Outbrain (OB) AI Stock Analysis

• Market Cap: $247.07M
• Dividend Yield: N/A
• Average Volume (3M): 453.12K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.84
• Revenue Growth: 4.15%
• EPS Growth: -394.93%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 89
• Industry: Internet Content & Information
• EPS (TTM): -0.20
• Shares Outstanding: 94,300,095
• 10 Day Avg. Volume: 631,448
• 30 Day Avg. Volume: 453,123
• PEG Ratio: 1.64
• Price to Book (P/B): 0.82
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.66
• 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: $5.73
• Price Target Upside: 118.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 50 Neutral
• Price Target: $3.00 ▲( 14.50% Upside)

Outbrain faces significant operational challenges despite some revenue growth and cash flow stability. The technical analysis signals weak momentum, while valuation concerns persist due to a negative P/E ratio. The recent earnings call was positive, highlighting strong merger integration and future cost savings. New board appointments may enhance strategic positioning, but overall, the stock presents moderate risk with potential for improvement if operational efficiencies are realized.

Positive Factors

Financial Performance

Management's reaffirmed FY25 outlook with the integration on track represented a positive quarter.

Market Position

Ad spend on Outbrain DSP grew 45% year-over-year, indicating strong platform performance.

Mergers and Acquisitions

OB's acquisition of Teads is a key upside value driver in 2025, both strategically and financially.

Negative Factors

Advertising Market

A step down in the advertising macro would be the key risk to achieving the expected adjusted EBITDA.

Operational Risk

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 for Outbrain and valuation that is looking more attractive.

Revenue Concerns

There is concern about the negative revenue growth at Teads legacy business, which may indicate negative synergies from combining these two cultures.

Outbrain Business Overview & Revenue Model

Company Description

Outbrain (OB) is a leading content discovery platform that operates within the digital marketing and advertising sector. The company specializes in personalized content recommendations, helping publishers and advertisers increase engagement by delivering tailored content to users across various digital platforms. Outbrain's core service involves providing a platform for native advertising, where brands can promote their content through recommendations on premium publisher websites.

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 has shown mixed financial performance. Revenue and profitability are under pressure, indicating operational challenges. The balance sheet is stable with low debt levels, yet profitability on equity remains a concern. Strong cash flow management is a positive highlight, suggesting potential for improved 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: 2.62
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 2.62 is below the 20-day moving average (MA) of 3.20, below the 50-day MA of 3.47, and below the 200-day MA of 4.99, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 28.67 is Positive, neither overbought nor oversold. The STOCH value of 6.60 is Positive, 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
TBLA	74 Outperform	$1.12B	90.81	1.35%	―	16.62%	―
SSTK	67 Neutral	$636.33M	16.63	7.07%	6.81%	10.30%	-57.87%
PERI	66 Neutral	$484.60M	41.65	-1.03%	―	-43.13%	-107.18%
Sector *	60 Neutral	$14.12B	6.43	-3.56%	3.69%	2.49%	-35.43%
THRY	59 Neutral	$569.03M	―	-51.21%	―	-14.71%	66.24%
OB	50 Neutral	$247.07M	―	-14.61%	―	4.15%	-394.93%
ZH	50 Neutral	$356.00M	―	-3.92%	―	-15.62%	79.81%

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.