EX-99.1 2 ny20037354x6_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On February 3, 2025, Outbrain acquired Teads pursuant to the Share Purchase Agreement. The following unaudited pro forma condensed combined financial statements and related notes are derived from the historical consolidated financial statements of Outbrain and the historical financial statements of Teads, and give effect to the Acquisition, the Offering and the other related contemplated financing transactions (the “Financing”) on a pro forma basis as described herein.
The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2024 and 2023 and the year ended December 31, 2023 have been prepared as if the Acquisition and the Financing had been completed on January 1, 2023, and the unaudited pro forma condensed combined balance sheet as of September 30, 2024 has been prepared as if the Acquisition and the Financing had been completed on September 30, 2024. The unaudited pro forma LTM consolidated statement of operations information has been derived as follows: (i) unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023, less (ii) unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023, plus (iii) unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2024.
The unaudited pro forma condensed combined financial statements and the accompanying notes should be read in conjunction with:
•
The unaudited historical condensed consolidated financial statements and related notes of Outbrain in its Quarterly Report on Form 10-Q as of September 30, 2024 and for the periods ended September 30, 2024 and 2023, as filed with the SEC on November 7, 2024 (“Outbrain’s Third Quarter 2024 10-Q”);
•
The audited historical consolidated financial statements and related notes of Outbrain in its Annual Report on Form 10-K as of and for the year ended December 31, 2023, as filed with the SEC on March 8, 2024 (“Outbrain’s 2023 Annual Report”);
•
The unaudited historical condensed interim consolidated financial statements of Teads as of September 30, 2024 and for the nine months ended September 30, 2024 and 2023, which are included in this offering memorandum; and
•
The audited historical consolidated financial statements of Teads as of December 31, 2023 and December 31, 2022 and for each of the three years in the period ended December 31, 2023, which are included in this offering memorandum.
The following unaudited pro forma condensed combined financial information and related notes has been prepared in accordance with Article 11 of Regulation S-X as amended by the Final Rule, Release No. 33-10786, to give effect to the following:
•
Application of the acquisition method of accounting under the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 805 (“ASC 805”), Business Combinations, where certain assets and liabilities of Teads were recorded by Outbrain at their respective fair values as of the date the acquisition was completed;
•
Adjustments to conform the financial statement presentation of Teads to Outbrain, based upon a preliminary assessment by Outbrain;
•
Adjustments to reflect the following financing transactions and other adjustments:
○
Issuance of the Notes offered hereby in an aggregate principal amount of $625 million; and
○
Issuance of 43.75 million newly issued shares of Outbrain Common Stock;
•
Adjustments to reflect transaction costs in connection with the acquisition.
The historical financial statements of Outbrain have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and in its reporting currency of U.S. dollars. The historical financial statements of Teads have been prepared in accordance with IFRS, as issued by IASB, and in its reporting currency of U.S. dollars. Accordingly, the unaudited pro forma condensed combined financial statements reflect certain

adjustments to Teads’ historical consolidated financial statements to align those financial statements with U.S. GAAP, based on Outbrain management’s preliminary analysis. In addition, certain items within Teads’ historical consolidated financial statements have been reclassified to align with Outbrain’s financial statement presentation.
As of the date of this offering memorandum, the Company has not completed the detailed valuation necessary to arrive at the final estimates of the fair value of Teads’ assets acquired and liabilities assumed, and the related allocation of the purchase price, nor has it identified all of the adjustments necessary to conform Teads’ accounting policies to those of Outbrain. Accordingly, the adjustments to the historical book values of assets and liabilities reflect the Company’s best estimates of the fair values, with the excess of the purchase price over the preliminary estimates of fair value recorded as goodwill. Actual results may differ once the Company has completed the detailed valuations necessary to finalize the purchase price allocation. The final calculation of consideration transferred could significantly differ from the amounts presented in the unaudited pro forma condensed combined financial statements due to movements in the value of the Company’s common stock and volatility, among other valuation inputs. Under applicable guidance, the Company is not required to finalize its acquisition accounting until all information is available, but no later than one year after the Acquisition is completed, and any subsequent adjustments made in connection with the finalization of the Company’s acquisition accounting may be material. There can be no assurance that such finalization will not result in material changes.
The pro forma condensed combined financial statements are unaudited, are presented for illustrative and informational purposes only, and are not necessarily indicative of the financial position or results of operations that would have occurred had the Acquisition and the Financing actually been completed as of the dates presented. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future consolidated financial position or operating results of the combined company. The unaudited pro forma condensed combined financial statements do not reflect any potential cost savings, operating efficiencies or synergies related to the Acquisition. The pro forma adjustments represent Outbrain management’s best estimates and are based upon currently available information and certain assumptions that the Company believes are reasonable. For more information, please see the section titled “Risk Factors — Risks Related to the Combined Company After Closing of the Acquisition — Outbrain incurred significant transaction and integration-related costs in connection with the Acquisition and may not be able to integrate Teads successfully or manage the combined business effectively, and many of the anticipated synergies and other benefits of the Acquisition may not be realized or may not be realized within the expected time frame.”

Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2024
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outbrain
Historical
 
 
Teads Historical
After
Reclassifications
(see Note 3)
 
 
GAAP &
Policy
Adjustments
 
 
Notes
 
 
Transaction
Accounting
and
Financing
Adjustments
 
 
Notes
 
 
Pro Forma
Combined
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
$57,061
 
 
$64,597
 
 
$—
 
 
 
 
 
$(625,000)
 
 
5
 
 
$104,833
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
608,175
 
 
7(a)
 
 
 
Short-term investments in marketable securities
 
 
73,467
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
73,467
Accounts receivable, net of allowances
 
 
157,542
 
 
210,267
 
 
—
 
 
 
 
 
(29)
 
 
6(a)
 
 
367,780
Prepaid expenses and other current assets
 
 
38,133
 
 
618,021
 
 
—
 
 
 
 
 
(593,584)
 
 
6(b)
 
 
62,570
Total current assets
 
 
326,203
 
 
892,885
 
 
—
 
 
 
 
 
(610,438)
 
 
 
 
 
608,650
Non-current assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term investments in marketable securities
 
 
—
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
—
Property, equipment and capitalized software, net
 
 
43,934
 
 
4,287
 
 
21,198
 
 
4(a)
 
 
(20,957)
 
 
6(c)
 
 
48,462
Operating lease right-of-use assets, net
 
 
15,791
 
 
14,831
 
 
615
 
 
4(c)
 
 
(639)
 
 
6(d)
 
 
30,598
Intangible assets, net
 
 
17,834
 
 
21,692
 
 
(21,198)
 
 
4(a)
 
 
385,506
 
 
6(e)
 
 
403,834
Goodwill
 
 
63,063
 
 
37,013
 
 
—
 
 
 
 
 
395,047
 
 
6(f)
 
 
495,123
Deferred tax assets
 
 
42,166
 
 
11,383
 
 
—
 
 
 
 
 
29,595
 
 
6(j)
 
 
83,144
Other assets
 
 
21,140
 
 
2,596
 
 
—
 
 
 
 
 
104,825
 
 
6(k)
 
 
141,838
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,084
 
 
7(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(807)
 
 
7(b)
 
 
TOTAL ASSETS
 
 
$530,131
 
 
$984,687
 
 
$615
 
 
 
 
 
$296,216
 
 
 
 
 
$1,811,649
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
 
$123,355
 
 
$121,229
 
 
$—
 
 
 
 
 
$(29)
 
 
6(a)
 
 
$244,555
Accrued compensation and benefits
 
 
18,721
 
 
20,833
 
 
—
 
 
 
 
 
—
 
 
 
 
 
39,554
Accrued and other current liabilities
 
 
124,053
 
 
37,671
 
 
(868)
 
 
4(c)
 
 
(673)
 
 
6(d)
 
 
193,595
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,420
 
 
6(g)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,166
 
 
7(a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
826
 
 
7(b)
 
 
 
Deferred revenue
 
 
6,598
 
 
2,894
 
 
—
 
 
 
 
 
—
 
 
 
 
 
9,492
Total current liabilities
 
 
272,727
 
 
182,627
 
 
(868)
 
 
 
 
 
32,710
 
 
 
 
 
487,196
Non-current liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
 
—
 
 
21
 
 
—
 
 
 
 
 
611,324
 
 
7(a)
 
 
611,345
Operating lease liabilities, non-current
 
 
12,634
 
 
12,363
 
 
(1,076)
 
 
4(c)
 
 
(389)
 
 
6(d)
 
 
23,532
Uncertain tax positions
 
 
5,327
 
 
—
 
 
—
 
 
 
 
 
99,825
 
 
6(k)
 
 
105,152
Deferred tax liabilities
 
 
3,459
 
 
1,484
 
 
650
 
 
4(c)
 
 
74,884
 
 
6(j)
 
 
80,477
Other liabilities
 
 
8,828
 
 
1,886
 
 
—
 
 
 
 
 
5,000
 
 
6(k)
 
 
15,714
TOTAL LIABILITIES
 
 
$302,975
 
 
$198,381
 
 
$(1,294)
 
 
 
 
 
$823,354
 
 
 
 
 
$1,323,416
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments and Contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
 
63
 
 
17,379
 
 
—
 
 
 
 
 
(17,379)
 
 
6(i)
 
 
107
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
44
 
 
7(b)
 
 
 
Additional paid-in capital
 
 
480,440
 
 
99,178
 
 
—
 
 
 
 
 
(99,178)
 
 
6(i)
 
 
762,701
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
283,894
 
 
7(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,633)
 
 
7(b)
 
 
 
Treasury stock, at cost
 
 
(74,079)
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
(74,079)
Accumulated other comprehensive loss
 
 
(9,942)
 
 
(29,107)
 
 
—
 
 
 
 
 
29,107
 
 
6(i)
 
 
(9,942)
Accumulated deficit
 
 
(169,326)
 
 
698,856
 
 
1,909
 
 
4(c)
 
 
423
 
 
6(d)
 
 
(190,554)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(21,420)
 
 
6(g)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(700,765)
 
 
6(i)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(231)
 
 
7(a)
 
 
TOTAL STOCKHOLDERS’ EQUITY:
 
 
227,156
 
 
786,306
 
 
1,909
 
 
 
 
 
(527,138)
 
 
 
 
 
488,233
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
 
$530,131
 
 
$984,687
 
 
$615
 
 
 
 
 
$296,216
 
 
 
 
 
$1,811,649
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2024
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outbrain
Historical
 
 
Teads Historical
After
Reclassifications
(see Note 3)
 
 
GAAP &
Policy
Adjustments
 
 
Notes
 
 
Transaction
Accounting
and Financing
Adjustments
 
 
Notes
 
 
Pro Forma
Combined
Revenue
 
 
$655,289
 
 
$428,482
 
 
$—
 
 
 
 
 
$(107)
 
 
6(a)
 
 
$1,083,664
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
487,484
 
 
210,314
 
 
(48,575)
 
 
4(b)
 
 
(107)
 
 
6(a)
 
 
649,116
Other cost of revenue
 
 
31,765
 
 
31,398
 
 
8,539
 
 
4(a)
 
 
(8,539)
 
 
6(c)
 
 
75,570
 
 
 
 
 
 
 
 
 
 
 
 
12,407
 
 
6(e)
 
 
Total cost of revenue
 
 
519,249
 
 
241,712
 
 
(40,036)
 
 
 
 
 
3,761
 
 
 
 
 
724,686
Gross profit
 
 
136,040
 
 
186,770
 
 
40,036
 
 
 
 
 
(3,868)
 
 
 
 
 
358,978
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
27,646
 
 
28,781
 
 
(8,539)
 
 
4(a)
 
 
(5,629)
 
 
6(h)
 
 
42,294
 
 
 
 
 
 
 
 
 
35
 
 
4(c)
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
71,762
 
 
85,554
 
 
48,575
 
 
4(b)
 
 
22,317
 
 
6(e)
 
 
219,365
 
 
 
 
 
 
 
 
 
309
 
 
4(c)
 
 
(10,402)
 
 
6(h)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,250
 
 
6(k)
 
 
 
General and administrative
 
 
51,805
 
 
41,987
 
 
44
 
 
4(c)
 
 
(12,058)
 
 
6(h)
 
 
83,824
 
 
 
 
 
 
 
2,046
 
 
4(d)
 
 
 
 
 
 
 
Total operating expenses
 
 
151,213
 
 
156,322
 
 
42,470
 
 
 
 
 
(4,522)
 
 
 
 
 
345,483
(Loss) income from operations
 
 
(15,173)
 
 
30,448
 
 
(2,434)
 
 
 
 
 
654
 
 
 
 
 
13,495
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on convertible debt
 
 
8,782
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
8,782
Interest expense
 
 
(2,950)
 
 
(1,060)
 
 
813
 
 
4(c)
 
 
(49,615)
 
 
7(a)
 
 
(52,812)
Interest income and other income, net
 
 
7,687
 
 
12,431
 
 
2,046
 
 
4(d)
 
 
(18,423)
 
 
6(b)
 
 
3,741
Total other income (expense), net
 
 
13,519
 
 
11,371
 
 
2,859
 
 
 
 
 
(68,038)
 
 
 
 
 
(40,289)
(Loss) income before income taxes
 
 
(1,654)
 
 
41,819
 
 
425
 
 
 
 
 
(67,384)
 
 
 
 
 
(26,794)
(Benefit) provision for income taxes
 
 
(1,110)
 
 
22,113
 
 
108
 
 
4(c)
 
 
(23,485)
 
 
6(j)
 
 
(11)
 
 
 
 
 
 
 
 
 
 
 
 
2,363
 
 
6(k)
 
 
Net (loss) income
 
 
$(544)
 
 
$19,706
 
 
$317
 
 
 
 
 
$(46,262)
 
 
 
 
 
$(26,783)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
49,171,414
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
92,921,414
Diluted
 
 
53,701,925
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
97,451,925
Net loss per common share (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$(0.01)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$(0.29)
Diluted
 
 
$(0.10)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$(0.32)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2023
(In thousands, except for share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outbrain Inc.
Historical
 
 
Teads Historical
after
Reclassifications
(see Note 3)
 
 
GAAP &
Policy
Adjustments
 
 
Note
 
 
Transaction
Accounting
and Financing
Adjustments
 
 
Note
 
 
Pro Forma
Combined
Revenue
 
 
$687,589
 
 
$430,419
 
 
$—
 
 
 
 
 
$(106)
 
 
6(a)
 
 
$1,117,902
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
524,024
 
 
197,993
 
 
(45,792)
 
 
4(b)
 
 
(106)
 
 
6(a)
 
 
676,119
Other cost of revenue
 
 
31,999
 
 
31,241
 
 
7,473
 
 
4(a)
 
 
(7,473)
 
 
6(c)
 
 
75,647
 
 
 
 
 
 
 
 
 
 
 
 
12,407
 
 
6(e)
 
 
Total cost of revenue
 
 
556,023
 
 
229,234
 
 
(38,319)
 
 
 
 
 
4,828
 
 
 
 
 
751,766
Gross profit
 
 
131,566
 
 
201,185
 
 
38,319
 
 
 
 
 
(4,934)
 
 
 
 
 
366,136
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
28,033
 
 
17,314
 
 
(6,046)
 
 
4(a)
 
 
—
 
 
 
 
 
39,344
 
 
 
 
 
 
 
 
 
43
 
 
4(c)
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
73,116
 
 
79,048
 
 
45,792
 
 
4(b)
 
 
22,317
 
 
6(e)
 
 
221,902
 
 
 
 
 
 
 
 
 
379
 
 
4(c)
 
 
1,250
 
 
6(k)
 
 
 
General and administrative
 
 
44,766
 
 
29,192
 
 
(1,427)
 
 
4(a)
 
 
21,420
 
 
6(g)
 
 
94,417
 
 
 
 
 
 
 
 
 
54
 
 
4(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
412
 
 
4(d)
 
 
 
 
 
 
 
Total operating expenses
 
 
145,915
 
 
125,554
 
 
39,207
 
 
 
 
 
44,987
 
 
 
 
 
355,663
(Loss) income from operations
 
 
(14,349)
 
 
75,631
 
 
(888)
 
 
 
 
 
(49,921)
 
 
 
 
 
10,473
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on convertible debt
 
 
22,594
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
22,594
Interest expense
 
 
(4,428)
 
 
(821)
 
 
656
 
 
4(c)
 
 
(61,989)
 
 
7(a)
 
 
(66,582)
Interest income and other income (expense), net
 
 
5,733
 
 
11,259
 
 
412
 
 
4(d)
 
 
(14,172)
 
 
6(b)
 
 
3,232
Total other income (expense), net
 
 
23,899
 
 
10,438
 
 
1,068
 
 
 
 
 
(76,161)
 
 
 
 
 
(40,756)
Income (loss) before income taxes
 
 
9,550
 
 
86,069
 
 
180
 
 
 
 
 
(126,082)
 
 
 
 
 
(30,283)
Provision (benefit) for income taxes
 
 
3,365
 
 
23,485
 
 
46
 
 
4(c)
 
 
(26,591)
 
 
6(j)
 
 
2,668
 
 
 
 
 
 
 
 
 
 
 
 
2,363
 
 
6(k)
 
 
Net income (loss)
 
 
$6,185
 
 
$62,584
 
 
$134
 
 
 
 
 
$(101,854)
 
 
 
 
 
$(32,951)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
51,178,127
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
94,928,127
Diluted
 
 
57,696,222
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
101,446,222
Net income (loss) per common share (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$0.12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$(0.35)
Diluted
 
 
$(0.15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$(0.47)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2023
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outbrain
Historical
 
 
Teads Historical
After
Reclassifications
(see Note 3)
 
 
GAAP &
Policy
Adjustments
 
 
Notes
 
 
Transaction
Accounting
and Financing
Adjustments
 
 
Notes
 
 
Pro Forma
Combined
Revenue
 
 
$935,818
 
 
$649,812
 
 
$—
 
 
 
 
 
$(171)
 
 
6(a)
 
 
$1,585,459
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
708,449
 
 
286,086
 
 
(62,830)
 
 
4(b)
 
 
(171)
 
 
6(a)
 
 
931,534
Other cost of revenue
 
 
42,571
 
 
42,549
 
 
10,295
 
 
4(a)
 
 
(10,295)
 
 
6(c)
 
 
101,663
 
 
 
 
 
 
 
 
 
 
 
 
16,543
 
 
6(e)
 
 
Total cost of revenue
 
 
751,020
 
 
328,635
 
 
(52,535)
 
 
 
 
 
6,077
 
 
 
 
 
1,033,197
Gross profit
 
 
184,798
 
 
321,177
 
 
52,535
 
 
 
 
 
(6,248)
 
 
 
 
 
552,262
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
36,402
 
 
31,181
 
 
(10,295)
 
 
4(a)
 
 
(3,596)
 
 
6(h)
 
 
53,751
 
 
 
 
 
 
 
 
 
59
 
 
4(c)
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
98,370
 
 
108,534
 
 
62,830
 
 
4(b)
 
 
29,756
 
 
6(e)
 
 
295,032
 
 
 
 
 
 
 
 
 
520
 
 
4(c)
 
 
(6,645)
 
 
6(h)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,667
 
 
6(k)
 
 
 
General and administrative
 
 
58,665
 
 
47,073
 
 
74
 
 
4(c)
 
 
21,420
 
 
6(g)
 
 
121,946
 
 
 
 
 
 
 
2,416
 
 
4(d)
 
 
(7,702)
 
 
6(h)
 
 
Total operating expenses
 
 
193,437
 
 
186,788
 
 
55,604
 
 
 
 
 
34,900
 
 
 
 
 
470,729
(Loss) income from operations
 
 
(8,639)
 
 
134,389
 
 
(3,069)
 
 
 
 
 
(41,148)
 
 
 
 
 
81,533
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on convertible debt
 
 
22,594
 
 
—
 
 
—
 
 
 
 
 
—
 
 
 
 
 
22,594
Interest expense
 
 
(5,393)
 
 
(929)
 
 
891
 
 
4(c)
 
 
(78,527)
 
 
7(a)
 
 
(83,958)
Interest income and other income (expense), net
 
 
7,793
 
 
4,549
 
 
2,416
 
 
4(d)
 
 
(14,909)
 
 
6(b)
 
 
(151)
Total other income (expense), net
 
 
24,994
 
 
3,620
 
 
3,307
 
 
 
 
 
(93,436)
 
 
 
 
 
(61,515)
Income (loss) before provision for income taxes
 
 
16,355
 
 
138,009
 
 
238
 
 
 
 
 
(134,584)
 
 
 
 
 
20,018
Provision (benefit) for income taxes
 
 
6,113
 
 
42,186
 
 
60
 
 
4(c)
 
 
(33,075)
 
 
6(j)
 
 
18,434
 
 
 
 
 
 
 
 
 
 
 
 
3,150
 
 
6(k)
 
 
Net income (loss)
 
 
$10,242
 
 
$95,823
 
 
$178
 
 
 
 
 
$(104,659)
 
 
 
 
 
$1,584
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
50,900,422
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
94,650,422
Diluted
 
 
56,965,299
 
 
 
 
 
 
 
 
 
 
 
43,750,000
 
 
 
 
 
100,715,299
Net income (loss) per common share (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$0.20
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$0.02
Diluted
 
 
$(0.06)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$(0.12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the LTM Period Ended September 30, 2024
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4) = (1)+(2)-(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended
December 31,
2023
 
 
Nine Months
Ended September 30,
2024
 
 
Nine Months
Ended September 30,
2023
 
 
LTM Period
Ended September 30,
2024
Revenue
 
 
$1,585,459
 
 
$1,083,664
 
 
$1,117,902
 
 
$1,551,221
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
931,534
 
 
649,116
 
 
676,119
 
 
904,531
Other cost of revenue
 
 
101,663
 
 
75,570
 
 
75,647
 
 
101,586
Total cost of revenue
 
 
1,033,197
 
 
724,686
 
 
751,766
 
 
1,006,117
Gross profit
 
 
552,262
 
 
358,978
 
 
366,136
 
 
545,104
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
53,751
 
 
42,294
 
 
39,344
 
 
56,701
Sales and marketing
 
 
295,032
 
 
219,365
 
 
221,902
 
 
292,495
General and administrative
 
 
121,946
 
 
83,824
 
 
94,417
 
 
111,353
Total operating expenses
 
 
470,729
 
 
345,483
 
 
355,663
 
 
460,549
Income from operations
 
 
81,533
 
 
13,495
 
 
10,473
 
 
84,555
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Gain on convertible debt
 
 
22,594
 
 
8,782
 
 
22,594
 
 
8,782
Interest expense
 
 
(83,958)
 
 
(52,812)
 
 
(66,582)
 
 
(70,188)
Interest income and other income (expense), net
 
 
(151)
 
 
3,741
 
 
3,232
 
 
358
Total other expense, net
 
 
(61,515)
 
 
(40,289)
 
 
(40,756)
 
 
(61,048)
Income (loss) before provision for income taxes
 
 
20,018
 
 
(26,794)
 
 
(30,283)
 
 
23,507
Provision (benefit) for income taxes
 
 
18,434
 
 
(11)
 
 
2,668
 
 
15,755
 
 
 
 
 
 
 
 
 
Net income (loss)
 
 
$1,584
 
 
$(26,783)
 
 
$(32,951)
 
 
$7,752
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
94,650,422
 
 
92,921,414
 
 
94,928,127
 
 
93,148,887
Diluted
 
 
100,715,299
 
 
97,451,925
 
 
101,446,222
 
 
97,975,207
Net income (loss) per common share (Note 8):
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$0.02
 
 
$(0.29)
 
 
$(0.35)
 
 
$0.08
Diluted
 
 
$(0.12)
 
 
$(0.32)
 
 
$(0.47)
 
 
$0.03
 
 
 
 
 
 
 
 
 
 
 
 
 
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

1. Description of the Acquisition and the Financing
On August 1, 2024, Outbrain entered into the Share Purchase Agreement with Teads and Altice Teads to acquire, directly and via certain of its subsidiaries, all of the issued and outstanding equity interests of Teads from Altice Teads (the “Acquisition”). The Acquisition closed on February 3, 2025 (the “Acquisition Closing Date”).
The consideration paid on the Acquisition Closing Date consisted of: (1) a cash payment of $625 million, subject to certain customary adjustments as set forth in the Agreement and (2) 43.75 million newly issued shares of Outbrain Common Stock, par value $0.001 (the “Common Stock Consideration”).
In connection with the Acquisition, on February 3, 2025, Outbrain and the Issuer, as borrowers, entered into a New Credit Agreement, establishing a New Revolving Credit Facility with aggregate commitments of $100.0 million, including a letter of credit sub-limit of $10.0 million and a swingline sub-limit of $20.0 million. The New Credit Agreement also established a Bridge Facility with aggregate commitments of $625.0 million.
On the Acquisition Closing Date, the Bridge Facility was drawn in full to fund the cash portion of the Total Consideration. The proceeds from the Offering will be used, together with cash on hand, to (i) repay in full and cancel the indebtedness incurred under the Bridge Facility, including accrued and unpaid interest thereon and (ii) pay fees and expenses incurred in connection with the Offering and the Bridge Facility Refinancing.
2. Basis of Presentation
The Company and Teads both operate on a calendar year-end basis. The unaudited pro forma condensed combined financial statements have been derived from (i) the unaudited historical condensed consolidated financial statements of Outbrain in its Quarterly Report on Form 10-Q as of September 30, 2024 and for the periods ended September 30, 2024 and 2023, as filed with the SEC on November 7, 2024, (ii) the audited historical consolidated financial statements of Outbrain in its Annual Report on Form 10-K as of and for the year ended December 31, 2023, as filed with the SEC on March 8, 2024, (iii) the unaudited historical interim condensed consolidated financial statements of Teads as of September 30, 2024 and for the nine months ended September 30, 2024 and 2023, which are included in this offering memorandum, and (iv) the audited historical consolidated financial statements of Teads as of December 31, 2023 and December 31, 2022 and for each of the three years in the period ended December 31, 2023, which are included in this offering memorandum. All historical financial statements have been prepared in U.S. dollars.
The unaudited pro forma condensed combined financial statements show the impact of the Acquisition on the financial statements under the acquisition method of accounting, in accordance with ASC 805, Business Combinations, with Outbrain treated as the accounting acquirer of Teads.
The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effects of the Acquisition and the Financing and certain other adjustments. The final determination of the consideration transferred and acquisition accounting will be based on the fair values of the Teads assets acquired and liabilities assumed on the Acquisition Closing Date and using the fair value concepts defined in ASC 820, Fair Value Measurements. The Company is not required to finalize its acquisition accounting until all information is available, but no later than one year after the Acquisition is completed, and any subsequent adjustments made in connection with the finalization of the Company’s acquisition accounting may be material. There can be no assurance that such finalization will not result in material changes.
The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2024 and 2023 and the year ended December 31, 2023 have been prepared as if the Acquisition and the Financing had been completed on January 1, 2023, and the unaudited pro forma condensed combined balance sheet as of September 30, 2024 has been prepared as if the Acquisition and the Financing had been completed on September 30, 2024. The unaudited pro forma LTM consolidated statement of operations information has been derived as follows: (i) unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023, less (ii) unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023, plus (iii) unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2024.
The accounting policies of Teads under IFRS as issued by the IASB, which are described in Note 2 to Teads’ historical consolidated financial statements included in this offering memorandum, are not expected to be significantly different from U.S. GAAP, except for those adjustments discussed further in Note 4 below. Although the

adjustments to Teads’ historical financial statements represent the currently known material adjustments to conform to U.S. GAAP, the accompanying unaudited pro forma IFRS to U.S. GAAP adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed. In addition, the accounting policies of Outbrain may vary materially from those of Teads outside of differences between U.S. GAAP and IFRS. During the preparation of the unaudited pro forma condensed combined financial statements, certain conforming adjustments were made based on the initial analysis of the differences in accounting policies. The Company is in the process of evaluating Teads’ accounting policies, and as a result of that review, additional differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.
3. Reclassifications of Teads’ Historical Financial Information
Certain reclassifications have been made to Teads’ historical balance sheet to conform to Outbrain’s balance sheet presentation, as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
Teads Historical Consolidated
Balance Sheet Line Items
 
 
Outbrain Historical
Consolidated Balance Sheet
Line Items
 
 
Teads Before
Reclassifications
 
 
Reclassification
Adjustments
 
 
Notes
 
 
Teads After
Reclassifications
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
Cash and cash equivalents
 
 
$64,597
 
 
$—
 
 
 
 
 
$64,597
Trade receivables
 
 
Accounts receivable, net of allowances
 
 
210,267
 
 
—
 
 
 
 
 
210,267
Financial assets (current)
 
 
 
 
 
574,158
 
 
(574,158)
 
 
(a)
 
 
—
Other receivables
 
 
Prepaid expenses and other current assets
 
 
43,863
 
 
574,158
 
 
(a)
 
 
618,021
Property, plant and equipment
 
 
Property, equipment and capitalized software, net
 
 
4,287
 
 
—
 
 
 
 
 
4,287
Right-of-use assets
 
 
Operating lease right-of-use assets, net
 
 
14,831
 
 
—
 
 
 
 
 
14,831
Intangible assets
 
 
Intangible assets, net
 
 
21,692
 
 
—
 
 
 
 
 
21,692
Goodwill
 
 
Goodwill
 
 
37,013
 
 
—
 
 
 
 
 
37,013
Deferred tax assets
 
 
Deferred tax assets
 
 
11,383
 
 
—
 
 
 
 
 
11,383
Financial assets (non-current)
 
 
Other assets
 
 
2,596
 
 
—
 
 
 
 
 
2,596
Total assets
 
 
Total assets
 
 
$984,687
 
 
$—
 
 
 
 
 
$984,687
EQUITY AND LIABILITIES
 
 
LIABILITIES AND
STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Trade and other payables
 
 
Accounts payable
 
 
$121,229
 
 
$—
 
 
 
 
 
$121,229
 
 
 
Accrued compensation and benefits
 
 
—
 
 
20,833
 
 
(b)
 
 
$20,833
Short-term borrowings
 
 
 
 
 
16,855
 
 
(16,855)
 
 
(c)
 
 
—
Lease liabilities
 
 
 
 
 
5,450
 
 
(5,450)
 
 
(c)
 
 
—
Current tax liabilities
 
 
 
 
 
2,653
 
 
(2,653)
 
 
(c)
 
 
—
Contract liabilities
 
 
Deferred revenue
 
 
2,871
 
 
23
 
 
(c)
 
 
2,894
Other current liabilities
 
 
Accrued and other current liabilities
 
 
33,569
 
 
4,102
 
 
(b),(c)
 
 
37,671
Long term borrowings
 
 
Long-term debt
 
 
21
 
 
—
 
 
 
 
 
21
Lease liabilities
 
 
Operating lease liabilities, non-current
 
 
12,363
 
 
—
 
 
 
 
 
12,363
Non-current provisions
 
 
 
 
 
1,882
 
 
(1,882)
 
 
(d)
 
 
—
Deferred tax liabilities
 
 
 
 
 
1,484
 
 
—
 
 
 
 
 
1,484
Other non-current liabilities
 
 
Other liabilities
 
 
4
 
 
1,882
 
 
(d)
 
 
1,886
 
 
 
Total liabilities
 
 
198,381
 
 
—
 
 
 
 
 
198,381
Share capital
 
 
Common stock
 
 
17,379
 
 
—
 
 
 
 
 
17,379
Share premium
 
 
Additional paid-in capital
 
 
99,178
 
 
—
 
 
 
 
 
99,178
Reserves
 
 
Accumulated other comprehensive income
 
 
(29,107)
 
 
—
 
 
 
 
 
(29,107)
Retained earnings
 
 
Accumulated retained earnings (deficit)
 
 
698,856
 
 
—
 
 
 
 
 
698,856
Total equity
 
 
Total stockholders’ equity
 
 
$786,306
 
 
$—
 
 
 
 
 
$786,306
Total equity and liabilities
 
 
Total liabilities and stockholders’ equity
 
 
$984,687
 
 
$—
 
 
 
 
 
$984,687
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Reclassifications of financial assets to prepaid expenses and other current assets to conform to Outbrain’s presentation.
(b)
Reclassification to separately break out accrued compensation and benefits from other current liabilities to conform to Outbrain’s presentation.
(c)
Reclassifications to condense the presentation of certain Teads’ historical financial statement line items within current liabilities to be included in accrued and other current liabilities, consistent with Outbrain’s presentation.

(d)
Reclassifications to condense the presentation of certain Teads’ historical balance sheet line items within non-current liabilities to be included in other liabilities.
Certain reclassifications have been made to Teads’ historical statements of operations to conform to Outbrain’s presentation, as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30, 2024
Teads Historical Consolidated
Statement of Operations Line
Items
 
 
Outbrain Historical
Consolidated Statement
of Operations Line Items
 
 
Teads Before
Reclassifications
 
 
Reclassification
Adjustments
 
 
Notes
 
 
Teads After
Reclassifications
 
 
 
 
 
 
(in thousands)
Revenue
 
 
Revenue
 
 
$428,482
 
 
$—
 
 
 
 
 
$428,482
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
 
Traffic acquisition costs
 
 
241,712
 
 
(31,398)
 
 
(a)
 
 
210,314
 
 
 
Other cost of revenue
 
 
 
 
 
31,398
 
 
(a)
 
 
31,398
 
 
 
Total cost of revenue
 
 
 
 
 
 
 
 
 
 
 
241,712
 
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
186,770
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Technology and development expenses
 
 
Research and development
 
 
28,781
 
 
—
 
 
 
 
 
28,781
Sales and marketing expenses
 
 
Sales and marketing
 
 
85,554
 
 
—
 
 
 
 
 
85,554
General and administrative expenses
 
 
General and administrative
 
 
41,987
 
 
—
 
 
 
 
 
41,987
 
 
 
Total operating expenses
 
 

 
 
 
 
 
 
 
 
156,322
Profit from operations
 
 
Income from operations
 
 
30,448
 
 
—
 
 
 
 
 
30,448
 
 
 
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
Interest expense
 
 
(1,060)
 
 
—
 
 
 
 
 
(1,060)
Other financial income and (expenses)
 
 
Interest income and other income (expense), net
 
 
12,431
 
 
—
 
 
 
 
 
12,431
 
 
 
Total other income (expense), net
 
 

 
 
 
 
 
 
 
 
11,371
Profit before tax
 
 
Income before income taxes
 
 
41,819
 
 
—
 
 
 
 
 
41,819
Income tax expense
 
 
Provision for income taxes
 
 
22,113
 
 
—
 
 
 
 
 
22,113
Profit for the period
 
 
Net income
 
 
$19,706
 
 
$—
 
 
 
 
 
$19,706
(a)
Reclassification to separately break out Teads’ cost of revenue between traffic acquisition costs and other cost of revenue, consistent with Outbrain’s presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30, 2023
Teads Historical Consolidated
Statement of Operations Line
Items
 
 
Outbrain Historical
Consolidated Statement
of Operations Line Items
 
 
Teads Before
Reclassifications
 
 
Reclassification
Adjustments
 
 
Notes
 
 
Teads After
Reclassifications
 
 
 
 
 
 
(in thousands)
Revenue
 
 
Revenue
 
 
$430,419
 
 
$—
 
 
 
 
 
$430,419
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
 
Traffic acquisition costs
 
 
229,234
 
 
(31,241)
 
 
(a)
 
 
197,993
 
 
 
Other cost of revenue
 
 
 
 
 
31,241
 
 
(a)
 
 
31,241
 
 
 
Total cost of revenue
 
 
 
 
 
 
 
 
 
 
 
229,234
 
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
201,185
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Technology and development expenses
 
 
Research and development
 
 
17,314
 
 
—
 
 
 
 
 
17,314
Sales and marketing expenses
 
 
Sales and marketing
 
 
79,048
 
 
—
 
 
 
 
 
79,048
General and administrative expenses
 
 
General and administrative
 
 
29,192
 
 
—
 
 
 
 
 
29,192
 
 
 
Total operating expenses
 
 

 
 
 
 
 
 
 
 
 125,554
Profit from operations
 
 
Income from operations
 
 
75,631
 
 
—
 
 
 
 
 
75,631
 
 
 
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
Interest expense
 
 
(821)
 
 
—
 
 
 
 
 
(821)
Other financial income and (expenses)
 
 
Interest income and other income (expense), net
 
 
11,259
 
 
—
 
 
 
 
 
11,259
 
 
 
Total other income (expense), net
 
 

 
 
 
 
 
 
 
 
10,438
Profit before tax
 
 
Income before income taxes
 
 
86,069
 
 
—
 
 
 
 
 
86,069
Income tax expense
 
 
Provision for income taxes
 
 
23,485
 
 
—
 
 
 
 
 
23,485
Profit for the period
 
 
Net income
 
 
$62,584
 
 
$—
 
 
 
 
 
$62,584

(a)
Reclassification to separately break out Teads’ cost of revenue between traffic acquisition costs and other cost of revenue, consistent with Outbrain’s presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31, 2023
Teads Historical Consolidated
Statement of Operations Line
Items
 
 
Outbrain Historical
Consolidated Statement of
Operations Line Items
 
 
Teads Before
Reclassifications
 
 
Reclassification
Adjustments
 
 
Notes
 
 
Teads After
Reclassifications
 
 
 
 
 
 
(in thousands)
Revenue
 
 
Revenue
 
 
$649,812
 
 
$—
 
 
 
 
 
$649,812
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
 
Traffic acquisition costs
 
 
328,635
 
 
(42,549)
 
 
(a)
 
 
286,086
 
 
 
Other cost of revenue
 
 
 
 
 
42,549
 
 
(a)
 
 
42,549
 
 
 
Total cost of revenue
 
 
 
 
 
 
 
 
 
 
 
328,635
 
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
321,177
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Technology and development expenses
 
 
Research and development
 
 
31,181
 
 
—
 
 
 
 
 
31,181
Sales and marketing expenses
 
 
Sales and marketing
 
 
108,534
 
 
—
 
 
 
 
 
108,534
General and administrative expenses
 
 
General and administrative
 
 
47,073
 
 
—
 
 
 
 
 
47,073
 
 
 
Total operating expenses
 
 

 
 
 
 
 
 
 
 
186,788
Profit from operations
 
 
Income from operations
 
 
134,389
 
 
—
 
 
 
 
 
134,389
 
 
 
Other income (expense), net:
 
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
Interest expense
 
 
(929)
 
 
—
 
 
 
 
 
(929)
Other financial income and (expenses)
 
 
Interest income and other income (expense), net
 
 
4,549
 
 
—
 
 
 
 
 
4,549
 
 
 
Total other income (expense), net
 
 

 
 
 
 
 
 
 
 
  3,620
Profit before tax
 
 
Income before income taxes
 
 
138,009
 
 
—
 
 
 
 
 
138,009
Income tax expense
 
 
Provision for income taxes
 
 
42,186
 
 
—
 
 
 
 
 
42,186
Profit for the year
 
 
Net income
 
 
$95,823
 
 
$—
 
 
 
 
 
$95,823
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
Reclassifications to separately break out Teads’ cost of revenue between traffic acquisition costs and other cost of revenue, consistent with Outbrain’s presentation.
4. IFRS to U.S. GAAP and Accounting Policy Adjustments
Teads’ historical consolidated financial statements have been prepared in accordance with IFRS, which differs in certain respects from U.S. GAAP. The unaudited pro forma condensed combined financial statements include the statement of operations of Teads from the audited historical consolidated financial statements for the year ended December 31, 2023, the statement of operations of Teads from the historical unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2024 and 2023, and the balance sheet of Teads from the historical unaudited condensed interim consolidated financial statements as of September 30, 2024, in each case prepared in accordance with IFRS as issued by the IASB.
The historical figures have been adjusted to reflect Teads’ consolidated statements of operations and balance sheet on a U.S. GAAP basis for the preparation of the unaudited pro forma condensed combined financial statements herein.
The following adjustments have been made to Teads’ historical financial statements to present them on a U.S. GAAP basis and conform them to the Company’s accounting policies for the purposes of the unaudited pro forma condensed combined financial statements:
(a)
to reclassify $21.0 million of capitalized software and $0.2 million of leasehold improvements, which are classified within intangible assets on Teads’ balance sheet under IFRS, to property and equipment and capitalized software, net, to conform to Outbrain’s accounting policy of presenting these items within fixed assets, as permitted by U.S. GAAP. The related capital software amortization expenses have been reclassified from operating expenses to other cost of revenue, in accordance with U.S. GAAP;

(b)
to present certain allocated compensation-related costs within sales and marketing operating expenses rather than cost of revenue, in accordance with Outbrain’s accounting policies;
(c)
Under IFRS, lessees account for all leases as finance leases, with the associated lease expenses recorded within interest expense and depreciation expense. Under U.S. GAAP, Teads’ leases, which were analyzed under Accounting Standards Codification Topic 842, “Leases”, would be classified as operating leases with lease expense recognized on a straight-line basis as part of operating expenses. Accordingly, the below adjustments were reflected to derecognize the lease assets and liabilities recorded for Teads’ finance leases in accordance with IFRS and recognize the corresponding operating lease assets and liabilities in accordance with U.S. GAAP in the unaudited pro forma condensed combined balance sheet:
 
 
 
 
 
 
 
September 30, 2024
 
 
 
Teads Finance
Leases under IFRS
 
 
Teads Operating
Leases Under
U.S. GAAP
 
 
Adjustment
 
 
 
(in thousands)
Operating lease right-of-use assets, net
 
 
$14,831
 
 
$15,446
 
 
$615
Accrued and other current liabilities
 
 
5,450
 
 
4,582
 
 
(868)
Operating lease liabilities, non-current
 
 
12,363
 
 
11,287
 
 
(1,076)
Net adjustment
 
 
$(2,982)
 
 
$(423)
 
 
$2,559
 
 
 
 
 
 
 
 
 
 
In the unaudited pro forma condensed combined statement of operations, Teads’ interest expense for lease liabilities classified as finance leases was removed and the allocated operating expenses were adjusted for the differences between the departmental expenses recognized under IFRS to the amounts to be recognized under U.S. GAAP, as summarized below:
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2024
 
 
Nine Months Ended
September 30, 2023
 
 
Year Ended
December 31, 2023
 
 
 
Teads
Finance
Leases
under
IFRS
 
 
Teads
Operating
Leases
Under
U.S.
GAAP
 
 
Difference
 
 
Teads
Finance
Leases
under
IFRS
 
 
Teads
Operating
Leases
Under
U.S.
GAAP
 
 
Difference
 
 
Teads
Finance
Leases
under
IFRS
 
 
Teads
Operating
Leases
Under
U.S.
GAAP
 
 
Difference
 
 
 
(in thousands)
Interest expense - finance leases
 
 
813
 
 
—
 
 
(813)
 
 
656
 
 
—
 
 
(656)
 
 
891
 
 
—
 
 
(891)
Operating expenses - finance lease depreciation
 
 
$4,116
 
 
$—
 
 
$(4,116)
 
 
$3,899
 
 
$—
 
 
$(3,899)
 
 
$5,256
 
 
$—
 
 
$(5,256)
Operating expenses - fixed lease costs
 
 
—
 
 
4,504
 
 
4,504
 
 
—
 
 
4,375
 
 
4,375
 
 
—
 
 
5,909
 
 
5,909
 
 
 
$4,116
 
 
$4,504
 
 
$388
 
 
$3,899
 
 
$4,375
 
 
$476
 
 
$5,256
 
 
$5,909
 
 
$653
Research and development
 
 
 
 
 
 
 
 
$35
 
 
 
 
 
 
 
 
$43
 
 
 
 
 
 
 
 
$59
Sales and marketing
 
 
 
 
 
 
 
 
$309
 
 
 
 
 
 
 
 
$379
 
 
 
 
 
 
 
 
$520
General and administrative
 
 
 
 
 
 
 
 
$44
 
 
 
 
 
 
 
 
$54
 
 
 
 
 
 
 
 
$74
 
 
 
 
 
 
 
 
 
$388
 
 
 
 
 
 
 
 
$476
 
 
 
 
 
 
 
 
$653
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tax effects of the above adjustments were calculated using a blended U.S. federal and state tax rate and statutory rates of the respective foreign jurisdictions in which Teads operates; and

(d)
to present bank charges within general and administrative expenses, in accordance with U.S. GAAP, rather than within finance costs under IFRS.
We continue to perform a detailed review of Teads’ historical financial statements prepared under IFRS, as issued by IASB. As a result of that review, the Company may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.
5. Preliminary Purchase Price Allocation
The aggregate purchase price paid by the Company to acquire Teads was comprised of (i) a cash payment of $625 million and (ii) 43.75 million newly issued shares of Outbrain Common Stock. The aggregate purchase price paid by the Company to acquire Teads was approximately $0.9 billion.
From and after closing, Altice Teads agreed to indemnify Outbrain and its affiliates for certain losses that may be incurred by them. For further information about an indemnity related to tax matters and the effect on these unaudited pro forma condensed combined financial statements, refer to 6(k) below.
The following summarizes the preliminary calculation of consideration transferred. The final calculation of consideration transferred is subject to future adjustments, including changes in the fair value of equity consideration:
 
 
 
 
 
 
 
Amount
(in thousands)
Cash consideration
 
 
$625,000
Common Stock(1)
 
 
283,938
Preliminary Aggregate Purchase Consideration
 
 
$908,938
 
 
 
 
(1)
Represents a preliminary value of 43.75 million shares of Outbrain Common Stock based on the closing stock price as of January 22, 2025 of $6.49 per share. The actual value of the stock consideration will change based on fluctuations in the value of Outbrain Common Stock on the closing date of the Acquisition.
Under the acquisition method of accounting, the estimated purchase price, calculated as described above, is allocated to the identifiable assets acquired and the identifiable liabilities assumed with any excess being allocated to goodwill.
The allocation of the purchase price is preliminary, and the final determination will be based on the fair values of assets acquired and liabilities assumed, including the fair values of identifiable intangible assets and the fair values of liabilities assumed on the date the Acquisition was consummated. The purchase price allocation is dependent upon certain valuation and other studies that have not yet been completed. Accordingly, the preliminary purchase price allocation is subject to further adjustments as additional information becomes available and as additional analyses and final valuations are conducted at and following the completion of the Acquisition. The final valuations could differ materially from the preliminary valuations presented below and, as such, no assurances can be provided regarding the preliminary purchase price allocation.
The preliminary purchase price allocation was estimated based on Teads’ historical financial statements reflecting IFRS to U.S. GAAP and accounting policy adjustments for pro forma purposes. The following tables summarize the preliminary purchase price allocation to the identifiable assets acquired and liabilities assumed of Teads as well as the identifiable intangible assets recognized as part of the Acquisition (in thousands):
 
 
 
 
 
 
 
As of
September 30, 2024
 
 
 
(in thousands)
Purchase consideration
 
 
$908,938
Amounts of identifiable assets acquired and liabilities assumed
 
 
 
Book value of Teads’ net assets (1)
 
 
$788,215
Less:
 
 
 
Elimination of intercompany transactions with Altice Teads
 
 
(593,584)
Elimination of historical goodwill
 
 
(37,013)
Elimination of historical capitalized software
 
 
(20,957)
Elimination of historical intangible assets
 
 
(494)
Add:
 
 
 
Preliminary value of identifiable intangible assets
 
 
386,000
 
 
 
 

 
 
 
 
 
 
 
As of
September 30, 2024
 
 
 
(in thousands)
Deferred tax impact of identifiable intangible assets
 
 
(45,289)
Preliminary estimate of fair value of identifiable net assets acquired
 
 
$476,878
Preliminary estimate of goodwill
 
 
$432,060
 
 
 
 
(1)
The book value of Teads’ net assets reflects preliminary IFRS to U.S. GAAP and accounting policy adjustments. The final goodwill amount that will be recorded in connection with the Acquisition is subject to change due to changes in the book value of Teads’ assets and liabilities at acquisition.
For purposes of determining the consideration transferred, the closing price of Outbrain Common Stock from January 22, 2025 has been utilized. An increase or decrease of 10% in the closing price of the Common Stock would increase or decrease the total consideration by $28.4 million, which would result in a corresponding increase or decrease to goodwill in the unaudited pro forma condensed combined financial statements.
See Note 6 for the preliminary fair value of the identifiable intangible assets.
6. Transaction Accounting Adjustments
The preliminary pro forma adjustments included in the unaudited pro forma condensed combined financial statements are as follows:
(a)
Reflects the elimination of Teads’ historical intercompany balances with Outbrain, which will be eliminated in consolidation of the combined company, as well as the related revenue and traffic acquisition costs.
(b)
Reflects the elimination of Teads’ intercompany balances with Altice Teads, which was required to be settled prior to the consummation of the Acquisition through a series of intercompany movements and distributions. The unaudited pro forma condensed combined balance sheet reflects the eliminations of $19.5 million interest receivable within prepaid expenses and other current assets and intercompany loans receivable of $574.1 million, net of provision for credit losses, within prepaid expenses and other current assets. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2024, the nine months ended September 30, 2023 and the year ended December 31, 2023 reflect the elimination of net income of $18.4 million, $14.2 million, and $14.9 million, respectively, from interest income and other income (expense), net. These adjustments eliminate the impacts of the interest income, as well as the provision for credit losses on the intercompany loans.
(c)
Reflects an adjustment to eliminate the $21.0 million balance of Teads’ capitalized software included in its consolidated balance sheet as of September 30, 2024, as well to eliminate the related amortization expense of $8.5 million, $7.5 million and $10.3 million for the nine months ended September 30, 2024, the nine months ended September 30, 2023 and the year ended December 31, 2023, respectively, as it is included in the preliminary fair value of the technology intangible asset in (e) below.
(d)
Reflects the re-measurement of Teads’ lease portfolio as of September 30, 2024, updated for discount rates as of such date. The Company also reflected the impact of the practical expedient that it adopted at the Acquisition Closing, whereby it will not recognize right-of-use operating lease assets and liabilities for leases with a remaining lease term of twelve months or less. As a result of this re-measurement, operating lease right of use assets, net declined by $0.6 million, accrued and other current liabilities declined by $0.7 million and operating lease liabilities, non-current declined by $0.4 million. The statements of operations impact of this re-measurement was not material for the nine months ended September 30, 2024, the nine months ended September 30, 2023 or the year ended December 31, 2023.
(e)
Reflects the net increase in intangible assets based on a preliminary estimated fair value, partially offset by an elimination of historical intangible assets. The preliminary estimated fair value is allocated to intangible assets primarily consisting of customer relationships, publisher relationships, technology and a trade name. The estimated fair values and useful lives of identifiable intangible assets are preliminary and have been performed based on publicly available benchmarking information given the limited time available to perform a full valuation study and limitations of information for the valuation study at this time. The amount that will ultimately be allocated to identifiable intangible assets and the related amount of

amortization, may differ materially from this preliminary allocation. Any change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill. A hypothetical 10% change in the valuation of intangible assets would result in a change to annual amortization expense of approximately $4.6 million.
These estimated useful lives are preliminary and were determined based on our review of the time period over which economic benefit is estimated to be generated and other factors, including Outbrain management’s view based on historical experience with similar assets and market-based analysis.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Amortization
 
 
 
 
Teads
Historical
Amounts
After
Reclassifications, net
 
 
Estimated
Fair Value
 
 
Increase/
Decrease
 
 
Nine Months
Ended
September 30, 2024
 
 
Nine Months
Ended September 
30, 2023
 
 
Year Ended
December 31, 2023
 
 
Estimated
Weighted
Average
Useful Life
(Years)
 
 
 
(dollars in thousands)
 
Publishers(2)
 
 
$—
 
 
$57,900
 
 
$57,900
 
 
$4,343
 
 
$4,343
 
 
$5,790
 
 
10
Customers(2)
 
 
326
 
 
173,700
 
 
173,374
 
 
14,475
 
 
14,475
 
 
19,300
 
 
9
Technology(1)
 
 
—
 
 
115,800
 
 
115,800
 
 
12,407
 
 
12,407
 
 
16,543
 
 
7
Trade name(2)
 
 
—
 
 
38,600
 
 
38,600
 
 
3,619
 
 
3,619
 
 
4,825
 
 
8
Other intangible assets
 
 
168
 
 
—
 
 
(168)
 
 
—
 
 
—
 
 
—
 
 
 
Total estimated intangible assets
 
 
$494
 
 
$386,000
 
 
$385,506
 
 
$34,844
 
 
$34,844
 
 
$46,458
 
 
 
Less: elimination of
historical amortization(2)
 
 
 
 
 
 
 
 
 
 
 
120
 
 
120
 
 
159
 
 
 
Total increase in
amortization of intangible assets
 
 
 
 
 
 
 
 
 
 
 
$34,724
 
 
$34,724
 
 
$46,299
 
 
 
(1)
Amortization expense is recorded within cost of revenue.
(2)
Amortization expense is recorded within sales and marketing expenses within operating expenses. This amount excludes the amortization of capitalized software, which is separately eliminated in (c) above.
(f)
Reflects the adjustment to eliminate Teads’ historical goodwill and record the preliminary estimate of goodwill related to the Acquisition, which is calculated as the difference between the fair value of the consideration transferred and the estimated fair values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The goodwill amount is subject to change due to various factors, including the fair values of assets and liabilities at acquisition date and foreign exchange currency impacts.
 
 
 
 
 
 
 
As of
September 30, 2024
 
 
 
(in thousands)
Preliminary estimate of goodwill
 
 
$432,060
Teads’ historical goodwill
 
 
(37,013)
Adjustment to goodwill
 
 
$395,047
(g)
Total transaction-related costs are estimated at approximately $30.0 million, $8.6 million of which has been reflected within general and administrative expenses in the Company’s historical consolidated statement of operations for the nine months ended September 30, 2024. The remainder of transaction costs of $21.4 million has been reflected as an adjustment to accounts payable in the unaudited pro forma condensed combined balance sheet as of September 30, 2024, as well as an adjustment to general and administrative expenses in the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023 and the year ended December 31, 2023.
(h)
Reflects the elimination of stock-based compensation expense for the PSAR Plan, as the related awards were cancelled prior to the Acquisition Closing and the holders will not receive any cash compensation or replacement awards. This plan was adopted in October 2023, therefore, there was no expense recognized during the nine months ended September 30, 2023.

 
 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2024
 
 
Year Ended
December 31, 2023
 
 
 
(in thousands)
Sales and marketing
 
 
$10,402
 
 
$6,645
Research and development
 
 
5,629
 
 
3,596
General and administrative
 
 
12,058
 
 
7,702
Total stock-based compensation expense
 
 
$28,089
 
 
$17,943
(i)
Reflects the elimination of Teads’ historical equity accounts;
 
 
 
 
 
 
 
September 30,
2024
 
 
 
(in thousands)
Common stock
 
 
$17,379
Additional paid-in capital
 
 
99,178
Accumulated other comprehensive loss
 
 
(29,107)
Accumulated deficit
 
 
700,765
Total stockholders’ equity
 
 
$788,215
 
 
 
 
(j)
Represents the tax effect of the above adjustments using a blended U.S. federal and state tax rate and statutory tax rates of the respective foreign jurisdictions in which Teads operates and reflects any anticipated changes to the tax filing statuses of the acquired entities. The statutory tax rates range from 9% to 35%, which are in effect as of the pro forma balance sheet date. The actual effective tax rate could be materially different (either higher or lower) from the rate presented in the unaudited pro forma condensed combined financial information. These assumptions could change depending on post-acquisition activities, the geographical mix of income, changes in tax law, as well as the final determination of the fair value of the identifiable intangible assets and liabilities.
(k)
Represents adjustments to increase uncertain tax positions by $99.8 million and to increase tax contingencies by $5.0 million, with an offsetting increase to other assets of $104.8 million relating to an indemnification provided by the Share Purchase Agreement. The corresponding tax effects have been reflected within the provision for income taxes and sales and marketing expenses in the unaudited pro forma condensed combined statements of operations.
Actual adjustments may differ materially based on the final determination of fair value and are subject to change.
7. Financing Adjustments
The unaudited pro-forma condensed combined financial statements have been adjusted to record the effects of incurring new indebtedness to finance the Acquisition. In connection with the Acquisition on February 3, 2025, Outbrain, as the initial borrower, entered into the New Credit Agreement, establishing the New Revolving Credit Facility with aggregate commitments of $100 million and (ii) the Bridge Facility in an aggregate principal amount of 625 million. We funded the cash consideration of the Acquisition with the Bridge Facility. The proceeds from the Offering will be used, together with cash on hand, to (i) repay in full and cancel the indebtedness incurred under the Bridge Facility, including accrued and unpaid interest thereon and (ii) pay fees and expenses incurred in connection with the Offering and the Bridge Facility Refinancing.
The unaudited pro forma condensed combined balance sheet assumes that $625 million aggregate principal amount of Notes are issued on September 30, 2024 and the unaudited pro forma condensed combined statements of operations assume that the Notes are issued on January 1, 2023.

(a) Debt Financing
The following debt financing adjustments were made in the unaudited pro forma condensed combined balance sheet and statements of operations:
 
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
Statement of Operations Adjustments
(in thousands)
 
 
Recorded on
Balance Sheet at
September 30,
2024
 
 
Adjustment
As of
September 30,
2024
 
 
Total
Amount
 
 
Nine Months
Ended
September 30,
2024
 
 
Nine Months
Ended
September 30,
2023
 
 
Year
Ended
December 31,
2023
Long-term debt(1)
 
 
$—
 
 
$625,000
 
 
$625,000
 
 
$46,875
 
 
$46,875
 
 
$62,500
Deferred issuance costs
 
 
(526)
 
 
(13,150)
 
 
(13,676)
 
 
$2,051
 
 
$2,051
 
 
$2,735
Total long-term debt
 
 
$(526)(2)
 
 
$611,850(3)
 
 
$611,324(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
Statement of Operations Adjustments
(in thousands)
 
 
Recorded on
Balance Sheet at
September 30,
2024
 
 
Adjustment
As of
September 30,
2024
 
 
Total
Amount
 
 
Nine Months
Ended
September 30,
2024
 
 
Nine Months
Ended
September 30,
2023
 
 
Year
Ended
December 31,
2023
Deferred issuance costs - New Revolving Credit Facility
 
 
$110
 
 
$3,675(5)
 
 
$3,785
 
 
$568
 
 
$568
 
 
$757
Deferred issuance costs - prior facility
 
 
231
 
 
(231)
 
 
—
 
 
(83)
 
 
(83)
 
 
(111)
Increase in deferred financing fees
 
 
$341
 
 
$3,444(6)
 
 
$3,785
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bridge Facility fees
 
 
$1,208
 
 
$11,166(7)
 
 
$12,374
 
 
$—
 
 
$12,374
 
 
$12,374
Commitment fee - New Revolving Credit Facility
 
 
 
 
 
 
 
 
 
 
 
375
 
 
375
 
 
500
Commitment fee - prior facility
 
 
 
 
 
 
 
 
 
 
 
(171)
 
 
(171)
 
 
(228)
Total incremental expenses
 
 
 
 
 
 
 
 
 
 
 
$49,615
 
 
$61,989
 
 
$78,527
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
On the Acquisition Closing Date, the Bridge Facility was drawn in full to fund the cash portion of the Total Consideration. Because we expect to use the proceeds from the Offering, together with cash on hand, to repay in full and cancel the indebtedness incurred under the Bridge Facility, including accrued and unpaid interest thereon, and to pay fees and expenses incurred in connection therewith, these unaudited pro forma financial statements assume that the Notes are the only long-term indebtedness incurred in connection with the Acquisition. The interest expense on the Notes was calculated using an estimated interest rate of approximately 10.0%. The actual interest rate could be materially different from this estimate based on the final terms of the Offering. A change of 0.125% in the interest rate would increase or decrease interest expense on a pro forma basis by $0.6 million for the nine months ended September 30, 2024, $0.6 million for the nine months ended September 30, 2023 and $0.8 million for the year ended December 31, 2023.
(2)
Recorded as a decrease in other assets.
(3)
Recorded as an increase in cash and cash equivalents.
(4)
Recorded as an increase in long-term debt.
(5)
Recorded as a decrease in cash and cash equivalents.
(6)
Recorded as an increase in other assets.
(7)
Recorded within other assets and accrued and other current liabilities.
(b) Equity Financing
As previously described above, the unaudited pro forma condensed combined financial statements assumed that the Company issued 43.75 million shares of Common Stock, as detailed below:
 
 
 
 
 
 
 
September 30,
2024
 
 
 
(in thousands)
Issuance of common stock, par value of $0.001 per share
 
 
$44
Issuance of common stock, additional paid-in capital
 
 
283,894
Pro-forma adjustment to stockholders’ equity
 
 
$283,938
 
 
 
 
In connection with the issuance of equity as described above, the Company incurred equity issuance cost as described below:
 
 
 
 
 
 
 
 
 
 
 
 
 
Decrease to
additional
paid-in capital
 
 
Recorded on
Balance Sheet
As of
September 30,
2024
 
 
Equity
Issuance Costs
Net of
Amounts
Recorded
 
 
 
(in thousands)
Total equity issuance costs
 
 
$1,633
 
 
$807(1)
 
 
$826(2)
 
 
 
 
 
 
 
 
 
 
(1)
Reflected as a decrease to other assets, where these costs have been recorded as of September 30, 2024.
(2)
Reflected as an increase to accrued and other current liabilities.

8. Earnings (Loss) per Share
The following unaudited pro forma condensed combined basic and diluted earnings (loss) per share calculations are based on unaudited pro forma net income for the combined company and historical basic and diluted weighted average shares of Outbrain, adjusted to give effect to the issuance of consideration in the form of Common Stock.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months
Ended
September 30, 2024
 
 
Nine Months
Ended
September 30, 2023
 
 
Twelve Months
Ended
December 31, 2023
 
 
LTM Period
Ended
September 30, 2024
 
 
 
(Dollars in thousands)
Numerator:
 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma net (loss) income attributed to common stockholders - basic
 
 
$(26,783)
 
 
$(32,951)
 
 
$1,584
 
 
$7,752
Adjustments related to convertible debt(1)
 
 
(4,834)
 
 
(14,588)
 
 
(13,930)
 
 
(4,388)
Pro-forma net (loss) income attributable to common stockholders - diluted
 
 
$(31,617)
 
 
$(47,539)
 
 
$(12,346)
 
 
$3,364
 
 
 
 
 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average number of common shares outstanding - reported
 
 
49,171,414
 
 
51,178,127
 
 
50,900,422
 
 
49,398,887
Common shares issued as part of the Acquisition
 
 
43,750,000
 
 
43,750,000
 
 
43,750,000
 
 
43,750,000
Pro-forma weighted average shares - basic
 
 
92,921,414
 
 
94,928,127
 
 
94,650,422
 
 
93,148,887
Convertible debt(1)
 
 
4,530,511
 
 
6,518,095
 
 
6,064,877
 
 
4,577,753
Restricted stock units
 
 
—
 
 
—
 
 
—
 
 
248,567
Pro-forma weighted average shares - diluted
 
 
97,451,925
 
 
101,446,222
 
 
100,715,299
 
 
97,975,207
Pro forma net (loss) income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
$(0.29)
 
 
$(0.35)
 
 
$0.02
 
 
$0.08
Diluted
 
 
$(0.32)
 
 
$(0.47)
 
 
$(0.12)
 
 
$0.03
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The Company uses the if-converted method to calculate the dilutive impact of the Convertible Notes, which assumes share settlement as of the beginning of the period if the effect is more dilutive than cash settlement.
The following potentially dilutive weighted-average shares have been excluded from the calculation of diluted net loss per share for each period presented because they are anti-dilutive:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months
Ended
September 30, 2024
 
 
Nine Months
Ended
September 30, 2023
 
 
Twelve Months
Ended
December 31, 2023
 
 
LTM Period
Ended
September 30, 2024
Options to purchase common stock
 
 
2,337,331
 
 
2,562,276
 
 
2,523,643
 
 
2,355,347
Warrants
 
 
188,235
 
 
188,235
 
 
188,235
 
 
188,235
Restricted stock units
 
 
3,854,406
 
 
3,158,901
 
 
3,275,430
 
 
1,629,047
Performance-based stock units
 
 
492,353
 
 
38,571
 
 
51,534
 
 
391,215
Total shares excluded from diluted loss per share
 
 
6,872,325
 
 
5,947,983
 
 
6,038,842
 
 
4,563,844