Good day. Welcome to Teads Holding Co.'s fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Teads Holding Co.'s Investor Relations. Please go ahead. Good morning.

And thank you for joining us on today's conference call to discuss Teads Holding Co.'s fourth quarter and full year 2025 results. Joining me on the call today we have David Kostman and Jason Kiviat, the CEO and CFO of Teads Holding Co. During this conference call, management will make forward-looking statements based on current expectations and assumptions, including statements regarding our business outlook and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. These risk factors are discussed in detail in our Annual Report on Form 10-K for the year ended December 31, 2024, as updated in our subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the call's original date, and we do not undertake any duty to update any such statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's fourth quarter and full year 2025 results announcement for definitional information and reconciliation of non-GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website, investors.teads.com, under News and Events. With that, let me turn the call over to David.

Thank you, Matt. Good morning, everyone, and thank you for joining us. About a year ago, we brought Outbrain and Teads Holding Co. together. The goal was and still is to build a best-in-class digital advertising platform that delivers results across every screen, from the phone in your pocket to the TV in your living room and for every advertiser objective, from branding to actual sales. Year one was a transition. We managed the friction of merging two different cultures, technologies, businesses, while navigating some tough market conditions. Also make a deliberate choice to build a sustainable premium marketplace and walk away from some low-quality revenue. It was a hard call, but we believe it was a necessary one to protect our marketplace and ensure that we can grow our business with the world's biggest brands. The lessons we learned allowed us to sharpen our focus in the second half of the year. We have simplified the org chart, right-sized our cost, and brought in fresh leadership. Now we believe we are moving into 2026 with strong alignment on our strategic priorities and a well-defined execution plan. We expect this to be the inflection point and the year we return to growth. Looking at Q4, we hit the high end of our guidance on ex-TAC, beat our adjusted EBITDA target, and generated positive free cash flow. Beyond the numbers, there are a few key indicators I want to highlight. First, CTV is accelerating. Our focus on the living room is paying off. We crossed the $100 million annual revenue mark with growth hitting 55% in Q4, and with strong growth on the home screen placements. Second, performance cross-selling was scaling. We saw a 300% jump in sales to enterprise customers compared to Q3. Now to be clear, that is still…

Thanks, David. As David mentioned, we achieved our Q4 guidance for ex-TAC gross profit at the high end of our range and exceeded our range for adjusted EBITDA, generating positive adjusted free cash flow in both the quarter and for the full year. Revenue in Q4 was approximately $352,000,000, reflecting an increase of 50% year over year on an as-reported basis, primarily reflecting the impact of the acquisition. On a pro forma basis, we saw a year-over-year decline of 17% in Q4. I spoke last quarter about the drivers of volatility in our top line, stemming from both legacy Teads Holding Co. operating businesses. I will reiterate them briefly here in the context of what we anticipate for 2026. But an important takeaway is that since we last reported in November, we have seen a more stable top line. Within our enterprise clients, we saw a deceleration in our top line starting in June that we attribute largely to operational challenges and distraction of the merger. This primarily impacted us in several key markets, most notably the U.S. and U.K. However, the changes we implemented in leadership and operations in Q3 are yielding positive indications in Q4 and into Q1, giving us confidence that we can see a return to growth by Q4 of this year. TPV growth has accelerated, top line in the U.K. has stabilized, and our sales of performance campaigns to enterprise customers, including cross-selling, is accelerating. Within our direct response clients, through both strategic decisions around quality and external factors, including deliberately exiting lower-quality demand and supply sources from our ecosystem, we turned a small but meaningful segment of arbitrage-based customers. This impacted our revenues primarily in H2, and most meaningfully in Q4. And while we feel we have a healthier long-term business from these changes,…

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Laura Martin with Needham and Company. Please proceed with your question.

Sure. Thank you very much for taking the questions. On the salesforce, I was just wondering, are we pretty much staffed up now on the salesforce from the integration, and do you expect smooth sailing going forward on those kinds of hires? And then secondly, I was really interested, David, in your comments on the exclusive deals with Samsung and LG. Are those for home page programmatic the way Nexon is talking about, or is that for—I was just wanting you to expand on what rights you have that are exclusive right now. Thank you.

Thanks, Laura. Good morning. So first on the salesforce, we are confident we have the right leadership team and the right team in place. So do you anticipate smooth sailing? Nothing is smooth, but we are very confident. We have a good team. I think we replaced the people we wanted to replace, and I am very confident with what I have seen the last few months with the new leadership. On the home screens, we have been at this for about two years working on a home screen. So we have exclusive in certain geographies with LG. We have an exclusive relationship in certain geographies with Samsung. We had until last year an exclusive relationship with Vizio, which now also NexGen is involved. But what we do and where our advantage is really that we work directly integrated between Teads Ad Manager and the home screen. It is a very unique special format, and the advantages we have around creative adaptation to the different formats and the ability of advertisers to really buy and optimize across multiple OEMs in one platform, that is a huge advantage. You can activate it programmatically, but when you activate it programmatically, it is very different in terms of the, you know, outcomes that you can drive. The premium brand relationship we have directly are a big factor why these companies work with us exclusively. We have a global footprint in more than 50 markets. They do want those premium brands on that home screen. I mean, there is no tolerance for the type of brand, so that is a huge advantage that we have. So between Teads Ad Manager direct integration, ability to run campaigns across multiple OEMs, the creative adaptation, and the premium brands, that gives us a, you know, a huge scale and then I think a huge heads up on that business. And it is also driving other parts of our business. We talked on—I mentioned on the call the omnichannel, so the ability to activate on the home screen and then on the web is a big advantage. And the ability to drive just performance campaigns. So we believe we have a two-year head start there, and it is a great differentiator for us.

Our next question comes from the line of Matthew Condon with Citizens. Please proceed with your question.

Thank you so much for taking my questions. The first one, just can you provide additional color just on the securitization of the business, and just what trends are you seeing so far in Q1? Do you see confidence that you have got this back on the right track? My second one is on the organizational changes. Just do we have the right team in place today across the entirety of the business? And should we expect anything else and or any other changes going forward? Thank you so much.

Thanks, Matthew. So this is Jason. I could take the—I think I got—this is a little broken, but I think your first question is about Q1 trends and what gives us confidence, so if I miss anything you said, I will just start there. Yeah. Look. I think we are seeing improvements in Q1. Right? Maybe—I know the numbers might be a little funky with the timing of the acquisition last year being a few days into February, and so the pro forma and the as-reported periods are slightly different. On an as-reported basis, we are guiding, you know, at our midpoint to something, you know, fairly flat year over year for ex-TAC. And on a pro forma basis, it is down, but not down to the same level we saw in Q4 where we were down a bit more. So what we are seeing, you know, in this early part of Q1 and what we expect for the full quarter is, you know, closing of the gap quite a bit here, and, you know, that means we are better than what is typical in Q1 relative to Q4. And it is really concentrated in the areas that we are focusing on, which obviously when you are focusing on something and you see improvement in it, it gives you some confidence. Right? So, you know, CTV is accelerating, you know, through the home screens and the omnichannel as David said. You know, we are focused on driving more performance sales. Obviously, a big part of the kind of synergies of the combination, and we do see momentum there. And then I know I have talked a little bit about some of the operational challenges that have been driving the headwinds for much of the last year or six months or so. And, you know, U.K. and U.S. are the countries I have kind of called out. You know, in the U.K., we do see a relative improvement and a big shrinking of the gap, you know, starting in Q1 here. As David mentioned, in the U.S., we had new leadership in Q1, and we do feel good and gain some confidence from the pipeline that we see in March and beyond. So, you know, cautiously optimistic, but, you know, we have taken meaningful steps to focus and reduce cost and focus and realign around the things that we think will drive growth, and we are starting to see good indications of those things.

And I think, maybe in terms of the team, I am very comfortable. I mean, we started the year with a very clearly defined execution plan. We sort of elevated to the leadership team some people from the product and tech side. So I am very comfortable with where we are. We rolled out very specific goals and targets. And I think the execution plan is well defined with the right team at this point.

That is very helpful. Thank you so much.

Our next question comes from the line of James Heaney with Jefferies. Please proceed with your question.

Yeah. Great. Thank you, guys. Just what are the assumptions behind the full year EBITDA guide? How should we think about the linearity of growth and margin as we move throughout the year? And then any color you can maybe also provide around linearity of ex-TAC gross profit growth? I think you said getting to growth in Q4, but any other things to think about moving throughout the year?

Sure. Yeah. Thanks, James. I will take that. It is Jason. I mean, our guidance of approximately $100,000,000 of EBITDA, it does not, you know, imply a full year ex-TAC growth on a, you know, on a pro forma basis. But we do expect to get to growth by the end of the year by Q4. So maybe some color on kind of how we see that playing out, you know, a couple points of context. You know, for one, I did mention on the call, we have this year-over-year, you know, comp headwind—about $20,000,000 of ex-TAC from the quality cleanup. And just to put that into kind of when we see that happening, you know, it started to really impact us, you know, fully in Q4, and, you know, maybe about half of the impact we talked about in Q3 from the supply cleanup and some of the early impacts there. So the full impact, about $8,000,000 of a headwind in Q4 of ex-TAC, and we expect that same $8,000,000 to impact Q1 and Q2 as well before starting to, you know, shrink in Q3 and be de minimis for Q4. So the comps do ease as the year goes on. That is the biggest kind of headwind that we see kind of moving forward. And, generally, you know, we expect it will take a few quarters to build back to growth from the year-over-year decline that we reported in Q4. We see improvement, as I said, in Q1. We think it will take a few quarters to get to growth, but believe, you know, that our changes in focus, leadership, and operations are driving this change, start to see it in Q1 from the things we did last year, and the things that we are doing in Q1 will help more and more as the year goes on. So on a pro forma basis, we expect to see improvement each quarter of the year and then Q4 being where we hit the positive growth. In terms of expenses to get to EBITDA, you know, obviously, you can see in our guidance for Q1, it is substantially reduced expenses from, obviously, from the restructuring and the step-up of, you know, full year of synergies now that we have compared to last year. So you can see the lower cost base, and that is even, you know, despite FX headwinds of a few million dollars that we see from the weakening of the dollar versus, you know, the euro and the shekel. But, you know, for the rest of the year, a few million dollar step-up probably in Q2 and Q3 just based on seasonality, revenue-related items, and some, you know, fully staffing where we have some empty roles right now, and then a normal Q4 seasonal step-up as you have seen in our results this year as well would be what I expect.

Yeah. Very thorough answer. Thank you. Maybe just quickly, for either of you, anything on just specific ad verticals that you would want to call out in terms of strength or weakness? I mean, any particular standouts that you would want to highlight. Thank you.

Maybe I will take that. I mean, there is nothing really that is material. I mean, we do not have any vertical that is sort of double digit even. So we see some weakness in CPG and automotive, some strength in health and finance, but nothing really of note.

Great. Thank you.

Our next question from the line of Zach Cummins with B. Riley Securities. Please proceed with your question.

Hi. Good morning, David and Jason. Thanks for taking my questions. I wanted to ask about the Google TV opportunity. I mean, can you maybe go a little more into detail around that announcement, and what type of growth opportunity does that unlock for you as we move forward in 2026 for CTV home screen?

Overall, CTV home screen is a huge opportunity for us. We are, as I said, I mean, two years into it. We have a huge base of OEMs. We added Google TV to that. I am sorry. This is the New York background noise. So we added Google TV recently. We added TCL, Vewd, and many others. So the overall opportunity is huge. I mean, it today accounts for a big percentage of our CTV business. We have grown 455% and expect similar growth rates or better for this year on the business. And I said it earlier, I think we have clear differentiators there. I think the direct access is a big differentiator. The premium direct premium advertiser relationship is a big advantage, and that is why I think these OEMs and other applications on CTV really sign up with Teads Holding Co. in order to make sure that that experience on the home screen is the best they can offer to the audiences. So it is a large opportunity and it also helps us to, as I mentioned earlier, to omnichannel sales, sell more campaigns to our advertisers also around the online video, combining the CTV home screen and the web. So it is a very big opportunity. It is a big area of investment for us, and we are very excited about it.

Understood. And my one follow-up question is just around the proactive cleanup of some of the inventory throughout 2025. Obviously, a meaningful headwind when you think of ex-TAC over the next couple of quarters. But is that process largely behind us now? Do you have the ideal mix of inventory now that you are focusing more so on enterprise-level brands?

Yes. I think it is behind us in terms of executing on that cleanup or trimming of supply and demand quality. So we walked away from about $20,000,000 in revenue. The impact will continue into the first half of this year. It was about an $8,000,000 headwind in Q4. It will continue through the first half of this year, but we have a much healthier network. We are actually delivering better ROAS for our performance advertisers, and the network and the marketplace is much more suitable for the premium brands we work with.

Great. Well, thanks for taking my questions, and best of luck with the rest of the quarter.

And this concludes—we have reached the end of the question and answer session. I would like to turn the floor back over to David Kostman for closing remarks.

Thank you very much for attending today. As you can hear, we are somewhat encouraged by the sequential trends that we see. We do believe that 2026 will be an inflection point for us. We are very focused on execution and also finding the sort of right to invest in the attractive growth areas that we see, like CTV. So excited about the future and look forward to updating you.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.