Teads cuts 15% of workforce after $900 million merger

The newly shaped Teads Holding Co. introduced its first full quarter as a mixed firm following the February 3, 2025 acquisition of TEADS by Outbrain Inc. for roughly $900 million, with the entity now working beneath the Teads model.

On February 3, 2025, in reference to the completion of the Acquisition, the Firm introduced a restructuring plan (the “Plan”), as a part of its efforts to streamline operations and cut back duplication of roles. The Plan includes a discount in workforce of roughly 15%.

The Firm estimates that it’s going to incur roughly $14 million to $20 million in costs in reference to the Plan, of which roughly $10 million to $12 million is predicted to be incurred in 2025. These costs primarily encompass severance and different associated funds.

Price efficiencies type a significant factor of the merger rationale. The corporate tasks annual synergies of $65-75 million by fiscal yr 2026, with roughly $60 million coming from value reductions. Of those value financial savings, $45 million pertains to compensation bills, with 70% anticipated to be carried out throughout the first month after closing.

In response to the six months ended June 30, 2025 submitting, the worker severance and associated prices for the interval had been associated to the termination of roughly 194 staff. The Firm recorded $8.3 million in severance prices and $0.7 million in authorized prices throughout the first half of 2025.

Operational restructuring and management modifications

CEO David Kostman’s candid evaluation throughout the Q2 earnings name revealed the scope of organizational challenges: “We’re not absolutely happy with our monetary efficiency in Q2 and the way we’re guiding for Q3”. The manager workforce recognized particular operational points requiring speedy consideration.

“Our preliminary focus was on permitting the merge groups to settle in, creating alignment and readability on roles and tasks. Nevertheless, a number of learnings from the primary few months resulted in us figuring out crucial structural modifications to enhance the effectiveness of the gross sales group,” Kostman defined throughout the earnings name.

The corporate carried out sweeping management modifications throughout key markets. “In early July, we consolidated our European enterprise beneath new managing director, Alex Savage, who ran the legacy groups Central European and LatAm companies to drive higher operations and effectiveness in our key markets,” in response to administration.

The U.S. market obtained explicit focus given its challenges. “We instructed The USA’s management, making certain a targeted mandate for The US workforce, our largest market, eradicating resolution making bottlenecks, enabling the workforce to concentrate on the purchasers, and instilling a stronger operational rigor and concentrate on enterprise KPIs.”

Market headwinds and strategic response

The earnings name revealed important market challenges past integration points. “The US market continues to be the primary headwind on our enterprise with a yr over yr decline of greater than 20%,” Kostman disclosed.

CFO Jason Kiviat detailed the elements impacting Q2 efficiency: “One, a decrease charge of conversion from our gross sales pipeline, significantly in key nations, U.S, UK and France, that we attribute largely to operational points. Two, some softness in a few our key verticals, shopper items, automotive and luxurious items, primarily pushed by tariff associated uncertainty and softer demand in sure geographies.”

The corporate additionally made deliberate high quality enhancements that briefly impacted income. “We made a deliberate and aggressive discount in publishers and properties that do not meet our elevated high quality requirements publish merger, eradicating over 200 publishers in the previous few months. This got here up led to a roughly 5% yr over yr discount of legacy Outbrain revenues.”

Know-how integration and AI development

Regardless of operational challenges, the corporate highlighted technological progress. “We’re accelerating funding in our subsequent era promoting platform, Groups Advert Supervisor. We count on that the following era of our platform might be constructed leveraging agentic AI modules, delivering elevated efficiencies for businesses and effectiveness for advertisers,” Kostman defined.

The corporate launched a number of new merchandise throughout the integration interval. “In Q2, we launched new choices that align with our core differentiation. We launched related advertisements in beta, a particular format that enables a single model to occupy each mid article and finish of article placement demonstrating the potential of name codecs.”

Linked TV emerged as a development driver. “We proceed to see sturdy development in our CTV enterprise with 80% yr over yr development in Q2 on a professional forma foundation,” in response to administration remarks.

Monetary efficiency and steering challenges

The combination challenges materialized in monetary metrics. Income in Q2 was $343.1 million, representing a 60% enhance year-over-year as a result of acquisition, however the firm fell in need of expectations with an EPS miss that led to a 19.19% inventory value decline in pre-market buying and selling.

Adjusted EBITDA reached $27.0 million for Q2, in comparison with $7.4 million within the prior yr interval. Nevertheless, the corporate withdrew its full-year 2025 EBITDA steering as a result of uncertainty about integration timing.

“Contemplating the truth that This autumn is our most important quarter of the yr, traditionally contributing almost 50% of annual adjusted EBITDA for the professional type a enterprise and an unusually wide selection of outcomes we at present see for This autumn as a result of uncertainty of how shortly this steps we’re taking will impression income developments, we now have decided to not reaffirm adjusted EBITDA steering for the complete yr 2025,” CFO Kiviat defined.

Future outlook and workforce optimization

Regardless of near-term challenges, administration expressed confidence within the strategic route. “We have now made some organizational choices that we count on to result in market share features, development, and stronger yields and profitability. Whereas Q3 should still replicate a number of the conventional impact of the merger, together with our reorg and realignment, we count on to see clear momentum constructing to This autumn,” Kostman said.

The corporate maintained its dedication to value self-discipline. “We proceed to count on complete value synergy financial savings to match roughly $40,000,000 for the yr and preserve our expectation of $60,000,000 for 2026,” in response to administration.

With the completion of the merger between Israeli digital promoting firm Outbrain and French firm Teads, the merged entity will half methods with about 200 staff, most of them outdoors Israel. This transfer is an element of what’s recognized within the enterprise world as the belief of synergies, that means the elimination of duplicate roles.

Scale and market place

The merger created substantial scale within the digital promoting sector. The mixed firm reaches 2.2 billion shoppers month-to-month by premium digital environments throughout CTV and cellular. As one of the vital scaled promoting platforms on the open web, Teads maintains direct partnerships with greater than 10,000 publishers and 20,000 advertisers globally.

“The union creates one of many largest open web firms, with mixed promoting spend of roughly $1.7 billion (FY24),” in response to firm statements.

Timeline

Key Phrases Defined

Teads

Teads represents each the unique French promoting know-how firm and the brand new model identification for the mixed entity following the merger. The corporate makes a speciality of premium video promoting and omnichannel advertising and marketing options, specializing in brand-safe environments throughout the open web. Teads has advanced from a video promoting pioneer to a complete outcomes platform serving over 10,000 publishers and 20,000 advertisers globally.

Merger

The $900 million strategic mixture between Outbrain and Teads created one of many largest unbiased promoting platforms on the open web. This transaction mixed Outbrain’s AI-driven efficiency know-how with Teads’ premium video and branding capabilities, aiming to supply advertisers complete options spanning the whole advertising and marketing funnel from consciousness to conversion throughout a number of digital channels.

Firm

The mixed entity operates as Teads Holding Co., buying and selling beneath the TEAD ticker image on Nasdaq. The corporate serves as an omnichannel outcomes platform, leveraging predictive AI know-how to attach high quality media with data-driven artistic experiences. With almost 1,800 staff throughout 36 nations, the corporate reaches 2.2 billion shoppers month-to-month by premium digital environments.

Integration

The post-merger integration course of includes combining two distinct organizational cultures, know-how platforms, and operational approaches right into a unified enterprise mannequin. This complicated endeavor contains consolidating management buildings, harmonizing gross sales processes, integrating know-how programs, and eliminating duplicate features whereas sustaining service continuity for shoppers and companions throughout international markets.

Price

Price administration represents a crucial element of the merger’s monetary rationale, with projected annual synergies of $65-75 million by 2026. The corporate expects $60 million in value reductions, primarily from eliminating duplicate roles and streamlining operations. Quick restructuring costs of $14-20 million will generate long-term financial savings, together with $45 million particularly from compensation expense reductions.

Workforce

The worldwide workforce discount impacts roughly 200 staff, representing 15% of the mixed group’s complete headcount. The restructuring primarily targets duplicate roles created by the merger, with most layoffs occurring outdoors Israel. The severance course of includes terminating 194 staff throughout the first half of 2025, with completion anticipated by Q1 2026.

Income

Income efficiency displays each the advantages and challenges of the merger, with Q2 2025 reaching $343.1 million, a 60% enhance from the prior yr as a result of acquisition. Nevertheless, underlying enterprise developments present weak spot, significantly within the U.S. market with a 20% year-over-year decline. The mixed entity generated roughly $1.7 billion in promoting spend throughout fiscal yr 2024.

Administration

The management construction combines executives from each legacy organizations, with David Kostman serving as CEO of the mixed entity. Jeremy Arditi and Bertrand Quesada, former Teads co-CEOs, assumed roles as Co-Presidents and Chief Enterprise Officers for the Americas and Worldwide markets respectively. Latest organizational modifications embrace European enterprise consolidation and U.S. management restructuring to enhance operational effectiveness.

Enterprise

The enterprise mannequin focuses on delivering measurable outcomes for advertisers throughout the open web, differentiating from closed ecosystem platforms. The corporate operates a two-sided market connecting advertisers with premium publishers by AI-driven know-how. Linked TV represents a key development space with 80% year-over-year development, whereas the platform processes billions of knowledge factors to optimize marketing campaign efficiency.

Efficiency

Efficiency challenges emerged throughout the integration interval, with slower-than-expected return to development and withdrawal of full-year monetary steering. Regardless of reaching $27.0 million in Adjusted EBITDA for Q2, operational points in key markets together with the U.S., UK, and France impacted conversion charges. The corporate expects efficiency enhancements in This autumn 2025 as organizational modifications take impact and integration advantages materialize.

Abstract

Who: Teads Holding Co. (previously Outbrain Inc.), led by CEO David Kostman, implementing workforce reductions affecting roughly 200 staff throughout international operations

What: 15% workforce discount involving termination of 194 staff in first half of 2025, a part of post-merger integration to get rid of duplicate roles and obtain $40-75 million in annual value synergies

When: Initiated February 2025, largely carried out in Q2 2025 with $8.3 million in severance prices recorded, completion anticipated by Q1 2026

The place: World implementation with most cuts occurring outdoors Israel, affecting the mixed 1,800-person workforce throughout 36 nations, with particular concentrate on U.S., UK, and France operations

Why: Streamlining operations after $900 million merger to get rid of position duplication, cut back prices by $45 million in compensation bills, handle 20% U.S. market decline, and place for future development regardless of slower-than-expected integration progress and withdrawal of full-year monetary steering