Outbrain (OB) AI Stock Analysis

• Market Cap: $373.88M
• Dividend Yield: N/A
• Average Volume (3M): 477.44K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.05
• Revenue Growth: -4.91%
• EPS Growth: -107.37%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 84
• Industry: Internet Content & Information
• EPS (TTM): -0.14
• Shares Outstanding: 93,940,410
• 10 Day Avg. Volume: 495,987
• 30 Day Avg. Volume: 477,442
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.42
• Price to Cash Flow (P/CF): 2.20
• P/FCF Ratio: 2.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $7.28
• Price Target Upside: 80.20% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

Outbrain's stock faces significant challenges with declining revenue and profitability, as reflected in its financial performance and valuation metrics. However, strong cash flow management and strategic acquisitions like Teads provide a foundation for potential future growth. Negative technical indicators suggest bearish sentiment, though corporate events and strategic guidance offer some optimism.

Positive Factors

Acquisition Benefits

OB's acquisition of Teads is a key upside value driver, both strategically and financially.

Platform Expansion

Outbrain's Moments video format is enhancing brand experiences and is expected to capture a larger share of brand budgets.

Revenue and EBITDA Growth

4Q24 Net Revenues were up 7% year-over-year, with Adjusted EBITDA up 21% year-over-year.

Negative Factors

Execution Risks

M&A and large integrations carry heightened execution risk which has been the primary reason behind the analyst remaining Neutral despite liking the deal strategically.

Sales Force Challenges

Sales force attrition is impacting near-term results.

Slower Start Post-Acquisition

The new look Teads is off to a slower start as 4Q headwinds carried over, but management is seeing improvements and remains confident in its execution plan.

Outbrain Business Overview & Revenue Model

Company Description

Outbrain Inc., together with its subsidiaries, operates an online content recommendation platform worldwide. It offers Outbrain Engage, a product suite for media partners that provides personalized feeds and data-driven recommendations, as well as a solution to maximize user engagement. The company's Outbrain Engage solution also includes a web-based dashboard to manage and control various aspects of the platform, including content, formats, sources, frequency, and categories of ads delivered on their properties, as well as monetizes the content through customized data-driven advertising. It also provides Outbrain Amplify, a product suite for advertisers that provides an open web platform that helps users to connect with audiences on premium digital properties. The company's Outbrain Amplify solution also provides advertisers with access to ad inventory that support various formats, including text and image, video, interactive carousel, app install, and other forms of direct response; and ads optimized for engagement. Outbrain Inc. was incorporated in 2006 and is headquartered in New York, New York.

How the Company Makes Money

Outbrain generates revenue through a pay-per-click (PPC) model, where advertisers are charged each time a user clicks on their promoted content. The company's platform connects advertisers with publishers, displaying ads in the form of content recommendations that blend seamlessly with the host site's editorial content. Outbrain shares a portion of the advertising revenue with publishers, incentivizing them to host Outbrain's content recommendations. Additionally, Outbrain may engage in strategic partnerships with major media companies, further expanding its reach and enhancing its revenue potential.

Outbrain Financial Statement Overview

Summary

Outbrain's financial performance is mixed. Revenue is declining with a negative net profit margin, indicating operational challenges. However, the balance sheet is stable with low debt and strong cash flow management, which could improve financial health if revenue trends stabilize.

Income Statement

The company experienced a decline in revenue from the previous year with a Revenue Growth Rate of -4.91% for TTM. The Gross Profit Margin stands at 21.59%, which is reasonable, yet the firm has struggled with profitability as indicated by a negative Net Profit Margin of -0.08%. EBIT and EBITDA margins are also negative at -1.42% and 0.13% respectively, reflecting ongoing operational challenges.

Balance Sheet

The Debt-to-Equity Ratio improved significantly to 0.05, indicating low leverage. However, the Return on Equity (ROE) is negative at -0.31%, reflecting inefficiencies in generating profits from equity. The Equity Ratio is relatively stable at 42.12%, showing a strong equity base relative to total assets.

Cash Flow

The company demonstrated a strong recovery in cash flows with a significant Free Cash Flow Growth Rate, moving from negative to positive at $53.59 million. The Operating Cash Flow to Net Income Ratio is robust at 96.44, indicating strong cash flow generation relative to reported net income. Free Cash Flow to Net Income Ratio is substantial at 75.37, highlighting effective cash flow management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
889.88M	935.82M	992.08M	1.02B	767.14M
	Gross Profit
192.10M	184.80M	192.65M	240.26M	165.06M
	EBIT
-12.64M	-8.64M	-10.95M	-7.49M	10.18M
	EBITDA
24.83M	42.45M	15.97M	8.90M	26.99M
	Net Income Common Stockholders
-711.00K	10.24M	-24.58M	10.99M	4.36M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
166.13M	165.20M	272.49M	455.40M	93.64M
	Total Assets
549.21M	664.64M	781.15M	795.89M	356.49M
	Total Debt
15.82M	131.16M	249.44M	236.00M	3.85M
	Net Debt
-73.28M	60.27M	143.86M	-219.40M	-89.79M
	Total Liabilities
317.87M	441.57M	563.36M	539.12M	436.30M
	Stockholders Equity
231.34M	223.06M	217.79M	256.77M	-79.81M
Cash Flow		Free Cash Flow
61.18M	-6.49M	-22.13M	36.71M	42.48M
	Operating Cash Flow
68.56M	13.75M	3.81M	56.76M	52.99M
	Investing Cash Flow
67.15M	69.64M	-317.90M	-20.10M	-9.42M
	Financing Cash Flow
-117.70M	-117.07M	-31.70M	325.89M	-4.23M

Outbrain Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OB, the sentiment is Negative. The current price of 4.04 is below the 20-day moving average (MA) of 4.43, below the 50-day MA of 5.70, and below the 200-day MA of 5.28, indicating a bearish trend. The MACD of -0.56 indicates Negative momentum. The RSI at 29.23 is Positive, neither overbought nor oversold. The STOCH value of 22.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OB.

Outbrain Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRTO	73 Outperform	$2.02B	19.48	10.43%	―	-1.22%	112.13%
PERI	67 Neutral	$385.08M	31.13	1.75%	―	-32.95%	-89.11%
PUBM	67 Neutral	$480.42M	42.67	4.36%	―	9.08%	43.58%
TTD	66 Neutral	$29.44B	76.03	15.37%	―	25.63%	118.49%
MGNI	64 Neutral	$1.90B	95.75	3.10%	―	7.82%	―
Sector *	59 Neutral	$29.40B	0.71	-18.77%	4.01%	2.13%	-47.15%
OB	52 Neutral	$373.88M	―	-0.31%	―	-4.91%	-107.37%

Outbrain Corporate Events

Outbrain Appoints Dexter Goei and Mark Mullen to Board

Outbrain Inc. announced the appointment of Dexter Goei and Mark Mullen to its Board of Directors, effective March 12, 2025. This strategic move, under the Stockholders Agreement with Altice Teads S.A., allows both executives to bring their extensive experience in corporate strategy, operations, and finance to the company, potentially enhancing its industry positioning and operational effectiveness.

Outbrain Completes $637.5 Million Senior Notes Offering

On February 11, 2025, Outbrain Inc.’s subsidiary, OT Midco Inc., completed a private offering of $637.5 million in senior secured notes due in 2030, surpassing the originally announced $625 million. The proceeds were used to repay the senior secured bridge facility related to Outbrain’s acquisition of Teads, alongside other associated costs. This financial move strengthens Outbrain’s market position by ensuring the stability and support of its global operations under the Teads brand.

Outbrain’s Subsidiary Prices $637.5M Senior Secured Notes

On February 7, 2025, Outbrain Inc.’s subsidiary, OT Midco Inc., priced a private offering of $637.5 million in senior secured notes due 2030, increasing from a previously announced $625.0 million. The proceeds will be used to repay a bridge facility related to Outbrain’s acquisition of Teads, as well as cover associated fees and expenses. The offering will close on February 11, 2025, and is expected to impact the company’s financial strategy and market operations significantly.

Outbrain’s Subsidiary Launches $625M Note Offering

On February 3, 2025, Outbrain’s subsidiary OT Midco Inc. initiated a private offering of $625 million in senior secured notes due 2030. The proceeds will be used to refinance the bridge facility used for acquiring Teads, a Luxembourg-based company, and cover related expenses. This strategic financial move aims to enhance Outbrain’s operational efficiency and market positioning by securing assets across multiple global subsidiaries.

Outbrain Finalizes $900M Acquisition of Teads, Restructures

Outbrain, a leader in digital advertising, finalized its acquisition of Teads on February 3, 2025. This merger creates a formidable force in the open internet advertising space, integrating branding and performance offerings under Teads’ name. The acquisition, valued at approximately $900 million, was funded through a combination of cash and shares. It aims to achieve significant revenue and cost synergies, estimated at $65-75 million annually by 2026, and involves a restructuring plan to streamline operations. The merger is expected to strengthen Outbrain’s market position by leveraging Teads’ extensive media reach and advanced AI capabilities.