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TH

Teads Holding Co. (TEAD)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered within company guidance on Ex-TAC gross profit and Adjusted EBITDA, but missed Wall Street consensus on revenue and EPS; revenue was $343.1M and diluted EPS was -$0.15 .
  • Gross margin expanded to 35.1% and Ex-TAC gross margin to 42.0% on the combined business; Adjusted EBITDA reached $27.0M as integration cost synergies began to flow-through .
  • Management introduced Q3 guidance (Ex-TAC gross profit $133–$143M; Adjusted EBITDA $21–$29M) and withdrew FY25 Adjusted EBITDA guidance due to uncertainty around the pace of post-merger benefits; the company still expects positive FY25 free cash flow .
  • Call commentary flagged operational sales execution issues, U.S. demand headwinds (>20% YoY decline), tariff-related uncertainty in consumer goods/auto/luxury, and near-term revenue pressure from deliberate removal of >200 lower-quality publishers .

What Went Well and What Went Wrong

What Went Well

  • Achieved Q2 guidance on both Ex-TAC gross profit ($144.2M) and Adjusted EBITDA ($27.0M), with strong cash generation (operating cash flow $25.0M; adjusted FCF $22.1M) .
  • CTV revenue grew more than 80% YoY on a pro-forma basis, with expanded OEM homescreen partnerships (e.g., Samsung) and launch of Teads Audiences for CTV; management emphasized momentum in omnichannel and premium supply .
  • Cost discipline and synergy capture: ~$40M total cost synergies expected in 2025, rising to $60M run-rate in 2026; repurchased $9.3M principal of 10% notes at ~17% discount, demonstrating opportunistic capital allocation .
  • “We have continued to see excellent customer response…a true end-to-end platform delivering outcomes across branding and performance” — CEO David Kostman .

What Went Wrong

  • Missed Wall Street consensus: revenue and EPS below expectations; management cited slower pipeline conversion in the U.S., U.K., and France and softness in consumer goods, automotive, and luxury (tariff-related uncertainty) .
  • U.S. market remains the main headwind with >20% YoY decline, highlighting macro sensitivity and integration-related sales execution gaps .
  • Near-term revenue pressure from cleanup of underperforming supply, removing >200 publishers; while strengthening quality, this reduced page views and weighed on revenue in the short term .

Financial Results

Core P&L and Cash Flow (GAAP and disclosed non-GAAP)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$234.6 $286.4 $343.1
Gross Profit ($USD Millions)$56.1 $82.7 $120.3
Gross Margin (%)23.9% 28.9% 35.1%
Ex-TAC Gross Profit ($USD Millions)$68.3 $103.1 $144.2
Ex-TAC Gross Margin (%)29.1% 36.0% 42.0%
Net Income ($USD Millions)$(0.2) $(54.8) $(14.3)
Diluted EPS ($USD)—$(0.80) $(0.15)
Adjusted EBITDA ($USD Millions)$17.0 $10.7 $27.0
Net Cash Provided by Operating Activities ($USD Millions)$42.7 $(1.0) $25.0

Q2 2025 vs Wall Street Consensus (S&P Global)

MetricActualConsensusVariance
Revenue ($USD Millions)$343.1 $352.22*-$9.12M (−2.6%)
EPS ($USD)−$0.15 −$0.045*−$0.105
EBITDA ($USD Millions)$16.55*$30.58*−$14.03M

Values marked with * retrieved from S&P Global.

Significance: Revenue and EPS were below consensus; EBITDA (S&P definition) below consensus as well. Company-reported Adjusted EBITDA was $27.0M (non-GAAP), which differs from S&P EBITDA definitions .

KPIs and Operational Metrics

KPIQ4 2024Q1 2025Q2 2025
Advertisers spending ≥$0.5M (LTM)—~500 >500; ~70% of spend; avg >$2M per advertiser
CTV revenue YoY growth (pro forma)—>100% >80%
Supply outside traditional feed~30% of revenue —34% share on legacy Outbrain supply
Publishers removed (quality cleanup)——>200 removed
Cash, cash equivalents & marketable securities ($USD Millions)$166.1 $155.9 $166.1
Net debt ($USD Millions)—$471 (as of 3/31) $454 (as of 6/30)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ex-TAC Gross ProfitQ2 2025$141M–$150M Actual: $144.2M Achieved within range
Adjusted EBITDAQ2 2025$26M–$34M Actual: $27.0M Achieved within range
Ex-TAC Gross ProfitQ3 2025—$133M–$143M New guidance
Adjusted EBITDAQ3 2025—$21M–$29M New guidance
Adjusted EBITDA (FY)FY 2025≥$180M Not reaffirmed Withdrawn
Free Cash Flow (FY)FY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
AI/technology initiativesEmphasis on RPM improvements and DSP growth Moments vertical video scaling; integration milestones Agentic AI roadmap in Teads Ad Manager; Amplify MCP Server for AI-agent campaign mgmt Expanding AI adoption across platform and performance
Supply quality & cleanupSupply expansion outside feed to ~30% —Deliberate removal of >200 low-quality publishers; 7th consecutive quarter of RPM growth Near-term revenue pressure; long-term marketplace quality up
Tariffs/macroMacro noted in risk disclosures —Softness in consumer goods/auto/luxury tied to tariff uncertainty; slower conversion in US/UK/FR Macro/trade dynamics weighing on demand
Product performance (CTV, formats)Homescreen & premium supply momentum CTV >100% YoY; ~5% of spend CTV >80% YoY; new OEM homescreen, Audiences for CTV; Connected Ads beta; Immersive Feeds scaling CTV scaling; new brand-performance formats gaining traction
Regional trends——U.S. >20% YoY decline; European leadership consolidation; US mandate focus Organizational refocus to address US weakness
R&D execution—Integration & synergy planning Accelerating next-gen platform leveraging agentic AI modules; H1 2026 launch target Increased investment; clear timeline
Regulatory/legal & riskStandard SEC risk disclosures —Comprehensive risk disclosure incl. geopolitical, AI impacts, privacy Heightened risk management focus post-merger

Management Commentary

  • “Q2 was our first full quarter as a combined company, and we delivered results within our guidance…our partners see the power of what we’re building for advertisers and media owners across the open internet” — CEO David Kostman .
  • “We are accelerating investment in our next generation advertising platform…built leveraging agentic AI modules…with a focus on providing control, transparency, and modularity” — CEO David Kostman .
  • “Revenue in Q2 was approximately $343M…In June, we experienced several headwinds that decelerated our revenue trends…lower conversion from our sales pipeline in the U.S., U.K., and France…softness in consumer goods, automotive, and luxury…short-term residual impact from cleanup of underperforming supply partners” — CFO Jason Kiviat .
  • “We provided the following guidance. For Q3, we expect Ex-TAC gross profit of $133M to $143M and Adjusted EBITDA of $21M to $29M…we have made a decision not to reaffirm Adjusted EBITDA guidance for the full year 2025…we still expect to generate positive free cash flow” — CFO Jason Kiviat .

Q&A Highlights

  • Pace and visibility of post-merger benefits and Q4 seasonality: management declined to reaffirm FY25 Adjusted EBITDA given wide potential Q4 outcomes, emphasizing focus on positive free cash flow and cost discipline .
  • U.S. demand weakness and sales execution: leadership realignment and CRO forum established to remove decision bottlenecks and sharpen cross-sell narrative; expectation for improved execution into H2 and 2026 .
  • Revenue pressure drivers: tariff uncertainty in key verticals and deliberate publisher cleanup; RPM growth continues to offset some page-view declines .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 revenue was $352.22M and EPS was −$0.045; actuals were $343.1M and −$0.15, respectively (misses). S&P Global EBITDA consensus was $30.58M vs S&P Global actual $16.55 (miss). Company-reported Adjusted EBITDA was $27.0M and reflects a different non-GAAP definition than S&P EBITDA .
    Values retrieved from S&P Global.

Where estimates may need to adjust:

  • Near-term models should reflect management’s Q3 guide and the withdrawal of FY25 Adjusted EBITDA guidance; incorporate U.S. demand headwinds, tariff-related vertical softness, and execution improvements expected into Q4 .

Key Takeaways for Investors

  • Revenue and EPS missed consensus, but profitability and cash generation tracked guidance; margin expansion underscores combined business mix shift and synergy capture .
  • U.S. weakness (>20% YoY) and tariff-sensitive verticals are tangible headwinds; organizational changes intend to improve pipeline conversion into H2 .
  • CTV remains a structural growth vector (>80% YoY), supported by OEM homescreen access and audience solutions; brand-to-performance formats (Connected Ads, Immersive Feeds) deepen differentiation .
  • Quality-focused supply cleanup (>200 publishers removed) likely depresses near-term revenue, but enhances marketplace integrity and sustained RPM improvements (7th consecutive quarter) .
  • Q3 guide ($133–$143M Ex-TAC; $21–$29M Adjusted EBITDA) plus FY free cash flow target suggest continued cost control; absence of FY25 Adjusted EBITDA reaffirmation raises Q4 outcome dispersion .
  • Balance sheet flexibility: $166.1M cash/investments and opportunistic debt repurchases at ~17% discount; net debt reduced to $454M from $471M QoQ .
  • Tactical implication: expect estimate cuts on revenue/EPS and potentially EBITDA (S&P definition) near-term; watch U.S. demand, sales execution KPIs, and Q4 seasonality as key stock catalysts .

Values marked with * retrieved from S&P Global.