Outbrain Inc. (Nasdaq: OB), a leading recommendation platform for
the open web, announced today financial results for the quarter
ended June 30, 2022.
“We are pleased to report that despite worsening
macroeconomic headwinds, we delivered on the guidance we provided
for the second quarter of 2022,” said David Kostman, Outbrain's
Co-CEO. “We continued to gain significant market share globally
with wins of top premium publishers throughout 2022. We expect that
this increased market share, together with our investments in
technology and product, will position us well for strong growth
when the advertising market recovers. Nevertheless, in view of
market softness and economic uncertainty, we continued to adjust
our cost structure with focus on profitability.”
“Product innovation, quality, and our deep
partnerships remain the cornerstones of our business and are key
differentiators, especially when the macro environment remains
challenging,” added Yaron Galai, Outbrain’s Co-Founder and Co-CEO.
“We recognize the near-term environment will remain volatile,
however, during these times, we will continue to focus on the long
term and make the right strategic investments in our future product
and supply partnerships.”
Second Quarter 2022 Key Financial Metrics:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in millions USD) |
|
|
2022 |
|
|
2021 |
|
%Change |
|
|
2022 |
|
|
2021 |
|
%Change |
Revenue |
|
$ |
250.9 |
|
$ |
247.2 |
|
2% |
|
$ |
505.1 |
|
$ |
475.2 |
|
6% |
Gross profit |
|
|
48.7 |
|
|
59.1 |
|
(18)% |
|
|
102.7 |
|
|
112.5 |
|
(9)% |
Net (loss) income |
|
|
(10.3 |
) |
|
15.2 |
|
(168)% |
|
|
(12.2 |
) |
|
25.9 |
|
(147)% |
Net cash provided by (used in) operating activities |
|
|
1.5 |
|
|
19.5 |
|
(92)% |
|
|
(1.1 |
) |
|
24.9 |
|
(105)% |
Non-GAAP Financial Data * |
|
|
|
|
|
|
|
|
Ex-TAC gross profit |
|
|
59.3 |
|
|
66.8 |
|
(11)% |
|
|
122.8 |
|
|
127.2 |
|
(3)% |
Adjusted EBITDA |
|
|
5.9 |
|
|
24.6 |
|
(76)% |
|
|
17.5 |
|
|
45.2 |
|
(61)% |
Adjusted net (loss) income |
|
|
(10.9 |
) |
|
16.5 |
|
(166)% |
|
|
(11.0 |
) |
|
27.0 |
|
(141)% |
Free cash flow |
|
|
(8.9 |
) |
|
16.5 |
|
(154)% |
|
|
(17.8 |
) |
|
19.1 |
|
(193)% |
* See non-GAAP reconciliations below
Second Quarter 2022
Highlights:
- Revenue increased to $250.9
million, compared to $247.2 million. Revenue increased 6% on a
constant currency basis, excluding net unfavorable foreign currency
effects of approximately $11.5 million. The reported increase was
driven by approximately $25.8 million, or 10% of growth from new
media partners1, offset by a decrease of
approximately $22.2 million due to net revenue retention of 91% on
existing media partners. We have experienced lower yields mainly
due to weaker demand on our platform, primarily as a result of the
current macroeconomic conditions and the impact on advertising
spend.
- Gross profit decreased 18% year
over year to $48.7 million, compared to $59.1 million. Gross profit
decreased 14% on a constant currency basis, excluding net
unfavorable foreign currency effects of approximately $1.9
million.
- Ex-TAC gross profit decreased 11%
year over year to $59.3 million, compared to $66.8 million. Ex-TAC
gross profit decreased 8% on a constant currency basis, excluding
net unfavorable foreign currency effects of approximately $1.9
million.
- Net loss of $10.3 million compared
to net income of $15.2 million in the prior year.
- Adjusted EBITDA of $5.9 million
compared to $24.6 million in the prior year, reflecting lower
Ex-TAC gross profit and increased operating expenses. Adjusted
EBITDA included net favorable foreign currency effects of
approximately $0.7 million.
- We increased our cost saving
initiatives to address the current macroeconomic environment,
focusing on efficiencies and cost reduction opportunities. We
expect that these actions will result in cost savings of an
additional $12 million in the second half of 2022 as compared with
our prior guidance.
- Cash from operating activities was
$1.5 million in the period; free cash flow was a use of cash of
$8.9 million, reflecting our planned increase in capital
expenditures. Cash and cash equivalents were $391.4 million as of
June 30, 2022.
As of July 31, 2022, we repurchased 2,339,374
shares for a total of $12.6 million, including commissions, under
our $30 million stock repurchase program, with remaining
availability under the program of $17.5 million.
2022 Full Year and Third Quarter
Guidance
The following forward-looking statements reflect
our expectations for 2022.
For the full year ended December 31, 2022, we
expect:
- Ex-TAC gross profit of at least
$228 million
- Adjusted EBITDA of at least $18
million
For the third quarter ending September 30, 2022,
we expect:
- Ex-TAC gross profit of $48 million
to $52 million
- Adjusted EBITDA of breakeven to
$(4) million
The above measures are forward-looking non-GAAP
financial measures for which a reconciliation to the most directly
comparable GAAP financial measure is not available without
unreasonable efforts. See “Non-GAAP Financial Measures” below. In
addition, our guidance is subject to risks and uncertainties, as
outlined below in this release.
________________________________
1 We calculate media partner
net revenue retention at the end of each quarter by starting with
revenue generated on media partners’ properties in the same period
in the prior year, “Prior Period Retention Revenue.” We then
calculate the revenue generated on these same media partners’
properties in the current period, “Current Period Retention
Revenue.” Current Period Retention Revenue reflects any expansions
within the media partner relationships, such as any additional
placements or properties on which we extend our recommendations, as
well as contraction or attrition. Our media partner net revenue
retention in a quarter equals the Current Period Retention Revenue
divided by the Prior Period Retention Revenue. These amounts
exclude certain revenue adjustments and revenue recognized on a net
basis. New media partners are defined as those relationships in
which revenue was not generated in the prior year period, except
for limited instances where residual revenue was generated on a
media partner’s properties. In such instances, the residual revenue
would be excluded from net revenue retention above.
Conference Call and Webcast
Information
Outbrain will host an investor conference call
this morning, Thursday, August 11th at 8:30 am ET. Interested
parties are invited to listen to the conference call which can be
accessed live by phone by dialing 1-877-407-9208 or for
international callers, 1-201-493-6784. A replay will be available
two hours after the call and can be accessed by dialing
1-844-512-2921, or for international callers, 1-412-317-6671. The
passcode for the live call and the replay is 13731328. The
replay will be available until August 25, 2022. Interested
investors and other parties may also listen to a simultaneous
webcast of the conference call by logging onto the Investors
Relations section of the Company’s website at
https://investors.outbrain.com. The online replay will be available
for a limited time shortly following the call.
Non-GAAP Financial Measures
In addition to GAAP performance measures, we use
the following supplemental non-GAAP financial measures to evaluate
our business, measure our performance, identify trends and allocate
our resources: Ex-TAC gross profit, Adjusted EBITDA, free cash
flow, adjusted net (loss) income and adjusted diluted EPS. These
non-GAAP financial measures are defined and reconciled to the
corresponding GAAP measures. These non-GAAP financial measures are
subject to significant limitations, including those we identify
below. In addition, other companies in our industry may define
these measures differently, which may reduce their usefulness as
comparative measures. As a result, this information, should be
considered as supplemental in nature and is not meant as a
substitute for revenue, gross profit, net (loss) income, diluted
EPS or cash flows from operating activities presented in accordance
with U.S. GAAP.
Because we are a global company, the
comparability of our operating results is affected by foreign
exchange fluctuations. We calculate constant currency measures and
foreign currency impacts by translating the current year’s reported
amounts into comparable amounts using prior year’s exchange rates.
All constant currency financial information being presented is
non-GAAP and should be used as a supplement to our reported
operating results. We believe that this information is helpful to
our management and investors to assess our operating performance on
a comparable basis. However, these measures are not intended to
replace amounts presented in accordance with GAAP and may be
different from similar measures calculated by other companies.
The Company is also providing third quarter and
full year 2022 guidance on a non-GAAP basis. These forward-looking
non-GAAP financial measures are calculated based on internal
forecasts that omit certain amounts that would be included in GAAP
financial measures. The Company has not provided quantitative
reconciliations of these forward-looking non-GAAP financial
measures to the most directly comparable GAAP financial measures
because it is unable, without unreasonable effort, to predict with
reasonable certainty the occurrence or amount of all excluded items
that may arise during the forward-looking period, which can be
dependent on future events that may not be reliably predicted. Such
excluded items could be material to the reported results
individually or in the aggregate.
Ex-TAC Gross Profit
Ex-TAC gross profit is a non-GAAP financial
measure. Gross profit is the most comparable GAAP measure. In
calculating Ex-TAC gross profit, we add back other cost of revenue
to gross profit. Ex-TAC gross profit may fluctuate in the future
due to various factors, including, but not limited to, seasonality
and changes in the number of media partners and advertisers,
advertiser demand or user engagements.
We present Ex-TAC gross profit, as well as
Adjusted EBITDA as a percentage of Ex-TAC gross profit, because
they are key profitability measures used by our management and
board of directors to understand and evaluate our operating
performance and trends, develop short-and long-term operational
plans and make strategic decisions regarding the allocation of
capital. Accordingly, we believe that these measures provide
information to investors and the market in understanding and
evaluating our operating results in the same manner as our
management and board of directors. There are limitations on the use
of Ex-TAC gross profit in that traffic acquisition cost is a
significant component of our total cost of revenue but not the only
component and, by definition, Ex-TAC gross profit presented for any
period will be higher than gross profit for that period. A
potential limitation of this non-GAAP financial measure is that
other companies, including companies in our industry, which have a
similar business, may define ex-TAC gross profit differently, which
may make comparisons difficult. As a result, this information,
should be considered as supplemental in nature and is not meant as
a substitute for revenue or gross profit presented in accordance
with U.S. GAAP.
Adjusted EBITDA
We define Adjusted EBITDA as net (loss) income
before charges related to exchange of senior notes upon IPO;
interest expense; interest income and other income (expense), net;
provision for income taxes; depreciation and amortization;
stock-based compensation, and other income or expenses that we do
not consider indicative of our core operating performance,
including but not limited to, merger and acquisition costs, certain
IPO and public company implementation related costs, and regulatory
matter costs. We present Adjusted EBITDA as a supplemental
performance measure because it is a key profitability measure used
by our management and board of directors to understand and evaluate
our operating performance and trends, develop short-and long-term
operational plans and make strategic decisions regarding the
allocation of capital, and we believe it facilitates operating
performance comparisons from period to period.
We believe that Adjusted EBITDA provides useful
information to investors and others in understanding and evaluating
our operating results in the same manner as our management and
board of directors. However, our calculation of Adjusted EBITDA is
not necessarily comparable to non-GAAP information of other
companies. Adjusted EBITDA should be considered as a supplemental
measure and should not be considered in isolation or as a
substitute for any measures of our financial performance that are
calculated and reported in accordance with GAAP.
Adjusted Net (Loss) Income and Adjusted
Diluted EPS
Adjusted net (loss) income is a non-GAAP
financial measure, which is defined as net (loss) income excluding
items that we do not consider indicative of our core operating
performance, including but not limited to, charges related to the
exchange of senior notes upon IPO, the cumulative incremental
stock-based compensation expense impact for awards with an IPO
performance condition, merger and acquisition costs, certain IPO
related costs, deferred tax asset valuation allowance release, and
regulatory matter costs. Adjusted net (loss) income, as defined
above, is also presented on a per diluted share basis. We present
adjusted net (loss) income and adjusted diluted EPS as supplemental
performance measures because we believe they facilitate performance
comparisons from period to period. However, adjusted net (loss)
income or adjusted diluted EPS should not be considered in
isolation or as a substitute for net (loss) income or diluted
earnings per share reported in accordance with GAAP.
Free Cash Flow
Free cash flow is defined as cash flow from
operating activities less capital expenditures and capitalized
software development costs. Free cash flow is a supplementary
measure used by our management and board of directors to evaluate
our ability to generate cash and we believe it allows for a more
complete analysis of our available cash flows. Free cash flow
should be considered as a supplemental measure and should not be
considered in isolation or as a substitute for any measures of our
financial performance that are calculated and reported in
accordance with GAAP.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the federal securities laws, which
statements involve substantial risks and uncertainties.
Forward-looking statements generally relate to possible or assumed
future results of our business, financial condition, results of
operations, liquidity, plans and objectives. You can generally
identify forward-looking statements because they contain words such
as “may,” “will,” “should,” “expects,” “plans,” “anticipates,”
“could,” “intends,” “guidance,” “outlook,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these terms or other similar
expressions that concern our expectations, strategy, plans or
intentions. We have based these forward-looking statements largely
on our current expectations and projections regarding future events
and trends that we believe may affect our business, financial
condition and results of operations. The outcome of the events
described in these forward-looking statements is subject to risks,
uncertainties and other factors, including but not limited to:
overall advertising demand and traffic generated by our media
partners; factors that affect advertising demand and spending, such
as unfavorable economic or business conditions or downturns,
instability or volatility in financial markets, and other events or
factors outside of our control, such as U.S. and global recession
concerns, geopolitical concerns, including the conflict between
Russia and Ukraine, supply chain issues, inflationary pressures,
labor market volatility, and the pace of recovery or any
resurgences of the COVID-19 pandemic; any failure of our
recommendation engine to accurately predict user engagement, any
deterioration in the quality of our recommendations or failure to
present interesting content to users or other factors which may
cause us to experience a decline in user engagement or loss of
media partners; limits on our ability to collect, use and disclose
data to deliver advertisements; the effects of the ongoing and
evolving COVID-19 pandemic, including the resulting global economic
uncertainty, and measures taken in response to the pandemic; our
ability to continue to innovate, and adoption by our advertisers
and media partners of our expanding solutions; our ability to meet
demands on our infrastructure and resources due to future growth or
otherwise; our ability to extend our reach into evolving digital
media platforms; our ability to maintain and scale our technology
platform; our ability to grow our business and manage growth
effectively; the success of our sales and marketing investments,
which may require significant investments and may involve long
sales cycles; the risk that our research and development efforts
may not meet the demands of a rapidly evolving technology market;
the loss of one or more of our large media partners, and our
ability to expand our advertiser and media partner relationships;
our ability to compete effectively against current and future
competitors; failures or loss of the hardware, software and
infrastructure on which we rely, or security breaches; our ability
to maintain our profitability despite quarterly fluctuations in our
results, whether due to seasonality, large cyclical events, or
other causes; political and regulatory risks in the various markets
in which we operate; the challenges of compliance with differing
and changing regulatory requirements; and the risks described in
the section entitled “Risk Factors” and elsewhere in our Annual
Report on Form 10-K filed for the year ended December 31, 2021, as
updated in our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022, and in subsequent reports we file with the SEC.
Accordingly, you should not rely upon forward-looking statements as
predictions of future events. We cannot assure you that the
results, events and circumstances reflected in the forward-looking
statements will be achieved or occur, and actual results, events or
circumstances could differ materially from those projected in the
forward-looking statements. We undertake no obligation to update
any forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the
occurrence of unanticipated events. We do not assume any obligation
to update any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law.
About Outbrain
Outbrain (Nasdaq: OB) is a leading
recommendation platform for the open web. Our technology enables 10
billion daily recommendations to consumers across more than 7,000
online properties and connects advertisers to these audiences to
grow their business. Founded in 2006, Outbrain is headquartered in
New York with offices in 17 cities worldwide.
Media Contact
press@outbrain.com
Investor Relations Contact
IR@outbrain.com
(332) 205-8999
|
OUTBRAIN INC.Condensed Consolidated
Statements of Operations(In
thousands) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(Unaudited) |
Revenue |
|
$ |
250,883 |
|
|
$ |
247,153 |
|
|
$ |
505,099 |
|
|
$ |
475,177 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Traffic acquisition costs |
|
|
191,554 |
|
|
|
180,324 |
|
|
|
382,250 |
|
|
|
347,937 |
|
Other cost of revenue |
|
|
10,610 |
|
|
|
7,767 |
|
|
|
20,199 |
|
|
|
14,709 |
|
Total cost of revenue |
|
|
202,164 |
|
|
|
188,091 |
|
|
|
402,449 |
|
|
|
362,646 |
|
Gross profit |
|
|
48,719 |
|
|
|
59,062 |
|
|
|
102,650 |
|
|
|
112,531 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
10,519 |
|
|
|
8,474 |
|
|
|
20,947 |
|
|
|
16,902 |
|
Sales and marketing |
|
|
28,122 |
|
|
|
21,186 |
|
|
|
55,517 |
|
|
|
41,054 |
|
General and administrative |
|
|
12,957 |
|
|
|
12,247 |
|
|
|
28,991 |
|
|
|
22,640 |
|
Total operating expenses |
|
|
51,598 |
|
|
|
41,907 |
|
|
|
105,455 |
|
|
|
80,596 |
|
(Loss) income from
operations |
|
|
(2,879 |
) |
|
|
17,155 |
|
|
|
(2,805 |
) |
|
|
31,935 |
|
Other expense, net: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,953 |
) |
|
|
(189 |
) |
|
|
(3,824 |
) |
|
|
(359 |
) |
Other expense, net, and interest income |
|
|
(3,828 |
) |
|
|
(943 |
) |
|
|
(4,909 |
) |
|
|
(3,196 |
) |
Total other expense, net |
|
|
(5,781 |
) |
|
|
(1,132 |
) |
|
|
(8,733 |
) |
|
|
(3,555 |
) |
(Loss) income before provision
for income taxes |
|
|
(8,660 |
) |
|
|
16,023 |
|
|
|
(11,538 |
) |
|
|
28,380 |
|
Provision for income
taxes |
|
|
1,658 |
|
|
|
822 |
|
|
|
670 |
|
|
|
2,433 |
|
Net (loss) income |
|
$ |
(10,318 |
) |
|
$ |
15,201 |
|
|
$ |
(12,208 |
) |
|
$ |
25,947 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
57,590,308 |
|
|
|
17,519,243 |
|
|
|
57,414,636 |
|
|
|
17,371,162 |
|
Diluted |
|
|
57,590,308 |
|
|
|
20,937,154 |
|
|
|
57,414,636 |
|
|
|
20,014,953 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
|
($0.18 |
) |
|
|
$0.34 |
|
|
|
($0.21 |
) |
|
|
$0.58 |
|
Diluted |
|
|
($0.18 |
) |
|
|
$0.28 |
|
|
|
($0.21 |
) |
|
|
$0.51 |
|
OUTBRAIN INC.Condensed Consolidated Balance
Sheets(In thousands, except for number of shares and par
value) |
|
|
|
June 30,2022 |
|
December 31,2021 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
391,409 |
|
|
$ |
455,397 |
|
Accounts receivable, net of allowances |
|
|
180,411 |
|
|
|
192,814 |
|
Prepaid expenses and other current assets |
|
|
30,903 |
|
|
|
27,873 |
|
Total current assets |
|
|
602,723 |
|
|
|
676,084 |
|
Property, equipment and capitalized software, net |
|
|
34,098 |
|
|
|
28,008 |
|
Operating lease right-of-use assets, net |
|
|
12,846 |
|
|
|
— |
|
Intangible assets, net |
|
|
28,220 |
|
|
|
5,719 |
|
Goodwill |
|
|
63,063 |
|
|
|
32,881 |
|
Deferred tax assets |
|
|
36,258 |
|
|
|
32,867 |
|
Other assets |
|
|
16,933 |
|
|
|
20,331 |
|
TOTAL ASSETS |
|
$ |
794,141 |
|
|
$ |
795,890 |
|
|
|
|
|
|
LIABILITIES,
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(DEFICIT) |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
130,469 |
|
|
$ |
160,790 |
|
Accrued compensation and benefits |
|
|
17,701 |
|
|
|
23,331 |
|
Accrued and other current liabilities |
|
|
130,796 |
|
|
|
99,590 |
|
Deferred revenue |
|
|
5,386 |
|
|
|
4,784 |
|
Total current liabilities |
|
|
284,352 |
|
|
|
288,495 |
|
Long-term debt |
|
|
236,000 |
|
|
|
236,000 |
|
Operating lease liabilities, non-current |
|
|
9,766 |
|
|
|
— |
|
Other liabilities |
|
|
17,426 |
|
|
|
14,620 |
|
TOTAL LIABILITIES |
|
$ |
547,544 |
|
|
$ |
539,115 |
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|
Common stock, par value of $0.001 per share — 1,000,000,000 shares
authorized; 59,542,657 shares issued and 56,684,158 shares
outstanding as of June 30, 2022 and 58,015,075 shares issued
and 56,701,394 shares outstanding as of December 31, 2021 |
|
$ |
60 |
|
|
$ |
58 |
|
Preferred stock, par value of $0.001 per share — 100,000,000 shares
authorized, none issued and outstanding as of June 30, 2022
and December 31, 2021 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
449,282 |
|
|
|
434,945 |
|
Treasury stock, at cost, 2,858,499 shares as of June 30, 2022
and 1,313,681 shares as of December 31, 2021 |
|
|
(26,076 |
) |
|
|
(16,504 |
) |
Accumulated other comprehensive loss |
|
|
(7,211 |
) |
|
|
(4,474 |
) |
Accumulated deficit |
|
|
(169,458 |
) |
|
|
(157,250 |
) |
TOTAL STOCKHOLDERS’
EQUITY |
|
$ |
246,597 |
|
|
$ |
256,775 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
794,141 |
|
|
$ |
795,890 |
|
OUTBRAIN INC.Condensed Consolidated
Statements of Cash Flows(In
thousands) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2022 |
|
June 30, 2021 |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
(Unaudited) |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(10,318 |
) |
|
$ |
15,201 |
|
|
$ |
(12,208 |
) |
|
$ |
25,947 |
|
Adjustments to reconcile net
(loss) income to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment |
|
|
2,756 |
|
|
|
1,681 |
|
|
|
5,160 |
|
|
|
3,285 |
|
Amortization of capitalized software development costs |
|
|
2,416 |
|
|
|
2,095 |
|
|
|
4,711 |
|
|
|
4,092 |
|
Amortization of intangible assets |
|
|
1,584 |
|
|
|
892 |
|
|
|
3,153 |
|
|
|
1,818 |
|
Stock-based compensation |
|
|
3,357 |
|
|
|
1,461 |
|
|
|
6,090 |
|
|
|
2,948 |
|
Non-cash operating lease expense |
|
|
965 |
|
|
|
— |
|
|
|
2,133 |
|
|
|
— |
|
Provision for credit losses |
|
|
1,227 |
|
|
|
732 |
|
|
|
978 |
|
|
|
1,385 |
|
Deferred income taxes |
|
|
(3,655 |
) |
|
|
(217 |
) |
|
|
(3,995 |
) |
|
|
(602 |
) |
Other |
|
|
2,476 |
|
|
|
814 |
|
|
|
3,530 |
|
|
|
3,215 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(7,362 |
) |
|
|
(17,768 |
) |
|
|
8,523 |
|
|
|
(3,852 |
) |
Prepaid expenses and other current assets |
|
|
(6,016 |
) |
|
|
(3,070 |
) |
|
|
(4,598 |
) |
|
|
(4,565 |
) |
Other assets |
|
|
534 |
|
|
|
(662 |
) |
|
|
2,094 |
|
|
|
(465 |
) |
Accounts payable and accrued and other current liabilities |
|
|
14,998 |
|
|
|
18,370 |
|
|
|
(16,123 |
) |
|
|
(8,821 |
) |
Operating lease liabilities |
|
|
(839 |
) |
|
|
— |
|
|
|
(1,936 |
) |
|
|
— |
|
Deferred revenue |
|
|
(755 |
) |
|
|
(447 |
) |
|
|
904 |
|
|
|
(7 |
) |
Other |
|
|
143 |
|
|
|
373 |
|
|
|
454 |
|
|
|
483 |
|
Net cash provided by (used in)
operating activities |
|
|
1,511 |
|
|
|
19,455 |
|
|
|
(1,130 |
) |
|
|
24,861 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(7,546 |
) |
|
|
(437 |
) |
|
|
(10,355 |
) |
|
|
(676 |
) |
Capitalized software development costs |
|
|
(2,888 |
) |
|
|
(2,560 |
) |
|
|
(6,333 |
) |
|
|
(5,089 |
) |
Acquisition of business, net of cash acquired |
|
|
— |
|
|
|
— |
|
|
|
(34,524 |
) |
|
|
— |
|
Other |
|
|
(111 |
) |
|
|
(12 |
) |
|
|
(97 |
) |
|
|
(31 |
) |
Net cash used in investing
activities |
|
|
(10,545 |
) |
|
|
(3,009 |
) |
|
|
(51,309 |
) |
|
|
(5,796 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from exercises of stock options and warrants |
|
|
1,479 |
|
|
|
1,243 |
|
|
|
3,753 |
|
|
|
1,791 |
|
Treasury stock repurchases and share withholdings on vested
awards |
|
|
(7,854 |
) |
|
|
— |
|
|
|
(9,572 |
) |
|
|
(249 |
) |
Deferred financing costs |
|
|
— |
|
|
|
(494 |
) |
|
|
— |
|
|
|
(494 |
) |
Principal payments on finance lease obligations |
|
|
(857 |
) |
|
|
(1,167 |
) |
|
|
(1,871 |
) |
|
|
(2,273 |
) |
Net cash used in financing
activities |
|
|
(7,232 |
) |
|
|
(418 |
) |
|
|
(7,690 |
) |
|
|
(1,225 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes |
|
|
(3,212 |
) |
|
|
269 |
|
|
|
(3,875 |
) |
|
|
(161 |
) |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in
cash, cash equivalents and restricted cash |
|
$ |
(19,478 |
) |
|
$ |
16,297 |
|
|
$ |
(64,004 |
) |
|
$ |
17,679 |
|
Cash, cash equivalents and
restricted cash — Beginning |
|
|
411,066 |
|
|
|
95,449 |
|
|
|
455,592 |
|
|
|
94,067 |
|
Cash, cash equivalents and
restricted cash — Ending |
|
$ |
391,588 |
|
|
$ |
111,746 |
|
|
$ |
391,588 |
|
|
$ |
111,746 |
|
OUTBRAIN INC.Non-GAAP
Reconciliations(In thousands) |
|
The following table presents the reconciliation of Gross profit to
Ex-TAC Gross Profit, for the periods presented: |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
$ |
250,883 |
|
|
$ |
247,153 |
|
|
$ |
505,099 |
|
|
$ |
475,177 |
|
Traffic acquisition costs |
|
|
(191,554 |
) |
|
|
(180,324 |
) |
|
|
(382,250 |
) |
|
|
(347,937 |
) |
Other cost of revenue |
|
|
(10,610 |
) |
|
|
(7,767 |
) |
|
|
(20,199 |
) |
|
|
(14,709 |
) |
Gross profit |
|
|
48,719 |
|
|
|
59,062 |
|
|
|
102,650 |
|
|
|
112,531 |
|
Other cost of revenue |
|
|
10,610 |
|
|
|
7,767 |
|
|
|
20,199 |
|
|
|
14,709 |
|
Ex-TAC Gross Profit |
|
$ |
59,329 |
|
|
$ |
66,829 |
|
|
$ |
122,849 |
|
|
$ |
127,240 |
|
The following table presents the reconciliation of net (loss)
income to Adjusted EBITDA, for the periods presented: |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net (loss) income |
|
$ |
(10,318 |
) |
|
$ |
15,201 |
|
|
$ |
(12,208 |
) |
|
$ |
25,947 |
|
Other expense, net |
|
|
5,781 |
|
|
|
1,132 |
|
|
|
8,733 |
|
|
|
3,555 |
|
Provision for income taxes |
|
|
1,658 |
|
|
|
822 |
|
|
|
670 |
|
|
|
2,433 |
|
Depreciation and amortization |
|
|
6,756 |
|
|
|
4,668 |
|
|
|
13,024 |
|
|
|
9,195 |
|
Stock-based compensation |
|
|
3,357 |
|
|
|
1,461 |
|
|
|
6,090 |
|
|
|
2,948 |
|
Regulatory matter costs |
|
|
(1,980 |
) |
|
|
1,147 |
|
|
|
(261 |
) |
|
|
1,147 |
|
Merger and acquisition, public company implementation costs(1) |
|
|
610 |
|
|
|
150 |
|
|
|
1,424 |
|
|
|
(61 |
) |
Adjusted EBITDA |
|
$ |
5,864 |
|
|
$ |
24,581 |
|
|
$ |
17,472 |
|
|
$ |
45,164 |
|
Adjusted EBITDA as % of Ex-TAC
Gross Profit |
|
|
9.9 |
% |
|
|
36.8 |
% |
|
|
14.2 |
% |
|
|
35.5 |
% |
|
(1) Primarily includes costs related to our public company
implementation costs and costs related to our acquisition of vi in
January 2022. |
OUTBRAIN INC.Non-GAAP Reconciliations
(Continued)(In thousands) |
|
The following table presents the reconciliation of net (loss)
income to adjusted net (loss) income, for the periods
presented: |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net (loss) income |
|
$ |
(10,318 |
) |
|
$ |
15,201 |
|
|
$ |
(12,208 |
) |
|
$ |
25,947 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Regulatory matter costs |
|
|
(1,980 |
) |
|
|
1,147 |
|
|
|
(261 |
) |
|
|
1,147 |
|
Merger and acquisition, public company implementation costs(1) |
|
|
610 |
|
|
|
150 |
|
|
|
1,424 |
|
|
|
(61 |
) |
Total adjustments, before
tax |
|
|
(1,370 |
) |
|
|
1,297 |
|
|
|
1,163 |
|
|
|
1,086 |
|
Income tax effect |
|
|
816 |
|
|
|
— |
|
|
|
87 |
|
|
|
— |
|
Total adjustments, after
tax |
|
|
(554 |
) |
|
|
1,297 |
|
|
|
1,250 |
|
|
|
1,086 |
|
Adjusted net (loss)
income |
|
$ |
(10,872 |
) |
|
$ |
16,498 |
|
|
$ |
(10,958 |
) |
|
$ |
27,033 |
|
|
|
|
|
|
|
|
|
|
Adjusted net (loss)
income |
|
$ |
(10,872 |
) |
|
$ |
16,498 |
|
|
$ |
(10,958 |
) |
|
$ |
27,033 |
|
Undistributed earnings allocated to participating securities |
|
|
— |
|
|
|
(10,045 |
) |
|
|
— |
|
|
|
(16,459 |
) |
Adjusted net (loss) income
attributable to common stockholders used to compute adjusted net
(loss) income per common share |
|
$ |
(10,872 |
) |
|
$ |
6,453 |
|
|
$ |
(10,958 |
) |
|
$ |
10,574 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares used
to compute diluted net (loss) income per common share |
|
|
57,590,308 |
|
|
|
20,937,154 |
|
|
|
57,414,636 |
|
|
|
20,014,953 |
|
|
|
|
|
|
|
|
|
|
Diluted net (loss) income per
common share - reported |
|
$ |
(0.18 |
) |
|
$ |
0.28 |
|
|
$ |
(0.21 |
) |
|
$ |
0.51 |
|
Adjustments, after tax |
|
|
(0.01 |
) |
|
|
0.03 |
|
|
|
0.02 |
|
|
|
0.02 |
|
Diluted net (loss) income per
common share - adjusted |
|
$ |
(0.19 |
) |
|
$ |
0.31 |
|
|
$ |
(0.19 |
) |
|
$ |
0.53 |
|
|
(1) Primarily includes costs related to our public company
implementation costs and costs related to our acquisition of vi in
January 2022. |
The following table presents the reconciliation of net cash (used
in) provided by operating activities to free cash flow, for the
periods presented: |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by (used in)
operating activities |
|
$ |
1,511 |
|
|
$ |
19,455 |
|
|
$ |
(1,130 |
) |
|
$ |
24,861 |
|
Purchases of property and
equipment |
|
|
(7,546 |
) |
|
|
(437 |
) |
|
|
(10,355 |
) |
|
|
(676 |
) |
Capitalized software
development costs |
|
|
(2,888 |
) |
|
|
(2,560 |
) |
|
|
(6,333 |
) |
|
|
(5,089 |
) |
Free cash flow |
|
$ |
(8,923 |
) |
|
$ |
16,458 |
|
|
$ |
(17,818 |
) |
|
$ |
19,096 |
|
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