Earnings call transcript: Teads Holding Q2 2025 misses EPS forecast, stock drops

Teads Holding Co reported its second-quarter earnings for 2025, revealing a significant earnings miss that led to a sharp decline in its stock price. The company posted an earnings per share (EPS) of -$0.10, well below the forecast of -$0.0107, marking a surprise of 834.58%. Revenue came in at $343 million, slightly below the expected $352.22 million. Following the announcement, Teads’ stock price dropped 19.19% in pre-market trading, reflecting investor concerns over the earnings miss and future guidance. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, despite falling over 63% in the past six months.

Key Takeaways

• Teads Holding reported a substantial EPS miss for Q2 2025.
• Revenue increased 60% year-over-year but fell short of expectations.
• Stock price fell 19.19% in pre-market trading following the earnings release.
• The company launched new products and restructured leadership to improve execution.
• Teads withdrew its full-year 2025 EBITDA guidance, citing uncertainty.

Company Performance

Teads Holding demonstrated strong year-over-year revenue growth of 60%, reaching $343 million. However, the company faced challenges in meeting EPS expectations, which overshadowed its positive revenue performance. The company is actively expanding its product offerings, including a new "Connected Ads" format and enhanced Connected TV (CTV) services. Despite these efforts, the U.S. market’s 20% decline and softness in key consumer sectors presented significant hurdles.

Financial Highlights

• Revenue: $343 million, up 60% year-over-year
• Adjusted EBITDA: $27 million, a 2.5x increase from Q1
• Free Cash Flow: $19 million, or $22 million excluding transaction costs
• Cash and Equivalents: $166 million
• Net Debt Balance: $454 million

Earnings vs. Forecast

Teads Holding’s Q2 2025 EPS of -$0.10 was a significant miss compared to the forecast of -$0.0107, representing an 834.58% surprise. Revenue fell short of the $352.22 million expectation, missing by 2.59%. This performance follows a trend of mixed results in previous quarters, where the company has struggled to consistently meet earnings forecasts.

Market Reaction

Following the earnings announcement, Teads’ stock price experienced a sharp decline, falling 19.19% in pre-market trading. This drop brought the stock closer to its 52-week low of $2.07, reflecting investor concerns over the earnings miss and uncertainty about future performance. The broader market reaction was negative, with the stock’s decline significantly outpacing sector trends. With a beta of 1.33, the stock has shown higher volatility than the broader market. Analyst price targets range from $3.40 to $10.00, suggesting potential upside despite recent challenges. A detailed analysis of Teads’ valuation and growth prospects is available in the Pro Research Report on InvestingPro.

Outlook & Guidance

Teads Holding provided guidance for Q3 2025, projecting gross profit between $133 million and $143 million and adjusted EBITDA between $21 million and $29 million. The company withdrew its full-year 2025 EBITDA guidance, indicating uncertainty in the market environment. Despite the challenges, Teads remains confident in generating positive free cash flow for the year and anticipates building momentum in Q4.

Executive Commentary

CEO David Kaufman acknowledged the company’s underwhelming financial performance, stating, "We are not fully satisfied with our financial performance in Q2." Kaufman emphasized the potential for improved execution in the second half of the year, citing strategic changes and leadership restructuring. CFO Jason Kiviat expressed confidence in the company’s cash flow prospects, stating, "We continue to expect to generate positive free cash flow this year."

Risks and Challenges

• Declining U.S. market: A 20% year-over-year decline poses significant challenges.
• Consumer sector softness: Weakness in consumer goods, automotive, and luxury verticals.
• Leadership restructuring: Recent changes may disrupt short-term operations.
• Withdrawal of guidance: Creates uncertainty regarding future financial performance.
• High net debt: A net debt balance of $454 million could constrain financial flexibility.

Q&A

During the earnings call, analysts raised concerns about the U.S. market decline and its impact on Teads’ performance. Executives addressed questions about the company’s AI search impact on traffic and detailed their debt repurchase strategy. The leadership team emphasized ongoing operational improvements and control measures to navigate the challenging market environment.

Full transcript - Teads Holding Co (TEAD) Q2 2025:

Conference Operator: Good day, ladies and gentlemen, and welcome to Tead’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like to turn the call over to Investor Relations.

Please go ahead.

Maria, Investor Relations, Tead: Good morning, and thank you for joining us on today’s conference call to discuss Tead’s second quarter twenty twenty five results. Joining me on the call today, we have David Kaufman and Jason Kiviat, the CEO and CFO of TEED’s. During this conference call, management will make forward looking statements based on current expectations and assumptions, including statements regarding our business outlook and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward looking statements. These risk factors are discussed in detail in our Form 10 k filed for the year ended 12/31/2024 as updated in our subsequent reports filed with the Securities and Exchange Commission.

Forward looking statements speak only as of the call’s original date, and we do not undertake any duty to update any such statements. Today’s presentation also includes references to non GAAP financial measures. You should refer to the information contained in the company’s second quarter earnings release for definitional information and reconciliations of non GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.peeps.com, under news and events. With that, let me turn the call over to David.

David Kaufman, CEO, Tead: Thank you, Maria. Good morning, Thank you for joining us as we report on our first full quarter as a combined company. Before diving into the details, I wanna make a few points. We have continued to see excellent customer response from advertisers, agencies, and media owners globally to the new team’s value proposition, a true end to end platform delivering outcomes across branding and performance. In q two, we grew EBITDA sequentially in a meaningful way, generating strong cash flow.

At the same time, we are experiencing a slower pace in the return to growth than we had anticipated post merger, mostly attributed to organizational issues we identified during the quarter. We are executing on the integration decisively, making critical organizational changes that we believe positions us for success in the second half of the year and beyond. I will elaborate on each of these points. Turning to the quarter. On the financial front, we delivered results within our guidance for positive sequential progress and a deceleration in the year over year decline rates.

As it relates to the post merger integration, we successfully launched the new kids brand and value proposition globally. Organizationally, our initial focus was on allowing the merge teams to settle in, creating alignment and clarity on roles and responsibilities. However, several learnings from the first few months resulted in us identifying necessary structural changes to improve the effectiveness of the sales organization. We’ve taken those lessons, which are not uncommon when you merge companies of similar size, responded quickly, and accelerated some key changes. In early July, we consolidated our European business under new managing director, Alex Savage, who ran the legacy teams Central European and LatAm businesses to drive better operations and effectiveness in our key markets.

We instructed The USA’s leadership, ensuring a focused mandate for The US team, our largest market, removing decision making bottlenecks, enabling the team to focus on the customers, and instilling a stronger operational rigor and focus on business KPIs. We created a global CRO forum led by me that includes all our original leads, our strategic account group, global agencies, and our brand direct response. Jeremy Arbiti, our co president, continues to steer global strategy agencies, partnerships, and corporate development, while Bertrand Quezada, our co president, drives regional leadership across Europe and JPEG. We also refined our go to market sales approach, including changes in packaging and pricing and in our cross sell strategy, simplifying the narrative and pitch of our sales teams. We expect that the combination of these changes will lead to improved execution in the second half of the year and into 2026.

We’re equally focused on maintaining financial discipline. On cost synergies, we remain on track to deliver 40,000,000 in cost savings for 2025, with a full year run rate savings of $60,000,000 expected in 2026. We remain confident in our ability to deliver positive free cash flow for the full year and recently took the step of repurchasing the portion of our outstanding debt, reinforcing our commitment to efficient capital allocation. Let me turn to the business starting with the demand side. The US market continues to be the main headwind on our business with a year over year decline of more than 20%.

We are now seeing early signs of positive impact from some of the changes I highlighted. We continue to see strong growth in our CTV business with 80% year over year growth in q two on a pro form a basis. We believe that the completion of the integration of our combined home screen offerings across OEMs into Teams ad manager, allowing for a much more efficient workflow for our customers will further support growth in this business. We’re also continuing to grow our CTV inventory, especially across the home screen of premium OEMs like Samsung, LG, and Hisense, which we believe is a reflection of our trusted brand relationships and creative capabilities. We are also going with other premium supply partners including HBO Max, Paramount, and others.

In addition, we are continuing to further diversify our supply as part of our omnichannel strategy. On the retail media front, we announced our first partnership to activate performance campaigns on retail sites to PentaLip. We aim to grow our presence in retail media and leveraging brand advertiser relationships into performance use cases, specifically product sales. On the strategic account front, we signed new joint business partnerships with several top global brands, including Kia and Zalando, underscoring confidence in our integrated offering. We’re seeing initial success in cross selling performance products to legacy teams clients.

Example includes Lowe’s, Citroen, AB InBev, Nestle, and others. And in our outgoing direct response business, which is focused on affiliates and other pure performance advertiser categories, we launched our Amplify AI based MCP server that allows AI agents to connect natively to the Amplify platform. This innovation streamlines integration and workflows for performance marketers, allowing us to deliver greater efficiency and measurable results. An early adopter has called the product revolution of campaign management and a mandatory tool for anyone serious about native performance advertising. Also, as has been the case for several years, legacy outgreens supply outside of our traditional feed continued to grow to over 34% in q two, enabling performance advertisers to reach consumers with a range of placements across the entirety of the open Internet, including display placements, banners, and others.

We continue to expand this type of supply specifically for direct response performance buyers. On the supply side, we saw some decline in our traffic volumes driven by two main factors. First, we made a deliberate and aggressive reduction in publishers and properties that don’t meet our elevated quality standards post merger, removing over 200 publishers in the last few months. This came up led to a roughly 5% year over year reduction of legacy Outbrain revenues. And while it creates near term pressure on revenues, we believe it strengthens our marketplace long term by ensuring our supply drives positive outcome for advertisers on quality placements.

Second, we saw a modest decline in traffic from premium publishers largely due to reductions in search driven visits. As this is an area generating many questions, let me clarify. Notably, even with some pressure on pay views, we saw a seventh consecutive quarter of RPM growth on the outbound legacy platform, which largely offset the decline in paid views and is a testament to our improving monetization per page and per session. It is important to note that search traffic accounts for around 7% of legacy outbound pages and even a much smaller portion across our full network when taking into account legacy feeds and CTV impressions. Another point is that the impact of AI overviews or AI summarization is more pronounced by a factor of two x on evergreen content than on current events content, such as news, sports, entertainment, and finance, where our inventory is the strongest.

Also, AI prompts such as chat GPT are growing traffic source and drive a higher rate of page views than before based on users clicking on the disclosure of sources for topics they are most interested in. We are in active discussions with companies in the ecosystem about opportunities to monetize such AI based results. Moving to the product and technology side. We are accelerating investment in our next generation advertising platform, Teams Ad Manager. We expect that the next generation of our platform will be built leveraging agentic AI modules, delivering increased efficiencies for agencies and effectiveness for advertisers with a focus on providing control, transparency, and modularity.

We expect to launch this new platform in h one twenty twenty six, more on that in our upcoming quarters. In q two, we launched new offerings that align with our core differentiation. We introduced connected ads in beta, a distinctive format that allows a single brand to occupy both mid article and end of article placement demonstrating the potential of brand formats. Early interest signals real potential for scale, and we are already testing it with several advertisers. We’ve seen overall growth in our vertical experiences across publishers.

Our vertical video solutions, which includes immersive feeds, the legacy moments product, is gaining traction with both advertisers and publishers and is live on over 70 premium publishers with early adoption by brands, including Luxottica, James Smucker Company, and others. On the CTV front, we also launched new nonstandard formats for in play advertising. These include l shape, pose and and others. We’re also in the initial stages of driving performance campaigns on CTV with the initial focus being on delivering incremental traffic to advertise the properties by retargeting web users on the CTV screens, leveraging the Teams omni channel household graph. In closing, we remain confident in the strategic rationale behind this merger to build the go to platform for advertisers seeking scaled, high quality performance on the open Internet for all their campaign objectives.

We are continuing to invest in growth areas. We are not fully satisfied with our financial performance in q two and how we are guiding for q three. But when we look at the medium term, we believe that we will continue to provide incremental value to our advertisers, leveraging AI, our unique product capabilities, and access to the most premium media of the world through an end to end platform. We have made some organizational decisions that we expect to lead to market share gains, growth, and stronger yields and profitability. While q three may still reflect some of the traditional effect of the merger, including our reorg and realignment, we expect to see clear momentum building to q four.

I’m tracking the leading indicators closely and look forward to updating you on our progress on our next call. Now I’ll turn it over to Jason for a more detailed financial update. Thanks, David. As David mentioned, we achieved our q two guidance for Astec gross profit and adjusted EBITDA in our first full quarter since completing the acquisition of Teeth in February. Revenue in Q2 was approximately $343,000,000 reflecting an increase of 60% year over year on an as reported basis, driven primarily by the impact of the acquisition.

On a pro form a basis, we saw a similar year over year decline percentage in Q2 as we reported in Q1. While we saw momentum early in the quarter, the summer months have proved more challenging. In June, we experienced several headwinds that decelerated our revenue trends. One, a lower rate of conversion from our sales pipeline, particularly in key countries, U. S, UK and France, that we attribute largely to operational issues as David discussed.

Two, some softness in a couple of our key verticals, consumer goods, automotive and luxury goods, primarily driven by tariff related uncertainty and softer demand in certain geographies. And three, the short term residual impact from our cleanup of underperforming supply partners, which drove the majority of the decline in paid views we experienced and was a headwind on revenue. Despite this, we still experienced positive year over year growth and expect from the legacy operating business as we continue to drive higher RPMs through improved algorithms, optimizations and improving performance for advertisers, which helps lead to higher average CPCs. XPAC gross profit in the quarter was $141,000,000 an increase of 158% year over year on an as reported basis, driven primarily by the impact of the acquisition. Note that Expect gross profit growth is outpacing revenue growth, which was driven primarily by a net favorable change in our revenue mix resulting from the acquisition, additionally aided by the continuation of improved Sarea new mix and RPM growth from the legacy Outbrain business.

Other cost of sales and operating expenses increased year over year, predominantly driven by the impact of the acquisition as well as several related onetime expenses. Note, in the quarter, we recognized $5,000,000 of acquisition and integration related costs as well as 2,000,000 of restructuring charges. Also note that we recorded a benefit from deal related cost synergies in Q2 of approximately $13,000,000 which we expect to extend throughout H2 as we continue to capture savings across both compensation and non compensation areas. We continue to expect total cost synergy savings to match approximately $40,000,000 for the year and maintain our expectation of $60,000,000 for 2026. Overall, we’re focused on our integration and plan to remain disciplined on cost and cash flow generation while taking steps to drive top line growth.

Adjusted EBITDA for Q2 was 27,000,000, which on a as reported basis represents an increase of nearly 2.5 times as compared with Q1. Moving to liquidity. Free cash flow, which as a reminder, we define as cash from operating activities plus CapEx and capitalized software costs, was $19,000,000 in the quarter. This includes cash outflows related to transaction costs, which when excluded, resulting in adjusted free cash flow of $22,000,000 During the quarter, we used $3,000,000 of cash to repurchase $9,300,000 principal amount of long term debt at a discount of approximately 17% as the debt is trading at a considerable discount to core value. As we continue to expect to generate positive cash flow this year and beyond, we view the opportunity to use excess cash on hand as an accretive capital allocation opportunity.

We will continue to consider repurchases in the future. As a result, we ended the quarter with a 166,000,000 of cash, cash equivalents and investments and marketable securities on the balance sheet. We continue to have €15,000,000 or about $17,500,000 in overdraft borrowings classified on our balance sheet as short term debt. And we have 628,000,000 in principal amount of long term debt at a 10% coupon due in 2030. The long term debt is carried on our balance sheet net of discount and deferred financing fees and has a balance of 603,000,000 as of June 30, resulting in a net debt balance of $454,000,000 as compared with $471,000,000 from March 31.

In these first 150, I’m very proud of what we’ve accomplished in terms of integration, decisions we’ve made, and how quickly we’ve adapted as a combined management team to our learnings. All our integration decisions take into consideration our long term goals and vision. This process is challenging as we know two complementary but distinct businesses and strive to quickly execute a high performing efficient go to market strategy. In the short term, we have felt the slower than anticipated return to growth, which we believe is predominantly a matter of timing. Delays in our return to growth have a sizable impact to our adjusted EBITDA in the short term as most of our expenses are fixed costs.

With that context, we provided the following guidance. For Q3, we expect excess gross profit of $133,000,000 to $143,000,000 and we expect adjusted EBITDA of $21,000,000 to $29,000,000 Considering the fact that Q4 is our most significant quarter of the year, historically contributing nearly 50% of annual adjusted EBITDA for the pro form a business and an unusually wide range of outcomes we currently see for Q4 due to the uncertainty of how quickly this steps we’re taking will impact revenue trends, we have made a decision not to reaffirm adjusted EBITDA guidance for the full year 2025. However, we still expect to generate positive free cash flow this year and are very confident that we are taking will drive improvements to results starting in Q4 and into 2026. Now I’ll turn it back to the operator for Q and A.

Conference Operator: Thank you. The floor is now open for questions. If you do have a question, please press 1 on your keyboard. And our first question comes from Laura Martin. Laura, your line is live from Needham.

Thank you.

Laura Martin, Analyst, Needham: Hi. Thank you. I’ll just ask two. Just following up on that last comment, Jason, around debt. So you’re buying in debt at 17% discount, which sounds like a good deal, but you only spent 8,000,000, but your free cash flow was 19.

Is this and you have so much cash on the book. Is there some like, why the restriction? Why not spend, like, all your free cash flow on buying in debt since you have so much cash on the book? Just curious as to how you size how much debt you buy in in a single quarter. Is that a good idea?

And then second for David for you, I wanted you to I wanted to drill down a little bit on this negative 20% U. S. In The U. S. Which is creating a headwind.

How much of that is structural we’re going to have to go through four quarters of that? And how much do you think is just a one or two quarter dislocation that are that will not recur in future quarters? Thank you.

David Kaufman, CEO, Tead: Hey, Laura. It’s Jason. Thanks for your question. So on the on the debt, you know, we used as you said, 8,000,000. We do have a lot more cash from that.

You know, we use what we were what we were comfortable with, you know, immediately in terms of excess cash. So in our first interest payments on the debt is actually in in in a week or two. So, you know, we’re still in the process of integrating where, you know, moving cash around in most efficient, you know, in in in in effective way. But we we we totally are open to more in the future. It’s, you know, as we do expect to generate cash flow this year and and, of course, beyond, You know, it’s something that if we if we see it as, you know, accretive use of capital, we’ll continue to for us, the the 8,000,000 is really the start of of of what we thought was excess cash available on on the balance sheet at this time.

Alright, David. I’ll take the second one. So as we said, I mean, we are not happy with exactly where we ended, but the good news is that these are all within our control. The organizational, structural, legal, sales processes, we’ve made a lot of changes on that very quickly when we realized it. I can tell you that I’m tracking very closely leading indicators around pipeline, conversions, meetings, RFPs, and all of them are trending up in The US.

So I’m, you know, pretty positive around how we’re end up towards the end of the year. And I think, again, this is in our control, and I think we’ve changed it. We made the right changes to to affect that.

Conference Operator: Thank you. And our next question comes from Matt Connen from Citizens. Go ahead.

David Kaufman, CEO, Tead: Thank you so much for taking my questions. My first one is just on, you know, it’s good to see you guys are from the 40,000,000 in synergies in ’25, 70 in ’26. But can you just talk about if if things don’t materialize in the top line that you guys expect, what’s your willingness to to cut more out of expenses just to meet that that free cash flow target for the end of the year? Maybe I’ll take that. So at the moment, we’re really focused on growth, totally focused on back to growth, and we believe that, you know, the changes we’ve made will will get us there.

We always look at opportunities if we need to. And right now, we believe we have the right cost structure to to get back to growth in the second half of the year. And we are tracking it very closely. So if we see something that changes, we will adjust. And we’ve done it in the past, so we know how to do it.

But right now, I think we we decided deliberately to focus on back to growth. Got it. And maybe just a follow-up on just the return to growth and the revamped go to market strategy. You should say called up pricing and packaging. Can you maybe just elaborate just on specifically what you are doing and what’s giving you confidence that kind of if you can get back on track?

For sure. I mean, as an example, LegacyT, they moved from being single product company to a multi product company. I think there’s a lot of opportunities to package better the omnichannel offering. So if you price, for example, something where you give a home screen placement, but you can package with it also in stream and other online video. We’re just approaching this in a more in a more structural way, more strategically around the portfolio.

I I think it’s it’s a big change and we already see that working. On top of that, we’re now adding quite significant amount of cross selling of performance to legacy customers and branding solutions to legacy Alvin customers. Packaging those together, finding the ideal pricing for the combined offering is something that, you know, takes some time. I think right now we are again, it’s not perfect yet, but it’s already really impacting the the volume and the the conversion rates and the win rates in our piece. Thank you so much.

Conference Operator: Thank you. And our next question comes from Ygal Aroun from Citi. Go ahead.

David Kaufman, CEO, Tead: Hey, guys. Good morning. So just on the the transition challenges, wanna maybe tie some of these points together a little bit better. And, David, talk about the advertiser response being really strong and and are being energized by on the on the new combined products, and you know, yet we’re we’re down 20% in The US and, you know, seeing some of the challenges around the the sales org organization. It sounds like the majority of the challenges or or maybe even all are around that.

So can you just maybe bridge those two points first? And and then in, you know, in what you’re seeing in four q and pulling the guidance and and the wide range of outcomes, you know, you’re you’re talking about having sort of or feeling like still confident you fixed these issues. So what what gets you maybe where to to where you wanna be in four q versus not in this wide range of outcomes that you see potentially in four q? Hey, Yod. Thanks.

So I think we we met in economy. You you could see that I think the brand is where we see we had more than 300 meetings with top brands, top agencies, really presenting and and and promoting the concept of branding and performance and the opportunities that, you know, we bring to the market by combining the two. For example, connected ad. It’s a great launch of a product that has a mid article, end of article, one brand taking it, then being able to combine. So that that that is super positive.

I mean, we have not had any any issues around what’s the meaning of the combination. Everyone wants to give it a chance, wants to potentially push more budgets there. Generally, people are looking to diversify from walled gardens and asking one of the largest players on the open Internet that can reach incremental audiences with great ROI from branding and performance is is resonating very well. Now in three markets, we’re having really organizational operation issues that are highlighted, which is The US, UK, and France. Other markets, for example, in Europe have all been growing.

So it means it really relates to management, operations, rigor, and other things that that we are addressing. Yeah. I’m very confident because I feel ready I mean, these things take time. I’m confident because I see leading indicators that that I refer to, like, how much more coverage we have on on our speed, the win rate, the number of meetings, the conversion of the pipeline, the speed of the conversion of the pipeline. So looking at all of these, I can tell you, we’ve seen already in July month over month growth in cross selling or both performance capabilities, performance campaigns to legacy client and branding campaigns to to legacy helping clients.

I see more meetings, and I’m I’m pretty encouraged by what I see and and I think it’s not great news how we performed and what we’re guiding, but it is good news that it is I feel it’s most of it is totally in our control and getting back market share is is something that with better execution behind the confidence we’ll get there. Okay. And I I guess, you know, what about you you talked about the impact to traffic from GenAI and AI overviews. You know, this this topic is probably top of mind more more than any other single topic from investors. And, yeah, you outlined you’ve seen some impact, but it’s not the majority of your I guess, revenue basis impacted directly from this.

Can you just talk about the trends that you expect to see? I think part of the the concern is that this AI overviews continues to become a a bigger part of search. You know, this has a a greater impact. So was the was the decision to move away from certain publishers related to the trends that you’re seeing here at all? And then the commentary around trying to monetize the the new kind of Gen AI overview.

So that was pretty interest excuse me, interesting. I just want to hear a little bit more about your approach there. Thanks. Sure. So, again, maybe maybe I’ll start this with one sort of thing that is specifically for us, which is this reduction in in publishers.

And we have to elevate the quality of of the supply. I think we want to try to bring key legacy advertisers to supply. We just have to play in a in a in a different ball game than than before. And we made a conscious decision to reduce about 200 punctures without a lot of pages, lower quality, and about 5% of of the revenue. So that’s something that’s specifically something we did.

Going back to the to the bigger topic, a, I mean, we have big believers in the open Internet generally. People are spending more time on the open Internet that includes, obviously, also CTV, which is on a runway for us for about $100,000,000 this year, growing 80% this quarter. We have unique offerings that I think diversifying from the opening in the open Internet from traditional publishers to to CTV and to retail media things that we’re Specifically on traditional publishers, I think there’s it it it it’s a mixed bag for search. AI summaries had really had minimal impact on us until now. I’m taking it very, very seriously and, obviously, we’re tracking it.

But there’s a few few elements that play here. One is the type of content. Evergreen content is much more effective than current content, which is news, entertainment, sports, finance, and others. Publishers are are really doing a lot to increase the engagement of users on their sites including incorporating, you know, chat GPT type capabilities into the site and keeping the users more engaged and that creates more interesting supply that we’re helping them monetize and can help them monetize. Generally, I think we have the premium publishers are doing a lot to improve experiences on their side, lesser density, better quality, which plays again in our favor here.

So there’s there’s a lot going on. It’s clearly, I think, I mean, we can’t deny it. It is a risk on on pages. On the other hand, we’ve also shown continuously improvement in monetizing pages. So our RPM, which is what we get per page is increasing for the seventh consecutive quarter.

And I you know, we see that a really good pipeline in the outlook will continue to do that. I’m getting here, you know, it’s it’s a mixed bag, which tracking it. I think it is something that is impacting the industry, but, you know, the industry has always found a way to to to really do well, and I’m confident that between sort of what we can do with the publisher world, diversification, better monetization, I think it it’s it’s gonna be something that we go through and come out of it in in in a good place. Great. Thank you so much, Ed.

Conference Operator: And our next question comes from Ed Alter from Jefferies. Your line is open.

David Kaufman, CEO, Tead: Hey, everyone. Thanks for the question. Maybe just digging into kind of these headwinds a little bit more. Where is this mostly been on the go to market strategy, or is the products fit? Just just just to give a little more color on there would be greatly appreciated.

Hi, David. It’s I think I said it needs it’s very much, I would say, operational, which then gives us the confidence that that we can fix it. I think the product is is great. The new go to market, which clarifies the branding packages, performance packages, the omnichannel is something that is starting to resonate and and and the leveraging this sort of new go to market to get get more business. So we’re very confident on the product, the strategy, the brand performance combined offering, our premium advertiser base, increased our joint business partnerships.

We’re working a bit more on the in The US on the programmatic side on on on certain type of deals. So I think it it it is things that are in our control, and I feel that sort of we already turned the corner based on some of the numbers I see in July. Great. And and on the CTV opportunity, is would would you say today that’s mostly on the home screen and then where that can go? Could you get in screen placements or is is home screen the the main part of that strategy?

It’s a combination of the two. I think the home screen is where we have a really clearly unique differentiation. Many of these home screen placements today, we have exclusive access to. It’s really a a strong demonstration of unique creative capabilities and the quality of advertisers. LG, Samsung, HiSense, they need to make sure that on the home screen, you have only the most premium advertisers of the world and they’re very selective even when we look at the legacy feeds, advertiser base is still selective.

So that’s a great differentiation, but and big part of the business is in stream. Then in the other advantage that we have is now that all these CTV offerings have been integrated into TZN manager, which is our platform. It makes it much easier for agencies to run campaigns on an omnichannel basis and dynamically allocate those campaigns. So that is, again, I think a big tailwind for the growth in potential in CTV. Great.

Thanks.

Conference Operator: Thank you. And our next question comes from Zach Cummins from B. Riley Securities. Go ahead, Zach.

David Kaufman, CEO, Tead: Hi. This is Ethan Whiteall calling in for Zach Cummins. Thank you for taking my question. I think to start, just going forward, can you maybe speak a little bit to your your capital allocation priorities, maybe between that pay down and other options and maybe what your strategy would be there? Sure.

I can take that. You can take that question. You know, we we said really since since we we closed the deal, our priority has been to to, you know, obviously, go back to to to growth here, focus on integration, synergy capture, and generate cash and and using that cash to deleverage. You know, our target leverage ratio we’ve shown in the past is is one to one and a quarter times. And, obviously, I think the use of, you know, what I what I consider our our excess cash, you know, to to to start buying back some of the the bond at a significant discount, you know, aligns with what we said in the past, and and that continues to be our priority.

Got it. And then sort of looking at tariff uncertainty in the macro environment right now for throughout the rest of the year. I was wondering if you could just speak a little bit to your visibility looking at demand for for the rest of the year. Yeah. It’s a big pleasure for sure.

And then David Go ahead. Yeah. Yeah. I I think we we feel very good about it. Obviously, you know, what we’re we’re focused on are are the leading KPIs as David, you know, mentioned in in, I think, in the in the prepared remarks and also one of the big questions, you know, the the the number of meetings, the RFPs, the the pipeline, the weighted pipeline, and we’re monitoring it, you know, even closer than we were previously.

And I think we feel, you know, better about our visibility than we did, obviously, in the first maybe hundred days compared here to the second hundred days post closing. So you know, we feel good. We’re monitoring it closely. And and those days that we’re we’re assessing over, you know, the KPIs that drive that drive the business and and and the local look open to it. And I think that is reflected in quality operational and organizational changes that we’ve made.

So yeah. So good. And I know we also just have a pretty diverse business, you know, where we did see softness in in certain verticals or or geos. You know, there there’s kind of an overlap there, and, you know, none of our verticals are more than mid single digit percentage. So what we have seen softness, you know, you know, we we felt it, you know, in luxury goods or automotive, but it’s been, you know, it’s been high quality.

You David said, if you take out those three markets, you know, you can take the other, you know, 50% or so of of the legacy key businesses. It’s grown year over year. Right? And so we we feel good about that and we’re gaining momentum that we really saw up until June when when it’s gotten down a little bit. I mean, I I would just add, I mean, the geo diversity is is very is very relevant here with about 30% in The Americas, 6% in India, and 10% in in JPEG.

As as they said, we don’t have any major customer vertical concentration. We’ve seen some, you know, softness in certain geographies in, like, Beauty and Lux and others, but the portfolio is diversified enough. We don’t see today any major macro negative impact. And other than, you know, again, there’s been some instability around the tariff announcement that so I think we’re over that at this point and really we don’t see any big macro impact here. Understood.

I appreciate all the color. Thanks.

Conference Operator: Thank you. And at this time, we have no further questions. I would now like to turn the floor back over to David Kaufman for any closing remarks.

David Kaufman, CEO, Tead: Thank you very much. Thanks for joining us today, and I look forward to updating you on sort of the developments we see in our business. Thank you.

Conference Operator: Thank you. This does conclude today’s conference. We appreciate your attendance. You may disconnect your lines at this time, and have a wonderful day.

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