Quantify the impact of Google's AI changes (blue links to AI answers) on the 30% decline in DR/SME gross profit, and whether this decline affects the ability to sell omnichannel products on the CTV side.

Management stated that page view declines due to AI shifts were anywhere from 10-15% for some publishers, and 15-25% overall for premium publishers, varying by country. They also noted impacts on monetizing pages. They clarified that the DR/SME decline does not impact the ability to sell omnichannel, as most omnichannel efforts target in-read placements in traditional publisher spaces, which are less affected. “we were seeing page view declines... it's anywhere for some publishers, it's 10, 15%. Some of them see higher percentages overall on the premium side of our publishers. It varies by country, but I would say it's in the 15 to 25% of paid good design.”

Can you update on progress and traction with large ad agencies, especially regarding product placement and feedback?

Management highlighted that over 90% of enterprise billings are through big agencies. They are seeing increased traction around AI-level integrations for activation and planning with agencies, attributing this to investments in the Teads Ad Manager platform. They expressed confidence in H2 growth and acceleration into 2027 due to their unique positioning in branding, performance, CTV, online video, measurement, and exclusive CTV home screen inventory. “if you look at the billings of the enterprise side of the business, it's about 90 plus percent is built through the big agencies. What we are seeing is 2D investments that we did in the Tees Ad Manager platform, increasing traction around integrations at the AI level on activation and planning with agencies.”

TEAD

Teads (TEAD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Aug 6, 2026

Source: earnings call transcript

Executive summary

Teads Q2 FY26 — Enterprise Growth and CTV Acceleration Offset DR/SME Headwinds

Teads reported a mixed Q2 FY26, with strong performance in its Enterprise segment, driven by significant Connected TV growth and omnichannel adoption, offsetting substantial headwinds in its Direct Response and SME business. The company is strategically investing in its high-margin Enterprise segment while actively addressing cost structures and operational efficiencies in the challenged DR/SME unit, leading to a suspension of full-year EBITDA guidance.

Highlights

Enterprise gross profit reached $89 million in Q2, aligning with plans.
Connected TV (CTV) revenue grew 67% year-over-year to approximately $40 million in Q2, now representing 13% of total revenue.
Branding customers utilizing omnichannel campaigns increased to 16% of Q2 branding revenue, up from 9% in Q2 2025.
Company ended Q2 with $91 million in cash, cash equivalents, and marketable securities, and positive free cash flow of $3 million.

Concerns

Direct Response and SME gross profit declined 30% year-over-year to $34 million in Q2.
Adjusted EBITDA of $7 million in Q2 came below the expected range due to a spike in expenses.
Full-year 2026 EBITDA guidance was suspended due to volatility in the DR and SME business.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Adjusted EBITDA	Guidance suspended high materiality	FY26	Low
Enterprise business advertiser spend growth	mid-single-digit extra growth medium materiality	H2 FY26	High
Enterprise business year-over-year growth	return to year-over-year growth of X-Tech medium materiality	H2 FY26	High
Connected TV (CTV) growth	accelerate high materiality	into 2027 · CY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Enterprise brand and agencies business This is the primary growth engine, positioned to capture market share and expand margins. Advertiser spend stabilized in Q2 and is expected to grow mid-single digits in H2. CTV growth is a key driver, supported by global home screen leadership and the rollout of Teads CEV Ensembler. Omnichannel adoption is also reinforcing broader packages. Advertiser spend YoY: flatCTV revenue growth YoY: 67%CTV revenue: $40 millionCTV as % of Q2 revenue: 13%Branding customers utilizing omnichannel campaigns as % of Q2 branding revenue: 16%	—	—	—	$89 million
Direct response and small and medium enterprises (SME) business This business is navigating significant strategic and operational headwinds, including impacts from AI summaries shifting organic referral patterns, closed ecosystems leveraging AI, and platform policy updates. A deliberate quality reset, including exiting low-margin accounts and pruning lower-quality supply, also contributed to the decline.	—	-30%	—	$34 million

Product announcements

Product	Type	Timeline	Details
Teads CEV Ensembler	launch	—
Teads Engage operating system	launch	Q2 FY26

Deals & partnerships

LG Renewed exclusive home screen partnership

Renewed exclusive home screen partnership with LG across Europe and APAC, with expansion into new markets.

TiVo Integrated with TiVo's ads

Integrated with TiVo's ads across 5.3 million households in North America and the UK.

Vida Japan Integrated with Vida Japan

Integrated with Vida Japan, unlocking 2.3 million devices as of July 1st.

Stellantis, Louis Vuitton, Warner Brothers, Dyson Secured and renewed major global joint business partnerships

Secured and renewed major global joint business partnerships with premier enterprise brands.

Risks & headwinds

Decline in Direct Response and SME business Q2 FY26

30% year-over-year decline in gross profit

Mitigation:Executing a plan focused on client outcomes, new supply, and operational efficiency; launched Teads Engage OS; entering higher margin programmatic environments; reorganizing internal structure to reduce cost base.

Impact of AI summaries on organic referral patterns ongoing

15-25% page view declines for premium publishers

Mitigation:Launched Teads Engage OS to monetize complete reader sessions rather than relying on volatile search-driven page views.

Increased competition from closed ecosystems leveraging AI ongoing

strengthen their positions alongside ongoing platform policy updates, making it more challenging for publishers to monetize through native

Mitigation:Entering new supply channels, including active dialogues with leading AI players to leverage global scale and data across emerging LLM channels.

Spike in Q2 operating expenses Q2 FY26

Adjusted EBITDA below expected range

Mitigation:Scrutinizing cost structure in lower profit areas; expecting a step down in cost in Q3; much of the higher expenses are temporary and timing related.

Elevated bad debts Q2 FY26

continued to be elevated

Mitigation:Related primarily to prior customers whose business with us was impacted by quality initiatives implemented last year.

What to watch in Q3 FY26

Enterprise business advertiser spend growth

H2 FY26

Current flat YoY in Q2

Target mid-single-digit extra growth

Why it matters

This segment is the primary growth engine, and its acceleration is key to overall company performance and long-term value.

Advertiser spend stabilized from our prior headwinds in 2025 to be flat year-over-year in Q2, and we expect mid-single-digit extra growth in H2.

Find out whether TEAD delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you update on potential transactions to strengthen the balance sheet? How are you balancing investments in the enterprise business against profitability and liquidity, and what are the expected returns?

Management confirmed they are still evaluating opportunities to strengthen the balance sheet and are scrutinizing cost structures for efficiencies, particularly through AI implementation. They emphasized focusing investments on the high-growth, higher-margin enterprise business (CTV, Omnichannel, AI integrations) where they see great returns, while running the DR/SME business for profitability.

“we're continuing to evaluate opportunities to strengthen our balance sheet... it's really about focusing on the growth drivers. We have tremendous momentum around CTV, Omnichannel, the brand and enterprise business... and we want to invest in this part of the business.”

asked by Brianna Diaz · answered by Unknown Speaker

2 min read 5 chapters

Detailed narrative

Enterprise Business Momentum

The enterprise segment, powered by Connected TV (CTV) growth and omnichannel solutions, delivered $89 million in gross profit for Q2 FY26. Advertiser spend in this segment stabilized to flat year-over-year in Q2 and is projected to achieve mid-single-digit growth in the second half of the fiscal year.

Management anticipates this growth to further accelerate into 2027, driven by strategic investments in product architecture and go-to-market teams.

Connected TV (CTV) Expansion

CTV revenue demonstrated robust growth, surging 67% year-over-year to approximately $40 million in Q2 FY26, now comprising 13% of total revenue compared to 7% in Q2 2025. This expansion is attributed to Teads' global home screen leadership, reaching over 500 million home screens worldwide, and the successful rollout of the Teads CEV Ensembler, a unified full-funnel branding and performance suite.

The company also renewed key partnerships and integrated with new platforms to expand its supply and reach.

Direct Response & SME Headwinds

In contrast, the Direct Response (DR) and Small and Medium Enterprises (SME) business experienced a significant 30% year-over-year decline in gross profit, reaching $34 million in Q2 FY26. This segment is navigating substantial strategic and operational headwinds, including the impact of AI summaries shifting organic referral patterns, which led to 15-25% page view declines for some premium publishers.

Additionally, closed ecosystems leveraging AI and ongoing platform policy updates are making monetization more challenging.

Strategic Response to DR/SME Challenges

To address the challenges in the DR/SME segment, Teads launched the AI-powered Teads Engage operating system in Q2, designed to unify content and ad inventory to monetize complete reader sessions, reducing reliance on volatile search-driven page views. The company is also actively pursuing new supply channels, including higher-margin programmatic environments and dialogues with leading AI players for emerging LLM channels.

Internal structures are being reorganized, and AI tools embedded to streamline processes and reduce the cost base of this business.

Q2 Expense Spike and Balance Sheet

Adjusted EBITDA for Q2 FY26 came in at $7 million, below the expected range, primarily due to a spike in expenses in the latter half of the quarter. These higher costs were attributed to timing and cutoff of discretionary expenses, temporary transitionary costs for cloud platform migration, FX fluctuations (particularly the Israeli shekel), and elevated bad debts.

The company ended the quarter with $91 million in cash, cash equivalents, and marketable securities, and access to $40 million via its revolving credit facility, while actively evaluating opportunities to strengthen its financial profile.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.