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INTEGRAL AD SCIENCE HOLDING CORP. (IAS)·Q1 2025 Earnings Summary

Executive Summary

  • IAS delivered a clean top-line beat and margin outperformance: Revenue rose 17% YoY to $134.1M and Adjusted EBITDA reached $41.5M (31% margin), driven by 24% growth in Optimization and 33% in Publisher; GAAP EPS was $0.05 .
  • Against S&P Global consensus, IAS beat on revenue ($134.07M vs $129.33M*) and Primary EPS ($0.13 vs $0.02*), implying positive surprise on both growth and earnings quality; management raised the midpoints of FY25 revenue and Adjusted EBITDA outlooks to $590–$600M and $204–$210M, respectively .
  • Mix shift continued toward higher-ROI products: Social measurement grew 15% and comprised 58% of measurement and 21% of total revenue; open web display declined single digits as budgets shifted to optimization offerings .
  • Publisher momentum (Publica) remained a bright spot (33% YoY) on OEM adoption, though management flagged Q2 growth will moderate versus Q1 due to Oracle onboarding timing .
  • Stock reaction catalysts: broad-based beat, raised FY midpoints, accelerating optimization products (Meta/TikTok/YouTube pre-bid), and continued Publica strength—tempered by near-term open web softness and measurement growth cadence .

What Went Well and What Went Wrong

  • What Went Well

    • Optimization and publisher strength: Optimization +24% to $64.8M; Publisher +33% to $20.9M; both outpaced total company growth .
    • International and gross margin: International revenue +18% to $42.7M (32% of total); gross margin held at 78%, up ~100 bps YoY .
    • Management execution and tone: “We exceeded our expectations…highlighted by a 24% increase in optimization revenue and a 33% increase in publisher revenue…We are raising the midpoint of our full-year financial outlook” — CEO Lisa Utzschneider .

  • What Went Wrong

    • Measurement growth moderated: Up 4% YoY as open web display was down single digits; budgets are shifting from measurement to optimization .
    • Working capital tightened cash: Operating cash flow was $3.5M due largely to reductions in payables and accrued expenses; cash declined to $59.1M due to $20M debt paydown and investment .
    • Q2 publisher growth moderation: Management expects Q2 publisher growth to be double digit but below Q1’s 33% on Oracle onboarding timing .

Financial Results

Headline P&L and Margins (USD)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$133.53 $153.00 $134.07
Gross Margin (%)80% 78% 78%
GAAP Net Income ($M)$16.09 $15.30 $7.99
GAAP Diluted EPS ($)$0.10 $0.09 $0.05
Adjusted EBITDA ($M)$50.65 $61.40 $41.52
Adjusted EBITDA Margin (%)38% 40% 31%

Segment and Mix (Q1 2025)

Segment/MixQ1 2025YoY Change
Optimization Revenue ($M)$64.8 +24%
Measurement Revenue ($M)$48.4 +4%
Publisher Revenue ($M)$20.9 +33%
International Revenue ($M)$42.7 +18%
International as % of Total32% —
Gross Profit ($M)$103.9 +18%

KPIs and Operating Metrics (Q1 2025)

KPIQ1 2025
Advertiser NRR109%
Large Ad Customers (> $200k)239
Social as % of Measurement58%
Social as % of Total Revenue21%
Video as % of Measurement58%
Open Web (Display)Down single digits YoY
Cash & Equivalents ($M)$59.1
Long-term Debt (end of Q1)~$15M
Diluted Shares166.81M

Results vs S&P Global Consensus (Q1 2025)

MetricConsensus*ActualSurprise
Revenue ($M)$129.33*$134.07 +$4.74M
Primary EPS ($)$0.02*$0.13*Beat

Values marked with an asterisk (*) were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 2025—$142–$144 New
Adjusted EBITDA ($M)Q2 2025—$45–$47 New
Revenue ($M)FY 2025$588–$600 $590–$600 Raised midpoint
Adjusted EBITDA ($M)FY 2025$202–$210 $204–$210 Raised midpoint
Gross Margin (%)FY 202577–79 77–79 Maintained
Stock-based Comp ($M)Q2 2025—$19–$21 New
Stock-based Comp ($M)FY 2025$77–$81 $72.5–$75.5 Lowered
Effective Tax RateFY 2025~30% ~30% Maintained
Weighted Avg Shares (M)Q2 2025—164.5–165.5 New
Weighted Avg Shares (M)FY 2025—165–167 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Q1 2025 (Current Period)Trend
AI/Tech & PerformanceEmphasis on AI-backed TMQ, Quality Attention, Quality Sync expansion; prioritizing performance, reach, innovation “IAS is an AI-first company…Launching Dynamic Performance Profiles; audience-enriched contextual segments; Impression Feed; accelerating AI use cases” Accelerating
Social Optimization (Meta/TikTok/YouTube)First-to-market Meta optimization testing; expanding TikTok/YouTube measurement GA expansion of pre-bid features on Meta/TikTok; Reddit viewability/IVT; pre-screen for Google SPN; expected scaling through 2025 Scaling
CTV/Publica (Publisher)Publica product features to increase bidding competition; 30% growth (Q4) Publisher +33% (Q1); continued OEM adoption; Q2 growth moderates on Oracle timing Strong but moderating near term
Mid-market StrategyNew COO with Oracle background; mid-market a key lever for 2025 Investing in mid-market sales, simpler activation, automation; self-serve focus Building
Oracle Customer Onboarding70%+ win-rate; integration began Q4 High stickiness; strong cross/upsell; higher Context Control adoption from former Grapeshot clients Positive follow-through
China ExpansionAnnounced entry; alpha tests; “plant seeds” approach Ongoing alpha with luxury/CPG; growing headcount and pipeline; positive client event in Shanghai Early but constructive
Macro / MixQ4 saw retail/CPG improvement; focus on performance/ROI Open web display softness persists; budget shift from measurement to optimization; management “customer-obsessed” in guide setting Mixed: optimization tailwind, open web headwind

Management Commentary

  • “We reported 17% revenue growth in the first quarter…We achieved an adjusted EBITDA margin of 31%…We expect double-digit, profitable growth in the second quarter and for the full year 2025.” — CEO Lisa Utzschneider .
  • “Optimization revenue increased 24%…Measurement revenue increased 4%…Publisher revenue increased 33%…Adjusted EBITDA…$41.5M at a 31% margin.” — Interim CFO Jill Putman .
  • “We are raising the midpoint of our full-year financial outlook…Revenue of $590–$600M…Adjusted EBITDA of $204–$210M; we expect to maintain gross margin 77%–79%.” — CEO Lisa Utzschneider .
  • Product momentum: “Dynamic Performance Profiles…34% higher conversion rates and 26% eCPM efficiency in APAC case study…Quality Sync adoption…58% lower cost per conversion” — CEO .
  • Social optimization ROI: “Advertisers…can see annual savings reach 2x their ad investments when using our social optimization solutions.” — CEO .

Q&A Highlights

  • Demand and mix: Brands “leaning into performance programmatic” drove Optimization +24%; open web display softness reflects industry-wide display trends and budget shifts to optimization .
  • Q2 cadence by line: Double-digit total advertiser growth; Optimization growth remains double digit but below Q1’s 24%; Measurement improves to mid-to-high single digits; Publisher double digit but below Q1 on Oracle timing .
  • Mid-market build-out: Lower-touch, automated, performance-focused offerings; staged hiring with self-funding discipline; faster activation and ROI for clients .
  • Publica drivers: Product features increasing bidding competition in auctions; OEM adoption underpinning 33% publisher revenue growth .
  • China update: Alpha tests with luxury/CPG; healthy interest and initial events; longer-term “crawl-walk-run” approach .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $134.07M vs $129.33M*; Primary EPS $0.13 vs $0.02* — clear beats on both lines. Note: S&P’s “Primary EPS” differs from GAAP diluted EPS reported at $0.05 . Values marked with an asterisk (*) were retrieved from S&P Global.
  • Q2 2025 set-up: Company guides revenue to $142–$144M and Adjusted EBITDA to $45–$47M . S&P Global consensus indicates revenue ~$143.61M* and EBITDA ~$46.59M*, which aligns with the company’s ranges. Values marked with an asterisk (*) were retrieved from S&P Global.

Key Takeaways for Investors

  • Optimization-led mix shift is durable: Pre-bid social and contextual innovations (Meta/TikTok/YouTube, Quality Sync, DPP) continue to drive outperformance and should support growth and incremental ROI for advertisers .
  • Publisher/Publica is a second engine: OEM adoption and auction-competition features drove +33% publisher growth; near-term moderation reflects timing, not demand, supporting a constructive H2 trajectory .
  • Measurement stabilization with social strength: Social measurement +15% and 58% of measurement offsets open web pressure; expect mid-to-high single-digit measurement growth ahead per management .
  • FY25 outlook de-risked at the margin: Midpoints raised for revenue and Adjusted EBITDA; gross margin maintained; SBC lowered, implying better expense discipline .
  • International and enterprise diversification: 32% of revenue ex-Americas and 109% NRR signal resilience and upsell/cross-sell potential, including former Oracle accounts .
  • Watch list: Open web display recovery pace, Q2 publisher deceleration (Oracle timing), and scaling cadence of social pre-bid revenues into 2026 (management expectation) .
  • Near-term trading bias: Positive on beat-and-raise profile and product momentum; any weakness tied to headline measurement softness or Q2 publisher moderation may be buyable if optimization trajectory holds .

Appendix: Additional Business Updates (Q1 2025 timeframe)

  • Platform expansions announced during/around Q1: TikTok pre-bid video-level exclusion lists; Reddit viewability/IVT measurement; pre-screen brand safety for Google Search Partner Network; Spotify podcast brand safety/suitability targeting and measurement; Nextdoor first-to-market pre-bid safety partnership; Roblox coverage expansion .

Notes:

  • All company financials and guidance are sourced from IAS’s Form 8-K and earnings materials for Q1 2025 and related press releases/transcripts .
  • Values marked with an asterisk (*) were retrieved from S&P Global.