Ladies and gentlemen, welcome to Teads' Second Quarter 2025 Earnings Conference Call. At this time, all participants are in the listen-only mode. A question -and -answer session will follow the formal presentations. As a reminder, this conference is being recorded. I would like to turn the call over to Teads' investor relations. Please go ahead. Good morning and thank you for joining us on today's conference call to discuss Teads' second quarter 2025 results. Joining me on the call today, you have David Kostman and Jason Siviak, the CEO and CFO of Teads. 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 Form 10-K filed 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 second quarter earnings release for definitional information and reconciliations of non-GAAP measures with 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, Maria. Good morning, everyone. Thank you for joining us as we report on our first full quarter as a combined company. Before diving into the details, I want to make a few points. We have continued to see excellent customer response from advertisers, agencies, and media owners globally through the new Teads value proposition, a true end-to-end platform delivering outcomes across branding and performance. In Q2, we grew EBITDA sequentially in a meaningful way, generating strong cash flow. At the same time, we are experiencing a slower pace in the return to growth than we had anticipated post-merger, mostly attributed to organizational issues we identified during the quarter. We are executing on the integration decisively, making critical organizational changes that we believe positions us for success in the second half of the year and beyond. I will elaborate on each of these points. Turning to the quarter, on the financial front, we delivered results within our guidance for positive sequential progress and a deceleration in the year-over-year decline rates. As it relates to the post-merger integration, we successfully launched the new Teads brand and value proposition globally. Organizationally, our initial focus was on allowing the merged teams to settle in, creating alignment and clarity on roles and responsibilities. However, several learnings from the first few months resulted in us identifying necessary structural changes to improve the effectiveness of the sales organization. We've taken those lessons, which are not uncommon when you merge companies of similar size, responded quickly, and accelerated some key changes. In early July, we consolidated our European business under a new Managing Director, Alex Savage, who ran the legacy Teads Central European and LATAM businesses to drive better operations and effectiveness in our key markets. We restructured the U.S. sales leadership, ensuring a focused mandate for the U.S. team, our largest market, removing decision-making bottlenecks, enabling the team to focus on the customers, and instilling a stronger operational rigor and focus on business KPIs. We created a global CRO forum led by me that includes all our regional leads, our strategic account group, global agencies, and our direct response. Jeremy Arbity, our Co-President, continues to steer global strategy agencies, partnerships, and corporate development, while Bertrand Quesada, our Co-President, drives regional leaderships across Europe and Japan. We also refined our go-to-market sales approach, including changes in packaging and pricing and in our cross-sell strategy, simplifying the narrative and taste of our sales teams. We expect that the combination of these changes will lead to improved execution in the second half of the year and into 2026. We're equally focused on maintaining financial discipline. On cost synergies, we remain on track to deliver $40 million in cost savings for 2025, with a full-year run rate savings of $60 million expected in 2026. We remain confident in our ability to deliver positive free cash flow for the full year and recently took the step of repurchasing a portion of our outstanding debt, reinforcing our commitment to efficient capital allocation. Let me turn to the business, starting with the demand side. The U.S. market continues to be the main headwind on our business, with a year-over-year decline of more than 20%. We are now seeing early signs of positive impact from some of the changes I highlighted. We continue to see strong growth in our CTV business, with 80% year-over-year growth in Q2 on a pro forma basis. We believe that the completion of the integration of our combined home screen offerings across OEMs into Teads Ad Manager, allowing for a much more efficient workflow for our customers, will further support growth in this business. We're also continuing to grow our CTV inventory, especially across the home screens of premium OEMs like Samsung, LG, and Hisense, which we believe is a reflection of our trusted brand relationships and creative capabilities. We are also growing with other premium supply partners, including HBO Max, Paramount, and others. In addition, we are continuing to further diversify our supply as part of our omnichannel strategy. On the retail media front, we announced our first partnership to activate performance campaigns on retail sites through [Pentelead]. We aim to grow our presence in retail media and leveraging brand advertiser relationships into performance use cases, specifically product sales. On the strategic accounts front, we signed new joint business partnerships with several top global brands, including Kia and Zalando, underscoring confidence in our integrated offering. We're seeing initial success in cross-selling performance products to legacy Teads clients. Example includes Lowe's, Switzerland, AD&B, Nestlé, and others. In our outgoing direct response business, which is focused on affiliates and other pure performance advertiser categories, we launched our Amplify AI-based MCP server that allows AI agents to connect natively to the Amplify platform. This innovation streamlines integration and workflows for performance marketers, allowing us to deliver greater efficiency and measurable results. An early adopter has called the product a revolution of campaign management and a mandatory tool for anyone serious about native performance advertising. Also, as has been the case for several years, legacy outgoing supply outside of our traditional feed continued to grow to over 34% in Q2, enabling performance advertisers to reach consumers with a range of placements across the entirety of the open internet, including display placements, banners, and others. We continue to expand this type of supply specifically for our direct response performance buyers. On the supply side, we saw some decline in our traffic volumes driven by two main factors. First, we made a deliberate and aggressive reduction in publishers and properties that don't meet our elevated quality standards post-merger, removing over 200 publishers in the last few months. This cleanup led to a roughly 5% year-over-year reduction of legacy outgoing revenues. While it creates new compress on revenues, we believe it strengthens our marketplace long-term by ensuring our supply drives positive outcomes for advertisers on quality placements. Second, we saw a modest decline in traffic from premium publishers, with a larger Q2 reduction in search-driven visits. As this is an area that's generating many questions, let me clarify. Notably, even with some pressure on page views, we saw a seventh consecutive quarter of RPM growth on the outgoing legacy platform, which largely offset the decline in page views and is a testament to our improving monetization per page and per session. It is important to note that search traffic accounts for around 70% of legacy outgoing page views and is a much smaller portion across our full network when you take into account legacy teams and CTV impressions. Another point is that the impact of AI overviews or AI summarizations is more pronounced by a factor of 2x on evergreen content than on current events content, such as news, sports, entertainment, and finance, where our inventory is the strongest. Also, AI prompts such as ChatGPT are a growing traffic source and drive a higher rate of page views than before based on users clicking on the disclosure of sources or topics they're most interested in. We are in active discussions with companies in the ecosystem about opportunities to monetize such AI-based results. Moving to the product and technology side, we are accelerating investment in our next-generation advertising platform, Teads Ad Manager. We expect that the next generation of our platform will be built leveraging agentic AI modules, delivering increased efficiencies for agencies and effectiveness for advertisers, with a focus on providing control, transparency, and modularity. We expect to launch this new platform in H1 2026. More on that in our upcoming quarters. In Q2, we launched new offerings that align with our core differentiation. We introduced connected ads in beta, a distinctive format that allows a single brand to occupy both mid-article and end-of-article placement, demonstrating the potential of brand formants. Early interest signals real potential for scale, and we are already testing it with several advertisers. We're seeing overall growth in our vertical experiences across publishers. Our vertical video solutions, which includes immersive feeds, the legacy Moments product, is gaining traction with both advertisers and publishers and is live on over 70 premium publishers with early adoption by brands including Lukotka, James Mucker Company, and others. On the CTV front, we also launched new non-standard formats for in-play advertising. These include L-save, pause ads, and others. We're also in the initial stages of driving performance campaigns on CTV, with the initial focus being on delivering incremental traffic to advertiser properties by retargeting web users on the CTV screens, leveraging the Teads omnichannel household graph. In closing, we remain confident in the strategic rationale behind this merger to build the go-to platform for advertisers seeking scaled, high-quality performance on the open internet for all their campaign objectives. We are continuing to invest in growth areas. We are not fully satisfied with our financial performance in Q2 and how we are guiding for Q3. When we look at the medium term, we believe that we will continue to provide incremental value to our advertisers, leveraging AI, our unique product capabilities, and access to the most premium media of the world through an end-to-end platform. We have made some organizational decisions that we expect to lead to market share gains, growth, and stronger yields and profitability. While Q3 may still reflect some of the transitional effects of the merger, including our reorg and realignment, we expect to see clear momentum building into Q4. I'm tracking the leading indicators closely and look forward to updating you on our progress on our next call. Now, I'll turn it over to Jason for a more detailed financial update. Thanks, David. As David mentioned, we achieved our Q2 guidance for our sector of profits and roughly needed to document our first full quarter since completing the acquisition of Teads Holding Co. in February. Revenue in Q2 was approximately $343 million, reflecting an increase of 60% year-over-year on an average reporting basis, driven primarily by the impact of the acquisition. On a pro forma basis, we saw a similar year-over-year decline percentage in Q2 as we reported in Q1. While we saw momentum early in the quarter, the summer months will prove more challenging. In June, we experienced several headwinds that decelerated our revenue trends. One, a lower rate of conversion from our sales pipeline, particularly in key countries, U.S., U.K., and France, that we attribute largely to operational issues, as David discussed. Two, some softness in a couple of our key verticals, particularly consumer goods, automotive, and luxury goods, primarily driven by cash-related uncertainty and softer demand in certain geographies. Three, the short-term residual impact from our cleanup of underperforming supply partners, which drove the majority of the decline in paid views we experienced and was a headwind on revenue. Despite this, we still experienced positive year-over-year growth in expense from the legacy operating business as we continue to drive higher RPM through improved algorithms, optimizations, and improving performance for advertisers, which helped lead to higher average CTCs. Expect gross profit in the quarter was $144 million, an increase of 158% year-over-year on an average reporting basis, driven primarily by the impact of the acquisition. Note that expect gross profit growth is outpacing revenue growth, which is driven primarily by a net capable change in our revenue mix resulting from the acquisition, additionally aided by the continuation of improvements to revenue mix and RPM growth from the legacy outgoing business. Other cost of sales and operating expenses increased year-over-year, predominantly driven by the impact of the acquisition as well as several related to one-time expenses. In the quarter, we recognized $5 million of acquisition and integration-related costs, as well as $2 million of restructuring charges. Also note that we recorded a benefit from fuel-related cost synergies in Q2 of approximately $13 million, which we expect to extend throughout Q2 as we continue to capture savings across both compensation and non-compensation areas. We continue to expect total cost synergy savings to amount to approximately $40 million for the year and maintain our expectation of $60 million for 2026. Overall, we're focused on our integration and plan to remain disciplined on cost and cash flow generation while taking steps to drive top-line growth. Adjusted EBITDA for Q2 was $27 million, which on an average reported basis represents an increase of nearly 6.5 times as compared with Q1. Moving to liquidity, free cash flow, which as a reminder we define as cash from operating activities plus CapEx, is capitalized off work costs with $19 million in the quarter. This includes cash outflows related to transaction costs, which are not excluded, resulting in a drastic free cash flow of $22 million. During the quarter, we used $8 million of CapEx to repurchase $9.3 million principal amounts of long-term debt at a discount of approximately 17%, as the debt is trading at a considerable discount to par value. As we continue to expect to generate positive cash flow this year and beyond, we view the opportunity to use excess cash on hand as an exclusive capital allocation opportunity. We will continue to consider repurchases in the future. As a result, we ended the quarter with $166 million of CapEx, cash equivalents, and investments in marketable securities on the balance sheet. We continue to have EUR 15 million, or about $17.5 million, in overdraft borrowings plus five more balance sheet of short-term debt. We have $628 million in principal amount of long-term debt at a 10% coupon due in 2030. The long-term debt is carried on our balance sheet in and of discount and deferred financing fees, and on the balance of $603 million as of June 30th, resulting in a net debt balance of $454 million as compared with $471 million from March 31st. In these first 150 days, I'm very proud of what we've accomplished in terms of integrations, decisions we've made, and how quickly we've adapted as a combined model to attune to our learnings. All of our integration decisions take into consideration our long-term goals and vision. This process is challenging as we melt two complementary but distinct businesses and strive to quickly execute a high-performing and efficient go-to-market strategy. In the short term, we've felt a slower than anticipated return to growth, which we believe is predominantly a matter of timing. The delays in our return to growth have a sizable impact to our adjusted EBITDA in the short term, as most of our expenses are fixed costs. With that context, we provided the following guidance. For Q3, we expect gross profit of $133 million - $143 million, and adjusted EBITDA of $21 million - $29 million. Considering the fact that Q4 is our most significant quarter of the year, historically contributing nearly 50% of annual adjusted EBITDA for the performer business and an unusually wide range of outcomes we currently see for Q4 due to the uncertainty of how quickly the steps we've taken will impact revenue trends, we've made a decision not to reaffirm adjusted EBITDA guidance for the full year 2025. However, we still expect to generate positive free cash flow this year and are very confident the steps we are taking will drive improvements to the results starting in Q4 and into 2026. Now, I'll turn it back to the operator for Q&A. Thank you. The floor is now open for questions. If you do have a question, please press star one on your keyboard. Again, it's star one to ask a question. If you'd like to remove yourself from the queue, please press one. Our first question comes from Laura Anne Martin. Laura, your line looks live from New York. Hi. Thank you. I'll just ask two. Just following up on that last comment, Jason, around debt. You're buying in debt at a 17% discount, which sounds like a good deal, but you only spent $8 million, but your free cash flow was $19 million. Is this, and you have so much cash on the book, is there some, like, why is that a restriction? Why not spend, like, all your free cash flow on buying in debt since you have so much cash on the book? Just curious as to how you size how much debt you buy in in a single quarter. It seems like a good idea. Second, for David, for you, I wanted to drill down a little bit on this - 20%, U.S. in the U.S., which is creating a headwind. How much of that is structural? We're going to have to go through four quarters of that, and how much do you think is just a one or two quarter dislocation that will not recur in future quarters? Thank you. Thank you, Laura. Jason, thanks for your question. On the debt, we've said, as you said, $8 million. We drew a lot more cash from that. Our first interest payment on the debt is actually in a week or two. We no longer fill in the closet of building integrating where, you know, moving cash around in the most efficient environment. We do expect to generate cash flow this year. Of course, loan, you know, it's something that if we see it as a creative use of capital, we'll continue to. For us, the $8 million is really the start of what we thought was excess cash available on the balance sheet at the time. All right, David, I'll take the second one. As we said, we are not confident with exactly where we ended, but the good news is that these are all things within our control. The organizational, structural, legal, strategic processes, we've made a lot of changes on that very quickly when we realized it. I can tell you that I'm tracking very close leading indicators around pipeline, conversions, leading RFPs, and all of them are trending up in the U.S. I'm pretty positive around how we're going to end up towards the end of the year. I think, again, this is in our control, and I think we've changed, we made the right changes to affect that. Thank you. Our next question comes from Matt Cohen from Citizens. Go ahead. Thank you so much for taking my questions. My first one is just on, you know, between the CTV from the $40 million synergies in 2025 and $65 million- $70 million in 2026. Continue to talk about if things don't materialize in the top line that you guys expect, which your willingness to cut more out of expenses is to meet that free cash flow target for the end of the year. I'll take that. At the moment, we're really focused on growth. It's always focused on back to growth, and we believe that the changes we've made will get us there. We always look at opportunities if we need to. Right now, we believe we have the right cost structure to get back to growth in the second half of the year. We are tracking it very closely. If we see something that changes, we will adjust. We've done it in the past, so we know how to do it. Right now, I think we decided deliberately to focus on back to growth. Got it. Maybe just a follow-up on the return to growth and the revamped go-to-market strategy. You've been pretty well about pricing, and if you can continue to just elaborate on specifically what you are doing and what's giving you confidence that everything can get back on track. For sure. I mean, as an example, the legacy Teads, they moved from being a single-party company to a multi-product company. I think there's a lot of opportunities to package better the omnichannel offering. If you price, for example, something where you give a home screen placement, but you can package with it a home screen and other online video, just approaching this in a more structural way, more strategically around the portfolio, I think is a big change, and we already see that working. On top of that, we're now adding quite a significant amount of cross-selling of performance to legacy Teads customers and branding solutions to legacy outgoing customers. Packaging those together, finding the ideal pricing for the combined offering is something that takes some time. I think right now we are, again, it's not perfect yet, but it's already really impacting the volume and the conversion rates and the win rates in our team. Thank you so much. Thank you. Our next question comes from Ygal Arounian from Citigroup Inc. Go ahead. Hey guys, good morning. Just on the transition challenges and what's, I want to maybe tie some of these points together a little bit better. David, you talk about the advertiser response being really strong and it being energized by some of the new combined products. Dealing with that, we're down 20% in the U.S. and seeing some of the challenges around the sales organization. It sounds like the majority of the challenges are, or maybe even all are, around that. Can you just maybe bridge those two points first, and then in what you're seeing in 4Q and pulling the guidance and the wide range of outcomes, you're talking about having sort of, or feeling like you're feeling confident that you've fixed these issues. What gets you maybe to where you want to be in 4Q versus not in this wide range of outcomes that you see potentially in 4Q? Hey, Ygal, thanks for, I think we had been kind of maybe you could see there, I think the brand is very big. We had more than 300 meetings with top brands, top agencies, really presenting and promoting the concept of branding and performance and the opportunity that we bring to the market by combining the two. For example, connected ads puts a great long-form product that has a mid-article, end-of-article while brand taking it, then being able to combine. That is super positive. I mean, we have not had any issues around what's the meaning of the combination. Everyone wants to give it a chance, wants to potentially push more budgets here. Generally, people are looking through diverse platform walled gardens and asking one of the loudest players on the open internet that can reach incremental audiences with great ROI across branding and performance is resonating very well. Now, in key markets, we're having really organizational operational issues that are highlighted, which is the U.S., U.K., and France. Other markets present in Europe have all been growing. It means it's really related to team management, operations, rigor, and other things that we are addressing. I'm very confident because I see already things stay high. I'm confident because I see leading indicators that I refer to, like how much more coverage we have on RFP, the win rate, the number of meetings, the conversion of the pipeline, the speed of the conversion of the pipeline. Looking at all of these, I can tell you we've seen already in July, month-over-month growth in cross-selling of both performance capabilities, performance complaints to legacy Teads clients, and branding complaints to legacy outgoing clients. I see more meetings, and I'm putting forth by what I see. I think it's not great news how we performed and what we're guiding, but it is good news that it is, I feel it's not really disturbing our control, and getting that market share is something that with better execution behind the confidence we'll get there. Okay. I guess, you know, what about, you talked about the impacts to traffic from deep Gen AI and AI overviews. You know, this topic is probably top of mind more than any other big topic from investors. You outlined you're seeing some impacts, but it's not the majority of your, I guess, revenue basis and impacts it directly from this. Can you just talk about the trend that you expect to see? I think part of the concern is that this AI overviews needs to become a bigger part of search. You know, this has a greater impact. Was the decision to move away from certain publishers related to the trends that you're seeing here at all? The commentary around trying to monetize the new kind of Gen AI overview, I thought that was pretty interesting. Just wanted to hear a little bit more about your approach there. All right. Maybe I'll start with the one sort of thing that is specifically for us, which is this reduction in publishers. We have to elevate the quality of the supply. I think when we try to bring each legacy advertiser to supply, we just have to play in a different ball game than before. We made a conscious decision to reduce about 200 times without a lot of pages, lower quality, and about 5% of the revenue. That's something that specifically is something we did. Going back to the bigger topic, I mean, we are big believers in the open internet generally, and people are spending more time on the open internet. That includes obviously also CTV, which is going to runway for us for about $100 million this year, growing 80% this quarter. We have unique offerings, too. I think diversifying from the open internet from traditional publishers to CTV and to retail media, I think we're doing specifically on traditional publishers. I think it's a mixed bag. Search, AI summaries have really had minimal impact on us until now. I'm taking this very, very seriously, and obviously we're tracking it. There are a few elements that play here. One is the type of content. Evergreen content is much more effective than current content, which is news, entertainment, sports, finance, and others. Publishers are really doing a lot to increase the engagement of users on their sites, including incorporating, you know, ChatGPT type capabilities into the site and keeping the users more engaged. That creates more interesting supply that we're helping them monetize and can help them monetize. Generally, I think the premium publishers are doing a lot to improve experiences on their site, lesser density, better quality, which plays, again, in our favor here. There's a lot going on. It's clearly, I think, I mean, we can't deny it. It is a risk on pages. On the other hand, we've also shown continuous improvement in monetizing pages. Our RPM, which is what we get per page, is increasing for the seventh consecutive quarter. I see that really good pipeline in the algorithm to continue to do that. I'm leaving here, Ygal, and it's a mixed bag. We're tracking it. I think it is something that is impacting the industry, but the industry has always found a way to really do well. I'm confident that between what we can do with the publisher world, diversification, better monetization, I think it's going to be something that we go through and come out of it in a good place. Great. Thank you so much, guys. Okay, ladies and gentlemen, to ask a question, it's star one. Our next question comes from Ed Alder from Jefferies. Your line is open. Hey everyone, thanks for the question. Maybe just digging into kind of these segments a little bit more, where is this mostly been on the go-to-market strategy, or is the products fit? Just to give it a little more color on there, I would be greatly appreciated. Hi, David. I think for them, it's very much operational, which then gives us the confidence that we can fix it. I think the product is great. The new go-to-market, which clarifies the branding packages, performance packages, the omnichannel, is something that is starting to resonate and we're leveraging this sort of new go-to-market to get more business. We're very confident on the product, the strategy, the brand performance, combined offering, our premium advertiser base, increase our joint business partnerships. We're working a bit more in the U.S. on the programmatic side on certain types of deals. I think it is things that are in our control, and I feel that it will be already turned the corner based on some of the numbers I see in July. Great. On the CTV opportunity, would you say today that's mostly on the home screen, and then where that can go, could you get in-screen placements, or is home screen the main part of that strategy? It's a combination of the two. I think the home screen is where we have a really extremely unique differentiation. Many of these home screen placements today we have exclusive access to. It's really a strong demonstration of unique creative capabilities and the quality of advertisers. LG, Samsung, Hisense, they need to make sure that on the home screen they have only the most premium advertisers of the world, and they're very selective. Even when we look at the legacy Teads, the advertiser base is still selective. That's a great differentiation, but a big part of the business is in-screen. I think the other advantage that we have is now that all these CTV offerings have been integrated into Teads Ad Manager, which is our platform. It makes it much easier for agencies to run campaigns on an omnichannel basis and dynamically allocate those campaigns. That is, again, I think a big tailwind for the growth in potential in CTV. Great. Thanks. Thank you. Our next question comes from Zach Cummins from B. Riley Securities. Go ahead, Zach. Hi, this is Ethan Widell on calling in for Zach Cummins. Thank you for taking my question. I think to start, just going forward, can you maybe speak a little bit to your capital allocation priorities, maybe between, I'd say, down and other options and maybe what your strategy would be there? Sure. I can take a look and think through your question. You know, we've said really since we closed the deal, our priority has been the resolution passes at one to one to quarter times. Honestly, I think it uses what I would consider our excess cash to start buying back some of those. It should be our priority. Got it. Thank you. Looking at sharp uncertainty in the macro environment right now for the rest of the year, I was just wondering if you could speak a little bit to your visibility looking at demand for the rest of the year. Yeah, I guess I'm Jason Siviak for sure. I'm David. Sorry, go ahead. Yeah, I think you feel very good about it. Obviously, what we're focused on are the leading KPIs, as David mentioned in the prepared remarks and also in one of the questions, the number of users, the RFPs, the pipeline, the weighted pipeline. We're discussing the KPIs that drive the business and the overall approach. I think that is reflected in a lot of that. Pretty diverse business, where we did see sharpness in certain verticals or geos, where there's kind of an overlap there. None of our verticals are more than mid-single-digit percentage of what we have here. We take the other 50% or so of the legacy Teads business has grown year-over-year, right? It's gotten down a little bit. I would just add, the diversity is very relevant here with also the 10% in Jamaica, 60% in India, 10% in JPAC. As Jason said, we don't have any major customer vertical concentration. We're seeing some sharpness in certain geographies in like VDN Labs and others, but the portfolio is diverse enough. We don't see today any major macro negative impact. Other than, you know, there's been some instability around the tariff announcement, but I think we're over that at this point, and we really don't see any big macro impact here. Understood. I appreciate it. Thanks. Thank you. At this time, we have no further questions. I would now like to turn the floor back over to David Kostman for any closing remarks. Thank you very much. Thanks for joining us today, and I look forward to updating you on some of the developments we see in our business. Thank you. Thank you. This does conclude today's conference. We appreciate your attendance. You may disconnect your lines at this time and have a wonderful day.