Teads Holding Co. Q4 FY2024 earnings call

• On February 3rd, Outbrain closed the acquisition of Teads, combining branding and performance capabilities. - Q4 results were driven by pillars like expanding share of wallet from advertisers, supply beyond traditional feed (reaching 30% of revenue in Q4 2024), and deepening premium media partnerships. - Over 70% of Outbrain's customer base used the AI-based Creative Automation suite. - Post-merger integration is underway, with $65M-$75M in synergies expected, including $35M annualized compensation savings from headcount reductions, organizational reorganization, and connecting demand/supply platforms.

For Q4, Outbrain delivered Ex TAC gross profit and adjusted EBITDA within guidance range, with record free cash flow. Q4 revenue was approximately $235 million, a 5% year-over-year decrease. Ex TAC gross profit was $68.3 million, an increase of 7% year-over-year. Adjusted EBITDA grew 21% year-over-year to $17 million. Revenue generated from supply beyond the traditional feed represented approximately 30% of Q4 2024 revenue versus 26% in Q4 2023.

• Q1 2025 expected Ex TAC gross profit: $100 million to $105 million; adjusted EBITDA: $8 million to $12 million. - Full-year 2025 expected adjusted EBITDA: at least $180 million. - Pro forma improvement in legacy Teads performance, with H2 2025 expected to see single-digit positive growth year-over-year. - Synergy realization to increase over 2025, from a few million dollars in Q1 to the run rate of estimated 2026 synergy amount.

Q: Andrew Boone asked about the transition of publishers and advertisers onto the combined platform, concerns around dis-synergies, and demand for native advertising.

A: David Kostman responded that focus is on unifying teams and cross-selling, with core growth drivers like expanding beyond the feed, shifting performance buyers to Outbrain DSP, and continuous growth in Ex TAC gross profit. He also discussed legacy growth drivers.

Q: James Heaney asked about the growth drivers of the Outbrain DSP and its strategy going forward.

A: David Kostman said Outbrain bought Zemanta 7 years ago, using bidding technology to broaden share of wallet for performance advertisers, and will continue investing in the DSP for direct response advertisers, consolidating capabilities into Teads ad managers. Jason Kiviat added that the accounting for DSP spending is a net revenue recognition, differing from core demand platform gross revenue.

Q: Ygal Arounian asked about the Teads sales force impact in 1Q, full-year EBITDA guidance, and CTV opportunity.

A: Jason Kiviat said legacy Teads business trends improved in recent months, with France recovering quickly and distraction from merger decreasing. CTV business for Teads grew close to tripling in 2024, and there's opportunity in omnichannel capabilities.

Q: Laura Martin asked about synergy breakdown and company name change.

A: Jason Kiviat said $60M of $65M-$75M synergies are costs (45M personnel-related, 15M non-compensation), with remaining 5-15M EBITDA impact from revenue synergies. David Kostman said the company will operate under the name Teads, with a name and ticker change planned.