Teads Holding Co. (TEAD)·Q3 2025 Earnings Summary

Executive Summary

• Q3 results missed both Wall Street consensus and the company’s prior Q3 guidance: revenue $318.8M vs $335.4M consensus; Primary EPS -$0.17 vs -$0.09 consensus; EBITDA $10.0M vs $25.6M consensus; also below the company’s Q3 guidance for Ex‑TAC gross profit and Adjusted EBITDA (see Guidance Changes). Revenue fell 7% sequentially vs Q2 ($343.1M → $318.8M) while rising 42% YoY on acquisition impact . Values retrieved from S&P Global.*
• Management cited slower-than-expected post-merger integration benefits, increased competition, and Open Internet traffic headwinds (generative AI reducing publisher clicks), with notable sales softness in the U.S., UK, and France, and legacy Outbrain DSP cleanup impacting Ex‑TAC by ~$5M YoY .
• Positive vectors: Ex‑TAC gross margin expanded to 41.0% (26.6% LY), CTV revenue grew ~40% YoY on a pro-forma basis, cross-sell revenue rose 67% QoQ, and cross‑screen (CTV+Web) adoption surpassed 10% of branding advertisers .
• Q4 guide implies sequential improvement (Ex‑TAC GP $142–$152M; Adj. EBITDA $26–$36M), but execution on restructured go‑to‑market and cost discipline are key; high interest burden (10% notes) continues to weigh on GAAP profitability .

What Went Well and What Went Wrong

• What Went Well

  • Mix and margin quality improved: gross margin rose to 33.2% (21.8% LY) and Ex‑TAC gross margin to 41.0% (26.6% LY), reflecting higher-margin acquired business .
  • CTV momentum: ~40% YoY CTV revenue growth on a pro‑forma basis; launch of CTV Performance; accelerating traction in CTV HomeScreen, with 2,500+ cumulative campaigns and new partners TCL and Google TV .
  • Cross‑sell progress: revenue generated via cross‑selling increased 67% sequentially; cross‑screen (CTV+Web) adoption now >10% of branding advertisers .
  • Management focus: restructuring of go‑to‑market organization and decisive measures to accelerate growth and improve profitability, with Investor Day planned for March 2026 .

• What Went Wrong

  • Underperformance vs guidance and consensus: Q3 Ex‑TAC GP ($130.5M) and Adj. EBITDA ($19.2M) missed the company’s Q3 guidance ranges ($133–$143M and $21–$29M, respectively). Revenue, EPS, and EBITDA also missed consensus (see tables) . Values retrieved from S&P Global.*
  • Integration and demand headwinds: integration benefits took longer to materialize; increased competition and advertiser volatility; weaker sales conversion in U.S., UK, and France; Open Internet traffic decline as generative AI bypasses publisher sites (10–15% decline in paid page views at a representative segment of premium publishers) .
  • Legacy DSP headwinds: cleanup of underperforming supply and quality control changes led to ~$30M lower customer spend YoY and ~$5M YoY decline in Ex‑TAC GP in legacy Outbrain DSP .
  • Interest expense drag: Q3 interest expense of $17.1M (10% notes) pressured GAAP net income; YTD interest $57.7M including bridge facility costs .

Financial Results

Segment/Geography revenue (advertiser location)

KPIs and operating quality

Vs. Wall Street consensus (S&P Global)

Values retrieved from S&P Global.*

Additional balance sheet/liquidity notes

• Cash, cash equivalents and short-term marketable securities: $138.3M as of Sept 30, 2025 .
• Total debt obligations: $621.6M, including $604.0M carrying value of 10% senior secured notes and €15M overdraft facility ($17.6M) .
• GAAP interest expense was $17.1M in Q3 and $57.7M YTD; bridge facility costs contributed materially in 1H25 .

Guidance Changes

Note: Company did not reaffirm FY25 Adjusted EBITDA in Q2 due to unusually wide potential outcomes in Q4; no new FY25 Adjusted EBITDA guide in Q3 .

Earnings Call Themes & Trends

Note: A Q3 2025 earnings call transcript was not available in the document set; themes below reflect press release and 10‑Q disclosures.

Management Commentary

• “While we continue to make strategic progress and show exciting growth in areas like CTV, this quarter fell short of our expectations, and we are moving swiftly with decisive measures to further accelerate the return to growth and improve profitability, with a focus on cash flow generation. In Q3, we restructured our go to market organization and today we announced a new leader for that organization.” — David Kostman, CEO
• “We remain confident in the strategic thesis behind our merger and the potential of our cross-screen, outcome-driven branding and performance ad platform.” — David Kostman, CEO

Additional color

• Integration execution, competition, and traffic trends were called out as revenue headwinds; early-stage indicators (pipeline, meetings, cross-sell) improved but had not converted to revenue at the expected pace .

Q&A Highlights

• A Q3 2025 earnings call transcript was not available in the filings/document set. The company hosted a call on Nov 6, 2025 (dial-in and webcast provided), but a transcript could not be located for analysis in this dataset .

Estimates Context

• Revenue: $318.8M vs $335.4M consensus; miss (~5% below) as integration benefits lagged while traffic and competitive headwinds persisted . Values retrieved from S&P Global.*
• Primary EPS: -$0.17 vs -$0.09 consensus; non-GAAP adjustments (acquisition/integration, restructuring) narrowed GAAP loss from -$0.21 to adjusted -$0.17; high interest expense also weighed . Values retrieved from S&P Global.*
• EBITDA (S&P standardized): $10.0M vs $25.6M consensus; company’s Adjusted EBITDA was $19.2M (lower YoY% on Ex‑TAC GP due to integration/operating factors) . Values retrieved from S&P Global.*

Non‑GAAP adjustments and impact

• Adjusted net loss improved vs GAAP by $3.4M in Q3 (adjustments: acquisition/integration $3.7M; restructuring $0.7M; tax effects), taking adjusted diluted EPS to -$0.17 from GAAP -$0.21 .

Key Takeaways for Investors

• Execution watch: The new go‑to‑market leadership and process changes must translate into bookings/revenue in the U.S., UK, and France; early indicators improved but revenue conversion lagged in Q3 . Near‑term stock reaction likely tied to proof of improved sell‑through and Q4 delivery vs guide.
• Margin mix is improving structurally: Ex‑TAC and gross margins expanded materially YoY with the acquired business; sustaining 40%+ Ex‑TAC margin is supportive for medium‑term profitability if growth normalizes .
• CTV remains a core growth vector: Despite moderation from Q2’s >80% YoY to ~40% in Q3, traction across CTV Performance and HomeScreen (2,500+ campaigns) plus new OEM/CTV partners supports a continued channel mix tailwind .
• AI: Internal model improvements are a lever for both performance and branding outcomes; externally, generative AI is an industry headwind for publisher traffic. Net impact depends on faster internal AI gains vs external structural traffic pressures .
• Legacy DSP cleanup is prudent but a near‑term drag: The quality reset reduced spend and Ex‑TAC; expect normalization once the improved supply base and cross‑sell ramp stabilize .
• Balance sheet leverage: 10% notes (fair value below carrying) and ~$17M per quarter interest expense pressure GAAP EPS; execution against Adjusted EBITDA and FCF is key to deleveraging over time .
• Near-term positioning: Q4 guide implies sequential improvement, but delivery risk remains amid macro/traffic headwinds and integration execution; trading setups favor evidence of beats on Ex‑TAC GP/Adj. EBITDA vs guide and indications of 2026 synergy capture .

Footnotes:
Values retrieved from S&P Global.*

Sources: Q3 2025 8‑K (press release, financial statements, guidance) ; Q3 2025 10‑Q (MD&A, trends, debt, geography) ; Q2 2025 8‑K (prior metrics, Q3 guidance) .