Q2 2025 Teads Holding Earnings Call
Speaker #3: Good day, ladies and gentlemen, and welcome to Ted's second quarter 2025 earnings conference call. At this time, all participants are in the listen-only mode.
Speaker #3: Question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would like to turn the call over to Ted's Investor Relations. Please go ahead.
Speaker #4: Good morning, and thank you for joining us on today's conference call to discuss Ted's second quarter 2025 results. Joining me on the call today, we David Kostman and Jason Kiviat, the CEO and CFO of Ted's.
Speaker #4: During this conference call, management will make forward-looking statements based on current expectations and assumptions including statements regarding our business outlook and prospects. These statements are subject to risks and uncertainties that may cause actual results to differ materially from our forward-looking statements.
Speaker #4: These risks, factors, or discussed in detail in our form 10K filed for the year ended December 31st, 2024. As updated in our subsequent reports filed with the Securities and Exchange Commission, forward-looking statements speak only as of the call's original date and we do not undertake any duty to update any such statements.
Speaker #4: Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's second quarter earnings release for definitional information.
Speaker #4: And reconciliations of non-GAAP measures to the comparable GAAP financial measures. Our earnings release can be found on our IR website investors.teds.com. Under news and events, with that, let me turn the call over to David.
Speaker #5: Thank you, Maria. Good morning, everyone. Thank you for joining us as we report on our first full quarter as a combined company. Before diving into the details, I want to make a few points.
Speaker #5: We have continued to see excellent customer response from advertisers, agencies, and media owners globally to the new Ted's value proposition, a true end-to-end platform delivering outcomes across branding and performance.
Speaker #5: In Q2, we grew EBITDA sequentially in a meaningful way generating strong cash flow. At same time, we are experiencing a slower pace in the return to growth than we had anticipated post-merger, mostly attributed to organizational issues we identified during the quarter.
Speaker #5: We are executing on the integration decisively, making critical organizational changes that we believe positions us for success in the second half of the year and beyond.
Speaker #5: I will elaborate on each of these points. Turning to the quarter, on the financial front, we delivered results within our guidance, so positive sequential progress and a deceleration in the year-over-year decline rates.
Speaker #5: As it relates to the post-merger integration, we successfully launched the new Ted's brand and value proposition globally. Organizationally, our initial focus was on allowing the merge teams to settle in, creating alignment and clarity on roles and responsibilities.
Speaker #5: However, several learnings from the first few months resulted in us identifying necessary structural changes to improve the effectiveness of the sales organization. We've taken those lessons, which are not uncommon when you merge companies of similar size, responded ickly, and accelerated some key changes.
Speaker #5: In early July, we consolidated our European business under a new merging director, Alex Savage, who ran the legacy Ted's Central European and Latam businesses to drive better operations and effectiveness in our key markets.
Speaker #5: We restructured the USA's leadership, ensuring a focused mandate for the US team our largest market, removing decision-making bottlenecks, enabling the team to focus on the customers and instilling a stronger operational rigor and focus on business KPIs.
Speaker #5: We created a global CRO forum led by me, that includes all our regional leads, our strategic account group, global agencies, and our brand direct response.
Speaker #5: Jeremy Ardity, our co-president, continues to steer global strategy agencies, partnerships, and corporate development while Bertrand Quesada, our co-president, drives regional leadership across Europe and JPEC.
Speaker #5: We also refined our go-to-market sales approach including changes in packaging and pricing and in our cross-sell strategy. Simplifying the narrative and pitch of our sales teams.
Speaker #5: We expect that the combination of these changes will lead to improved execution in the second half of the year and into 2026. We are equally focused on maintaining financial discipline.
Speaker #5: On cost synergies, we remain on track to deliver $40 million in cost savings for 2025. With a full-year run rate savings of $60 million, expected in 2026.
Speaker #5: We remain confident in our ability to deliver positive free cash flow for the full year and recently took the step of repurchasing a portion our outstanding debt reinforcing our commitment to efficient capital allocation.
Speaker #5: Let me turn to the business, starting with the demand side. The US market continues to be the main headwind on our business. With a year-over-year decline of more than 20%, we are seeing early signs of positive impact from some of the changes I highlighted.
Speaker #5: We continue to see strong growth in our CTV business, with 80% year-over-year growth in Q2 on a pro forma basis. We believe that the completion of the integration of our combined home screen offerings across OEMs into Ted's ad manager will allow for a much more efficient workflow for our customers, which will further support growth in this business.
Speaker #5: We're also continuing to grow our CTV inventory especially across the home screens of premium OEMs like Samsung, LG, and Hisense. Which we believe a reflection of our trusted brand relationships and creative capabilities.
Speaker #5: We are also growing with other premium supply partners including HBO Max, Paramount, and others. In addition, we are continuing to further diversify our supply as part of our omnichannel strategy.
Speaker #5: On the retail media front, we announced our first partnership to activate performance campaigns on retail sites to Pentalyp. We aim to grow our presence in retail media and leveraging brand advertiser relationships into performance use cases specifically product sales.
Speaker #5: On the strategic account front, we signed new joint business partnerships with several top global brands including Kia and Zalando. Underscoring confidence in our integrated offering.
Speaker #5: We're eing initial success in cross-selling performance products to legacy Ted's clients example includes Lowe's, Citroën, AB InBev, Nestlé, and others. And in our outbound direct response business, which is focused affiliates and other pure performance advertiser categories, we launched our Amplify AI-based MCP server that allows AI agents to connect natively to the Amplify platform.
Speaker #5: This innovation streamlines integration and workflows for performance marketers allowing us to deliver greater efficiency and measurable results. An early adopter has called the product a revolution of campaign management and a mandatory tool for anyone serious about native performance advertising.
Speaker #5: Also, as has been the case for several years, legacy outbound supply outside of our traditional feed continued to grow to over 34% in Q2.
Speaker #5: Enabling performance advertisers to reach consumers with a range of placements across the entirety of the open internet including display placements, banners, and others. We continue to expand this type of supply specifically for our direct response performance buyers.
Speaker #5: On the supply side, we saw some decline in our by two main factors. First, we made a deliberate and aggressive reduction in publishers and properties that don't meet our elevated quality standards post-merger.
Speaker #5: publishers in the last few months. This clean-up led to a roughly 5% year-over-year reduction of legacy outbound revenues. And while it creates Removing over 200 new pressure on revenues, we believe it strengthens our marketplace long-term by ensuring our supply drives positive outcomes for advertisers on quality placements.
Speaker #5: Second, we saw a modest decline in traffic from premium publishers largely due to a reduction in search-driven visits. As this is an area generating many questions, let me clarify.
Speaker #5: Notably, even with some pressure on page views, we saw a seventh consecutive quarter of RPM growth on the outbound legacy platform, which largely offset the decline in page views and is a testament to our improving monetization per page and per session.
Speaker #5: It is important to note that search traffic accounts for around 7% of legacy outbound page views and even a much smaller portion across our full network when you take into account legacy Ted's and CTV impressions.
Speaker #5: Another point is that the impact of AI overviews or AI summarizations is more pronounced by a factor of 2X on evergreen content than on current events content such as news, sports, entertainment, and finance.
Speaker #5: Where our inventory is the strongest. Also, AI prompts such as ChatGPT are a growing traffic source and drive a higher rate of page views than before, based on users clicking on the disclosure of sources for topics they're most interested in.
Speaker #5: We are in active discussions with companies in the ecosystem about opportunities to monetize such AI-based results. Moving to the product and technology side, we are accelerating investment in ur next generation advertising platform, Ted's Ad Manager.
Speaker #5: We expect that the next generation of our platform will be built leveraging agentic AI modules delivering increased efficiencies for agencies and effectiveness for advertisers.
Speaker #5: With a focus on providing control, transparency, and modularity. We expect to launch this new platform in H1 2026. More on that in our upcoming quarters.
Speaker #5: In Q2, we launched new offerings that align with our core differentiation. We introduced connected ads in beta. A distinctive format that allows a single brand to occupy both mid-article and end-of-article placement, demonstrating the potential of brand formats.
Speaker #5: Early interest signals reveal potential for scale and we are already testing it with several advertisers. We've seen overall growth in ur vertical experiences across publishers.
Speaker #5: Our vertical video solutions which includes Immersive Feeds, the legacy Moments product, is gaining traction with both advertisers and publishers and is live on over 70 premium publishers with early adoption by brands including Luxottica, JM Smucker Company, and others.
Speaker #5: On the CTV front, we also launched new non-standard formats for in-play advertising. These include L-shape, pose ads, and others. We're also in the initial stages of driving performance campaigns on CTV with the initial focus being on delivering incremental traffic to advertiser properties by retargeting web users on the CTV screens leveraging the Ted's omnichannel household graph.
Speaker #5: In closing, we remain confident in the strategic rationale behind this merger. To build the go-to platform for advertisers, seeking scaled, high-quality performance on the open internet for all the campaign objectives.
Speaker #5: We are continuing to invest in growth areas. We're not fully satisfied with our financial performance in Q2, and how we are guiding for Q3.
Speaker #5: But when we look at the medium term, we believe that we will continue to provide incremental value to advertisers leveraging AI, our unique product capabilities, and access to the most premium media of the world through an end-to-end platform.
Speaker #5: We have made some organizational decisions that we expect to lead to market share gains growth and stronger yields and profitability. While Q3 may still reflect some of the traditional effects of the merger, including our reorg and realignment, we expect to see clear momentum building into Q4.
Speaker #5: I'm tracking the leading indicators closely and look forward to updating you on our progress on our next call. Now, I'll turn it over to Jason for more detailed financial update.
Speaker #6: Thanks, David. As David mentioned, we achieved our Q2 guidance for Xtech Gross Profit and adjusted EBITDA in our first full quarter since completing the acquisition of Ted's in February.
Speaker #6: Revenue in Q2 was approximately $343 million, reflecting an increase of 60% year-over-year on an as-reported basis. Driven primarily by the impact of the acquisition.
Speaker #6: On our pro forma basis, we saw a similar year-over-year decline percentage in Q2 as we reported in Q1. While we saw momentum early in quarter, the summer months have proved more challenging.
Speaker #6: In June, we experienced several headwinds that decelerated our revenue trends. One, a lower rate of conversion from our sales pipeline, particularly in key countries US, UK, and France, that we attribute largely to operational issues as David discussed.
Speaker #6: Two, some softness in a couple of our key verticals, particularly consumer goods, automotive, and luxury goods primarily driven by tariff-related uncertainty and softer demand in certain geographies.
Speaker #6: And three, the short-term residual impact from our cleanup of underperforming supply partners which drove the majority the decline in page views we experienced and was a headwind on revenue.
Speaker #6: Despite this, we still experienced positive year-over-year growth on Xtech from the legacy operating business as we continue to drive higher RPMs through improved algorithms, optimizations, and improving performance for advertisers.
Speaker #6: Which helped to lead to higher average CPCs. Xtech Gross Profit in the quarter was $144 million, an increase of 158% year-over-year on an as-reported basis driven primarily by the impact of the acquisition.
Speaker #6: Note that Xtech Gross Profit growth is outpacing revenue growth, which is driven primarily by a net favorable change in our revenue mix resulting from the acquisition, but additionally aided by the continuation of improvements to revenue mix and RPM growth from the legacy outbound business.
Speaker #6: Other costs of sales and operating expenses increased year-over-year predominantly driven by the impact of the acquisition as well as several related one-time expenses. Note in the quarter we recognized $5 million of acquisition and integration-related costs as well as $2 million of restructuring charges.
Speaker #6: Also note that we recorded a benefit from deal-related cost synergies in Q2 of approximately $13 million, which we expect to extend throughout H2 as we continue to capture savings across both compensation and non-compensation areas.
Speaker #6: We continue to expect total cost synergy savings to match to approximately $40 million for the year and maintain our expectation of $60 million for 2026.
Speaker #6: Overall, we're focused our integration and plan to remain disciplined on costs and cash flow generation while taking steps to drive top-line growth. Adjusted EBITDA for Q2 was $27 million, which on an as-reported basis represents an increase of nearly $2.5 times as compared with Q1.
Speaker #6: Moving to liquidity, free cash flow which, as a reminder, we define as cash from operating activities less CAPEX and capitalized software costs was $19 million in the quarter.
Speaker #6: This includes cash outflows related to transaction costs which, when excluded, result in adjusted free cash flow of $22 million. During the quarter, we used $8 million of cash to repurchase $9.3 million principal amount of long-term debt at a discount of approximately 17%.
Speaker #6: As the debt is trading at a considerable discount to par value. As we continue to expect to generate positive cash flow this year and beyond, we viewed the opportunity to use excess cash on hand as an accretive capital allocation opportunity.
Speaker #6: We will continue to consider repurchases in future. As a result, we ended the quarter with $166 million of cash, cash equivalents, and investments in marketable securities on the balance sheet.
Speaker #6: And continue to have $15 million or about $17.5 million in overdraft borrowings classified in our balance sheet as short-term debt. And we have $628 million in principal amount of long-term debt at a 10% coupon due in 2030.
Speaker #6: The long-term debt is carried in our ance sheet net of discount and deferred financing fees and at a balance of $603 million as of June 30th, resulting in a net debt balance of $454 million.
Speaker #6: As compared with $471 million from March 31st. In these first 150 days on very proud of what we've accomplished in s of integration, decisions we've made, and how quickly we've adapted as a combined management team to ur learnings.
Speaker #6: All of our integration decisions taken into consideration are long-term goals and vision. This process is challenging as we know two complementary but distinct businesses and strive to quickly execute a high-performing, efficient go-to-market strategy.
Speaker #6: In the short term, we've felt a slower than anticipated return to growth, which we believe is predominantly a matter of timing. The delays in ur return to growth have a sizable impact to our adjusted BITDA in the short term, as most of our expenses are fixed costs.
Speaker #6: With that context, we provided the following guidance. For Q3, we expect Xtech Gross Profit of $133 million to $143 million. And we expect adjusted EBITDA of $21 million to $29 million.
Speaker #6: Considering the fact that Q4 is our most significant quarter of the year, historically contributing nearly 50% of annual adjusted EBITDA for the pro forma business, and the unusually wide range of outcomes we currently see for Q4, due to the uncertainty of how quickly the steps we've taken will impact revenue trends, we have made the ision not to reaffirm adjusted EBITDA guidance for the full year 2025.
Speaker #6: However, we still expect to generate positive free cash flow this year and are very confident steps we are taking will drive improvements to the results starting in Q4 and into 2026.
Speaker #6: Now, I'll turn it back to the operator for Q&A.
Speaker #1: Thank you. The floor is now open for questions. If you do have a estion, please press star one on your keyboard. Again, it's star one to ask a question.
Speaker #1: If you'd like to remove yourself in the queue, please press one. And our first question comes from Laura Martin. Laura, your line is live.
Speaker #1: From Needham.
Speaker #7: Okay. Thank you. Hi. Thank you. I'll just ask two. Just following up on that last comment, Jason, around debt. So you're buying in debt at 17% discount, which sounds like a good deal.
Speaker #7: But you only spent $8 million, but your free cash flow was 19. Is this, and you have so much cash on the books, is there some like why the restriction?
Speaker #7: Why not spend like all your free cash flow on buying in debt since you have so much cash on the books? Just curious as to how you size, how much debt you buy in in a single quarter.
Speaker #7: It seems like a good idea. And then second, for David, for you, I wanted you to I wanted to drill down a little bit on this negative 20% US in the US, which is creating a headwind.
Speaker #7: How much of that is structural? We're going to have to go through for quarters of that. how much do you think is just a one or two-quarter dislocation that will that are that will not recur in future quarters?
Speaker #7: Thank you.
Speaker #6: David Lawrence, Jason. Thanks for the question. So on the on the debt, you know we used the, as you said, $8 million. We do have a lot more cash than that.
Speaker #6: You know we use what we were what we were comfortable with. You know immediately in terms of excess cash. So you know our first interest payments on the debt is actually in in a week two.
Speaker #6: So you ow and we're still in the process of integrating. Where you know moving cash around the efficient you ow and effective way. But we totally are open to more in the ure.
Speaker #6: It's you know as we do expect to generate cash flow this year and of course beyond, you know it's something that if we if we see it as you know the creative use of capital will continue to for us the $8 million is really the start of what we thought was excess cash available on the balance sheet at this time.
Speaker #8: No worries, David. I'll e the second one. So as we said, I mean 're not happy with exactly where we ended, but the good news is that these are all things within our control.
Speaker #8: They are organizational, structural, rigorous sales processes we've made a lot of changes on that. Very quickly when we realized it, I can tell you that I'm cking very closely leading indicators around pipeline, conversions, meetings, RFPs, and all of them are trending up in the US.
Speaker #8: So I'm you know pretty positive around how we're going to end up towards the end of the year. And I think again, this is in our control and I ink we've changed we made the right changes to affect that.
Speaker #1: Thank you. And our next question comes from Matt Cohen from Citizens. Go ahead.
Speaker #9: Thank you so much for taking my questions. My first one is just on you know it's good to see ou guys are from the 40 million in synergies and 25 and the 55 to 70.
Speaker #9: In 26, but can you just talk about if things don't materialize, my top line like you guys expect, what's your willingness to cut more out of expenses just to meet that free cash flow target for the end of the year?
Speaker #8: Maybe I'll take that. So at the moment, we're really focused on growth, totally focused on back to growth, and we believe that you know the changes we've made will get us there.
Speaker #8: We always look at opportunities if we need to. And right now, we believe have the right cost structure to get back to growth in the second half of the year.
Speaker #8: And we are tracking it very closely. So if we see something that changes, we will adjust. And we've done it in the past, so we know how to do it.
Speaker #8: But right now, I think we decided deliberately to focus on back to growth.
Speaker #9: Got it. And maybe just a follow-up on just the return to growth and revamped go-to-market strategy. You specifically called out pricing and packaging. Can ou maybe just elaborate just on the specifically what ou are doing and what's iving you confidence that everything can get back on track?
Speaker #8: For sure. I mean, as an example, the legacy Ted's books from being single-party companies to a multi-product company, I think there's a lot of opportunities to package better the omnichannel offering.
Speaker #8: So if you price, for ample, something where you give a home screen placement, but you can package with it also in-stream and other online video.
Speaker #8: So you just approaching this is a more in a more structural way more strategically around the portfolio. I think it's a big change and we already see that working.
Speaker #8: On top of that, we're now adding quite significant amount of cross-selling of performance. To legacy ed's customers and branding solutions to legacy outbound customers, packaging those together, finding the ideal pricing for the combined offering is something that you know takes some time I think right now we are again, it's not perfect yet, but it's already really impacting the volume and the conversion rates and the win rates in our piece.
Speaker #9: Thank you so much.
Speaker #1: Thank you. And our next question comes from Igo Aron from Citi. Go ahead.
Speaker #10: Hey, guys. Good morning. So just on the transition challenges, what I want to maybe tie some of these points together a little bit better.
Speaker #10: David, you talk the advertiser response being really strong and being energized by it. On the new combined product and you know yet we're we're 20% in the US and you ow seeing some of the challenges around the sales organization.
Speaker #10: It sounds like the majority of the challenges or maybe even all are around that. So can you just maybe bridge those two points first and then in you know in what ou're seeing in 4Q and pulling the guidance and the wide range of outcomes, you ow you're talking about having sort of or feeling like feeling confident that you've ixed these issues.
Speaker #10: So what gets you maybe where to where you want to be in 4Q? Versus not in this wide range of outcomes that you see potentially in 4Q?
Speaker #8: Hey, Igo. Thanks. So I think we met in kind of maybe you could see there, I think, the brand is where we see we had more than 300 meetings with top brands, top agencies.
Speaker #8: Really presenting and promoting the concept of branding and performance and the opportunities that you know we bring to the market by combining the two.
Speaker #8: For example, connected ads, just a great launch of a product that has a mid-article, end-of-article, one brand taking it, and then being able to combine so that that that is super positive.
Speaker #8: I mean, we have not had any any issues around what's the meaning of the combination. Everyone wants to give it a chance, wants to potentially push more budgets there.
Speaker #8: Generally, people are looking to diversify from wall gardens and asking one of the largest players on the open internet that can reach incremental audiences, with great ROI across branding and performance.
Speaker #8: It's resonating very well. Now, in three markets, we're having really organizational, operational issues that are highlighted, which is the US, UK, and France. Other markets, for example, in Europe have all been growing.
Speaker #8: So it means it's really relates to management, operations, rigor, and other things that that we are addressing. Yeah, I'm very confident because I see already I mean, these things take time.
Speaker #8: I'm confident because I see leading indicators that that I refer to like how much more coverage we have on on RFPs. The win rates, the number of meetings, the conversion of the pipeline, the speed of the conversion of the pipeline.
Speaker #8: So looking at all of these, I can tell you we've seen already in July month-over-month growth in cross-selling of both performance, capabilities, performance campaigns to legacy Ted's clients and branding campaigns to to legacy outbound clients.
Speaker #8: I see more meetings, and I'm pretty encouraged by what I see. And again, I think it's not great news how we performed and what we're guiding, but it is good news that it is I feel it's most of it is still in our control and getting back market share is something that would better execution we're highly confident we'll there.
Speaker #9: Okay. And I ess you know one of the you talked about the impact to traffic from GenAI and AI overviews. You know this this topic is probably the top of mind more more than any other single topic from investors.
Speaker #9: And you outlined you're eing some impacts, but it's not the majority of your I ess revenue bases and impacted directly from this. Can you just talk about the trends that you expect to see?
Speaker #9: I think part the the concern is that this AI overview is continues to become a bigger part of search. You know this has a greater impact.
Speaker #9: Was the was the decision to move away from certain publishers related to the trends that you're eing here at all? And then the commentary around trying monetize the the new kind of GenAI overview, I thought that was pretty interesting.
Speaker #9: Excuse me. Interesting. I just wanted to ar a little bit more about your approach there. Thanks.
Speaker #8: Sure. So Igo, maybe I'll start this with one sort of thing that is specifically to us, which is this reduction in publishers. And we have to elevate the quality of the supply.
Speaker #8: I think when we try to bring Ted's legacy advertisers to supply, we just have to play in a ball game than before. And we made a conscious decision to reduce about 200 publishers that are a lot of page views, lower quality, and about 5% of of the revenue.
Speaker #8: So that's something that's specifically something we did. Going back to the sort of bigger topic, A, I mean, we are big believers in the open internet generally.
Speaker #8: People are spending more time on the open internet. That includes obviously also CTV, which is on a run rate for us for about 100 million dollars this year, growing 80% this quarter.
Speaker #8: We have unique offerings too. So I think diversifying from the open in the open internet from traditional publishers to to CTV and to retail media things we're ing.
Speaker #8: Specifically on traditional publishers, I think there's it's a mixed bag. So search, AI summaries have really had minimal impact on us until now. I'm taking it very, very seriously and obviously we're tracking it.
Speaker #8: But there's a few few elements that play here. One is the type of content evergreen content is much more effective than current content, which is news entertainment, sports, finance, and others.
Speaker #8: Publishers are really doing a lot to increase the engagement of users on their site, including incorporating you know chat GPT-type capabilities into the site and keeping the users more engaged.
Speaker #8: And that creates more interesting supply that we're helping them monetize and can help them monetize. Generally, I think we have the premium publishers are doing a lot to improve experiences on the site.
Speaker #8: Lesser density, better quality which plays again in our favor here. So there's a lot going on. It's clearly, I think, I mean, we can't deny it is a risk on page views.
Speaker #8: On the other hand, we've also shown continuously improvement in monetizing pages. So our RPM, which is what we get per page, is increasing for the seventh consecutive quarter.
Speaker #8: And I you know we see that really good pipeline in algorithm to continue to do that. I'm giving here, Igo, it's a mixed bag.
Speaker #8: We're tracking it. I think it is something that is impacting the industry, but you know the industry has always found a way to to to really do well.
Speaker #8: And I'm confident that between sort of what we can do with the publisher world, diversification, better monetization, I think it's it's going to be something that we go through and come out of it in good place.
Speaker #9: Great. Thank you so much, guys.
Speaker #1: Again, ladies and gentlemen, to ask a estion, it's star one. And our next question comes from Ed Alter from Jeffries, your line is open.
Speaker #11: Hey, everyone. Thanks for the estion. Maybe just digging into kind of these headwinds a little bit more, where is this mostly been on the go-to-market strategy or is the products fit?
Speaker #11: Just to give it a little more color on there would be greatly reciated.
Speaker #6: Hi, David. I think I said it's very much I would say operational and which again gives us the confidence that we can fix it.
Speaker #6: I ink the product is great. The new go-to-market, which clarifies the branding packages, performance packages, the omnichannel, is something that is starting resonate and we're eraging this sort of new go-to-market to get more business.
Speaker #6: So we're y confident on the product, the strategy, the brand formats combined offering. Our premium advertiser base we increased our joint business partnerships. We're ing a bit more on the in the US on the programmatic side, on certain type of deals.
Speaker #6: So I think it is things that are in our control. And I feel that sort of we already turned the corner based on some of the numbers I see in July.
Speaker #11: Great. And on the CTV opportunity, is would you say today that's mostly on the home screen and then where that can go? Could you get in-screen placements or is home screen the main part of that strategy?
Speaker #6: It's a combination of the two. I think the home screen is where we have a really clearly unique differentiation. Many of these home screen placements today we have exclusive access to.
Speaker #6: It's really a strong demonstration of unique creative capabilities and the quality of advertisers. LG, Samsung, Hisense, they need to make sure that on the home screen you have only the most premium advertisers of the world.
Speaker #6: And they're very selective even when we look the legacy Ted's advertiser base, they're still selective. So that's a at differentiation. But again, a big part of the business is in-stream.
Speaker #6: Then in the other advantage that we have is now that all these CTV offerings have been integrated into Ted's ad manager, which is our platform, it makes it much easier for agencies to run campaigns on an omnichannel basis and dynamically allocate those campaigns.
Speaker #6: So that is again I think a big tailwind for the growth in potential in CTV.
Speaker #11: Great. Thanks.
Speaker #1: Thank you. And our next question comes from Zach Cummings from BeReilly Securities. Go ahead, Zach.
Speaker #12: Hi. This is Ethan Whiteall calling in for Zach Cummings. Thank you for taking my estion. I think to start, just going forward, can you maybe speak a little bit to your capital allocation priorities?
Speaker #12: Maybe between debt pay down and other options and maybe what your strategy would be there? Sure. I can take that, Ethan. Thanks for the estion.
Speaker #12: You know we've said really since we closed the deal our priority has been to you know obviously build back to growth here. Focus integration, synergy capture, and generate cash and using that cash to deleverage.
Speaker #12: And our target leverage ratio we've shared in the past is one to one and a quarter times. You know obviously I think the use of you ow what I would consider our excess cash you ow to start buying back some of the bond at a significant discount.
Speaker #12: You know aligns with what 've said in the past. And that continues to be our priority.
Speaker #9: Got it. Thank you. And then, sort of, you know, looking at tariff uncertainty in the macro environment right now for throughout the rest of the year, I was wondering if you could just speak a little bit to your visibility looking at demand for the rest of the year.
Speaker #12: Yeah. I can start there for sure. And then David.
Speaker #8: Sorry. Go head. Yeah. Yeah. You know I ink we feel very good about it obviously. You know what we're focused are the leading KPIs, as David you know mentioned and I think on the prepared remarks and also in one of the questions.
Speaker #8: You know the you know number of meetings, the RFPs, the pipeline, the weighted pipeline. And we're monitoring it you know even closer than we were previously.
Speaker #8: And I think we feel you know better about our visibility than we did obviously in the first maybe 100 days compared here to the second 100 days post-closing.
Speaker #8: So you know we feel good. We're monitoring it closely. And as David said, we're obsessing over you know the KPIs that drive the business and the rigor that goes into it.
Speaker #8: And I think that is reflected in a lot of the operational and organizational changes that we've made. So yeah, I feel good. And you know we also I would just say have a pretty diverse business.
Speaker #8: You know where we did see softness in certain verticals or geos, you know there's kind of an overlap there. And you know none of ur verticals are more than you know mid-single-digit percentage to where we have seen softness you ow we felt that you know in luxury goods or automotive.
Speaker #8: But it's been you know it's been isolated, as David said. f you take out those three markets, you know you take the other you know 50% or so of the legacy Ted's business, it's it's grown.
Speaker #8: Year over year, right? And so we feel good about that. And regaining the momentum that we really saw up until June when it flattened down a little bit.
Speaker #11: I mean, I would just add, I an, thank you. Diversity is very is very evant here with about 30% in the Americas, 60% in India, 10% in JPAC.
Speaker #11: As Jason said, we don't have any major customer vertical concentration. We've seen some you know softness in certain geographies in like beauty and lux and others.
Speaker #11: But the portfolio is diversified enough. We don't see today any major macro negative impact. And other than you know again, there's been some instability around the tariff announcement that sort of think we over that.
Speaker #11: At this point, and we've really we don't see any big macro impact here.
Speaker #9: Understood. I reciate all the color. Thanks.
Speaker #1: Thank you. And at this time, we no further questions. I would now like to turn the floor back over to David Kostman for any closing remarks.
Speaker #8: Thank you very much. Thanks for joining us today. And I look forward to updating you on sort of the developments we see in our business.
Speaker #8: Thank you.