Outbrain Inc Reports Second Quarter 2024 Financial Results

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Outbrain Inc. Reports Second Quarter 2024 Financial Results

Outbrain Inc. (NASDAQ: OB), a leading technology platform, announced its financial results for the quarter ended June 30, 2024.

Key Financial Metrics

Metric	Q2 2024	Q2 2023	YoY Change	Consensus Estimate
Revenue	$214.1M	$225.8M	-5%	$228.7M
Gross Profit	$45.6M	$44.0M	+4%	N/A
EPS (GAAP)	$-0.01	$0.25	N/A	$-0.06
Net Loss	$2.2M	Net Income of $11.3M	N/A	N/A
Adjusted Net Income	$0.1M	Adjusted Net Loss of $3.9M	N/A	N/A
Adjusted EBITDA	$7.4M	$3.5M	+111%	N/A

Interpretation: Outbrain saw a 5% decrease in revenue compared to the same period last year, falling short of the consensus estimate of $228.7M. However, the company improved its gross profit by 4% year-over-year. Despite a GAAP net loss of $2.2M, the company achieved an adjusted net income of $0.1M and more than doubled its adjusted EBITDA to $7.4M.

Segment Revenue Performance

Segment	Q2 2024 Revenue	Q2 2023 Revenue	QoQ Change
Core Platform	$187.6M	$200.2M	-6.3%
Emerging Products	$26.5M	$25.6M	+3.5%

Interpretation: The Core Platform segment experienced a 6.3% decline in revenue, while the Emerging Products segment showed a modest growth of 3.5%. This indicates shifting dynamics within Outbrain's portfolio but stable overall performance in emerging segments.

Operational Highlights

Operational Metric	Q2 2024	Q2 2023	YoY Change
RPM Growth	3 consecutive quarters	-	-
Onyx Re-booking Rate	40%	-	-
Growth in Zemanta DSP Advertiser Spend	50% (H1 2024 vs. H1 2023)	-	-
Predictive Demographics Feature Adoption Rate	Up to 40% above traditional third-party segments	-	-
Revenue from Non-traditional Feed Products	27% of total	24% of total	+3%

Interpretation: Operational metrics indicate strong RPM growth for three consecutive quarters and significant growth in Zemanta DSP advertiser spend, showcasing Outbrain's successful product enhancements and features.

Management Comments

David Kostman, CEO of Outbrain, expressed satisfaction with the financial results, attributing success to business model improvements and growth areas. He also mentioned the planned merger with Teads, expected to create one of the largest end-to-end open internet advertising platforms.

Share Repurchase Program

Outbrain repurchased 464,054 shares for $2.0 million during Q2 2024, under its $30 million stock repurchase program authorized in December 2022. As of June 30, 2024, $6.6 million remained available under the repurchase program.

Forward Guidance

For Q3 2024: - Ex-TAC Gross Profit: $58 million to $62 million - Adjusted EBITDA: $8 million to $10.5 million

For the full year 2024: - Ex-TAC Gross Profit: $238 million to $248 million - Adjusted EBITDA: Increased expectation to $31.5 million to $36 million

Stock Price Movement

Following the earnings release, Outbrain’s stock price increased by 6.71%.

Summary: While Outbrain faced a slight revenue decline in Q2 2024, it achieved growth in gross profit, adjusted EBITDA, and operational metrics. The upcoming merger with Teads and robust forward guidance highlight a positive outlook. The market responded favorably, reflected in a 6.71% increase in share price post-release.