Teads (TEAD) Q2 Revenue Jumps 60%

Teads (NASDAQ:TEAD), a digital advertising platform known for its AI-powered and omnichannel solutions, announced results on August 7, 2025. The standout news was a 60% revenue jump to $343.1 million (GAAP), primarily reflecting its recent merger, but this still missed analyst forecasts of $352.2 million (GAAP). On the bottom line, non-GAAP EPS matched expectations at (-$0.02) per share, yet the company widened its net loss (GAAP) year over year due to integration and restructuring costs. While Gross profit (GAAP) and operating cash flow (GAAP) both rose sharply, leadership declined to reaffirm previous full-year Adjusted EBITDA (non-GAAP) guidance, highlighting uncertainties linked to ongoing merger integration and high seasonality typical for the fourth quarter. Overall, the period marked strong operational progress tempered by shortfalls in top-line growth versus Street expectations and continued integration spending.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Company Overview and Recent Priorities

Teads runs a global digital advertising platform that connects advertisers with premium publishers across the open Internet. Its core business revolves around helping brands display video and rich media ads to target audiences using artificial intelligence (AI) for campaign management and optimization. It has positioned itself as an alternative to “walled garden” platforms by giving advertisers access to curated ad inventory from over 10,000 publishers and leveraging direct data relationships.

Since the Outbrain–Teads merger earlier this year, the firm has focused on three key areas: innovating with AI for better ad results, expanding its product suite to cover more digital channels (like Connected TV), and deepening relationships with large advertisers and exclusive publishers. Success depends on the pace of integration, realization of cost savings (synergies), unique data capabilities, and launching new ad formats. Keeping such partnerships and innovating on performance-driven campaigns remain crucial for growth and margin improvement.

Quarter in Review: Financial and Operational Highlights

The company’s revenue (GAAP) rose 60% compared to the prior-year quarter, reflecting the impact of the completed merger and favorable foreign exchange effects. Despite this growth, Revenue (GAAP) was shy of external analyst expectations by $9.1 million, or 2.6%. Gross profit (GAAP) increased 164% year over year as higher-margin activities from the acquired business improved the gross margin (GAAP) from 21.3% to 35.1%. Net loss (GAAP) widened to $14.3 million, versus $2.2 million in Q2 2024, mainly due to $5.4 million in acquisition and integration expenses and $1.7 million of restructuring, which were partially offset by a $1.2 million gain from debt repurchase. Adjusted EBITDA, a non-GAAP measure of operating profitability before interest, taxes, depreciation, and amortization, was $27.0 million, marking a 264% year-over-year jump. The company’s ex-TAC gross profit—gross profit before Traffic Acquisition Costs—improved by 158% to $144.2 million (non-GAAP).

Cash generation saw a sizeable boost, with operating cash flow (GAAP) was $25.0 million and adjusted free cash flow (non-GAAP) was $22.1 million. Cash and short-term investments at quarter-end stood at $166.1 million, while total debt was $620.6 million as of June 30, 2025. The company reported it is on track to hit at least $40 million in cost savings in 2025 and $65–$75 million by 2026. However, leadership noted some integration benefits are taking longer than expected to materialize, which, combined with a high degree of fourth-quarter seasonality (about half of annual Adjusted EBITDA comes in Q4), led it to pause adjusted EBITDA guidance. No impairment charges were recorded, suggesting stabilization of the asset base post-merger.

On the product side, Teads expanded its presence in Connected TV (CTV), a digital ad product that serves video ads directly to television screens via internet-connected devices. CTV revenue grew more than 80% year over year on a pro forma basis. Notably, the platform added new premium home screen inventory through a manufacturing partnership with Samsung, complementing earlier exclusivity with LG and Vidaa and increasing reach to over 300 million TV screens. The company also launched Amplify MCP Server—an AI-powered campaign tool tailored for performance-driven advertisers and continued to develop its “vertical experience” product suite, such as Immersive Feeds (formerly Moments) that offer social-media-style vertical video in publisher environments.

In terms of customers and reach, more than 500 advertisers spent over $500,000 each over the trailing twelve months ended June 30, 2025, making up about 70% of client spending during that period with an average spend exceeding $2 million per advertiser. Teads now works with over 20,000 advertisers globally, expanding its set of Joint Business Partnerships with new signings like Kia and Zalando. Publisher relationships remain a major advantage as the company renewed with brand-safe, high-profile media like TMZ and Condé Nast. Data capabilities have also grown. Teads' Omnichannel Household Graph helps advertisers identify and reach viewers at scale across screens. Management emphasized a commitment to “AI everywhere,” embedding AI into creative workflows and campaign management at scale. For example, its “image to clip” feature, which turns still images into short videos for ads, exceeded $1 million in campaign value by May 2025.

Looking Ahead: Guidance and Areas to Watch

Looking forward, management issued guidance targeting ex-TAC gross profit (non-GAAP) in the range of $133–$143 million and adjusted EBITDA (non-GAAP) between $21–$29 million for Q3 2025. This outlook anticipates continued positive free cash flow for the full year. However, leadership declined to reaffirm its previous full-year adjusted EBITDA (non-GAAP) target of at least $180 million. It cited both historically high fourth-quarter variability—since half of annual adjusted EBITDA (non-GAAP) is typically generated in Q4—and the slower-than-anticipated realization of certain integration benefits from the Outbrain–Teads merger.

Investors should pay close attention to the pace of organic growth in the rest of the year, the continuing ramp of synergy benefits, and the company’s ability to sustain free cash flow while managing its sizable debt load. Other focal points include the ongoing growth in CTV, advertiser and publisher expansion, and developments in AI-powered ad delivery and creative tools.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.