Teads Holding Co. Q1 FY2025 earnings call

• Merged with Teads on February 3, forming the new Teads with a vision to create an open Internet advertising platform for elevated outcomes from branding to performance.
• Have direct exclusive media relationships, an AI-powered algorithm accessing over 1 billion data points per minute, and a creative studio to connect with audiences across fragmented channels.
• Completed majority of headcount-related synergies post-merger, with 90% of annualized compensation-related targets actioned. On track to reach $60 million in annualized cost savings by 2026, with $40 million expected in 2025.
• Focused on AI everywhere effort, with examples like image-to-clip enabling short video creation for performance marketers.

Revenue in Q1 was approximately $286 million, a 32% year-over-year increase on an as-reported basis due to the acquisition of Teads. Ex-TAC gross profit in the quarter was $103.1 million, an increase of 98% year over year. CTV revenue grew over 50% year over year, now representing approximately 5% of total ad spend. The revenue mix was influenced by the acquisition, with a pro forma like-for-like year-over-year decline of ~7% estimated for the full quarter.

• Q2 Ex-TAC gross profit expected to be $141 million to $150 million.
• Q2 adjusted EBITDA expected to be $26 million to $34 million.
• Full-year 2025 adjusted EBITDA expected to be at least $180 million.

• Advertisers' planning and buying cycles shortening, meaning less advanced notice for budget commitments.
• Macro uncertainty affecting advertisers' scrutiny of ad spend and budget allocation.

Q: Can you expand on the macro context, shortening of planning and buying cycles, and cross-selling opportunity?

A: Jason Kiviat noted improvements in demand levels from January to March, with legacy Teads business showing month-over-month improvement. David Kostman mentioned balanced advertiser breakdown (70% performance, 30% branding) and focus on measurable outcomes. On cross-selling, David Kostman highlighted excitement around JVPs and potential for growth from cross-selling.

Q: How much of JVP wins are due to the new combination and when will cross-selling start?

A: David Kostman said JBPs are a huge asset, with growth from combined value proposition. Cross-selling is in early days but expected to ramp up in the second half.

Q: When will revenue from positive meetings start, and any reversal in advertising on news sites?

A: David Kostman said revenue from positive meetings will ramp up in the second half. He noted more openness in advertising on news sites due to better technology solutions allowing selective blocking, with positive impact on monetization for supply partners.

Q: How would Teads benefit from Google divesting ad serving and publisher tech, and strategy for moments vertical video?

A: David Kostman said Teads is less impacted by Google ruling as it has direct exclusive supply. For moments vertical video, it's part of a broader vertical video suite with potential for growth in brand and performance advertising, with significant investment planned.

Q: Perspective on second-half guidance and CTV business opportunities?

A: Jason Kiviat discussed expected pro forma growth in the second half, with cost synergies ramping up. David Kostman highlighted CTV differentiation from exclusivity on home screen placements and opportunities in performance CTV, with focus on implementation strategy for performance CTV.