Teads NASDAQ: TEAD reported second-quarter results that reflected diverging performance between its enterprise advertising business and its direct-response and small-and-medium enterprise segment, as connected TV growth and omnichannel adoption helped support the company’s higher-margin operations.
Chief Executive Officer David Kostman said the company generated $123 million in ex-TAC gross profit, $7 million in adjusted EBITDA and $3 million in free cash flow during the quarter. Revenue was approximately $285 million, down 17% from a year earlier, according to Chief Financial Officer Jason Kiviat.
The company said it is suspending guidance, including its previously issued full-year 2026 adjusted EBITDA outlook, citing volatility in its direct-response and SME business as it pursues strategic and operational changes.
Enterprise Business Shows Stabilization
Teads’ enterprise business, which serves global brands and agencies, produced $89 million in ex-TAC gross profit in the second quarter. Kostman said advertiser spending in the segment was flat year over year, stabilizing after headwinds in 2025. The company expects mid-single-digit ex-TAC gross-profit growth in the second half of 2026.
Kiviat said May and June each posted positive year-over-year advertiser-spend growth from enterprise customers. He characterized that trend as an indication that the company has moved beyond the low point in the business and is positioned to return the segment to growth this year.
Connected TV was a central contributor to the enterprise strategy. CTV revenue increased 67% year over year to approximately $40 million and represented 13% of second-quarter revenue, compared with 7% in the same period of 2025.
Kostman said Teads’ home-screen offering reaches more than 500 million home screens globally. During the quarter, the company renewed its exclusive LG home-screen partnership across Europe and Asia-Pacific, expanded into additional markets, partnered with TiVo Ads across 5.3 million households in North America and the U.K., and integrated with VIDAA Japan, adding 2.3 million devices as of July 1.
The company also cited increased adoption of omnichannel advertising packages. Branding customers using omnichannel campaigns accounted for 16% of second-quarter branding revenue, up from 9% a year earlier and approaching Teads’ 18% full-year target.
Teads secured or renewed global joint-business partnerships with Stellantis, Louis Vuitton, Warner Bros. and Dyson, Kostman said. He added that the company has active discussions and early-stage implementations involving artificial intelligence and data collaborations with major agency holding companies.
Direct-Response Segment Faces Industry and Operational Pressures
Teads’ direct-response and SME business, which includes affiliate search, performance buyers and direct-to-consumer brands using its Amplify platform, generated $34 million in ex-TAC gross profit, down 30% year over year.
Kostman attributed the decline to broader changes in search and open-web traffic, including the growing use of AI-generated summaries that are altering organic referral patterns and reducing publisher impressions. He also cited competition from closed advertising ecosystems and ongoing platform policy changes.
During the question-and-answer session, Kostman said page views among Teads’ premium publishers had declined by roughly 15% to 25%, varying by country. He said the changes have not materially affected the company’s ability to sell omnichannel products, because much of that offering is sold in mid-article in-feed placements.
The company also said part of the decline was intentional. Teads exited certain low-margin direct-response accounts and removed lower-quality open-web supply as part of a quality reset intended to strengthen brand safety and improve supply standards for strategic brand customers. Most of those actions occurred during 2025, management said.
To address the pressures, Teads launched EngageOS, an AI-powered publisher operating system designed to help publishers monetize complete reader sessions rather than depending on search-driven page views. Penske Media, The Arena Group, Scripps and New Post are among publishers testing the product, and Kostman said Teads has seen significant lifts in yield.
The company is also pursuing higher-margin programmatic supply channels, holding discussions with AI companies concerning emerging large-language-model channels, enhancing advertiser targeting and campaign efficiency within Amplify, and introducing formats such as vertical video.
Costs, Profitability and Balance Sheet
While Teads met its second-quarter ex-TAC gross-profit guidance, adjusted EBITDA came in below its expected range. Kiviat said a late-quarter increase in expenses contributed to the shortfall.
Approximately half of the variance from expectations stemmed from expense timing and cutoffs, including discretionary travel, entertainment and marketing expenses as well as temporary costs related to moving the company’s cloud platform to a new provider. Foreign-exchange movements, particularly involving the Israeli shekel, and elevated bad-debt expenses tied primarily to prior customers also weighed on costs.
Kiviat said Teads expects costs to decline in the third quarter and is reviewing the cost structure of lower-profit and more scalable parts of the business. The company is centralizing teams and embedding AI tools to streamline processes and reduce the direct-response segment’s cost base.
Teads ended the quarter with $91 million in cash equivalents and investments in marketable securities, along with access to $40 million through its revolving credit facility. Kostman said the company continues to evaluate opportunities to strengthen its balance sheet but did not provide further details on potential transactions.
Management said it intends to continue investing in the enterprise business despite possible near-term EBITDA trade-offs, citing CTV, omnichannel products, agency relationships and higher margins as the company’s primary long-term growth opportunities.
About Teads (NASDAQ:TEAD)
Teads is a global digital media platform specializing in outstream video advertising and high-impact display formats. Founded in 2007 and listed on the Nasdaq under the ticker TEAD, the company connects advertisers, agencies and publishers through a programmatic marketplace designed to maximize brand engagement across desktop, mobile and connected TV. Teads offers proprietary ad formats such as inRead, outstream expansion units and seamless mobile placements that activate only when visible to the user, helping clients optimize viewability and attention metrics without relying on traditional pre-roll or banner placements.
The Teads platform leverages data-driven targeting and machine learning to serve personalized creative in real time.
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