Strategic Turnaround Potential Amidst Revenue Softness and Strong EBITDA Performance

Team Internet Group Plc’s Q2 2025 results reveal a stark contrast between short-term revenue challenges and long-term strategic momentum. While gross revenue plummeted 36% year-on-year to $263.9 million, driven by Google’s March 2025 decision to auto-opt advertisers out of its AdSense for Domains (AFD) program, the company’s adjusted EBITDA of $24.6 million—down 47%—suggests disciplined cost management amid a transformative shift to Related Search On Content (RSOC) monetization [1]. This duality raises critical questions for investors: Is the company’s pain a temporary setback or a catalyst for sustainable growth?

Strategic Pain Points and Structural Shifts

The transition from AFD to RSOC—a Google-mandated shift—has directly impacted Team Internet’s Search segment. RSOC’s richer on-page content model initially reduced click-through rates, contributing to a 25% decline in net revenue to $72.8 million in H1 2025 [2]. However, RSOC’s share of gross revenue surged from 4% to 24% year-on-year, signaling early traction [1]. CEO Michael Riedl has framed this as a necessary trade-off: “Short-term monetization efficiency is lower, but RSOC offers a superior user experience and higher click prices in the long run” [3].

To accelerate this transition, Team Internet incurred a $4.7 million restructuring expense in Q2 2025, targeting operational streamlining and future cost savings [2]. Broader cost-cutting initiatives aim to reduce the 2026 cost base by $24 million compared to 2024, with a focus on automation and workforce optimization [3]. These measures have already reduced net debt from $110 million to $93.3 million, providing financial flexibility during the transition [2].

EBITDA Resilience Amid Revenue Softness

Despite the 47% EBITDA decline, the company’s adjusted EBITDA margin of 9.3% (calculated from $24.6 million on $263.9 million revenue) outperforms its 2024 margin of 5.6% (calculated from $22.9 million operating profit on $409.7 million revenue). This suggests that cost reductions are offsetting some of the revenue headwinds [1]. The operating loss of $7.0 million in H1 2025, compared to a $22.9 million profit in H1 2024, underscores the transitional pain but also highlights the company’s commitment to long-term structural improvements [1].

Long-Term Growth Levers

The RSOC model’s potential lies in its ability to attract higher-value advertisers and improve user engagement. While the initial phase of the transition has reduced monetization efficiency, the company anticipates a “structural improvement in quality and profitability” as the model matures [3]. Additionally, the Domains, Identity & Software (DIS) and Comparison segments have shown resilience, contributing to a diversified revenue base [3].

Investor skepticism is understandable given the 36% revenue drop, but the strategic pivot aligns with broader industry trends toward content-driven monetization. The planned September 2025 results webinar, featuring CEO Riedl and CFO William Green, will provide critical insights into the pace of RSOC adoption and the effectiveness of cost-cutting measures [4].

Conclusion: Balancing Short-Term Pain with Long-Term Gain

Team Internet Group’s Q2 2025 results reflect the costs of a necessary transformation. While revenue softness and operating losses are immediate concerns, the company’s EBITDA resilience and strategic focus on RSOC position it for a potential rebound. Investors should monitor two key metrics: (1) the rate of RSOC’s gross revenue contribution and (2) the success of cost-cutting initiatives in sustaining EBITDA margins. If the company can navigate the transition without compromising its balance sheet, the long-term growth story—anchored in a modernized monetization model and diversified segments—could justify the current volatility.

Source:
[1] Team Internet H1 2025 presentation: Revenue falls 36% amid search monetization transition, [https://www.investing.com/news/company-news/team-internet-h1-2025-presentation-revenue-falls-36-amid-search-monetization-transition-93CH-4217792]
[2] Team Internet Group plc Reports Earnings Results for the Half Year Ended June 30, 2025, [https://www.marketscreener.com/news/team-internet-group-plc-reports-earnings-results-for-the-half-year-ended-june-30-2025-ce7c50d2dd81f421]
[3] Team Internet Group Reports Strategic Transformation and Resilient Growth in H1 2025, [https://www.tipranks.com/news/company-announcements/team-internet-group-reports-strategic-transformation-and-resilient-growth-in-h1-2025]
[4] Notice of Results | Company Announcement, [https://www.investegate.co.uk/announcement/rns/team-internet-group-plc--tig/notice-of-results/9042252]