OB - Earnings call transcript Q4 2024

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Operator

Good morning and welcome to the Outbrain and Teads Completed Acquisition Call. It is now my pleasure to turn the call over to David Kostman, CEO of Outbrain.

David Kostman

Good morning, everyone, and thank you for joining us on short notice. It is my pleasure to welcome you, as you can see, to the new Teads. Today is a truly exciting day as we embark on a new chapter in the amazing journey of both Outbrain and Teads.

morning, signed the and this a of announced we transaction announced we we acquisition closed Teads, As in August. the strength solutions the for Internet the name marks we to performance. The combined expertise create milestone start uniting operate transformative and open a the This under will chapter in combine branding the platform leaders X of omnichannel category open Teads, outcomes company X Internet. with deep of where incredibly complementary outcomes access single to point a from creating elevated awareness to deliver we're sales. Together, consideration, to Through largest this EBITDA. advertising million Internet $X.X merger, of transformational $XXX we will adjusted of players with one become billion dollars the estimated combined open and an on the of about

approximately million million transaction markets. To this capabilities parent company Together, long-term in and is side many few about of and response with world, in is XX,XXX for Le world, with overview them advertisers, cash supply the others. about the transaction most million companies companies leveraging in to opening start Apple, Axel working leader Heineken Altice, CTV Monde, on Teads. the what including expanded Both each buyers. a be me valued of of Vuitton, and to and and direct the company in than stock strategic marketing, and as shares Let leader table. last pioneer details CTV, the with XX.XX XX-plus and Hisense side, more $XXX the and have relationships such common branding Louis a the couple agencies half half primarily Fox, the call, of that the the years, with issued transaction Teads with brings brands companies premium of performance LG, video of has is be omnichannel relationships other CNN, of exclusive itself, quick on the with investors $XXX the on the and our new others, most brands Springer; and strategic a its like premium will at the the solutions. Outbrain media it we'll providing into

As from reduction This resulting million an and capital is primarily $XXX the was but the the Teads. of reflect in a really appreciation for into it the price our reasons you convertible the equity. in this and go converting adjustment structure transaction that Jason we share since done of announcement we August, to simplifying to preferred cash details, announced of eliminating a can distraction related and softer see, to equity onetime will and events softness stems from believe by brand the common QX the to merger.

the made the be the credit So upside from potential adjustment business. will Arditi, will be XX the directors. Teads, commercial equity of to the company. side will and are of appointing transaction Teads, the we're very seller, to of pleased the staying lead Altice combined some approximately CEO metrics. Altice, of our Quesada improved Bertrand Co-CEOs they as the new I the remain own also as that of X Jeremy and the with benefiting of XX% out

view. the by a of expect cash generating synergies soon by of by a factor full into we XXXX. when transformative perspective a revenue a TAC and X.Xx of just grow Teads not industry account very flows. but will Also, ex history Jeremy. This The Teads You our has also point year an transaction grow Xx from from financial hear from will strong of factor taking our EBITDA is new

and that put of were we on while months tactical combination started clearances. to executing awaiting detailed allowed which morning. chart. One is this execution You this this aspect can plans, from This we regulatory strategic of cash on us XX% conversion the X see had we flow unique in planning place

in you with generally conviction, stage, at about have organization expectations actually are we while and readiness. and this a talking position strategic fully plans a people tactical So baked new

talking to from to that new Teads direct count platform G&A going across and overlap. branding feel the the such and more me of demand to our needs and performance us will the leverage to the strategy proposition value see, open be we invest significant unique combined connections logic deliver you and which to and and of of will and bring with full-funnel I Jeremy across will combination down properties. great direct the the let reductions capabilities fit platform the friend the take new operating is success our end-to-end open media together, and about innovation favorable supply teams advertisers between which deliver the will Internet The we're a benefit to campaigns As one for connecting we and our company most to of side. so want importantly, strategic opportunities combination over our me, partners data it anywhere to the evolution of how consideration combination, and bring for to and X that, end-to-end, turn one. Very results Teads market. better Very for customer the through you natural cross-sell important only mergers. I such new other turn connections will strategic provide a the when contextual in on offices scale. With The with and solidifying head on Arditi. confidence cultural the have unique funnel around provides is will that advertisers. business the high synergies huge and from about in to the will allow announced immediate we've teams to the about platform do signals reaction the is company position engineering Onyx of and data We're can on actual partner, my important of into then at And become screens each factors combined better platforms, sales. The day work we we on advertisers The the had tremendously advertisers Internet. steroids very launched and on talking Jeremy outcomes

Jeremy Arditi

scale Thank We you, Teads everyone new what the is X.X to unique to to company around unique we want to companies over excited access David. on these value fundamental day reaching foundation, reach. -- because the the here billion media partners. At serve exceptional monthly, provide this owner such the take unique and a are open say reach We're with visitors and massive of assets that makes our the exceptional one. of advertisers high-level with the the XX% We our through with currency some focused combination be proposition on. starts Internet. what customers Reach Teads brings

We with of connected deep on web some of owners media media Both a have a TV, the we and focus share partnering biggest and publishers across have a and premium exclusive owners. inventory. of history companies the high have

to of in inventory that the a is path All Teads. presented part for have the supply very majority new we as of direct advertisers this now of the

homescreen. The of articles nonstandard article the the TV or pages an ecosystem. across the available often not a of campaigns of see synchronize attractive space, because feasible these that CTV-native are general operating is middle the of us control might pipes ecosystem. say the placements also it's standard in But the in also in programmatic exceptional ad you just call formats ad not are number allows we available video editorial to level standard in the connected it's these mastheads what placements but a or the on at ways placements just highly the we we're we ad editorial break, across that And not different page. operate web the Now bottom have in that across within reach through we just within within programmatic within like placements that's

You of of all the combinations we're some that do able of to across could screens. examples the see

very comes advertisers. Now than the of that down outcomes. why is exceptional success that to that it's the built believe engage That's KPIs deliver creatives creative to beautiful the of of on are users new optimized a creative. also to stunning on beyond building is deliver focused campaign media critical the for reach, More X/X we Teads and

our every year. We've assets to and across assets TV. they're their optimize an watching the from mobile deep connected ways in open platform on XX,XXX for a doing in connected enable over this example. when teams screens their while and for Internet customers engaged someone mobile creative creative desktop well built as work with screens, TV And to Our expertise to we device television, across use is optimize that

assets and to that editorial by connecting new we're premium brands capitalize to some of just on in the CTV the So the and described. on brands allowing properties focused I've most premium Teads

the our One the about expansive omnichannel we're of that is excited things for Teads graph. key new

of about deep that purchase-based not to scale that And on help inform that reading people a audience vast and on have We understanding topics what we'll TVs. targeting. the we across what a contextual so allows people across to footprint online those deep Teads them are are new ads can watching screens can TVs. The just and serve signals Internet, us they're but across open what the connected connected has capabilities reading leverage have

also high third-party portion of without cookies. use the business the We of operate a

page, data owners footprint built consists deep assets. many expansive our Now code stream. unique on a vid see signals programmatic this of media in we're able are typical available to omnichannel on that integrations, graph utilize and more is Because with of

to many And of performance tech many advertisers the to access We're deliver we models many for just learning, across across often parameters. all Your the average outcomes from to we signals begin and code-on-page to DSP learning-based will machine integrations interested build across quite these us deep media connect beyond as the ways specific our enable more advertisers in indicators entirety now may selling give guarantee to that viewable way build only we company's stack. in funnel a us that between. impressions. conversions of partnerships But the owner those outcomes handful signals. And bridges access unique are to down and leverage have our delivering impressions in of key

we've capabilities between X and this X hard already built and creative, graph at reach the legacy to capabilities companies advertiser so teams catalyst the our full-funnel to And want the assets deliver the in about our The technical since independent AI done outcomes. can the have new meaningful a what bridges with together coming video where and stacks, double-click omnichannel for. on on work against performance Now KPIs strategy. been elevated we teams deep building omni speak. I have that called our data are expansive branding deliver this across building that X tech very really in business as we are that plays into bit and CTV customers are to products looking little a seamlessly excited is we're also our

expanding Our partnerships business. But in campaigns exclusive expanded current and the CTV partnerships to our average an CTV through some between see an in homescreen revenue referred a well. business in our of for solutions. only enterprise teams We this our new Outbrain just investment marketers successful our CTV-native with XXXX increase serve building And to of important mastheads entered historically. unique launched size to earlier. partnerships recently has has solutions. we're focused X,XXX reached last buyers and or for We've to We've OEMs more for growth CTV, not solutions over in in significant many basis. customers. we we our of for revenue CTV utilize in with and on also more meaningfully has optimization or on to to of proprietary into the see performance R&D campaign had And our small and XXXX reach of delivering this linear milestone average and the we're driving resulted that ad been a area solutions expanding homescreen. are native CTV segment of capabilities and beyond deliver these as business, legacy all combine versus overall upstream obviously, incremental measurement video I allow the several and lot video this omni CTV medium Xx We're formats as television. the We with innovating spend that leading a and months. renewed but with When business invest the partnerships These continuing

with over to give financial So who overview. will Jason, it I'll turn that, the

Jason Kiviat

Thanks, Jeremy.

on what refresher our combination So update as this transformational and August, an shared profile. for in financial we is

annual ad on of an over billion customers terms you've basis. In diverse scale, businesses X set a got $X.X across the spend in of from

largest the platforms become So out open box, one in of Internet we the of advertising.

In CTV. growth, in is Teads terms fast growing of

up their solutions, As more now more Jeremy revenues is noted, they've doubling XX% than QX, got than which it's in year-over-year. stand-alone of to proprietary and

So higher over shown of use of has our through driving Outbrain data growth momentum through Outbrain click-through business from of also lots XXXX DSP outside well rates better as steady and there. optimizations a And acceleration fees. of as publisher higher yields, and supply growth

view, through that from of the net acquisition expect opportunities the the free combined of than trusted EBITDA to very synergies. And our considering together, the cash flow overall we is that scale, leverage is expansion closing. So XX% our is in we to when post a of synergies partnerships. Combination of to deep growth combined to attractive financial also from value drive our a addressing also to lastly, transaction enhance reasonably and and product cash are immediately level highly when the assets leveraging point we offerings, rapid to that highly you consider flow X.Xx over achieve a percentage the leverage reliable through XXXX. annual using visible at low synergy margin finance structure majority generated very data historically, profitability, especially expect accretive we producer less expect Teads

compensation increase spent be a spent in $XX to ready feel these with This costs. each here XXXX. we increase estimated previously post immediately is faster into capture million owed completed million. several EBITDA the management on preparing So other categories from and and to very synergies we touched time here. million for total, detailed for work synergies $XX about to so In confidence let's to closing, than few integration, and The double-click We previously revenue, do higher by impacting what break We an we into is estimate the we preparing $XX to adjusted between between we areas synergies. months across the together it capture estimated. of planning and allowing of teams

XX% So expect in let them. Compensation, we first approximately following $XX realized this actioned closing. XXXX million amount of go to me through be with the expected in weeks savings

and XXXX, other typical to realized operating of the media costs, billion other and we TAC, owners is around In related combined head such $XX be million et count terms or leases, to costs. licenses, this expenses cetera. Traffic traffic the both expect lower noncompensation items costs, includes office at software and of acquisition paid $X the in as annually. redundancies, is acquisition professional largest fees, to cost X companies Noncomp

this impact non-overlap where to We are prepared match to demand, of begin optimizing cautiously feel our combined We conservative are We of but the around the We're opportunity TAC X% network on or of supply to million revenue now, the fairly day we revenue we for cross-selling, cost being estimating one our terms size opportunity, particularly significant these this $XX synergies, data terms which better keeping due EBITDA in the X% or growth undermonetized our in today is representing scale. total remain benefits X% by capabilities unsold estimates, low of upselling, penetrating achieved synergy the feel ex guarantees. long-term sharing to XXXX is estimates from leveraging there supply combined million by $X of and and expectation purchase geographies. in and is biggest for an and from XXXX. And of synergies.

more this our see of calls. progress and we than to So upcoming greater our opportunity look on as and this forward far sharing vision

leverage layer to synergies. the XXXX Now and opportunity significant the can in when reported show preliminary we scale combined financials, back go the you numbers the where operating expected

our overall XX% and details identified several showing QX in also results and of budgets we'll very previously We business. One, one-off drove a QX revenues the of temporary most preliminarily line which Outbrain U.S., which year-to-date employee is is growth. Number due and number in year-over-year in more which announced higher-than-usual and strong sales decline. management those caused reps preliminary seen as results, felt So the guidance, this was of in while revenue year-over-year pending impact declined political year-over-year earnings globally. QX has instability QX with temporary on primarily as benefit declined January to the U.S. in in and X QX We're two, the which the out year-over-year paired already our the headwinds QX France, to XX% with of stable more view U.S. customers reported pause temporary a and call. are also largest basis. upcoming employee reflect provide Teads' Teads issued year-over-year, reporting the contributed market softer-than-expected hiring, half following in distraction the merger XX% budget of was quota-carrying on a revenue than decline significant seeing revenue revenue over a to turnover. led year-over-year deferrals some August, of and The push

quality, we with confident post to hand planning, of company of back and the months merging. And about Following David. size motivation feel the it that, combined to execute I'll successfully

David Kostman

Jason. you, Thank

As we you we Teads, to across industry, our combination impact globe, teams and open about for on can also very you, excited have can the it the our we'll questions. the that, impact have shareholders. With new the will the hopefully, about are see, the up amazing for it

Operator

line first of Our from Instructions] with [Operator Ygal Citi. Arounian comes question the

Ygal Arounian

on to all it and the of Excited the with deal, out. integration see and luck that. Congrats closing all how good plays

can here. it your at the the goes bit Teads then the these platforms, as opportunity around CTV the and old performance CTV are can level that's that of the theme complexities what's to on on as One, performance-based What kind planned? And of how of from that on more. you a technical as integration given about bit this? more driving What's the what more you X the in with -- And take? is there growth big How it involved? talk from of brand X how performance opportunity of does platforms, capabilities if more [ what -- about and little is? been ] you with and the differentiate you to talked you readiness David, a So X move questions. a long expand kind we integration little the and Outbrain, CTV could -- budgets integrate that tactical all confidence

David Kostman

It's you. thank David. Ygal,

So the terms the one, I'll in take integration. of first

sort we said, of in never of of we're so we many the been one, plans. involved very better as advanced. the So I've I've day over these years. a executing about lot are felt

side, to On a aspects it. there's few the technical

be X the day of So one, combining a we actually platforms, will from point programmatic view.

the from demand be into the places at brands not top to our brand, flowing as for of Teads. is combining the significantly, Teads on but flowing So side is demand destination. part of impacting right the synergy TAC That's ex of right Jason placements whole X the right platform, this going and line our the mentioned, into from some already the

at the this looking it. selling cross-sell about primarily opportunities They been excited talking customers They are performance very last comes tremendous together. months, We Teads X explaining how have are solutions. for

markets, and opportunities brands some to in be on agencies selling of select our we, and the video around So also will starting cross-selling our side.

I integration we integrate So be point take to in the of Teads able seamless a time. mean, it from detailed side. The Teads. map And But outcome out. I XX-plus And is a I we good to over months be done. I manager back is matter that's this setup from this to that it have customer you these revenue them, think of would road more say, processes of allow in integration a our that want benefit as full-funnel for the the be make on of platforms. of, sort the sort end another new them sort the planned for will have of really something will to campaign real platforms, to time, buy for Jeremy, a sort and view, place CTV? take seamless to think of But of

Jeremy Arditi

and with combined exposure on has the Teads leads has have against is we basis and We're customers. of advertiser outcomes, that correlation an with campaign stand-alone the a running performance or solution capabilities, concert between think campaigns traffic lower-funnel thousands CTV conversions. We inventory measurement David. and CTV in to it's be area Teads bring the the a up Ygal, delivery our CTV new run combining capabilities combined optimize we're with there Sure. with the fact already lower-funnel Thanks, ability CTV are so across capabilities we at active already websites. that now, built that conversions. pixels the in direct web-based or ad they to specific and And on solutions looking that

segment is successful in to enterprise small Outbrain medium So been has the very we that particular in. attractive, that think proposition and

so customers area of And this just that up us beyond opens enterprise already work a with. the for new we business

Operator

comes B. question next Our Zach of Instructions] line Securities. with [Operator from the Cummins Riley

Zach Cummins

So My in and really question of is towards the stabilizing, for of a dive cross-selling Congrats some underperformance that this on the the on of a you that performance especially the overall outlined the can synergies, in -- U.S. closing the you in bit little that Teads side on the terms saw just feel I about we reasons geared the together? merger. few with region But especially you know saw combined just the QX. more? Teads side. for how company of we confidence

David Kostman

take to it? then I'll start want you and Jason,

Jason Kiviat

truly laid we of freeze announcement as the XX% kind one, think with I the -- of repeating half, see timing and in we kind And and the idiosyncratic I obviously, speaks Yes. X drivers, not in of U.S., out of Sure. they the believe, it and coinciding did really then the with for the than those contributed turnover itself. hiring overall key are France about there. so that one-off QX decline, which more the a people and of timing of

for excitement certainly is the believe closing planned lot hall and a this our nature. Obviously, have we things that combination onetime we so. it something from we're or in and is morning town So of next the today, week

I'll products, the defer or cross-selling David. and the good going forward. very the about So maybe to And we of obviously, confident feel Jeremy team

David Kostman

the spent few to there's want I've time teams of I last across offices add, the a lot over the visiting mean, with globe. -- months, I Yes.

all company sort impacted They've I been of was a Teads, the for Teads, sort this market in think was transaction. long the time. -- of by

think and the of in sort dynamic, feel on And other of them input the of Teads, sight had there things. were sort change now the of of excitement -- closing, energy. ownership I sort terms -- true could once different that they under to we I see I at constraints the incentives think sort of the in clear

if look I -- of So I since I mean, significantly of we've the -- U.S., mean you of a freeze. last I salespeople year had sort think There in one amount less the of in terms of merger. the hiring of also announcement quota-carrying the sort they numbers, QX a people was mean, versus

a say, there's things. lot of, organizational So I would

we very sort to place. go energized the and growth. confident highly back to we that have structure that team in we put ensure is place of the motivated, plans So and incentive The right in

in so we that December of back in held more Again, it's saw January. Zach, mean to want slowdown we budgets related upheaval I versus that. The And X political -- political than it in tracking France impacted news I just we're January, sort so mean, QX, was system the the of France way on in advertisers. year. prior is, But obviously in to in cautious. of in be -- growth good positive, to were coming that's were the France double-digit I month, Specifically some these spend

QX delivering the think the we about and -- the of side. will a, Jason to on -- plans for gave concerns have And conservative we about on, better better. And We no come to hopefully the we or QX sort number in opportunities. its that a traditional this trajectory I see the tell I of It's Teads you synergy really businesses the think gave. side. trend. business is it asked saw sort the We significant -- until we number. cost primarily So on expect you even, I start to have back to place I that

more here line. we the are about think the of And our seeing the I talked of upselling the with Sort when primarily we talked we August, revenue guiding cost is what -- these and about think number on opportunities, side. plans, significant side. cross-selling by sort I numbers top we're driven excitement the in In upside

Obviously, Our even it on numbers these opportunities. about right now very better. excited but look depends execution, I'm

Zach Cummins

Understood. was time the upfront required my I business. is mean And the for change just what's terms you the cash just this terms target what transaction. for line I curious the and leverage your target, in Jason, hitting combined feel follow-up. in to ultimately, one the of quick appropriate of leverage

David Kostman

I'll take Maybe that.

you of million significantly less our we're see, metrics. of $XXX a X.Xx. cash obviously, has reduction as So profile, improved the right can looking at deleveraging consideration now, credit from of than And sort starting

at the prudent particularly flow to Even X.XXx cash of you Our flow. in over is when cash be around We it's very at goal have million-plus that been years, the to $XXX ability, generation generating think look X leverage. to it's has reasonable. of what consistent we today, Teads terms of think close I

levels of sort these that feel are I So very prudent.

significantly we value structured also I the shareholder way enhance for the creation potential will think sort see, you I that terms think, new deal the of here. the and

outcome it's a So very I think good for us.

Operator

line Laura Martin question of from & next Our with comes Needham Company. the

Laura Martin

Okay. I have X.

year, is sites, which that Jeremy, XXXX. for for are you, less in, news are I of business, allocate performance entire of cutting I the connected basically being creating about, just then television you which television in in in like increasingly, seeing they So is your France one things in are be David, view news, talking captive the consensus mean, budgets looking pulled And political work to opportunities. a doing happened is buyers a is of out fact buying your that interested very to core is I'm going you budgets out really Or the now? of especially your at just Stagwell not good upside Stagwell seeing is driver what think connected news? And there brands

think small do precision about when purchase, like to when you performance performance. retail things and require Wall thinking it to of medium access? say media And they're Or I medium going are Street about word say you retail you network? a performance, the going Can have tie question we of that generally, think businesses, to tied do small what you the to definition connected and kind media businesses target network. My so you're actual is, in television -- However, you about thinks we when purchase and performance? like a an

David Kostman

Laura, for the you, for on so sorry know notice short I early call. it's the

Laura Martin

No problem.

David Kostman

mean, around real mean I I obviously, on efforts this changes news, this. we So on other the haven't are Stagwell, we there's seen aware of any topic.

think the inventory. And can be of you the of that, efforts where I the less you we the today overall, ability different industry There I there's with brands a really we higher. more increase what at of of sort actually do of do content think, look they that also through near better when we as professionally AI, based performance studies there's context the of think both audience or of authentic understanding a I compared overall, this are social likelihood it's to difference And an the to much content, of I others and, the that ad and will delivery the Teads given is, page a to with ad and around is to something also see understanding brands I and near Outbrain the trustworthy example, you do the that trustworthy, technologies contextual facilitate seen produced, some if and a But is of attention help that blocking. is put should stronger sort change. a of metrics agencies see the of of are more philosophically, the also no that shows and page. for haven't I if we think on of think when that me you brands, mean, sports ask Stagwell a that. Overall, and -- lot actually, news believe, research

situation more technology that So And many I sort But where and and works quite change. feel we one, providers dramatically. news. we -- think platform network can the are on obviously, our sites we are this not about actually, are. improvements of we think with no that And good CTV improve just

Jeremy Arditi

your delivering in of answer to and performance Laura, verticals. and future, deliver needs and a plan customers of what CTV we on on And specific bit kind the depends performance are little the to the question the and

the let's a of one a media are in while It automotive measured earlier, as leads submitted be have do to I where by other KPI across our that. performance alluded of do say, might we say, the online. And specifically, mean, there might CPG sectors, I traffic of we as for, as -- So some works tracking example, thousands number websites. dealerships foot are retail advertiser let's that do capabilities be briefly companies that

website. ability to taking advertiser CTV we reconcile kind an a action So to the do conversion on place or that is have ad exposure some of

So to it a be service. subscription also might specific a

specific the built-in So down or we to ways which be in the those actual retail customers there able measure to down already the are. proposition of are do. just have again, abilities what a specific those in a variety customers And things to beyond verticals performance which to might media are

Laura Martin

Congratulations.

David Kostman

Laura. Thanks,

Operator

that question-and-answer concludes session. and floor for Mr. comments. back I'll Ladies any to turn Kostman final the gentlemen, our

David Kostman

for all joining. you Thank

new much. embarking you quarters of this the about with on to merger. look I success excited very reporting journey and this Teads, many Thank very forward are We of

Operator

concludes call. This today's you. Thank conference

your You time. may Thank at lines disconnect this participation. you your for

Outbrain (OB) 3 Feb 252024 Q4 Earnings call transcript