Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Outbrain Inc (OB, Financial) achieved its Q1 guidance for ex-tech gross profit and adjusted EBITDA, indicating strong financial performance.
- The merger with Teds has been successfully integrated, leading to significant milestones and synergies.
- The company has exclusive media relationships, providing access to a massive global inventory and proprietary data.
- Outbrain Inc (OB) has a diverse balance of advertiser segments and geographies, with a healthy mix of branding and performance campaigns.
- The CTV revenue grew over 100% year over year, showcasing strong growth in this segment.
Negative Points
- Despite the acquisition, there was a year-over-year decline of approximately 7% on a pro forma basis for the full quarter.
- The company incurred $16 million in acquisition-related costs and $16 million from the impairment of intangible assets.
- There is uncertainty in the macroeconomic environment, leading to shortened planning and buying cycles for advertisers.
- Free cash flow was negatively impacted by acquisition-related costs and restructuring charges, resulting in a use of cash of approximately $7 million.
- The company has a significant amount of long-term debt, with a net debt balance of $471 million.
Q & A Highlights
Q: Can you expand on the macro environment, particularly regarding the shortening of planning and buying cycles? Are you seeing any differences in advertiser focus between brand and performance?
A: Jason, CFO, explained that while there is a shortening of planning and buying cycles, there hasn't been a significant pullback in demand. Advertisers are scrutinizing budgets more, which is seen as an opportunity for Outbrain. The company maintains a balanced approach, with 70% of their business in performance and 30% in branding, focusing on delivering measurable outcomes for both segments.
Q: How much of the strong JVP wins are a direct result of the new combination, and what is the opportunity from cross-selling?
A: David, CEO, highlighted that the JVP wins are partly due to the combined value proposition of the merger. The company is excited about the potential for cross-selling, which has already begun to show positive results. The combination allows Outbrain to offer both branding and performance capabilities, which is attractive to large clients.
Q: Can you discuss the improvement in the legacy Teads business and the opportunity with larger clients?
A: Jason, CFO, noted that the legacy Teads business has seen month-over-month improvement since the merger's closing, with the overhang of uncertainty now lifted. David, CEO, added that there is a significant opportunity to gain more share of wallet from large clients by delivering better outcomes with their platform.
Q: What is the path from meetings to revenue conversion, and when can we expect to see revenue from these positive meetings?
A: David, CEO, mentioned that while there isn't a typical path, the company expects to see revenue ramp up in the second half of the year. The cross-selling efforts and improved performance of the legacy business are expected to contribute to growth.
Q: How does the DOJ ruling in the Google lawsuit impact Outbrain, and what is the strategy for expanding the Moments vertical video product?
A: David, CEO, stated that the DOJ ruling is less impactful on Outbrain due to their direct exclusive relationships with supply partners. Regarding the Moments product, the company sees vertical video as a significant growth area and plans to invest in expanding these opportunities across publishers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
