Outbrain Inc. reported its financial results for the three and nine months ended September 30, 2024, revealing a mixed performance compared to the same periods in 2023. For the third quarter, revenue decreased to $224.2 million from $230.0 million, a decline of 2.5%. For the nine months, revenue also fell to $655.3 million from $687.6 million, down 4.7%. Despite the revenue drop, gross profit for the third quarter increased to $48.9 million, up from $46.4 million, reflecting a gross margin improvement from 20.2% to 21.8%. For the nine-month period, gross profit rose to $136.0 million from $131.6 million, marking a 3.4% increase.
The company reported a net income of $6.7 million for the third quarter, a significant increase from $0.5 million in the prior year. However, for the nine months, Outbrain experienced a net loss of $0.5 million, contrasting with a net income of $6.2 million in 2023. Adjusted EBITDA for the third quarter improved to $11.5 million from $10.3 million, while for the nine months, it rose to $20.3 million from $14.5 million.
Traffic acquisition costs (TAC) decreased by 5.0% to $164.5 million in the third quarter, contributing to a reduction in TAC as a percentage of revenue, which fell to 73.4% from 75.3%. Operating expenses increased by 18.4% to $51.8 million, driven by acquisition-related costs and higher personnel expenses.
Strategically, Outbrain announced the acquisition of Teads S.A. on August 1, 2024, for a total consideration of $725 million in cash and stock. This acquisition is expected to enhance Outbrain's market position and is funded through a combination of cash on hand and a new $750 million senior secured bridge facility. The company also repurchased $118 million of its Convertible Notes in September 2024, eliminating its long-term debt obligations and resulting in a pre-tax gain of approximately $8.8 million.
As of September 30, 2024, Outbrain's cash and cash equivalents totaled $57.1 million, with total current assets at $326.2 million, down from $401.8 million at the end of 2023. The company reported total liabilities of $303.0 million, significantly reduced from $441.6 million at the end of the previous fiscal year.
Overall, while Outbrain faced challenges in revenue generation, it demonstrated improvements in gross profit and net income for the third quarter, alongside strategic moves to strengthen its market position through acquisitions and debt management.