Outbrain Earnings Call Highlights CTV Gains, Cash Strain

Outbrain, Inc. ((TEAD)) has held its Q1 earnings call. Read on for the main highlights of the call.

Outbrain’s latest earnings call painted a cautiously optimistic picture, pairing solid strategic progress with ongoing financial strain. Management highlighted strong gains in connected TV, expanding enterprise relationships and improving margins, yet also acknowledged revenue contraction, thin profitability, negative free cash flow and liquidity concerns that keep investors on alert.

CTV Growth Becomes a Core Engine

Connected TV revenue surged more than 50% year over year in the first quarter, with particular strength across EMEA and APAC markets. New and expanded home-screen partnerships with LG, Samsung and Google TV are giving Outbrain privileged access to premium inventory and a stronger launchpad for integrated omnichannel campaigns.

Ex-TAC Gross Profit Outpaces Revenue

Ex-TAC gross profit reached €108 million, up 5% year over year even as headline revenue declined, reflecting a healthier mix. Management noted that higher-margin enterprise business and better revenue-per-mille helped gross profit grow faster than sales, though on a pro forma basis gross profit still declined 11% against tough comparisons.

Enterprise Base Anchors Stability

The company underscored the scale of its enterprise franchise, saying these customers generated roughly €900 million of revenue in 2025 and about 80% of Ex-TAC. Around €450 million flowed through major agencies, while approximately 50 global joint business partnerships accounted for more than $200 million of spend, reinforcing the durability of long-term relationships.

Omnichannel Adoption Gains Traction

Outbrain reported that 13% of campaigns are now omnichannel, up from 8% a year earlier, signaling growing demand for full-funnel solutions. Advertisers are increasingly blending CTV with open-internet placements to reach consumers across screens, a trend management views as central to future growth.

Cost Cuts Boost Operating Efficiency

Restructuring and integration moves have reduced the compensation run rate by more than 20% compared with last year, providing meaningful cost relief. Other cost of sales and operating expenses also fell, helped by one-off costs rolling off, synergies from recent deals and disciplined ongoing reductions.

Product Edge and High-Profile Wins

The company emphasized product differentiation, citing the integration of Outbrain performance algorithms into Teads Ad Manager and aggressive use of AI for creative and optimization. New vertical video formats and renewals with major brands such as McDonald’s, Heineken and Volkswagen, including a Gucci campaign that sharply lifted awareness and recall, were presented as proof points.

Revenue Pressure and Financial Targets

Despite operational wins, reported Q1 revenue of about €266 million fell 7% year over year, with an 11% decline on a pro forma basis and a prior quarter pro forma drop of 19%. Management nonetheless set clear financial targets, guiding for Q2 Ex-TAC gross profit of $121–$131 million, adjusted EBITDA of $14–$22 million and reaffirming a full-year adjusted EBITDA goal near $100 million.

Profitability and Cash Flow Under Strain

Near-term profitability remains weak, with adjusted EBITDA in the first quarter around $1 million and adjusted free cash flow a negative €41 million. The cash burn reflected a large semiannual bond interest payment, restructuring-related severance and working capital timing, leaving €99 million in cash, cash equivalents and marketable securities.

Direct Response Cleanup Weighs on Results

The company’s effort to clean up quality in its direct response business is generating an estimated $20 million Ex-TAC headwind this year, concentrated mainly in the first half. Management expects this drag to make second-quarter comparisons particularly difficult but to fade materially by the back half, easing pressure on growth metrics.

Liquidity and Geographic Imbalance

Outbrain’s balance sheet remains a focal risk, with management reviewing options to strengthen its capital structure and citing a minimum comfortable cash range of roughly €70–€80 million versus the current €99 million. Performance outside the U.S. is outpacing domestic trends, and while leadership changes and go-to-market tweaks aim to revive the U.S. business, recovery there is still described as a work in progress.

Guidance Points to Gradual Recovery

Management’s guidance envisions a gradual rebuilding phase, with Q2 Ex-TAC gross profit projected between $121 million and $131 million and adjusted EBITDA of $14–$22 million. They reiterated a full-year adjusted EBITDA target near $100 million and signaled expectations for year-over-year revenue growth to resume by the fourth quarter, even as they acknowledged ongoing working-capital volatility and a narrow liquidity buffer.

Outbrain’s earnings call left investors weighing robust strategic positioning against fragile near-term finances and execution risk. Strong CTV momentum, an entrenched enterprise base and rising omnichannel adoption offer credible growth levers, but sustained revenue recovery, improved cash generation and a stronger balance sheet will be critical to rebuilding market confidence.