INTEGRAL AD SCIENCE HOLDING CORP. (IAS)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue grew 16% year over year to $154.4M and exceeded both company guidance ($148–$150M) and Wall Street consensus ($149.2M), driven by strength across optimization, measurement, and publisher businesses . Q3 Adjusted EBITDA was $55.3M (36% margin), above the prior guidance range of $51–$53M .
• Versus Street: IAS beat consensus on revenue and Primary EPS (Street $0.072; actual $0.193*) while noting comparability issues between consensus “EBITDA” and IAS’s reported Adjusted EBITDA* .*
• Net income declined year over year to $7.0M (5% margin) from $16.1M (12% margin), due to higher operating expenses, foreign exchange effects, and $6.1M merger-related costs booked in Q3 as IAS advances the Novacap take-private transaction .
• Catalyst: IAS suspended earnings calls and withdrew forward guidance following the announced Novacap acquisition; near-term stock narrative is tied to merger closing milestones and regulatory approvals .

What Went Well and What Went Wrong

What Went Well

• “We exceeded our revenue and adjusted EBITDA outlook for the third quarter with strength across our businesses,” said CEO Lisa Utzschneider .
• Strategic product momentum: Expanded Total Media Quality (TMQ) to Meta Threads, adding third‑party Brand Safety & Suitability measurement; broadens IAS’s AI‑driven content-level analysis across Meta .
• Platform integrations expanding: Selected for Brand Safety measurement on TikTok Pangle (380k apps, 2.9B daily reach via app traffic) and expanded verification with Snap across Sponsored Snaps and Chat Feed ad formats .

What Went Wrong

• Profitability compression: Net income fell to $7.0M (5% margin) from $16.1M (12% margin) YoY; Adjusted EBITDA margin declined to 36% from 38% YoY amid higher opex and merger-related costs ($6.1M in Q3) .
• Elevated stock-based compensation: SBC rose to $22.6M in Q3 vs $16.4M in Q3 2024, pressuring reported margins despite top-line growth .
• Guidance and investor engagement curtailed: IAS did not host a Q3 call and did not provide a financial outlook due to the pending Novacap transaction, reducing real-time management color for investors .

Financial Results

Headline Metrics (GAAP and Non-GAAP)

Segment and Regional Breakdown

Street vs Actual (Q3 2025)

Values with asterisks retrieved from S&P Global.

Notes on comparability:

• Street “Primary EPS” often reflects normalized EPS, which differs from GAAP diluted EPS reported by IAS ($0.04) .
• Street “EBITDA” is not equivalent to IAS’s reported Adjusted EBITDA ($55.27M); use caution when interpreting “miss” on EBITDA due to differing definitions .

Guidance Changes

Rationale: IAS suspended guidance and did not host an earnings call due to the pending Novacap acquisition .

Earnings Call Themes & Trends

(Company did not host a Q3 call due to the announced acquisition; themes derived from Q1–Q3 press releases.)

Management Commentary

• CEO Lisa Utzschneider: “We exceeded our revenue and adjusted EBITDA outlook for the third quarter with strength across our businesses” . On strategy: expanding TMQ for Meta Threads to deliver “third‑party, independent Brand Safety & Suitability Measurement” powered by frame‑level AI .
• CFO Alpana Wegner (Q2): “We expanded our credit facility capacity and exited the quarter debt‑free. We continue to generate strong cash flows that enable us to invest in the long-term success of IAS” .
• CEO on TikTok Pangle: “IAS is committed to providing brands with greater transparency…so they can scale campaigns with confidence” .
• CEO on Snap: Expansion “underscores the importance of third‑party verification” and “trust advertisers place with IAS” .

Q&A Highlights

• IAS did not host a Q3 earnings conference call and did not provide financial outlook due to the pending Novacap transaction; therefore, no Q&A session took place .

Estimates Context

• Revenue beat: IAS delivered $154.36M vs Street consensus $149.18M* .*
• EPS beat: Primary EPS (normalized) of $0.1928* vs Street $0.0718*; note this differs from reported GAAP diluted EPS of $0.04 .*
• EBITDA comparability: Street “EBITDA” ($52.13M*) is not directly comparable to IAS’s Adjusted EBITDA ($55.27M); IAS’s non‑GAAP measure excludes SBC, D&A, FX, merger‑related costs, and other items per reconciliation .*

Values retrieved from S&P Global.

Implications: Consensus models likely need to reflect higher Q3 revenue and normalized EPS, while ensuring alignment of EBITDA definitions to IAS’s Adjusted EBITDA reporting for apples‑to‑apples comparisons .

Key Takeaways for Investors

• Top-line momentum: Revenue up 16% YoY and above both guidance and Street, with optimization (+21% YoY) and publisher (+21% YoY) leading growth .
• Profitability quality: Adjusted EBITDA margin steady at 36% despite elevated opex; QoQ step‑up vs 35% in Q2 highlights operating leverage in core products .
• Non‑GAAP and one‑offs matter: Merger‑related costs ($6.1M), FX, D&A, and higher SBC drove GAAP net margin compression; focus on Adjusted EBITDA and reconciliation for trend analysis .
• Liquidity strengthened: Cash increased to $129.2M; debt was repaid earlier in 2025, supporting investment capacity in AI and platform integrations .
• Strategic moat expanding: New measurement capabilities across Meta Threads, Snap Sponsored Snaps, TikTok Pangle, plus MRC accreditation on Amazon DSP enhance IAS’s verification leadership with scaled partners .
• Near‑term narrative: With guidance suspended and no earnings call, the stock’s near‑term path is likely driven by milestones related to the Novacap transaction (deal terms: $10.30 per share, ~$1.9B valuation) and regulatory approvals .
• Medium‑term thesis: IAS’s AI‑first measurement and optimization footprint, expanding accreditation/trust signals, and cross‑platform integrations position the company for durable revenue growth and margin stability post‑transaction .