Teads (TEAD) Q4 2025 Earnings Call Transcript

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DATE

Thursday, March 5, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Co-Chief Executive Officer — David Kostman
• Chief Financial Officer — Jason Kiviat

TAKEAWAYS

• Revenue -- $352 million, representing a 50% increase year over year on an as-reported basis due to the acquisition, but a 17% year-over-year decline on a pro forma basis.
• Ex-TAC Gross Profit -- $152 million, up 122% as reported, but down 19% on a pro forma basis, as mix shifts favored more profitable streams following acquisition integration.
• CTV Revenue -- Surpassed $100 million annualized, with 55% growth in Q4 and significant expansion in home screen placements.
• Enterprise Performance Cross-Selling -- Sales to enterprise customers increased 300% sequentially from Q3, albeit totaling just a few million dollars per quarter.
• Adjusted EBITDA -- $37 million in Q4, exceeding guided range.
• Adjusted Free Cash Flow -- $3 million for Q4 and $6 million for the full year, consistently positive throughout 2025.
• Balance Sheet Position -- Ended the quarter with $139 million in cash, cash equivalents, and marketable securities, against $17.5 million in short-term debt and $628 million in long-term debt at a 10% coupon due 2030.
• Annual Cost Savings -- December restructuring is projected to deliver between $35 million and $40 million in annual savings from personnel reductions.
• Goodwill Impairment -- Recognized a $350 million non-cash impairment charge due to share price and market cap declines, with no effect on liquidity or covenants.
• Q1 2026 Guidance -- Ex-TAC gross profit expected in the range of $102 million to $106 million; adjusted EBITDA expected to range from breakeven to $3 million.
• Full-Year 2026 Guidance -- Targeting adjusted EBITDA of approximately $100 million, with potential for a small use of cash but overall confidence in liquidity and further positive free cash flow opportunities.
• Global OEM Reach -- Teads Ad Manager now has access to over 500 million addressable TVs through expanded partnerships, including exclusivity with LG in Italy and Greece and Samsung TV in Asia-Pacific.
• Operational Progress -- Stabilization observed in the U.K. top line and improved sales pipeline in the U.S. following leadership and organizational changes.
• Inventory Quality Cleanup -- Deliberately exited lower-quality demand and supply sources, resulting in an anticipated $20 million ex-TAC headwind concentrated in H1 2026 and tapering off by Q4.
• AI Advancement -- Integration of AI and LLMs contributed to lower cost per acquisition and improvement in advertising margins.
• Omnichannel Results -- Recent partnership with Accor delivered quantifiable lifts: "23% lift in brand favorability" and a "17% increase in purchase intent."

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RISKS

• Kiviat stated, "the operational challenges have led us to a timetable longer than we initially anticipated, resulting in this impairment charge," referencing the $350 million goodwill impairment related to market cap and share price declines.
• Kiviat said, "The year-over-year comparison impact for 2026 is expected to be a headwind of approximately $20,000,000 of ex-TAC with the vast majority of that in H1, phasing down to a minimal amount by Q4," due to exiting lower-quality supply and demand sources.
• Kostman noted, "The 2025 trimming of our supply and demand sources to ensure higher quality will impact our year-over-year comparisons early on," with soft year-over-year performance expected through early 2026.
• Kiviat highlighted that FX headwinds "a few million dollars that we see from the weakening of the dollar versus, you know, the euro and the shekel." will impact expenses despite ongoing cost reductions.

SUMMARY

Teads Holding Co. (NASDAQ:TEAD) delivered Q4 results at the high end of ex-TAC gross profit guidance, and adjusted EBITDA exceeded the outlook, amid continued positive adjusted free cash flow generation. Management noted annualized CTV revenue surpassed $100 million, with home screen expansion contributing to rapid segment growth and differentiated positioning through exclusive OEM partnerships. Strategic cost reductions are expected to yield $35 million to $40 million in annual savings following restructuring, while management recognized a $350 million non-cash goodwill impairment reflecting recent market valuation declines but with no liquidity impact. The company projects full-year 2026 adjusted EBITDA of approximately $100 million and expects to resume pro forma ex-TAC growth by Q4, as the impact of revenue quality cleanup moderates and integration synergies take hold.

• Leadership emphasized stabilization in key geographies, with the U.K. and U.S. seeing improved pipelines due to organizational realignment.
• Kostman said, "We crossed the $100 million annual revenue mark with growth hitting 55% in Q4, and with strong growth on the home screen placements."
• Integration of AI and data infrastructure is "already seeing tangible results," leading to measurable improvements in advertiser KPIs and company margins.
• Ex-TAC gross profit growth is outpacing revenue growth due to enhanced mix and premium inventory focus post-acquisition.
• The inventory quality cleanup, including walking away from $20 million in lower-quality revenue, remains a temporary headwind, mainly impacting H1 performance comparisons.

INDUSTRY GLOSSARY

• Ex-TAC: Revenue after deducting traffic acquisition costs, a key profit measure for digital advertising platforms.
• CTV: Connected TV; advertising inventory delivered via smart TVs or internet-connected TV platforms.
• OEM: Original equipment manufacturer; device makers like LG, Samsung, or Vizio that provide home screen advertising placements.
• TPV: Total platform volume; aggregate metric representing the scale of campaigns or impressions managed through the platform.
• LLM: Large language model; advanced type of AI used for predictive analytics and ad content optimization.
• ROAS: Return on ad spend; a measure of revenue generated per dollar spent on advertising.

Full Conference Call Transcript

David Kostman: Thank you, Matt. Good morning, everyone, and thank you for joining us. About a year ago, we brought Outbrain and Teads Holding Co. together. The goal was and still is to build a best-in-class digital advertising platform that delivers results across every screen, from the phone in your pocket to the TV in your living room and for every advertiser objective, from branding to actual sales. Year one was a transition. We managed the friction of merging two different cultures, technologies, businesses, while navigating some tough market conditions. Also make a deliberate choice to build a sustainable premium marketplace and walk away from some low-quality revenue.

It was a hard call, but we believe it was a necessary one to protect our marketplace and ensure that we can grow our business with the world's biggest brands. The lessons we learned allowed us to sharpen our focus in the second half of the year. We have simplified the org chart, right-sized our cost, and brought in fresh leadership. Now we believe we are moving into 2026 with strong alignment on our strategic priorities and a well-defined execution plan. We expect this to be the inflection point and the year we return to growth. Looking at Q4, we hit the high end of our guidance on ex-TAC, beat our adjusted EBITDA target, and generated positive free cash flow.

Beyond the numbers, there are a few key indicators I want to highlight. First, CTV is accelerating. Our focus on the living room is paying off. We crossed the $100 million annual revenue mark with growth hitting 55% in Q4, and with strong growth on the home screen placements. Second, performance cross-selling was scaling. We saw a 300% jump in sales to enterprise customers compared to Q3. Now to be clear, that is still just a few million dollars per quarter, but we believe it demonstrates how much headroom we have to grow. Third, in Q4, we renewed several of our joint business partnerships with leading global brands and have many more in process of resigning in Q1.

The feedback from surveying our partners, one year into the merger, is excellent, highlighting creative excellence, innovation, and media-added value, and the renewals demonstrate the strategic nature of these relationships. On the operational side, we expect that our December restructuring would save us between $35 million to $40 million annually. In addition, we have added top-tier talent like Molly Spielman, our Chief Commercial Officer, Danny Christian, our Chief Marketing Officer, and Eiralee Jain, who heads our North American business. We have also flattened the leadership structure to make sure our teams can move faster and drive speed and accountability. For 2026, the strategy for our enterprise advertisers is built on three pillars.

First, we will continue to lead with our CTV offerings by focusing on two clear differentiators: home screen leadership and omnichannel branding to performance. On the home screen, we are continuing to win. We are not just another ad midstream. We are an entry point to the living room and TVs. And our leadership is anchored by our strategic partnership with leading OEMs like LG, Samsung, NVIDIA, and Vizio. In Q4, we further solidified our position by expanding our relationships with LG, signing exclusive partnerships in Italy and Greece, and in Q1 of this year, we expanded our footprint through an exclusive partnership with Samsung TV in certain regions in Asia-Pacific.

We are further expanding this reach through new integrations with Google TV and Rakuten, all focusing on integration of these OEMs and bringing these premium, highly visible, and valuable placements directly into Teads Ad Manager. In terms of scale, we have access now to well over 500 million addressable TVs globally and already ran well over 3,500 campaigns on home screens.

What we hear from our partners is that they choose to work with Teads Holding Co. due to the unique combination of our direct relationships with the most premium brands of the world through our 50-plus joint business partnerships, the quality of our creative services in ensuring the creatives are well adapted to the unique environment of the home screen, and the integration with our platform, Teads Ad Manager, which makes transacting on multiple OEMs easier and faster. And we are proving that CTV plus web is a winning combination. Our thesis is simple: using the big screen for awareness, then retargeting on mobile drives measurable sales.

For example, our recent partnership with Accor, a global hotel operator, demonstrated that omnichannel activation on Teads Holding Co. not only drove 23% lift in brand favorability, but also a 17% increase in purchase intent. That is a massive win for our advertisers and a differentiator for Teads Holding Co. Second point on enterprise: we are deepening our strategic relationships with agencies. We are working on integration of our audiences with the world's leading agencies and on other data collaborations. A great example of this is our new integration with Havas, which allows their planners to activate our audiences directly from their own planning environment, driving both speed and efficiency. Third, we are scaling our performance business for enterprise advertisers.

We are integrating performance capabilities, leveraging Outbrain know-how directly into Teads Ad Manager designed to create a frictionless experience for agencies buying full funnel. And we are advancing our algorithmic capabilities and investing in superior post-campaign measurement. We expect these investments to drive continuous improvements in ROAS and overall campaign performance for our enterprise advertisers. Turning to our direct response advertisers. They are purely focused on ROAS, plain and simple, and internally on driving efficiencies that grow profitability. The 2025 trimming of our supply and demand sources to ensure higher quality will impact our year-over-year comparisons early on, but the foundation of our business is significantly stronger today than it was a year ago.

We also see here exciting opportunities such as running direct response performance campaigns on CTV. In Q4 of last year, we had several million dollars of such sales. One general comment: you will hear our peers discuss supply path shortening as a new initiative, but for us, it is a foundational architecture. We provide a straight line to the source of premium supply, whether that is an LG home screen or a top-tier global publisher, which is one of the reasons we can deliver superior outcomes from branding to performance. AI is the engine behind many of these growth areas. It is both a performance driver for our clients and a productivity tool for our engineers and teams.

On the algorithmic side, we have progressed on the integration of our AI and data infrastructure, and we are already seeing tangible results. In addition, by using LLM models to sharpen our predictive delivery, for example, by analyzing the content of ads to extract additional relevant signals, we are achieving two goals at the same time. We are hitting better KPIs for our advertisers, specifically by lowering the cost per acquisition, and we are seeing the path forward expanding our own margins at the same time.

We are also investing in transitioning from manual campaign setups and toward agentic-driven goal setting, which we believe will simplify the experience for our partners and allow our technology to optimize for outcomes more effectively. To sum it up, I believe the heavy lifting of the transition is behind us. We have used the second half of last year to build a leaner, faster, and better Teads Holding Co. We saw some positive indicators in Q4 into Q1. We have started the year with strategic clarity, a well-defined execution plan, and the right leadership, which I am confident will allow us to make 2026 a breakout year. I will now turn it over to Jason to walk through the financials.

Jason Kiviat: Thanks, David. As David mentioned, we achieved our Q4 guidance for ex-TAC gross profit at the high end of our range and exceeded our range for adjusted EBITDA, generating positive adjusted free cash flow in both the quarter and for the full year. Revenue in Q4 was approximately $352,000,000, reflecting an increase of 50% year over year on an as-reported basis, primarily reflecting the impact of the acquisition. On a pro forma basis, we saw a year-over-year decline of 17% in Q4. I spoke last quarter about the drivers of volatility in our top line, stemming from both legacy Teads Holding Co. operating businesses. I will reiterate them briefly here in the context of what we anticipate for 2026.

But an important takeaway is that since we last reported in November, we have seen a more stable top line. Within our enterprise clients, we saw a deceleration in our top line starting in June that we attribute largely to operational challenges and distraction of the merger. This primarily impacted us in several key markets, most notably the U.S. and U.K. However, the changes we implemented in leadership and operations in Q3 are yielding positive indications in Q4 and into Q1, giving us confidence that we can see a return to growth by Q4 of this year.

TPV growth has accelerated, top line in the U.K. has stabilized, and our sales of performance campaigns to enterprise customers, including cross-selling, is accelerating. Within our direct response clients, through both strategic decisions around quality and external factors, including deliberately exiting lower-quality demand and supply sources from our ecosystem, we turned a small but meaningful segment of arbitrage-based customers. This impacted our revenues primarily in H2, and most meaningfully in Q4. And while we feel we have a healthier long-term business from these changes, we expect that this will impact our year-over-year comps through much of 2026.

The year-over-year comparison impact for 2026 is expected to be a headwind of approximately $20,000,000 of ex-TAC with the vast majority of that in H1, phasing down to a minimal amount by Q4. X-TAC gross profit in the quarter was $152,000,000, an increase of 122% year over year on an as-reported basis and a decline of 19% on a pro forma basis. Note that ex-TAC gross profit growth is outpacing revenue growth due to a net favorable change in our revenue mix post-acquisition, as well as the continuation of improvements to revenue mix and RPM growth that we have been seeing for the last few years.

Other cost of sales and operating expenses increased year over year, primarily reflecting the impact of the acquisition as well as a non-cash impairment in goodwill. As a result of recent declines in our share price and overall market capitalization, we were required under accounting standards to perform an impairment assessment and ultimately recorded an impairment to goodwill of around $350,000,000. This accounting adjustment is entirely non-cash and does not impact our liquidity, operating cash flows, or our debt covenants.

I also want to be clear and emphasize we fully believe in the fundamental strategy of our omnichannel full-funnel offering, but as we have reported, the operational challenges have led us to a timetable longer than we initially anticipated, resulting in this impairment charge. As our actions exemplify, we are committed to returning to growth and improving profitability, and to that end, in the quarter, we recognized $6,000,000 of restructuring charges, primarily related to the reduction in force we announced largely executed in December. The restructuring is expected to save approximately $35,000,000 to $40,000,000 annually from the elimination of both filled and unfilled roles.

Adjusted EBITDA in Q4 was $37,000,000, and adjusted free cash flow, which, as a reminder, we define as cash from operating activities plus CapEx, capitalized software costs, as well as direct transaction costs, was approximately $3,000,000 in the fourth quarter and $6,000,000 for the year. As a result, we ended the quarter with $139,000,000 of cash, cash equivalents, and investments in marketable securities on the balance sheet, and continue to have €15,000,000, or about $17,500,000, in overdraft borrowings, classified in our balance sheet as short-term debt. Additionally, we have $628,000,000 in principal amount of long-term debt at a 10% coupon due in 2030.

As we have said in the past, we are always evaluating our cost and capital structure opportunities to improve our financial profile. In that regard, we are evaluating opportunistic alternatives that may be available to us to strengthen our balance sheet and build a more durable capital structure. Now I will turn to our guidance. We are focused on operating as a cash flow generating business. We have taken recent steps to improve our cost structure, we will continue to look for opportunities as we further advance our integration and leverage the exciting avenues to streamline operations that are now available with AI.

We have taken steps to realign our team, appoint new leadership, and enhance our focus on the areas that we feel will help us return to top line growth. While we feel good about the steps we are taking and the progress we are seeing, we acknowledge the uncertainty of the overall environment and how it may impact the timeline and progress as we pursue a return to top line growth. With that, we have provided the following guidance. For Q1 2026, we expect ex-TAC gross profit of $102,000,000 to $106,000,000. We expect adjusted EBITDA of breakeven to $3,000,000. And for full year 2026, we expect adjusted EBITDA of approximately $100,000,000.

While this level of annual EBITDA could potentially result in a small use of cash, we are comfortable with our cash balance and borrowing ability, and additionally, we see opportunities to generate positive free cash flow this year. Now I will turn it back to the operator for Q&A.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Laura Martin with Needham and Company. Please proceed with your question.

Laura Martin: Sure. Thank you very much for taking the questions. On the salesforce, I was just wondering, are we pretty much staffed up now on the salesforce from the integration, and do you expect smooth sailing going forward on those kinds of hires? And then secondly, I was really interested, David, in your comments on the exclusive deals with Samsung and LG. Are those for home page programmatic the way Nexon is talking about, or is that for—I was just wanting you to expand on what rights you have that are exclusive right now. Thank you.

David Kostman: Thanks, Laura. Good morning. So first on the salesforce, we are confident we have the right leadership team and the right team in place. So do you anticipate smooth sailing? Nothing is smooth, but we are very confident. We have a good team. I think we replaced the people we wanted to replace, and I am very confident with what I have seen the last few months with the new leadership. On the home screens, we have been at this for about two years working on a home screen. So we have exclusive in certain geographies with LG. We have an exclusive relationship in certain geographies with Samsung.

We had until last year an exclusive relationship with Vizio, which now also NexGen is involved. But what we do and where our advantage is really that we work directly integrated between Teads Ad Manager and the home screen. It is a very unique special format, and the advantages we have around creative adaptation to the different formats and the ability of advertisers to really buy and optimize across multiple OEMs in one platform, that is a huge advantage. You can activate it programmatically, but when you activate it programmatically, it is very different in terms of the, you know, outcomes that you can drive.

The premium brand relationship we have directly are a big factor why these companies work with us exclusively. We have a global footprint in more than 50 markets. They do want those premium brands on that home screen. I mean, there is no tolerance for the type of brand, so that is a huge advantage that we have. So between Teads Ad Manager direct integration, ability to run campaigns across multiple OEMs, the creative adaptation, and the premium brands, that gives us a, you know, a huge scale and then I think a huge heads up on that business. And it is also driving other parts of our business.

We talked on—I mentioned on the call the omnichannel, so the ability to activate on the home screen and then on the web is a big advantage. And the ability to drive just performance campaigns. So we believe we have a two-year head start there, and it is a great differentiator for us.

Operator: Our next question comes from the line of Matthew Condon with Citizens. Please proceed with your question.

Matthew Condon: Thank you so much for taking my questions. The first one, just can you provide additional color just on the securitization of the business, and just what trends are you seeing so far in Q1? Do you see confidence that you have got this back on the right track? My second one is on the organizational changes. Just do we have the right team in place today across the entirety of the business? And should we expect anything else and or any other changes going forward? Thank you so much.

Jason Kiviat: Thanks, Matthew. So this is Jason. I could take the—I think I got—this is a little broken, but I think your first question is about Q1 trends and what gives us confidence, so if I miss anything you said, I will just start there. Yeah. Look. I think we are seeing improvements in Q1. Right? Maybe—I know the numbers might be a little funky with the timing of the acquisition last year being a few days into February, and so the pro forma and the as-reported periods are slightly different. On an as-reported basis, we are guiding, you know, at our midpoint to something, you know, fairly flat year over year for ex-TAC.

And on a pro forma basis, it is down, but not down to the same level we saw in Q4 where we were down a bit more. So what we are seeing, you know, in this early part of Q1 and what we expect for the full quarter is, you know, closing of the gap quite a bit here, and, you know, that means we are better than what is typical in Q1 relative to Q4. And it is really concentrated in the areas that we are focusing on, which obviously when you are focusing on something and you see improvement in it, it gives you some confidence. Right?

So, you know, CTV is accelerating, you know, through the home screens and the omnichannel as David said. You know, we are focused on driving more performance sales. Obviously, a big part of the kind of synergies of the combination, and we do see momentum there. And then I know I have talked a little bit about some of the operational challenges that have been driving the headwinds for much of the last year or six months or so. And, you know, U.K. and U.S. are the countries I have kind of called out. You know, in the U.K., we do see a relative improvement and a big shrinking of the gap, you know, starting in Q1 here.

As David mentioned, in the U.S., we had new leadership in Q1, and we do feel good and gain some confidence from the pipeline that we see in March and beyond. So, you know, cautiously optimistic, but, you know, we have taken meaningful steps to focus and reduce cost and focus and realign around the things that we think will drive growth, and we are starting to see good indications of those things.

David Kostman: And I think, maybe in terms of the team, I am very comfortable. I mean, we started the year with a very clearly defined execution plan. We sort of elevated to the leadership team some people from the product and tech side. So I am very comfortable with where we are. We rolled out very specific goals and targets. And I think the execution plan is well defined with the right team at this point.

Matthew Condon: That is very helpful. Thank you so much.

Operator: Our next question comes from the line of James Heaney with Jefferies. Please proceed with your question.

James Heaney: Yeah. Great. Thank you, guys. Just what are the assumptions behind the full year EBITDA guide? How should we think about the linearity of growth and margin as we move throughout the year? And then any color you can maybe also provide around linearity of ex-TAC gross profit growth? I think you said getting to growth in Q4, but any other things to think about moving throughout the year?

Jason Kiviat: Sure. Yeah. Thanks, James. I will take that. It is Jason. I mean, our guidance of approximately $100,000,000 of EBITDA, it does not, you know, imply a full year ex-TAC growth on a, you know, on a pro forma basis. But we do expect to get to growth by the end of the year by Q4. So maybe some color on kind of how we see that playing out, you know, a couple points of context. You know, for one, I did mention on the call, we have this year-over-year, you know, comp headwind—about $20,000,000 of ex-TAC from the quality cleanup.

And just to put that into kind of when we see that happening, you know, it started to really impact us, you know, fully in Q4, and, you know, maybe about half of the impact we talked about in Q3 from the supply cleanup and some of the early impacts there. So the full impact, about $8,000,000 of a headwind in Q4 of ex-TAC, and we expect that same $8,000,000 to impact Q1 and Q2 as well before starting to, you know, shrink in Q3 and be de minimis for Q4. So the comps do ease as the year goes on. That is the biggest kind of headwind that we see kind of moving forward.

And, generally, you know, we expect it will take a few quarters to build back to growth from the year-over-year decline that we reported in Q4. We see improvement, as I said, in Q1. We think it will take a few quarters to get to growth, but believe, you know, that our changes in focus, leadership, and operations are driving this change, start to see it in Q1 from the things we did last year, and the things that we are doing in Q1 will help more and more as the year goes on. So on a pro forma basis, we expect to see improvement each quarter of the year and then Q4 being where we hit the positive growth.

In terms of expenses to get to EBITDA, you know, obviously, you can see in our guidance for Q1, it is substantially reduced expenses from, obviously, from the restructuring and the step-up of, you know, full year of synergies now that we have compared to last year. So you can see the lower cost base, and that is even, you know, despite FX headwinds of a few million dollars that we see from the weakening of the dollar versus, you know, the euro and the shekel.

But, you know, for the rest of the year, a few million dollar step-up probably in Q2 and Q3 just based on seasonality, revenue-related items, and some, you know, fully staffing where we have some empty roles right now, and then a normal Q4 seasonal step-up as you have seen in our results this year as well would be what I expect.

James Heaney: Yeah. Very thorough answer. Thank you. Maybe just quickly, for either of you, anything on just specific ad verticals that you would want to call out in terms of strength or weakness? I mean, any particular standouts that you would want to highlight. Thank you.

David Kostman: Maybe I will take that. I mean, there is nothing really that is material. I mean, we do not have any vertical that is sort of double digit even. So we see some weakness in CPG and automotive, some strength in health and finance, but nothing really of note.

James Heaney: Great. Thank you.

Operator: Our next question from the line of Zach Cummins with B. Riley Securities. Please proceed with your question.

Zach Cummins: Hi. Good morning, David and Jason. Thanks for taking my questions. I wanted to ask about the Google TV opportunity. I mean, can you maybe go a little more into detail around that announcement, and what type of growth opportunity does that unlock for you as we move forward in 2026 for CTV home screen?

David Kostman: Overall, CTV home screen is a huge opportunity for us. We are, as I said, I mean, two years into it. We have a huge base of OEMs. We added Google TV to that. I am sorry. This is the New York background noise. So we added Google TV recently. We added TCL, Vewd, and many others. So the overall opportunity is huge. I mean, it today accounts for a big percentage of our CTV business. We have grown 455% and expect similar growth rates or better for this year on the business. And I said it earlier, I think we have clear differentiators there. I think the direct access is a big differentiator.

The premium direct premium advertiser relationship is a big advantage, and that is why I think these OEMs and other applications on CTV really sign up with Teads Holding Co. in order to make sure that experience on the home screen is the best they can offer to the audiences. So it is a large opportunity and it also helps us to, as I mentioned earlier, to omnichannel sales, sell more campaigns to our advertisers also around the online video, combining the CTV home screen and the web. So it is a very big opportunity. It is a big area of investment for us, and we are very excited about it.

Zach Cummins: Understood. And my one follow-up question is just around the proactive cleanup of some of the inventory throughout 2025. Obviously, a meaningful headwind when you think of ex-TAC over the next couple of quarters. But is that process largely behind us now? Do you have the ideal mix of inventory now that you are focusing more so on enterprise-level brands?

David Kostman: Yes. I think it is behind us in terms of executing on that cleanup or trimming of supply and demand quality. So we walked away from about $20,000,000 in revenue. The impact will continue into the first half of this year. It was about an $8,000,000 headwind in Q4. It will continue through the first half of this year, but we have a much healthier network. We are actually delivering better ROAS for our performance advertisers, and the network and the marketplace is much more suitable for the premium brands we work with.

Zach Cummins: Great. Well, thanks for taking my questions, and best of luck with the rest of the quarter.

Operator: And this concludes—we have reached the end of the question and answer session. I would like to turn the floor back over to David Kostman for closing remarks.

David Kostman: Thank you very much for attending today. As you can hear, we are somewhat encouraged by the sequential trends that we see. We do believe that 2026 will be an inflection point for us. We are very focused on execution and also finding the sort of right to invest in the attractive growth areas that we see, like CTV. So excited about the future and look forward to updating you.

Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.

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