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Date

May 7, 2026, at 8:30 a.m. ET

Call participants

  • Co-CEO — David Kostman
  • Chief Financial Officer — Jason Kiviat

Takeaways

  • Revenue -- Reported at approximately EUR 266 million, reflecting a 7% decline year over year.
  • Ex-TAC gross profit -- Stated as EUR 108 million, growing 5% year over year, with pro forma decline of 11% versus a 19% decline the previous quarter.
  • Adjusted EBITDA -- Delivered approximately $1 million, aligning with company guidance.
  • Adjusted free cash flow -- Utilized $41 million, influenced by a semi-annual bond interest payment of $31 million and working capital seasonality.
  • Quarter-end cash balance -- Ended the period with $99 million in cash, cash equivalents, and investments in marketable securities.
  • CTV revenue growth -- Exceeded 50% year over year, with notable contributions from EMEA and APAC, and home screen inventory solidified through partnerships with LG, Samsung, and Google TV.
  • Omnichannel campaign adoption -- Increased to 13% of all campaigns, up from 8% in the comparable period.
  • Enterprise agency & brand revenue -- In 2025, this segment generated approximately $900 million and accounted for about 80% of Ex-TAC due to higher margin profile; about EUR 450 million came from leading agencies and direct brands.
  • Direct response revenue -- Totaled approximately $500 million and represented 20% of Ex-TAC, with a business focus on algorithm-driven performance.
  • Renewed major partnerships -- Successfully extended agreements with enterprise brands such as McDonald's, Heineken, and Volkswagen.
  • Cost reductions -- Restructuring actions lowered the compensation run rate by over 20% year over year.
  • Guidance for Q2 2026 -- Projected Ex-TAC gross profit of $121 million-$131 million and adjusted EBITDA of $14 million-$22 million.
  • Full-year 2026 adjusted EBITDA guidance -- Maintained at approximately $100 million.
  • Strategic product integration -- Integration of Outbrain performance algorithms into Teads Ad Manager offers unified campaign management across branding and performance.
  • Operational focus -- Leadership stated integration challenges from 2025 are resolved, with newly formed teams and continued adoption of AI across the organization.

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Risks

  • Chief Financial Officer Kiviat highlighted that prior year headwinds will cause the “hardest comparison period of the year in Q2,” with an explicit Ex-TAC headwind of approximately $20 million year over year, largely contained within the first half.
  • Kiviat said, “adjusted free cash flow was a use of cash of $41 million in the quarter,” citing the timing of semi-annual bond interest and working capital seasonality as contributing factors.
  • Kiviat acknowledged continued evaluation of “opportunistic alternatives that may be available to us to strengthen our balance sheet and build a more durable capital structure,” indicating current leverage or liquidity is an ongoing consideration.

Summary

Teads (TEAD +21.88%) reported a 7% year-over-year revenue decline, balanced by 5% growth in Ex-TAC gross profit and explicit improvement in the rate of margin decline compared to prior quarters. The leadership team emphasized progress post-integration, attributing cost reductions and a 20% decrease in compensation expenses to recent restructuring efforts. Accelerating CTV revenue growth—over 50% year over year primarily in EMEA and APAC—along with expanded omnichannel adoption and new product integration, signaled a shift toward higher-value, diversified advertising solutions. Management reiterated its full-year adjusted EBITDA target of approximately $100 million and introduced Q2 guidance showing sequential improvement in gross profit and profitability. The company is actively reviewing its capital structure but maintained a $99 million cash position exiting the quarter.

  • Management identified agency demand for unified, AI-powered campaign management as a key driver for rising share-of-wallet opportunities within the enterprise segment.
  • Kiviat reported that minimum operating cash needs have declined following integration, now estimated at $70 million-$80 million with plans to potentially lower that further.
  • Brand partnerships were described as strategic, with joint business partnerships exceeding $200 million in spend and supporting both data collaboration and scaled ad spending frameworks.
  • Investment in CTV formats beyond home screen—including in-stream, in-play, and pause ads—remains a priority for product expansion and differentiation.
  • Leadership noted continued seasonality impacts on cash flows and reaffirmed expectation for year-over-year revenue trends to improve meaningfully by Q3 and Q4 as prior year quality adjustments phase out.

Industry glossary

  • Ex-TAC: Revenue after deducting traffic acquisition costs, representing net advertising revenue retained by the platform.
  • CTV: Connected TV; digital video delivered on television screens via internet-connected devices and smart TVs.
  • TAM (Teads Ad Manager): Teads’ central platform enabling agencies and brands to plan, execute, and optimize omnichannel advertising campaigns.
  • JBP (Joint Business Partnership): Strategic agreements with agencies or brands that involve data-sharing and structured, large-scale ad spending.
  • RPM: Revenue per mille (thousand) impressions, a key advertising yield metric for publishers and platforms.

Full Conference Call Transcript

David Kostman: Thank you, Dani. Good morning, everyone, and thank you for joining us. Before we dive into our Q1 highlights, I want to frame our current market position. One year into the combination of Outbrain and Teads, the new Teads has evolved into the definitive omnichannel outcomes platform. By combining our premium video and performance heritages, we've created the connected tissue between the living room and the mobile screen, delivering the precise accountability that today's advertisers demand across CTV and the open Internet and from branding to performance. To understand our scale, it's best to look at the two distinct advertiser bases that fuel our platform. First, our enterprise business, which is composed of global brands and major advertising agencies.

In 2025, these generated approximately $900 million in revenue, accounting for approximately 80% of our Ex -TAC due to its higher margin profile. About half of this, roughly EUR 450 million, is driven through the world's leading agencies like Publicis, Omnicom, Havas, Stagwell as well as brand direct relationships. Our enterprise brand roster includes icons such as Apple, LVMH, Stellantis and Nestle. We now manage approximately 50 global joint business partnerships, which moves us beyond vendor status into strategic territory involving data collaboration and large-scale spending frameworks. In 2025 alone, these JBPs represented over $200 million in spend. These partners activate through Teads Ad Manager or TAM, for both brand and performance goals across CTV and the open internet.

While we compete with major DSPs, we win because of our end-to-end stack. One, we have created exclusive supply. We offer premium environment others simply can't access. Second, first-party data. Our code on page provides unique signals for cookie-less world. This data is augmented by strategic data and measurement partnerships. Third, AI-driven creative. We optimize the big idea for any screen. Fourth, our global scale. In a world of consolidation, brands want a scaled global partner they can trust. Second, our direct response engine. This represents approximately $500 million in revenue and 20% of our Ex-TAC and includes affiliates direct-to-consumer brands, search-focused buyers and others. These are what we call elastic buyers.

They are always on as long as we hit their ROAS targets. Primarily activating through our amplified platform, which is the legacy Outbrain stack. This business is a high-volume efficiency play. We differentiate here through superior algorithmic performance and AI-led content optimization and workflows. In this space, we compete against some of the legacy Outbrain competitors. What makes the new Teads truly unique is that these two worlds are now converging in our favor. We are integrating Outbrain's industry-leading performance algorithms into Teads Ad Manager, TAM. This creates a powerful, unified workflow. And for the first time, a holding company agency can manage a high-gloss branding campaign and a high-velocity conversion campaign within a single seamless environment.

In CTV specifically, we are seeing a clear shift. Advertisers are no longer just looking for reach. They want video that drives action. Our ability to leverage AI for creative optimization and performance tracking across both CTV and the web is a unique value proposition that we are starting to scale. To see how this works in practice, I'll bring you one example. If we look at Gucci Beauty's recent omnichannel campaign for its Gucci Flora collection. They deployed a premium attention-driven strategy, combining CTV home screen and in-Read placements to stand out in the crowded luxury fragrance category. By aligning media delivery with high-interest environments like fashion and travel, Gucci achieved market-leading incremental gains across the entire funnel.

Awareness, this campaign delivered a 175% increase in top-of-mind awareness compared to the control group. In terms of attention, which is a key KPI we deliver. We saw 29% higher consumer attention versus standard beauty benchmarks. On the ad recall front, Gucci Beauty achieved 2.8x higher ad recall than the category average. And on consideration, this strategy drove a 3-point lift in brand consideration and preference over its competitors. This is one recent example, but it demonstrates that Teads can deliver a unified journey that most point solutions simply cannot replicate. Teads can do this due to the breadth of our offerings across screens and the depth of our offering from branding to performance.

Turning you to our Q1 results, this was a pivotal quarter of execution. We exceeded our Ex-TAC revenue guidance. We saw good indications from partners that Teads is on a strong path to becoming an essential AI-powered global platform for the modern advertiser. We executed with a new leadership team in a focused and effective way, putting behind us many of the integration challenges we experienced in 2025. To illustrate how this strategy is translating into results, here are a few data points. Our CTV revenue grew over 50% year-over-year, with particularly strong momentum in EMEA and APAC. We've solidified our home screen leadership through partnerships with LG, Samsung and Google TV.

We believe this gives us the largest footprint of this high-value inventory globally. 13% of our campaigns are now omnichannel, compared to 8% in Q1 of last year, as more clients realize the benefits of the full funnel approach I just described. We successfully renewed partnerships with many enterprise brands, including McDonald's, Heineken, and Volkswagen. In our direct response business, we launched vertical video formats and continue to drive CTV campaigns. And we continued the aggressive adoption of AI in our product solutions, engineering teams, and across internal functions. To sum it up, the foundational integration work of 2025 is behind us. We have a new leadership team in place.

Our product road map is focused and truly differentiated value proposition, and our client base is validating our strategy. We are operating according to our plan and remain confident in our trajectory. I will now turn the call over to Jason to review the financials.

Jason Kiviat: Thanks, David. As David mentioned, we exceeded our Q1 guidance for Ex-TAC gross profit and achieved our guidance for adjusted EBITDA. Revenue in Q1 was approximately EUR 266 million, reflecting a 7% decline year-over-year. As I noted in our last update in March, we've seen a more stable top line to start this year. We continue to see progress in our areas of focus, and David touched on a lot of this in his remarks. Importantly, we're starting to see that in our results as we continue to drive towards a return to year-over-year growth by Q4 of this year. Ex-TAC gross profit in the quarter was EUR 108 million, an increase of 5% year-over-year.

We closed the acquisition in February of last year, on a pro forma basis, this represents a decline of 11% year-over-year, as compared with the 19% decline we reported in Q4. So we're starting to see some progress, and particularly in Europe, the Middle East and Asia. Excluding the U.S., we grew revenue from enterprise customers year-over-year, and we believe we will see a greater positive impact in the U.S. in the coming quarters from the changes we've made in our operations.

Based on the dynamics of the prior year headwinds, we have our hardest comparison period of the year in Q2, but forward is expected to significantly ease in Q3 and Q4, mainly due to the quality-related cleanups we did in our direct response business last year, which started having a material impact in Q3 of 2025. As noted last quarter, this is expected to be a headwind of approximately $20 million of Ex-TAC year-over-year, with the vast majority in H1, phasing down to a minimal amount by Q4. We expect to continue to make progress on our turnaround in Q2.

But as you'll see in our Q2 guidance, this is partially muted by the comps and is expected to right itself in H2. Note that Ex-TAC gross profit growth is outpacing revenue growth due to a net favorable change in our revenue mix post acquisition, with more business from enterprise advertisers and agencies, as well as the continuation of improvements to revenue mix and RPM growth that we've seen for several quarters. Other cost of sales and operating expenses decreased year-over-year, largely driven by one-time costs in the prior year period, the realization of gear-related synergies, and the additional cost reductions we discussed and implemented last quarter.

Looking back, our restructuring efforts have reduced our compensation run rate by over 20% year-over-year. This was offset partially in Q1 by the impact of the shorter comparison period in the prior year, including increased amortization of the acquired intangibles, as well as an unfavorable FX impact. On the whole, we have a streamlined cost structure and a more efficient operation. We expect a similar cost level for the balance of the year, with some seasonality mainly in Q4 and additional opportunities to continue to drive efficiency through ongoing integration. Adjusted EBITDA for Q1 was approximately $1 million and adjusted free cash flow was a use of cash of $41 million in the quarter.

The use of cash was driven by the timing of our semi-annual bond interest payment of $31 million. The low seasonality of Q1, which is typical in our business as well as timing of working capital. Working capital typically fluctuates for us quarter-to-quarter based on timing of collections and payments. Typically, Q1 is a very strong seasonal net working capital quarter for us, but as H2 was very strong last year, there was timing and cut off element impacting Q1. As a result, we ended the quarter with $99 million of cash, cash equivalents and investments in marketable securities on the balance sheet.

As we've said in the past, we are always evaluating our cost and capital structure for opportunities to improve our financial profile. In that regard, we are evaluating opportunistic alternatives that may be available to us to strengthen our balance sheet and build a more durable capital structure. Now I'll turn to guidance. For Q2 2026, we expect Ex-TAC gross profit of $121 million to $131 million, and we expect adjusted EBITDA of $14 million to $22 million. For full year 2026, we continue to expect adjusted EBITDA of approximately $100 million. Now I'll turn it back to the operator for Q&A.

Operator: [Operator Instructions] The first question comes from Laura Martin with Needham & Company.

Laura Martin: So David, could you talk about the work you're doing now with ad agencies and what kind of feedback and learning you're getting from them right now? And then, Jason, when you think about the free cash flow level, given what the current outlook and both Q1 reported and also what you're seeing today, could you talk about progress in free cash flow for this year, please?

David Kostman: Hey, Laura. Good morning. Thanks for joining. So on the agency front, we're very focused around strengthening the depth of strategic integrations around data and ID with the agencies, and a lot of focus around how we start driving agentic campaign setup, management of campaigns to agents on Teads Ad Manager. And we're working on just general interconnectivity and making their workflows more efficient, to, again, using AI, automated workflows and make the campaigns much more effective.

I mean I highlighted on the call one thing, the integration of performance capabilities into Teads Ad Manager, which is again the platform that they access is very helpful in terms of enabling agencies to run campaigns that are both branding and conversions in one platform. And that will increase again the share of wallet that we can get from these agencies because they're very focused on efficiency and workflows and ability to run campaigns on one dashboard.

Jason Kiviat: Sure. And here's Jason for the second question, Laura. Thanks for it. Q1, obviously, maybe a little bit of surprise to some people who see the number of the free cash flow being down EUR 41 million, not a surprise to us. We ended Q4 with just a pretty high working capital balance in terms of just cut off timing of cash going in or out before or after New Year's. So that wasn't a surprise. And obviously, the interest payment we know is scheduled twice a year, including in February. So not a surprise for us. We also had severance payments related to our restructuring that we announced in Q4 going out in Q1.

So all that said, we're up a little bit higher actually, in the month subsequent in April in cash balance. And we do expect, and we said last quarter that at our guidance of around EUR 100 million of EBITDA, that should be a small use of cash for the year net-net, but it will go up and down just based on the timing of working capital throughout the year.

Operator: The next question comes from Brianna Diaz with JMP Securities.

Brianna Diaz: David, with the new leadership, have you made any structural changes to the go-to-market model now that they've been in the position and in the seat for a few months? And just what are the changes you're seeing in regard to the U.S. business and what gives greater confidence that, that can rebound in the coming quarters? And then Jason, just you mentioned the evaluation of opportunistic alternatives to strengthen the balance sheet and build a more durable capital structure. I don't think any debt was repurchased in the quarter. Can you just update us on the status of the reevaluations or what the possibilities are?

And just on cash, can you help us understand maybe what a minimum cash level you guys would be able to comfortably operate?

David Kostman: Hi, Brianna Diaz. In terms of the go-to-market, which we have changed a little bit the coverage model around agencies and strategic accounts. So we're putting emphasis on integrating these two by, changing the coverage model and incentives. That's a big one. In the U.S. specifically, we have a new team Molly, who joined us as the Chief Commercial Officer end of November, brought a new GM for North America, Nirali, in February, and we've made some changes around the leadership of the organization. And we see the momentum already into the second quarter of the U.S. also picking up. We highlighted that we had real strength in the first quarter in EMEA and APAC.

And I think we see some of the steps we took in EMEA and APAC in the second half of last year will also translate into hopefully the same impact in the U.S. going into the second quarter and the second half of the year.

Jason Kiviat: Yeah. Thanks, Brianna. This is Jason for the second part. Yes, we're actively evaluating our structure, exploring possible transactions that would optimize the capital structure, considering all available options to us and working with our advisers and our board towards that end. We don't intend to discuss anything further regarding this at the moment, but just wanted to share that it's something that we are looking into. And as far as the minimum cash question, it's a good question. It's evolved over time as we've progressed through our integration at the time of the actual merger, a year and a few months ago, we said it was probably around EUR 100 million. It's certainly less than that today.

It varies by time of year and even by time of month, just based on, as I said, working capital flows and needs. It's probably in the $70 million to $80 million range. But again, we're working to even bring that further down through further integration. And obviously, in any way we can reduce the requirement definitely is more efficient use of cash.

Operator: Our next question comes from Ed Alter with Jefferies.

Edward Alter: Can you remind us with kind of the CTV business growing faster than some of the other parts of the business, how that impacts the mix of Ex-TAC gross margins? And similarly, if your CTV spend could move be it to other CTV formats besides home screen?

David Kostman: Maybe I'll start generally with CTV. Sorry, just start generally. I think when we look at CTV, it's -- the CTV itself, the business that is growing more than 50%. It's on the average margin of the company, which is around the 40s. And this is what is important about it is that it also leads to growth in other placements. So we're looking at focusing on leveraging CTV for omnichannel. So the example I gave on the call is one of many examples.

You can look at many case studies where our advertisers are using the entry point of CTV into the living room, but then expanding their campaigns into online video, into the in-read placement, and then expanding it further also from branding to performance. So for us, CTV is a great growth business, and it's a great sort of platform for growing the overall business across the board.

Edward Alter: And just as a follow-up, is there any kind of ambition to move beyond home screen ads to other formats on CTV given that part of your business is growing so well?

David Kostman: For sure. I mean, the home screen is one part of the business. We don't break it down exactly, but I would say it's around half, and we have obviously in-stream. We are now advancing with formats around in-play and pause ads. So it's the biggest area of investment for us product-wise is the CTV area in terms of format, optimizing the creative with AI in the Teads Brand Studio and really leveraging then the CTV to the rest of our business. But it's -- the home screen is where we have, in many regions, exclusivity.

So it gives us a great entry point and a great ability to work with advertisers on the most premium placements that drive the most attention. And by being smarter about packaging, offering broader solutions and campaigns that are broader than just the home screen, I think we're leveraging that to grow the entire business. But the home screen is a great entry point, the exclusivities we have with LG in many geographies, with Samsung, we're now expanding that home screen position. We believe we are the only platform for the large agencies where they can actually launch CTV home screen campaigns on multiple OEMs. These integrations take time in the optimization.

So I think we have a very solid position there that is a springboard to grow significantly CTV and omnichannel.

Operator: Thank you. At this time, I would like to turn the floor back to David Kaufman for closing remarks.

David Kostman: Thank you all for joining. As you can see, I think we have all the critical pieces really to turn the buzzwords of omnichannel and full funnel into a repeatable growth driver in reality. We're executing. We are confident on the ability to hit the goals we gave -- set ourselves and we presented you for 2026. And I think the market is going in our direction, and we're very excited about the trajectory, and we'll see you in the next quarterly call. Thank you.

Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.