Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Outbrain Inc (OB, Financial) delivered Ex-TAC gross profit within their guidance range and exceeded their adjusted EBITDA guidance for Q3 2024.
- The company generated positive free cash flow for the fifth consecutive quarter, showcasing strong financial management.
- Outbrain Inc (OB) reported a 60% year-over-year increase in advertising spend on their DSP platform, indicating strong traction and adoption.
- The company successfully renewed agreements with key publishing partners and secured new partnerships, enhancing their premium media owner relationships.
- Outbrain Inc (OB) launched 'Moments,' a new product that brings social media-like experiences to the open internet, showing early signs of high audience engagement.
Negative Points
- Total revenue for Q3 2024 decreased by 3% year over year, indicating challenges in maintaining top-line growth.
- Net revenue retention of publishers was 91%, reflecting downward pressure from one key supply partner.
- Operating expenses increased due to one-time costs related to an anticipated transaction, impacting overall profitability.
- The company experienced a slower start to Q4, particularly in the US, due to advertisers' cautiousness around election uncertainties.
- A key partner's transition to new bidding technology caused volatility, impacting overall growth in Q3 by a double-digit percentage.
Q & A Highlights
Q: Can you provide an update on the integration with TS and any potential impacts of AI on traffic growth for your publisher partners?
A: David Kostman, CEO: We are progressing with post-merger integration planning across product and go-to-market strategies. We are excited about the revenue synergies, particularly in cross-selling opportunities. Regarding AI, we haven't observed any negative impact on traffic from our premium publisher base; page views remain relatively flat.
Q: Could you elaborate on the Q4 Ex-TAC guidance and any ongoing impacts from the large supply partner?
A: Jason Kiviat, CFO: We expect acceleration in year-over-year growth in Q4, but we are cautious due to a slower start in October, particularly in the US. Advertisers were cautious due to election uncertainties. Excluding the impact of one key partner, growth was higher, and we expect a slightly easier comparison in Q4.
Q: How does the Moments product fit with your existing solutions, and what improvements are you seeing?
A: David Kostman, CEO: Moments brings social media experiences to the open internet, enhancing audience engagement. It complements our existing solutions by offering immersive experiences at the right time. Initial indications show strong user engagement, and we are excited about its potential impact in 2025.
Q: What are your thoughts on the impact of the election results on advertising budgets?
A: David Kostman, CEO: The clear outcome of the election is positive, as advertisers were holding back budgets due to uncertainties. We expect clarity to lead to a release of potential budgets, allowing advertisers to return to normal spending patterns.
Q: Can you discuss the financial performance and future outlook?
A: David Kostman, CEO: We are pleased with our financial performance, including consecutive quarters of improved Ex-TAC margin and cash flow. Innovation, particularly with Moments and AI, is crucial. We are optimistic about the opportunities ahead, especially with the upcoming combination with TS.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
