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Outbrain (OB) 8 Aug 24 2024 Q2 Earnings call transcript

AInvestThursday, Aug 8, 2024 10:48 pm ET
1min read

In the recent second quarter earnings call of Outbrain Inc., the company's executives shared their optimistic outlook for the future, driven by a transformative merger with Teads and a focus on expanding their reach and capabilities.

Key Themes: Merger with Teads and Strategic Growth Drivers

Outbrain's CEO, David Kostman, opened the call with the announcement of the company's acquisition of Teads, positioning Outbrain as a leader in Open Internet advertising. This merger is expected to significantly enhance Outbrain's financial profile, with increased profitability and growth opportunities. The strategic move reflects the company's ambition to become a full-funnel platform for brands on the Open Internet, leveraging the combined strengths of both companies.

The earnings call also highlighted the company's strategic growth drivers. Outbrain has been expanding its share of wallet with advertisers, with Onyx, its direct sales division, experiencing growth in both new clients and rebookings. The success of Onyx, which has seen a rebooking rate of nearly 40% in Q2, is a testament to its ability to deliver impactful campaigns for clients. Additionally, Outbrain's shift towards its demand-side platform, Zemanta, has resulted in a 50% increase in advertiser spend in the first half of 2024.

Investor Insights: Positive Feedback and Exciting Prospects

During the call, investors and analysts expressed their enthusiasm for the Teads acquisition, viewing it as a significant opportunity for Outbrain to offer a full-funnel solution for brands on the Open Internet. The positive feedback underscores the market's confidence in Outbrain's strategic direction and its potential to capitalize on the growing demand for open internet advertising solutions.

Financial Performance: A Strong Second Quarter

Outbrain reported a strong second quarter, with gross profit exceeding expectations and positive free cash flow for the fourth consecutive quarter. The company's revenue, while showing a 5% decrease year-over-year, was driven by new media partners and a 27% increase in revenue from inventory beyond its traditional feed. These positive trends, coupled with the successful launch of its new AI-driven targeting solution, predictive demographics, and the expected synergies from the Teads merger, point to a promising future for Outbrain.

Looking Ahead: A Strategic Path Forward

With the acquisition of Teads, Outbrain is well-positioned to capitalize on the growing demand for open internet advertising solutions. The company's focus on expanding its share of wallet with advertisers, investing in its demand-side platform, and deepening partnerships with top publishers and media owners sets the stage for sustained growth and profitability. As Outbrain embarks on this next chapter with Teads, its strategic initiatives and the positive feedback from the industry suggest a bright future ahead.

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