Outbrain Announces Third Quarter 2022 Results

NEW YORK, Nov. 10, 2022 (GLOBE NEWSWIRE) — Outbrain Inc. (Nasdaq: OB), a leading recommendation platform for the open web, announced today financial results for the quarter ended September 30, 2022.

“We are pleased to announce that we beat the high end of our guidance for the third quarter,” said David Kostman, Outbrain’s Co-CEO. “With the continued momentum in exclusive, multi-year premium publisher wins, we are gaining market share and building a tremendous open web supply footprint that will be highly leverageable in supporting our future growth. At the same time, amid a continuing uncertain macroeconomic environment, we remain committed to operational efficiencies and cost reduction efforts to focus on cash flow.”

“In Q3 we officially released Keystone, our new business optimization platform that enables publishers to grow and diversify their revenue streams by leveraging Outbrain’s technology,” added Yaron Galai, Outbrain’s Co-Founder and Co-CEO. “We, along with our design partners, are excited about the higher engagement and business results it has driven.”

Third Quarter 2022 Key Financial Metrics:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions USD) 2022 2021 % Change 2022 2021 % Change
Revenue $ 229.0 $ 250.8 (9 )% $ 734.1 $ 726.0 1 %
Gross profit 41.9 60.3 (30 )% 144.6 172.8 (16 )%
Net loss (4.6 ) (53.9 ) * (91 )% (16.8 ) (28.0 ) * (40 )%
Net cash (used in) provided by operating activities (12.1 ) 36.2 (134 )% (13.3 ) 61.1 (122 )%
Non-GAAP Financial Data**
Ex-TAC gross profit 52.7 68.1 (23 )% 175.5 195.4 (10 )%
Adjusted EBITDA 1.7 19.9 (92 )% 19.2 65.0 (71 )%
Adjusted net (loss) income* (5.5 ) 6.6 (183 )% (16.5 ) 33.7 (149 )%
Free cash flow (15.8 ) 30.7 (152 )% (33.6 ) 49.8 (168 )%


* Net loss for 2021 periods includes one-time items of (pretax) (i) $42.0 million of charges related to exchange of senior notes upon IPO and (ii) $16.5 million of incremental stock-based compensation expense, both of which were triggered and recognized in Q3 2021 as a result of the Company’s IPO.

** See non-GAAP reconciliations below

Third Quarter 2022 Highlights:

  • Revenue of $229.0 million, a decrease of $21.8 million, or 9%, compared to $250.8 million in the prior year period. Revenue decreased 3% on a constant currency basis, excluding net unfavorable foreign currency effects of approximately $14.0 million. The reported decrease was driven by lower revenue of approximately $47.8 million due to net revenue retention of 81% on existing media partners, as 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, as well as due to unfavorable foreign currency effects. This decrease was partially offset by approximately $27.6 million, or 11%, of growth from new media partners1.
  • Gross profit of $41.9 million, a 30% year-over-year decrease compared to $60.3 million in the prior year period. Gross profit decreased 28% on a constant currency basis, excluding net unfavorable foreign currency effects of approximately $1.7 million.
  • Ex-TAC gross profit of $52.7 million, a 23% year-over-year decrease compared to $68.1 million in the prior year period. The decrease in Ex-TAC Gross Profit was primarily driven by an unfavorable revenue mix and lower performance from certain deals. Ex-TAC gross profit decreased 20% on a constant currency basis, excluding net unfavorable foreign currency effects of approximately $1.7 million.
  • Net loss of $4.6 million, including approximately net one-time benefits of $0.9 million, compared to net loss of $53.9 million, including one-time expenses of $60.5 million, in the prior year period. See non-GAAP reconciliations below.
  • Adjusted net loss of $5.5 compared to adjusted net income of $6.6 million in the prior year period.
  • Adjusted EBITDA of $1.7 million compared to $19.9 million in the prior year period, primarily reflecting lower Ex-TAC gross profit. Adjusted EBITDA included net favorable foreign currency effects of approximately $1.9 million.
  • Cash used in operating activities was $12.1 million in the period; free cash flow was a use of cash of $15.8 million. Cash, cash equivalents and investments in marketable securities were $344.9 million, comprised of cash and cash equivalents of $137.9 million and investments of $207.1 million as of September 30, 2022.

As of October 31, 2022, we have repurchased 5,823,415 shares for a total of $27.8 million to date, including commissions, under our $30 million stock repurchase program, with remaining availability under the program of $2.2 million.

2022 Full Year and Fourth Quarter Guidance

The following forward-looking statements reflect our expectations for 2022.

For the full year ended December 31, 2022, we are increasing guidance to:

  • Ex-TAC gross profit of at least $232.5 million
  • Adjusted EBITDA of at least $23.2 million

For the fourth quarter ending December 31, 2022, we expect:

  • Ex-TAC gross profit of $57 million to $60 million
  • Adjusted EBITDA of $4 million to $6 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.

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-term 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.

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.