any time by the Company at its discretion without prior notice. There were no 464,054 and 1,410,001 shares, respectively, with a fair value of $2.0 million and $5.9 million, respectively, under the repurchase program.
As of June 30, 2025, the remaining availability under the Company’s $30 million share repurchase program was $6.6 million. Commission costs associated with share repurchases and any excise taxes accrued as a result of the Inflation Reduction Act of 2022 do not reduce the remaining authorized amount under the repurchase programs.
In addition, the Company may periodically withhold shares to satisfy employee tax withholding obligations arising in connection with the vesting of restricted stock units and exercise of options and warrants in accordance with the terms of the Company’s equity incentive plans and the underlying award agreements.
During the three and six months ended June 30, 2025, the Company withheld 70,108 and 143,108 shares, respectively, with a fair value of $0.2 million and $0.6 million, respectively, to satisfy employee tax withholding obligations. During the three and six months ended June 30, 2024, the Company withheld 47,088 and 84,580 shares, respectively, with a fair value of $0.2 million and $0.4 million, respectively.
Accumulated Other Comprehensive Income (Loss)
The following table details the changes in accumulated other compressive loss, net of tax:
| Foreign Currency Translation Loss | Unrealized Gain (Loss) on Investments in Marketable Securities(1) | Total Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Balance–December 31, 2024 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||
Realized gains from sales of investments in marketable securities reclassified to earnings | ( | ( | |||||||||||||||
| Other comprehensive income (loss), net of tax | ( | ||||||||||||||||
| Balance–June 30, 2025 | $ | $ | ( | $ | |||||||||||||
(1) The tax effects related to realized and unrealized gains on investments in marketable securities was immaterial for the three and six months ended June 30, 2025. There were no amounts reclassified from accumulated other comprehensive loss to earnings in the three and six months ended June 30, 2024.
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
13. Stock-based Compensation
Equity Incentive Plans
In July 2021, the Board and the Company’s stockholders approved the 2021 Long-Term Incentive Plan (the “2021 Plan”), which may be used to grant, among other award types, stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”). The number of shares of Common Stock reserved for future issuance under the 2021 Plan will be increased pursuant to provisions for annual automatic evergreen increases. The Company’s previous awards issued under its 2007 Omnibus Securities and Incentive Plan, as amended and restated on January 21, 2009 and June 4, 2025 (the “2007 Plan”), remain subject to the 2007 Plan. As of June 30, 2025, 417,865 and 52,458 shares were available for grant under the 2021 Plan and the 2007 Plan, respectively. The Company generally issues new shares for stock option exercises and vesting of RSUs and PSUs.
The Company recognizes stock-based compensation expense for stock-based awards based on the estimated fair value of the awards on the date of grant. The Company accounts for forfeitures as they occur. The following table summarizes stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | |||||||||||||||||||
As of June 30, 2025, the Company’s remaining unrecognized stock-based compensation expense was approximately $29.2 million for unvested RSUs and $4.3 million for unvested PSUs.
The following table summarizes stock option, RSU and PSU activity for the six months ended June 30, 2025:
Stock Options | Service-Based RSUs | PSUs | |||||||||||||||
Outstanding—December 31, 2024 | |||||||||||||||||
| Granted | |||||||||||||||||
| Exercised/Vested | ( | ( | |||||||||||||||
Forfeited | ( | ( | |||||||||||||||
Outstanding—June 30, 2025 | |||||||||||||||||
Service-based RSUs
The fair value of service-based RSUs granted to the Company’s eligible employees and non-employee directors are based on the fair value of the Common Stock on the date of grant. Compensation expense is recognized on a straight-line basis over the service period. During the six months ended June 30, 2025, the Company granted 6,796,762 service-based RSUs with a weighted average grant date fair value of $2.59 per share.
Performance Stock Units
The Company grants PSU awards to its senior executives and other key employees, some of which are subject to vesting conditions based on the Company’s financial or operational metrics and others of which are subject to market-based vesting conditions based on achievement of absolute and relative total shareholder return ("TSR") metrics.
PSUs - Financial & Operational Vesting Conditions
The fair value of PSUs with financial and operational performance conditions is based on the fair value of the Common Stock on the date of grant. PSUs vest subject to employees’ continuing employment and the Company’s achievement of specified performance goals over the specified performance period (typically three years ). Expense related to these PSUs is recognized
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
ratably during the performance period, based on the probability of attaining the specified performance targets. The potential number of shares that may be earned is determined based on achievement of the performance targets up to a maximum of 150 % of the number of PSUs granted. During the six months ended June 30, 2025, the Company granted 721,424 of these PSUs to its executives with a weighted average fair value of $2.57 per share.
PSUs - Market-Based Vesting Conditions
The Company also grants market-based PSUs, which are based on TSR performance, to its senior executives and other key employees. The absolute TSR awards are subject to achievement of specified stock price hurdles of the Common Stock for 20 days out of a 30 -trading day window during the 3-year performance period, as well as continued employment through the quarterly service dates over the 3-year period. The number of shares that are eligible to vest range from 0 % to 100 % of the number of PSUs granted based on achievement of the specified stock price hurdles, with half of our CEO’s 2024 PSU award subject to vesting based on two additional above-target stock price hurdles.
In June 2025, the Company also granted relative TSR awards with vesting dependent on the Company’s TSR relative to the market performance of the designated peer group. The performance achievement for the relative TSR awards is measured based on the actual performance against the relative TSR goals measured over the period beginning with the date of grant through the end of each calendar year in the 3-year performance period, subject to employee’s continuing employment through the annual settlement dates of the vested awards. The number of shares that are eligible to vest range from 0 % to 150 % of the relative TSR awards granted, depending on the Company’s relative TSR ranking based on pre-established goals, subject to interpolation between applicable performance levels.
The following assumptions are used to estimate the fair value of the Company’s market-based PSUs:
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Expected volatility | % | % | |||||||||
| Risk-free rate | % | % | |||||||||
| Expected dividend yield | |||||||||||
During the six months ended June 30, 2025, the Company granted 551,424 relative TSR awards to its senior executives and other key employees with a weighted average grant date fair value of $2.88 per share. In addition, in connection with the Acquisition, the Company granted a total of 730,000 absolute TSR awards to two of its key employees with a weighted average grant date fair value of $0.25 per share.
Stock-Based Awards Granted Outside of Equity Incentive Plans
Warrants
The Company issued equity-classified warrants to purchase shares of Common Stock to certain third-party advisors, consultants, and financial institutions, which expire in September 2026. As of each of June 30, 2025 and December 31, 2024, 48,529 7.34
Employee Stock Purchase Plan
As of June 30, 2025, approximately 3,350,446 shares of Common Stock have been reserved for issuance under the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”), which is subject to annual automatic evergreen increases. There have been no shares purchased under the ESPP as it is not yet active.
See Note 13 to the Company’s 2024 Form 10-K for additional information relating to the Company’s share-based compensation awards.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
14. Defined Benefit Plans
In connection with the Acquisition, the Company acquired certain defined benefit plans in two international locations. Pension benefits under these plans are based on the employees' age, years of service, and compensation levels during their employment period.
As of June 30, 2025, the Company had net liabilities of $6.1 million recorded within other non-current liabilities in its condensed consolidated balance sheet, which included an aggregate fair value of plan assets of $6.7 million and an aggregate projected benefit obligation of $12.8 million as of June 30, 2025. The plan assets, financed by the employer and employee contributions, are invested in cash, bonds, equities, real estate, and alternative investments.
The following table summarizes the components of the Company’s net periodic benefit cost related to the Company’s defined benefit pension plans:
| Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | ||||||||||
| (In thousands) | |||||||||||
| Service cost | $ | $ | |||||||||
| Interest cost | |||||||||||
| Expected return on plan assets | ( | ( | |||||||||
| Total net periodic benefit cost | $ | $ | |||||||||
The service cost component of net periodic benefit cost is recorded within operating expenses in the condensed consolidated statements of income while the other components are recorded in other income, net.
There were no cash contributions required to be made to the Company’s defined benefit plans during the period from February 2, 2025 through June 30, 2025.
15. Net Loss per Common Share
The following table presents the computation of the Company’s basic and diluted loss per share:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss attributed to common stockholders - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares - basic and diluted | |||||||||||||||||||||||
Net loss per share: | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The Company has PSUs, which are only included in diluted net income (loss) per share to the extent the underlying performance conditions have been satisfied at the end of the reporting period, or would be considered satisfied if the end of the reporting period was the end of the related performance period and the result would be dilutive.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following weighted-average shares have been excluded from the calculation of diluted net loss per share for each period presented because they are anti-dilutive:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Convertible debt | |||||||||||||||||||||||
| Options to purchase common stock | |||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Performance-based stock units | |||||||||||||||||||||||
Total shares excluded from diluted loss per share | |||||||||||||||||||||||
16. Segment and Geographic Information
The Company has one
The Company generates its revenue by operating a two-sided technology platform that drives business results by connecting media owners and advertisers with engaged audiences to drive business outcomes. The Company’s platform enables thousands of digital media owners to provide tailored experiences to their audiences, delivering audience engagement and monetization. For advertisers, the Company’s platform optimizes audience attention and engagement to deliver greater return on investment at each step of the marketing funnel. This segment constitutes 100% of the Company’s consolidated revenue and profit and is the primary focus of the Company’s management’s decision making regarding product development, marketing strategies and capital allocation.
The table below summarizes the results of operations that are provided to the CODM. As the Company has one reporting segment, net income is used as the measure of profit or loss to assess segment performance and allocate resources. The Company’s asset information is not regularly provided to the Company’s CODM.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Revenue from external customers | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Traffic acquisition costs | |||||||||||||||||||||||
| Personnel-related costs | |||||||||||||||||||||||
| Merger and acquisition costs | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Marketing and advertising expenses | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
| Impairment charges | |||||||||||||||||||||||
Other segment expenses (1) | |||||||||||||||||||||||
Gain on repurchase of long-term debt | ( | ( | |||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
Other expense (income) and interest income, net | ( | ( | |||||||||||||||||||||
| Benefit from income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Segment and consolidated net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
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OUTBRAIN INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents total revenue based on where the Company’s advertisers are physically located:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
The Americas (1) | $ | $ | $ | $ | |||||||||||||||||||
| EMEA (Europe, the Middle East and Africa) | |||||||||||||||||||||||
| Asia | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
______________________________________________________________
(1) Includes U.S. revenues of $90.1 million and $169.3 million for the three and six months ended June 30, 2025, respectively, and $59.9 million and $119.3 million for the three and six months ended June 30, 2024, respectively.
The Company’s long-lived assets by geographic location, which are comprised of property, equipment and capitalized software, net and operating lease right-of-use assets, net are summarized below:
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| The Americas | $ | $ | |||||||||
| EMEA (Europe, the Middle East and Africa) | |||||||||||
| Asia | |||||||||||
| Total long-lived assets, net | $ | $ | |||||||||
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 7, 2025 (“2024 Form 10-K”). In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, beliefs, and expectations, and involve risks and uncertainties that could cause actual results, events, or circumstances to differ materially from those projected in the forward-looking statements. Factors that could cause or contribute to these differences include those set forth in Part I, Item 1A of our 2024 Form 10-K, which is incorporated by reference in this Report, as such factors may be revised or supplemented in subsequent filings with the SEC, as well as those discussed below and elsewhere in this Report, including under the caption “Note About Forward-Looking Statements.”
The purpose of this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide the readers of our financial statements with narrative information from our management, which is necessary to understand our business, financial condition, and results of operations. The MD&A should be read in conjunction with our condensed consolidated financial statements and notes thereto. In addition to the condensed consolidated financial statements prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP financial measures throughout this discussion to provide investors with supplemental metrics used by our management for financial and operational decision making. These measures are supplemental and are not an alternative to our financial statements prepared in accordance with U.S. GAAP. See “Non-GAAP Reconciliations” in this Report for the definitions and limitations of these measures, and reconciliations to the most comparable U.S. GAAP financial measures.
Business Overview
Outbrain Inc. (“Outbrain”) was incorporated in August 2006 in Delaware. On February 3, 2025, Outbrain completed the acquisition (“Acquisition”) of TEADS, a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg (“Legacy Teads”). The consideration paid at the closing of the Acquisition was approximately $0.9 billion. Upon closing, we began operating under the new Teads brand and on June 6, 2025, we completed our corporate name change from Outbrain Inc. to Teads Holding Co. (together with its subsidiaries, “Teads,” the “Company,” “we,” “our,” or “us”). Teads Holding Co.’s common stock, par value $0.001 per share (the “Common Stock”), trades on The Nasdaq Stock Market LLC under the new “TEAD” ticker symbol effective June 10, 2025. The Company is headquartered in New York, New York with various wholly-owned subsidiaries, including in Europe, the Middle East and Asia.
As a result of the Acquisition, our results of operations include the results of the acquired business from February 3, 2025 through June 30, 2025. Accordingly, the financial information presented as of and for the three and six months ended June 30, 2025 is not directly comparable to our financial information presented for the corresponding prior year periods.
Teads is the omnichannel outcomes platform for the Open Internet, driving full-funnel results for marketers across premium media. With a focus on meaningful business outcomes for branding and performance objectives, we drive value with every media dollar by leveraging predictive AI technology to connect quality media, beautiful brand creative, and context-driven addressability and measurement.
We operate a two-sided marketplace, which together, creates a scaled end-to-end advertising solution. We have direct relationships with both (i) global advertisers including Fortune 500 brands, agency holding companies, and small-to-medium sized businesses, and (ii) media owners spanning premium publishers to connected TV (“CTV”) platforms. We believe that CTV is an example of our investment in and expansion into high-growth channels. CTV positions our platform to capture increasing advertiser spend as it continues its shift from linear television into on-demand television. We generate revenue from advertisers purchasing media owner inventory through our platforms.
Our platform is designed to enable advertisers to not only reach their audiences across the entire Open Internet — from web, to CTV, to app environments — but to drive outcomes from those audiences at each step of the marketing funnel. These outcomes include completed views, post-click engagement, brand uplift, sign-ups, sales, and more. Our solution is designed to directly address the largest challenges in the advertising industry today — including inefficient supply chains and fragmentation, quality and scale of inventory, and the ability to correlate advertising investment to concrete business outcomes. For advertisers and their agencies, we offer a single access point to scaled audiences across premium, curated media environments, with technology solutions that we believe drive outcomes from branding to performance. For media owners, we provide both sustainable, year-round advertising revenue and technology solutions designed to more deeply engage and retain audiences.
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By combining the respective sets of exclusive media inventory of Outbrain and Legacy Teads, from publishers to CTV, we believe that we provide a more connected consumer experience across the Open Internet.
The following is a summary of our performance for the periods presented, which incorporate the results of operations for Legacy Teads from February 3, 2025 through June 30, 2025:
•Our revenue was $343.1 million in the three months ended June 30, 2025, compared to $214.1 million in the three months ended June 30, 2024, including net favorable foreign currency effects of approximately $5.4 million. Revenue for the six months ended June 30, 2025 was $629.5 million, compared to $431.1 million for the six months ended June 30, 2024, including net favorable foreign currency effects of $2.9 million.
•Our gross profit was $120.3 million and our gross margin was 35.1% for the three months ended June 30, 2025, compared to gross profit of $45.6 million and gross margin of 21.3% for the comparable period in 2024. Our gross profit was $202.9 million and our gross margin was 32.2% for the six months ended June 30, 2025, compared to gross profit of $87.2 million and gross margin of 20.2% for the six months ended June 30, 2024.
•Our Ex-TAC Gross Profit(1) was $144.2 million in the three months ended June 30, 2025, compared to $56.0 million in the three months ended June 30, 2024. Our Ex-TAC Gross Profit(1) was $247.3 million for the six months ended June 30, 2025, compared to $108.1 million for the six months ended June 30, 2024.
•Our net loss was $14.3 million, or (11.9)% of gross profit, in the three months ended June 30, 2025, compared to net loss of $2.2 million, or (4.8)% of gross profit, for the comparable period in 2024. For the six months ended June 30, 2025, our net loss was $69.2 million, or (34.1)% of gross profit, compared to net loss of $7.2 million, or (8.3)% of gross profit, for the six months ended June 30, 2024.
•Our Adjusted EBITDA(1) was $27.0 million for the three months ended June 30, 2025, compared to $7.4 million for the three months ended June 30, 2024. Adjusted EBITDA(1) was 18.7% and 13.2% of Ex-TAC Gross Profit(1) in the three months ended June 30, 2025 and 2024, respectively. Our Adjusted EBITDA(1) was $37.7 million for the six months ended June 30, 2025, compared to $8.8 million for the six months ended June 30, 2024. Adjusted EBITDA(1) was 15.2% and 8.1% of Ex-TAC Gross Profit(1) for the six months ended June 30, 2025 and 2024, respectively.
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(1)Ex-TAC Gross Profit, Adjusted EBITDA, and Adjusted EBITDA as a percentage of Ex-TAC Gross Profit are non-GAAP financial measures. See “Non-GAAP Reconciliations” in this Report for definitions and limitations of these measures, and reconciliations to the comparable GAAP financial measures.
Recent Developments
Acquisition of Teads
On August 1, 2024, we entered into a definitive share purchase agreement (the “Share Purchase Agreement”) with Altice Teads S.A. (the “Seller” or “Altice Teads”), a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg and the sole shareholder of Legacy Teads, and Legacy Teads. Pursuant to the Share Purchase Agreement, we agreed to acquire all of the issued and outstanding share capital of Legacy Teads on the terms and conditions set forth in the Share Purchase Agreement. On February 3, 2025, the parties entered into Amendment No. 1 to the Share Purchase Agreement, which revised certain terms of the Share Purchase Agreement, including the consideration paid at the closing of the Acquisition.
On February 3, 2025, we completed the Acquisition for an aggregate closing day consideration of approximately $0.9 billion, including $625 million in cash, subject to certain customary adjustments, and 43.75 million shares of Common Stock. Following the closing, the Seller owns approximately 46.6% of the Company’s issued and outstanding shares of Common Stock (based on the amount of issued and outstanding shares of Common Stock as of December 31, 2024). We believe that the Acquisition created one of the largest Open Internet advertising platforms, which is differentiated by our ability to drive outcomes for awareness, consideration, and performance objectives, across CTV, web and mobile applications.
During the three and six months ended June 30, 2025, we recorded Acquisition-related costs of approximately $5.4 million and $21.9 million, respectively. See Note 2 to the accompanying condensed consolidated financial statements for additional information on the Acquisition.
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2025 Restructuring Plan
On February 3, 2025, in connection with the completion of the Acquisition, we announced a restructuring plan (the “Plan”), involving a reduction in workforce, as part of our efforts to streamline operations and reduce duplication of roles. We estimate that we will incur approximately $14 million to $20 million in charges in connection with the Plan, of which approximately $10 million to $12 million is expected to be incurred in 2025. These charges will consist primarily of severance and related costs.
The actions associated with the employee restructuring under the Plan were initiated in February 2025 and were implemented in large part in the second quarter of 2025, and are expected to be completed by the first quarter of 2026. During the three and six months ended June 30, 2025, the Company recorded associated non-cash charges of approximately $1.7 million and $9.0 million (see Note 3 to the accompanying condensed consolidated financial statements for additional information).
The estimates of the charges and expenditures that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan.
Credit Agreements
In connection with the entry into the Share Purchase Agreement on August 1, 2024, the Company entered into a debt commitment letter, dated August 1, 2024, with Goldman Sachs Bank USA, Jefferies Finance LLC and Mizuho Bank, LTD, pursuant to which these parties committed to provide (i) a $100 million senior secured revolving credit facility and (ii) a senior secured bridge facility in an aggregate principal amount of up to $750 million.
Subsequently, on February 3, 2025 (the “Credit Facilities Closing Date” or “Acquisition Closing Date”), in connection with the completion of the Acquisition, Outbrain and our wholly-owned subsidiary, OT Midco Inc. (“Midco”), entered into a credit agreement (the “Credit Agreement”) among the Company, Midco, the additional borrowers party thereto from time to time, Goldman Sachs Bank USA, as sole administrative agent and swingline lender, U.S. Bank Trust Company, National Association, as the collateral agent, and the lenders, issuing banks and arrangers party thereto from time to time. The Credit Agreement provided for (a) a super senior secured revolving credit facility in an aggregate principal amount of $100.0 million (the “2025 Revolving Facility”) and (b) a senior secured bridge term loan credit facility in an aggregate principal amount of $625.0 million (the “Bridge Facility” and, together with the Revolving Facility, the “Credit Facilities”). See the “Liquidity and Capital Resources” section below and Note 9 to the accompanying condensed consolidated financial statements for additional information regarding the Credit Facilities. On the Credit Facilities Closing Date, Midco borrowed $625 million in aggregate principal amount under the Bridge Facility (the “Bridge Loans”). The proceeds of the Bridge Loans were used to finance the consideration for the Acquisition and to pay related transaction fees, costs and expenses.
Further, on the Credit Facilities Closing Date, in connection with the entry into the Credit Agreement described above, the Company terminated the Second Amended and Restated Loan and Security Agreement, dated as of November 2, 2021, by and among the Company, Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, Zemanta Holding USA Inc. and Zemanta Inc.
Senior Secured Notes
On February 11, 2025, Midco completed a private offering (the “Offering”) of $637.5 million in aggregate principal amount of 10.000% senior secured notes due 2030 (the “Notes”) at an issue price of 98.087% of the principal amount thereof in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). See the “Liquidity and Capital Resources” section below and Note 9 to the accompanying condensed consolidated financial statements for additional information regarding the Notes.
The proceeds from the Offering were used, together with cash on hand, to repay in full and cancel the indebtedness incurred under the Bridge Facility, including accrued and unpaid interest thereon, that was used to finance and pay costs related to the Acquisition, as well as pay fees and expenses incurred in connection with the Offering and the Bridge Facility refinancing.
On June 17, 2025, the Company completed the repurchase of $9.3 million aggregate principal amount of the Notes for $8.0 million in cash, including accrued interest, representing a discount of approximately 17% to the principal amount of the repurchased Notes.
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Impairment of vi
In March 2025, in connection with the post-merger integration of the newly acquired Teads business, we made a decision to discontinue the video product offering associated with our prior acquisition of vi. Accordingly, during the six months ended June 30, 2025, we recorded impairment charges totaling $15.5 million to fully write off the associated intangible assets and capitalized software, as further described below and in Note 5 to the accompanying condensed consolidated financial statements.
Conditions in Israel
Many of our employees, including certain members of our management team and board of directors (“Board”), operate from our offices in Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region directly affect our business and operations. Following the October 7th attacks by Hamas terrorists on Israel's southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups. Although certain ceasefire agreements have been reached with Hamas and Lebanon (with respect to Hezbollah), these agreements failed to be upheld and military activity and hostilities continue to exist at varying levels of intensity, and the situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries.
In June 2025, a new round of direct hostilities broke out between Israel and Iran, involving significant missile and drone strikes exchanged between the two countries. This escalation and other regional events have heightened regional instability and increased security risks across Israel. These events have resulted in significant travel restrictions, facility closures and shelter-in-place orders, including remote work measures, in various locations, and may further impact critical infrastructure, supply chains, and the broader Israeli economy.
The draft of Israeli military reservists, as well as the evacuation of Israeli citizens from areas near conflict zones have adversely affected our employees impacted by such actions. In addition, future government-imposed restrictions and precautions in response to such conflicts may negatively impact our employees, management and directors by interrupting their ability to effectively perform their roles and responsibilities. In addition, further hostilities involving Israel, possible damage to facilities and infrastructure, increased cyber attacks, the interruption or curtailment of trade between Israel and its trading partners, and/or the willingness to do business with companies with operations in Israel, as well as macroeconomic indications of deterioration of Israel’s economic standing as reflected in the downgrading in Israel’s credit rating by rating agencies that took place in parallel to these events, could adversely affect our business, financial condition and results of operations and could make it more difficult for us to raise capital. The intensity and duration of Israel’s current wars against Hamas, Hezbollah, and other terror organizations and Iran and other countries are difficult to predict and we are continuing to monitor the situation and assessing its potential impact on our business.
We cannot attribute the impact of the current trends in advertising demand to any particular factor, including the conditions in Israel, and cannot predict the impact if the war continues or escalates further. See Item 1A “Risk Factors” included in our 2024 Form 10-K for more information regarding certain risks associated with the conditions in Israel.
Macroeconomic Environment
General worldwide economic conditions have recently experienced significant instability, as well as volatility and disruption in the financial markets, resulting from factors including geopolitical tensions, including the effects of the wars between Russia-Ukraine, Israel-Hamas, and Israel-Iran and the expansion of such conflicts, tariffs and trade wars, new and proposed legislation in the U.S., general economic uncertainty, inflation, increased interest rates, recessionary concerns, bankruptcies, currency exchange rate fluctuations, global supply chain disruptions, and labor market volatility. The global economy is also experiencing heightened uncertainty in part due to market reactions to changes in tariff policies, which have the potential to further exacerbate inflationary pressures, with the duration of any such impact remaining uncertain. These conditions have negatively impacted our advertisers and, as a result, our business and could, if they continue or worsen further, adversely impact us in the future, including if our advertisers were to reduce or further reduce their advertising spending as a result of any of these factors. We continue to monitor our operations, and the operations of those in our ecosystem (including media partners, advertisers, and agencies), but these conditions make it difficult for us, our media partners, advertisers, and agencies to accurately forecast and plan future business activities and they could cause a further reduction or delay in overall advertising demand and spending or impact our advertisers’ ability to pay, any of which would negatively impact our business, financial condition, and results of operations.
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Factors Affecting Our Business
Advertiser Retention and Growth
Our engine serves the ad experiences that are predicted to deliver high attention or engagement, rather than prioritizing simply based on price of the ads. We believe this approach leads to better return on advertiser spend (“ROAS”) for advertisers, whether they are focused on driving a performance outcome, or a branding outcome. Our growth is partially driven by retaining and expanding the amount of spend by advertisers on our platform, as well as by acquiring new advertisers. Through our recent acquisition of Teads, we have expanded our total addressable market to now include top of the funnel marketing, while also attracting more diverse, premium demand. We view our full-funnel offering of both branding and performance capabilities as an opportunity to increase our share of wallet from advertisers and agencies. In addition, our joint business partnerships, or JBPs, represent a significant overall portion of our revenue and are strategic for driving advertiser retention and growth.
We continually invest in enhancements to our platform that allow advertisers to drive concrete business outcomes and ROAS. In particular, we are expanding our usage of artificial intelligence (“AI”) to automate manual tasks in campaign set up and optimization, and to enhance advertiser creative and landing page performance. We also support advertisers with developing creative ads across formats, as a value added service to our advertisers.
Prices paid by advertisers on our platform fluctuate period to period for a variety of reasons, including supply and demand balance, macroeconomic conditions, and seasonality. In order to grow our revenue and Ex-TAC Gross Profit and maximize value for our advertisers and media partners, our focus as a business is on driving business outcomes and ROAS for advertisers, not on optimizing for price.
For the six months ended June 30, 2025, tens of thousands unique advertisers were active on our owned and operated platforms, in addition to the thousands of advertisers who access the platform through programmatic partnerships.
User Engagement with Relevant Media and Advertising Content
Driving attention and engagement is the key pillar of our platform that drives value for consumers, media partners, and advertisers. Our AI prediction engine manages this dynamic, matching consumers with editorial and advertiser experiences that will deliver attention and engagement across the Open Internet. We believe that the user experience has a profound impact on long-term user behavior patterns and thus “compounds” over time, improving our long-term monetization prospects. This principle guides our behavior and, as a result, we strive to compound consumer attention and engagement, continually enhancing value for both advertisers and media owners.
Growth in attention and engagement is driven by several factors, including enhancements to our AI prediction engine, growth in the breadth and depth of our data assets, the size and quality of our content and advertising index, user engagement, new media partners, expansion on existing media partners and expansion to new media environments and formats. As we grow attention and engagement, we are able to collect more data and continually improve our prediction engine, which drives better results for our advertiser and media owner partners. This growth “flywheel” can be measured by growth of the consumer data points we drive, such as click-through-rate (“CTR”). CTR improvements increase the number of clicks on our platform. We believe that we have a significant opportunity to further grow consumer engagement, and thus our business, as today CTR for ads on the Outbrain platform is less than 1% of ads served.
Retention and Growth of Relationships with Media Partners
We rely on our relationships with our media partners for our advertising inventory and our corresponding ability to drive advertising revenue. To further strengthen these relationships, we continuously invest in our technology and product functionality to drive user engagement and monetization by taking steps designed to (i) improve our algorithms, referred to as our AI prediction engine; (ii) attract and procure relevant demand; (iii) expand the adoption of our enhanced products by media partners; and (iv) expand our demand capabilities to new formats.
Our relationships with media partners are typically long-term, exclusive, and strategic in nature. Our top 20 media partners leveraged our platform for an average of 7 years (based on 2024 revenue), despite their typical contract length being two to four years.
Our growth depends on media partners’ ability to drive traffic to their sites and generate page views. The proliferation of social media properties, streaming services and other platforms, as well as the adoption of AI have negatively impacted and may continue to negatively impact our media partners’ growth.
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Expansion Into New Environments, New Experiences and New Ad Formats
The available mediums and formats for consumers to engage with media has greatly expanded over the last several years. As this evolution in media consumption and consumer behavior continues, we are focused on utilizing our AI prediction technology to bring curated, relevant consumer experiences to these new devices, experiences and formats.
Fundamentally, we plan to continue to make our platform available for media partners on all types of devices and platforms and evolve our business to apply our technology to the most popular methods of media consumption, which now include unique video, high-impact display, and other new media experiences, such as Moments, our vertical video offering launched in 2024, powered by Outbrain technology.
Examples of environments in which content consumption is expected to grow include pre-installed applications on Smartphones, Smartphone content feeds, gaming applications, push notifications, and CTV. Through the acquisition of Teads, we have created an omnichannel outcomes platform, enabling advertisers to not only reach their audiences across the entire Open Internet — from web, to CTV, to app environments — but to drive outcomes from those audiences at each step of the marketing funnel.
The development and deployment of new ad formats allow us to better serve consumers, media partners and, ultimately, advertisers who seek to target and engage consumers at scale; we believe this continues to open and grow new types of advertiser demand, while ensuring relevance as the environments in which we operate diversify. As an example, we are rolling out our Connected Ads solutions, a new offering designed to provide a more immersive brand experience by delivering complementary ad placements on a single publisher page. We believe these initiatives are critical to our long-term growth and our ability to deliver differentiated value.
Investment in Our Technology and Infrastructure
Innovation is a core tenet of our Company and our industry. We plan to continue our investments in our people and our technology in order to retain and enhance our competitive position. For example, improvements to our AI prediction engine or use of additional data signals, help us deliver more relevant ads, driving higher user engagement, thereby improving ROAS for advertisers and increasing monetization for our media partners.
We strongly believe in the transformative power of AI in shaping the future of sustainable media, and we are powered by our deep expertise in using AI technology for years to empower both media owners and advertisers in their businesses. We leverage AI in a manner designed to enable media owners to increase their revenues and connect with audiences on their own platforms within the Open Internet. We use machine learning to predict consumer interest and propensity to convert ads to sales. Our technology has developed into a robust AI machine learning system and is largely homegrown by our Research and Development team. One of the strongest long-term levers in our business is the continuous improvement of our algorithms and the data sets our algorithms learn from. Our direct integrations across our media partners’ properties provide us with a large volume of proprietary first-party data, including context, user interest and behavioral signals. The more data points we have, the better our advertisers’ ROAS, and yield potential can be.
Our dynamic placement optimization and ad serving technology, powered by our Smartlogic product, dynamically adjusts both the arrangement and the formats of content delivered to a user, depending on the user’s preferences and a media partner’s key performance indicators, designed to provide a tailored and engaging feed experience. We continue to invest in media partner and advertiser focused tools, technology, and products as well as privacy-centric solutions.
Industry Dynamics
Our business depends on the overall demand for digital advertising, on the continuous success of our current and prospective media partners, and on general market conditions. Digital advertising is a rapidly growing industry, with growth that has outpaced the growth of the broader advertising industry. Content consumption continues to shift online, requiring media owners to adapt in order to successfully attract, engage and monetize their consumers. As audiences are increasingly engaged across digital media platforms, and as more purchase data is created, collected, integrated and analyzed digitally, advertisers are increasingly able to leverage sophisticated measurement and attribution solutions in order to optimize their advertising spend across the marketing funnel. As a result, advertisers are increasingly shifting spend away from legacy media offerings towards data-based solutions, driven by performance-centric metrics. We believe that our strength in delivering engagement and clear outcomes for advertisers, built on our proprietary AI prediction engine, aligns well with the ongoing market shift towards increased accountability and expectations of ROAS from digital advertising spend.
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AI is revolutionizing content creation, distribution, and personalization; automating tasks like video editing, image recognition, and language translation. AI-powered systems are also improving content delivery, helping media platforms suggest relevant movies, shows, articles, and advertisements to consumers. This is especially important at a time when advertisers increasingly anticipate measurable results from their digital advertising investments. Our experience in this space enables us to more nimbly capitalize on the opportunities for media owners and advertisers to leverage AI and automation to engage consumers and optimize their business goals.
At the same time, the proliferation of generative AI tools, particularly their integration into major search engines and web browsers, is causing a shift in how users discover and consume content online. These tools can provide users with direct answers and AI-generated summaries, which has reduced their need to click through to original publisher websites. This trend of bypassing the traditional user journey to a publisher’s site could lead to a significant decline in direct user traffic across the Open Internet. A reduction in traffic to our media partners directly decreases the inventory of advertising impressions available for us to monetize, which has affected, and could in the future have a significant effect on, our revenue and results of operations.
Regulators across most developed markets are increasingly focused on enacting and enforcing user privacy rules as well as exerting tighter oversight on the major “walled garden” platforms. Industry participants have recently been, and likely will continue to be, impacted by changes implemented by platform leaders, such as Apple’s change to its Identifier for Advertisers policy and Google’s evolving roadmap pertaining to the use of third-party cookies within its Chrome web browser. See Item 1A, “Risk Factors'' in our 2024 Form 10-K for additional information regarding changing industry dynamics with respect to industry participants and the regulatory environment.
Seasonality
The global advertising industry experiences seasonal trends that affect most participants in the digital advertising ecosystem. Our revenue generally fluctuates from quarter to quarter as a result of a variety of factors, including seasonality, as many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, as well as the timing of advertising budget cycles. Historically, the fourth quarter of the year has reflected the highest levels of advertiser spending, and the first quarter generally has reflected the lowest level of advertiser spending.
In addition, expenditures by advertisers tend to be cyclical and discretionary in nature, reflecting changes in brand advertising strategy, budgeting constraints, and buying patterns, and a variety of other factors, many of which are outside of our control. The quarterly rate of increase in our traffic acquisition costs is generally commensurate with the quarterly rate of increase in our revenue. However, traffic acquisition costs have, at times, grown at a faster or slower rate than revenue, primarily due to the mix of the revenue generated or contracted terms with media partners. We generally expect these seasonal trends to continue, though historical seasonality may not be predictive of future results given the potential for changes in advertising buying patterns and macroeconomic conditions. These trends will affect our operating results and we expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.
Definitions of Financial and Performance Measures
Revenue
We generate revenue from advertisers through ads that we deliver across a variety of media partner properties. We charge advertisers based on certain actions, such as the number of clicks or impressions of their ads, or other actions, such as the number of completed video views. We recognize revenue when an ad is clicked on or displayed to the end user.
The amount of revenue that we generate depends on the level of demand from advertisers on our media partners’ properties. We generate higher revenue at times of high demand, which is also impacted by seasonal factors. Due to the measurable performance that our advertisers achieve with us, a portion of our advertisers increase their level of spend with us over time as long as their ROAS objectives are met.
We continue to expand and introduce new platform features that are adopted by our clients, expand our omnichannel capabilities, extend our reach to more CTV and other inventory and add additional clients whose businesses may have different underlying business models.
Our agreements with advertisers provide them with considerable flexibility to modify their overall budget, price (cost-per-click or cost-per-impression), and the ads they wish to deliver on our platform.
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Traffic Acquisition Costs
We define traffic acquisition costs (“TAC”) as amounts owed to media partners for the purchase of inventory. We incur costs with our media partners, which may be publishers or third-party intermediaries, in the period in which certain actions, such as click-throughs, impressions or views occur. Such costs due to media partners are based on the media partners’ contractual revenue share, a CPM model or guaranteed rates of payment based on certain media partner conditions. In some circumstances, we incur costs based on a guaranteed minimum payment, which may be based on either impressions, page views or a fixed amount if the partner reaches certain performance targets, in exchange for guaranteed placement on specified portions of the media owners’ online properties. As such, traffic acquisition costs may not correlate with fluctuations in revenue, as our costs may remain fixed even with a decrease in revenue. Traffic acquisition costs also include amounts payable to media partners whose supply is purchased programmatically.
Other Cost of Revenue
Other cost of revenue consists of costs related to the management of our data centers, hosting fees, data connectivity costs, research and insight costs, and depreciation and amortization. Other cost of revenue also includes the amortization of capitalized software that is developed or obtained for internal use associated with our revenue-generating technologies.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. The largest component of our operating expenses is personnel costs. Personnel costs consist of wages, benefits, bonuses, stock-based compensation and, with respect to sales and marketing expenses, sales commissions.
Research and Development. Research and development expenses are related to the development and enhancement of our platform and consist primarily of personnel and the related overhead costs, amortization of capitalized software for non-revenue generating infrastructure and facilities costs.
Sales and Marketing. Sales and marketing expenses consist primarily of personnel and the related overhead costs for personnel engaged in marketing, advertising, client services, and promotional activities. These expenses also include advertising and promotional spend on media, conferences, and other events to market our services, and facilities costs.
General and Administrative. General and administrative expenses consist primarily of personnel and the related overhead costs, professional fees, facilities costs, insurance, and certain taxes other than income taxes. General and administrative personnel costs include, among others, our executive, finance, human resources, information technology and legal functions. Our professional service fees consist primarily of accounting, audit, tax, legal, information technology and other consulting costs, including costs relating to the Acquisition, as well as our compliance with Sarbanes-Oxley Act requirements.
Impairment Charges. Impairment charges primarily consist of impairments of long-lived assets and capitalized software associated with the discontinuance of the video product offering associated with vi during the first quarter of 2025, as well as impairments of right-of-use assets for exited office locations, both in connection with the post-Acquisition integration of Teads.
Restructuring Charges. Restructuring charges consist primarily of severance and other costs in connection with our announced Plan to streamline our operations and reduce duplicative workforce upon completion of the Acquisition.
Other (Expense) Income , Net
Other (expense) income, net is comprised of gain on repurchase of long-term debt, interest expense, and other (expense) income and interest income, net.
Gain on Repurchase of Long-Term Debt. On June 17, 2025, the Company completed the repurchase of $9.3 million aggregate principal amount of the Notes for approximately $8.0 million in cash, including accrued interest, at a discount of approximately 17% to the principal amount and recorded a pre-tax gain of approximately $1.2 million.
Interest Expense. Interest expense consists of interest and fees on the Bridge Facility drawn and repaid during the first quarter of 2025, interest on our Notes, the Overdraft Facility (as defined below) assumed in the Acquisition, our revolving credit facilities, and our previously outstanding convertible notes. Interest expense may increase if we incur any borrowings under our 2025 Revolving Facility or if we enter into new debt facilities or finance lease arrangements.
Other (Expense) Income and Interest Income, net. Other (expense) income and interest income, net primarily consists of interest earned on our cash, cash equivalents and investments in marketable securities, discount amortization on our investments
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in marketable securities, and foreign currency exchange gains and losses. Foreign currency exchange gains and losses, both realized and unrealized, relate to transactions and monetary asset and liability balances denominated in currencies other than the functional currencies, including mark-to-market adjustments on undesignated foreign exchange forward contracts. Foreign currency gains and losses may continue to fluctuate in the future due to changes in foreign currency exchange rates.
Benefit for Income Taxes
Benefit for income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions, as well as deferred income taxes and changes in valuation allowance, reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Realization of our deferred tax assets depends on the generation of future taxable income. In considering the need for a valuation allowance, we consider our historical and future projected taxable income, as well as other objectively verifiable evidence, including our realization of tax attributes, assessment of tax credits and utilization of net operating loss carryforwards.
Results of Operations
We have one operating segment, which is also our reportable segment. The following table sets forth our results of operations for the periods presented, which incorporates the results of Legacy Teads for the period from February 3, 2025 through June 30, 2025:
Three Months Ended June 30, | Six months Ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
Condensed Consolidated Statements of Operations: | ||||||||||||||||||||||||||
| Revenue | $ | 343,096 | $ | 214,148 | $ | 629,453 | $ | 431,112 | ||||||||||||||||||
| Cost of revenue: | ||||||||||||||||||||||||||
| Traffic acquisition costs | 198,927 | 158,191 | 382,162 | 323,001 | ||||||||||||||||||||||
| Other cost of revenue | 23,905 | 10,381 | 44,377 | 20,940 | ||||||||||||||||||||||
| Total cost of revenue | 222,832 | 168,572 | 426,539 | 343,941 | ||||||||||||||||||||||
| Gross profit | 120,264 | 45,576 | 202,914 | 87,171 | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research and development | 13,285 | 9,330 | 27,264 | 18,523 | ||||||||||||||||||||||
| Sales and marketing | 79,676 | 24,377 | 133,413 | 47,994 | ||||||||||||||||||||||
| General and administrative | 27,888 | 16,921 | 64,365 | 32,136 | ||||||||||||||||||||||
| Impairment charges | — | — | 15,614 | — | ||||||||||||||||||||||
| Restructuring charges | 1,674 | 575 | 8,953 | 742 | ||||||||||||||||||||||
| Total operating expenses | 122,523 | 51,203 | 249,609 | 99,395 | ||||||||||||||||||||||
| Loss from operations | (2,259) | (5,627) | (46,695) | (12,224) | ||||||||||||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||||
Gain on repurchase of long-term debt | 1,225 | — | 1,225 | — | ||||||||||||||||||||||
| Interest expense | (17,524) | (569) | (40,648) | (1,506) | ||||||||||||||||||||||
| Other (expense) income and interest income, net | (1,506) | 2,746 | (1,990) | 4,151 | ||||||||||||||||||||||
| Total other (expense) income, net | (17,805) | 2,177 | (41,413) | 2,645 | ||||||||||||||||||||||
| Loss before income taxes | (20,064) | (3,450) | (88,108) | (9,579) | ||||||||||||||||||||||
| Benefit from income taxes | (5,751) | (1,251) | (18,952) | (2,339) | ||||||||||||||||||||||
| Net loss | $ | (14,313) | $ | (2,199) | $ | (69,156) | $ | (7,240) | ||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||
Ex-TAC Gross Profit (1) | $ | 144,169 | $ | 55,957 | $ | 247,291 | $ | 108,111 | ||||||||||||||||||
Adjusted EBITDA(1) | $ | 26,976 | $ | 7,409 | $ | 37,665 | $ | 8,806 | ||||||||||||||||||
__________________________
(1)Ex-TAC Gross Profit and Adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Reconciliations” in this Report for the definitions and limitations of these measures, and reconciliations to the most comparable U.S. GAAP financial measures.
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Three and Six Months Ended June 30, 2025 Compared to Three and Six Months Ended June 30, 2024
Revenue
Revenue for the three months ended June 30, 2025 increased $129.0 million, or 60.2%, to $343.1 million, from $214.1 million for the three months ended June 30, 2024. Revenue increased $198.4 million, or 46.0%, to $629.5 million for the six months ended June 30, 2025 from $431.1 million for the six months ended June 30, 2024. Revenue for the three and six months ended June 30, 2025 included net favorable foreign currency effects of approximately $5.4 million and $2.9 million, respectively, and increased $123.6 million and $195.5 million, respectively, on a constant currency basis, compared to the prior year period.
Our reported increases in revenue for the three and six months ended June 30, 2025 were primarily attributable to incremental revenues from the Acquisition of $139.1 million and $219.4 million, respectively, offset in part by lower revenues of $10.1 million and $21.0 million from the legacy Outbrain business, primarily driven by lower ad impressions from certain media partners.
See “Non-GAAP Reconciliations” for information regarding the constant currency measures provided in this discussion and below to supplement our reported results.
Cost of Revenue and Gross Profit
Traffic acquisition costs — increased $40.7 million, or 25.8%, to $198.9 million for the three months ended June 30, 2025, compared to $158.2 million in the prior year period. Traffic acquisition costs increased $59.2 million, or 18.3%, to $382.2 million for the six months ended June 30, 2025, compared to $323.0 million in the prior year period. Traffic acquisition costs for the three and six months ended June 30, 2025 included net unfavorable foreign currency effects of approximately $4.8 million and $2.8 million, respectively, and increased $35.9 million and $56.4 million, respectively on a constant currency basis, compared to the prior year period.
The increase in traffic acquisition costs in both periods was largely driven by incremental costs from the Acquisition, partially offset by lower traffic acquisition costs from the legacy Outbrain business, reflecting lower revenue and a net favorable change in our revenue mix. As a percentage of revenue, traffic acquisition costs decreased to 58.0% for the three months ended June 30, 2025, from 73.9% for the three months ended June 30, 2024 and decreased to 60.7% for the six months ended June 30, 2025, from 74.9% for the six months ended June 30, 2024, reflecting the higher margin profile of the acquired business.
Other cost of revenue — increased $13.5 million, or 130.3%, to $23.9 million for the three months ended June 30, 2025, compared to $10.4 million in the prior year period. Other cost of revenue increased $23.5 million, or 111.9%, to $44.4 million for the six months ended June 30, 2025, compared to $20.9 million in the prior year period. These increases were primarily due to the impact of the Acquisition, including the associated amortization expense for technology intangible assets of approximately $4.1 million and $6.8 million, respectively. As a percentage of revenue, other cost of revenue increased to 7.0% for the three months ended June 30, 2025, from 4.8% for the three months ended June 30, 2024, and increased to 7.1% for the six months ended June 30, 2025, from 4.9% for the six months ended June 30, 2024.
Gross profit — increased $74.7 million, or 163.9%, to $120.3 million for the three months ended June 30, 2025, compared to $45.6 million for the three months ended June 30, 2024. Gross profit increased $115.7 million, or 132.8%, to $202.9 million for the six months ended June 30, 2025, compared to $87.2 million for the six months ended June 30, 2024. These increases were largely due to the impact of the Acquisition.
Ex-TAC Gross Profit
Our Ex-TAC Gross Profit increased $88.2 million, or 157.6%, to $144.2 million for the three months ended June 30, 2025, from $56.0 million for the three months ended June 30, 2024. Our Ex-TAC Gross Profit increased $139.2 million, or 128.7%, to $247.3 million for the six months ended June 30, 2025, from $108.1 million for the six months ended June 30, 2024. These increases were largely due to the impact of the Acquisition. See “Non-GAAP Reconciliations” for the related definition and reconciliations to our gross profit.
Operating Expenses
Operating expenses increased $71.3 million, or 139.3%, to $122.5 million for the three months ended June 30, 2025, from $51.2 million for the three months ended June 30, 2024, including net unfavorable foreign currency effects of approximately $1.5 million. The reported increase was primarily attributable to the impact of the Acquisition, including acquisition and integration costs during the three months ended June 30, 2025.
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Operating expenses increased $150.2 million, or 151.1%, to $249.6 million for the six months ended June 30, 2025, from $99.4 million for the six months ended June 30, 2024, including net unfavorable foreign currency effects of approximately $1.2 million. This reported increase was primarily due to the impact of the Acquisition, including incremental acquisition and integration costs of $18.7 million, as well as impairment charges of $15.6 million and higher restructuring charges of $8.2 million recorded during the six months ended June 30, 2025, as further described below.
The following are the components of the operating expenses for the quarterly and the year-to-date periods presented:
Research and development expenses — increased $3.9 million and $8.7 million, respectively, during the three and six months ended June 30, 2025, primarily due to the impact of the Acquisition. This increase was partially offset by lower personnel related costs of approximately $1.6 million in each period, resulting from our cost-saving initiatives.
Sales and marketing expenses — increased $55.3 million and $85.4 million, respectively, during the three and six months ended June 30, 2025, primarily due to the impact of the Acquisition, including amortization expenses recorded on the associated intangible assets of approximately $8.9 million and $14.2 million, respectively.
General and administrative expenses — increased $11.0 million and $32.2 million, respectively, during the three and six months ended June 30, 2025. This increase was primarily due to the impact of the Acquisition, including higher acquisition and integration related costs of $2.2 million and $18.7 million, respectively, during the three and six months ended June 30, 2025.
Impairment charges — were $15.6 million for the six months ended June 30, 2025, and were largely attributable to the full impairment of the carrying values of the definite-lived intangible assets of $15.1 million and capitalized software of $0.4 million associated with our previously acquired vi business, in connection with our decision to discontinue the related video product offering as part of our post-merger integration following the Acquisition (see Notes 5 and 6 to the accompanying condensed consolidated financials statements for additional information).
Restructuring charges — were $1.7 million and $9.0 million, respectively, during the three and six months ended June 30, 2025, including severance costs of $1.4 million and $8.3 million, respectively, and legal costs of $0.3 million and $0.7 million, respectively. These charges were incurred in connection with our previously announced Plan to streamline operations, including a reduction in workforce of approximately 15% to reduce duplicative roles after the Acquisition close. For the three months ended June 30, 2025, approximately $0.9 million related to sales and marketing and $0.8 million related to general and administrative expenses. For the six months ended June 30, 2025, approximately $0.8 million related to research and development, $5.9 million related to sales and marketing and $2.3 million related to general and administrative departments.
We estimate that total charges to be incurred under this Plan in 2025 will range from approximately $10 million to $12 million and we expect it to result in 2025 cost savings of approximately $40 million, with the higher run-rate impact in 2026 and beyond.
During the three and six months ended June 30, 2024, restructuring charges were $0.6 million and $0.7 million, respectively, comprised of severance and related costs.
Total operating expenses as a percentage of revenue increased to 35.7% for the three months ended June 30, 2025 from 23.9% for the three months ended June 30, 2024, and increased to 39.7% for the six months ended June 30, 2025 from 23.1% for the six months ended June 30, 2024. These increases were largely driven by the Acquisition and the associated Acquisition-related costs, as well as restructuring and impairment charges.
Other (Expense) Income
Gain on repurchase of long-term debt — on June 17, 2025, we completed the repurchase of $9.3 million aggregate principal amount of the Notes for approximately $8.0 million in cash, including accrued interest, representing a discount of approximately 17% to the principal amount of the repurchased Notes. As a result, we realized a pre-tax gain of approximately $1.2 million within other income in our consolidated statements of operations for the three and six months ended June 30, 2025.
Interest expense — increased $16.9 million to $17.5 million for the three months ended June 30, 2025, from $0.6 million for the three months ended June 30, 2024, which was primarily due to interest expense of $16.9 million on the Notes, including interest and amortization of the related discount and deferred financing fees, during the three months ended June 30, 2025, partially offset by reduced interest expense of $0.9 million due to the absence of the previously outstanding 2.95% convertible senior notes.
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Interest expense increased $39.1 million to $40.6 million for the six months ended June 30, 2025, from $1.5 million for the six months ended June 30, 2024. This increase was primarily driven by $26.1 million of interest expense on the Notes, including interest and amortization of the related discount and deferred financing fees, as well as $13.3 million of fees and interest related to the Bridge Facility, which was drawn to finance the cash portion of the Acquisition consideration and subsequently repaid with the proceeds from the Notes in February 2025. These increases were partially offset by reduced interest expense of $1.7 million due to the absence of the previously outstanding 2.95% convertible senior notes.
Other (expense) income and interest income, net — decreased $4.2 million to net expense $1.5 million for the three months ended June 30, 2025, compared to income of $2.7 million for the three months ended June 30, 2024. This decrease was primarily attributable to increased foreign currency losses of $6.3 million resulting from the remeasurement of transactions denominated in currencies other than the functional currencies and lower investment income of $1.5 million. These decreases were partially offset by more favorable mark-to-market adjustments of $2.5 million on undesignated foreign exchange forward contracts used to manage our foreign currency exchange risk on net cash flows from our non-U.S. dollar denominated operations during the three months ended June 30, 2025.
Other (expense) income and interest income, net, decreased by $6.2 million to net expense of $2.0 million for the six months ended June 30, 2025, compared to income of $4.2 million for the six months ended June 30, 2024. This decrease was primarily attributable to increased foreign currency losses of $6.8 million resulting from the remeasurement of transactions denominated in currencies other than the functional currencies and lower investment income of $2.6 million. These decreases were partially offset by more favorable mark-to-market adjustments of $2.6 million on undesignated foreign exchange forward contracts used to manage our foreign currency exchange risk on net cash flows from our non-U.S. dollar denominated operations during the six months ended June 30, 2025.
Benefit from Income Taxes
Benefit from income taxes increased to $5.8 million for the three months ended June 30, 2025, compared to $1.3 million for the three months ended June 30, 2024, and increased to $19.0 million for the six months ended June 30, 2025, compared to $2.3 million for the six months ended June 30, 2024. These increases were primarily due to higher pre-tax losses during the three and six months ended June 30, 2025, compared to the respective prior year periods. Our effective tax rate decreased to 28.7% in the three months ended June 30, 2025, compared to 36.3% in the three months ended June 30, 2024, and decreased to 21.5% in the six months ended June 30, 2025, compared to 24.4% in the six months ended June 30, 2024. These decreases were primarily due to increased concentration of profitability in lower-tax jurisdictions and lower non-deductible stock-based compensation costs. These declines were partially offset by the unfavorable impact due to the absence of the foreign-derived intangible income deduction in the current year periods, and an increase in uncertain tax positions, coupled with pre-tax losses in each of the periods.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the U.S., with certain provisions of the OBBBA effective in 2025 and others becoming effective in 2026 and beyond. OBBBA amends U.S. tax law including provisions related to bonus depreciation, interest deduction limitations, research and development, and foreign derived intangible income. We are currently in the process of evaluating the impact of the OBBBA on our condensed consolidated financial statements.
Our future effective tax rate may be affected by the geographic mix of earnings in countries with different statutory rates. Additionally, our future effective tax rate may be affected by our ongoing assessment of the need for a valuation allowance on our deferred tax assets or liabilities, or changes in tax laws, regulations, or accounting principles, tax planning initiatives, as well as certain discrete items.
Net Loss
As a result of the foregoing, we recorded a net loss of $14.3 million for the three months ended June 30, 2025, as compared to net loss of $2.2 million for the three months ended June 30, 2024. Net loss for the six months ended June 30, 2025 was $69.2 million, as compared to net loss of $7.2 million for the six months ended June 30, 2024.
Adjusted EBITDA
Our Adjusted EBITDA increased $19.6 million to $27.0 million for the three months ended June 30, 2025 from $7.4 million for the three months ended June 30, 2024. Adjusted EBITDA increased $28.9 million to $37.7 million for the six months ended June 30, 2025 from $8.8 million for the six months ended June 30, 2024. The increases in both periods were largely driven by the Acquisition. See “Non-GAAP Reconciliations” for the related definitions of Adjusted EBITDA and reconciliations to our net loss.
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Non-GAAP Reconciliations
Because we are a global company, the comparability of our operating results is affected by foreign exchange fluctuations. We calculate certain constant currency measures and foreign currency impacts by translating the current year’s reported amounts, excluding new acquisitions, into comparable amounts using the prior year’s exchange rates. All constant currency financial information being presented is non-GAAP and should be used as a supplement to our reported operating results. We believe that this information is helpful to our management and investors to assess our operating performance on a comparable basis. However, these measures are not intended to replace amounts presented in accordance with U.S. GAAP and may be different from similar measures calculated by other companies.
We present Ex-TAC Gross Profit, Adjusted EBITDA, Adjusted EBITDA as a percentage of Ex-TAC Gross Profit, Free Cash Flow, and Adjusted Free Cash Flow because they are key profitability measures used by our management and our Board to understand and evaluate our operating performance and trends, develop short-term and long-term operational plans, and make strategic decisions regarding the allocation of capital. Accordingly, we believe that these measures provide information to investors and the market in understanding and evaluating our operating results in the same manner as our management and the Board.
These non-GAAP financial measures are defined and reconciled to the corresponding U.S. GAAP measures below. These non-GAAP financial measures are subject to significant limitations, including those identified below. In addition, other companies in our industry may define these measures differently, which may reduce their usefulness as comparative measures. As a result, this information should be considered as supplemental in nature and is not meant as a substitute for revenue, gross profit, net loss or net cash provided by (used in) operating activities presented in accordance with U.S. GAAP.
Ex-TAC Gross Profit
Ex-TAC Gross Profit is a non-GAAP financial measure. Gross profit is the most comparable U.S. GAAP measure. In calculating Ex-TAC Gross Profit, we add back other cost of revenue to gross profit. Ex-TAC Gross Profit may fluctuate in the future due to various factors, including, but not limited to, seasonality and changes in the number of media partners and advertisers, advertiser demand or user engagements.
There are limitations on the use of Ex-TAC Gross Profit in that traffic acquisition cost is a significant component of our total cost of revenue but not the only component and, by definition, Ex-TAC Gross Profit presented for any period will be higher than gross profit for that period. A potential limitation of this non-GAAP financial measure is that other companies, including companies in our industry which have a similar business, may define Ex-TAC Gross Profit differently, which may make comparisons difficult. As a result, this information should be considered as supplemental in nature and is not meant as a substitute for revenue or gross profit presented in accordance with U.S. GAAP.
The following table presents the reconciliation of Ex-TAC Gross Profit to gross profit, the most directly comparable U.S. GAAP measure, for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Revenue | $ | 343,096 | $ | 214,148 | $ | 629,453 | $ | 431,112 | ||||||||||||||||||
| Traffic acquisition costs | (198,927) | (158,191) | (382,162) | (323,001) | ||||||||||||||||||||||
| Other cost of revenue | (23,905) | (10,381) | (44,377) | (20,940) | ||||||||||||||||||||||
| 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
We define Adjusted EBITDA as net income (loss) before gain on repurchase of long-term debt; interest expense; other expense (income) and interest income, net; provision (benefit) for income taxes; depreciation and amortization; stock-based compensation, and other income or expenses that we do not consider indicative of our core operating performance, including, but not limited to acquisition and integration costs, restructuring, and impairment charges. We present Adjusted EBITDA as a supplemental performance measure because we believe it facilitates operating performance comparisons from period to period.
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We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board. However, our calculation of Adjusted EBITDA is not necessarily comparable to non-GAAP information of other companies. Adjusted EBITDA should be considered as a supplemental measure and should not be considered in isolation or as a substitute for any measures of our financial performance that are calculated and reported in accordance with U.S. GAAP.
The following table presents the reconciliation of Adjusted EBITDA to net loss, the most directly comparable U.S. GAAP measure, for the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Net loss | $ | (14,313) | $ | (2,199) | $ | (69,156) | $ | (7,240) | ||||||||||||||||||
Gain on repurchase of long-term debt | (1,225) | — | (1,225) | — | ||||||||||||||||||||||
| Interest expense | 17,524 | 569 | 40,648 | 1,506 | ||||||||||||||||||||||
| Other expense (income) and interest income, net | 1,506 | (2,746) | 1,990 | (4,151) | ||||||||||||||||||||||
| Benefit from income taxes | (5,751) | (1,251) | (18,952) | (2,339) | ||||||||||||||||||||||
| Depreciation and amortization | 18,337 | 4,751 | 31,210 | 9,651 | ||||||||||||||||||||||
| Stock-based compensation | 3,790 | 4,508 | 6,731 | 7,435 | ||||||||||||||||||||||
Acquisition and integration costs | 5,434 | 3,202 | 21,852 | 3,202 | ||||||||||||||||||||||
Restructuring charges | 1,674 | 575 | 8,953 | 742 | ||||||||||||||||||||||
| Impairment charges | — | — | 15,614 | — | ||||||||||||||||||||||
| 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% | ||||||||||||||||||||||
Free Cash Flow
Free cash flow is defined as cash flow provided by operating activities, less capital expenditures and capitalized software development costs. Adjusted free cash flow is defined as free cash flow plus direct acquisition costs. Free cash flow and adjusted free cash flow are supplementary measures used by our management and the Board to evaluate our ability to generate cash and we believe it allows for a more complete analysis of our available cash flows. Free cash flow and adjusted free cash flow should be considered as supplemental measures and should not be considered in isolation or as a substitute for any measures of our financial performance that are calculated and reported in accordance with U.S. GAAP.
The following table presents the reconciliation of free cash flow to net cash provided by operating activities.
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
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 | |||||||||
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LIQUIDITY AND CAPITAL RESOURCES
We regularly evaluate the cash requirements for our operations, commitments, acquisitions, development activities and capital expenditures and manage our liquidity risk in a manner consistent with our corporate priorities. Our current investment program is focused on achieving maximum returns within our investment policy parameters, while preserving capital and maintaining sufficient liquidity.
We believe that our operating cash flow, cash and cash equivalents and investments, and available borrowing capacity, will be sufficient to fund our anticipated operating expenses and capital expenditures for at least the next 12 months and the foreseeable future. However, there are multiple factors that could impact our future liquidity, including our business performance, ability to collect payments from advertisers, having to pay media partners even if advertisers default on their payments, or other factors described under Item 1A “Risk Factors” included in our 2024 Form 10-K and subsequent reports filed with the SEC.
Sources of Liquidity
Our primary sources of liquidity are cash receipts from our advertisers, cash and cash equivalents, investments in marketable securities, and the available capacity under our 2025 Revolving Facility discussed below.
We have historically experienced higher cash collections during our first quarter due to seasonally strong fourth quarter sales, and, as a result, our working capital needs typically decrease during the first quarter. We generally expect these trends to continue in future periods.
As of June 30, 2025, our available liquidity was follows:
| June 30, 2025 | ||||||||
| (In thousands) | ||||||||
Cash and cash equivalents (1) | $ | 149,449 | ||||||
| Short-term investments | 16,693 | |||||||
2025 Revolving Facility (2) | 100,000 | |||||||
| Total | $ | 266,142 | ||||||
_____________________________________________
(1) As of June 30, 2025, approximately $104.0 million of our cash and cash equivalents was held outside of the United States by our non-U.S. subsidiaries. As of June 30, 2025, we plan to either reinvest indefinitely our earnings from our foreign subsidiaries or repatriate them tax-neutrally. We are in the process of evaluating our cash requirements post-Acquisition. If future earnings are repatriated and we are unable to do so in a tax-neutral manner, we may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and income taxes.
(2) On February 3, 2025, we entered into the Credit Agreement, which established the Credit Facilities, including the 2025 Revolving Facility and Bridge Facility, and our subsidiary, Midco, borrowed $625 million in aggregate principal amount of Bridge Loans under the Bridge Facility to finance the cash portion of the Acquisition consideration and the related transaction fees, costs and expenses. On February 11, 2025, the Bridge Facility, including accrued and unpaid interest thereon, was fully repaid and cancelled using proceeds from the Offering (as discussed below) and cash on hand.
Loans under the 2025 Revolving Facility (the “Revolving Loans”) bear interest, at the Company’s option, at (x) Term SOFR, subject to a “zero” floor, plus an interest rate margin of 4.25% per annum or (y) an alternate base rate plus an interest rate margin of 3.25% per annum. In addition, the 2025 Revolving Facility accrues an unused commitment fee at a rate ranging from 0.375% to 0.50%, depending on the Company’s senior secured net leverage ratio, as set forth in the Credit Agreement.
The 2025 Revolving Facility may be used for working capital and other general corporate purposes of the Company and our subsidiaries. Up to $10.0 million of the 2025 Revolving Facility is available in the form of letters of credit and up to $20.0 million of the 2025 Revolving Facility is available in the form of swingline loans. The Company may seek incremental commitments under the 2025 Revolving Facility from lenders or other financial institutions up to an aggregate principal amount equal to the greater of $62.5 million and 25% of the Company’s EBITDA (as defined in the Credit Agreement). The 2025 Revolving Facility lenders will not be under any obligation to provide any such incremental commitments, and any such increase in commitments will be subject to certain customary conditions precedent.
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Additional wholly-owned subsidiaries of the Company organized in certain jurisdictions may become borrowers under the 2025 Revolving Facility from time to time. The Credit Facilities are senior secured obligations of the Company, Midco and the Credit Facilities Guarantors (as defined in Note 9), provided, that, with respect to the application of proceeds from enforcement or distressed disposals of collateral, the 2025 Revolving Facility will rank super senior to other senior secured indebtedness of the Company, Midco and the Credit Facilities Guarantors, including the Bridge Facility.
The Credit Agreement includes a customary springing financial covenant with respect to the 2025 Revolving Facility that will require the Company and our restricted subsidiaries to comply with a maximum senior secured net leverage ratio from and after the fiscal quarter ending September 30, 2025, in the event that utilization under the 2025 Revolving Facility exceeds 40%.
In connection with the entry into the Credit Agreement described above, we terminated the Second Amended and Restated Loan and Security Agreement, dated as of November 2, 2021, by and among the Company, Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, Zemanta Holding USA Inc. and Zemanta Inc. and replaced it with the new 2025 Revolving Credit Facility.
As of June 30, 2025, no event of default (as defined in the Credit Agreement) has occurred under the Credit Agreement. See Note 9 to the accompanying condensed consolidated financial statements for additional information related to terms and conditions, covenants, guarantees, and events of default.
Material Cash Requirements
We plan to meet our liquidity needs through available cash, cash generated from our operations and our borrowing capacity. Our primary uses of liquidity are payments to our media partners, our operating expenses, capital expenditures, our long-term debt and the related interest payments. We primarily use our operating cash for payments due to media partners and vendors, as well as for personnel costs, and other employee-related expenditures. Our contracts with media partners are generally variable based bids on impressions or guaranteed minimum payments if the media partner reaches certain performance targets, and for legacy Outbrain may also include revenue share arrangements with media partners. See “Definitions of Financial and Performance Measures —Traffic Acquisition Costs.” We may also acquire or make investments in complementary companies or technologies, such as our recent Acquisition.
Debt Obligations
The following table presents our debt obligations as of June 30, 2025. We had no borrowings outstanding as of December 31, 2024.
| March 31, 2025 | |||||
| (In thousands) | |||||
10% Senior Secured Notes (1) | $ | 628,226 | |||
| Debt discount | (11,329) | ||||
| Unamortized debt issuance costs | (13,935) | ||||
| Total long-term debt | 602,962 | ||||
Short-term debt (€15 million) (2) | 17,562 | ||||
| Total debt | $ | 620,524 | |||
_______________________________________
(1) On February 11, 2025, Midco completed the Offering of the Notes at an issue price of 98.087% of the principal amount thereof in a transaction exempt from registration under the Securities Act. The Notes bear interest from February 11, 2025 at an annual rate of 10.000%, payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2025. The Notes will mature on February 15, 2030.
On June 17, 2025, we completed the repurchase of $9.3 million aggregate principal amount of the Notes for $8.0 million in cash, including accrued interest, representing a discount of approximately 17% to the principal amount of the repurchased Notes. As a result, we recorded a pre-tax gain of $1.2 million within other income in our consolidated statements of operations for the three and six months ended June 30, 2025.
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The Notes are guaranteed, jointly and severally on a secured, unsubordinated basis by the Company and each existing and future wholly-owned subsidiary of Outbrain that becomes a borrower, issuer or guarantor under the 2025 Revolving Facility. The Notes are also secured by first-priority lien over (i) all or substantially all assets of OT Midco, Outbrain and Teads Australia PTY Ltd, a subsidiary of Outbrain in Australia, and (ii) certain assets of some of the other direct and indirect subsidiaries of Outbrain in England and Wales, Canada, Germany, Mexico, Singapore, Switzerland, Luxembourg, Japan, Italy, France and Israel.
The terms of the Indenture, among other things, limit the ability of the Company and our restricted subsidiaries to (i) incur or guarantee additional indebtedness or issue preferred stock, (ii) pay dividends or make other restricted payments; (iii) make certain investments, (iv) transfer and sell assets, (v) create or incur certain liens, (vi) engage in certain transactions with affiliates and (vii) consolidate or merge or transfer all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications. The Indenture provides for customary events of default which include, among other things (subject in certain cases to customary grace and cure periods), defaults based on (i) the failure to make payments under the Indenture when due, (ii) breach of covenants, (iii) acceleration of other material indebtedness, (iv) bankruptcy events and (v) material judgments. Generally, if an event of default occurs, the trustee or the holders of at least 30% in principal amount of the then outstanding Notes may declare all of the Notes to be due and payable.
(2) Upon the close of the Acquisition, the Company’s new French subsidiary has an overdraft short-term credit facility with HSBC (the “Overdraft Facility”), which provides Teads France with a revolving line of credit of up to €15 million at a 3-month Euro Interbank Offered Rate (“EURIBOR”), plus a margin of 1.8%, payable quarterly in arrears. This facility may be used to fund general working capital needs of Teads France. Borrowings under this facility are subject to a commission fee of 0.035% per annum, and a facility fee of 1.25% per annum. There are no financial covenants relating to the Overdraft Facility.
See Note 9 to the accompanying condensed consolidated financial statements for additional information relating to our debt obligations.
Other Contractual Cash Obligations
See “Contractual Cash Obligations” disclosure within “Liquidity and Capital Resources” section of our 2024 Form 10-K for detailed disclosures of our other material cash obligations as of December 31, 2024.
The increase in the Company’s future contractual obligation and commitments resulting from our Acquisition primarily relates to the following:
•$628.2 million of the Notes issued on February 11, 2025 to finance the Acquisition;
•future interest payments of approximately $31.7 million in 2025, $62.8 million in each of 2026 through 2029, and $31.4 million in 2030;
•future operating lease obligations, which are included in the maturities of the Company’s lease liabilities under operating leases in Note 8 to our accompanying condensed consolidated financial statements.
The acquired business also has media partner agreements entered into in the normal course of business, the payments under which are contingent on publishers fulfilling their obligations to provide to the Company the related inventory.
Share Repurchases
On December 14, 2022, our Board approved a new stock repurchase program, authorizing us to repurchase up to $30 million of our Common Stock, with no requirement to purchase any minimum number of shares. The manner, timing, and actual number of shares repurchased under the program will depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through privately negotiated transactions or open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The repurchase program may be commenced, suspended, or terminated at any time at our discretion without prior notice. There were no shares repurchased under the stock repurchase program during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, we repurchased 464,054 shares and 1,410,001 shares, respectively, with a fair value of $2.0 million and $5.9 million, respectively, under the repurchase program. As of June 30, 2025, the remaining availability under our $30 million share repurchase program was $6.6 million.
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In addition, we periodically withhold shares to satisfy employee tax withholding obligations arising in connection with the vesting of restricted stock units and exercise of options and warrants in accordance with the terms of our equity incentive plans and the underlying award agreements. During the three and six months ended June 30, 2025, we withheld 70,108 shares and 143,108 shares, respectively, with a fair value of $0.2 million and $0.6 million, respectively, to satisfy the minimum employee tax withholding obligations. For the three and six months ended June 30, 2024, the Company withheld 47,088 shares and 84,580 shares, respectively, with a fair value of $0.2 million and $0.4 million, respectively.
Capital Expenditures
Our cash flow from investing activities primarily consists of capital expenditures and capitalized software development costs. We spent $4.1 million in capital expenditures during the six months ended June 30, 2025. We currently anticipate that our capital expenditures will be between $8 million and $11 million in 2025, primarily relating to expenditures for servers and related equipment and other equipment. However, actual amounts may vary from these estimates.
Cash Flows
The following table summarizes the major components of our net cash flows for the periods presented:
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
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) | |||||||||
| Effect of exchange rate changes | 147 | (392) | |||||||||
Net increase in cash, cash equivalents and restricted cash | $ | 60,909 | $ | 4,600 | |||||||
Operating Activities
Net cash from operating activities increased $11.9 million, to net cash provided by operating activities of $24.1 million for the six months ended June 30, 2025, as compared to net cash provided by operating activities of $12.2 million for the six months ended June 30, 2024. This increase was primarily due to higher working capital of $41.4 million, which was primarily attributable to cash flow generated by the acquired business, an increase in interest payable relating to the Notes, and the timing of cash collections and payments, which included cash outflows for acquisition-related costs and severance costs. This increase was partially offset by a $33.5 million increase in net loss after non-cash adjustments during the six months ended June 30, 2025, compared to the prior year period.
Our adjusted free cash flow increased to $27.4 million for the six months ended June 30, 2025, as compared to $5.0 million for the six months ended June 30, 2024, primarily driven by higher operating cash flow, adjusted for payments of direct acquisition costs, offset in part by increased capital expenditures and capitalized software development costs. Free cash flow and adjusted free cash flow are supplemental non-GAAP financial measures. See “Non-GAAP Reconciliations” for the related definition and a reconciliation to net cash provided by operating activities.
Investing Activities
Cash related to investing activities decreased $548.1 million to cash used in investing activities of $548.9 million in the six months ended June 30, 2025, from cash used in investing activities of $0.8 million in the six months ended June 30, 2024. This decrease in cash was primarily related to $598.3 million of cash consideration paid, net of cash acquired, in connection with the Acquisition, as well as increased capital expenditures and capitalized software development costs totaling $3.9 million. These decreases in cash were offset in part by higher net proceeds of $53.9 million from sales and maturities of marketable securities under our investment program (net of purchases), due to lower investments and higher early redemptions of available-for-sale securities in connection with the Acquisition.
Financing Activities
Net cash provided by financing activities increased $592.1 million to net cash provided by financing activities of $585.6 million in the six months ended June 30, 2025, from net cash used in financing activities of $6.5 million in the six months ended June 30, 2024. This increase in net proceeds resulted from debt issuances related to the Acquisition of $617.6 million, net of Bridge Loan repayment and our partial repurchase of the Notes, and lower treasury share repurchases of $5.7 million. These increases were partially offset by debt financing related costs payments of $30.8 million during the six months ended June 30, 2025.
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Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
Other than described below, there have been no other material changes to our critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our 2024 Form 10-K.
Business Combinations
Accounting for business combinations under ASC 805, Business Combinations, requires management to make significant estimates and assumptions, including the valuation of intangible assets acquired and the determination of fair values of liabilities assumed. Although we believe that the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.
Recently Issued Accounting Pronouncements
See Note 1 to the accompanying condensed consolidated financial statements for recently issued accounting standards, which may have an impact on our financial statements upon adoption.
JOBS Act Transition Period
We are an emerging growth company as defined in the JOBS Act. The JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of some accounting standards until they would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that have adopted new or revised accounting pronouncements as of public company effective dates. Based on the anticipated total gross revenue of the Company, we expect that we will cease to be an emerging growth company as of December 31, 2025.
Off-Balance Sheet Arrangements
We do not currently engage in off-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purpose entities and other structured finance entities.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have operations both in the United States and internationally, and we are exposed to market risks in the ordinary course of our business. These risks include foreign exchange, interest rate, inflation and credit risks.
Foreign Currency Risk
Our consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates related to our operations and intercompany transactions. Our primary foreign currency exposures are to Euros, the New Israeli Shekels, the British Pound Sterling, among other currencies. Our operating expenses are generally denominated in the currencies in which our operations are located. Foreign currency fluctuations may impact the remeasurement of balances that are denominated in different currencies than the functional currencies of our subsidiaries. In addition, changes in the U.S. Dollar against the currencies of the countries in which we operate impact our operating results, as further described in Item 2, “Results of Operations.” The effect of a hypothetical 10% increase or decrease in our weighted-average exchange rates on our revenue, cost of revenue and operating expenses denominated in foreign currencies would result in a $2.4 million unfavorable or favorable change to our operating income for the three months ended June 30, 2025 and $5.2 million unfavorable or favorable change to our operating income for the six months ended June 30, 2025.
We evaluate periodically the various currencies to which we are exposed and we are a party to, and may from time to time enter into additional foreign currency forward exchange contracts to manage our foreign currency risk and reduce the potential adverse impact from the appreciation or the depreciation of our non-U.S. dollar-denominated operations, as appropriate.
Interest Rate Risk
Our exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of the interest rates in the United States and abroad. Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents of $149.4 million, our investments in marketable securities of $16.7 million under our investment program, and any current or future borrowings under our credit facilities. Our investments in marketable securities consist of U.S. Treasuries, U.S. government bonds, commercial paper, U.S. corporate bonds and municipal bonds, all maturing within one year. The primary objectives of our investment program are focused on achieving maximum returns within our investment policy parameters, while preserving capital and maintaining sufficient liquidity. We plan to actively monitor our exposure to the fair value of our investment portfolio in accordance with our policies and procedures, which include monitoring market conditions, to minimize investment risk.
A 100-basis point change in interest rates as of June 30, 2025 would change the fair value of our investment portfolio by less than $0.1 million. Since our debt investments are classified as available-for-sale, the unrealized gains and losses related to fluctuations in market volatility and interest rates are reflected within accumulated other comprehensive loss within stockholders’ equity in our condensed consolidated balance sheets.
There have been no amounts outstanding under our new $100 million 2025 Revolving Facility pursuant to our Credit Agreement entered into in February 2025, or under our prior revolving credit facility with Silicon Valley Bank. However, as part of the Acquisition, we assumed the Overdraft Facility which had outstanding borrowings of $17.6 million as of June 30, 2025. The Overdraft Facility carries a variable rate of interest based on the three-month EURIBOR plus a margin of 1.8%.
Long-term debt recorded on our condensed consolidated balance sheet as of June 30, 2025 relates to our Notes with a carrying value of $603.0 million, which bear a fixed rate of interest. There was no long-term debt outstanding as of December 31, 2024.
Inflation Risk
Our business is subject to risk associated with inflation. We continue to monitor the impact of inflation to minimize its effects. If our costs, including wages, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs which could negatively impact our business, financial condition, and results of operations. Inflation throughout the broader economy has led and could continue to lead to reduced ad spend and indirectly harm our business, financial condition and results of operations. See Item 1A, “Risk Factors” in our 2024 Form 10-K.
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Credit Risk
Financial instruments that subject us to concentration of credit risk are cash and cash equivalents, investments and receivables. As part of our ongoing procedures, we monitor the credit levels and the financial condition of our customers in order to minimize our credit risk and require certain customers with higher potential credit risk to prepay for their campaigns. See Item 1A, “Risk Factors” in our 2024 Form 10-K under “We are subject to payment-related risks that may adversely affect our business, working capital, financial condition and results of operations.” We generally do not factor our accounts receivables (with an exception of less than 0.1 million factored as of June 30, 2025 by one of our newly acquired subsidiaries), nor do we maintain credit insurance to manage the risk of credit loss. We are also exposed to a risk that the counterparty to our foreign currency forward exchange contracts will fail to meet its contractual obligations. In order to mitigate this risk, we perform an evaluation of our counterparty credit risk and our forward contracts have a term of no more than 18 months.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act), as of June 30, 2025. Based on such evaluation, our CEO and CFO have concluded that as of June 30, 2025, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
Except as noted below, there were no changes to our internal control over financial reporting that occurred during the three months ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Acquisition of Teads
On February 3, 2025, we completed the Acquisition of Teads (see Note 2 to the accompanying condensed consolidated financial statements for additional information). Outbrain was the accounting acquirer in the Acquisition under U.S. GAAP and was subject to Section 404 of the Sarbanes-Oxley Act (“SOX”), while Teads, a privately held company, was not subject to Section 404 of SOX. Teads’ financial results have been included in Outbrain’s financial statements for the period subsequent to the Acquisition, from February 3, 2025 through June 30, 2025. As of June 30, 2025, we are still in the process of evaluating the internal controls of the acquired business and integrating it in our existing operations.
Inherent Limitations on Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected.
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Part II Other Information
Item 1. Legal Proceedings
Information with respect to this item may be found in Note 11 in the accompanying notes to the condensed consolidated financial statements included in Part I, Item 1 “Financial Statements” of this Report, under “Legal Proceedings and Other Matters,” which is incorporated herein by reference.
Item 1A. Risk Factors
There have been no material changes to our risk factors as previously disclosed in Item 1A of Part I of the Company’s 2024 Form 10-K, which is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
The shares of the Common Stock issued to Altice Teads on February 3, 2025 as consideration in connection with the Acquisition were issued in transactions exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act.
Purchases of Equity Securities by the Issuer
On December 14, 2022, our Board approved a share repurchase program authorizing us to repurchase up to $30 million of our Common Stock, with no requirement to purchase any minimum number of shares. The manner, timing, and actual number of shares repurchased under the program will depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through privately negotiated transactions or open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act. The repurchase program may be commenced, suspended, or terminated at any time at our discretion without prior notice.
In addition, we may from time to time withhold shares in connection with tax obligations related to vesting of restricted stock units in accordance with the terms of our equity incentive plans and the underlying award agreements. The below table sets forth the repurchases of our Common Stock for the three months ended June 30, 2025:
| Period | (a) Total number of shares (or units) purchased (1) | (b) Average price paid per share (or unit) | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)(2) | ||||||||||||||||||||||
| April 2025 | 681 | $3.26 | — | $6,615 | ||||||||||||||||||||||
| May 2025 | 1,112 | $3.37 | — | $6,615 | ||||||||||||||||||||||
| June 2025 | 68,315 | $2.81 | — | $6,615 | ||||||||||||||||||||||
| TOTAL | 70,108 | — | ||||||||||||||||||||||||
_____________________
(1) Total number of shares purchased is comprised of shares withheld to satisfy employee tax withholding obligations arising in connection with the vesting and settlement of restricted stock units under our 2007 Omnibus Securities and Incentive Plan and our 2021 Long-Term Incentive Plan.
On February 3, 2025, as part of the equity portion of the consideration for the Acquisition, we reissued 13,429,839 shares of our Treasury Stock at $6.01 per share, or $80.7 million.
Item 5. Other Information.
During the three months ended June 30, 2025, none
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EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| 10.1*† | 2007 Omnibus Securities and Incentive Plan and foreign addenda, as Amended and Restated effective June 4, 2025 (“2007 Plan”). | |||||||
| 10.2*† | Form of 2007 Plan Restricted Stock Unit Grant Notice and Award Agreement and related appendices (executive form), adopted June 2025. | |||||||
| 10.3*† | Rules of the Outbrain Inc. 2021 Long-Term Incentive Plan for Restricted Stock Units Granted to Employees in France (French Sub-Plan), adopted June 4, 2025. | |||||||
| 10.4*† | Form of 2021 Plan Restricted Stock Unit Grant Notice and Award Agreement and related appendices (executive form), adopted June 2025. | |||||||
| 10.5*† | Form of 2021 Plan Performance Stock Unit Award Grant Notice and Award Agreement (rTSR) (executive form), adopted June 2025. | |||||||
| 10.6*† | Form of 2021 Plan Performance Stock Unit Award Grant Notice and Award Agreement (financial metrics) (executive form), adopted June 2025. | |||||||
| 31.1* | Certification of Principal Executive Officer Pursuant To Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 31.2* | Certification of Principal Financial Officer Pursuant To Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
32.1*v | Certification of the Principal Executive Officer and Principal Financial Officer Pursuant To 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101.INS* | XBRL Instance Document | |||||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
_______________________________
* Filed herewith.
v This certification is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.
† Compensatory plan or agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 8, 2025.
| OUTBRAIN INC. | |||||
| By: | /s/ David Kostman | ||||
| Name: David Kostman | |||||
Title: Chief Executive Officer | |||||
| By: | /s/ Jason Kiviat | ||||
| Name: Jason Kiviat | |||||
Title: Chief Financial Officer | |||||
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FAQ
What was Teads (TEAD) revenue for Q2 2025 and how does it compare year-over-year?
Teads reported $343.1 million revenue for the three months ended June 30, 2025, up from $214.1 million for the same period in 2024.
How much did Teads pay to acquire Legacy Teads and what was the total consideration?
The Acquisition consideration totaled $884.9 million, consisting of approximately $621.9 million cash and $262.9 million in stock consideration.
What is Teads' net loss and key drivers for the six months ended June 30, 2025?
The company reported a $69.2 million net loss year-to-date, driven by interest expense, amortization of acquired intangibles, and restructuring and impairment charges.
What is Teads' debt profile following the acquisition?
As of June 30, 2025, total debt was $620.5 million, including long-term debt of $602.96 million related to 10% senior secured notes due 2030 and short-term debt of €15 million (~$17.6 million).
How much goodwill and intangible assets did Teads record after the acquisition?
Goodwill totaled $633.2 million and identifiable intangible assets (net) were $403.4 million as of June 30, 2025.
What liquidity did Teads report at June 30, 2025?
Cash and cash equivalents were $149.4 million and total cash, cash equivalents and restricted cash were $150.6 million at June 30, 2025.
Teads Holding
NASDAQ:TEAD
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Aug 7, 2025
[8-K] Teads Holding Co. Reports Material Event
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243.29M
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2.68%
Internet Content & Information
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