Teads, an ad tech company which specialises in outstream video advertising, is being spun off by its parent company Altice via an initial public offering (IPO). Altice has not yet disclosed what sort of valuation it is seeking from its public listing, which will see Teads traded on the NASDAQ Global Select Market.
This adds Teads as the latest in a long line of ad tech companies which have either kicked off or completed an IPO in the past year. Just in the past few weeks we’ve seen Taboola and Integral Ad Science complete their IPOs, while Innovid, Outbrain, and System1 have all announced their intentions to go public.
Rumours have been swirling for a couple of years now that Altice, a French telco, had been looking to offload Teads, which it first bought in 2017 for $308 million. But in its F-1 filing with the US Securities and Exchange Commission (SEC), Altice says it’s not planning to completely divest itself of Teads. Rather, under Altice’s proposal, it will still control a majority of the voting power of outstanding common shares. Teads will be listed as a “controlled company”, a legal term which allows Altice to retain greater control over the business.
This means that Altice will be able to cash in on Teads’ growth over the past few years, while retaining a grip on the company.
And going by figures published in the F-1 filing, Teads has seen significant growth since it was acquired by Altice. Teads reported 2016 revenues under $210 million prior to the acquisition, while 2020 revenues reached $540 million. During this period, Teads reported impressive post-tax profits of $111 million, made all the more noteworthy by the context of the pandemic.
Teads says it believes it’s well positioned for future growth too. The company says it is proving successful at maintaining strong customer relationships, with a publisher retention rate of 99 percent last year. And it says its outstream format’s focus on contextual targeting positions it well for the post-cookie world. Interestingly, Teads also claims it is “one of the few in the industry to leverage Google’s Privacy Sandbox solution”, believing that sticking with Google’s tools rather than adopting email-based identifiers will be the best way forward.
In the F-1 filing, Teads says it will seek further growth through expansion into new markets, new customer acquisition, growth of its performance advertising business, and potentially through M&A.
Looking at potential risk factors, which companies have to list in F-1 or S-1 filings, Teads says that competition from the walled gardens, as well as from competing ad tech companies, is one potential obstacle. Specifically, Teads acknowledged that advertisers may choose to shift more spend to walled gardens as third-party cookies are deprecated. And if advertisers find cookie-free targeting to be less effective, Teads could be forced to lower its prices to keep attracting customers.
